directors' report - Dutch-Bangla Bank Limited

● To develop small-scale entrepreneur, a long
term local currency loan equivalent to EURO
5.0 million was also arranged from
Netherlands Development Finance Company
(FMO) to finance small-scale enterprises
engaged in manufacturing, agriculture,
transport, tourism and productive trade &
commerce and service industries. The loan
amount was increased to EURO 7.5 million
to include residential housing finance only
for fixed income group.
Subordinated debt
The total amount of Subordinated loans stood at
Taka 1,416.3 million at the end of 2010.
Subordinated loans have been arranged from FMO
for financing housing sector of the country and to
strengthen the Tier 2 capital as well as total capital
of the Bank. Subordinated loans are eligible as Tier
2 capital of the Bank subject to the regulatory limit
of maximum 30% of Tier 1 capital. All the
subordinated loans were restructured in 2010 in line
with Bangladesh Bank requirement under Basel II.
Shareholders' equity
As at 31 December 2010, DBBL's shareholders'
equity increased to Taka 7,001.0 million from Taka
4,351.8 million of 2009 registering an increase by
Taka 2,649.2 million (60.9%). The increase resulted
from Taka 2,002.3 million after tax profit, Taka 41.4
million reserves against HFT and HTM securities and
Taka 605.5 million against assets revaluation
reserves. After issuing bonus shares @ 1:0.33, paid
up share capital of the Bank increased by Taka
500.0 million and stood at Taka 2,000.0 million at
the end of 2010. The statutory reserve increased to
Taka 2,748.4 million at the end of 2010 from Taka
2,000.0 million of 2009. The paid up share capital
and the statutory reserve together stood at Taka
4,748.4 million as at 31 December 2010. As per
Bangladesh Bank regulation, paid up share capital
and statutory reserve should be increased to at
least Taka 4,000.0 million latest by 11 August 2011
of which paid up share capital should be minimum
Taka 2,000.0 million. DBBL has met the
requirement much earlier before the deadline.
Capital management plan and capital adequacy
ratio
As per Bangladesh Bank guidelines in determining
the capital adequacy ratio (CAR) and minimum
capital requirement (MCR) for banks, Basel II
guidelines came into force with effect from 1
January 2010.
The capital adequacy ratio of DBBL stood at 9.64%
under Basel II at the end of 2010 as against 6.78%
of the previous year. Tier 1 capital increased to
Taka 6,051.2 million being 6.39% total risk
weighted assets (RWA) and supplementary capital
(Tier 2 capital) increased to Taka 3,074.7 million
being 3.25% of RWA.