annual report 2013

Adaptability for a sustainable growth

As a responsible corporate citizen, we are committed to creating value and

generating benefits for the society. In sync with our corporate philosophy, we
have placed special emphasis on adaptability as a key element of sustainable
growth: adaptability to changing environment and time to tackle most pressing
issues of the day in a more holistic way.

Adaptability as a core component of sustainable development recognizes that

growth must be both inclusive and environmentally sound to reduce poverty
and build shared prosperity for our society to continue to meet the needs of
future generations. In order to achieve a culture of adaptability and sustainable
development we have adopted A3 principle which is adaptability, attitude and
appreciation. The capacity to adapt in a changing environment, the attitude to
embrace new technology and the appreciation of our culture and environment
are the main tenets of our new business philosophy.

Cover concept

The tree is steeped in symbolism. In most cultures the tree has been a symbol
of hope, sustenance and adaptability. The inner rings of a tree trunk speak of
the age of a tree and, by extension, stories of a community. To envisage our
theme of adaptability for this year’s annual report we opted for a tree trunk with
its aging marks that tells the story of its adaptive nature and resonates hopes
for a new tomorrow.
awards that
speak about us
As a business, EBL is guided by the objectives to expand been well-appreciated and gotten recognitions from local
and deepen client relationships, and invest consistently and international institutions like Institute of Chartered
on technology. As a bank, we operate according to the Accountants of Bangladesh (ICAB), South Asian Federation
fundamental principles of the company, which include of Accountants (SAFA). EBL is a recipient of ‘Certificate of
putting our clients first and adhering to the highest standards Merit’ in the Best Presented Accounts Award 2009 by South
of integrity. Over the past 22 years our excellent culture Asian Federation of Accountants (SAFA). From 2008 to 2011
and a focused long-term strategy have contributed to our we have been awarded ICAB National Awards for the Best
outstanding track record. Presented Annual Reports.
Our customer first policy and our commitment to ‘not just Employee first is our bracing motto. We believe that the
make our customers happy, but to delight them’ brought us source of our competitive advantage lay deep inside our
laurels from top global institutions like The Asian Banker. Last company, in our people. Our core brand has always been
year EBL won the most prestigious award in retail banking our employees, appreciated for their passion to perform.
at the Asian Banker Excellence in Retail Financial Services For us employees are the best brand. We do not offer our
International Awards 2013. This award programme provides employees a job, we offer them a career. We have highest
the undisputed benchmark of the performance for the best per employee productivity in the banking industry for last 6
retail banks in this increasingly fierce market place. We have years. The wealth of our people skill set is being reflected in
been picked up by the jury from over 400 submissions from our qualified employees which includes 14 CDCS certified
the retail financial institutions from Asia Pacific, Central Asia, officers, 14 OMEGA certified hands, 33 IFC-FIT graduates, 4
Middle East and Africa. Documentary Credit Masters. We are focused on our human
Over the years EBL has emerged as the most valuable brand capital development and last year more than 6000 of our
in the financial landscape of Bangladesh. Our sustainable employees have received training at over 500 programmes.
growth principle has been the cornerstone of everything that Last year our HR policy and practices got international
we do. To remain on the growth path we believe that there recognition when we were awarded the Asia’s Best Employer
is no alternative to diversification and innovation of products Brand Award at World HRD Congress in Singapore. Our
and services. Last year we opened our fully-owned Hong Human Resources Division is also the first Bangladeshi bank
Kong operation with the aim of handling the ever-expanding to achieve ISO certification for its commitment to quality HR
trade business of the country with a commitment to delivering Practice in People Management.
our world-class services. We are mulling to spread our wings
Our Trade Service Department and Service Delivery
to China and Myanmar soon. Slowly and steadily from a local
Department are regarded among the best in the market
bank only we are emerging as a regional bank. Recently IFC
for our commitment to quality delivery and trade service
recognized 25 financial institutions from around the globe
operations. Our ISO 9001:2008 certifications for Trade
as its best partners for trade and supply chain financing
solutions for 2013. And EBL was one among the 11 global Service Department and Service Delivery Department speak
award winners. Global financial giants such as Citibank, J.P. volumes about our best practices.
Morgan, Scotiabank, Deutsche Bank, BNP Paribas, among We are consistently achieving recognition from World Bank.
others, featured in the list of global award winners. With this We have been awarded twice the best GTFP issuing Bank in
award EBL enters into a different league altogether. South Asia.
The awards were announced at the Global Trade Partners One of the most significant awards for EBL last year was
Awards dinner in Lisbon, Portugal on February 20, 2014. We CEO of the Year award to our CEO Ali Reza Iftekhar by Asian
got the global award in the Best Partner for Working Capital HR Leadership Award held in Dubai. This award carries a
Systemic Solutions category. In the past three years EBL got symbolic significance for us. Out of 45 nominations from
significant IFC awards which include the Most Active GTFP Asia he was selected by the Jury board for his significant
Issuing Bank in South Asia, Most Active Issuing Bank in contributions to the Bangladesh banking sector. As an ardent
Agribusiness and Best GTFP Issuing Bank in South Asia. This promoter of the concept of sustainable development he has
award is in recognition to our innovative solutions for working successfully introduced international best practices and
capital finance to our importer and counter party exporters ethical banking and transformed EBL into the most valuable
including Offshore Bill Financing. financial brand in the country.
Ms. Georgina Baker, Head of IFC Trade Finance & Supply The tag-line of EBL ‘Simple Math’ has always been much
Chain Solutions handed over the award to EBL Managing more than just a marketing slogan or an advertising strap line,
Director and CEO, Ali Reza Iftekhar. it defines the way we do business. Through the consistent
One of our core strengths is our fortress balance sheet delivery of the promise, EBL aims to live its brand promise of
and our adherence to ethical banking. Our sincere efforts excellence, provide innovative banking solutions and create
in bringing international standards in accounting have lasting value for all its stakeholders.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 awards that speak about us

EBL has won the Best Retail Bank in Bangladesh EBL has been awarded the Best Partner for Working Capital
2013 awarded by the Asian Banker. Systemic Solutions in 2013 by IFC.

EBL has been awarded the Asia’s Best Employer EBL has been adjudged the Best Financial Institution 2010
Brand Award at World HR Congress in Singapore. at the DHL- Daily Star Bangladesh Business Awards.

EBL has won 2nd Prize at the 12th ICAB National IFC has awarded EBL the Best GTFP Issuing Bank in
Awards for the Best Presented Annual Reports 2011. South Asia in 2012.
 contents
09 Letter of Transmittal
10 Disclaimer
11 Vision
12 Mission
13 Values
14 Strategic Priority
15 Code of Conduct and Ethical Guidelines
16 Corporate Directory
18 Company Milestones
Corporate Governance Report
20 EBL Organogram
21 Board of Directors 69 Corporate Governance Practices in EBL
28 Management Committees 80 BB Guidelines for Corporate Governance: Our
33 Directors Responsibility Statement Compliance Status
35 Report of the Audit Committee
88 BSEC Guidelines for Corporate Governance: Our
38 Chairman’s Statement
Compliance Status
42 Review of the Managing Director & CEO
44 Directors Report 2013 94 Certificate on Compliance of Corporate Governance
Guidelines

Stakeholders Information
55 Our Stakeholders
56 Financial Highlights
57 Five-Year Progression of EBL Sustainability Report & SME Success Stories
59 Market Price Information
Sustainability Report
59 DSE Price Volume Chart of EBL share
60 Vital Graphs
95 Sustainability: An Overview

63 Value Added Statement

95 Approach to Sustainability

64 Economic Value Added Statement

95 Sustainable Activities

65 Market value Added Statement

96 Environmental and Social Obligations and Initiatives

65 Financial Goals & Performance

97 Integrated Report: Delivering our Promises

66 Financial Calendar
100 SME Success Stories
67 Glimpses of the 21st AGM

102 Corporate Social Responsibility

EASTERN BANK LIMITED ANNUAL REPORT 2013

Management Discussion and Analysis
107 Financial Review
113 Business Review
114 Corporate Banking
119 Treasury
121 Consumer Banking
125 SME Banking
128 Business Support
128 EBL Centralized Operations
131 Information Technology
132 Human Resources
Financial Reports 2013
136 Risk Management & Control Environment 168 Auditor’s Report to the Shareholders
151 Disclosures on Risk Based Capital (Basel II)
170 Consolidated & Separate Financial Statements
161 Products Basket and Service Propositions
238 Highlights on the overall activities
161 Consumer Banking
239 Financial Statements of Offshore Banking Unit (OBU)
163 SME Banking
253 Financial Reports of the Subsidiaries:
164 Corporate Banking
165 Treasury 254 EBL Securities Limited
262 EBL Investments Limited
166 Statement on Integrity of Financial Statements
270 EBL Finance (HK) Limited

280 Branch Network

282 Correspondent Bank Network

289 Abbreviations

290 Notice of the 22nd AGM

291 Proxy Form

standard disclosure index
The following Disclosure Checklist will help the reader to indentify the key sections of the Annual Report 2013:

Particulars Ref. Page No.

Corporate Objectives, Values & Structure
 Vision and Mission 11-12
 Overall strategic objectives 14
 Core values and code of conduct/ethical principles 13, 15
 Profile of the Company 16-17
 Directors profiles and their representation on Board of other companies & Organization Chart 21-27, 231-233, 20
Management Report/ Commentary and analysis including Directors Report / Chairman’s
Review/CEO’s Review etc.
 A general review of the performance of the company 38-43, 107-135
 Description of the performance of the various activities / products / segments of the company 55-66, 161-165, 44-
and its group companies during the period under review. 53, 107-126
 A brief summary of the Business and other Risks facing the organization and steps taken to 113, 136-160
effectively manage such risks.
 A general review of the future prospects/outlook. 45, 115, 120-122,
126, 131, 134
 Information on how the company contributed to its responsibilities towards the staff (including 132-135
health & safety)
 Information on company's contribution to the national exchequer & to the economy 53, 103-105
Sustainability Reporting 95-99
 Social Responsibility Initiatives ( CSR) 103-105
 Environment related Initiatives 96
 Environmental & Social Obligations 96
 Integrated Reporting 97-99
Appropriateness of Disclosure of Accounting policies and General Disclosure
 Disclosure of adequate and properly worded accounting policies relevant to assets, liabilities,
Income and expenditure in line with best reporting standards.
 Any Specific accounting policies 182-195
 Impairment of Assets
 Changes in accounting policies/Changes in accounting estimates
Segment Information
 Comprehensive segment related information bifurcating segment revenue, segment results and 237, 113
segment capital employed
 Availability of information regarding different segments and units of the entity as well as non- 113-126, 128-135
segmental entities/units
 Segment analysis of
Segment Revenue
Segment Results
Turnover 237
Operating profit
Carrying amount of Net Segment assets
Financial Statements
 Disclosures of all contingencies and commitments 171, 177, 219
 Comprehensive related party disclosures 231-235
 Disclosures of Remuneration & Facilities provided to Directors & CEO 75, 223

EASTERN BANK LIMITED ANNUAL REPORT 2013

 standard disclosure index

Particulars Ref. Page No.

 Statement of Financial Position / Balance Sheet and relevant schedules
 Income Statement / Profit and Loss Account and relevant schedules
 Statement of Changes in Equity / Reserves & Surplus Schedule
 Disclosure of Types of Share Capital
170-279
 Statement of Cash Flow
 Consolidated Financial Statement (CFS)
 Extent of compliance with the core IAS/IFRS or equivalent National Standards
 Disclosures / Contents of Notes to Accounts
Information about Corporate Governance
 Board Of Directors, Chairman And CEO 22-27, 69-75
 Audit Committee (Composition, role, meetings, attendance, etc) Internal Control & Risk 35-37, 73-75, 78-80
Management
 Ethics and Compliance 15, 75-76, 80-93
 Remuneration and other Committees of Board 73-74
 Human Capital 76, 132-135
 Communication to Shareholders & Stakeholders 76
- Information available on website www.ebl.com.bd
- Other information 66, 76, 78-80
 Management Review and Responsibility 77-78, 107-135
 Disclosure by Board of Directors or Audit Committee on evaluation of quarterly reports 37, 49, 72
 Any other investor friendly information 66
Risk Management & Control Environment
 Description of the Risk Management Framework
 Risk Mitigation Methodology 136-160
 Disclosure of Risk Reporting
Stakeholders Information
 Distribution of shareholdering (Number of shares as well as category wise, e.g Promoter group,
FII etc) 70-71
 Shares held by Directors/Executives and relatives of Directors/Executives
 Redressal of investors complaints 76
Graphical/ Pictorial Data
 Earnings per Share
 Net Assets
 Stock Performance 60-65
 Shareholders’ Funds
 Return on Shareholders Fund
Horizontal/Vertical Analysis including following
Operating Performance (Income Statement)
 Total Revenue
 Operating profit
 Profit before Tax 56-58, 107-113
 Profit after Tax
 EPS
Statement of Financial Position (Balance Sheet)
 Shareholders Fund
 Property Plant & Equipment
57-58, 110-112
 Net Current Assets
 Long Term Liabilities/Current Liabilities

7
 Particulars Ref. Page No.
Profitability/Dividends/ Performance and Liquidity Ratios
 Gross Profit Ratio /Net interest margin ratio
 Earning before Interest, Depreciation and Tax / Profit before Provision and Tax
 Price earning ratio (Times)
58,60-62
 Current Ratios / SLR (%), CRR (%)
 Return on Capital Employed / Return on Equity
 Debt Equity Ratio / Total liabilities to shareholders’ equity
Statement of Value Added and its Distribution
 Government as taxes
 Shareholders as dividend
 Employees as bonus/remuneration
63-65
 Retained by the entity
 Market share information of the Company’s product/services
 Economic value added
Specific Areas for Banking Sector
Disclosure of Ratings given by various rating agencies for Instruments issued by/of Bank e.g. FD, 16
CD, Tier I perpetual Bonds
Details of Advances portfolio Classification wise as per the direction issued by the central bank of the 110-111, 146-147,
respective countries 154-156, 201-205,
213-214
Disclosure for Non Performing assets
 Movements in NPA
 Sector-wise breakup of NPA
204, 213-214
 Movement of Provisions made against NPA
 Details of accounts restructured as per regulatory guidelines
Maturity Pattern of Key Assets and Liabilities (ALM) 175, 181, 199-201,
210, 212
Classification and valuation of investments as per regulatory guidelines/Accounting Standards 186, 199-201
Business Ratio/Information
 Statutory Liquidity Reserve (Ratio) 196-197
 Net interest income as a percentage of working funds / Operating cost - Efficiency ratio 58
 Return on Average Asset 58
 Cost / Income ratio 58
 Net Asset Value Per Share 58
 Profit per employee 58
 Capital Adequacy ratio 57, 152-153, 217
 Operating profit as a percentage of working funds / Return on Asset 58
 Cash Reserve Ratio / Liquid Asset ratio 58, 196-197
 Dividend Cover ratio 58
 Gross Non-Performing assets to gross advances/Non-Performing Loans (Assets) to Total Loans 57
(Assets)
Details of credit concentration / Sector wise exposures 155-156, 202-204
The break-up of ‘Provisions and contingencies’ included in the Profit and Loss Account 186-187, 213-214
Disclosure under regulatory guidelines 50-51, 80-93, 151-
160, 217
Details of Non-Statutory investment portfolio 200-201
Disclosure in respect of assets given on operating & finance lease No such assets
Disclosures for derivative investments No such instruments
Bank's Network : List of Centers or Branches 280-288

EASTERN BANK LIMITED ANNUAL REPORT 2013

letter of transmittal
All Shareholders of Eastern Bank Limited
Bangladesh Bank
Bangladesh Securities and Exchange Commission (BSEC)
Registrar of Joint stock Companies & Firms
Dhaka Stock Exchange Limited (DSE)
Chittagong Stock Exchange Limited (CSE)

Dear Sir,

Annual report of Eastern Bank Limited for the year ended 31 December 2013.
We are pleased to present before you the Bank’s (EBL) Annual Report 2013 along
with the audited Financial Statements (Consolidated and Separate) for the year
ended 31 December 2013 and as on that date.
Financial Statements of ‘The Bank’ comprise those of EBL On-shore (main
operation) and Off-shore Banking Unit (presented separately) whereas
consolidated Financial Statements comprise Financial Statements of ‘The Bank’
and those of its operational subsidiaries [EBL Securities Ltd., EBL Investments
Ltd. and EBL Finance (HK) Ltd.] presented separately. Analyses in this report,
unless explicitly mentioned otherwise, are based on the financials of ‘The Bank’
not the consolidated financials.

Yours Sincerely,

Safiar Rahman, FCS

Company Secretary

9
disclaimer
This Annual Report 2013 contains audited financial  Energy crisis and weak infrastructure: Infrastructure
statements of the Bank (EBL) and its three operational bottlenecks, lack of adequate supply of energy to
subsidiaries. Review of business and financials presented production facilities, political uncertainty, rising cost of
in the Directors Report and Management Discussion & doing businesses may continue to cause slower growth
Analysis sections are based on audited financials as well as of manufacturing and industrial activities.
management information (mostly unaudited unless otherwise  Challenges in asset-liability management: Banking
specified) of the Bank. industry in Bangladesh has been burdened with excess
As a scheduled and listed bank in Bangladesh, the Bank has liquidity mainly due to lower demand for private sector
to comply with relevant circulars and instructions from two of credit. Higher growth of deposit than that of loans
its key regulators i.e. Bangladesh Bank (BB) and Bangladesh may force banks to go for low yielding govt. treasury
Securities and Exchange Commission (BSEC) while reporting securities and accept fall in profitability.
its annual financial statements and Annual Report. So, the  Rising capital requirement: Under Pillar II of Basel II
Bank while preparing and reporting financial statements of (Supervisory Review Process) Banks in Bangladesh may
the Bank, followed relevant ‘Bangladesh Financial Reporting have to maintain more capital to cushion extended areas
Standards’ (BFRSs) except in some cases where BB of risks whereas Basel III might cause internationally
instructed all the scheduled banks to follow the prescribed active banks to maintain more capital, adequate liquidity
treatments. Treatment of govt. treasury securities under and follow more stringent rules. Bangladeshi banks while
HFT category, provision against listed shares, unclassified doing trade finance with those banks might have to
loans and contingent assets etc. are the major areas where follow more stringent rules.
requirement of BFRSs and those of BB contradict. However,
 Consumer lending may continue to be discouraged
the bank followed instructions from Bangladesh Bank,
being the prime regulator for banks, and made adequate as unproductive sector: Banks are already maintaining
disclosures of the deviations (Please see Note 2.1 of financial a 50% equity margin ratio in consumer financing. This
statements). ratio has been increased by BB to 70% (Bank can
finance up to 30% of the value of designated items)
Hence, this Annual Report does not constitute an invitation in January 2012. The scope for lending to residential
to invest in EBL shares. Any decision taken in reliance of building may be limited further due to stricter regulatory
this information must be made at sole responsibility of the requirement enforced after the tragic accident at Rana
investors or prospective investors. Plaza.
Business ‘outlook’ and management estimates and  Capital market volatility: Although the capital market
assumptions in recognizing certain financial transactions exposure of the Bank never exceeds 3% of total
presented in different parts of this Annual Report can be no assets, volatility of share price might cause earnings to
assurance that actual outcomes will not differ materially from decrease.
the estimates/projections. Some of the challenges that may
 Directed lending: Regulators or govt. may direct banks
cause projected outcomes differ from the actual ones can be
put forth, which are not exhaustive as well: to take credit exposure to agricultural, renewable energy,
eco-friendly projects or some other under-served sectors
 Changes in macro-economic conditions: Slowing at defined rates which may not produce reasonable risk-
GDP growth since FY 2012, on the backdrop of slowing adjusted return.
industrial activities and falling growth in exports,
 Climate change effect and natural calamity:
manpower and weak internal and external demand.
Bangladesh is one of the most vulnerable countries to
 Changes in government and regulatory policy: To climate change effects and natural disaster. Agriculture
compensate gradual fall of tax revenue from banks sector, which contributes around 18 percent of GDP, is
and corporate bodies NBR may broaden new avenues the most susceptible sector to such risk.
of tax and VAT mostly to be shouldered by banks and
 Risk of Fraud: Internal fraud and external financial crime
corporates. BB may issues stricter regulations to counter
rising NPL, large scale financial scams in addition to are increasing in the industry due to weak corporate
lowering fees and charges by banks. governance, control weakness, and increasing use of
technology by criminals. Weak governance and control
 Capital market exposure limit reduced: As per the practices of few banks (mainly state owned ones)
newly amended Bank Company Act 1991, capital market exposed through big volume financial scams put a dent
exposure limit for banks has already been tagged with on confidence in banking system. EBL remains highly
four components of capital instead of liabilities which will vigilant to prevent any type of surprises with heightened
force banks to reduce their exposure within stipulated control measures, strong corporate governance and risk
time. management practices.

EASTERN BANK LIMITED ANNUAL REPORT 2013

vision
To become the most valuable brand in the
financial services in Bangladesh creating
long-lasting value for our stakeholders
and above all for the community we
operate in by transforming the way we do
business and by delivering sustainable
growth.

11
 mission
 We will deliver service excellence to
all our customers, both internal and
external.

 We will ensure to maximize shareholders’

value.

 We will constantly challenge our systems,

procedures and training to maintain a
cohesive and professional team in order
to achieve service excellence.

 We will create an enabling environment

and embrace a team based culture where
people will excel.

EASTERN BANK LIMITED ANNUAL REPORT 2013

values
Service Excellence We passionately drive customer delight.
We use customer satisfaction to accelerate
growth.
We believe in change to bring in timely solution.

Openness We share business plan.

We encourage two-way communications.
We recognize achievements, celebrate results.

Trust We care for each other.

We share knowledge.
We empower our people.

Commitment We know our roadmap.

We believe in continuous improvement.
We do our task before we are told.

Integrity We say what we believe in.

We respect every relationship.
We are against abuse of information power.

Responsible
Corporate Citizen We are tax-abiding citizen.
We promote protection of the environment for
our progeny.
We conform to all laws, rules, norms,
sentiments and values of the land.

13
 strategic priority

 Integrate sustainability principles into business strategy.

 Shift to values-based marketing.

 Strengthen internal controls through clearly laid down policies,

procedures and processes.

 Pursue an asset growth without compromising asset quality.

 Drive strong initiatives to recover classified and written off loans.

 Optimize funding mix to reduce cost of fund.

 Seek a deposit growth with innovative product offerings.

 Create customer-friendly culture through state-of-the-art IT

solutions supported by highly-skilled team.

EASTERN BANK LIMITED ANNUAL REPORT 2013

code of conduct and
ethical guidelines
EBL has authored Code of Conduct and Ethical Guidelines for Employees of the Bank. All
employees of the bank shall have to conserve the Code of Conduct and demonstrate highest
ethical standards. These are the core values, employees must pursue and nurture. The basic
assertion of the code of conduct of EBL is that each employee, while on the payroll of EBL, shall
place EBL ahead of his/her personal interest. Some key issues are as follows:

 Abidance of Laws: All the employees of the bank should undertake at all times to comply
with or observe all applicable laws and regulations of the country and the bank, far and
wide they operate.

 Integrity of records, customer privacy and employer information: All the employees
of the bank should maintain books and records with integrity and ensure accuracy and
timeliness of all transactions. They should shore up the privacy of the customers’ affairs.
Then as well, employees must not divulge the bank’s plans, methods, and activities,
considered by the employer to be proprietary and classified confidential. Moreover
members must not disclose such information without proper authorization.

 Misappropriation of Assets: Any employee of the bank shall not convert any funds and
property which are not legitimately theirs to their own use and benefit nor deliberately assist
another person in such exploitation.

 Conflict of Interest – personal interest and citizenship duties: Employees must not
use their position in the bank for personal emolument or to obtain benefits for themselves
together with members of their families or friends. Employees who discharge citizenship
responsibility through membership of public decision making bodies (school boards,
society, recreational bodies etc.) should be alert to possible conflicts of interest and declare
any such conflict.

 Speculation in Stocks: Employees and their dependents should not speculate/trade

in stocks, shares, securities or commodities of any description nor connected with the
formation or management of a joint-stock company.

 Honesty and Integrity: The employees of the bank must act honestly and with integrity at
all the times. The employees must act uprightly and equitably when dealing with the public
and other employees of the bank.

 Acceptance of Gift: An employee is not encouraged to accept a gift, benefit, hospitalities,

invitation to meals or offers for travel and lodging from the customers of the bank or
persons intending to have business dealing with the bank.

15
corporate directory
Name of the Company Network
Eastern Bank Limited Businesses of the bank are broadly segmented into three
divisions: Corporate, Consumer and SME Banking.
Legal Form
The corporate banking division has 11 relationship units;
A public limited company incorporated on 08 August 1992
8 of them are stationed in suitable business locations in
in Bangladesh with primary objective to carry out all kinds of
Dhaka and the rest 3 are in Chittagong. To facilitate and
banking businesses in and outside Bangladesh. Having taken
support business units we have a Project Finance Unit (PFU).
over the businesses, assets, liabilities and losses of erstwhile
Besides, we also have 2 product specific solution based units
Bank of Credit & Commerce International (Overseas) Limited
i.e. Structured Finance Unit (SFU) and Transaction Banking
as per BCCI Reconstruction Scheme 1992 of Bangladesh
(TB). Transaction Banking is supported by 3 particular Units
Bank, the Bank commenced Banking Operations on 16
i.e. Cash Management Unit (CMU), Trade Sales Unit (TSU)
August 1992.
and International Division.
Group Composition Structure Consumer Banking customers are served through a network of
71 Branches, 161 ‘EBL 365’ (with 175 ATMs and 42 Bills Pay
Eastern Bank Limited (Group) Machines) and 11 priority centers countrywide. The bank has
Bank Subsidiaries (fully owned) its presence in 11 major cities/towns in the country including
Dhaka, Chittagong, Sylhet, Khulna, Rajshahi and Cox’s Bazar.
Eastern Bank Limited EBL Securities Limited
SME Banking customers are served through 55 SME centers
(Stock Dealer & Brokerage)
located across the country.
Off-Shore Banking EBL Investments Limited
Unit (Merchant Banking Operations) Credit Rating
EBL Asset Management Limited The Bank has completed its credit rating by Credit Rating
(Asset management i.e. managing Information and Services Limited (CRISL) based on the
mutual funds) Financial Statements dated 31 December 2012 and was
EBL Finance (HK) Limited awarded ‘AA’ in the Long Term and ‘ST-2’ in the Short Term.

(First foreign subsidiary formed Rating by CRISL

to do trade finance and off-
shore banking business in Hong Rating Status Long term Short term
Kong. The company started its Surveillance Rating 2012 AA ST-2
commercial operation in early
Surveillance Rating 2011 AA ST-2
2013.)
Outlook Stable
Our Core Business
Ownership Composition
Over the years EBL has established itself as a leading private
commercial bank in the country with established leadership As on 31 December 2013, shareholding position of EBL by
in Corporate Banking with growing focus on SME and the Directors, General Public & Financial Institutions are
Consumer businesses. EBL offers a wide range of depository, presented below:
loan and card products to cater virtually for every customer Status
segment. From Student Banking to Priority Banking to Visa
Composition % of total
Signature card, EBL has almost all banking products in its Number of Shares
repertoire. The product basket is rich in content featuring shares
different types of Savings and Current Accounts, Personal Directors 192,923,886 31.57%
Loans, Debit Cards, Credit Cards, Pre-paid Cards, Internet General Public 348,023,246 56.94%
Banking, Corporate Banking, SME Banking, Investment
Financial Institutions 70,232,653 11.49%
Banking, Treasury & Syndication services.
Total 611,179,785 100.00%

EASTERN BANK LIMITED ANNUAL REPORT 2013

Board of Directors Risk Management Committee of the Board
Chairman Chairman Mir Nasir Hossain
M. Ghaziul Haque Asif Mahmood
Members
Gazi Md. Shakhawat Hossain
Directors (Other than chairman)
Secretary Safiar Rahman, FCS
Sl. Name Position
Stock Exchange Listing
1. Mir Nasir Hossain Director
Ordinary share of the Bank is listed with both Dhaka Stock
(Representing Mir Holdings Exchange Limited and Chittagong Stock Exchange Limited.
Ltd.) Shares of EBL are categorized as ‘A’ in the Stock Exchanges.
2. A. M. Shaukat Ali Director Market lot is 200 each and stock symbol is EBL.
3. Md. Showkat Ali Chowdhury Director Capital (31 December 2013)
(Representing Namreen
Authorized Capital Tk. 12,000,000,000 (1,200,000,000
Enterprise Ltd.)
ordinary shares of Tk. 10 each)
4. A.Q.I. Chowdhury, OBE Director
Paid-up Capital Tk. 6,111,797,850 (611,179,785
(Representing Namreen ordinary shares of Tk. 10 each)
Enterprise Ltd.)
5. Salina Ali Director Accounting Year-end
31 December.
(Representing Borak Real
Estate (Pvt) Ltd.) Head of Finance
6. Meah Mohammed Abdur Independent Director Masudul Hoque Sardar
Rahim
Head of Internal Control & Compliance
7. Asif Mahmood Director
Akhtar Kamal Talukder
(Representing Aquamarine
Distributions Ltd.) Auditors
8. Ormaan Rafay Nizam Independent Director Hoda Vasi Chowdhury & Co.
9. Gazi Md. Shakhawat Hossain Director Chartered Accountants

(Representing Purnima Tax Consultant

Construction (Pvt.) Ltd.) ACNABIN
10. Ali Reza Iftekhar Managing Director & Chartered Accountants
CEO
Legal Advisors
Company Secretary Sadat, Sarwat & Associates and
Safiar Rahman, FCS Sadia Rowshan Jahan

Company Registration Number

Executive Committee of the Board
C-22554(961)/92
Chairman Mir Nasir Hossain
Bangladesh Bank License Number
Md. Showkat Ali Chowdhury
BL/DA/5926/92
Members Salina Ali
Ali Reza Iftekhar- Managing Director & CEO Registered & Head Office
Secretary Safiar Rahman, FCS Jiban Bima Bhaban,
10, Dilkusha Commercial Area,
Audit Committee of the Board Dhaka-1000, Bangladesh.
Telephone: 880-2-9556360,
Chairman Meah Mohammed Abdur Rahim Fax: 880-2-9562364, 9554610
(Independent Director) Swift: EBLDBDDH, Cable: EASTBANK
A.M. Shaukat Ali e-mail: [email protected]

A.Q.I. Chowdhury, OBE Web: www.ebl.com.bd

Members
Ormaan Rafay Nizam (Independent Director)
Gazi Md. Shakhawat Hossain
Secretary Safiar Rahman, FCS

17
company milestones

08 August 1992 25 June 2011

Incorporated. Adjudged
the Best Financial Institution 2010
at the DHL-Daily Star
Bangladesh Business Award,
the most prestigious
award in Bangladesh.

01 March 2013
Awarded the
16 August 1992 25 November 2011 Best Retail Bank
Commenced banking operations. Conferred Global awards for in Bangladesh in the
Brand Excellence in the category category of ‘Excellence in
of ‘Best Banking and Retail Financial Services’
Financial Services’ by The by The Asian Banker.
Global Brand Congress in Mumbai.

20 March 1993 28 November 2011

Listed with Dhaka Incorporated with Hong Kong (HK)
Stock Exchange Ltd. authority ‘EBL Finance (HK) Limited’,
the fully owned first
foreign subsidiary of EBL.

24 May 2013
Tied up with agoda.com,
17 July 2003
first in Bangladesh, which will make
Launched online banking
international hotel booking cheaper
services across all the branches.
and hassle-free for EBL cardholders.

19 July 2012
19 May 2004 Crowned with Asia’s
Commenced operations of Best Employer Brand Awards 2012
Offshore Banking Unit, Bangladesh. in the category of ‘Best HR Strategy
in line with business’ by
World HR Congress and
Employer Branding Institute.

11 September 2004
Listed with Chittagong Stock Exchange Ltd

30 November 2005
Partnered with IFC under
Global Trade Finance Program (GTFP)
for handling complex trade transactions better.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 03 October 2013
Introduced Commercial Paper for
corporate houses, a short-term, unsecured money
market instrument issued in the form of promissory note,
which initiated a new chapter in the 09 January 2011
history of the financial market of Bangladesh. Incorporated
‘EBL Asset Management Limited’,
a fully owned subsidiary of the
Bank to do asset management
i.e. managing mutual funds.

04 April 2010
Became first bank in Bangladesh to
17 July 2003 implement ‘Universal Banking
Launched online banking services System (UBS)’, world’s one of the
across all the branches. renowned core banking solutions.

01 October 2012
Annual Report 2011 awarded
2nd prize in ‘Best Presented Annual Report’
01 March 2010
by ICAB and 3rd position in
Acquired 60% shares of a
‘Best Corporate Award’ by ICMAB.
brokerage house
‘LRK Securities Limited’
renamed afterwards as
‘EBL Securities Limited’
23 June 2013
and was acquired fully in 2012.
EBL in partnership with Visa launched
the country’s first AirMile reward
program titled EBL SkyMiles.

30 December 2009
25 September 2012 Established ‘EBL Investments Limited’
EBL CEO awarded ‘CEO of The Year’ a fully owned subsidiary to do
by World HRD Congress and World Brand merchant banking (MB) operations
Congress hosted by (MB License received in January 2013).
Asian Confederation of Businesses in Dubai.

09 November 2006
Partnered with ADB under
Trade Finance Facilitation Program (TFFP)
to receive guarantee and revolving credit facility.

06 June 2006
Launched SME Banking Division.

19
EBL organogram

EASTERN BANK LIMITED ANNUAL REPORT 2013

 board of directors

EASTERN BANK LIMITED ANNUAL REPORT 2013

23
M. Ghaziul Haque Mir Nasir Hossain A.M. Shaukat Ali
Chairman Director Director
Representing Mir Holdings Ltd.

Revered by all for his business acumen, Mr. Mir Nasir Hossain, Director of Mr. A. M Shaukat Ali, an Engineer
Mr. M. Ghaziul Haque is the longest Eastern Bank Limited is a prominent having interest in the field of banking,
serving Board Member of Eastern Bank entrepreneur of the country. With a hospital, construction etc. graduated
Limited (EBL). He joined the Board brilliant academic background and in Civil Engineering from the University
on 09.12.1993 and has been serving vast knowledge on country’s business of Dhaka in 1961. In 1977, he
till today with an interval between and economy, Mr. Hossain is involved received higher education in Japan in
21.05.2006 to 30.03.2011. Mr. Haque in diverse area of businesses like construction engineering. He held the
also served as the Chairman of the Construction, Telecom, ICT, Ceramic position of Project Director of World
Board of Directors of EBL from 30 Tiles Manufacturing, Bank, Insurance Bank, Asian Development Bank (ADB)
August 2000 to 21 May 2006. He is also etc. He accomplished his post Projects under the Ministry of Health &
the Chairman of MGH Group. graduation major in Accounting from Family Planning from the year 1987 to
the University of Dhaka with bright 1993. From 1993 to 1999, he was the
Mr. Haque graduated from the result. Chairman of Project Builders Limited.
Chittagong Government College under
Dhaka University in 1955 and started his He is the Chairman of both the He is also a member of the Audit
career with the reputed British Company Executive Committee (EC) and the Committee of the Board of Directors of
Bird & Co. Limited and rose to the top Risk Management Committee (RMC) the Bank (EBL).
as Managing Director in 1976. of the Board of Directors of the Bank
(EBL). In addition, Mr. Shaukat Ali is the
In 1980 he left Bird & Co. (Now Birds Chairman of Engineering Consultants
Bangladesh Agencies Limited) to Mr. Hossain is the Former President & Associates Limited and sponsor
venture into business and started of the Federation of Bangladesh Director of Samorita Hospital Limited.
off as a partner with Aquamarine Chambers of Commerce and Industry
Limited, a Chittagong-based Shipping (FBCCI), the apex trade body of the
Company. Later he formed a joint country. He was the Senior Vice
venture company Maersk Bangladesh President of SAARC Chamber of
Limited with the world’s largest Shipping Commerce and Industry (SCCI) and
Company Maersk Lines, Copenhagen, Vice President of Confederation of
Denmark. He served as the Chairman Asia Pacific Chambers of Commerce
of the company till 1997 with enviable and Industry (CACCI). He is at
success. present President of Association of
Telecommunication Infrastructure
Mr. Haque has an extensive background Operators of Bangladesh (TIOB).
and experience in Shipping Company
& Banking Business, Import, Export Mr. Mir Nasir Hossain is also deeply
Marketing, Restaurant, Aviation involved in many social activities and
Services, International Business a widely travelled person across the
Relations, Collaborations and Joint globe on business trips on different
Ventures. He is involved in many social occasions including attending
activities and a widely travelled person conference, seminar, symposium etc.
across the globe on business trips.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 board of directors

Md. Showkat Ali Chowdhury A.Q.I. Chowdhury, OBE Salina Ali

Director Director Director
Representing Namreen Enterprise Ltd. Representing Borak Real Estate (Pvt) Ltd.
Representing Namreen Enterprise Ltd.

Mr. Md. Showkat Ali Chowdhury, Mr. A.Q.I. Chowdhury, OBE, a renowned Mrs. Salina Ali re-joined as Director
Director of Eastern Bank Limited is a business executive of the country of the Bank on 28.03.2012. She is
prominent businessman of the country was awarded the Order of British the Chairman of Unique Group, the
and involved in the businesses of Empire (OBE) by her Majesty, the renowned business conglomerate
Ship Breaking & Recycling, Garments Queen of England for his outstanding in Bangladesh, having interest in
Industries, Real Estate, Power contributions in the field of Trade and Real Estate, Hotel Services, Ceramic
Generation & Engineering Services, Commerce as a high-profile Business Industry, Power Plant, Airlines, Aviation
Container Terminal & Handling, Executive. Services, Tourism, Manpower Export,
Insurance Company, Share Brokerage, Banking Services, Human Resources
and Tea plantation & Production. Mr. He is also a member of the Audit Development and many others. Mrs.
Chowdhury accomplished his Bachelor Committee of the Board of Directors of Ali who has ventured to set up a 5-Star
of Arts Degree from the Chittagong the Bank (EBL). Hotel in private sector in the country
University. is also the Chairman of Unique Hotels
Mr. Chowdhury also served as the
and Resorts Ltd. The Westin Dhaka
He is also a member of the Executive Chairman of the Board of Directors of
is already very popular amongst the
Committee (EC) of the Board of EBL from 21 May 2006 to 17 June 2008.
local and foreign community. She
Directors of the Bank (EBL). He is the Managing Director & CEO of JF
accomplished her Honors & Masters of
(Bangladesh) Ltd., formerly James Finlay
Social Science in Sociology from the
Mr. Chowdhury is a life member of Limited. He held a number of important
University of Dhaka.
SAARC Chamber of Commerce & positions in different capacities during
Industry (SAARC CCI), Bhatiary Golf & his 37 years tenure with James Finlay She is also a member of the Executive
Country Club Limited, Chittagong Press which includes offices as Chairman Committee (EC) of the Board of
Club Limited, Chattagram Maa O Shisu of Bangladesh Tea Association, Vice Directors of the Bank (EBL).
General Hospital, Director of Chittagong President of Bangladesh Employers’
Metropolitan Chamber of Commerce Federation, Member of Bangladesh Tea Mrs. Salina Ali having expertise in
& Industry (CMCCI) and member of Board, Representative of the Tripartite service industry, Tourism, Manpower
Chittagong Club Limited, Chittagong Labour Consultative Committee & many and export etc. is also involved in many
Senior’s Club Limited and Bangladesh others. He is the Chairman of Royal social activities. She is a widely travelled
Ship Breakers Association. He is also Capital Ltd. person across the globe on business
involved in many other social activities. trips.
He is a widely travelled person across
the globe on business trips.

25
Meah Mohammed Abdur Rahim Asif Mahmood Ormaan Rafay Nizam
Director Independent Director
Independent Director
Representing Aquamarine Distributions Ltd.

Mr. Meah Mohammed Abdur Rahim, Mr. Asif Mahmood, Director of Eastern Mr. Ormaan Rafay Nizam joined the
Director of Eastern Bank Limited is Bank Limited, is a highly proficient Board of Eastern Bank Limited on
a renowned businessman. He is the personality in the field of Information November 29, 2008 as Director from
Managing Director of Ancient Steamship Technology in Bangladesh. He is the the Depositors and was subsequently
Company Limited and Hudig & Meah Chairman of ADN Telecom Limited, appointed as an Independent Director
(Bangladesh) Limited. ADN Technologies Limited, Tech on 20 November 2012 by the Board
Valley Networks Limited, InGen upon fulfillment of the relevant criteria
He is the Chairman of the Audit Technology Limited, Bangladesh set by Bangladesh Securities and
Committee of the Board of Directors of News 24 Hours Limited. He is also Exchange Commission (BSEC). Mr.
the Bank (EBL). the Director of few more companies Rafay Nizam is also the Director of
doing IT and Telecom Business in National Brokers Limited, one of
Academically & professionally, Mr.
Bangladesh. the oldest Tea Broking Company in
Rahim obtained Bachelor of Commerce
Bangladesh, Member of Chittagong
Degree, Diploma in Banking & Business He is also a member of the Risk Club and Bhatiary Golf & Country Club
Studies as well as Diploma in Shipping, Management Committee (RMC) of the and also involved in organizing Cricket
A.I.C.S etc. He has expertise in the Board of Directors of the Bank (EBL). Sports activities at national level.
areas of Business Studies, Banking,
Finance, Management etc. He is Mr. Mahmood accomplished his He is also a member of the Audit
involved in many social activities and Mechanical Engineering Degree Committee of the Board of Directors of
is also a widely travelled person across from NIT, Durgapur, India. As well, the Bank (EBL).
the globe on business trips. he obtained various Professional
& Management trainings in IT & He obtained his Bachelor degree in
Telecommunication from home and Commerce from Chittagong University
abroad. He is a widely travelled and completed higher education from
person across the globe on business London School of Education (LSE).
trips. Mr. Nizam has expertise in the areas
of Business Studies, Finance and
Management etc.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 board of directors

Gazi Md. Shakhawat Hossain Ali Reza Iftekhar

Director Managing Director & CEO
Representing Purnima Construction (Pvt) Ltd.

Mr. Gazi Md. Shakhawat Hossain, A visionary banker and a dynamic

Director of Eastern Bank Limited is leader, Mr. Ali Reza Iftekhar is an
a promising businessman. He is the ardent promoter of the concept of
Chairman of Bay Hill Hotel & Resorts sustainable development. As the CEO
Ltd, Managing Director of Purnima and MD of Eastern Bank Limited he has
Construction (Pvt.) Ltd, Member of successfully introduced international
Policy Committee of Westin Hotel and best practices and ethical banking
also Director of Unique Hotel & Resorts and transformed EBL into the most
Ltd. valuable financial brand in the country.
He is recently elected chairman of the
He is Member of both the Audit Association of Bankers, Bangladesh
Committee and Risk Management (ABB), the apex body for banking
Committee (RMC) of the Board of professionals of the country, for the
Directors of the Bank (EBL). term of 2014 – 15.
Mr. Hossain obtained Masters in An achiever throughout his banking
Commerce (Accounting) from the career spanning 28 years, his
University of Dhaka. He has expertise achievements include CEO of the
in the areas of Financial Reporting and Year 2012 by Asian HR Leadership
Management, Insurance, International Award held in Dubai, Credit Specialist
Hotel & Restaurant etc. He is also the Certificate by world reputed Omega
director of General Electric Company in UK, certificate of recognition in
(BD) Limited. International Trade Skill Assessment
Program jointly conducted by Standard
Chartered Group London and ICC.

He also sits on the Board of the

International Leasing and Financial
Services Limited (ILFSL). An Hon’s
Graduate from the University of
Dhaka (DU) in Marketing in 1982,
he attended the Harvard Business
School program on Leadership in
Financial Organizations in 2012 and
also attended a strategic Leadership
Program at University of Oxford, UK.

27
 management committees

12 14
18

11
04

01
16
10

Mancom
Sl No Name Designation
1 Ali Reza Iftekhar Managing Director & CEO
2 Hassan O. Rashid DMD (Corporate & Treasury)
3 Akhtar Kamal Talukder SEVP & Head of ICC
4 Abul Moqsud SEVP & CRO and Head of CRM
5 Safiar Rahman SEVP & Company Secretary
6 S.M. Akhtaruzzaman Chowdhury SEVP & Head of Operations
7 Sami Karim SEVP & Head of SAMD
8 Ahmed Shaheen SEVP & Area Head, Corporate Banking, Dhaka
9 Ahsan Zaman Chowdhury EVP & Area Head, Corporate Banking (Ctg.)

EASTERN BANK LIMITED ANNUAL REPORT 2013

 09
03
05
13

15
17
06 19
07
08

02

Sl No Name Designation
10 A.M.M. Moyen Uddin EVP & Head of Information Technology (IT)
11 Md. Khurshed Alam EVP & Head of SME Banking
12 Nazeem A. Choudhury EVP & Head of Business, Consumer Banking
13 Maj Md. Abdus Salam, psc (Retd) SVP & Head of Administration & Security
14 Ziaul Karim SVP & Head of Brand & Communication
15 Mehdi Zaman SVP & Head of Treasury
16 Monjurul Alam VP & Head of Human Resources
17 Masudul Hoque Sardar VP & Head of Finance
18 Kamal Mustaba Ali Head of Projects, Project Management Department
19 Omar F Khandaker IT Consultant

29
Expanded Management Team (EMT)

Sl No. Name Designation Status in EMT

1 Ahmed Shaheen SEVP & Area Head, Corporate Banking, Dhaka Chairman
2 Mohammad Musa EVP & Head of Service Delivery Member Secretary
3 Md. Abdul Hakim EVP & Unit Head, Corporate Banking, Dhaka Member
4 Junaid Masrur EVP & Head of Transaction Banking, Corporate Banking Member
5 Md. Obaidul Islam SVP & Head of Financial Institution, Transaction Banking, Member
Corporate Banking
6 Usman Rashed Muyeen SVP & Head of Corporate Risk Member
7 M. Tariqul Islam SVP, Credit Administration (CAD) Member
8 Syed Sazzad Haider Chowdhury SVP & Head of Trade Operations Member
9 Md. Manirul Islam SVP & Head of Risk Management Unit (RMU) Member
10 Mehbub Benazir SVP & Branch Area Head- Zone 1, Dhaka Member
11 Iftekhar Uddin Chowdhury SVP & Branch Area Head, Chittagong Area Member
12 Ashraf- Uz-Zaman VP & Head of Compliance, ICC Member
13 Saidul Amin VP & Head of Liability and Wealth Management Member
14 Khan Md. Ishtiaque VP & Unit Head, Corporate Banking, Chittagong Member
15 Anwar Faruq Talukder VP & Head of Small Business, SME Banking Member
16 Md. Rezaul Karim VP & Head of Service Management, Information Member
Technology
17 S.M. Estencher Billah VP & Area Head, Service Delivery, Chittagong Member
18 Shuvra Kanti Saha VP & Area Head, Trade Operations, Chittagong Member
19 M. Khorshed Anowar VP & Head of Cards Business Member
20 Md. Abdul Awal VP & Head of Operation Risk Member
21 Md. Rezaul Islam VP & Head of Internal Control Member
22 Md. Azizul Hoque SAVP & Area Head, Service Delivery, Dhaka Member
23 S.K.M. Shariful Alam SAVP & Sr. Manager, Core Banking System Member
24 Irfan Islam SAVP & Senior Manager, Brand & Communication Member
25 Khurram Alamgir SAVP & Senior Manager, Administration & Security Member
26 Rashadul Karim FAVP & Head of Treasury & Investment Banking Member
Operations
27 Tapash Chakraborty AVP & Head of Talent Acquisition & Re-sourcing, HRD Member
28 Md. Safiqul Islam Zahid AVP & Manager, Financial Operations & Control Member

Asset Liability Committee (ALCO)

Sl No. Name Designation Status in ALCO

1 Ali Reza Iftekhar Managing Director & CEO Chairman
2 Hassan O. Rashid DMD (Corporate & Treasury) Member
3 Abul Moqsud SEVP & CRO and Head of CRM Member
4 Ahmed Shaheen SEVP & Area Head, Corporate Banking, Dhaka Member
5 Md. Khurshed Alam EVP & Head of SME Banking Member
6 Junaid Masrur EVP & Head of Transaction Banking, Corporate Banking Member
7 Nazeem A. Choudhury EVP & Head of Business, Consumer Banking Member
8 Masudul Hoque Sardar VP & Head of Finance Member
9 Saidul Amin VP & Head of Liability & Wealth Management, Consumer Banking Member
10 Mehdi Zaman SVP & Head of Treasury Member & Head
of ALM Desk

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management committees

Bank Risk Management Committee (BRMC)

Sl No. Name Designation Status in BRMC

1 Abul Moqsud SEVP & CRO and Head of CRM Chairman
2 Akhtar Kamal Talukder SEVP & Head of Internal Control & Compliance Member
3 S.M. Akhtaruzzaman Chwodhury SEVP & Head of Operations Member
4 A.M.M. Moyen Uddin EVP & Head of Information Technology Member
5 Mohammad Musa EVP & Head of Service Delivery Member
6 Mehdi Zaman SVP & Head of Treasury Member
7 Md. Manirul Islam SVP & Head of Risk Management Unit (RMU) Member Secretary
8 Masudul Hoque Sardar VP & Head of Finance Member
9 Rashadul Karim FAVP & Head of Treasury & Investment Banking Operations Member

Bank Operational Risk Committee (BORC)

Sl No. Name Designation Status in BORC

1 Akhtar Kamal Talukder SEVP & Head of ICC Chairman
2 S.M. Akhtaruzzaman Chwodhury SEVP & Head of Operations Member
3 Abul Moqsud SEVP & CRO and Head of CRM Member
4 Sami Karim SEVP & Head of SAMD Member
5 Ahmed Shaheen SEVP & Area Head, Corporate Banking, Dhaka Member
6 Md. Khurshed Alam EVP & Head of SME Banking Member
7 Mohammad Musa EVP & Head of Service Delivery Member
8 Nazeem A. Choudhury EVP & Head of Business, Consumer Banking Member
9 Maj Md. Abdus Salam, psc, (Retd) SVP & Head of Administration & Security Member
10 Mehdi Zaman SVP & Head of Treasury Member
11 M. Tariqul Islam SVP, Credit Administration (CAD) Member
12 Monjurul Alam VP & Head of Human Resources Member
13 Masudul Hoque Sardar VP & Head of Finance Member
14 A.T.M. Raziur Rahman VP & Head of Consumer Risk Member
15 Sayed Md. Estencher Billah VP & Area Head, Service Delivery, Chittagong Member
16 S.K.M. Shariful Alam SAVP & Sr. Manager, Core Banking System Member
17 Md. Azizul Hoque SAVP & Area Head, Service Delivery, Dhaka Member

Purchase Committee (PC)

Sl No. Name Designation Status in PC

1 Maj Md. Abdus Salam, psc, (Retd) SVP & Head of Administration & Security Convenor
2 S.M. Akhtaruzzaman Chowdhury SEVP & Head of Operations Member
3 A.M.M. Moyen Uddin EVP & Head of Information Technology (IT) Technical Expert
4 Ziaul Karim SVP & Head of Brand & Communication Member
5 Masudul Hoque Sardar VP & Head of Finance Member
6 Md. Zaherul Hasan VP, Engineering Technical Expert

31
Green Banking Cell (GBC)

Sl No. Name Designation Status in GBC

1 Hassan O. Rashid DMD (Corporate & Treasury) Chairman
2 Abul Moqsud SEVP & CRO and Head of CRM Member
3 A.M.M. Moyen Uddin EVP & Head of Information Technology (IT) Member
4 Md. Khurshed Alam EVP & Head of SME Banking Member
5 Maj Md. Abdus Salam, psc, (Retd) SVP & Head of Administration & Security Member
6 Ziaul Karim SVP & Head of Brand & Communication Member
7 Md. Manirul Islam SVP & Head of Risk Management Unit (RMU) Member
8 Monjurul Alam VP & Head of Human Resources (HR) Member

BASEL III Committee

Status in
Sl No. Name Designation
Committee
1 Akhtar Kamal Talukder SEVP & Head of ICC Chairman
2 Abul Moqsud SEVP & CRO and Head of CRM Member
3 S M Akhtaruzzaman Chowdhury SEVP & Head of Operations Member
4 A.M.M Moyen Uddin EVP & Head of Information Technology (IT) Member
5 Mehdi Zaman SVP & Head of Treasury Member
6 Masudul Hoque Sardar VP & Head of Finance Member
7 Md. Manirul Islam SVP & Head of Risk Management Unit (RMU) Member Secretary

Central Compliance Unit (CCU)

Sl No. Name Designation Status in CCU

1 Akhtar Kamal Talukder SEVP & Head of ICC CAMLCO and Head of CCU
2 Ashraf- Uz-Zaman VP & Head of Compliance, ICC Deputy CAMLCO
3 Md. Abdul Awal VP & Head of Operation Risk, ICC Deputy CAMLCO
4 Md. Rezaul Islam VP & Head of Internal Control, ICC Deputy CAMLCO
5 Md. Shahjahan Ali FAVP & Head of Regulatory Affairs, ICC Deputy CAMLCO

Participants of DAMLCO & BAMLCO Conference pose for a group photograph at BIAM Foundation in 2013

EASTERN BANK LIMITED ANNUAL REPORT 2013

directors responsibility
statement
In addition to the oversight responsibilities, the Board of  Discussion on Operating Performance: A brief
Directors has to ensure that the Financial Statements of description in this regard has been presented in
the Bank and its subsidiaries are prepared in accordance “Financial Performance Highlights” part of the Directors
with applicable Bangladesh Financial Reporting Standards Report 2013.
(including Bangladesh Accounting Standards), relevant  Discussion on continuity of any Extra-Ordinary gain
provision (s) of the Companies act 1994, Bank Company or loss: Last five years EBL has not experienced any
Act 1991 (amended up to 2013), rules and regulations of extra-ordinary gain or loss. EBL’s Five Years Progression
Bangladesh Bank and Bangladesh Securities and Exchange presented in the “Stakeholders Information” section will
Commission (BSEC), listing rules of Dhaka Stock Exchange provide thorough idea in this regard.
Ltd. and Chittagong Stock Exchange Ltd. and other
 Basis for related party transactions and a statement
applicable laws, rules and regulations.
of all related party transactions: The basis for related
In compliance with section 184 of Companies Act 1994 party transactions has been stated in the “Corporate
the Annual Report along with the Financial Statements of Governance Report” and a statement of related party
the Bank presented in the Annual General Meeting (AGM) transactions has been presented in the Annexure C1 of
incorporates a ‘Directors’ Report’ that contains, among the Financial Statements 2013.
others, a review of the following issues:
 Utilization of proceeds from public issues, rights
 State of the Bank’s affairs: A review of financial issues and/or through any others instruments:
performance and position has been presented in the The Bank took over the businesses, assets, liabilities
Directors Report 2013 and Management Discussion & and losses of erstwhile Bank of Credit & Commerce
Analysis (MD&A) section with relevant analytics. International (Overseas) Limited as they stood
 Any recommended reserve in the balance sheet: An after reduction or adjustments in accordance with
amount of BDT 967.15 million has been transferred to the provisions of the Bank of Credit & Commerce
‘Statutory Reserve’ being 20% of Profit Before Tax (PBT) International (Overseas) Limited (Reconstruction)
as per section 24 of Bank Company Act 1991 (amended Scheme, 1992. Therefore, the bank has not yet raised
up to 2013). any capital through public issues except a Right Issue
 Recommended dividend: The Board has recommended in 2009. However, the history of raising capital has been
20% cash dividend equivalent to BDT 1,222.36 million presented in the Directors Report 2013.
for the completed year 2013.  Deterioration of financial results after the company
 Any event after balance sheet date which may affect goes for IPO, Rights Offer, Direct Listing, etc.: Refer
company’s financial condition: None. to the earlier paragraph, the bank issued Right Share in
2009 but after that financial results of the Bank was not
 Any change in bank’s activities, subsidiaries’ deteriorated.
activities etc.: The first foreign subsidiary of EBL ‘EBL
Finance (HK) Limited’ commenced its business on March  Explanation of variances between Quarterly and
2013 and is mostly handling trade finance and off-shore Annual Financial performance: A brief discussion
banking business in Hong Kong. Besides, no major shift along with financial information in this regard has been
in internal policy, strategy and action plans experienced presented in the Directors Report 2013.
in 2013.  Remuneration to directors including independent
In compliance with BSEC Corporate Governance notification directors: Remuneration provided to directors has been
dated 07 August 2012 the Directors of the Bank hereby presented in the Corporate Governance Report and Note
declare on following issues, among others, in their report as 37 and Note 38 to the Financial Statements.
prescribed:  The financial statements prepared by the
 Industry outlook and possible future developments management present fairly its state of affairs, the
in the industry: A brief review in this regard has been result of its operations, cash flows and changes
presented in the Directors Report 2013. in equity: A brief description in this regard has been
presented in Review of Financial Reporting Section in
 Segment-wise or Product-wise Performance: Directors Report 2013.
Business-wise performance has been presented in the
MD&A section.  Maintenance of proper books of account: A brief
description in this regard has been presented in Review
 Risks and Concerns: A detailed discussion regarding of Financial Reporting Section in Directors Report 2013.
risks and management of the same has been presented
in “Risk Management & Control Environment” section  Consistent application of appropriate accounting
of this Annual Report. policies and estimates in preparation of financial

33
 statements: A brief description in this regard has been  The pattern of shareholdings: Please see page number
presented in the Review of Financial Reporting Section in 70 of the Corporate Governance Report 2013 and note
Directors Report 2013. 14.1 of the Notes to the FS 2013.
 Following International Accounting Standards  Brief resume of the directors and nature of their
(IAS)/ Bangladesh Accounting Standards (BAS)/ expertise in specific functional areas: Brief profile of
International Financial Reporting Standards (IFRS)/ directors and their representation in other companies
Bangladesh Financial Reporting Standards (BFRS), as have been presented in page no. 24-27 of this report and
applicable in Bangladesh, in preparation of financial Annexure C of the Financial Statements 2013.
statements and any departure there from has been To adhere to good corporate governance practices, the
adequately disclosed: Details description including Bank has been complying with two paramount guidelines
disclosure of departures has been presented in Note 2 to from Bangladesh Bank (BRPD Circular No 11, 18 and 19
the Financial Statements 2013. dated 27 October 2013) and BSEC (Notification No. SEC/
 The system of internal control is sound in design and CMRRCD/2006-158/134/Admin/44 dated 07 August 2012).
has been effectively implemented and monitored: A EBL’s compliance status to those prescribed practices is
brief description in this regard has been presented in the presented in Corporate Governance Report 2013.
Review of Internal Control System in Directors Report The Directors, to the best of their knowledge and information,
2013. hereby confirm that the Annual Report 2013 together with
 Significant doubts upon the Bank’s ability to continue the Directors Report and the Financial Statements have been
as a going concern: None as yet. prepared in compliance with applicable governing Acts, rules,
 Explanations to significant deviations from the last regulations, guidelines and laws of various regulatory bodies
year’s operating results: NII (Net Interest Income), including Bangladesh Bank and BSEC.
income from investment and provision against loans and
equity investments experienced significant deviations On behalf of the Board of Directors
in 2013 which have been adequately discussed in the
Directors Report 2013 and MD&A section.
 Summarization of last five year’s key operating and
financial data: Please see ‘Five-Year Progression of EBL’
in the section of Stakeholders’ Information.
 Declaration of dividend or not: Declared 20% cash
dividend for the year 2013.
 No. of Board meetings and directors’ attendance M. Ghaziul Haque
in 2013: Please see page number 70 of the Corporate Chairman
Governance Report 2013.

EASTERN BANK LIMITED ANNUAL REPORT 2013

report of the
audit committee
Audit Committee of the Board
In compliance with Bangladesh Bank guidelines and Bangladesh Securities And Exchange Commission (BSEC) Notification on
Corporate Governance, the Audit Committee (AC) of the Board of Eastern Bank Limited was formed by the Board of Directors
to provide independent oversight of the company’s financial reporting, non-financial corporate disclosures, internal control
systems and compliance to governing rules and laws etc. Following are the major objectives of the AC:
 To review the financial reporting process, the system of internal control and approach to manage risks, the audit
process, findings of Central Bank comprehensive audit and the bank processes for monitoring compliance with laws and
regulations and its own code of business conduct.
 To assist the Board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and
overall business plans set by the Board for effective functioning of the bank.

Composition and Qualifications

In compliance with the section 3.2 (i) of Corporate Governance Notification issued by BSEC on 07 August 2012, and
Bangladesh Bank BRPD Circular No.11, dated 27 October 2013, Audit Committee (AC) of EBL Board was last re-constituted in
the 520 Board Meeting held on 07 November 2013 with the following Board Members:

Status with Status with Educational Meeting

SL # Name
the Bank the Committee Qualification Attendance
01. Meah Mohammed Abdur Rahim Director Chairman Bachelor of Commerce/ 12/12
(Independent Director) A.I.C.S
02. A.M. Shaukat Ali Director Member B. Sc (Engg.), Civil 11/12
03. A.Q.I. Chowdhury, OBE Director Member Graduate 7/12
(Representing Namreen Enterprise Ltd.)
04. Gazi Md. Shakhawat Hossain Director Member M.com (Accounting) 11/12
(Representing Purnima Construction Pvt.
Ltd.)
05. Ormaan Rafay Nizam (Independent Director Member Commerce Graduate 0/2*
Director)
* Mr. Ormaan Rafay Nizam was appointed as a member of the AC in the 520 Board Meeting held on 07 November 2013 replacing Mr. Asif
Mahmood in compliance with the BRPD Circular No. 11 dated 27 October 2013 issued by Bangladesh Bank. However, Mr. Asif Mahmood
attended 07 AC meetings out of 10 up to his tenure.

The Company Secretary acts as the Secretary of the Audit  Review the arrangements made by the management
Committee of the Board. for developing and maintaining a suitable Management
Information System (MIS).
Roles and Responsibilities of Audit Committee
 Consider whether internal control strategies
The roles and responsibilities of Audit Committee of recommended by internal and external auditors have
EBL have been framed by considering the provisions of been implemented timely by the management.
BRPD Circular No 11 dated 27 October 2013, Corporate
 Review the existing risk management policy and
Governance Notification issued by BSEC on 07 August 2012,
procedures for ensuring an effective internal check and
and other best practice corporate governance guidelines
control system.
and standards. Some important roles and responsibilities are
highlighted below:  Review the corrective measures taken by the
management as regards to the reports relating to fraud-
Internal Control forgery, deficiency in internal control or other similar
 Evaluate whether management is adhering to the issues detected by internal and external auditors and
appropriate compliance culture by communicating the inspectors of the regulators and inform the Board on a
importance of internal control and risk management to regular basis.
ensure that all employees have clear understanding of
their respective roles and responsibilities.

35
Financial Reporting meet the external auditor at least once a year, without
 Review the Annual Financial Statements and determine management being present; to discuss their remit and
whether they are complete and consistent with applicable any issues arising from the audit.
accounting and reporting standards set by respective  Review the findings and recommendations made by the
governing bodies and regulatory authorities. external auditors for removing the irregularities, if any,
 Meet with Management and External/Statutory Auditors detected are duly acted upon by the management in
to review annual financial statements before their running the affairs of the bank.
finalization.
Compliance with existing laws and regulations
 Review along with management, the quarterly, half-yearly
and annual financial statements before submission to the Review whether the laws and regulations framed by the
Board for approval. regulatory authorities (Central Bank, BSEC and other bodies)
and internal circular/instructions/policy/regulations approved
Internal Audit by the Board and Management have been complied with.
 Monitor/ evaluate whether internal audit functions are
Miscellaneous
conducted independently from the management.
 The AC will submit a ‘Compliance Report’ on quarterly
 Review the activities and organizational structure of the
rest to the Board mentioning any errors and irregularities,
internal audit function and ensure that no unjustified
restrictions or limitations are made. fraud and forgery and other anomalies pointed by
Internal and External Auditor and Inspection Team from
 Review and assess the annual internal audit plan. Bangladesh Bank.
 Review the efficiency and effectiveness of internal audit
 The AC will submit the evaluation report relating to
function.
Internal and External Auditor of the Bank to the Board.
 Review that findings and recommendations made by the
 This committee will supervise other assignments
Internal Auditors for removing the irregularities, if any,
delegated by the Board and evaluate its own
detected are duly acted upon by the management in
performance regularly.
running the affairs of the bank.
 Meet the Head of ICC and the head of internal audit at Meetings of the Audit Committee
least once in a year, without management being present,
Bangladesh Bank suggested banks to hold at least 4
to discuss their remit and any issues arising from the
meetings in a year. The Audit Committee of EBL held
internal audits carried out. In addition, the Head of ICC
and the head of internal audit shall be given the right of 12 (Twelve) meetings in the year 2013 and had detailed
direct access to the Chairman of the Board and to the discussions and review session with the Head of Internal
Committee. Audit, Head of Internal Control & Compliance, External
Auditors etc. regarding their findings, observations and
External Audit remedial suggestions on issues of bank affairs that need
 Consider and make recommendations to the Board, improvement. The AC instructed management to follow those
to be put to shareholders for approval at the AGM, in remedial suggestions and monitored accordingly. Meeting
relation to the appointment, re-appointment and removal dates are as follows:
of the bank’s external auditor. The Committee shall
oversee the selection process for new auditors and if an SL # Meetings Date of Meeting
auditor resigns the Committee shall investigate the issues 01. 44 Audit Committee Meeting 23 January 2013
leading to this and decide whether any action is required.
02. 45 Audit Committee Meeting 24 February 2013
 Oversee the relationship with the external auditors
including: 03. 46 Audit Committee Meeting 26 February 2013
Approval of their remuneration, i.e. fees for audit or 04. 47 Audit Committee Meeting 08 May 2013
non-audit services.
05. 48 Audit Committee Meeting 19 June 2013
Assessing annually their independence and
objectivity taking into account relevant professional 06. 49 Audit Committee Meeting 25 July 2013
and regulatory requirements and the relationship with 07. 50 Audit Committee Meeting 22 August 2013
the auditor as a whole, including the provision of any
non-audit services. 08. 51 Audit Committee Meeting 12 September 2013
Satisfying itself that there are no relationships (such 09. 52 Audit Committee Meeting 25 September 2013
as family, employment, investment, financial or
10. 53 Audit Committee Meeting 23 October 2013
business) between the auditor and the bank (other
than in the ordinary course of business). 11. 54 Audit Committee Meeting 21 November 2013
 Meet regularly with the external auditor, including once 12. 55 Audit Committee Meeting 24 December 2013
at the planning stage before the audit and once after
the audit at the reporting stage. The Committee shall

EASTERN BANK LIMITED ANNUAL REPORT 2013

 report of the audit committee

Major areas focused by AC in 2013  Review of the First Quarter (Q1), half-yearly and Third
Quarter (Q3) Financial Statements (Un-audited) for the
The major areas of focus by the Audit Committee of the Bank
year 2013 before submission to the Board for approval
during the year 2013 are mentioned below:
in compliance with the BSEC’s Corporate Governance
 Review and approve ‘Annual Audit Plan 2014’ and ‘Risk Guidelines 2012.
Based Audit Plan 2014’.
 Review of the Bangladesh Bank Comprehensive
 Review of the audit ratings of all branches and Inspection Report on EBL Head Office as on 30
departments for the year 2012. September 2012 and its subsequent compliance by the
 Review of the Compliance and related risk level of management thereof.
branches and various departments.  Review of AML rating of all Branches for the year 2013.
 Review of Suspicious Transaction Report for the year  Review of Top 10 (Ten) Classified Accounts of the bank.
2012.
 Review of the compliance status of PCI-DSS (Payment
 Review of the Bank’s compliance status of Anti Money Card Industry-Data Security Standard).
Laundering.
 Review of the existing Audit Policy and Guidelines of
 Review of the process of strengthening Internal Control EBL.
Systems and Procedures of the Bank.
The Minutes of the Audit Committee meetings containing
 Review of the Mystery Shopper’s Survey Results 2012. various suggestions & recommendations to the management
This survey is carried out to gauge the status of service and the Board are placed to the Board for ratification on
excellence of the Bank. regular basis.
 Review of the annual financial statements of the bank
for the year ended 31 December 2012 as certified by
On behalf of the Audit Committee,
the External Auditors, M/S. Hoda Vasi Chowdhury & Co,
Chartered Accountants, before submission to the board
for approval.
 Review of the Management Report on the bank for the
year ended 31 December 2012 as submitted by the
External Auditors and its subsequent compliance by the Meah Mohammed Abdur Rahim
management thereof. Chairman of the Audit Committee of the Board

37
 chairman’s statement

“The capacity to adapt in a changing

environment, the attitude to embrace new
technology and the appreciation of our culture
and environment are the main tenets of our
new business philosophy for sustainable
growth and development.”

EASTERN BANK LIMITED ANNUAL REPORT 2013

 Earnings Per Share BDT 4.20
Dividend Per Share BDT 2.00

Dear Shareholders, Average inflation experienced a consistently upward

trend in 2013. The rise in food inflation pushed up
I feel pleasure and privileged to welcome you to the 22nd
average inflation from 6.06% in January 2013 to 7.53% in
Annual General Meeting (AGM) of the Bank (EBL) and to
December 2013. Higher distribution costs due to frequent
share our successes, challenges and renewed directions
in response to ever changing events in global and national and non-stop nationwide strikes and sharp rise of food
economy in general and local banking industry in particular inflation in India (which is correlated with Bangladesh
reflected in the Annual Report along with audited Financial food inflation) are major reasons of such upward trend of
Statements for the year 2013. inflation. The second half yearly (H2, FY 2014) monetary
stance of Bangladesh Bank targeted a monetary growth
Growth and recovery of global economy continues in a path aiming to bring down average inflation to 7%, while
pace slower than expected ensuring that credit growth is sufficient to stimulate
The growth of global economy is in low gear; the drivers inclusive economic growth.
of activity are changing with persisting downside risks.
Advanced economies are gradually strengthening with Banking Industry: falling credit demand, rising NPL,
lot more to do to repair financial sector, pursue fiscal stricter regulations
consolidation and spur job growth. Simultaneously Banks in Bangladesh faced one of the worst years in recent
the growth in emerging economies has slowed. This past in 2013 in terms of falling credit demand, rising NPL,
unwelcome yet unavoidable convergence is leading to weakening governance, lower profitability and deteriorating
tension, with emerging market economies facing the dual soundness. Extending credit and maintenance of asset
challenges of slowing growth and tighter global financial quality were major challenges in 2013 mainly due to a
conditions. The growth of U.S. economy has been hobbled pervasive sense of uncertainty centering political transition,
this year by excessive fiscal consolidation albeit private non-stop strikes and blockades, subdued economic
demand continues to be strong. The core economies activities and spillover effects of certain large scale
of Europe show some signs of recovery but southern
financial scams. Non-performing loan (NPL) rose to 12.8%
periphery countries are still struggling, as the progress on
in September 2013 which was 4.05% higher than that of
improving competitiveness and increasing export is not
corresponding period last year. However, the NPL scenario
yet strong enough to offset depressed internal demand.
of the scheduled banks has improved in December 2013
Japan’s economy is enjoying a dynamic rebound but will
just because of flexible loan rescheduling policy allowed by
lose steam in next year as fiscal policy tightens. China and
the Central Bank to mitigate sufferings of business houses
a growing number of emerging economies are coming off
for political unrest.
cyclical peaks for both cyclical and structural reasons.
But other legacies of the crisis still linger and might come The ample liquidity has piled up in the banking industry
back to the front. The architecture of the financial system is mainly due to low private sector credit demand caused
evolving, and its future shape is still unclear. These issues mainly by political uncertainties and infrastructure
will continue to shape the evolution of the world economy bottlenecks. In order to ensure good health of the banking
for many years to come. system and to bring all banks under strict monitoring
and control mechanism, a number of remedial measures
Bangladesh economy: Slower growth with upward have been taken by Bangladesh Bank. These include
inflationary trend amendment of Bank Company Act 1991, issuance of new
For the last two consecutives fiscal years the economy of corporate governance guidelines for Board of Directors,
Bangladesh has been experiencing slowing growth and Chief Executive Officers and Advisors and Consultants
achieved 6% growth in FY 2013 (ended 30 June 2013). of bank companies, implementation of credit and risk
Man-made obstacles such as political strife, deepening management training and a number of reform measures at
uncertainty centering political transition and the inadequate the administrative level.
improvements in the enabling infrastructure i.e. power, gas
Financial Performance of the Bank: satisfactory growth
and other facilities continued to pull down the pace of our
with asset quality decreased
economy. More than 11% growth of export with flat level
of imports and a satisfactory growth of inward remittances Despite facing formidable challenges from unhealthy
(12.6%) in FY 2013 contributed to a large surplus (USD business and political environment, the Bank has continued
5.1 billion) in Balance of Payments (BoP). Gross foreign to deliver consistent financial performance. We remained
exchange reserve shot up to USD 18 billion by the year end highly vigilant to maintain the quality of loan portfolio
2013 and the large surplus of BoP puts pressure on the throughout the period and managed to keep our NPL ratio
exchange rate to appreciate. Bangladesh Bank intervened at 3.59% at year-end 2013 compared to 3.17% of previous
frequently to prevent a large appreciation, leading to year-end. Efficient balance sheet management has
historic highs in building up official foreign exchange produced satisfactory result in core banking activities.
reserves. Excess liquid assets were invested in safer vehicles i.e.

39
govt. T-Bills/Bonds in absence of adequate credit demand practices, EBL has been awarded the Best Retail Bank in
from private sector which eventually produced much higher Bangladesh in 2013 in the category of ‘Excellence in Retail
investment income (39% positive growth) than that of Net Financial Services’ by ‘The Asian Banker’; a Singapore based
Interest Income (NII) (2% growth) during 2013. Normal financial magazine and research organization.
growth of operating expenses (13% positive) and lower
than expected growth (9%) of operating income led to a Contribution to National Economy: govt. and the society
6% growth of operating profit. Significant negative growth at large
(-23%) of provision against loans and shares eventually As a compliant and responsible corporate citizen, EBL
helped to achieve a 13% growth of Profit After Tax (PAT) in always pays corporate tax on time. Like previous years EBL
2013. Consequentially our Earnings Per Share (EPS) has continues to contribute to the Government’s revenue line by
increased to BDT 4.20 (consolidated BDT 4.15) against BDT depositing excise duty, withheld tax and VAT to Government
3.72 in 2012. Board has recommended a Cash Dividend @ 20 exchequer on time. During the calendar year 2013 we
percent or BDT 2.0 dividend per share (DPS) for the year 2013 contributed BDT 4,715.65 million to national exchequer as
after a mandatory transfer of BDT 1.58 per share to statutory tax, VAT and excise duty which is 22.29% higher than that of
reserve. 2012. The bank has also been engaged in a number of CSR
and benevolent causes all through the year focusing on the
Sustainable Banking: Adaptability for a sustainable areas of health, education, sports, art and culture.
growth
As a responsible corporate citizen, we are committed to Appreciations: we remain grateful and resolute as before
creating value and generating benefits for the society we I would like to take this opportunity to express my sincere
operate in. In line with our corporate philosophy, we have gratitude to all our stakeholders including shareholders,
placed special emphasis on adaptability as a key element of customers and regulators especially Bangladesh Bank and
sustainable growth: adaptability in a changing environment, BSEC for their continued support and judicious guidance. I
the attitude to embrace new technology and solving the am grateful to my fellow Members of the Board of Directors
important issues in a more holistic way. Adaptability as a for their valuable support and constant cooperation. My
core component of sustainable development recognizes that sincere appreciation goes to team EBL under seasoned
growth must be both inclusive and environmentally sound to leadership of Mr. Ali Reza Iftekhar, Managing Director &
reduce poverty and build shared prosperity for our society to CEO for their renewed vigor, continued commitment and
continue to meet the needs of future generations. engaged initiatives to take on new challenges. We believe
We keep our shareholders interest on top of our mind in our people, people believe in our values and values drive
while determining our corporate strategy. Our hallmark in business for the sustainable growth and wellbeing of all our
achieving consistent business and financial performance stakeholders.
testifies the accuracy and direction of our corporate strategy
being executed. Being a values driven bank we believe in
responsible leadership and strong control and compliance
practices. I am happy to share with our shareholders that
our ethical banking practice, prudent risk management,
diversified earnings stream, and strong corporate governance
safeguard us from any direct and indirect loss of money
and reputation especially from those originated from recent
financial scams. M. Ghaziul Haque
In recognition to our caring and sustainable banking Chairman of the Board of Directors

EASTERN BANK LIMITED ANNUAL REPORT 2013

our brand value
proposition

Sustainability
Setting Standards
Mobilizing Capital

Innovation
Embracing changes
Devising Solutions

Impact
Promoting Green Banking
Creating Lasting Value

Commitment
Initiating Co-Creation
Building Social Capital

41
review of the managing
director & CEO

Creating value for a

sustainable future is
our brand promise.
We perceive it
as the key to our
competitive edge
over our peers and a
guiding philosophy
of our risk
management tool.

Resilience of our economy affected the overall performance of the banking industry. With
New Year brings new challenges. 2013 was no exception only 11.04 percent credit growth compared to 20.60 percent
either. More than anything else, Bangladesh economy in 2012 and an alarming country NPL ratio of 8.93 percent as
stumbled on non-economic factors last year. Prolonged on year-end 2013 banking sector pose a serious concern or
political violence running up to national election rendered the two for stakeholders. But I am happy to share with you that
economic off-color. The situation was further dampened by despite a difficult time, the overall performance of EBL was
financial scams, depressed investors’ sentiment, deteriorating steady. We kept our NPL below 4 percent, 3.59 to be exact,
asset qualities in certain local banks, vandalism in RMG mainly for our efficient treasury management, prudent asset
factories, and subsequent US suspension of GSP facilities. quality management policy, ethical business practice, and
However, as every cloud has a silver lining, Bangladesh strong corporate governance.
economy showed its resilience with highest ever remittance Sustainable growth
inflow, strong FX reserve, rapid export growth coupled with
steady import, bumper crop production, stable exchange Creating value for a sustainable future is our brand promise.
rate and strong internal demand. These positives played We perceive it as the key to our competitive edge over our
a significant role for the economy to attain 6 percent GDP peers and a guiding philosophy of our risk management tool.
growth last year. At EBL, we believe in sustainable growth instead of rapid
progression that cannot be sustained over a longer period.
Dwindling demand for borrowing from the banking sector On the face of 2013 political headwinds, it is no surprise that
last year only helped pile up liquid assets. This resulted in both income and profit growth for core banking activities
insignificant returns and further erosion of asset quality. On were somewhat slower. But we have proved once again that
top of this, continued timid performance of the capital market we can keep our asset quality intact without hampering the

EASTERN BANK LIMITED ANNUAL REPORT 2013

momentum of our businesses. In the year 2013 our loan customers maximum facility from card products and services.
and advances growth was 6 percent. This is lower than the International hotel booking has now being made comfortable
industry average as we focused on maintaining our asset for our alliance with world’s largest online travel agency
quality rather than the rapid growth of our portfolio. Our agoda.com. EBL cardholders can now enjoy up to 7 percent
non-interest income grew by 17 percent while Net interest off over already low agoda.com rates from all their hotel
income (NII) increased by only 2 percent due to slower bookings through this site.
credit growth (6 percent) as opposed to higher deposit Over the last 21 years our strategy has been to focus on both
growth of 28 percent and liquid money market. The stable organic and inorganic growth and contribute to the business
money market led us to shifting resources from placement growth of Bangladesh. The launch of our fully-owned
to short term HFT securities. Therefore, our investment subsidiary, EBL Finance (HK) Ltd. in the Asia’s world city of
income had a substantial growth of 39 percent in the year Hong Kong with a mission to make foreign trade simpler for
2013. A significant portion of this growth was offset by our customers is a case in point.
marginal growth of fees, commission & FX income because
of negative growth of FX income (-26 percent) due to stable As a responsible corporate citizen, we are committed to
FX market and lesser recovery from written off loans which creating value for the society. For us development should
eventually led to 9 percent operating income growth. All be holistic and inclusive. Our new SME loan product EBL
these contributed to our 6 percent operating profit growth. Projukti is designed to support farmers to buy agricultural
However, negative growth of total provision (23 percent) machineries and equipment.
mainly from release of provision from share and specific We are accelerating innovation to make banking more
provision also led positive growth of Profit After Tax (PAT) by accessible and close to our customers through social media
13 percent in 2013. and by popularizing online and mobile banking.

Strengthening capital base Adaptability principle

To manage the overall risk exposure of the bank, our primary 2013 was undoubtedly a challenging year for Bangladesh
focus has always been to reinforce our risk management economy and 2014 will, no doubt, offer its share of new
policy with a strong internal control system. We are never in challenges. With our excellent track record of over 21 years
favor of increasing capital base to cover up the weaker risk of ethical and prudential banking we have emerged as one of
management process. We have been generating most of the the most trusted partners of progress to trade and business
incremental capital from retained profit (stock dividend and of the country. As we look forward, we are committed to
statutory reserve transfer etc.) to support incremental growth build a shared prosperity for our society to continue to meet
of Risk Weighted Assets (RWA). Our Capital Adequacy Ratio the needs of future generations. Our experience and prudent
has remained consistently above the threshold (10% of RWA) management have given us strength to see us through
of Minimum Capital requirement (11.95 percent as on difficult times. We are confident that we are on the right track
31 December 2013) without any fresh injection of capital. and draw our strength from our tradition of ethical business
to continue to improve our operational efficiency, offer
Innovating products innovative products and services to cater to contemporary
Adaptability to changing environment is crucial to sustainable needs and tastes.
development. We have always tried to create a culture of Given the uncertainties of the external environment, our
adaptability for sustainable development which will spur approach will be conservative while managing the balance
inclusive growth and ensure prosperity for the society we sheet and maintaining asset quality.
operate in. In an effort to embrace adaptability principle
we are constantly innovating products and services for our We are grateful
customers. In 2013 as well despite all odds, we offered I express my gratitude to the Governor of Bangladesh Bank
unique solutions for our customers. We arranged Commercial and his team for their support and guidance. I am deeply
Paper (CP) for ACI Ltd. and raised Tk. 50 crore for the local indebted to the chairman and the Board of Directors of EBL
corporate giant at two percent lower interest rate than bank for their prudence, stewardship and cooperation through
lending rates. This is a first of its kind product in Bangladesh thick and thin. A great debt is owed to our customers
financial market. and shareholders who believed in us and remained loyal
Delivering unparallel service proposition is our promise to throughout. Last but certainly not the least; I thank my team
our customers. The Asian Banker acknowledged our effort of for their constant enterprise, dedication, and commitment to
providing innovative services and products to our customers be the part of a winning team.
and awarded us with the Best Retail Bank in Bangladesh for
2013.
Among the most innovative products of 2013 AirMile
Reward Program tops the list. We introduced EBL SkyMiles
for the first time in Bangladesh. Bundled with a world of
travel privileges, this card offers customers the freedom to
travel at any part of the world any time and earn miles for
Ali Reza Iftekhar
their purchases through EBL credit cards. We associated
Managing Director & CEO
with MasterCard last year as well in an endeavor to offer

43
directors report 2013
The Board of Directors of Eastern Bank Limited takes GDP growth
pleasure in welcoming you all to the 22nd Annual General (year- on- year, in percent)
Meeting (AGM) and presenting Annual Report along with the
Audited Financial Statements for the year 2013. Before going 2012 2013p 2014 p
into details performance of the Bank, let’s cruise through the World 3.2 2.9 3.6
status of local and global economy in brief. Advanced Economies 1.5 1.2 2.0
Global Economy: An Overview Other Advanced Economies 1.9 2.3 3.1

The growth of global economy is in low gear, the drivers of Euro Area -0.6 -0.4 1.0
activity are changing, and downside risks persist. Advanced USA 2.8 1.6 2.6
economies are gradually strengthening but fall short of Emerging Market and 4.9 4.5 5.1
required repair of financial sector, pursuance of fiscal Developing Economies
consolidation and spurring job growth. Simultaneously the China 7.7 7.6 7.3
growth in emerging economies has slowed. This seemingly
India 3.2 3.8 5.1
unavoidable convergence is leading to tension, with emerging
Source: IMF World Economic Outlook (October 2013); p for
market economies facing the dual challenges of slowing projection.
growth and tighter global financial conditions. Changing
growth dynamics raise new policy challenges; whereas other Bangladesh Economy: A Brief Review
legacies of the crisis still linger and might come back to the The economy of Bangladesh has been experiencing slower
front. The architecture of the financial system is evolving and growth for last two consecutive fiscal years (FY) and made
its future shape is still unclear. These issues will continue to 6% GDP growth in FY 2013 (ended 30 June 2013) caused
shape the evolution of the world economy for many years to mainly by political strife, deepening uncertainties centering
come. political transition and inadequate improvements in the
provision of power, gas and infrastructure facilities. Due to
In 2013 as before, the U.S. economy remains at the center unfavorable weather and falling of rice prices agriculture
stage of global economy. The growth of U.S. economy has growth slowed to 2.2%, industry grew by 9.0% with strong
been hobbled this year by excessive fiscal consolidation expansion in construction and small-scale manufacturing
although private demand continues to be strong. The core and services growth declined to 6.06% in FY 2013 (6.3% in
economies of Europe show some signs of recovery not due FY 2012) reflecting stagnant imports and politically inspired
to recent major policy changes but of a change in mood of strikes that disrupted trade and finance.
consumers and firms. However, southern periphery countries In FY 2013 export made a remarkable growth of 11.2%
(Spain, Italy, Greece and Portugal) are still struggling, as the on higher garment exports in comparison to 6% growth
progress on improving competitiveness and increasing export in FY 2012, but the imports rose by only 0.8%. Inward
is not yet strong enough to offset depressed internal demand. remittances grew by 12.6% compared to 10.2% in FY 2012.
Japan’s economy is enjoying a dynamic rebound but may The balance of payments showed a large surplus of USD
lose stream in next year as fiscal policy tightens. China and 5.1 billion in FY 2013, boosting gross international reserves
a growing number of emerging economies are coming off to USD 15.3 billion on June 30, 2013. These large surpluses
created pressure on the exchange rate to appreciate which
cyclical peaks for both cyclical and structural reasons.
Bangladesh Bank intervened frequently to prevent, leading to
Outlook 2014: In 2014, the global growth is expected to be historic highs in building up official foreign exchange reserves
3.6% but the risks to the forecast remain to the downside. (currently hovering over USD 19 billion in February 2014).
From the advanced economies the growth is expected to External Sector Performance in H1, FY 2014: Coping with
be 2% and drivers of the projected uptick are a stronger all odds, export earnings registered an impressive growth of
U.S. economy, an appreciable reduction in fiscal tightening 20% in July-December (H1), FY 2014 due to consistent high
(except in Japan), and highly accommodative monetary growth maintained by RMG sector both in traditional and
conditions. Growth in the euro area will be held back by the non-traditional items but the growth rate of non-RMG export
very weak economies in the periphery. Emerging market and was only 3.8%. Import related activities did not pick up in a
developing economies are expected to grow by 5% as fiscal significant manner and increased by only 4.4%. The import
policy is forecast to stay broadly neutral and real interest growth was mainly driven by higher payments against imports
of food grains, chemicals and RMG related intermediate
rates to remain relatively low. Unemployment will remain
goods. Remittance experienced a negative growth of 8.4%
unacceptably high in many advanced economies as well as
in H1, FY 2014 which was 22% positive in the corresponding
in various emerging market economies, notably those in the
period of FY 2013. This happened due to significant fall in
Middle East and North Africa. remittances from major Middle East countries and declining

EASTERN BANK LIMITED ANNUAL REPORT 2013

 directors report 2013

number of outgoing expatriate workers. power supply. Imposition and enforcement of new ceiling by
The Balance of Payments (BoP) exhibited a surplus of USD Bangladesh Bank through changes in the Bank Company
2.04 billion in July-November FY 2014 because of robust Act 1991 (Amended up to 2013) for banks while investing
export performance and lower import payments. Current in the share market contributed further in piling up excess
account balance increased to USD 1.384 billion during July- fund in the banks which eventually forced banks to go for
November of FY 2014 compared to that of USD 433 million in low yielding assets (govt. T-Bills/Bonds) and fetching lower
the corresponding months of FY 2013. Another contributing revenue in 2013.
element of the higher BoP surplus was derived from the For the banking industry in Bangladesh 2013 was one of
commercial borrowing of private sector from foreign sources. the worst years in recent past in terms of credit growth and
The central bank rightly maintained the stability of exchange maintenance of portfolio health. Earnings and profitability
rate of BDT against USD by augmenting foreign exchange showed a mixed result: Return on Asset (ROA) and Return
reserves. on Equity (ROE) of SCBs turned positive in 2013 from red
Inflation: Average inflation experienced a consistently whereas PCBs continued to show positive ROE and ROA
upward trend in 2013. The rise in food inflation pushed up although lower than those of 2012. A series of remedial
average inflation from 6.06% in January 2013 to 7.53% in measures have been taken by the govt. and Bangladesh
December 2013. Using the 2005/06 base, point to point Bank to improve control practices, risk management
inflation data shows that food inflation has risen steadily and corporate governance of the banks. These include
from 1.75% in September 2012 to 9.00% in December 2013. amendment of Bank Company Act 1991(through inclusion
Higher distribution costs due to the frequent nationwide of some new sections and changing of provisions of some
strikes and sharp rise of food inflation in India which is existing sections), issuance of new corporate governance
correlated with Bangladesh food inflation are major reasons guidelines for Board of Directors, Chief Executive Officers
of such upward trend of inflation. Conversely, point to point and Advisors of bank companies, implementation of credit
non-food inflation was steadily declining, having peaked in and risk management training and a number of reform
October 2012 at 11.28% and has declined steadily to 4.88% measures at the administrative level.
in December 2013. This happened due to recent political
Economy and Business Outlook 2014
unrest which caused a slowdown in economic activity, lower
consumer demand and also adherence to the monetary Bangladesh Bank’s second half yearly (H2, FY 2014)
program. However, ensuring a functioning supply chain and monetary policy stance takes the recent economic and
enhancing market management capacity will be the keys in financial sector developments into account and targeted
the context of inflation management. a monetary growth path aiming to bring down average
inflation to 7%, while ensuring that credit growth is sufficient
Banking Industry in 2013 to stimulate inclusive economic growth. This would require
Maintenance of asset quality was the major challenge in 2013 a monetary program framework that limits reserve money
and is feared to remain so in 2014. Non-performing loan growth to 16.2% and broad money growth to 17% by June
(NPL) rose to 12.8% in September 2013 which was 4.05% 2014. The ceiling for private sector credit growth of 16.5%
higher than the corresponding period of last year. Higher has been kept well in line with economic growth targets. This
NPL in banking sector could be attributed to the spillover level is sufficient to accommodate any substantial rise in
effects of large scale financial frauds and subdued economic investment and trade-finance over the next six months.
activities due to political unrest and deepening uncertainty. It is expected that various initiatives taken recently to support
Many of reputed borrowers have also made default in their economic growth will continue in H2, FY 2014. To alleviate
regular payments as they could not run their businesses and compensate the impact of recent domestic disruptions
smoothly due to non-stop political agitation programs which on businesses, Bangladesh Bank has taken a number of
also played a role in pushing NPL ratio upward. However, important policy steps which include broadening the scope
defaulted loans in banking sector fell by roughly 4.99% year- of the Export Development Fund, and reducing the borrowing
on-year in December 2013, as the Central Bank had relaxed costs, as well as instructing banks to offer loan rescheduling
loan rescheduling rules (in December 2013) for the borrowers facilities to genuine borrowers facing cash flow difficulties,
affected by political unrest. The amount of classified loan especially SMEs, who are temporarily affected by the recent
was 8.93% of the total outstanding loans in the banking strikes and disruptions.
industry as on 31 December 2013, which was 10.03% in the The monetary policy stance also aims to preserve the
same month of the previous year. Default loans at the state- country’s external sector stability. It is anticipated that
owned banks as on 31 December 2013 was 19.76% of their Bangladesh Bank foreign currency reserves will increase
outstanding loans which was 23.87% a year ago and on the further in FY 2014 though at a more moderate pace than
same day, private banks’ default loans was 4.54% of their FY 2013. While the projected decline in remittances will not
outstanding loans which was 4.58% a year ago. (Source: The adversely affect external stability in FY 2014, it is imperative
Daily Star, 18 February 2014). that manpower exports resume its growth, and opportunities
Excess liquidity in the banking sector has increased by 73.8% such as investments in government securities are marketed
at the end of November 2013 over that of corresponding to NRBs, so that remittances can remain an important
period last year piled up mainly due to lower private sector part of medium-term external balance. It is expected that
credit demand caused by deepening political uncertainties Bangladesh Bank will continue to support a market-based
and agitation, infrastructure bottlenecks and shortage of exchange rate while seeking to avoid excessive foreign

45
exchange rate volatility. reached to 3.59% at year-end (YE) 2013 (3.17% in 2012)
which is lower than those of industry average and PCBs.
Finally, the relative stagnation in economic activities observed
during H1 of FY 2014 may improve in H2 of FY 2014 if the Net interest income (NII) which contributed 52% of total
political environment becomes favorable for undertaking operating income increased only 2% and Non-interest income
economic activities. increased by 17% in 2013 (major contributions made by
income from investment which increased by 39% from last
Financial Performance Highlights year) resulting an operating income of BDT 9,469 million in
2013, which is 9% higher than that of last year. Operating
Banking sector in Bangladesh passed somewhat a moderate profit of the bank increased at a slower pace by 6% due
year in terms of governance, profitability and soundness in to higher growth of operating expense (13%) than that of
2013. Continued setback suffered by some major sectors operating income. Total provision having decreased by 23%
in the economy i.e. textiles, ship-breaking, real estate and riding mainly on decrease of provision for loss on revaluation
commodity trading and lackluster performance of the capital of shares (72%) eventually contributed to 15% rise in profit
market put pressure on banks’ asset quality and profitability. before tax (PBT) to BDT 4,836 million than that of 2012. Profit
However, EBL managed its portfolio efficiently and NPL After Tax (PAT) increased by 13% or BDT 293 million in 2013.

Following table summarizes comparative financial performance of EBL both as a Group and as the Bank:
(Figures are in million BDT)

Group Bank % Change % Change

Particulars
2013 2012 2013 2012 (Group) (Bank)
Total operating income 9,581.87 8,819.11 9,469.37 8,726.99 9% 9%
Total operating expense 3,754.45 3,308.67 3,681.12 3,263.07 13% 13%
Operating profit (Profit before 5,827.42 5,613.91 5,788.26 5,463.92 4% 6%
provision and tax)
Provision for loans and
contingent assets:
Specific provision 706.27 728.49 706.27 728.49 -3% -3%
General provision 84.15 23.89 84.15 23.89 252% 252%
Provision for equity investments 197.33 491.92 162.09 491.92 -60% -67%
and other assets
Total provisions 987.74 1,244.31 952.51 1,244.31 -21% -23%
Profit before tax for the year 4,839.68 4,369.61 4,835.75 4,219.61 11% 15%
Tax provision 2,304.58 1,976.88 2,267.88 1,944.51 17% 17%
Profit after tax (PAT) 2,535.09 2,392.73 2,567.86 2,275.10 6% 13%
Earnings per share (EPS) 4.15 3.91 4.20 3.72 6% 13%

Following table also summarizes both the stand alone performance of the Bank and its three operational subsidiaries along
with overall group during the year 2013:
(Figures are in million BDT)

Eastern Bank Limited Subsidiaries

Inter
EBL
Particulars EBL EBL company Consolidated
Finance
Onshore Offshore Total Securities Investments elimination
(HK)
Limited Limited
Limited
Net Interest Income (NII) 4,708.37 183.19 4,891.56 27.55 33.60 3.54 - 4,956.24
Non-Interest income 4,564.34 13.47 4,577.81 74.37 5.86 6.59 (39.00) 4,625.63
Total operating income 9,272.71 196.66 9,469.37 101.91 39.45 10.14 (39.00) 9,581.87
Total operating expense 3,666.10 15.02 3,681.12 44.37 9.10 19.86 - 3,754.45
Profit before provisions 5,606.61 181.65 5,788.26 57.54 30.35 (9.72) (39.00) 5,827.42
Total provisions 945.83 6.68 952.51 31.42 3.82 - - 987.74
Profit before tax (PBT) 4,660.78 174.97 4,835.75 26.12 26.53 (9.72) (39.00) 4,839.68
Profit after tax (PAT) 2,392.89 174.97 2,567.86 0.01 15.94 (9.72) (39.00) 2,535.09

EASTERN BANK LIMITED ANNUAL REPORT 2013

 directors report 2013

Although the profit after tax (PAT) increased by 13% during 2013, ROE has remained same as last year and ROA changed
marginally. Following table presents some of the key financial ratios:

BANK
Particulars
Year 2013 Year 2012
Return on average equity (PAT/Average Equity) 14.44% 14.44%
Return on average assets (PAT/Average Assets) 1.68% 1.72%
Cost to income ratio (Operating expense/Revenue) 38.87% 37.39%
Capital adequacy ratio (Basel II) 11.95% 12.05%
NPL ratio 3.59% 3.17%
EPS (BDT) 4.20 3.72
Price to book value ratio 96.39% 113.24%

Appropriation of Profit
Profit after tax (PAT) of the Bank is BDT 2,567.86 million which contains a deferred tax income of BDT 321.90 million calculated
on specific provision made against classified loans (Bad/Loss Only) during the year 2013. As per BRPD Circular No. 11 dated
12 December 2011 of Bangladesh Bank, benefit arising out of deferred tax income can neither be distributed nor shown as
a component of tier 1 capital while reporting Capital Adequacy Status of the Bank. After a mandatory transfer of BDT 967.15
million (20 percent of Profit Before Tax), profit available for distribution stands at BDT 1,284.90 million. However, the Board of
Directors recommended 20% cash dividend for the year 2013:
(Figures are in million BDT)

BANK
Particulars % Change
2013 2012
Profit after tax (PAT) 2,567.86 2,275.10 12.87%
Less: Deferred tax income (321.90) (241.86) 33.09%
Profit after tax (PAT) net of Deferred tax income 2,245.96 2,033.24 10.46%
Retained Earnings (RE) carried forward 379.35 150.73 -
Less: Deferred tax income included in RE (373.26) (131.40) -
To be appropriated (Net of Deferred Tax Income) 2,252.05 2,052.57 9.72%
Less: Transfer to statutory reserve (967.15) (843.92) 14.60%
Profit available for distribution 1,284.90 1,208.65 6.31%
Add: Transferred from General Reserve - 30.00 -
Distributable Profit 1,284.90 1,238.65 3.73%

Dividend for the year (recommended):

Dividend (Cash 20% for 2013 and 2012) 1,222.36 1,222.36
Retained earnings to be carried forward 62.54 16.29
Dividend Payout Ratio (Dividend/PAT) 47.60% 53.73%

Payment of Dividend: In a commendable continuity of whatsoever for the bank in paying cash dividend, the Board
paying consistent rate of dividend, EBL has been paying of Directors of EBL proposes to pay 20% cash dividend for
more than 30% dividend for the years from 2007 to 2011 the year 2013.
except in the year of 2008 when 20% dividend was paid due Capital Adequacy Status Under Basel II: Bank has been
to increased paid up capital base from issue of right shares. maintaining 11.30% plus CAR in all the quarters of 2013
Except for the year 2009 when 20% cash and 17% stock against MCR of 10% without injecting any fresh capital
dividend was paid, all the distributions were through stock through Right Issue, Subordinated Debt etc. as presented
dividend to enhance solvency through capital adequacy. in following table. Bank’s strength in capital base is also
While stock dividend increases reinvestable resources and signified in the fact that the ratio of Tier i capital to RWA was
strengthen capital base, it puts pressure on future EPS due always hovering above 8.70% throughout the year.
to larger capital base. As there was no regulatory restriction

47
Following is the summary of Basel II reports of EBL (Solo Basis) as reported to BB during 2013:
(Figures are in million BDT)

Risk weighted assets (RWA) for Q4, 2013 Q3, 2013 Q2, 2013 Q1, 2013
A. Credit Risk for 113,666 112,941 113,782 106,548
On Balance Sheet exposures 87,927 87,290 84,635 83,496
Off Balance Sheet exposures 25,739 25,651 29,147 23,052
B. Market Risk (capital charge X 10) for: 12,360 11,147 10,328 7,677
a. Interest Rate Related Instruments 6,674 4,080 3,184 3,012
b. Equities 5,145 4,872 5,244 4,461
c. Foreign Exchange Position 541 2,195 1,900 204
C. Operational Risk (capital charge X 10) 14,253 12,653 12,653 12,653
Total Risk Weighted Assets (A + B + C) 140,279 136,741 136,763 126,878
D. Eligible Capital
1. Tier-1 (Core Capital ) 13,245 12,049 12,006 11,147
2. Tier-2 (Supplementary Capital) 3,519 3,491 3,452 3,424
3. Tier-3 (Eligible for market risk only) - - - -
4. Total Eligible Capital ( 1+2+3) 16,764 15,540 15,458 14,571
E. Total Risk Weighted Assets (RWA) 140,279 136,741 136,763 126,878
F. Capital Adequacy Ratio (CAR) (D4/E)*100 11.95% 11.85% 11.30% 11.48%
G. Core Capital to RWA (D1/E)*100 9.44% 9.28% 8.78% 8.79%
H. Supplementary Capital to RWA {(D2+D3)/E}*100 2.51% 2.57% 2.52% 2.69%
I. Minimum Capital Requirement (10% of RWA) 14,028 13,674 13,676 12,688
Minimum CAR Requirement 10% 10% 10% 10%
Excess/(Shortfall) Capital over MCR 2,736 1,866 1,782 1,883

Highlights of Capital Adequacy Status: Vigorous initiative Funded exposure to a customer having external rating
of bank management to pursue it’s corporate and medium of at least double B (BB) (equivalent to Bangladesh Bank
segment (SME) customers to do their entity rating by eligible rating grade 4) requires risk weight of 100% whereas
ECAIs played a major role in decreasing capital requirement. exposure to any unrated customer is risk weighted by
As on the reporting date, number of corporate (including 125%. Since external rating of most of our rated corporate
SME-Mid) customers having valid entity rating with funded and mid segment customers falls in the range of A to AAA
exposure was 153 at 31 December 2013. Funded exposure (Bangladesh Bank rating grade 1 & 2) bearing risk weight of
to rated regular corporate and mid segment customers was 50% or below, the more our customers do their entity rating,
BDT 34,779.48 million or 33.79% of total funded exposure. the less will be the capital requirement for EBL. So, drive of
Though our credit grew at a slower pace than expected, the Bank to this end will continue throughout the year 2014.
volume of funded exposure to customers with 1 and 2 rating History of raising capital: As on the reporting date (31-12-
increased in 2013 (BDT 29,803 million at YE 2013 vs. BDT 2013), the bank had a paid up capital of BDT 6,111,797,850
25,786 million at YE 2012) which testifies that EBL is focusing of which 78.84% was raised through stock dividend. The
more on customers with good rating. We did not have any history of raising our paid up capital to BDT 6,111.80 million
clients with rating 5 in our portfolio at YE 2013. as on YE 2013 is presented below:

Cumulative Paid up
AGM Date Particulars No. of Shares* Volume in Taka
Capital in Taka
9 December 1993 As per MOA & AOA 60,000,000 600,000,000 600,000,000
5 August 2001 20% Bonus Share 12,000,000 120,000,000 720,000,000
8 December 2003 15% Bonus Share 10,800,000 108,000,000 828,000,000
12 June 2007 25% Bonus Share 20,700,000 207,000,000 1,035,000,000
25 May 2008 34% Bonus Share 35,190,000 351,900,000 1,386,900,000
25 May 2008 Right Share 2:1 at Par 69,345,000 693,450,000 2,080,350,000
28 April 2009 20% Bonus Share 41,607,000 416,070,000 2,496,420,000

EASTERN BANK LIMITED ANNUAL REPORT 2013

 directors report 2013

Cumulative Paid up
AGM Date Particulars No. of Shares* Volume in Taka
Capital in Taka
30 March 2010 17% Bonus Share 42,439,140 424,391,400 2,920,811,400
30 March 2011 55% Bonus Share 160,644,627 1,606,446,270 4,527,257,670
29 March 2012 35% Bonus Share 158,454,018 1,584,540,180 6,111,797,850
31 March 2013 20% Cash Dividend - - 6,111,797,850
31 March 2014 20% Cash Dividend - - 6,111,797,850
*Face value per share of BDT 10 has been considered in all the cases to conform to comparability.

Status of Asset Quality: In 2013, banking industry Following table presents stand-alone quarterly information
experienced an increasing trend in Non- performing loan with average of four quarters.
(NPL) and reached to 12.8% at the end of third quarter of (Figures are in Million BDT)
2013 (September 2013), the highest since FY 2009. High NPL
Q1, Q2, Q3, Q4, QA*, Annual
in banking sector could be attributed to large scale financial Particulars
2013 2013 2013 2013 2013 2013
frauds and subdued economic activities due to political
Net Interest 1,215 1,219 1,161 1,296 1,223 4,892
violence and agitation.
Income
However, compared to PCBs’ NPL ratio of 4.54% (as on
Non-Interest 1,060 1,065 1,145 1,308 1,144 4,578
31 December 2013), EBL’s NPL ratio was 3.59% as on the
Income
same date (As on 31-12-2012: EBL 3.17% vs. PCBs 4.58%).
The NPL is supposed to come down to a moderate level in Operating 2,275 2,285 2,306 2,604 2,367 9,469
the balance sheet of the scheduled banks at YE 2013, as Income
expected by the Governor of the central bank, just because Operating 774 848 882 1,177 920 3,681
of flexible policy (rescheduling and so) undertaken by the Expense
Bangladesh Bank. The status of unclassified and classified Operating Profit 1,500 1,436 1,424 1,427 1,447 5,788
loan of the bank is as follows: *Quarterly Average
(Figures are in million BDT)
Setting 25% variance as threshold for being significant, no
Particulars 31-12-2013 31-12-2012 % Change significant variance was observed in 2013 except in case of
operating expense in the Q4. Operating expenses increased
Unclassified loans: 99,212.99 93,648.96 5.94% significantly (28% higher than QA) in Q4 mainly due to
Standard (Including 98,333.01 93,006.03 5.73% channel expansion initiatives (launching of new branches,
staff loan) ATMs, EBL 365, service centers etc.) and payment of
festival bonus and accrual of performance bonuses for the
Special Mention 879.98 642.93 36.87% employees.
Accounts (SMA)
Brief Review of Subsidiaries Businesses
Classified loans: 3,697.23 3,070.77 20.40%
In pursuance of an inorganic growth route and to open up
Sub-standard (SS) 479.77 263.72 81.92% diversified earnings stream, EBL established or acquired four
Doubtful (DF) 193.34 593.08 -67.40% subsidiaries, all of them fully owned, till the reporting date i.e.
31 December 2013. A brief review of subsidiaries business
Bad/loss (BL) 3,024.12 2,213.97 36.59% during 2013 has been presented below:
Total loans 102,910.22 96,719.74 6.40% EBL Securities Limited (EBLSL)
NPL % 3.59% 3.17% EBLSL has membership of both DSE & CSE and holds both
broker & dealer license for buying, selling and settlement
Variance between Quarterly Financial Performance and of securities on behalf of investors and for buying & selling
Annual Financial Statements of securities in its own portfolio. Unlike previous two years,
To gauge the said variance, five key financial information of 2011 and 2012, markets showed positive trend and were
each quarter of 2013 (Q1 to Q4) was analyzed or compared relatively stable after a great debacle of 2010 in the history
using Quarterly Average (QA) as the base. Profit before Tax of capital market. Turnover was in decreasing trend for three
was not considered mainly due to abrupt change in provision consecutive years and in 2013 it decreased by around 5%
against loans in Q4 (for new rescheduling circulars from BB) and daily average turnover came down to Tk 4.00 billion
whereas Profit after Tax was not considered due to deferred compared to Tk 4.21 billion of previous year (2012). However,
tax calculated once in a year (Q4). EBLSL performed well to increase market share of turnover
(2.18% in 2013 over 1.78% in 2012) in spite of decreasing
trend in the industry. The operating income of EBLSL grew

49
at a slower pace (5%) than that of operating expense (11%) a maximum of two years to purchase agricultural machinery
which caused a negative growth of operating profit by 7% and irrigation equipment. A maximum of 70% of the
or Tk 4 million. EBLSL is planning to open a new branch in machinery price will be provided as loan.
Chittagong with the approval of BSEC to expand its business Launching ‘EBL SkyMiles’: In collaboration with Visa, EBL
further by catering services to more customers. has introduced ‘EBL SkyMiles’, the country’s first ever AirMile
EBL Investments Limited (EBLIL) reward program to provide an exciting and exclusive reward
EBLIL, a private limited company established to do merchant experience to customers. Under this unique program, EBL
banking operations, obtained full-fledged Merchant Banking cardholders will accumulate SkyMiles while spending through
license from BSEC on 27 January 2013 and started its full their EBL credit cards. The cardholders would be able to
operation from June 2013. During 2013, EBLIL completed redeem the accumulated SkyMiles free air tickets, for any
the Capital Raising for CEAT Bangladesh Limited, one of destination across the world and on over 360 airlines.
the leading automobile tyre manufacturing companies. Signs deal with Alico to provide insurance coverage for
EBLIL also signed five underwriting deals in raising capitals the accountholders: EBL has signed a corporate agreement
for various reputed organizations. It has outperformed the with MetLife Alico Bangladesh to provide insurance
market in terms of return of own portfolio and achieved an coverage for the accountholders of EBL’s newly launched
annualized return of 31.46% on own portfolio compared to Savings products. EBL is the first local bank to launch such
4.55% annualized return of the market. proposition in the market. The customers of EBL Women’s
EBL Finance (HK) Limited Savings, EBL Premium Savings and EBL 50+ Savings will get
free insurance policies from Alico such as life insurance up to
The first foreign subsidiary of EBL started its commercial BDT five lac and medical reimbursement coverage up to BDT
operation in March 2013 to provide LC advising/ 15 thousands per month due to accidental causes as well as
amendments, document collection and Bill Financing insurance for critical illness.
services to customers. It is the first subsidiary of a local
bank to operate abroad with direct SWIFT Connectivity and EBL ties up with agoda.com: EBL as the first bank in
has already established SWIFT RMA with 24 reputed local Bangladesh has tied up with agoda.com making it easier for
banks in Bangladesh. Since its inception, a total of USD the customers to make their hotel booking online. It is an
3.7 million worth of Bills was financed, 1,527 L/C Advising/ Online Travel Agency (OTA) that specializes in hotel booking.
Amendment cases handled and 862 Document Collection EBL Cardholders will get up to 7% off over already lowest
cases processed by this company. agoda.com rates. Agoda.com is a platform through which
EBL Cardholders can choose from over 285,000 hotels.
EBL Asset Management Limited
Giving priority to continuous human capital development:
A private limited company was formed to grab the potential Recognizing human resource as the most valuable soft factor
business opportunity in managing mutual funds and of the organization, EBL continued to invest to enhance and
institutional wealth. EBL has already obtained permission upgrade skill sets of the people. A significant number of
from Bangladesh Bank and is under process of applying for seminars, workshops and trainings both in home and abroad
the license to BSEC. were arranged during the year. In 2013, EBL HR arranged 246
training programs in home and abroad for 6,412 participants
Highlights of business and operations of EBL
on various issues related to banking operations. Under newly
Foreign currency loans/deals: The bank made following introduced e-learning exam system 2,737 officers from
major FCY deals during the year 2013: Consumer Banking, SME Banking, Cards, Special Asset
• Coordinated successfully the drawdown of USD 12.50 Management and Operations Division have attended 25
Million Term Loan from DEG for Ananta Group. e-learning exam sessions countrywide to enhance Product
• Joint Lead Arranger for raising USD 66 Million Term Loan knowledge & Soft skills in order to provide better service.
for the 2nd Delivery Financing of Biman Bangladesh
Compliance with recent change of laws and
Airlines Ltd.
regulations
• Lending of USD 33.62 Million term loans through Offshore
Among the major regulatory changes that took place in
Banking Unit.
2013 amendments in the Bank Company Act 1991 was the
Introduction of Commercial Paper (CP) for financial most prominent and comprehensive one. Based on those
market: EBL has arranged a Commercial Paper (CP), first of amendments, Bangladesh Bank issued certain circulars/
its kind in Bangladesh, of BDT 500 million for ACI Ltd. CP is instructions/guidelines as noted below. Besides, Bangladesh
a short-term, unsecured money market instrument issued in Securities and Exchange Commission (BSEC) also issued
the form of promissory note. EBL raised the said fund for the certain notification and guidelines on revaluation of fixed
local corporate giant at an interest rate of only 12.5%, down assets, audit/certification services on compliance with
by at least 2% than bank lending rates. corporate governance guidelines etc. in 2013. The major
Launching collateral free credit facilities for Farmers: EBL changes of laws and regulations and compliance status of
has launched a collateral free credit facility ‘EBL Projukti’ EBL thereto are as follows:
to support farmers in buying agricultural machineries and  Formation of Risk Management Committee of the
equipment. Any farmer can enjoy this quarterly installment Board: In Compliance with BRPD Circular No. 11 dated
based term loan ranging from BDT 10,000 to BDT 150,000 for 27 October 2013, the Board of Directors of EBL has

EASTERN BANK LIMITED ANNUAL REPORT 2013

 directors report 2013

constituted, for the first time, a three members Risk system of internal controls.
Management Committee (RMC) of the Board in the A resonant internal control system helps a bank growing in a
520 Board Meeting held on 07 November 2013. This safe and sustainable way. The design and implementation of
committee has been formed to reduce probable risks any internal control system depends largely on a bank’s size,
which could be arisen during implementation of Board the mode of its operation and its risk profile. Effective control
approved policies, procedures and strategies by the practices generally include –
management.
 Restructuring of Executive Committee and Audit
Committee: As per Section 15B (2) of the Bank
Company Act (amended up to 2013) and BRPD Circular
No. 11 dated 27 October 2013, every bank company
shall constitute an audit committee (AC) consisting of
members who are not the members of the executive
committee (EC) of the Board. To comply with the same,
the AC and EC have been re-constituted by the BoD in
2013.
 Restriction on acquisition of immovable property:
Bangladesh Bank (BB) issued a Circular Letter (BRPD
Circular Letter No. 14 dated 12 August 2013) restricting
banks not to invest more than 30% of paid up capital in
immovable properties especially land and building/office
space. Banks already possessing immovable properties
beyond this limit shall not buy any more such property
without making proportionate increase of their paid
up capital. EBL has already crossed the said limit and
is not in a position to purchase immovable properties
without raising paid up capital at required proportion.
EBL however, after issuance of said guidelines from
Bangladesh Bank, did not buy any immovable property. Control Environment of the Bank reflects the commitment
 Guidelines on revaluation of fixed assets: As per of the Board of Directors and the management to an effective
the Notification dated 18 August 2013, BSEC issued internal control mechanism to safeguard stakeholders’
detail guidelines on revaluation of fixed assets of interest. The current business model of EBL segregates its
listed companies. One of the main clauses of the said whole crew into two major groups; business segment and
guidelines was time-lag between two valuations for the support services. While business segments are assigned with
same class of assets shall not be less than three years a set business target, support teams including the centralized
and no upward revaluation of an asset shall be made operations are totally independent from the business team
within two years of its acquisition. EBL normally makes entrusted with checking conflicts of interest, ensuring better
revaluation of lands among all of its fixed assets and last risk management and control practices. Notable beauties of
valuation was done in 2012. In compliance with the said centralized operations are operational efficiency and better
guidelines of BSEC, no revaluation of lands was done in control practices reflected in the fact that EBL has been
2013. delivering highest profit per employee for last couple of years
despite having a moderate sized balance sheet.
 Audit/certification on compliance of corporate
governance guidelines: Through Notification dated Risk Assessment is the identification, measurement,
21 July 2013, BSEC made amendments in Condition analysis and management of risks, both internal & external,
4 of corporate governance guidelines issued on 07 at individual business level and for the bank as a whole. EBL
August 2012 and included a new clause mentioning has formed a Risk Management Committee (RMC) of the
that statutory/external auditor shall not perform audit/ Board and a Risk Management Unit (RMU) as per Bangladesh
certification services on compliance of corporate Bank guidelines to oversee and monitor bank wide risk
governance guidelines of a listed company. In assessment, identification, measurement, analysis and
compliance with the said guidelines, EBL has appointed mitigation activities performed by different risk management
Rahman Rahman Huq, Chartered Accountants to functions. RMU under supervision of RMC of the Board sets
conduct such certification services for 2013. the risk appetite of the Bank.
Control Activities are those which ensure all the firewalls/
Review of Internal Control System checkpoints established through various policies, procedures
and best practices are in order so that the Bank is exposed to
EBL has a sound system of internal controls to safeguard
surprises, financial or otherwise, to the acceptable minimum
shareholders’ investments and the Bank’s assets.
level. EBL has developed and is following appropriate
The Board retains the ultimate responsibility for its
policies, guidelines and best practices as well as all the
operations, though has delegated to the Audit Committee
regulatory guidelines to control its daily activities. For
for the review of the adequacy and effectiveness of the
example, a loan proposal sourced by relationship manager

51
is assessed by the Certified Credit Analyst of Credit Risk Bank. The Compliance Unit of ICCD is also monitoring the
Management Department, documentation and disbursement regulatory compliance status of EBL on a continuous basis
done by Credit Administration Department and collection (if and updating the relevant departments upon the compliance
it becomes classified) done by Special Assets Management of any new issue imposed by regulatory authorities.
Department. EBL has been maintaining an NPL ratio However, Bangladesh Bank vide their DOS circular letter no:
far below the industry average (3.59% at yearend 2013) 17/2012 has launched a Self-Assessment Format in order
under more stringent regime of classification criteria set by to aid Bank for assessing itself and advised Bank to send a
Bangladesh Bank in 2012. quarterly assessment to BB. EBL has already started its self-
Segregation of Duties reduces a person’s opportunity to assessment activities to report to Bangladesh Bank timely.
commit and conceal fraud or errors. EBL has introduced The external auditors i.e. Hoda Vasi Chowdhury & Co.,
segregation of duties for each employee through a specific Chartered Accountants also provided their opinion on
job description and separate reporting line to make every adequacy of internal audit, internal control and risk
employee accountable and responsible for his job. As a management arrangements of the bank under point (ii) of the
result, both business and support activities of the Bank are “Report on Other Legal and Regulatory Requirements” of
always in an optimum level which, in turn, generates better their audit report. The said audit report has been mentioned
revenue for the Bank and the Shareholders. in page no. 168-169.
Due to having proper segregation of duties, the Bank has not
yet faced any significant fraud and forgery committed by its Review of Financial Reporting
employees due to separation of cards business and credit  Fair Presentation of Financial Statements
appraisal and approval (done by CFC). The Bank further
The management of EBL is responsible for the
segregated cards operations from the umbrella of cards
preparation and fair presentation of the Financial
business to Central Operations for avoiding any influence of
Statements. The said financial statements prepared
cards business team upon the cards operations. Our ethical
by the management as at and for the year ended 31
business practice, better credit appraisal and internal control
December 2013 present fairly, in all material respects,
mechanism protected us from negative outcome of the
its state of affairs, the results of its operations, cash
incidence.
flows and changes in equity. The external auditors i.e.
Accounting Information and Reconciliation–accurate and Hoda Vasi Chowdhury & Co., Chartered Accountants
updated accounting information and proper reconciliation also provided their opinion on the same by issuing
of accounts help the bank in providing timely and an unqualified audit report. We are referring page no.
authentic information to the Bank’s Board of Directors and 168-169 to see the audit report issued by the external
management for decision making. We have in place a “GL auditors.
Control & Reconciliation Policy” to ensure better control
 Maintenance of Proper Books of Account
and monitoring over financial transactions and reduction of
financial irregularities by taking confirmation of GL (General Proper books of account as required by law have
Ledger) balances from GL Owners on quarterly basis. been kept by EBL. The external auditors i.e. Hoda Vasi
Chowdhury & Co., Chartered Accountants also provided
IT Security- is, no doubt, a must for modern and high
their opinion on the same in point (iv) of “Report on Other
tech-based banking system. EBL has introduced Universal
Legal and Regulatory Requirements” of their audit report.
Banking System (UBS) software for running its daily activities
The said audit report has been mentioned in page no.
in a faster, safer & smoother way. We have also introduced
168-169.
a new Card Management Software to centrally monitor,
control the card business in an effective way. IT security is  Application of Accounting Policies and Accounting
monitored rigorously and ensured to keep its network off Estimates
limit from malicious attempts keeping maximum layers of Appropriate accounting policies have been consistently
failover process for all types of system related services. applied in preparation of the financial statements of
Data is replicated from Live to Disaster Recovery site on real the Bank and that the accounting estimates are based
time basis and our Internet Banking service was awarded on reasonable and prudent judgment. Estimates and
as “Secure” grade by external auditor at their Penetration underlying assumptions are reviewed on an ongoing
Testing. basis and any revisions to these are recognized in the
period in which the estimate is revised and in any future
Self-Assessment/Monitoring- is the Bank’s own oversight period affected. The significant accounting policies
of the control system’s performance. Self-assessment is applied and accounting estimates used for preparation of
evaluations of departmental or operational controls by the the financial statements of the Bank have been stated in
departments themselves. EBL has an independent internal detail in the notes to the FS.
risk based audit system in place who are regularly evaluating,
 Preparation of Financial Statements as per BAS/
assessing and rating the risks of various Departments and
BFRS and any Departure there-from
Branches and submit these audit reports periodically to the
Audit Committee of the Board for their further evaluation The financial statements of the Bank as at and for the
and recommendation. Surprise visit to different branches/ year ended 31 December 2013 have been prepared
departments has also been introduced as a part of strong under historical cost convention and in accordance with
monitoring and control over the daily activities of the Bangladesh Financial Reporting Standards (BFRSs),
the “First Schedule” (section 38) of the Bank Company

EASTERN BANK LIMITED ANNUAL REPORT 2013

 directors report 2013

Act 1991, as amended by the BRPD Circular no. 14 well as on bills from third parties including vendors. During
dated 25 June 2003, other Bangladesh Bank Circulars, the calendar year 2013 we contributed BDT 4,716 million
the Companies Act 1994, the Securities and Exchange to national exchequer as tax, VAT and excise duty which is
Rules 1987, Dhaka and Chittagong Stock Exchange’s 22.29% higher than that of 2012. We paid advance corporate
listing regulations and other laws and rules applicable in tax of BDT 2,464 million while deposited withheld tax of BDT
Bangladesh. In case the requirement of provisions and 1,780 million, VAT of BDT 358 million and Excise Duty of BDT
circulars issued by Bangladesh Bank differ with those of 114 million during the year 2013.
other regulatory authorities and accounting standards,
the provisions and circulars issued by Bangladesh Bank CSR activities
shall prevail. Being a socially responsible corporate, EBL continued to be
As such the Bank has departed from certain specific engaged in a number of CSR activities throughout the year,
requirements of BFRSs which contradict with those including a number of donations towards charitable causes.
of Bangladesh Bank, being the prime regulator, which To fulfill a continued commitment for ten years effective
are adequately disclosed in Note 2.1 (i) to (xiv) to the from March 2009, EBL contributed BDT 4.8 lacs to Prime
financial statements.
Minister’s Relief & Welfare Fund every year to one family of a
 Going Concern of EBL’s Business martyred army officer killed in BDR carnage in February 2009.
There are no significant doubts upon the Bank’s ability to To stand beside the victims of Savar tragedy EBL donated
continue as a going concern. The financial statements of BDT 2 crore from EBL Foundation to the Prime Minister’s
the Bank have been prepared on the assumption that the Relief & Welfare Fund.
entity (i.e. EBL) is a going concern and will continue in EBL also contributes to promote sports on national and
operation for the foreseeable future. Hence, it is assumed international events, cultural heritage and other related fields.
that EBL has neither intention nor the need to liquidate or
curtail materially the scale of its operations.
 Disclosure of Related Party Transactions On behalf of the Board of Directors
The basis for related party transactions has been stated
in the Corporate Governance Report and a statement
of related party transactions has been presented in the
Anexure C1 of Notes to the Financial Statements.

Contribution to National Exchequer

EBL regularly pays corporate tax on time, sometime even M. Ghaziul Haque
before it falls due as required and asked by the tax authority. Chairman of the Board of Directors
We also deposit excise duty, withheld tax and VAT to govt. Dhaka, 27 February 2014.
exchequer on time deducted from employees’ salary as

53
Our Stakeholders

We understand the essence of looking at our business from and professional development of our people because
the stakeholders’ viewpoint and finding areas where our their capability and commitment define our success. We
agendas overlap so that we remain mindful about the impacts provide an environment where employees are treated with
on our diverse stakeholders group while setting our priorities. respect, and diversity and differences are valued. We offer
We define stakeholders as groups or individuals who are a competitive range of benefits. EBL expects employees
affected by or can affect the achievements of our objectives. to act in accordance with EBL code of conduct, handle
We constantly engage with diverse range of stakeholders their business with integrity, deal with sensitive information
in different forms, from ongoing dialogue to direct feedback appropriately and factor into stakeholders interest in all their
requests. We value all reasonable feedback and try to actions.
balance the overlapping interests of our various stakeholders
as their support is necessary for our long term success. Major Business partners and suppliers
groups of stakeholders for EBL are as follows: We expect our business partners and suppliers to act as
responsible corporate citizens and consider social and
environmental issues in the dealings we are in depending on
the nature and impact of the activities.

Society and the environment

We want to play a pioneering role in addressing the
environmental and social issues being a responsible
corporate. Our ambition is to be a trustworthy, transparent
and sustainable bank taking action to minimize negative
impact on the environment and to contribute to building
a sustainable society for future generations. For local
communities, we are engaged through donation, education
and collaboration with development organization.

Regulators
We comply with all legal and regulatory aspects of business
and aim to maintain strong and open relationships with
regulators (Bangladesh Bank, Bangladesh Securities and
Exchange Commission) and other supervisory bodies. We
are committed to being transparent and meet expectations of
regulators.
Customers Government
We have an obligation to ensure that the customers we serve The Government is responsible for the framework in which
are treated fairly and are sold products that are appropriate public and private organizations operate; they create
for their needs. It is far more than a compliance issue but is legislation and regulations, influencing the way EBL can do
central to creating a sustainable business. We have a duty to business. We hold dialogues with the responsible government
care for our clients, build long-term relationships and provide representatives of National Board of Revenue on tax related
them with suitable and sustainable solutions for their financial issues and actively try to contribute to developments in the
and business needs. We receive customer feedback directly; financial sector of our country.
through various customer events, mystery shopping survey
etc. To our clients, we offer competitive interest rates without Rating agency
complicated terms and conditions.
Rating agency provides EBL a short term and long term
Shareholders and Financiers credit rating. We therefore have continuous dialogues
with our rating agency i.e. CRISL. We always maintain
In addition to ensuring a consistent and reasonable rate of transparency, integrity and accuracy in our reporting to keep
return on funds provided by shareholders and financiers, our creditworthiness more meaningful.
we are committed to maintain a sustainable relationship
with them. We offer innovative and suitable products for our Peer banks
financiers. We are transparent; provide accessible information
on our company and communicate with shareholders through We engage with the banking community as counter parties,
Annual General Meeting (AGM), Annual Report, shareholder investors, co-financiers or clients. We are committed to being
updates, quarterly financial statements and through our transparent and a trustworthy partner. Responsibility to our
website. stakeholders include operating with integrity in the money
and capital markets that constitute our business arena. We
Employees therefore take the utmost care when handling interbank
related transaction to safeguard the integrity and reputation
Our people have always been our most important asset and of EBL.
therefore an important stakeholder. We invest in the personal

55
Financial Highlights

BDT Million

Group Bank
Change Change
Particulars 2013 2012 2013 2012
% %
Performance During the Year
Net Interest Income 4,956 4,886 1.45% 4,892 4,814 1.61%
Non Interest Income 4,626 3,934 17.59% 4,578 3,913 16.99%
Operating Income 9,582 8,819 8.65% 9,469 8,727 8.51%
Operating Profit 5,827 5,614 3.80% 5,788 5,464 5.94%
Profit After Tax 2,535 2,393 5.95% 2,568 2,275 12.87%

Year End Financial Position

Loan 103,331 96,894 6.64% 102,910 96,720 6.40%
Investments 26,018 21,655 20.15% 25,904 21,655 19.62%
Deposits 117,037 91,435 28.00% 117,102 91,781 27.59%
Shareholders equity 18,559 17,250 7.59% 18,450 17,109 7.84%
Total Assets 158,163 147,044 7.56% 157,882 147,148 7.29%

Information Per Ordinary Share

Earnings per share (weighted average) 4.15 3.91 6.14% 4.20 3.72 12.90%
Dividend (%) 20% 20% 0.00% 20% 20% 0.00%
Price earning ratio (times) 7.01 8.11 -13.51% 6.93 8.52 -18.66%
Net asset value per share (BDT) 30.37 28.22 7.59% 30.19 27.99 7.84%
Market price per share (BDT) 29.10 31.70 -8.20% 29.10 31.70 -8.20%

Ratios (%)
Capital adequacy ratio (as per Basel II) 12.01% 12.18% -1.40% 11.95% 12.05% -0.85%
Non performing loans 3.58% 3.17% 12.90% 3.59% 3.17% 13.16%
Cost to income ratio 39.18% 37.52% 4.44% 38.87% 37.39% 3.97%

Reaching Closer: Channel Standing 2013

Branch ATM Bills pay Priority Center SME Center Student Center

71 175 42 11 55 3
Phone Banking (24X7 Contact Center): Just a call away to 16230

Internet Banking: log in from PC or mobile from anywhere in the world

SMS Banking: Just an SMS away to 6969

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

Five-Year Progression of EBL

BDT Million

PARTICULARS 2013 2012 2011 2010 2009

Balance Sheet Metric

Authorised capital 12,000 12,000 12,000 12,000 3,300
Paid up capital 6,112 6,112 4,527 2,921 2,496
Shareholders equity 18,450 17,109 14,407 12,084 8,429
Deposits 117,102 91,781 75,536 56,425 49,190
Borrowing 14,080 31,158 21,652 9,257 8,835
Loans and advances 102,910 96,720 81,774 58,607 47,668
Credit to deposit ratio (Gross) 87.88% 105.38% 108.26% 103.87% 96.91%
Credit to deposit ratio - Gross (excluding OBU loans) 79.66% 95.36% 99.86% 95.09% 93.78%
Liabilities to shareholders equity (times) 7.56 7.60 7.16 5.79 7.29
Investments 25,904 21,655 16,910 9,827 8,806
Fixed assets 6,897 5,970 4,453 3,614 1,804
Interest bearing assets 133,057 119,334 104,572 71,759 62,125
Total assets 157,882 147,148 117,601 82,098 69,871
Income Statement Metric
Net interest income (excluding investment income) 4,892 4,814 3,314 2,973 2,317
Non-interest income 4,578 3,913 4,476 3,487 2,313
Investment income 2,071 1,495 1,970 2,050 955
Non investment income (exchange, fees & charges) 2,507 2,418 2,506 1,437 1,358
Operating income 9,469 8,727 7,791 6,461 4,630
Operating profit (profit before provision and tax) 5,788 5,464 5,107 4,410 2,980
Provision for loans, investment and other assets 953 1,244 978 417 280
Profit before tax 4,836 4,220 4,129 3,992 2,701
Profit after tax (PAT) 2,568 2,275 2,521 2,425 1,455
Capital Metric (As per Basel II)
Risk weighted assets (RWA) 140,279 129,812 130,351 104,440 73,316
Core capital (Tier 1) 13,245 12,232 10,199 8,375 6,441
Supplementary capital (Tier 2) 3,519 3,414 3,071 2,912 1,875
Total capital / Regulatory capital (Tier 1 and 2) 16,764 15,646 13,270 11,287 8,317
Capital adequacy ratio-solo (regulatory capital/RWA) 11.95% 12.05% 10.18% 10.81% 11.34%
Core capital (Tier 1) to RWA 9.44% 9.42% 7.82% 8.02% 8.79%
RWA to total assets 88.85% 88.22% 110.84% 127.21% 104.93%
Credit Quality
Non performing/classified loans (NPLs) 3,697 3,071 1,561 1,169 1,172
Specific provision 1,929 1,387 866 611 756
General provision 1,644 1,563 1,541 1,107 876
NPL to total loans and advance 3.59% 3.17% 1.91% 1.99% 2.46%
Trade Business Metric
Export 74,003 67,518 58,589 39,633 34,548
Import (LC) 112,977 103,171 100,639 70,665 54,370
Guarantee 6,307 6,528 4,497 2,727 1,319

57
 BDT Million

PARTICULARS 2013 2012 2011 2010 2009

Efficiency / Productivity Ratios
Return on average equity (ROE) 14.44% 14.44% 19.03% 23.64% 22.10%
Return on average assets (ROA) 1.68% 1.72% 2.52% 3.19% 2.34%
Cost to income ratio 38.87% 37.39% 34.44% 32.10% 35.62%
Yield on average loan 13.67% 13.79% 13.40% 12.75% 13.69%
Cost of average deposit 8.24% 9.11% 8.40% 6.74% 8.55%
Net interest margin ratio 3.88% 4.30% 3.76% 4.44% 4.25%
Statutory liquidity reserve ratio 29.87% 22.93% 24.98% 19.93% 23.17%
Cash reserve ratio 6.10% 5.98% 6.00% 5.84% 5.51%
Operating profit per employee 3.86 4.07 4.21 4.53 3.39
Operating profit per branch 81.52 81.55 86.57 89.99 76.41
Share Distribution Metric
Earnings per share (EPS) in BDT 4.20 3.72 4.12 5.36 5.00
Operating profit per share in BDT 9.47 8.94 8.36 15.10 10.24
Price earning ratio (times) 6.93 8.52 15.97 24.16 12.89
Market price per share (BDT) as on close of the year at DSE 29.10 31.70 65.80 129.40 64.43
NAV (book value) per share in BDT 30.19 27.99 31.82 41.37 33.76
Dividend cover ratio: (EPS/DPS) 2.10 1.86 1.18 0.97 1.35
Dividend (%) 20 20 35 55 37
Cash (%) (proposed for 2013) 20 20 - - 20
Stock (%) - - 35 55 17
Market capitalization (at close of year) 17,785 19,374 29,789 37,795 16,083
Market price to net assets ratio (times) 0.96 1.13 2.07 3.13 1.91
Other Information (Actual Figure)
No of branches 71 67 59 49 39
No of employees (regular) 1,498 1,343 1,214 973 878
No of deposit accounts 352,627 305,363 218,239 194,351 176,080
No of loan accounts 178,896 132,238 88,375 65,656 35,125
No of foreign correspondents 715 663 660 644 665
Number of ATM 175 160 125 74 57
EBL 365 161 147 104 71 57
SME center 55 50 40 33 23
No of bills pay machine 42 42 27 10 8
No of priority center 11 8 7 6 6

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

Market Price Information

DSE CSE Total

Month Total Total Volume on
Month High Month Low Month High Month Low DSE & CSE
Volume Volume

Jan-13 32.60 30.90 3,051,800 32.50 31.20 190,898 3,242,698

Feb-13 33.50 31.80 4,061,400 33.70 31.40 347,980 4,409,380
Mar-13 33.10 25.40 4,695,200 32.60 26.80 425,662 5,120,862
Apr-13 27.40 24.90 2,001,800 27.20 24.60 326,782 2,328,582
May-13 28.70 26.70 2,350,800 28.10 26.40 874,846 3,225,646
Jun-13 27.90 26.40 4,234,000 28.00 26.50 574,529 4,808,529
Jul-13 27.50 26.10 5,632,200 27.50 25.80 191,259 5,823,459
Aug-13 27.00 25.50 2,996,400 26.80 25.30 106,739 3,103,139
Sep-13 26.80 25.50 2,974,200 26.50 25.20 191,992 3,166,192
Oct-13 27.20 26.00 2,949,000 27.00 25.20 260,855 3,209,855
Nov-13 32.40 26.80 4,844,800 30.90 26.00 425,970 5,270,770
Dec-13 29.40 27.50 1,949,600 29.00 26.70 105,020 2,054,620

DSE Price Volume Chart of EBL Share: 2013

59
Vital Graphs
Key Performance Indicators: Per Share

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

Vital Graphs
Year-end Financial Position 2013

61
Vital Graphs
Performance during the year 2013

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

Value Added Statement

Value added is the wealth accretion made by Eastern Bank Limited through providing banking and other financial services in
2013 for it’s employees, directors, government and shareholders in the form of salaries & allowances, remuneration, duties &
taxes, net profit after tax respectively and also indicates value of use of fixed assets through depreciation.

Value Added for the year ended 31 December

2013 2012
Particulars
Taka Taka
Wealth creation:
Revenue from Banking services 19,339,742,807 17,559,254,496
Less: Cost of services & supplies (11,302,397,778) (10,096,354,197)
8,037,345,029 7,462,900,299
Non-banking income 45,228,403 51,838,834
Provision for loans & other assets (952,509,071) (1,244,305,686)
Total wealth creation 7,130,064,362 6,270,433,448

Wealth distribution:
Employees & Directors
Employees as salaries & allowances 1,963,508,938 1,750,682,613
Directors as remuneration & fees 19,158,517 17,711,880
Government 2,348,830,401 2,027,720,346
Corporate tax 2,267,883,136 1,944,513,381
Service tax/ Value added tax 79,122,032 81,906,916
Municipalties/ local taxes 889,786 533,669
Excise duties 935,446 766,380
Shareholders
Dividend to shareholders 1,222,359,570 1,222,359,570
Retention for future business growth
Retained earnings 1,345,504,261 1,052,741,140
Depreciation and amortization 230,702,675 199,217,899
Total Wealth Distribution 7,130,064,362 6,270,433,448

63
Economic Value Added Statement
Economic Value Added (EVA) is the measure of financial performance of an organization. It is based on the principle that since a
company’s management employs equity capital to earn a profit, it must pay for the use of this equity capital. This management
tool is useful to shareholders in particular and other stakeholders in general to take decision for increasing wealth.
EVA is equal to Profit after Tax (PAT) plus the provision for loans & other assets less written off during the year minus cost of equity
where cost of equity is the opportunity cost that the shareholders forego. This cost of equity is calculated considering the risk free
rate based on weighted average rate of 10 years treasury bond issued by Bangladesh Government plus 2% risk premium. EBL
management is deeply concerned for maximization of wealth of its shareholders and other equity providers.

EVA statement for the year ended 31 December

Figures in BDT

Particulars 2013 2012

Shareholders equity 18,450,498,173 17,109,339,472
Add: Accumulated provision for loans & advances and other assets 4,481,469,159 3,695,777,983
Capital employed 22,931,967,333 20,805,117,455

Average capital employed / shareholders' equity 21,868,542,394 18,950,598,168

Earnings:
Profit after tax 2,567,863,831 2,275,100,710
Add: Provision for loans & advances and other assets charged during the year 952,509,071 1,244,305,685
Less: Written off loans during the year 322,366,338 385,918,914
Net earnings 3,198,006,564 3,133,487,481

Cost of equity:
Average cost of equity (based on weighted average rate of 10 years treasury bond issued 14.16% 13.80%
by the Bangladesh Government) Plus 2% risk premium
Capital charge (cost of average equity) 3,096,585,603 2,615,182,547
Economic value added 101,420,961 518,304,934

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

Market Value Added (MVA) Statement

Market value added statement reflects the company’s performance evaluated by the market through the share price. This
amount is derived from the difference between market capitalization and book value of the shares outstanding. It signifies the
enhancement of financial solvency as perceived by the market.

Market Value Added statement as at 31 December

Particulars 2013 2012

Face value per share (BDT) 10.00 10.00
Market value per share (BDT) 29.10 31.70
Number of shares outstanding 611,179,785 611,179,785
Total market capitalization (BDT million) 17,785.33 19,374.40
Book value of paid up capital (BDT million) 6,111.80 6,111.80
Market value added (BDT million) 11,673.53 13,262.60

Financial Goals and Performance (Bank)

Particulars Goals 2014 Goals 2013 Actual 2013 Actual 2012

Capital adequacy ratio (CAR) % 11% Plus 11% Plus 11.95% 12.05%
Return on average equity (ROE) % 20% Plus 20% Plus 14.44% 14.44%
Return on average assets (ROA) % 2.5% plus 2.5% plus 1.68% 1.72%
Cost to income ratio (%) Less than 35% Less than 35% 38.87% 37.39%
NPL to total loans and advance (%) Less than 3% Less than 3% 3.59% 3.17%
Weighted average credit risk grade (Number) 4.50 4.50 4.93 4.83
Deposits (BDT million) 126,085 109,524 117,102 91,781
Loans and advances (BDT million) 124,663 107,873 102,910 96,720

65
Financial Calendar

Quarterly Results
Particulars Submission Date to BSEC
Audited consolidated results for the 4th quarter ended 31 December 2012 March 12, 2013
Unaudited consolidated results for the 1st quarter ended 31 March 2013 May 09, 2013
Unaudited consolidated results for the 2nd quarter and half-year ended 30 June 2013 July 25, 2013
Unaudited consolidated results for the 3rd quarter ended 30 September 2013 October 24, 2013

Dividends
Distribution of 20% cash dividend in respect of financial year ended 31
Record date March 10, 2013
December 2012
Distribution of Cash Dividend Disbursement Date April 07, 2013
21 Annual General Meeting Notice Date February 28, 2013
21 Annual General Meeting Held On March 31, 2013

Taxation on Dividend Income

Stock dividend is tax exempted. In case of cash dividend, following is the current deduction of tax at source on dividend
income as per current fiscal act:
 If the shareholder is a company, either resident or non-resident, at the rate applicable to the company i.e. 20%
 If the shareholder is a resident person, other than company, at the rate of 10%
 If the shareholder is a non-resident (Other than Bangladeshi) person, other than company, at the rate of 25%
Since stock dividend is out of the loop of withholding tax deduction, its effective rate of return is much higher than cash
dividend.

Taxation Arising From Capital Gain

Capital gain arising from transfer or sale of Government securities is tax exempted. Capital gain arising from transfer or sale of
Stocks and Shares of public companies listed with stock exchanges is taxable at the rate of 10%.
Other Information
Exchange controls and other limitations affecting equity security holders
Non-residents can buy and sell EBL’s share and transfer the dividends after complying with Foreign Exchange Transaction
Guidelines and SEC Rules.

Stock Details

Particulars DSE CSE

Stock Symbol EBL EBL
Company Code 148 22025
Listing Year 1993 2004
Market Category A A
Electronic Share Yes Yes
Market Lot (Nos) 200 200
Face Value (Taka) 10 10
Total Number of Securities (Nos) 611,179,785 611,179,785

Accessibility of Annual Report 2013

Annual Report 2013 and other information about EBL may be accessed to EBL’s website www.ebl.com.bd. EBL provides
copies of Annual Reports to the Bangladesh Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchange
and Chittagong Stock Exchange for their reference. Respectable stakeholders may read them at their public reference room or
library.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 stakeholders information

glimpses of the 21st AGM

Registration of shareholders for the 21st AGM of EBL in progress. Directors of EBL and MD& CEO of the bank are seen on the
podium at the 21st AGM.

Shareholders engrossed in the proceedings of the 21st AGM. A section of the shareholders during the 21st AGM of EBL.

A one minute silence being observed in memory of deceased A shareholder reviews the Annual Report of the bank at the
shareholders. 21st AGM.

67
corporate governance report
Corporate Governance Practices in EBL Policy on Appointment of Directors
The members of the BoD of EBL are appointed according
Conceptual Framework to the provision of Companies Act 1994, Bank Company
Corporate governance (CG) is the system of principles, Act 1991 (Amended up to 2013), Corporate Governance
policies, procedures and clearly defined responsibilities and Guidelines of BSEC, Guidelines of Bangladesh Bank and
accountabilities framed to overcome the conflicts of interest Articles of Association of the Bank.
inherent in the corporate form. Corporate in today’s business The BoD is comprised of experienced members with
world is subject to a variety of conflicts of interest due to its diverse professional experience and knowledge such as
inherent complexities in forms and structures. So, two major business, banking and finance, IT, accounting, marketing,
objectives of corporate governance can be: administration, engineering which make the Board very
 To eliminate or mitigate conflicts of interest particularly proficient and balanced in directing Banks to achieve its
those between management and shareholders. desired objectives.
 To ensure that the assets of the company are used
Retirement and Election of Directors
efficiently and productively and in the best interests of its
shareholders and other stakeholders. According to clauses 105 and 106 of the Articles of
Association of Eastern Bank Limited, the following directors
From the view point of conflicts of interest, two relationships
retired and being eligible for re-election, were re-elected at
(between management and shareholders and directors and
the 21st Annual General Meeting (AGM) held on 31 March
shareholders) are the primary focus of most of the systems of
2013.
corporate governance. Board of directors (BoD) is a critical
component of the check and balance system that lies at the SL. Mode of
Name of Director
heart of corporate governance system. Board members owe No. Change
a duty to make decisions based on what ultimately is best
1. M. Ghaziul Haque Re-elected
for the long-term interests of the shareholders. In order to do
this effectively, Board members need a combination of three 2. Asif Mahmood Re-elected
things: independence, experience and resources. (Representing Aquamarine
Distributions Ltd.)
Guiding Philosophy of Corporate Governance
3. Gazi Md. Shakhawat Hossain Re-elected
Practices
(Representing Purnima
As a Bangladesh-incorporated bank, EBL is guided in its Construction (Pvt.) Ltd.)
corporate governance practices mainly by two regulatory
To comply with the Corporate Governance Guidelines
bodies: Bangladesh Bank (Central Bank of Bangladesh) and
issued by BSEC on 07 August 2012, the BoD appointed
Bangladesh Securities and Exchange Commission (BSEC).
Meah Mohammed Abdur Rahim & Ormaan Rafay Nizam
However, the Bank’s corporate governance philosophy as Independent Directors of the Board of EBL which was
encompasses not only regulatory and legal requirements but subsequently approved by the Shareholders in the 21st AGM
also various internal rules, policies, procedures and practices of EBL held on 31 March 2013.
based on the best practices of local and global banks. At
EBL we attach a simple meaning to ‘Corporate Governance’ As per Clauses 105 & 106 of the Articles of Association of the
which is ‘Due diligence’ in observing responsibilities by Bank, 3 (three) Directors shall retire by rotation from the office
Board as well as by management to safeguard interest of of the Directors in the 22nd AGM.
key stakeholders i.e. depositors, shareholders, employees All the retiring Directors are eligible for re-election in the
and the society at large. Two very important pillars of a good ensuing 22nd AGM subject to compliance with the BSEC
corporate governance structure are “Transparency” and Notifications dated 22 November 2011 and dated 07
“Accountability” backed by strong Internal Control and December 2011 respectively.
Compliance Structure and MIS capabilities.
Non-Executive Director
Structure of the Board
All the Directors of EBL except the Managing Director & CEO
According to Clauses 94 of the Articles of Association of are Non-Executive Directors including the Chairman.
Eastern Bank Limited, the Board of Directors is currently
constituted with 11 directors among whom 10 (ten) are Independent Directors
Non-executive directors including the Chairman and 1 (one)
EBL encourages effective representation of independent
is the Managing Director (Ex-Officio). The existing BoD of
directors in its BoD so that the Board, as a group,
the Bank includes two Independent Directors as prescribed
in the BSEC Corporate Governance Guidelines (No. 1.2), includes core competencies considered relevant in the
and Section 15 of Bank Company Act 1991 (Amended up to context of banking business. In compliance with the
2013). Corporate Governance Guidelines issued by BSEC, Bank

69
Company Act 1991 (Amended up to 2013) and Corporate usually twice in a month but emergency meetings are called
Governance Guidelines issued by Bangladesh Bank, the when required. Management provides information, references
BoD has appointed 02 (two) independent directors which and detailed working papers for each item of agenda to all
was subsequently approved by shareholders in the 21st the Directors well ahead of time fixed for the BoD meeting
Annual General Meeting (AGM). The independent directors for consideration. In the meeting, the Chairman of the BoD
being conversant in the field of financial, regulatory and allocates sufficient time for the Directors to consider each
corporate laws enjoy full freedom to carry out their assigned agenda item in a prudent way and allow them to freely
responsibilities. They have more than 12 (twelve) years of discuss, inquire, and express opinions on the items of interest
corporate management/professional experiences. so that they can fulfill their duties to the best of their abilities.
During the year 2013, total 25 Board Meetings were held; the
Board meetings and attendance attendance records of those meetings are as follows:
The Board of Directors holds meetings on a regular basis:

No. of
Total No. of
Sl. Name Position Meetings
Meetings Held
attended
1. M. Ghaziul Haque Chairman 25 23
2. Mir Nasir Hossain Director 25 17
(Representing Mir Holdings Ltd.)
3. A. M. Shaukat Ali Director 25 24
4. Md. Showkat Ali Chowdhury Director 25 18
(Representing Namreen Enterprise Ltd.)
5. A.Q.I. Chowdhury, OBE Director 25 16
(Representing Namreen Enterprise Ltd.)
6. Salina Ali Director 25 12
(Representing Borak Real Estate (Pvt.) Ltd.)
7. Meah Mohammed Abdur Rahim Independent Director 25 17
8. Asif Mahmood Director 25 15
(Representing Aquamarine Distributions Ltd.)
9. Ormaan Rafay Nizam Independent Director 25 14
10. Gazi Md. Shakhawat Hossain Director 25 20
(Representing Purnima Construction (Pvt.) Ltd.)
11. Ali Reza Iftekhar Managing Director & CEO 25 25
The Directors who could not attend the meeting(s) were granted leave of absence by the Board.

Attendance of HoF and CS in Board Meeting Ownership Composition

The Head of Finance (HoF) and the Company Secretary (CS) As on 31 December 2013 the Directors of Eastern Bank
of the Bank attend the meetings of the Board of Directors, Limited held 31.57% of total shares whereas Financial
provided that the Head of Finance and/or the Company Institutions and General Public is holding 11.49% and
Secretary do not attend such part of a meeting which 56.94% respectively:
involves consideration of an agenda item relating to their
personal matters.

31-12-2013 31-12-2012
No of Shares % of total
Sl. Composition No of Shares Held % of total shares
Held shares
1 Directors 192,923,886 31.57% 192,923,886 31.57%
2 General Public 348,023,246 56.94% 342,083,464 55.97%
3 Financial Institutions 70,232,653 11.49% 76,172,435 12.46%
Total 611,179,785 100.00% 611,179,785 100.00%

Directors’ Shareholding Status (other than independent directors) of EBL have been holding
required percentage of shares individually (minimum 2%) as
In compliance with SEC Notifications dated 22 November
well as jointly (minimum 30%).
2011 and dated 07 December 2011, all the eligible directors

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Shareholding structure of directors is as follows:

31-12-2013
No of Shares % of total
Sl. Name Position
Held shares
1. M. Ghaziul Haque Director 19,625,599 3.21%
2. Mir Holdings Ltd.
Director 30,476,236 4.99%
(Represented by Mir Nasir Hossain)
3. A. M. Shaukat Ali Director 12,518,491 2.04%
4. Namreen Enterprise Ltd.
Director
(Represented by Md. Showkat Ali Chowdhury)
60,908,280 9.97%
5. Namreen Enterprise Ltd.
Director
(Represented by A.Q.I. Chowdhury, OBE)
6. Borak Real Estate (Pvt.) Ltd.
Director 29,315,925 4.80%
(Represented by Salina Ali)
7. Meah Mohammed Abdur Rahim Independent Director 36,869 0.01%
8. Aquamarine Distributions Ltd.
Director 12,466,796 2.04%
(Represented by Asif Mahmood)
9. Ormaan Rafay Nizam Independent Director - -
10. Purnima Construction (Pvt.) Ltd.
Director 27,575,690 4.51%
(Represented by Gazi Md. Shakhawat Hossain)
11. Ali Reza Iftekhar Managing Director & CEO - -
Total 192,923,886 31.57%

Shareholding of CEO, HoF, CS, Head of ICC and  Manage the operation of the Bank safeguarding interests
top 5 Salaried Executives of customers and other stakeholders in compliance with
the highest standards of ethics and integrity;
Please refer to Note 14.1 to the Financial Statements of 2013.
 Implement the policies and strategic direction
Separation of Chairman and Chief Executive established by the Board;
Officer Roles  Establish and maintain a strong system of internal
In compliance with Bangladesh Bank BRPD Circular No. 11 controls;
and Circular Letter No. 18 dated 27 October 2013 and Clause  Ensure that the Bank’s compliance with applicable legal
1.4 of BSEC CG Guidelines dated 07 August 2012, we report and regulatory requirements.
that the Chairman of the Board Mr. M. Ghaziul Haque has
been elected from among the Directors and there are clear Roles and Responsibilities of the Board of
and defined roles and responsibilities of the Chairman and Directors
the Chief Executive Officer Mr. Ali Reza Iftekhar. The major roles and responsibilities of the Board, among
The Chairman of the Board approves the agenda for the others, are to set the vision, mission and policies of the Bank
Board meetings, assisted by the Managing Director and the and to determine the goals, objectives and strategies to
Company Secretary. Regular agenda items include approving ensure efficient utilization of the Bank’s resources. The roles
credits beyond CEO’s authority and aspects of the Bank’s and responsibilities of the Board of Directors are outlined
corporate strategy, financial performance, core risks and below (but not limited to) in compliance with Bangladesh
credit policy, corporate governance, CSR and organizational Bank BRPD Circular No. 11 dated 27 October 2013:
structure, human resources policy, customer and services  Work planning and strategic management
strategies, procurement policy, etc.
 Lending and Risk Management
On the other hand, CEO, being the Head of management
team of the Bank, is accountable to the Board and its  Internal Control Management
Committees to run and manage the Bank in accordance with  Human Resources Management and Development
the prescribed policies, principles and strategies established  Financial Management
by the Board and rules, regulations and guidelines from
 Formation of Supporting Committees
the Central Bank, BSEC and other regulatory authorities.
Management’s primary responsibilities are to:  Appointment of Independent Directors

71
 Appointment of Alternate Directors Independence of Non-Executive Directors
 Appointment of Managing Director & CEO All the Non-Executive Directors enjoy full freedom to carry out
their coveted responsibilities. They attend Board meetings
Responsibilities of the Chairman of the Board regularly and participate in the deliberation and discussions
To set out the following responsibilities, BRPD Circular No. effectively. They actively involved in the matter of formulation
11 dated 27 October 2013 issued by Bangladesh Bank and of general strategies of the Bank. But they do not participate
Corporate Governance Notification issued by BSEC on 07 in or interfere into the administrative or operational or routine
August 2012 has been taken into consideration. affairs of the Bank. However, they ensure confidentiality of the
Bank’s agenda papers, discussions at the Board/Committee
The overall responsibility of the Chairman is to:
Meetings, Notes and Minutes.
 Ensure that the Board sets and implements the Bank’s
direction and strategy effectively. Annual Appraisal of the Board’s Performance
 Act as the Bank’s lead representative, explaining aims At AGM shareholders critically appraise the performance of
and policies to the Shareholders. the Board freely through evaluation of financial position and
performance of the bank, its adequacy and effectiveness of
 Ensure no participation in or interfere into the
internal control system and overall governance mechanisms.
administrative or operational and routine affairs of the
The shareholders also raise their queries to the BoD in AGM
Bank.
and the Chairman of BoD duly makes responses on the said
The specific responsibilities of the Chairman, among queries.
others, are to: The performance of the Board is appraised based on certain
 Provide overall leadership to the Board, supplying vision parameters such as shareholder return, share price, return
and imagination, working closely with the CEO. on capital employed, earnings per share etc. of the bank.
 Take a leading role in determining the composition The attendance of Directors and their active participation in
and structure of the Board which will involve regular the meeting on various agenda is ensured in every Board
assessment of the: meeting. The Board approves annual budget at the beginning
of each year and monitors the status of the same on quarterly
size of the Board, basis to ensure achievement of the target. The Board’s
interaction, harmony and involvement of the performance is greatly dependent on the achievement (under
Directors. or over) of budgeted target. Besides, the performance
 Set the Board’s Agenda and plan Board Meetings. reports of supporting committees of the Board are also
placed in the Board meeting through which the performances
 Chair all Board Meetings, directing debate towards of the Board members are regularly assessed.
consensus.
 Ensure the Board receives appropriate, accurate, timely Annual Evaluation of the MD & CEO by the
and clear information. Board
 Chair the AGM and other Shareholders’ Meetings to The Board of Directors of EBL clearly defined and approved
foster effective dialogue with Shareholders. the roles, responsibilities and duties of Chief Executive
 Ensure that the views of shareholders are communicated Officer (CEO). Based on these assigned responsibilities,
to the Board as a whole. BoD makes annual evaluation of MD & CEO. Furthermore,
the performance evaluation of the MD & CEO is done by
 Work with Chairman of Board Committees. the Board through various reports like financial position
 Conduct (if required) on-site inspection of any bank- and performance report of the Bank, knowing update of
branch or financing activities under the purview of the various assignments given by the Board to the CEO and the
oversight responsibilities of the Board. Management from time to time and doing variance analysis of
Budget with Actual result and steps taken by CEO to achieve
Roles and Responsibilities of CEO, HoF, CS and the Budgeted target. Among the financial parameters, NPL
Head of ICC ratio, Growth of Loan & Deposit, Cost to Income Ratio, Loans
The Board of Directors of EBL clearly defined and approved write off and its recovery, Capital Adequacy Ratio, Credit to
the respective roles, responsibilities and duties of Chief Deposit Ratio etc. are the common ones.
Executive Officer (CEO), Head of Finance (HoF), Company
Secretary (CS) and Head of Internal Control & Compliance
Policy on Training of Directors
(ICC). The policy on training of Directors includes providing training
and information on the latest update related to banking
Appointment of HoF, Head of ICC and CS business such as relevant laws, policy guidelines, circulars,
The Bank appointed a Head of Finance, a Head of Internal rules and regulations issued by the regulatory authorities; so
Control & Compliance and a Company Secretary as per that they could effectively discharge the responsibilities as a
the policy of the Bank and other regulatory laws and Director of the Bank. Sometimes special discussion sessions
regulations. They are well conversant in the field of financial, are arranged with the experts regarding highly technical and
regulatory and corporate laws to carry out their assigned recent arguable issues. They also participate in the programs
responsibilities. and seminars organized by various professional bodies

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

at home and abroad on business, economic, technical, Board. The Company Secretary acts as the secretary of the
professional and corporate governance issues. committee.
The EC is comprised of 3 (Three) Non–Executive Directors
Directors’ Knowledge and Expertise in Finance
and Managing Director of the Bank. Details of EC members
and Accounting are stated in page no. 17.
Two Directors in the Board of the Bank obtained post-  Meeting and Responsibilities of EC
graduation major in Accounting from the University of
Dhaka. They have expertise in the field of accounting The EC of a larger sized BoD usually acts as a proxy for
and finance. Other Directors, majority of whom are either full BoD, can attend a meeting with short notice and take
successful entrepreneurs or seasoned professionals, are decisions to ensure smooth flow of banking businesses.
also well conversant in the field of business, economics and However, any decision taken by the committee has to be
administration. subsequently ratified by the full Board.
Since the current size of the Board of EBL (11 members
Directors Report on Compliance with Best including MD & CEO) is slim enough to hold two meetings in
Practices on Corporate Governance a month on a regular basis, there were not so many urgent
The status of compliance of corporate governance guidelines issues for EC to deal with during 2013. Hence, only one EC
issued by Bangladesh Bank has been presented in page meeting was held during the year 2013.
no. 80-87 and the guidelines issued by BSEC have been
Audit Committee (AC)
presented in page no. 88-93. Rahman Rahman Huq,
Chartered Accountants, duly certified the compliance status The Audit Committee of the Bank carries out its functions
of corporate governance guidelines and issued a report based on the Terms of Reference (ToR) approved by the
which is presented in page no. 94. Board and is accountable to the Board of Directors of the
Bank. The quorum of the AC meeting shall not constitute
Vision, Mission and Strategy of the Bank without at least 01 (one) Independent Director. The Company
 The vision and mission statement of the Bank approved Secretary acts as the secretary of the committee.
by the Board of Directors is presented in page no.  Appointment and Composition
11-13 of this annual report. The said statements are In compliance with Bangladesh Bank BRPD Circular
also disclosed in Bank’s website and other related No.11 dated 27 October 2013, Audit Committee (AC)
publications. of EBL Board has been re-constituted by the BoD in
 Strategic priorities which are time to time directed by the November 2013 to review and oversee company’s
Board have been presented in page no. 14 of this annual financial reporting, non-financial corporate disclosures,
report. internal control systems and compliance to governing
 Our sector wise business objectives, strategies, priorities laws, rules and regulations etc. independently. Details of
and future business outlooks have been elaborately AC members are stated in page no. 17.
described in “Management Discussion and Analysis”  Chairman of the AC
section of this annual report. The Chairman of the AC is an Independent Non-
executive Director who performs his duties with full
Board Committees and their Responsibilities
freedom.
To ensure good governance i.e. corporate governance in
 Members are Non-Executive Directors
bank management, Bangladesh Bank issued a circular
(BRPD Circular No. 11 dated 27 October 2013) wherein it All members of the AC are Non-executive Directors. No
restricted banks to form more than three committees or sub- Executive of the Bank is eligible to become a member of
committees of the Board. the AC. Also, no member of EC has been nominated as
the member of the AC.
To ensure proper accountability and transparency
through ‘due diligence’, EBL has three Board committees  Qualification of Members of AC
namely Executive Committee, Audit Committee and Risk All members of the AC are financially literate and one
Management Committee mainly to oversee and direct the member has post-graduation degree in Accounting.
operations, performance and strategic direction of the Bank. Moreover, all members of the AC have reasonable
The composition of the said Board Committees is presented knowledge on banking business, its operations, and risks
in the page no. 17. involved in it.
The Executive Committee (EC)  Terms of Reference (ToR) of AC
 Appointment and Composition The ToR of the AC has been framed by considering the
provisions of BRPD Circular No. 11 dated 27 October
In Compliance with Section 15B (2) of The Bank Company
2013, Corporate Governance Guidelines issued by BESC
Act (amended up to 2013) and BRPD Circular No. 11 dated
on 07 August 2012, and other best practice corporate
27 October 2013, the Board of Directors of EBL has re-
governance guidelines and standards. Some important
constituted the Executive Committee (EC) of the Board in
roles and responsibilities of AC as per ToR have been
2013 with four members (maximum limit is seven members).
described in “Report of the Audit Committee” section
None of them are the members of Audit Committee of the
of this annual report.

73
 Internal Control & Compliance Division’s Access to strategies for minimizing/ controlling of risk. The
AC committee shall review the risk management
The Head of Internal Control & Compliance (ICC) and the policy of the bank and modify the same as per
Head of Internal Audit have direct access to the AC as requirement.
and when required. In addition, the AC meets the head For controlling of risk, it is the responsibility of RMC
of ICC and the head of Internal Audit at least once in to ensure suitable administrative structure at the
a year, without management being present, to discuss bank. To ensure the compliance of risk management
their remit and any issues arising from the internal audits guidelines relating to credit risk, foreign exchange
carried out. risk, internal control and compliance risk, money
 Objectives and Activities of the AC laundering risk and information and communication
technology risk, the RMC shall form separate
The AC regularly reviews the internal control systems of committees at the management level and also
the Bank and also reviews along with the management, monitor their activities.
the quarterly, half yearly and annual financial statements
of the Bank before submission to the Board for approval. RMC shall review the risk management policy and
The objectives and activities of the AC have been guidelines of the bank at least once in a year, make
described in “Report of the Audit Committee” section necessary modifications as per requirement and
of this annual report. submit the same to the Board for approval. Besides,
the committee shall review the approval limits of
 Meeting of the Audit Committee loan and others and take necessary initiatives to
The Audit Committee of EBL held 12 (twelve) meetings in the modify the same as per requirement.
year 2013 and had detailed discussions and review session The committee shall review and examine the system
with the Head of Internal Control & Compliance, Head of regarding preservation of information and reporting
Internal Audit, External Auditors etc. regarding their findings, of the management and made approval of the same.
observations and suggestions with corrective measures on
the related areas and on other issues of Bank affairs that The committee shall monitor the overall
need improvement. The AC instructed the management to implementation of risk management policy of the
follow those suggestions and monitored accordingly from bank and also examine whether remedial measures
time to time. have been taken for minimization of credit risk,
market risk and operation risk of the bank.
The Minutes of the Audit Committee Meetings containing
various suggestions & recommendations to the Management  Meeting of the RMC
and the Board are placed to the Board for ratification on a The committee is entitled to conduct at least four
regular basis. The major areas focused by the AC during meetings in a year and call meeting at any time as
the year 2013 have been presented in “Report of the Audit per requirement. The committee can call the chief
Committee” section of this annual report. executive, chief risk officer or any executive to attend the
committee meeting.
The Risk Management Committee (RMC)
 Appointment and Composition No Remuneration Committee but Activities
In Compliance with BRPD Circular No. 11 dated 27 As the Bank is restricted (by Central Bank) to have more than
October 2013, the Board of Directors of EBL has three sub-committees of the Board, the Board oversees the
constituted, for the first time, a three members Risk recruitment and remuneration process of the employees by
Management Committee (RMC) of the Board on 07 reviewing and approving of the following:
November 2013 (maximum limit is five members). 1. Human Resources (HR) Policies i.e. “People
The RMC has been formed to reduce probable risks Management Manual” of the Bank.
which could be arisen during implementation of Board
2. Directly involved in recruitment, promotion and
approved policies, procedures and strategies. The RMC
remuneration process of top executives (Up to two-level
is entrusted to examine and review whether management
below the rank of the Managing Director & CEO) as per
is properly working on identification, management
the Bangladesh Bank Circular (BRPD Circular No.11
and mitigation of credit risk, foreign exchange risk,
dated 27 October 2013).
internal control and compliance risk, money laundering
risk, information and communication technology risk, 3. Other than the above as mentioned in (2), all
operation risk, interest rate risk and liquidity risk and appointments, promotions and fixing remuneration are
keeping adequate provision and capital against the said made by the Managing Director & CEO of the Bank as
risks. authorized by the Board.
All three members of this RMC are Non–Executive 4. Board also approves the appointment of Management
Directors of the Board and details of RMC members are Consultants one-off basis for conducting periodic
stated in page no. 17. (usually once in every two years) Salary Survey to
determine EBL’s competitive position with peer Banks
 Responsibilities of RMC
in the industry. Based on the Survey Result, Board
It is the responsibility of RMC to identify and assess approves required adjustments to existing benefit
risk of the bank and guide management to formulate packages for the employees of the Bank.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Benefits provided to Directors and Managing  Appraisal or valuation services or fairness opinions.
Director  Financial information system design and implementation.
According to the Circulars and Guidelines issued by  Bookkeeping or other services related to accounting
Bangladesh Bank from time to time, banks in Bangladesh can records or financial statements.
only provide the following facilities to the Directors:  Broker-dealer service.
 Chairman: The Chairman of the Board of Directors may  Actuarial services.
be provided an office chamber, private secretary, office
assistant, a telephone in office and a full time car and a  Internal audit services.
mobile phone to be used within the country.  Audit/ certification services on compliance of corporate
 Directors: Directors are entitled to fees and other governance guidelines issued by BSEC.
benefits for attending the Board/support committee (EC/  Any other service that the Audit Committee determines.
AC/ RMC) meetings (Notes to the Financial Statements No partner or employees of the Hoda Vasi Chowdhury & Co.,
No. 38). Chartered Accountants, possesses any share of the EBL
 Managing Director & CEO: Managing Director is during the tenure of their audit assignment at EBL.
paid salary, allowances and other facilities according
to his service contract as approved by the Board and Highlights on Central Bank Inspections
Bangladesh Bank. (Notes to the Financial Statements Bangladesh Bank carried out a comprehensive inspection
No. 37). of EBL Head Office and 17 branches in 2012, 05 branches
The Bank (EBL) has fully complied with Bangladesh Bank in 2013 and 08 core risks based on 30-06-2013 financials
Circular and Guidelines. and information along with Foreign Exchange & Trade,
Dhaka. They submitted their detailed inspection report
Establishment and Review of Internal Control during 2012 and 2013 which was placed to the Audit
System Committee of the Board first and then to the Board. Major
findings of the inspection were discussed in a meeting
EBL has a sound system of internal control to safeguard
participated by the Board, Bangladesh Bank representatives
shareholders’ investments, customer deposits and the Bank’s
and related management personnel of the Bank. The
assets. The Board of Directors of EBL retains the ultimate
Board took the observations with utmost importance and
responsibility for its operations, though has delegated to
instructed management to comply with BB suggestions
the Audit Committee for the review of the adequacy and
for improvement. BB also conducted several other audits
effectiveness of the system of internal controls.
on different units/departments of the bank all the year
A detail review of internal control system has been presented round which include Treasury Department, Trade Service
in “Directors Report” of this annual report. Department, Credit Administration Department and Off-shore
Banking Unit etc.
Risk Management
The Risk Management Committee (RMC) of the Board Related Party Transactions
reviews and monitors the overall risk management system The Bank in its ordinary course of business undertook
of the Bank and updates to the Board from time to time. financial transactions with some entities or persons that fall
The Risk Management Unit (RMU) of EBL is responsible for within the definition of ‘Related Party’ as contained in BAS 24
management, integration and monitoring of all risks within the (Related Party Disclosures) and relevant provisions of Bank
risk appetite set by the RMC. Risk management functions Company Act 1991 (amended up to 2013)and Bangladesh
are subject to continuous scrutiny of the Internal Control & Bank BRPD Circular No. 14 dated 25 June 2003. As on
Compliance Division (ICCD) to ensure appropriateness and the reporting date, the Bank had funded and non-funded
integrity of the risk management mechanism. exposures with its subsidiaries, non-funded exposures to
The risk management system of EBL has been described in some current and ex-directors and credit card limit to some
“Risk Management and Control Environment” section of of its Directors. Besides, the Bank had procured some goods
this annual report. and services from the entities of related party during 2013.
Please refer to Annexure C1 of financial statements for details
Appointment of External Auditors of related party transactions.
The Board of Directors of EBL in the 21st AGM held on
31 March 2013 appointed Hoda Vasi Chowdhury & Co.,
Ethics and Compliance
Chartered Accountants (an Independent Correspondent Firm  Code of Conduct and Ethical Guidelines
to Deloitte Touche Tohmatsu) as the statutory auditors for the EBL has written Code of Conduct and Ethical Guidelines
year 2013. for the Board of Directors and Employees of the Bank.
The basic premise of the code of conduct of EBL is that
Services not provided by External Auditor each employee, while on the payroll of EBL, shall place
Complying with provision 4 of BSEC guidelines we declare EBL ahead of his/her personal interest. The management
that Hoda Vasi Chowdhury & Co., Chartered Accountants, relies on each of the employees to make a judgment of
involved in statutory audit, was not engaged in any of what is right and proper in any particular situation.
following services during 2013:

75
 Compliance of Code of Conduct and Ethical productivity in the banking industry for last 7 years. In 2012
Guidelines our HR policy and practices got international recognition
The Board of Directors complies with all applicable Laws when we were awarded the Asia’s Best Employer Brand
and Regulations of the land and with the Memorandum Award at World HRD Congress in Singapore. Our Human
and Articles of the Bank and the policies of the Bank Resources Division is also the first in Bangladesh to achieve
adopted by the Board from time to time. ISO certification for its commitment to quality HR Practice in
People Management.
All employees of the Bank maintain the Code of Conduct
and demonstrate highest Ethical standards. The The details discussion on the bank’s “Human Resources” has
employees of the Bank undertake at all times to comply been presented in page 132-135 of this annual report.
with or observe all applicable laws and regulations of the
Communication to Shareholders and Other
country and the Bank, everywhere they operate. They
maintain books and records with integrity and ensure Stakeholders
accuracy and timeliness of all transactions. They do not  Policy on Communication with Shareholders and
share the Bank’s plans, methods and activities, which Other Stakeholders
considered by the management to be proprietary and The Share Department (which is under the Board
confidential. An employee is not encouraged to accept Secretariat) of the Bank plays an instrumental role to make
gift, benefit, hospitalities, invitation to meals or offers for effective communication with its shareholders and other
travel and lodging from our customers or persons intend stakeholders. Shareholders and other stakeholders of the
to have business dealing with the Bank. Bank may contact to this Department within office hour
 Effective Anti-Money Laundering and Anti-terrorism for any sort of information and queries. Common services
Program include but not limited to allow or rejection of transfer or
The bank has established separate Central Compliance transmission of shares, issue of duplicate certificates,
Unit (CCU) and appointed a senior official as Head of allotment of shares issued from time to time, opening
CCU to ensure compliance of Anti-Money Laundering and operation of bank accounts for payment of dividend,
Prevention Act and Anti-Terrorism Act. redemption of paper shares and the listing of securities
on stock exchanges etc. Furthermore, EBL provides
The CCU nominates Department Anti-Money Laundering updated information in its website from time to time for
Compliance Officer (DAMLCO) and Branch Anti-Money the shareholders and other stakeholders of the Bank.
Laundering Compliance Officer (BAMLCO) and guides
 Policy on Ensuring Participation of Shareholders at AGM
them about their day to day compliance activities.
The CCU arranges DAMLCO and MAMLCO conference To ensure effective and efficient participation of
every year and train up bank employees through in- shareholders in AGM, EBL publishes notice of AGM
house experts and also hires experts from BB. in daily newspapers with necessary details within
reasonable time-frame. The arrangement of AGM
 Whistleblowing and Anti-Fraud Program normally takes place in a well-known place and at
The Audit Committee of the Board reviews the Bank’s convenient time. Annual Reports are circulated as
arrangements for its employees to raise concerns, in per the provision of Companies Act 1994, so that
confidence, about possible wrongdoing in financial shareholders would get sufficient time to go through the
reporting or other matters. The Audit Committee report and freely provide their valuable comments and
ensures that these arrangements allow proportionate suggestions in the AGM.
and independent investigation of such matters and The Glimpses of the 21st AGM have been presented in
appropriate follow up action. The Audit Committee “Stakeholders’ Information” section of this annual report.
also reviews the Bank’s procedures for detection and
 Redressal of Shareholders Complaints
prevention of fraud.
The Internal Control & Compliance Division (ICCD) of Any complaint, received at AGM or throughout the year,
the Bank always engage in examination of whether any related to transfer and transmission of shares, non-
fraud-forgery or irregularities is going on in the Bank. The receipt of Annual Reports, and dividends timely and
ICCD also conducts special audit or investigations as other share related matters is resolved lawfully in time.
instructed by the Board or Audit Committee of the Bank. The Company Secretary of EBL plays the role as a Chief
The ICCD submits reports upon the observations they Compliance Officer in handling any such issue related to
detected throughout their audit to the Audit Committee our shareholders, investors etc.
at a regular interval.
Environmental and Social Obligations
Human Capital We believe that every small “GREEN” step taken today would
Employee first is the bracing motto of EBL. We believe that go a long way in building a greener future. As an environment
the source of our competitive advantage lay deep inside our responsive Bank we initiated Go Green campaign in our
company, in our people. Our core brand has always been our Bank. EBL is the first Bank to claim refinance from the
employees, appreciated for their passion to perform. For us Central Bank for carbon credits. A detailed description
employees are the best brand. We do not offer our employees regarding environmental and social obligation has been
a job, we offer them a career. We have highest per employee presented in “Sustainability Report” and “Corporate Social

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Responsibility” sections of this Annual Report. CEO to carry out daily operations to the best interest of the
shareholders. Besides conventional segregation of functional
Management committees and their departments, EBL has some designated committees
responsibilities entrusted with specific objectives. The composition of all
In an effective CG structure, corporate/bank management these committees is presented in the page number 28.
has a collective mandate under the leadership of MD &

MANAGEMENT
COMMITTEES

MANCOM EMT BRMC ALCO BORC PC BASEL III Committee

The Management Committee (MANCOM) being headed by the Head of ICC. The major roles and
MANCOM is considered the highest decision and policy responsibilities of BRMC are as follows:
making authority of the management which consists of the  Review the organizational structure covering all individuals
CEO and different business and support unit heads. The involved in risk taking as well as managing of it.
major roles and responsibilities of MANCOM are as follows:  Review and recommend establishing/formulating of
 Set or review vision, mission and strategies of the overall risk assessment and management policies,
Bank as a whole and for business units for effective methodologies, guidelines, and procedures in line
discharging of management responsibilities. with Bangladesh Bank guidelines for identification,
 Strategic and tactical decisions relating to business, measurement and monitoring of risks.
credit, operations, administration, HR, internal and  Review Bank’s risk appetites and recommend necessary
financial control and compliance etc. changes to retain Bank’s exposure within the acceptable
 Analysis of business and financial performance of the level of risks as set by risk appetites.
Bank.  Endorse portfolio objectives in line with Bank’s agreed
 Review and discuss policies and procedures of the Bank risk appetites, and recommend tolerance limits/
and make changes if necessary before taking to the benchmarks for each type of risk.
Board (if needed).  Assist development of effective and efficient information
 Finalize periodic (usually once in a year) employee system/ MIS inflow process and data management
performance appraisal and promotions. capabilities to support the risk management functions of
the bank.
 Discuss and approve Budget before forwarding to Board.
 Consider and propose innovative projects, products Asset Liability Committee (ALCO)
and services as well as management methodology and ALCO of EBL was engaged with full of activity in setting
business strategies to the Board of Directors (if needed). strategies and revamping previously taken strategies to
 Acting Managing Director can preside over the MANCOM cope with current market scenario. The major roles and
meeting in absence of MD. responsibilities of ALCO are as follows:
 Measuring overall risk appetite of the Bank both in
Expanded Management Team (EMT) banking book and in trading book.
Expanded Management Team (EMT) is a platform to enhance  Measuring liquidity requirement of the Bank in various
leadership capability of the potential individuals to drive time buckets and taking strategic and proactive actions
business results. The team is represented by member(s) from to meet the requirements.
every division and is accountable to Management Committee
for its deliverables. Chairman of this EMT is a MANCOM  Monitoring the interest rate risk of the Bank and taking
member by default who acts as a bridge between EMT and actions to keep the interest rate gap at the desired level.
MANCOM. EMT comprises mid-level managers (28 members  Monitoring the movement of macro variables and yield
at present) from cross sections nominated by their respective curve shift and taking strategy for short, mid and long
divisional heads on yearly basis. The Scope of this team is to term interest rate risk management.
excel the projects and initiatives approved by the MANCOM.  Keeping the balance sheet mix at desired level for Main
Bank Risk Management Committee (BRMC) Operation and OBU.

Following BB instructions (DOS EW 1164/14 EBL/2009-449  Measuring and monitoring concentration risk,
dated 10 June 2009 and DOS EW 1164/14 EBL/2009-590 diversification and product profitability.
dated 24 September 2009), the Bank formed a separate risk Bank Operational Risk Committee (BORC)
management unit named ‘Bank Risk Management Committee
(BRMC)’ to ensure proper and timely identification, It’s a key ‘Operations Risk Management’ forum of the
measurement and mitigation of risks exposed by the bank Bank to identify, measure, manage and monitor issues that
in a comprehensive way. At present, this committee is expose the Bank to operational risks. The major roles and

77
responsibilities of BORC are as follows: approved by the Board in its 513th meeting dated 17 July
 To transform a somewhat ‘form filling exercise’ into 2013. This committee will work as SRP (Supervisory Review
a proactive forum of senior management to discuss, Process) Team which will be headed by MD & CEO. The
evaluate and decide on existing and potential operation major roles and responsibilities of BASEL III Committee and
risks. SRP Team are as follows:
 To ensure that Managing Director & CEO is being  Implementation of BASEL Guidelines as per the
informed timely regarding status of compliance by the requirements of Bangladesh Bank from time to time.
respective employees.  Coordination of functions related to risk review process
 To ensure compliance with business/function operation and capital planning.
risk policies and procedures across all units in the Bank.  Review and recommendation of ICAAP (Internal Capital
 To ensure that operation risks identified within Adequacy Assessment Process).
businesses are assessed in terms of wider implications  Oversee the adequacy of risk governance framework to
of business and strategic risks and those risks are meet minimum requirements under BASEL guidelines
reviewed and reported accordingly. applicable in the country.
 To assess reputational implication of operation risks  Ensure inclusion of SRP implementation agenda in each
identified and ensure that MANCOM is duly updated of meeting of the Audit Committee.
the same.
 Placement of annual ICAAP document to Board of
 To ensure that all significant issues raised through Directors for approval.
internal audit and regulatory review are resolved
 Engage in the dialogue with Bangladesh Bank SREP
effectively within agreed timeline.
team, when required.
 To ensure implementation of the real time incident
reporting process.  Any other activity required to comply with Bangladesh
Bank and other regulatory requirement.
Purchase Committee (PC)
The six member Purchase Committee (PC) drawing members
Internal Controls: the watchdog of transparency
from Administration, Operations, Finance, Engineering, IT and accountability
and Brand & Communication, plays an instrumental role in Effective internal control system results in better risk
the procurement procedure of the Bank. The main objectives management practices in terms of identification,
of this committee are to contribute towards sustainable measurement, monitoring and mitigation of risks. Internal
development of the Bank following Board approved Control and Compliance (ICC) Division of EBL continually
procurement policy and ensure that value for money is recognizes and assesses all of the material risks that could
achieved in all procurement activities. The major functions of adversely affect the achievement of the Bank’s goals.
the committee are as follows: The risk assessment by internal control focuses more on
 This committee recommends the lists of vendors compliance with regulatory requirements, social, ethical
for annual enlistment after thorough investigation of and environmental risks that affect the banking industry.
submitted documents and physical visit of vendors’ It ensures reliable financial and managerial information
facilities, if required, to the Managing Director & CEO for that promote better strategic decision for the Bank. ICC
final approval. ensures compliance with laws and regulations, policies and
 As per Procurement and Disposal Manual, sealed procedures issued by both the bank management and the
quotations are opened by purchase committee and regulators. Better internal controls may enable a business to
recommend the vendors considering price and quality of engage safely in more profitable activities that would be too
the goods and services. risky for a competitor without those controls. ICC enhances
public confidence over the banks and facilitates risk based
 In case of large procurement such as renovation of
bank examination.
branches, PC opens the sealed quotations in front of
vendors and declares the name of winning vendor. This At EBL, the Head of ICC has dual reporting lines to CEO
practice has increased competitiveness among vendors and Audit Committee of the Board and thus acts as a bridge
which resulted in cost effectiveness in procurement of between management and Board. ICC acts as a watchdog
goods and services which ultimately increased the value to ensure safe, sound and compliant operations of the
to all stakeholders. Bank. It keeps informed the management and Board (where
necessary) with any relevant update which is not routinely
BASEL III Committee covered by financial reporting and other non-financial
The seven members BASEL III Committee has been disclosures.
formed drawing members from CRM, Operations, Finance, Based on the size of the Bank and its requirement ICC of EBL
Treasury, RMU and IT to play an instrumental role regarding comprises of four units i.e. Operation Risk Unit, Compliance
implementation of BASEL Guidelines as per the requirements Unit, Internal Control (it comprises audit unit) Unit and Legal
of Bangladesh Bank from time to time. The committee was Unit.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Managing Audit committee branches and departments under legal framework.

Director & CEO of the Board  Checking whether the appropriate policies include
a. top level review, b. appropriate activity controls
for different departments and divisions, c. system of
approval and authorizations, d. appropriate segregation
Head of Internal of duties and personnel are not assigned with conflicting
Control & Compliance responsibilities.
 Review the Quarterly Operation Report.
 Review of Policies/ Guidelines and PPGs of the Bank.
 Arrange various training for the employees of the Bank.
Head of Head of Head of Head of
Operation Risk Internal Control Compliance Legal  Arrange training of Anti Money Laundering as a “Lead
Bank”.
 Support and advice departments and branches in
Operation Risk Unit (ORU): This unit is responsible to complying with their various regulatory and other
monitor the operations risk of various branches, units compliance issues as required.
and departments of the Bank. They set the strategy,  Follow up of Bank’s regular and ad hoc submission of
collect relevant data and analyze those to assess the risk returns/ reports/ queries to Bangladesh Bank and other
of operational area of the Bank. ORU normally uses the regulatory bodies.
following four steps to conduct their activities:
Internal Control (Audit) Unit: Audit unit of EBL is applying
1. Identification of operation risk risk based internal audit methodology for doing their audit
2. Assessment of risk identified functions. Risk based internal audit includes, in addition
to selective transaction testing, an evaluation of the risk
3. Mitigation or control of risk identified
management systems and control procedures prevailing in
4. Monitoring of mitigation or control steps taken various areas of the Bank’s operations. Under risk-based
In case of any lapses/ irregularities found, ORU takes internal audit, the focus shifts from the full-scale transaction
appropriate corrective measures within the respective testing to risk identification, prioritization of audit areas and
business/operation areas. If they find any significant allocation of audit resources in accordance with the risk
operational lapses, they recommend the issue to the higher assessment. While focusing on effective risk management
management (MANCOM/BORC) through Head of ICC for and controls, risk-based internal audit would not only offer
immediate resolution of the same. Some major tools of this suggestions for mitigating current risks but also anticipate
unit are as follows: areas of potential risks and play an important role in
 A framework for business and support functions to protecting the bank from various risks.
identify their major operational risks and mitigation plans. Annual audit plan is prepared by considering all risk areas
 Branch/ Departmental Control Function Checklist and their prioritization based on the level and directions of
(DCFCL). risks. For example, high risky branch or department (based
on previous audit rating, higher management’s and regulatory
 Prime Risk Indicator (PRI). requirement) is to be audited at shorter intervals as compared
 Quarterly Operation Report (QOR). to medium or less risky branch or department, as applicable.
 Spot check/ Surprise visit. This annual audit plan is approved by the bank’s senior
management and by the Audit Committee of the Board
 Incident Report etc.
before starting of New Year.
Compliance Unit: This unit is entrusted to ensure that bank
Results and status of internal audit in 2013: In 2013,
complies with all regulatory requirements while conducting
67 branches and 49 divisions/ departments/units were
its business. They maintain liaison with the regulators at all
audited by the audit unit of the Bank as per audit plan. After
levels and notify the other units/departments regarding the
finalization of audit report, audit rating is calculated based
regulatory changes. Some major functions of this unit are as
on audit findings and EBL Audit Policy and Guidelines and
follows:
this rating is informed to the related management with audit
 Ensure compliance of all Comprehensive and Special report.
Inspection reports of Bangladesh Bank.
Major audit findings include but not limited to different types
 Ensure compliance of Internal Audit Report. of operational lapses due to human error, non-compliance
 Ensure compliance of regulatory bodies like the central of internal policies or circulars, lack of thorough knowledge
bank, tax authority, Ministry of Finance, Law enforcing about relevant laws and regulations etc. The deficiencies
agencies and other regulators. identified during the audits are notified to the appropriate
level (business heads) and significant audit findings are
 Supervise and monitor the legal issues against the bank.
reported to the Managing Director & CEO and to the Audit
 Ensure smooth resolution of various complaints of Committee as well.

79
Legal Unit: This Unit plays a significant role ensuring enlistment (i.e. making memo, submitting the memo
legal support to all branches & departments of EBL and before the Board, making offer letter after final approval
maintaining liaison with different regulatory bodies such as of the Board in favor of enlisted lawyers) of Retainer and
Bangladesh Bank, tax authority, Ministry of Finance, Anti- Panel lawyer for the Bank.
Corruption Commission, CID, Police, Central Intelligence Cell  Mitigating the queries of different authorities such as
etc. by mitigating their queries regarding illegal & irregular Bangladesh Bank, tax authority, Ministry of Finance, Anti-
transactions/ activities and complained matter. The major Corruption Commission, CID, Police, Central Intelligence
functions of this unit are as follows: Cell etc. regarding various illegal & irregular transactions
 Monitoring and follow up of the suits/ cases/ writs/ & activities and investigation of different cases.
Appeals/ Revisions filed, by and against the Bank, in  Providing up to date report regarding conducting cases
the Judge Court and especially in the Supreme Court of as per requirements of internal and external authorities.
Bangladesh.
 Vetting of property documents as well as Lease
 Obtaining Legal Opinion from the Retainer/ Legal Agreements in connection with the floor spaces
Advisors/ Expert Lawyers on complicated issues. purchased for the Branch Premises.
 Maintaining Liaison with Retainer/ Panel lawyer for  Vetting of property documents as well as Contract for
smoothly conducting the suits/cases/writs/Appeals/ Sale & Deed of Sale in connection with Land/Floor
Revisions and providing them all kinds of logistic and Spaces to be purchased by the Bank.
documentary support for proper execution of the
 Drafting of Lease Agreement & vetting of property
respective cases.
documents purchased for the ATM Booth.
 Taking initiative and performing all procedures regarding

BB guidelines for Corporate Governance: Our Compliance Status

To ensure good governance i.e. corporate governance in bank management, Bangladesh Bank (BB) issued three circulars in
2013 covering three broad areas as follows:
1. BRPD Circular No.11 dated 27 October 2013: Formation and responsibilities of Board of Directors (BoD).
2. BRPD Circular Letter No. 18 dated 27 October 2013: Appointment and responsibilities of Chief Executive Officer (CEO).
3. BRPD Circular Letter No. 19 dated 27 October 2013: Contractual appointment of Advisor and Consultant.
The summary of the BB guidelines and EBL’s compliance thereto are presented below:

1. Formation and responsibilities of Board of Directors (BoD)

Compliance
Sl. No. Particulars
Status
1 Formation of BoD: Prior approval from BB to be taken before appointment of new Directors, Complied.
as well as dismissal, termination or removal of any Director from the post. Qualification No such
and competency of Directors, maximum number of Directors of the Board, appointment of instance of
independent Directors, appointment of maximum 02 (two) members from a family as Director. dismissal,
termination or
removal.
1.1 Appointment of New Directors: Every bank company, other than specialized banks, at the
time of taking prior approval from BB while appointing Directors should furnish the following
information along with the application:
a. Personal information of the nominated person Complied
b. Declaration of nominated person Complied
c. Declaration for confidentiality by the nominated person Complied
d. In case of independent director, the approval letter from BSEC Complied
e. CIB report of the nominated person Complied
f. Updated list of Directors Complied
1.2 Vacancy of office of a Director
1.2 (a) The office of a Director shall be vacated as per the provision of Section 108(1) of Companies Act
1994. Besides, provision of Section 17 of Bank Company Act 1991, providing false declaration at No such case
the time of appointment or observing shortfall of qualification as a Director.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance
Sl. No. Particulars
Status
(b) If the office of a Director is vacated as per Section 17 of Bank Company Act 1991, s/he will not
be eligible to become Director of that bank company or any other bank company or financial
institutions within one year from the date of repayment of the total dues to the bank. The dues can No such
be adjusted with the shares held by the Director in that bank company and he cannot transfer his incident
shares of that bank company until he repays his all the liabilities of that bank company or financial
institutions.
(c) BB can remove Directors or Chairman of a bank company other than the state-owned banks for
doing any activity that is detrimental to the interest of the banks depositors or against the public No such
interest under Section 46 and can also dissolve the Board of a bank company under Section 47 of instance as yet
Bank Company Act 1991.
1.3 Removal of Directors from office: With the prior approval of Bangladesh Bank, any Director of
a bank company other than specialized banks can be removed from his office for the reasons
No such
specified in its Articles of Association. The reason and grounds of the dismissal/removal and the
instance as yet
copy of such decision taken by BoD and a list of Directors shall be submitted to Bangladesh
Bank. Such removal shall be effective from the date of BB’s approval.
1.4 Appointment of Alternate Director: An alternate director can be appointed to act for a director
No such
during his absence for a continuous period of not less than three months from Bangladesh by
Director in EBL
fulfilling following instructions:
(a) Bank has to collect and properly maintain the documentary evidences relating to departure and
arrival of the original director while traveling abroad. If there is any exception, the CEO should N/A
immediately inform it to BB.
(b) The copy of the decision of the BoD regarding appointment of alternate director, with original
director's probable returning date from abroad should be sent to BB within 7 days of taking the N/A
decision and the director's arrival date must be intimated to BB immediately after his/her return.
(c) Any loan defaulter or any person who is not eligible to become a director as per any relevant
N/A
guiding rules & regulation will not be appointed as an alternate director.
(d) As an alternate director is appointed temporarily; therefore, he/she will not be included in any kind
N/A
of committee constituted by the BoD.
(e) The alternate director or his/her affiliated organization will not get any kind of loan facilities from
the bank. In case of previous loan, enhancement of limit or extension of time period or any kind of
N/A
exemption or interest waiver will not be allowed. Moreover, all restrictions applicable to directors
according to rules & regulations will also be applicable to the alternate director.
2 Director from Depositors: As per Bank Company Act 1991 (amended in 2013) appointment of
Directors from depositors is no longer required. But, in compliance with the provision of section Complied.
15(9) of Bank Company Act 1991 (amended up to 2013), bank company may consider the tenure No Depositor
of existing Directors from depositors or may appoint them as the Independent Director of the Director in EBL
company.
3 Information regarding Directors: Banks are advised to take the following steps regarding
directors information:
(a) Every bank should keep an updated list of bank directors. Complied
(b) Banks should send a directors' list to other banks or financial institutions immediately after the
Complied
appointment or release of director.
(c) Banks should display a list of directors on the website and update it on a regular basis. Complied
4 Responsibilities of the Board of Directors (BoD)
4.1 Responsibilities and Authorities of the BoD:
(a) Work planning and strategic management
(i) The BoD shall determine the objectives and goals and to this end shall chalk out strategies Complied.
and work plans on annual basis. It shall analyze/monitor at quarterly rests the development of
implementation of work plans.

81
 Compliance
Sl. No. Particulars
Status
(ii) The BoD shall have its analytical review presented in the Annual Report as regard to success/
failure in achieving the business and other targets as set out in its annual work plan and shall
apprise the shareholders of its opinions/recommendations on future plans and strategies. It shall Complied
set the Key Performance Indicators (KPIs) for the CEO and executives immediate two tiers below
the CEO and have it evaluated at times.
(b) Loan and Risk Management
(i) The policies, procedures, strategies, etc. in respect of appraisal of loan/investment proposal,
sanction, disbursement, recovery, re-scheduling and write-off thereof shall be made with the
BoD’s approval under the purview of the existing laws, rules and regulations. The BoD shall Complied
specifically distribute the power of sanction of loan/investment and such distribution should
desirably be made among the CEO and his subordinate executives as much as possible. No
director, however, shall interfere, directly or indirectly, into the process of loan approval.
(ii) The board shall frame policies for risk management and get them complied with and shall
monitor the compliance at quarterly rests and review the concerned report of the risk management
Complied
team and shall compile in the minutes of the board meeting. The BoD shall monitor the
compliance of the guidelines of BB regarding key risk management.
(c) Internal Control Management
The Board shall be vigilant on the internal control system of the bank in order to attain and
maintain satisfactory health or grade of its loan/investment portfolio. The board will establish such
an internal control system so that the internal audit process can be conducted independently from Complied
the management. It shall review at quarterly rests the reports submitted by its audit committee
regarding the compliance of recommendations made in internal and external audit reports and the
BB inspection reports.
(d) Human Resources (HR) Management and Development
Complied.
(i) Policies relating to recruitment, promotion, transfer, disciplinary and punitive measures,
EBL BoD
human resources development etc. and service rules shall be framed and approved by the
approves HR
BoD. The chairman or the directors shall in no way involve themselves and interfere into
policy from
or influence over any administrative affairs including recruitment, promotion, transfer and
time to time
disciplinary measures as executed under the set service rules. No member of the BoD shall
which guides
be included in the selection committees for recruitment and promotion to different levels.
all actions
Recruitment, promotion, transfer and punishment of the executives immediate two tiers
or decisions
below the CEO shall, however, rest upon the BoD. Such recruitment and promotion shall
related to HR of
have to be carried out complying with the service rules i.e., policies for recruitment and
EBL.
promotion.
(ii) The BoD shall place special attention to the development of skills set of bank’s staff in different
fields of its business activities including prudent appraisal of loan/investment proposals, and to
the adoption of modern electronic and information technologies, and the introduction of effective Complied
Management Information System (MIS). The BoD shall get these programs incorporated in its
annual work plan.
(iii) The BoD will compose Code of Ethics for every tier of employees and they will follow it
Complied
properly. The BoD will promote healthy code of conducts for developing a compliance culture.
(e) Financial Management
(i) The annual budget and the statutory financial statements will be prepared with the approval
of the BoD. It will at quarterly rests review/monitor the positions in respect of bank’s income, Complied
expenditure, liquidity, non-performing assets, capital base and adequacy, maintenance
of loan loss provision and steps taken for recovery of defaulted loans including legal
measures.
(ii) The BoD will frame the policies and procedures for bank’s purchase and procurement activities Complied.
and shall accordingly approve the distribution of power for making such expenditures. The EBL follows
maximum possible delegation of such power shall rest on the CEO and his subordinates. The a Board
decision on matters relating to infrastructure development and purchase of land, building, vehicles Approved
etc. for the purpose of bank’s business shall, however, be taken with the approval of the BoD. ‘Procurement
and disposal
policy.’

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance
Sl. No. Particulars
Status
(iii) The BoD will review whether an Asset-Liability Committee (ALCO) has been formed and it is Complied
working according to BB guidelines.
(f) Appointment of Chief Executive Officer (CEO): In order to strengthen the financial base of the
bank and obtain confidence of the depositors, one of the major responsibilities of the BoD is to
Complied
appoint an honest, efficient, experienced and suitable CEO or Managing Director. The BoD will
appoint a competent CEO for the bank with the approval of BB.
(g) Other responsibilities of the BoD: Complied.
In accordance to BB Guidelines issued from time to time. The BoD will do
so as and when
required by BB.
4.2 Meetings of the Board of Directors: Board of Directors may meet once or more than once in a Complied.
month upon necessity and shall meet at least once in every three months. Excessive meetings are Usually EBL
discouraged. holds two
Board Meetings
in a month.
4.3 Responsibilities of the Chairman of the BoD:
(a) As the Chairman of the BoD or Chairman of any committee formed by the BoD or any director
does not personally possess the jurisdiction to apply policy making or executive authority, he/she
Complied
shall not participate in or interfere into the administrative or operational and routine affairs of the
bank.
(b) The Chairman may conduct on-site inspection of any bank branch or financing activities under
the purview of the oversight responsibilities of the BoD. 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 BoD or the executive committee and if deemed Complied
necessary, with the approval of the BoD, he shall effect necessary action thereon in accordance
with the set rules through the CEO. However any complaint against the CEO shall have to be
apprised to BB through the BoD along with the statement of the CEO.
(c) The Chairman may be offered an office room, a personal secretary/assistant, a peon/MLSS, a
telephone at the office, a mobile phone usable inside the country and a vehicle in the business Complied
interest of the bank subject to the approval of the BoD.
5 Formation of Supportive Committees of the Board: The BoD of every Bank Company can form
only three supporting committees of the BoD i.e. Executive Committee (EC), Audit Committee (AC) Complied
and Risk Management Committee (RMC).
5.1 Executive Committee (EC): EC is to be formed for taking decision on urgent and day-to-day or
routine activities between the intervals of two BoD meetings. The EC will perform according to the
terms of reference set by the BoD.
The EC will be formed with maximum of 07 (seven) members for a period of 03 (three) years. The
Chairman of the BoD can also be the member of the EC. The company secretary of the bank
shall act as the secretary of the EC. EC members, besides being honest and sincere, should have
reasonable knowledge on banking business, its operations and risk management and be capable Complied
of making valuable and effective contributions in the functioning of the Committee. The committee
shall discharge responsibilities and take decision on the matters as instructed by the BoD except
discharging of those responsibilities and taking decisions that are specifically assigned to the full
BoD by the Bank Company Act 1991 or other related laws and regulations. The decisions taken by
the Committee shall be ratified in the next BoD meeting. Upon necessity the Committee can call
meeting at any time. The Committee may invite CEO, Chief Risk Officer or any executive to attend
the committee meeting.
5.2 Audit Committee (AC): The AC should have maximum five members and two of them shall be
Independent Directors. It should be constituted of such members who are not members of the EC
of the BoD. The members of the Committee may be nominated for three years and the company Complied
secretary of the bank shall act as the secretary of the Committee. Please see ‘Report of the Audit
Committee’ for details.

83
 Compliance
Sl. No. Particulars
Status
5.3 Risk Management Committee (RMC): The RMC is to be formed to mitigate impending
risks which could be arisen during implementation of BoD approved policies, procedures and
strategies. This committee is entrusted to examine and review whether management is properly
working on identifying and mitigation of credit risk, foreign exchange risk, internal control and
compliance risk, money laundering risk, information and communication technology risk, operation
risk, interest rate risk and liquidity risk and keeping adequate capital and provision against the
risks identified.
Complied
The RMC is to be formed with maximum five members who will be appointed for 03 (three) years.
Each member should be capable of making valuable and effective contributions in the functioning
of the Committee. The company secretary of the bank shall act as the secretary of the Committee.
RMC shall review the risk management policy and guidelines of the bank at least once in a year,
make necessary modifications as per requirement and submit the same to the BoD for approval.
Besides, lending limits and other limits should be reviewed at least once in a year and should be
amended, if necessary. Please see page no. 74 for details.
6 Training of the Directors: The Directors of the Board will acquire appropriate knowledge of
the Banking laws and other relevant laws, rules and regulations to effectively discharge the Complied
responsibilities as a Director of the bank.
7. Intimation of the Circular to the Board and related persons by CEO: The CEO will inform about
Complied
this Circular to the directors and other related persons.

2. Appointment and responsibilities of Chief Executive Officer (CEO)

Compliance
Sl. No. Particulars
Status
A Rules and regulations for appointment of the CEO
1 Moral Integrity: In case of appointment to the post of CEO, satisfaction in respect of the
concerned person should be ensured to the effects that:
a) He has not been convicted by any Criminal Court of Law.
b) He has not been punished for violating any rules, regulations or procedures/ norms set by any Complied
regulatory authority.
c) He was not associated with any such company/organization; registration or license of which
has been cancelled.
2 Experience and Suitability:
a) For appointment as a CEO, the concerned person must have experience in banking profession
for at least 15 (fifteen) years as an active officer and at least 02 (two) years experience in a post
immediate below the CEO of a bank.
b) He must have a Master’s degree at minimum from any recognized university. Higher academic
education in the field of Economics, Banking and Finance or Business Administration will be
treated as additional qualification for the concerned person. Complied

c) In respect of service, the concerned person should have excellent track record of performance.
d) Satisfaction should be ensured that the concerned person was not dismissed from service
when he was chairman/director/official of any company.
e) Any director of any bank or financial institution or any person who has business interest in the
concerned bank will not be eligible for appointment to the post of the CEO.
3 Transparency and financial integrity: Before making appointment as a CEO, satisfaction should
be ensured to the effects that:
a. The concerned person was not involved in any illegal activity while performing duties in his
own or banking profession.
Complied
b. He has not deferred payment to creditors or has not compromised with his creditors to be
relieved from debts or he is not a loan defaulter.
c. He is not a tax defaulter.
d. He has never been adjudicated a bankrupt by the Court.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance
Sl. No. Particulars
Status
4 Age Limit: No person crossing the age of 65 years shall hold the post of CEO of a bank. Complied
5 Tenure: The tenure of the CEO shall not be more than 03 (three) years, which is renewable. If the
candidate has less than 3 years left to attain 65 years, he/she can be appointed for that shorter Complied
period.
6 Guidelines in fixing the salary and allowances: Banks are required to follow the guidelines
stated below while determining the salary and allowances of the CEO and submitting such
proposal to BB:
a. In fixing the salary and allowances of the CEO, financial condition, scope of operation,
business-volume and earning capacity of the bank; qualifications, achievement of the
candidate in the past, age and experience and the remuneration paid to the persons
occupying same position in the peer banks shall have to be taken into consideration.
b. Total salary shall be comprised of direct salary covering ‘Basic Salary’ and ‘House Rent’ and
allowances as ‘Others’. The allowances (e.g., provident fund, utility bill, leave-fare assistance)
in ‘Others’ head should be specified in amount/ceiling. Besides, other facilities (e.g., car, fuel,
driver etc.), as far as possible, shall have to be converted in the monetary value and thus
determining monthly total salary, it shall have to be mentioned in the proposal submitted to
BB. In the proposal, Basic Salary, House Rent, Festival Allowance, other allowances and other Complied
facilities shall have to be specified in Taka amount.
c. Without improving the bank’s major financial indicator like- CAMELS, annual salary increment
will not be payable.
d. Terms of salary-allowances and other facilities as specified in the terms and conditions of
appointment cannot be changed during the tenure. In case of renewal, proposal may be made
for re-fixation of the salary considering the work performance of the current CEO.
e. The CEO so appointed shall not get any other direct or indirect facilities (e.g., dividend,
commission, club expense, etc.) other than the salary-allowances and other facilities as
enumerated in clause (b) above.
f. The bank shall not pay any income tax for the CEO, i.e., the CEO so appointed shall have to
pay it.
7 Incentive Bonus: The CEO will get incentive bonus subject to paying incentive bonus to
all executives/officers/workers of the bank and the said bonus amount will not exceed BDT Complied
1,000,000 in a year.
8 Honorarium for attending the Board Meeting: Being a salaried executive, CEO will not get any
Complied
honorarium for attending the Board meeting or Board formed Committee meeting.
9 Evaluation Report: For reappointment of the CEO, the Chairman of the bank shall have to submit
Complied
a Board approved evaluation report to BB.
10 Prior Approval from Bangladesh Bank: Prior approval from Bangladesh Bank is mandatory
before appointing CEO as per section 15(4) & (5) of Bank Company Act 1991 (amended up to
2013). For processing such approval, along with the proposal signed by the Chairman of the BoD,
Complied
the selected person’s complete resume, offer letter (mentioning the direct & indirect remuneration
and facilities) and copy of Board’s approval must be submitted to BB. The selected person must
also submit declarations as per Annexure A & Annexure B to BB.
11 Decision of Bangladesh Bank is final: The decision of BB for appointment of the CEO will be
treated as final and the CEO such appointed cannot be terminated, released or removed from his/ Complied
her office without prior approval from BB.
B Responsibilities and Authorities of the CEO: The CEO of the bank, whatever name called, shall
discharge the responsibilities and exercise the authorities as follows:

85
 Compliance
Sl. No. Particulars
Status
a. In terms of the financial, business and administrative authorities vested upon him by the BoD,
the CEO shall discharge his own responsibilities. He shall remain accountable for achievement
Complied
of financial and other business targets by means of business plan, efficient implementation
thereof and prudent administrative and financial management.
b. The CEO shall ensure compliance of the Bank Company Act 1991 and other relevant laws and
Complied
regulations in discharging of routine functions of the bank.
c. The CEO shall include clearly any violation from Bank Company Act 1991 and/or other
relevant laws and regulations in the “Memo” presented to the meeting of the BoD or any other Complied
Committee (s) engaged by the BoD.
d. The CEO shall report to Bangladesh Bank of issues in violation of the Bank Company Act 1991
Complied
or of other laws/regulations.
e. The recruitment and promotion of all staffs of the bank except those in the two tiers below
him/her shall rest on the CEO. He/she shall act in such cases in accordance with the approved
Complied
service rules on the basis of the human resources policy and approved delegation of
employees as approved by the BoD.
f. The authority relating to transfer of and disciplinary measures against the staff, except those
at two tiers below the CEO, shall rest on him/her, which he/she shall apply in accordance
Complied
with the approved service rules. Besides, under the purview of the human resources policy as
approved by the BoD, he/she shall nominate officers for training etc.

3. Contractual appointment of Advisor and Consultant

Compliance
Sl. No. Particulars
Status
A Rules and regulations for appointment of an Advisor No such
advisor in EBL
1 Experience and Suitability: For appointment as advisor, the concerned person will have to fulfill
the following requirements with regard to experience and qualifications:
a. Experience in Banking or Administration for at least15 (fifteen) years or have a long experience
in social activities.
b. Higher academic education in the field of Economics, Banking and Finance or Business
Administration will be treated as additional qualification for the concerned person.
N/A
c. Satisfaction should be ensured that the concerned person was not dismissed from his service
when he was Chairman/ Director/ Executive of any company.
d. The person who is working in any bank or financial institution or who has business interest in
that bank will not be eligible for appointment to the post of Advisor.
e. Satisfaction should be ensured that the concerned person is not a loan defaulter or tax
defaulter and has never been adjudicated a bankrupt by the Court.
2 Responsibilities of the Advisor: The roles and responsibilities of the Advisor should be defined
specifically. The Advisor can advise the Board of Directors or CEO only on those matters specified
in the appointment letter. The routine and general activities of the bank will not be included in his N/A
terms of reference. He will not be entitled to exercise any power or involved himself in the decision
making process of financial, administrative, operations or other activities of the bank.
3 Prior approval from Bangladesh Bank: Prior approval from BB is mandatory before appointing
an Advisor. For such appointment, the justifications of the post of advisor, responsibilities or
terms of reference, complete resume of the concerned person, terms of appointment (mentioning
N/A
remuneration and facilities) and copy of BoD's approval shall be submitted to BB. The nominated
person has to make a declaration as per Annexure A. This declaration shall also be submitted to
BB.
4 Remuneration and other facilities of Advisor: The post of Advisor is not a fixed or substantive
post in the bank's organization structure. Advisor will not be entitled to salaries and allowances
as regular employee except gross amount of remuneration, transport and telephone facilities. N/A
Remunerations inconsistent with the terms of reference of the advisor will not be considered as
acceptable to BB.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance
Sl. No. Particulars
Status
5 Tenure of Advisor: The tenure of the Advisor shall be maximum 01(one) year, which is renewable.
An evaluation report (by the Chairman that is approved by the BoD) of previous tenure should be N/A
submitted to BB along with the re-appointment proposal.
6 Appointment of Ex-executive: For ensuring good governance, any former Director, CEO or
any other Executive of the bank will not be eligible to become an Advisor in the same bank
N/A
immediately after their retirement or resignation. However, after one year from such retirement or
resignation, he/she will be eligible for appointment as Advisor.
B Rules and regulations for appointment of a Consultant
1 Terms of reference of Consultant: Consultant can be appointed for specialized tasks like
tax, law and legal procedures, engineering and technical works, information technology, etc.
Complied
Consultants’ appointment should be avoided as much as possible for those works that could be
done by regular employees of the bank.
2 Responsibilities of a Consultant: The responsibilities or terms of reference of a Consultant
should be specified. He/she should not be involved in any activities beyond his/her terms of
Complied
references and he/she cannot exercise any kind of power in bank operation or cannot participate
in the decision making process.
3 Appointment of a Consultant: A Consultant can be appointed with the approval of the BoD. After
such appointment the bank shall send the Consultant’s complete resume, terms of reference and Complied
details of remuneration to BB immediately.
4 Tenure of a Consultant: The tenure of a Consultant should be consistent with the terms of
reference, but would not exceed 02 (two) years. Generally the Consultant will not be eligible for
re-appointment. But to complete the unfinished tasks, his contract may be extended for maximum
Complied
period of 01 (one) year with the approval of BB. The Chairman of the bank upon approval of the
BoD shall have to submit the extension proposal to BB with the evaluation report of his previous
tenure.
5 Remuneration/honorarium of a Consultant: The Consultant’s remuneration should be in the
Complied
form of monthly or single lump-sum payment, and he is not entitled to any other facilities.
6 Appointment of Ex-executive: For ensuring good governance, any former Director, CEO or any
other Executive of the bank will not be eligible for appointment as a Consultant in the same bank
No such case
immediately after their retirement or resignation. However, after one year from such retirement or
resignation, he/ she will be eligible for appointment as a Consultant.

87
BSEC guidelines for Corporate Governance: Our Compliance Status
The Bangladesh Securities and Exchange Commission (BSEC) issued a Corporate Governance (CG) Guidelines in 2012 which
is being followed by banks on ‘Comply’ basis. Status of compliance by EBL with the said CG guidelines issued by BSEC
through Notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued under section 2CC of the
Securities and Exchange Ordinance, 1969 is as follows:
(Report under Condition No. 7.00)

Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
1.0 Board of Directors
1.1 Board’s Size: Board members shall not be less than 5 (Five)

and more than 20 (Twenty)
1.2 Independent Director
1.2 (i) Independent Director: At least 1/5th 
1.2 (ii) For the purpose of this clause “independent director” means a

director:
1.2 (ii) a) Independent Directors do not hold any share or hold less than

one percent (1%) shares of total paid up capital.
1.2 (ii) b) Independent Directors are not connected with the company’s
Sponsor Or Director Or Shareholder who holds 1% or more 
shares.
1.2 (ii) c) Independent Directors do not have any other relationship,
whether pecuniary or otherwise, with the company or its 
Subsidiary/Associated Companies.
1.2 (ii) d) Independent Directors are not the Members, Directors or

Officers of any Stock Exchange.
1.2 (ii) e) Independent Directors are not the Shareholders, Directors or
Officers of any member of Stock Exchange or an Intermediary 
of the Capital Market.
1.2 (ii) f) Independent Directors are/were not the partners or executives
during preceding 3 (three) years of concerned company’s 
Statutory Audit Firm.
1.2 (ii) g) They are not the Independent Directors in more than 3 (three)

listed Companies.
1.2 (ii) h) They are not convicted by a Court of competent jurisdiction
as a defaulter in payment of any loan to a Bank or a Non-Bank 
Financial Institution (NBFI).
1.2 (ii) i) They have not been convicted for a criminal offence involving

moral turpitude.
1.2 (iii) The Independent Directors shall be appointed by the Board of Done in the 21st

Directors and approved by the Shareholders in the AGM. AGM of EBL.
1.2 (iv) The post of Independent Directors cannot remain vacant for

more than 90 days.
1.2 (v) The Board shall lay down a Code of Conduct of all Board

Members and Annual Compliance of the Code to be recorded.
1.2 (vi) The tenure of office of an Independent Directors shall be for
a period of 3 (three) years which may be extended for 1 (one) 
Term only.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
1.3 Qualification of Independent Director (ID)
1.3 (i) Independent Director shall be knowledgeable individual with

integrity
1.3 (ii) The Independent Director must have at least 12 (twelve) years

of corporate management/ professional experiences
1.3 (iii) In special cases above qualification may be relaxed by the
N/A
Commission
1.4 Separate Chairman and CEO and their clearly defined roles

and responsibilities.
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 Please refer to

MD&A Section
1.5 (iii) Risks and concerns 
1.5 (iv) Discussion on cost of goods sold, gross profit margin and net Discussion on
profit margin interest income,
 expense,
operating and net
profit provided.
1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss 
1.5 (vi) Basis for related party transaction- a statement of all related Please refer to

party transactions should be disclosed in the annual report Annexure C & C1.
1.5 (vii) Utilization of proceeds from public issues, right issues and/ or
N/A
through any others instruments.
1.5 (viii) An explanation if the financial results deteriorate after the
N/A
company goes for IPO, RPO, Rights Offer, Direct Listing etc.
1.5 (ix) If significant variance occurs between Quarterly Financial Please refer to
performance and Annual Financial Statements the Directors Report

management shall explain about the variance on their Annual
Report.
1.5 (x) Remuneration to directors including independent directors. Please refer to

Note 38 of FS.
1.5 (xi) The financial statements prepared by the management of the
issuer 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 issuer 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)/Bangladesh Departure has
Accounting Standards (BAS)/International Financial Reporting been adequately
Standards (IFRS)/Bangladesh Financial Reporting Standards explained in Note

(BFRS), as applicable in Bangladesh, have been followed in 2.1 to the Financial
preparation of the financial statements and any departure Statements.
there-from has been adequately disclosed.

89
 Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
1.5 (xv) The system of internal control is sound in design and has been

effectively implemented and monitored.
1.5 (xvi) There are no significant doubts upon the issuer company's
ability to continue as a going concern. If the issuer company

is not considered to be a going concern, the fact along with
reasons thereof should be disclosed.
1.5 (xvii) Significant deviations from the last year’s operating results
of the issuer company shall be highlighted and the reasons 
thereof should be explained.
1.5 (xviii) Key operating and financial data of at least preceding 5 (five)

years shall be summarized.
1.5 (xix) If the issuer company has not declared dividend (cash or stock)
N/A
for the year, the reasons thereof shall be given.
1.5 (xx) The number of Board meetings held during the year and

attendance by each director shall be disclosed.
1.5 (xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with
name wise details where stated below) held by:
1.5 (xxi) a) Parent/Subsidiary/Associated Companies and other related

parties (name wise details);
1.5 (xxi) b) Directors, Chief Executive Officer, Company Secretary, Chief Please refer to
Financial Officer, Head of Internal Audit and their spouses and  Note 14.1 of the
minor children (name wise details); FS.
1.5 (xxi) c) Executives (top five salaried employees of the company other Please refer to
than stated in 1.5(xxi)b);  Note 14.1 of the
FS.
1.5 (xxi) d) Shareholders holding ten percent (10%) or more voting interest Please refer to
in the company (name wise details). NIL Note 14.1 of the
FS.
1.5 (xxii) In case of appointment/re-appointment of a Director the Company shall disclose the following
information to the Shareholders:
1.5 (xxii) a) a brief resume of the Director; 
1.5 (xxii) b) Nature of his/her expertise in specific functional areas. 
1.5 (xxii) c) Names of companies in which the person also holds the Please refer to
directorship and the membership of committees of the board.  Annexure C of the
FS
2.0 Chief Financial Officer, Head of Internal Audit & Company Secretary
2.1 Appointment of CFO, Head of Internal Audit and Company In case of EBL
Secretary and their clearly defined roles, responsibilities and  Head of Finance
duties.
2.2 Attendance of CFO and the Company Secretary at Board of

Directors meeting
3 Audit Committee:
3 (i) Audit Committee shall be the sub-committee of the Board of

Directors.
3 (ii) The Audit Committee shall assist the Board of Directors in Please refer to
ensuring that the financial statements reflect true and fair view the Report of the

of the state of affairs of the Company and in ensuring a good Audit Committee.
monitoring system within the business.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
3 (iii) The Audit Committee shall be responsible to the Board of Please refer to
Directors. The duties of the Audit Committee shall be clearly  the Report of the
set forth in writing. Audit Committee.
3.1 Constitution of the Audit Committee
3.1 (i) The Audit Committee shall be composed of at least 3 (three)

members.
3.1 (ii) Constitution of Audit Committee with Board Members including

one Independent Director.
3.1 (iii) All members of the Audit Committee should be “financially
literate” and at least 1 (one) member shall have accounting or 
related financial management experience.
3.1 (iv) Filling of Casual Vacancy in Committee 
3.1 (v) The Company Secretary shall act as the secretary of the

Committee.
3.1 (vi) The quorum of the Audit Committee meeting shall not

constitute without at least 1 (one) independent director.
3.2 Chairman of the Audit Committee
3.2 (i) Chairman of the Audit Committee shall be an Independent

Director.
3.2 (ii) Chairman of the audit committee shall remain present in the

Annual General Meeting (AGM).
3.3 Role of Audit Committee
3.3 (i) Oversee the financial reporting process. 
3.3 (ii) Monitor choice of accounting policies and principles. 
3.3 (iii) Monitor Internal Control Risk management process. 
3.3 (iv) Oversee hiring and performance of external auditors. 
3.3 (v) Review along with the management, the annual financial

statements before submission to the board for approval.
Please refer to
3.3 (vi) Review along with the management, the quarterly and half the Report of the
yearly Financial Statements before submission to the Board for  Audit Committee
approval.
3.3 (vii) Review the adequacy of internal audit function. 
3.3 (viii) Review statement of significant related party transactions

submitted by the management.
3.3 (ix) Review Management Letters/ Letter of Internal Control

weakness issued by statutory auditors.
3.3 (x) When money is raised through Initial Public Offering (IPO)/ N/A
Repeat Public Offering (RPO)/Rights Issue the company shall
disclose to the Audit Committee about the uses/ applications
of funds by major category (capital expenditure, sales and
marketing expenses, working capital, etc.), on a quarterly
basis, as a part of their quarterly declaration of financial results.
3.4. Reporting of the Audit Committee
3.4.1 Reporting to the Board of Directors
3.4.1 (i) The Audit Committee shall report on its activities to the Board

of Directors.

91
 Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
3.4.1 (ii) The Audit Committee shall immediately report to the Board of
Directors on the following findings, if any:
3.4.1 (ii) a) Report on conflicts of Interests. NIL
3.4.1 (ii) b) Suspected or presumed fraud or irregularity or material defect
NIL
in the internal control system;
3.4.1 (ii) c) Suspected infringement of laws, including securities related
NIL
laws, rules and regulations;
3.4.1 (ii) d) Any other matter which shall be disclosed to the Board of
NIL
Directors immediately.
3.4.2 Reporting of anything having material financial impact to the
NIL
Commission.
3.5 Reporting to the Shareholders and General Investors. NIL
4 External/Statutory Auditors:
4 (i) Appraisal or valuation services or fairness opinions. 
4 (ii) Financial information systems design and implementation. 
4 (iii) Book-keeping or other services related to the accounting

records or financial statements.
4 (iv) Broker-dealer services. 
4 (v) Actuarial services. 
4 (vi) Internal audit services. 
4 (vii) Any other service that the Audit Committee determines. 
4 (viii) No partner or employees of the external audit firms shall
possess any share of the company they audit at least during 
the tenure of their audit assignment of that Company.
4 (ix) Audit/ certification services on compliance of corporate

governance as required under clause (i) of condition No. 7
5 Subsidiary Company
5 (i) Provisions relating to the composition of the Board of
Directors of the holding company shall be made applicable

to the composition of the Board of Directors of the subsidiary
company.
5 (ii) At least 1 (one) independent director on the Board of Directors
of the holding company shall be a director on the Board of 
Directors of the subsidiary company.
5 (iii) The minutes of the Board meeting of the subsidiary company
shall be placed for review at the following Board meeting of the 
holding company.
5 (iv) The Minutes of the respective Board meeting of the holding
company shall state that they have reviewed the affairs of the 
Subsidiary Company also.
5 (v) The Audit Committee of the holding company shall also review
the Financial Statements, in particular the investments made 
by the Subsidiary Company.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate governance report

Compliance Status
(Put  in the
Condition appropriate column) Remarks
Title
No. (if any)
Not
Complied
complied
6 Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
6 (i) They have reviewed financial Statements for the year and that

to the best of their knowledge and belief:
6 (i) a) These statements do not contain any materially untrue
statement or omit any material fact or contain statements that 
might be misleading. Please refer to
the Statement on
6 (i) b) These statements together present a true and fair view of Integrity of FS by
the company’s affairs and are in compliance with existing  MD & CEO and
accounting standards and applicable laws. Head of Finance.
6 (ii) There are, to the best of knowledge and belief, no transactions
entered into by the company during the year which are

fraudulent, illegal or violation of the company’s code of
conduct.
7 Reporting and Compliance of Corporate Governance:
7 (i) The company shall obtain a Certificate from a Professional Please refer to the
Accountant/ Secretary (CA/CMA/CS) regarding compliance following page.
of conditions of Corporate Governance Guidelines of the 
Commission and shall send the same to the shareholders
along with the Annual Report on a yearly basis.
7 (ii) The directors of the company shall state, in accordance with
the Annexure attached, in the directors' report whether the 
company has complied with these conditions.

93
EASTERN BANK LIMITED ANNUAL REPORT 2013
sustainability report and SME
success stories
Sustainability Report
Sustainability: An Overview For the second time we are publishing this concise version of
sustainability report in the annual report covering our major
Sustainability for EBL means doing business responsibly
activities in the year 2013. This report is self-declared and
to contribute in economic and social wellbeing of the
is not authenticated by any external authority and covers all
community in which we operate. In order to meet expectation
operations and activities of the bank only.
of stakeholders we must make our business sustainable. In
sync with our corporate philosophy, we have placed special Approach to sustainability
emphasis on adaptability as a key element of sustainable
growth: adaptability to changing environment and time to Our approach to sustainability lies on:
tackle most pressing issues of the day in a more holistic  Integration of ethical, social and environmental criteria
way. Adaptability as a core component of sustainable into the business decision making process.
development recognizes that growth must be both inclusive  Adherence to compliance, transparency, and good
and environmentally sound to reduce poverty and build corporate governance.
shared prosperity for our society to continue to meet the
 Contribution to social and economic progress in the
needs of future generations.
communities where the bank is doing business.
It is necessary to have a solid business model capable
 Continuation of stable and lasting relationships with all
of generating recurring and stable revenue, delighted
related stakeholders including employees of the bank.
customers, optimum use of capital, rationalization of cost,
prudent risk management, and strength of Brand to become  Promotion of sustainable finance with strong focus on
sustainable corporate house. Being sustainable also means the renewable energy and clean technology sector.
taking responsible decisions in context of ethical, social
and environmental issues as well as long term welfare of the
community.

Sustainable activities

Environmental and Social risk

Customer and Service quality Products and services
management
Customer’s delight remains in the forefront EBL offers responsible and EBL takes into account and assesses
of EBL’s business model. The bank has over sustainable products and social and environmental aspects in
600 thousand customers, who recognize services to meet customers’ the credit risk analysis and decision-
the brand as prestige, comfort, and reliable need. These products and making processes for its financing
partner. Understanding their needs, services are not offered solely operations. Bank’s Environmental and
providing innovative solutions and building on financial consideration but Social (E&S) risk management process
long-term relationships based on trust and also on ethical, social and is developed on EBRD (European Bank
transparency created foundation of banks environmental counts. for Reconstructions and Development)
business model aiming generation of stable Examples include indirect guidelines. EBL also follows the minimum
and recurrent revenue. microcredit via micro financing regulatory requirement for assessment of
Continuous pursuance for suitable customer institutions and direct lending to Environmental Risk Rating.
service is the key differentiator in banking certain disadvantaged groups Application of IFC performance standard
business. In recent years, EBL has been including small farmers at in assessment of E&S risk of all large
surveying customer satisfaction at service subsidized price. projects will be initiated gradually.
delivery points by third parties to understand
the areas those need improvement.
The bank planned to invest in systems for
3600 customer relationship management
and automated system for managing
incidents, claims, and complaints.

95
 Sustainable technology and process Promoting Sustainable Finance Employee
EBL’s technological and operational systems Our main impact on people and EBL employees nationwide are the
make it one of the most efficient online the environment is through the people who make the bank’s sustainable
banks in the country. The bank is investing business activities we finance. business model possible and enable it to
in technology to ensure data security, faster We work closely with our clients offer the best service to its customers.
and reliable customer service, as well as and customers to manage Our people management model is
minimizing operational risk to customers. potential environmental and structured around attracting and retaining
The Bank focuses its efforts on improving its social risks associated with the best talent, knowledge management
internal processes to become more efficient. our financing decisions and to and professional commitment.
identify opportunities to finance
cleaner technologies. EBL pursue its people development
program so that the professionalism of all
staff goes beyond complying with laws,
codes of conduct and internal regulations;
they respect the social, ethical and
environmental commitment of the Bank.
Financial Inclusion Corporate Governance Corporate Social Responsibility
The lending we provide to people and Good governance contributes At EBL, we believe the most rewarding
businesses helps to support job creation and to the long-term success of a investment is investing in the society.
economic development in the country. We company, creating trust and We are driven by our purpose to sustain
are also committed to extending access to engagement between the and ensure growth by making profit for
finance for individuals and small businesses company and its stakeholders. people and not over them. We believe
that have traditionally been underserved by The right culture, behavior and in creating lasting value for our clientele,
financial institutions. SMEs are key business values have been established and shareholders, and employees and above
segment for EBL to accelerate growth and promoted at all levels of the bank. all for the community we operate in.
productivity. In 2013, we increased lending As a responsible corporate, we ensure
to SMEs by 23.7 percent to BDT 16.64 our CSR activities are anchored on the
billion. principle of ‘Building Social Capital’. We
We remain committed to microfinance as recognize that we have some definite
a means of poverty alleviation. We have responsibilities to our customers,
partnered with a good numbers of MFIs to employees, government, environment,
disburse small loans to primary agriculture, and to the communities at large. To
solar home systems, and other rural materialize the same, EBL recognizes and
economic activities. always upholds the rights of other group
of stakeholders, and treats them fairly.
A detail report on CSR has been
presented in page no.103 of this report.

Environmental and Social Obligations influence its customers to operate responsibly and minimize
impacts on climate change issues, hazardous waste disposal,
EBL itself use resources for its operations and emits carbon.
and depletion of non-renewable natural resources.
Responsible consumption of resources can reduce bank’s
carbon footprint. Given the size and nature of its operations, EBL also discharges the responsibility for protection of
environmental impacts human rights, gender equity, and consumer right protection.
EBL strongly believes of such activities are EBL strongly believes that the essence of the contract
between the society and the business is that companies shall
that the essence of much lower than the not pursue their immediate profit objectives at the expense of
activities of bank’s
the contract between customers. Sustainable the longer term interests of the community.
the society and the development of the Environmental and Social Initiatives
business is that community cannot
be ensured without EBL strives to meet and exceed the social and environmental
companies shall not factoring into the expectations beyond the minimum regulatory requirements.
pursue their immediate environment and the Integration of ethical, social and environmental criteria in
society as a whole. business decision making process was our core initiatives in
profit objectives at the While pursuing the 2013. Some notable initiatives are given below:
expense of the longer triple bottom line 1. Application of Environmental and Social (E&S) risk
term interests of the (people, planet and
profit) motto, EBL
management procedures in assessing all credit
applications over BDT 2.5 million for SMEs and BDT 10.0
community. has engaged itself to million for corporate and real estate.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 sustainability report and SME success stories

2. Adoption of IFC negative list in the credit policy. committees at Board and Management level engaged in
3. Preparation of Green Office Guide with the aim to reduce supervising and executing sustainability management. As a
our own carbon footprint. counterweight to the business activities, risk management is
supervised by the Risk Management Committee of the Board
4. Introduction of new SME product titled as “EBL and ensured through a high level management committee
Utpadon” to increase the scope of financial inclusion. and independent risk management unit. Besides the risk
5. Introduction of new product titled as “EBL Projukti” for committee, there is a Board Audit Committee to ensure
procurement of agricultural machinery/equipment by the compliance and internal control.
farmers. As we believe that being sustainable also means taking
6. Disbursement of loan to farmers for cultivation of maize, responsible decisions in context of ethical, social and
oilseeds, onion, ginger, and pulses at subsidized interest environmental considerations, there are other working groups
rate of 4.00% p.a. and guidelines functioning within the bank to uphold the
7. Indirect lending through partner Micro Finance culture of taking responsible decisions:
Institutions (MFIs) for purchasing solar home systems in Green Banking Cell
off grid areas.
This working group is headed by Deputy Managing Director
8. Direct lending to farmers and underprivileged people at and the team is made up with the people of risk, technology,
subsidized interest @ 13.00% p.a. brand and operations division. Its main functions include
9. Indirect lending through partner MFIs in primary reduction of carbon footprint of bank’s own operations and
agriculture and to the people who were previously compliance with E&S risk policies while lending to customers.
considered unbankable.
Environmental and Social Risk Management
10. Partnering initiatives of development financial institutions
for sustainable and effective improvement in ship The bank has appointed Environmental and Social Risk
breaking sector bringing all stakeholders together. Manager as custodian of environmental and social risk
This effort has achieved a milestone by delivering management policies and procedures. This individual is
Joint Statement of Commitment by Bangladesh Ship responsible for development, review, and administration of
Breaking Association (BSBA) and Association of E&S risk management system in the bank. E&S risk manager
Bankers Bangladesh (ABB) committing cooperation for also appointed E&S risk officer for assistance.
improvement in environmental and social practices to General code of conduct
minimize pollution and enhance workplace safety.
This code brings together the ethical principles and rules of
Sustainability Management conduct governing the actions of the entire Bank’s staff and
Board of Directors of the Bank sets the framework for is the central element of the bank’s compliance program.
incorporating sustainability principles into tangible business Some key issues relating to code of conduct and ethical
strategies, budget, credit policies, capital planning, risk guidelines have been presented in “Code of Conduct and
appetite, corporate social responsibility, etc. There are several Ethical Guidelines” section of this annual report.

Integrated Report: Delivering our promises

Value addition and distribution to economy Year 2013 Year 2012
Value added
Income from Banking Services 19,339.74 17,559.25
(-) Cost of services (11,296.24) (10,091.18)
Value added by Banking Services 8,043.50 7,468.07
Non-Banking Income 45.23 51.84
(-) Loan losses and provisions (952.51) (1,244.30)
Total 7,136.22 6,275.61
Distribution of added value
To Employees& Directors
Salaries and other benefits 1,963.51 1,750.68
Remuneration and fees 19.16 17.71
Total to Employees & Directors 1,982.67 1,768.39
To capital providers
Dividend to shareholders 1,222.36 1,222.36
Interest to debenture/bond holders - -

97
 Value addition and distribution to economy Year 2013 Year 2012
Total to providers of capital 1,222.36 1,222.36
To Government
Income tax 2,589.79 2,186.38
VAT 79.12 81.91
Other duties & taxes 1.83 1.30
Total to Government 2,670.74 2,269.59
To expansion and growth
Retained profit 1,345.50 1,052.74
Depreciation 230.70 199.22
Deferred tax (321.90) (241.86)
Total to Expansion and Growth 1,254.30 1,010.10
To community investments
Donations and Gifts 6.15 5.17
Total to community 6.15 5.17
Total Distributed 7,136.22 6,275.61
Note: All figures above are in Million Bangladesh Taka
Excellence in Customer Service Year 2013 Year 2012
Number of average customers 646,175 479,053
Number of complaints received through all channels 1,365 942
Complaints per 1000 customers 2.11 1.97
Usual turnaround time to resolve any complaint 3-7 days 3-7 days

Financial Inclusion Year 2013 Year 2012

Cumulative Agricultural and Rural Credit extended through MFIs (BDT in Million) 1,734 1,635
Cumulative Agricultural Credit extended through own network (BDT in Million) 62 45
Cumulative Agricultural and Rural Credit extended from ADB fund (BDT in Million) 1,378 667
Total Number of individual impacted 96,662 81,584
Total Number of MFI partnered 13 12
Tackling Financial Crime Year 2013 Year 2012
Number of staffs completed training on AML 1,071 1,563
Number of SuspiciousTransactions reported to Bangladesh Bank 6 4
Number of accounts closed for unsatisfactory KYC - 4
Promoting Sustainable finance Year 2013 Year 2012
Amount financed for installation of ETP to plants in operations - -
Amount financed in plants having ETP (loan disbursed to projects having ETP)* 16,457 22,264
Amount financed to solar panel / renewable energy plants - 1
Amount financed to Bio-fertilizer plants - -
Amount financed to brick kilns adopted cleaner technology - -
Amount financed to other green projects** 40 -
Total Sustainable Finance 16,497 22,265
Note: All figures above are in Million Bangladesh Taka
*Approximate amount
**Solar Home System Through MFI
Number of employee trained in sustainable finance 35 12

EASTERN BANK LIMITED ANNUAL REPORT 2013

 sustainability report and SME success stories

Employer of Choice Year 2013 Year 2012

Headcount (Regular staff) [As on 31 December 2013 and 2012] 1,498 1,343
Percentage* of female representation 20.5 % 20%
Percentage* of voluntary attrition 6.5 % 7%
Number of permanent staff received training 3,613 1,279
Total number of training days 8,009 4,051
Average training days per employee 5 3
Percentage*Growth in Headcounts 10% 4%
Number of fresh graduates recruited as Management Trainee Officer (MTO) 18 26
Number of fresh graduates recruited as Probationary Officer 27 30
Number of fresh graduates recruited in other positions 35 18
Years of service with EBL as percentage* of total permanent staff headcount
Less than 5 years 67% 67%
5 > 10 years 19% 17%
10 > 15 years 4% 5%
Over 15 years 10% 11%
Note: *Expressed as percentage of Total permanent staff headcounts
Protecting Environment Year 2013 Year 2012
Number of customers eligiblefor Environmental Due Diligence 89 84
Number of customers appraised for Environmental Risk Rating 89 84
Low 78 73
Moderate 9 11
High 2 0
Cost of water consumed by the bank (BDT in Million) 8.61 7.97
Cost of paper consumed by the bank (BDT in Million) 3.68 3.44
Cost of energy (electricity, fuel, and gas) consumed by the bank (BDT in Million) 81.54 75.56
Installed capacity of solar energy to run bank premises and ATMs (in Kilowatt) 2.59 2.59
Percentage of bank branches connected online 100% 100%
Number of staff received training on Environmental and Social Risk Management 6 60
Corporate Social Responsibility Year 2013 Year 2012
Major Expenditure for CSR (BDT in Million) 6.15 5.17

99
SME Success Stories

Saiful Islam sitting proud on his power tiller

EBL Projukti brings joy to Saiful ‘EBL Nobodoy’ changes everything for Saha
‘It was a dream for me to buy a power tiller and EBL turned ‘When I came to Savar I had Tk 1500 in my hand and now I
my dream into a reality,’ says Saiful Islam, a farmer of possess 1.15 Crore net worth which became possible due to
Dhamrai area. my trustworthiness in business deals’ says Nrependra Nath
Saiful Islam was wondering for a long time to find a financial Saha.
solution for his power tiller. But it remained a dream untill one Saha who was a pulse trader at Pabna in his earlier age,
day an executive of agri business team of EBL-SME informed struggled for decades to become a successful businessman
Saiful the ‘EBL Projukti’ facilities available for the direct of Savar area. After passing HSC exam in 1977 he
farmers to purchase agri machine/ equipment. He was briefed discontinued his study. He started jute cultivation with his
about the detail features of EBL Projukti facility highlighting father at Pabna. But a number of customers cheated with
the quarterly installment based repayment mechanism. them and they lost Tk. 72,000 in jute marketing business in
Being interested about the product features and repayment 1978. After losing the business capital, he left jute business
system, Mr. Saiful decided to apply for ‘EBL Projukti’ loan and started pulse trading business at Pabna.
for an amount of Tk 1,00,000 to buy a ‘Power Tiller’. His He had been earning good profits at this business and
loan application was processed swiftly by the respective delivering his responsibilities as an elder son of the family
relationship manager and after a few days, a loan distribution for more than 4 years. He spent a lot of money for arranging
program was held. marriage ceremony of his sister, facilitated educational
Saiful with other applicants received his loan cheque of Tk expenses of his younger brothers and maintained the regular
1,00,000 for ‘Power Tiller’ purchase on that occasion from family expenses as well.
the Governor of Bangladesh Bank. When he received the His wife gave him Tk 1,00,000 by encashing her DPS from a
loan cheque, the situation was so surprising for him that bank to buy an Oil Processing Mill at Savar, Dhaka. Mr. Saha,
he became speechless right that moment and later on he receiving capital from his wife, started business again and
expressed his gratitude to EBL saying, “It was a dream for gradually became renowned businessman for mustard oil
me to buy a ‘Power Tiller’ and EBL turned my dream into a processing and marketing business in Savar area.
reality”. At present, his total net worth of business is approximately

EASTERN BANK LIMITED ANNUAL REPORT 2013

 sustainability report and SME success stories

manpower business, he got a chance to fly to Saudi Arabia

to work as a cargo driver. He worked there for 13 years. In
2002, he permanently came back to Bangladesh. During this
long time job period, he earned a good amount of foreign
exchange and invested most of his earnings to acquire some
agricultural lands at his own village. He bought near about
5 acres of cultivable lands and after coming back home; he
decided to invest more money in crop cultivation.
As agricultural farming was his main source of income, he
took it seriously and started to cultivate on a number of
diversified crops like oil-seed crops, mustard, pulses, maize,
vegetables, bean, tomato, eggplant etc. He became popular
in his village and neighboring areas within a few days for his
innovative steps of crop cultivation which was at the same
time more profitable than rice production.
As he was expanding his cultivation day by day following
Nrependra Nath Saha standing confidently in his oil processing mill various modern agricultural practices, he felt more financial
requirement to fulfill those initiatives. So, he was wondering
BDT 1.15 Crore. He earned Tk 18.95 Lac profit last year. to get agricultural loan from any bank. In his area he knew a
He was enjoying a Cash Credit facility of BDT 15.00 Lac person who is enjoying agricultural credit of EBL. He came
and a Term Loan facility of BDT 3.50 Lac from other private to know about the specialized agricultural credit program of
commercial banks of Savar. EBL, which costs only 4% interest for cultivation of some
Getting informed by an existing EBL SME client about specialized crops. He became interested, but at the same
the special product features of EBL Nobodoy, he became time was confused whether the offer was authentic or not.
interested and finally decided to receive loan from EBL. One day he came to EBL Savar Branch to inquire about the
He initiated his banking relationship with EBL last year by
availing a small ticket loan facility of EBL Nobodoy against
his enterprise ‘M/S JOY OIL MILL’ with a loan amount of
Tk 10.00 Lac only at the lowest interest rate available in the
market which is 10% P.A.
He was very much satisfied with the services provided by
SME Team of Savar Branch as they disbursed the loan within
a shorter processing period when he was fallen in a major
financial crisis. Being satisfied with EBL’s product features
and services, he is expecting to continue a long term, strong
and participatory banking relationship with EBL and willing
to receive more financial support from EBL rather than other
financial institutes. He expressed his deepest satisfaction for
EBL commenting, “I prefer to Bank with EBL for a number of
reasons” and showed his interest to receive an enhancement
facility on his existing loan limit to accommodate required
financial needs considering his recent business growth.

EBL Krishi Rin brings smile to Kuddus For Kuddus life has never been so beautiful
‘When I heard about the 4% interest rate facility for Krishi Rin
of EBL, I had doubt on it. But when I received that facility, it specialized agricultural credit program. The relationship team
really changed my views on EBL,’ says Abdul Kuddus– an of Agri Business Unit confirmed him about the offer regarding
Oil-Seed cultivator of Dhamrai area the facility to finance import substitute crops @ 4% interest
Mr. Abdul Kuddus, an oil-seed cultivator started working at a for cultivating pulses, oil-seeds, spices and maize only. As
‘Rice Mill’ at the age of 17 in Dhamrai, Dhaka. He had been Mr. Kuddus was cultivating oil-Seed crops, i.e. mustard, he
working there for 8 years. In the mean time, being curious applied for a loan in subsidized interest and after a few days
about motor driving techniques, he learned driving from one he was sanctioned with an amount of Tk 1,50,000 @ 4%
of his acquaintance and started his driving career initially interest only. After receiving such credit Mr. Kuddus shared
running a Trac, owned by the same owner of Rice Mill. his thought saying, ‘When I heard about the 4% interest rate
facility for Krishi Rin of EBL, I had doubt on it. But when I
In 1988, with the help of his cousin, who was involved in received that facility, it really changed my views on EBL.’

101
corporate social
responsibility
Social Commitment of EBL as well as gratuity and superannuation benefits to eligible
employees. Various annual conferences and recreational
The most sustainable investment is investing in the society.
events are arranged for EBL employees which add vitality
We at EBL are driven by the purpose of sustaining and
and motivation towards work and organization. Employees
ensuring growth by making profit for people and not over
are provided with orientation, local and foreign training and
them. We believe in creating lasting value for our clientele,
development programs. The Bank allocates a considerable
shareholders, and employees and above all for the
budget each year for various technical and leadership training
community we operate in.
and development programs to help improve the capabilities
As a responsible corporate, we ensure our CSR activities are of its people.
anchored on the principle of ‘Building Social Capital’. We
recognize that we have some definite responsibilities to our Contribution to National Exchequer
customers, employees, environment, and the society at large. Being a responsible and tax abiding corporate citizen, EBL
regularly pays corporate tax on time, sometime even before
Our understanding of responsibility
it falls due as required and asked by the tax authority. We
We committed to create sustainable value for our clients also deposit excise duty, withheld tax and VAT to govt.
and employees, our shareholders and for society. Our goal exchequer on time deducted from employees’ salary as well
is to create a culture of high-performance and dedicate our as payments to customers and vendors. Following graph
services and propositions and touch lives with care and shows our contribution:
empathy.

We are customer-centric
For us customers are the cause of existence, never just
a queue in the bank counter. Recognizing ‘customer
satisfaction’ as a journey not destination, EBL is determined
to serve its customers’ needs by offering innovative but
useful financial products and services, while maintaining
good relationships with them as their trusted partner. To
do so, the Bank has developed working systems, applied
modern technology, and made available knowledgeable and
skilled people so as to ensure that customers receive the best
possible service. To uphold the spirit of ‘inclusive banking’,
the Bank continually expanding its reach through branches,
ATMs, EBL-365 (Kiosk) and business centers nationwide.
EBL protects confidentiality of customer’s information, and
attaches highest importance in complaint management.
We are environment-responsive
Employees are our core brand
We believe that every small ‘GREEN’ step taken today
Recognizing human resources as the most valuable asset, would go a long way in building a greener future. As an
EBL has established a competitive and enabling working environment-responsive bank we initiated Go Green
environment to help employees perform their best. To campaign in our Bank. After
attract and retain good reducing the use of electricity
Our passion to people, EBL follows a and paper at the office, EBL EBL is the first
balanced compensation
perform has been scheme comprising
is now gearing up for carbon bank to receive
trading to show its commitment
appreciated by the financial and qualitative to environment-friendly funding. refinance from
benefits. Besides
World HR Congress providing competitive
EBL is the first bank to receive the central
refinance from the central bank
when they conferred package, the Bank for carbon credits. We have bank for carbon
provides various reduced electricity consumption
us Asia’s best welfare schemes such by 30 percent and paper use by
credits.
Employer Brand as healthcare and 20 percent in 2013. Some of our
contributory provident branches and ATM’s of the bank
Award 2012. funds, house building are now run on solar power.
and car loan schemes

103
 The Bank also ensures Association (DUAA) has been awarding scholarships to all
We launched a that the customer the departments of University of Dhaka since 2009. In 2012,
product named having production we awarded scholarships to 300 deserving students from all
facilities susceptible to 72 departments of University of Dhaka under “EBL-DUAA
‘Nobodoy’, damage environment Inspiration” financial grant program. There were 37 differently
designed to finance has due environmental able students among this group. EBL salutes their spirit
clearance certificate and is privileged to honor these young achievers. EBL also
and promote from the concerned donated BDT 1.5 million and more than 30 computers to
ministry while granting various schools and educational institutions.
environment-friendly or renewing credit Bangladesh has almost 800,000 blind people. Blind people
economic activities. facilities. EBL is the first are considered as a burden to their family but EBL would like
bank in Bangladesh to consider blind people as an asset and extended support to
to offer Sustainable Blind Education and Rehabilitation Development Organization
Energy Finance loan product with assistance from the South (BERDO) which has been working since July 1991 to foster
Asia Enterprise Development Facility (SEDF), managed by the development of the visual, physical, intellectual, and
IFC in partnership with the UK Department for International speech and hearing impairment community in Bangladesh.
Development and the Norwegian Agency for Development EBL has donated five computers and a cheque for TK
Cooperation to help companies implement energy-saving 100,000 for the education of visually impaired students of
measures and boosting the competitiveness of private BERDO.
enterprises.

We are committed to our community

Our responsibilities to the community are manifested by our
activities in areas such as education, health, art and culture.

Education
As the global economy becomes more and more knowledge
intensive, human capital will be the future point of
differentiation between nations. We believe in human capital
development and competencies and are committed to
improving educational opportunities for our future generation.
We promote talented young people and give them a fair
chance because we are convinced that education is the most
important resource for ensuring the future of societies.
Our goal is to give children and young people from EBL has donated five computers and a cheque for TK 100,000
underprivileged families the opportunity to successfully for the education of the blind students of Blind Education and
complete high school or vocational training through targeted Rehabilitation Development Organization (BERDO) as part of its CSR
programs. At the same time, we would like to help them build activities. Ali Reza Iftekhar, Managing Director and CEO of Eastern
Bank Ltd. formally handed over the computers to Md. Saidul Huq,
their own social networks. Our commitment to education is
Executive Director, BERDO at a simple ceremony at EBL Head office,
to help young people discover their own creative potential, Dhaka.
develop skills and build confidence. And in the area of
academic development, we contribute to the lively dialogue BERDO has been working for the development and
between research and practice. protection of the disabled community in Bangladesh.
Recognizing ‘education’ as the most pivotal area of human Founded in July 1991 and run by individuals living with
capital development, EBL along with Dhaka University Alumni blindness themselves.

Health
Proyash, an institution run by Bangladesh Army, is dedicated
to the wellbeing of persons and children with special needs
through education and training. The institute is also working
to generate awareness about disability in Bangladesh;
develop quality teachers, therapists and caregivers;
and empower persons with disability to ensure equal
opportunities and promote disability friendly right based
society. EBL has been working with Proyash for a long time
and has donated some computers.
EBL believes that mental health is the key to rapid
Prof. AK Azad Chowdhury, Chairman of University Grants
Commission, hands a scholarship cheque and certificate to a student socioeconomic development of the country; the Bank has
of University of Dhaka (DU) at Nabab Nawab Ali Chowdhury Senate donated large volumes of equipment to various hospitals
Bhaban in the university.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 corporate social responsibility

across the country to underline its commitment to quality

healthcare delivery in Bangladesh.

Art and Culture

At EBL, we believe art and culture are the essence of a nation
and its identity. As responsible corporate citizens, we believe
it is our foremost duty to support our sports and uphold our
art and culture. We are passionate about our patronage of
music, sports and art and culture.
For years, EBL has promoted promising young artists and,
at the same time, has given a broad audience access to
experience art and music. In this way, we encourage people
to try something new and broaden their horizons. EBL is not
just a patron of music. For long it has been the patron of arts
in this country, promoting fine arts, literature and culture. EBL
has been sponsoring art camps and exhibitions on a regular
basis. EBL has a rich treasure of art works by leading artists Prime Minister Sheikh Hasina hands over a cheque for Tk. 4.8 lac to
of Bangladesh in its permanent collection. a family member of one of the officers killed in BDR carnage. A.Q.I.
Chowdhury, OBE, Director of EBL was present during the handing
Other Supports over of the cheque.

EBL considers the society as an extended family. We are

always at their side when they are in distress and need our EBL has donated BDT 20 million from EBL Foundation for the
help most. Every year, we distribute blankets to the cold hit victims of Savar building collapse tragedy through the Prime
people of the country. This year as well, we have distributed Minister’s Relief & Welfare Fund.
over 2,005 blankets to Dhaka Metropolitan Police (DMP) for A.Q.I. Chowdhury, OBE, Director Eastern Bank Ltd, handed
distribution among the poor cold-hit people in the country. over the cheque to Prime Minister Sheikh Hasina.

Managing Director and CEO of EBL Ali Reza Iftekhar formally

handing over blankets to Dhaka Metropolitan Police Commissioner A.Q.I. Chowdhury, OBE, Director of EBL hands over a cheqe for Tk.
Benazir Ahmed for distribution among cold hit people of the remote Two crore to Prime Minister Sheikh Hasina for the victims of Savar
regions of the country. tragedy. Ali Reza Iftekhar, Managing Director and CEO of EBL was
also present during the handing-over of the cheque.
EBL is committed to give every year for ten years BDT 4.8 lac
to Prime Minister’s Relief & Welfare Fund to one family of the ‘We want to support the victims and their immediate families.
officers killed in BDR carnage. It’s our commitment to our society; and this is one of the
several initiatives that the Bank has taken to support our
communities,’ says Ali Reza Iftekhar, Managing Director &
CEO of EBL, about our CSR Principle.

105
financial review

Business Environment in 2013 Income Statement for 2013

The overall business environment in 2013 has been impacted Higher operating efficiency, lower provisioning resulted
mainly by non-economic factors; a perceived sense of improved bottom line
‘uncertainty’ centering on smooth transition of state power
heavily dictated the direction and magnitude of business and Operating income (+9%)
economic conditions of the country. Depressed investors’
The bank’s total operating income comprise of two major
sentiment, man-made obstacles to business and economic
items: net interest income (NII) and non-interest income (NoII).
activities, lack of corporate governance and deteriorating
In 2013, NII accounted for 52% while NoII accounted for
asset qualities in certain local banks and concerted vandalism
48% of total operating income. In 2013, EBL has generated
in RMG factories hampered overall business activities.
about 52% of total operating income from NII, 22% from
Although some of our key macro-economic variables like
investment income, 25% from fees, commission & FX income
export, remittance, FX reserve and inflation showed positive
and 1% from other operating income. Investment income
signs compared to last year, the overall GDP growth is set to
increased by 39% in 2013 to BDT 2,071 million (Investment
embrace a decline in the FY 2014.
income share in total operating income increased from
While the banking sector was struggling to recover from 17% in 2012 to 22% in 2013) while our net interest income
the setbacks originating from a number of large financial increased by only 2% in 2013 to BDT 4,892 million (NII share
scams concerning some state owned and private commercial in total operating income decreased from 55% in 2012 to
banks, unearthed in the recent past, political deadlock 52% in 2013). Our operating income mix for 2013 & 2012 is
made the situation worse for the banking industry in compared below:
general. It has become imperative for this sector to restore
public confidence through improved risk management and
control cultures. As remedial measures, Bangladesh Bank
took number of steps such as newly introduced the Bank
Company Act 1991 (amended up to 2013), formation of risk
management committee of the Board, conducting credit
and risk management training, spelling out the terms and
references and responsibilities of the board of directors,
and a number of reform measures at the administrative
level. Under above circumstances, although many of the
related targets are off-track with indiscipline featuring in
several banks, EBL continued to deliver consistent financial
performance.

Review of Eastern Bank Financials in

2013
Despite a tumultuous year, we performed satisfactorily
in 2013 in terms of business, service quality and product
proposition. Besides ensuring consistent financial
performance, we redirected our focus towards product
innovation, EBL arranged Commercial Paper for ACI Limited
to raise BDT 500 million at a rate lower by at least 2% than
bank lending rate, launching new service propositions (EBL
SkyMiles), building strategic relations (tied up with agoda.
com to make hotel bookings online), portfolio diversification
(focusing more on SME), raising awareness on green banking
- all of which helped us during bad times. Precisely we
believe in the idea of sustainable banking. Our track record
in delivering consistent performance is the testament to the
resilience of the Bank’s business model, and underscores
the sheer diversity of our income sources. These results are
not a bounce-back, nor flattered by big one-off items. Such
consistency is all the more important –given the scale and
unpredictability of the external events.

107
Net Interest Income (+2%) strong preference for short-term instruments because of the
higher fraction of time banks get assured liquidity support
Money Market in 2013 from central bank against these short-term instruments. As
Overall liquidity position and interest rate structure was banks and other investors are unwilling to invest in long term
relatively flat in the year of 2013. Call money rate was ranging bonds for liquidity preference, yields on 10-year, 15- year and
between 6.50% and 12.00% throughout the year. In the 20-year bonds remained almost stable.
first quarter of 2013, interest rate was a bit high and ranged
between 8.00% and 12.00%. Later on interest rate started
to slide downwards and closed the year at a range between
6.50% and 7.00%. Throughout the year of 2013, Central
Bank kept the Repo rate unchanged to 7.75%. Special Repo
(only for Primary Dealers) rate was 10.75%. Average call
money rate experienced the following trend in 2013:

EBL Performance
Our investment income is usually generated from fixed
income securities, secondary market portfolio, preference
share & bond and also dividend income from subsidiaries.
Overall investment income increased significantly (39% or
BDT 576 M) with substantial pie from fixed income securities.
Increased money market average daily turnover on various
EBL Performance
instruments (up from BDT 22,684 million in 2012 to BDT
Round the year 2013, EBL experienced a mismatch between 23,007 million in 2013) together with improved spread
loan and deposit growth which affected our net interest enabled the bank to book higher revenue from holding of
income. Our net interest income increased marginally (2% or fixed income securities. Although EBL is not a Primary Dealer
BDT 77 M) mainly for following reasons: (PD), we were very active in the secondary Govt. Securities
 Slower loan growth (by 6% or BDT 6,190 million from trading in both buy side and sell side and this trading activity
December, 2012) due to sluggish business environment generated a substantial amount of revenue for the bank.
and political instability but higher deposit growth (28% or
BDT 25,321 million from December, 2012). Fees, Commission & FX income (+2%)
 Since money market was liquid and spread dips, Trade Business in 2013
bank shifted investible resources from money market Bangladesh’s export sector recorded a robust growth in the
placement to short term HFT securities which resulted first six months of FY 2014 in the backdrop of a number of
higher investment income but not placement income (a important developments. Export sectors had to face the
component of NII) while borrowing expense is booked consequences of disruption due to political turmoil, address
under the head of interest expense. the fallouts from the Rana plaza tragedy, face the labor unrest
 Interest suspense (net) increased in 2013 due to rise of in the RMG sector, and confront the threat to GSP. On the
NPL. other hand, a stable exchange rate, adjustment capacity
of export-oriented sector, particularly the RMG, and the
Investment income (+39%) recovery, albeit slow, in the developed economies, made
a positive impact on the performance of the sector. Export
Fixed Income Market 2013
earnings stood at about USD 12.6 billion, registering an
Yield curve on Govt. T-bills and T-bonds got steeper in 2013, impressive growth of 16.56 per cent, during July-December
with short term rates fallen drastically. Yield of 91 days, 182 in FY 2014 over the corresponding period of FY 2013.
days and 364 days T-bill were 7.12%, 8.14% and 8.78% Import related activities did not pick up during Jul-Nov FY 14
respectively at the end of 2013 which was 9.50%, 10.85% (increased by only 4.4%). Growth was mainly driven by higher
and 11.18% respectively at the end of 2012. As the money payments against imports of food grains, chemicals and
market rate was hovering around 6.00-7.50% throughout RMG related intermediate goods. Lower level of international
the year with absence of volatility and market was burdened prices also helped to keep the payments in check.
with excess liquidity, banks took positions to earn profits Remittances experienced (-) 8.4% growth during H1 of FY
by investing in short term securities. Moreover, banks have 14 mainly due to lower growth of manpower export (-13.8%

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

in H1 of FY 14). During Jul-Nov FY 14, Balance of Payments responsible for such an over supply. Due to this increased
(BoP) observed a favorable situation achieving a surplus of liquidity in USD, market players were, on an average, in
USD 2.0 billion because of robust export performance and a selling spree that eventually resulted in a continuous
lower import payments. Foreign exchange reserve crossed depreciation of USD. But, it was expected that the
the USD 18.0 billion mark. depreciation would go on for an additional round, hurting the
country’s export performance. However, Bangladesh Bank
EBL Performance periodic monitoring system resulted in periodic interventions
Fees and commission together with FX income experienced in the foreign exchange market to buy excess USD from
a minimal growth (2% or BDT 57 million) in 2013 mainly the market. For this, the floor rate of USDBDT 77.75 existed
because of the negative growth of FX income. However, our for most of the period of 2013. In 2013, Bangladesh Bank
fees, commission and charges income witnessed expected bought more than 3.0 billion of USD from the market, which
growth (17% or BDT 256 M) with trade related income eventually boost up foreign exchange reserve of the country.
taking the center stage. Our export, import business as at 31 Foreign Exchange reserve was USD 18.07 billion on 30-Dec-
December 2013 & 2012 is compared below: 2013 against USD 12.75 billion on 30-Dec-2012.

EBL Performance
Round the year 2013, EBL had always kept its open position
within its set limit of 29.37 million USD. In 2013, EBL foreign
exchange business turnover increased to USD 14.96 billion
compared to 12.5 billion in 2012. Inspite our increased
turnover, reduction of spread due to stable FX market and a
severe competition prevailing among the peers led to a 26%
negative growth of FX income to BDT 558 million.

Other operating income (+26%)

Other operating income experienced a positive growth (26%
or BDT 31 million) largely caused by 30% increase of rebate
earnings to BDT 55 million and swift & telex charges by 48%
to BDT 50 million.

Operating expenses (+13%)

Total operating expenses of the Bank have increased by
Foreign Exchange Business in 2013 13% or BDT 418 million compared to that of 2012 mainly for
following reasons:
2013 experienced a massive fallback of US Dollar (USD)
against Taka (BDT). The highest rate that the market traded  Total salary and allowances have increased by 12% or
in the last year was USDBDT 79.7503 with the lowest being BDT 214 million in 2013 over that of 2012 caused mainly
USDBDT 77.75. The rate started falling sharply from the by increase of head count and regular increment. In
beginning of the year until it stabilized at USDBDT 77.75 2013, 1,439 new members including 45 future leaders
after around five months. Such a steep decline of USD joined EBL family while this number was only 986 in
against BDT was caused by different factors of which the 2012. Total 308 people joined in permanent position in
country’s trade flows was the most significant one. Given a 2013.
sizeable growth of exports against that of imports, the market  Overall bank rent and tax, utility bills, insurance
experienced a gradual increase in the supply of USD against premium, printing and stationary, repair, maintenance,
BDT. A continuous increase in inward remittance was also office security, advertisement and business promotion
expenses increased considerably during 2013 mainly
because of channel expansion initiatives (addition of 4
branches, 15 ATM, 3 Priority centers), renewal of many
of its rent agreements at significantly higher rates (on an
average 10 to 12% increment loaded) and hiring new
office location (JBC 5Th floor, Dhanmondi and Uttara
Sales Office etc.).

Cost to Income Ratio (%)

Overall Cost to income ratio of EBL increased from 37%
to 39% during 2013 mainly because of higher growth of
operating expenses (13%) than that of operating revenue
(9%). As expected, the channel expansion initiatives trigger
instant increase of operating expenses but take a reasonable
time to generate revenue causing the mentioned rise of cost
to income ratio.

109
 Profit After Tax (+13%)
Marginal growth of NII (2% or BDT 77 million) and fees,
commission & FX income (2% or BDT 57 million) consumed a
substantial portion of investment income growth (39% or BDT
576 million) which eventually led to a moderate growth of
operating profit by 6% or BDT 324 million. However, negative
BDT Million

growth of total provision (-23% or BDT 292 million) against

share and classified loans also led to a positive growth of PAT
by 13% or BDT 293 million in 2013.
As per Bank Company Act 1991 (Amended upto 2013), 20%
of profit before tax is required to be transferred to statutory
reserve until the balance of the same reaches to the level of
paid up capital. As such an amount of BDT 967 million has
been transferred to statutory reserve during the year.

Balance sheet as at 31 December, 2013

Funds sourced through an impressive growth of deposit
were partly parked in government securities and used partly
in paying off borrowing in the backdrop of lower appetite for
private sector credit resulting a marginal growth of NII but
Total Provision (-23%) higher growth of investment income in 2013.

Provision for loans and advance (+5%) In 2013, the banking industry as a whole experienced a
huge imbalance between loan and deposit growth which
Specific provision charged during the year 2013 against consequently affected profitability, asset composition and
classified loans has decreased by 3% or BDT 22 million against also revenue mix. Though the banks’ deposits increased,
that of previous year. General provision against unclassified they were unable to lend those in desirable sectors which left
loans & off-balance sheet exposures charged during the year them with excess liquidity of around BDT 901,700 million on
increased by BDT 60 million in 2013 mainly due to shifting of December 31, 2013. Low private sector demand for credit
classified loan to unclassified one. Nonetheless, the general due to political uncertainties and also the ceiling imposed
provision is allowed (by BB) to be treated as Tier-II capital of on banks’ investment in the share market by Bangladesh
the bank and provides safeguard against future default as well Bank contributed to high liquidity in the banking system.
as supports business growth by strengthening the capital base. Consequently, both the deposit and lending rates were
slashed. On average, the deposit and lending rates in last
Provision for loss on revaluation of shares (-72%) December stood at 8.39% and 13.45% respectively in contrast
to 8.47% and 13.8% a year ago. As the deposits could not be
As per BRPD Circular, investments in quoted shares and
invested, most of the banks have lowered the interest rate of
unquoted shares were revalued at the year-end comparing
deposit. To recover the losses from the idle deposit, the banks
market price and carrying value of last audited balance
had invested in the treasury bills and in the call money market,
sheet respectively. Provision is made on ‘portfolio basis’
but the interest rate there was also low as well.
for any loss arising from diminution in value of investments.
Provision charged during the year 2013 against revaluation of Total assets of EBL stood at BDT 157,881 million at YE 2013
shares decreased by 72% or BDT 343 million against that of against BDT 147,148 million at YE 2012 registering a growth
previous year. of 7%. Loans & advance grew by 6% whereas deposits grew
by 28% in 2013. The increase in asset was mainly funded
Profit before Tax (+15%) by growth of deposits and very minimum level of borrowing.
Deposit growth was used for funding credit growth and
After making above provisions, profit before tax of EBL stood holding of securities for SLR purpose.
at BDT 4,836 million during 2013 registering a growth of
15%. Higher growth of fees and commission (17 %+) and Loans and Advances (+6%)
investment income (39%+), negative growth of provision to
Political unrest and squeeze in credit demand across the
some extent offset the growth of operating expenses leading
industry led to a rise in excess liquidity for PCBs. Hence, in
to increase of the profit before tax by 15% during 2013.
2013 the resultant loan and advances growth was moderate
and registered a growth of 6% and stood at BDT 102,910
Provision for Income Tax (+17%)
million at YE 2013. With a pie of around 73% in corporate
Provision against last year’s income tax of EBL was BDT lending, EBL’s credit exposure is well diversified and spread
2,268 million compared to BDT 1,945 million of preceding over more than 14 sectors such as textile & RMG, agriculture,
year which was 17% higher over 2013. Although our income pharmaceuticals, telecom, ship-breaking, transportation,
tax rate is 42.5%, our effective tax rate for the year 2013 electronic goods and service industries, etc. Retail and SME
increased to 53.24% from 51.81% of 2012 due to reduction of together constitute more than 27% of the loan portfolio.
our tax exempted income from dividend and capital gain and During the year 2013, our working capital loan like OD,
also for recognition of previously un recognized tax losses.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

grew at much higher rate than loan during the year. During
the year 2013, fixed deposit pie decreased from 55% to 49%
and short notice deposit pie increased from 18% to 27%.

Investment (+20%)
In 2013, we had a considerable exposure in Government
securities and capital market in the form of proprietary equity
investment, exposure against shares, loans to share/stock
brokers, merchant banks and investment in treasury bills &
bonds. In 2013, the bank’s total investment stood at BDT
25,904 million, which was 16% of total assets.
Investment comprised of Government securities of BDT
21,660 million (84% of total investments) and others
(investment in debenture, corporate bond, ordinary share and
preference share etc.) comprised of BDT 4,244 million. There
was 22% growth of investment in Government securities
since bank had to invest more fund in Government securities
Demand loan and other short term loan increased considering to cover the increased statutory liquidity ratio (SLR) for
the nature of sources of funds. deposit growth.

Deposits (+28%) EBL Own Portfolio in Secondary Market:

Overall deposits of the bank increased by 28% and stood EBL never believes in speculation rather invests strategically
at BDT 117,102 million at year end 2013. The growth was with long term perspective. In 2010 - 2012, EBL generated
facilitated by expanding branch network and high standard significantly higher return than the market through investing
service provided to customers along with liability revamping in fundamentally strong shares. However, 2013 was an
initiatives carried out for mobilization of deposits. Deposit equally grim year for both institutional & individual investors.
Therefore, the secondary market return of EBL portfolio
declined in 2013 as did the returns to all other investors.
However, the portfolio combination remains fundamentally
strong as ever with focus on shares of bank, NBFI and power
sectors. When the market returns to its normal streak, the
well-balanced EBL portfolio is expected to perform well. EBL
investment in ordinary share (Quoted and Unquoted) was
BDT 3,549 million in 2012 which was brought down to BDT
3,489 million in 2013 i.e. 2% negative growth over that of
2012.
However, for recognition of loss suffered from investment
in capital market, adequate provision had been made on
unrealized loss (gain net off) as per Bangladesh Bank circular.

111
 and under different forms from Bangladesh Bank mainly due
to slower credit growth than deposit growth and relatively
flat interest rate structure in the money market in the year
of 2013. In 2013, the bank’s total borrowing stood at BDT
14,080 million, which is 10% of total liabilities.
EBL Asset Liability Management in 2013
2013 started with a trajectory of fall in interest rate. EBL
was first among the local banks to take exposure on falling
interest rate by cutting rate by 0.50% to 1.50% on different
buckets. As desired by ALM desk, BDT 5,890 million high-
cost fund with a weighted average cost of 12.10% was
drained out from the bank during January 2013 and was
funded from money market with a weighted average rate of
10.29%.
Throughout the year of 2013, EBL was able to reduce the
cost of deposit by 96 bps while return on loan was reduced
by 46 bps, giving us 50 bps spread on the whole balance
sheet. On this falling interest rate regime, major challenge for
bank was to maintain the positive duration gap as wide as
possible. ALM desk through its active recommendations was
Borrowing (-55%) able to increase the duration gap to 0.72 at YE 2013, from
In 2013, overall borrowing of bank decreased significantly 0.58 at YE 2012.
by 55% in the form of demand borrowing, term borrowing High concentration of Term deposit on 3 months bucket was
a major challenge for us.
However, because of active product pricing and offering
of new deposit products, we were able to decrease the
concentration of 3 months deposit to 34% on 31 December,
2013 from 40% at beginning of the year.
On the asset side, bank maintained sufficient liquid asset
as it bought large amount of bills/bond to take exposure
on interest rate and to utilize excess fund. As overall credit
growth was slow and there was no imminent upward pressure
on interest rate, we deliberately increased our re-pricing gap
on 1-3 months and 3-6 months bucket.
Overall, 2013 was a good year on balance sheet
management, as all the interest rate and macro bet from ALM
desk was accurate and bank was able to keep the balance
sheet composition close to desired level.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

business review
At EBL, we believe in relationship banking. Relationship preferences and catering to them.
grows over time and deepens with sensing and responding
EBL follows centralized business line based matrix as
to the changing customers’ needs. We have always put
opposed to branch based business matrix used by most
our customers at first and their financial needs at top of
of the local banks. The Business Matrix of EBL consists
our business agenda. We would like to see our customers
delighted and not just satisfied. We are constantly looking of Corporate, Treasury, Consumer and SME Banking as
for better ways to provide, combine and deliver products core business units. Treasury being the manager of funds
that meet our customers’ expectation. We try to listen maintains CRR/SLR as per regulatory requirement, makes
closely to our customers, even when they complain. Our optimum use of excess funds and sources funds from money
motto is: Staying close to the customers, learning their and capital markets and deals with foreign exchange etc.

Corporate Banking along with Treasury, contributes the lion share to the bottom line of the Bank. Corporate Banking occupies
the largest pie of the loan book (around 73%) whereas Consumer Banking contributes the most in mobilizing funds (around
53%) as on year end 2013. The high priority Small & Medium Enterprise (SME) division continued to experience growth in both
loan and deposit.

113
corporate banking

Despite many challenges in 2013, EBL Corporate Banking achieved balanced

growth by leveraging strong customer relationship and by providing innovative
solutions to meet their growing financing need.
Corporate Banking of Eastern Bank Limited is said to be the leader in wholesale
banking in Bangladesh. Driven by relationship management teams, the division
offers full-fledged, innovative, customized solutions and services to its clients. This
particular division acts as a single point solution provider for all banking services
to the corporate clients including project financing, working capital, trade, supply
chain, cash management solutions, payroll, syndication, merger, acquisition and
advisory services.
Corporate Banking Division is comprised of 11 corporate relationship units, 08 in
Dhaka and 03 in Chittagong located in Motijheel, Gulshan and Agrabad.
To facilitate and support business units, we have 01 Project Finance Unit, 02
product specific solution based units namely Structured Finance Unit and
Transaction Banking. Hassan O. Rashid
Transaction Banking is supported by 03 particular units namely Cash Management Deputy Managing Director
Unit, Trade Sales Unit and Financial Institutions Unit. Corporate & Treasury

“In spite of prolonged challenges

throughout 2013 which affected
adversely customer businesses and
overall economic activities of the
country, Corporate Banking managed
to deliver balanced business growth
by focusing on asset quality, strict
portfolio monitoring and innovation of
new financial products. The coming
year 2014 poses few challenges
but EBL will continue to focus on
balanced growth through product
innovation, differentiated service and
deepening existing relationship.”

Corporate Banking initiatives 2013

First Ever in Bangladesh EBL Structured Finance Unit (SFU) introduced Key Highlights
Commercial Paper (CP) for the financial market
Loans & Advance
In 2013, we arranged Commercial Paper (CP) for ACI Ltd, a renowned local
business conglomerate.
CP is a short-term, unsecured money market instrument issued in the form of a
+3%
promissory note. EBL raised BDT 500 million at a competitive interest rate. 2013: BDT 73,919 million
2012: BDT 71,679 million
This deal is a milestone for us for three reasons:
2013: 73% of Total Loan
Firstly, though the concept of CP is prevalent globally but it has been issued for the
2012: 75% of Total Loan
first time in Bangladesh. This has helped to broaden the investment opportunities in
the market by providing a new financial product for the investors. Deposits

+47%
Secondly, corporate houses will be able to raise funds from the market without
depending solely on borrowings from financial institutions in order to meet their
short-term requirements.
2013: BDT 47,758 million
And finally, this is a testimony of our efforts in developing financial market of the 2012: BDT 32,580 million
country by offering unique and innovative solutions.
2013: 41% of Total Deposit
EBL continued its dominance in Aviation Financing in 2013 2012: 36% of Total Deposit
EBL helped HG Aviation Ltd. to add two 737 Boeing aircrafts on lease to expand its
international routes.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

Other Significant Deals of Structured Finance develop the Offshore Banking Unit and product offerings
 Completed on-lending of USD 33.62 Million term loans including Bill Discounting/Financing, bilateral and
syndicated Term Loan and other products for Export
through Offshore Banking Unit of EBL.
Processing Zone customers and local manufacturing
 Appointed as the Facility Agent for Issuance of BDT industries.
2,000 Million Preferred Shares on account of United
 Closely working with the multilaterals including IFC, DEG,
Power Generation & Distribution Company Ltd.
ADB, FMO, Proparco, CDC, Norfund and others, EBL
 Successfully coordinated the drawdown of USD 12.50 has developed products and the largest OBU Asset book
Million Term Loan from DEG for Ananta Group. among the local banks.
 Appointed as the Trustee for BSRM Steel Re-rolling Mills Biman Hajj Flight Collection
Ltd. to facilitate the issuance of Bond to the tune of BDT
EBL has extended a unique cash management solution to
2,000 Million.
Biman Bangladesh Airlines for collection of airfare of the Hajj
 Mandated by Biman Bangladesh Airlines Ltd. as Joint pilgrims.
Arranger with Standard Chartered Bank Ltd. and The
City Bank Ltd. for USD 66 million Commercial Loan for Cash Management Solution for Dhaka Stock Exchange
Delivery Finance of two 777-300 ER aircraft from Boeing. EBL established account relationship with DSE for placement
 Mandated by Ceat Bangladesh Ltd. as Facilitator, Agent of their investment proceeds.
and Arranger for LC facility under USD 35 million offshore Key Priorities in 2014
loan from Bank of India, Hong Kong.
 Maintaining quality of existing portfolio with focus on
 Lead Arranger for the Term Loan Syndication of BDT trade and structured financing.
1,600 Million for Confidence Cement Ltd.
 Launching innovative products to tap into the growing
 Lead Arranger for the Term Loan Syndication of USD 35 cross border opportunities.
Million for SM Spinning Mills Ltd.  Managing and growing corporate deposits through
Offshore Banking Services integrated customized solution.

 EBL has been the pioneer among local banks to  Continue to invest in people and technology to improve
productivity and customer satisfaction.

115
our customers speak for us

“EBL has a dynamic management team ready to offer “We are honored to have you as our financial partner towards
diversified product portfolio to suit client’s need. Its services our success.
surpass foreign banks, yet have the local touch of flexibility.” We find EBL as an innovative commercial bank that can
Sharif Zahir deliver quality service with flexibility under the leadership of a
Managing Director dynamic management with explicit vision.”
Ananta Apparels ltd. Uzma Chowdhury, CPA
Director
PRAN-RFL Group
“Eastern Bank Ltd is a local bank with international flavor. It
has lot of promises for future and a benchmark for other local
banks.” “We believe that EBL has established itself as a leading
Reaz Uddin Al Mamoon private commercial bank in the country with its dynamic
Managing Director management team along with its wide range of financial
Epyllion Group products to cater customers’ need. The bank has already
made its position in the industry through quality service and
flexibility unlike other commercial banks of its kind through
innovation and with a definite clean vision.”
“Incepta Pharmaceuticals Limited is pleased with the
services and the various banking products of Eastern Bank S. M. Ashraful Alam
Limited. We hope to continue banking relationship with Managing Director
Eastern Bank Limited with more future modern banking Walton Hi-Tech Industries Ltd.
products and services. Wishing them every success in
banking business.”
“We believe that Eastern Bank Limited has made a leading
Abul Muktadir
position in financial sector through its innovation and quality
Managing Director
service to customers by an excellent team management.
Incepta Pharmaceuticals Limited
We congratulate EBL management to make it possible very
efficiently and effectively.”

“Eastern Bank Ltd is committed to meet the highest Alhaj Md. Khabiruddin Molla
standards of customer service & financial solutions. We are Managing Director
very delighted by the service received from Eastern Bank Ltd. M I Cement Factory Ltd.
We wish them every success in the coming days”
Hasan Mahmood Raja “EBL is found to be the pioneer in innovative solutions to the
Chairman financial needs of Corporate. We wish EBL to continue this
United Group endeavor in coming days also.”
Pradip Kar Chowdhury
Executive Director, Finance & Planning
“Based on a partnership of trust, understanding, innovation,
Advanced Chemical Industries Limited
strong ethical principles and mutual respect, EBL has always
played a vital role in the successful and sustained growth
of our organization. The bank has always provided us with
various new products and services to enhance our financing “EBL with its dynamic management and professional team
structure in such a dynamic and competitive industry. has always been responsive to customer needs. We have
found them to be willing and able to offer innovative solutions
The relationship that MSM and EBL have developed over the which have further strengthened the relationship between
years is priceless and as a financial partner the institution Transcom and EBL.
has always played an important role in the success of our
company.” We take this opportunity to wish EBL greater success in
years to come.”
A. Matin Chowdhury
Managing Director Latifur Rahman
Malek Spinning Mills Ltd. Chairman & CEO
Transcom Limited

EASTERN BANK LIMITED ANNUAL REPORT 2013

“Since 2007, Envoy Group has been banking with Eastern “From the beginning of our journey EBL came up with
Bank Limited. EBL holds the leading position among the local innovative financing scheme which in turn helped us to
private banks of our country when it comes to innovation and support and sustain our operation. In the very near future
excellence in customer service. EBL has the most efficient NOVOAIR will step out to international operation. We expect
Relationship Teams in the country who know their customers EBL will extend its usual hand as a trusted partner of our
and work hard to serve every financial and non-financial need journey to the future.”
when and where required. Arshad Jamal
We hope to continue a mutually beneficial relationship with Chairman
EBL.” Tusuka Group
Abdus Salam Murshedy
Managing Director
“We appreciate/value EBL’s mission to drive efficiencies in
Envoy Group
financial industry by setting clear standards and we believe
that EBL, with a strong heritage in financial services, will
continue to grow strength to strength and will create new
“EBL’s innovative approach to keep up with the complex ground breaking best-process practices in industry. We
financial and management needs became exemplary and consider our association with EBL as significant milestone in
satisfying for each of our team members. Thus Hameem our journey.”
Team could truly rely and trust EBL even under odd
Mostafa Kamal
situations. Its customer service, up-gradation of system,
Managing Director
efficient management and above all personal touch has
Meghna Group
simply won over the clients’ heart and mind while maintaining
banking norms.
On behalf of Hameem Group we would like to see EBL
growing at a faster pace and continue to serve the nation.” “We always find Eastern Bank Ltd at our side at the time of
necessity. It’s cordial and prompt support, timely response,
A. K. Azad co-operation and giving priority to the customer interests has
Managing Director placed Eastern Bank Limited at a unique place. Our working
Hameem Group partnership has flourished than ever before. We wish the
warm relationship with Eastern Bank Limited will prosper
more in the days to come.”
“In its efforts to make viable commercial journey, Eastern
Aameir Alihussain
Bank Limited remains the leading Bank to stand by Regent
Managing Director
Airways. It is not money alone that they provide with, the
BSRM Group
dedicated EBL team comes up with consultation services
as and when needed. When bankers turned their back to
commercial civil aviation it is EBL to appreciate the need to
support this sector and focus on the potentials it holds. We “EBL was always with us in all waves and now they are
are aware teaming with other like-minded banks EBL remains one of the best supportive Banks of our Group with their
the leader in civil aviation.” all types of innovative Products & Services. They also have
a contributory participation with our new & big projects
Mashruf Habib
as Shah Cement Industries Ltd., Abul Khair Steel Melting
Managing Director
Ltd. and Abul Khair Steel Ltd. with their state of the art
Regent Airways
technology, time-befitting business policy and eligible
Management Staffs & Employees. We want to grow with EBL
all time and wishing them all the best.”
Md. Abu Syed Chowdhury
Deputy Managing Director
Abul Khair Group

117
corporate banking
highlights 2013

EBL has arranged a Commercial Paper (CP) worth BDT 500 EBL MD & CEO, Mr. Ali Reza Iftekhar received the crest of IFC
million for ACI Ltd. Global Award 2013 as The Best Partner for Working Capital
Systemic Solutions from Ms. Georgina Baker.

Deal closing ceremony for USD 12.5 million term loan for Ananta Mandate signing ceremony between EBL and Confidence
Group, arranged from DEG by Structured Finance Unit of EBL. Cement Ltd. for raising term loan of BDT 1,600 million for the
cement company’s expansion project in Chittagong.

Bangladesh launching ceremony of EBL Finance (HK) Limited, EBL arranged a roundtable on Sustainable Ship Recycling in
first fully owned foreign subsidiary of EBL. Bangladesh jointly with FMO, IFC, DEG, Proparco, Dutch Embassy,
German Embassy and Chittagong Chamber held in Chittagong.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

treasury
EBL has a seasoned and well-trained treasury team capable of providing all
kinds of treasury solutions through wide range of treasury products. To provide
superior service with respect to pricing and cater the best possible solution to the
customers, EBL Treasury has five separate desks.

In 2013, EBL Treasury has played around with its specific priorities set at the Mehdi Zaman
beginning of the year. We acted to optimize our priorities through following means Head of Treasury
in maximizing overall profitability of EBL Treasury. “The conduit for Treasury in 2013
was a stable path of interest rate and
 Exploring new opportunities especially in the fields of derivatives: We foreign exchange, with absence of
had significant success in the arena of new avenue creation in money market. volatility. Market was burdened with
In case of overall derivative portfolio, especially in SWAP and Repurchase excess liquidity as demand for credit
Agreements, we were able to double our overall portfolio. Spread was was low. Fall of interest rate on govt.
securities was impending and banks
hit downward because of flat market scenario but volume compensated
heavily invested in govt. securities to
sufficiently. take macro bet. EBL treasury was no
 Closely monitoring market behavior to catch significant business exception from that; we took macro
bet on Treasury bills and bonds of
prospects out of volatility: 2013 was not a year of volatility. Market was
different tenor, which paid us as
flat and overall economic activity was slow due to political uncertainty. First expected.”
quarter of 2013 experienced some small bumps but later on overall economy
became so sluggish that it could not put any pressure on the overall liquidity Key Highlights
and interest rate structure. Our main strategy in 2013 was to increase the
treasury asset duration and decrease treasury liability duration. In this way, we Total Money Market Income


were able to enhance the spread in the down market.
Maximizing portfolio size as well as portfolio returns by discovering new
+26%
investment opportunities: In Bangladesh, T-Bill and T-Bond rates move 2013: BDT 2,191 million
along the inter-bank rates with a time lag of 2-3 month period and 5-6 month 2012: BDT 1,740 million
period respectively. As inter-bank rate started to slide after first quarter and
expectation was flat, it was almost obvious since the middle of 2013 that Average Daily Money Market Turnover

+1%
overall interest rate structure of GSEC will be downward. So, taking this fact
into consideration, EBL treasury took considerable long position in GSEC
which eventually yielded substantial earnings in this category. Taking the right
2013: BDT 23,007 million
position in the right time was the key to achieve huge success in this arena.
2012: BDT 22,684 million
 Building rapports with external and internal counterparts: Treasury
business, in all over the world, is relationship based. It is no different in Net Exchange Income

-26%
Bangladesh and we put optimum effort in building rapport with all of our inter-
bank and corporate counterparts. In 2013, we continually engaged ourselves
in various client calls and conferences which has contributed to improving our
business relationships. 2013: BDT 558 million
2012: BDT 757 million
EBL Treasury in Money Market
Total FX Transaction Volume
Total turnover vide various money market instruments accounted for around BDT
23,007.60 million in 2013 which is 1.43% higher than BDT 22,684.30 million in
2012. Higher spread accompanied by new avenues of business brought a desirable +20%
performance from the money market business. However, active participation in 2013: USD 14.96 billion
trading of secondary government securities has also contributed to the growth of 2012: USD 12.50 billion
revenue generated from money market business.

119
EBL Treasury in Foreign Exchange Treasury Priorities in 2014
Foreign Exchange Position Management:  Continuing to explore new avenues to utilize market
opportunities especially in the field of derivatives.
Throughout the year, EBL treasury always kept its open
position within its set limit of USD 29.37 million. EBL treasury  Maximizing portfolio size as well as returns by
makes forecast about future exchange rate movement on a discovering new investment opportunities.
regular basis and maintains its open position according to
 Putting more efforts to build rapport with external and
its future projection- that is when treasury’s forecast is BDT
will depreciate against USD and the projected depreciation internal counterparts
rate of BDT is more than the money market funding rate, it  Managing Balance Sheet with specific focus on interest
maintains and holds position long. When treasury’s projection rate movement.
is appreciation of BDT against USD, it maintains its position
short.  Creating stronger corporate sales desk.

Transaction Volume and Profit:  Automation of Treasury Front office and ALM activities.
In foreign exchange area, total turnover was USD 14.96 Market outlook, as it has always been, is a function of both
billion in 2013, while it was 12.5 billion in 2012 and USD 10.5 global and local economic factors. Considering that the
billion in 2011. Growth of total turnover in 2012 compared local factors will cope with the changes in global scenario;
to 2011 was 10%. Although, turnover increased in 2013, money growth, expected inflation, private sector growth
stable exchange rate made the competition severe in foreign and government’s borrowing from the banking sector will
exchange market which compromised our spread. Also, fall play as catalysts of growth. Country-wide political turmoil,
in volatility reduced trading opportunity for traders. EBL if not settled, will severely hamper the credit growth and
was involved in forward dealing, corporate dealing, SWAP cause excess liquidity in the market. Moreover, government’s
etc. in FX market. In 2013, EBL was active in cross currency borrowing from banking sector will play a massive role in
settlement with other banks with the help of multiple trading the movement of the market. Foreign currency reserve is
platforms. consistently growing due to the reduction in import payment
and satisfactory growth in export and remittance flow.

Therefore, money supply in the economy appears to

remain constant. Since adequate liquidity is available in the
market, yields of treasury securities are expected to slide
down significantly. Both deposit rate and advance rate
are projected to fall down. Apparently, market will remain
liquid and thus, less volatility is expected in the money
market. However, market anticipation for BDT stands at its
appreciation though remittance flow may fluctuate a little and
export may vary due to political unrest. It is expected that
import payment will not experience a hike soon.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

consumer banking
For better management of our large customer base and distribution network, EBL
Consumer Banking operates through several value centers and departments.
Working together seamlessly, we ensured top class banking experience for our
valued customers:

Nazeem A. Choudhury
Head of Consumer Banking

“Revisit, Understand, and Nurture –

abbreviated as RUN, was the theme
EBL Consumer Banking adopted for
2013. Customer is the center of all
our activities and getting back to this
very basic was the mantra. 2013 was
a challenging year for EBL Consumer
Banking. Volatile socio economic
Consumer Banking Initiatives 2013 and political situation was quite
perplexing for the business growth.
Liability & Wealth Management But with combined effort, dedication
and sincerity, EBL Consumer Banking
 To tap new deposit segments, EBL revamped and launched 6 new deposit Team pursued the goals and a good
product suits titled ‘EBL Max Saver’, ‘EBL Classic Savings’, ‘EBL Power number of achievements have been
Savings’, ‘EBL Premium Savings’, ‘EBL 50+ Savings’ and ‘EBL Smart Women’s made. With new branches, priority
centers, EBL365s, improved system
Savings’. To encourage the long term savings habit of the customers, EBL and top-of-the-class service quality,
launched 1 new deposit scheme titled ‘EBL Millionaire’. Attractive benefits we stayed well connected with and
were bundled with traditional Current Account and a new current product carried out the trust of our valued
titled ‘EBL Current Plus’ was launched as well. The new products helped the customers throughout the year!”

bank to grow at a much faster pace than the market. As a direct result of these
initiatives, the Current and Savings account portfolio of the bank grew by Key Highlights
300% over the year.
Loans & Advance

+5%
 EBL Priority Banking continued its journey as country’s number one premium
banking service in 2013 as well. In 2013, 3 new priority centers were opened,
2 in Dhaka and 1 in Chittagong to take priority services within the reach of the
customers. EBL Priority Banking now operates through 11 centers in Dhaka, 2013: BDT 11,112 million
Chittagong & Sylhet. 2012: BDT 10,563 million
Key priorities in 2014 2013: 11% of Total Loan
2012: 11% of Total Loan
 Continue focusing on the low-cost deposit sourcing and introducing
technology driven liability solutions Deposits

Payroll Banking & Customer Proposition

 Revamped EBL Payroll Banking offers tailor-made integrated payroll services
+17%
that reduce cost, eliminate paperwork and improve security for corporate 2013: BDT 62,010 million
houses. A staggering 246 new corporate tie-ups have been accomplished. 2012: BDT 52,995 million
 EBL participated in the ‘First School Banking Conference 2013’ organized 2013: 53% of Total Deposit
by Bangladesh Bank; remained one of the key participants in the event and 2012: 58% of Total Deposit
was recognized by Bangladesh Bank. EBL has also arranged some major

121
 campaigns with the top schools in the country. Key priorities in 2014
 EBL organized many exclusive tie-ups to provide  Opening of 6 new branches at strategic business
privileged services to its customers; e.g. Western Union locations and improving the look and feel of flagship
is the new partner for money transfer services, exclusive branches
offers at Cathay Pacific and Dragon Air; joint campaign
arrangement with GrameenPhone, Navana, Rangs
Alternative Distribution Channel (ADC)
Limited; segment wise value added proposition offering; As an endless endeavor to provide the customers with top
health awareness sessions, lifestyle event, and many of the class banking experience, Alternative Distribution
more. Channel (ADC) is offering customers with a range of
convenient banking options. Today, EBL provides one of the
Key priorities in 2014 best Internet Banking services in the country. Customers can
 Developing strategic relationships with various business enjoy banking services through EBL Internet Banking from
and govt. organizations to offer 360 degree banking their PC, Tab or Smart Phone with complete security and
solution. confidentiality. A wide array of services are available; e.g.
viewing account details, opening Fixed Deposit, managing
Consumer Asset loans, instant mobile recharge, utility bill payments, online
Launched some exclusive products campaign for the payment including other bank fund transfer, request for
customers; e.g. for SME customers, Eid Campaign, Home Cheque book, and more.
Loan Campaign, Loan Take Over, Loan Top up and many EBL became the first bank in Bangladesh to introduce
more. smartphone based App. EBL account holders can access
their EBL transactional accounts with EBL Mobile App. They
Cards Business can see, move and manage their finances anytime, anywhere.
 Launched ‘EBL SkyMiles’- Bangladesh’s first EBL Mobile App can be downloaded from Google Play Store
Airmile Reward program for the premium EBL Credit and Apple App Store.
Cardholders. EBL opened 27 new EBL365 (brand name of EBL ATM
 Launched exclusive Online Hotel Booking offer with locations) in 2013. With this addition, now EBL has one of the
Agoda – one of the largest online booking platform. largest networks of 175 ATMs. EBL has also set up a number
 EBL Cards has teamed up with MasterCard and Diners of Bills Pay Machine (BPM) across the country to help the
Club International to launch MasterCard and Diners Club customers to pay bills 24x7. EBL has 42 BPMs in operation
branded Credit, Debit and Prepaid cards in Bangladesh. now. We plan to increase this in number to increase customer
convenience and reduce branch footfall.
 EBL Cards migrated to a world renowned Card
Management System “HPS PowerCard” from its Key priorities in 2014
previous system. PowerCard offers robust and scalable  Introducing Mobile based Banking on ATMs and focus
framework with strong security features. on increasing number of transactions through Alternate
Key priorities in 2014 Channels

 Introducing Merchant Acquiring Services, E-Commerce Banks must constantly innovate to improve customer
and Card based Cash Management Solution in the experience. Customers want tailored and live solution to
market their problems every now and then. They also want multiple
channels to take delivery of the service. For this reason, to
Branches stay strong and long in the business, EBL strives to innovate,
improve and simplify products and processes. By focusing
EBL serves its customer base through branches as the key
on our consumer banking excellence to help drive economic
touch points. Till the end of 2013, a total of 71 branches and
opportunities, we endeavor to create sustainable value for all
11 Priority Centers were in operation to serve the clientele of
stakeholders and consumers alike.
EBL. In 2013, EBL has opened 4 new branches and 3 priority
centers to reach out the new market segments across the
country.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

Consumer Protection
and Service Quality No. of complaints
received in 2013 1,363
1,363
No. of complaints
solved in 2013

Eastern Bank Ltd. always strives to become the bank the bank has conducted 2 campaigns to ensure the practice
of choice. Since inception, the bank has developed a of proper telephone etiquettes. Moreover, the bank has
comprehensive balance in the way it manages the portfolio circulated “Telephone Etiquette Card” for every individual
(deposits and liabilities), innovate customer-centric products, employee of Eastern Bank Ltd.
and service offerings; and drives sectorial and geographic
penetration. This has enabled us to emerge as one of the Reward & Punishment
leading private banks in Bangladesh for institutional and retail At EBL we have cultivated a rewarding culture for those
customers. who are outstanding in their performances. In the year 2013
‘Service Excellence’ represents our true spirit of being the bank has recognized a total of 618 employees for their
service-oriented. This spirit is supported by key facets, which excellence in providing services to our valued customer. At
distinguish us from our peers. These facets comprise of the same time the bank has also sent several Improvement
knowledge, human capital, technology and responsibility. and Cautionary Letters to warn the employees and act
accordingly to the policy and guidelines of EBL for ensuring
At EBL, customer support and information dissemination service excellence.
are conducted through a three pronged approach –
Moreover for engaging and encouraging the employees in
 Direct Enablers – Including Contact Center, mailers excellent customer service, EBL has launched “Thank you
and bank statements, period meetings, and regulatory Program”- A monthly recognition program to praise the
updates. exemplary customer service providers.
 Self-Enablers – IVR, net banking, placing phones in
ATMs connected to Contact Center, and information and Training & Development
resources on the website. Our knowledge-driven strategy allows us to have deep and
 Indirect Enablers – Relationship managers, contact wide insights towards Sustainability & Social Infrastructure.
center agents, and other key customer touch points. EBL trains and teaches the employees the art of providing
customer service prudently and properly. It also ensures
Initiatives & Innovations towards Service Excellence that employees practice what they preach to internal and
external customers. Employees are given sound instructions
As a continuous endeavor for becoming the best in service,
and shown visual presentation on how they should meet and
EBL has taken several trendsetting and innovative initiatives
greet as well as serve the customer professionally. They are
to understand the customer norms better than before and
also taught to serve an extra mile and exceed the customer
has also redesigned its structures and policies to be on same
expectation by serving the way customers have dreamt of
line with the prevailing customer tone.
and would like to be served.
Customer Events Customer Protection & Retention
In the year 2013, EBL has organized several customer events
Eastern Bank Limited (EBL) is committed to become the
to hear the customers’ voice and to be closer with its valued
most valuable brand in the financial services in Bangladesh
customers. Micro Marketing Event is a Customer Service
by creating long lasting value for the stakeholders and above
Day – Observed quarterly throughout the country where high
all for the community by delivering sustainable growth. This
valued and prospective customers are honored and meet the
includes building an organisational culture that recognises the
top management directly to share their views and feedback.
benefits of effective customer relationship management.
In this event, the potential and prospective customers are
invited to enrich our relation with them so that we can uplift Customer complaints/concerns are a valuable source of
our commitment to provide better and qualitative service to feedback and an important tool for business and staff
our valued customers. development. Diligent and prompt attention to complaints
can help us identify the needs of our customers and
Service Excellence-A Continuous Journey stakeholders, understand our business shortcomings,
increase customer satisfaction, and improve overall
Mystery Shopping Survey- Mystery Shopping Survey performance.
is a service quality assessment survey to ensure service
excellence at the branches. In recent banking phenomenon EBL has constructed an effective complaint management
to ensure sustainability, to assess prevailing service level, system, in which customers can raise their voice to the
and to improve the service standards according to customer concerned management through their preferred channels. All
need, mystery shopping survey is very important. As such to the customer complaints and concerns are monitored centrally
acknowledge the present service level of the bank and also to with utmost diligence to ensure customer satisfaction. As a
improve accordingly, the Bank conducts “mystery shopping” result, in the year 2013 the bank has successfully resolved all
survey every year. This project continues throughout the year. the complaints received from the customers.
Bangladesh Bank has organized a seminar session on
Telephone Etiquettes- In addition to face to face survey at
“Designing the Complaint Management Guideline for
the branch level, the bank has also taken several initiatives
schedule Banks of Bangladesh”, in which EBL was given the
for ensuring proper telephone etiquettes. In the year 2013
privilege to present its complaint management policy.

123
consumer banking
highlights 2013

EBL and Visa launch ‘EBL SkyMiles’, the first ever AirMile reward EBL ties up with MasterCard.
program of the country.

Inauguration of the 10th Priority Banking Center of EBL at Inauguration of Novoair’s special counter for premium customers
Shantinagar. of EBL at the domestic terminal of Hazrat Shahjalal International
Airport.

EBL has signed an agreement with Arirang Aviation Ltd. EBL opens its 68th branch at Jashim Uddin Road, Uttara.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

SME banking
EBL SME Banking team believes in relationship banking and relies on its
specialized skills in credit assessment on lending decision based on the risk
assessment principle “we know the borrower”. The key to relationship banking
is “soft” partnership in the sense of a shared fate, mutual trust, and ongoing
interaction that continually tests and reaffirms (or places in doubt) confidence.
EBL’s business model reflects its prudent banking culture which emphasizes
separation of sales and risk functions at the customer interface that contributes in
improving portfolio quality. SME Banking is following the Hunter Farmer Model to
ensure the asset quality by three-layer collection team, focusing on progressive but
qualitative growth of asset and low cost liability for generating significant revenue
by way of differentiating the market by sub-Branding, segmenting, and channel
expansion with ‘Beyond Lending Approach’.
Since the start of the journey in June 2006, the SME Banking Division of the bank
has been growing with an upward trend and contributing to the profitability of the
bank positively. The division has managed to grow its portfolio to more than BDT Md. Khurshed Alam
16,000 million by financing more than 9,000 entrepreneurs by the end of 2013. Head of SME Banking
Starting with only 25 employees in 2006, at present EBL SME has 350 permanent “In Bangladesh, SMEs are recognized
and contractual employees to manage the most articulate and emerging business as an engine of economic growth and
in Bangladesh. SME Banking is directly related with the well-being of its customers. rapid industrialization to efficiently
At EBL, SME Banking is imbued with the spirit of togetherness with other business reach economies of scale and are
partners: ‘Together we grow’! expected to create significant jobs.
EBL has built a strong foundation
The present organization structure is as follows: for its SME banking business as
it downscales into the additional
improvements to help the bank
further leverage the opportunity from
its previous corporate focus. By
realizing the potential developmental
and profitability prospects of the SME
business EBL plans to expand it’s
SME portfolio across segments and
sectors, particularly in manufacturing
sector.”
SME Banking Initiatives 2013
Small Business Key Highlights
 Highest refinance received from Bangladesh Bank among all commercial Loans & Advance

+24%
banks in the country for consecutive fourth years.
 SME loan product “EBL Utpadan” has been introduced for entrepreneurs
having productive facility.
 100% secured SME E-Cash/Loan for SME entrepreneurs has been introduced. 2013: BDT 16,640 million
2012: BDT 13,448 million
 Agri Unit disbursed small ticket size agri loans to 335 clients in 2013 with a
disbursement of BDT 33.09 Million having a cumulative disbursement of BDT 2013: 16% of Total Loan
61.66 Million since 2011 among a total of 738 rural client-bases at Savar and 2012: 14% of Total Loan
Dhamrai. Deposits

+23%
 Agri Unit launched a new agri loan product ‘EBL Projukti’ to help direct farmers
to buy agri machinery/equipment.
 Agri Unit financed Oil-Seed (Mustard) and Maize cultivators @4% subsidized
interest rate among the successful farmers of Dhamrai area. 2013: BDT 6,544 million
 Agri Unit has implemented proper monitoring and recovery strategies and 2012: BDT 5,340 million
experienced successful management of the increased portfolio at the year-end 2013: 6% of Total Deposit
having no overdue throughout its 2.5 years of journey. 2012: 6% of Total Deposit

125
Key priorities in 2014 Corporates with focus on the EBL corporate clients to
 Introduce start up financing for new entrepreneurs have better control on risks,

 Cluster development i.e. Shoe cluster, Solar electricity  Signing MOU with the corporate clients and with others
for referral and comfort,
 Channel expansion to unbanked area deployment of a
new Unit  Introducing customized products, preferably PPG based,
for above mentioned targeted customers,
 Agri Unit is intending to extend its direct financing
activities in the year 2014 by developing new agri Liability Business:
products focusing on fisheries, livestock and poultry,
 Successfully conducted two Liability campaigns i.e.
agro-based industries etc.
“Winter Carnival” and “Summer Tribute” to boost-up
 Agri Unit is planning to finance the Contract Farmers of employee engagement to achieve SME Banking Liability
PRAN Group and targeting to disburse short/medium business goals.
term agri loans among 1000 fresh Agri Customers with
 Extended SME Term Deposit Product Line by bringing
a disbursement exposure of 100 Million within the year
amendments in “Extra-Value-Fixed Deposit”.
2014.
 Launched new PPG Driven Liability Product “EBL Repeat
 Agri Unit is concentrating on proper utilization of
–SME” for SME Clientele.
extended Alternative Distribution Channels (ADC) of EBL
for Financial Inclusion of rural client-base in the main- Key priorities in 2014
stream banking channels by introducing EBL 365 (ATM
 Launching Cash Management Solution Team for SME
and BPM) and Krishi Debit Card facilities.
Clientele to offer more tailor-made banking solutions for
 Agri Unit is going to finance more specialized high value the SMEs.
crops in the year 2014, such as Flower Cultivation,
 Mobile Banking Solutions to be launched which will
Mushroom Production etc.
create value proposition and convenient banking services
Medium Business for the SMEs.
 In coming year 2014 “SME Liability Business Unit” will
Industrialization in Bangladesh is mostly spearheaded by
the medium and large industries. Growth of large industries launch three new PPG Driven Liability Products “SME
is eventually narrowing. Thus the missing middle and Privilege, “High Performance Account-SME” and “SME
small enterprises are taking the place in long cherished Profit First” TD Products in its Liability Product Basket.
development of Bangladesh.  To create customer bondage and brand loyalty, “SME
With a vision to be the best and to cater the financial needs Liability Business Unit” will conduct a high budget
of missing middle business segment EBL started structured customer event “SME Customer Carnival” for its Liability
SME Banking. As a part of that strategy, Medium Business customers within 2nd Quarter of 2014.
segment has done business very successfully with an
MIS and Monitoring Unit
efficient team having main focus on maintaining a quality
asset portfolio. Despite having very critical and vulnerable  Introduced electronic monitoring system which provides
national economic and political condition round the year 2013 SMS reminder to Small segment clients before and after
we have maintained sustainable and quality growth in this of installment date.
segment.  Received the refinance facilities from the fund of JICA.

Medium Plus  Received highest refinance facilities from Bangladesh

Bank for last consecutive fourth years and crossed the
As mentioned earlier Upper Middle business concerns are
amount of BDT 4,000 million as refinance facilities.
still somewhat missing from our lending focus. Most of them
are corporate clients of other banks. A big part of them are
neither in our corporate segment nor in SME. We will focus Strategic Alliances in 2013
on booking these accounts in the year 2014. If we can  EBL has signed a Memorandum of Understanding (MoU)
provide proper financial solutions to them, they will grow and with Bangladesh Bank for getting pre and re-finance from
ultimately will become our corporate clients. A separate Unit JICA Fund handled by Bangladesh Bank.
will be formed as Medium Plus unit, which will directly report
 EBL has signed a MoU with CRISL. Under the MoU
to Head of Medium Business to ensure specific focus and
CRISL will provide the pre-investment clients loan
dedicated service to upper medium clients.
application assessment and rating services to EBL.
Key priorities in 2014 The main reasons to choose EBL is to receive innovative
 In the year 2014, the main focus of the Medium Business and personalize services, understanding the needs of SMEs
will be to maintain the Asset quality which was the are moving away from basic transaction banking and vanilla
best in the bank in 2012 and 2013 in terms of NPL lending towards more tailored and innovative financial
percentage. services. It is also clear that today’s SME customers want
a different type of relationship with their bank – one offering
 In booking new business main focus will be financing the
access to sound, trustworthy advice on products and
Suppliers, Dealers/Distributors of MNCs and Large Local
services, as well as on a range of wider business issues.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

SME banking
highlights 2013

EBL launched a new SME product called EBL Projukti to enable EBL and CRISL signed an MoU.
farmer to buy agriculture machinery.

EBL distributed loan among oil seed cultivators at Dhamrai area. EBL distributed loan among banana cultivators in Dhamrai area.

EBL holds an exchange of ideas meeting with flower traders and SME night 2013.
cultivators.

127
business support
EBL Centralized Operations
Centralization of Banking Operations is a phenomenon, where product processing is moved from various points to one point
or specific number of points under supervision of entities independent of business objectives. The decision making and control
functions are retained centrally by specific level of management in the organization. EBL management sees Centralization
of Operations in terms of better control and monitoring of activities to ensure that they are regularly accomplished as per
organizational objectives and without any deviation. The most apparent aspects of centralization of operations in EBL are its
enhanced capability to closely monitor and control transaction activities, implement uniform set of policies, best procedures
and practices across the Bank to carry out day to day customer services.

Objectives of Centralized Operations

Efficient
Risk Human Cost Effective
Business
Management Resource Effectiveness Control
Support

To achieve capacity To keep To ensure optimum The uniformity Standardization of

by offering best appropriate utilization and of activities and product & process,
class support to control over better skill specialization in greater degree
each business units regular operational development work process lead of supervision,
in their planned activities which prospect of to cost effective effective co-
progress through ensures better human resources. operations and operation, self
prompt and operational risk Centralized best utilization of and departmental
compliant delivery management and processing human resources. integration ensures
of services along ensure service concept helps effective control
with significant quality. in establishing and service
reduction in leadership for delivery.
bulk transaction efficient and
processing time. appropriate
decision making
and yields for the
organization.

Subsequently, with the expansion of EBL branches across the country during last three/four years, the “Hub and Spoke
(H&S)” concept has been adopted to establish presence near to customer concentrated location for facilitating transactions.
Under H&S concept a group of selected branches across a defined geographical location are being facilitated with customer
services through an extended Operations office. All such offices are under the umbrella and supervision of Centralized
Operations at Head Office.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

Trade Operations Surveillance Audit of QMS as per ISO 9001:2008

Trade Operation has never seen more turbulence as it Standard
has in 2013; especially in the wakes of the Hall-mark and Together as a team, the Trade Operations also faced the
Bismillah Group scams. However, the Trade Operations of ‘Surveillance’ audit by the Bureau Veritas; who audited the
Eastern Bank Ltd., by dint of its centralized operations and overall standard of our Quality Management System on
support from the top-level officials of the bank; has not only the notions of ‘Continuous Improvement’ and ‘Customer
remained unscathed, but also been appreciated by regulatory Satisfaction’. We passed the audit successfully and are
bodies for its uncompromising stance towards maintaining preparing ourselves for the upcoming recertification audit in
compliance to candid banking norms. In various forums, the March 2014.
management of EBL has been praised for its superior quality
Trade Transactions (Main Operation) in 2013
trade practices.

Signature Achievements 2013 2012 Growth over

Category
No. No. 2012 (%)
In the year 2013, albeit numerous challenges, Trade
Letter of credit 16,299 14,214 15%
Operations Division of EBL made its mark via numerous ‘first
of its kind’ achievements- Letter of guarantee 896 705 27%
Export bill (foreign) 21,151 16,028 32%
Restructuring the Organogram
Export bill (inland) 7,166 5,425 32%
This year, the organogram of Trade Operations has seen
a paradigm shift it has never seen before. Being the Trade Transactions (OBU) in 2013
trend setter, Trade Operations has segregated its generic
organogram to two distinct operational units, the Operations 2013 2012 Growth over
Category
Team and the Transaction Team. The task of the former would No. No. 2012 (%)
be much like that of a relationship team; which will comprise Import (LC) 132 114 16%
of overseeing all sorts of customer communications and Export (bills) 102 68 50%
facilitating various requests. The transaction team, on the Documentary collections 83 63 32%
other hand, would solely focus on performing transactions
as required by the end customers. The key benefit from this Service Delivery
segregation would be utmost utilization of human resources
Since commencement, Service Delivery is continuously
and more division of labor, which would significantly cut
enhancing its windows to provide efficient and timely services
down the process of duplication of work and lead time in
to its customers under centralized operations platform.
performing transactions.
With this view, Service Delivery expanded its networks to
Inter-Bank Connectivity through SWIFT Shyamoli, Dhaka in 2013 and is also planning to extend its
presence in Comilla in coming days.
In 2012, our honorable Managing Director & CEO initiated
the idea of inter-connectivity between all the banks operating ‘Service Delivery’ is ensured through four functional units
in Bangladesh through SWIFT so that complexities related namely Account Services, Item Processing, Non Resident
to authenticity of local LCs and Acceptances get eradicated Business Operations and Alternate Channel Operations. In
gradually. This has been a very timely suggestion, and in 2013, Service delivery successfully passed its surveillance
line with it, EBL Trade Operations has forgone all manual audit of Quality Management System (QMS) under ISO
correspondences in terms of LC Issuance, Advising and 9001:2008, performed by Bureau Veritas.
Acceptance, and has adopted full-fledged usage of SWIFT At the end of 2013, number of live accounts for which Service
wherever appropriate and applicable in 2013. Delivery Department provided services through different
delivery channels reached at 316,690 which were 303,445 at
Skill Development and Certification
the end of year 2012.
Being the first ISO certified Trade Operations among the
Brief summary of SD transaction achievements in 2013 is
private banks in Bangladesh, Trade Operations’ year long
appended below (in numbers):
activities included numerous internal & external training
sessions, workshops and seminars; dedicated to make Growth over
our current workforce more capable of meeting the ever Services 2013 2012
2012 (%)
increasing complexity of global trade business.
New Account 102,749 87,455 17%
EBL has made its mark as one of the first Bangladeshi Processing
Banks to go for professional certification in the country. Side
Clearing Cheque 1,459,827 1,098,131 33%
by side, the 13 Certified Documentary Credit Specialists
Processing
(CDCS), 35 IFC FIT Graduates and 4 Documentary Credit
Masters have given the Trade team the competitive edge it Alternate Channel 235,240 167,790 40%
requires. In addition, there are 7 ISO certified Lead Auditors at Activities
Operations Division, who have upheld EBL’s image by playing
an instrumental role in achieving and maintaining its Quality
Performance Highlights
Management System as per ISO 9001:2008 standards. Up-gradation in Alternate Channel: In 2013, services and

129
features of EBL Internet Banking has been reviewed and 2012. It includes both ‘Internal Transfer’ (account to
re-launched with a good number of new services. During last account transfer within EBL) and ‘Other Bank Transfer’
year, EBL launched Fixed Deposit opening, FCY Credit Card through BEFTN.
Bill Payment, Cheque Book issue request, 3rd Party Fund  CMO handled IPO Subscription of 3 (three) companies
Transfer to any EBL account or any account with any bank in as the ‘Lead Banker to the Issuer’ namely Mozaffar
Bangladesh and Mobile Airtime Recharge Services through
Hossain Spinning Mills, AFC Agro Biotech & Bengal
EBL Internet Banking Platform.
Windsor Thermoplastic Limited and arranged collection
Account Services: Complete shifting of central archive of 74,993 numbers of FCY Instruments. Besides this,
containing customer account opening documents under CMO has executed 49,413 numbers of FCY refund
custodianship of Account Services Unit (ASU) took place in warrant payments during 2013.
2013. During this year about 50,000 account opening forms
 CMO successfully implemented Bangladesh Bank’s
have been shifted to central archives of ASU from distant
Online TM Form Management; Form-C & Wage-Earner’s
area branches for better control and monitoring. In 2013
Reporting System for pan EBL.
processing activities of 17 distant area branches have been
taken over at Account Services Units through which more  CMO successfully implemented Bangladesh Bank’s
controlled and synchronized services can be offered to our Online Application for 18A Permission through their Web
customers. In 2013, customer’s account documentation & Portal.
KYC information update project has been initiated. Almost  CMO successfully distributed 56,973 numbers of
70,000 accounts’ documents have been reviewed and dividends of two renowned companies namely Unique
regularized in 2013 and the project is still continuing. Hotel & Resorts Ltd and International Leasing Financial
Item Processing: In 2013, EBL Item Processing Unit has Services Ltd. (ILFSL) through BEFTN. Beside these,
handled 2 IPO refund processing as lead banker. About around 16,652 Dividends of EBL, for the year 2012, has
400,000 refund warrants were processed through BACH. been distributed through BEFTN.

Treasury & Investment Banking Regulatory Reporting & Reconciliation

Operations To reap the true benefit of segmentation of operations from
business, ‘Regulatory Reporting and Reconciliation’ (RRR),
The team of Treasury & Investment Banking Operations
has been formed to handle all regulatory reporting and ensure
of EBL has been functioning independently to render high
submission of periodical statements timely and accurately.
quality services of product solutions related with treasury,
The commencement of Regulatory Reporting & Reconciliation
investment banking and other wholesale operations, e.g.,
(RRR) unit in 2012 was one of the newest ventures that the
Syndication, Corporate and SME refinancing activities etc.
Operations Division has undertaken, with the sole objective of
Some of the notable achievements are:
bringing all regulatory reporting under a broad umbrella.
 Successful management of 35% transaction growth in
In 2013, RRR managed to report a significant number of
FX and Money Market treasury deals.
transactions in the Online Monitoring System of Bangladesh
 Efficiently handled significant volume of Govt. Securities Bank, highlighted by EXP Issuance of over 30,000.00, EXP
(Treasury Bills / Bonds) worth BDT 2,300 Crore. A Duplicate reporting of over 28,000, EXP Triplicate reporting of
noteworthy fact is that EBL is one of the most active over 27,000, LC reporting of over 7,500, IMP (E2/P2) of over
participants in the Securities market operations in 10,500 and Bill of Entry reporting of over 10,000.
Bangladesh.
The Operations Division, albeit significant growth in
 Effectively communicated large pull of data to internal
transaction processing has already begun its strategic
as well as external stakeholders through 28 reports &
journey towards excellence and the following are the
returns; majority of which are highly sensitive in view of
upcoming initiatives that it is currently working on with 2014
purpose and time.
being the prospective deadline of completion-
 Integration of SWIFT messaging with FX module, which
 Increase presence of Ops delivery points near to
made FX deal processing 100% automated.
customer concentrated zones
 Agent Banking & Mobile Banking Operations
Cash Management Operations (CMO)
 Supervisory control over Card Operations & ATM network
Our Cash Management Operations (CMO) offers a wide
range of receivable and payable services to meet complex  Introduction of dashboard for internal performance
cash management needs. Payments received and made monitoring
to suppliers of different entities are efficiently processed  Customized information window for Corporate and SME
to optimize their cash flow position and to ensure effective customers
management of the businesses. EBL CMO provides a gamut
We are looking forward to 2014 with renewed hope and
of products and services, ensuring that all the business
youthful exuberance, and are committed to remain true to our
requirements of the corporations are met under one roof.
supreme motto-
 CMO has handled salary transfer of 210 numbers of
Payroll Customers, which is 145% higher than that of “Together, We Pave the Way”.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

information technology
Cutting edge technology is the cornerstone of the sustainable Internet Banking facility. Now the customers or his nominated
growth of EBL. IT Security is one of the pivotal arena on persons have no need to come to EBL branch physically to
which EBL gives utmost concern so as to ensure maximum transfer fund to other bank account.
level of safety of the data of the bank. Project on ISO 27000
Certification and PCI DSS compliance are underway. We have Mobile top-up feature was implemented. By this facility, now
done a good progress towards achieving those two highly the customer of EBL can recharge to any mobile number
acceptable standards. using his EBL Internet Banking 24 x 7 from any part of the
New Card Management System (CMS), Hightech Payment world.
Systems (HPS) was introduced by replacing old card system, Phone banking feature for new Card Management System
aiming to offer broad range of versatile product basket to the
customer. Full automation of Card related transaction was was accommodated. Internet Banking services were made
another strategic avenue which was taken into account while faster compared to earlier period. Fine tunings in this module
implementing the new card system. This newly introduced were done last year to make the functionalities more robust.
card solution is one of the leading card systems of the world. Many new projects were initiated in 2013 which are being
Many new projects, in accordance with card business, were continued; such as - Two Factor Authentication for Internet
taken on which substantial progress was done; such as – Banking module, Bulk data upload, Bulk E-mailing system etc.
EMV implementation for issuing and acquiring for all payment
systems, Diners Club issuing and acquiring, MasterCard
issuing and acquiring, E-commerce acquiring, two factor
authentication for Card Not Present transactions (i.e. VCAS)
etc. Those are continued now.
New offshore associate, EBL Finance (Hong Kong) Limited
was accommodated in the Core Banking System. All of
the functionalities of this subsidiary of EBL are now fully
automated and on real time online. This entity is now
integrated with SWIFT system individually and independently
with its separate existence. EBL branded Hardware Token for Two Factor Authentication
Online integration between Core Banking System (UBS)
and LAPS (Loan Application Processing System) module Server virtualization was implemented. Through this new
was done through which now loan account can be opened system, multiple operating systems and applications can
securely from LAPS module without logging into Core
be run on a single server. It consolidates hardware to get
Banking System.
vastly higher productivity from fewer servers. This technology
Following are in-house complete solutions which reduces cost as a whole.
are used in live:
In 2013, Eastern Bank Limited went online with new Agro
EasyTreasury – This is for easing of activity of Dealing project in partnership with GrameenPhone (GP) to bring
Room. the agro market before the farmers and buyers through
De-Dup Engine – It is an intelligent searching tool innovative technological solution. The solution, jointly
depending on various parameter used by Consumer developed by EBL IT and GP, includes an online portal where
Finance Centre (CFC). buyer places bid on the farmer’s to-be-produced or already
produced products. On the other hand, the farmer can sell
EasyTask Manager – Through this solution, processing
his products at agreeable rate. Under this process, accounts
of tasks, starting from receipt of document, assignment
of buyer, seller and GrameenPhone are maintained with
of required task against those documents to related
EBL. By this platform, payment to the sellers and receipt of
users and subsequent monitoring of those tasks of Trade
goods by the buyer are ensured by GrameenPhone. This
Service Department is accomplished.
new technology of EBL and its related process eliminate the
GoAML – It validates and download data, format data unwelcome profits of the middleman of agro products. One
according to xml syntax and write data to XML file, upload of the essence of this solution is that farmer can sell its future
the same to the application of Bangladesh Bank. product upfront to the buyer at agreed price.
EasyGefu – For clearing, account wise charge waiver
setup, loading clearing data from Cheque Processing Priorities in 2014
System, automatically generating charge batch, updating  Agent Banking
old account data, validating on various condition and
 Customer Relationship Management (CRM)
uploading to UBS.
 2nd Disaster Recovery site setup in Jessore

Implantation of BEFTN (Bangladesh Electronic Fund Transfer  Desktop Virtualization

Network) feature in Internet Banking channel through which  Document Management System Workflow
EBL customers can transfer fund from their EBL account to
 Encrypted E-statement with Digital Certificate
other accounts of other banks in Bangladesh using their EBL

131
human resources
Employer of Choice they are always eager to volunteer for special projects,
possess a very high sense of belongingness to EBL.
In EBL we believe in People not in process. Our people
are our source of competitive advantage. Our performance Occupational Health and Safety
driven culture, quality of working relationships, healthy work
Occupational health and safety is of paramount importance
life balance, recognition for the performers, investment
to EBL. The bank values its people and their wellbeing and
for Human Capital Development, best practices to attract,
is committed to providing the highest standards of safe and
sharpen, and retain top talents and especially our “People
healthy workplace for all staff, contractors, customers and
First” policy and practices strengthen EBL’s position as
visitors.
employer of choice in the corporate arena of the country.
Not only in the corporate arena EBL has already established We consult with our employees in health and safety matters
itself as one of the most lucrative employer brands but also to ensure their involvement. To meet our commitment, EBL
as deserving employer in the job market. Last year we have remains always ready to take all reasonably practicable
received 92,027 job applications and currently we have steps to ensure the health and safety of people by the
149,768 active job seekers in our e-recruitment system. development, implementation and enforcement of policies
These numbers once again took EBL to a new height in and procedures.
becoming employer of choice. To assist in facilitating communication between management
EBL HR is a 19 members team serving 3,232 members EBL and staff on health and safety matters EBL provides Hand
family. Our motto is “People First”. Our satisfaction is in Books on First Aid and Guideline on Fire Safety & Security
customer delight. Our inspiration is the talented EBL. Our at Bank Premises to every employee during their joining.
encouragement is EBL’s success. Because, at EBL HR we Moreover, we arrange annual fire drill where participation is
believe, “Great Career Starts Here”. compulsory for the employees.

Sustainable employee relations & retention: Some features of Team EBL

We believe in open door policy. Literally, CEO and top Particulars 2013 2012 2011
management’s door is open to every employee. We
Number of employees 3,232 2,685 2,680
encourage open communication, feedback, and discussions
about any matter of importance to employees so that they Female Representation 20.5% 20% 19%
are well informed and contribute to the changes happening Average Employee Age 32.83 33 33 years
across the organization. years years
Our environment is very competitive but rewarding; Average Length of 6 years 6 years 6 years
professional but friendly; overall we are a family. People Service
treat each other as friends, colleagues and co-workers; Age wise staff distribution
support and help each other to get the job done. Immediate
supervisors, team leaders, managers are focused on Age Class 2012 2013 Changes
leadership not on administration. 18-29 17.13% 21.58% 4.45%
We help our future leaders to uncover organizational 30-39 58.45% 57.18% -1.27%
competencies and make sure that we have the right people 40-49 18.24% 16.10% -2.14%
for those pivotal and critical roles that play such a big role in
50> 6.18% 5.14% -1.04%
driving success. Our approach to talent management begins
with our overall business strategy and ends with a refined Total 100% 100%
people and leadership plan.
Area wise staff distribution
We recognize performers and celebrate their success in
public. We have a very good reward and recognition policy. Region 2012 2013 Changes
All the monetary and non-monetary benefits are linked with Chittagong 17.65% 19.17% 1.52%
performance; EBL is 100% performance driven organization. Dhaka 73.94% 73.01% -0.93%
For a performer EBL is the best place to work; for a non-
Khulna 2.38% 2.07% -0.31%
performer this is the best place to get their competencies
improved. Rajshahi 2.68% 2.27% -0.41%
Our people are passionate to come to work. The energy and Sylhet 3.35% 3.47% 0.12%
commitment they show to the workplaces is incomparable, Total 100% 100%

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

Department wise staff distribution: 2013

Employees
Officer in Trainee
Division in Permanent Sales Team Total %
Position
Position
Consumer Banking 789 402 832 2,023 62.59
Corporate Banking 81 7 88 2.72
SME Banking 125 28 192 345 10.67
Treasury 5 5 0.15
Administration 13 7 20 0.62
Board Secretariat 5 5 0.15
Brand & Communications 5 5 0.15
Credit Risk Management 135 33 168 5.20
Finance 15 15 0.46
Human Resources 34 * 6 40 1.24
Internal Control & Compliance 36 36 1.11
Information & Technology 41 10 51 1.58
MD's Secretariat 10 1 11 0.34
Operations 136 88 224 6.93
Special Asset Management 68 128 196 6.06
Grand Total 1,498 710 1,024 3,232 100
* Including 18 Future Leaders

Recruitment Human Capital Development:

In EBL, we hire attitude not skill. We hire people to fill up EBL provides opportunity to its people to learn on the job and
the gap for creating an enabling environment by putting the off the job, acquire skills and knowledge from everywhere
‘best fit’ people in right place on right time. Our recruitment and develop a greater understanding of the whole workplace.
and selection processes are designed to attract and retain In 2013, 246 different types of Learning & Development
programs were organized and 6412 participants attended
suitable candidates. EBL only recruits and selects people
those programs. These learning & development programs
who demonstrate an alignment with our company values
cover wide range of contemporary topics like: Major Policy
and philosophy. Because we believe recruiting decision has
Issues & Directives of Bangladesh Bank and E-Banking in
a major impact on our business performance. In 2013, 1439 Bangladesh, ISO 9001:2008 (Quality Management System),
new members including 45 future leaders joined in EBL Legal Aspects of Banking & Credit, Present Status of
family. Capital Adequacy requirement by banks under Basel III and
Managing Fraud in Banks. We have also arranged Leadership
Type of Employees 2012 2013 Changes
Training Program for Management Team and Sales Team
Employees in Permanent 229 308 34.50% Leaders. Customized Credit Training was provided to
Position our CNB, SME and Corporate Employees. We have also
Officer in Trainee Position 147 308 109.52% organized customized training on Internal Control and
Compliance at BIBM for ICCD employees.
Consumer & SME Sales 610 823 34.92%
In 2013 we organized 14 foundation training programs,
Team
3 General Banking training at BIBM and also 2 in-house
Total 986 1,439 45.94% banking foundation program for Future Leaders. We ensured
training on Money Laundering Prevention Act-2012 and Anti-
Terrorism Act 2012 for most of the employees.

A comparative picture for 2012 & 2013 are given bellow:

No of
No of L&D Changes in No of No of
L&D Changes in 2013
Types of Program Programs 2013 Participants Participants
Programs Participants (%)
in 2013 L&D Programs (%) in 2012 in 2013
in 2012
Local Training 143 136 -4.90% 360 340 -5.56%
In house Training 63 74 17.46% 3,651 3,316 -9.18%
Foreign Training 15 11 -26.67% 22 19 -13.64%
e-learning 16 25 56.25% 2,097 2,737 30.52%
Total 237 246 3.80% 6,130 6,412 4.60%

133
We have successfully implemented E-learning examination need to maintain a high performance culture along with
in 2013. The objective of E-learning exam is to increase market competitiveness. In addition to the market driven
functional knowledge, leadership skills and other aspects that compensation package, we have a series of other benefits
help in developing employees to achieve sustainable growth for our employees like insurance coverage, End of Service
through service excellence. 2737 employees from different Benefits and other banking facilities. EBL also provides
departments have successfully enhanced their skills through provident fund, gratuity, superannuation fund, subsidized
E-learning exams. loans like staff car Loan, staff House Building loan etc.
as long term benefits. Every year we recommended and
People’s Benefit processed greater number of Staff Loans then the previous
Our compensation and benefits strategy combines the year.

2012 2013 Changes in 2013 (+/-)

Loan Name No In Million No In Million In Million (BDT)
(BDT) (BDT)
Loan Against Monthly Salary 149 15.20 172 21.17 5.97
Loan Against Provident Fund 92 23.93 108 21.83 -2.09
Staff Car Loan 88 130.55 96 138.21 7.66
Staff HBL 94 230.45 106 268.24 37.79
Furniture & Equipment Allowance 111 12.98 121 13.00 0.02
Total 534 413.11 603 462.45 49.34

Summary of people’s benefit analysis in 2012 & 2013

In 2013, we have linked people’s pay with performance by  Successfully completed ISO 9001:2008 Annual
providing special midyear increment to the performers. We Surveillance Audit without any NC audited by Bureau
conducted a compensation & benefits survey to benchmark Veritas and Accredited by United Kingdom Accreditation
EBL’s pay package as per the market. In addition, in 2013 we Service. Since 2012, EBL HR is The ONLY ISO Certified
have donated salary of one day to the victims of Rana Plaza HR Department in the country
tragedy at savar.
Priorities in 2014
Performance highlights of EBL Human Resources in 2013:
 Introduce e–HRIS
 Conducted Compensation and Benefits survey
 Paperless Green HR
 Review of organization structure
 Revamp of People’s Policy
 Leadership Journey for the leaders of the bank
 e-learning platform with virtual class room and library
 Introduced e-assessment center in future leader
 Implementation of Compensation and Benefits survey
selection process
findings
 Electronic Archiving of staff records and files
 360˚ Performance Appraisal
 Introduced KYE (Know Your Employee) for reducing
 Customer delight through Service Excellence
people related risks

Consumer banking division poses for a photograph during 2013 annual conference

EASTERN BANK LIMITED ANNUAL REPORT 2013

 management discussion and analysis

EBL HR received well wishes

from former employees

It was a great opportunity for me to work with the SMARTEST private

commercial bank in the country and gathered a wide range of exposures
as Human Resources professional in Bangladesh banking sector. EBL
branded itself as the most prestigious local bank with multinational flavor
partnering with the global banks and financial institutions. I feel proud
to be a part of EBL family and I wish continuous growth and prospect of
EBL in future.”
Zulfikar Hyder
Former Head of Human
Resources

In EBL, I worked for 12 years & 7 months. When a person works in a

superior organization like EBL for so long, he remains EBLized and
achieved aEBLity
It was highly honorEBLe for me to work in a bank whose Vision is
incomparaEBLe, Mission is executaEBLe, Strategy is winnaEBLe,
Values are respectEBLe, brand is recognizEBLe, working environment
is companionEBLe, leaders are knowledgEBLe, transformation was
sustainEBLe, policies & processes are impeccaEBLe, human resources
Ahmed Rashid Joy
are highly capaEBLe, banking knowledge are exchangEBLe, recognition
Former Head of
was equitaEBLe and corporate governance is so commendEBLe.
Medium Business

Like a plant grow from a seed, similarly I grown up in EBL from a

probationary officer (2nd batch) to “Head of Structured Finance” and
departed in my 16th year of professional service. My journey in EBL
was full of diversification as EBL put my work life blended with Branch
Banking and Corporate Banking. At the time of my leaving, I realized the
current CEO led us with best possible solution for training, package, role,
accountability, guidance, compliance, service quality, leadership and last
not the least BUSINESS.
Md. Abdul Wadud I miss EBL and wish good success for its better growth.
Former Head of
Structured Finance,
Corporate Banking

I was happy about my EBL HR colleagues. I became nostalgic thinking

about our HR team, time I spent, the formal & informal communications,
atmosphere, cooperation and timely service delivery.

Md. Sirajul Islam

Former Head of
Human Resources

135
risk management
& control environment
Risk performance 2013 slower than expectation, and remittance is assumed to be
declined. Under such circumstance, we assume that the
Bangladesh economy remained resilient against lingering
resilience gained in a decade is stretched and the recovery
political turmoil but could not deliver the expected growth.
largely depends on political stability, macroeconomic solidity,
The economy made significant progress in some key areas -
country’s competitiveness, and confidence of investors.
foreign exchange reserve increased a new high to $ 18 billion
Remittance and Export, two key factors that kept the
as on 19 December 2013, inflation eased steadily to 7.50%,
economy afloat in 2013, may face tough challenges. Although
and public debt has declined. Key drivers for economic
export situation is still under control, there are signs that
performance in last calendar year were: moderate growth in
orders are being cancelled and diverted to other countries.
export and buoyant remittance from wage earners. However,
Export may grow slower due to placement of lower orders
inflow of remittance declined in later months of the year.
triggered by industrial accidents, labor unrest, increased
Private sector credit growth marked a historical fall as competition, and disruption of transport. On the other hand,
political uncertainties curbed the demand for investment, remittance already showed declining trend amid failure to
contributing to ample liquidity in the banking sector. Banking send more workers abroad to traditional markets. 33% less
sector’s growth was slower due to weaker demand for credit workers went abroad in 2013 compared to its previous year.
and increasing impaired loans. As predicted last year, the
Private sector investment went downhill due to lack of
main challenge was managing impaired assets and excess
confidence and lingering uncertainty in political fronts.
liquidity. In these respect, we have performed better than
Disrupted production and distribution caused damage in
many of our peers.
trade and commercial activities. Usual cash conversion
In 2013, loan loss provisions were higher than the historic cycles were changed and loan repayment went irregular.
lows we have experienced in 2011; and the swell was Government’s target for collection of revenue may fall
driven principally by increase of specific provision against short since collection of direct taxes and value added
our corporate banking exposure. On the other hand, SME taxes will be squeezed amid slowing down of trade and
and Consumer Banking performed better keeping loan loss business activities. As a result, government’s dependency
provisions stable. We remain disciplined in our approach on borrowing from banking sector might increase and may
to credit risk management and proactive in our collection crowd out private sector investments.
efforts to minimize account delinquencies. The increase of
Recently announced monetary policy for the second half
loan loss provisions is primarily related to a few large clients
of fiscal year 2013-14 is conventional, which will pursue
but the number can be increased if fresh political agitation
tamed inflation and moderate growth estimated to be six
launched in 2014. The advances-to-deposits ratio remained
percent around. The success of monetary policy largely
strong at 72.45 percent and other liquidity parameters were
depends on the favorable political environment and increased
satisfactory.
private sector investment. However the banking industry
Risk oversight and management functions were given shall continue struggle managing its impaired assets which
priority in 2013. We have a well established risk governance are regularized taking the flexible opportunity allowed by
structure and an experienced senior team. We continue to Bangladesh Bank in December 2013. Besides, it will take
build on the bank’s culture of risk management discipline. time for restoration of the loan repayment capacity of
Capital, considered as key cushion of risk, was more than business entities of the country.
adequate of the minimum regulatory requirement, and bank
has windows open to raise additional capital to support Major risks and uncertainties in 2014
its growth in next few years. Overall, the bank preserved Taking risk is in the core of banking business and EBL is not
its competitiveness to grow at constant pace in coming an exception. As a responsible bank, we accept selected risk
years given the political stability sustains and positive by taking informed decision and such decisions are exposed
developments are around. to uncertainties. We seek to contain and mitigate these risks
within our appetite set by the Board of Directors and price
Economic Outlook 2014
for adequate compensation against risks taken in due course
The economic outlook is not promising in 2014 if current of business. Since risks by their nature are uncertain, tools
trends continue. Major development partners predicted are not available that can prevent unfavorable outcome
GDP growth within 5.5% to 5.8%, which is much lower than with certainty. Good judgment and prediction of future with
last four years average. Bangladesh Bank in its Monetary greater accuracy are fundamental for risk management.
Policy for the second half of fiscal year 2013-14, estimated Some major uncertainties bank may face in coming year are
that the GDP growth will range from 5.8% - 6.1%. It is also set out below. These should not be regarded as a complete
predicted that construction and trading sector will perform and comprehensive statement of all potential risks and
sluggish in rest of current fiscal year, export may grow uncertainties that the bank may experience.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 Principal Uncertainties
Risks Description Our response
Deteriorating macroeconomic conditions leads to We monitor economic trends
lower GDP growth that may have impact personal in the markets very closely and
income and consumption pattern, demand for continuously review the suitability
Deteriorating Macroeconomic
products and services, debt service capacity, and of our risk policies and controls.
conditions
saving propensity. In general, slower GDP growth
and unfavorable macroeconomic conditions affect
our business negatively.
It is not predictable to foresee the nature and We review key regulatory
impact of future changes in economic policies, developments in order to anticipate
laws and regulations and such changes may changes and their potential impact
Change in regulatory policies and
contradict with our strategic interests. The outcome on our performance. If necessary,
compliance
of such changes is generally difficult to predict and we respond unilaterally or through
could be material to the bank. our participation in Association of
Bankers Bangladesh.
We face a risk that geopolitical tensions or We actively monitor the political
conflict in countries where we or our customers situation in major trading partner
have business interest could impact trade flows, countries of Bangladesh to
Geopolitical events
customers’ repayment ability, and our ability to anticipate any potential impact
continue business. on our customers who buy or sell
products from these countries.
The risk of fraud and other criminal activities is We have measures in place to
growing as criminals become more sophisticated monitor and mitigate this risk.
Risk of Fraud and as they take advantage of the increasing use of Controls are embedded in our
technology in society. policies and procedures across the
range of bank’s activities.
The risk that violent political agitation like strike We actively monitor political
and blockade disrupts production, distribution, and developments and keep contact
Uncertainty in political fronts
movement of goods of our customers and erode with the customers to assess
their repayment capacity. potential impacts and way out.
The risk that natural calamity like flood and cyclone Insurance of inventory is widely
Natural calamity may cause our disruption of our customers used to mitigate such risks.
business including damage of inventory.

Risk Management d. Risk taking decisions are in line with the business strategy
and objectives set by the Board;
Objective of Risk Management
e. The expected payoffs compensate for the risks taken; and
Our risk philosophy is that the risk we take should be in line
f. Sufficient capital as a buffer is available to take risk.
with the risk appetite set by our board of directors. We accept
risks if fits with the business strategy, assisted by prudent Elements of Risk Management Framework
decision-making process and management efficiency. The
Effective risk management is fundamental to being able
risk framework of the bank is designed within the scope
to generate profits consistently and sustainably. Hence,
of Bangladesh Bank guidelines on Risk management,
risk management is the central part of the financial and
issued 15 February 2012 vide DOS circular -02 and other
operational management of the bank. Our risk management
guidelines on core risks: credit, foreign exchange, asset-
framework has elements and flexibility to establish enterprise-
liability management, internal control, ICT and anti money
wide risks management system. Elements of our risk
laundering. Risk management is the discipline at the core
management framework are:
of our organization and encompasses all the activities that
affect its risk profile. The framework involves identification, a. Risk Governance
measurement, monitoring, and controlling risks to ensure b. Risk Assessment
that:
c. Risk quantification and aggregation
a. Individuals who take or manage risks clearly understand
d. Monitoring and reporting
it;
e. Risk and control optimization
b. The organization’s risk exposure is within the limits
established by the Board;
c. Risk taking decisions are explicit and clear;

137
Risk Management Framework Risk Management Committees

Committee Key Objectives Represented by

Board Risk To ensure Mir Nasir Hossain,
Management that the bank Director and Chairman
Committee wide risks are of the committee.
managed within Asif Mahmood,
the risk strategy Director and Member
and appetite of the committee.
established by the
Board of Directors. Gazi Md. Shakhawat
Hossain, Director
and Member of the
committee.
Bank Risk To monitor Risk management,
Management activities of the treasury, operations,
Committee Risk Management IT, and finance and
(BRMC) Unit responsible internal compliance.
for integrated
risk management
across the bank.
Bank To supervise All business units,
Operational operational risk risk management,
Risk management operations, treasury,
Committee activities of all support functions,
functional areas of branch operations, and
the bank. internal compliance.
Asset To optimize bank’s Business units, risk
Liability financial goal management, treasury,
Committee retaining liquidity Deputy Managing
risk and interest Director and Managing
rate risk of the Director.
bank at desired
level.

Risk Management Unit Governance of Credit Risk:

Risk Management Unit (RMU) has been established on 03 Final authority and responsibility for all activities that expose
July 2012 as per the requirement of Bangladesh Bank risk the bank to credit risk rests with the Board of Directors in
management guidelines. Head of RMU now reports to the conjunction with the senior management of the bank. The
Chief Risk Officer (CRO). RMU works as the secretariat of the Board delegated authority to the Managing Director and
CRO and support achieving his/her objectives. In addition CEO or other officers of the credit risk management division
to the regulatory measures and compliance, RMU continues for credit underwriting except large loans, which are more
to enrich risk culture and management techniques sharing than 10 percent of banks eligible capital. The Board also set
knowledge on global best practices. credit policies and delegates authority to the management
for setting procedures, which together has structured the
Management of Credit Risk credit risk management framework in the bank. The Credit
Policy Manual contains the core principles for identifying,
Credit Risk:
measuring, approving, and managing credit risk in the bank
Credit risk is the risk of loss that may occur from the failure of and designed to meet the organizational requirements that
any counter party to make required payments in accordance exist today as well as to provide flexibility for future. These
with agreed terms and conditions and/or deterioration of policies represent the minimum standards for credit extension
creditworthiness. Credit risk may arise from both the banking by the bank, and are not a substitute for experience and good
book and trading book. Credit risk is managed through a judgment.
framework set by policies and procedures established by
The policy covers corporate, retail, small and medium
the Board. The responsibility is clearly segregated between
enterprise exposures. Policies and procedures together have
origination of business transaction and approval of the
structured and standardized credit risk management process
transaction.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

both in obligor and portfolio level. There is a comprehensive is Independent of business origination function to establish
credit appraisal procedure that covers industry/business better internal control and to reduce conflict of interest.
risk, management risk, financial risk, facility structure risk, The Head of Credit Risk Management (HoCRM) has clear
security risk, environmental risk, reputational risk, and responsibility for management of credit risk.
account performance risk. Credit risk management function
Credit Management Process:

Loan origination The loan origination process comprises initial screening and credit appraisal. The evaluation focuses on
and risk the borrower’s ability to meet its obligations in a timely manner. Efforts are made to ensure consistent
appraisal standards are maintained in credit approval. Collateral and guarantees form an important part of the
credit risk mitigation process. Internal policy dictates the type of security offered, standards for periodic
valuations and assessment of realizable value of collateral. A basic risk rating model is in place for
customers other than retail and consumer segments. The internal risk rating is an important part that
compares customers risk profile using a common scale though credit decision are not taken solely on the
basis of credit rating. Lending is primarily made on the basis of cash flow and repayment ability; which
are distinct from collateral based lending.
Loan approval The Bank has established clear guidelines for loan approvals/renewals by adopting individual authority
and sanction based approval structure for better responsibility. All credit applications require assessment by the
independent credit risk team who do not have any revenue target.
Credit Bank’s loan portfolio is administered through a centralized Credit Administration Division which ensures
Administration efficient and effective post sanction customer support including disbursement, settlements, processing,
and renewal notices and advising customers on interest rate amendments. This division works independently
Disbursement and reports to Head of Credit Risk Management to ensure clear segregation of duties from business
origination. Disbursements made only after stipulated conditions have been met and relevant security
documents obtained.
Credit To safeguard the bank against possible credit losses, problem loans need to be identified early. The
Measurement Credit Risk Management Division measures and tracks the status of the credit portfolio, undertakes
and Monitoring impact studies and detects early warning signals pointing to deterioration in the financial health of a
borrower. Accountability for credit risk performance is vested with individual business units and unhealthy
trends addressed at all levels.
Recoveries Non Performing Loans are managed by the Special Asset Management Division. This unit is responsible
for all aspects of an adversely classified facility, follow up of rescheduled facilities, monitoring the value
of the applicable collateral and liquidation, scrutiny of legal documents and liaising with the customer
until all recovery matters are finalized. This division’s activities are seamlessly integrated with Credit
Administration and Credit Risk Management to ensure effective follow up.

Internal Rating Scale: Risk Grading Matrix facilitates objectivity for making credit
Risk measurement plays a central role along with judgment decisions; however final decisions are taken on subjective
and experience in informed risk taking decisions, and judgment and prudence of the approver.
portfolio management. For the purpose of risk measurement, Credit Approval Authority:
we use a numerical grading system associated with the
borrower. Though this rating system, ‘Credit Risk grading Board of Directors has sole authority to approve any
Matrix’ (CRGM), is not a lending decision making tool but credit exposure and to sub- delegate such authority to the
used as a general indicator to compare one customer with Managing Director and CEO with or without authority for
another set of customers, and weighted average CRG of further sub delegation. We have adopted individual authority
all customers indicates movement of the portfolio risk. based approval structure to ensure better accountability.
CRGM analyze a borrower against a range of quantitative Classification and Provisioning Policy:
and qualitative measures. The numeric grade from 1 to 11
EBL follows Bangladesh Bank Circulars and Guidelines for
indicates creditworthiness of the borrower - lower numbers
loan classification and provisioning. Existing guidelines are
are indicative of lower likelihood of default, while 9 to 11
described in BRPD circular no. 14 dated 23 September
grades are assigned to default borrowers. However, we
2012 and subsequent amendments to this circular. These
are yet to assign Probability of Default (PD) corresponding
circulars are publicly available at: www.bangladesh-bank.org/
to each risk grade and to cap exposure both at borrower
mediaroom/circulars/circulars.php
and portfolio level against each risk grade. No score card
or rating model for retail and SME (small) borrowers are Credit Risk Mitigation and Control:
currently in practice; rather borrowers are assessed against
The bank obtains collateral against its credit exposure
pre approved criteria outlined in Product Program Guidelines
wherever possible as secondary recourse to the borrowers.
(PPG) approved by the Board of Directors. Thus the Credit
Primary recourse remains being the cash flow of the

139
business. The reliance on these mitigates is carefully processes depends on the nature, size and complexity
assessed in light of issues such as legal certainty and of bank’s activities. Sound liquidity risk management
enforceability, market valuation, and counter party risk of the employed in measuring, monitoring and controlling liquidity
guarantor. Collateral is held to mitigate credit risk exposures risk is critical to the viability of the bank. Our liquidity risk
and risk mitigation policies determine the eligibility of management procedures are comprehensive and holistic.
collateral types. Responsibility of managing and controlling liquidity of the
Collateral types that are eligible for risk mitigation include: bank lies with Asset Liability Committee (ALCO) and the
cash and bank deposits; residential, commercial and committee meets at least once in every month. Asset and
industrial property; fixed assets such as motor vehicles, Liability Management (ALM) desk of the treasury function
aircraft, plant and machinery; marketable securities; closely monitors and controls liquidity requirements on a daily
commodities; bank guarantees; and standby letters of credit. basis by appropriate coordination of funding activities and
Documentation must be held to enable the bank to realize they are primarily responsible for management of liquidity in
the asset without the co-operation of the asset owner in the the bank. A monthly projection of fund flows is reviewed in
event that this is necessary. Regular valuation of collateral is ALCO meeting regularly.
required in accordance with banks credit risk policy, which
prescribes both the process of valuation and the frequency Liquidity Risk Measurement:
of valuation for different collateral types. The valuation At a very basic level, liquidity measurement involves
frequency is driven by the level of price volatility of each assessing all of a bank’s cash inflows against its outflows
type of collateral and the nature of the underlying product to identify the potential for any net shortfalls going forward.
or exposure. Bank also performs stress test on changes in This also includes funding requirements for off balance sheet
collateral (land and building) values for total portfolios to commitments.
assist senior management in managing the risks in those An important aspect of measuring liquidity is making
portfolios given the value of collateral decline by 10 percent, assumptions about future funding needs. While certain cash
20 percent and 40 percent. Physical collateral is required to inflows and outflows can be easily calculated or predicted,
be insured against most relevant risks, keeping the bank as bank also make assumptions about future liquidity needs,
loss payee under the insurance policy. both in the very short-term and for longer time periods.
Where guarantees are used as credit risk mitigation the One important factor to consider is the critical role a bank’s
creditworthiness of the guarantor is assessed and established reputation plays in its ability to access funds readily and at
using the credit approval process in addition to that of the reasonable terms.
obligor or main counter party. The main types of guarantors We have identified several key liquidity risk indicators, which
include bank guarantees, non banking financial institutions, are monitored on a regular basis to ensure healthy liquidity
parent companies, and shareholders. position. These ratios are:
This may be pertinent to mention that the bank did not use i. Statutory Liquidity Requirement
credit derivatives to mitigate credit risk or dealt with these ii. Cash Reserve Ratio
instruments till 31 December 2013. iii. Asset to Deposit Ratio
Credit concentration risk iv. Structural Liquidity Profile
v. Maximum Cumulative Outflow
Credit concentration risk may arise from a single large
vi. Medium Term Funding Ratio
exposure or from multiple exposures that are closely
vii. Volatile Liability Dependency Ratio
correlated. This is managed within concentration caps set
viii. Liquid Asset to Total Deposit Ratio
by industrial sector. Additional concentration thresholds are
ix. Liquid Asset to Short Term Liabilities
set and monitored, where appropriate, by tenor profile and
x. Liquidity Coverage Ratio (LCR)
products. Credit concentrations are monitored in each of
the businesses and concentration limits that are material to Liquidity Risk management and mitigation:
the bank are reviewed and approved at least annually by the In order to develop comprehensive liquidity risk management
Credit Risk Management Division or Managing Director & framework, we have Contingency Funding Plan (CFP), which
CEO. is a set of policies and procedures that serves as a blueprint
for the bank to meet its funding needs in a timely manner and
Management of Liquidity Risk
at a reasonable cost.
Liquidity Risk: For day-to-day liquidity risk management, CFP ensures
Liquidity Risk is the potential for loss to a bank arising from that the bank is best prepared to respond to an unexpected
either its inability to meet its obligations as they fall due or to problem. In this sense, a CFP is an extension of ongoing
fund growth of assets without incurring unacceptable cost or liquidity management that formalizes the objectives of
losses. Liquidity risk is often triggered by the consequences liquidity management by ensuring:
of other financial risks such as credit risk, interest rate risk, a) A reasonable amount of liquid assets are maintained;
foreign exchange risk, etc.
b) Measurement and projection of funding requirements
Liquidity Risk governance: during various scenarios; and
The intensity and sophistication of liquidity risk management c) Management of access to funding sources.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

CFP also provides directions for plausible actions in

distress and emergency situations. In case of a sudden
liquidity stress, it is important for the bank to beseem
organized, candid, and efficient to meet its obligations to the
stakeholders. Since such a situation requires a spontaneous
action, CFP will put the bank in better position to address the
liquidity problem more efficiently and effectively. CFP ensures
that bank management and key staffs are ready to respond to
any distress situations.
Maturity ladder of cash inflows and outflows are effective
tool to determine banks cash position. A maturity ladder
estimates a bank’s cash inflows and outflows and thus net
deficit or surplus (GAP) both on a day to day basis and over
a series of specified time periods. A bucket wise (e.g. call,
2-7 days, 1 month, 1-3 months, 3-12 months, 1-5 years,
over 5 years) maturity profile of the assets and liabilities
is prepared to understand mismatch in every bucket. A
structural maturity ladder or profile is prepared periodically
following guidelines of the Bangladesh Bank DOS circular no.
02 dated 29 March 2011.

Internal Control:
Bank has adequate internal controls to ensure the integrity
of its liquidity risk management process. These systems
promote effective and efficient operations, reliable financial Market Risk governance:
and regulatory reporting, and compliance with relevant laws,
Risk Management Unit (RMU) and the bank’s treasury
regulations and internal policies. An effective system of
division are responsible for risk identification, measurement,
internal control for liquidity risk includes:
monitoring, control, and management reporting in relation
a) a strong control environment; to market risk. Treasury Middle Office is an integral part
b) an adequate process for identifying and evaluating of market risk management and independently evaluates
liquidity risk; and monitors treasury department’s transaction from risk
perspective. Overall risk parameters and exposures of the
c) the establishment of control activities such as policies and
bank are monitored by RMU and periodically reports to Bank
procedures;
Risk Management Committee (BRMC).
d) adequate information systems; and
Interest Rate Risk:
e) continual review of adherence to established policies and
procedures. Interest Rate Risk is the potential impact on a bank’s earning
and net asset value due to changes in market interest rates.
With regard to control policies and procedures, attention has
In simple words, interest risk arises when bank is obliged
been given to appropriate approval processes, limits, reviews
to pay more interest for liabilities but can’t charge more on
and other mechanisms designed to provide a reasonable
assets. Such risk can’t be eliminated as re-pricing period of
assurance that the bank’s liquidity risk management
assets and liabilities are different.
objectives are achieved.
Other than re-pricing issue, sources of interest risk are: yield
Management of Market Risk curve risk, basis risk, and embedded options. The immediate
impact of a variation in interest is on the bank’s net interest
Market Risk: income, while a long term impact is on bank’s net worth since
Market Risk is the risk of potential losses in the on balance economic value of banks assets, liabilities and off balance
sheet and off balance sheet positions of a bank stemming sheet exposures are affected.
from adverse movements in market rates or prices such as
interest rates, foreign exchange rates, equity prices, credit Measurement of Interest Rate Risk:
spreads, and/or commodity prices. Market risk can be Bank’s interest rate risk measurement system takes into
subdivided into three categories depending on risk factors: account the specific characteristics of each individual interest
i. Interest Rate Risk, sensitive position, and captures the potential movements in
interest rates. Re-pricing schedules are used as interest rate
ii. Foreign Exchange Risk, and risk measurement techniques.
iii. Equity Price Risk. The techniques for measuring bank’s interest rate risk
The primary objective of the market risk management is to exposure begin with a maturity/re-pricing schedule that
ensure that bank’s activities which are exposed to various distributes interest sensitive assets, liabilities, and off-
market risks are generating optimum return, and downside balance sheet positions into a certain number of predefined
risks are in control and within the limit of agreed appetite. time bands according to their maturity (if fixed rate) or time

141
remaining to their next re-pricing (if floating rate). Those assumed changes in interest rates. Duration incorporates
liabilities lacking definitive re-pricing intervals (e.g. sight an instrument’s remaining time to maturity, the level of
deposits or savings accounts) are assigned to re-pricing interest rates, and intermediate cash flows. If a fixed income
bands according to the judgment and past experience of the instrument has only one cash flow, as a zero coupon bond
bank. does, duration will equal the maturity of the instrument:
a zero coupon bond with five years remaining to maturity
Gap Analysis: has duration of five years. If coupon payments are received
Simple maturity/re-pricing schedules are used to generate before maturity, the duration of the bond declines, reflecting
simple indicators of the interest rate risk sensitivity of both the fact that some cash is received before final maturity.
earnings and economic value to changing interest rates. This
approach is typically referred to as gap analysis. To evaluate Interest Rate Risk management and control:
earnings exposure, interest rate sensitive liabilities (ISL) Bank’s interest rate risk management involves the application
in each time band are subtracted from the corresponding of following basic elements in the management of assets,
interest rate sensitive assets (ISA) to produce a re-pricing liabilities, and OBS instruments. Principles of interest rate risk
“gap” for that time band. A negative or liability sensitive gap management include:
occurs when ISL exceed ISA in a given time band. This gap a) Appropriate board and senior management oversight;
implies that an increase in market interest rates could cause
a decline in net interest income. In this situation, a decrease b) Adequate risk management policies and procedures;
in interest rates should improve the net interest rate spread c) Appropriate risk measurement, monitoring, and control
in the short term, as deposits are rolled over at lower rates functions; and
before the corresponding assets. An increase in interest d) Comprehensive internal controls and independent audits.
rates lowers earnings by narrowing or eliminating the interest
Bank has developed and implemented effective and
spread. Conversely, a positive or asset-sensitive gap occurs
comprehensive procedures and information systems to
when ISA exceeds ISL in a given time band. This gap implies
manage and control interest rate risk in accordance with its
that a decrease in market interest rates could cause a decline
interest rate risk policies. Internal inspections/audits are a
in net interest income. In this situation, a decline in interest
key element in managing and controlling interest rate risk
rates should lower or eliminate the net interest rate spread in
management program.
the short term, as assets are rolled over at lower rates before
the corresponding liabilities. An increase in interest rates Exchange Rate Risk:
should increase the net interest spread.
Exchange Rate Risk is the current or prospective risk to
From Gap schedules mentioned above, the bank computes earnings and capital arising from adverse movements in
an estimate of changes in bank’s net interest income (NII) currency exchange rates. Banks foreign exchange risk may
given changes in interest rates. The gap for particular time arise from following activities:
band can be multiplied by a hypothetical change in interest
Trading in foreign currencies as a market maker or position
rate to obtain an approximate change in net interest income.
taker including the un hedged positions arising from
Duration Analysis: customer driven foreign exchange transactions;
Duration is the time-weighted average maturity of the present i. Holding foreign currency position in the banking book in
value of the cash flows from assets, liabilities and off-balance the form of loans in foreign currency.
sheet items. It measures the relative sensitivity of the value ii. Engaging in derivative transactions that are denominated
of these instruments to changing interest rates (the average in foreign currency for trading or hedging purpose.
term to re-pricing), and therefore reflects how changes in
iii. Settlement risk due to default of counter parties.
interest rates will affect the bank’s economic value, that is,
the present value of equity. In this context, the maturity of an iv. Time-zone risk, which arises out of time lags in settlement
investment is used to provide an indication of interest rate of one currency in one center and settlement of another
risk. Generally, the longer the term to maturity (next re-pricing currency in another center located at different time zone.
date) of an investment and the smaller the payments that Bank’s foreign exchange risk management policies and
occur before maturity (e.g. coupon payments), the higher the procedure include:
duration (in absolute value). Higher duration implies that a
i. accounting and management information systems to
given change in the level of interest rates will have a larger
measure and monitor foreign exchange positions, foreign
impact on economic value. Duration-based weights can
exchange risk and foreign exchange gains or losses;
be used in combination with a maturity/re-pricing schedule
to provide a rough approximation of the change in bank’s ii. governing the management of foreign currency activities;
economic value that could occur given a particular set of and
changes in market interest rates. Specifically, an “average” iii. independent inspections or audits.
duration is assumed for the positions that fall into each
time band. The average durations are then multiplied by Measurement of foreign exchange risk
an assumed change in interest rates to construct a weight Bank ensures that all people dealing with foreign exchange
for each time band. The weighted gaps are aggregated transactions have clear understanding of the amount at risk
across time bands to produce an estimate of the change and the impact of changes in exchange rates on this foreign
in economic value of the bank that would result from the currency exposure. The Bank has an effective accounting

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

and management information system in place that accurately c. verify the adequacy and accuracy of management
and frequently records and measures its foreign exchange information reports regarding the bank’s foreign exchange
exposure and the impact of potential exchange rate changes risk management activities;
on the bank. At a minimum, the bank monitors and reports: d. ensure that foreign exchange hedging activities
 the net spot and forward positions in each currency or are consistent with the bank’s foreign exchange risk
pairings of currencies in which the bank is authorized to management policies, strategies and procedures; and
have exposure; e. ensure that personnel involved in foreign exchange
 the aggregate net spot and forward positions in all risk management are provided with accurate and
currencies; and complete information about the bank’s foreign exchange
 transactional and translational gains and losses relating risk policies and risk limits and positions and have
to trading and structural foreign exchange activities and the expertise required to make effective decisions
exposures. consistent with the foreign exchange risk management
policies.
Control of foreign exchange activities
Equity Price Risk:
The key elements of foreign exchange control program are
well defined procedures governing: Equity price risk is the risk of losses caused by changes in
equity prices. These losses could arise because of changes in
a) organizational controls to ensure that there exists the value of listed shares held directly by the bank; changes
a clear and effective segregation of duties between in the value of listed shares held by a bank subsidiary;
those persons who initiate foreign exchange transactions changes in the value of listed shares used as collateral for
and those persons who are responsible for operational loans from a bank or a bank subsidiary, whether or not the
functions such as arranging prompt and accurate loan was made for the purpose of buying the shares; and
settlement, and timely exchanging and reconciliation of changes in the value of unlisted shares.
confirmations, or account for foreign exchange activities.
Equity price risk associated with equities could be systematic
b) procedural controls to ensure that: or unsystematic. The former refers to sensitivity of portfolio’s
i. transactions are fully recorded in the records and value to changes in overall level of equity prices, while the
accounts of the bank; latter is associated with price volatility that is determined by
ii. transactions are promptly and correctly settled; and firm specific characteristics. From an accounting perspective
in Bangladesh, equity risk is “one-sided”– equity securities
iii. unauthorized dealing is promptly identified and
must be held at the lower of cost or market value. If market
reported to management; and
value drops below the cost, bank is required to form loss
c) controls to ensure that foreign exchange activities are allowances or “provisions” on the liability side of the balance
monitored frequently against the bank’s foreign exchange sheet, by means of an expense on the profit and loss
risk, counter party and other limits and that excesses are statement. However, if market values rise above cost, there
reported. is no corresponding income recorded unless the security
Moreover, bank ensures that employees conducting foreign is sold. Even though the one-sided risk is purely in an
exchange trading activities on behalf of the bank do so accounting sense, it will have a real implication for bank if
within a written code of conduct governing foreign exchange regulatory capital falls below the minimum requirement due to
dealing. Such a code of conduct should include guidance excessive shock from the decline in market value of securities
respecting trading with related parties and transactions the bank holds.
in which potential conflicts of interest exists. These
Measuring Equity Price Risk
should include trading with affiliated entities, personal foreign
exchange trading activities of foreign exchange traders, The bank is yet to compute VAR on equity portfolio to
and foreign exchange trading relationships with foreign measure Equity Price Risk but managing the risk by keeping
exchange and money market brokers with whom the bank its exposure within the regulatory limits. As on 31 December
deals. Each bank should ensure that these guidelines are 2013, total exposure to capital market was 45.28 % of banks
periodically reviewed with all foreign exchange traders. Paid up Capital, Share premium, Retained Earnings and
Statutory Reserve against regulatory requirement of 25%.
Independent audits
Marking to Market is the tool bank applies offsetting losses
Independent audits are a key element in managing and arisen from changes in market price of securities. As of 31
controlling foreign exchange risk management program. December 2013, bank set aside Tk. 86.00 crore charging
Bank use the independent audit team to ensure compliance its profit and loss account to cover the differential amount
with, and the integrity of, the foreign exchange policies and between purchase price and market price of shares and
procedures. Independent audits test the bank’s foreign securities under its portfolio.
exchange risk management activities in order to:
Independent Audit
a. ensure foreign exchange management policies and
procedures are being adhered to; Independent audits provide an objective assessment of
the securities portfolios’ existence, quality and value, the
b. ensure effective management controls over foreign
integrity of the securities portfolio management process,
exchange positions;
and they promote the detection of problems relating thereto.

143
Independent audit ensures that: marked HIGH, it is referred to MANCOM.
a. investment in securities activities are in compliance with
bank’s securities portfolio management policies and
procedures, and with the laws and regulations to which
these activities are subject;
b. securities transactions are duly authorized and accurately
and completely recorded on the books of the bank;
c. recorded securities are conservatively valued on the
books of the bank;
d. securities held by depositories to the order of the bank
conform with the records of the bank;
e. management has established suitably designed controls
over securities positions and that such controls operate
effectively;
f. adequacy and accuracy of management information
reports regarding the bank’s securities portfolio
management activities; and
g. personnel involved in securities portfolio management are
provided with accurate and complete information on the
bank’s securities portfolio management policies and risk
limits and have the expertise required to make effective
decisions consistent with these policies. Management of Money Laundering Risk
Management of Operational Risk Money laundering risk is defined as the risk of direct and
indirect losses incurred by the bank due to lack of diligence
Operational Risk: in applying appropriate KYC procedures. These losses could
Operational Risk is defined as the risk of unexpected losses probably have been avoided and damage to the bank’s
due to physical catastrophe, technical failure, and human reputation significantly diminished had the bank maintained
error in the operation of a bank; including fraud, failure of effective KYC program.
management, internal process errors and unforeseeable The bank has established separate Central Compliance
external events. Unit (CCU) and appointed a senior official as Head of
Operation risk is different as there is no upside of this risks – CCU to ensure compliance of Anti-Money Laundering
these risk can’t be taken for direct reward. Thus objective of Prevention Act and Anti-Terrorism Act. The CCU nominates
the management of operational risk is to minimize the risk in Department Anti-Money Laundering Compliance Officer
cost effective manner, if elimination is not possible. (DAMLCO) and Branch Anti-Money Laundering Compliance
Officer (BAMLCO) and guides them about their day to day
Currently bank is not using any model or tool to capture
compliance activities.
operational loss data for historical analysis rather it is a self
assessment process. Bank has a separate Operational Risk The CCU arranges DAMLCO and BAMLCO conference
Management unit reporting to the Head of Internal Control every year and train up bank employees through in-house
and Compliance Division. experts and also hires experts from BB. The core roles and
responsibilities of CCU are as follows:
Operational Risk governance:
 Ensure compliance of the Bank’s Anti-Money Laundering
Operational Risk Management Unit is primarily responsible (AML) & Countering Financing of Terrorism (CFT) Policy
for risk identification, measurement, monitoring, control, and and review & update the policy as and when necessary.
reporting of operational risk. This unit presently reports to
 Set strategy and program for combating Money
Head of ICCD (Internal Control and Compliance Division).
Laundering and Terrorist Financing.
Besides, there is a committee called ‘Bank Operational Risk
Committee’ (BORC) that reports to MD & CEO, plays the  Ensure appropriate training for the employees on AML
supervisory role in this respect. issues so that employees are aware of the regulatory
issues to discharge their responsibilities effectively and
Operational Risk Mitigation & Control: efficiently.
Operational risks are analyzed through review of  Examine and analyze the STR report received from
Departmental Control Function Check List (DCFCL). This branches and if required, report the same to Bangladesh
is a self assessment process for detecting HIGH risk areas Bank.
and finding mitigation of those risks. These DCFCLs are
 Address any query from Bangladesh Financial
then discussed in monthly meeting of Bank Operational
Intelligence Unit (BFIU) for any account of a customer.
Risk Committee (BORC). The committee analyze HIGH and
MODERATE risk indicators and set responsibility for specific  Freeze/mark “no debit” or withdrawal option as
people to resolve the issue. If anything remains unresolved or instructed by BFIU.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

Management of Information Technology and information about their customers, employees, products,
Communication Risk services, research and financial status and people makes
relation with EBL based on trust and reliability and perceives
Information Technology and Communication (ICT) risk is
EBL as convergent entity for safe keeping the money,
defined as risk of direct or indirect loss resulting from (i)
information and other assets. In return EBL always pay
Unacceptable use of the ICT system by or through staff,
greater values to customer information and assets and
contractors, partners and former employees, (ii) breaches
protects those from any type of unauthorized use and/
in established defenses, poor/changes to configuration
or fraud. That’s why EBL IT Division has involved in best
without risk analysis, (iii) Systems lifecycle management, poor
practices to identifying and assessing information and related
requirements definition, poor system design and inadequate
technological risks and also to ensure acceptable level of
testing, and (iv) inadequate resilience, poor business
security establishing security standards and controls against
continuity management.
threats, vulnerabilities, attacks and frauds through its IT
In this 21st century, information is treated as the most Security Department.
valuable as well as vulnerable asset and needs to be suitably
In-addition, IT Division is protecting and ensuring the
protected which can ensure business continuity, minimize
confidentiality, integrity, and availability of information
business risk, maximize return on investments and can help
systems and related technology in today’s highly cyber
business to gain a competitive edge and opportunities. As
threatened environment. Some controls are shown in the
banking business, EBL amass a great deal of confidential
following:

Risk Indicators Controls

IT Security Policy (i) EBL has comprehensive IT Security Policies and procedures which are formally documented
and endorsed by top management.
(ii) IT Security Policies and procedures are reviewed periodically.
(iii) Approved IT Security Policies, procedures and amendments are communicated/ distributed
to concern departments/ branches duly.
(iv) IT strictly follows IT Security Policy, procedures and request others to do the same.
IT Operation Manuals IT Division has process guideline/manual for all key activities and operations.
IT Organogram IT Division has approved organogram chart.
IT Strategy/Plan EBL IT has formally documented IT Strategy and short term plans to achieve the strategy.
Job Descriptions (JD) Each staff in IT Division has own Job description (JD). IT maintains approved roster schedule.
IT Security Training & EBL IT ensures that all IT personnel (including new joiners) are getting proper education, training,
Awareness, Job related updates and awareness on relevant job functions, IT security activities and business foundations.
training
Protection of Sensitive 1. EBL IT has established standard Physical & Environmental Security Measures (e.g. Locked
Area/ Information Store & Door, Locked rack, CCTV, AC, Fire Extinguisher, etc.) to all Sensitive area (e.g. Data Centre,
Processing Zone (ISPZ) Disaster Recovery Site, Power Rooms, Server Rooms, etc.).
2. IT has standard Logical Security Measures (e.g. Access card, Password Protected Server,
Access Log, Measuring Device Logs, Periodic Testing Results, etc.) to all core device
(server, PC, etc.), connecting device (switch, router, etc.), security device (firewall, IDS, etc.),
all applications (core banking system, antivirus, firewall, VPN, utilities, etc.), databases,
networks and others.
3. EBL IT has prescribed access request and revocation form for security zone.
4. IT has authorized and updated access list for security zones.
5. IT maintains and reviews visitor book for accessing security zone.
6. IT performs testing of measuring and controlling devices/systems (e.g. smoke, fire, water
detector).
Problem Management IT Division handles all system and device related problems with adequate care and as per
approved process guideline and maintains all logs with resolution.
Change Management IT division manages all changes as per approved policy and process and also maintains all logs/
forms.
Asset Management 1. All IT Assets are identified through tag/label and covered by insurance.
2. IT Assets inventory is adequately maintained and reviewed periodically.
3. IT Asset purchase, use, destroy, render all are done as per policy.
User Management IT provides necessary hardware-PC, UPS, Printer, email, internet and create, delete or modify
user accounts, passwords, role/rights, etc. through proper requisition.
Network Management IT has standard design and practice in network connectivity, access, build-up, configuration,
monitoring, maintenance and security.
Business Continuity IT has Business Continuity Management (BCM) to support and handle any human made or
Management natural incident/disaster; moreover regular backup schedule and retention avoids the risk of
data loss based on the criticality of the system. All incidents and failure logs are investigated and
brought to resolution.

145
Management of Reputational Risk Qualitative statements are agreed as below:
Reputation Risk May arise from the possibility that negative i. Under no circumstance bank’s reputation to be
publicity regarding the bank and its business practices, in the compromised by revenue generating activities.
territory or elsewhere through related entities, and whether ii. EBL shall always avoid potential brand damaging issues.
accurate or not will adversely impact the operations and
iii. EBL shall avoid anti environment and anti social elements
positions of the bank.
in its business.
Reputation risk is difficult to measure and manage. The
Bank is not using any technique to quantify reputation risk.

Risk Reporting

Self assessed risk rating

Risk Category Risk analysis and management actions
2013
Effectiveness of Credit Policy Low Credit policy manual reviewed and effectiveness of credit
Risk arises where credit policy policies assessed regularly based on feedback from the
amendments do not keep pace related departments. Amendments made to credit policies
with changes in the local and are approved by the Board of Directors; and procedures by
global environment. the Managing Director & CEO. Performance against internally
defined risk appetite and regulatory ones reviewed. Potential
risk exposures arising from changes in the local and global
economic environment monitored. Reports are circulated to
relevant Business Units, Bank Risk Management Committees
and Board Risk Committee.
Adequacy of Portfolio Moderate The credit quality of the corporate banking portfolio has
monitoring Risk arises where diluted in 2013. Corporate credit portfolio represents 73
systems and controls are not percent of bank’s total loans and advances. Corporate
in place to regularly assess the portfolio distribution in terms of internal rating in the year
health of the credit portfolio. 2013 & 2012 is presented below.

Credit Concentration Risk Low Sectoral Exposure:

Sectoral concentration risk is measured by Harfindahl-
[Risk arises where Credit Hirschman Index (HHI). As on 31 December 2013 index value
Portfolio is not sufficiently was 0.08 that indicates low concentration.
diversified]

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

Self assessed risk rating

Risk Category Risk analysis and management actions
2013

Moderate Top 20 customer exposure:

Fund based exposure to top 20 customers are measured as
percentage of total loans and advances. Some consideration
to top 20 customers exists since the EBL has about 72
percent exposure in corporate banking. The bank pursuing
its business in SME sector since last seven years to reduce
concentration on large borrower ad SME portfolio now
consists about 15 percent of total portfolio. Bank shall
continue its priority in SME sector to reduce concentration
risk on large borrowers.

Adequacy of Recovery Process Moderate Non Performing Loans (NPL):

Gross NPL and net NPL (Gross NPL less specific provision
and interest suspense) as percentage of Loans and
[Risk arises where systems
Advances for last five years are shown below:
and controls are not in place to
monitor recoveries
and adequate bad debt
provisioning]

The challenging external environment spurred the Bank

to look at different ways of restricting the growth of NPA
during the year. Strategies were adopted to identify accounts
reflecting signs of delinquency and proactive measures
were taken to prevent such accounts migrating to the
non performing category by restricting existing exposure
according to revised cash flow. Furthermore the recovery
processes were strengthened and minimum regulatory loan
loss provision has been provided.

147
 Self assessed risk rating
Risk Category Risk analysis and management actions
2013
Risk arising from inability to Low We continuously review liquidity policy and contingency
raise capital in a liquidity crisis. funding plan to address funding methods in an emergency
situation. Since the bank is yet to issue sub debt to raise
capital, its ability to raise capital remains better.
Risk arising from inability to Low Reliance on short term interbank borrowings decreased in
meet maturing deposit liabilities 2013 since lower demand for credit was prevailed in the
as they fall due. market. Asset Deposit (AD) ratio was around 75 percent
throughout the year. Adherence to the statutory liquid asset
ratio (SLR) monitored. The SLR mandates that 19% of all
liabilities excluding shareholder funds should be held in
defined liquid assets.
Risk of potential losses which Low Bank has implemented stress tests to measure the resilience
could arise from low liquidity in of its liquidity if average withdrawal increased by six percent
markets. in consecutive five working days. Stress test result as on 31
December shows that the bank will remain liquid under such
stress.
Risk arising from adverse Low The impact of interest rates on portfolios is minimal due
movements in interest rates. to the Bank holding treasury bills and bonds with short
maturities and mainly for maintenance of SLR.
Risk arising from Maturity Low Contractual maturity mismatch of Assets and Liabilities
Mismatch reviewed monthly and implications identified. Risk from such
mismatch was low in 2013 as the market was liquid and
availability of customers’ deposit was adequate.
General appetite for Market Low We continuously review the Treasury Policy to incorporate
Risk based on Treasury activity regulatory developments and internal decision-making
process.
Equity Risk Low EBL’s equity portfolio made a very low return in 2013 which
[Risk arising from adverse is also reflected in the poor performance of the local stock
movements in stock markets] market indices.
Close monitoring of equity portfolio and benchmark indices
by Investment Committee is the key tool for managing this
risk. Adequate provision has been provided to offset the risk
where market value of equity is lower than the investment.
Foreign Exchange Risk Low Bank mainly holds USD and there is a regulatory limit for
[Risk arising from unhedged Net Open Position, time to time set by Bangladesh Bank. In
foreign exchange positions and 2013, exchange rate was stable though local currency gained
poor treasury controls] against US dollar. Bangladesh Bank intervention kept the rate
exporter friendly.
Value at Risk (VaR) is calculated following historical value
method and limits are monitored regularly. If Fx VaR exceeds
internal limit, the issue immediately raised to the Managing
Director & CEO.
Effectiveness of Operational Moderate Operational Risk Policies reviewed during the year and
Risk Policy. updated in line with regulatory developments and internal
decisions.
Risks arising from a poor Low Bank’s operational risk management team collects
Control Environment. operational loss data from all branches of the bank. During
the year 2013, physical damage of Tk 160,000 was reported
and the bank received insurance claim in full.
Bank Operational Risk Committee (BORC) sits in
every month and resolve ‘HIGH’ risk issues reported in
Departmental Control Function Checklists.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 risk management & control environment

Self assessed risk rating

Risk Category Risk analysis and management actions
2013
Technology Risk Low Periodic review of information security to protect the Bank’s
[Risk arising from system data from unauthorized access, modification or deletion and
to ensure its confidentiality, integrity and availability. System
breakdowns and disruptions] disruptions reviewed during every month in BORC.
High Impact Unforeseen Low Risk Assessment and Business Continuity Plans reviewed
Events Risk arising due to lack across the Bank, including IT Disaster Recovery Plan.
of preparedness to natural
disasters and terrorism.
Risk arising from inadequate Low Bank is working to introduce internal loss limit to track actual
operational risk mitigation loss with the given appetite set by the Board of Directors.
strategies.
People Risk Low Talent sourcing, development, retention of top performers in
[Risk arising from inability to all departments are key focus areas. Promoting leadership
attract and retain skilled staff] and succession planning are key mitigate of people risk.

[Risk arising from outsourced Low KRIs on security service provider such as number of guards
security service Activities] on duty, shifts worked monitored and feedback given to
service provider.
Legal Risk Low Review of legal charter and monitoring of legal cases and
[Risk arising from litigation recovery process are regularly done by Special Asset
against the bank or faulty legal Management Division. Standard and Non standard contracts
documentation] and collateral documents are vetted by panel lawyers.

Stress Testing iv. Negative shift in NPL category: This shock indicator
measures additional requirement of loan loss provision
Stress testing is a simulation technique to determine the
due to negative shift of a portion of non performing loan
reactions of different financial institutions under a set of
to the next worst category. For example, Special Mention
exceptional, but plausible assumptions. EBL performs
to Sub Standard, Sub Standard to Doubtful and Doubtful
quarterly stress testing within the scope of Bangladesh Bank
to Bad & Loss. Applied levels of shock are 5%, 10%, and
DOS (Department of Off-Site Supervision) Circular: 01 dated
15%.
23 February 2011.
v. Increase of NPL in RMG and Capital Market sectors:
The scope of stress testing is limited to simple sensitivity
This shock indicator measures additional requirement of
analysis. Followings describe the methodology of stress
loan loss provision due to shift of performing loans of the
testing and calibration of shocks:
RMG and Capital Market segments directly into ‘Bad &
Credit Risk Loss’ category. Applied levels of shock are 3%, 9%, and
Stress test for credit risk assesses changes in CAR due to the 15%.
impact of the increase of non performing loans triggered by Interest Rate Risk
five pre determined shock events with three levels of shock –
Interest rate risk is potential that the value of the on balance
Minor, Moderate and Major. These five shock events are:
sheet and off balance sheet positions of the bank would be
i. Increase in NPL: This individual shock explains negatively affected with the change in the interest rates. The
the impact if a portion of performing loan directly vulnerability of adverse affect due to interest rate can be
downgraded to ‘Bad & Loss’ category that requires measured by ‘simple sensitivity’ and ‘duration gap’ analysis.
100% loan loss provision. Levels of shock are: 3%, 9%
Simple sensitivity analysis measures the impact on NII (Net
and 15%.
Interest Income) at each maturity bucket resulted from the
ii. Increase in NPL due to large top borrowers: Default change in interest rate. On the other hand Duration Gap
of large borrowers can create significant impact on Analysis measures a single duration GAP form weighted
the bank. This indicator explains the impact of three average remaining maturity of each risk sensitive assets and
standard events; default of 3 top borrowers, top 7 liabilities. Once the GAP is determined, effect on NII can
borrowers, and top 10 borrowers directly to ‘Bad & Loss’ be computed applying level of shocks. For both measures,
category. shock levels are fixed at 1%, 2% and 3%.
iii. Fall in the forced sale value of mortgaged collateral:
Exchange Rate Risk
This measures the loss bank could suffer from the
event of decrease in market value of Land & Building The stress for Exchange Rate Risk assesses the impact of
mortgaged with the bank as collateral. Standard levels of exchange rate on Capital Adequacy Ratio (CAR). The stress
shock are applied @ 10%, 20% and 40%. is determined by computing the decline of the value of

149
assets (net short/long Fx position) due to adverse change in CAR after shocks (%)
exchange rate by 5%, 10% and 15%. Individual Shocks
Minor Moderate Major
Equity Price Risk Performing loan directly 11.65 11.04 10.42
The stress for Equity Price Risk assesses the impact of the downgraded to B/L (RMG
falling price of capital market instruments on bank’s exposure sector)
in capital market. Levels of shock are 10%, 20% and 40%, Performing loan directly 11.85 11.65 11.44
which are calibrated on CAR. downgraded to B/L
Liquidity Risk (Capital Market Sector)

The stress test Liquidity risk evaluates the resilience of the Increase in NPLs due 8.59 5.50 3.69
bank if the bank faces cash withdrawal pressure above the to default of top large
average pattern for continuous five working days. A bank borrowers
is considered well liquid if it survives continuous stress for Negative shift in NPL 11.73 10.80 10.56
5 working days without resorting liquidity from outside. categories
Standard levels of shock are 2%, 4% and 6% over normal Decrease in FSV of the 11.84 11.73 11.50
withdrawal. collateral
Combined Shock Interest Rate Shock 11.52 11.08 10.64
The stress test also measures effect of combined shocks on FEx: Currency 11.93 11.92 11.90
Capital Adequacy Ratio for assumptions includes: decrease Depreciation
in the FSV of the collateral, increase in Non Performing Equity Shock 11.75 11.55 11.15
Loans, negative shift in NPL categories, change in interest
rate, change in foreign exchange rate, and change in the Level of Shock
market value of shares and securities. Combined shocks from Particulars
Minor Moderate Major
all these events are calibrated on CAR.
CAR after combined 9.78 5.42 0.63
Credit shock under Basel II shock
Standardized approach of Basel II allows banks to compute
its Risk Weighted Assets following external rating of the Level of Shock
Particulars
borrower. Higher the external rating, lower the risk weight; Minor Moderate Major
hence regulatory requirement of capital depends on the
CAR after credit shock 11.23 11.17 11.11
external rating customers. Under such circumstance, if credit
under Basel II (Balance
rating of any customer downgraded, CAR of the bank will be
Sheet)
affected. The stress test measures how CAR will be affected
if risk weighted assets are increased due to downgrading of
Level of Shock
customer’s external rating. Applied levels of shock are 5%, Particulars
10% and 15%. Minor Moderate Major
CAR after credit shock 11.87 11.82 11.78
Summary of Stress Testing Results as on 31 December
under Basel II (Off
2013 is presented below:
Balance Sheet)
Stress Test : Simple Sensitivity Analysis
Positions as on : 31 December 2013

Regulatory CAR : 10.00%

CAR before shock : 11.95%

EASTERN BANK LIMITED ANNUAL REPORT 2013

disclosures on risk based
capital (Basel II)
Background: These disclosures under Pillar III of Basel II are established to do merchant banking operations, obtained
made following revised ‘Guidelines on Risk Based Capital approval from BSEC for Merchant Banking License in January
Adequacy (RBCA)’ for banks issued by Bangladesh Bank 2013. It is running business in full scale.
(Central Bank of Bangladesh) in December 2010. These EBL Finance (HK) Limited: The first foreign subsidiary of
quantitative and qualitative disclosures are intended to EBL was incorporated on 28 November 2011 with Hong Kong
complement the Minimum Capital Requirement (MCR) under (HK) authority to act as a routing and discounting intermediary
Pillar I and Supervisory Review Process (SRP) under Pillar II of LCs issued by EBL and to advise other local and foreign
of Basel II. banks’ LCs. EBL obtained all the required licenses from
The purpose of these disclosures is to present relevant Bangladesh and HK authority. It is now in full operation.
information on adequacy of capital in relation to overall risk EBL Asset Management Ltd.: A private limited company
exposures of the Bank so that the market participants can formed to grab the potential business opportunity in
assess the position and direction of the Bank in making managing mutual funds and institutional wealth. EBL has
economic decisions. already obtained permission from Bangladesh Bank and is
Consistency and Validation: The quantitative disclosures under process of applying for the license to BSEC.
are made on the basis of consolidated audited financial Restriction on movements of funds: The rules and
statements of EBL and its Subsidiaries as at and for the regulations of BRPD of Bangladesh Bank that govern ‘Single
year ended 31 December 2013 prepared under relevant Borrower Exposure Limit’ for the customers are equally
international accounting and financial reporting standards applicable for the Bank in financing its own subsidiaries. Bank
as adopted by the Institute of Chartered Accountants of is following latest Bangladesh Bank circular in determining
Bangladesh (ICAB) and related circulars/instructions issued maximum amount of finance to the subsidiaries of the Bank.
by Bangladesh Bank from time to time. The assets, liabilities, As on year end 2013, EBL had a credit line to ‘EBL Securities
revenues and expenses of the subsidiaries are combined Ltd.’of BDT 950 million and a Guarantee of BDT 150 million
with those of the parent company (EBL), eliminating inter- (against clearing settlements with DSE).
company transactions. Assets of the subsidiaries were risk
weighted and equities of subsidiaries were crossed out with Aggregate amount of capital deficiencies: As on the
the investment of EBL while consolidating. reporting date there was no such deficiency.

So, information presented in the ‘Quantitative Disclosures’ Capital Structure

section can easily be verified and validated with
Summary information on the terms and conditions of tier
corresponding information presented in the consolidated and
I & II capital instruments: Regulatory capital, as stipulated in
separate audited financial statements 2013 of EBL (Group
the revised RBCA guidelines by BB, is categorized into three
and the Bank) available on the website of the Bank (www.ebl.
tiers according to the order of quality of capital (Tier I, II & III).
com.bd).
Tier I or Core Capital comprises the highest quality capital
Scope of Application components, Tier II or Supplementary Capital comprises
capital elements that fall short of some of the characteristics
Applicable top corporate entity: The Risk Based Capital of core capital but contribute to overall strength of the Bank
Adequacy framework applies to Eastern Bank Limited (EBL) and Tier III or Additional Supplementary Capital comprises
on ‘Consolidated Basis’ as there were three operational short term subordinated debt with maturity of two to five
subsidiaries of the Bank as on the reporting date i.e. 31 years. As on year end 2013, there was no tier III component
December 2013. However, ‘Solo Basis’ information has been of capital at EBL. Component wise details are presented in
presented beside those of ‘Consolidated Basis’ to facilitate the quantitative disclosure part that follows:
comparison.
Conditions for maintaining regulatory capital (solo
Entities within the group: The Bank had four subsidiaries, basis): The Bank complied with all the required conditions
all of them were fully owned, as on the reporting date i.e. 31 for maintaining regulatory capital as stipulated in the revised
December 2013. RBCA guidelines by Bangladesh Bank as per following
EBL Securities Limited: Having acquired rest 40% shares details:
of a brokerage house namely ‘EBL Securities Ltd.’, EBL  The amount of Tier 2 capital will be limited to 100% of
completed full acquisition of the same in 2012. It has the amount of Tier 1 capital:
membership of both DSE & CSE and holds both broker &
dealer license for buying, selling and settlement of securities Status of Compliance: Complied.
on behalf of investors and for buying & selling of securities in  50% of revaluation reserves for fixed assets and
its own portfolio. securities eligible for Tier 2 capital:
EBL Investments Ltd.: A private limited company Status of Compliance: Complied.

151
 10% of revaluation reserves for equity instruments Status of compliance: Complied. Excess Tier-1
eligible for Tier 2 capital: capital maintained after meeting credit risk was BDT
Status of Compliance: There was no unrealized 1,878.5 million (BDT 13,245.16 - BDT 11,366.66).
gain from quoted equities as on the reporting date. Whereas capital required for meeting 28.5% of
market risks was BDT 352.25 million (BDT 1,235.95
 Subordinated debt shall be limited to a maximum of 30% X 28.5%) as on the reporting date.
of the amount of Tier 1 capital:
There are certain deductions from tier i capital which are
Status of Compliance: As on the reporting date noted with the status of compliance in the respective table
there was no subordinated debt in the capital presented below.
structure of EBL.
Quantitative Disclosures: As on the reporting date (31
 Limitation of Tier 3: A minimum of about 28.5% of market December 2013), the Bank had a consolidated capital of BDT
risk needs to be supported by Tier-1 capital. Supporting 16,871.67 million comprising Tier-1 capital of BDT 13,352.60
of Market Risk from Tier 3 capital shall be limited up million and Tier-2 capital of BDT 3,519.07 million. Following
to maximum of 250% of a bank’s Tier-1 capital that is table presents component wise details of capital (Tier-1&2) as
available after meeting credit risk capital requirement. on reporting date i.e. 31 December 2013:

(Figures are in million BDT)

A Tier – 1 ( Core Capital) Consolidated Solo (Bank)

1 Fully Paid-up Capital 6,111.80 6,111.80
2 Statutory Reserve 5,362.42 5,362.42
3 Non- repayable Share premium account - -
4 General Reserve 130.00 130.00
5 Retained Earnings 1,392.34 1,284.90
6 Minority interest in Subsidiaries - -
7 Non- Cumulative irredeemable Preference shares - -
8 Dividend Equalization Account 356.04 356.04
9 Other (if any item approved by Bangladesh Bank) - -
10 Sub-Total: (1 to 9) 13,352.60 13,245.16
B Tier -2 (Supplementary Capital)
1 General Provision (Unclassified loans + SMA+ off balance sheet exposure) 1,644.33 1,644.33
2 Assets Revaluation Reserves up to 50% 1,844.75 1,844.75
3 Revaluation Reserve for Securities up to 50% 29.99 29.99
4 Revaluation Reserve for equity instruments up to 10% - -
5 All other preferences shares - -
6 Subordinated debt - -
7 Other (if any item approved by Bangladesh Bank) - -
8 Sub total (1 to 7) 3,519.07 3,519.07
9 Deductions from tier i and ii capital (if any) - -
C Total Eligible Capital (A+B) 16,871.66 16,764.23

Capital Adequacy and occasional issue of right shares to support incremental

growth of Risk Weighted Assets (RWA). Besides meeting
Assessment of the adequacy of capital: Assessing
regulatory capital requirement, the Bank maintains adequate
regulatory capital in relation to overall risk exposures of a
capital to absorb material risks foreseen. Therefore, the
bank is an integrated and comprehensive process. EBL
Bank’s Capital Adequacy Ratio (CAR) remains consistently
follows the ‘asset based’ rather than ‘capital based’ approach
within the comfort zone since the parallel run from 1 January
in assessing the adequacy of capital to support current and
2009. During the year 2013, the CAR ranges from 11.36% to
projected business activities.
12.01% on consolidated basis and from 11.30% to 11.95 %
The Bank focuses on strengthening risk management and on solo basis against minimum requirement of 10% of RWA.
control environment rather than increasing capital to cover
Risk Management Unit (RMU) under guidance of the SRP
up weak risk management and control practices. EBL has
team/BRMC (Bank Risk Management Committee), is taking
been generating most of its incremental capital from retained
active measures to identify, quantify, manage and monitor all
profit (stock dividend and statutory reserve transfer etc.)

EASTERN BANK LIMITED ANNUAL REPORT 2013

 disclosures on risk based capital (Basel II)

risks to which the Bank is exposed to. (HoCRM) has clear responsibility for management of credit
Quantitative Disclosures: Following table shows component risk.
wise allocation of capital to meet three risks and an amount Credit risk grading and measurement: Risk measurement
of additional capital maintained over MCR i.e. 10% of along with judgment and experience play a central role in
RWA. As on the reporting date i.e. 31 December 2013, EBL informed risk taking decisions, and portfolio management.
maintained a Capital Adequacy Ratio (CAR) of 12.01% on For the purpose of risk measurement we use a numerical
‘Consolidated Basis’ and 11.95% on ‘Solo Basis’ against grading system ‘Credit Risk Grading Matrix’ (CRGM)
required minimum of 10%. We had an excess capital of BDT associated with a borrower. This CRGM is not a lending
2,823.56 million (Consolidated) after meeting all three risks as decision making tool but used as a general indicator to
on the reporting date as shown in the following table: compare one set of customers with another set, and its
(Figures are in million BDT) weighted average value indicate movement of portfolio risk.

Capital Adequacy Consolidated Solo (Bank) CRGM analyzes a borrower against a range of quantitative
and qualitative measures. Quantitative measurements
Capital requirement for Credit Risk 11,350.90 11,366.66
scale has numeric grades from 1 to 11; lower numbers are
Capital requirement for Market Risk 1,255.94 1,235.95
indicative of lower likelihood of default while 9 to 11 grades
Capital requirement for Operational Risk 1,441.26 1,425.27 are assigned to default borrowers. However, we are yet to
Minimum capital requirement (MCR) 14,048.10 14,027.88 assign Probability of Default (PD) corresponding to each
Additional capital maintained over MCR 2,823.56 2,736.35 grade and to cap exposure both at borrower and portfolio
Total capital maintained 16,871.66 16,764.23 level against each risk grade. No score card or rating model
Risk weighted assets 140,480.99 140,278.79 for retail and SME (small) borrowers are currently in practice;
Total capital ratio (CAR) 12.01% 11.95% rather borrowers are assessed against some pre-approved
Tier I capital ratio 9.50% 9.44% criteria outlined in Product Program Guidelines (PPG), which
are approved by the Board of Directors.
Credit Risk Credit risk mitigation: Potential credit losses from any given
Qualitative Disclosures: account, customer or portfolio are mitigated using a range of
tools such as collateral, netting agreements, credit insurance,
Definition of Credit Risk: Credit risk is the risk of loss that and other guarantees. The reliance that can be placed on
may occur from the failure of any counterparty to make these mitigants is carefully assessed in light of issues such
required payments in accordance with agreed terms and as legal certainty and enforceability, market valuation, and
conditions and/or deterioration of creditworthiness. Credit counterparty risk of the guarantor. Collateral types which
risk may arise from both the banking book and trading are eligible for risk mitigation include: cash; residential,
book and is managed through a framework set by policies commercial and industrial property; fixed assets such as
and procedures established by the Board of Directors. The motor vehicles, aircraft, plant and machinery; marketable
responsibility is clearly segregated between originator of securities; commodities; bank guarantees; and letters
business transaction and approver in the risk function. of credit. Collateral is valued by independent third party
Credit approval: Board of Directors of EBL has the sole surveyor in accordance with our credit policy and procedures.
authority to approve any credit exposure and to sub delegate Credit monitoring: Credit exposures and portfolio
such authority to the Managing Director & CEO with or performance are monitored at least quarterly at EBL.
without authority for further sub delegation. We have adopted Corporate and medium enterprise accounts are continuously
individual authority based approval structure to ensure better monitored under a clearly set out ‘Early Alert’ policy. Sign of
accountability. Currently, MD & CEO’s lending authority is deteriorations are well defined and broad guidelines are given
further sub delegated to Head of Credit Risk Management in the credit policy to be followed by business origination
Division and Departmental Heads. units. Early Alerts are raised for financial deterioration,
Credit policies and procedures: The Credit Policy Manual management weakness, irregular repayments, breach of
contains the core principles for identifying, measuring, covenants, eroding position in the industry, etc. If early alerts
approving, and managing credit risk in the bank. These are raised, account plans are then reevaluated; remedial
policies are established by the Board of Directors, and are actions are agreed and monitored. Remedial actions include
designed to meet the organizational requirements that exist but not limited to exposure reduction, security enhancement,
today, and to provide flexibility for future. These policies exiting the relationship or immediate movement to our
represent the minimum standards for credit extension by Special Asset Management Division (SAMD) – the dedicated
the bank, and are not a substitute for experience and good loan recovery unit of the Bank.
judgment. Definitions of past due and impaired credit: To define past
There is a comprehensive credit appraisal procedure that due and impairment through classification and provisioning,
covers industry/business risk, management risk, financial the bank follows Bangladesh Bank Circulars and Guidelines.
risk, facility structure risk, security risk, environmental risk, The summary of some objective criteria for loan classification
reputational risk, and account performance risk. Credit risk and provisioning requirement as stipulated by the central
management function is independent of business originating bank BRPD circular no. 14 dated 23 September 2012 are as
functions to establish better control and check, and to reduce below:
conflict of interest. The Head of Credit Risk Management

153
 Loans Classification
Sub Standard Doubtful Bad & Loss
Type of Facility
Overdue Provision Provision Overdue Provision
Overdue Period
Period (%) (%) Period (%)
Continuous Loan 3 months or more but 20% 6 months or more but 50% 9 months or 100%
less than 6 months less than 9 months more
Demand Loan 3 months or more but 20% 6 months or more but 50% 9 months or 100%
less than 6 months less than 9 months more
Fixed Term Loan more 3 months or more but 20% 6 months or more but 50% 9 months or 100%
than Tk. 10 lac less than 6 months less than 9 months more
Fixed Term Loan up to 6 months or more but 20% 9 months or more but 50% 12 months or 100%
Tk. 10 lac less than 9 months less than 12 months more
Short Term 12 months or more 5% 36 months or more but 5% 60 months or 100%
Agricultural & Micro but less than 36 less than 60 months more
Credit months
Specific provision for classified loans and general provisions for unclassified loans and advances and contingent assets are
measured following BB prescribed provisioning rates as mentioned below:

General provision on: (for both Standard and Special Mention Account) Rate
Unclassified general loans and advances 1%
Unclassified small and medium enterprise 0.25%
Loans to BHs/MBs/SDs against shares etc. 2%
Unclassified loans for housing finance and on loans for professionals 2%
Unclassified consumer financing other than housing financing and loans for professionals 5%
Short term agri credit and micro credit 5%
Off balance sheet exposures 1%
Specific provision on:
Substandard loans and advances other than short term agri credit and micro credit 20%
Doubtful loans and advances other than short term agri credit and micro credit 50%
Bad/loss loans and advances 100%
Substandard short term agri credit and micro credit 5%
Doubtful short term agri credit and micro credit 5%
Problem Credit Management: The Bank has a Special Asset Management Division (SAMD), dedicated for management,
settlement and recovery of problem credits. Major responsibility of this department is to formulate strategy and action plans
for minimization of risk, prevention of loss, maximization of recoveries, and restructuring, direct recovery, and/or pursuing legal
actions.

Quantitative Disclosures:
Total gross credit risk exposures by major types: Bangladesh Bank guidelines on Basel II, stipulated to segregate bank’s
asset portfolio into different categories, and the below table shows our gross exposure in each asset category.

(Figures are in million BDT)

Exposures
SL. Exposure type Consolidated Solo (Bank)
a) Cash 1,752.69 1,752.66
b) Claims on Bangladesh Government (Other than PSEs) and BB (denominated in 6,430.87 6,430.87
domestic and foreign currency)
Different Risk Weights 350.85 350.85
Unrated 41.00 41.00

EASTERN BANK LIMITED ANNUAL REPORT 2013

 disclosures on risk based capital (Basel II)

Exposures
SL. Exposure type Consolidated Solo (Bank)
c) Claims on Banks and NBFIs (denominated in domestic as well as foreign currency)
i) Original maturity over 3 months: - -
Different Risk Weights 1,220.00 1,220.00
Unrated 250.00 250.00
ii) Original maturity less than 3 months 11,014.97 10,569.60
d) Claims on Corporate (excluding equity exposures): - -
Different Risk Weights 35,166.10 35,166.10
Unrated 34,447.75 34,447.75
e) Claims under Credit Risk Mitigation (Corporate) 50.00 50.00
f) Claims categorized as retail portfolio & Small Enterprise (excluding consumer finance 5,794.56 5,794.56
and staff loans)
g) Consumer finance 6,870.08 6,870.08
h) Claims fully secured by residential property (excluding staff loan) 937.70 937.70
i) 1. Past Due Claims (Risk weights are to be assigned net of specific provision):
Where specific provisions are less than 20 per cent of the outstanding amount of the 984.27 984.27
past due claim
Where specific provisions are no less than 20 per cent of the outstanding amount of 378.02 378.02
the past due claim
Where specific provisions are more than 50 per cent of the outstanding amount of 417.52 417.52
the past due claim
2. Claims fully secured against residential property that are past due for more than 90 5.40 5.40
days and/or impaired and specific provision held there-against is less than 20% of
outstanding amount.
j) Capital market exposures 1,064.67 939.40
k) Unlisted equity investments and regulatory capital instruments issued by other banks 1,243.06 1,243.06
(other than those deducted from capital) held in banking book.
l) Investments in premises, plant and equipment and all other fixed assets 6,528.29 6,517.49
m) All other assets:
i) Claims on GoB & BB (e.g. Coupon Receivable from Govt. T Bonds & reimbursable 627.98 627.98
from BB on PSP, Shadharan shanchaypatra, etc.)
ii) Staff loan/investment 1,236.54 1,236.54
v) Other assets (net of specific provision, if any) 1,593.72 2,007.72
Total: 118,406.02 118,238.56
Geographical distribution of exposures: Our business is concentrated in two major cities – Dhaka and Chittagong as
country’s business activities are concentrated in these two locations. Below table shows our credit exposure as at year end
2013 in different divisions:
(Figures are in million BDT)

Division CORP SME CNB (incld. Staff) Total

Dhaka Division 51,033.81 10,275.02 8,812.40 70,121.24
Chittagong Division 22,577.04 4,454.36 2,872.89 29,904.29
Sylhet Division - 302.23 196.08 498.31
Rajshahi Division 308.48 584.54 198.50 1,091.52
Khulna Division - 920.20 239.81 1,160.01
Rangpur Division - 104.07 30.78 134.85
Total 73,919.33 16,640.42 12,350.47 102,910.22

155
Industry wise distribution of exposures: Major industry wise credit exposure of the bank (not group) as on 31 December
2013 was as below, and the numbers remained within the appetite of the bank as approved by the Board of Directors.
(Figures are in million BDT)

Industry/sector 31-12-2013 Mix % 31-12-2012 Mix %

Commercial and Trading 18,768.87 18.2% 16,752.93 17.3%
Construction 1,606.80 1.6% 1,141.40 1.2%
Sugar & Edible Oil Refinery 2,997.69 2.9% 4,497.19 4.6%
Crops, fisheries & live stocks 1,593.56 1.5% 2,062.27 2.1%
Electronics & Electrical Goods 2,951.15 2.9% 3,590.71 3.7%
Individuals 12,344.81 12.0% 11,634.71 12.0%
Pharmaceuticals Industries 4,034.23 3.9% 3,102.20 3.2%
Readymade Garments Industry 10,700.66 10.4% 11,055.38 11.4%
Ship Breaking Industry 3,196.89 3.1% 5,508.78 5.7%
Metal & Steel Products 7,867.56 7.6% 7,116.32 7.4%
Transport & E-communication 6,015.25 5.8% 7,089.52 7.3%
Textile Mills 9,771.75 9.5% 8,361.72 8.6%
Power Sector 2,539.08 2.5% 2,747.14 2.8%
Others 18,521.91 18.0% 12,059.47 12.5%
Total 102,910.22 100.0% 96,719.74 100.0%

Residual contractual maturity of credit exposure: Residual maturity of credit exposure in our major business (counterparty
type) as on 31 December 2013 was as below:
(Figures are in million BDT)

Total (with
below 90 3-6 More than 5
Business Segment 6-12 months 1-5 years OBU) as on
days months years
31.12.2013
Consumer 4,569.59 451.86 1,037.59 4,199.19 853.94 11,112.18
Corporate 37,337.71 18,406.53 4,090.84 12,924.35 1,159.89 73,919.33
SME (small) 399.00 525.65 1,126.35 6,352.40 - 8,403.39
SME (medium) 4,571.75 1,555.96 1,314.13 795.18 - 8,237.03
Staff 1.81 1.49 6.89 192.34 1,035.77 1,238.29
Total 46,879.86 20,941.49 7,575.81 24,463.46 3,049.60 102,910.22

Business segment wise impaired loans: as on 31 December 2013:

(Figures are in million BDT)

Total Classified
Business type SMA SS DF BL
Loans and SMA
Corp 214.97 201.71 - 2,221.05 2,637.72
SME (small) 261.99 85.44 75.25 301.48 724.15
SME (medium) 84.10 0.24 1.47 108.03 193.84
Consumer 561.06 287.38 76.71 2,630.55 3,555.71
Total 1,122.12 574.77 153.43 5,261.11 7,111.42

Gross Non Performing Assets (NPAs): As on the reporting date i.e. 31 December 2013, NPA ratio was 3.59%.
Movement of NPAs: Movement of classified loans during the year is presented in the following table:
(Figures are in million BDT)

Particulars 2013 2012

Opening Balance as on 01 January 3,070.77 1,560.59
Additions during the year 3,998.58 2,255.63
Reductions during the year 3,372.13 745.45
Closing Balance as on 31 December 3,697.23 3,070.77

EASTERN BANK LIMITED ANNUAL REPORT 2013

 disclosures on risk based capital (Basel II)

Movement of Specific Provisions for NPAs (provisions for classified loans) is presented in following table:
(Figures are in million BDT))

Particulars 2013 2012

Opening balance of provision held 1387.32 866.44
New provisions during the year 817.40 845.88
Provisions no longer required (written off loans) 274.78 (325.00)
Closing balance of provision held 1,929.94 1,387.32

Equities: Disclosures for Banking Book Positions

Nature and purpose of Equity investment: Investment of EBL in equity securities is broadly categorized into two parts:
securities (Ordinary shares, Mutual Fund) that are traded in the secondary market (trading book assets) and Un-quoted
securities (including preference share and subscription for private placement). Unquoted securities are categorized as
banking book equity exposures which are further subdivided into two groups: unquoted securities which are invested without
any expectation that these will be quoted in near future (i.e. held to maturity) and securities that are acquired under private
placement or IPO and are going to be traded in the secondary market after completing required formalities. Usually these
securities are held for trading or investment for making capital gains.
Policies for valuation and accounting of equity holdings: For valuation of Unquoted HTM and quoted HFT equity securities,
relevant BFRS and Bangladesh Bank circulars are followed respectively. Unquoted HTM securities are recorded at purchase
price including transactions costs, if any and are impairment tested whereas quoted HFT securities are marked to market
quarterly. Revaluation loss (if any) is booked accordingly calculated on portfolio basis (gain net off). No unrealized gain is
booked against HFT equity securities as per Bank policy. Dividends received from these securities are accounted for as and
when received.
Quantitative Disclosures: As EBL Securities Limited maintains an insignificant portfolio of proprietary equity investment,
comparison between consolidated and solo (bank) positions showed almost identical balance as on the reporting date i.e. 31
December 2013. For unquoted equities (including private placement), market value has been assumed identical to cost in the
following table only to facilitate calculation of unrealized losses.
(Figures are in million BDT)

Cost Market Value

Consolidated Solo (Bank) Consolidated Solo (Bank)
Quoted shares and Mutual Funds 3,542.35 3,428.14 2,672.34 2,572.43
Unquoted shares and Mutual Funds: 60.90 60.90 60.90 60.90
Unquoted (HTM) 29.60 29.60 29.60 29.60
Private placement 31.30 31.30 31.30 31.30
Total 3,603.25 3,489.04 2,733.24 2,633.33

Other information related to equity investments including capital requirement for the year has been presented as follows:

(Figures are in million BDT)

Consolidated Solo (Bank)

Cumulative realized gains (losses) arising from sales 54.95 54.95
Total unrealized gains (losses) (870.01) (855.72)
Total latent revaluation gains (losses) - -
Any amount of the above included in Tier 2 capital - -
Capital required for quoted securities: 534.47 514.49
Specific risk 267.23 257.24
General market risk 267.23 257.24

Interest Rate Risk In The Banking Book

Interest rate risk is the risk that a bank will experience deterioration in its financial position as interest rates move over time.
Interest rate risk is typically divided into two parts:
– Traded interest rate risk
– Non-traded interest rate risk (balance sheet)

157
Interest rate risk in the banking book (IRRBB) arises from a bank’s core banking activities. It arises from differences between
the timing of rate changes and the timing of cash flows (re-pricing risk); from changing rate relationships among yield curves
that affect bank activities (basis risk); from changing rate relationships across the range of maturities (yield curve risk); and from
interest-rate-related options embedded in bank products (option risk).
The process of interest rate risk management by the bank involves determination of the business objectives, expectation about
future macro-economic variables and understanding the money markets and debt market in which it operates. Interest rate risk
management also includes quantifying the appetite for market risk to which bank is comfortable.
The Bank uses the following approach to manage interest rate risks inherent in the Balance sheet:
Simple Gap Analysis: Traditional Gap analysis of on-balance sheet Asset Liability Management (ALM) involves careful
allocations of assets and liabilities according to repricing/maturity buckets. This approach quantifies the potential change in net
interest income using a specified shift in interest rates, e.g. 100 or 200 basis points, or a simulated future path of interest rates.
Assumptions: For Gap analysis, bank considers the following:
 For fixed-rate contract, remaining maturity is considered.
 For contracts with provision of re-pricing, time remaining for next re-pricing is considered.
 For assets and liabilities which lack definitive re-pricing interval or for which there is no stated maturity, bank determines
the core and volatile portion. For asset, volatile portion is bucketed till 3 months using historical repayment behavior and
stable portion is bucketed in 6-12 months bucket. For liabilities, volatile portion is bucketed till 1 year using historical
withdrawal behavior and stable portion is bucketed in over 1 year segment.
Also, following assumptions are met:
 The main assumption of gap analysis is that interest rate moves on parallel fashion. In reality however, interest rate does
not move upward.
 Contractual repayment schedule are met.
 Re-pricing of assets and liabilities takes place in the mid-point of time bucket.
 The expectation that loan payment will occur in schedule.
 Optionality embedded in different products is not considered.

Quantitative Disclosure: Result of Gap analysis as on December 31, 2013:

Particulars 3 month 6 Months

For 100 basis point increase/decrease in Interest rate, Impact on NII +-48.1 million +-49.1 million
For 200 basis point increase/decrease in Interest rate, Impact on NII +-96.2 million +-98.2 million
Duration Analysis: The focus of the Duration Analysis is to measure the level of a bank’s exposure to interest rate risk in
terms of sensitivity of Market Value of its Equity (MVE) to interest rate movements. Duration Gap can be used to evaluate the
impact on the Market Value of Equity of the bank under different interest rate scenarios. ALCO monitors the Leveraged Liability
Duration and duration gap of the total bank balance sheet on a quarterly basis to assess the impact of parallel shift of the
assumed yield curve.

Dec-31-2012 Jun-30-2013 Dec-31-2013

Duration of Asset 0.88 0.92 1.04
Duration of Liabilities 0.34 0.41 0.41
Leveraged Liability Duration 0.30 0.67 0.67
Duration Gap 0.58 0.35 0.37

Market Risk
Qualitative Disclosures:
Market Risk: Market Risk is defined as the possibility of loss due to changes in the market variables. It is the risk that the value
of on/off-balance sheet positions will be adversely affected by movements in equity price, interest rate and currency exchange
rates. The objective of our market risk policies and processes is to obtain the best balance of risk and return whilst meeting
customers’ requirements. The primary categories of market risk for the bank are:
Interest rate risk: arising from changes in yield curves, credit spreads and implied volatilities on interest rate options.
Currency exchange rate risk: arising from changes in exchange rates and implied volatilities on foreign exchange options.
Equity price risk: arising from changes in the prices of equities, equity indices, equity baskets and implied volatilities on
related options.
Bank has comprehensive Treasury Trading Policy, Asset-Liability Management Policy, Investment Policy approved by Board of

EASTERN BANK LIMITED ANNUAL REPORT 2013

 disclosures on risk based capital (Basel II)

Directors to assess, monitor and manage all the above market risks. Bank has defined various internal limits to monitor market
risk and is computing the capital requirement as per standardized approach of Basel II.
Methods used to measure Market Risk: Bank applies maturity method in measuring interest rate risk in respect of securities
in trading book. The capital charge for entire market risk exposure is computed under the standardized approach using the
maturity method and in accordance with the guideline issued by Bangladesh Bank.
Market Risk Management System: To manage the interest rate risk, ALCO regularly monitors various ratios and parameters.
Among the ratios, the key ratios that ALCO regularly monitors are Liquid asset to total assets, Volatile liability dependency ratio,
medium term funding ratio, Snap liquidity ratio and Short term borrowing to Liquid assets ratio. ALCO also regularly monitors
the interest rate sensitive gap and duration gap of total portfolio.
To manage foreign exchange risk of the bank, the Bank has adopted the limit by central bank to monitor foreign exchange
open positions. Foreign exchange risk is computed on the sum of net short positions or net long positions, whichever is higher
of the foreign currency positions held by the Bank.
Bank is using Value at Risk (VaR) analysis based on historical method to assess the minimum level of loss on foreign currency
holding that is likely to be exceeded at certain level of probability (5% probability) in 1 day. Also, based on VaR, bank has
set Management Trigger Point at BDT 10.00 million for aggregate currency exposure, based on 1 day VaR at 95% level of
confidence.
Value-at-Risk estimates (Loss in domestic currency) presented below:

Time Horizon
Confidence level 1 day 2 days 3 days 4 days 5 days
90% 1,458,612 1,936,841 2,221,913 2,989,821 3,001,321
95% 1,921,877 2,826,103 3,171,631 3,859,277 4,282,481
99% 3,694,004 5,469,763 5,478,434 5,384,724 7,033,220
The Bank has been active in secondary market during the year with 2.17% assets invested in equity securities as on the
reporting date. To manage equity risk, the Investment Committee of the bank ensures taking prudent investment decisions
complying sectoral preference as per investment policy of the bank and capital market exposure limit set by BB.
Quantitative Disclosures: Capital required for market risk as on the reporting date follows:
(Figures are in million BDT)

a Interest rate risk 667.37

b Equities 534.47
c Foreign exchange risk 54.10
d Commodity risk
Total 1,255.94

Operational Risk
Qualitative Disclosures:
Operational Risk: Operational risk is the risk of direct or indirect loss due to an event or action resulting from the failure of
internal processes, people and systems, or from external events. We seek to minimize exposure to operational risk, subject to
cost benefit trade-offs.
The bank captures some pre identified risk events associated with all functional departments of the bank through standard
reporting format. Bank’s Operational Risk Committee (BORC) sits every month with all these reports and decides action plans
to resolve risk issues by specific individual and/or group within an agreed timeline. The committee also escalates ‘high level
risk’ issues to MANCOM (Management Committee) and BRMC (Bank Risk Management Committee) based on importance
and urgency of taking effective decisions. BORC is responsible for setting and maintaining standards for operational risk
management and measurement, which is separate from the business functions.
Performance gap of executives and staffs: EBL is an equal opportunity employer. At EBL we recognize the importance of
having the right people at right positions to achieve organizational goals. Our recruitment and selection is governed by the
philosophies of fairness, transparency and diversity. Understanding what is working well and what requires further support is
essential to our performance management system. The performance management process aims to clarify what is expected
from employees as well as how it is to be achieved.
At the beginning of a year we adequately communicate to our direct reports what are expected from him/her during ensuing
period. A half yearly and yearly performance appraisal practices are in place to review achievements based on which rewards
and recognition decisions are made. Internal control & compliance (ICC) is continuously monitoring to minimize any potential
brand damaging performance gap by employees especially fraud-forgery, misuse of power of attorney, weak customer
services, weak internal and regulatory compliance etc.

159
However, our learning and development strategy puts special focus on continuous professional development to strengthen
individual’s skill level by removing the weakness to perform the assigned job with perfection. We have a wide range of internal
& external training programs to enhance capabilities to minimize performance gap and to contribute more to bottom line.
The reward and recognition policy of the bank is designed to motivate our people to perform better be it business or supporting
business. Our strategy of reinforcing people’s positive behaviors is based on following premises:
Is rooted in an understanding of what really motivates our people.
Encourage teamwork by creating a culture where individual and team success is recognized.
Regular benchmarking to compare our reward and recognition strategy with similar organizations.
Potential external events: We understand that business operates in an umbrella of inter connected socio-economic and
political environment. Few externalities affect business performance directly such as macro-economic conditions, regulatory
changes, change in demand, status of infrastructure whereas few factors affect operations of the business directly or indirectly
such as force shut down due to political instability, threat of vandalism to the bank’s sophisticated physical outlets including IT
equipments etc.
Policies and processes for mitigating operational risk: As there is no upside of this risk, the objective of the management of
operational risk is to minimize the risk in cost effective manner, if elimination is not possible.
Currently bank is not using any model or tool to capture operational loss data for historical analysis rather it is a self-
assessment process. Bank has a separate Operational Risk Management Unit responsible for risk identification, measurement,
monitoring, control, and reporting of operational risk.
Operational risks are analyzed through review of Departmental Control Function Check List (DCFCL). This is a self-assessment
process for detecting HIGH risk areas and finding mitigation of those risks. These DCFCLs are then discussed in monthly
meeting of Bank’s Operational Risk Committee (BORC). The committee analyzes HIGH and MODERATE risk indicators and
set responsibility for suitable personnel to resolve the issue. If anything remains unresolved or marked HIGH, it is referred to
MANCOM.
Approach for calculating capital charge for operational risk: The bank applies ‘Basic Indicator Approach’ of Basel II as
prescribed by BB in revised RBCA guidelines. Under this approach, banks have to calculate average annual gross income
(GI) of last three years and multiply the result by 15% to determine required capital charge. Gross Income is the sum of ‘Net
Interest Income’ and ‘Net non-interest income’ of a year or it is ‘Total Operating Income’ of the bank with some adjustments as
noted below. GI shall:
• Be gross of any provision (e.g. for unpaid interest),
• Be gross of operating expenses, including fees paid to outsourcing service providers,
• Exclude realized profits/losses from sale of securities held to maturity in the banking book,
• Exclude extraordinary or irregular items,
• Exclude income derived from insurance and
• Include lost interest i.e. interest suspense on SMA and classified loans.

Quantitative Disclosures: The capital requirement for operational risk is as follows:

(Figures are in million BDT)

Particulars Consolidated Solo (Bank)

Last three year's average Gross Income (adjusted) 9,608.39 9,501.79
Capital charge required (15% of GI) 1,441.26 1,425.27

EASTERN BANK LIMITED ANNUAL REPORT 2013

products basket &
service propositions
Consumer Banking EBL 50+ FD
A term deposit product exclusively for people of fifty years
Deposit Products and above with interest paid at a higher rate to the customer
every month.
EBL Savings Account
EBL Just Double
EBL Classic Savings
A term deposit product that doubles the initial deposit
A savings account with interest paid half yearly. amount over a fixed period (currently six years).
EBL Power Savings Fixed Deposit
A savings account with interest paid monthly on the small Fixed deposits of different tenures (1 month to 3 years) for the
deposits of the customers. convenience of the customers.
EBL Max Saver Extra Value Fixed Deposit
A savings account with interest paid monthly on day end Fixed deposit of different tenures with minimum Fixed
balance of the account. Deposit amount of BDT 10 lac.
EBL Premium Savings All EBL Fixed Deposit products come with secured loan
A tier based savings account with interest paid monthly facility.
on average balance of the account; comes with special
customer propositions. Student Banking Products
EBL Junior
EBL 50+ Savings
An insurance backed savings account with comparatively
A tier based savings account exclusively for people of fifty
higher interest rate designed exclusively for children aged
years and above, comes with special customer propositions.
between 6 to 18 years, operated by parents until his/her
EBL Smart Women’s Savings maturity (18 years)
A tier based savings account exclusively for female citizens of EBL Campus
Bangladesh, comes with special customer propositions A specialized insurance incorporated savings account with
comparatively higher interest rate on daily balance for the
EBL Current Account students aged between 18 - 28 years
EBL Current Account EBL Child Future Plan
A unique Deposit Pension Scheme (DPS) for the tenure of 3,
Standard current account with unlimited transaction facility.
5, 10 and 15 years with monthly installment in any multiple of
EBL Current Plus BDT 500; ranges from BDT 500- BDT 15,000
A unique current account that comprises unlimited Payroll Products
transaction facility with a wide range of privileges.
EBL Executive Account
EBL DPS Account A special savings account for payroll customers of EBL;
EBL Confidence comes with free account maintenance facility and an
attractive interest rate.
A monthly savings scheme with flexible tenures (3/5/7/10
years) and monthly installment in any multiple of BDT 500; EBL Visa Payroll Card
ranges from BDT 500- BDT 20,000 A prepaid card for the payroll customers of EBL.

EBL Millionaire Scheme Loan Products

A monthly savings scheme with flexible long term tenures EBL Jibandhara
(3/5/7/10/12/15 years) and maturity value of BDT 1 (one)
An any purpose personal loan facility.
million.
Fast Cash
EBL Fixed Deposit
A secured overdraft facility against fixed deposit.
EBL Repeat
Fast Loan
A term deposit product with interest paid to the customer A secured term loan facility against fixed deposit.
every month.

161
EBL Executive Loan EBL Pre-paid Card
An any purpose personal loan facility for salaried executives. A payment card with direct deposit facility that lets you make
EBL Auto Loan virtually any kind of purchase, pay your bills and more with
A term loan to purchase automobile. funds directly from your card without having to have any
Bank Account.
EBL Home Loan
A term loan to purchase/extend/renovate house/apartment. EBL Lifestyle Prepaid Card
Local currency card for students and non-account holding
EBL Education Finance pack customers.
Comprises of unsecured term Loan, secured term loan &
secured OD facility to finance education at home and abroad. EBL Travel Prepaid Card
A card for all travel purposes; can be used anywhere outside
Card Products Bangladesh.
EBL Consumer Credit Card EBL Smart Remit Card
Simple revolving loan facility with a host of benefits for Local currency card where any NRB can send remittance
customers depending upon the income level and social directly to the card.
status.
EBL ACCA Card
EBL Signature Credit Card
For the payments related to ACCA examination and
For the premium customer base; comes at a lower interest registration.
rate and insurance benefit of BDT 1 crore.
EBL Payroll Card
EBL Platinum Credit Card
Issued to corporate houses to disburse salaries or employee
For customers with minimum monthly income level of BDT payments.
50,000; comes with insurance benefit of BDT 10 lac.
EBL Express Card
EBL Gold Credit Card
Special co-branded card with GrameenPhone for facilitating
For customers with minimum monthly income level of BDT reimbursement to their employees & stakeholders.
45,000.
EBL Hajj card
EBL Classic Credit Card
Issued against the personal hajj expense entitlement (Hajj
For customers with minimum monthly income level of BDT quota) for individual Hajjis.
20,000.
Skymiles Reward Program
EBL Corporate Credit Card
A reward program bundled with a world of travel privileges.
Revolving loan facilities for corporate houses to manage their Customers can earn miles against their card purchases on
local and global business expenses more effectively through their EBL Signature & Platinum credit cards.
credit card.
NRB Products
EBL Debit Card
EBL Matribhumi is a tailor-made product and service
Allow customers to access their EBL current/savings account proposition for the NRBs which includes:
for withdrawal of cash or payment for goods and services
NRB Deposits products
EBL Signature Debit Card
A dual currency debit card for priority customers; comes with EBL Global
insurance benefit of BDT 1 crore. Foreign currency (FCY) current account offered in USD/
GBP/EURO where the fund remains in foreign currency and
EBL Platinum Debit Card is freely remittable abroad. Global visa debit card, issued
A dual currency debit card for EBL Premium, EBL Smart against this account, can be used anywhere in the world
Women’s & EBL 50+ savings account holders; comes with
insurance benefit. EBL NFCD
Auto renewable foreign currency fixed/time deposit account
EBL Classic Debit Card in USD/GBP/EURO for the tenure of 1/3/6/12 months.
For regular EBL account holders; local use only
EBL Shonchoy
EBL Business Debit Card Interest bearing local currency savings account for NRBs.
For EBL SME account holders; local use only Fund sent from abroad can be invested in different NRB
bonds. Local visa debit card issued against this account
EBL Global Debit Card
For foreign currency account holders with global currency EBL Paribar
usage privileges Interest bearing Local Currency Savings Account for the

EASTERN BANK LIMITED ANNUAL REPORT 2013

 products basket & service propositions

resident family members of NRBs. Fund can be sent from any Internet Banking
part of the world to this account. Local visa debit card issued EBL Internet Banking offers 24 hour banking services from
against this account your PC or mobile with features like utility bill payments,
EBL RFCD instant mobile top-up and fund transfer.

Foreign currency account (USD/EUR/GBP) for resident

Bangladeshis which can be opened with foreign currency SME Banking
brought at the time of their return from abroad. Global
Visa debit card, issued against this account, can be used
Small Segment Loan Products
anywhere in the world EBL Asha
Remittance An EMI based collateral free loan product for small segment
clients with a repayment period of maximum 48 months. Loan
Simple, quick and safe way to send money to Bangladesh
amount ranges between BDT 200,000 and BDT 1500,000
through different distribution channels from abroad. Remitted
fund can be disbursed through EBL branches, designated EBL Agrim
mobile outlets of Robi and Banglalink, mobile account
This is a seasonal/festival loan product for SME entrepreneurs
(M-Wallet) service of Banglalink and Smart Remit card. Funds
with single shot repayment facility. Loan amount ranges
can also be credited directly into the accounts maintained
between BDT 200,000 and BDT 950,000
with EBL or other banks located in Bangladesh
EBL Mukti
NRB Loan products
A unique and collateral free loan product for women
Personal Secured Loan (FAST Loan)
entrepreneurs in the small segment with only 10% interest
Personal Secured Credit (FAST Cash) rate. Loan amount ranging up to BDT 2,500,000
Investment EBL Uddog
BOND An EMI based partial secured loan by EBL FDR for small
and mid-segment clients with a repayment period up to 60
Wage earners development bond (WEDB)
months
Issued in BDT; interest payable in BDT.
EBL Uddom
US Dollar investment bond (USDIB)
A bundle loan product partially secured by EBL FDR, loan
Issued in USD; interest payable in USD. for small segment clients with a repayment period up to 60
months
US dollar premium bond (USDPB)
Issued in USD; interest payable in BDT. EBL Unnoti
Collateral based secured bundle loan for SME clients for
Swadesh Biniyog purchasing of fixed assets as well as to meet up the working
Gateway for the NRBs to invest in the capital market of capital
Bangladesh through non-resident investors taka account
(NITA). NRBs can participate in both primary and secondary EBL Nobodoy
market with the fund of NITA through beneficiary owners (BO) A loan product for the SME entrepreneurs for agro based
account maintained with EBL Securities Ltd. industries including renewable energy. Interest rate is 10% of
this product
Services
EBL Udoy
Priority Banking Service
A special single digit interest loan product for the producer of
EBL offers the best Priority Banking services of the country leather goods. It is EMI based and collateral free loan
with 11 fully equipped priority centers in Dhaka, Chittagong
& Sylhet. There is an array of attractive propositions and EBL Utpadon
personalized services that are offered exclusively to priority A special product under JICA-BB refinance scheme
customers. for financing the SME entrepreneurs to establish new
manufacturing projects or expansion of existing one. Loan
Phone Banking and Contact Center
amount ranging from BDT 500,000 to BDT 30,000,000
Banking with EBL is just a phone call away – 16230! EBL has
been operating a 24 x 7 x 365 Contact Center since 2011. EBL E Cash/Loan
Customers can now dial 16230 from anywhere, anytime and 100% cash covered loan facility for urgent requirement of
get connected to a Contact Center Executive for banking SME entrepreneurs. Loan facility from BDT 50,000 to 100
services over the phone. Customers can now also enjoy million.
automated services from EBL’s state-of-the-art Phone
banking system.

163
Agri Business Loan Product development organizations, financial institutions, Non-bank
financial institutions and public corporations.
EBL Krishi Rin
EBL serves more than 2,000 clients- including many of the
Short term collateral free loan for providing financial support industry leaders- through our dedicated relationship teams,
to direct farmers and share croppers for cultivation of crops industry specialists and product experts.
especially high value crops
EBL Corporate Banking is committed to deliver the full
EBL Projukti spectrum of banking solutions, from simple transactional
A collateral free loan for individual farmer involved in direct products to complex structured finance that eventually helps
farming to purchase agricultural machinery/equipment. the customer to achieve their financial goal:

Medium Segment Loan Products: Cash Management Solutions

Manage clients’ business liquidity effectively and efficiently
EBL Banijyo
through extending extensive range of products and services.
A bundle product comprising LC, LTR, and OD. maximum Some common deposit products like current deposit, SND,
loan is BDT 20,000,000 against 30%-40% EBL FDR. fixed deposit, high performance account (HPA) etc. which
EBL Invoice Factoring are offered to retail clients are also on offer to corporate
customers.
EBL invoice factoring is a mode of extending finances to
organizations/suppliers against the direct assignment of their Nationwide Collection Services (NCS)
receivables to the factor (financial institutions). Nationwide collection services (NCS) is designed to facilitate
collecting daily funds through EBL own branch network
Other conventional mid segment loan products
and correspondent bank network and credit the same to
Cash credit the single collection account maintained with EBL which
Secured overdraft facilitates large corporates with faster fund availability in a
Overdraft cost-effective manner.
Demand loan
Import loan Payment Transfer Services (PTS)
Time loan EBL’s payment Transfer Service (PTS) is formulated to
Letter of credit facilitate organizations to transfer funds to their respective
Loan against trust receipt branch offices through EBL own branches and also through
Letter of guarantee Bangladesh Electronic Fund Transfer Network (BEFTN)
Usance letter of credit across the country which facilitates the corporate clients with
Acceptance faster fund transfer solution in a cost-effective manner.
Local bill purchased documentary
Foreign bill purchased documentary EBL Cheq Pro
EBL Cheq Pro is very user-friendly software which facilitates
SME Deposit Products the preparation, printing, recording and reconciliation of EBL
EBL Subidha cheques and generates different kinds of MIS.

A deposit product for SME clients with operational facilities Cash Pick-up & Delivery Service
of a current account but financial benefit of a short notice Cash pick-up and delivery service is designed for cash pick-
deposit account. up from the designated EBL branch and to be delivered in the
EBL Equity Builder office premises of the client. The service is provided through
enlisted security company of the Bank.
An equity multiplier deposit product for SME clients. An
entrepreneur of SME can build equity by depositing on Working Capital Solutions
monthly basis for his/her enterprise’s name.
Provides flexible financing to smooth and improve cash flow,
SME Double Return full range of working capital products can help customers
to meet day-to-day financial obligations and fund business
A term deposit product designed for SME entrepreneurs
growth. Working capital solutions comprises of full range
where the fixed deposit amount will be doubled after the
of trade solutions. Trade solution is designed to enhance
maturity period.
trading status and to help achieving customers domestic and
EBL Repeat SME international trade objectives:
A term deposit scheme where a SME client can earn interest Funded Facilities
on a monthly basis as well as yearly also.
 Import Loan: Post import facility against L/C
 Demand Loan: To meet cash requirement time to time
Corporate Banking (local purchase/duty/tax/export bill receivables etc.)
Eastern Bank Limited provides integrated corporate
 Manufacturers Demand Loan: Facilitating
banking solutions to large local corporates, multinationals,
manufacturers with low cost working capital Loan

EASTERN BANK LIMITED ANNUAL REPORT 2013

 products basket & service propositions

 Overdraft: To meet day to day overhead expenses. Structured financing

 Time Loan: To meet short term requirement/ post import Corporate Banking Division comprises of Structured
against Machinery LC etc. Finance Unit which is specialized to facilitate syndication
 Packing Credit: To meet fund requirement of the arrangements, Agency and Trustee services, Pre-investment
exporters to make export items. feasibility studies and customized financial product
development to cater clients’ needs.
 Local Documentary Bill Purchased (LDBP): To
 Bangladeshi Taka Syndication Arrangement
purchase/discount against Local L/C
 USD Term Loan and Syndication
 Foreign Documentary Bill Purchased (FDBP): To  Arranging Multilateral Financing
purchase/discount/negotiate export documents against  Advisory Services
Sight/Usance Export L/C.  Trustee and Agency Services
 EDF Loan: To finance LC under Export Development  Arranging Debt (Bonds/Commercial Paper)
Fund.  Equity Financing
 Customized Financial Solutions
Non Funded Facilities  Special Arrangements (IPFF/ Special fund of BB/ Agri-
Letter of Credit (Cash/Back to Back) business Loan etc)

 Sight LC: To import locally/from abroad on sight basis. EBL internet banking
 Usance/ Deferred LC: To import locally/ from abroad on This facility allows faster reconciliation of collection process
usance/deferred basis. by overview of transactions, download statements and take
 Structured LC/OBU: Usance LC with sight payment printout of the statements sitting in the office. The information
arrangement to beneficiary after shipment by EBL reporting capability through EBL Internet Banking gives a
Offshore Banking Unit or correspondent Bank. whole new way to access banking information quickly and
reliably. It provides access to balances, end-of-day and intra-
Guarantee (Open ended/Close ended) day account statements, transaction details. This adds value
in reconciliation in terms of automation.
 Performance Guarantee
 Bid Bond
 Advance payment Guarantee Treasury Products
 Retention Bond
 Security Bond Money market
Call money
Bridge financing Term Money
To finance temporary funded requirement for onward Foreign Exchange SWAP
conversion to other facilities. Repo/Reverse Repo
Promissory Note
Long term financing:
 Term Loan (Normal/ Amortized/ Capitalized): To
Fixed income and investment
finance capital Expenditure (Building/Machines etc). Treasury Bill/Bonds to inter-bank
Treasury Bill/Bonds to: NBFIs/Corporate/Insurance
 Term Loan (IPFF): World Bank (IDA) funded projects with
Companies/Pension Funds/Provident Funds
specific criteria.
 Term Loan (Special Products against Government Fund/ Foreign exchange and corporate sales
Multilateral Fund) Spot/ Forward in USD/BDT
Spot/Forward in major cross currencies
Offshore financing
Derivative products in major currencies
Foreign Currency Financing from Offshore Banking Unit: Derivative products in Commodities
Derivative products based on Interest Rate
 Import Loan (Funded Short Term)
 Demand Loan (Funded Short Term)
 Bill Discounting/Financing (Funded Short Term)
 Term loan (Funded Long Term)
 Sight/Usance LC (Non-Funded)
 Guarantee. (Non-Funded)

165
statement on integrity
of financial statements
by MD & CEO and Head
of Finance
We hereby certify that the Financial Statements (FS) of installing a system of internal control and accounting records,
Eastern Bank Limited (the Bank) as at and for the year ended for safeguarding assets and preventing and detecting frauds
31 December 2013 have been prepared in accordance with as well as other irregularities, which is reviewed, evaluated
Bangladesh Financial Reporting Standards BFRSs), the and updated on an ongoing basis. Our Internal Auditor has
“First Schedule” (section 38) of the Bank Company Act 1991, conducted periodic audits to provide reasonable assurance
as amended by the BRPD Circular no. 14 dated 25 June that the established policies and procedures of the Bank were
2003, other Bangladesh Bank Circulars, the Companies Act consistently followed. However, there are inherent limitations
1994, the Securities and Exchange Rules 1987, Dhaka and that should be recognized in weighing the assurance
Chittagong Stock Exchange’s listing regulations and other provided by any system of internal controls and accounting.
laws and rules applicable in Bangladesh. The Accounting
Policies used in the preparation of the FS are appropriate and We certify to the Board that:
are consistently applied by the Bank. In case the requirement i. We have reviewed Financial Statements of the Bank for
of provisions and circulars issued by Bangladesh Bank differ the year 2013 and to the best of our knowledge and
with those of other regulatory authorities and accounting belief:
standards, the provisions and circulars issued by Bangladesh a) these statements do not contain any materially
Bank shall prevail with adequate disclosures of deviations untrue statement or omit any material fact or contain
made (please refer to note 2.1 of the FS). Comparative statements that might be misleading;
information has been reclassified wherever necessary to
b) these statements together present a true and fair
conform to the current year presentation.
view of the Bank’s affairs and are in compliance with
The estimates and judgments relating to the FS were made existing accounting standards and applicable laws.
on a prudent and reasonable basis; in order that the FS
ii. There are, to the best of knowledge and belief, no
reflect in a true and fair manner, the form and substance of
transactions entered into by the Bank during the year
transactions and present the state of affairs reasonably. To
which are fraudulent, illegal or violation of the Bank’s code
ensure this, the Bank has taken proper and sufficient care in
of conduct.

Masudul Hoque Sardar Ali Reza Iftekhar

Head of Finance Managing Director & CEO

Dhaka 26 February 2014

EASTERN BANK LIMITED ANNUAL REPORT 2013

Independent Auditor’s Report
to the Shareholders of Eastern Bank Limited

We have audited the accompanying consolidated financial statements of Eastern Bank Limited (EBL) and its subsidiaries (together
referred to as the “Group”) as well as the separate financial statements of Eastern Bank Limited (the “Bank”) which comprise the
consolidated and separate balance sheets as at 31 December 2013, consolidated and separate profit and loss accounts, statements
of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other
explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements of the Group and
also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting
Standards (BFRS) as explained in Note 2 and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements of the Group and also separate financial statements of the Bank that are free from
material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the local central bank (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.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial
statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA).
Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements of the Group and the separate financial statements of the Bank are free from
material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements of the Group and separate financial statements of the Bank. The procedures selected depend on our judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements of the Group and the separate financial
statements of the Bank, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to
the entity’s preparation of consolidated financial statements of the Group and separate financial statements of the Bank that give a
true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements of the Group and the separate financial statements of the
Bank.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements of the Group and also 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 2013,
and of its consolidated and separate financial performance and cash flows for the year then ended in accordance with Bangladesh
Financial Reporting Standards (BFRS) as explained in Note 2.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, 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 of the Group and the separate financial statements of the
Bank 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 and the Bank as disclosed in Note 2 to 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 Bank and its related entities;
(iii) financial statements of all subsidiaries of the Bank have been audited by us as well as other auditors and have been properly
reflected in the 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 and proper returns adequate for the purpose of our audit have been received from branches not
visited by us;
(v) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet and
separate profit and loss account of the Bank together with the annexed notes dealt with by the report are in agreement with the
books of account and returns;
(vi) the expenditures incurred was for the purpose of the Bank’s business;
(vii) the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in
conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;
(viii) adequate provisions have been made for advance and other assets which are in our opinion, doubtful of recovery;
(ix) the records and statements submitted by the branches have been properly maintained and consolidated in the financial
statements;
(x) the information and explanations required by us have been received and found satisfactory;
(xi) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 3,640 person hours during the
audit; and
(xii) Capital Adequacy Ratio (CAR) as required by the Bangladesh Bank has been maintained adequately during the year.

Hoda Vasi Chowdhury & Co

Dhaka, 27 February 2014 Chartered Accountants

169
Eastern Bank Limited and its subsidiaries
Consolidated Balance Sheet
As at 31 December 2013

2013 2012
Note
Taka Taka
PROPERTY AND ASSETS

Cash 3
Cash in hand (including foreign currencies) 3.1 1,752,685,015 1,097,923,927
Balances with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3.2 6,428,136,805 9,699,237,183
8,180,821,820 10,797,161,110
Balances with other Banks and Financial Institutions 4
In Bangladesh 4.1 8,432,060,955 7,653,914,011
Outside Bangladesh 4.2 2,121,282,542 1,369,531,149
10,553,343,497 9,023,445,160

Money at call and short notice 5 - 100,000,000

Investments 6
Government 6.1 21,659,579,849 17,789,164,429
Others 6.2 4,358,216,416 3,865,532,147
26,017,796,265 21,654,696,576
Loans and advances 7
Loans, Cash Credits, Overdraft etc. 7.1 94,617,143,691 87,537,630,678
Bills purchased and discounted 7.2 8,713,673,891 9,356,540,473
103,330,817,582 96,894,171,151

Fixed assets including land, building, furniture and fixtures 8 6,908,244,828 5,979,132,331
Other assets 9 2,980,600,498 2,378,099,220
Non banking assets 10 191,733,000 217,733,000

TOTAL ASSETS 158,163,357,490 147,044,438,547

LIABILITIES AND CAPITAL

Liabilities
Borrowing from other banks, financial institutions and agents 11 14,079,880,398 31,158,073,038
Deposits and other accounts 12
Current deposits & other accounts, etc. 12.1 9,843,455,920 9,806,371,635
Bills payable 12.2 789,543,484 866,317,963
Savings bank deposits 12.3 16,923,994,211 14,080,165,001
Fixed deposits 12.4 89,479,847,553 66,659,786,106
Bearer certificates of deposits 12.5 - 22,250,000
117,036,841,168 91,434,890,705

Other liabilities 13 8,487,815,290 7,201,928,608

TOTAL LIABILITIES 139,604,536,856 129,794,892,351

SHAREHOLDERS' EQUITY
Share Capital-Paid up capital 14 6,111,797,850 6,111,797,850
Statutory reserve 15 5,362,423,625 4,395,274,232
Dividend equalisation reserve 16 356,040,000 356,040,000
Reserve against pre take over loss 17 1,554,759,750 1,554,759,750
Pre take over loss 18 (973,078,718) (952,794,812)
Asset revaluation reserve 19 3,689,495,550 3,689,495,550

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited and its subsidiaries

Consolidated Balance Sheet
As at 31 December 2013

2013 2012
Note
Taka Taka
Reserve for amortization of treasury securities (HTM) 20 827,635 98,740
Reserve for revaluation of treasury securities (HFT) 21 59,972,091 13,754,631
General reserve 22 130,000,000 160,000,000
Reserve for non banking assets 23 178,971,165 204,427,796
Foreign currency translation gain/(loss) 24 103,896 (5,418,843)
Profit & loss account -retained earnings 25 2,087,507,790 1,722,111,302
TOTAL SHAREHOLDERS' EQUITY 18,558,820,634 17,249,546,196
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 158,163,357,490 147,044,438,547

OFF BALANCE SHEET ITEMS

Contingent liabilities 26
Acceptances and endorsements 26.1 26,827,594,612 26,450,629,146
Letters of guarantees 26.2 12,515,097,423 10,054,243,019
Irrevocable letters of credit 26.3 15,562,071,032 12,329,127,919
Bills for collection 26.4 5,110,318,370 4,199,088,283
Other liabilities (bad and loss) - -
60,015,081,437 53,033,088,367
Other contingent liabilities
Value of travelers' cheques on hand - -
Value of Bangladesh Sanchaya Patra on hand 495,586,100 661,328,100
495,586,100 661,328,100
Other commitments
Lease rental commitments - -
Documentary credits and short term trade -related transactions - -
Forward assets purchased and forward deposits placed 5,706,512,611 6,657,310,819
Undrawn note issuance and revolving facilities - -
Undrawn formal standby facilities, credit lines and other commitments - -
Spot and forward foreign exchange rate contracts - -
Other capital commitments - -
Other exchange contracts - -
Claims against the Bank not acknowledged as debt 5,706,512,611 6,657,310,819
TOTAL OFF-BALANCE SHEET ITEMS 66,217,180,148 60,351,727,286

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

171
Eastern Bank Limited and its subsidiaries
Consolidated Profit & Loss Account
For the year ended 31 December 2013

2013 2012
Note
Taka Taka
Particulars

Interest Income 27 14,859,455,868 13,744,606,348

Less: Interest paid on deposits and borrowings 28 9,903,211,484 8,859,087,401
Net Interest Income 4,956,244,384 4,885,518,947

Income from investments 29 2,043,952,370 1,454,538,594

Fees, commission and brokerage 30 2,431,683,365 2,359,416,890
Other operating income 31 149,992,549 119,634,560
Total operating income 9,581,872,668 8,819,108,991

Salary & allowances 32 1,997,616,366 1,771,184,174

Rent, taxes, insurance, utilities etc. 33 437,696,891 356,265,307
Legal & professional expenses 34 50,958,931 39,978,673
Postage, stamp, telecommunication etc. 35 106,558,598 97,761,769
Stationery, printing, advertisement, etc. 36 234,260,245 210,666,288
Managing Director's salary and allowances 37 16,155,930 14,782,397
Directors' Fees & Expenses 38 3,083,587 2,959,483
Audit fees 39 951,609 510,000
Charges on loan losses - -
Repairs, maintenance and depreciation 40 441,553,824 423,739,898
Other operating expenses 41 465,615,029 390,820,658
Total operating expenses 3,754,451,011 3,308,668,647
Other non operating income 42 - 103,473,610
Profit before provisions 5,827,421,657 5,613,913,954
Provision for loans and advances 13.4.1
Specific provision 706,268,210 728,489,302
General provision 84,148,586 23,892,959
790,416,796 752,382,261
Other provision 43 197,328,131 491,923,424
Total provisions 987,744,927 1,244,305,685
Profit before tax for the year 4,839,676,730 4,369,608,269
Provision for tax made for the year 13.3.1 (2,626,486,626) (2,218,739,865)
Deferred tax (expenses)/income 44 321,904,353 241,861,619
Profit after tax for the year 2,535,094,458 2,392,730,023
Appropriation
Statutory reserve 15 (967,149,393) (843,922,818)
General reserve - -
(967,149,393) (843,922,818)
Retained earnings carried forward 1,567,945,065 1,548,807,205

Earnings per share (EPS) 45 4.15 3.91

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited and its subsidiaries

Consolidated Cash Flow Statement
For the year ended 31 December 2013

2013 2012
Note
Taka Taka
A) Cash flows from operating activities

Interest received 14,693,964,387 13,475,672,069

Interest paid (9,308,256,163) (8,447,887,516)
Dividend received 47,126,403 51,838,834
Fees and commission received 2,431,683,365 2,359,416,890
Income from investment 1,996,825,967 1,402,699,759
Recovery of loans previously written off 13.4 110,434,318 117,394,950
Cash paid to employees (including directors) (2,016,855,883) (1,788,926,054)
Cash paid to suppliers (1,271,028,490) (716,338,869)
Income taxes paid 13.3.2 (2,498,021,720) (2,139,757,091)
Received from other operating activities 149,992,549 119,634,560
Paid for other operating activities (231,266,730) (600,772,403)
Operating cash flow before changes in operating assets and liabilities 4,104,598,002 3,832,975,130
Increase/(decrease) in Operating Assets & Liabilities
Changes in trading securities (10,021,682,719) (6,015,412,660)
Loans and advances to other banks - -
Loans and advances to customers (other than banks) (6,271,154,951) (14,857,247,650)
Non banking assets 543,369 1,045,000
Other assets 46 (602,501,278) (571,491,205)
Deposits from other Banks 12.a.1 1,188,456,427 3,988,480
Deposits from customers (other than banks) 23,838,144,179 15,991,199,584
Recovery from/ Payment against BCCI assets (20,283,906) (165,590,574)
Liability for tax 193,439,447 261,265,529
Liabilities for provision (1,098,179,245) (1,456,779,410)
Other liabilities 47 1,265,329,609 886,524,071
Net Cash received from operating activities 12,576,708,936 (2,089,525,706)
B) Cash flows from investing activities
Changes in non-trading securities 5,704,755,084 877,455,417
Purchase of property, plant and equipment (1,163,886,846) (652,659,446)
Sales proceeds of fixed assets (Annexure A1) 426,049 5,824,804
Acquisition of non controlling interest - (59,100,107)
Net cash used in investing activities 4,541,294,287 171,520,668
C) Cash flows from financing activities
Borrowings from other banks, financial institutions and agents (17,078,192,640) 9,505,588,762
Dividend paid (cash dividend) (1,222,359,570) -
Net cash received from financing activities (18,300,552,210) 9,505,588,762
D) Net (decrease) / increase in cash (A+B+C) (1,182,548,988) 7,587,583,729
E) Effects of exchange rate changes on cash and cash equivalents (4,666,264) (20,491,874)
F) Opening cash and cash-equivalents 19,924,110,070 12,357,018,215
G) Closing cash and cash-equivalents (D+E+F)* 18,736,894,818 19,924,110,070

*Closing cash and cash-equivalents

Cash in hand (including foreign currencies) 3.1 1,752,685,015 1,097,923,927
Balances with Bangladesh Bank and its agent bank (s) 3.2 6,428,136,805 9,699,237,183
Balances with other Banks and Financial Institutions 4 10,553,343,498 9,023,445,160
Money at call and short notice 5 - 100,000,000
Prize bonds 6.1 2,729,500 3,503,800
18,736,894,818 19,924,110,070

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014

173
 Eastern Bank Limited and its subsidiaries
Consolidated Statement of Changes in Equity
For the year ended 31 December 2013

Figures in Taka

EASTERN BANK LIMITED

Reserve for Reserve for Foreign
Dividend Reserve Assets Reserve for
Statutory Pre take over amortization revaluation General currency Retained
Paid up capital equalisation against pre revaluation non banking Total
Particulars reserve loss of treasury of treasury reserve translation earnings
reserve take over loss reserve assets
securities (HTM) securities (HFT) gain / (loss)

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka

Balance as on 01-01-2013 6,111,797,850 4,395,274,232 356,040,000 1,554,759,750 (952,794,812) 3,689,495,550 98,740 13,754,631 160,000,000 204,427,796 (5,418,843) 1,722,111,302 17,249,546,196

Foreign currency transaction

- - - - - - - - - - - (10,189,003) (10,189,003)
adjustment for OBU RE

ANNUAL REPORT 2013

Net profit for the period after tax - - - - - - - - - - - 2,535,094,455 2,535,094,455

Transfer to statutory reserve - 967,149,393 - - - - - - - - - (967,149,393) -

Transfer General Reserve to RE - - - - - - - - (30,000,000) - - 30,000,000 -

Cash Dividend Paid - - - - - - - - - - (1,222,359,570) (1,222,359,570)

Adjustment of revaluation of
- - - - - - - 46,217,459 - - - - 46,217,459
treasury securities (HFT)

Reserve for HTM securities - - - - - - 728,895 - - - - 728,895

Recovery of pre-takeover loss - - - - (20,283,906) - - - - - - (20,283,906)

Adjustment of reserve for non

- - - - - - - - - (25,456,631) - - (25,456,631)
banking assets

Currency translation difference - - - - - - - - - 5,522,739 - 5,522,739

Balance as on 31-12-2013 6,111,797,850 5,362,423,625 356,040,000 1,554,759,750 (973,078,718) 3,689,495,550 827,635 59,972,091 130,000,000 178,971,165 103,896 2,087,507,790 18,558,820,634

Balance as on 31-12-2012 6,111,797,850 4,395,274,232 356,040,000 1,554,759,750 (952,794,812) 3,689,495,550 98,740 13,754,631 160,000,000 204,427,796 (5,418,843) 1,722,111,302 17,249,546,196

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
 Eastern Bank Limited and its subsidiaries
Consolidated Liquidity Statement
( Asset and Liability Maturity Analysis)
As at 31 December 2013
Figures in Taka

Not more than

Particulars 1-3 months term 3-12 months term 1-5 years term Above 5-years term Total
1 month term

Assets
Cash in hand (including balance with
- - - 8,180,821,820
Bangladesh Bank and its agent Bank) 8,180,821,820
Balances with other banks
3,033,064,269 5,950,279,227 1,570,000,000 - - 10,553,343,497
and financial institutions
Money at call and short notice - - - - - -
Investments 2,271,610,840 1,540,141,503 6,988,802,025 10,862,014,802 4,355,227,094 26,017,796,265
Loans and advances 14,332,793,487 24,189,145,978 37,982,520,877 23,877,560,537 2,948,796,701 103,330,817,582
Fixed assets including land, building,
12,021,635 25,462,426 108,194,718 504,579,598 6,257,986,451 6,908,244,828
furniture and fixtures
Other assets 477,426,862 (79,255,664) - 1,578,648,661 1,003,780,639 2,980,600,498
Non-banking assets - 8,727,000 11,662,000 171,344,000 - 191,733,000
Total Assets 28,307,738,913 31,634,500,470 46,661,179,620 36,994,147,598 14,565,790,886 158,163,357,490
Liabilities
Borrowing from other banks, financial
1,400,345,368 4,409,892,760 6,046,957,206 1,109,192,331 1,113,492,734 14,079,880,398
institutions and agents
Deposits and other accounts 20,196,771,881 21,896,833,769 31,274,266,779 41,799,445,464 1,869,523,275 117,036,841,168
Provisions & other liabilities 447,753,075 939,763,239 480,857,106 4,159,064,712 2,460,377,159 8,487,815,290
Total Liabilities 22,044,870,323 27,246,489,767 37,802,081,091 47,067,702,507 5,443,393,167 139,604,536,856
Net Liquidity Gap 6,262,868,590 4,388,010,703 8,859,098,529 (10,073,554,908) 9,122,397,719 18,558,820,633
Cumulative Net Liquidity Gap 6,262,868,590 10,650,879,294 19,509,977,822 9,436,422,914 18,558,820,633 -
financial reports 2013

175
Eastern Bank Limited
Balance Sheet
As at 31 December 2013

2013 2012
Note
Taka Taka
PROPERTY AND ASSETS

Cash 3
Cash in hand (including foreign currencies) 3.1 1,752,660,726 1,097,919,688
Balances with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3.2 6,428,136,805 9,699,237,183
8,180,797,531 10,797,156,871
Balances with other Banks and Financial Institutions 4
In Bangladesh 4.1 8,012,554,438 7,616,918,267
Outside Bangladesh 4.2 2,390,509,831 1,369,531,149
10,403,064,269 8,986,449,416

Money at call and short notice 5 - 100,000,000

Investments 6
Government 6.1 21,659,579,849 17,789,164,429
Others 6.2 4,244,004,844 3,865,510,224
25,903,584,693 21,654,674,653
Loans and advances 7
Loans, Cash Credits, Overdraft etc. 7.1 94,491,939,790 87,363,196,058
Bills discounted and purchased 7.2 8,418,279,159 9,356,540,473
102,910,218,949 96,719,736,531

Fixed assets including land, building, furniture and fixtures 8 6,897,393,729 5,969,586,747
Other assets 9 3,394,841,686 2,702,997,096
Non banking assets 10 191,733,000 217,733,000

TOTAL ASSETS 157,881,633,857 147,148,334,316

LIABILITIES AND CAPITAL

Liabilities
Borrowing from other banks, financial institutions and agents 11 14,079,880,398 31,158,073,038
Deposits and other accounts 12
Current deposits & other accounts, etc. 12.1 9,877,524,621 9,806,371,635
Bills payable 12.2 789,543,484 866,317,963
Savings bank deposits 12.3 16,923,994,211 14,080,165,001
Fixed deposits 12.4 89,510,645,864 67,005,863,858
Bearer certificates of deposits 12.5 - 22,250,000
117,101,708,180 91,780,968,457

Other liabilities 13 8,249,547,103 7,099,953,348

TOTAL LIABILITIES 139,431,135,680 130,038,994,843

SHAREHOLDERS' EQUITY
Share Capital-Paid up capital 14 6,111,797,850 6,111,797,850
Statutory reserve 15 5,362,423,625 4,395,274,232
Dividend equalisation reserve 16 356,040,000 356,040,000
Reserve against pre take over loss 17 1,554,759,750 1,554,759,750
Pre take over loss 18 (973,078,718) (952,794,812)
Asset revaluation reserve 19 3,689,495,550 3,689,495,550
Reserve for amortization of treasury securities (HTM) 20 827,635 98,740

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited

Balance Sheet
As at 31 December 2013

2013 2012
Note
Taka Taka
Reserve for revaluation of treasury securities (HFT) 21 59,972,091 13,754,631
General reserve 22 130,000,000 160,000,000
Reserve for non banking assets 23 178,971,165 204,427,796
Foreign currency translation gain 24 (781,214) (5,418,842)
Profit & loss account -retained earnings 25 1,980,070,442 1,581,904,578
TOTAL SHAREHOLDERS' EQUITY 18,450,498,176 17,109,339,473
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 157,881,633,857 147,148,334,316

OFF BALANCE SHEET ITEMS

Contingent liabilities 26
Acceptances and endorsements 26.1 26,827,594,612 26,450,629,146
Letters of guarantees 26.2 12,515,097,423 10,054,243,019
Irrevocable letters of credit 26.3 15,562,071,032 12,329,127,919
Bills for collection 26.4 5,110,318,370 4,199,088,283
Other liabilities (bad and loss) - -
60,015,081,437 53,033,088,366
Other contingent liabilities
Value of travelers' cheques on hand - -
Value of Bangladesh Sanchaya Patra on hand 495,586,100 661,328,100
495,586,100 661,328,100
Other commitments
Lease rental commitments - -
Documentary credits and short term trade -related transactions - -
Forward assets purchased and forward deposits placed 5,706,512,611 6,657,310,819
Undrawn note issuance and revolving facilities - -
Undrawn formal standby facilities, credit lines and other commitments - -
Spot and forward foreign exchange rate contracts - -
Other capital commitments - -
Other exchange contracts - -
5,706,512,611 6,657,310,819
Claims against the Bank not acknowledged as debt - -
TOTAL OFF-BALANCE SHEET ITEMS 66,217,180,148 60,351,727,285

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

177
Eastern Bank Limited
Profit & Loss Account
For the year ended 31 December 2013

2013 2012
Note
Taka Taka
Particulars

Interest Income 27 14,807,156,889 13,698,222,818

Less: Interest paid on deposits and borrowings 28 9,915,598,012 8,884,100,640
Net Interest Income 4,891,558,877 4,814,122,178

Income from investments 29 2,070,848,267 1,494,601,857

Fees, commission and brokerage 30 2,357,317,315 2,299,911,740
Other operating income 31 149,648,740 118,356,915
Total operating income 9,469,373,199 8,726,992,690

Salary & allowances 32 1,963,508,938 1,750,682,613

Rent, taxes, insurance, utilities etc. 33 423,237,948 349,945,005
Legal & professional expenses 34 50,841,431 39,385,833
Postage, stamp, telecommunication etc. 35 102,784,849 96,448,339
Stationery, printing, advertisement, etc. 36 233,344,345 210,436,903
Managing Director's salary and allowances 37 16,155,930 14,782,397
Directors' Fees & Expenses 38 3,002,587 2,929,483
Audit fees 39 460,000 402,500
Charges on loan losses - -
Repairs, maintenance and depreciation 40 436,238,593 420,010,651
Other operating expenses 41 451,542,538 378,049,190
Total operating expenses 3,681,117,160 3,263,072,914
Other non operating income 42 - -
Profit before provisions 5,788,256,039 5,463,919,776
Provision for loans and advances 13.4.1
Specific provision 706,268,210 728,489,302
General provision 84,148,586 23,892,959
790,416,796 752,382,261
Other provision 43 162,092,275 491,923,424
Total provisions 952,509,071 1,244,305,685
Profit before tax for the year 4,835,746,968 4,219,614,091
Provision for tax made for the year 13.3.1 (2,589,787,489) (2,186,375,000)
Deferred tax (expenses)/income 44 321,904,353 241,861,619
Profit after tax for the year 2,567,863,832 2,275,100,710
Appropriation
Statutory reserve 15 (967,149,393) (843,922,818)
General reserve - -
(967,149,393) (843,922,818)
Retained earnings carried forward 1,600,714,438 1,431,177,892

Earnings per share (EPS) 45 4.20 3.72

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited

Cash Flow Statement
For the year ended 31 December 2013

2013 2012
Note
Taka Taka
A) Cash flows from operating activities

Interest received 14,653,695,525 13,429,288,539

Interest paid (9,317,789,985) (8,472,900,756)
Dividend received 84,228,403 91,838,834
Fees and commission received 2,357,317,315 2,299,911,740
Income from investment 1,986,619,864 1,402,763,022
Recovery of loans previously written off 13.4 110,434,318 117,394,950
Cash paid to employees (including directors) (1,982,667,455) (1,768,394,493)
Cash paid to suppliers (1,246,447,167) (707,882,912)
Income taxes paid 13.3.2 (2,464,182,418) (2,120,987,614)
Received from other operating activities 149,648,740 118,356,915
Paid for other operating activities (220,839,863) (587,175,110)
Operating cash flow before changes in operating assets and liabilities 4,110,017,277 3,802,213,115
Increase/(decrease) in Operating Assets & Liabilities
Changes in trading securities (9,907,493,070) (6,015,727,460)
Loans and advances to other banks - -
Loans and advances to customers (other than banks) (6,037,021,054) (14,676,892,074)
Non banking assets 543,369 1,045,000
Other assets 46 (584,305,893) (163,818,214)
Deposits from other Banks 12.a.1 1,188,456,427 3,988,480
Deposits from customers (other than banks) 23,554,080,732 16,004,994,505
Recovery from/ Payment against BCCI assets (20,283,906) (165,590,574)
Liability for tax 196,299,282 176,474,233
Liabilities for provision (1,062,943,389) (1,358,285,226)
Other liabilities 47 1,129,528,292 915,279,768
Net Cash received from operating activities 12,566,878,067 (1,476,318,446)
B) Cash flows from investing activities
Changes in non-trading securities 5,704,755,084 877,455,417
Purchase of property, plant and equipment (1,158,935,705) (652,490,827)
Sales proceeds of fixed assets(Annexure A1) 426,049 5,824,804
Investment in Subsidiary-EBL Securities Limited (100,000,000) (551,400,000)
Investment in Subsidiary-EBL Finance (HK) Limited (7,538,698) -
Net cash used in investing activities 4,438,706,730 (320,610,606)
C) Cash flows from financing activities
Borrowings from other banks, financial institutions and agents (17,078,192,640) 9,505,588,762
Dividend paid (cash dividend) (1,222,359,570) -
Net cash received from financing activities (18,300,552,210) 9,505,588,762
D) Net (decrease) / increase in cash (A+B+C) (1,294,967,413) 7,701,419,055
E) Effects of exchange rate changes on cash and cash equivalents (5,551,374) (20,491,874)
F) Opening cash and cash-equivalents 19,887,110,087 12,206,182,906
G) Closing cash and cash-equivalents (D+E+F)* 18,586,591,300 19,887,110,087

*Closing cash and cash-equivalents

Cash in hand (including foreign currencies) 3.1 1,752,660,726 1,097,919,688
Balances with Bangladesh Bank and its agent bank (s) 3.2 6,428,136,805 9,699,237,183
Balances with other Banks and Financial Institutions 4 10,403,064,269 8,986,449,416
Money at call and short notice 5 - 100,000,000
Prize bonds 6.1 2,729,500 3,503,800
18,586,591,300 19,887,110,087

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014

179
 Eastern Bank Limited
Statement of Changes in Equity
For the year ended 31 December 2013

Figures in Taka

EASTERN BANK LIMITED

Reserve for
Reserve for Foreign
Dividend Reserve Assets amortization Reserve for
Statutory Pre take over revaluation General currency Retained
Paid up capital equalisation against pre revaluation of treasury non banking Total
Particulars reserve loss of treasury reserve translation earnings
reserve take over loss reserve securities assets
securities (HFT) gain / (loss)
(HTM)

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka

Balance as on 01-01-2013 6,111,797,850 4,395,274,232 356,040,000 1,554,759,750 (952,794,812) 3,689,495,550 98,740 13,754,631 160,000,000 204,427,796 (5,418,843) 1,581,904,578 17,109,339,472

Foreign currency transaction

- - - - - - - - - - - (10,189,003) (10,189,003)

ANNUAL REPORT 2013

adjustment for OBU RE
Net profit for the period after
- - - - - - - - - - - 2,567,863,831 2,567,863,831
tax
Transfer to statutory reserve - 967,149,393 - - - - - - - - - (967,149,393) -
Transfer General Reserve
- - - - - - - - (30,000,000) 30,000,000 -
to RE
Cash Dividend Paid - - - - - - - - - - - (1,222,359,570) (1,222,359,570)

Reserve for revaluation of

- - - - - - - 46,217,459 - - - - 46,217,459
treasury securities (HFT)

Reserve for HTM securities - - - - - - 728,895 - - - - 728,895

Recovery of pre-takeover loss - - - - (20,283,906) - - - - - (20,283,906)

Adjustment of reserve for non

- - - - - - - - - - - (25,456,631)
banking assets (25,456,631)
Currency translation
- - - - - - - - - - 4,637,629 - 4,637,629
difference
Balance as at 31-12-2013 6,111,797,850 5,362,423,625 356,040,000 1,554,759,750 (973,078,718) 3,689,495,550 827,635 59,972,091 130,000,000 178,971,165 (781,214) 1,980,070,442 18,450,498,176

Balance as at 31-12-2012 6,111,797,850 4,395,274,232 356,040,000 1,554,759,750 (952,794,812) 3,689,495,550 98,740 13,754,631 160,000,000 204,427,796 (5,418,843) 1,581,904,578 17,109,339,472

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
 Eastern Bank Limited
Liquidity Statement
( Asset and Liability Maturity Analysis)
As at 31 December 2013

Figures in Taka

Not more than

Particulars 1-3 months term 3-12 months term 1-5 years term Above 5-years term Total
1 month term

Assets

Cash in hand (including balance with Bangladesh Bank and its agent Bank) 8,180,797,531 - - - - 8,180,797,531

Balances with other banks

3,033,064,269 5,800,000,000 1,570,000,000 - - 10,403,064,269
and financial institutions

Money at call and short notice - - - - - -

Investments 2,271,588,917 1,425,951,855 6,988,802,025 10,862,014,802 4,355,227,094 25,903,584,693

Loans and advances 14,907,679,970 23,193,660,862 37,982,520,877 23,877,560,537 2,948,796,701 102,910,218,949

Fixed assets including land, building, furniture and fixtures 11,907,997 23,815,995 107,171,977 497,761,324 6,256,736,435 6,897,393,729

Other assets 777,155,302 236,763,083 - 1,578,648,661 802,274,639 3,394,841,686

Non-banking assets - 8,727,000 11,662,000 171,344,000 - 191,733,000

Total Assets 29,182,193,988 30,688,918,796 46,660,156,879 36,987,329,324 14,363,034,870 157,881,633,857

Liabilities

Borrowing from other banks, financial institutions and agents 1,400,345,368 4,409,892,760 6,046,957,206 1,109,192,331 1,113,492,734 14,079,880,398

Deposits and other accounts 20,238,771,829 21,920,889,761 31,061,280,943 42,011,242,371 1,869,523,275 117,101,708,180

Provisions & other liabilities 436,467,662 866,617,149 327,020,422 4,159,064,712 2,460,377,159 8,249,547,103

Total Liabilities 22,075,584,859 27,197,399,670 37,435,258,572 47,279,499,414 5,443,393,167 139,431,135,680

Net Liquidity Gap 7,106,609,129 3,491,519,126 9,224,898,307 (10,292,170,089) 8,919,641,703 18,450,498,176

Cumulative Net Liquidity Gap 7,106,609,129 10,598,128,255 19,823,026,562 9,530,856,473 18,450,498,176 -

financial reports 2013

181
Eastern Bank Limited and its subsidiaries
Notes to the Financial Statements
as at and for the year ended 31 December 2013

1 The Bank and its activities

1.1 Incorporated in Bangladesh, Eastern Bank Limited (“the Bank”) was formed as a public limited company with primary objective to carry
out all kind of banking businesses inside and outside Bangladesh. The Bank took over the businesses, assets, liabilities and losses
of erstwhile Bank of Credit & Commerce International (Overseas) Limited (hereinafter called “BCCI”) as they stood after reduction or
adjustments in accordance with the provisions of the Bank of Credit & Commerce International (Overseas) Limited (Reconstruction)
Scheme, 1992, hereinafter called “the Scheme”. The Bank commenced operations from 16 August 1992 with 4 branches and at present
it has 71 branches all over Bangladesh. Shares of the Bank is listed with both Dhaka Stock Exchange Limited and Chittagong Stock
Exchange Limited. The registered office of the Bank is located at Jiban Bima Bhaban, 10 Dilkusha C/A, Dhaka-1000.

The principal activities of the Bank are to provide a comprehensive range of financial products (loans and deposits) and services, personal
and commercial banking, trade services, cash management, treasury, securities and custodial services.

1.2 Offshore Banking Unit

Offshore Banking Unit (OBU) is a separate business unit of Eastern Bank Limited, governed under the Rules and Guidelines of Bangladesh
Bank. The Bank obtained permission for OBU operations vide Bangladesh Bank’s letter no. BRPD(P)744/(89)/2004-303 dated 25 January
2004. It gives loans (on and off-balance sheet exposures) and takes deposits only in freely convertible foreign currencies to and from non-
resident person/institutions, fully foreign owned EPZ companies etc. The unit commenced its operation from 19 May 2004 and its office is
located at Jiban Bima Bhaban, 10 Dilkusha C/A (1st floor), Dhaka.

1.3 Subsidiaries of the Bank

EBL Securities Limited - fully owned
EBL Securities Limited (EBLSL) a fully acquired securities brokerage firm, has membership and operates under both Dhaka Stock
Exchange and Chittagong Stock Exchange. The principal activities of this subsidiary is to buying, selling and settlement of securities on
behalf of investors and in its own portfolio. It’s registered office is located at 59, Motijheel C/A (1st Floor), Dhaka.

EBL Investments Limited - fully owned

EBL Investments Limited (EBLIL), another fully owned subsidiary of EBL, was incorporated on 30 December 2009. It obtained required
license from BSEC in January 2013 and started its full fledged merchant banking business, portfolio management, underwriting etc. in
June 2013. Its registered office is located at 59, Motijheel C/A (1st Floor), Dhaka,.
EBL Finance (HK) Limited - fully owned foreign subsidiary
EBL Finance (HK) Limited, the fully owned first foreign subsidiary of EBL was incorporated on 28 November 2011 with Hongkong (HK)
authority. This subsidiary started full fledged business (i.e. offshore trade finance, advising, documents collection etc.) in Hongkong with
well equipped and skilled human capital during 2013 after obtaining all the required licenses from Bangladesh and HK authority. It’s
registered office is Unit 1201, 12th Floor, Albion Plaza, 2-6 Granville Road, Tsimshatsui, Hongkong.

EBL Asset Management Limited - fully owned

EBL Asset Management Limited (EBLAM), another fully owned subsidiary of EBL was incorporated on 9 January 2011 to carry on the
business on asset management, capital market operation, equity investment etc. Operation of this subsidiary is yet to start after getting
license from BSEC & completing its subscriptions.

2 Basis of preparation and significant accounting policies

Basis of preparation

2.1 Statement of compliance

The consolidated financial statements of the Group and the separate financial statements of the Bank have been prepared under the
historical cost convention except land which are revalued and held for trading Govt treasury bills/bonds which are measured at fair value
and in accordance with Bangladesh Financial Reporting Standards (BFRSs), the “First Schedule” (section 38) of the Bank Company Act
1991 (amendment upto 2013), BRPD Circular no. 14 dated 25 June 2003, other Bangladesh Bank Circulars, the Companies Act 1994,
the Securities and Exchange Rules 1987, Dhaka and Chittagong Stock Exchange’s listing regulations and other laws and rules applicable
in Bangladesh. In case the requirement of provisions and Circulars issued by Bangladesh Bank differs with those of other regulatory
authorities and accounting standards, the provisions and Circulars issued by Bangladesh Bank shall prevail.
As such the Group and the Bank has departed from those contradictory requirements of BFRSs in order to comply with the rules and
regulations of Bangladesh Bank which are disclosed below:

i) Investments in shares and securities

BFRSs: As per requirements of BAS 39 investments in shares and securities generally fall either under “at fair value through Profit and
Loss Account” or under “available for sale” where any change in the fair value at the year-end is taken to Profit and Loss Account or
Revaluation Reserve Account respectively.

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Bangladesh Bank: As per 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 investments (portfolio basis); otherwise investments are recognized at costs.

ii) Revaluation gain/loss on Government securities

BFRSs: As per requirement of BAS 39, T-bills and T-bonds fall under the category of “held for trading” and “held to maturity” where any
change in the fair value of held for trading is recognized in Profit and Loss Account, and amortized cost method is applicable for held to
maturity using an effective interest rate.

Bangladesh Bank: According to DOS Circular no. 05 dated 26 May 2008 and subsequent clarification in DOS Circular no. 05 dated 28
January 2009, loss on revaluation of Government securities (T-bill / T-bond) which are categorized as held for trading should be charged
through Profit and Loss Account, but any gain on such revaluation should be recorded under Revaluation Reserve Account. However, at
the year-end if there is any revaluation gain from any particular T-bill/T-bond under held for trading; such gain can be used to the extent of
any revaluation loss for that particular T-bill/T-bond (held for trading).
T-bills/T-bonds designated as held to maturity are measured at amortized cost method but interest income/gain should be recognized
through reserve.”

iii) Provision on loans and advances

BFRSs: As per BAS 39 an entity should undertake impairment assessment when objective evidence of impairment exists for financial
assets that are individually significant. For financial assets which are not individually significant, the assessment can be performed on an
individual or collective (portfolio) basis.

Bangladesh Bank: As per BRPD Circular no. 14 dated 23 September 2012 and BRPD Circular no. 19 dated 27 December 2012, a general
provision @ 0.25% to 5% under different categories of unclassified loans (standard/SMA loans) should be maintained regardless of
objective evidence of impairment. And specific provision for sub-standard/doubtful/bad-loss loans should be made at 20%, 50% and
100% respectively on loans net off eligible securities (if any). Also, a general provision @ 1% should be provided for certain off-balance
sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.

iv) Other comprehensive income

BFRSs: As per BAS 1 elements of Other Comprehensive Income (OCI) can be presented in a separate statement i.e. Other
Comprehensive Income or can be included in a Single Statement of Comprehensive Income.

Bangladesh Bank: The scheduled banks in Bangladesh have been using certain prescribed templates of financial statements (including
names of those financial statements) issued by Bangladesh Bank. Those templates do not include ‘Other Comprehensive Income’nor are
the elements of OCI allowed to be included in a Single Comprehensive Income Statement (Profit & Loss Account, as per BB format). As
such the bank does not prepare a separate OCI Statement. However elements of OCI, if any, are shown in the statements of changes in
equity.”
v) Financial instruments - presentation and disclosure
As per BB guidelines, in certain cases financial instruments are categorized, recognized, measured and presented differently from those
prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in these financial
statements.

vi) REPO transactions

BFRSs: When an entity sells a financial asset and simultaneously enters into an agreement to repurchase the same (or a similar asset) at
a fixed price on a future date (REPO or stock lending), the arrangement is accounted for as a collateralized borrowing and the underlying
asset continues to be recognized in the entity’s financial statements. This transaction will be treated as borrowing and the difference
between selling price and repurchase price will be treated as interest expense.
Bangladesh Bank: As per BB circulars/guidelines, when a bank sells a financial asset and simultaneously enters into an agreement to
repurchase the same (or a similar asset) at a fixed price on a future date (REPO or stock lending), the arrangement is accounted for as a
normal sale transaction and the financial assets should be derecognized in the seller’s book and recognized in the buyer’s book.

vii) Financial guarantees

BFRSs: As per BAS 39 financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial
guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial guarantee.
The financial guarantee liability is subsequently carried at the higher of this amortized amount and the present value of any expected
payment when a payment under the guarantee has become probable. Financial guarantees are prescribed to be included within other
liabilities.
Bangladesh Bank: As per BRPD circular 14, 2003, financial guarantees such as L/C, L/G should be treated as off balance sheet items. No
liability is recognized for the guarantee except the cash margin.”

viii) Cash and cash equivalents

BFRSs: Cash and cash equivalent items should be reported as cash item as per BAS 7.
Bangladesh Bank: Some highly liquid assets such as money at call and short notice, T-bills/bonds, 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

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 and short notice and Prize bonds are shown as cash and cash equivalents beside cash in hand, balance with BB and other banks.
ix) Non banking assets

BFRSs: No indication of non banking assets is found in any BFRSs.

Bangladesh Bank: As per BRPD Circular no.14 dated 25 June 2003, there should exist a face item named non banking assets.

x) Cash flow statement

BFRSs: Cash flow statement can be prepared either in direct method or in indirect method. The presentation method is selected to
present cash flow information in a manner that is most suitable for the business or industry. Whichever method selected should be applied
consistently.

Bangladesh Bank: As per BRPD circular 14 dated 25 June 2003, cash flow statement is to be prepared following a mixture of direct and
indirect method.”

xi) Balance with Bangladesh Bank: (CRR)

BFRSs: Balance with Bangladesh Bank should be treated as other assets as it is not available for use in day to day operations as per BAS 7.

Bangladesh Bank: Balance with Bangladesh Bank should be treated as cash and cash equivalents.

xii) Off balance sheet items

BFRSs: No requirement of disclosure for off balance sheet items as 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. L/C, L/G, Acceptance should be
disclosed separately on the face of the Balance Sheet.”

xiii) Disclosure of appropriation of profit

BFRSs: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.

Bangladesh Bank: As per BRPD circular 14 dated 25 June 2003, an appropriation of profit should be disclosed on the face of Profit and
Loss Account.”

xiv) Loans and advance net of provision

BFRSs: Loans and advances should be presented net of provisions.

Bangladesh Bank: As per BRPD circular 14 dated 25 June 2003, provision on loans and advances should be presented separately as
liability and cannot be netted off against loans and advances.

[Also refer to Note 2A (II) Compliance of Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards
(BFRSs)]

2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items:

- Government Treasury Bills and Bonds designated as ‘Held for Trading (HFT)’ at present value using marking to market concept with
gain credited to revaluation reserve but loss charged to Profit and Loss Account.
- Government Treasury Bills and Bonds designated as ‘Held to Maturity (HTM)’ at present value using amortization concept.
- Zero Coupon Bond at present value using amortization concept.
- Land is recognized at cost at the time of acquisition and subsequently measured at fair value as per BAS-16 “Property Plant &
Equipment.” and BSEC notification SEC/CMRRCD/2009-193/150/Admin dated 18 August 2013.

2.3 Use of estimates and judgments

The preparation of the consolidated financial statements of the Group and the separate financial statements of the Bank in conformity
with BFRSs require management to make judgments, estimates and assumptions that affect the application of accounting policies and
the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
in which the estimate is revised and in any future period affected.
Key estimates include the following:
- Loan loss provision
- Revaluation of land
- Deferred tax assets/liabilities
- Gratuity & Superannuation fund

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2.4 Foreign Currency Transactions and Translations

Functional and presentation currency
The consolidated financial statements of the Group and the separate financial statements of the Bank are presented in Bangladesh Taka
(BDT) which is the Group’s and the Bank’s functional currency except OBU where functional currency is US Dollar (USD) and EBL Finance
(HK) Ltd. where functional currency is Hongkong Dollar (HKD). All financial information presented in Taka has been rounded off to the
nearest integer, except when otherwise indicated.

Foreign currency transactions

Transactions/Day End Balances in foreign currencies are converted into respective functional currencies (Bangladesh Taka in case of
EBL Main Operations, US Dollar in case of OBU and HKD in case of EBL Finance (HK) Ltd.) at the rate of exchange ruling at the date of
transactions as per BAS 21 “The Effects of Changes in Foreign Exchange Rates”. Effects of Exchange rate differences (rates at which
transactions were initially recorded and the rate prevailing on the reporting date/date of settlements) applied on the monetary assets or
liabilities of the bank are recorded in the Profit and Loss Account.

Foreign currency translations for foreign operations

As per BAS 21 “The Effects of Changes in Foreign Exchange Rates”, Assets and liabilities of OBU and EBL Finance (HK) Ltd. have been
presented into Taka (which is functional currency of the Parent i.e. Bank) using year end standard mid-rate (i.e. the closing rate) of the
Bank. Yearly income and expenses of the said subsidiaries are translated using monthly average rate of standard mid-rates of exchange.
The net cumulative amount of the exchange differences has been presented separately as a component of equity.

2.5 Basis of consolidation

- Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating
policies of an entity, so as to obtain economic benefits from its activities.
- The consolidated financial statements incorporate the financial statements of Eastern Bank Limited and the financial statements
of subsidiary companies from the date that control commences until the date that control ceases. The financial statements of such
subsidiary companies are incorporated on a line by line basis and the investments held by the bank are eliminated against the
corresponding share capital of subsidiaries in the consolidated financial statements.
- Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated
in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the
extent that there are no evidence of impairment.

2.6 Cash flow statement

Cash flow statement has been prepared in accordance with Bangladesh Accounting Standard (BAS) 7 “Statement of Cash Flows” and
under the guideline of Bangladesh Bank BRPD Circular no.14 dated 25 June 2003. The Statement shows the structure of changes in cash
and cash equivalents during the financial year.

2.7 Reporting period

These financial statements of the Bank and its subsidiaries cover one calendar year from 1 January to 31 December.

2.8 Liquidity statement

The liquidity statement has been prepared in accordance with remaining maturity grouping of Assets and Liabilities as at the close of the
year as per following bases:

Particulars Basis of Use

Cash, Balance with other banks and financial institutions, Maturity/behavioral trend.
money at call and short notice etc.
Investments Residual maturity term.
Loans and advances Repayment/maturity schedule and behavioral trend (non-maturity products).
Fixed assets Useful life.
Other assets Realization/amortization basis.
Borrowings from other banks and financial institutions Maturity/repayment term.
Deposits and other accounts Maturity and behavioral trend (non-maturity products).
Other long term liability Maturity term.
Provision and other liability Settlement/adjustment schedule basis.

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2.9 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have
been applied consistently by group entities except otherwise instructed by the Central Bank as prime regulator Certain comparative
amounts in the financial statements have been reclassified and rearranged to conform to the current year’s presentation.

A. Assets and basis of their valuation:

i) Cash and cash equivalents
Cash and cash equivalents include notes and coins in hand and at ATM, unrestricted balances held with Bangladesh Bank and its agent
bank, balance with other banks and financial institutions, money at call and on short notice and prize bond which are not ordinarily
susceptible to change in value.

ii) Investments

All investments (other than government treasury securities) are initially recognized at cost, including acquisition charges associated with
the investment. Accounting treatment of government treasury securities (categorized as HFT or/and HTM) is made following Bangladesh
Bank BRPD Circular no. 05 dated 26 May 2008 and subsequent clarifications.

Held to Maturity (HTM)

Investments which are intended to be held till maturity are classified as “Held to Maturity”. These are measured at amortized cost at each
year end by taking into account any discount or premium on acquisition. Premiums are amortized and discount accredited, using the
effective or historical yield method. Any increase or decrease in value of such investments is booked to equity.

Held for Trading (HFT)

These are investments primarily held for selling or trading. After initial recognition, investments are marked to market weekly and any
decrease in the present value is recognized in the Profit and Loss Account and any increase is booked to Revaluation Reserve Account
through Profit and Loss Account as per Bangladesh Bank DOS Circular no. 05 dated 28 January 2009.

REPO and Reverse REPO

REPO and Reverse REPO are recorded based on DOS Circular no. 06, dated 15 July 2010 of Bangladesh Bank. In case of REPO of both
coupon and non-coupon bearing (Treasury bill) securities, the Bank adjusts the Revaluation Reserve Account for HFT securities and stops
the weekly revaluation (if the revaluation date falls within the REPO period) of the same security. For interest bearing security, the Bank
does not accrue interest during REPO period.
Investments – Initial recognition and subsequent measurement at a glance
Investments are stated as per following bases:

Measurement after initial

Investment class Initial recognition Recording of changes
recognition
Govt. T-bills/bonds (HFT) Cost Fair value Loss to Profit and Loss Account, gain to
Revaluation Reserve through Profit and Loss
Account.
Govt. T-bills/bonds (HTM) Cost Amortised cost Increase or decrease in value to equity.
Debenture/Bond Face value None None
Shares (Quoted) * Cost Lower of cost or market value Loss (net) to Profit and Loss Account but no
unrealised gain booking.
Shares (Unquoted) Cost Lower of cost or Net Asset Value Loss (net) to Profit and Loss Account but no
(NAV) unrealised gain booking.
Prize bond Cost None None
* Provision has been made on unrealized loss (gain net off) according to DOS Circular no. 4, dated 24 November 2011.

Investment in Subsidiaries

Investment in subsidiaries are accounted for under the cost method of accounting in the Bank’s financial statements in accordance
with BAS 27 “Consolidated and Separate Financial Statements” and BFRS 3 “Business Combination”. Impairment of investment in
subsidiaries is made as per the provision of BAS 36 “Impairment of Assets”.

iii) Loans, advances and provisions

Loans and advances are stated at gross amount. General provisions on unclassified loans and contingent assets, specific provisions for
classified loans and interest suspense thereon are shown under other liabilities. Provision against classified loans and advances is made
on the basis of quarter end review by the management and instructions contained in BRPD Circular no. 14 dated 23 September 2012 and
BRPD Circular no. 19 dated 27 December 2012.

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Heads Rates
General provision on:
Unclassified (including SMA) general loans and advances 1%
Unclassified (including SMA) small and medium enterprise 0.25%
Unclassified (including SMA) Loans to BHs/MBs/SDs against Shares etc. 2%
Unclassified (including SMA) loans for housing finance and on loans for professionals 2%
Unclassified consumer financing other than housing finance and loans for professionals 5%
Short term agri credit and micro credit 5%
Off balance sheet exposures 1%
Specific provision on:
Substandard loans and advances other than short term agri credit and micro credit 20%
Doubtful loans and advances other than short term agri credit and micro credit 50%
Bad/loss loans and advances 100%
Substandard short term agri credit and micro credit 5%
Doubtful short term agri credit and micro credit 5%

iv) Fixed assets and depreciation

Recognition and measurement

Fixed assets except land are stated at cost less accumulated depreciation as per BAS-16 “Property, Plant and Equipment”. Land is
recognized at cost at the time of acquisition and subsequently measured at revalued amounts which are the fair value at the time of
revaluation done by independent valuer and any surplus on revaluation is shown as equity component until the asset is disposed.

The cost of an item of fixed assets is recognized as an asset if it is probable that future economic benefits associated with the item will
flow to the entity, and the cost of the item can be measured reliably.

The cost of an item of fixed assets comprises:

- its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.

- any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the
manner intended by management.
- the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs

Subsequent costs are capitalized only when it is probable that the future economic benefits associated with the costs will flow to the
entity and cost can be measured reliably. The carrying amount of the replaced portion is derecognized. The costs of day to day servicing
of fixed assets i.e. repairs and maintenance is charged to profit and loss account as expense when incurred.

Depreciation
Depreciation is charged at the rates stated below on all fixed assets on the basis of estimated useful lives as determined in the fixed
asset policy of the Bank. In all cases depreciation is calculated on the straight line method. Charging depreciation commences from the
month of acquisition (for full month) and ceases at the month when the assets are disposed. No depreciation is charged on building under
construction until the usage of the assets.

Depreciation rates used for each type of fixed assets are as follows:

Particulars of fixed assets Rate of depreciation/ amortisation p.a. Estimated useful lives (Years)
Buildings 2.50% 40
Furniture and Fixtures 10.00% 10
Machineries and equipment 20.00% 5
Computers 33.33% 3
Stabilisers and UPS 33.33% 3
Vehicles 20.00% 5
Software 20.00% 5

Repairs and maintenance are charged to profit and loss account as expense when incurred.

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 Capital work in progress/Building under Construction

Building under construction is recognised and reported under Fixed Assets as per BAS 16- ‘Property, Plant & Equipment’ as Capital
working progress until the construction work is completed and the asset is ready for intended use. Depreciation of the asset will be
charged from the date of its intended use.

Derecognition of fixed assets

The carrying amount of an item of fixed assets is derecognized on disposal or when no future economic benefits are expected from its
use or disposal. The gain or loss arising from derecognition of an item of fixed assets is to be recorded in profit or loss when the item is
derecognized.
v) Leased Assets

Fixed assets which are procured under finance lease arrangement (under which substantially all the risks and rewards incidental to
ownership are transferred to the lessees i.e. EBL) are reported as leased assets as per BAS 17 “Leases”.
These assets held under finance lease are recognized as assets of the bank at an amount equal to the lower of their fair value and the
present value of minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease
obligation. Any initial direct costs incurred are added to the amount recognized as leased asset.
These assets are depreciated fully over the shorter of the lease terms and their useful lives.

vi) Intangible assets

Intangible asset is an identifiable non-monetary asset without physical substance. An intangible asset is recognized if it is probable that
the future economic benefits that are attributable to the assets will flow to the entity and the cost of the asset can be measured reliably in
accordance with BAS 38: “Intangible Assets”.
Subsequent expenditure on intangible asset of the Group is capitalized only when it increases the future economic benefits embodied in
the specific assets to which it relates. All other expenditure is expensed as incurred.

The core banking software used by EBL used by subsidiaries represent the value of computer application software licensed for the use of
the bank. Software is carried at cost less accumulated amortization and any impairment losses. Initial cost comprises license fees paid at
the time of purchase and other directly attributable costs incurred for customizing the software for its intended use. Software is amortized
using the straight line method over the estimated useful life of 5 (five) years commencing from the month at which the application software
is made available for use.

vii) Impairment of Assets

An asset is impaired when its carrying amount exceeds its recoverable amount as per BAS 36 “Impairment of Assets”. The Bank and the
subsidiaries assesse at the end of each reporting period whether there is any indication that an asset may be impaired and/or whenever
events or changes in circumstances indicate that the carrying value of the asset may not be recovered. If any such indication exists, the
Bank and the subsidiaries make an estimate of the recoverable amount of the assets. The carrying amount of the asset is reduced to its
recoverable amount, if the recoverable amount is less than its carrying amount and impairment losses are recognized in the profit and loss
account. However, impairment of financial assets are guided by the relevant BB circulars/instructions and BAS 39.

viii) Other assets

Other assets include investment in subsidiaries, Membership of DSE & CSE, advance for operating and capital expenditure, stocks of
stationary and stamps, security deposits to government agencies etc. As per BRPD Circular No. 14 dated 25 June 2003, Income & Non-
income-generating other assets item(s) have been shown separately in the relevant notes to the financial statements.

ix) Non banking assets

Non-banking assets are acquired on account of the failure of a borrower to repay the loan in time after receiving the decree from the court
regarding the right and title of the mortgaged property. The bank was awarded absolute ownership on few mortgaged properties (mostly
land) through the verdict of honorable court under section 33(7) of the ‘Artharin Adalat Act 2003’. The value of the properties has been
recognized in the financial statements as non-earning assets on the basis of third party valuation report. Value of the assets received in
addition to the loan outstanding has been kept as reserve against non-banking assets. Party wise details (including possession date) of
the properties are presented in Note 10.

B. Liabilities and provisions:

i) Borrowings from other banks, financial institutions and agents

Borrowings from other banks, financial institutions and agents include interest bearing borrowings which are stated in the financial
statements at principal amount of the outstanding balance. Interest payables on such borrowings are reported under other liabilities.

ii) Deposits and other accounts

Deposits and other accounts include non-interest bearing current deposits redeemable at call, interest bearing short-term deposits,
savings deposits and fixed deposits which are initially measured at the consideration received. These items are subsequently measured
and accounted for at the gross value of the outstanding balance in accordance with the contractual agreements with the counter parties.

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iii) Other liabilities

Other liabilities comprise items such as provision for loans and advances/ investments, provision for taxes, interest payable on borrowing,
interest suspense and accrued expenses etc. Individual item-wise liabilities are recognized as per the guidelines of Bangladesh Bank and
Bangladesh Financial Reporting Standards (BFRS).

iv) Dividend payments

Interim dividend is recognized when it is paid to shareholders. Final dividend is recognized when it is approved by the shareholders in
AGM. The proposed dividend for the year 2013, therefore, has not been recognized as a liability in the balance sheet in accordance with
BAS 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 the payment is established.
v) Provision for loans and advances

Provision for classified loans and advances is made on the basis of quarter end review by the management and instructions contained in
BRPD Circular no. 14 dated 23 September 2012 and BRPD Circular no. 19 dated 27 December 2012. Details are stated in Note 13.00.

vi) Provision for investment in capital market

For recognition of loss suffered from investment in capital market, provision has been made on unrealized loss (gain net off) according to
DOS Circular No. 04 dated 24 November 2011 on portfolio basis.

vii) Provision for off-balance sheet exposures

In compliance with Bangladesh Bank guidelines, contingent liabilities have been disclosed under off-balance sheet items. As per BRPD
Circular no.14 dated 23 September 2012 and related earlier circulars, the bank has been maintaining provision @ 1% against certain off-
balance sheet exposures.

viii) Provision for other assets

Provision for other assets is made as per the guidelines mentioned (100% provision is required on other assets which are outstanding for
one year and above) in the BRPD Circular No. 14 dated 25 June 2001.

ix) Provision for nostro accounts

Provision for unsettled transactions on nostro accounts is made in accordance with the guideline of Foreign Exchange Policy Department
of Bangladesh Bank, FEPD Circular no. FEPD (FEMO) / 01/2005-677 dated 13 September 2005. On the reporting date, EBL has no
unsettled transactions outstanding for more than 3 months and no provision has been made in this regard.

x) Provision for liabilities and accrued expenses

In compliance with BAS 37, provisions for other liabilities and accrued expenses are recognized in the financial statements when the Bank
has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.

xi) Contingent liabilities

Contingent liabilities which include certain guarantees and letters of credit pledged as collateral are possible obligations that arise from
past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
within the control of the Bank. Contingent liabilities are not recognized in the financial statements as per BAS 37 “Provisions, Contingent
Liabilities and Contingent Assets”. However, disclosure on contingent liabilities have been made on the face of balance sheet under “Off-
balance Sheet Items” as per the guidelines of BRPD Circular No. 14 dated 25 June 2003.

C. Share capital and reserves

i) Authorized and issued capital

The authorized capital of the bank is the maximum amount of share capital that the bank is authorized by its Memorandum and Articles of
Association to issue (allocate) among shareholders. Part of the authorized capital can (and frequently does) remain unissued. This number
can be changed by shareholders’ approval upon fulfillment of related provisions of Companies Act 1994. The part of the authorized capital
which has been issued to shareholders is referred to as the issued share capital of the bank.

ii) Paid-up capital

The paid-up capital represents the amount of bank’s capital that has been contributed by ordinary shareholders. The holders of ordinary
shares are entitled to receive dividend as recommended by the Board and subsequently approved by the shareholders from time to time
in the Annual General Meeting (AGM).

iii) Share premium

The Share premium represents the excess amount received by the bank from its shareholders over the nominal/par value of its share. The
amount of share premium can be utilized as per the provision of Section 57 of the Companies Act 1994. Currently EBL does not have any
contribution from its shareholders as share premium.

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 iv) Statutory reserve

In compliance with the provision of Section 24 of Bank Companies Act 1991, the bank transfers at least 20% of its profit before tax to
“Statutory Reserve Fund” each year until the sum of statutory reserve and share premium equal to the paid up capital of the bank.

v) Asset revaluation reserve

When an asset’s carrying amount is increased as a result of revaluation, the increased amount is credited directly to equity under the
heading of assets revaluation reserve as per BAS 16- “Property, Plant and Equipment”. The bank also follows the assets revaluation
guidelines issued by BSEC on 18 August 2013.

vi) Reserve for Amortization/ revaluation of securities

When a Financial Asset is catagorised under HTM or HFT and subsequent value of the asset is increased as a result of amortisation of
assets or marked to market revaluation, the net increased amount (for HTM increase or decrease of book value and for HFT loss to P&L
but gain to revaluation reserve through P&L) is credited directly to equity under the heading of reserve for amortization/ revaluation of
securities as per Bangladesh Bank DOS circular no. 06, dated 15 July 2010.

D. Revenue recognition:

i) Interest income

Interest on unclassified loans and advances is accounted for as income on accrual basis, interest on classified loans and advances is
credited to interest suspense account with actual receipt of interest there from credited to income as and when received as per instruction
contained in BRPD 14 dated 23 September 2012 & BRPD 19 dated 27 December 2012 of Bangladesh Bank.

ii) Fees and commission income

Fess and commission income arises on services provided by the Bank and recognized as and when received basis. Commission charged
to customers on letters of credit, letters of guarantee and acceptance are credited to income at the time of effecting the transactions.

iii) Interest income from investments

Interest income on investments in Government and other securities, debentures and bonds is accounted for on accrual basis.

iv) Income from Exchange

Exchange income includes all gain and losses from foreign currency day to day transactions,conversions and revaluation of Non Monetary
items.

v) Dividend income

Dividend income from investments is recognized at the time when it is declared, ascertained and right to receive the payment is
established.

vi) Interest paid on borrowings and deposits

Interest paid on borrowings and deposits are calculated on 360 days basis (except for some treasury instruments which are calculated on
364 days basis) in a year and recognized on accrual basis.

vii) Management and other expenses

Expenses incurred by the Bank are recognised on actual and accrual basis.

viii) Taxes

The expense comprises current and deferred tax. Current tax and deferred tax is recognized in profit or loss except to the extent that it
relates to a business combination or items recognized directly in equity.

a. Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the
reporting date and any adjustment to the tax payable in respect of previous years.

Provision for current income tax has been made on taxable income of the Bank @ 42.5% (0% on gain of govt. securities, 10% on capital
gain of trading shares in Secondary Market and 20% on dividend income) as prescribed in the Income Tax Ordinance 1984.

b. Deferred tax

Deferred tax is calculated on taxable/deductible temporary differences between tax base amount and carrying amount of assets and
liabilities as required by Bangladesh Accounting Standard (BAS) 12- “Income Taxes” and BRPD Circular no. 11 dated 12 December 2011.

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ix) Retirement/post-employment benefits

The retirement benefits accrued for the employees of the Bank during the reporting period have been accounted for in accordance with
the provisions of BAS 19 “Employee Benefit”. The retirement benefit schemes operated by the Bank are outlined below:

a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which payments into the plan are fixed. Subsequent payments
out of the plan to retired members are based on the size of the ‘fund’ meaning contributions that have been made into the scheme and
investment returns on scheme assets. The Bank maintains one funded defined contribution plan i.e. “Provident fund” for its employees
under a separate trustee board.

Provident Fund
The Bank operates a contributory provident fund for its permanent employees funded by both the employees and the Bank equally;
employees contribute 10% of basic salary and the Bank contributes an equal amount.The Bank’s contribution is made each month and
recorded under salary and allowances. This fund is managed by a separate trustee board i.e. “EBL Employees Provident Fund Trust”
and any investment decision out of this fund is made separately from that of the Bank’s funds. This fund has received approval from the
National Board of Revenue on 31 July 1997.

b) Defined benefit plans

Defined benefit plans are post-employment benefit plans other than defined contribution plans. These plans define the amount that retired
members will receive from the plans during retirement, by reference to factors such as length of service and salary levels.
Contributions are paid into the scheme based on actuarial valuation. The Bank retains an obligation to make up any shortfall in a plan,
thereby bearing the risk of the plan under-performing. The Bank maintains two funded defined benefit plans i.e. “Gratuity fund” and
“Superannuation fund” for its employees under two separate trustee boards.

Gratuity

The Bank operates a funded gratuity scheme approved by the National Board of Revenue with effect from 1 January 1997. The Gratuity
Fund is managed separately by “”EBL Employees Gratuity Fund Trust”” and any investment decision out of this fund is also made by this
Trust. The benefit is paid to the eligible employees i.e. who have completed minimum 7 (seven) years of continuous service at the time
of separation from the Bank. As per policy of the Bank, eligible employees are provided with the benefit equal to the latest monthly basic
salary multiplied by varied rates as per service length.

Provision for gratuity is made monthly on the basis of actuarial valuation made once in three years, or immediately after any major change
in the salary structure that could impact provisions. Last actuarial valuation was done based on information of September 2012. As per
this valuation, from 1 October 2012 a contribution of 17.20% of basic payroll is contributed to the fund by the Bank each year until the
next actuarial review is carried out.

Superannuation fund

The Bank operates a superannuation fund approved by the National Board of Revenue with effect from 20 November 1999 and governed
by the trust deed of “EBL Employees Superannuation Fund Trust”. As per the trust deed, benefit is payable to the employees of the
Bank as per their rank, grade and length of service with the Bank. The Bank conducted last actuarial valuation of the fund on September
2012. The actuary recommended a contribution of Tk. 73,450,000 to the fund to offset the past service liability. In addition, 1% of total
admissible benefit is being contributed each year into the fund until the next actuarial valuation.

E. Others
i) Materiality and aggregation

Each material class of similar items has been presented separately in the financial statements. Items of dissimilar nature also have been
presented separately unless they are immaterial in accordance with BAS 1 “Presentation of Financial Statements”.

ii) Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability
simultaneously. Advance tax paid and provision for tax of the bank is presented on net basis as a liability item if the liability is higher than
asset and as an asset item if the asset is higher than liability.

iii) Earnings per share

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares as per BAS 33 “Earnings per Share”. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the bank by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and
the average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

191
 iv) Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to
common control or common significant influence
Related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is
charged as per BAS 24 ‘ Related Party Disclosures’, Bangladesh Bank & BSEC guidelines. Details of the related party transactions have
been disclosed in Annexure C and C1.

v) Reconciliation of books and account

Books of account in regard to inter-bank (in Bangladesh and outside Bangladesh) as well as inter-branches are reconciled at regular
intervals to keep the unreconciled balances within non-material level.

vi) Events after the reporting period

All the material events after the reporting period have been considered and appropriate adjustments/disclosures have been made in the
financial statements as per BAS 10 “Events after the Reporting Period”. Board’s recommendation for dividend distribution is a common
item presented in the Note - 48.

vii) Operating segments

The Bank has nine reportable segments, as described below, which are the Bank’s strategic business units. The strategic business units
offer different products and services, and are managed separately based on the Bank’s management and internal reporting structure. For
each of the strategic business units, the Bank Management Committee reviews internal management reports on at least a quarterly basis.
The following summary describes the operations in each of the Bank’s reportable segments:

Segment Name Description

Investment Banking Includes the Bank's trading, investment in equities and other capital market activities.
Corporate Banking Includes loans, deposits and other transactions and balances with corporate customers.
Consumer Banking Includes loans, deposits and other transactions and balances with retail customers.
Treasury Undertakes the Bank's funding and maintenance of SLR, Asset-liability management through
borrowings and placement, currency swap and investing in liquid assets such as short-term
placements and corporate and government debt securities.
SME Banking Includes loans, deposits and other transactions and balances with SME customers.
Offshore Banking Includes loans, deposits and other transactions and balances in freely convertible currencies
with eligible Corporate customers.
EBL Securities Limited Includes to buy, sell and deal in shares, stocks, debentures and other securities on behalf of
customers, doing margin lending etc.
EBL Investments Limited Established to do all kinds of merchant banking activities including issue management,
underwriting, portfolio management and other transactions.
EBL Finance (HK) Limited Formed to do trade finance and off-shore banking business in Hong Kong. The company
started its commercial operation in early 2013.

Information regarding the results of each reportable segment is included in Annexure - E. Performance is measured based on segment
profit before provision, as included in the internal management reports that are reviewed by the Bank’s Management Committee. Segment
profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of
certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm’s length basis.

viii) Risk management

Financial Institutions are in the business of taking risk and it is important how a bank decides on risk taking transactions. EBL firmly
believes that robust risk management is the core function that makes its business sustainable. The risk management systems in place at
the Bank are discussed below:

a) Credit Risk

Credit risk is the risk of loss that may occur from the failure of any counter party to make required payments in accordance with agreed
terms and conditions and/or deterioration of creditworthiness. Credit risk is managed through a framework set by policies and procedures
established by the Board.

The responsibility is clearly segregated between origination and approval of business transaction.

Board of Directors is the apex body for credit approval process of the Bank. However, they delegate authority to the Managing Director &
CEO or other officers of the credit risk management division. The Board also sets credit policies to the management for setting procedures,
which together has structured the credit risk management framework in the bank. The Credit Policy Manual contains the core principles for
identifying, measuring, approving, and managing credit risk in the bank. The policy covers corporate, retail, small and medium enterprise

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

exposures. Policies and procedures together have structured and standardized credit risk management process both in obligor and
portfolio level. There is a comprehensive credit appraisal procedure that covers Industry/Business risk, management risk, financial risk,
facility structure risk, security risk, environmental risk, reputation risk, and account performance risk. The Head of Credit Risk Management
has clear responsibility for management of credit risk.
Respective relationship managers, at least once in a quarter, review credit exposures and portfolio performance. Corporate and Medium
Enterprise accounts are continuously monitored under a clearly set out ‘Early Alert’ policy. Sign of deteriorations are well defined and
broad guidelines are given in that policy for business origination units. Early Alerts are raised for financial deterioration, management
weakness, irregular repayments, breach of covenants, eroding position in the industry, etc. If early alerts are raised, account plans are
then re-evaluated; remedial actions are agreed and monitored. Remedial action includes, but not limited to exposure reduction, security
enhancement, exit of relationship or immediate movement of our Special Asset Management Division.

The bank follows the criteria for loan classification and provisioning requirement as stipulated in the BRPD Circular no. 14 dated 23
September 2012. Adequate provision has been kept which is stated in Note 13.00 to the financial statements.

b) Liquidity Risk

Liquidity Risk is the potential for loss to a bank arising from either its inability to meet its obligations as they fall due or to fund increases
in assets without incurring unacceptable cost or losses. The Bank is deemed to have adequate liquidity when it can obtain sufficient fund
promptly and at a reasonable rate.

Responsibility of managing and controlling liquidity of the bank lies with Asset Liability Committee (ALCO) that meets at least once in every
month. Asset Liability Management (ALM) desk of the treasury function being primarily responsible for management of liquidity risk closely
monitors and controls liquidity requirements on a daily basis by appropriate coordination of funding activities. A monthly projection of fund
flows is reviewed in ALCO meeting regularly. On monthly basis, ALCO monitors liquidity management by examining key ratios, maximum
cumulative outflow, upcoming funding requirement from all business units, asset-liability mismatch etc.
ALCO also monitors concentration of deposits on large institutional depositors which is volatile in nature. In addition to these ratios, Bank
prepares structural liquidity profile, maturity profile of term deposit, cash flow modeling, and contingency funding plan on monthly basis,
which are analyzed in ALCO meeting to ensure liquidity at the level acceptable to the bank and regulators.

c) Market Risk

Risk Management Unit (RMU) is responsible for overall monitoring, control, and reporting of market risk while Treasury Mid Office is
an integral part of market risk management which independently evaluates and monitors treasury department’s transaction from risk
perspective. Overall risk parameters and exposures of the bank are monitored by RMU and periodically reported to Bank Risk Management
Committee (BRMC). Market risk can be subdivided into three categories depending on risk factors: Interest Rate Risk, Foreign Exchange
Risk, and Equity Price Risk.

d) Interest Rate Risk

Interest rate risk is the risk to earnings or capital of the bank arising from movement of interest rates. The movement of interest rates affects
bank’s reported earnings and capital by changing:
- Net interest income
- The market value of trading accounts (and other instruments accounted for by market value), and
- Other interest sensitive income and expenses.

To manage interest rate risk, ALCO regularly monitors various ratios and parameters. Bank deploys several analysis techniques (e.g. Rate
Sensitive Gap Analysis, Duration Gap Analysis) to measure interest rate risk, its impact on Net Interest Income and takes insight about
course of actions.

e) Foreign Exchange Risk

Foreign exchange risk is the risk that a Bank’s financial performance or position will be affected by fluctuations in the exchange rates
between currencies and implied volatility on foreign exchange options. Bank makes import payment and outward remittance as its
outflow, whereas it gets foreign currency inflow as export receipts and inward remittance. Exchange rate risk arises, if, on a particular
day, these inflow-outflows don’t match and bank runs its position long/short from these customer driven activities. Bank also faces
foreign exchange risk if it sources its funding in one currency by converting fund from another currency. Currently, the Bank is facing such
transaction exposure in foreign currency for its off-shore banking unit. But these transactions exposure is always hedged.

The bank computes VaR (Value at Risk) on its foreign exchange position arising from customer driven foreign exchange transactions at
95% confidence level on daily basis. The bank maintains various Nostro accounts in order to conduct operations in different currencies.
The management of the bank set limits for conducting Nostro account transactions. All Nostro accounts are reconciled on monthly basis
and outstanding entries are reviewed by the management for its settlement/ adjustment. The position maintained by the bank at the end
of the day is within the stipulated limit prescribed by the Bangladesh Bank.

f) Equity Price Risk

Equity price risk is the risk of losses caused by changes in equity prices. These losses could arise because of changes in the value of listed
shares held directly by the bank; changes in the value of listed shares held by a bank subsidiary; changes in the value of listed shares used

193
 as collateral for loans whether the loan was made for the purpose of buying the shares; and changes in the value of unlisted shares.
Marking to Market is the tool bank applies for making full provision against losses arisen from changes in market price of securities. As
of 31 December 2013, bank sets aside BDT 478.77 million charging its profit and loss account to cover the differential amount between
purchase price and market price of securities traded in the secondary market.

g) Operational Risk

Operational Risk is defined as the risk of unexpected losses due to physical catastrophe, technical failure, and human error in the
operation of a bank; including fraud, failure of management, internal process errors and unforeseeable external events. Operational Risk
Unit under Internal Control & Compliance Division (ICCD) is primarily responsible for risk identification, measurement, monitoring, control,
and reporting of operational risk. Internal Control (audit) Unit of ICCD also conducts risk-based audit at departmental and branch level
throughout the year. Besides, there is a committee called ‘Bank Operational Risk Committee’ (BORC) reporting to MD & CEO which plays
a supervisory role.
Operational risks are analyzed through review of Departmental Control Function Check List (DCFCL). This is a self-assessment process for
detecting high risk areas and finding mitigants of those risks. These DCFCLs are then discussed in monthly meeting of Bank Operational
Risk Committee (BORC).
h) Prevention of Money Laundering and Terrorist Financing

For prevention of Money Laundering and Terrorist Financing, the bank has a comprehensive policy which is approved by the Board of
EBL. The CEO’s formal Annual Policy statement on Anti Money Laundering (AML) and combating the financing of terrorism (CFT) is
issued to ensure greater due diligence and compliance at all levels of the bank. The bank has also formed a Central Compliance Unit
(CCU) under the leadership of Chief Anti Money Laundering Compliance officer (CAMLCO) at Head office, Branch Anti Money Laundering
Compliance officer (BAMLCO) at branches, to review and verify the transactions of accounts to make Suspicious Transactions Reports
(STR), and ensure AML & CFT compliance culture throughout the bank. Training is being conducted continuously for all the officers of
the bank to create awareness and develop the skill for ensuring KYC (Know your Clients) compliance and identifying suspicious activities/
transactions.

i) Information and Communication Technology Risk

EBL has a comprehensive IT Security Policy and procedures which are formally documented and endorsed by top management. IT
Division (hereinafter IT) has established standard Physical & Environmental Security Measures (e.g. Locked Door, Locked rack, CCTV, AC,
Fire Extinguisher, etc.) to all Sensitive areas (e.g. Data Centre, Disaster Recovery Site, Power Rooms, Server Rooms, etc.). IT has standard
Logical Security Measures (e.g. Access card, Password Protected Server, Access Log, Measuring Device Logs, Periodic Testing Results,
etc.) to all core devices (server, PC, etc.), connecting devices (switch, router, etc.), security devices (firewall, IDS, etc.), all applications
(core banking system, antivirus, firewall, VPN, utilities, etc.), databases, networks and others. IT has standard design and practice in
network connectivity, access, build-up, configuration, monitoring, maintenance and security. IT has Business Continuity Management
(BCM) to support and handle any human made or natural incident/disaster; moreover regular backup schedule and retention avoids the
risk of data loss based on the criticality of the system.

j) Internal Audit
The Bank has established an independent internal audit function with the head of internal control & compliance (ICC) reporting directly
to the chairman of audit committee. The internal audit team performs risk based audit on various business and operational areas of the
Bank on continuous basis. The audit committee and the Board regularly reviews the internal audit reports as well as monitor progress of
previous findings.

k) Prevention of fraud
Like any other banks and financial institutions, EBL is also exposed to the inherent risk of fraud and hence implemented a number of
anti fraud controls and procedures specifically designed to prevent and detect any material instances of fraud or irregularities. As per the
requirement of Bangladesh Bank regular reportings are made on self assessment of various anti fraud controls as well as any incident of
fraud and forgeries that have been identified by the Bank. Regular staff training and awarness programmes are taken to ensure that all
officers and staff of the Bank are fully aware of various fraud risks in thier work area and prepared to deal with it.

2 A Credit rating of the Bank

As per BRPD Circular no. 6 dated 5 July 2006, the Bank has done its credit rating by Credit Rating Information and Services Limited
(CRISL) based on thefinancial statements as at and for the year ended 31 December 2012. The following ratings have been awarded:

Particulars Periods Date of Rating Long term Short term

Entity Rating January to December 2012 30-May-13 AA ST-2

Entity Rating January to December 2011 19-Jun-12 AA ST-2
Entity Rating January to December 2010 9-Jun-11 AA ST-2
Entity Rating January to December 2009 1-Jun-10 AA ST-2
Entity Rating January to December 2008 24-May-09 AA- ST-2
Entity Rating January to December 2007 15-Jun-08 A+ ST-3

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2B Compliance of Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs)

Name of BASs / BFRSs BASs / BFRSs No. Status

Presentation of Financial Statements BAS 1 * Applied
Inventories BAS 2 N/A
Statement of Cash Flows BAS 7 Applied
Accounting Policies, Changes in Accounting Estimates and Errors BAS 8 Applied
Events after the Reporting Period BAS 10 Applied
Construction Contracts BAS 11 N/A
Income Taxes BAS 12 Applied
Property, Plant and Equipment BAS 16 Applied
Leases BAS 17 Applied
Revenue BAS 18 Applied
Employee Benefits BAS 19 Applied
Accounting for Government Grants and Disclosure of Government Assistance BAS 20 N/A
The Effects of Changes in Foreign Exchange Rates BAS 21 Applied
Borrowing Costs BAS 23 Applied
Related Party Disclosures BAS 24 Applied
Accounting and Reporting by Retirement Benefit Plans BAS 26 N/A
Consolidated and Separate Financial Statements BAS 27 Applied
Investments in Associates BAS 28 N/A
Interests in Joint Ventures BAS 31 N/A
Financial Instruments: Presentation BAS 32 * Applied
Earnings per share BAS 33 Applied
Interim Financial Reporting BAS 34 Applied
Impairment of Assets BAS 36 Applied
Provisions, Contingent Liabilities and Contingent Assets BAS 37 *Applied
Intangible Assets BAS 38 Applied
Financial Instruments: Recognition and Measurement BAS 39 * Applied
Investment Property BAS 40 N/A
Agriculture BAS 41 N/A
First-time Adoption of Bangladesh Financial Reporting Standards BFRS 1 N/A
Share-based Payment BFRS 2 N/A
Business Combinations BFRS 3 Applied
Insurance Contracts BFRS 4 N/A
Non-current Assets Held for Sale and Discontinued Operations BFRS 5 N/A
Exploration for and Evaluation of Mineral Resources BFRS 6 N/A
Financial Instruments: Disclosures BFRS 7 * Applied
Operating Segments BFRS 8 Applied
Consolidated Financial Statements BFRS 10 Applied
Joint Arrangements BFRS 11 N/A
Disclosure of Interests in Other Entities BFRS 12 Applied
Fair Value Measurement BFRS 13 * Applied
* Subject to departure described in note 2.1
N/A = Not Applicable

2B.1 New Accounting Standards not yet Adopted

Although International Accounting Standard Board (IASB) has issued a new standard (IFRS 9) along with related amendments to existing
standards (IAS/ BAS 32, 39) but none of these have been adopted and/ or endorsed locally as BAS/ BFRS and as such any possible
impact could not be determined.

2C Audit Committee disclosures

Please refer to “Report of the Audit Committee” for details disclosures on Audit Committee presented in other information in the annual
report.

2.10 Approval of financial statements

These financial statements were reviewed by the Audit Committee of the Board of EBL in its 57 meeting held on 27 February 2014 and
was subsequently approved by the Board in its 527 meeting held on the same date.

195
 Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

3 Cash

Cash in hand (including foreign currencies) 3.1 1,752,685,015 1,097,923,927 1,752,660,726 1,097,919,688
Balance with Bangladesh Bank and its agent
Bank(s) (including foreign currencies) 3.2 6,428,136,805 9,699,237,183 6,428,136,805 9,699,237,183
8,180,821,820 10,797,161,110 8,180,797,531 10,797,156,871

3.1 Cash in hand (including foreign currencies)

Local currency 3.1.1 1,701,142,811 1,049,473,290 1,701,118,522 1,049,469,051

Foreign currencies 51,542,204 48,450,637 51,542,204 48,450,637
1,752,685,015 1,097,923,927 1,752,660,726 1,097,919,688
3.1.1 Local currency
With Bank 1,701,118,522 1,049,469,051 1,701,118,522 1,049,469,051
With Subsidiaries 24,289 4,239 - -
1,701,142,811 1,049,473,290 1,701,118,522 1,049,469,051

3.2 Balance with Bangladesh Bank and its

agent Bank(s) (including foreign currencies)

Bangladesh Bank
Local currency 5,974,501,836 5,277,706,872 5,974,501,836 5,277,706,872
Foreign currencies 98,759,263 4,159,306,976 98,759,263 4,159,306,976
6,073,261,099 9,437,013,849 6,073,261,099 9,437,013,849
Sonali Bank (as an agent of Bangladesh Bank)- 354,875,706 262,223,334 354,875,706 262,223,334
local currency
6,428,136,805 9,699,237,183 6,428,136,805 9,699,237,183
3.a Cash Reserve Ratio (CRR):
As per section 33 of Bank Company Act -1991 (Amended upto 2013) & MPD circular No- 04 dated 01 December 2010 of Bangladesh
bank (effective from 15 December 2010 to 31 January 2014), all scheduled banks have to maintain a CRR of minimum 5.5% on daily
basis and 6.0% on bi-weekly basis on weekly average demand and time liabilities of the base month which is two months back of
reporting month (i.e. CRR of December 2013 is based on weekly average balance of October 2013). EBL maintained required CRR
bi-weekly basis as on the reporting date.

Average time and demand liabilities of

October 2013 (excluding inter-bank deposit) 100,201,921,600 88,267,859,750

Required reserve (5.5% on daily basis and 6.0% on bi weekly basis of average time and 6,012,115,296 4,854,732,286
demand liabilities)
Actual reserve held with Bangladesh Bank including TT in transit (In local currency)* 6,110,187,019 5,276,887,440
Surplus / (shortage) 98,071,723 422,155,154
*As per Bangladesh Bank statement

3.b Statutory Liquidity Ratio (SLR): 19% of average demand and time liabilities

As per section 33 of Bank Company Act -1991 (Amended upto 2013) & MPD circular No - 05 dated 01 December 2010 of Bangladesh
bank (effective from 15 December 2010 to 31 January 2014) all scheduled banks have to maintain SLR of minimum 19% based on
weekly average demand and time liabilities of the base month which is two months back of the reporting month (i.e. SLR of December
2013 is based on weekly average balance of October 2013). EBL maintained the minimum SLR 19% as per said circular as on the
reporting date.

Average time and demand liabilities of

October 2013 (excluding inter-bank deposit) 100,201,921,600 88,267,859,750

Required reserve (19% of average time and demand liabilities) 19,038,365,104 16,770,893,353
Actual reserve held (Note 3.c) 29,943,629,781 20,240,800,132
Surplus / (shortage) 10,905,264,677 3,469,906,780

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 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

3.c Actual reserve held

Cash held 1,796,716,726 1,124,404,688

Balance with Bangladesh Bank (local currency) * 6,110,187,019 5,276,887,440
Balance with Bangladesh Bank (foreign currency)* - -
Balance with Sonali Bank 354,875,706 262,223,334
TT in transit - 75,500,000
Unencumbered approved securities (HFT) 11,935,560,500 6,774,028,860
Unencumbered approved securities (HTM) 9,721,289,830 6,690,755,810
Unencumbered approved securities (other eligible) 25,000,000 37,000,000
29,943,629,781 20,240,800,132
*As per Bangladesh Bank Statement.

4 Balances with other banks and financial

institutions

Balance in Bangladesh 4.1 8,432,060,955 7,653,914,011 8,012,554,438 7,616,918,267

Balance outside Bangladesh 4.2 2,121,282,542 1,369,531,149 2,390,509,831 1,369,531,149
10,553,343,497 9,023,445,161 10,403,064,269 8,986,449,417

4.1 Balance in Bangladesh

In Current Deposit Accounts with

Banks 289,005,206 171,761,324 82,668,584 134,765,580
Non Banking Financial Institutions - - - -
289,005,206 171,761,324 82,668,584 134,765,580
Inter company elimination (34,067,605) - - -
254,937,601 171,761,324 82,668,584 134,765,580
In Special Notice Deposit Accounts with
Banks 160,685,304 480,481,939 149,885,897 134,404,187
Non Banking Financial Institutions - - - -
160,685,304 480,481,939 149,885,897 134,404,187
Inter company elimination (10,799,407) (346,077,752) - -
149,885,897 134,404,187 149,885,897 134,404,187

In Fixed Deposit Accounts with

Banks 5,304,048,730 3,451,634,994 5,036,811,230 3,027,748,500
Non Banking Financial Institutions 7,680,000,000 9,977,381,066 7,680,000,000 9,977,381,066
12,984,048,730 13,429,016,060 12,716,811,230 13,005,129,566
Inter company elimination (4,956,811,273) (6,081,267,560) (4,936,811,273) (5,657,381,066)
8,027,237,457 7,347,748,500 7,779,999,957 7,347,748,500
8,432,060,955 7,653,914,011 8,012,554,438 7,616,918,267

4.1.1 Balances of subsidiaries with Banks & NBFI

with Eastern Bank Limited
EBL Securities Limited 1,929,694 135,651
EBL Investments Limited 28,869,714 345,942,101
EBL Finance (HK) Limited 34,067,605 -
64,867,013 346,077,752
Balance of subsidiaries with other banks & NBFI
Banks 247,269,017 36,995,744
Non Banking Financial Institutions 172,065,000 -
419,334,017 36,995,744
484,201,030 383,073,496

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 Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

4.1.1.a Balance of subsidiaries with EBL (eliminated as intra

group balance)
EBL Securities Limited 1,929,694 135,651
EBL Investments Limited 28,869,714 345,942,101
EBL Finance (HK) Limited 34,067,605 -
64,867,013 346,077,752

4.2 Balance outside Bangladesh

In Deposit account (non-interest bearing) with
AB Bank Limited, Mumbai 17,528,763 30,879,671 17,528,763 30,879,671
Al-Rajhi Bank - KSA 310,967 425,854 310,967 425,854
Bank of Bhutan, Bhutan 751,886 1,476,829 751,886 1,476,829
Citibank N A, New york - 408,527,305 - 408,527,305
Citibank NA, Mumbai 174,247 1,775,951 174,247 1,775,951
Commerz Bank AG, Frankfurt, Germany 48,131 98,022,963 48,131 98,022,963
Habib American Bank, New York 18,937,045 13,224,728 18,937,045 13,224,728
HSBC, New York - 179,315,817 - 179,315,817
ICICI Bank Limited, Mumbai 34,632,888 22,677,273 34,632,888 22,677,273
JP Morgan Chase Bank NA, London 15,338,543 33,101,586 15,338,543 33,101,586
JP Morgan Chase Bank NA, Sydney 7,539,839 1,476,295 7,539,839 1,476,295
JP Morgan Chase Bank, New York 41,899,254 52,631,090 41,899,254 52,631,090
JP Morgan Chase Bank, Germany 18,102,761 - 18,102,761 -
Mashreqbank, Newyork 30,350,998 42,453,033 30,350,998 42,453,033
National Commercial Bank, Jeddah, KSA - 2,926,708 - 2,926,708
Nepal Bngladesh Bank Limited, Kathmandu 1,768,950 5,590,632 1,768,950 5,590,632
NIB Bank Limied-Karachi 32,992,933 1,012,460 32,992,933 1,012,460
Nordea Bank, Norway 825,270 919,113 825,270 919,113
Standard Chartered Bank , Colombo 5,028,556 528,562 5,028,556 528,562
Standard Chartered Bank, Frankfurt, Germany 5,721,847 4,511,346 5,721,847 4,511,346
Standard Chartered Bank, Kolkata 16,980,944 40,487,357 16,980,944 40,487,357
Standard Chartered Bank, New york - 142,721,537 - 142,721,537
Standard Chartered Bank, Singapore 1,018,142 1,352,858 1,018,142 1,352,858
Wachovia Bank NA 25,761,727 - 25,761,727 -
The Bank of Nova Scotia, Toronto 464,716 1,036,605 464,716 1,036,605
The Bank of Tokyo Mitshubishi, London 14,814,901 35,242,895 14,814,901 35,242,895
The Bank of Tokyo Mitshubishi, Kolkata 523,802 537,949 523,802 537,949
The Bank Toykyo Mitshubishi, Tokyo 1,711,517,868 5,087,978 1,711,517,868 5,087,978
Wells Fargo Bank, N.A. New York - 129,344,388 - 129,344,388
Zuercher Kantonal Bank, Zurich, Switzerland 2,282,041 1,554,080 2,282,041 1,554,080
Standard Chartered Bank, New york - OBU 49,714,222 100,292,457 49,714,222 100,292,457
Deutsche Bank AG, Frankfurt, Germany-OBU 20,591,092 - 20,591,092 -
Commerz Bank AG, Frankfurt, Germany - OBU - 10,395,830 - 10,395,830
HSBC, Hongkong-HKD (EBL Finance HK Limited) 3,005,081 - - -
HSBC, Hongkong-USD (EBL Finance HK Limited) 42,655,130 - - -
2,121,282,542 1,369,531,149 2,075,622,331 1,369,531,149
Placement by OBU (interest bearing)
EBL Finance (HK) Limited 314,887,500 - 314,887,500 -
Inter company elimination (314,887,500) - - -
2,121,282,542 1,369,531,149 2,390,509,831 1,369,531,149

(For details of Foreign currency amounts and rates thereof please see "Annexure-B")
4.a Balance with other banks and financial institutions
(according to remaining maturity grouping)
Receivable
On demand 3,205,333,286 4,316,449,417 3,033,064,269 4,316,449,416
In not more than one month 5,778,010,211 2,236,995,743 5,800,000,000 2,200,000,000
In more than one months but not more than three months 1,570,000,000 2,470,000,000 1,570,000,000 2,470,000,000
In more than three months but not more than one year - - - -

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In more than one year but not more than five years - - - -
In more than five years - - - -
10,553,343,497 9,023,445,160 10,403,064,269 8,986,449,416

5 Money at call and short notice

With Bank Companies

Jamuna Bank Limited - - - -
Prime Bank Limited - - - -
- - - -
With Non Banking Financial Institutions
Peoples Leasing and Financial Services Limited - - - -
Bangladesh Industrial Finance Co.Ltd. 100,000,000 100,000,000
Lanka Bangla Finance Limited - - - -
- 100,000,000 - 100,000,000
- 100,000,000 - 100,000,000

6 Investments
Government 6.1 21,659,579,849 17,789,164,429 21,659,579,849 17,789,164,429
Others 6.2 4,358,216,416 3,865,532,147 4,244,004,844 3,865,510,224
26,017,796,265 21,654,696,575 25,903,584,693 21,654,674,652

6.1 Government (Investment in govt. securities)

Treasury Bills 6.1.1 3,149,805,825 8,661,553,310 3,149,805,825 8,661,553,310
Treasury Bonds 6.1.2 16,511,699,915 9,124,107,319 16,511,699,915 9,124,107,319
Bangladesh Bank Bills 1,995,344,608 - 1,995,344,608 -
Prize Bonds 2,729,500 3,503,800 2,729,500 3,503,800
21,659,579,849 17,789,164,429 21,659,579,849 17,789,164,429

6.1.1 Treasury Bills

Unencumbered
91- days treasury bills 125,700,979 6,318,501,874 125,700,979 6,318,501,874
182- days treasury bills 309,306,247 265,026,336 309,306,247 265,026,336
364- days treasury bills 2,714,798,599 178,584,352 2,714,798,599 178,584,352
3,149,805,825 6,762,112,562 3,149,805,825 6,762,112,562
Encumbered
91- days treasury bills - 1,794,875,395 - 1,794,875,395
182- days treasury bills - 77,097,637 - 77,097,637
364- days treasury bills - 27,467,715 - 27,467,715
- 1,899,440,747 - 1,899,440,747
3,149,805,825 8,661,553,310 3,149,805,825 8,661,553,310

6.1.2 Treasury Bonds

Unencumbered
2- year Treasury bonds 158,169,315 - 158,169,315 -
5- year Treasury bonds 8,531,852,595 2,066,206,534 8,531,852,595 2,066,206,534
10- year Treasury bonds 7,356,337,851 4,487,196,814 7,356,337,851 4,487,196,814
15- year Treasury bonds 269,646,780 72,789,538 269,646,780 72,789,538
20- year Treasury bonds 195,693,376 76,479,220 195,693,376 76,479,220
16,511,699,915 6,702,672,106 16,511,699,915 6,702,672,106
Encumbered
5- year Treasury bonds - 2,157,495,498 - 2,157,495,498
10- year Treasury bonds - 243,659,578 - 243,659,578
15- year Treasury bonds - 20,280,137 - 20,280,137
- 2,421,435,212 - 2,421,435,212
16,511,699,915 9,124,107,319 16,511,699,915 9,124,107,319
Disclosure on REPO and Reverse Repo transactions are
in Annexure- D

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6.2 Others (Investment in other securities)

Debentures 6.2.1 25,000,000 37,000,000 25,000,000 37,000,000

Corporate bonds 6.2.2 220,000,000 280,000,000 220,000,000 280,000,000
Ordinary Shares (Quoted and Unquoted) 6.2.3 3,603,216,416 3,548,532,147 3,489,004,844 3,548,510,224
Preference Shares 6.2.4 510,000,000 - 510,000,000 -
4,358,216,416 3,865,532,147 4,244,004,844 3,865,510,224
6.2.1 Debentures
Investment Corporation of Bangladesh (ICB) - 2,000,000 - 2,000,000
House Building Finance Corporation (HBFC) 25,000,000 35,000,000 25,000,000 35,000,000
25,000,000 37,000,000 25,000,000 37,000,000
6.2.2 Corporate bonds
Orascom Bond 120,000,000 180,000,000 120,000,000 180,000,000
Trust Bank Subordinated Bond 100,000,000 100,000,000 100,000,000 100,000,000
220,000,000 280,000,000 220,000,000 280,000,000

6.2.3 Ordinary Shares (Quoted and Unquoted)

Quoted shares & MFs

Quoted shares (sector wise)
Banks 753,228,084 760,391,847 750,638,150 760,391,847
NBFIs 583,388,877 596,898,649 558,756,422 596,898,649
Insurances 43,286,006 38,753,046 38,753,046 38,753,046
Fuel & Power 336,754,338 270,185,137 299,129,058 270,170,150
Chemicals & Pharmaceuticals 63,624,320 16,843,638 52,595,450 16,843,638
Cement & Ceramics 82,730,209 119,510,993 70,323,479 119,504,057
Engineering 174,870,280 166,986,958 171,878,099 166,986,958
Others 232,643,549 213,937,939 214,942,201 213,937,939
2,270,525,663 2,183,508,207 2,157,015,905 2,183,486,284
Mutual Funds
AB Bank First Mutual Fund 47,530,000 50,000,000 47,530,000 50,000,000
EBL First Mutual Fund 103,881,814 103,185,000 103,185,000 103,185,000
EBL NRB Mutual Fund 250,973,470 250,973,470 250,973,470 250,973,470
Exim Bank First Mutual Fund 49,435,000 - 49,435,000 -
First Bangladesh Fixed Income Fund 750,000,000 750,000,000 750,000,000 750,000,000
Green Delta Mutual Fund 10,000,000 10,000,000 10,000,000 10,000,000
LR Global BD First Mutual Fund 20,000,000 20,000,000 20,000,000 20,000,000
PHP First Mutual Fund 30,005,000 30,005,000 30,005,000 30,005,000
Popular Life First Mutual Fund 10,000,000 10,000,000 10,000,000 10,000,000
SEBL First Mutual Fund - 10,000,000 - 10,000,000
1,271,825,284 1,234,163,470 1,271,128,470 1,234,163,470
Total Quoted shares & MFs 3,542,350,946 3,417,671,677 3,428,144,374 3,417,649,754
Unquoted shares & MFs
Shares 60,865,470 80,860,470 60,860,470 80,860,470
Mutual Fund - 50,000,000 - 50,000,000
60,865,470 130,860,470 60,860,470 130,860,470
Total 3,603,216,416 3,548,532,147 3,489,004,844 3,548,510,224

6.2.3.1 Market Value of Shares (as on 31 December)

Quoted shares & MFs

Banks 430,499,747 488,477,494 428,136,747 488,346,494
NBFIs 360,699,853 407,473,256 340,397,353 407,473,256
Insurances 30,085,734 27,173,052 26,055,954 27,173,052
Fuel & Power 271,413,249 225,899,805 240,642,449 225,689,045
Chemicals & Pharmaceuticals 59,322,998 16,860,000 48,622,614 16,860,000
Cement & Ceramics 78,135,934 87,213,375 66,516,194 87,207,739
Engeering 101,003,038 88,331,324 98,201,038 88,331,324

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Others 150,877,465 152,354,011 134,178,896 152,354,011

1,482,038,019 1,493,782,317 1,382,751,246 1,493,434,921
Mutual Funds 1,190,262,033 1,199,868,600 1,189,632,033 1,199,868,600
Total 2,672,300,052 2,693,650,917 2,572,383,279 2,693,303,521

* Lock in stauts of Mutual Funds

10% of EBL First Mutual Fund, EBL NRB Mutual Fund & First Bangladesh Fixed Income Fund shall be locked in for 10 years from the
date of commencement of trading.
6.2.4 Preference Shares
United Power Generation and Distribution Co. Ltd. 510,000,000 - 510,000,000 -
510,000,000 - 510,000,000 -
6.a Remaining maturity grouping of investments
On demand 58,688,527 2,006,406,298 58,688,527 2,006,406,298
In not more than one month 2,327,106,962 4,315,621,299 2,212,900,390 4,315,599,376
In more than one month but not more than three months 1,425,951,855 2,213,899,182 1,425,951,855 2,213,899,182
In more than three months but not more than one year 6,988,807,025 4,281,992,806 6,988,802,025 4,281,992,806
In more than one year but not more than five years 10,862,014,802 4,921,004,230 10,862,014,802 4,921,004,230
In more than five years 4,355,227,094 3,915,772,760 4,355,227,094 3,915,772,760
26,017,796,265 21,654,696,575 25,903,584,693 21,654,674,652
7 Loans and advances
Loans, cash credits, overdrafts, etc. 7.1 94,617,143,691 87,537,630,678 94,491,939,790 87,363,196,058
Bills purchased and discounted 7.2 8,713,673,891 9,356,540,473 8,418,279,159 9,356,540,473
103,330,817,582 96,894,171,150 102,910,218,949 96,719,736,532
7.1 Loans, cash credits, overdrafts etc.
Inside Bangladesh
Loans - general 77,758,246,487 71,890,919,875 77,758,246,487 71,890,919,875
Cash credit 177,960,444 274,168,567 177,960,444 274,168,567
Overdraft 17,521,264,355 16,027,428,719 16,555,732,858 15,198,107,617
95,457,471,287 88,192,517,161 94,491,939,790 87,363,196,058
Inter Company Elimination (840,327,596) (654,886,483) - -
94,617,143,691 87,537,630,678 94,491,939,790 87,363,196,058
7.2 Bills purchased and discounted
Inside Bangladesh
Local bills /documents 8,298,018,874 9,264,184,670 8,298,018,874 9,264,184,670
Foreign bills /documents 415,655,017 92,355,802 120,260,285 92,355,802
8,713,673,891 9,356,540,473 8,418,279,159 9,356,540,473

7.2.1 Bills purchased and discounted

(on the basis of the residual maturity grouping)
Receivable
Within one month 1,966,050,824 3,385,111,874 1,966,050,824 3,385,111,874
In more than one month but less than three months 4,199,418,810 3,981,954,022 3,904,024,078 3,981,954,022
In more than three months but less than six months 2,548,204,256 1,394,414,357 2,548,204,256 1,394,414,357
Above six months - 595,060,220 - 595,060,220
8,713,673,891 9,356,540,473 8,418,279,159 9,356,540,473

7.a Residual maturity grouping of loans and advances including

bills purchased & discounted
Receivable
On demand 5,680,536,917 318,212,750 5,680,536,917 318,212,750
In not more than one month 9,227,143,053 16,782,628,094 9,227,143,053 17,357,514,577
In more than one month but not more than three months 23,489,055,594 19,970,594,626 23,193,660,862 19,221,273,524
In more than three months but not more than one year 38,107,724,778 34,068,107,114 37,982,520,877 34,068,107,114
In more than one year but not more than five years 23,877,560,537 22,081,173,980 23,877,560,537 22,081,173,980
In more than five years 2,948,796,701 3,673,454,586 2,948,796,701 3,673,454,586
103,330,817,582 96,894,171,150 102,910,218,949 96,719,736,532
7.b Loans and advances on the basis of significant concentration

7.b.1 Loans and advances to Directors, executives and others

Advance to Directors and their allied concerns 245,122 - 245,122 -
Advances to Managing Director & CEO 18,600,727 19,318,492 18,600,727 19,318,492
Advances to Other executives and staffs 1,219,692,890 1,009,941,141 1,219,692,890 1,009,941,141

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Advances to Customers (Group wise) 84,707,930,656 79,786,679,682 84,582,726,754 79,612,245,063

Industrial Advances 17,384,348,188 16,078,231,836 17,088,953,456 16,078,231,836
103,330,817,582 96,894,171,150 102,910,218,949 96,719,736,532

7.b.2 Large Loan details (Loans and Advances allowed to each customer
exceeding 10% of Bank's total capital)

* Total Loans and Advances (in BDT crore) 4,657 3,742

Number of Customers 19 32
Classified amount thereon Nil Nil

*This amount represents total loans and advances (comprising funded and non funded facilities) to each customer exceeding
Tk.167.64 crore which is equivalent to 10% of total capital of the bank (i.e. Tk. 1,676.42 crore) as at 31 December 2013.

7.b.3 Industry-wise concentration of loans and advances

including bills purchased and discounted
Commercial and Trading 19,064,267,730 16,752,934,496 18,768,872,998 16,752,934,496
Construction 1,606,803,682 1,141,397,918 1,606,803,682 1,141,397,918
Sugar & Edible Oil Refinery 2,997,693,286 4,497,185,248 2,997,693,286 4,497,185,248
Crops, fisheries & livestocks 1,593,561,694 2,062,272,225 1,593,561,694 2,062,272,225
Electronics Goods 2,951,149,902 3,590,709,326 2,951,149,902 3,590,709,326
Individuals 12,470,016,714 11,634,705,039 12,344,812,812 11,634,705,039
Pharmaceuticals Industries 4,034,228,226 3,102,199,054 4,034,228,226 3,102,199,054
Readymade Garments Industry 10,700,662,042 11,055,375,475 10,700,662,042 11,055,375,475
Ship Breaking Industry 3,196,887,627 5,508,784,927 3,196,887,627 5,508,784,927
Metal & Steel Products 7,867,558,592 7,116,319,396 7,867,558,592 7,116,319,396
Transport & Ecommunication 6,015,253,247 7,089,519,142 6,015,253,247 7,089,519,142
Textile Mills 9,771,752,848 8,361,720,082 9,771,752,848 8,361,720,082
Power Sector 2,539,076,319 2,747,142,736 2,539,076,319 2,747,142,736
Others 18,521,905,674 12,233,906,089 18,521,905,674 12,059,471,470
103,330,817,582 96,894,171,151 102,910,218,949 96,719,736,532

7.b.4 Sector - wise concentration of loans and advances

including bills purchased and discounted
Government sector - - - -
Public sector 350,854,463 449,533,856 350,854,463 449,533,856
Private sector 102,979,963,119 96,444,637,294 102,559,364,486 96,270,202,675
103,330,817,582 96,894,171,150 102,910,218,949 96,719,736,532

7.b.5 Geographical location-wise concentration of loans and advances

including bills purchased and discounted
Inside Bangladesh
Dhaka Division 70,246,443,909 67,680,272,961 70,121,240,004 67,505,838,341
Chittagong Division 29,904,290,132 26,576,116,429 29,904,290,132 26,576,116,429
Sylhet Division 498,310,254 465,585,365 498,310,254 465,585,365
Rajshahi Division 1,091,516,498 1,083,246,896 1,091,516,498 1,083,246,896
Khulna Division 1,160,011,346 1,035,520,062 1,160,011,346 1,035,520,062
Rangpur Division 134,850,715 53,429,439 134,850,715 53,429,439
103,035,422,854 96,894,171,151 102,910,218,949 96,719,736,531
Outside Bangladesh 295,394,732 - - -
103,330,817,582 96,894,171,151 102,910,218,949 96,719,736,531

7.b.6 Geographical location and business segment-wise

concentration of loans and advances
(including bills purchased and discounted) Corporate SME Consumer Total
Division
Dhaka Division 51,033,810,172 10,275,024,846 8,812,404,985 70,121,240,004
Chittagong Division 22,577,040,445 4,454,355,881 2,872,893,806 29,904,290,132
Sylhet Division - 302,227,516 196,082,738 498,310,254

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Rajshahi Division 308,478,376 584,540,904 198,497,218 1,091,516,498

Khulna Division - 920,201,890 239,809,456 1,160,011,346
Rangpur Division - 104,069,818 30,780,897 134,850,715
Total 73,919,328,993 16,640,420,855 12,350,469,101 102,910,218,949

7.b.7 Business segment - wise concentration of loans and

advances including bills purchased and discounted
Corporate 64,709,751,720 62,655,667,196 64,289,153,083 62,481,232,576
Offshore Banking Unit 9,630,175,910 9,197,756,355 9,630,175,910 9,197,756,355
SME 16,640,420,855 13,448,315,765 16,640,420,859 13,448,315,765
Consumer 11,112,175,480 10,563,172,202 11,112,175,480 10,563,172,202
Executives & Staffs 1,238,293,617 1,029,259,633 1,238,293,617 1,029,259,633
103,330,817,582 96,894,171,151 102,910,218,949 96,719,736,531

7.b.8 Loans & advances

Inside Bangladesh
Continuous loan (CL-2)
Consumer Finance 4,215,160,531 5,213,258,727 4,215,160,531 5,213,258,727
Small & Medium Enterprise 4,796,949,030 3,567,658,302 4,796,949,030 3,567,658,302
Loans to BHs/MBs/SDs against Shares 939,401,453 678,811,287 939,401,453 678,811,287
Other Corporate Loans 6,907,383,968 6,186,992,000 6,782,180,063 6,012,557,380
16,858,894,982 15,646,720,315 16,733,691,077 15,472,285,695
Demand loan (CL-3)
Small & Medium Enterprise 9,210,692,135 3,397,557,769 9,210,692,135 3,397,557,769
Corporate Loans 46,219,257,798 48,292,133,645 46,219,257,798 48,292,133,645
55,429,949,933 51,689,691,414 55,429,949,933 51,689,691,414
Term loan (CL-4)
Consumer Finance (including staff, other than HF) 4,388,222,185 5,594,807,127 4,388,222,185 5,594,807,127
Housing Finance (HF) 943,402,141 785,502,674 943,402,141 785,502,674
Small & Medium Enterprise 8,700,197,049 6,470,678,745 8,700,197,049 6,470,678,745
Corporate Loans 16,700,236,128 16,695,486,619 16,700,236,128 16,695,486,619
30,732,057,503 29,546,475,164 30,732,057,503 29,546,475,164
Short term agri credit and microcredit (CL-6)
Short term agri credit 14,520,433 11,284,258 14,520,433 11,284,258
14,520,433 11,284,258 14,520,433 11,284,258
Outside Bangladesh
Loans, cash credits, overdrafts etc. 295,394,732 - - -
103,330,817,582 96,894,171,151 102,910,218,949 96,719,736,531

7.b.9 Security/ Collateral - wise concentration of loans and

advances (including bills purchased and discounted)
Collateral of movable/immovable assets 41,972,378,450 33,961,978,194 41,972,378,450 33,961,978,194
Local banks and financial institutions guarantee 942,221,948 1,732,868,205 942,221,948 1,732,868,205
Government guarantee 350,854,463 449,533,857 350,854,463 449,533,857
Foreign bank guarantee - - - -
Export documents 528,512,087 311,317,280 528,512,087 311,317,280
Fixed deposit receipts (FDR) 5,607,455,872 6,707,768,257 5,607,455,872 6,707,768,257
FDR of other banks - 586,730,452 - 586,730,452
Government bonds - - - -
Personal guarantee 7,347,225,935 6,762,252,511 7,347,225,935 6,762,252,511
Other securites (Hypothecation charges) 46,582,168,827 46,381,722,395 46,161,570,193 46,207,287,775
103,330,817,582 96,894,171,151 102,910,218,949 96,719,736,531

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7.b.10 Classified and unclassified loans & advances

Unclassified
Standard (Including Staff Loan) 98,753,606,859 93,180,467,881 98,333,008,225 93,006,033,261
Special Mention Accounts (SMA) 879,979,651 642,928,794 879,979,651 642,928,794
99,633,586,510 93,823,396,675 99,212,987,876 93,648,962,055
Classified
Sub-standard 479,766,825 263,721,106 479,766,825 263,721,106
Doubtful 193,344,322 593,082,222 193,344,322 593,082,222
Bad/Loss 3,024,119,925 2,213,971,147 3,024,119,925 2,213,971,147
7.b.11 3,697,231,072 3,070,774,476 3,697,231,072 3,070,774,476
103,330,817,582 96,894,171,151 102,910,218,948 96,719,736,531
Percentage of Classified Loans & Advances (NPL) 3.58% 3.17% 3.59% 3.17%

7.b.10.a The above unclassified loans and advances includes certain customer accounts with an aggregate outstanding amount of Tk 16.80 crore, which have
been previously classified but subsequently removed from classification as at 31 December 2013 on the basis of stay order from the Honorable High Court
Division of the Supreme Court of Bangladesh.

7.b.11 Movements of Classified Loans and advances

Opening balance 3,070,774,476 1,560,592,120 3,070,774,476 1,560,592,120
Additions during the year 3,998,584,663 2,255,633,277 3,998,584,663 2,255,633,277
Reductions during the year (3,372,128,068) (745,450,922) (3,372,128,068) (745,450,922)
Closing balance 7.b.11.a 3,697,231,072 3,070,774,476 3,697,231,072 3,070,774,476

Measures taken for recovery of classified loans:

Bank as a whole takes following steps to recover its classified Loans and Advances
i) Sending letters and reminders to customers
ii) Special assets management department is responsible for holding discussion with the clients to recover the loans
iii) Disposal/encashment of security through auction
iv) Legal proceedings and settlement
v) Report to central bank
vi) Rescheduling, restructuring, waiver or W/off
vii) Negotiation and settlement with approval from competent authority.

2013 (Bank) 2012 (Bank)

Taka % Taka %
7.b.11.a Business segment - wise concentration of Classified
Loans & Advances (NPL)

Corporate 2,422,757,948 65.53 1,937,944,227 63.11

Offshore Banking Unit - - - -
SME 571,891,702 15.47 513,090,622 16.71
Consumer 702,581,422 19.00 619,739,627 20.18
3,697,231,072 100.00 3,070,774,476 100.00

7.b.11.b Industry- wise concentration of Classified Loans &

Advances (NPL)

Commercial and Trading 501,238,429 13.56 541,356,944 17.63

Construction 6,426,085 0.17 57,233,568 1.86
Sugar & Edible Oil Refinery 718,705,099 19.44 765,089,890 24.92
Crops, fisheries & livestocks 6,901,008 0.19 6,252,257 0.20
Electronics Goods 4,732,665 0.13 4,308,585 0.14
Individuals 702,581,422 19.00 619,739,627 20.18
Readymade Garments Industry 233,147,185 6.31 232,111,036 7.56
Ship Breaking Industry 768,884,012 20.80 430,944,928 14.03
Metal & Steel Products 29,623,062 0.80 38,444,203 1.25
Transport & E-communication 2,598,277 0.07 1,712,579 0.06
Textile Mills 191,953,057 5.19 191,953,056 6.25
Others 530,440,771 14.35 181,627,802 5.91
3,697,231,072 100.00 3,070,774,476 100.00

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

7.b.12 Particulars of loans and advances

i) Debts considered good in respect of which the bank is 96,154,376,140 90,103,715,293 95,733,777,506 89,929,280,673
fully secured
ii) Debts considered good for which the bank holds no
4,237,427,146 3,785,336,281 4,237,427,146 3,785,336,281
other security than the debtor's personal security

iii) Debts considered good and secured by the personal

security of one or more parties in addition to the personal 2,939,014,297 3,005,119,577 2,939,014,297 3,005,119,577
security of the debtors.

iv) Debts adversely classified; for which no provision is created. - - - -

103,330,817,583 96,894,171,152 102,910,218,949 96,719,736,531
v) Debts due by directors or officers of the bank or any of
1,238,538,739 1,044,830,401 1,238,538,739 1,044,830,401
them either jointly or severally with any other persons.

vi) Debts due by companies and firms in which the

directors of the bank have interests as directors, partners
- - - -
or managing agent or in case of private companies as
members.

vii) Maximum total amount of advances, including

temporary advances made at any time during the period
1,238,538,739 1,044,830,401 1,238,538,739 1,044,830,401
to directors or managers or officers of the bank or any of
them either severally or jointly with any other persons.

viii) Maximum total amount of advances, including

temporary advances, granted during the period to the
companies or firms in which the directors of the bank - - - -
have interests as directors, partners or managing agents
or, in case of private companies as members .

ix) Due from other banking companies - - - -

x) Information in respect of classified loans and advances
a) Classified loans for which interest/profit not credited to income 3,697,231,072 3,070,774,476 3,697,231,072 3,070,774,476
(i) (Decrease)/Increase of provision (specific) - - - -
(ii) Amount of written off debt against fully provided debts 322,366,338 385,918,914 322,366,338 385,918,914
(iii) Amount of debt recovered against the debt which was
110,434,318 117,394,950 110,434,318 117,394,950
previously written off
b) Amount of provision kept against loans classified as
1,744,445,238 1,129,420,887 1,744,445,238 1,129,420,887
bad/loss as at the Balance Sheet date.
c) Amount of interest creditable to the interest suspense account 672,910,943 665,254,434 672,910,943 665,254,434

xi) Cumulative amount of written off loans

Opening Balance 1,886,753,384 1,500,834,470 1,886,753,384 1,500,834,470
Amount written off during the year 322,366,338 385,918,914 322,366,338 385,918,914
Balance of written off loans and advances (as of 31/12/2013) 2,209,119,722 1,886,753,384 2,209,119,722 1,886,753,384

7.b.13 Cumulative amount of written off loans for which law

3,354,286,616 2,961,210,884 3,354,286,616 2,961,210,884
suits have been filed (note 7.b.14)

7.b.14 Details of cumulative amount of written off loans

including legal & other charges
Opening balance 2,961,210,884 2,406,135,690 2,961,210,884 2,406,135,690
During the year 393,075,733 555,075,194 393,075,733 555,075,194
Closing balance 3,354,286,616 2,961,210,884 3,354,286,616 2,961,210,884

7.b.14.1 Cumulative number of loan accounts written off

Opening balance 1,057 670
During the year 634 387
Closing balance 1,691 1,057

205
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Taka Taka Taka Taka
8 Fixed assets including land, building, furniture and fixtures

Cost
Freehold Land and Land Development 5,177,928,478 4,636,946,781 5,177,928,478 4,636,946,781
Buildings on Freehold land 730,841,590 462,801,908 730,841,590 462,801,908
Building under construction (Corporate Head Office)* 379,904,613 201,326,929 379,904,613 201,326,929
Machinery and Equipment 552,527,072 484,137,953 547,945,392 479,640,206
Computer and Network equipments 370,737,255 327,100,189 366,150,351 323,986,704
Furniture and fixtures 339,350,436 309,541,096 330,678,401 303,253,667
Vehicles 110,041,599 106,586,251 108,699,294 105,243,946
Leased Assets (finance lease) 90,084,859 90,084,859 90,084,859 90,084,859
Software 220,752,558 200,453,714 217,890,577 198,441,734
Total Cost 7,972,168,459 6,818,979,680 7,950,123,555 6,801,726,734
Accumulated depreciation (1,063,923,631) (839,847,349) (1,052,729,826) (832,139,986)
Written Down Value at 31 December 6,908,244,828 5,979,132,331 6,897,393,729 5,969,586,748
* Building under construction represents the accumulated cost incurred for corporate head office located at Gulshan Avenue and is
classified as Fixed Assets under ‘BAS 16 - Property, Plant & Equipment’ assuming that future economic benefit associated with the
asset will inflow to the entity in near future. However, Depreciation of the asset will commence from the date of its use.

Details of these are in Annexure-A & A1.

9 Other assets
Income generating
Investment in subsidiary-EBL Securities Limited 9.1 - - 867,400,000 767,400,000
Investment in subsidiary-EBL Investments Limited 9.2 - - 299,999,900 299,999,900
Investment in subsidiary-EBL Finance (HK) Limited 9.3 - 7,240,655 14,779,352 7,240,655
DSE Membership 9.4 553,800,000 553,800,000 - -
CSE Membership 9.5 201,500,000 201,500,000 - -

Non- Income generating

Receivable from subsidiaries 9.6 - - 5,612,917 47,097,400
Other assets of subsidiaries 9.7 17,300,375 34,299,423 - -
Stock of stationeries 14,532,435 16,148,228 14,532,435 16,148,228
Stamps on hand 3,820,980 1,734,226 3,820,980 1,734,226
Advance to staff for expenses 9.8 238,491 489,000 238,491 489,000
Suspense account 9.9 5,266,159 5,120,648 5,266,159 5,120,648
Security deposits-govt. agencies 2,457,801 2,257,801 2,257,801 2,257,801
Interest and dividend receivables 9.10 755,949,181 473,930,637 758,801,887 473,930,637
Sundry receivables 9.11 225,645,517 108,604,461 225,645,517 108,604,461
Advance rent 333,964,153 300,001,498 333,964,153 300,001,498
Prepayments and advance to vendors 167,734,063 273,696,672 164,130,751 273,696,672
Deferred tax assets 9.12 698,391,343 376,486,990 698,391,343 376,486,990
Bangladesh Bank clearing account - 22,788,981 - 22,788,981
2,980,600,498 2,378,099,220 3,394,841,686 2,702,997,096

9.1 Investment in subsidiary-EBL Securities Limited

EBL acquired its securities brokerage subsidiary fully in two phases at a total cost of BDT 479.90 million and injected afterwards BDT
387.50 million as a fresh capital.

9.2 Investment in subsidiary-EBL Investments Limited

This fully owned subsidiary of EBL was incorporated on 30 December 2009 with an initial paid up capital of BDT 300 million. It was
awarded merchant banking license by BSEC on January 2013 and since started its full fledged merchant banking operations.

9.3 Investment in subsidiary-EBL Finance (HK) Limited

EBL Finance (HK) Limited, the first fully owned foreign subsidiary of EBL, was incorporated on 28 November 2011 with an initial
authorized capital of HKD 1.41 million (equivalent to BDT 14.78 million). This subsidiary commenced its full fledged operations in
Hongkong from early 2013.

9.4 Valuation of EBL Securities Limited

While assessing value of EBL Securities Ltd. in 2010, the independent valuer (a Professional accounting firm) determined the fair value
of DSE membership only taking book value of all other assets and liabilities. While acquiring the rest 40% shares in 2012 based on
valuation done by ACNABIN, Chartered Accountants, the Bank considered only 40% of fair value/market value of DSE membership i.e.
BDT 344.40 million (instead of full value of BDT 861 million as of 30 June 2011) and thereby avoided booking any revaluation gain of
60% shares acquired earlier.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka
9.5 EBL Securities Limited acquired CSE Membership at a cost of BDT 201.50 million in 2012 and started its trading operation in 2013.

9.a Demutualization of DSE and CSE Membership

As per the Scheme of Demutualization of both DSE and CSE in accordance with the Exchange Demutualization Act 2013 (the “Scheme”),
the Company being the initial shareholders of DSE and CSE, is entitled to receive the following number of shares:

Membership No of Shares Face Value Total Value

Dhaka Stock Exchange Limited 7,215,106 10 72,151,060
Chittagong Stock Exchange Limited 4,287,330 10 42,873,300
Total number and value of shares 11,502,436 10 115,024,360

The Scheme is not yet completed and these shares are also currently not traded. Moreover, no determination has been made on the
trading rights. Hence the actual fair value is not readily ascertainable. However management expects the fair value to be similar or more
than the current fair value. Once more clarity about the Scheme and related factors are available a determination of fair value and related
adjustments including impairment assessment, if any shall be made at that time.

9.6 Receivable from Subsidiaries

Receivable from:
EBL Securities Limited 3,312,400 47,097,400
EBL Investments Limited -
EBL Finance (HK) Limited 2,300,517 -
5,612,917 47,097,400

9.7 Other assets of subsidiaries

Accounts receivable 17,057,561 29,807,571
Advances and prepayments - 4,092,418
Deferred revenue expenses 242,814 399,434
17,300,375 34,299,423
9.8 Advance to staff for expenses
Due for
Less than three months 238,491 489,000 238,491 489,000
More than three months but less than six months - - - -
More than six months but less than nine months - - - -
More than nine months but less than twelve months - - - -
More than twelve months - - - -
238,491 489,000 238,491 489,000
9.9 Suspense account
This includes the system related automatic suspenses and temporary parking accounts shown as net of debit and credit balances. Net
credit balance is shown under other liabilities whereas net debit balance is shown under other assets. These balances are in the process
of regular monitoring so that it remains within a non material level.

9.10 Interest and dividend receivables

Interest Receivables 750,484,891 473,930,637 750,484,891 473,930,637
Interest Receivable - OBU 5,976,971 - 5,976,971 -
Dividend Receivables- other than subsidiaries 8,570,833 - 8,570,833 -
765,032,695 473,930,637 765,032,695 473,930,637
Inter unit/company elimination (9,083,514) - (6,230,808) -
755,949,181 473,930,637 758,801,887 473,930,637

9.11 Sundry receivables

Receivable from BB for Sanchaypatra and WEDB 29,545,579 42,116,403 29,545,579 42,116,403
Excise duty receivable from customers 55,902,869 48,057,237 55,902,869 48,057,237
Counter party receivable for REPO 29,243,341 - 29,243,341 -
NRB Remittance 5,792,923 5,381,232 5,792,923 5,381,232
Recoverable expenses 11,308,604 9,596,604 11,308,604 9,596,604
Other receivables 93,852,202 3,452,984 93,852,202 3,452,984
225,645,517 108,604,461 225,645,517 108,604,461

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Note
Taka Taka Taka Taka
9.12 Net Deferred tax assets
Deferred tax assets/(liabilities) have been recognised and measured as per BAS-12: Income Taxes and BRPD circular # 11 dated 12
December 2011.

Deferred tax assets 9.12.a 720,872,694 390,778,700 720,872,694 390,778,700

Deferred tax liabilities 9.12.b (22,481,351) (14,291,710) (22,481,351) (14,291,710)
698,391,343 376,486,990 698,391,343 376,486,990

9.12.a Deferred tax assets

Provision made against Bad/Loss loans (for 2011 & 2012) 1,026,799,913 320,968,073 1,026,799,913 320,968,073
Provision made against Bad/Loss loans for 2013 889,806,053 707,731,913 889,806,053 707,731,913
Written off against provision made for 2011 to 2013 (220,434,923) (109,220,692) (220,434,923) (109,220,692)
Tax allowed on provision - - - -
Deductible temporary difference 1,696,171,044 919,479,294 1,696,171,044 919,479,294
Tax rate 42.50% 42.50% 42.50% 42.50%
Deferred tax assets/(liabilities) 720,872,694 390,778,700 720,872,694 390,778,700
Opening Deferred tax assets/(liabilities) 390,778,700 136,411,431 390,778,700 136,411,431
Deferred tax (expense)/income 330,093,994 254,367,269 330,093,994 254,367,269
Based on detailed analysis management are satisfied that there would be adequate taxable profit available in future against which
such temporary differences can be deducted.

9.12.b Deferred tax liabilities

Carrying amount of fixed assets for DT 1,327,666,446 1,116,831,818 1,327,666,446 1,116,831,818
Tax base 1,274,769,150 1,083,204,266 1,274,769,150 1,083,204,266
Taxable temporary differences (52,897,296) (33,627,552) (52,897,296) (33,627,552)
Tax rate 42.50% 42.50% 42.50% 42.50%
Deferred tax assets/(liabilities) (22,481,351) (14,291,710) (22,481,351) (14,291,710)
Opening deferred tax asset/(liabilities) (14,291,710) (1,786,060) (14,291,710) (1,786,060)
Deferred tax (expense)/income (8,189,641) (12,505,650) (8,189,641) (12,505,650)

10 Non-banking assets
The Bank was awarded absolute ownership on few mortgaged properties through the verdict of honorable court under section 33(7)
of the Artharin Adalat Act 2003. These were recorded as non banking assets (carrying value of which was BDT 191,733,000 as on
reporting date) as per valuation report submitted by professional valuation firm and recording of transactions were certified by the then
external auditors KPMG Rahman Rahman Huq. Value of the assets received in addition to the loan outstanding/written off loans was
kept as reserve against non banking assets. Following are the details:

Non earning assets

Name of Parties Type of assets and Possession

2013 2012 2013 2012
description Date
M/S Safa Garments 18 Decimal of Land, 18.01.2005 * 8,727,000 8,727,000 8,727,000 8,727,000
Ltd * Tejgaon, Dhaka
Arshim & co 12 Katha of Land, 27.03.2007 4,200,000 4,200,000 4,200,000 4,200,000
Tejgaon, Dhaka
M/s Innovative 11.25 Decimal of Land, 07.06.2007 262,000 262,000 262,000 262,000
Computer Ltd. Dhaka
North Amirican 6.5 Decimal of Land, 16.07.2007 31,600,000 31,600,000 31,600,000 31,600,000
Computer Dynamics Tejgaon, Dhaka
and ors.
M/S Bangla Union 192.96 Decimal of Land, 30.07.2007 57,300,000 57,300,000 57,300,000 57,300,000
Steel Ind. Ltd. Chittagong
M/s Computer Bazar 0.14 acres of Land, 21.06.2009 1,696,000 1,696,000 1,696,000 1,696,000
Network Sabujbagh, Dhaka
Stec Fashions Ltd. 28.03 Deimal of land, 26.01.2009 2,321,000 2,321,000 2,321,000 2,321,000
Mirpur, Dhaka
Royals Paper Store 106.50 Decimal of Land, 21.05.2009 7,727,000 7,727,000 7,727,000 7,727,000
Dhaka
Dhaka Electronics* 3 Katha of Land , 12.03.2005* - 26,000,000 - 26,000,000
Ramna, Dhaka
Sabbir Ahmed 6 Decimal of Land, 10.05.2007 600,000 600,000 600,000 600,000
Mirpur, Dhaka

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

M/s. Tri Angle Trading 0.33 Acres of Land, 26.04.2007 6,600,000 6,600,000 6,600,000 6,600,000
Associates Savar, Dhaka
M/S Unicorn 16.5 Decimal of Land, 22.11.2007 15,000,000 15,000,000 15,000,000 15,000,000
Bangladesh Ltd. Dhaka
HM Yunus 1.84 Acres of Land, 06.02.2008 55,700,000 55,700,000 55,700,000 55,700,000
Gazipur
191,733,000 217,733,000 191,733,000 217,733,000

* The two NBA properties on account of M/S Safa Garments Ltd and Dhaka Electronics expired 7 years holding period on 17.01.2012
& 15.03.2012 respectively. The Bank applied on 15.01.2012 to Bangladesh Bank (BB) for extension of time for further 5 years bar BB
extended for 1 year vide their letter dated 13.02.2012. Subsequently, after expiry of 1 year, the Bank again applied on 16.01.2013 to BB
for extension of time for further 4 years. BB vide their letter dated 06.05.2013 advised the Bank to ensure taking absolute possession
and selling both the properties. Out of these two, the claim from Dhaka Electronics has been settled in 2013.

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

11 Borrowings from other banks, financial institutions and agents

Borrowing inside Bangladesh 11.1 8,420,239,834 26,919,994,508 8,420,239,834 26,919,994,508
Borrowing outside Bangladesh 11.2 5,659,640,564 4,238,078,530 5,659,640,564 4,238,078,530
14,079,880,398 31,158,073,038 14,079,880,398 31,158,073,038

11.1 Borrowing inside Bangladesh

Demand Borrowing:
Banks 840,327,596 9,310,000,000 - 9,310,000,000
Non Banking Financial Institutions - - - -
840,327,596 9,310,000,000 - 9,310,000,000
Elimination of intra-group balance (840,327,596) - - -
- 9,310,000,000 - 9,310,000,000
Term Borrowing:
Banks 5,313,155,023 6,059,362,563 5,313,155,023 6,059,362,563
Non Banking Financial Institutions - - - -
5,313,155,023 6,059,362,563 5,313,155,023 6,059,362,563
Elimination of intra-group balance (4,936,811,273) - (4,936,811,273) -
376,343,750 6,059,362,563 376,343,750 6,059,362,563

Other borrowings
From Bangladesh Bank under
Investment Promotion & Financing Facility (IPFF) 503,906,012 581,734,215 503,906,012 581,734,215
Export Development Fund - EDF 3,856,131,560 3,559,380,799 3,856,131,560 3,559,380,799
Refinancing for Agrobased Industries 1,165,008,600 1,294,454,000 1,165,008,600 1,294,454,000
Refinancing Agribusiness - Revolving 1,993,763,912 2,042,625,932 1,993,763,912 2,042,625,932
Second Crop Diversification Project 515,086,000 106,262,000 515,086,000 106,262,000
SME Foundation 10,000,000 10,000,000 10,000,000 10,000,000
Repo with BBK against ALS (Assured Liquidity Support) - 3,956,175,000 - 3,956,175,000
8,043,896,084 11,550,631,946 8,043,896,084 11,550,631,946
8,420,239,834 26,919,994,508 8,420,239,834 26,919,994,508
11.2 Borrowing from outside Bangladesh
In non-interest bearing with
Standard Chartered Bank, New york 28,770,154 - 28,770,154 -
Citibank N A, New york 95,592,430 - 95,592,430 -
HSBC, New York 2,948,078 - 2,948,078 -
JP Morgan Chase Bank FR, Germany - 6,033,830 - 6,033,830
National Commercial Bank, Jeddah, KSA 21,742 - 21,742 -
Deutsche Trust Company Americas, New York 12,058,160 - 12,058,160 -
139,390,564 6,033,830 139,390,564 6,033,830
Other borrowing by OBU
In interest bearing with
Banca Ubae Spa, Spain 388,750,000 - 388,750,000 -
Deutsche Investitions-und Entwicklungsgesellschaft MBH 1,244,000,000 1,596,998,000 1,244,000,000 1,596,998,000
(DEG)
International Finance Corporation (IFC) 2,332,500,000 2,395,497,000 2,332,500,000 2,395,497,000
FMO, Netherland 1,555,000,000 - 1,555,000,000 -
United Bank Limited, Dubai - 239,549,700 - 239,549,700
5,520,250,000 4,232,044,700 5,520,250,000 4,232,044,700
5,659,640,564 4,238,078,530 5,659,640,564 4,238,078,530

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Taka Taka Taka Taka

11.a Remaining maturity grouping of Borrowings - (including OBU)

Payable
On demand 247,052,275 13,266,175,000 247,052,275 13,266,175,000
In not more than one month 1,153,293,093 6,770,381,346 1,153,293,093 6,770,381,346
In more than one month but not more than three months 4,409,892,759 4,121,845,409 4,409,892,759 4,121,845,409
In more than three months but not more than one year 6,046,957,206 5,259,383,867 6,046,957,206 5,259,383,867
In more than one year but not more than five years 1,109,192,331 1,052,291,200 1,109,192,331 1,052,291,200
In more than five years 1,113,492,734 687,996,216 1,113,492,734 687,996,216
14,079,880,398 31,158,073,038 14,079,880,398 31,158,073,038
12 Deposits and other accounts
Current deposits and other accounts, etc. 12.1 9,843,455,920 9,806,371,635 9,877,524,621 9,806,371,635
Bills payable 12.2 789,543,484 866,317,963 789,543,484 866,317,963
Savings bank deposits 12.3 16,923,994,211 14,080,165,001 16,923,994,211 14,080,165,001
Fixed deposits 12.4 89,479,847,553 66,659,786,106 89,510,645,864 67,005,863,858
Bearer certificates of deposits 12.5 - 22,250,000 - 22,250,000
117,036,841,168 91,434,890,705 117,101,708,180 91,780,968,457

12.1 Current deposits and other accounts

Current deposits 12.1.1 4,624,020,832 3,534,079,850 4,658,089,533 3,534,079,850
Deposit margin on facilities (LC, LG, Acceptance etc.) 3,640,356,218 4,231,818,746 3,640,356,218 4,231,818,746
Matured Deposits 200,000 200,000 200,000 200,000
Sundry Deposits (Matured BCD, TD Redemption) 33,038,242 10,779,828 33,038,242 10,779,828
Interest Accrued on Deposits 1,545,840,628 2,028,604,027 1,545,840,628 2,028,604,027
Current deposit-offshore banking unit - 889,185 - 889,185
9,843,455,920 9,806,371,635 9,877,524,621 9,806,371,635

12.1.1 Current deposits

Local Currency 4,088,778,537 3,149,625,146 4,088,778,537 3,149,489,495
Foreign Currency 569,310,996 384,590,355 569,310,996 384,590,355
4,658,089,533 3,534,215,501 4,658,089,533 3,534,079,850
Elimination of intra-group balance (34,068,701) (135,651) - -
4,624,020,832 3,534,079,850 4,658,089,533 3,534,079,850

12.2 Bills payable

Local currency 784,529,183 862,948,656 784,529,183 862,948,656
Foreign currency 5,014,301 3,369,306 5,014,301 3,369,306
789,543,484 866,317,963 789,543,484 866,317,963

12.3 Savings bank deposits

Transactional Deposit Accounts:
EBL saving deposits account 3,969,396,799 3,849,789,558 3,969,396,799 3,849,789,558
High performance deposit account - retail 5,126,404,193 4,909,407,572 5,126,404,193 4,909,407,572
EBL campus account 43,023,598 20,627,486 43,023,598 20,627,486
EBL interesting account 1,649,940,005 1,759,725,127 1,649,940,005 1,759,725,127
Salary account deposits 309,317,668 195,054,081 309,317,668 195,054,081
EBL Savings Plus account 1,020,913,492 395,286,832 1,020,913,492 395,286,832
EBL Sonchoy account 59,718,753 49,950,803 59,718,753 49,950,803
EBL Paribar account 703,542,939 359,939,598 703,542,939 359,939,598
EBL Global account 90,200,649 110,096,487 90,200,649 110,096,487
EBL Global GBP account 8,686,713 56,795,333 8,686,713 56,795,333
EBL RFCD account 82,569,786 57,615,929 82,569,786 57,615,929
EBL Junior account 212,656,343 154,540,152 212,656,343 154,540,152
EBL Easy account 3,030,125 576,487 3,030,125 576,487
EBL Agri Saver 143 - 143 -
EBL Smart Womens Savings 83,815,454 - 83,815,454 -
EBL Classic Savings 68,433,504 - 68,433,504 -
EBL Premium Savings 269,505,506 - 269,505,506 -
EBL 50 Plus Savings 50,647,066 - 50,647,066 -
EBL Power Savings 101,202,452 - 101,202,452 -
EBL Max Saver 156,745,851 - 156,745,851 -
Unclaimed savings deposit 1,861,586 1,861,586 1,861,586 1,861,586
14,011,612,625 11,921,267,032 14,011,612,625 11,921,267,032

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

Scheme Deposits:
Monthly deposit plan (MDP) account - 179,408 - 179,408
EBL Confidence account 2,262,135,766 1,806,429,971 2,262,135,766 1,806,429,971
EBL Secure account 353,928,828 282,413,676 353,928,828 282,413,676
EBL Child Future Plan account 94,049,715 20,148,150 94,049,715 20,148,150
EBL Millionaire Scheme 83,162,019 - 83,162,019 -
SME Equity Builder account 119,105,258 49,726,765 119,105,258 49,726,765
2,912,381,586 2,158,897,969 2,912,381,586 2,158,897,969
16,923,994,211 14,080,165,001 16,923,994,211 14,080,165,001

12.4 Fixed deposits

Special notice deposits (SND) account 31,561,726,862 16,377,750,289 31,561,726,862 16,377,885,940
Term deposits account 57,581,111,546 50,273,847,889 57,581,111,546 50,273,847,889
RFCD account 2,214,528 1,128,474 2,214,528 1,128,474
NFCD account 348,235,982 353,001,555 348,235,982 353,001,555
Term deposit - Offshore banking unit 17,356,946 - 17,356,946 -
89,510,645,864 67,005,728,207 89,510,645,864 67,005,863,858
Elimination of intra-group balance (30,798,311) (345,942,101) - -
89,479,847,553 66,659,786,106 89,510,645,864 67,005,863,858

12.5 Issuance of Bearer Certificate of Deposits was stopped as per BRPD circular No. 09 dated 20 October 2002. These are considered
now as Matured Deposits and taken under other deposits.

12.a Deposits from banks-inside Bangladesh 12.a.1 1,188,456,427 3,988,480 1,188,456,427 3,988,480
Other than banks 115,848,384,741 91,430,902,224 115,913,251,753 91,776,979,976
117,036,841,168 91,434,890,704 117,101,708,180 91,780,968,457
12.a.1 Deposits from banks
In special notice deposit accounts with
Janata Bank Limited 42,998 42,176 42,998 42,176
Meghna Bank Limited 6,526,216 - 6,526,216 -
Mercantile Bank Limited 21,390 21,596 21,390 21,596
National Bank Limited 149,785 144,101 149,785 144,101
NRB Bank Limited 1,173,141,631 - 1,173,141,631 -
NRB Commercial Bank Limited 4,294,876 - 4,294,876 -
Dhaka Bank Limited - 91,580 - 91,580
One Bank Limited 3,828,204 3,652,497 3,828,204 3,652,497
Southeast Bank Limited 445,397 29,639 445,397 29,639
Standard Bank Limited 5,929 6,891 5,929 6,891
1,188,456,427 3,988,480 1,188,456,427 3,988,480

12.b Deposits on the basis of significant concentration

12.b.1 Sector - wise concentration of Deposits and other

accounts
Government sector 874,959,460 1,247,801,451 874,959,460 1,247,801,451
Other public sector 11,407,834,768 8,644,134,884 11,407,834,768 8,644,134,884
Private sector 104,754,046,940 81,542,954,369 104,818,913,952 81,889,032,121
117,036,841,168 91,434,890,704 117,101,708,180 91,780,968,457

12.b.2 Business segment - wise concentration of Deposits

and other accounts
Corporate 47,675,671,083 32,233,027,218 47,740,538,096 32,579,104,971
Offshore Banking Unit 17,356,946 889,185 17,356,946 889,185
SME 6,544,420,656 5,339,748,691 6,544,420,656 5,339,748,691
Consumer 62,009,848,999 52,994,907,647 62,009,848,999 52,994,907,647
Others- Bills Payables 789,543,484 866,317,963 789,543,484 866,317,963
117,036,841,168 91,434,890,704 117,101,708,180 91,780,968,457

211
 Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

12.c Residual maturity grouping of Deposits

From banks
Payable:
On demand - - - -
Within one month 1,188,456,427 3,988,480 1,188,456,427 3,988,480
In more than one month but less than six months - - - -
In more than six months but less than one year - - - -
In more than one year but within five years - - - -
In more than five years but within ten years - - - -
1,188,456,427 3,988,480 1,188,456,427 3,988,480
From other than banks
Payable:
On demand 920,829,160 655,660,176 920,829,160 655,660,176
Within one month 18,121,613,991 17,479,258,152 18,129,486,243 17,521,258,100
In more than one month but less than six months 21,916,380,831 20,617,697,416 21,920,889,761 20,641,753,409
In more than six months but less than one year 31,048,493,222 22,097,914,771 31,061,280,943 22,166,139,675
In more than one year but within five years 41,971,544,262 28,867,737,374 42,011,242,371 29,079,534,281
In more than five years but within ten years 1,869,523,275 1,712,634,335 1,869,523,275 1,712,634,335
115,848,384,741 91,430,902,224 115,913,251,753 91,776,979,976
117,036,841,168 91,434,890,704 117,101,708,180 91,780,968,457
Unclaimed deposit aging 10 years or more 704,844 5,538,548 704,844 5,538,548

13 Other liabilities
Privileged creditors 13.1 326,317,939 313,858,624 326,317,939 313,858,624
Acquirer liabilities 13.2 140,446,893 110,425,213 140,446,893 110,425,213
Sundry creditors 162,963,981 158,912,998 162,963,981 158,912,998
Security deposit 17,539,750 18,256,912 17,539,750 18,256,912
Current tax liability/(assets) 13.3 1,480,961,079 1,367,000,453 1,475,061,768 1,349,456,697
Provision for loans and advances- other than Offshore 13.4 3,476,553,016 2,857,162,569 3,476,553,017 2,857,162,569
Provision for loans and advances - Offshore 97,013,933 92,805,394 97,013,933 92,805,394
Interest suspense account 13.5 672,910,943 665,254,434 672,910,943 665,254,434
Provision for other assets 13.6 68,802,170 21,463,790 47,856,113 21,463,790
Provision for loss on revaluation of shares (net) 13.7 874,335,895 724,346,229 860,046,096 724,346,229
Advance interest/commission received 20,378,400 30,902,907 20,378,400 30,902,907
Expenses payable 317,020,422 223,545,831 317,020,422 223,545,831
Interest payable on borrowing including Offshore 13.8 105,847,548 131,683,819 105,847,548 131,683,819
Inter branch and inter system accounts 40,703 266,802 40,703 266,802
Advance export proceeds 356,956,828 235,510,785 356,956,828 235,510,785
Miscellaneous payable 13.09 172,581,260 166,002,875 172,581,260 166,002,875
Other liabilities-offshore banking unit 13.10 11,507 97,469 11,507 97,469
Other liabilities of subsidiaries 13.11 197,133,021 84,431,504 - -
8,487,815,290 7,201,928,608 8,249,547,103 7,099,953,348
13.1 Privileged creditors
Three major categories of government dues are reported. Tax deducted at source, VAT and Excise duty payable to govt. exchequer.

Tax deducted at source (TDS) 175,791,724 164,210,462 175,791,724 164,210,462

VAT deducted at source (VDS) 35,016,205 35,573,822 35,016,205 35,573,822
Excise duty deducted from customer accounts 115,510,011 114,074,340 115,510,011 114,074,340
326,317,939 313,858,624 326,317,939 313,858,624

13.2 Acquirer liabilities

These liabilities are of temporary nature arisen from debit and credit card transactions. Transactions are settled next day with relevant
parties and reconciled monthly. Major balance includes 'Acquirer Cash' which is a liability to relevant parties arisen due to withdrawal
of cash by EBL cardholders from Q-Cash/VISA ATMs (Not owned by EBL):

Prepaid card liability 12,333,364 49,746,214 12,333,364 49,746,214

Travel card liability 17,035,102 16,635,128 17,035,102 16,635,128
Credit card liability 30,824,266 12,381,203 30,824,266 21,904,839
Acquirer cash and other liabilities 80,254,161 31,662,668 80,254,161 22,139,032
140,446,893 110,425,213 140,446,893 110,425,213

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka
13.3 Current tax liability/(assets)
Provision for tax
Opening balance 2,589,515,621 2,283,165,841 2,556,953,823 2,227,932,951
Settlement/adjustments for previous years (2,273,937,989) (1,912,390,084) (2,250,237,736) (1,857,354,128)
Provision for tax made during the year 13.3.1 2,626,486,626 2,218,739,865 2,589,787,489 2,186,375,000
2,942,064,258 2,589,515,621 2,896,503,576 2,556,953,823
Balance of income tax paid
Opening balance 1,222,515,168 977,678,738 1,207,497,126 943,863,641
Settlement/adjustments for previous years (2,259,433,709) (1,894,920,660) (2,250,237,736) (1,857,354,128)
Paid during the year 13.3.2 2,498,021,720 2,139,757,091 2,464,182,418 2,120,987,614
1,461,103,179 1,222,515,168 1,421,441,808 1,207,497,126
1,480,961,079 1,367,000,453 1,475,061,768 1,349,456,697

13.3.1 Provision for tax made during the year 13.3.1.a 2,626,486,626 2,218,739,865 2,589,787,489 2,186,375,000
2,626,486,626 2,218,739,865 2,589,787,489 2,186,375,000

13.3.1.a Income tax expenses/Provision for tax

Current tax expenses
Current year 2,556,925,675 2,218,820,213 2,525,924,753 2,186,375,000
Adjustment for prior year 69,560,951 (80,348) 63,862,736 -
Total income tax expenses 2,626,486,626 2,218,739,865 2,589,787,489 2,186,375,000

13.3.2 Income tax paid during the year

Withholding tax deducted at source 143,612,157 104,328,880 127,932,097 92,631,583
Advance tax paid in cash 2,354,409,563 2,035,428,211 2,336,250,321 2,028,356,031
Advance income tax paid 2,498,021,720 2,139,757,091 2,464,182,418 2,120,987,614

2013 2012
% Taka % Taka

13.3.3 Reconciliation of effective tax rate

Profit before income tax as per profit and loss account 4,835,746,967 4,219,614,091

Income Tax using the domestic corporate tax rate (@ 42.5%) 42.5% 2,070,540,840 42.5% 1,793,335,989
Factors affecting the tax charge for current year
Non deductible expenses 11.02% 533,042,961 12.90% 544,394,351
Tax exempt income -0.84% (40,847,278) -2.31% (97,456,921)
Tax savings from reduced tax rates from dividend -0.39% (18,951,391) -0.49% (20,663,738)
Tax savings from reduced tax rates from capital gain -0.37% (17,860,362) -0.87% (36,524,278)
Tax incentives - - - -
Recognition of previously unrecognized tax losses - - - -
Adjustment for last year 1.32% 63,862,718 0.08% 3,289,598
Total income tax expenses 53.24% 2,589,787,489 51.81% 2,186,375,000

13.4 Provision for loans and advances - other than OBU

A) Specific provision against loans and advances

Opening balance 1,387,320,825 866,437,600 1,387,320,825 866,437,600
Fully provided debt written off during the year (274,781,701) (325,001,027) (274,781,701) (325,001,027)
Recovery from loans previously written off 110,434,318 117,394,950 110,434,318 117,394,950
Specific provision for the year 13.4.1 706,268,210 728,489,302 706,268,210 728,489,302
Provision released or no longer required - - - -
Provision held at the end of the year 1,929,241,652 1,387,320,825 1,929,241,652 1,387,320,825
Required provision as per relevant BRPD circular of BB 1,912,041,652 1,379,320,825 1,912,041,652 1,379,320,825
Surplus/ (Shortage) 17,200,000 8,000,000 17,200,000 8,000,000

B) General provision against unclassified loans and advances

Opening balance 982,329,576 1,086,208,985 982,329,576 1,086,208,985
Provision made during the year for loans and
advances 13.4.1 16,646,282 (103,879,409) 16,646,282 (103,879,409)
Provision held at the end of the year 998,975,858 982,329,576 998,975,858 982,329,576
Required provision as per relevant BRPD 998,602,451 982,329,576 998,602,451 982,329,576
circular of BB
Surplus/ (Shortage) 373,406 - 373,406 -

213
 Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka
C) General provision against contingent assets (1%)
Opening balance 487,512,168 390,927,388 487,512,168 390,927,388
Provision during the year for contingent assets 13.4.1 60,823,339 96,584,780 60,823,339 96,584,780
Provision held at the end of the year 548,335,507 487,512,168 548,335,507 487,512,168
Required provision as per relevant BRPD circular of BB 548,335,507 487,512,168 548,335,507 487,512,168
Surplus/ (Shortage) - - - -

Total (A+B+C) 3,476,553,016 2,857,162,569 3,476,553,017 2,857,162,569

13.4.1 Provision for loans and advances charged

Bank 2013 2012
during the year
Main Operation OBU Total Total

General Provision for UC loans & advances 16,646,282 6,794,671 23,440,953 (73,112,971)
General Provision for Contingent liabilities 60,823,339 (115,706) 60,707,633 97,005,930
General Provision charged during the year 77,469,621 6,678,965 84,148,586 23,892,959
Specific Provision 816,702,528 - 816,702,528 845,884,252
Recovery from loans previously written off (110,434,318) - (110,434,318) (117,394,950)
Specific Provision (net) charged during the year 706,268,210 - 706,268,210 728,489,302
Total Provision for loans and advances charged during the year 783,737,831 6,678,965 790,416,796 752,382,261

13.4.2 Calculation of provision for loans and advances as per CL

Interest Eligible Base for Required Actual Surplus /
Outstanding
Nature suspense securities provision Provision provision (shortage)
Taka Taka Taka Taka Taka Taka Taka
Standard 97,096,473,158 162,788,958 - 97,096,473,158 1,078,467,277 1,078,840,684 373,407
SMA 879,979,652 4,878,250 - 879,979,652 16,436,933 16,436,933 -
SS 479,766,825 31,638,134 38,278,234 410,346,615 82,069,323 82,069,323 -
DF 193,344,322 19,831,133 4,522,500 171,054,181 85,527,091 102,727,091 17,200,000
BL 3,024,119,923 453,774,468 884,838,815 1,744,445,238 1,744,445,238 1,744,445,238 -
Staff loan 1,236,535,067 - - - - - -
Total Loans 102,910,218,947 672,910,943 927,639,548 100,302,298,844 3,006,945,862 3,024,519,269 17,573,407
Contingent 54,904,763,066 - - 54,904,763,066 549,047,631 549,047,631 -
liabilities
Total 157,814,982,013 672,910,943 927,639,548 155,207,061,910 3,555,993,492 3,573,566,899 17,573,407
Provision for unclassified loans and advances - OBU (97,013,883) (97,013,883) -
Provision for loans and advances (excluding OBU) 3,458,979,609 3,476,553,016 17,573,407

13.5 Interest suspense account

Opening balance 665,254,434 352,951,006 665,254,434 352,951,006
Amount transferred during the year 816,898,158 1,116,758,008 816,898,158 1,116,758,008
Amount recovered during the year (761,838,170) (743,161,059) (761,838,170) (743,161,059)
Amount written off during the year (47,403,479) (61,293,521) (47,403,479) (61,293,521)
Balance at the end of the year 672,910,943 665,254,434 672,910,943 665,254,434

13.6 Provision for other assets

Opening balance 21,463,790 8,313,675 21,463,790 8,313,675
Provision made during the year 47,338,380 13,150,115 26,392,323 13,150,115
Adjustment made during the year - - - -
68,802,170 21,463,790 47,856,113 21,463,790

13.7 Provision for revaluation of shares 724,346,229 273,322,488 724,346,229 273,322,488

Opening balance 149,989,751 478,773,309 135,699,952 478,773,309
Provision made during the year (85) (27,749,567) (85) (27,749,567)
Adjustment made during the year 874,335,895 724,346,229 860,046,096 724,346,229

Provision has been kept on unrealized loss (gain net off) according to DOS Circular No. 4 dated 24 November 2011.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012
Note
Taka Taka Taka Taka

13.8 Interest Payable on Brrowing including

Offshore
Interest payable on Borrowing 85,898,168 95,439,164 85,898,168 95,439,164
Interest payable on Borrowing-Offshore 29,032,894 36,244,655 26,180,188 36,244,655
114,931,062 131,683,819 112,078,356 131,683,819
Elimination of Intra-group transactions (9,083,514) - (6,230,807) -
105,847,548 131,683,819 105,847,548 131,683,819

13.09 Miscellaneous payable

Sale of savings certificate and WEDB 22,852,092 15,174,914 22,852,092 15,174,914
Unclaimed instruments 2,279,574 2,329,574 2,279,574 2,329,574
Other liabilities 147,449,594 148,498,387 147,449,594 148,498,387
172,581,260 166,002,875 172,581,260 166,002,875

13.10 Other liabilities-Offshore banking unit

Sundry creditors 11,507 97,469 11,507 97,469
11,507 97,469 11,507 97,469

13.11 Other liabilities of subsidiaries

Accounts payable 156,111,837 76,864,037
Liabilities for expenses 8,575,947 7,927,608
Others liabilities 38,376,197 44,546,000
Bank overdraft 840,327,596 654,886,483
1,043,391,577 784,224,128
Elimination of Intra-group transactions
Rent & others (5,612,917) (4,488,400)
Share trading account (318,043) (417,741)
Interim dividend receivable - (40,000,000)
Bank overdraft (840,327,596) (654,886,483)
(846,258,556) (699,792,624)
Net other liabilities 197,133,021 84,431,504

13.a Nostro Reconciliation As per our book (GL) As per their book (statement)
Debit (USD) Credit (USD) Debit (USD) Credit (USD)

Up to three months 1,945,263 2,414,224 1,606,063 12,854,745

More than three months but less than six - 19,860 - -
months
More than six months but less than nine - - - -
months
More than nine months but less than twelve - - - -
months
More than twelve months - - - -
Total 1,945,263 2,434,085 1,606,063 12,854,745

* The Bank is not required to keep provision regarding the unreconciled debit balance as at balance sheet date since there was
no debit entry aging more than three months.

14 Share Capital
A) Authorized capital
1,200,000,000 ordinary shares of Tk 10 each 12,000,000,000 12,000,000,000 12,000,000,000 12,000,000,000

B) Issued, subscribed 2013 (Nos.) 2012 (Nos.)

and fully paid up capital
Issued against cash 129,345,000 129,345,000 1,293,450,000 1,293,450,000 1,293,450,000 1,293,450,000
Issued as bonus share 481,834,785 481,834,785 4,818,347,850 4,818,347,850 4,818,347,850 4,818,347,850
611,179,785 611,179,785 6,111,797,850 6,111,797,850 6,111,797,850 6,111,797,850

14.1 Slab wise list as on 31 December 2013

In terms of the clause (cha) of the Memorandum of Association and Article # 4 of the Articles of Association of the Bank and clause
4 of BCCI Reconstruction Scheme 1992, the Authorised Capital of the Bank was Tk 12,000,000,000 divided into 1,200,000,000
ordinary shares of Tk 10 each. The issued, subscribed and fully paid up capital of the bank is Tk 6,111,797,850 divided into
611,179,785 ordinary shares of Tk 10 each. Subject to above conditions the break up of issued, subscribed and paid up capital of Tk
6,111,797,850 as on 31 December 2013 is as follows:

215
Percentage of group wise shareholdings:

2013 2012
Shareholders'
group (%) of share (%) of
No. of shares Taka No of Shares Taka
holding shareholding
Directors 192,923,886 31.57% 1,929,238,860 192,923,886 31.57% 1,929,238,860
General Public 348,023,246 56.94% 3,480,232,460 342,083,464 55.97% 3,420,834,640
Financial 70,232,653 11.49% 702,326,530 76,172,435 12.46% 761,724,350
Institutions
Total 611,179,785 100.00% 6,111,797,850 611,179,785 100.00% 6,111,797,850

Status of shareholding (shares of EBL) as on 31 December 2013 by CEO, CFO, Head of Internal Control and Compliance, Company
Secretary and top five salaried executives is shown in the following table:

CEO, CS, CFO & HoICC and their spouses & minor children.
Shareholding
Name Designation
position (Nos)
Ali Reza Iftekhar (with his spouse & minor children) Managing Director & CEO 146,893
Safiar Rahman (with his spouse & minor children) SEVP & Company Secretary -
Akhtar Kamal Talukder (with his spouse & minor children) SEVP & Head of Internal Control and Compliance 24,940
Masudul Hoque Sardar (with his spouse & minor children) VP & Head of Finance -

Executives (Top five salaried employess other than CEO, CS, CFO & HoICC)
Hassan O. Rashid Deputy Managing Director 101,000
Sami Karim SEVP & Head of Special Assets Management -
S M Akhtaruzzaman Chowdhury SEVP & Head of Operations -
Md. Khurshed Alam EVP & Head of SME -
Md. Abdul Hakim EVP & Unit Head, Corporate Banking Unit- 02 -

Shares held by any shareholder to the extent of 10% or more. Nil

A range wise distribution schedule of the above shares is given below as required by the regulation 37 of the Listing Regulations of Dhaka
Stock Exchange Limited:

Range No. of shareholders No. of shares (%) of shareholding

001-500 10,149 1,769,030 0.29%

501-5,000 5,888 9,501,256 1.55%
5,001-10,000 559 3,917,659 0.64%
10,001-20,000 301 4,098,069 0.67%
20,001-30,000 122 2,974,971 0.49%
30,001-40,000 61 2,087,417 0.34%
40,001-50,000 57 2,557,467 0.42%
50,001-100,000 101 7,216,255 1.18%
100,001-1,000,000 204 63,758,290 10.43%
1,000,001 and above 71 513,299,371 83.99%
Total 17,513 611,179,785 100.00%

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
Note
2013 2012 2013 2012

14.2 Capital adequacy ratio (BASEL II)

Tier – I (Core capital)

Paid up capital 6,111,797,850 6,111,797,850 6,111,797,850 6,111,797,850
Statutory reserve 5,362,423,626 4,395,274,232 5,362,423,626 4,395,274,232
General reserve 130,000,000 160,000,000 130,000,000 160,000,000
Dividend equalization reserve 356,040,000 356,040,000 356,040,000 356,040,000
Retained earnings 1,392,342,034 1,348,849,899 1,284,904,684 1,208,643,175
Non controlling interest - - - -
13,352,603,509 12,371,961,981 13,245,166,159 12,231,755,257
Tier –II (Supplementary capital)
General provision against UC loans and contingent assets 1,644,325,298 1,562,647,138 1,644,325,298 1,562,647,138
Revaluation Reserve for Securities up to 50% 29,986,046 6,926,686 29,986,046 6,926,686
Assets Revaluation Reserves up to 50% 1,844,747,775 1,844,747,775 1,844,747,775 1,844,747,775
3,519,059,119 3,414,321,599 3,519,059,119 3,414,321,599
Tier –III (Additional Supplementary capital) - - - -
A. Total capital 16,871,662,628 15,786,283,580 16,764,225,278 15,646,076,856
B. Total risk weighted assets 140,480,991,676 129,635,173,574 140,278,788,379 129,812,217,605
C. Required capital based on risk weighted assets (10% on B ) 14,048,099,168 12,963,517,357 14,027,878,838 12,981,221,761
D. Surplus/(deficiency) [A - C] 2,823,563,460 2,822,766,223 2,736,346,440 2,664,855,096

Capital adequacy ratio

Minimum requirement Consolidated Bank (Solo)
2013 2012 2013 2012 2013 2012

On core capital 5% 5% 9.50% 9.54% 9.44% 9.42%

On supplementary capital Not specified Not specified 2.51% 2.63% 2.51% 2.63%
On additional
Not specified Not specified - - - -
supplementary capital
On total capital 10% 10% 12.01% 12.18% 11.95% 12.05%

15 Statutory Reserve
Opening balance 4,395,274,232 3,551,351,414 4,395,274,232 3,551,351,414
Transferred from profit during the year 967,149,393 843,922,818 967,149,393 843,922,818
Closing balance 5,362,423,625 4,395,274,232 5,362,423,625 4,395,274,232

16 Dividend equalization reserve

According to BRPD Circular No. 18 dated 20 October 2002, in case of declaring cash dividend at a higher rate i.e., beyond 20% , a
sum equal to the amount of dividend in excess of 20% shall have to be transferred to the Dividend Equalization Account which shall
be treated as `Core Capital' of the bank.

17 Reserve against Pre-takeover loss

This represents the amount deducted from depositors and other accounts of customers of erstwhile BCCI branches in Bangladesh
under clause 11(3) of the Scheme. In accordance with clause 14 of the Scheme, a review was carried out of the recovery made
against the BCCI assets in 1997 and it was concluded that no repayment of the deductions need to be made to the depositors of
BCCI as per the Scheme. As this provision is no longer required, it therefore, has been shown as reserve against pre take over loss
(Note-18).

18 Pre-take over loss

Assets and liabilities of erstwhile BCCI which were not previously considered while calculating 'Pre-take over loss' and were reported
with similar class of assets and liabilities of EBL, have been bundled with 'Pre-take over loss' during 2008 with retrospective effect in
2007.

Opening balance (952,794,813) (787,204,238) (952,794,813) (787,204,238)

Recoveries/adjustment during the year (20,283,906) (165,590,574) (20,283,906) (165,590,574)
Closing balance (973,078,718) (952,794,812) (973,078,718) (952,794,812)

19 Assets revaluation reserve

Opening balance 3,689,495,550 2,651,941,750 3,689,495,550 2,651,941,750
Addition during the year 19.1 - 1,037,553,800 - 1,037,553,800
Closing balance 3,689,495,550 3,689,495,550 3,689,495,550 3,689,495,550

217
 Carrying value WDV as at Revaluation
Revaluation
Acquisition as at 01-01- 31-12-2013 Surplus booked
19.1 Location Area of Land surplus booked
Date 2013 (Revalued (Revalued in previous
during this year
Amount) Amount) years
1. Plot 364/A, Block: E, 132 decimal 27/07/2008 640,000,000 640,000,000 - 333,400,000
Bashundhara R/A, Dhaka
2. Plot 19, Block: A, 8.25 decimal 04/11/2009 87,500,000 87,500,000 - 35,081,837
Bashundhara R/A, Dhaka
3. Purbachol, Kaliganj, 140.5 11/09/2007 106,439,393 106,439,393 - 71,772,743
Gazipur. decimal
4. Plot 05, Block: CES 43.312 20/11/2002 2,624,969,697 2,624,969,697 - 2,529,344,747
(A), New 100 Gulshan decimal
Avenue, Dhaka
5. 33, Agrabad, 22.17 17/02/1983 671,818,181 671,818,181 - 671,818,181
Chittagong decimal
6. Polash Bari, Ashulia, 626.50 20/11/2011 501,200,000 501,200,000 - 48,078,042
Savar, Dhaka decimal
4,631,927,271 4,631,927,271 - 3,689,495,550

Above revaluation reserves are related to only land component and no deferred tax has been recognised on the basis that taxes paid
at the time of land registration are final discharge of related tax liability.

Consolidated Bank
Note
2013 2012 2013 2012

20 Reserve for amortization of treasury securities (HTM)

Opening balance 98,740 3,793 98,740 3,793
Addition during the year 728,895 94,947 728,895 94,947
Adjustment made during the year - - - -
Closing balance 827,635 98,740 827,635 98,740

As per instruction/circular of Bangladesh Bank (DOS circular Letter No 05 dated 26 May 2008).
21 Reserve for revaluation of treasury securities (HFT)
Opening balance 13,754,631 409,033,635 13,754,631 409,033,635
Addition during the year 219,437,165 47,110,062 219,437,165 47,110,062
Adjustment made during the year (173,219,705) (442,389,066) (173,219,705) (442,389,066)
Closing balance 59,972,091 13,754,631 59,972,091 13,754,631

22 General Reserve
Opening balance 160,000,000 160,000,000 160,000,000 160,000,000
Transferred to Retained Earnings (30,000,000) - (30,000,000) -
Closing balance 130,000,000 160,000,000 130,000,000 160,000,000

23 Reserve against Non-banking assets

Opening balance 204,427,796 233,527,796 204,427,796 233,527,796
Amount transferred during the year - - - -
Adjustment made during the year (25,456,631) (29,100,000) (25,456,631) (29,100,000)
Closing balance 178,971,165 204,427,796 178,971,165 204,427,796

24 Foreign currency translation difference: [gain/(loss)

Assets and liabilities of OBU and EBL Finance (HK) Ltd. have been presented into Taka (which is functional currency of the Bank) using
year end standard mid rate of exchange of the Bank @ USD 1 = BDT 77.75 and HKD 1= BDT 10.0774. Yearly incomes and expenses
are translated using monthly average exchange rate (USD 1= BDT 78.0987 & HKD 1 =BDT 10.1174). The net cumulative result of the
exchange differenes has been presented separately as equity component as per BAS 21 (para 39).

25 Retained Earnings
Opening balance 1,722,111,302 1,769,737,547 1,581,904,578 1,735,266,868
Profit for the year 2,535,094,458 2,392,730,023 2,567,863,832 2,235,100,710
Transfer to statutory reserve (967,149,394) (843,922,818) (967,149,394) (843,922,818)
Transfer from General Reserve 30,000,000 - 30,000,000 -
Cash Dividend (1,222,359,570) (1,584,540,185) (1,222,359,570) (1,584,540,180)
FX adjustment for transferring OBU Profit (10,189,003) (10,189,003) -
Dividend received from subsidiary - - - 40,000,000
Adjustment of non 25.1 - (11,893,266) - -
controlling interest
Closing balance 2,087,507,790 1,722,111,302 1,980,070,442 1,581,904,578

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
Note
2013 2012 2013 2012

25.1 This figure represents Retained Earnings (RE) of EBLSL (40%) during the 2nd half of 2011 which was considered as noncontrolling
interest (NCI) while reported on 31 December 2011. Since acquisition was done on the basis of 30 June 2011, and bargain purchase
gain was considered thereon, this RE of NCI has been adjusted with RE balance of 2012.

26 Contingent liabilities
Acceptance and endorsements 26.1 26,827,594,612 26,450,629,146 26,827,594,612 26,450,629,146
Letters of guarantee 26.2 12,515,097,423 10,054,243,019 12,515,097,423 10,054,243,019
Irrevocable letters of credit 26.3 15,562,071,032 12,329,127,919 15,562,071,032 12,329,127,919
Bills for collection 26.4 5,110,318,370 4,199,088,283 5,110,318,372 4,199,088,283
60,015,081,437 53,033,088,366 60,015,081,437 53,033,088,366

26.1 Acceptance and endorsements

Acceptances 8,513,585,832 7,135,006,250 8,513,585,832 7,135,006,250
Acceptances-(ULC-Cash) 18,297,887,144 19,294,568,247 18,297,887,144 19,294,568,247
26,811,472,976 26,429,574,496 26,811,472,976 26,429,574,496
Acceptances-Offshore Banking Unit 16,121,636 21,054,649 16,121,636 21,054,649
26,827,594,612 26,450,629,146 26,827,594,612 26,450,629,146

26.2 Letters of guarantees

Directors 192,900 980,260 192,900 980,260
Government 471,496,327 484,095,727 471,496,327 484,095,727
Banks and other financial institutions 4,180,310,717 4,167,611,023 4,180,310,717 4,167,611,023
Others (Customers etc.) 7,863,097,479 5,401,556,009 7,863,097,479 5,401,556,009
12,515,097,423 10,054,243,019 12,515,097,423 10,054,243,019
Letter of guarantee-Offshore Banking Unit - - - -
12,515,097,423 10,054,243,019 12,515,097,423 10,054,243,019

26.2.1 A case was filed by Eastern Bank Limited, successor of BCCI Overseas Limited against National Bank Ltd (NBL) for issuing guarantee
at Artha Rin Adalat - 3, Dhaka, which has been decreed against NBL on 04 January 2004 for Tk 27,366,450 plus interest @ 18% p.a.
amounting to Tk 45,565,139 from 01 October 1994 to 31 December 2003 making an aggregate amount of Tk 72,931,589. Against the
decreed amount, NBL has made an appeal against the order which is still pending with the Honorable High Court, Dhaka. Before filing
the appeal NBL had paid Tk 13,683,225 to the court being 50% of the principal decreed amount.

26.3 Irrevocable letters of credit

Letters of credit (LC)- Cash sight 3,524,404,110 3,079,465,675 3,524,404,110 3,079,465,675
Letters of credit (LC)- Cash Usance 7,035,251,168 4,551,213,399 7,035,251,168 4,551,213,399
Letters of credit (LC)- Back to Back 4,947,325,031 4,636,720,476 4,947,325,031 4,636,720,476
15,506,980,309 12,267,399,550 15,506,980,309 12,267,399,550
Letter of credit-Offshore Banking Unit 55,090,723 61,728,368 55,090,723 61,728,368
15,562,071,032 12,329,127,919 15,562,071,032 12,329,127,919

26.4 Bills for collection

Local Documentary Bills Purchased (LDBC) 2,525,412,218 2,502,886,996 2,525,412,218 2,502,886,996
Foreign Documentary Bills Purchased (FDBC) 2,140,536,966 1,263,839,382 2,140,536,966 1,263,839,382
Margin on Bills Purchase 444,369,186 432,361,905 444,369,186 432,361,905
5,110,318,370 4,199,088,283 5,110,318,370 4,199,088,283
Bills for collection- Offshore Banking Unit - - - -
5,110,318,370 4,199,088,283 5,110,318,370 4,199,088,283

26.5 Workers' profit participation fund (WPPF)

As per Bangladesh Labour Act 2006 and SRO no. 336/Law/2010, all companies falling within the scope of WPPF are required to
provide 5% of its profit before charging such expense to their eligible employees within the stipulated time. Bank obtained opinion
from its legal advisor on this issue which stated that EBL is not required to make provision for WPPF as Banks are not within the
scope of WPPF. As such the Bank did not make any provision during the year for WPPF.

27 Interest income
Interest on advances 13,405,739,995 11,997,476,291 13,245,321,775 11,926,079,521
Interest on money at call and short notice 91,782,626 475,771,082 91,782,626 475,771,082
Interest on placement with other banks 992,502,514 906,954,962 992,502,514 906,954,962
and Financial Institutions
Interest on foreign currency balances 77,393,390 6,957,817 77,393,390 6,957,817
Interest income-offshore 486,172,006 464,808,821 479,764,766 464,808,821
15,053,590,531 13,851,968,973 14,886,765,071 13,780,572,203
Elimination of Intra-group/company transactions (194,134,663) (107,362,624) (79,608,182) (82,349,385)
14,859,455,868 13,744,606,348 14,807,156,889 13,698,222,818

219
 Consolidated Bank
Note
2013 2012 2013 2012

28 Interest paid on deposits and borrowings

Interest on deposits 28.1 8,700,843,534 7,619,010,461 8,601,567,611 7,619,010,461
Interest on borrowings from Banks & FIs 28.2 630,448,371 753,670,798 627,584,341 753,670,798
Interest on borrowings from BB 28.3 466,181,326 445,134,602 466,181,326 445,134,602
Interest on Margin 3,301,360 3,452,437 3,301,360 3,452,437
Interest paid on deposits and borrowings-
296,571,556 145,181,727 296,571,556 145,181,727
offshore banking unit
10,097,346,147 8,966,450,025 9,995,206,194 8,966,450,025
Elimination of Intra-group/company
(194,134,663) (107,362,624) (79,608,182) (82,349,385)
transactions
9,903,211,484 8,859,087,401 9,915,598,012 8,884,100,640

28.1 Interest on deposits

Interest on Savings Deposits 844,041,627 687,782,816 844,041,627 687,782,816
Interest on Short Notice Deposits 2,109,913,745 1,518,174,264 2,010,637,822 1,518,174,264
Interest on Term Deposits 5,746,888,162 5,413,053,382 5,746,888,162 5,413,053,382
8,700,843,534 7,619,010,461 8,601,567,611 7,619,010,461

28.2 Interest on borrowings from Banks & FIs

Interest on demand borrowing 400,468,551 487,994,822 400,468,551 487,994,822
Interest on term borrowing 229,979,820 265,675,976 227,115,790 265,675,976
630,448,371 753,670,798 627,584,341 753,670,798

28.3 Interest on borrowings from BB

Repo with BB 86,118,397 71,563,392 86,118,397 71,563,392
Repo with BB against ALS 88,193,630 127,438,931 88,193,630 127,438,931
Borrowings under IPFF 66,960,459 63,877,734 66,960,459 63,877,734
Borrowings under EDF 74,276,472 42,188,219 74,276,472 42,188,219
Refinancing for Agrobased Industries 42,764,222 46,060,988 42,764,222 46,060,988
Refinancing Agribusiness - Revolving 97,976,544 91,431,379 97,976,544 91,431,379
Second Crop Diversification Project 9,458,270 2,169,516 9,458,270 2,169,516
SME Foundation 433,332 404,443 433,332 404,443
466,181,326 445,134,602 466,181,326 445,134,602

29 Income from Investments

Dividend on shares
Ordinary shares 38,555,570 49,863,071 36,657,570 49,926,334
Preference shares 8,570,833 1,912,500 8,570,833 1,912,500
47,126,403 51,775,571 45,228,403 51,838,834
Interim dividend from Subsidiaries 29.1 - - 39,000,000 40,000,000
Interest on Reverse REPO 50,720,176 256,559,103 50,720,176 256,559,103
Interest on debentures 188,973 2,443,288 188,973 2,443,288
Interest on bonds-Treasury 1,672,908,556 839,921,569 1,672,908,556 839,921,569
Interest on bills-Treasury 440,317,062 174,208,628 440,317,062 174,208,628
Interest on bonds- Corporate 30,977,600 42,171,111 30,977,600 42,171,111
Gain from trading in Govt. securities 96,111,242 120,574,616 96,111,242 120,574,616
Gain/ (loss) on reclassification/revaluation of treasury
(359,558,704) (145,423,775) (359,558,704) (145,423,775)
securities (HFT)*
Gain or (loss) on shares traded in secondary market 65,161,062 112,308,484 54,954,959 112,308,484
2,043,952,370 1,454,538,594 2,070,848,267 1,494,601,857

*As per instruction/circular of Bangladesh Bank (DOS circular Letter No 05 dated 26 May 2008 and subsequent clarifications.

29.1 The Board of Directors of EBL Investments Limited approved in its 3rd AGM an interim cash dividend of Tk. 39,000,000 (approx
13.00%) for the year 2012 .

30 Commission, exchange and brokerage

Fees, commission and charges 1,790,422,931 1,513,106,953 1,787,160,193 1,508,001,320
Exchange gain net off exchange losses 558,301,841 756,843,202 557,867,362 756,843,202
Brokerage 64,510,586 54,399,517 - -
Commission, exchange and brokerage-offshore 18,448,007 35,067,218 12,289,760 35,067,218
2,431,683,365 2,359,416,890 2,357,317,315 2,299,911,740

31 Other operating income

Rebate earnings 54,618,412 42,135,373 54,618,412 42,135,373
Postage charges recovered 14,848,291 10,850,518 14,848,291 10,850,518
Swift & Telex charges 49,637,473 33,547,991 49,637,473 33,547,991

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
Note
2013 2012 2013 2012

Service charges related to trade operations 7,026,274 7,868,208 7,026,274 7,868,208

Locker rent 11,377,105 10,005,850 11,377,105 10,005,850
Gain on sale of fixed assets 388,082 4,710,392 388,082 4,710,392
Other earnings 10,915,811 9,528,207 10,572,002 8,250,562
Other operating income-offshore 1,181,101 988,022 1,181,101 988,022
149,992,549 119,634,560 149,648,740 118,356,915

Commission, fees and charges received against export and export related services are VAT exempted as per service code S056 of
SRO 188-AIN/2012/646-MUSHAK, dated 07 June 2012.

32 Salary and allowances

Basic salary 619,418,136 544,278,198 603,657,903 535,576,900
Other salary & allowances 961,863,321 869,418,385 947,622,332 860,717,087
Festival bonus 97,975,100 92,293,557 97,975,100 89,194,592
Performance bonus 143,106,206 119,000,000 139,000,000 119,000,000
Bank's contribution to provident fund 56,454,832 50,422,143 56,454,832 50,422,143
Contribution to gratuity fund 32.1 105,313,974 87,283,352 105,313,974 87,283,352
Contribution to superannuation fund 32.2 13,484,798 8,488,539 13,484,798 8,488,539
1,997,616,366 1,771,184,174 1,963,508,938 1,750,682,613

32.1 Contribution to gratuity fund

Provision to gratuity fund was made as per actuarial valuation report of the fund as on 30 September 2012. Valuation was carried out
on "Projected unit credit method" as recommended by Bangladesh Accounting Standard (BAS) 19 "Employee Benefits". Under this
method the valuation was done considering both "future service cost" which an employee shall obtain in normal course of service and
"past service cost" which is the difference between assets built up from past contributions and accrued liabilities (i.e. benefits earned
by members as a result of service as of valuation date).

Results of the valuation

a) The continuing fund

Past service position

Value of liabilities in respect of members in service 559,009,000

Value of fund 262,969,641
Surplus/(Deficit) (296,039,359)

Required contribution rates

Past service 3.20%

Future service 14.00%
Of the total basic payroll 17.20%

The above percentages apply to the basic payroll of all employees who are entitled to receive benefits under the employee gratuity
fund.

b) The closed fund

If the fund is discontinued as at the date of valuation and benefits are paid as and when they fall due the financial position would be as
follows:
Value of liabilities 175,163,000
Value of fund 262,969,641
Surplus/(Deficit) 87,806,641

Finally, actuary recommended that with effect from 1 October 2012 a contribution of at least 17.20% of basic payroll is contributed
into the fund each year until the next actuarial review is done. The Bank is maintaining recommended provision from above mentioned
date.

32.1.a Contribution to Gratuity fund during the year

Basic payroll for December 2013 612,290,548

Required contribution during the year 105,313,974
(17.20% on basic payroll)
Maintained during the year 105,313,974
Surplus/(Deficit) -

221
 Consolidated Bank
Note
2013 2012 2013 2012

32.2 Contribution to superannuation fund

Provision to superannuation fund was made as per actuarial valuation report of the fund as on 30 September 2012. Valuation was
carried out on "Projected unit credit method" as recommended by Bangladesh Accounting Standard (BAS) 19 "Employee Benefits".
Under this method the valuation was done considering both "future service cost" which an employee shall obtain in normal course
of service and "past service cost" which is the difference between assets built up from past contributions and acrued liabilities (i.e.
benefits earned by members as a result of service as of valuation date).

Results of the valuation

a) The continuing fund

Past service position

Value of liabilities in respect of members in service 148,324,000

Value of fund 74,874,149
Deficit 73,449,851

Required contribution rates

Past service 0.40%

Future service 1.00%
Of the total admissible benefit 1.40%

b) The closed fund

If the fund winds up at the date of valuation and benefits are paid as and when they fall due in accordance with the rules the financial
position of the fund would be as follows.

Value of liabilities 52,339,000

Value of fund 74,874,149
Deficit/(Surplus) (22,535,149)

The actuary recommended a contribution of at least 1.40% of total admissible benefits into the fund until the next actuarial
investigation is carried out.

33.2.a Contribution to Superannuaiton fund during the year

Total Admissible benefits as per actuarial valuation 963,200,000

Required contribution during the year 13,484,798
(1.40% on admissible benefits)
Maintained during the year 13,484,798
Surplus/(Deficit) -

33 Rent, taxes, insurance, utilities etc.

Rents, rates and taxes - Premises & Equipments 288,907,747 230,720,564 275,918,280 225,419,673
Insurance premium 79,925,202 64,522,315 79,888,924 64,507,947
Utilities (except telecommunication) 68,863,942 61,022,428 67,430,744 60,017,385
437,696,891 356,265,307 423,237,948 349,945,005

34 Legal & professional expenses

Legal & professional expenses 31,651,385 34,542,437 31,533,885 33,949,597
Other legal expenses 19,307,546 5,436,236 19,307,546 5,436,236
50,958,931 39,978,673 50,841,431 39,385,833

35 Postage, stamp, telecommunication etc.

Telephone -office 25,940,927 17,228,032 25,786,450 17,228,032
Lan, Wan, Swift and Telex 54,793,984 57,061,811 52,506,732 55,752,011
Postage & courier 24,723,836 23,161,341 23,400,462 23,161,341
Stamp & court fees 1,099,851 310,585 1,091,206 306,955
106,558,598 97,761,769 102,784,849 96,448,339

36 Stationery, printing, advertisement, etc.

Printing and stationery 77,981,156 62,306,932 77,369,319 62,093,454
Publicity and advertisement 156,279,089 148,359,356 155,975,026 148,343,449
234,260,245 210,666,288 233,344,345 210,436,903

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
Note
2013 2012 2013 2012

37 Managing Director's salary and allowances (Bank only)

Basic salary 8,632,645 7,644,361 8,632,645 7,644,361
Allowances 4,182,420 4,080,000 4,182,420 4,080,000
Bonus 2,477,600 2,293,600 2,477,600 2,293,600
Bank's contribution to provident fund 863,265 764,436 863,265 764,436
16,155,930 14,782,397 16,155,930 14,782,397
38 Directors' fees & expenses
Meeting attendance fees 1,211,000 1,135,000 1,130,000 1,105,000
Other expenses 1,872,587 1,824,483 1,872,587 1,824,483
3,083,587 2,959,483 3,002,587 2,929,483

Each director of bank is paid for Tk. 5,000/- per board meeting and per committee meeting.

39 Audit Fees
Statutory audit fees for the year 873,609 443,478 400,000 350,000
VAT on audit fees (15%) 78,000 66,522 60,000 52,500
951,609 510,000 460,000 402,500

40 Repairs, maintenance and depreciation

Depreciation: ( Annexure 'A' & 'A1')
Buildings 15,478,968 9,948,156 15,478,968 9,948,156
Machinery and equipment 96,808,758 95,956,939 96,205,726 95,276,690
Computer and network equipment 49,108,037 43,350,906 48,292,175 42,730,609
Vehicles 14,362,338 14,564,565 14,160,992 14,363,219
Furniture and fixtures & leased assets 32,471,739 28,702,401 30,966,395 27,759,287
Software 25,961,840 9,441,734 25,598,419 9,139,938
234,191,680 201,964,701 230,702,675 199,217,899
Repairs and maintenance
Machinery & equipments 60,970,081 45,038,756 59,756,192 44,347,372
Vehicles 5,014,032 7,121,961 5,014,032 7,121,961
Furniture and fixtures 19,056,494 11,839,213 19,056,494 11,839,213
Rented premises- general 38,774,670 69,103,461 38,378,211 69,077,060
Rented premises-electricity & lighting 16,826,691 31,117,733 16,826,691 31,117,733
Software maintenance 66,720,176 57,554,074 66,504,298 57,289,414
207,362,144 221,775,197 205,535,918 220,792,752
Total 441,553,824 423,739,898 436,238,593 420,010,651

41 Other expenses
Card expenses 107,815,950 86,549,512 107,815,950 86,549,512
Business travelling & conveyance 51,670,451 54,707,768 51,375,019 53,390,034
Bank charges 13,988,670 11,687,260 13,857,547 11,652,397
Donation 6,147,525 5,172,410 6,147,525 5,172,410
Fees and subscriptions 3,973,241 3,390,385 3,589,344 3,372,067
Books, periodicals and publications 861,228 520,338 850,688 448,468
Cartage/freight 800,308 1,563,379 800,308 1,563,379
Recruitment and training expenses 17,588,935 18,284,693 17,525,935 18,264,218
Entertainment & recreation 65,094,976 47,764,533 64,436,345 47,188,898
Uniform and liveries 4,520,844 2,854,587 4,520,844 2,854,587
Petty expenses and other losses 603,890 242,547 603,890 242,547
Office securities 106,906,035 79,655,507 106,324,373 79,357,938
Direct sales team (DST) expenses 42,161,667 25,268,029 42,161,667 25,268,029
Collection and contact point verification expense 10,487,769 11,666,832 10,487,769 11,666,832
Share transfer expenses (for stock dividend) 90,000 4,210,000 90,000 4,210,000
AGM expenses 4,798,594 4,709,519 4,798,594 4,709,519
Auction Notice & Share trading expenses 1,140,863 445,504 1,140,863 445,504
Miscellaneous w/off & Loss on sale of FA - 172,794 - 172,794
Other operating expenses-OBU 15,015,875 21,520,057 15,015,875 21,520,057
Other expenses of subsidiaries 41.1 11,948,206 10,435,004 - -
465,615,029 390,820,658 451,542,538 378,049,190

41.1 Other expenses of subsidiaries

Petty expenses 265,546 451,716
CDBL Charges 42,310 2,937,903
Registration & renewal 217,131 384,853
Guarantee premium 1,725,000 1,725,000
Laga & Howla Charge 5,042,710 4,299,576
Deferred revenue expenses (written off) 206,620 156,620

223
 Consolidated Bank
Note
2013 2012 2013 2012

Bad Debts 2,438,477 -

Preliminary expenses 1,438,379 -
Other adminastration expenses 572,033 479,336
11,948,206 10,435,004

42 Other non operating income

Gain from bargain purchase 42.1 - 103,473,610
- 103,473,610

42.1 Gain from bargain purchase

Net assets of the subsidiary at acquisition - 33,351,862
Fair value adjustment - 553,794,000
A.Fair value of net assets - 587,145,862
B. Purchase consideration for the subsidiary - 479,900,000
Bargain Purchase gain (A-B) * - 107,245,862
C. Purchase gain recognised at the time of 60% acquisition * - 3,772,252
Net purchase gain for remaining 40% acquisition * - 103,473,610

Bargain purchase gain was derived and treated following guidelines provided in paragraph 32, 33 and 34 of BFRS 3.

43 Other provision
Provision against other assets 13.6 47,338,380 13,150,115 26,392,323 13,150,115
Loss on revaluation of shares 13.7 149,989,751 478,773,309 135,699,952 478,773,309
197,328,131 491,923,424 162,092,275 491,923,424

44 Deferred tax income (net)

Deferred tax income 9.12.a 330,093,994 254,367,269 330,093,994 254,367,269
Deferred tax expense 9.12.b (8,189,641) (12,505,650) (8,189,641) (12,505,650)
321,904,353 241,861,619 321,904,353 241,861,619
45 Earnings per share
Earnings per share (EPS) has been computed by dividing the profit after tax (PAT) by the weighted average number of ordinary shares
outstanding as on 31 December 2013 as per BAS- 33 "Earnings Per Share". Diluted earning per share was not required to calculate
as there were no dilution possibilities during the year.

Consolidated Bank
2013 2012 2013 2012

A Weighted average number of shares :

Number of shares in 2012 before bonus share issued - 452,725,767 - 452,725,767

Bonus share issued in 2012 (35%) - 158,454,018 - 158,454,018
Number of shares outstanding in 2013 611,179,785 - 611,179,785 -
Weighted average number of shares 611,179,785 611,179,785 611,179,785 611,179,785

B Earnings Per Share (EPS) :

Profit attributable to the shareholders of EBL for the year 2,535,094,456 2,392,730,025 2,567,863,831 2,275,100,710
Weighted average number of shares 611,179,785 611,179,785 611,179,785 611,179,785
Earnings per share (EPS) 4.15 3.91 4.20 3.72

46 Changes in other assets

Opening Balance:
DSE Membership 553,800,000 349,000,000 - -
CSE Membership 201,500,000 - - -
Receivable from subsidiaries - - 47,097,400 37,996,186
Other assets of subsidiaries 34,299,423 31,065,875 - -
Stock of stationeries 16,148,228 16,212,646 16,148,228 16,212,646
Stamps on hand 1,734,226 1,593,297 1,734,226 1,593,297
Advance to staff for expenses 489,000 311,549 489,000 311,549
Suspense account 5,120,648 7,719,869 5,120,648 7,719,869
Security deposits-govt. agencies 2,257,801 1,921,825 2,257,801 1,921,825
Interest and dividend receivables 473,930,637 365,562,525 473,930,637 365,562,525
Sundry receivables 108,604,461 239,510,816 108,604,461 239,510,816
Advance rent 300,001,498 252,920,861 300,001,498 252,920,861

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Consolidated Bank
2013 2012 2013 2012

Prepayments and advance to vendors 269,946,879 394,130,405 262,706,223 394,130,404

Deferred tax assets 376,486,990 134,625,371 376,486,990 134,625,371
Bangladesh Bank clearing account 22,788,981 1,822,390 22,788,981 1,822,390
Prepaid expenses- Offshore Banking Unit 10,990,449 10,210,587 10,990,449 10,210,588
2,378,099,221 1,806,608,016 1,628,356,541 1,464,538,327
Closing Balance:
DSE Membership 553,800,000 553,800,000 - -
CSE Membership 201,500,000 201,500,000 - -
Receivable from subsidiaries - - 5,612,917 47,097,400
Other assets of subsidiaries 17,300,375 34,299,423 - -
Stock of stationeries 14,532,435 16,148,228 14,532,435 16,148,228
Stamps on hand 3,820,980 1,734,226 3,820,980 1,734,226
Advance to staff for expenses 238,491 489,000 238,491 489,000
Suspense account 5,266,159 5,120,648 5,266,159 5,120,648
Security deposits-govt. agencies 2,457,801 2,257,801 2,257,801 2,257,801
Interest and dividend receivables 755,949,181 473,930,637 758,801,887 473,930,637
Sundry receivables 225,645,517 108,604,461 225,645,517 108,604,461
Advance rent 333,964,153 300,001,498 333,964,153 300,001,498
Prepayments and advance to vendors 167,734,063 269,946,879 164,130,751 262,706,223
Deferred tax assets 698,391,343 376,486,990 698,391,343 376,486,990
Bangladesh Bank clearing account - 22,788,981 - 22,788,981
Prepaid expenses- Offshore Banking Unit - 10,990,449 - 10,990,449
2,980,600,498 2,378,099,221 2,212,662,434 1,628,356,541
Net changes in other assets (602,501,278) (571,491,205) (584,305,893) (163,818,214)

47 Changes in other liabilities

Opening balances
Privileged creditors 313,858,624 202,929,150 313,858,624 202,862,900
Acquirer liabilities 110,425,213 230,261,579 110,425,213 230,261,579
Sundry creditors 158,912,998 127,523,117 158,912,998 127,523,117
Security deposit 18,256,912 18,669,666 18,256,912 18,669,666
Current tax liability/(assets) 1,367,000,453 1,305,487,103 1,349,456,697 1,284,069,311
Provision for loans and advances- other than Offshore 2,857,162,569 2,343,573,973 2,857,162,569 2,343,573,973
Provision for loans and advances - Offshore 92,805,394 63,817,276 92,805,394 63,817,276
Interest suspense account 665,254,434 352,951,006 665,254,434 352,951,006
Provision for other assets 21,463,790 8,313,675 21,463,790 8,313,675
Provision for loss on revaluation of shares (net) 724,346,229 273,322,488 724,346,229 273,322,488
Advance interest/commission received 30,902,907 28,119,144 30,902,907 28,119,144
Expenses payable 223,545,831 222,978,067 223,545,831 222,978,067
Interest payable on borrowing including Offshore 131,683,819 199,236,547 131,683,819 199,236,547
Inter branch and inter system accounts 266,802 488,604 266,802 488,604
Advance export proceeds 235,510,785 540,406,862 235,510,785 540,406,862
Miscellaneous payable 166,002,875 206,123,307 166,002,875 206,123,307
Conversion balance - 148,614 - 148,614
Other liabilities-offshore banking unit 97,469 81,807,446 97,469 81,807,446
Other liabilities of subsidiaries 84,431,504 109,248,914 - -
7,201,928,608 6,315,406,538 7,099,953,348 6,184,673,580
Closing balances
Privileged creditors 326,317,939 313,858,624 326,317,939 313,858,624
Acquirer liabilities 140,446,893 110,425,213 140,446,893 110,425,213
Sundry creditors 162,963,981 158,912,998 162,963,981 158,912,998
Security deposit 17,539,750 18,256,912 17,539,750 18,256,912
Current tax liability/(assets) 1,480,961,079 1,367,000,453 1,475,061,768 1,349,456,697
Provision for loans and advances- other than Offshore 3,476,553,016 2,857,162,569 3,476,553,017 2,857,162,569
Provision for loans and advances - Offshore 97,013,933 92,805,394 97,013,933 92,805,394
Interest suspense account 672,910,943 665,254,434 672,910,943 665,254,434
Provision for other assets 68,802,170 21,463,790 47,856,113 21,463,790
Provision for loss on revaluation of shares (net) 874,335,895 724,346,229 860,046,096 724,346,229
Advance interest/commission received 20,378,400 30,902,907 20,378,400 30,902,907
Expenses payable 316,068,813 223,545,831 316,560,422 223,545,831
Interest payable on borrowing including Offshore 86,242,086 131,683,819 86,242,086 131,683,819
Inter branch and inter system accounts 40,703 266,802 40,703 266,802
Advance export proceeds 356,956,828 235,510,785 356,956,828 235,510,785
Miscellaneous payable 172,581,260 166,002,875 172,581,260 166,002,875

225
 Consolidated Bank
2013 2012 2013 2012

Other liabilities-offshore banking unit 11,507 97,469 11,507 97,469

Other liabilities of subsidiaries 197,133,021 84,431,504 - -
8,467,258,218 7,201,928,608 8,229,481,640 7,099,953,348
Net changes in other liability 1,265,329,609 886,522,070 1,129,528,292 915,279,768

48 Events after the reporting period

The Board of Directors of Eastern Bank Limited in 527 Board Meeting held on 27 February 2014 recommended Cash Dividend @ 20%
on the holding of shares i.e. (Tk. 2 against each share of Tk. 10) on the record date ( 11 March 2014) for the year 2013. The amount of
recommended cash dividend is Tk. 1,222,359,570.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 “Annexure-A”
Eastern Bank Limited and its subsidiaries
Consolidated schedule of Fixed Assets
As at 31 December 2013 Figures in Taka
Cost Accumulated Depreciation Net book
Disposals Balance at Balance on On disposals Balance at value at 31
Balance on 01 Revaluation Additions Charge for
Particulars during the 31 December 01 January during the 31 December December
January 2013 Reserve during the year the year
year 2013 2013 year 2013 2013
Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka
Tangible assets:
Land 4,636,946,781 - 540,981,697 - 5,177,928,478 - - - - 5,177,928,478
-
Building 462,801,908 - 268,039,682 - 730,841,590 16,942,002 15,478,968 - 32,420,970 698,420,620

Building under construction 201,326,929 - 178,577,684 - 379,904,613 - - - - 379,904,613

Machinery and Equipment 484,137,953 - 70,566,042 (2,176,923) 552,527,072 296,282,202 96,808,758 (2,176,852) 390,914,108 161,612,963

Computer and Network

327,100,189 - 51,188,084 (7,551,018) 370,737,255 216,021,929 49,108,037 (7,551,359) 257,578,608 113,158,647
Equipment

Vehicles 106,586,251 - 3,513,848 (58,500) 110,041,599 59,919,814 14,362,338 (58,499) 74,223,653 35,817,946

Furniture and fixtures & Leased

399,625,955 - 30,148,750 (339,410) 429,435,295 217,329,762 32,471,739 (328,687) 249,472,814 179,962,480
Assets under Finance Lease

Intangible assets:
Software 200,453,715 - 20,298,843 - 220,752,558 33,351,638 25,961,840 - 59,313,478 161,439,080

At 31 December 2013 6,818,979,680 - 1,163,314,630 (10,125,851) 7,972,168,459 839,847,348 234,191,680 (10,115,397) 1,063,923,631 6,908,244,828

As at 31 December 2012
Cost Accumulated Depreciation Net book
Disposals Balance at Balance on On disposals Balance at value at 31
Balance on 01 Revaluation Additions Charge for
Particulars during the 31 December 01 January during the 31 December December
January 2012 Reserve during the year the year
year 2012 2012 year 2012 2012
Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka
Tangible assets:
Land 3,594,373,470 1,037,553,800 5,019,511 - 4,636,946,781 - - - - 4,636,946,781
-
Building 307,099,220 - 155,702,688 - 462,801,908 6,993,846 9,948,156 - 16,942,002 445,859,906

Building under construction 31,298,489 170,028,439 201,326,929 - - - - 201,326,929

Machinery and Equipment 386,801,750 - 115,181,893 (17,845,691) 484,137,953 218,315,868 95,956,939 (17,725,711) 296,547,096 187,590,857

Computer and Network

293,222,115 - 33,878,074 - 327,100,189 172,404,329 43,350,906 - 215,755,235 111,344,954
Equipment

Vehicles 96,986,201 - 16,896,300 (7,296,250) 106,586,251 52,651,496 14,564,565 (7,296,247) 59,919,814 46,666,437

Furniture and fixtures & Leased

360,751,811 - 42,956,122 (4,081,980) 399,625,955 191,919,707 28,702,401 (3,290,544) 217,331,564 182,294,392
Assets under Finance Lease

Intangible assets:
Software 92,527,305 - 107,926,409 - 200,453,714 23,909,905 9,441,734 - 33,351,639 167,102,075

At 31 December 2012 5,163,060,361 1,037,553,800 647,589,437 (29,223,921) 6,818,979,680 666,195,151 201,964,701 (28,312,502) 839,847,350 5,979,132,331
financial reports 2013

227
 “Annexure-A1”

Eastern Bank Limited

Schedule of Fixed Assets
As at 31 December 2013 Figures in Taka
Cost Accumulated Depreciation Net book
Disposals Balance at Balance on On disposals Balance at value at 31
Balance on 01 Revaluation Additions Charge for
Particulars during the 31 December 01 January during the 31 December December
January 2013 Reserve during the year the year

EASTERN BANK LIMITED

year 2013 2013 year 2013 2013
Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka
Tangible assets:
Land 4,636,946,781 - 540,981,697 - 5,177,928,478 - - - - 5,177,928,478

Building 462,801,908 - 268,039,682 - 730,841,590 16,942,002 15,478,968 - 32,420,970 698,420,620

Building under construction 201,326,929 - 178,577,684 - 379,904,613 - - - - 379,904,613

Machinery and Equipment 479,640,206 - 70,482,109 (2,176,923) 547,945,392 293,993,108 96,205,726 (2,176,844) 388,021,990 159,923,402

Computer and Network Equipment 323,986,704 - 49,714,665 (7,551,018) 366,150,351 214,675,262 48,292,175 (7,550,916) 255,416,522 110,733,829

ANNUAL REPORT 2013

Vehicles 105,243,946 - 3,513,848 (58,500) 108,699,294 59,178,855 14,160,992 (58,499) 73,281,348 35,417,946

Furniture and fixtures & Leased

393,338,526 - 27,764,144 (339,410) 420,763,260 214,552,838 30,966,395 (326,576) 245,192,657 175,570,603
Assets under Finance Lease

Intangible assets:
Software 198,441,734 - 19,448,843 - 217,890,577 32,797,920 25,598,419 - 58,396,339 159,494,238
At 31 December 2013 6,801,726,734 - 1,158,522,672 (10,125,851) 7,950,123,555 832,139,986 230,702,675 (10,112,835) 1,052,729,826 6,897,393,729

As at 31 December 2012
Cost Accumulated Depreciation Net book
Disposals Balance at Balance on On disposals Balance at value at 31
Balance on 01 Revaluation Additions Charge for
Particulars during the 31 December 01 January during the 31 December December
January 2012 Reserve during the year the year
year 2012 2012 year 2012 2012
Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka
Tangible assets:
Land 3,594,373,470 1,037,553,800 5,019,511 - 4,636,946,781 - - - - 4,636,946,781

Building 307,099,220 - 155,702,688 - 462,801,908 6,993,846 9,948,156 - 16,942,002 445,859,906

Building under construction 31,298,489 170028439.9 201,326,929 - - - - 201,326,929

Machinery and Equipment 382,304,003 - 115,181,893 (17,845,691) 479,640,206 216,442,129 95,276,690 (17,725,711) 293,993,108 185,647,098

Computer and Network

290,120,630 - 33,866,074 - 323,986,704 171,944,653 42,730,609 - 214,675,262 109,311,442
Equipment

Vehicles 95,643,896 - 16,896,300 (7,296,250) 105,243,946 52,111,883 14,363,219 (7,296,247) 59,178,855 46,065,091

Furniture and fixtures & Leased

354,464,383 - 42,956,122 (4,081,980) 393,338,526 190,084,095 27,759,287 (3,290,544) 214,552,838 178,785,690
Assets under Finance Lease

Intangible assets:
Software 90,515,325 - 107,926,409 - 198,441,734 23,657,983 9,139,938 - 32,797,921 165,643,813
At 31 December 2012 5,145,819,416 1,037,553,800 647,577,437 (29,223,921) 6,801,726,734 661,234,589 199,217,899 (28,312,502) 832,139,986 5,969,586,750
 financial reports 2013

Eastern Bank Limited “Annexure-A2”

Schedule of Fixed Assets Disposals

As at 31 December 2013
Net
Accumulated Sales Tax & Gain/
Cost book Mode of Buyer/
Date Particulars Depreciation Value VAT (Loss)
value Disposal Highest bidder
Taka Taka Taka Taka Taka Taka
Motor Cycle Hero
Md. Mominul
9/4/2013 Honda (Reg# 58,500 58,499 1 8,720 720 7,999 Open Tender
Islam
Moulovibazar-A-02-0390)
M/S Al Madina
8/7/2013 Furniture & Equipments 766,720 766,631 89 78,262 6,462 71,711 Open Tender
Trading
M/S Nadim
24/7/2013 Computer & Equipments 5,671,882 5,671,739 143 223,682 20,131 203,408 Open Tender
Enterprise
BORLAND
24/7/2013 Computer & Equipments 3,616,000 3,615,963 37 115,385 10,384 104,964 Open Tender
Computers
-
Grand Total: Gain/(Loss) 10,113,102 10,112,832 270 426,049 37,697 388,082

Eastern Bank Limited and its subsidiaries

Balance with other Banks and Financial Institutions (Consolidated)
As at 31 December 2013
“Annexure-B”
Outside Bangladesh - (note-4.2)
2013 2012
Currency Amount in Conversion Amount in Conversion Amount in
Name of Banks and FIs Amount in BDT.
Name Foreign rate per unit Foreign rate per unit
BDT.
Currency F.C. Currency F.C.
In demand deposit account (non interest bearing) with :
AB Bank Limited, Mumbai USD 225,450 77.75 17,528,763 386,721 79.85 30,879,671
Al-Rajhi Bank, KSA SAR 15,000 20.73 310,967 20,000 21.29 425,854
Bank of Bhutan, Bhutan USD 9,671 77.75 751,886 18,495 79.85 1,476,829
Citibank N. A., Mumbai USD 2,241 77.75 174,247 22,241 79.85 1,775,951
Citibank N. A., Newyork USD - - - 5,116,191 79.85 408,527,305
Commerz Bank AG, Frankfurt,
EURO 451 106.83 48,131 928,446 105.58 98,022,963
Germany
Commerz Bank AG, Frankfurt,
EURO - - - 98,466 105.58 10,395,830
Germany - OBU
Deutsche Bank AG, Frankfurt,
EURO 192,749 106.83 20,591,092 - - -
Germany-OBU
Habib American Bank, New York USD 243,563 77.75 18,937,045 165,620 79.85 13,224,728
HSBC - New york, USA USD - - - 2,245,661 79.85 179,315,817
ICICI Bank Mumbai USD 445,439 77.75 34,632,888 283,999 79.85 22,677,273
JP Morgan Chase Bank, Germany EUR 169,456 106.83 18,102,761 - - -
JP Morgan Chase Bank N.A.,
GBP 119,745 128.09 15,338,543 256,352 129.13 33,101,586
London
JP Morgan Chase Bank N.A., NY USD 538,897 77.75 41,899,254 659,125 79.85 52,631,090
JP Morgan Chase Bank NA, Sydney AUD 109,391 68.93 7,539,839 17,829 82.80 1,476,295
Mashreqbank, Newyork USD 390,367 77.75 30,350,998 531,660 79.85 42,453,033
National Commercial Bank, KSA SAR - - - 137,451 21.29 2,926,708
Nepal Bangladesh Bank Ltd.,
USD 22,752 77.75 1,768,950 70,014 79.85 5,590,632
Kathmandu
NIB Bank Limited, Karachi USD 424,346 77.75 32,992,933 12,680 79.85 1,012,460
Nordea Bank, Norway NOK 65,226 12.65 825,270 64,325 14.29 919,113
Standard Chartered Bank, New
USD 639,411 77.75 49,714,222 1,256,012 79.85 100,292,457
york - OBU
Standard Chartered Bank, Colombo USD 64,676 77.75 5,028,556 6,619 79.85 528,562
Standard Chartered Bank, Frankfurt EURO 53,561 106.83 5,721,847 42,730 105.58 4,511,346
Standard Chartered Bank, Kolkata USD 218,404 77.75 16,980,944 507,043 79.85 40,487,357
Standard Chartered Bank, New
USD - - - 1,787,373 79.85 142,721,537
york

229
 2013 2012
Currency Amount in Conversion Amount in Conversion Amount in
Name of Banks and FIs Amount in BDT.
Name Foreign rate per unit Foreign rate per unit
BDT.
Currency F.C. Currency F.C.
Standard Chartered Bank,
SGD 16,615 61.28 1,018,142 20,729 65.26 1,352,858
Singapore
The Bank of Nova Scotia, Toronto CAD 6,401 72.60 464,716 12,935 80.14 1,036,605
The Bank of Tokyo Mitshubishi,
USD 6,737 77.75 523,802 6,737 79.85 537,949
Kolkata
The Bank of Tokyo Mitshubishi,
GBP 115,657 128.09 14,814,901 272,936 129.13 35,242,895
London
The Bank Toykyo Mitshubishi,
JPY 2,315,051,898 0.74 1,711,517,868 5,382,964 0.95 5,087,978
Tokyo
Wachovia Bank NA USD 331,341 77.75 25,761,727 - - -
Wells Fargo Bank, N.A. New York USD - - - 1,619,844 79.85 129,344,388
Zurcher Kantonal Bank, Zurich,
CHF 26,169 87.20 2,282,041 17,767 87.47 1,554,080
Switzerland
HSBC, Hongkong-HKD (EBL
HKD 298,200 10.08 3,005,081 - - -
Finance HK Limited)
HSBC, Hongkong-USD (EBL
USD 548,619 77.75 42,655,130 - - -
Finance HK Limited)
Total 2,121,282,542 1,369,531,149

Borrowing from Banks and Financial Institutions (Consolidated)

As at 31 December 2013

“Annexure-B1”
Outside Bangladesh - (note-11.2)
2013 2012
Currency Amount in Conversion Amount in Conversion Amount in
Name of Banks and FIs Amount in BDT.
Name Foreign rate per unit Foreign rate per unit
BDT.
Currency F.C. Currency F.C.
Standard Chartered Bank, New
USD 370,034 77.75 28,770,154 - - -
york
Citibank N A, Newyork USD 1,229,485 77.75 95,592,430 - - -
HSBC, New York USD 37,917 77.75 2,948,078 - - -
National Commercial Bank, Jeddah,
SAR 1,049 20.73 21,742 - - -
KSA
Deutsche Trust Company Americas,
USD 155,089 77.75 12,058,160 - - -
New York
JP Morgan Chase Bank FR,
EURO - - - 57,151 105.58 6,033,829
Germany
Banca Ubae Spa, Spain USD 5,000,000 77.75 388,750,000 - - -
Deutsche Investitions-und
Entwicklungsgesellschaft MBH USD 16,000,000 77.75 1,244,000,000 20,000,000 79.85 1,596,998,000
(DEG)
International Finance Corporation
USD 30,000,000 77.75 2,332,500,000 30,000,000 79.85 2,395,497,000
(IFC)
FMO Netherland USD 20,000,000 77.75 1,555,000,000 - - -
United Bank Limited, Dubai USD - - - 3,000,000 79.85 239,549,700
Total 5,659,640,564 4,238,078,529

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited “Annexure-C”

Related party disclosures

Two parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to
common control or common significant influence Related party informations are given below.

I) Directors' interest in different entities

Percentage
Status with of holding/
Name of Directors Name of the firms/companies in which they have interests Status
the Bank interest in
the concern
M. Ghaziul Haque Chairman Andes Limited Chairman 14.03%
MGH Logistics Pvt. Ltd Chairman 5.00%
MGH Holdings Ltd. Chairman 20.00%
MGH Global Airlines Ltd. (BD) Port management ser. Ltd. Chairman 1.02%
Peninsular Shipping Services Ltd. Chairman 20.00%
MGH Restaurants Pvt. Ltd. Chairman 5.00%
Aquamarine Distributions Ltd. Chairman 1.00%
Galileo Bangladesh Ltd. Chairman 20.00%
Renaissance Aviation Services Ltd. Chairman 25.00%
One World Aviation Services Ltd. Chairman 20.00%
RAS Holdings Ltd. Chairman 5.00%
ITSA- Total Logistics Ltd. Chairman 3.33%
Transmarine Logistics Ltd. Chairman 25.00%
Total Transportation Ltd. Chairman 0.01%
Tricom Global Logistics Ltd. Chairman 10.00%
Global Freight Ltd. Chairman 0.20%
International Brands Ltd. Chairman 0.01%
Integrated Transportation Services Ltd. Chairman 0.50%
Emirates Shipping Lines Bangladesh Ltd. Chairman 51.22%
Radio Foorti Ltd. Chairman 5.00%
Portlink Logistics Centre Ltd. Chairman 0.02%
Mir Nasir Hossain Director Mir Technologies Ltd Chairman 20.00%
(Representing Mir Holdings Ltd.) Mir Communications Ltd. Chairman 40.00%
Mir Energy Ltd. Chairman 40.00%
Global Fair Communications Ltd. Chairman 40.00%
Mir Akther Hossain Ltd. MD 18.00%
Mir Ceramic Ltd. MD 87.77%
Mir Telecom Ltd. MD 20.00%
Mir Holdings Ltd. MD 50.00%
Mir Pharmaceuticals Ltd. MD 50.00%
MIR LPG limited MD 40.00%
Bangla Telecom Ltd. MD 40.00%
Coloasia Ltd. MD 40.00%
BTS Communications (BD) Ltd MD 40.00%
Agrani Insurance Co. Ltd. Shareholder 3.72%
Fair Trading Proprietorship 100.00%
Jupiter Technology Proprietorship 100.00%

A. M. Shaukat Ali Director Engineering Consultants & Associates Ltd. Chairman 20.00%
Samorita Hospital Limited Director 3.10%
Md. Showkat Ali Chowdhury Director The Need Apparels (Pvt.) Ltd. Chairman 35.00%
(Representing Namreen Need Tex Ctg. Ltd. Chairman 17.50%
Enterprise Ltd.) Need Fashion Wear & Textile Ltd. Chairman 35.00%
Need Dresses (Pvt.) Ltd. Chairman 17.50%
Chittagong Oxygen (Pvt.) Ltd. Chairman 20.00%
Finlay (International) Ltd. Chairman 81.00%
KAPS Bangladesh Ltd. Chairman 12.50%
J F (Bangladesh) Ltd. Chairman 81.00%
Port Link Housing Ltd. Chairman 50.00%

231
 Percentage
Status with of holding/
Name of Directors Name of the firms/companies in which they have interests Status
the Bank interest in
the concern

Finlay Properties Ltd. Chairman 55.00%

Electro Power Synergy Ltd. Chairman 33.33%
Z.N. Enterprises Limited. MD 50.00%
Namreen Enterprise Ltd. MD 50.00%
ABC Steel Enterprise Ltd. MD 80.00%
M.M. Khan & Co. Ltd. MD 52.00%
Port Link Logistics Centre Ltd. MD 25.00%
SL Steels Ltd. MD 50.00%
South Asia Securities Ltd. Director 7.10%
Peninsula Housing & Development Ltd. Director 36.00%
Legend Properties Development Ltd. Director 50.00%
Consolidated Tea & Plantation Ltd. Director 5.00%
Consolidated Tea & Lands Co. (BD) Ltd. Director 5.00%
Baraoora (Sylhet) Tea Co.(BD) Ltd. Director 5.00%
Eastern Industries Ltd. Director 25.00%
M/S Chittagong Properties Managing 50.00%
Partner
A.Q.I. Chowdhury, OBE Director Royal Capital Ltd. Chairman 50.00%
(Representing Namreen JF (Bangladesh) Ltd. MD 10.00%
Enterprise Ltd.) The Consolidated Tea & Lands Co. (BD) Ltd. MD 5.00%
Baraoora (Sylhet) Tea Co. Ltd. MD 5.00%
Consolidated Tea & Plantation Ltd. MD 5.00%
Finlay (International) Ltd. MD 10.00%
Artisan Ceramic Ltd. MD 5.00%
Finlay Properties Ltd. Director 30.00%
International Leasing & Financial Services Ltd. (ILFSL) Director Representing:
Z.N. Enterprise
Ltd.
Salina Ali Director Unique Group of Companies Ltd. Chairperson 10.00%
(Representing Borak Real Unique Hotel and Resorts Ltd. Chairperson 5.45%
Estate (Pvt.) Ltd.) Borak Real Estate (Pvt.) Ltd. Chairperson 12.00%
Unique Ceramic Industries (Pvt.) Ltd Chairperson 7.50%
Borak Travels Ltd. Chairperson 50.00%
Unique Eastern (Pvt.) Ltd. Chairperson 10.42%
Unique Vocational Training Center Ltd. Chairperson 12.00%
Borak Shipping Ltd. Chairperson 7.50%
Unique Property Development Ltd. MD 12.00%
Unique Share Management Ltd. MD 20.00%
Unique Shakti Ltd. MD 20.00%
Meah Mohammed Abdur Rahim Director Ancient Steamship Company Ltd. MD 78.00%
(Independent Director) Hudig and Meah (BD) Ltd. MD 51.00%
Asif Mahmood (Representing Director ADN Telecom Limited (Former Advanced Data Networks Chairman
Aquamarine Distributions Ltd.) 35.71%
System Ltd.) & MD
Chairman
InGen Technology Ltd. 62.00%
& MD
Advance Technology Computers Ltd. Chairman 33.33%
ADN Technologies Ltd. Chairman 51.00%
Tech Valley Networks Ltd. Chairman 46.00%
Bangladesh News 24 Hours Ltd. Chairman 80.00%

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Percentage
Status with of holding/
Name of Directors Name of the firms/companies in which they have interests Status
the Bank interest in
the concern

Vice Representing
InGen Motors Ltd.
Chairman InGen Ind. Ltd.
InGen Industries Ltd. Chairman 55.00%
Representing
BASE Limited Chairman
InGen Ind. Ltd.
Representing
Managing
MyTel Limited ADN Telecom
Director
Limited
Tech Valley Computers Ltd. Director 33.33%
Valley Power Solutions Ltd. Director 33.33%
Ormaan Rafay Nizam
Director National Brokers Limited Director 6.50%
(Independent Director)
Gazi Md. Shakhawat Hossain Director M/s Purnima Construction (Pvt) Ltd MD 0.099%
(Representing M/s Purnima Representative 40.00%
Bay Hill Hotel & Resorts Ltd.
Construction (Pvt.) Ltd.) Chairman
Representative 7.46%
Unique Hotel and Resorts Ltd
Director
Representing
Ali Reza Iftekhar MD & CEO International Leasing and Financial Services Ltd. Director
EBL
EBL Investments Ltd. Director 0.000033%
EBL Securities Ltd. Director 0.00025%
Representing
EBL Finance (HK) Ltd. Director
EBL
EBL Asset Management Ltd. Director 0.0002%
Representing
The Bangladesh Rating Agency Ltd. Director
EBL

ii) Significant contracts where Bank is a party & wherein Directors have interest: Nil
iii) Shares issued to Directors and Executives without consideration or exercisable at discount : Nil
iv) Related Party Transactions : Please see Annexure -C1
v) Lending Policies to Related Parties : Related parties are allowed Loans and Advances as per General Loan Policy of the Bank.
vi) Business other than Banking business with any related concern of the Directors as per Section-18(2)
of the Bank Company Act 1991: Nil

233
Eastern Bank Limited “Annexure-C1”

Related Party Transactions

Related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged
as per BAS 24.The Bank in normal course of business had transactions with other entities that fall within the definition of ‘Related Party’ as
contained in Bangladesh Accounting Standards (BAS)-24 (Related party disclosures) and as defined in the BRPD circular #14, issued by
Bangladesh Bank on 25 June 2003.

1 The significant Related party transactions during the year were as follows:

1.a Advance facilities:

Nature of Interest Outstanding Transactions Outstanding
Name of the Representing of the Directors Nature of Sanctioned as at as at Amount
01-01-2013 Debit Credit 31-12-2013
organization Directors with the borrowing Facilities Amount Overdue
firm/individual Taka Taka Taka Taka
Md. Showkat
Z. N. Enterprise Ltd.
Ali Chowdhury
LG-
Represented
Customer ID-100397 MD Performance 192,900 192,900 - - 192,900
Director
Bond-SME
Eastern Bank
Ltd.
Tech Valley Asif
Secured
Solutions Limited Mahmood
Overdraft - 9,500,000 - 1,181 - 1,181
Customer ID- Represented
SME
1111077 Director
Eastern Bank
Ltd.
Unique Enterprise Mohd. Noor LG-
Customer ID- Ali Performance 787,360 787,360 - - 787,360
100711 Ex-Chairman Bond-SME

1.b Credit card facilities:

Outstanding as Outstanding as
Approved limit
Representing Directors Nature of interest with EBL at 01-01-2013 at 31-12-2013

Taka Taka Taka

A.M. Shaukat Ali Director 500,000 - -

Mir Nasir Hossain Representing Director 500,000 - (105)

Md. Showkat Ali Chowdhury Representing Director 250,000 - 243,941

Mohd. Noor Ali Ex Chairman 500,000 288,011 124,254

Aneela Haque Ex Director 500,000 - (1,769)

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2) Transactions relating to procurement of goods & services:

Amount of
Outstanding as at
Name of the Company/ Representing Nature of transactions transaction made
31-12-2013
Person Directors during 2013
Taka Taka

Techvalley Solutions Ltd Asif Mahmood Purchase of Computer, network 1,524,859 -

equipments & maintenance cost
Techvalley Networks Ltd Asif Mahmood Purchase of Computer, network 29,259,507 -
equipments & oracle licensing for CMS
project
ADN Telecom Limited Asif Mahmood Monthly internet connectivity bills 655,300 -
ADN Technologies Ltd Asif Mahmood Purchase of Software for CMS Project & 1,665,214 -
Contact Center
Unique Hotel and Resorts Salina Ali Security Deposit - 438,900
Ltd.
Unique Hotel and Resorts Salina Ali Lease rent agreement for ATM booth at 105,000 -
Ltd. The Westin, Gulshan, Dhaka
Md. Showkat Ali Md. Showkat Advance rent for EBL DST Sales office at - 2,340,000
Chowdhury Ali Chowdhury Dhanmondi, Dhaka
Md. Showkat Ali Md. Showkat Rental payment for EBL DST Sales office 2,400,000 -
Chowdhury Ali Chowdhury at Dhanmondi

3 Transactions with subsidiaries:

3.a Bank balance of subsidiaries with Eastern Bank Limited:

Balance as at 31-12-2013
Name of Subsidiaries Nature of Account
Taka

EBL Securities Limited Special Notice Deposit (SND) 1,929,694

Special Notice Deposit (SND) 8,869,714
EBL Investments Limited
Fixed Deposits Account 20,000,000
EBL Finance (HK) Limited Nostro Account 34,067,605

3.b Others with subsidiaries :

Balance as at 31-12-2013
Name of Subsidiaries Nature of transaction
Taka

EBL Securities Limited Advance rent receivable 3,312,400

EBL Finance (HK) Limited Receivable against expense 2,300,517
Long Term Finance 314,887,500

4 Compensation of key management personnel: Refer to note 37

235
 “Annexure-D”

Eastern Bank Limited

a Disclosure regarding outstanding REPO as on 31 December 2013
Figures in Taka
Amount (Cash Con 1st Leg
Sl Counterparty name Agreement date Reversal Date
cash consideration)
1 Janata Bank Ltd. 30/12/2013 6/1/2014 4,229,440,673

Disclosure regarding outstanding Reverse REPO as on 31 December 2013

Figures in Taka
Amount (Cash Con 1st Leg
Sl Counterparty name Agreement date Reversal Date
cash consideration)
1 Lanka Bangla Finance Ltd. 29/12/2013 1/1/2014 149,576,257
2 Mercantile Bank Ltd 26/12/2013 2/1/2014 807,634,604
3 Lanka Bangla Finance Ltd. 30/12/2013 6/1/2014 104,159,214

b. Disclosure regarding overall transaction of REPO and reverse REPO

Figures in Taka
Min Outstanding during the Max Outstanding during Daily average outstanding
year the year during the year
Securities sold under REPO
With Bangladesh Bank 155,135,000 4,158,600,000 744,655,344
With other Banks & Financial 199,724,000 5,266,645,347 452,313,665
Institutions
Securities purchased under
Reverese REPO
With Bangladesh Bank - - -
With other Banks & Financial 43,750,250 3,487,734,769 311,073,310
Institutions

EASTERN BANK LIMITED ANNUAL REPORT 2013

 “Annexure - E”

Eastern Bank Limited and its subsidiaries

Business segment profit and loss account
For the year ended 31 December 2013 Figures in million BDT
Eastern Bank Limited Subsidiaries
Particulars EBL Finance Consolidated
Corporate Consumer SME Treasury Common OBU Total EBLSL EBLIL
(HK) Ltd.
Interest income 8,769 2,076 2,367 1,161 35 400 14,807 28 21 4 14,860
Interest expense 3,594 4,481 908 716 217 9,916 - (12) - 9,904
NII before FTP 5,174 (2,405) 1,459 445 35 183 4,891 28 34 4 4,956
FTP on deposits, liability & equity 2,286 4,301 685 (8,762) 1,491 - - - - - -
FTP on loans (5,398) (634) (1,231) 7,297 (35) - - - - - -
Net FTP (3,112) 3,667 (545) (1,466) 1,456 - - - - - -
NII After FTP 2,062 1,262 914 (1,021) 1,491 183 4,890 28 34 4 4,956
Investment income before FTP 162 - 1,801 - - 1,963 7 (34) - 1,936
FTP on investments (234) 191 - 43 - - - - - - -
Investment income after FTP (72) 191 - 1,843 - - 1,962 7 (34) - 1,935
Fees, commission and brokerage 936 844 120 - - 12 1,912 67 - 7 1,985
FX Income 231 24 24 279 - - 558 - - - 558
Other operating income 70 32 45 - - 1 148 (1) - - 147
Total operating income 3,227 2,352 1,102 1,101 1,491 197 9,469 101 - 10 9,582
Direct Operating Expenses 357 1,747 269 13 15 2,402 44 9 20 2,475
Allocated Expenses 359 517 180 34 189 1,279 - - - 1,279
Profit before provisions 2,510 88.51 653 1,054 1,302 182 5,789 57 (9) (10) 5,828

Fund transfer pricing (FTP):

FTP on loans, deposits, liabilities & equities has been calculated on average balances as per FTP policy which was formally established on 2010 for the purpose of segment reporting.

Segment assets and liabilities

The necessary information regarding assets and liabilities of operating segments (excluding subsidiaries) are not seperable and individually identifiable for segment. And so the assets
and liabilities of the respective segments have not been presented here.
financial reports 2013

237
Eastern Bank Limited “Annexure - F”

Highlights on the overall activities

Sl No Particulars 2013 2012

1 Paid up capital Taka 6,111,797,850 6,111,797,850

2 Total capital (Tier-I & II) Taka 16,764,225,278 15,646,076,856
3 Surplus/(shortage) capital Taka 2,736,346,440 2,664,855,096
4 Total assets Taka 157,881,633,857 147,148,334,316
5 Total deposits Taka 117,101,708,180 91,780,968,457
6 Total loans and advances Taka 102,910,218,949 96,719,736,531
7 Total contingent liabilities Taka 60,015,081,437 53,033,088,366
8 Loans to deposits ratio (total loans/total deposits) % 87.88 105.38
9 % of classified loans against total loans and advances % 3.59 3.17
10 Profit after tax and provisions Taka 2,567,863,831 2,275,100,710
11 Loans classified during the year (Gross) Taka 3,998,584,663 2,255,633,277
12 Provision held against classified loans Taka 1,929,241,652 1,387,320,825
13 Surplus of provision Taka 17,573,406 8,000,000
14 Cost of fund (interest expense/average borrowing and % 8.67 9.26
deposits)
15 Interest bearing assets Taka 133,056,841,652 119,333,775,371
16 Non-interest bearing assets Taka 24,824,791,202 27,814,558,945
17 Return on aseets (PAT/average assets) % 1.68 1.72
18 Income from investments Taka 2,070,848,267 1,494,601,857
19 Return on investment or ROI (PAT/average equity, long term % 3.38 3.12
borrowings and deposits)
20 Earnings per share (PAT/weighted average number of shares) Taka 4.20 3.72
21 Operating profit per share(Net Operating profit/ weighted Taka 9.47 8.94
average number of shares)
22 Price earning ratio (restated) Times 6.93 8.52

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Independent Auditor’s Report

to the Shareholders of Eastern Bank Limited

We have audited the accompanying financial statements of the Offshore Banking Unit (the “Unit”) Bangladesh of Eastern Bank Limited (the
“Bank”) which comprise the balance sheet as at 31 December 2013, profit and loss account and cash flow statement for the year then ended,
and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements of the Unit that give a true and fair view in
accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in Note 2 and for such internal control as management
determines is necessary to enable the preparation of financial statements of the Unit that are free from material misstatement, whether
due to fraud or error. The Bank Company Act, 1991 and the local central bank (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.

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements of the Unit are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of the Unit.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements
of the Unit, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
of financial statements the Unit that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements of the Unit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements of the Unit give a true and fair view of the financial position of the Unit as at 31 December 2013, and
of its financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) as
explained in Note 2.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, 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 financial statements of the Unit 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 Bank as disclosed in Note 2 to the financial statements of the
Bank 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 Unit and its related entities;
(iii) in our opinion, proper books of account as required by law have been kept by the Unit so far as it appeared from our examination of those
books;
(iv) the balance sheet and profit and loss account of the Unit together with the annexed notes dealt with by the report are in agreement with
the books of account and returns;
(v) the expenditures incurred was for the purpose of the Unit’s business;
(vi) the financial statements of the Unit have been drawn up in conformity with prevailing rules, regulations and accounting standards as well
as related guidance issued by Bangladesh Bank;
(vii) adequate provisions have been made for advance and other assets which are in our opinion, doubtful of recovery;
(viii) the information and explanations required by us have been received and found satisfactory; and
(ix) we have reviewed over 80% of the risk weighted assets of the Unit and we have spent around 660 person hours during the audit.

Hoda Vasi Chowdhury & Co

Dhaka, 27 February 2014 Chartered Accountants

239
Eastern Bank Limited
Offshore Banking Unit, Bangladesh
Balance Sheet
As at 31 December 2013
2013 2012
Note
USD TAKA USD TAKA

PROPERTY AND ASSETS

Cash
In hand (including foreign currencies) - - - -
With Bangladesh Bank (including foreign - - - -
currencies)
- - - -

Balance with other Banks and FIs

(on current and other accounts) 3
Inside Bangladesh 5,638,649 438,404,960 15,000,000 1,197,748,500
Outside Bangladesh 4,954,248 385,192,814 1,386,204 110,688,287
10,592,897 823,597,774 16,386,204 1,308,436,787

Money at call and short notice - - - -

Investment - - - -

Loans and Advances: 4

Loans, cash credits, overdrafts etc. 4.1 34,930,869 2,715,875,055 20,869,655 1,666,439,889
Bills purchased and discounted 4.2 88,929,915 6,914,300,855 94,318,421 7,531,316,466
123,860,784 9,630,175,910 115,188,076 9,197,756,355

Fixed Assets - - - -

Other Assets 5 76,874 5,976,971 137,639 10,990,449

Non Banking Assets - - - -

TOTAL ASSETS 134,530,555 10,459,750,654 131,711,919 10,517,183,591

CAPITAL AND LIABILITIES

Borrowing from other banks,
financial institutions and agents 6
Bangladesh Bank - - - -

Other Banks and FIs

Demand Borrowing 6.1 57,857,316 4,498,406,313 70,850,196 5,657,381,066
Term Borrowing 6.2 72,625,000 5,646,593,750 56,538,072 4,514,559,363
130,482,316 10,145,000,063 127,388,268 10,171,940,428
130,482,316 10,145,000,063 127,388,268 10,171,940,428

Deposits and other accounts 7

Current deposits and other accounts 7.1 223,240 17,356,946 11,136 889,185
Term deposits 7.2 - - - -
223,240 17,356,946 11,136 889,185

Other Liabilities 8 1,584,639 123,205,628 1,617,379 129,147,517

TOTAL LIABILITIES 132,290,195 10,285,562,637 129,016,782 10,301,977,130

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited

Offshore Banking Unit, Bangladesh
Balance Sheet
As at 31 December 2013

2013 2012
Note
USD TAKA USD TAKA

CAPITAL/SHAREHOLDERS' EQUITY

Share capital- Paid up capital - - - -

Foreign currency translation difference 9 - (781,214) - (5,418,843)
Profit and loss account- retained
16 2,240,360 174,969,231 2,695,138 220,625,304
earnings
TOTAL LIABILITIES AND
134,530,555 10,459,750,654 131,711,919 10,517,183,591
SHAREHOLDERS' EQUITY

OFF BALANCE SHEET ITEMS:

Contingent liabilities:
Acceptance and endorsements 207,352 16,121,636 263,678 21,054,649
Letter of guarantee - Banks - - - -
Letter of guarantee - Others - - - -
Bills for collection - - - -
Irrevocable letters of credit 708,562 55,090,723 773,055 61,728,368
Other Commitments - - - -
915,914 71,212,359 1,036,733 82,783,017

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

241
Eastern Bank Limited
Offshore Banking Unit, Bangladesh
Profit and Loss Account
For the year ended 31 December 2013
2013 2012
Particulars Note
USD TAKA USD TAKA

Interest income 10 6,143,057 479,764,766 5,678,060 464,808,821

Interest paid on deposits and 11 3,797,394 296,571,556 2,779,498 227,531,112
borrowings
Net interest income 2,345,663 183,193,210 2,898,562 237,277,708
Commission, exchange and brokerage 12 157,362 12,289,760 428,378 35,067,218
Other operating Income 13 15,123 1,181,101 12,070 988,022
Total operating income 2,518,148 196,664,071 3,339,009 273,332,949

Operating expenses 14 192,268 15,015,875 262,887 21,520,057

Profit before provision 2,325,880 181,648,196 3,076,122 251,812,892
Less :Provision for unclassified Loans 15 85,520 6,678,965 380,985 31,187,587
and Advances
(Including provision for off Balance
Sheet items)
Profit before income tax 2,240,360 174,969,231 2,695,138 220,625,304
Less. Provision for income tax - - - -
Net Profit/(loss) after tax 2,240,360 174,969,231 2,695,138 220,625,304
Balance of Profit brought forward from - - - -
previous year
Retained Earnings carried forward 16 2,240,360 174,969,231 2,695,138 220,625,304

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014
Signed as per our annexed report of same date

Auditors
Hoda Vasi Chowdhury and Co.
Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Eastern Bank Limited

Offshore Banking Unit, Bangladesh
Cash Flow Statement
For the year ended 31 December 2013
2013 2012
Note
USD TAKA USD TAKA

A) Cash flow from operating activities

Interest received 6,794,106 534,795,110 4,950,693 406,728,623

Interest paid (3,914,581) (306,636,023) (3,549,557) (289,020,195)
Commission, exchange and 17 157,362 12,289,760 428,378 35,067,218
brokerage
Received from other operating 18 15,123 1,181,101 12,070 988,022
activities
Paid for operating expenses 19 (192,268) (15,015,875) (262,887) (21,520,057)
Operating profit before changes in operating 2,859,742 226,614,073 1,578,697 132,243,611
assets and liabilities

(Increase)/decrease in operating assets:

Loan and advances to customers (9,323,757) (487,449,900) (36,832,223) (2,798,616,611)
Other Assets 60,765 5,013,479 (12,639) (779,861)
Increase/(decrease) in operating liabilities:
Foreign currency translation difference - -
Deposits from Banks
Customers' deposits and other accounts 329,292 26,532,228 (12,249,222) (1,002,007,390)
Other liabilities (118,260) (12,620,854) (1,770,340) (147,644,266)
(9,051,960) (468,525,047) (50,864,424) (3,949,048,129)
Net cash flow from operating activities (6,192,218) (241,910,974) (49,285,728) (3,816,804,518)

B) Cash flow from investing activities - - - -

C) Cash flow from financing activities - - - -

Borrowing from other banks, financial 3,094,048 (26,940,365) 67,773,143 5,302,296,860
institutions and agents
Net profit transferred to main 16 (2,695,138) (220,625,304) (2,101,210) (156,563,681)
operations
Net cash from financing activities 398,911 (247,565,669) 65,671,933 5,145,733,180
D) Net (decrease) / increase in cash (A+B+C) (5,793,307) (489,476,643) 16,386,204 1,328,928,661
E) Effects of exchange rate changes on cash - 4,637,630 (20,491,874)
and cash equivalents
F) Opening cash and cash-equivalents 16,386,204 1,308,436,787 - -
G) Closing cash and cash equivalent (D+E+F) 10,592,897 823,597,774 16,386,205 1,308,436,787

Closing cash and cash equavalents

Cash in hand (including foreign currencies) - - - -
Balances with Bangladesh Bank and its agent - - - -
bank (s)
Balances with other Banks and Financial 10,592,897 823,597,774 16,386,204 1,308,436,787
Institutions (Annexure A)
Money at call and short notice - - - -
Prize bonds - - - -
10,592,897 823,597,774 16,386,204 1,308,436,787

These financial statements should be read in conjunction with the annexed notes.

Chairman Director Director Managing Director & CEO

Dhaka, 27 February 2014

243
 Eastern Bank Limited
Offshore Banking Unit, Bangladesh
Statement of Liquidity in USD & BDT

EASTERN BANK LIMITED

(Maturity analysis of assets and liabilities)
As at 31 December 2013
Maturity within 1 to 5
Maturity within 1 month Maturity within 1 to 3 months Maturity within 3 to 12 months Maturity over 5 years Total Amount
Particulars years
USD BDT USD BDT USD BDT USD BDT USD BDT USD BDT

ASSETS

Cash in hand - - - - - - - - - - - -

Balance with other banks and

ANNUAL REPORT 2013

financial institutions 10,592,897 823,597,774 - - - - - - - - 10,592,897 823,597,774

Money at call and short notice - - - - - - - - - - - -

Investment in Treasury Bills & others

- - - - - - - - - - - -

Loans & advances to customers 17,685,326 1,375,034,106 44,174,331 3,434,554,258 32,868,210 2,555,503,366 28,885,036 2,245,811,562 247,879 19,272,617 123,860,783 9,630,175,910

Fixed assets - - - - - - - - - - - -

Other assets - - 76,874 5,976,971 - - - - 76,874 5,976,971

Non-banking assets - - - - - - - - - - - -

Total Assets 28,278,224 2,198,631,880 44,251,205 3,440,531,229 32,868,210 2,555,503,366 28,885,036 2,245,811,562 247,879 19,272,617 134,530,554 10,459,750,654

LIABILITIES

Borrowings from other banks & 59,307,316 4,611,143,813 30,000,000 2,332,500,000 41,175,000 3,201,356,250 - - - - 130,482,316 10,145,000,063
financial institutions

Deposits & other accounts 45,602 3,545,521 44,352 3,448,404 97,638 7,591,365 35,648 2,771,656 - - 223,240 17,356,946

Other liabilities 336,723 26,180,188 148 11,507 - - - - 1,247,768 97,013,933 1,584,638 123,205,628

Total Liabilities 59,689,640 4,640,869,522 30,044,500 2,335,959,911 41,272,638 3,208,947,615 35,648 2,771,656 1,247,768 97,013,933 132,290,194 10,285,562,637
Net liquidity gap (31,411,417) (2,442,237,642) 14,206,704 1,104,571,318 (8,404,428) (653,444,249) 28,849,388 2,243,039,906 (999,888) (77,741,316) 2,240,360 174,188,017
Cumulative liquidity gap (31,411,417) (2,442,237,642) 17,204,713) (1,337,666,324) (25,609,140) (1,991,110,572) 3,240,248 251,929,334 2,240,360 174,188,017 - -
 financial reports 2013

Eastern Bank Limited

Offshore Banking Unit
Notes to the Financial Statements
As at and for the year ended 31 December 2013
1 Nature of business
Offshore banking Unit (“the Unit”) is a separate business unit of Eastern Bank Limited (“the Bank”), governed under the Rules and
Guidelines of Bangladesh Bank. The Bank obtained the Offshore Banking Unit permission vide letter no. BRPD(p)744/(89)/2004-303
dated 25 January 2004. The Bank commenced the operation of its Offshore Banking Unit from 19 May 2004 and its office is located at
10, Dilkusha C/A (2nd floor) Dhaka.
2 Significant accounting policies and basis of preparations
Basis of preparation
2.1 Statement of compliance
The financial statements of the Unit as at and for the year ended 31 December 2013 have been prepared under the historical cost
convention and in accordance with Bangladesh Financial Reporting Standards (BFRSs), the “First Schedule” (section 38) of the Bank
Companies Act 1991, as amended by the BRPD Circular no. 14 dated 25 June 2003, other Bangladesh Bank Circulars, the Companies
Act 1994, the Securities and Exchange Rules 1987 and other laws and rules applicable in Bangladesh. In case the requirement of
provisions and Circulars issued by Bangladesh Bank differ with those of other regulatory authorities and accounting standards, the
provisions and Circulars issued by Bangladesh Bank shall prevail.
As such the Unit has departed from those contradictory requirements of BFRSs in order to comply with the rules and regulations of
Bangladesh Bank which are disclosed below:
i) Provision on loans and advances
BFRSs: As per BAS 39 an entity should undertake impairment assessment when objective evidence of impairment exists for financial
assets that are individually significant. For financial assets which are not individually significant, the assessment can be performed on
an individual or collective (portfolio) basis.

Bangladesh Bank: As per BRPD Circular no. 14 dated 23 September 2012 and BRPD Circular no. 19 dated 27 December 2012,
a general provision @ 0.25% to 5% under different categories of unclassified loans (standard/SMA loans) should be maintained
regardless of objective evidence of impairment. And specific provision for sub-standard/doubtful/bad-loss loans should be made at
20%, 50% and 100% respectively on loans net off eligible securities (if any). Also, a general provision @ 1% should be provided for
certain off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.”
ii) Other comprehensive income
BFRSs: As per BAS 1 elements of Other Comprehensive Income (OCI) can be presented in a separate statement i.e. Other
Comprehensive Income or can be included in a Single Statement of Comprehensive Income.

Bangladesh Bank: The scheduled banks in Bangladesh have been using certain prescribed templates of financial statements
(including names of those financial statements) issued by Bangladesh Bank. Those templates do not include ‘Other Comprehensive
Income’nor are the elements of OCI allowed to be included in a Single Comprehensive Income Statement (Profit & Loss Account,
as per BB format). As such the bank does not prepare a separate OCI Statement. However elements of OCI, if any, are shown in the
statements of changes in equity.”
iii) Financial instruments - presentation and disclosure
As per BB guidelines, in certain cases financial instruments are categorized, recognized, measured and presented differently from
those prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in these
financial statements.
iv) Financial guarantees
BFRSs: As per BAS 39 financial guarantees are contracts that require an entity to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.
Financial guarantee liabilities are recognized initially at their fair value, and the initial fair value is amortized over the life of the financial
guarantee. The financial guarantee liability is subsequently carried at the higher of this amortized amount and the present value of any
expected payment when a payment under the guarantee has become probable. Financial guarantees are prescribed to be included
within other liabilities.
Bangladesh Bank: As per BRPD circular 14, 2003, financial guarantees such as L/C, L/G should be treated as off balance sheet items.
No liability is recognized for the guarantee except the cash margin.”
v) Cash and cash equivalents
BFRSs: Cash and cash equivalents items should be reported as cash item as per BAS 7.

Bangladesh Bank: Some cash and cash equivalents items such as money at call and short notice should not be shown as cash and
cash equivalents. Money at call and short notice should be shown as face item in balance sheet.

245
vi) Cash flow statement
BFRSs: 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 14 dated 25 June 2003, cash flow should be a mixture of direct and indirect method.

vii) Off balance sheet items

BFRSs: No requirement of disclosure for off balance sheet items as 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 14 dated 25 June 2003, off balance sheet items e. g. L/C, L/G should be disclosed separately in the
face of balance sheet.”
viii) Disclosure of appropriation of profit
BFRSs: There is no requirement to show appropriation of profit in the face of statement of comprehensive income.

Bangladesh Bank: As per BRPD 14 dated 25 June 2003, an appropriation of profit should be disclosed in the face of Profit and Loss
Account.
ix) Loans and advance net of provision
BFRSs: Loans and advances should be presented net of provisions.

Bangladesh Bank: As per BRPD 14 dated 25 June 2003, provision on loans and advances should be presented separately as liability
and cannot be netted off against loans and advances.”
2.2 Foreign currency
Items included in the financial statements of the Unit are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”). The financial statements of the Unit are presented in US Dollar (USD) and Bangladeshi
Taka (BDT) where USD is the functional currency and BDT is the Unit’s presentation currency.
Transactions in foreign currencies are recorded in the functional currency at the rate of exchange prevailing on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the presentation currency at the rate
of exchange ruling at the balance sheet date.
2.3 Loans and advances
a) These are stated gross, with accumulated specific and general provisions for bad and doubtful debts being shown under other
liabilities.
b) Provision for Loans and Advances is made on the basis of period end review by the management and of instructions contained in
BRPD circular no. 14 dated 23 September 2012 and BRPD circular no. 19 dated 27 December 2012.
2.4 Revenue recognition
2.4.1 Interest income:
Interest on unclassified (excluding SMA) loans and advances have been accounted for as income on accrual basis.
2.4.2 Fees and commission income:
Fees and commission income arieses on services provided by the unit and recognised as and when received basis.
2.4.3 Interest paid on borrowings and deposits:
Interest paid on borrowings and deposits are calculated on 360 days in a year and accounted for on accrual basis.
2.4.4 Operating Expenses:
Expenses incurred by the unit except mentioned in 2.4.5 are recognised on actual and accrual basis.
2.4.5 Allocation of common expenses
Operating expenses in the nature of rent, rates and taxes, salaries, management expenses, printing and stationery, electricity,
postages, stamps, telecommunication and audit fees are accounted for in Profit and Loss Account of the Main Operation of the
Bank.
2.5 General
2.5.1 Fixed assets of this unit are appearing in the books of the main operation of the bank and depreciation is also charged to Profit and
Loss Account of the main operation of the Bank.
2.5.2 Assets and liabilities have been translated into Taka currency @ USD 1 = BDT 77.75 (2012: BDT 79.8499) which represents the year-
end standard mid rate of exchange (i.e. closing rate). Incomes and expenses are translated at an average rate over the year of the
transactions i.e. (USD 1= BDT 78.0987). The cumulative amount of the exchange differences has been presented separately in equity
until the disposal of foreign operations.
2.5.3 Certain corresponding figures in the financial statements have been reclassifed and rearranged to conform to the current year’s
presentation.
2.5.4 These financial statements of the unit cover one calender year from 1 January 2013 to 31 December 2013.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2013 2012
Note
USD TAKA USD TAKA

3 Balance with other Banks and Financial Institutions

Inside Bangladesh - - - -
In interest bearing account
Term Placement
Eastern Bank Limited 5,638,649 438,404,960 - -
United Commercial Bank Limited - 15,000,000 1,197,748,500
5,638,649 438,404,960 15,000,000 1,197,748,500
Outside Bangladesh
In interest bearing account
EBL Finance (HK) Limited 4,050,000 314,887,500 - -
4,050,000 314,887,500 - -

In-non interest bearing account

Standard Chartered Bank Newyork- (Annexure A) 639,411 49,714,222 1,256,012 100,292,457
Deutsche Bank AG, Frankfurt, Germany-(Annexure A) 264,837 20,591,092 130,192 10,395,830
904,248 70,305,314 1,386,204 110,688,287
4,954,248 385,192,814 1,386,204 110,688,287
10,592,897 823,597,774 16,386,204 1,308,436,787
3.1 Balance with other banks and financial institutions
(according to remaining maturity grouping)

Receivable
On demand 10,592,897 823,597,774 16,386,204 1,308,436,787
In not more than one month - - - -
In more than one month but not more than three months - - - -
In more than three months but not more than one year - - - -
In more than one year but not more than five years - - - -
In more than five years - - - -
10,592,897 823,597,774 16,386,204 1,308,436,787

4 Loans and advances

i) Loans, cash credits, overdrafts, etc. 4.1 34,930,869 2,715,875,055 20,869,655 1,666,439,889
ii) Bills purchased and discounted 4.2 88,929,915 6,914,300,855 94,318,421 7,531,316,466
123,860,784 9,630,175,910 115,188,076 9,197,756,355

4.1 Loans, Cash Credit, Overdraft etc.

Inside Bangladesh :
Loans 33,675,217 2,618,248,095 20,759,068 1,657,609,490
Cash Credit - - - -
Overdraft 1,255,652 97,626,961 110,587 8,830,399
34,930,869 2,715,875,055 20,869,655 1,666,439,889
Outside Bangladesh :
Loans - - - -
Cash Credit - - - -
Overdraft - - - -
- - - -
34,930,869 2,715,875,055 20,869,655 1,666,439,889

4.2 Bills Purchased and Discounted

Inside Bangladesh :
Bills Discounted /Financed 88,929,915 6,914,300,855 94,318,421 7,531,316,466
LDBP/FDBP - - - -
88,929,915 6,914,300,855 94,318,421 7,531,316,466
Outside Bangladesh :
Bills Discounted /Financed - - - -
LDBP/FDBP - - - -
- - - -
88,929,915 6,914,300,855 94,318,421 7,531,316,466

4.a Maturity grouping of loans and advances including bills

discounted and purchased

Payable on demand 17,685,326 1,375,034,106 31,988,363 2,554,267,597

Less than three months 44,174,331 3,434,554,258 50,814,640 4,057,543,896
More than three months but less than one year 32,868,210 2,555,503,366 24,428,789 1,950,636,329

247
 2013 2012
Note
USD TAKA USD TAKA

More than one year but less than five years 28,885,036 2,245,811,562 7,956,285 635,308,533
More than five years 247,880 19,272,617 - -
123,860,784 9,630,175,910 115,188,076 9,197,756,355

4.b Maturity analysis of bills purchased and discounted

Payable on demand 916,090 71,225,963 971,597 77,581,996

Less than three months 59,135,086 4,597,752,938 62,718,164 5,008,045,374
More than three months but less than one year 28,878,739 2,245,321,954 30,628,542 2,445,689,095
More than one year but less than five years - - - -
88,929,915 6,914,300,855 94,318,303 7,531,316,466

4.a.1 Loans and Advances to Directors, Executive and Others

Advance to Directors and their allied concerns

- - - -
(including Ex-Directors)
Advances to CEO & Managing Director - - - -
Advances to Other executives and staffs - - - -
Advances to Customers (Group wise) - - - -
Industrial Advances 123,860,784 9,630,175,910 115,188,076 9,197,756,355
123,860,784 9,630,175,910 115,188,076 9,197,756,355

4.a.2 Industry-wise Concentration of loans and advances

Crops, fisheries and livestocks 2,762,675 214,797,948 1,558,145 124,417,741

Edible oil refinery 3,274,802 254,615,866 16,812,042 1,342,439,911
Electronics goods 6,560,060 510,044,671 5,033,402 401,916,639
Power, Gas & Oil 299,812 23,310,413 1,690,825 135,012,240
Transport (Shipping, Airlines, Bus, Truck, Carrier) 13,385,562 1,040,727,434 15,635,139 1,248,464,302
Readymade garments 16,068,621 1,249,335,321 7,080,959 565,413,907
Commerce and Trading 718,594 55,870,720 7,319,207 584,437,912
Sugar Industry 108,578 8,441,947 - -
Cement Industry 3,306,878 257,109,735 2,910,580 232,409,560
Foods & Beverage 21,335,951 1,658,870,170 5,211,783 416,160,331
Polymer 14,138,495 1,099,267,974 4,425,707 353,392,283
Textile mills 29,341,297 2,281,285,841 2,734,539 218,352,698
Ship Breaking Industry - - 14,888,579 1,188,851,507
Industries for Steel products 3,378,129 262,649,559 26,701,187 2,132,087,072
Pharmaceutical Industries 5,377,527 418,802,748 - -
Others 3,803,801 295,745,564 3,185,981 254,400,252
123,860,784 9,630,175,910 115,188,076 9,197,756,355

4.a.3 Geographical location-wise concentration of Loans and advances

Inside Bangladesh:
Dhaka Division 121,388,186 9,437,931,446 88,410,939 7,059,604,667
Chittagong Division 2,472,598 192,244,464 26,777,137 2,138,151,687
Khulna Division - - - -
Rajshahi Division - - - -
Barishal Division - - - -
Sylhet Division - - - -
Rangpur Division - - - -
Outside Bangladesh: - - - -
123,860,784 9,630,175,910 115,188,076 9,197,756,355

4.c Classified, unclassified, doubtful and bad loans and advances

Unclassified:
Standard 123,860,784 9,630,175,910 115,188,076 9,197,756,355
Special mention account - - - -
Classified
Sub-standard - - - -
Doubtful - - - -
Bad/loss - - - -
123,860,784 9,630,175,910 115,188,076 9,197,756,355

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2013 2012
Note
USD TAKA USD TAKA
4.d i) Debt considered good in respect of which the bank is fully
123,860,784 10,117,530,935 115,188,076 9,409,103,437
secured

ii) Debt considered good for which the bank holds no other
- -
security than the debtor's personal security

iii) Debts considered good and secured by the personal

security of one or more parties in addition to the personal - - - -
security of the debtors

iv) Debts considered doubtful or bad, not provided for - - - -

123,860,784 10,117,530,935 115,188,076 9,409,103,437

v) Debts taken by directors or executives or any of them

- - - -
taken jointly or separately with other persons

vi) Debts due by directors or officers of the bank or any of

them either severally or jointly with any other person and
debts due by companies or firms in which the directors, - - - -
partners or managing agent or in the case of private
companies as members

vii) Maximum total amount of advances, including

temporary advances made at any time during the period to
- - - -
directors or managers or officers of the bank or any of them
either severally or jointly with any other persons

viii) Maximum total amount of advances, including

temporary advance granted during the period to the
companies or firms in which the directors of the bank are - - - -
interested as directors, partners or managing agents or, in
case of private companies as members

ix) Due from other banking companies - - - -

x) Classified loans and advances on which no interest is

- - - -
credited to income

5 Other Assets
Prepayments - - 137,639 10,990,449
Interest Receivable on Term Placement 76,874 5,976,971 - -
76,874 5,976,971 137,639 10,990,449

6 Borrowings from other banks, financial institutions and

agents

Demand Borrowings 6.1 57,857,316 4,498,406,313 70,850,196 5,657,381,066

Term Borrowings 6.2 72,625,000 5,646,593,750 56,538,072 4,514,559,363
130,482,316 10,145,000,063 127,388,268 10,171,940,428

6.1 Demand Borrowings

In non interest bearing account with
Standard Chartered Bank, Newyork (Annexure-A2) - - - -
In interest bearing account with
Eastern Bank Limited (DBU) 57,857,316 4,498,406,313 70,850,196 5,657,381,066
57,857,316 4,498,406,313 70,850,196 5,657,381,066

249
 2013 2012
Note
USD TAKA USD TAKA

6.2 Term Borrowings

Borrowing inside Bangladesh

Basic Bank Limited 625,000 48,593,750 538,072 42,964,963

The City Bank Ltd. 1,000,000 77,750,000 - -
Commercial Bank of Cylon - 3,000,000 239,549,700
1,625,000 126,343,750 3,538,072 282,514,663
Borrowing outside Bangladesh

Banca Ubae Spa 5,000,000 388,750,000 - -

Deutsche Investitions-Und
16,000,000 1,244,000,000 20,000,000 1,596,998,000
Entwicklungsgesellschaft Mbh
International Finance Corporation 30,000,000 2,332,500,000 30,000,000 2,395,497,000
FMO Netherland 20,000,000 1,555,000,000 3,000,000 239,549,700
71,000,000 5,520,250,000 53,000,000 4,232,044,700
72,625,000 5,646,593,750 56,538,072 4,514,559,363

6.1.a Classification based on type of security

Secured - - - -
Unsecured 130,482,316 10,145,000,063 127,388,268 10,171,940,428
130,482,316 10,145,000,063 127,388,268 10,171,940,428

6.a Maturity grouping of borrowings from other banks,

financial institutions and agents

Payable within one month 59,307,316 4,611,143,813 24,593,130 1,963,759,002

More than one month but less than three months 30,000,000 2,332,500,000 79,595,137 6,355,663,746
More than three months but less than one year 41,175,000 3,201,356,250 23,200,000 1,852,517,680
More than one year but less than five years - - - -
130,482,316 10,145,000,063 127,388,268 10,171,940,428

7 Deposits and other accounts

Current deposits and other accounts 7.1 223,240 17,356,946 11,136 889,185
Term deposits 7.2 - - - -
223,240 17,356,946 11,136 889,185

7.1 Current deposits and other accounts:

Current account 49,836 3,874,785 6,086 485,943
Other Accounts 7.1.a 173,404 13,482,161 5,050 403,242
223,240 17,356,946 11,136 889,185

7.1.a Other Accounts:

Interest Payable on deposit - - -
Margin on Facility 173,404 13,482,161 5,050 403,242
173,404 13,482,161 5,050 403,242

7.2 Term deposits

Special notice deposit- SND - - - -
Term deposit - BB - -
- - - -

7.a Maturity grouping of deposits and other accounts 45,602 3,545,521 890 71,093
Payable on demand 44,352 3,448,404 224 17,868
Payable within one month 97,638 7,591,365 2,056 164,184
More than one month but less than three months 35,648 2,771,656 7,965 636,039
More than three months but less than one year - - - -
More than one year but less than five years 223,240 17,356,946 11,136 889,185

8 Other liabilities

Provision for taxation 8.1 - - - -

Provision for unclassified Loans and advances 1,247,768 97,013,933 1,162,248 92,805,394
( Including provision for off Balance Sheet items) - - - -
Interest payable on Borrowing 336,723 26,180,188 453,910 36,244,655
Conversion GL-Liability 8.2 - - - -
Sundry Creditors 148 11,507 1,221 97,468
1,584,638 123,205,628 1,617,379 129,147,517

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2013 2012
Note
USD TAKA USD TAKA

8.1 Provision for tax of the unit is accounted for in the books of Eastern Bank Limited.

8.a Maturity grouping of other liabilities

Payable on demand 336,723 26,180,188 455,130 36,342,123
Payable within one month 148 11,507 - -
More than one month but less than three months - - - -
More than three months but less than one year - - - -
More than one year but less than five years - - - -
More than five years 1,247,768 97,013,933 1,162,249 92,805,394
1,584,638 123,205,628 1,617,379 129,147,517

9 Foreign currency translation difference

The foreign currency translation difference is a net result of exchange differrence of year end standard mid rate and monthly average
of standard mid rate arising from translation of functional currency to presentation currecy. Assets and liabilities have been presented
into Taka (which is functional currency of the Bank) using year end standard mid rate of exchange of the Bank i.e. USD 1 = BDT 77.75
(2012: BDT 79.8499) and incomes and expenses are translated using monthly average of standard mid rate of exchange (USD 1= BDT
78.0987).

10 Interest income

Interest on Advances 5,996,376 468,309,155 5,672,199 464,329,028

Interest on Money at Call and Short Notice - - - -
Interest on Placement with other Banks 146,681 11,455,611 5,861 479,793
6,143,057 479,764,766 5,678,060 464,808,821

11 Interest paid on deposits and borrowings

Interest on Deposits - - - -
Interest on Borrowings 3,797,394 296,571,556 2,779,498 227,531,112
Interest on Margin - - - -
3,797,394 296,571,556 2,779,498 227,531,112
12 Commission, exchange and brokerage

Fees & Commission 144,903 11,316,743 456,132 37,339,153

Exchange gain/(loss) net off exchange gains* 12,459 973,017 (27,754) (2,271,934)
Brokerage - - - -
157,362 12,289,760 428,378 35,067,218

*The net result of exchange differeces arising from day to day transactions & revaluation of monetary items are recognized in profit and
loss account as per BAS 21 (The Effect of changes in Foreign Exchange Rates).

13 Other Operating Income

Service charges, SWIFT charges etc. 15,123 1,181,101 12,070 988,022

15,123 1,181,101 12,070 988,022

14 Operating Expenses
Account Maintenance & Processing fees 191,717 14,972,885 257,412 21,071,837
Other charges 550 42,990 5,475 448,220
192,268 15,015,875 262,887 21,520,057

15 Provision for Loans and Advances

General Provision 85,520 6,678,965 380,985 31,187,587
Specific Provision - - - -
85,520 6,678,965 380,985 31,187,587

16 Profit and loss account - retained earnings

Opening balance 2,695,138 220,625,304 2,101,210 156,563,681

Profit during the year 2,240,360 174,969,231 2,695,138 220,625,304
4,935,498 395,594,535 4,796,348 377,188,985
Transferred to Main ops during the year (2,695,138) (220,625,304) (2,101,210) (156,563,681)
Closing balance 2,240,360 174,969,231 2,695,138 220,625,304

251
 2013 2012
Note
USD TAKA USD TAKA

17 Cash received from commission, exchange and brokerage

Commission, exchange and brokerage 157,362 12,289,760 428,378 35,067,218

157,362 12,289,760 428,378 35,067,218

18 Cash received from other operating activities

Service charges, SWIFT charges etc. 15,123 1,181,101 12,070 988,022

15,123 1,181,101 12,070 988,022

19 Paid for operating expenses

Operating expenses (192,268) (15,015,875) (262,887) (21,520,057)

(192,268) (15,015,875) (262,887) (21,520,057)

20 Cash and cash equivalent

Balance with other banks & FIs 10,592,897 823,597,774 16,386,204 1,308,436,787
Money at call and short notice - - - -
10,592,897 823,597,774 16,386,204 1,308,436,787

EASTERN BANK LIMITED ANNUAL REPORT 2013

AUDITORS’ REPORT
TO THE SHAREHOLDERS OF
EBL SECURITIES LIMITED

We have audited the accompanying financial statements of EBL SECURITIES LIMITED, which comprises the statement of financial position
as at December 31, 2013 and the related statement of comprehensive income, statement of cash flows, statement of changes in equity for the
year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements:

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Accounting
Standards (BAS) & Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994 and other applicable laws and regulations.
These responsibilities includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances

Auditor’s Responsibility:
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
Bangladesh Accounting Standards on Auditing (BSA).Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion:
In our opinion the Financial Statements prepared in accordance with Bangladesh Accounting Standards (BAS) & Bangladesh Financial
Reporting Standards (BFRS), give a true and fair view of the state of the company’s affairs as at December 31, 2013 and of the result of its
operations and its cash flows for the year then ended and comply with the applicable sections of the Companies Act 1994 and other applicable
laws and regulations.

Further to our opinion in the above paragraph, we state that:

a) 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;
b) in our opinion, proper books of account as required by law have been kept by EBL SECURITIES LIMITED, so far as it appeared from our
examination of those books;
c) the company’s Statement of Financial Position, Statement of Comprehensive Income and Statement of Cash Flow and Statement of
Changes in Equity dealt with by the report are in agreement with the books of account and returns;
d) The expenditure incurred was for the purpose of the company’s business.

Dhaka, February 09, 2014 Ahmed Khan & Co.

Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL SECURITIES LIMITED

STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2013

2013 2012
Note Taka Taka

I. ASSETS
A. Non-Current Assets: 209,674,825 211,451,017
Fixed Assets less Accumulated Depreciation 04 6,769,545 8,087,321
Intangible Assets less Amortization 05 1,156,466 1,458,262
Deferred Revenue Expenses less Written off 06 242,814 399,434
Membership of DSE & CSE at Cost 07 201,506,000 201,506,000

B. Current Assets: 1,241,578,329 907,569,159

Advances, Deposits & Prepayments 08 2,189,553 4,092,418
Advance Income Tax 09 23,754,860 9,381,768
Accounts Receivable 10 972,621,104 779,128,673
Investment in Securities 11 68,803,199 21,923
Cash & Cash Equivalents 12 174,209,614 114,944,377

TOTAL ASSETS (A+B) 1,451,253,154 1,119,020,175

II. EQUITY & LIABILITIES 411,660,842 311,646,071

C. Share Holders' Equity: 13 400,000,000 300,000,000
Share Capital 14 11,660,842 11,646,071
Retained Earnings

D. Non-Current Liabilities: - -

E. Current Liabilities: 1,039,592,312 807,374,104

Accounts Payable 15 103,051,342 76,864,037
Bank Overdraft 16 840,327,596 654,886,483
Liability for Expenses 17 5,505,685 7,927,608
Other Liabilities 18 64,481,284 44,488,400
Provision for Tax 19 26,226,405 23,207,577

TOTAL LIABILITIES (C+D+E) 1,451,253,154 1,119,020,175

The attached notes 1 to 26 form an integral part of the financial statements.

Chief Executive Officer Director Chairman

Dhaka, February 09, 2014
Signed in terms of our annexed report of even date.

Ahmed Khan & Co.

Chartered Accountants

255
EBL SECURITIES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013
2013 2012
Particulars Note Taka Taka
A. Revenue:
Commission Earning 20 67,155,825 60,687,995
Income from Investment 21 6,866,080 (63,263)
Other Operating Income 22 127,166,756 130,775,047
201,188,661 191,399,779
B. Expenses:
Direct Expenses 23 5,042,064 7,237,479
Office & Administrative Expenses 24 39,298,757 38,265,891
Financial Expenses 25 99,305,642 84,320,430
143,646,463 129,823,801

C. Operating Profit before Provision: 57,542,198 61,575,978

Loss on Revaluation of Shares 10,471,550 -
Loss on Margin Loan 20,946,057 -
D. Profit before Tax: 26,124,591 61,575,978
Income Tax Expenses 26 26,109,819 25,136,747
Net Profit after Tax 14,772 36,439,231

The attached notes 1 to 26 form an integral part of the financial statements.

Chief Executive Officer Director Chairman

Dhaka, February 09, 2014
Signed in terms of our annexed report of even date.

Ahmed Khan & Co.

Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL SECURITIES LIMITED

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2013
2013 2012
Taka Taka
Cash Flows from Operating Activities:
Net Profit/(Loss) after Provision for Tax 14,772 36,439,231
Add: Depreciation 2,448,380 2,445,006
Add: Amortization 301,796 301,796
Add: Written off- Deferred Revenue Expenses 156,620 156,620
Net Profit/(Loss) after Depreciation 2,921,567 39,342,654

Changes in Working Capital: (42,525,726) (162,938,651)

(Increase)/Decrease in Advances, Deposits & Pre-payments 1,902,865 2,322,026
(Increase)/Decrease in Advance Income Tax (14,373,092) 19,625,598
(Increase)/Decrease in Receivable (193,492,431) (44,960,983)
(Increase)/Decrease in Investment in Securities (68,781,276) 314,800
Increase/(Decrease) in Payable 26,187,306 (6,018,172)
Increase/(Decrease) in Bank Overdraft 185,441,113 (61,100,933)
Increase/(Decrease) in Liability for Expenses (2,421,922) (790,738)
Increase/(Decrease) in Other Liabilities 19,992,883 (11,176,000)
Increase/(Decrease) in Interim Dividend Payable - (40,000,000)
Increase/(Decrease) in Provision for Tax 3,018,828 (21,154,250)

A. Net Cash provided from/ (used in) Operating Activities: (39,604,159) (123,595,997)

Cash Flows from Investing Activities:

(Increase)/Decrease in Membership Fees of DSE & CSE - (201,500,000)
Fixed Assets Purchased (1,130,604) (12,000)

B. Net Cash provided from/ (used in) Investing Activities (1,130,604) (201,512,000)

Cash Flows from Financing Activities:

Increase/(Decrease) in Paid-up Capital 100,000,000 287,500,000

C. Net Cash provided from/ (used in) Financing Activities: 100,000,000 287,500,000

Net Increase / (Decrease) in Cash & Cash Equivalent

During the Year (A+B+C) : 59,265,237 (37,607,997)
Opening Cash & Cash Equivalents 114,944,377 152,552,374
Closing Cash & Cash Equivalents* 174,209,614 114,944,377

Closing Cash & Cash Equivalents*

Cash in Hand 10,903 4,239
Cash at Bank 174,198,711 114,940,137
174,209,614 114,944,377

The attached notes 1 to 26 form an integral part of the financial statements.

Chief Executive Officer Director Chairman

Dhaka, February 09, 2014
Signed in terms of our annexed report of even date.

Ahmed Khan & Co.

Chartered Accountants

257
EBL SECURITIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2013
Figures are in BDT
Retained
Particulars Paid-up Capital Total
Earnings
Balance as on January 01, 2013 300,000,000 11,646,071 311,646,071
Net Surplus/ (Deficit) for the Year 100,000,000 14,772 100,014,772
Interim Dividend - - -
Balance as at December 31, 2013 400,000,000 11,660,842 411,660,842

FOR THE YEAR ENDED DECEMBER 31, 2012

Figures are in BDT
Retained
Particulars Paid-up Capital Total
Earnings
Balance as on January 01, 2012 12,500,000 15,206,840 27,706,840
Net Surplus/ (Deficit) for the Year 287,500,000 36,439,231 323,939,231
Interim Dividend - (40,000,000) (40,000,000)
Balance as at December 31, 2012 300,000,000 11,646,071 311,646,071

The attached notes 1 to 26 form an integral part of the financial statements.

Chief Executive Officer Director Chairman

Dhaka, February 09, 2014
Signed in terms of our annexed report of even date.

Ahmed Khan & Co.

Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL SECURITIES LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2013

1 REPORTING ENTITY:

1.1 Domicile and Legal Status of the Company:

EBL Securities Ltd. is one of the leading brokerage houses domiciled in Bangladesh which has been constituted by changing
the name of LRK Securities Limited, limited by shares incorporated under the Companies Act 1994 vide incorporation no.
C-32161(1282)/97.
The company purchased a Chittagong Stock Exchange (CSE) membership license bearing distinctive no. 021 from Agrani Securities
Limited, the transfer of which has been approved by CSE in its 175th meeting held on October 07, 2012

1.2 Nature of Business Activities:

The principal activities of the company during the year were to buy, sell and deal in shares, stocks, debentures and other securities, to
become member of stock exchange in Bangladesh and/ or elsewhere and undertake all the functions of a Stock Exchange Member.

2 BASIS OF PREPARATION:
2.1 Statement of Compliance:
The financial statements are prepared on the historical cost basis and therefore, did not take into consideration the effect of inflation.
The financial statements have been prepared and the disclosures of information have been made in accordance with the Companies
Act 1994, the Securities and Exchange Rules 1987, the listing Rules of Dhaka Stock Exchange, Guidelines from Bangladesh Bank,
Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) and other applicable laws and
regulations.

2.2 Other Regulatory Compliances:

The company is also required to comply with the following major laws and regulations in addition to the Companies Act 1994 where
applicable:
The Income Tax Ordinance 1984
The Income Tax Rules 1984
The Value Added Tax Act 1991
The Value Added Tax Rules 1991

EBL Securities Ltd. also registered with the Bangladesh Securities and Exchange Commission (BSEC) to act as Stock Dealer for
carrying its own investment in the capital market. It also extends margin loan to its clients against their margin for investment in the
listed securities. The required margin level is monitored daily and pursuant to established guidelines, customers are required to deposit
additional margin to reduce the position, where necessary.
EBL Securities Ltd. encompasses a wide range of services having registered with the Securities and Exchange Commission to act as
“custody participant” of Central Depository of Bangladesh Limited (CDBL).

2.3 Basis of Accounting:

The financial statements except for cash flow information have been prepared on accrual basis of accounting.

2.4 Use of Estimates and Assumptions:

Preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported
amount of assets and liabilities, income and expenses. These financial statements contain information about the assumptions it made
about the future and other major sources of estimation uncertainty at the end of the reporting period that have a significant risk of
resulting in a material adjustment to the carrying amount of assets, liabilities, income and expenses within the next financial year.
In accordance with the guidelines as prescribed by BAS 37: Provisions, Contingent Liabilities and Contingent Assets. Provisions are
recognized in the flowing situation:
• When the company has an obligation as a result of past events,
• When it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
• Reliable estimates can be made of the amount of the obligation.

259
2.5 Consistency:
In accordance with the BFRS framework for the presentation of financial statements together with BAS 1 and BAS 8, EBL Securities
applies the accounting disclosure principles consistently from one period to the next. Where selecting and applying new accounting
policies, changes in accounting policies applied, correction of errors, the amounts involved are accounted for and retrospectively
accordance with the requirement of BAS 8. We however, have applied the same accounting principles in 2013 as in financial
statements for 2012.

3 SIGNIFICANT ACCOUNTING POLICIES:

The accounting polices set out below have been applied consistently to all periods presented in these financial statements:

3.1 Fixed Assets and Depreciation:

These are measured at cost less accumulated deprecation. Cost includes expenditures that are directly attributable to the acquisition
of the fixed assets. Full month’s depreciation has been charged on additions irrespective of date when the related assets are put into
use and no depreciation is charged for the month of disposal. Depreciation is provided at the following rates on straight-line basis in
accordance with BAS 16 over the periods appropriate to the estimated useful lives of the different types of assets:

Furniture & Fixture 15%

Television & Multimedia 20%
Computer & Accessories 20%
Generator 15%
Office Equipment 15%
Office Decoration 15%
Car Vehicles 15%

3.2 Intangible Assets and Amortization:

Intangible assets are recognized if it is probable that future economic benefits that are attributable to the asset will flow to the company
and the cost of the asset can be measured reliably in accordance with BAS 38: Intangible Assets. Accordingly, these assets are stated
in the Statement of Financial Position at cost less accumulated amortization.
Subsequent expenditure on intangible assets is capitalized only when it increases the future economic benefits embodied in the
specific assets to which it relates. All other expenditure is recognized as incurred.

3.3 Impairment:
Financial Assets:
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial
asset is considered to be impaired if objective evidence indicates that one or more have occurred indicating a negative effect on the
estimated future cash flows from the asset. However, no such condition that might be suggestive of a heightened risk of impairments
of assets existed at the reporting date.
Non Financial Assets:
The carrying amounts of non-financial assets are reviewed at each reporting date to determine whether there is any indication of
impairment. An impairment loss is recognized in Statement of Comprehensive Income if the carrying amount of an asset exceeds its
estimated recoverable amount. However, no such condition that might be suggestive of a heightened risk of impairment of assets
existed at the reporting date.
3.4 Cash and Cash Equivalents:
Considering the provisions of BAS-1 and BAS-7, cash in hand and bank deposits, which were held and available for use of the
company without any restriction have been stated as cash and cash equivalent.
The net cash flow from operating activities is determined by adjusting profit for the period under indirect method as per BAS-7 “Cash
Flow Statement”.
3.5 Accounts Receivable:
Trade receivables are stated at nominal values as reduced by the appropriate allowances for estimated doubtful amounts. No such
receivables are accounted for if the loans are classified as bad and loss. Receivables include the margin loan provided to the clients in
which interest is charged. Such interest is not recognized as income until it is realized from the respective client account.
3.6 Margin Loan:
EBL Securities extends margin loan to the portfolio investors at an agreed ratio (between investors deposit and loan amount) of
purchased securities against the respective investor account. The investors are to maintain the margin as per set rules and regulations.
The margin is monitored on daily basis as it changes due to change in market price of shares. If the margin falls below the minimum
requirement, the investors are required to deposit additional fund to maintain margin as per rules otherwise the securities are sold to

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

bring the margin to the required level.

3.7 Investment in Securities:
Investment in listed securities is recognized at cost. Quarterly impairment test is carried out by comparing cost with market price.
In case of diminution of market value compared to cost, provision is made on portfolio basis but no unrealized gain is booked when
market value exceeds cost.
3.8 Payables:
Trade and other payables are stated at their nominal values.
3.9 Due from/to Related Party:
Due from/to related party is stated at their nominal values.
3.10 Accrued Expenses and Other Liabilities:
Liabilities are recognized for the goods and services received, whether paid or not for those goods and services. Payables are not
interest bearing and are stated at their nominal values.
3.11 Bank Overdraft:
Eastern Bank Limited has sanctioned EBL Securities Ltd. credit facilities of BDT 1,100.00 million out of which BDT 950.00 million and
150.00 million is against overdraft and letter of guarantee respectively vide letter reference no # MS/1082/2013 dated June 24, 2013.
EBL Securities Ltd. facilitates the fund to its clients as margin loan. Interest costs are recognized in the Statement of Comprehensive
Income in the period in which they are incurred.
3.12 Provisions:
Provision is recognized in the Statement of Financial Position when the company has a legal and constructive obligation as a result of
past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate thereof can be made.
3.13 Revenue Recognition:
Revenue, which comprises of brokerage commission, service charges and capital gain, is recognized in accordance with Bangladesh
Accounting Standard (BAS) 18: Revenue Recognition.
3.14 Income from Margin Loan:
Income from margin loan is recognized on accrual basis. Such income is calculated considering daily margin loan balance of the
respective customers. Income is recognized on quarterly rest.
3.15 Dividend Income:
Dividend income from ordinary shares is recognized when the shareholders’ legal rights to receive payments have been established
i.e. during the period in which dividend is declared in the Annual General Meeting. Dividend declared but not received is recognized as
deemed dividend.
3.16 Gain/Loss on Sale of Securities:
Capital gain/loss on disposal of securities listed in the stock exchange is recorded on realized basis i.e. only when securities are sold in
the market.
3.17 Interest Suspense Account:
Suspense interest account is created against interest income from negative equity customers. Since the negative equity customers
are temporarily unable to repay their debt, interest income accrued from those negative equity clients during the year 2013 have been
transferred into the suspense interest account.
3.18 Income Tax Expenses:
Income tax expenses comprise current and deferred tax. Income tax expense is recognized in the Statement of Comprehensive
Income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
3.19 Earnings per Share:
Earnings per share has been computed by dividing the profit after Tax (PAT) by the weighted average number of ordinary shares
outstanding as on December 31, 2013 as per BAS 33: “Earnings Per shares” Diluted earnings per share was not required to be
calculated as their were no dilution possibilities during the year.
3.20 Particulars of Employees:
The number of employees engaged by the company during the year and part thereof was 42 (44 in 2012) and all the staffs of the
company are drawing salary and allowances above Tk 60,000 per annum.
3.21 Events after Statement of Financial Position:
There are no such events after the reporting period existed at the end of the reporting period.
3.22 Currency:
The amounts in the Financial Statements have been rounded off to the nearest integer in Bangladeshi Taka.
3.23 General:
Previous year’s figures have been re-arranged/re-classified, where consider necessary, to conform to current year’s presentation.

261
Auditors’ Report to the
Shareholders of
EBL Investments Limited
We have audited the accompanying financial statements of EBL Investments Limited (the “Company”) which comprise the statement
of financial position as at 31 December 2013, related statement of Comprehensive Income, statement of changes in equity and
statement of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh
Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994 and other applicable
laws and regulations. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor consider internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh
Financial Reporting Standards (BFRS), give a true and fair view of the state of the Company’s affairs as at 31 December 2013 and
of the results of its operations for the year then ended and comply with the Companies Act 1994, the Bangladesh Securities and
Exchange Commission Rule 1987 and other applicable laws and regulations.

Further to our opinion in the above paragraph, we state that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the
purposes of our audit and made due verification thereof;
b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our
examination of those books;
c) the Company’s statement of financial position and statement of comprehensive income dealt with by the report are in agreement
with the books of account and returns; and
d) the expenditure incurred was for the purpose of the Company’s business.

Hoda Vasi Chowdhury & Co.

Dhaka, 20 February 2014 Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL Investments Limited

Statement of Financial Position
As on 31st December 2013

2013 2012
Note Taka Taka
PROPERTY AND ASSETS
Non Current Assets:
Property, Plant & Equipment Less Accumulative Depreciation 3 319,688 -
Intangible Assets Less Amortization 4 788,375 -
Advances, Deposit & Prepayments 5 770,903 -
1,878,966 -

Current Assets:
Accounts Receivable 6 7,276,618 -
Advance Income tax 7 15,906,512 5,636,274
Investments 8 312,645,873 -
Cash & Cash Equivalent 9 8,869,947 345,942,101
344,698,950 351,578,375
TOTAL ASSETS 346,577,916 351,578,375

EQUITY AND LIABILITIES

Shareholders' Equity
Paid up capital 10 300,000,000 300,000,000
Retained earnings 11 19,105,122 42,166,654
Total Shareholders' Equity 319,105,122 342,166,654

Non Current Liabilities 12 - -

Current Liabilities
Accounts Payable 13 3,752,772 -
Provision for tax 14 19,334,278 9,354,221
Provision for diminution in value of investments 15 3,818,249 -
Provision for Expenses 16 58,150 -
Other liabilities 17 509,345 57,500
27,472,794 9,411,721

TOTAL EQUITY AND LIABILITIES 346,577,916 351,578,375

The annexed notes 1 to 27 form an integral part of these financial statements.

Chairman Director Managing Director

Signed as per our annexed
report of same date.

Hoda Vasi Chowdhury & Co.

Dhaka, 20 February 2014 Chartered Accountants

263
EBL Investments Limited
Statement of Comprehensive Income
For the year ended 31st December 2013

2013 2012
Particulars Note Taka Taka
Operating Income

Fees & commission 18 617,499 -

Income from Investment 19 5,238,023 -
Interest income 20 33,595,273 25,013,239
Total operating income 39,450,795 25,013,239

Operating Expense

Administrative Expenses 21 9,038,948 57,500

Financial Expenses 22 65,811 11,150
Total operating expense 9,104,759 68,650
Profit/(Loss) before Provision 30,346,036 24,944,589
Provision for diminution in value of investments 23 3,818,249 -
Profit/(Loss) before Provision for tax 26,527,787 24,944,589
Provision for income tax 24 10,589,318 7,228,118
Net profit after tax 15,938,469 17,716,471

Earning per share 25 5.31 5.91

The annexed notes 1 to 27 form an integral part of these financial statements.

Chairman Director Managing Director

Signed as per our annexed
report of same date.

Hoda Vasi Chowdhury & Co.

Dhaka, 20 February 2014 Chartered Accountants

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL Investments Limited

Cash Flow Statement
For the year ended 31st December 2013

2013 2012
Particulars Note Taka Taka
A. Cash flows from operating activities
Operating Cash flows before changing in operating assets/liabilities 15,938,469 15,376,335
Increase/ Decrease in operating Assets/ Liabilities
Accounts receivable (7,276,618) -
Advance Income Tax (10,270,238) -
Investment in Securities (45,403,373) -
Investment in IPO (5,000) -
Investment in FDR (267,237,500) -
Provision for diminution in value of investments 3,818,249 -
Provision for Expenses 58,150 -
Other liabilities 451,845 -
Increase/ Decrease in other Assets - -
Accounts payable 3,752,772 -
Provision for tax 9,980,057 -
Net cash flow from operating activities (296,193,188) 15,376,335

B. Cash flows from investing activities

Fixed Assets (1,878,966) -
Net cash flow from investing activities (1,878,966) -
C. Cash flows from financing activities
Net financing received from parent - -
Cash Dividend (39,000,000) -
Net cash flow from financing activities (39,000,000) -
D. Net increase/(decrease) in cash and cash equivalents (A+B+C) (337,072,155) 15,376,335
E. Opening cash and cash equivalents 345,942,101 330,565,766
F. Closing cash and cash equivalents 8,869,947 345,942,101

Closing cash and cash equivalents represents

Cash in hand 233 -
Balances with other banks and financial institutions 8,869,714 345,942,101
8,869,947 345,942,101

The annexed notes 1 to 27 form an integral part of these financial statements.

Chairman Director Managing Director

Dhaka, 20 February 2014

265
EBL Investments Limited
Statement of Changes in Equity
For the year ended 31st December 2013

Retained
Share capital Total
earnings
Taka Taka Taka

Balance as at 1 January 2013 300,000,000 42,166,654 342,166,654

Net profit during the period - 15,938,469 15,938,469

Cash dividend paid (for 2012) - (39,000,000) (39,000,000)
- - -
Balance as at 31st December, 2013 300,000,000 19,105,122 319,105,122

Balance as at 31st December, 2012 300,000,000 42,166,654 342,166,654

The annexed notes 1 to 27 form an integral part of these financial statements.

Chairman Director Managing Director

Dhaka, 20 February 2014

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL Investments Limited

Notes to the Financial Statements
As at and for the year ended 31st December 2013

1. Legal status and nature of the Company

EBL Investments Limited (here-in-after referred to as “EBL Investments Limited (EBLIL)” or “the Company”) was incorporated in
Bangladesh with the Registrar of Joint Stock Companies and Firms (RJSCF) vide registration no. C 81417/09 dated 30 December
2009 as a Private Limited Company under the Companies Act, 1994 and obtained required marchant banking license from BSEC in
27th January,2013. This Company is a fully owned subsidiary of Eastern Bank Limited. EBLIL is well equipped with skilled human
resources and business set up to start full fledged operations from July,2013.

EBLIL has started full pledge merchant banking operation during early second half of 2013. The activities of the Company include
services broadly classified as fees and commission based and fund based services, such as underwriting of securities, issue
management, portfolio management, corporate advisory services etc.

2. Significant accounting policies and basis of preparations:

2.1 Statement of compliance

The financial statements of the Company as at and for the period ended 31st December 2013 have been prepared in accordance with
Bangladesh Financial Reporting Standards (BFRS), Companies Act 1994 and other laws and rules applicable in Bangladesh.

2.2 Basis of measurement

The financial statements are prepared on historical cost convention.

2.3 Basis of accounting

The financial statements except for cash flow information have been prepared on accrual basis of accounting.

2.4 Use of estimates and judgments

The preparation of the financial statements requires management to use 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 recognised in the
period in which the estimate is revised and in any future periods affected. However, no such revisions to accounting estimates took
place during the reporting period.

2.5 Reporting period

The financial period of the Company covers one year from 1st January 2013 to 31st December 2013 and is followed consistently.

2.6 Functional and presentation currency and level of precision

The financial statements are presented in Bangladesh Taka (BDT), which is the Company’s functional currency. All financial information
has been rounded off to the nearest Taka.

2.7 Property, plant and equipment

Recognition and measurement

Assets are recognised initially at cost and subsequently at cost less accumulated depreciation in compliance with BAS 16, “Property
Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any direct cost for bringing the assets
to its working condition for its intended use. Expenditure incurred after the assets have been put into use, such as repairs and
maintenance is normally charged off as revenue expenditure in the period in which it is incurred. Software and all up gradation/
enhancement are generally charged off as revenue expenditure unless they bring similar significant additional benefits.

267
 When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property plant and equipment.

Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of an item if it is probable
that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs
of the day to day servicing of property, plant and equipment are recognised in the profit and loss account as incurred.

Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a
component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each components of an item of
property, plant and equipment. Depreciation is charged at the following rates starting from the month of acquisition of assets:

Category of assets Rate of depreciation

Building 2.50%
Furniture and fixtures 10%
Machineries and equipments 20%
Vehicle 20%
Computer and Accessories 20%

No depreciation is charged in the month of disposal.

Disposal of fixed assets

Gains and losses on disposal of an item of property plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of the property plant and equipment disposed off and is recognised net with “other income” in profit and
loss account.

2.8 Intangible assets

Intangible assets are initially recognised at cost including any directly attributable cost. Intangible assets that have finite useful lives
are measured at cost less accumulated amortisation @ 15% and accumulated impairment losses. Intangible assets include software,
integrated systems along with related hardware.

2.9 Books of accounts

The Company maintains its books of accounts in electronic form through Mbank software.

2.10 Cash and cash equivalent and cash flow statement

Considering the provisions of BAS-1 and BAS-7, cash in hand and bank deposits, which were held and available for use of the
Company without any restriction have been stated as cash and cash equivalent.

The net cash flow from operating activities is determined for the period under direct method as per BAS-7 “Cash Flow Statement”.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

2.11 Risk and uncertainty for use of estimates (provisions)

The preparation of financial statements in conformity with Bangladesh Accounting Standards requires management to make estimates
and assumptions that affect the reported amounts of revenue and expenses, assets and liabilities and disclosure requirements for
contingent assets and liabilities during and at the date of the financial statements. Due to inherent uncertainty involved in making
estimates, actual result reported could differ from those estimates.

In accordance with the guidelines as prescribed by BAS 37, Provisions, Contingent Liabilities and Contingent Assets, provisions are
recognised in the following situations:

When the company has an obligation as a result of past events;

When it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
Reliable estimate can be made of the amount of the operation.

A provision is recognised if, as a result of past event, the company has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value
of money and the risks specific to the liability. The unwinding of the discount is recognised as finance costs.

2.12 Revenue Recognition

As per BAS-18, “Revenue” is recognised when it is probable that the economic benefits associated with the transaction will flow
to the Company and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be measured
reliably.

2.12.1 Fees and Commission income arises on services rendered by the company and recognized on and accrual basis.

2.12.2 Interest income is accounted on accrual basis.

2.13 Income and expenditures

Income and expenditures are recognised on accrual basis. Income is only recognised if its realisation is reasonably certain.

2.14 General

Certain corresponding figures have been rearranged/reclassified to conform to the current year's presentation adopted in these
financial statements.

269
EBL Finance (HK) Limited
Report of the Directors

The directors present their report together with the audited financial statements for the period from 28 November 2011 (Date of incorporation)
to 31 December 2013.

Principal activities
The principal activity of the Company is engaged in money lending business.

Results
The results of the Company for the period ended 31 December 2013 and the state of affairs of the Company at that date are set out on pages 5
and 6.

Share capital
Movements in share capital during the period are set in note 12 to the financial statements.

Directors
The sole director during the period and up to the date of this report was:-

Eastern Bank Limited (Appointed on 28 November 2011)

In accordance with the Company’s Articles of Association, all directors are not subject to rotation or retirement at the annual general meeting
and are therefore continue in office.

Directors’ interests in contracts

Save as disclosed in note 14 to the financial statements, no other contract of significance to which the Company or its holding company was a
party and in which a director of the Company had a material interest subsisted at the end of the period or at any time during the period.

Directors’ rights to acquire shares and debentures

At no time during the period was the Company or its holding company a party to any arrangement to enable the directors of the Company to
acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.

Management contracts
No contract concerning the management and administration of the whole or any substantial part of the business of the Company was entered
into or existed during the period.

Other matters
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements which
would render any amount stated in the financial statements misleading.

Auditor
The financial statements have been audited by Kingston C.P.A. Limited who retire and, being eligible, offer themselves for re-appointment.

By Order of the Board

For and on behalf of
Eastern Bank Limited

Chairman/Director
Hong Kong, 24 January 2014

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

Independent Auditor’s Report

To The Shareholders of EBL Finance (HK) Limited
(Incorporated in Hong Kong with limited liability)

We have audited the financial statements of EBL Finance (HK) Limited (“the Company”) set out on pages 5 to 16, which comprise the balance
sheet as at 31 December 2013, and the income statement, statement of changes in equity and cash flow statement for the period then ended,
and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Financial Statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with Hong Kong Financial
Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants 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.

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit solely to you, as a body, in accordance with
section 141 of the 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. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong
Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements give a true and fair view of the state of the Company’s affairs as at 31 December 2013,and of its loss
and cash flows for the period then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in
accordance with the Hong Kong Companies Ordinance.

Kingston C.P.A. Limited

Certified Public Accountants, Hong Kong
Auditor, Tony K.Y. Ng; P.C. No. P01792
24 January 2014

271
EBL Finance (HK) Limited
Balance Sheet - 31 December 2013
Note HK$
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment 8 180,307

Current assets 9
Bills financed 28,840,895
Other receivables 471,699
Deposits and prepayments 140,300
Cash and bank balances 7,912,851
37,365,745
Current liabilities
Accrual and other payables 555,733
Temporary receipts 4,892,901
Amounts due to a holding company 10 260,898
Loan from a holding company 11 31,387,500
37,097,032
Net current assets 268,713
Net assets 449,020
EQUITY
Capital and reserves
Share capital
Authorised, issued and fully paid -
1,410,000 ordinary share of HK$1 each 12 1,410,000
Accumulated losses (960,980)
Total equity 449,020

Approved and authorised for issue by the board of directors on 24 January 2014

By Order of the Board

For and on behalf of
Eastern Bank Limited

Sole Director

The annexed notes form an integral part of these financial statements.

EASTERN BANK LIMITED ANNUAL REPORT 2013

EBL Finance (HK) Limited

Income Statement
PERIOD FROM 28 NOVEMBER 2011
(DATE OF INCORPORATION)
TO 31 DECEMBER 2013

Particulars Note HK$

Turnover 4 1,241,968
Cost of sales (283,080)
Gross profit 958,888
Other revenues and net gains or losses 4 42,944
Operating expenses (1,962,812)
Operating loss 5 (960,980)
Finance costs -
Loss for the period carried forward (960,980)

STATEMENT OF CHANGES IN EQUITY

PERIOD FROM 28 NOVEMBER 2011
(DATE OF INCORPORATION)
TO 31 DECEMBER 2013

Share capital Accumulated losses Total

HK$ HK$ HK$
Issuance of share capital (Note 12) 1,410,000 - 1,410,000
Net loss for the period - (960,980) (960,980)
Balance at 31 December 2013 1,410,000 (960,980) 449,020

The annexed notes form an integral part of these financial statements.

273
EBL FINANCE (HK) LIMITED
CASH FLOW STATEMENT
PERIOD FROM 28 NOVEMBER 2011
(DATE OF INCORPORATION)
TO 31 DECEMBER 2013

HK$

Operating activities
Loss before taxation (960,980)
Adjustment for:
Interest expense 283,080
Depreciation 64,062
Operating cash flows before working capital changes (613,838)
Increase in bills financed 28,840,895)
Increase in other receivables (471,699)
Increase in deposits and prepayments (140,300)
Increase in accruals and other payables 555,733
Increase in temporary receipts 4,892,901
Increase in amounts due to a holding company 260,898
Increase in loan from a holding company 31,387,500
Cash generated from operations 7,030,300
Interest paid (283,080)
Net cash generated from operating activities 6,747,220
Net cash used in from investing activities
Payments to acquire property, plant and equipment (244,369)
Net cash generated from financing activities
Proceeds from issue of share capital 1,410,000
Net increase in cash and cash equivalents 7,912,851
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 7,912,851
Analysis of cash and cash equivalents at end of period
Bank balances 7,912,851

EASTERN BANK LIMITED ANNUAL REPORT 2013

 financial reports 2013

EBL FINANCE (HK) LIMITED

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2013

1. ORGANISATION AND OPERATIONS

The Company is a private company incorporated in Hong Kong with limited liability. The address of its registered office is Unit
1201, 12th Floor, Albion Plaza, 2-6 Granville Road, Tsimshatsui, Hong Kong.
During the period, the Company engaged in money lending business.

2 APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (HKFRSs),
accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance.
The Company has not early applied the following new standards, amendments or interpretations that have been issued and
relevant to the Company but are not yet effective. The directors of the Company anticipate that the application of these standards,
amendments or interpretations will have no material impact on the results and the financial position of the Company.

HKFRS 9 Financial Instruments 2

HKFRS 13 Fair Value Measurement 1

1
Effective for annual periods beginning on or after 1 January 2013.
2
Effective for annual periods beginning on or after 1 January 2015.

3 PRINCIPAL ACCOUNTING POLICIES

(a) Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention, as modified by the available-for-sale financial
assets, financial assets and financial liabilities at fair value through profit or loss.
The financial statements have also been prepared under the accrual basis of accounting.
(b) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is provided to write off the cost of items of property, plant and equipment over their estimated useful lives and after
taking into account of their estimated residual value, using the straight-line method. Assets held under finance leases are depreciated
over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.
The useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The principal annual rates are as follows:-

Machineries and equipments 20% - 33.33%

Furniture and fixtures 20%

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year in which the item is
derecognised.
(c) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as 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.
(d) Impairment losses
At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to
be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in prior years. A reversal of an impairment loss is recognised as
income immediately.

275
 PRINCIPAL ACCOUNTING POLICIES (CONT’D)
(e) Cash and cash equivalents
Cash and cash equivalents include cash in hand, short-term deposits held at banks, other short-term highly liquid investments with
original maturities of three months or less.
(f) 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, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous year.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax base used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised 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 is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
(g) Other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of other 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 receivables. The amount of the
provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at
the effective interest rate. The amount of the provision is recognised in the income statement.
(h) Other payables
Other payables are recognised initially at fair value and subsequently stated at amortised cost. The difference between the proceeds
and the amount payable is recognised over the period of the payable using the effective interest method.
(i) Foreign currencies
(i) Functional and presentation currency
Items included in the Company’s financial statements are measured using the currency of the primary economic
environment in which it operates (the “functional currency”). These financial statements are presented in Hong Kong dollar,
which is the Company’s functional and presentation currency.
(ii) Transactions, assets and liabilities
Transactions in foreign currencies are translated at the approximate rates ruling on the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies are translated at the approximate rates ruling on the balance sheet
date. Exchange differences are dealt with through the income statement.
(j) Related parties
Two parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial and operating decisions. Parties are also considered to be related
if they are subject to common control or common significant influence.
(k) Revenue recognition
(i) Interest income is recognised on a time proportion basis.
(ii) Fees, commission and charges on letter of credit are recognised when the services are provided.

4. TURNOVER, OTHER REVENUES AND NET GAINS OR LOSSES

Turnover represents interest income on bills financed; fees, commission and charges on letter of credit.
Revenues recognised during the period are as follows:-
HK$
Turnover
Interest income on bills financed 633,289
Fees, commission and charges on letter of credit 608,679
Other revenues and net gains or losses 1,241,968
Net exchange gain 42,944
Total revenues 1,284,912

EASTERN BANK LIMITED ANNUAL REPORT 2013

 HK$
5. OPERATING LOSS
Operating loss is stated after charging:-
Auditor’s remuneration 35,000
Depreciation 64,062
Operating lease charges 640,084
Preliminary expenses 9,130
Salaries and wages 718,443

6. TAXATION
(a) No provision for Hong Kong Profits Tax has been made in the financial statements as the Company has no assessable profit for
the period.
(b) No provision for deferred taxation has been made in the financial statements as there are no material deductible and taxable
temporary differences needed to be accounted for in the period.

7. DIRECTORS’ EMOLUMENTS
During the period ended 31 December 2013, no amounts have been paid in respect of directors’ emoluments, directors’ or past
directors’ pensions or for any compensation to directors or past directors in respect of loss of office.

8. PROPERTY, PLANT AND EQUIPMENT

Machineries Furniture
Total
and equipments and fixtures
HK$
HK$ HK$
COST
Acquisition at cost 63,730 180,639 244,369
Accumulated Depreciation For The Period 11,276 52,786 64,062
Carrying Amounts At 31 December 2013 52,454 127,853 180,307

9. BILLS FINANCED
The following is the aging analysis of bills financed at the balance sheet date:-
HK$
0-3 months 23,133,001
4-6 months 5,707,894
7-9 months -
10-12 months -
Over 12 months -
28,840,895

10. AMOUNTS DUE TO A HOLDING COMPANY

The amounts are unsecured, interest-free and with no fixed term of repayment.

11. LOAN FROM A HOLDING COMPANY

The amounts are unsecured with 3.5% interest rate per annum and repayable within one year.

12. SHARE CAPITAL

During the period, 1,410,000 subscriber’s shares of HK$1 each were issued at par for working capital.

277
 13. COMMITMENTS UNDER OPERATING LEASE
At 31 December 2013, total future minimum lease payments under non-cancellable operating leases are payable as follows:-

Land and
building
HK$
Within 1 year 174,930
After 1 year but within 5 years -
Over 5 years -
174,930

14. RELATED PARTY TRANSACTIONS

During the period, the Company had the following transaction with a related party in the normal course of business:-

Type of transaction Related party HK$

Interest expense Holding company 283,080

15. FINANCIAL RISK MANAGEMENT

The Company is exposed to various kinds of risks in its operation and financial instruments. The Company’s risk management
objectives and policies mainly focus on minimising the potential adverse effects of these risks on the Company by closely monitoring
the individual exposure as follows:-

(a) Market risk

(i) Currency risk
(1) The Company receives its interest income and service fee, mainly in US dollar, that exposes itself to foreign currency risk
arising from such transactions and the resulting payables and receivables. The Company closely and continuously monitors the
exposure as follows:-
HK dollar is pegged to US dollar, there is no significant exposure expected on US dollar transactions and balances.
(2) Sensitivity analysis
As the net exposure of the Company to foreign currency is relatively small, change in foreign currency exchange rate will have no
material impact on the financial performance of the Company.
(ii) Interest rate risk
The Company’s exposure on interest rate risk is mainly on its interest bearing borrowings. In order to manage the interest rate
risk, the Company will repay the corresponding borrowing when it has surplus fund.
(iii) Price risk
There is no significant price risk as the Company does not have any investment that are traded in an active market.

(b) Credit risk

The major exposure to credit risk of the Company’s financial assets, which comprise bills financed, deposits and prepayments and
cash and bank balances, arises from the default of the counterparties, with a maximum exposure equal to the carrying amount of
these financial assets in the balance sheet.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 (c) Liquidity risk
The Company manages its funds conservatively. The shareholders of the Company would provide sufficient fund to meet continuous
operational need.
The maturity profile of all financial liabilities of the Company as at the
balance sheet date is as follows:-

HK$
Due and payable
0-3 months 10,359,532
4-6 months 3,487,500
7-9 months 8,525,000
10-12 months 14,725,000
Over 12 months -
Total current liabilities 37,097,032

(d) Fair value

The Company’s financial instruments are carried at amounts not materially different from their fair values as at 31 December 2013.

16. IMMEDIATE AND ULTIMATE HOLDING COMPANY

The directors regard Eastern Bank Limited, a company incorporated in Bangladesh, as being the immediate and ultimate holding
company.

17. FINANCIAL STATEMENTS PRESENTED FOR A PERIOD LONGER THAN ONE YEAR
The financial statements cover a period from 28 November 2011 (Date of incorporation) to 31 December 2013. The directors of the
Company consider the preparation of annual financial statements would involve expenses and delay out of proportion to the value to
the members of the Company.

279
branch network
Dhaka 8300029, Fax: 8300053 South Keraniganj, Dhaka
Principal Branch/Student Center Email: [email protected] Tel: 02 7763725, 7763726,7763727
Jiban Bima Bhaban, 10 Dilkusha C/A, Dhaka 1000 Moghbazar Branch/SME Center Email: [email protected]
Tel: 02 9558392, 9565696, 9571262 Shafi Complex, 1/A West Moghbazar, New Mirpur Dar-Us-salam Road Branch
Fax: 02 7160747. Email: [email protected] Circular Road, Chand plaza, 10 Dar-Us- Salam Road,
Motijheel Branch/SME Center Ramna, Dhaka. Tel: 02 9361756, 9360115 Mirpur-01, Dhaka-1216
88 Motijheel C/A, Dhaka Fax: 02 9348570 Email: moghbazar@ebl-bd. Tel: 02 9003465 Fax: 02 9003449
Tel: 02 9559655, 9565073-4. Fax: 02 9565074 com Email: [email protected]
Email: [email protected] English Road Branch/SME Center Narayanganj SME/Agri Branch
Gulshan Branch 68, Shahid Sayed Nazrul Islam Sarani 34, ASP Bhaban, Mahim Ganguly Road,
Concord Richmond, 68 Gulshan Avenue, Plot (1st & 2nd floor), North South Road, Tanbazar, Narayanganj.
8A Block Dhaka-1100, Tel: 02 7125269, 7116019 Tel: 02 7644480, 7644048, Fax: 02 7644077
CES (F) Gulshan 1, Dhaka Email: [email protected] Email: [email protected]
Tel: 02 9897703, 9897594, 8827254, 8827101-2 Chawk Mughultuly Branch/SME Center Tangail Branch
Fax: 02 9897703. Email: [email protected] 150 Chawk Mughultuly (1st Floor), Dhaka “Rahman Center” (1st floor),
Bashundhara Branch Tel: 02 7314364, 7314369 55 Victoria Road, Tangail
Plot-15, Block-A, Bashundhara R/A, Email: [email protected] Tel: 092162437, 092162438, 092162439
Badda, Dhaka-1219 Narayangonj Branch Email: [email protected]
Tel: 8845391, 8845392, Fax: 8845390 64 BB Road (Islam Plaza), Narayangonj Mymensingh SME/Agri Branch
Email: [email protected] Tel: 02 7648557-58 “Hamida Market”, 45 Choto bazaar,
Banani Branch/Student Center Email: [email protected] Kotwaly, Mymensingh
“Skylark Mark84” House # 84, Road # 11, Keraniganj Branch Tel: 09163831, 09163861, 09163841
Block-D, Banani, Dhaka, Banani Model Town, Jahanara Plaza, Bondh Dakpara, Zinzira, Email: [email protected]
Gulshan, Dhaka - 1213, Tel: Phone: 9862669, Keraniganj, Dhaka Bhairab SME/Agri Branch
9862572,9860476 Fax: 9862903 Tel: 02 7762236-7 House-0161, Kalibari Road, Bhairab Bazar,
Email: [email protected] Email: [email protected] Kishorgonj, Bhairab
Uttara Branch/SME Center Board Bazar Branch/SME Center Tel: 09424 72307, 09424 72308,
Plot 1A, Road 4, Sector 4, Uttara Model Omar Ali Plaza, House 1, Block C, Board Fax: 09424 72309,
Town, Dhaka Bazar, Gazipur Email: [email protected]
Tel: 02 8915136, 8919051, 8950470, 7911128 Tel: 02 9293895-6 Dohar Branch
Fax: 02 8918859 Email: [email protected] Email: [email protected] Ashraf Ali Chowdhury Plaza,
Mirpur Branch/SME Center Savar Branch 83, College Road, Joypara,
House # 17, Main Road # 3, Block-A, E/3, Tala Bagh, Thana Road, Savar, Dhaka Dohar, Dhaka
Section-11, Tel: 02 7744757-8 Fax: 02 7744759 Tel: 06223-56211, 06223-56209, 06223-56208
Mirpur, Dhaka-1216 Satmosjid Road Branch Email: [email protected]
Tel: 02 -9008115, 9010478 48, Satmosjid Road (Ground floor of Faridpur Branch
Email: [email protected] OLYMPIA Chinese Golpukur Dream Shopping Complex
Shyamoli Branch/SME Center Restaurant) Dhanmondi, 7/216, Mujib Road, Faridpur
Plot 16-A/5, Ring Road, Block F, Tel: 02 9144603 Fax: 02 9144604 Tel: 0631-67218, 0631-67219, 0631-67220
Mohammadpur Housing Estate, Dhaka 1207 Banasree Branch Email: [email protected]
Tel: 02 8116015, 9132497, 9133165 Plot No-10 (1st Floor & ATM at GF), Progoti Sarani Branch
Email: [email protected] Block-C, Eastern Housing Banasree Project, Azahar Comfort Complex, 130/A, Progoti
Dhanmondi Branch/Student Center Banasree Rampura, Dhaka. Sarani, Middle Badda, Gulshan, Dhaka
House 21, Road 8, Dhanmondi R/A, Tel: 02 7287991, 7286266 Tel: 8826796, 8825357, 8824963
Dhaka-1205 Uttara Garib-E-Newaz Branch Email: [email protected]
Tel: 02 9126141, 9114145, 9146235 Plot No-15 (1st floor), Garib-E-Newaz Azimpur Branch
Email: [email protected] Avenue, Sector-11, Tulip Feroza Dream, 104, Azimpur Road,
Sonargaon Road Branch/SME Center Uttara, Dhaka-1230 Hazaribagh, Dhaka
‘A.H.N. Tower’ (1st Floor), Tel: 02 8915457, 8915447 Tel: 9660483, 9612004, 9612005
13 & 15, Sonargaon Road, Ramna, Email: [email protected] Email: [email protected]
Dhaka Nawabgonj Branch Madhabdi SME/Agri Branch
Tel: 02 8613225, 8619866 Hossain Plaza, Kolakopa Union Parishad, 242/1, Algi Road, Madhabdi Bazar,
Email: [email protected] Nawabgonj, Dhaka-1320 Parkashipur, Madhabdi, Narshindi
Shantinagar Branch/SME Center Tel: 0622556264, 0622556266, 0622556265 Tel: 9446995, 9446978, 9446993
Iris Noorjehan (1st Floor) Plot no. 104, Kakrail Road Email: [email protected] Email: [email protected]
Ramna, Dhaka Keraniganj SME/Agri Branch DEPZ Branch
Tel: 02 8300012, 02 8300013, 02 8300028, 02 ‘Green Tower’, Aganagar Union Parishad, Mazid Tower, Baipail, Dhamshona, Ashulia,

EASTERN BANK LIMITED ANNUAL REPORT 2013

Dhaka, Tel: 02 7790926, Fax: 02 7790927 Choumuhani Branch Maijdee Branch
Email: [email protected] “Kiron Imperial” (GF, 1st and 2nd Floor), 1460 Alif Plaza, Main Road, Maijdee, Noakhali
Dakshinkhan Branch Karimpur Road, Tel: 0321 71115, 0321 71116, Fax 880 0321
Golam Sharif Market, 250/A, Ashkona, Choumuhoni , Begumgonj, Noakhali 71137, Email: [email protected]
Dakshinkhan, Uttara, Dhaka Phone: 0321 56497, 0321 56495, 0321 56496 Jamal Khan Branch
Tel: 01714075356, 01819132494, Cox’s Bazar Branch/SME Center CPDL AM Majesta(1st Floor),
01775828814, 10 Hotel Motel Zone, Kolatali Road, Cox’s 84, Jamal Khan Road, Chittagong.
Email: [email protected] Bazar Tel : 031-2866603-04 ,Fax-88 031-2866605
Wari Branch Tel: 0341-51295-7 Email: [email protected] Dohazari Branch
40/1 Rankin street, Wari, Dhaka Feni SME/Agri Branch Hazari Tower (01st Floor), Dohazari,
Tel: 02 7112175, 02 7110137, Fax: 02 “Kazi Alamgir Center”, 26 S.S.K Road, Feni Chandanaish, Chittagong. Tel : 09666777325
7110949, Email: [email protected] Tel: 0331 73562, 0331 73563, 0331 73564 Sylhet
Jashim Uddin Road Branch Email: [email protected] Upasahar Branch
Giant Business Tower, Level 2, Plot 3 & 3/A, Halishahar Branch 504, Gas Bhaban (GF)
Sector 3, Uttara, Dhaka House-1, Road-1, Block-L, Halishahar Mehdi Bagh, Sylhet
Tel: 028961486, 028961481, 028961472 Housing Estate Tel: 0821 719573, 719584 Fax: 0821 719584
Email: [email protected] Halishahar, Chittagong. Email: [email protected]
Ponchoboti Branch Tel: 031 2513895, 031 2513896-7 Chouhatta Branch/SME Center
101 & 102 ponchobotir more (1st floor), Email: [email protected] Firoz Centre,
Fatullah, Narayangonj Sirajuddowla Road Branch 891/KA, Chouhatta, Sylhet
Tel: +88-02-7672837, 7672853, 94, Siraj-Ud-Doula Road Tel: 0821-717545, 723242, 721386 Fax: 0821
Fax: +88-02-7672884 (opposite to Didar Market), 717545, Email: [email protected]
Chittagong Dewan Bazaar, Chandanpura, Chittagong Bishwanath Branch
Agrabad Branch/SME Center Tel: 031 2865261-4 Khurshid Ali Shopping Complex
33 Agrabad C/A, Chittagong CEPZ Chittagong Branch Notun Bazar, Bishwanath, Sylhet-3100
Tel: 031-720755-9 Fax: 031 710262 1279/A Saleh Complex, CEPZ Gate, Bandar, Tel: 08224 56005
Email: [email protected] Chittagong. Email: [email protected]
Station Road Branch Tel: 031 742195, 031 742196, 031 742197 Moulvi Bazar Branch/SME Center
Asian S. R. Hotel, (GF) Email: [email protected] 26, Sylhet Trunk Road (1st Floor),
291, Station Road, Chittagong Lohagara Chittagong Branch Moulvi Bazar-3200
Tel: 031-621898, 636986, 620519 Fax: 031 M. K. Shopping Complex (1st Floor), Tel: 0861 52034 , 0861 52226
620519, Email: [email protected] Bottoli, Main Road, Lohagara, Chittagong Email: [email protected]
Khatunganj Branch Tel: 0303 456681, 0303 456682 Fax: 0303 Brahmanbaria Branch
173 Khatunganj Badsha Market, 456682, Email: [email protected] Abil Mia Plaza, 106, T.A. Road, Brahmanbaria
Chittagong. Hathazari Chittagong Branch Tel: 01194493940, 01715073206,
Tel: 031 621316, 630229, 635153 Fax: 031 Haji Sultan Market, Hathazari Bus Stand, 01743438386, Email: [email protected]
638743, Email: [email protected] Hathazari, Chittagong Khulna
O. R. Nizam Road Branch Tel: 031-2601956, 031-2601957, Fax: 031- Khulna Branch/SME Center
Avenue Centre, 787 CDA Avenue, Chittagong 2601958, Email: [email protected] Tayamun Centre & Properties
Tel: 031-617082, 617083, 2853251, 2857073-5 Comilla SME/Agri Branch 181, Khan A. Sabur Road, Khulna
Fax: 031 617083 Email: [email protected] Chowdhury Plaza, 195, Jail Road, Tel: 041 723506, 721069, 720041-2, 723418
Jubilee Road Branch/SME Center Jhawtala, Comilla Fax: 041 721740, Email: [email protected]
Mannan Bhaban, 156 Nur Ahmed Sarak, Tel: 08172778, 08172779, 08172479, Jessore Branch/SME Center
Jubilee Road, Chittagong 08172679, 08172478 25/A R.N. Road (1st Floor)
Tel: 031 614442, 031 621480, 2858471 Email: [email protected] Jessore, Tel: 0421-68842-3, 0421-64533
Fax: 031 615594. Email: [email protected] Nazirhat Branch Email: [email protected]
Chandgaon Branch Zaria Community Centre, (Adjacent to Dorbar Rajshahi
House-16, Road-01, Block-A, Chandgaon R/A Gate) Rajshahi Branch/SME Center
Chittagong–4212 Nazirhat, Fatickchari, Chittagong Doinik Barta Complex (Ground Floor)
Tel: 031 2571204, 2571205, 2572704 Tel: 044 3800 0504-5 Ext: 101, 017 1310 Alupotti, Natore Road, Rajshahi-6000
Email: [email protected] 7217, Email: [email protected] Tel: 0721 772372, 772356 Fax 9721 772356
Panchlaish Branch Bhatiari Branch Email: [email protected]
Al-Hakim Plaza Sajeda Bhaban(Ground Floor, 1st & 2nd Bogra Branch/SME Center
14, Panchlaish R/A, Chittagong-4203 floor)”, beside H.Akbar Ali Road, 1020/1092, Satani Mega Centre, Sherpur
Tel: 031 2552691, 031-2553556 Fax: 031 Bhatiari,Chittagong Road, Bogra 5800
2552692, Email: [email protected] Tel: 044 38000567, 044 38000568 Tel: 051 78373, 78887 , 69932
Raozan Branch Email: [email protected] Email: [email protected]
Bharetoshowri Market, Kaptai Road Mehdibagh Branch Rangpur
Noapara, Raozan, Chittagong-4346 Emdad Heights, 38 Chatteshwari Circle, Rangpur Branch
Tel: 031 2571207 Mehdibagh, Chittagong House-11, Road-1, Dhap Jail Road, Rangpur
Email: [email protected] Tel: 031 2869451 - 2, Fax 031 2869453 Tel: 052155289, 052155290, 052155291
Email: [email protected] Email: [email protected]

281
correspondent
bank network
ALGERIA Standard Chartred Bank ICICI Bank Canada
ALGIERS Arab Investment Company Bank of MontrealNA
Citibank NA Algeria The Bank of Tokyo Mitsubishi UFJ Ltd State Bank of India
BMI Bank BSC (C) BNP Paribas S.A
ARGENTINA
BUOENS AIRES BELGIUM CHINA
Bank Boston NA Argentina BRUSSELS BEIJING
Deutsche Bank Ag ABN AMRO Bank NV BANK OF CHINA
Citibank International PLC BANK OF MONTREAL (CHINA) CO. LTD.
AUSTRALIA The Bank of Tokyo Mitsubishi UFJ Ltd BEIJING, CHINA
MELBOURNE ING Bank Belgium BANK OF TOKYO-MITSUBISHI UFJ (CHINA),
Citibank NA Commerzbank AG, Belgium LTD
Dexia Bank SA JPMORGAN CHASE BANK (CHINA)
SYDNEY BNP Paribas S.A. Belgium COMPANY LIMITED BEJING BRANCH
JP Morgan Chase Bank N.A. Deutsche Bank AG Bank Of Communications Co Ltd
Citibank NA ICICI Bank UK PLC DEUTSCHE BANK AG
HSBC Bank Australia KBC Bank NV WOORI BANK (CHINA) LIMITED (ALL CHINA
The Bank of Tokyo Mitsubishi UFJ Ltd LLOYDS TSB Bank PLC OFFICES)
BNP Paribas Sydney THE ROYAL BANK OF SCOTLAND N.V. Industrial and Commercial bank of China
Westpac Banking Corporation (BELGIUM) SUMITOMO MITSUI BANKING
COMMONWEALTH BANK OF AUSTRALIA COMMERZBANK BRUSSELS BELGIUM CORPORATION
SYDNEY State Bank of India GUANGZHOU
CITI BANK NA SYDNEY, AUSTRALIA Bank of China
BHUTAN JP Morgan Chase Bank (China)
AUSTRIA PHUNTSHOLING SHANGHAI
VIENNA Bank of Bhutan BANK OF MONTREAL (CHINA) CO. LTD.
RaiffeisenZentralbankOesterreich THIMPU SHANGHAI, CHINA
The Bank of Tokyo Mitsubishi UFJ Ltd. Bhutan National Bank Ltd. BANK OF TOKYO-MITSUBISHI UFJ (CHINA),
Citibank International PLC LTD. (SHANGHAI BRANCH)
Deutsche Bank Aktiengesellschaft BRAZIL JPMORGAN CHASE BANK N.A.
UniCredit Bank Austria AG PAULISTA CITI BANK, N.A.SHANGHAI BR. CHINA.
Bank Gutmann Banco de Tokyo-Mitsubishi UFJBrasilSA COMMERZBANK AG
BurgenlaendischeRaiffeisenbankInEisenstadt SAO PAULO Bank of Chongging, China
RaiffeisenbankAlberschwende Banco Citibank SA Deutsche Bank (China) Co. Ltd. Shanghai,
RAIFFEISENLANDESBANK BURGENLAND Deutsche Bank SA China
RGMBH CITIBANK N.A. HSBC BANK (CHINA) COMPANY LIMITED
RAIFFEISENLANDESBANK VORARLBERG PORTO ALEGRE THE BANK OF NEW YORK MELLON,
RAIFFEISENLANDESBANK KAERNTEN, Banco Do Estado Do Rio Grande Do Sul S/A SHANGHAI BRANCH (SHANGHAI BRANCH)
REG.GEN.M.B.H. JIANGSU JIANGYIN RURAL COMMERCIAL
RAIFFEISENLANDESBANK CAMEROON BANK
OBEROESTERREICH CITIBANK N.A. MIZUHO CORPORATE BANK (CHINA),LTD
AKTIENGESELLSCHAFT STANDARD CHARTERED BANK BANK OF NOVA SCOTIA
RAIFFEISEN-LANDESBANK STEIERMARK CAMEROON S.A. Wells Fargo Bank NA
AG NANHAI RURAL CREDIT UNION
CANADA STANDARD CHARTERED BANK.
BAHRAIN TORONTO SHENZHEN
MANAMA Bank of Nova Scotia BANK OF TOKYO-MITSUBISHI UFJ (CHINA),
ALUBAF Arab International Bank B.S.C. ( C ), Toronto Dominio Bank, Canada LTD
Manama, Bahrain Citibank NA DEUTSCHE BANK AG
Citibank NA Bahrain HSBC Bank Canada

EASTERN BANK LIMITED ANNUAL REPORT 2013

TIANJIN FRANCE DUESSELDORF
BANK OF TOKYO-MITSUBISHI UFJ (CHINA), PARIS BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
LTD Attijariwafa Bank Europe, Paris, France THE (DUESSELDORF BRANCH)
Bnp Paribas S.A. HSBC TRINKAUS UND BURKHARDT
PINGHU The Bank Of Tokyo-Mitsubishi Limite WESTLB AG
ZHEJIANG PINGHU RURAL COOPERATIVE Hongkong Shanghai Banking Corp. Ccf WGZ Bank AG (Westdeutsche
BANK Citibank International Plc Genossenschafts-Zentralbank)
Credit Mutuel (Holding Bfcm)
SHAOXING Credit Mutuel - Cic Banques (Banque HUMBURG
BANK OF RUIFENG (FORMERLY ZHEJIANG Federative Credit Mutuel - Bfcm) JOH. BERENBERG,GOSSLER UND CO.KG
SHAOXING COUNTY RURAL COOPERATIVE Banque Fédérative Du Crédit Mutuel COMMERZ BANK, HUMBRUG, GERMANY
BANK) Commerzbank Ag DANSKE BANK Hamburg
Deutsche Bank Ag DEUTSCHE BANK AG
CAYMAN ISLANDS Deutschland Ag UNICREDIT BANK AG
COMMERZBANK AG Mizuho Corporate Bank Ltd, New York
Branch HANNOVER
CONGO National Bank Of Pakistan DEUTSCHE BANK AG
CITIBANK CONGO UBAF
STUTTGART
CYPRUS GABON LANDESBANK BADEN-WUERTTEMBERG
NICOSIA (LEFKOSIA) LIBREVILLE
BANK OF CYPRUS PUBLIC COMPANY Citibank N.A. PASSAU
LIMITED RAIFFEISENLANDESBANK
GAMBIA OBEROESTERREICH
CZECH REPUBLIC BANJUL AKTIENGESELLSCHAFT
PRAGUE Standard Chartered Bank ZWEIGNIEDERLASSUNG BAYERN
CeskoslovenskaObchodni Banka AS
Citibank AS GERMANY GREECE
Deutsche Bank Ag FRANKFURT AM MAIN ATHENS
Unicredit Bank BHF-BANK AKTIENGESELLSCHAFT Bank of Cyprus Public Company Limited
J.P.MORGAN AG Citibank International PLC
DENMARK CITIGROUP GLOBAL MARKETS
COPENHAGEN DEUTSCHLAND AG UND CO KGAA HONG KONG
Citibank International PLC COMMERZBANK AG HONG KONG
Danske Bank AS DEUTSCHE BANK AG
Sydbank A/S SEB AG SEB MERCHANT BANKING THE ROYAL BANK OF SCOTLAND N.V.,
Nordea Bank DZ BANK AG DEUTSCHE ZENTRAL (HONG KONG) BRANCH (FORMER ABN
Svenska Handels Banken, Denmark GENOSSENSCHAFTSBANK AMRO)
ING BANK DEUTSCHLAND AG AXIS Bank, Hong Kong
EGYPT SCB, GERMANY INTESA SANPAOLO SPA HONG KONG
CAIRO BNP PARIBAS KING ROAD HK
Citibank Cairo MUENCHEN BANK OF AMERICA, N.A. HONG KONG
HSBC Bank NA, New york. USA DEUTSCHE BANK AG BANK OF TOKYO-MITSUBISHI UFJ LTD.
Housing and Development Bank UNICREDIT BANK AG, MUENCHEN< UNICREDIT BANK AG HONG KONG
BNP Paribas GERMANY BRANCH (HYPOVEREINSBANK HONG
KONG BRANCH)
FINLAND BERLIN JP MORGAN CHASE BANK N.A.
HELSINKI BERLINER VOLKSBANK EG Citibank N.A.
Citibank International PLC COMMERZBANK AG CITI BANK NA HONG KONG
Nordea Bank PLC DEUTSCHE BANK AG COMMERZBANK AG HONG KONG
SvenskaHandelsbanken BRANCH
Pohjola Bank PLC CHEMNITZ DEUTSCHE BANK AG
Aktia Bank DEUTSCHE BANK AG EBL FINANCE (HK) LIMITED
Sampo Bank (Part Of Danske Bank Group). FORTIS BANK, HONG KONG
Skandinaviska Enskilda Banken DRESDEN HABIB FINANCE INTERNATIONAL LIMITED
DEUTSCHE BANK AG SVENSKA HANDELSBANKEN AB

283
HBZ FINANCE LTD.HONG KONG ICICI BANK LIMITED MILAN
HSBC HONGKONG MASHREQ BANK PLC INTESA SANPAOLO SPA (FORMERLY
ICICI BANK LTD, HONG KONG UNITED BANK OF INDIA BANCA INTESA SPA), Milan Br.
THE BANK OF NEW YORK MELLON, HONG DELHI BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
KONG BRANCH BANK OF TOKYO-MITSUBISHI UFJ THE (MILAN BRANCH)
MIZUHO CORPORATE BANK, LTD. (CHINA), LTD BANCA POPOLARE DI MILANO S C A R L
LONDON BRANCH CITI BANK MILAN, ITALY
CALCUTTA
MASHREQBANK LONDON COMMERZBANK AG
SONALI BANK
BANK OF NOVA SCOTIA, THE DEUTSCHE BANK AG
Wells Fargo Bank NA BANCA ALPI MARITTIME CREDITO
INDONESIA
STANDARD CHARTERED BANK GAMBIA COOPERATIVO CARRU-SOC.COOP
JAKARTA
LIMITED ING BANK NV
Bank Negara Indonesia-PT(Persero) Jakarta,
SUMITOMO MITSUI BANKING MIZUHO CORPORATE BANK. HONG KONG
Indonesia
CORPORATION BANCA POPOLARE DI MAROSTICA
Bank of Tokyo Mitsubishi Ltd
TORONTO-DOMINION BANK BANCA POPOLARE DI SONDRIO
Citibank NA
UBAF TERCAS - CASSA DI RISPARMIO DELLA
Hong Kong and Shanghai Banking
INDUSTRIAL AND COMMERCIAL BANK OF PROVINCIA DI TERAMO SPA
Corporation Ltd
CHINA (ASIA) LIMITED UNICREDIT BANCA D IMPRESA SPA
JPMorgan Chase Bank N.A. Jakarta,
WING HANG BANK,LTD.
Indonesia
WESTPAC BANKING CORPORATION PADOVA
Standard Chartered Bank
BANCA ANTONVENETA SPA
Deutsche Bank AG
HUNGARY
Bank Mandiri (Europe) Ltd.
BUDAPEST PIACENZA
BANK MANDIRI (EUROPE) LTD.
CIB Bank Ltd CASSA DI RISPARMIO DI PARMA E
BANK CENTRAL ASIA
Citibank Europe PLC PIACENZA S.P.A.
LASALLE BANK NA
Deutsche Bank AG
BANK MEGA LTD
PORDENONE
CITI BANK NA JAKARTA, INDONESIA
INDIA BANCA POPOLARE FRIULADRIA SPA
MUMBAI
IRELAND
Arab Bangladesh Bank Limited SAN PIETRO
DUBLIN
Bank of America CREDITO EMILIANO S.P.A.
Citibank N.A. Ireland
Bank of Nova Scotia
Wells Fargo Bank NA
Canara Bank SONDRIO
Bank of America, N.A
Citibank NA CREDITO VALTELLINESE
Deutsche Bank AG
ITALY
Federal Bank Limited TRAPANI
ABBADIA SAN SALVATORE
Hong Kong and Shanghai Banking Corp. BANCA NUOVA SPA
BANCA MONTE DEI PASCHI DI SIENA
Ltd.
S.P.A.
Punjab National Bank TURIN
Standard Chartered Bank UNICREDIT BANCA SPA, VIGEVANO ITALY
ALBERTARIO
Union Bank of India
INTESA SANPAOLO SPA (FORMERLY
Tamiland Mercantile Bank. Mumbai VERONA
BANCA INTESA SPA)
AXIS Bank BANCO POPULARE SOC COOP.ITALY
HDFC Bank UNICREDIT PRIVATE BANKING SPA
BOLOGNIA
Bank of Ceylon BANCO POPOLARE DI VERONA E NOVARA
UNICREDIT SPA (FORMERLY UNICREDIT
Indusind Bank Ltd SCRL
BANCA SPA)
Syndicate Bank
Yes Bank Ltd VICENZA
CARRARA
IDBI Bank Ltd BANCA POPOLARE DI VICENZA SCPA
CASSA DI RISPARMIO DI CARRARA
UTI Bank
BNP PARIBAS ROME
GENOVA
BANK OF TOKYO-MITSUBISHI UFJ BANCA DELLE MARCHE, SPA
BANCA PASSADORE E C.
(CHINA), LTD INTESA SANPAOLO SPA (FORMERLY
BANK OF TOKYO-MITSUBISHI UFJ, LTD., BANCA INTESA SPA)
LA SPEZIA
THE (MUMBAI BRANCH) Unione di Banche Italiane Scpa, Italy
CASSA DI RISPARMIO DELLA SPEZIA
JP MORGAN CHASE BANK N.A. BANCA NATIONALE DEL LAVORO S.P.A.
S.P.A.

EASTERN BANK LIMITED ANNUAL REPORT 2013

 correspondent bank network

CASSA DI RISPARMIO DI RAVENNA S.P.A. Korea Exchange Bank MAURITIUS

ITALY Wells Fargo Bank NA PORT LOUIS
BANCA CARIM-CASSA DI RISPARMIO DI Busan Bank Standard Chartered Bank
RIMINI SPA Standard Chartered Bank Korea
BANCA DI CREDITO COOPERATIVO DI Shinhan Bank MAURITIUS
SATURNIA UBAF DEUTSCHE BANK (MAURITIUS) LTD
B. C. C. DI ALTAVILLA SILENTINA E DEUTSCHE BANK AG, SEOUL BRANCH
MOROCCO
CALABRITTO
KSA CASABLANCA
BANCA UBAE SPA
JEDDAH CITIBANK MAGHREB
IVORY COAST Saudi Hollandi Bank
NEPAL
ABIDJAN Bank Muscat SAOG
KATHMANDU
CITIBANK N.A. Deutsche Bank AG
Bank of Nova Scotia
National Commercial Bank, SA
Standard Chartered Bank
ADDIS ABABA Al-Rajhi Bank
STANDARD CHARTERED BANK COTE Samba Financial Group
NETHERLANDS
D’IVOIRE Citibank Beirut
AMSTERDAM
National Bank of Pakistan
ING Bank NV
JAPAN State Bank of India
ABN Amro Bank NV
TOKYO Standard Chartered Bank
Commerz Bank AG
Bank of Tokyo Mitsubishi Ltd.
Citibank International PLC
Bayerische Hypo-UND Vereinsbank AG KUWAIT
The Bank of Tokyo Mitsubishi UFJ Ltd
Citibank NA KUWAIT CITY
Deutsche Bank A.G. Amsterdam,
Commerzbank AG Citibank NA Kuwait
Netherlands
Hong Kong and Shanghai Banking Corp. Commercial bank of Kuwait
Ltd. Oman exchange co.
BREDA
Mizuho Corporate Bank Ltd. ING Bank NV
LEBANON
Standard Chartered Bank ROTTERDAM
BEIRUT
Sumitomo Mitsui Banking Corpn. ABN Amro Bank NV
Citibank NA Beirut
UBAF-Union De BanquesArabes ET HOLLANDSCHE BANK-UNIE N.V.
Standard Chartered Bank Beirut
Francaises FORTIS BANK (NEDERLAND)N.V.
Wells Fargo Bank NA
MACAO UTRECHT
Chiba Kogyo Bank, Ltd
MACAO BUSAN BANK
JP MORGAN CHASE BANK, N.A
Hong Kong and Shanghai Banking Corp
DEUTSCHE BANK AG
BANK OF NOVA SCOTIA, THE NEW ZEALAND
MALAYSIA AUCKLAND
KUALA LAMPUR Citibank NA
KAZAKHSTAN
J.P. Morgan Chase Bank Berhad HSBC Bank
CJSC CITIBANK KAZAKHSTAN
CIMB Bank Berhad
Citi Bank NA Kualalumpur, Malysaia NIGERIA
KENYA
Deutsche Bank (Malaysia) Berhad LAGOS
NAIROBI
HSBC, Kualalumpur SCB, Naigeria
Citibank NA,
MAY Bank NIGERIA INTERNATIONAL BANK LIMITED
Standard Chartered Bank Kenya Limited
RHB Bank Berhad
DUBAI BANK KENYA LTD
Standard Chartered Bank NORWAY
Bank of Tokyo Mitsubishi Ufj OSLO
KOREA
JP Morgan Chase Bank, NA Labuan Branch SWEDBank, Norway
SEOUL
The Bank of Tokyo-Mitsubishi UFJ, Ltd Nordea Bank Norge ASA
MALDIVES SkandinaviskaEnskildaBanken
JP Morgan Chase Bank N.A.
MALI Handelsbanken
Citi Bank NA Seoul, Korea
HONGKONG AND SHANGHAI BANKING DNBNorBank ASA
Kookmin Bank
CORPORATION LIMITED, THE Citibank International PLC
HSBC Ltd Seoul Korea
Woori Bank, Seoul OMAN
MALTA MUSCAT
Industrial Bank of Korea
ST. JULIAN’S HSBC Bank Middle East Ltd
The Bank of New York Mellon, Seoul Branch
FIMBANK PLC

285
Bank Muscat SAN MARINO Commerz Bank AG
STANDARD CHARTERED BANK DOGNA BNP Paribas SA
Banca Agricola Commerciale Istituto The Bank of Tokyo Mitsubishi UFJ Ltd
PAKISTAN Bancario Sammarinse Spa Banco de Sabadell SASpain
KARACHI CaixaDestalvisIPensions
SUMMIT BANK LTD (F/K/A ARIF HABIB) SENEGAL CajaLaboralPopular, Coop. de Credito
(OLD BIC:AHRBPKKA; NEW BIC: DAKAR Unicaja (Montes De Piedad Y Caja De
SUMBPKKA) Citibank NA Ahorros De Ronda
Bank Alfalah Limited, Pakistan Fortis Bank SA - Sucursal En Espana
Bankislami Pakistan Limited SIERRA LEONE CAIXA D’ESTALVIS DE CATALUNYA,
BANK OF TOKYO-MITSUBISHI UFJ, LTD., FREETOWN TARRAGONA I MANRESA
THE (KARACHI BRANCH) SCB, SINGAPORE CITIBANK INTERNATIONAL PLC
CITIBANK N.A. PAKISTAN KARACHI DEUTSCHE BANK AG
DEUTSCHE BANK AG SINGAPORE Banco Espirito Santo SA(BES)
Meezan Bank Limited SINGAPORE CITY SRILANKA
HABIB METROPOLITAN BANK LIMITED ABN Amro Bank N.V. Singapore COLOMBO
NEDBANK LTD Axis Bank, Singapore Bank of Ceylon
STANDARD CHARTERED BANK BNP Paribas Citibank NA
United Bank Ltd, Pakistan Bank of America, N.A. Singapore Seylan Bank Limited
Bank Al Habib Limited The Bank of Tokyo-Mitsubishi Limited Standard Chartered Bank
Banco Santander, S.A. Singapore Branch COMMERCIAL BANK OF CEYLON PLC
PHILLIPINES Bayersche Hypo-Und Vereinsbank Ag L DEUTSCHE BANK AG
MANILA J P Morgan Chase Bank, Singapore PEOPLE’S BANK
Asian Development Bank Citi Bank Na Singapore
Citibank NA Commerz Bank, Singapore SWEDEN
Standard Chartered Bank Deutsche Bank Ag STOCKHOLM
DEUTSCHE BANK AG Dnb Asia Ltd CITIBANK INTERNATIONAL PLC
BANK OF TOKYO-MITSUBISHI UFJ, LTD., Skandinaviska Enskilda Banken Ab DANSKE BANK Stockholm
THE (MANILA BRANCH) Fortis Bank, SKANDINAVISKA ENSKILDA BANKEN
Habib Bank, Singapore SVENSKA HANDELSBANKEN
POLAND Svenska Handelsbanken, Singapore Branch NORDEA BANK SWEDEN AB (PUBL)
WARSZAWA HSBC, Singapore SWEDBANK
RAIFFEISEN BANK POLSKA S.A. ICICI Bank
ING Bank NV Singapore GENEVA
PORTUGAL Malayan Bank, Malayasia NORDEA BANK NORGE ASA
LISBON Mizuho Corporate Bank Ltd SKANDINAVISKA ENSKILDA BANKEN
BANCO BPI SA Nordia Bank, Sweden
CITIBANK INTERNATIONAL PLC Bank of Nova Scotia SWITZERLAND
(SUCURSAL EM PORTUGAL) Oversea-Chinese Banking Corpn Ltd GENEVA
DEUTSCHE BANK AG Rabobank Nederland BANQUE CANTONALE DE GENEVE
Banco Espirito Santo SA(BES) State Bank of India ZURICH
Standard Chartered Bank ABN Amro Bank
QATAR Sumitomo Mitsui Banking Corporation ZuercherKantonalkbank
DOHA UBAF Citibank NA (SCHWEIZ)
Mashreq Bank United Overseas Bank Ltd, Singapore Credit Suisse
HSBC Bank Middle East Limited Habib Bank AG Zurich
SCB, KARACHI, PAKISTAN SLOVAKIA UBS AG
BRATISLAVA ING BANK (SWITZERLAND)LTD
ROMANIA CITIBANK EUROPE PLC, POBOCKA BANQUE CANTONALE VAUDOISE
BUCHAREST ZAHRANICNEJ BANKY BANQUE DE COMMERCE ET DE
CITIBANK EUROPE PLC SOUTH AFRICA PLACEMENTS
JOHANNESBERG BNP PARIBAS (SUISSE) SA
RUSSIA Citibank NA United Bank A.G
MOSCOW FIRST NATIONAL BANK Deutsche Bank Ag
ZAO CITIBANK, MOSCOW SPAIN LUGANO
DEUTSCHE BANK AG MADRID BSI SA

EASTERN BANK LIMITED ANNUAL REPORT 2013

 correspondent bank network

YVERDON-LES-BAINS ING Bank A.S. Istanbul, Turkey CITI BANK NA LONDON

UBS AG AL-Baraka Turk Participation Bank Crown Agents Bank Limited
Citibank NA TurkiyeMerkezSubesi COMMERZBANK AG
TAIWAN HSBC Bank A.S. NORTHERN BANK (PART OF DANSKE
TAIPEI Oyak Bank A.S BANK GROUP).
Bank of America, N.A. Taipei (Taipei Branch) TurkiyeGrantiBankasiAS DEUTSCHE BANK AG
The Bank of Tokyo-Mitsubishi Limited AKBANK T.A.S HABIB ALLIED INTERNATIONAL BANK, PLC
JP Morgan Chase Bank,N.A. DEUTSCHE BANK AG ISTANBUL HABIB BANK AG ZURICH
Citi Bank Na Taipei, Taiwan FORTIS BANK A.S ICICI BANK UK PLC
Chinatrust Commercial Bank Finansbank AS ING Bank
Deutsche Bank AG PRIVATGESCHAEFTSBANK MIZUHO CORPORATE BANK (CHINA),LTD.
Far Eastern International Bank SEKERBANK T.A.S HSBC BANK
HSBC. Taipei, Taiwan. MASHREQ BANK CAIRO
The Bank of New York Mellon, Taipei Branch UAE NORDEA BANK FINLAND PLC,SINGAPORE
Kathrein Und Co Privatgeschaeftsbank DUBAI NEPAL BANGLADESH BANK
Aktiengesellschaft Citibank NA WELLS FARGO BANK NA,
The Bank of Nova Scotia Habib Bank AG Zurich WELLS FARGO BANK NA, LONDON
Wells Fargo Bank Na, Seoul HSBC Bank Middle East ROYAL BANK OF SCOTLAND PLC
Standard Chartered Bank Taipei, Taiwan Mashreqbank PSC STANDARD CHARTERED BANK
Taichung Commercial Bank Standard Chartered Bank
Emirates Bank International Psc URUGUAY
TANZANIA United Bank Ltd MONTEVIDEO
DARES SALAM AXIS Bank, Dubai, UAE Citibank NA
CITIBANK TANZANIA LTD DEUTSCHE BANK AG BANCO ITAU
STANDARD CHARTERED BANK TANZANIA DUBAI ISLAMIC BANK
LTD HABIB BANK LIMITED USA
EMIRATES ISLAMIC BANK NEW YORK, NY
THAILAND DEUTSCHE BANK TRUST COMPANY
BANGKOK ABU DHABI AMERICAS
Bank of Ayudhya Public Company Limited ABU DHABI COMMERCIAL BANK BNP PARIBAS U.S.A
Indian Overseas Bank (Formerly Bharat BANK OF AMERICA N.A. NEW YORK
Overseas Bank Ltd.) FUJAIRAH UNION BANK N.A.
Bangkok Bank Public Co.Ltd. BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
BNP Paribas NATIONAL BANK FOR FOREIGN THE (NEW YORK BRANCH)
Bank of America, N.A. Bangkok ECONOMIC CATHAY BANK (NEW YORK BRANCH)
Bank of Tokyo-Mitsubishi Ufj, Ltd., The JP MORGAN CHASE BANK NEW YORK
(Bangkok Branch) UGANDA USA
JP Morgan Chase Bank N.A., CITIBANK UGANDA LIMITED CITI BANK NA NEW YORK
Citi Bank Na Bangkok, Thailand COMMERZ BANK, NEWYORK
Deutsche Bank AG DEUTSCHE BANK TRUST COMPANY
Export Import Bank of Thailand UKRAINE AMERICAS
HSBC, Bangkok,Thailand. KIEV EAST-WEST BANK
Kasikornbank Public Company Limited Credit Dnepr Bank, Dnipropetrovsk, Ukraine ABN AMRO CAPITAL USA LLC
Mizuhu Corporate Bank Ltd Deutsche Bank AG HABIB AMERICAN BANK
Standard Chartered Bank Citibank NA Woori Bank
Sumitomo Mitsui Banking Corporation ICICI BANK
CIMB Thai Bank Public Company UK CALABRITTO
LONDON BANK OF NEWYORK, NEWYORK
TUNISIA ANZ BANKING GROUP LTD KEYBANK NATIONAL ASSOCIATION
TUNIS INTESA SANPAOLO SPA LONDON UK LASALLE BANK NA
Citibank NA BANK MANDIRI (EUROPE) LTD. LLOYDS TSB BANK PLC
BANK OF AMERICA, N.A. UK MIZUHO CORPORATE BANK LTD.
TURKEY BANK OF TOKYO MITSUBISHI LTD, UK HABIB METROPOLITAN BANK LTD
ISTANBUL BANK OF BEIRUT (UK) LTD MASHREQ BANK QATAR
Deniz Bank AS, Turkey SONALI BANK UK LIMITED MUTUAL TRUST BANK LTD., BANGLADESH
AktifYatirimBankasi A.S. Turkey JPMORGAR CHASE BANK N.A. NATIONAL BANK OF PAKISTAN

287
CAPITAL ONE NA, USA MINNEAPOLIS,MN HO CHI MINH CITY
WELLS FARGO BANK, NA U.S. BANK ANZ BANK(VIETNAM) LIMITED
PNC Bank, NA WASHINGTON THE BANK OF TOKYO-MITSUBISHI UFJ,
STANDARD CHARTERED BANK International Bank for Reconstruction & LTD. HANOI BRANCH (HANOI BRANCH)
SUMITOMO MITSUI BANKING Development (IBRD) BANK OF TOKYO MITSUBISHI LIMITED
CORPORATION CITIBANK NA, HANOI, VIETNAM
SILICON VALLEY BANK UZBEKISTAN DEUTSCHE BANK AG
SOVEREIGN BANK TASHKENT HONGKONG AND SHANGHAI BANKING
NATIONAL BANK FOR FOREIGN WOORIBANK
LOS ANGELES, CA ECONOMIC ACTIVITY OF THE REPUBLIC STANDARD CHARTERED BANK
Bank of Tokyo Mitsubishi Ltd. OF UZBEKISTAN
Zambia
TULSA,OK VIETNAM CITIBANK ZAMBIA LTD
Bank of Oklahoma NA HANOI STANDARD CHARTERED BANK ZAMBIA
Joint Stock Commercial Bank for Investment LTD.
SAN FRANCISCO and Development of Vietnam (BIDV)
BANK OF AMERICA, N.A WOORI BANK, HANOI ZIMBABWE
BANK OF TOKYO-MITSUBISHI UFJ, LTD., STANDARD CHARTERED BANK, HANOI STANDARD CHARTERED BANK ZIMBABWE
THE (SAN FRANCISCO BRANCH) LIMITED
WELLS FARGO BANK, N.A.

EASTERN BANK LIMITED ANNUAL REPORT 2013

abbreviations
ABB Association of Bankers Bangladesh Limited IFC International Finance Corporation
AC Audit Committee IT Information Technology
ADC Alternative Distribution Channel IAS International Accounting Standard
ALCO Asset Liability Committee IPO Initial Public Offering
ALS Assured Liquidity Support IVR Interactive Voice Response
ATM Automated Teller Machine LAPS Loan Application Processing System
BACH Bangladesh Automated Clearing House LC Letter of Credit
BAS Bangladesh Accounting Standard MANCOM Management Committee
BB Bangladesh Bank (Central Bank of Bangladesh) MCR Minimum Capital Requirement
BFRS Bangladesh Financial Reporting Standard MD&A Management Discussion & Analysis
BORC Bank Operational Risk Committee MFIs Micro Finance Institutions
BRMC Bank Risk Management Committee MICR Magnetic Ink Character Recognition
BRPD Banking Regulation and Policy Department (Of MOR Monthly Operation Report
Bangladesh Bank) NBFI Non-bank Financial Institution
CAR Capital Adequacy Ratio NII Net Interest Income
CMU Cash Management Unit NPL Non Performing Loan (Classified Loan)
CP Commercial Paper NCBs Nationalized Commercial Banks
CSU Customer Support Unit NRB Non Resident Business
CRR Cash Reserve Ratio OBU Offshore Banking Unit
CRGM Credit Risk Grading Matrix OCI Other Comprehensive Income
CSR Corporate Social Responsibility PCBs Private Commercial Banks
CDBL Central Depository Bangladesh Limited PC Purchase Committee
CDCS Certified Documentary Credit Specialist PD Probability of Default
CRISL Credit Rating Information and Services Ltd. PFU Project Finance Unit
DCFCL Departmental Control Function Check List POS Point of Sale
DEPZ Dhaka Export Processing Zone PPG Product Program Guidelines
DR Disaster Recovery PRI Prime Risk Indicator
EBL Eastern Bank Limited QMS Quality Management System
EBLAML EBL Asset Management Limited RBCA Risk Based Capital Adequacy
EBLIL EBL Investments Limited RBIA Risk Based Internal Audit
EBLSL EBL Securities Limited RFCD Resident Foreign Currency Deposit
EC Executive Committee RWA Risk Weighted Assets
ECAI External Credit Assessment Institution RMG Readymade Garments
EFT Electronic Fund Transfer ROA Return on Assets (excluding contingent items)
EMI Equal Monthly Installment ROE Return on Equity
EPZ Export Processing Zone SAMD Special Asset Management Division
E&S Risk Environmental and Social Risk SFU Structured Finance Unit
ETP Effluent Treatment Plant SAFA South Asian Federation of Accountants
FD Fixed Deposit SME Small and Medium Enterprise
FTP Fund Transfer Pricing SLR Statutory Liquidity Ratio
FY Fiscal Year (July to June) STP Straight Through Processing
GDP Gross Domestic Product SRP Supervisory Review Process (Pillar II of Basel II)
GOB Government of Bangladesh TFP Trade Finance Program
GTFP Global Trade Finance Program TSD Trade Service Division
HFT Held for Trading UBS Universal Banking System (Core Banking
HRD Human Resource Division Solution)
ICAB Institute of Chartered Accountants of WACRG Weighted Average Credit Risk Grade
Bangladesh.
ICCD Internal Control & Compliance Division

289
 EASTERN BANK LIMITED
HEAD OFFICE
JIBAN BIMA BHABAN
10, DILKUSHA COMMERCIAL AREA
DHAKA-1000.

NOTICE OF THE 22ND ANNUAL GENERAL MEETING

NOTICE is hereby given to all the Members of Eastern Bank Limited (EBL) that the 22nd Annual General Meeting (AGM) of
the Company will be held on Monday 31 March, 2014 at 10.30 A.M. at the Bangabandhu International Conference Centre
(BICC), Agargaon, Dhaka to transact the following Agenda:
AGENDA
01. To receive, consider and adopt the Profit & Loss Account of the Company for the year ended 31 December, 2013 and
the Balance Sheet as at that date together with the Reports of the Auditors and the Directors thereon.
02. To declare the Dividend for the year ended 31 December, 2013 as recommended by the Board of Directors.
03. To elect Directors.
04. To appoint the Auditors of the Company for the term until the next Annual General Meeting
and to fix their remuneration.

By order of the Board of Directors

Dated, Dhaka
2 March 2014
Safiar Rahman, FCS
SEVP & Company Secretary

NOTES:

 The Board of Directors recommended for payment of 20% (Twenty Percent) Cash Dividend on the profit of the Bank
as at the close of business on 31 December 2013.

 The ‘Record Date’ in lieu of Book Closure on Tuesday, 11 March 2014. The Shareholders whose names would appear
in the Register of Members of the Company and/or in the Depository on the ‘Record Date’ (11 March 2014) will be
eligible to attend the 22nd AGM and entitled to Cash Dividend as mentioned above.

 A Member eligible to attend the Annual General Meeting is entitled to appoint a Proxy to attend and vote on his/her
behalf. The Proxy may not be a Member of the Company. Forms of Proxy, duly stamped, must be deposited at the
Registered Office of the Company at least 48 hours before the time fixed for the Meeting.

 Annual Report, Attendance Slip and Proxy Form along with the Notice are being sent to all the Members by Courier
Service/Post. The Members may also collect the Proxy Form from the Registered Office of the Company.

 The Shareholders are requested to register their names in the counter at the entrance of the AGM Venue from 9.00
A.M. on 31 March 2014.

 No Gift/Gift Coupon/Food Box etc; to be distributed at the 22nd AGM, in compliance with the Bangladesh
Securities and Exchange Commission’s Circular No.SEC/CMRRCD/2009-193/154 dated 24 October 2013.
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