CREDIT RATING REPORT On ISLAMI BANK BANGLADESH LIMITED

CREDIT RATING REPORT 

On 

ISLAMI BANK BANGLADESH LIMITED 

REPORT: RR/1544/12 

Address: 

CRISL 

Nakshi Homes 

(4 th & 5 th Floor) 

6/1A, Segunbagicha, 

Dhaka-1000 

Tel: 9515807-8 

9514767-8 

Fax: 88-02-9565783 

Email: 

crisldhk@crislbd.com 

Analysts: 

Md. Touhidul Islam 

touhidul@crislbd.com 

Md. Anowar Hossain 

anowar@crislbd.com 

Entity Rating 

Long Term: AA+ 

Short Term: ST-1 

Outlook: Stable 

ISLAMI BANK 

BANGLADESH 

LIMITED 

CHAIRMAN 

Professor Abu Nasser 

Muhammad Abduz Zaher 

MANAGING DIRECTOR 

Janab Mohammad Abdul 

Mannan 

TOTAL ASSETS 

Tk.389375.60 million 

TOTAL EQUITY 


TOTAL INVESTMENT 


Page 1 of 1717 

This is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. CRISL long-term rating is valid 

for only one year and short term rating for six months from the date of rating. After the above periods, these ratings will not 

carry any validity unless the bank goes for rating surveillance. 

CRISL followed Bank/FI Rating Methodology published in CRISL website www.crislbd.com 

Date of Rating June 21, 2012 

Long Term 

Short Term 

Surveillance Rating AA+ ST-1 

Outlook 

Stable 

1.0 RATIONALE 

CRISL has reaffirmed the Long Term rating of Islami Bank Bangladesh Limited (IBBL) to ‘AA+’ 

(pronounced as Double A plus) and Short Term rating to ‘ST-1’ based on consolidated 

financials up to December 31, 2011 and other relevant qualitative and quantitative 

information up to the date of rating. During the year under surveillance, the bank maintained 

comfortable capital adequacy with good asset quality, good financial performance and 

sufficient liquidity and strong market position with wide operational network etc. However, the 

above factors have been moderated, to some extent, by considerable increase in gross NPI, 

exposure to credit concentration risk, unsatisfactory performance of rescheduled assets, 

considerable investment in low yielding government bond etc. 

Banks rated in this category are adjudged to be of high quality, offer higher safety and have 

high credit quality. This level of rating indicates a banking entity with a sound credit profile 

and without significant problems. Risks are modest and may vary slightly from time to time 

because of economic conditions. Short term rating indicates highest certainty of timely 

repayment. Short-term liquidity including internal fund generation is very strong and access 

to alternative sources of funds is outstanding. Safety is almost risk free like Government 

short-term obligations. 

CRISL also viewed the bank with “Stable Outlook” and believes that bank will be able to 

maintain its good fundamentals in future. CRISL does not foresee any volatility in the 

operation of the bank within the rating validity period. 

2.0 CORPORATE PROFILE 

2.1 Genesis 

Islami Bank Bangladesh Limited, the first Islamic Shari’ah based private commercial bank in 

South-East Asian region, was incorporated on 13 March, 1983 as a public limited company 

under Bank Companies Act 1991. The bank was sponsored by few local and foreign corporate 

bodies, foreign individuals and a group of local businessmen. The bank went into initial public 

offering in 1985 and started operation with a paid up capital of Tk.80.00 million. The bank is 

operating with paid up capital of Tk.10,007.71 million against authorized capital of Tk.20,000 

million as on December 31, 2011. The bank is running with the mission to establish Islamic 

Banking through the introduction of a welfare oriented banking system and also to ensure 

equity & justice in economic activities, achieve balanced growth and equitable development 

through diversified investment operations particularly in the priority sectors and less 

developed areas of the country, and to encourage socio-economic development and financial 

services to the low-income community particularly in the rural areas. Since its listing, the 

share of the bank has been trading with both the bourses as ‘A’ category issue. The asset size 

of the bank (consolidated) stood at Tk.389.38 billion at YE2011 against Tk.330.79 billion at 

YE2010 and general investment stood at Tk.305.79 billion at YE2011 against Tk.261.73 billion 

at YE2010. The bank is the pioneer in introducing Islamic banking concept in Bangladesh and 

created a strong brand image by offering Shari’ah based investments and deposit products. 

The bank is also pioneer in the country in issuing the first ever Mudaraba Perpetual Bond in 

the secondary market worth of Tk.3.00 billion. Due to its endeavor to quality banking, the 

bank was awarded with “Corporate Governance Disclosure Award 2010” (Joint winner) by 

South Asian Federation of Accountants (SAFA), “National Best Corporate Award-2010” (1 st 

Position among the private commercial banks in Islamic Operation) by Institute of Cost and 

Management Accountants of Bangladesh (ICMAB), “Best Published Accounts and Reports 

2010” (third position) by the Institute of Chartered Accountants of Bangladesh (ICAB) and




“Best Islamic Financial Institution of the Country” by Global Finance, USA etc. Currently the 

Board is chaired by Professor Abu Nasser Muhammad Abduz Zaher while Janab Mohammad 

Abdul Mannan is leading the management team as Managing Director and CEO. The bank 

carries out its activities through 266 branches (including 30 SME/Agriculture branches) 

operating with staff strength of 11,465 as on December 31, 2011. This report is being 

prepared as a part of CRISL surveillance. The corporate Head Office of the bank is located at 

its own premise Islami Bank Tower (18 storied building), 40, Dilkusha Commercial Area, 

Dhaka-1000. 

Diversified ownership 

Wide operational network 

2.2 Ownership Pattern 

There were no major changes in ownership of IBBL which remains diversified among few 

foreign and local corporate bodies, foreign individuals, local sponsors and general public. The 

denomination of IBBL shares has been changed from Tk.100 to Tk.10 each with effect from 

December 04, 2011. Out of the total 1,000.77 million shares, 42.01% share were held by 

sponsors and Directors (out of that 35.94% was foreign sponsors and Directors), 25.27% by 

local general public, 22.74% by foreign shareholders (excluding foreign sponsors/directors), 

9.98% by institution shareholder while some nominal shares were held by the government. 

Again, the total shareholding consists of 58.68% by foreign shareholders and 41.32% by the 

local shareholders as on December 31, 2011. 

2.3 Operational Network 

IBBL is currently operating with the highest operating network among the private commercial 

banks (PCBs). The bank has been operating with 266 branches (including 30 SME/Agriculture 

branches) with the inclusion of 15 new branches during 2011. In order to facilitate and control 

the administrative function of the branches, IBBL has set up 12 zones including one new zone 

(Mymensingh) throughout the country. Among 266 branches, 9 branches are in Dhaka Central 

Zone, 24 branches (excluding 2 SME/Agriculture branches) in Dhaka South Zone, 22 branches 

(excluding 2 SME/Agriculture branches) in Dhaka North Zone, 15 branches (excluding 2 

SME/Agriculture branches) in Chittagong North Zone, 16 branches (excluding 2 

SME/Agriculture branches) in Chittagong South Zone, 24 branches (excluding 4 

SME/Agriculture branches) in Bogra Zone, 23 branches (excluding 3 SME/Agriculture 

branches) in Khulna Zone, 29 branches (excluding 4 SME/Agriculture branches) in Comilla 

Zone, 20 branches (excluding 3 SME/Agriculture branches) in Sylhet Zone, 17 branches 

(excluding 3 SME/Agriculture branches) in Barishal Zone, 18 branches (excluding 3 

SME/Agriculture branches) in Rajshahi Zone and 19 branches (excluding 2 SME/Agriculture 

branches) in Mymensingh Zone. This large branch network of IBBL is supported by 100 own 

ATM and 1035 shared ATM along with 30 SME/Agriculture branches and Internet Banking. 

2.4 Business Profile 

The bank is continuing its focus in different deposit products and trade financing in shari’ah 

based investment portfolio. IBBL provides a full range of financial services to individuals, small 

and medium sized enterprise, entrepreneurs and corporate bodies. Under the guidance of 

Shari’ah Supervisory Committee, the Bank designed all deposits, investment products and 

services and formulated policy guideline and working procedure for banking activities. As a 

part of product development, the bank launched different new products which include 

Students Mudaraba Savings Accounts, Murabaha foreign currency investment scheme and 

Mudaraba NRB bond during the year under surveillance. In addition to the above, IBBL was 

also involved with different promotional activities such as sponsorship of Dhaka city 

beautification in connection with ICC Cricket World Cup 2011 and National School Football 

Championship 2011 etc to promote the bank and its product. 


In addition to regular business activities, the bank has two fully owned subsidiaries namely 

“Islami Bank Securities Limited” (IBSL), “Islami Bank Capital Management Limited” (IBCML). 

The subsidiaries have been formed during 2010 and the financial statements have been 

consolidated as per BB guideline. The subsidiaries have been focusing on providing quality 

services to the prospective investors in the capital market. However, IBCML is yet to start its 

core business operation. In addition to the above IBBL is also running offshore banking units, 

which commenced operation on February 8, 2011.




Dominant market player 

2.5 Market Position 

The bank has been continuing its operation as one of the dominant market players in the 

banking industry. The banking industry of Bangladesh reported deposit and investment (loans 

& advances) of Tk.4438.70 billion and Tk.3708.82 billion respectively in YE2011 against 

Tk.3684.00 billion and Tk.3145.18 billion respectively in YE2010 shared by 47 banks. Against 

the same deposit of IBBL rose to Tk.341.86 billion at YE2011 from Tk.291.94 billion at YE2010 

registering 17.10% growth. Similarly, total investment increased to Tk.305.79 billion at 

YE2011 from Tk.261.73 billion at YE2010 representing 16.84% increase. Market share of IBBL 

in terms of deposit was almost same compared to last year which stood at 7.70% in 2011 

from 7.92% in 2010 while market share in terms of investment (loans & advances) was also 

stable which stood at 8.24% at YE2011 against 8.32% in 2010. Deposit growth of the bank 

was 17.10% against industry growth of 20.49% and growth of investment was 16.84% 

against industry growth of 17.92% in 2011. 

In addition to that, the bank generated substantial income from non-funded business. Among 

non-funded business, total foreign exchange business of IBBL has significantly increased and 

stood at Tk.716.06 billion in 2011 against Tk.609.33 billion in 2010 indicating 17.52% 

increase during the period. Similarly the export business of the bank increased to Tk.178.24 

billion in 2011 from Tk.148.42 billion in YE2010 representing 20.09% growth. On the other 

hand, import business rose to Tk.301.21 billion from Tk.246.28 billion with 22.30% growth in 

the above periods. Moreover, inward remittance increased to stand at Tk.236.61 billion in 

2011 against Tk.214.63 billion in 2010 representing growth of 10.24% in 2011 holding the 

market share of 26.07% in the country’s remittance. 

3.0 BANKING SECTOR REVIEW 

Banking sector passed through a hard year during 2011 due to global as well as our 

macroeconomic slow down. Before the collapse of share market at the end of 2010 almost all 

private commercial banks invested beyond approved limit of their capital in the share market. 

During 2011 the Bangladesh bank directed all banks to bring down excess exposure in capital 

market to applicable limit which many banks could not do by the end of 2011. During 2011 

some of the banks faced liquidity constraint and as a remedial measure announced higher 

profit rate to attract substantial deposits from customers. During the period Bangladesh Bank 

also revised repo rate 4 times to fix the same at Tk 7.25 in the first week of September, 2011 

which made the banks’ placement from BB costlier. Although Bangladesh Bank earlier fixed 

highest profit rate for lending (except some selected items) but considering various factors 

the same cap was withdrawn (except some selected items) in the first quarter of 2011. In 

order to strengthen the Audit Committee of the Bank’s Board, the Bangladesh Bank raised the 

number of A.C. members from 3 to 5 from June 2011. In the meantime BB took various other 

steps for faster and quicker operational activities of the banks such as on line CIB service for 

the banks, on line L/C monitoring system, submission of on line weekly statement of position 

on every Thursday by banks, e-returns i.e. electronic submission of scheduled bank returns, 

on line export monitoring system, Bangladesh automated clearing house (BACH), Electronic 

Fund Transfer (EFT), initiation of mobile banking and now almost every commercial bank is 

using their own core banking solution for faster and efficient banking operations in line with 

international banking system. 

During the 2011 credit rating process got impetus as most of the banks concentrated 

attention on the credit rating of their clients to improve CAR from asset management point of 

view. This effort is still continuing with the banks as large number of clients ratings are still 

pending. 


After successful implementation of Pillar I process under Basel II, the Bangladesh bank has 

now going to implement Pillar II system i.e supervisory review process (SRP) under a 

structured Internal Capital Adequacy Assessment Process (ICAAP). All the banks in the 

meantime submitted the ICAAP document to BB under specified format given by BB. 

Bangladesh Bank has not yet completed the dialogue with SRP team of the banks to assess 

ICAAP to complete Supervisory Review Evaluation Process (SREP). It is expected that after 

SREP, the capital requirement for banks would go to higher side.




Overall banking sector, experienced steady growth in 2011. During the 2011 the deposit base 

stood at TK.4439 billion (Tk.3684 billion in 2010) and investment TK.3709 billion (Tk.3145 

billion in 2010) showing 20.49% and 17.92% growth respectively against 2010. During the 

2011 investment growth was almost in line with deposit growth resulting to investment to 

deposit ratio (L/D) of 83.56%. Overall gross NPI ratio showed improvement to stand at 6.12% 

against 7.27% net in YE2010. Finally overall net NPI stood at 0.70% in YE2011 against 1.28% 

at YE2010. Overall Capital Adequacy Ratio (CAR) at YE2011 (4 th quarter) stood at 11.35% 

(regulatory requirement 10.00% and above) against the same period 9.31% (regulatory 

requirement 9% and above). From the latest CAR it is quite obvious that CAR at 2011 was not 

adequate to take care of stress tests and other risks under pillar-II of Basel-II operation as 

suggested by Bangladesh Bank. 

However, considering various regulatory measures, service efficiency achievement, 

profitability and operational performance, the 2011 was an average year for the banking 

sector for many reasons. Nevertheless, under Basel-II Pillar II system, the banks are heading 

towards more risk based capital adequacy system which will make the bank more shock 

absorbent. 

4.0 CORPORATE GOVERNANCE 

17 members Board 

7 member Executive 

Committee 


4.1 Board of Directors 

The Board of IBBL is continuing with 17 members including an Independent Director, two 

Depositor Directors and the Managing Director as Ex-Officio. During the last year Janab 

Mominul Islam Patwary was appointed as a new Director with the replacement of Dr. Md. 

Shafiqur Rahman. Among the Directors, six are representatives of different institutional 

sponsors. The Board is currently Chaired by Professor Abu Nasser Muhammad Abduz Zaher, 

representative of the Ibn Sina Pharmaceutical Industry Ltd. The Board is involved in setting 

key targets for the bank and monitoring the progress, approving long term strategic plan, 

appointing key management personnel and adopting sufficient risk management systems to 

mitigate core risks of the bank. During 2011 the Board conducted 17 meetings against 16 

meetings in the previous year. For smooth operation of the bank, the Board formed two 

committees namely Executive Committee and Audit Committee. 

4.2 Key Board Committees 

The bank is continuing with 07 (seven) member Executive Committee (EC) Chaired by 

Engineer Md. Eskander Ali Khan. The Committee reviews different operational affairs including 

administration and investment, development/ expansion of business of the Bank, opening of 

new branches, purchase of property of the Bank etc. The Audit Committee (AC) is comprised 

of four members with one new member Janab Mohamad Adnan Midani. The committee is 

headed by Janab Md. Shahidul Islam a renowned businessman. Other two members are Janab 

Md. Abdus Salam (FCA, FCS) and Independent Director Professor N R M Borhan Uddin (Ph. D). 

AC members play key role in finalization of the financial statements of the bank and other role 

under specific Terms of Reference (ToR) that sets out its responsibilities and composition. EC 

and AC respectively held 53 and 30 meetings during 2011 against 52 and 32 meetings during 

2010. 

4.3 Management Committee (M.C.) 

There is no major change in Management Committee during the period under surveillance. 

The Management Committee of IBBL is headed by Janab Mohammad Abdul Mannan, Managing 

Director of the bank. Janab Mannan has been serving in the banking sector for around two 

and half decades. In Management Committee, Janab Mannan is aided by six Deputy Managing 

Directors along with five Executive Vice Presidents who lead different 

wings/divisions/departments. The day-to-day banking functions are handled by these 

professionals having modern banking knowledge and experience. The above management 

team provides wide succession plan and has the acumen to carry out the objectives of the 

bank smoothly. During the 2011 the M.C. held 66 meetings against 58 meetings in the 

previous year.




Board approved 

structured delegation of 

power 

Staff strength of 11,465 

4.4 Delegation of Power 

IBBL management is continuing with the same delegation of power in terms of investment, 

administrative and financial issues. Delegation varies depending on different mode of 

investment which is up to Tk.100.00 million for Managing Director, up to Tk.150.00 million for 

M.C. and up to Tk.1500.00 million for EC. Investment approval beyond the above delegated 

authority is approved by the Board of the bank. CRISL views that being a bank with large 

branch network and operation, the management needs to have more delegation to reduce the 

pressure on Executive Committee. However, the Board has delegated substantial 

administrative power to the management for smoothing the day-to-day functioning of the 

bank. 

4.5 Human Resources Management 

IBBL is continuing with structured human resources policy with total staff strength of 11,465 

(including 216 female officials) at YE2011 against 10,349 at YE2010. Among the total HR 

strength, 7129 are Officer and above level and 3869 are support level employees. During the 

year under surveillance the Bank recruited 1,372 against 957 employees in the previous year 

while promoted 2,696 during the year 2011 against 2670 in 2010. Against the above total 199 

employees left the bank in 2011 against 144 in 2010 and HR turnover ratio stood at 1.92% in 

2011 against 1.50% in 2010. The bank has Board approved Human Resources Policy Manual 

including compensation package, incentive bonus, gratuity, contributory provident fund, 

superannuation fund, benevolent fund, house building investment scheme, car scheme etc. 

IBBL has qualified and experienced successors in its human resource set up. In order to 

improve the efficiency of the human resources of the bank, IBBL has been arranging training 

programs to its employees at home and abroad to participate in different training programs. 

IBBL has full-fledged training and research academy called Islami Bank Training and Research 

Academy (IBTRA) where continuous training programs are arranged for the professionals of 

the bank regarding Banking Laws and Practices, Investment Operations and Management, 

Foreign Exchange etc. The bank also sent officers and executives to BIBM, BBTA and other 

foreign and local training institutes to enhance banking knowledge and competencies of the 

professionals to adapt with emerging challenges. 

4.6 ICT and its use in MIS 

IBBL is continuously improving in the automation of banking activities. All the branches have 

been brought under on-line banking using Fiber Optics, DDN and Radio Link where ‘Any 

Branch Banking’ facilities are being provided. IBBL is the only bank in Bangladesh, which 

developed in-house built integrated Banking system namely eIBS having major modules viz.: 

General Banking (GB), Investment and Foreign Exchange. Both GB and Investment module 

are running at all 266 branches including 30 SME/Agriculture branches. The foreign exchange 

module has been implemented at 43 authorized Dealer (AD) branches. Apart from the core 

banking facilities, the bank provides other IT enabled services such as shared and owned 

Automated Teller Machine (ATM), SMS banking, EFTN and i-banking. IBBL has established the 

country’s largest Data Center in the banking sector running on Sun Solaris 10 & Oracle 10g 

Enterprise Edition. Branch data are being uploaded in the Data Centre from all online 

branches, which are being used as branch backup data and preparing MIS reports for different 

Wings/Divisions/Departments of Head Office. A strong central MIS has already been set up 

through using data from the Data Centre. IBBL has completed setting up Disaster Recovery 

Site (DRS) as per guideline of Bangladesh Bank as a replication of existing Data Centre which 

is on live operation. 

12 members Shari’ah 

Supervisory Committee 


4.7 Shari’ah Compliance 

There is no major change in the Shari’ah Supervisory Committee. The Shari’ah Supervisory 

Committee of IBBL is constituted of 12 members and headed by Sheikh Moulana Mohammad 

Qutubuddin, Chairman, Baitush Sharaf Anjuman-E-Ittehad Bangladesh. The Committee 

reviews different operational issues and gives independent opinion based on Islamic Shariah 

as well as provide necessary guidelines on different issues, creates awareness about the 

compliance of Shariah, suggests the bank to develop more awareness among the employees 

and clients about Islamic Banking and to train the employees on different aspects of Shariah 

principles. During 2011, the Committee conducted 7 meetings and sub-committee met in 21 

meetings. The Muraqibs of the Shari’ah Supervisory Committee have inspected 251 branches




out of 266 branches included 30 SME/Agriculture branches to check the Shari’ah compliance 

in the banking activities. Moreover, the Committee checked the financial statements of the 

bank and provided separate report regarding financial statements. In compliance with 

Shari’ah principle, the brokerage firm of IBBL involves in trading of shares of shari’ah 

compliant business. 

4.8 Integrity of Accounting & Auditing 

IBBL’s external financial reporting seems transparent and informative as required by 

BFRS/BAS and by regulators. M/s. A. Qasem & Co. and M/s. ACNABIN, having appropriate 

business expertise, are the external auditors of the bank and also provides cash incentive 

audit services as per regulatory requirement. As per best corporate governance practice, if fee 

for non-audit services is material, then external auditor should not be involved in non-audit 

services to keep independence of audit opinion. M/s. K. M. Hassan & Co. and M/s. A. Hossain 

& Co. are acting as tax consultant of the Bank. The Audit Committee reviews the major 

accounting issues, potential audit risks and quality of internal control systems. 

5.0 RISK MANAGEMENT 

The bank follows structured risk management procedure in all risk areas as according to BB 

guidelines. The bank’s risk management policy defines the relationship between the risk 

management philosophy, process and procedure. As per instruction of BB, IBBL has already 

formed a Risk Management Unit (RMU) with specific terms of reference (ToR) to look after six 

core risk areas in banking operations. 

Structured investment 

risk management 

5.1 Investment Risk Management 

IBBL follows structured procedure for investment risk management. In order to manage 

investment risk the bank formulated investment policies in compliance with regulatory 

requirements covering investment assessment, collateral requirements, risk grading and 

reporting, documentation and legal formalities and procedures. Separate investment 

guidelines were also formulated for Small & Medium Enterprises and Consumer Investment 

Schemes. On the basis of designation of officials, authorization limits have been carefully 

allocated in Branches, Zonal Offices and Head Office for the approval and renewal of 

investment facilities. Board is the supreme authority to approve investment beyond the 

discretionary power of Branches, Zonal Officials, Head Office Executives, MC and EC. Having 

specific guidelines, concentration limits of exposure to industries and geographies are set 

through observing market trend, however, maximum concentration to individual client is 

determined on the basis of regulatory guidelines. Investment Wing of Head Office also 

provides advice, guidance and specialized skills to business units to promote best practice 

throughout the bank in the management of investment risk. Moreover, Internal Control and 

Compliance Wing and Shari’ah Muraqibs independently verify the compliance with approved 

Investment guidelines, Bangladesh Bank guidelines and operational procedures. The 

investment functions of the bank have been segregated in the area of Relationship 

Management/Marketing, Investment Administration, Investment Documentation and 

Investment Recovery. 

While reviewing the risk weight wise distribution of risk of on-balance sheet exposure under 

investment (credit) risk, it was revealed that 14.93% of the exposures falls under 0% risk 

category, 12.42% under 20%, 37.16% under 50%, 10.50% under 75%, 13.32% under 

100%, 10.95% under 125%, 0.57% under 150% category and rest 0.16% fell under Credit 

risk mitigation. The above information reveals the fact that the risk concentration is on 50% 

risk category. Among the corporate exposure it has been found that 82.60% were rated by 

ECAIs under Basel-II guideline which is considered to be good and contributed significantly 

towards improvement of CAR. However, these ratings need to be updated through 

surveillance by ECAIs to keep the same use worthy. 

Page 6 of 1717




5.2 Asset Liability Management (ALM) 

With a view to effective management of asset liability, in 2011 IBBL has reorganized the Asset 

Liability Committee (ALCO) and amended the Asset Liability Manual in conformity with the 

Bangladesh Bank ALM guideline. ALCO is headed by Managing Director and he is aided by 4 

Deputy Management Directors and 5 Executive Vice Presidents from respective divisions. 

ALCO meeting is held in every month and before meeting key agenda are prepared and 

circulated to all the members of the ALCO and minutes are prepared accordingly. ALCO is 

responsible for reviewing the liquidity management, deposit and investment trend, deposit 

mix, maturity profile, monitoring limit breaches, profit rate profile, maximum level of undrawn 

commitments etc. ALCO held 12 regular meetings in 2011. 

5.3 Internal Control and Compliance 

‘Internal Control and Compliance Wing’ of the bank has been established to minimize the 

operational irregularities, lapses, malpractices, corruptions and frauds arising out of the 

deviations from the set rules and procedures as a part of establishing culture through 

establishment of three separate divisions namely a) Audit & Inspection Division, b) 

Compliance Division and c) Monitoring Division. Audit and Inspection Division undertakes 

periodic and special audit/inspection of the Branches, Zonal Offices and 

Departments/Divisions/Wings of Head Office to review the operational effectiveness of the 

Bank. In 2011, the audit team visited all the Zonal Offices, Branches and SME/Agriculture 

Branches and provided 382 (three hundred eighty two) reports on Branch/Zonal Office level 

and 35 (thirty five) reports on Head Office level. Moreover, heads of 12 Zonal Offices 

inspected different Branches and submitted 590 (five hundred ninety) inspection reports. 

Heads of Branches also conducted and submitted 506 (five hundred six) Audited Reports 

against their Self-Audit. Besides that, the Audit & Inspection Division conducted 32 (thirty 

two) investigation against complaints from different branches during the year 2011. The 

compliance division ensures that, the Bank complies with all regulatory requirements, 

maintain liaison with the regulatory bodies and notify any regulatory changes to all concerned 

and provide training & guidance as and when necessary about regularly issues. 

Monitoring division assesses the risk of functional areas of business mentioned in the 

Departmental Control Function Checklist (DCFCL) by analyzing various reports and 

recommend to the Management for the frequencies of Audit teams to be sent accordingly, 

monitor the internal control functions through Quarterly Operations Report (QOR) and check 

the completion of investment documentation to uphold the cross interests of all the 

beneficiaries of the Bank. 

5.4 Prevention of Money Laundering 

Anti Money Laundering risk is defined as the loss of reputation and expenses incurred as 

penalty for being negligent in prevention of money laundering. For mitigating risks the Bank 

has formed 5 (five) members Central Compliance Unit (CCU) and 6 (six) members Branch 

Compliance Unit (BCU) under the leadership of the Chief Anti Money Laundering Compliance 

Officer (CAMLCO), at Anti Money Laundering (AML) Department, Branches Control Division 

(BCD), Head Office. Anti Money Laundering Compliance units (BCU) are also functioning at 

Branch level, who independently monitor/review the transactions of the accounts to verify 

Suspicious Transaction Reports (STRs). It may be mentioned here that AMLD, BCD submitted 

total 80 (eighty) numbers of STRs, second highest of the country to the AMLD, Bangladesh 

Bank from the inception of AML operations to till date. 


IBBL introduced (a) 13 (thirteen) numbers of Uniform Account Opening Form (AOF); (b) Know 

Your Customer (KYC) Profile and (c) Transaction Profile (TP) in the Bank as per instructions of 

Bangladesh Bank. IBBL had already issued 72 (seventy two) circulars providing necessary 

instructions for Prevention of Money Laundering activities and also for Combating Financing of 

Terrorism. Moreover, IBBL introduced a Policy Guideline and arranged training 

sessions/workshops to combat terrorist financing in the light of Anti Terrorism Act, 2009 

coupled with the Anti Money Laundering Act, 2009 approved by the Board of Directors of the 

Bank. A revised/updated IBBL Policy Manual: “Guidelines on Prevention of Money Laundering 

Issues” had been approved by the Board in its 181st Meeting held on 04.11.2010 covering the 

rules of Money Laundering Prevention Act, 2009 and Anti Terrorism Act, 2009. To establish




effective Anti Money Laundering drive at branch level, IBBL introduced AML Rating systems 

such as excellent/ good/ satisfactory/ marginal/ unsatisfactory through Self Assessment 

Report & Independent Testing Procedure as per instruction of Bangladesh Bank. During the 

last year, the different branches submitted 254 reports of which 91 reports were good,146 

were satisfactory and rest were marginal. 

5.5 Market Risk 

Major market risks arise from profit rate risk, equity and commodity financing risk and foreign 

exchange risk. The position of IBBL bank stands as follows: 

5.5.1 Profit Rate Risk 

Regulatory pressure to reduce profit rate in the market has been creating substantial profit 

rate risk for the banks. The Asset Liability Committee (ALCO) of IBBL monitors and evaluated 

the overall profit rate structure. IBBL has been following a competitive profit rate and has 

flexibility of setting profit rate according to market conditions and Bangladesh Bank ceilings. 

The bank has no profit sensitive trading portfolio. For non trading portfolio (general 

investment), the bank has been operating through buying and selling policy i.e. Bai- 

Murabaha, Bai-Muajjal, Bai-Salam, Bai-as-Sarf and Rent sharing mode like HPSM. IBBL also 

makes Investment under Musharaka mode i.e. profit and loss sharing mode and Mudaraba 

mode i.e. profit sharing and loss bearing on short term basis. Investment exposures under 

profit loss sharing mode is insignificant, hence facing little risk of investment loss. In case of 

rent sharing mode i.e. HPSM, the bank can adjust the rate of rent in line with market 

situation. IBBL has been exposed to some risk on buying and selling mode. 

5.5.2 Equity Risk and Commodity Financing Risk 

The bank does not have investment in the equity market, which carries insignificant equity 

risk. IBBL has very small investment in equity portfolio with only one quoted share. The bank 

had investment in Bangladesh Shipping Corporation (BSC), the face value of which was Tk.20 

million, whereas market value was Tk.110.90 million as on 31 December, 2011. The share of 

the same has been kept as SLR purpose and the bank revalued the same based on the closing 

market price. In unquoted share category, it has investment in Karmasangsthan Bank, CDBL 

and Bangladesh Aroma Tea Ltd. As the bank is involved in commodity financing, it exposed to 

commodity financing risk due to its investment in commodity based industries. 

5.6 Foreign Exchange Risk 

In order to minimize the Foreign Exchange Risk, Islami Bank Bangladesh Limited has adopted 

Foreign Exchange Risk Manual named “Foreign Exchange Treasury Manual”, through which 

the foreign exchange operations are being dealt with. Currency rate appropriateness is carried 

out by the treasury back-office to check as to whether all deals have been concluded at 

market rates. Dealing limit of dealers is set on the basis of expertise and efficiency of the 

dealers. To minimize the risk arising from the Foreign Exchange Transactions management 

approved Counter party Limit, Daylight limit/Intra-day limit, After Hour Dealing Limit, Over 

Night Limit, Stop Loss Limit and Management Action Trigger have been set by the 

management. Moreover, it has the opportunity to invest the Foreign Currency balance under 

Mudaraba Foreign Currency investment Mode and also under restricted Mudaraba principle 

through Islamic Development Bank (IDB). 

While reviewing the Foreign Currency Position, it has been found that the sum of net short 

position found nil and the sum of net long position stood at USD $20.82 million as on 

December 31, 2011. The bank’s required capital for the same stood at Tk.170.00 million 

which was duly considered while calculation of Capital Adequacy Ratio (CAR). 

Page 8 of 1717




6.0 PERFORMANCE 

6.1 Analytical Framework 

The analytical framework has mainly been based on consolidated financials (considering all 

the subsidiaries into account) of the bank. However, separate position has also been 

considered wherever required. The bank reported consolidated financial statements as well as 

separate financial statement in line with Bangladesh Accounting Standards as well as BB 

guideline. 

Good financial 

performance 

6.2 Financial Performance (Overall) 

Although the banking industry passed through a tough year in 2011, IBBL registered steady 

performance during the period under surveillance. CRISL evaluates the financial performance 

in terms of Return on Average Asset (ROAA), Return on Average Equity (ROAE) and Net 

interest/profit margin (NIM). Investment income of the bank increased to stand at Tk.32.02 

billion registering 29.24% growth. Against the same, the bank paid Tk.18.40 billion as profit 

on deposit (increased by 27.15%) resulting to net investment income of Tk.13.62 billion 

which was 32.26% higher than that of previous year. Unlike other banks in the industry, IBBL 

could manage to maintain the net investment margin due to its stable cost of fund during the 

period under surveillance. During the year 2011 the total operating income increased to 

Tk.20,123.41 million against Tk. 15,711.95 million in the last year representing 28.08% 

growth during the period. The above operating income in YE2011 revealed that 67.68% 

income was generated from net investment income (65.52% in YE2010), 26.32% from 

commission, exchange & brokerage income (25.44% in YE2010), 1.64% from investment in 

share and securities (3.12% in YE2010) and rest 4.36% from other operating income (5.92% 

in YE2010). The net profit after tax stood Tk.4,624.59 million during 2011 against Tk. 

4,485.48 million in 2010 representing 3.10% growth and the same was not in line with 

operating income growth due to significant increase in provision for classified investment and 

provision for diminution in value of investment in shares during the period. Moreover, due to 

higher growth in asset (17.71%) compared to net income (3.10%), the Return on Average 

Assets after tax (ROAA) decreased to 1.28% in 2011 against 1.47% in 2010. Similarly, the 

Return on Average Equity after tax (ROAE) slightly decreased to 18.09% in YE2011 against 

20.57% of the previous year. The bank made provision of TK.2,673.39 million during 2011 

against TK. 1,114.99 million during 2010 registering 1.39 times growth which was mainly due 

to increase in provision for classified investment and diminution in value of investment in 

shares. Net interest/profit margin (NIM) stood at 4.40% in YE2011 against 4.17% in the 

previous year. 

6.2.1 Stand Alone Operation 

On stand alone basis, operating income before provision of the bank increased to 

TK.12,731.63 million in YE2011 compared to TK.9,569.70 million in YE2010 registering 

33.04% growth over previous year. Net investment income also increased to TK.13,618.31 

million during 2011 against TK.10,294.37 million in 2010 indicating 32.29% growth. Profit 

payment against deposits of IBBL increased by 27.15% during 2011. Net profit after tax 

increased to TK. 4,841.45 million in 2011 against TK. 4,463.47 million in 2010 registering 

growth of 8.47% which was not in line with growth in operating income due to increase in 

provision during the period. 

Two subsidiaries 

6.2.2 Operations of Subsidiaries 

As said earlier, the bank has formed two subsidiaries. The operation of IBSL started in March 

22, 2010. IBSL is involved in portfolio management and brokerage service. The own portfolio 

size of IBSL stood at TK.1,920.85 million as on December 31, 2011. Due to adherence to 

Shariah principles, IBSL is not involved in non Shariah compliant securities. IBSL reported TK. 

238.74 million loss during the same period. The bank also has another subsidiary named 

IBCML which was formed on April 01, 2010 which is yet to get license and start its core 

business operation. The net profit of IBCML stood at Tk.21.89 million which was generated 

only from other operating income (bank deposit). 

Page 9 of 1717




Good operating efficiency 

6.3 Operating Efficiency (Overall) 

Overall operating efficiency of IBBL has been found to be good. The operating efficiency is 

reviewed in terms of operating income, operating expenses, cost-to-income ratio and yield 

against per Tk.100 staff cost. Operating income of the bank rose to Tk.20,123.41 million 

during the year 2011 from Tk.15,711.95 million in 2010 registering a growth of 28.08%. 

Operating expense of the bank increased to Tk.7,291.67 million during 2011 from Tk.6,107.17 

million in 2010 showing 19.40% growth. It appears from the above that the growth of 

operating income of the bank is higher than the growth of operating expense during 2011. 

However, growth of operating income is still higher than the growth of net income due to 

increase in provision for classified investment and investment in shares. Consequently, 

efficiency ratio stand at 36.23% in 2011 against 38.87% in 2010. Yield per 100 Taka Staff 

cost also increased to Tk.275.28 in 2011 against Tk. 223.65 in 2010. 

7.0 ASSET MANAGEMENT (overall) 

Gross NPI 2.71% 

7.1 Non Performing Investment /Asset Quality 

IBBL is continuing with large investment portfolio during the period under surveillance. The 

overall assets quality of the bank has been found to be good even experiencing downturn over 

previous year. Total investments of the bank increased to TK.305,790.18 million at the 

YE2011 (Tk.305,840.56 million on stand alone basis) compared to TK.261,725.13 million at 

the YE2010 indicating an increase of 16.84%. The total nonperforming investment (NPI) of 

the bank stood at TK.8,292.32 million as on December 31, 2011 from TK.4,655.63 million in 

2010 registered 78.11% growth over the previous year. The above was mainly due to 

significant injection of fresh NPI (TK.8,146.69 million) during 2011 which is a matter of 

concern for the bank. However, the above increase was offset by recovery of Tk.1,741.50 

million and declassification of Tk.2,399.90 million during the period. The NPI at YE2011 

consisted of 38.01% (YE2010; 19.25%) under substandard, 9.68% (YE2010; 11.19%) under 

doubtful and remaining 52.30% (YE2010; 69.56%) under bad/loss investment. Due to the 

above growth in NPI, gross NPI ratio increased to 2.71% in YE2011 against 1.78% in YE2010. 

After considering the specific provision and profit suspense against classified investment, the 

net NPI increased to 1.36% at YE2011 (1.36% on stand alone basis) compared to 0.73% at 

YE2010. The gross NPI coverage decreased to 98.36% at YE2011 against 141.47% at 

YE2010. 

7.2 Sectoral and Credit Concentration (Stand alone basis) 

The bank is continuing its operation with concentration to trade finance and textile sector. The 

sectoral portfolio reveals that 32.52% investment was in trade finance, followed by 20.82% in 

textile, 5.24% in iron & steel engineering, 5.04% in housing, 3.50% in RMG, 2.00% in 

agricultural sector and rest are segregated to other general investment. While reviewing 

sectoral NPI in 2011, it was revealed that classified investment pie is mostly comprised of 

trade finance (23.16%) followed by Textile (20.34%), Transport (19.53%), House building 

(4.59%), others (30.23%) and rest are insignificantly distributed in different sectors. CRISL 

views that the bank is significantly exposed to sectoral concentration risk in textile sector 

which might be affected with the volatility of commodity price both in the national and 

international market and the sectoral performance. 

CRISL reviewed financing facilities extended to Group of companies of IBBL and it was 

revealed that the funded exposure of the bank to different Group of companies contribute 

significant portion of capital which exposes the bank to credit concentration risk. 

Significant large 

investment 

Page 10 of 

7.3 Large Investment (stand alone basis) 

The bank’s large investment exposure has slightly decreased during the period under 

surveillance. The large Investment exposure of IBBL stood at Tk.62,288.50 million (funded 

Tk.34,377.30 million and non-funded Tk.27,911.20 million) against 13 accounts at the 

YE2011; whereas the same was Tk.64,850.80 million consisting 18 accounts in 2010. The 

large investment of the bank stood at 20.37% of total investment in YE2011 against 24.64 % 

of the previous year. All large investment exposures were in unclassified status. The Bank has 

also started syndicated financing with other shari’ah based banks to minimize the large




investment exposure in order to mitigate concentration risk. In the meantime, the bank has 

extended investment amounting to Tk.1138.36 million in four projects with other shari’ah 

based Banks. 

Rescheduled investment 

10.56% 

Considerable involvement 

in off balance sheet 

exposure 

7.4 Rescheduled Investment (stand alone basis) 

IBBL is continuing with large rescheduled assets during the period under surveillance. As on 

December 31, 2011, the total rescheduled investment of the bank stood at Tk.32,293.63 

million against Tk.24,813.93 million in the previous year and the same was 10.56% of the 

total investment at the YE2011 against 9.43% in the previous year. The above was 

comparatively high and a cause of concern for the bank. Out of the above rescheduled 

amount IBBL recovered Tk.7252.58 million (22.46% of the rescheduled assets) during the 

year 2011. CRISL also reviewed top 50 rescheduled agreements as on December 31, 2011 

and it was revealed that 28 accounts were rescheduled for the 1st time, 10 accounts for the 

second time, 3 accounts for the third time and 2 accounts for the fourth time. 

7.5 Off-Balance sheet Exposure (stand alone basis) 

IBBL has considerable involvement in off balance sheet exposure and the same has slightly 

increased during the year under surveillance. Total contingent liabilities increased to 

TK.113,420.93 million in 2011 from TK. 113,098.67 million in 2010. IBBL’s off balance sheet 

items comprised of 76.62% irrevocable letter of credit, 15.63% bills for collection and rest 

7.75% under letter of guarantees and other contingent liabilities in the same line with 

previous year. The total off balance sheet risk weighted assets constituted of 10.56% of total 

risk weighted assets of the bank at YE2011 against 6.12% at YE2010. 

While reviewing the risk weight-wise classification of the investment equivalent of off balance 

sheet exposure, it was revealed that 7.81% falls under 20% risk weight, 34.26% under 50% 

risk weight, 19.67% under 75%, 11.31% under 100%, 26.95% under 125% and rest 0.003% 

under 150% risk category. The total risk weighted assets of off-balance sheet exposure stood 

at Tk.2,696.15 million. 

8.0 CAPITAL ADEQUACY (overall) 

Good capital adequacy 

IBBL has been operating with good capital adequacy. During the surveillance the capital 

adequacy position of IBBL has improved due to good assets management. Under risk based 

capital adequacy framework of Basel-II, the total RWA of the bank stood at TK.25,5431.30 

million as on December 31, 2011 of which 91.21% emanated from credit risk, 0.75% from 

market risk and rest 8.04% from operational risk. Against the above, total eligible capital 

stood at Tk.33,530.44 million comprising Tier-I (core capital) of Tk.23,214.95 million and 

Tier-II (supplementary capital) of Tk.10,315.49 million representing a capital surplus of 

Tk.7,987.00 million. The Risk Weighted Capital Adequacy Ratio (RWCAR) stood at 13.13% at 

YE2011 (YE2010; 11.06%) against minimum requirement of 10% as on December 2011. Of 

the above 9.09% was Tier-I capital to risk weighted assets (regulatory minimum capital 

adequacy ratio 5% for Tier-I and 10% for total capital) and 4.04% was Tier-II capital. 

Internal capital generation was decreased to 20.25% during 2011 against 23.97% in the 

previous year. The risk weighted assets decreased to Tk.255,431.30 million at YE2011 against 

Tk.256,804.90 million from previous year which was mainly due to proper asset management 

through rating of corporate clients. Unlike most of the banks in the industry, IBBL focused 

both on asset management and capital management to maintain required capital in line with 

Basel-II capital adequacy framework. However, the Bank needs regular monitoring of the 

surveillance of client ratings in order to make them use worthy. 

Page 11 of




Stress Testing Analysis 

The following table shows the sensitivity of risk factors on CAR (based on actual CAR of 

13.13%). 

CAR highly sensitive to 

increase in NPI 

Indicators 

Magnitude of Sensitivity 

Decrease in the FSV of the collateral -0.14 ~ -0.57 

Increase in NPIs -0.36 ~ -6.56 

Negative Shift in NPI’s Category 0.00 ~ -0.28 

Interest Rate 0.15 ~ 0.46 

FEX: Currency Appreciation 0.00 ~ -0.01 

Equity Shock 0.00 ~ -0.02 

Total Change -0.36 ~ -6.97 

CAR After Shock (%) 12.77 ~ 6.15 

As IBBL is maintaining adequate capital according to the Basel II capital requirement, any 

change in the risk indicators have minor effect on the capital adequacy of the bank. From the 

above analysis it has been revealed that CAR of the bank is highly sensitive to increase in NPI. 

9.0 LIQUIDITY AND FUNDING (overall) 

Sufficient liquidity 

9.1 Liquidity Management 

IBBL has been operating with sufficient liquidity. IBBL is continuing with a good liquid assets 

portfolio in the balance sheet which includes government securities, balance in hand and other 

banks etc. The total liquid assets including cash, cash equivalent and Bangladesh Bank 

instruments represented approximately 20.89% of total deposit at YE2011 (19.81%; 

YE2010). Investment in Bangladesh Government Islamic Investment Bond has increased to 

Tk.13,800 million at YE2011 against Tk. 11,000 million at YE2010. As per Bangladesh Bank 

Guidelines the bank has been maintaining more than required Cash Reserve Ratio (CRR) and 

Statutory Liquidity Ratio (SLR) and the CRR and SLR of IBBL were 9.59% (required 6%) and 

15.78% (required 11.50%) in 2011 respectively. Investment to deposit ratio slightly 

decreased to 89.45% in YE2011 against 89.65% in YE2010 due to higher growth in deposit 

than the investment. 

IBBL have favorable gap in all maturity buckets. Liquidity gap ratio up to 3 months period is 

1.17 times and maturity bucket up to 12 months period is 1.08 times of liability. Overall gap 

analysis results in a net liquidity surplus of Tk.27,800.21 million. Hence it is expected that the 

bank will be able to meet its obligations with sufficient cumulative surplus. 

Cost of fund 8.86% 

9.2 Fund Management 

IBBL has been operating with good funding base during the period under surveillance. The 

funding mix consists of 87.80% deposits and others, 7.09% shareholders equity, 4.34% 

provision, tax and other liabilities and 0.77% Mudaraba Perpetual Bond. Total deposits 

consists of Mudaraba Saving Deposit of TK.132.05 billion (38.63% of total deposit), other 

Mudaraba Deposit TK.103.11 billion (30.16% of total deposit), Mudaraba Term Deposit of 

TK.65.17 billion (19.06% of total deposit), Al-Wadeeah current and other deposit of Tk.38.66 

billion (11.31% of total deposit) and Bills payable of TK.2.86 billion (0.84% of total deposit). 

Top 50 depositors are holding 1.83% of total deposit at YE2011 against 1.70% in the previous 

year. The bank’s weighted average cost of fund was almost stable which stood 8.86% at 

YE2011 compared to 8.65% in the previous year. The bank is mainly dependent of customer 

deposit which is profit rate sensitive. Any volatility in the cost of fund may affect profitability 

of bank. 

Page 12 of




10.0 OBSERVATION SUMMARY 

Rating Comforts: 

• Comfortable capital adequacy 

• Good Asset quality 

• Good financial performance 

• Comfortable liquidity 

• Strong market position 

• Considerable improvement in non-funded 

business 

• Experienced top management 

• Wide Operational network 

• Carrier of Islamic Banking Flagship in 

Bangladesh 

• Significant rated corporate exposures 

Rating Concerns: 

• Increase in Gross NPI 

• Considerable sectoral concentration 

• Rescheduled assets performance yet to arrive 

at satisfactory level 

• Exposed to credit concentration risk 

• Considerable investment in low yielding 

government bond 

Business Opportunities: 

• Product diversification 

• Portfolio diversification in low risk category 

business segment including SME 

• Client rating to enhance investment 

Business Challenges: 

• Recent liquidity crisis in market 

• Regulatory pressure for minimizing 

interest/profit rate spread 

• Entrance of new bank 

• Implementation of risk based capital adequacy 

• Unrest in capital market 

11.0 PROSPECTS 

The financial sector of Bangladesh which is considered as highly regulated and structured was 

subject to further refinement under Basel II regime, during 2011, to ensure risk based capital 

adequacy for the banks. In fact during first part of the 2011 a good number of banks having 

low CAR or marginal CAR took actions to increase capital base by the issuance of bonds to be 

included under Tier II capital. This was mainly a balance sheet approach followed by banks to 

enhance capital base without going for clients rating as recommended in Basel II system. 

Although it was a cumbersome process and needed permission from Bangladesh Bank yet all 

banks could not adopt the opportunity for not having CAMELS ratings 2 for both issuer and 

issue rating. However the requirement was subsequently relaxed by one notch by Bangladesh 

Bank to allow the banks to increase capital base under tier II capital by the issuance of short 

term bonds. Subsequently banks found increase of capital through balance sheet is really 

costlier on many accounts. Finally the banks decided to gain capital through clients rating ( 

i.e. asset base approach) which is continuing and as per available statistics most of the banks 

started asking their good clients to get themselves rated by recognized ECAIs on the hope 

that bank’s capital requirement will be substantially reduced if the clients obtain good rating 

with their good fundamentals etc. It has started giving positive results and CRISL believes 

that with the passage of time a good percentage of clients would come under rating coverage 

for ultimate benefit of banks to have additional capital saved due to good rated clients for 

further investment in future without putting pressure for additional capital from bank. 

Page 13 of 

During 2011 on an average there had been liquidity constrain in the banking sector. Over and 

above the Bangladesh Bank enhanced the REPO rate thrice during 2011 which finally stood at 

Tk.7.25 at the YE2011 to combat double digit inflation effect. For these reasons money 

market was volatile with high cost of fund. In spite of market situation average growth of 

Deposit as provided by BB for the banking industry YE2011 stood at 20.49%. Similarly the 

investment growth was recorded as 17.92%. As deposit provides good investment capacity to 

banks therefore all banks intensified deposit mobilization effort during 2011. This effort got 

further impetus as the BB withdrew the profit cap from the market with the moral persuasion 

to maintain 4.5% profit spread between deposit and investment. The final result was at 

YE2011 almost all banks improved their deposits and investment growth as shown by BB in




its scheduled banks statistics. With the improvement of economic meltdown in the western 

world including USA, Bangladesh Export started gaining momentum in recent days and the 

banks are continuously playing an appreciative role both in export and import business. 

Inward remittance from the expatriate Bangladeshis through the banking channel has also 

increased due to fast e-bank facilities etc. CRISL believes that under Basel II regime banks 

with risk based capital adequacy are more capable and vibrant to operate in line with the 

international banking community with equal efficiency. 

END OF THE REPORT 

(Information used herein is obtained from sources believed to be accurate and reliable. However, CRISL does not 

guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or 

omissions or for the results obtained from the use of such information. Rating is an opinion on credit quality only 

and is not a recommendation to buy or sell any securities. All rights of this report are reserved by CRISL. Contents 

may be used by news media and researchers with due acknowledgement) 

[We have examined, prepared, finalized and issued this report without compromising with the matters of any 

conflict of interest. We have also complied with all the requirements, policy procedures of the SEC rules as 

prescribed by the Securities and Exchange Commission.] 

Page 14 of




12.0 CORPORATE INFORMATION 

DATE OF INCORPORATION: 13 th March 1983 

FUNCTIONING DATE: 30 th March 1983 

BOARD OF DIRECTORS: 

Prof. Abu Nasser Muhammad Abduz Zaher Chairman 

Janab Yousif Abdullah Al-Rajhi 

Vice- Chairman 

Engr. Mustafa Anwar 

Vice- Chairman 

Engr. Md. Eskander Ali Khan 

Director 

Jb. Md. Khurshed Hossain 

Director 

Dr. Abdulhameed Fouad Al-Khateeb Director 

Jb. Mohamad Adnan Midani 

Director 

Jb. Mohammad Abdullah Al Jalahma Director 

Jb. Hafizul Islam Mian 

Director 

Jb. Md. Shahidul Islam 

Director 

Engr. Muhammad Dawood Khan 

Director 

Jb. Mohammed Nazrul Islam 

Director 

Jb. Mominul Islam Patwary 

Director 

Jb. Md. Abdus Salam, FCA, FCS 

Depositor Director 

Jb. Humayun Bokhteyar ACPA, FCA Depositor Director 

Prof. N R M Borhan Uddin Ph. D 

Independent Director 

Janab Mohammad Abdul Mannan 

Managing Director, Ex-Officio Director 

Auditors: 

A. Qasem & Co. 

Chartered Accountants 

& 

ACNABIN 

Chartered Accountants 

Core Management Body: - 

Janab Mohammad Abdul Mannan 

Janab Mohd. Shamsul Haque 

Janab Md. Habibur Rahman 

Janab Md. Setaur Rahman 

Janab Md. Nurul Islam 

Janab Muhammad Abul Bashar 

Managing Director & CEO 

DMD (Operations Wing) 

DMD (Investment Wing) 

DMD (On deputation in Nigeria) 

DMD (International Banking Wing) 

DMD (Information & Communication Technology 

Division) 

DMD (Retail Investment Wing) 

DMD (Internal Control & Compliance Wing) 

EVP (Risk Management Unit) 

EVP (Treasury Division) 

EVP (Corporate Investment Division-I) 

EVP (Assets Management Division) 

EVP (Human Resources Division) 

Janab Syed Abdullah Mohammed Saleh 

Janab Md. Habibur Rahman Bhuiyan, FCA 

Janab A.K.M. Abdul Malek Chowdhury 

Janab Md. Mahbub-ul-Alam 

Janab Md. Nurul Islam Khalifa 

Janab Rafi Ahmed Begh 

Janab Abdus Sadeque Bhuiyan 

Janab Mohammad Nesar Uddin, FCA, FCMA SVP (Chief Financial Officer) 

Janab Abu Reza Md. Yeahia 

SVP (Company Secretary) 

CAPITAL HISTORY: 

Figures in Million Taka 

Year 

Authorized Capital Issued, Subscribed and Paid-up Rate of Source of 

(Million Tk.) 

Capital (Million Tk.) Increase Paid-up Capital 

2007 5,000.00 3,801.60 10% Bonus Share Issue 





Page 15 of




13.0 FINANCIALS 

A. Balance Sheets 

Figure in Million 

Particulars 2011* 2010* 2009 2008 2007 

Cash in Hand 4,656.00 3,787.39 2,480.77 3,107.36 2,907.14 

Cash with BB & Other Banks/FIs 35,975.92 35,266.02 35,004.90 28,222.96 14,169.31 

Cash with Other Banks/FIs 16,853.30 7,114.71 7,678.37 5,623.18 4,012.33 

Investment in Shares & Securities. 15,853.18 13,471.20 11,136.61 7,532.61 20,365.71 

Total Investment, Adv. & Bills 305,790.18 261,725.13 214,615.80 180,053.94 144,920.61 

Fixed Assets 7,110.25 6,757.09 6,512.36 4,407.22 3,987.23 

Other Asset 3,136.78 2,663.63 874.02 1,931.87 1,000.01 

Total Assets 389,375.60 330,785.17 278,302.84 230,879.14 191,362.35 

Current A/Cs & Others A/Cs 38,658.70 35,497.19 23,794.37 18,958.13 19,165.15 

Bills Payable 2,863.40 2,980.61 2,545.71 2,308.04 1,767.59 

Savings Bank Deposits 132,051.08 111,143.63 95,081.55 77,498.41 62,403.50 

Term Deposits 65,167.29 51,156.12 45,268.01 36,706.85 31,103.69 

Other Mudaraba Deposits 103,114.79 91,159.94 77,602.50 64,871.98 51,885.35 

Deposits & Other A/C 341,855.26 291,937.49 244,292.14 200,343.41 166,325.29 

Other Liabilities 19,906.59 15,331.40 13,905.15 16,475.23 13,817.42 

Total Outside Liabilities 361,761.85 307,268.89 258,197.29 216,818.64 180,142.71 

Paid Up Capital 10,007.71 7,413.12 6,177.60 4,752.00 3,801.60 

Reserves & Others 17,606.04 16,103.15 13,927.94 9,308.49 7,418.05 

Shareholders' Equity 27,613.75 23,516.27 20,105.54 14,060.49 11,841.34 

Total Liabilities & Shareholders' 

Equity 

389,375.60 330,785.17 278,302.84 230,879.14 191,362.35 

B. Income Statement 

Figure in Million 

Particulars 2011* 2010* 2009 2008 2007 

Investment Income 32,019.53 24,766.26 21,370.53 19,543.84 14,572.19 

Profit Paid on Deposit 18,401.22 14,471.89 13,076.99 12,162.10 9,410.59 

Net Investment Income 13,618.31 10,294.37 8,293.54 7,381.74 5,161.60 

Income from Investment in Share & 

Sec. 

331.00 490.42 115.16 408.76 284 

Comm., Exchange & Brokerage 5,297.46 3,997.73 3,437.20 3,337.52 2,579.01 

Other Non Investment Income 876.63 929.42 480.96 940.22 264.32 

Total Operating Income 20,123.41 15,711.95 12,326.86 11,594.23 8,288.94 

Salary, Allowance 4,655.98 4,289.28 3,153.35 2,837.99 2,037.23 

Other Operating Expenses 2,635.67 1,817.89 1,392.63 1,277.82 1,089.35 

Total Operating Expenditure 7,291.66 6,107.17 4,545.97 4,115.81 3,126.58 

Profit/Loss before Provisions 12,831.75 9,604.78 7,780.89 7,952.43 5,162.36 

Prov. for Unclassified Investment 553.00 743.00 384.26 310.02 436.76 

Prov. for Classified Investment 1,641.31 -80.01 939.6 528.51 653.62 

Prov. For others Assets/Off Balance 

Sheet Items 

479.08 452.00 -60.63 766.06 291.16 

Net P/L before Taxes 10,158.36 8,489.79 6,517.66 6,347.83 3,780.82 

Provisions for Tax 5,533.77 4,004.31 3,114.11 3,673.04 1,731.77 

Net P/L after Tax 4,624.59 4,485.48 3,403.55 2,674.80 1,427.36 

* Consolidated Financial Statements 

Page 16 of




RATING 

AAA 

Triple A 

(Highest Safety) 

AA+, AA, AA- 

(Double A) 

(High Safety) 

A+, A, A- 

Single A 

(Adequate 

Safety) 

CRISL RATING SCALES AND DEFINITIONS 

LONG-TERM - BANKS 

DEFINITION 

Banks rated in this category are adjudged to be of best quality, offer highest safety and have highest 

credit quality. Risk factors are negligible and risk free, nearest to risk free Government bonds and 

securities. Changing economic circumstances are unlikely to have any serious impact on this category 

of banks. 

Banks rated in this category are adjudged to be of high quality, offer higher safety and have high credit 

quality. This level of rating indicates a corporate entity with a sound credit profile and without 

significant problems. Risks are modest and may vary slightly from time to time because of economic 

conditions. 

Banks rated in this category are adjudged to offer adequate safety for timely repayment of financial 

obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors 

are more variable and greater in periods of economic stress than those rated in the higher categories. 

BBB+, BBB, 

BBB- 

Triple B 

(Moderate 

Safety) 

BB+, BB, BB- 

Double B 

(Inadequate 

Safety) 

B+, B, B- 

Single B 

(Risky) 

CCC+,CCC, 

CCC- 

Triple C 

(Vulnerable) 

CC+,CC, CC- 

Double C 

(Highly 

Vulnerable) 

C+, C, C- 

(Near to Default) 

D 

(Default) 

Banks rated in this category are adjudged to offer moderate degree of safety for timely repayment of 

financial obligations. This level of rating indicates that a bank is under-performing in some areas. These 

entities are however, considered to have the capability to overcome the above-mentioned limitations 

with special care and cautious operation. Risk factors are more variable in periods of economic stress 

than those rated in the higher categories. 

Banks rated in this category are adjudged to lack of key protection factors, which results in an 

inadequate safety. This level of rating indicates a bank as below investment grade but deemed likely to 

meet obligations when due. Overall quality may move up or down frequently within this category. 

Banks rated in this category are adjudged to be with high risk. Timely repayment of financial obligations 

is impaired by serious problems which the entity is faced with. Whilst an entity rated in this category 

might be currently meeting obligations in time, continuance of this would depend upon favorable 

economic conditions or on some degree of external support. 

Banks rated in this category are adjudged to be with vulnerable protection factors. This rating indicates 

that the degree of certainty regarding timely payment of financial obligations is doubtful unless 

circumstances are favourable. 

Banks rated in this category are adjudged to be with high vulnerable position. This rating indicates that 

the degree of certainty regarding timely payment of financial obligations is quite lower unless overall 

circumstances are favourable or there is possibility of high degree external support. 

Banks rated in this category are adjudged to be with near to default in timely repayment of financial 

obligations. This type rating may be used to cover a situation where a insolvency petition has been filed 

or similar action has been taken, but payments on the obligation are being continued with high degree 

of external support. 

Banks rated in this category are adjudged to be either currently in default or expected to be in default. 

This level of rating indicates that the entities are unlikely to meet maturing financial obligations and 

calls for immediate external support of a high order. 

For long-term ratings, CRISL assigns + (Positive) sign to indicate that the issue is ranked at the upper-end of its 

generic rating category and - (Minus) sign to indicate that the issue is ranked at the bottom end of its generic rating 

category. Long-term ratings without any sign denote mid-levels of each group. 

SHORT-TERM - BANKS 

Highest Grade 

Highest certainty of timely payment. Short-term liquidity including internal fund generation is 

ST-1 

very strong and access to alternative sources of funds is outstanding, Safety is almost like risk 

free Government short-term obligations. 

High Grade 

ST-2 

High certainty of timely payment. Liquidity factors are strong and supported by good 

fundamental protection factors. Risk factors are very small. 

Good Grade 

Good certainty of timely payment. Liquidity factors and company fundamentals are sound. 

ST-3 

Although ongoing funding needs may enlarge total financing requirements, access to capital 

markets is good. Risk factors are small. 

Moderate Grade 

ST-4 

Moderate liquidity and other protection factors qualify issues as to invest grade. Risk factors are 

larger and subject to more variation. 

Non-Investment Grade 

Speculative investment characteristics. Liquidity is not sufficient to insure against disruption in 

ST-5 

debt service. Operating factors and market access may be subject to a high degree of variation. 

ST-6 

Default 

Issuer failed to meet scheduled principal and/or interest payments. 

Page 17 of

CREDIT RATING REPORT On ISLAMI BANK BANGLADESH LIMITED

Create successful ePaper yourself

Delete template?

Save as template?