auditors’ report - sonali bank limitedthe report are in agreement with the books of account and...

AUDITORS’ REPORT TO THE SHAREHOLDERS

OF Sonali Bank Limited

We have audited the accompanying consolidated financial statements of Sonali Bank Limited (SBL) and its subsidiaries, (the “Group”) as well as the financial statements of Sonali Bank Limited (“the Bank”) which comprises the consolidated Balance Sheet as at 31 December 2011 consolidated Income Statement, consolidated Statement of Changes in Equity, consolidated 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 these consolidated financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, 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 consolidated 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 these financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. The financial statements of the Bank’s two subsidiaries namely, Sonali Investment Limited and Sonali Exchange Co., Inc. were audited by other auditors whose reports have been furnished to us and in our opinion, in so far as it relates to the amounts included in respect of the bank’s subsidiaries, are based solely on the reports to the other auditors.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion 1. Loans and Advances aggregating to Tk. 2,880 million have been identified as Non-performing. Had

provision been made on such non-performing loans and advances, profit for the year would have been decreased by Tk. 2,405 million ( Tk. 2,275 million on account of additional provision and Tk. 130 million on account of transfer of interest income to interest suspense account).

2. Interest receivable from Government. against exemption of loan is aggregated to BDT 5,375 million.

Neither any provision has been kept nor has any amount so far received from the Government since 1994-95.

Qualified Opinion In our opinion, except for the effects of the aforesaid-paragraphs 1 to 2, the Financial Statements- prepared in accordance with Bangladesh Financial Reporting Standards, give a true and fair view of the state of the bank's affairs and its subsidiaries as at 31 December 2011 and the results of its operations and its cash flows for the period then ended and comply with the Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchanges Rules 1987 and other applicable laws and regulations. Emphasis of Matter

In addition to our above qualified opinion we draw reader’s attention to note no. 13.1 (i) of the financial statements which describes management’s explanation on shortfall of provision on un-responded branch adjustment debit balance.

Further to our opinion in the above paragraph, we state 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 there-of;

(ii) in our opinion, proper books of account as required by law have been kept by 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;

(iii) the Bank's Balance Sheet and Income Statement together with the annexed notes 1 to 48 dealt with by the report are in agreement with the books of account and returns;

(iv) the expenditures incurred was for the purpose of the bank's business;

(v) subject to our findings no. 1 to 5, the financial position of the bank as on 31 December 2011 and the profit for the year then ended have been properly reflected in the financial statements and the financial statements have been prepared in accordance with the generally accepted accounting principles;

(vi) the financial statements have been drawn up in conformity with the Bank Companies Act, 1991 and in accordance with the accounting rules and regulations issued by the Bangladesh Bank;

(vii) the financial statements conform to the prescribed standards set in the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;

(viii) the records and statements submitted by the branches have been properly maintained and reflected in the financial statements;

(ix) subject to our findings adequate provisions have been made for advances and other assets which are, in our opinion, doubtful of recovery;

(x) the information and explanations required by us have been received and found satisfactory;

(xi) the Bank has Two (2) overseas branches;

(xii) 80% of the risk- weighted assets have been audited; and

(xiii) We have spent approximately 12,215 man hours for the audit of the books of accounts and the financial statements of the Bank.

Syful Shamsul Alam & Co., Hoda Vasi Chowdhury & Co., Chartered Accountants Chartered Accountants

Place: Dhaka

Dated: 29 May 2012.

2011 2010Property and Assets Note BDT BDT

Cash 3(a) 65,634,773,139 33,230,634,571

In Hand (Including Foreign Currency) 3,992,625,523 5,138,688,934

61,642,147,616 28,091,945,637

4(a) 13,077,936,686 40,099,345,277 In Bangladesh 7,079,712,392 28,555,819,000 Outside Bangladesh 5,998,224,294 11,543,526,277

Money at Call on Short Notice 5 11,742,379,680 5,547,312,900

Investments 6(a) 132,089,167,727 111,745,095,461 Government 119,359,837,845 96,838,566,107 Others 12,729,329,882 14,906,529,354

Loans and Advances 348,091,755,805 286,098,070,161 Loans, Cash Credit, Overdrafts, etc. 7(a) 301,426,695,855 256,717,951,354 Bills Purchased and Discounted 7(b) 46,665,059,950 29,380,118,807

8(a) 23,060,119,998 10,594,092,052 Other Asset ( figure of 2010 restated) 9(a) 101,908,464,655 133,200,410,488

Non-Banking Asset 10 - -

Total Property and Asset 695,604,597,690 620,514,960,910

Liabilities and Capital

11 2,096,263,206 26,385,637

Deposit and Other Accounts 12 533,123,037,103 478,134,084,948 Current Deposit & Other Accounts 12(a) 128,393,661,256 118,947,874,651 Bills Payable 9,211,842,670 8,643,731,434 Savings Deposits 165,670,880,144 153,685,198,818 Fixed Deposits 229,846,653,031 196,857,280,045 Other Deposits - - Other Liabilities 13(a) 104,262,013,373 104,943,593,203

Total Liabilities 639,481,313,683 583,104,063,788 Capital/Shareholders' Equity:Paid up Capital 14.2 11,250,000,000 9,000,000,000 Statutory Reserve 15 5,924,918,206 3,956,476,533 Retained Earnings (figure of 2010 restated) 16(a) 12,826,014,349 4,806,256,012 Other Reserve 17 26,122,351,452 19,648,164,577 Total Shareholders' Equity 56,123,284,007 37,410,897,122 Total Liabilities and Shareholders' Equity 695,604,597,690 620,514,960,910

Borrowing from other Banks, Financial Institutions &

Agents

Fixed Asset including Premises,Furniture & Fixture

Sonali Bank LimitedConsolidated Balance Sheet

As at 31 December 2011

With Bangladesh Bank and its agent Bank (including ForeignCurrency)

Balance with other Banks & Financial Institutions

1

Sonali Bank LimitedConsolidated Balance Sheet

As at 31 December 20112011 2010

Off-Balance Sheet Items Note BDT BDT

Contingent Liabilities 18Letter of Guarantee 6,131,165,629 6,790,367,716 Irrevocable Letter of Credit 124,710,753,123 114,168,814,894 Bills for Collection 17,329,785,045 10,094,319,715 Other Contingent Liabilities - -

148,171,703,797 131,053,502,325

Other Commitments - -

- - - -

- -

- - Claim against the bank not acknowledged as debt - - Litigation pending against Bank - -

Other Memorandum Items - - Value of Travelers' Cheque on Hand - - Value of Bangladesh Sanchoy Patra on Hand - -

148,171,703,797 131,053,502,325

Place: Dhaka.

Documentary credits and short term trade relatedtransactions

Forward asset purchased and forward deposit placedUndrawn note issuance and revolving underwriting facilities

Dated: 29 May 2012

Undrawn formal standby facilities, credit lines and othercommitments

Total Off Balance Sheet Items including Contingent Liabilities

The annexed notes form an integral part of these accounts

Chairman Director Director Managing Director & CEO

Signed as per annexed report on even date

Syful Shamsul Alam & Co. Chartered Accountants

Hoda Vasi Chowdhury & Co.Chartered Accountants

2

2011 2010

Particulars Note BDT BDT

Interest Income 20(a) 28,092,050,860 22,841,408,729 21(a) (22,415,764,284) (19,131,795,895)

Net Interest Income 5,676,286,576 3,709,612,834

Income from Investments 22(a) 7,473,468,291 5,896,206,997

Commission, Exchange and Brokerage 23(a) 7,703,669,610 9,546,277,030

Other Operating Income 24(a) 2,861,559,542 1,436,254,869

. 18,038,697,443 16,878,738,896

Total Operating Income 23,714,984,019 20,588,351,730

Less: Operating Expenditure:

Salary and Allowances 25(a) 8,140,545,647 9,345,557,066

Rent, Tax, Insurance, Electricity 26(a) 604,406,721 500,713,404

Legal Expense 27 26,052,472 30,380,407

Postage, Stamps and Telephone 28(a) 61,239,063 80,898,613

Printing, Stationery, Advertisement 29(a) 173,802,290 153,953,292

Chief Executive's salary and fees 30 6,171,743 3,651,612

Directors' Fee 31(a) 5,541,409 4,998,772

Audit Fee 32(a) 2,784,231 2,150,000

- -

33(a) 420,364,042 334,754,923

Other Expenditure 34(a) 1,796,346,347 1,643,103,897

Total Operating Expenses 11,237,253,965 12,100,161,986

Profit Before Provision 12,477,730,054 8,488,189,744

35(a) (465,648,951) (3,001,447,059)

36(a) 129,549,057 -

Other Provision 37 4,331,871,631 (1,004,184,181)

Total Provision 3,995,771,737 (4,005,631,240)

Profit Before amortization 16,473,501,791 4,482,558,504

Amortization of Intangible Assets (figure of 2010 restated) 6,574,320,716 6,574,320,716

Total Profit before tax 9,899,181,075 (2,091,762,212)

Less: Provision for Tax 82,766,608 1,117,251,898

Current Tax 13.6(a) (994,742,010) (1,070,000,000)

Deferred Tax 9.8.2 1,077,508,618 2,187,251,898 Net Profit After Tax ( figure of 2010 restated 9,981,947,683 (974,510,314)

Retained Surplus Brought Forward 4,806,256,012 6,170,766,326 14,788,203,695 5,196,256,012

Charges on loan loss

Depreciation and Repair of Bank's Property

Provision against Loans & Advances

Less: Interest Paid on Deposit and Borrowing, etc.

Sonali Bank LimitedConsolidated Profit and Loss AccountFor the year ended 31 December 2011

Provision against Investment in Quoted Shares

3

Sonali Bank LimitedConsolidated Profit and Loss AccountFor the year ended 31 December 2011

Appropriation:

Transferred to General Reserve - -

Transferred to Statutory Reserve 1,968,441,673 390,000,000

Dividend etc. - -

1,968,441,673 390,000,000

Retained Surplus, Carried Forward 16 (a) 12,826,014,349 4,806,256,012

Earnings Per Share restated 43(a) 108.65 (10.61)





Hoda Vasi Chowdhury & Co. Chartered Accountants

Place: DhakaDated: 29 May 2012

4

2011 2010Note BDT BDT

A.Interest receipts in cash 41,009,065,826 21,002,814,622 Interest payments (22,415,764,284) (19,131,795,895) Dividends receipts 64,076,855 37,944,995 Fee and commission receipts in cash 7,195,633,751 6,949,167,514 Recoveries on loans previously written off - - Cash payments to employees (7,928,410,517) (9,053,757,372) Cash payments to Suppliers (229,561,964) (203,901,321) Income taxes paid (500,000,000) -

3,239,035,894 3,100,396,987 (3,419,244,667) (5,435,910,555)

17,014,830,894 (2,735,041,025)

Statutory deposits - - Purchase/sale of trading securities - - Loans & advances to other banks - - Loans & advances to customers (61,993,685,644) (32,075,565,462) Other assets (item-wise) 32,483,249,497 (19,508,772,858) Deposits from other banks 4,670,519,722 4,430,439,105 Deposits from customers 50,318,432,432 67,552,076,440 Other liabilities account of customers - - Trading liabilities - - Other liabilities (item-wise) (181,579,828) 17,949,839,259

25,296,936,179 38,348,016,484

B.Proceeds from sale of securities - - Payments for purchase of securities (19,705,842,463) (8,952,508,896) Purchase/sale of property, plant & equipment (12,466,027,946) (546,817,431) Purchase/sale of subsidiary - -

(32,171,870,409) (9,499,326,327)

C.Receipts from issue of loan capital & debt security - - Payments for redemption of loan capital & debt security 2,069,877,569 (33,738,962) Receipts from issue of ordinary share - Dividends paid - -

2,069,877,569 (33,738,962)

D. 12,209,774,233 26,079,910,170

E. - -

F. 86,648,364,898 60,568,454,728

G. 42(a) 98,858,139,131 86,648,364,898

Net cash from financing activities

Net increase/decrease in cash and cash equivalents

Net cash from operating activities

Cash flows from investing activities

Net cash from investing activities

Cash flows from financing activities

Effects of exchange rate changes on cash and cash-equivalents

Cash and cash-equivalents at beginning for the year/period


Cash and cash-equivalents at end of the year/period


Sonali Bank LimitedConsolidated Statement of Cash Flow For the year ended 31 December 2011

Cash flows from operating activities

Operating profit before changes in operating assets andliabilities

Increase/decrease in operating assets and liabilities

Receipts from other operating activities (item-wise)Payments for other operating activities (item-wise)

5

Particulars Paid up CapitalStatutory Reserve

Other Reserve Asset Revaluation

Reserve Revaluation of

InvestmentRetained Earning

Total

Balance as at 1 January 2010 9,000,000,000 3,566,476,533 47,000,000 8,833,824,291 4,993,072,592 10,821,607,786 37,261,981,202

Shortfall of goodwill amortization - - - - - (4,650,841,460) (4,650,841,460) Restated balance 9,000,000,000 3,566,476,533 47,000,000 8,833,824,291 4,993,072,592 6,170,766,326 32,611,139,742

Changes in equity 2010

Surplus/deficit on account of revaluation of investments - - - - 5,774,267,694 - 5,774,267,694 Net Profit for the year 2010 - - - - - (1,364,510,314) (1,364,510,314)Transferred to Statutory Reserve - 390,000,000 - - - - 390,000,000

Balance as at 31 December 2010 9,000,000,000 3,956,476,533 47,000,000 8,833,824,291 10,767,340,286 4,806,256,012 37,410,897,122


Surplus/deficit on account of revaluation of properties - - - - - - -

Surplus/deficit on account of revaluation of investments - - - 12,026,800,411 (5,552,613,536) - 6,474,186,875

Currency translation differences - - - - - 24,932 24,932

Net gains and losses not recognized in the income statement

- - - - - - -

Transferred to Other Reserve - - - - - - -

Net Profit for the year 2011(after appropriation) - - - - - 8,019,733,405 8,019,733,405

Dividends (Bonus share) - - - - - - -

Issue of share capital 2,250,000,000 - - - - - 2,250,000,000

Transferred to Statutory Reserve - 1,968,441,673 - - - - 1,968,441,673



Sonali Bank LimitedConsolidated Statement of Changes in Equity

For the year ended 31 December 2011 Amount in taka

6

2011 2010Property and Assets Note BDT BDT

Cash 3 65,634,773,139 33,230,634,571

In Hand (Including Foreign Currency) 3,992,625,523 5,138,688,934

61,642,147,616 28,091,945,637

4 12,601,457,703 40,099,345,277 In Bangladesh 6,885,819,000 28,555,819,000 Outside Bangladesh 5,715,638,703 11,543,526,277

Money at Call on Short Notice 5 11,742,379,680 5,547,312,900

Investments 6 134,075,750,559 111,745,095,461 Government 119,359,837,845 96,838,566,107 Others 14,715,912,714 14,906,529,354

Loans and Advances 7 345,991,348,911 286,098,070,161 Loans, Cash Credit, Overdrafts, etc. 299,326,288,961 256,717,951,354 Bills Purchased and Discounted 46,665,059,950 29,380,118,807

8 23,026,415,030 10,594,092,052 Other Asset (figure of 2010 restated) 9 102,119,984,054 133,200,410,488

Non-Banking Asset 10 - -

Total Property and Asset 695,192,109,076 620,514,960,910

Liabilities and Capital

11 2,096,263,206 26,385,637

Deposit and Other Accounts 12.1 533,192,166,553 478,134,084,948 Current Deposit & Other Accounts 128,462,790,706 118,947,874,651 Bills Payable 9,211,842,670 8,643,731,434 Savings Deposits 165,670,880,144 153,685,198,818 Fixed Deposits 229,846,653,031 196,857,280,045 Other Deposits - - Other Liabilities 13 103,811,376,412 104,943,593,203

Total Liabilities 639,099,806,171 583,104,063,788 Capital/Shareholders' Equity:Paid up Capital 14 11,250,000,000 9,000,000,000 Statutory Reserve 15 5,924,918,206 3,956,476,533 Retained Earnings (figure of 2010 restated) 16 12,795,033,247 4,806,256,012 Other Reserve 17 26,122,351,452 19,648,164,577 Total Shareholders' Equity 56,092,302,905 37,410,897,122 Total Liabilities and Shareholders' Equity 695,192,109,076 620,514,960,910

2011 2010Off-Balance Sheet Items Note BDT BDT

Contingent Liabilities 18

Borrowing from other Banks, Financial Institutions &

Agents


Sonali Bank LimitedBalance Sheet


Balance with other Banks & Financial Institutions

With Bangladesh Bank and its agent Bank (including ForeignCurrency)

7

Sonali Bank LimitedBalance Sheet

As at 31 December 2011Letter of Guarantee 6,131,165,629 6,790,367,716 Irrevocable Letter of Credit 124,710,753,123 114,168,814,894 Bills for Collection 17,329,785,045 10,094,319,715 Other Contingent Liabilities - -

148,171,703,797 131,053,502,325

Other Commitments - -

- - - -

- -

- - Claim against the bank not acknowledged as debt - - Litigation pending against Bank - -

Other Memorandum Items - - - -

Value of Bangladesh Sanchoy Patra on Hand - -

148,171,703,797 131,053,502,325

Date: 29 May 2012Place :Dhaka

Total Off Balance Sheet Items including Contingent Liabilities

Forward asset purchased and forward deposit placed

Value of Travelers' Cheque on Hand

Undrawn note issuance and revolving underwriting facilities

Undrawn formal standby facilities, credit lines and othercommitments

Documentary credits and short term trade relatedtransactions




Hoda Vasi Chowdhury & Co.Chartered Accountants


8

2011 2010

Particulars Note BDT BDT

Interest Income 20 27,902,144,333 22,841,408,729

21 (22,402,387,574) (19,131,795,895)

Net Interest Income 5,499,756,759 3,709,612,834

Income from Investments 22 7,561,794,956 5,896,206,997

Commission, Exchange and Brokerage 23 7,487,046,101 9,546,277,030

Other Operating Income 24 2,860,061,530 1,436,254,869

17,908,902,587 16,878,738,896

Total Operating Income 23,408,659,346 20,588,351,730

Less: Operating Expenditure:

Salary and Allowances 25 7,950,235,276 9,345,557,066

Rent, Tax, Insurance, Electricity 26 597,208,721 500,713,404

Legal Expense 27 26,052,472 30,380,407

Postage, Stamps and Telephone 28 60,694,119 80,898,613

Printing, Stationery, Advertisement 29 172,945,089 153,953,292

Chief Executive's salary and fees 30 6,171,743 3,651,612

Directors' Fee 31 4,517,009 4,998,772 Audit Fee 32 2,734,231 2,150,000

- - 33 414,290,292 334,754,923

Other Expenditure 34 1,782,456,313 1,643,103,897 Total Operating Expenses 11,017,305,265 12,100,161,986

Profit Before Provision 12,391,354,081 8,488,189,744

35 (436,725,627) 3,001,447,059 Provision against Investment in Quoted Shares 36 130,028,996 - Other Provision 37 4,331,871,631 1,004,184,181 Total Provision 4,025,175,000 4,005,631,240

Profit Before amortization 16,416,529,081 4,482,558,504

Amortization of Intangible Assets (figure of 2010 restated) 6,574,320,716 6,574,320,716 Total Profit Before tax 9,842,208,365 (2,091,762,212)

Less: Provision for Tax 115,010,543 1,117,251,898

Current Tax 13.5 (962,498,075) (1,070,000,000)

Deferred Tax 9.8.2 1,077,508,618 2,187,251,898

Net Profit After Tax 9,957,218,908 (974,510,314)

Retained Surplus Brought Forward (figure of 2010 restated) 4,806,256,012 6,170,766,326

14,763,474,920 5,196,256,012

Sonali Bank LimitedProfit and Loss Account

For the year ended 31 December 2011

Depreciation on and Repair to Bank's Property

Provision against Loans & Advances

Charges on loan loss

Less: Interest Paid on Deposit and Borrowing, etc.

9

Sonali Bank LimitedProfit and Loss Account


Appropriation:

Transferred to General Reserve - -

Transferred to Statutory Reserve 1,968,441,673 390,000,000

Dividend etc. - -

1,968,441,673 390,000,000

Retained Surplus, Carried Forward 12,795,033,247 4,806,256,012

Earnings Per Share restated 43 108.38 (10.61)




Hoda Vasi Chowdhury & Co. Chartered Accountants


Place: Dhaka.Date: 29 May 2012

10

2011 2010Note BDT BDT

A.Interest receipts in cash 40,969,133,162 21,002,814,622 Interest payments 21 (22,402,387,574) (19,131,795,895) Dividends receipts 22 64,076,855 37,944,995 Fee and commission receipts in cash 6,979,010,242 6,949,167,514 Recoveries on loans previously written off - - Cash payments to employees (7,967,789,923) (9,053,757,372) Cash payments to Suppliers (229,561,964) (203,901,321) Income taxes paid (500,000,000) -

38 3,237,537,882 3,100,396,987 39 (3,159,916,559) (5,435,910,555)

16,990,102,121 (2,735,041,025)

Statutory deposits - - Purchase/sale of trading securities - - Loans & advances to other banks - - Loans & advances to customers (59,893,278,750) (32,075,565,462) Other assets (item-wise) 40 32,271,730,096 881,227,142 Deposits from other banks 4,670,519,722 4,430,439,105 Deposits from customers 50,387,561,881 67,552,076,440 Other liabilities account of customers - - Trading liabilities - - Other liabilities (item-wise) 41 (632,216,789) (2,440,160,741)

26,804,316,160 38,348,016,484

B.Proceeds from sale of securities - - Payments for purchase of securities (21,698,677,622) (8,952,508,896) Purchase/sale of property, plant & equipment (12,432,322,978) (546,817,431) Purchase/sale of subsidiary - -

(34,131,000,600) (9,499,326,327)

C.Receipts from issue of loan capital & debt security - - Payments for redemption of loan capital & debt security 2,069,877,569 (33,738,962) Receipts from issue of ordinary share - - Dividends paid - -

2,069,877,569 (33,738,962)

D. 11,733,295,250 26,079,910,170

E. - -

F. 86,648,364,898 60,568,454,728

G. 42 98,381,660,148 86,648,364,898

Operating profit before changes in operating assets andliabilities

Receipts from other operating activities (item-wise)Payments for other operating activities (item-wise)

Sonali Bank LimitedStatement of Cash Flow


Cash flows from operating activities

Cash and cash-equivalents at end of the year/period



Cash and cash-equivalents at beginning for the year/period

Net cash from investing activities

Cash flows from financing activities

Net cash from financing activities

Net increase/decrease in cash and cash equivalents

Increase/decrease in operating assets and liabilities

Net cash from operating activities

Cash flows from investing activities

Effects of exchange rate changes on cash and cash-equivalents

11

Particulars Paid up CapitalStatutory Reserve

Other Reserve Asset Revaluation

Reserve Revaluation of

InvestmentRetained Earning

Total

Balance as at 1 January 2010 9,000,000,000 3,566,476,533 47,000,000 8,833,824,291 4,993,072,592 10,821,607,786 37,261,981,202

Shortfall of goodwill amortization - - - - - (4,650,841,460) (4,650,841,460)

Restated balance 9,000,000,000 3,566,476,533 47,000,000 8,833,824,291 4,993,072,592 6,170,766,326 32,611,139,742


Surplus/deficit on account of revaluation of investments - - - - 5,774,267,694 - 5,774,267,694

Net Profit for the year 2010 - - - - - (1,364,510,314) (1,364,510,314)

Transferred to Statutory Reserve - 390,000,000 - - - - 390,000,000



Surplus/deficit on account of revaluation of properties - - - - - - -

Surplus/deficit on account of revaluation of investments - - - 12,026,800,411 (5,552,613,536) - 6,474,186,875

Currency translation differences - - - - - - -

Net gains and losses not recognized in the income statement

- - - - - - -

Transferred to Other Reserve - - - - - - -

Net Profit for the year 2011(after appropriation) - - - - - 7,988,777,235 7,988,777,235

Dividends (Bonus share) - - - - - - -

Issue of share capital 2,250,000,000 - - - - - 2,250,000,000

Transferred to Statutory Reserve - 1,968,441,673 - - - - 1,968,441,673



Sonali Bank LimitedStatement of Changes in Equity

For the year ended 31 December 2011 Amount in taka

12

Assets

Cash in hand 65,634,773,139 - - - - 65,634,773,139

Balance with other banks and financial institutions 5,523,923,777 3,191,714,926 3,740,000,000 145,819,000 - 12,601,457,703

Money at call on short notice 11,742,379,680 - - - - 11,742,379,680

Investments 1,600,500,000 2,683,500,000 12,083,684,547 9,316,955,134 108,391,110,878 134,075,750,559

Loans and Advances 51,284,332,018 14,121,006,278 168,078,802,861 38,253,779,679 74,253,428,075 345,991,348,911

Fixed assets including premises, furniture and fixtures - - 605,522,567 1,000,000,000 21,420,892,463 23,026,415,030

Other assets 11,819,000,878 13,832,747,871 24,968,767,251 18,668,528,377 32,830,939,676 102,119,984,054 Non-banking assets - - - - - - Total Assets 147,604,909,492 33,828,969,075 209,476,777,226 67,385,082,190 236,896,371,092 695,192,109,076

LiabilitiesBorrowings from Bangladesh Bank, other banks financial institutions and agents (11.4) 1,040,000,000 - 1,056,263,206 - - 2,096,263,206

Deposits 228,035,071,127 72,687,727,176 72,684,063,380 114,944,579,413 44,840,725,456 533,192,166,552

Other accounts - - - - - - Provision and other liabilities 62,321,108 25,773,005 57,252,220,209 21,918,088,311 24,552,973,780 103,811,376,413

Total Liabilities 229,137,392,235 72,713,500,181 130,992,546,795 136,862,667,724 69,393,699,236 639,099,806,171

Net Liquidity Gap (81,532,482,743) (38,884,531,106) 78,484,230,431 (69,477,585,534) 167,502,671,856 56,092,302,905


Particularsup to 01 month

maturity1-3 months

maturity3-12 months

maturity1-5 years maturity

more than 5 years maturity

Total

Current and savings deposits do not have any contractual maturity and hence have been classified among all five maturities. Further, it has been assumed that on a going concern basis, these deposits arenot expected to fall below the current year's level.

Liquidity Statement Sonali Bank Limited

(Assets and Liability Maturity Analysis)As at 31 December 2011

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Sonali Bank Limited Notes to the Financial Statements


1. The Bank and its activities

Status of the Bank

Sonali Bank Limited was incorporated in Bangladesh on 03 June 2007 as a Public Limited Company under Companies Act 1994. Formally this bank was incorporated as a nationalized commercial bank named as Sonali Bank established by The Bangladesh Bank Order 1972 (Presidential Order no. 26 of 1972) and was fully owned by the Government of the People’s Republic of Bangladesh. Subsequently after incorporation dated 15 November 2007 Sonali Bank Limited has taken over the undertaking and business of Sonali Bank with all its assets, benefits, rights, powers, authorities, privileges, liabilities, borrowings, obligations etc. as a going concern under a Vendor’s Agreement signed between the Government of the People’s Republic of Bangladesh and the Sonali Bank Ltd with a retrospective effect from 1st July 2007. Principal Activities of the Bank

The Bank has 1196 branches including two overseas branches at Kolkata and Siliguri in India as on 31 December 2011. The principal activities of the bank are to provide a comprehensive range of financial services, personal and commercial banking, trade and services, cash management, treasury, securities and custody services and perform Government treasury functions as an agent of the Bangladesh Bank. Islamic Banking window

The bank operates Islamic Banking window in five branches designated in compliance with the rules of Islamic Shariah.

Free Services provided by the Bank

The bank provides more than 21 types of free services on behalf of the government of Bangladesh through its rural and urban branches as part of their commitment to society. These services includes collection of utilities bills, payment of allowances to freedom fighters, old-aged people, meritorious students, widowed and acid burnt women and also collection of taxes and revenues on behalf of the government organizations.

1.2. Subsidiary

Sonali Exchange Co. Inc. (SECI)

A subsidiary company named Sonali Exchange Co. Inc. was incorporated on 4 April 1994 under the laws of the State of New York, Department of State, licensed on 17 October 1994 by the State of New York Banking Department and commenced operation as an International Money Remitter from 12 December 1994.

1.3. Associate

Sonali Bank UK. Ltd. (SB. UK. Ltd.)

A money remitting company under the name and style of Sonali Trade and Finance (U.K) Limited was incorporated as an associate under the U.K. Companies Act 1985 on 30 June 1999. Subsequently the company was allowed to commence its function as a bank from 7 December 2001 (the operational activities started on 10 December 2001) by the Financial Services Authority of U.K. had changed its name as Sonali Bank (U.K) Ltd. and restructured the ownership of the Company having 51% share capital in favour of the Government of the People’s Republic of Bangladesh and remaining 49% by Sonali Bank Limited.

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2. Summary of significant accounting policies and basis of preparation of the financial statements

2.1 Basis of preparation of the Financial Statements

The financial statements of the Bank, comprising Balance Sheet, Profit and Loss Account, Cash Flow Statements, Statement of Changes in Equity, and relevant Notes and Disclosures have been prepared as at 31 December 2011 in accordance with First Schedule of the Bank Companies Act 1991, as amended, BRPD circular No. 14 of 25 June 2003, other Bangladesh Bank circulars, International Accounting Standards and International Financial Reporting Standards adopted in Bangladesh as Bangladesh Accounting Standards (BAS), and Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Securities and Exchange Rules 1987 and other rules and regulations applicable in Bangladesh on a going concern basis. All inter-branch account balances and transactions among the Head Office and the branches have been incorporated in financial statements.

2.2 Functional and presentation currency

These financial statements are presented in Taka, which is the Bank's functional currency except as indicated figures have been rounded to the nearest taka.

2.3 Basis of consolidation

A separate set of records for consolidation of the statement of affairs and income and expenditure of the subsidiaries and branches are maintained at the Head Office of the Bank based on which these financial statements have been prepared.

The consolidated financial statements comprise the financial statements of Sonali Bank Ltd., including overseas branches Kolkata and Siliguri as at 31 December 2011. The financial statements of Sonali Investment Limited and Sonali Exchange Co. Inc. (SECI), USA as at 31 December 2011 have been consolidated. However, the financial statements of Sonali Exchange Co. Inc. (SECI) are presented separately.

Comparative figure of last year (2010) of Sonali Bank Limited and its subsidiaries were not consolidated.

2.4 Use of estimates and judgments

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

2.5 Foreign currency conversion

Transactions in foreign currencies are translated into Bangladeshi Taka and recorded at the ruling exchange rates applicable on the date of transaction.

i) Assets and liabilities denominated in foreign currency are translated into Taka at the weighted average rates at the balance sheet date.

ii) Transactions in foreign currencies are converted into Taka currency at the rate of exchange prevailing on the dates of such transactions and any gains or losses thereon are adjusted to revenue through foreign exchange trading account.

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2.6 Comparative Information

Presentation of Financial Statements, comparative information in respect of the previous year have been presented in all numerical information in the financial statements and the narrative and descriptive information where, it is relevant for understanding of the current year's financial statements.

2.7 Reporting period

These financial statements cover one calendar year form 1 January to 31 December 2011

2.8 Cash flow statements

Presentation of financial statements requires that a cash flow statement is to be prepared as it provides information about cash flows of the enterprise which is useful in providing users of financial statements with a basis to asses the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilize those cash flows. Cash flow statements has been prepared under the direct method for the period, classified by operating, investing and financing activities as prescribed in BAS 7 “Cash Flow Statements”.

2.9 Statement of Changes in Equity

The Statement of changes in Equity reflects information about the increase or decrease in net assets or wealth.

2.10 Liquidity Statement (Asset & Liabilities Maturity Analysis)

The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following basis:

• Balances with other bank & financial institution, money at call & short notice etc are on the basis of their maturity term.

• Investments are on the basis of their residual maturity term. • Loans & advances are on the basis of their repayment/maturity schedule. • Fixed assets are on the basis of their useful life. • Other assets are on the basis of their adjustment. • Borrowing from other banks, financial institutions and agents as per their maturity/repayment term. • Deposits & other accounts are on the basis of their maturity/repayment term • Provisions & other liabilities are on the basis of their settlement.

2.11 Assets and basis of their valuation

2.11.1 Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the bank management for its short term commitments.

2.11.2 Loans, Advances/Investments and provision

a) Loans and advances of conventional Banking / Investments of Islamic Banking branches are stated in the Balance Sheet on gross value.

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b) Provision for loans and advances is made on the basis of periodical review by the management and instructions contained in Bangladesh Bank, BCD Circular no. 34 dated 16 November 1989, BCD Circular no. 20 dated 27 December 1994, BCD Circular no 12 dated 4 September 1995, BRPD Circular no, 16 dated 6 December 1998, BRPD circular no 9 dated 14 May 2001, BRPD circular no, 2 of February 2005, BRPD circular no, 09 of August 2005 and BRPD circular no 17 dated 06 December 2005. BRPD Circular No.-5 dated June 05, 2006 Circular No.- 8 dated August 07, 2007 Circular No.-10 dated September 18, 2007. General provision on Loans & Advances Other than short term Agricultural credit & Micro Credit, provision rates are given below:

General Provision on unclassified loans and advances (other than loans under Small Enterprise, Consumer Financing and Special Mention Account).

1%

General Provision on unclassified Small Enterprise Financing 2%

General Provision on unclassified Consumer Financing for: Housing – Professionals – Other than Housing and Professionals

2% 2% 5%

General Provision on unclassified Special Mention Account 5% Provision on sub-standard loans and advances 20% Provision on doubtful loans and advances 50% Provision on bad/loss loans and advances 100% General Provision on Off Balance Sheet Exposures 1%

The provision rates for general provision on Short term Agricultural Credit & Micro Credit are given below:

Unclassified (Regular & Irregular) 5%

Substandard 5%

Doubtful 5%

Bad/Loss 100%

Loans and advances are written off to the extent that

i) there is no realistic prospect of recovery, and

ii) against which legal cases are filed and classified as bad loss for more than five years as per guidelines of Bangladesh Bank.

These write off however will not undermine/affect the claim amount against the borrower. Detailed memorandum records for all such write off accounts are maintained and followed up.

211.3 Bills Purchased and Discounted

a) Bills purchased and discounted do not include Government Treasury bills and have been classified into two sub-heads viz.,

(i) Payable in Bangladesh and (ii) Payable outside Bangladesh. b) The bills purchased and discounted have been analyzed in the form/terms as per the maturity grouping.

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2.11.4 Investments

All investment in securities is initially recognized at cost, being fair value of the consideration given, including acquisition charges associated with the investment. Premiums are amortized and discounts accredited, using the effective yield method and are taking to discount income. The valuation of investment has been enumerated as follows:

Held to maturity (HTM)

Investments which have fixed or determinable payments and are intended to be held to maturity, are classified as held to maturity. These investments are subsequently measured at amortized cost, less any provision for impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition. Any gain or loss on such investments is recognized in the statement of income when the investment is derecognized or impaired as per IAS 39 ‘Financial Instruments: Recognition and Measurement’.

Held for trading (HFT)

The securities under this category are the securities acquired by the bank with the intention to trade by taking advantages of short term price/interest movement, and the securities those are classified as HFT by the Bank held in excess of SLR (net of CRR) at a minimum level. Investments classified in this category are principally for the purpose of selling or repurchasing on short trading or if designated as such by the management. In this category, investments are measured in fair value and any change in the fair value i.e. profit or loss on sale of securities in HFT category is recognized in the statement of income.

Value of investments is stated as per the following bases:

Particulars Valuation Method

Government Securities: Government Treasury Bills Present Value Prize Bonds Cost Price Bangladesh Bank Bills Cost Price Special Treasury Bonds Present Value Reverse Repo Cost Price Debentures of Govt. Corporations Cost Price Other Investments (Quoted Shares) Market Price Other Investments ( Other than Quoted Shares) Cost Price

Investment in Listed Securities (quoted)

These securities are bought and held primarily for the purpose of selling them in future or held for dividend income. These are reported at market price. Unrealized gains or losses are not recognized in the profit and loss account.

Investment in Unlisted Securities (Un-quoted) Investment in unlisted securities is reported at cost under cost method.

2.11.5 Recognition of Fixed Assets

All Property and equipment are classified and grouped on the basis of their nature as required in BAS-1-“ Presentation of Financial Statements”. The major categories of Property and equipment held by the bank are property (Premises & Buildings), Library Book, Furniture and fixtures, electrical

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Installations, Typewriters and calculating machines, Computer/Software, Motor Car and other vehicles. As per Para 31 of BAS 16 after recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Assets acquired under own finance

All Fixed Assets are stated at cost less accumulated depreciation as per BAS-16.Property, Plant & Equipment. The Cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.

The bank recognizes in the carrying amount of an item of property plant and equipments the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the bank and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance is normally charged off as revenue expenditure in the period in which it is incurred.

As guided in paragraph 30 of BAS-16 Property Plant and equipment these are capitalized at cost of acquisition and subsequently stated at cost less accumulated depreciation. The cost of acquisition of an asset comprises its purchase price and directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward fright, duties and refundable taxes. The opening and closing carrying amounts of all property and equipment are presented including the amount of additions, disposals and depreciation charged during the year as required by paragraph 73(a-e) of BAS-16, Maintenance expenses that does not increase in the future economic benefit of assets is charged to profit & loss account.

2.11.6 Depreciation on Fixed assets

As required in paragraph 43 of BAS-16 property Plant and equipment depreciation has been charged at the following rates on reducing balance method on all fixed assets other than motor vehicles and computer software which are depreciated on straight line basis and no depreciation on land is charged.

Category of the assets Rate of depreciation

Land Nil Building 2.50% Library Book 7% Furniture and fixtures 10% Electrical Installation 20% Typewriters and Calculating machines 20% Computer/ Software 20% Motor Car and other vehicles 20%

Depreciation on newly acquired assets is charged in full if the assets are acquired within 20 December and no depreciation is charged on assets acquired after 20 December. In case of assets disposed of, depreciation is charged up to the date of disposal of such assets. During the year overseas branches shown BDT 1,308,079 as depreciation on fixed assets and certified by the local independent auditors.

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2.11.7 Other Assets

Other assets comprise investment in Sonali Exchange Ltd. Inc USA, Prepaid Expenses, Branch adjustment and others as per Bangladesh Bank Circulars.

2.11.8 Non- Banking Assets

There are no assets acquired in exchange for loan during the period.

2.12 Liabilities and basis of their valuation

2.12.1 Statutory Reserve

As per section 24 of the Bank Companies Act 1991, 20% of the net profit i.e, profit before tax require to transfer to statutory reserve until such reserve equals to its paid up capital.

2.12.2 Other Reserve

Other reserve comprises are balance of reserve for unforeseen losses, investment, revaluation reserve and fixed assets revaluation reserve as on 31st December 2011

2.12.3 Exchange Equalization Fund

This represents the amount arise from exchange gain due to devaluation of Bangladesh taka with foreign currencies and is accounted for as per instruction issued by the Bangladesh bank from time to time.

2.12.4 Retirement Benefit Schemes

Accounting recognition & measurement, as well as the disclosures requirements for different benefit schemes for employees are the following:

2.12.4.1 Employees General Provident Fund

Employees General Provident fund is operated from 13 September 1981 under which the concerned employees are required to contribute at least 10% and highest 30% (on declaration) of their basic salary with no matching contribution by the bank. This Fund relates to the employees who are availing Pension and Death-Cum-Retirement Benefit (PDCRB) Scheme.

2.12.4.2 Contributory Provident Fund

The bank operated a Provident Fund named as Contributory Provident Fund into which the bank contributed 10% of the basic salary of its eligible employees while the employees contributed an equal amount to the fund.

2.12.4.3 Pension and Death-Cum-Retirement Benefit (PDCRB) Scheme:

The bank operated a Pension Fund named as Pension and Death-Cum-Retirement Benefit (PDCRB) Scheme for the employees of General Provident Fund into which the bank contributes 50% of the basic salary of its eligible employees. Payments out of this fund are made to the employees on their separation from bank’s service.

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2.12.4.4 Gratuity.

The Bank introduced the Gratuity scheme for the member of the Employees of Contributory Provident Fund into which the Bank contributes 50% of the basic salary of its eligible employees. Payments out of this scheme are made to the members on their separation from bank’s service.

2.12.4.5 Investment of the Pension/Gratuity Funds:

The balance of Pension/Gratuity funds are partly invested in approved securities with a view to increasing the Fund and remaining balance being utilized by the bank towards payment of retirement benefits to the employees.

2.12.4.6 Administration of the Fund:

The Provident Fund, Pension Fund and Gratuity are being administered by two administrative committees each of which consists of 5 (five) members representing 3 (three) from Board of Directors, 1 (one) from officers and another from members of the staff.

2.12.4.7 Benevolent Fund

This fund is mainly created for sanctioning scholarship to the meritorious students among the children of the Bank employees. The distressed employees and family member of deceased employees are also helped from this Fund.

2.12.4.8 Accounting treatment of the fund

Liability for pension benefit and PDCRB fund are recognized at fair value at the reporting date, which is presented at the net total after deducting fund investment from gross obligation of the benefit plan.

2.12.5 Deposits and Other Accounts

Deposits and other accounts include bills payable have been analyzed in terms of the maturity grouping showing separately other deposits and inter-bank deposits. Unclaimed deposits for 10 years or more held by the bank have been shown separately.

2.12.6 Taxation

Income tax represents the sum of the current tax and deferred tax payable.

2.12.6.1 Current tax

Provision for current income tax has been made @ 42.5% as prescribed in the Finance Act 2011 on the accounting Profit made after considering some of the taxable add back income and disallowance of expenditure in compliance with BAS-12.

2.12.6.2 Deferred taxation

The Bank has adopted deferred tax accounting policy as per Bangladesh Accounting Standard (BAS) 12. Deferred tax liabilities are the amounts of Income tax payable in future periods in respect of taxable temporary difference. Deferred tax assets are the amount of income tax recoverable in future periods in respect of

deductible temporary differences the carry forward of unused tax losses and Carry forward of unused tax credits

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Deferred tax is computed at the prevailing tax rate as per Finance Act 2011.

2.12.7 Provisions and accrued expenses

In compliance with BAS-37, Provisions 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.

2.12.8 Provision for Off-Balance Sheet Exposures

In compliance with Bangladesh Bank guidelines Off-Balance Sheet items have been disclose under contingent liabilities. As per BRPD Circular No.10 dated September 18, 2007, Banks are required to maintain provision @ 1% against Off-Balance Sheet Exposures (L/C, Guarantee and Bills for Collection).

2.12.9 Provision for Nostro Accounts

According to guideline of Foreign Exchange Policy Department of Bangladesh Bank, Circular no. FEOD(FEMO)/01/2005-677 dated 13 September, 2005, Bank is not required to make provision regarding the un-reconciled debit balance as at Balance Sheet date since there was no debit entries more than three month.

2.13 Revenue recognition Moment of recognition, amount to be recognized and disclosure requirements of revenue has been made as per BAS-18

2.13.1 Interest income

In terms of the provisions of the BAS-18 “Revenue”, the interest income is recognized on accrual basis. Interest on loans and advances ceases to be taken into income when such advances are classified. i) Interest on unclassified loans and advances is calculated on daily product basis but charged and accounted for quarterly and in some cases yearly on accrual basis.

ii) No interest is recognized on loan classified as bad/loss.

iii) Interest is charged on classified loans and advances as per BRPD Circular No.05 dated 05 June 2006.

iv) Interest suspense and penal interest, if any, calculated on classified loans and advances is taken as income in the year of receipt of such interest from the defaulting borrowers.

v) Commission and discount on Bills Purchased and Discounted are recognized at the time of realization.

2.13.2 Investment income

Interest income on investments is recognized on accrual basis. Capital gain on investments in shares is also included in investment income. Capital gain is recognized when it is realized.

i) Income on investment in Treasury Bills, Bonds and Debenture etc. other than shares has been accounted for on accrual basis.

ii) Income on investment in shares of subsidiary company-Sonali Exchange Co. Inc. USA is accounted for as and when it is received.

iii) Govt. securities (HTM) are revalued on accrual basis and effect of such revaluation gain has been credited to Asset Revaluation Reserve account.

iv) Dividend/Other Operating Income are recognized at the time when it is realized.

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v) Net increase in securities held to maturity during the period due to the valuation at mark to market basis has been credited to profit and loss account.

2.13.3 Fees and commission income

• Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions.

• Fee and Commission on bills discounted, purchased & others are recognized at the time of realization.

• And exchange gains or losses arising out of such transactions are recognized as income or expense for the year foreign currency transactions are converted into BDT at prevailing on the dates of such transactions and dealt with exchange account.

2.13.4 Interest paid on Deposit and Borrowing

Interest paid on deposits, borrowing and other expenses are recognized as accrual basis.

2.13.5 Dividend income on shares

Dividend income from shares is recognized during the period in which they are declared and actually received.

2.14 Reconciliation of inter-bank and inter-branch account

Accounts with regard to inter bank (in Bangladesh and outside Bangladesh) are reconciled regularly and there are no material differences that may affect the financial statements significantly.

Risk Management

Bangladesh Bank has identified 6 (Six) core risks for management of the banks and has provided the necessary guidance for implementation of the six risks are:

The prime objective of the risk management is that the Bank takes well calculative business risk to safeguard its capital, financial resources and growth of sustainable profitability. In this context, the Bank has formed a committee (MANCOM) to overview proper implementation and regular monitoring of these critical areas. The policies and procedures for managing these risks are outlined in the notes below. The Bank has designed and implemented a framework of controls to identify, monitor and manage these risks, which are as follows:

a) Credit Risk Management

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Concentration of credit risk arises when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. To manage credit risk, the Bank applies credit limits to its customers and obtains adequate collaterals. Credit risk in the Sonali Bank Ltd.’s portfolio is monitored, reviewed and analyzed by the Credit Risk Management (CRM).

CRM determines the quality of the credit portfolio and assists in minimizing potential losses. To achieve this objective, CRM formulates appropriate credit policies and procedures for the Bank to ensure building and maintaining quality credits and an efficient credit process.

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Sonali Bank Ltd has established Asset-Liability Management Committee (ALCO) to screen out the banks/financial institutions and determine the maximum risk exposure on each of them. ALCO also assesses recommends and controls cross border/country risk.

To manage the Non-Performing Loans (NPL), Sonali Bank Ltd has comprehensive remedial management policy, which includes a framework of controls to identify weak credits and monitoring of these accounts.

b) Foreign Exchange Risk Management

Foreign Exchange Risk is defined as the possibility of losses due to change in exchange rates interest rate etc. according to market forces. The Foreign Exchange Risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying Foreign Exchange transactions.

Treasury Division independently conducts the transactions and the Back Office of Treasury is responsible for verification of the deals and passing of their entries in the books of account. All foreign exchange transactions are revalued at Mark-to-Market rate as determined by Bangladesh Bank at the month -end. All NOSTRO accounts are reconciled on daily basis and outstanding entries beyond 30 days are reviewed by the Management for their settlement.

c) Asset Liability Risk Management

Asset Liability Committee (ALCO) of the Bank monitors Balance Sheet Risk and liquidity Risks of the Bank. The Balance Sheet Risk is determined as potential change in earnings due to change in rate of interest foreign exchange rates and regulatory instructions, which are not of trading nature. Asset Liability Committee (ALCO) reviews Liquidity requirement of the Bank, the maturity of assets and liabilities, deposits and lending, pricing strategy and the Liquidity contingency plan. The primary objective of the Asset Liability Committee (ALCO) is to monitor and avert significant volatility in Net Interest Income (NII), investment value and exchange earnings for the purpose of taking future action plan for better interest of the organization.

d) Money Laundering Risk Management

Money laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. For mitigating the risk the Bank has designated Chief Compliance Officer at Head Office and Compliance Officer at Branches, who independently review the transactions of the accounts to verify suspicious transactions. Manuals for Prevention of Money Laundering, KYC and Transaction profile have been introduced. Training has been being imparted to Executives, Officers and staff for developing awareness and skill for identifying suspicious transactions and other Money Laundering related activities.

e) Internal Control & Compliance Risk Management

Operational loss may arise from errors and fraud due to lack of Internal Control and Compliance. Inspection and Audit Division controls operational procedure of the Bank and undertakes periodical and special audit of the branches and departments at Head Office for review of the operation and compliance of the statutory requirement. The Audit Committee of the Board subsequently reviews the report of the Audit and Inspection Division as well as other related division, as and when required.

f) Guideline on Information & Communication Technology:

This IT Guideline is a systematic approach to policies required to be formulated for IT and also to ensure security of information and information systems. This guideline covers all information that is

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electronically generated, received, stored, printed, scanned and typed. The provisions of this guideline apply to:

1. Sonali Bank Limited for all of its IT system. 2. All activities and operations required to ensure data security including facility design, physical

security, network security, disaster recovery and business continuity planning, use of hardware and software, data disposal and protection of copy rights and other intellectual properly rights.

The implementation of MIS will be linked from the branches to the central database. In the future the information will be easily accessible by senior management and is expected to be important source of information of strategic decision-making process based on a comprehensive database. It is to be declared that the Bank is fully compliant according to the guideline of Central Bank’s IT policy.

2.17 Call Loan and Fixed Deposit with the ICB Islamic Bank Ltd.

The Bank has demanded payment of Call Loan and Fixed Deposit for BDT 18.00 crore and BDT 14.58 crore respectively together with up-to-date interest accrued thereon. Attempt is made for recovery the Call Loan and Fixed Deposit.

2.18 Credit Rating of the Bank

As per the BRPD instruction circular No.6 dated July 5, 2006, the has done its credit rating by Credit Rating Information and Services Limited (CRISL) based on the financial statements dated 31 December 2010.

Particulars Date of Rating Long term Short term

As Government supported entity

AAA (Highest Safety) ST-1 (Highest Grade)

Stand Alone Rating

30 November 2011

A- (Adequate Safety) ST-2 (Good Grade)

2.19 Compliance report on Bangladesh Accounting Standards (BAS) and Bangladesh

Financial Reporting Standards (BFRS)

The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). While preparing the financial statements, Sonali Bank Limited applied most of IAS and IFRS as adopted by ICAB. Details are given below:

Bangladesh Financial Reporting Standard (BFRSs) BFRS No.

Status

Shares Based Payment 2 Not Applicable

Business Combination 3 Applied Insurance Contracts 4 Applied Non Current Assets Held for Sale and Discounted Operation 5 Applied Exploration for and Evaluation of Mineral Resources 6 Applied Financial Instruments: Disclosures 7 Applied Operating Segments 8 Applied

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Name of the BAS BAS no. Status

Presentation of Financial Statements 1 Applied Inventories 2 Applied Statement of Cash Flows 7 Applied Accounting policies, Changes in accounting Estimates and Errors

8 Applied

Events after the Reporting Period 10 Applied Construction Contracts 11 Not Applied Income Taxes 12 Applied Property, Plant and Equipment 16 Applied Leases 17 Applied Revenue 18 Applied Employees Benefits 19 Applied Accounting for Government Grants and Disclosure of Government Assistance

20 Not Applied

The Effects of Changes in Foreign Exchange Rates 21 Applied Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Accounting and Reporting by Retirement Benefit Plans 26 Applied Consolidated and Separate Financial Statements 27 Applied Investment in Associates 28 Applied Disclosures in the Financial Statements of Banks and similar Financial Institutions (supersedes by BFRS-7)

30 Applied

Interest in Joint Ventures 31 Not Applied Financial Instruments: Presentation (supersedes by BFRS-7) 32 Applied Earning Per Share 33 Applied Interim Financial Reporting 34 Applied Impairment of Assets 36 Applied Provision, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Financial Instruments: Recognition and Measurement (supersedes by BFRS-7)

39 Applied

Investment Property 40 Applied Agriculture 41 Not Applied

2.19 Off-balance sheet items

Under general banking transactions, liabilities against acceptance, endorsements, and other obligations and bills against which acceptance has been given and claims exists there against, have been shown as off balance sheet items.

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

As per BRPD circular #10, dt 18 Sep 2007, 1% provision should be maintained against off- balance sheet items.

Earnings per share (EPS)

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The Company calculates Earning per Share (EPS) in accordance with BAS 33: Earning Per Share, which has been shown on the face of profit & loss account, and the computation of EPS is stated in Note 44.

2.21 Approval of financial statements

The financial statements were approved by the Board of Directors on 29 May, 2012.

Information about business and geographical segments

The Bank’s operations are divided under the following business segments:

Retail and Corporate banking operations are under the umbrella of the commercial banking. The bank has Treasury Management Division (TMD) for Treasury Management.

Inter segment transactions are operated on inter branch fund transfer measures as determined by the management. Income, expenses, assets and liabilities are specially identified with individual segments. Based on such allocation, segmental information has been prepared as on 31 December 2011 and information related to Profit and Loss Account for the period ended 31 December 2011:

Particulars Total Taka Operating profit before Tax & Provision 12,391,354,081

Provision against Investment -Other provision 4,331,871,631Profit/(Loss) before Taxes 9,842,208,365Provision for Current Tax 962,498,075Deferred Tax Assets (1,077,508,618)Net Profit after Tax 9,957,218,908Segment Assets 695,192,109,076Segment Liability 695,192,109,076

In addition, the geographical segments of the Loan and Advances are shown separately under the Note no. 7.8.

2.23 Implementation of BASEL-II

To comply with International best practices and to make the Bank’s capital more risk-sensitive as well as to build the Banking industry more shock absorbent and stable, Bangladesh Bank provides revised regulatory capital framework “Risk Based Capital Adequacy for Banks” which is effective from 1st January 2009. According to the BRPD Circular no-09 dated 31st December 2008, following specific approaches are suggested for implementing BASEL-II:

a) Standardized Approach for calculating Risk Weighted Assets (RWA) against Credit Risk; b) Standardized (Rule Based) Approach for calculating RWA against Market Risk; and c) Basic Indicator Approach for calculating RWA against Operational Risk

Under the Standardized Approach of the Risk Based Capital Adequacy Framework (Basel II), Credit Rating is to be determined on the basis of risk profile assessed by the External Credit Assessment Institutions (ECAIs) duly recognized by Bangladesh Bank.

Along with the existing capital adequacy rules and reporting Bangladesh Bank (ref. BRPD Circular no.10 dated 25.11.2002) Banks will start quarterly reporting as per the set of the reporting formats

28

provided by Bangladesh Bank. For the purpose of statutory compliance during the period of parallel run i.e. 2011, the computation of capital adequacy requirement under existing rules will prevail.

Sonali Bank Ltd. Management is aware about guideline of Bangladesh Bank and prepared for implementing new capital Accord BASEL-II.

2.24 General

a) These financial statements are presented in Taka. Figures appearing in these financial statements have been rounded off to the nearest Taka.

b) Figures of previous period from 01 January 2010 to 31st December 2010 have been rearranged wherever necessary to confirm current year’s presentation.

c) Some items of the financial statements are reclassified and restated as required by BAS and BFRS to enhance better reporting.

2011 2010

BDT BDT

3.00 Cash

In Hand( Including foreign currency)

Local Currency 3,512,775,678 4,608,556,769

Foreign Currency 479,849,845 530,132,165

3,992,625,523 5,138,688,934

Balance with Bangladesh Bank and its Agent Bank

Local Currency 61,642,147,616 28,091,945,637

Foreign Currency - -

61,642,147,616 28,091,945,637

65,634,773,139 33,230,634,571

Details of un adjusted entries are shown in annexure-A

3.1 Cash Reserve Requirement (CRR ) and Statutory Liquidity Ratio (SLR )

3.1.1 Cash Reserve Requirement (CRR ) and Statutory Liquidity Ratio (SLR)

Cash Reserve Requirement (CRR ) Percentage

Required 6% 27,133,400,000 24,639,947,000

Maintained ( as per Bank Statement ) 6.16% 27,856,100,000 24,833,576,000

Surplus/(Deficit) 0.16% 722,700,000 193,629,000

Statutory Liquidity Ratio (SLR) (including CRR )

Required 19% 85,922,400,000 78,026,500,000

Maintained 32.20% 145,612,800,000 124,820,189,000

Surplus/(Deficit) 13.20% 59,690,400,000 46,793,689,000

3.1.2 Components of Statutory Liquidity Ratio (SLR)

Cash in hand 3,992,625,523 5,138,688,934 Balance with Bangladesh Bank and its agent bank(s) 61,642,147,616 28,091,945,637 Government Treasury Bills 8,314,158,016 7,680,820,040 Government Bonds 111,045,679,829 88,815,008,167

184,994,610,984 129,726,462,778

Cash Reserve Requirements (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordancewith the Section 25 & 33 of the Bank Companies Act 1991 and subsequent MPD Circular No.4 & 5 dated December 01, 2010.

The Cash Reserve Requirement on the Bank's time and demand liabilities at the rate of 6% has been calculated and maintainedwith Bangladesh Bank in current account and 19% Statutory Liquidity Ratio, including CRR, on the liabilities has also beenmaintained in the form of treasury bills, bonds and debentures including F.C. balance with Bangladesh Bank. Both the reservesmaintained by the Bank are in excess of the statutory requirements, as shown below:

As per MPD Circular No. 4 & 5 dated December 01, 2010 Sonali Bank Ltd. has to maintain Tk.2713.34 (6% of Total Demand & Time liabilities) crore daily average on fortnightly basis on December 2011 as CRR .

As per directives of Bangladesh Bank actual CRR should be maintained at an average of 6% on time and demand liabilities on a fortnightly basis. However, minimum 5.5% can be maintained for a particular day of the fortnight. Therefore, effectively there was no shortfall in CRR as per Bangladesh Bank directives.

29

2011 2010

BDT BDT

3 (a) Consolidated Cash

Cash In Hand

Sonali Bank Ltd. (3.00) 3,992,625,523 5,138,688,934Sonali Investment Ltd. - -

Sonali Exchange Co.,Inc - -

3,992,625,523 5,138,688,934

Balance with Bangladesh Bank and its agent bank(s)

Sonali Bank Ltd. (3.00) 61,642,147,616 28,091,945,637Sonali Investment Ltd. - -


61,642,147,616 28,091,945,637

65,634,773,139 33,230,634,571

4.00 Balance with Other Banks and Financial Institutions:

In side Bangladesh - Note 4.1 6,885,819,000 28,555,819,000 Outside Bangladesh - Note 4.2 5,715,638,703 11,543,526,277

12,601,457,703 40,099,345,277

4.1 Balance with other Banks and Financial Institutions

In Bangladesh :

Transaction Currency

AB Bank Ltd BDT - 1,500,000,000

BASIC Bank BDT 650,000,000 -

Bangladesh Commerce Bank Ltd. BDT - 1,200,000,000

BRAC Bank Ltd. BDT - 2,500,000,000

Bangladesh Industrial Finance Company Ltd. BDT 270,000,000 100,000,000

Bangladesh Finance & Investment Company Ltd. BDT 100,000,000 -

Dhaka Bank BDT - 750,000,000

Dutch Bangla Bank Ltd BDT - 3,500,000,000

Estern Bank BDT 150,000,000 -

Export Import Bank of Bangladesh BDT - 2,500,000,000

Fareast Finance & Investment Company Ltd. BDT 300,000,000 -

First Lease Finance & Investment Ltd. BDT 170,000,000 30,000,000

FAS Finance & Investment Ltd. BDT 200,000,000 -

Fidelity BDT - 100,000,000

GSP Finance CO Ltd BDT 200,000,000 -

Ind Infrastructure & Development Co. (IIDFC) BDT 150,000,000 300,000,000

Investment Corporation of Bangladesh BDT 1,500,000,000 5,500,000,000

ICB Islamic Bank Ltd BDT 145,819,000 145,819,000

International Leasing & Finance Service Ltd. BDT 200,000,000 200,000,000

Jamuna Bank Limited BDT - 3,950,000,000

Lanka Bangla Finance Ltd BDT 400,000,000 300,000,000

Mercantile Bank Ltd. BDT - 650,000,000

30

2011 2010

BDT BDT

Mutual Trust Bank Ltd. BDT - 250,000,000

National Bank of Pakistan BDT - 800,000,000

National Housing Finance and Investment Ltd. BDT 150,000,000 150,000,000

National Crerdit and Commerce Bank Ltd. BDT - 500,000,000

People's Leasing & Financial Services Ltd. BDT 750,000,000 680,000,000

Prime Finance and Investment Ltd. BDT - 100,000,000

Premier Leasing & Investment Ltd BDT 300,000,000 150,000,000

Phoenix Finance & Investment Limited BDT 300,000,000 200,000,000

Pubali Bank Ltd. BDT 150,000,000 500,000,000

Premier Bank Ltd. BDT 100,000,000 250,000,000

Reliance Finance Ltd. BDT 400,000,000 400,000,000

Standerd Bank Ltd. BDT - 800,000,000

United Commercial Bank Ltd. BDT - 500,000,000

Uttara Finance & Investment Ltd BDT 300,000,000 50,000,000

Total 6,885,819,000 28,555,819,000

4.2

Outside Bangladesh :

Foreign Bank - Note 4.2.1 5,523,923,777 10,322,117,404

Asian Clearing Union - Note 4.2.2 - 939,204,215

Overseas Branches of Sonali Bank Ltd. - Note 4.2.3 191,714,926 282,204,658

5,715,638,703 11,543,526,277

4.2.1

FC amount Exchange rate

Sonali Bank (UK) Ltd.London GBP 19,062,047.73 2,410,470,576 ZIRO Bank PLC, (London) GBP 276,433.40 34,958,542 Natwest Bank PCL (London) U.S dollar 50,478.14 4,131,383 Standard Chartered Bank U.S dollar 2,255,193.66 184,576,325 Sonali Bank (UK) Ltd.London U.S dollar 27,507,547.91 2,251,083,551 J.P margon ,chase Bank U.S dollar 104,235.84 8,531,182 Bank of America U.S dollar 11,610.35 950,249 Rafedian Bank ,Irak U.S dollar 255,938.60 20,947,295 Habib American Bank U.S dollar 3,561,800.77 291,515,584 Chase Chemical Bank U.S dollar 693,634.15 56,770,487 Bangladesh Foreign Post Office (BFPO) U.S dollar 2,257,506.50 184,765,619 Sonali Bank Kolkata Br. ACD 9,519.00 779,042 Euno Credito Italian Spa EURO 661,876.53 70,094,909 Standard Chartered Bank London EURO 41,066.06 4,349,033

5,523,923,777

105.90 Total

81.84

Particulars

Balance held with foreign bank

Foreign Currency

Balance with other Banks and Financial Institutions


Exchange rate

126.45

81.85

81.85

81.84

81.84

126.46

81.84

81.84

81.84

81.85

81.84

105.90

31

2011 2010

BDT BDT

4.2.2 Balance Held with Asian Clearing Union (ACU)

FC amountEquivalent Taka as

on 2010

Sonali Bank Ltd Kolkata ACE - 4,022,163.80 Nepal Bank Ltd. Nepal ACD - 65,263,436.87 Mayanmar Trade, Mayanmar ACD - 239,442,131.91 Bank of Bhutan ACD - 252,274,643.16 Sonali Bank Ltd Kolkata ACD - 337,582,458.25 Bank Mili, Iran ACD - 24,643,604.77 Bank of Sylon, Srilanka ACD - 15,975,776.68

939,204,215

4.2.3 Balance Held with Overseas Branches of Sonali Bank Limited

FC amount Equivalent Taka

Overseas Branches (Kolkata & Siliguri) IRS 123,890,069 191,714,926 191,714,926

4.3

On Demand 5,523,923,777 19,636,649,382 Less than three months 3,191,714,926 14,050,810,585 More than three months but less than one year 3,740,000,000 6,411,885,310 More than one year but less than five years 145,819,000 - More than five years - -

12,601,457,703 40,099,345,277

4 (a) Consolidated balance with other banks and financial institutions

In Bangladesh

Sonali Bank Ltd. (4.1) 6,885,819,000 28,555,819,000 Sonali Investment Ltd. 263,022,842 - Sonali Exchange Co.,Inc - -

7,148,841,842 28,555,819,000

Less: Inter Company Balance Eliminated 69,129,450 -

7,079,712,392 28,555,819,000

Outside Bangladesh

Sonali Bank Ltd. (4.2) 5,715,638,703 11,543,526,277 Sonali Investment Ltd. - - Sonali Exchange Co.,Inc 282,585,591 -

5,998,224,294 11,543,526,277

Total 13,077,936,686 40,099,345,277

5.00 Money at Call on Short Notice

Inside Bangladesh - Note 5.1 11,730,000,000 5,530,000,000 Outside Bangladesh - Note 5.2 12,379,680 17,312,900

- - - -

Total

Foreign Currency

ParticularsAs at 31 December 2011

Equivalent Taka as on 2011

- - -

Particuars

Exchange rate

1.54746 Total

Maturity grouping of Balance with other Banks and Financial Institutions

32

2011 2010

BDT BDT

11,742,379,680 5,547,312,900

5.1 Inside Bangladesh

ICB Islamic Bank Ltd. 180,000,000 180,000,000

People Leasing - 100,000,000

Agrani Bank Ltd 1,000,000,000 850,000,000

AB Bank Ltd 500,000,000 -

Estern Bank Ltd 450,000,000 -

Jamuna Bank Ltd 350,000,000 -

Mutual Truar Bank Ltd 1,500,000,000 -

Mercantile Bank Ltd 3,000,000,000 -

NCC Bank Ltd 1,800,000,000 -

Uttara Bank Ltd 300,000,000 -

BD Comm Bank Ltd - 1,000,000,000

Dhaka Bank Ltd - 100,000,000

Prime Bank Ltd 2,500,000,000 600,000,000

Pubali Bank Ltd - 1,000,000,000

ICB - 1,030,000,000

Lanka Bangla Finance 100,000,000 500,000,000

Reliance Finance - 100,000,000

Citi Bank Ltd. 50,000,000 70,000,000

- - 11,730,000,000 5,530,000,000

5.2 Outside Bangladesh

Kolkata Branch of Sonali Bank Limited 12,379,680 17,312,900

6.00 Investments :

Treasury Bills

28 days Treasury Bills - - 91 days Treasury Bills 543,889,610 1,878,175,160 182 days Treasury Bills 2,266,810,946 1,595,156,248 364 days Treasury Bills 5,503,457,460 4,207,488,632 2 Years Treasury Bills - - 5 Years Treasury Bills - - Total amount 8,314,158,016 7,680,820,040

Add: Reverse REPO with Others Bank - -

8,314,158,016 7,680,820,040

Less: REPO with Others Bank

Total Treasury Bills 8,314,158,016 7,680,820,040

Government Bonds

Prize Bonds 88,891,610 90,252,110 T & T Treasury Bond - -

88,891,610 90,252,110

Government Securities:

33

2011 2010

BDT BDT

Bangladesh Government Treasury Bond (Note 6.3.2) 110,956,788,219 88,724,756,057 Less: REPO with Others Bank - - Sub Total 110,956,788,219 88,724,756,057 Total Government Bonds 111,045,679,829 88,815,008,167

Government Approved Debentures (Note 6.3) - 342,737,900

Total Government Securities and Bonds 119,359,837,845 96,838,566,107

Other Investments:

Shares 10,164,093,780 12,077,987,630

Ordinary Share of Sonali Bank UK Limited 717,105,537 621,815,855

Debentures Public 286,857,900

Debentures 54,156,225 75,584,712

Private Bonds (6.4) 1,300,000,000 934,579,902

Investment in Sonali Investment Ltd. 2,000,000,000 1,000,000,000

Investment in SECI 77,752,750 56,596,000

Security Deposit with Central Bank of India 10,159,109 9,262,991

14,610,125,301 14,775,827,090

Outside Bangladesh (Overseas Branches) 105,787,413 130,702,264

Total Other Investments 14,715,912,714 14,906,529,354

134,075,750,559 111,745,095,461

6.1

Held for Trading ( HFT) 49,102,181,074 61,642,141,348

Held to Maturity (HTM) 70,630,650,561 42,000,680,614

Other Investments 14,342,918,924 8,102,273,499

134,075,750,559 111,745,095,461

6.2 Maturity grouping of investments as follows :

On demand 1,600,500,000 1,711,010,128 Less than three months 2,683,500,000 9,813,044,895 More than three months but less than one year 12,083,684,547 3,070,005,015 More than one year but less than five years 9,316,955,134 18,812,296,709 Above five years 108,391,110,878 78,338,738,714

134,075,750,559 111,745,095,461

6.3

Market Price-2011 Cost Price-2011 Cost Price-2010

Government

Treasury Bills (Note- 6.3.1) 7,680,820,040 8,314,158,016 7,680,820,040 Reverse Repo - - - T & T Treasury Bond - - - Bangladesh Government Treasury Bond (Note 6.3.2) 88,724,756,057 110,956,788,219 88,724,756,057

Government Approved Debentures - - 342,737,900

Prize Bonds 88,891,610 88,891,610 90,252,110 96,494,467,707 119,359,837,845 96,838,566,107

6.3.1 Government Securities:

Treasury Bills

28 days Treasury Bills - - 91 days Treasury Bills 543,889,610 1,878,175,160

Government Securities are Classified according to Circular No. 05 dated26-05-2008 as follows:

Cost and Market value of Investments as on 31.12.2011 as follows :

34

2011 2010

BDT BDT

182 days Treasury Bills 2,266,810,946 1,595,156,248 364 days Treasury Bills 5,503,457,460 4,207,488,632 2 Years Treasury Bills - - 5 Years Treasury Bills - -

8,314,158,016 7,680,820,040

6.3.2 Government Treasury bonds

3 Years T&T bond - -

3Years treasury bond (BPC) - -

5 Years treasury bond - 1,454,734,426

5 Years Bangladesh Government treasury bond (BGTB) 21,274,855,134 17,274,114,524

10 Years BGTB treasury bond - 1,300,459,288

10 Years Bangladesh Government treasury bond (BGTB) 27,661,370,658 22,734,141,971

15 Years Government treasury bond (BGTB) 4,833,211,954 3,718,973,115

20 Years Government treasury bond (BGTB) 4,008,505,473 3,339,583,733

1-13 Years treasury bond (BJMC) 7,138,900,000 -

2-5 Years treasury bond (BPC) - -

5-15 Years BPC treasury bond 44,954,600,000 37,654,600,000

25 Years SPL treasury bond 1,085,345,000 1,248,149,000

110,956,788,219 88,724,756,057

Investment in Shares & Bond

ParticularsNumber of Company Market Price

2011Cost Price

2011Cost Price

2010

Listed Securities 104 8,091,653,172 5,144,178,377 5,145,184,345

Un-Listed Securities 13 2,188,726,295 2,188,726,295 178,317,320

10,280,379,467 7,332,904,672 5,323,501,665

Listed Securities

Sector wise investment

Listed securities

Sector Number of Company

Market Price2011

Cost Price 2011

Cost Price 2010

Bank and NBFI 30 2,083,568,149 2,280,097,490 1,800,697,382 Insurance Companies 5 4,701,938 10,488,350 13,142,464 Fuel and Power Co. 5 129,341,332 336,266,197 101,068,048 Manufacturing & Other 64 5,874,041,754 2,517,903,786 3,230,276,451

104 8,091,653,172 5,144,755,823 5,145,184,345 Un-Listed Securities

The unlisted investments are shown at cost because the fair value cannot be measured reliably

Sector Number of Company

Market Price 2011

Cost Price 2011

Cost Price 2010

Bank and NBFI 4 166,010,220 136,010,220 108,702,200 Manufacturing 1 15,997,000 15,997,000 15,997,000

Others 8 2,036,719,075 2,036,141,626 53,618,120

13 2,218,726,295 2,188,148,846 178,317,320

Investments have been recorded at market price. Market value of securities has been determined on the basis of the value of securities at the last trading day of the year.

35

2011 2010

BDT BDT

Name of company

Market value

2011

Janatamf 937,000 8.80 8,245,600 7,778,750 Stprimfmf 207,000 20.10 4,160,700 - Abbank 1,302,420 68.40 89,085,528 52,751,348 ACI 270,870 205.60 55,690,872 120,309,802 ACIformula 167,000 87.40 14,595,800 25,468,344 Aftabauto 1,230,617 138.70 170,686,578 149,993,365 Agranins 160 40.90 6,544 7,156 Aimsistmf 12,000 39.90 478,800 686,400 Alarabank 1,276,971 37.90 48,397,201 47,485,280 Amcl(pran) 10,000 136.50 1,365,000 4,516,750 Apextanry 30,000 120.40 3,612,000 300,000 Apexweav 5,120 100.00 512,000 512,000 Ashraftex 364,582 10.00 3,645,820 3,645,820 Atlasbang 57,160 246.60 14,095,656 23,412,599 Azadprint 756 100.00 75,600 75,600 Bankasia 1,510,660 38.50 58,160,410 62,832,592 Batbc 83,200 618.50 51,459,200 55,706,425 Bayleasing 396,800 69.90 27,736,320 - Bcil 2,960 100.00 296,000 296,000 Bdcom 484,615 26.00 12,599,990 28,312,845 Helhasa 150,000,000 10.00 - 1,500,000,000 Bsc 1,077 554.50 597,197 107,700 Beaconphar 2,000,000 31.00 62,000,000 - Beximco 793,583 113.20 89,833,596 68,921,437

Beximco Textile 30,391 76.00 - 303,910

Bgic 489,025 49.10 24,011,128 27,513,741 Bifc 700 43.60 30,520 - Boc 56,750 611.40 34,696,950 31,521,351 Bracbank 2,670,930 46.10 123,129,873 75,197,553 Bxpharma 332,198 93.20 30,960,854 41,169,528 Citybank 1,960,400 53.00 103,901,200 59,023,047

Citybankgins 20 1504.00 - 9,298 Continins 19,260 42.80 824,328 211,590

Dbhousing 0.00 0.00 - 98,476 Bhistmf 782,000 8.10 6,334,200 11,917,680 Descoh 860,470 113.00 97,233,110 122,353,110 Dhakabank 1,197,033 44.00 52,669,452 57,951,673 Dulacot 16,000 16.30 260,800 160,000

Market price No of shares

Quoted Shares

8,037,810.00

Book value 31.12.2010

124,080,130

27,616,790

2011

Book value

31.12.2011

10,972,270.00

159,358,633

63,604,491

61,082,944

151,233,368

7,149

1,312,800.00

61,911,354 1,806,700

300,000

512,000

3,645,820

24,523,871

75,600

41,990,460 57,253

161,816,137

65,527,552

296,000

33,050,747

-

107,700

20,000,000

160,349,972

(577,450)

35,272,680

- 11,948,960

182,422,784

67,921,738

40,057,546

130,778,284

-

1,217,151

160,000

36

2011 2010

BDT BDT

Dutchbangl 140,160 156.90 21,991,104 20,018 Ecables 60,000 57.10 3,426,000 60,000 Ebl 9,613,864 66.60 640,283,342 202,553,219 Ebl1stmf 1,154,000 10.10 11,655,400 25,232,760 Eximbank 996,640 27.90 27,806,256 27,815,618 Firstsbank 931,616 26.30 24,501,501 29,214,080 GP 1,151,400 162.10 186,641,940 182,131,862 Grameens2 250,800 17.00 4,263,600 8,853,000 Greendelmf 524,500 6.90 3,619,050 5,852,800 Heidelbcem 8,880 255.90 2,272,392 1,025,600 Icb(primary) 2,362,871 1623.50 3,836,121,069 140,022,000 Icb3rdnrb 480,000 7.70 3,696,000 5,672,000 Icbempmf1st 8,130,000 8.60 69,918,000 10,669,890 Icbislamic 5,418,100 10.00 54,181,000 54,181,000 Ific 429,080 68.00 29,177,440 - Iificistmf 730,000 8.00 5,840,000 11,030,300 Ifilislmfi 166,500 6.30 1,048,950 1,769,895 Intech 637,065 29.00 18,474,885 18,991,080 Ipdc 119,400 31.30 3,737,220 6,902,478 Islamibank 44,800 54.40 2,437,120 8,840,520 Jamunabank 732,890 34.60 25,357,994 28,388,745 Jamunaoil 144,240 180.30 26,006,472 36,857,037 Jutespin 30,000 165.40 4,962,000 300,000 Karnaphuli 508,728 50.00 25,436,400 48,369,082 Kpcl 353,778 62.70 22,181,881 40,550,715 Lafsurceml 11,850 489.00 5,794,650 1,122,195 lr global 5,000,000 10.60 53,000,000 - Mercanbank 2,722,650 34.90 95,020,485 47,336,275 Mpetroleum 59,010 189.90 11,205,999 13,365,511 Mtbl 1,803,070 34.60 62,386,222 25,899,190 Nationaltea 4,392 530.00 2,327,760 439,200 Natoxg 1,305 100.00 130,500 130,500 Navanacng 352,579 81.10 28,594,157 63,051,468 Nbl 1,816,111 66.60 120,952,993 58,334,794 Nccbank 1,880,944 30.50 57,368,792 85,676,365 Niloycem 98 100.00 9,800 9800Ntltubes 140,730 64.20 9,034,866 24,164,608

Noternins 0.00 - - 102,821 Ocl 240,050 64.40 15,459,220 41,490,119 Onebankltd 2,364,930 48.50 114,699,105 91,106,304 Pdprinter 29,243 10.00 292,430 292,430 Peoplesins 99,655 38.80 3,866,614 9,439,191 Pfistmf 271,500 7.20 1,954,800 4,064,355 Phenixins 12 80.10 961 56,472 Phpmf1 299,500 6.70 2,006,650 2,539,910

25,256,832

4,416,360

6,477,575

600,000 119,287,984

1,355,798

236,287,100

27,095,920

40,506,057

35,466,621 301,816,482

25,017,543 7,344,448

11,052,200

1,773,225

6,744,000

133,613,704

19,175,500

39,578,339

(16,272)

30,597,560

49,356,791 43,943,945

46,967,910

300,000

1,777,500

50,000,000

87,606,161 439,200

111,002,384

14,931,525

130,500 71,277,371

9,800

24,085,940

154,634,747

92,621,827

- 43,144,187

9,261,324

4,075,215

138,757,533

292,430

752

3,042,920

37

2011 2010

BDT BDT

Popular1mf 1,000,000 6.90 6,900,000 - Powergrid 252,950 62.60 15,834,670 8,365,020 Premierban 756,953 30.90 23,389,848 27,908,910 Premierlea 23,800 33.30 792,540 3,212,155 Prime1icba 242,000 8.30 2,008,600 3,308,140 Primebank 672,402 44.70 30,056,369 3,551,205 Primeinsur 65 53.70 3,491 11,876 Pubalibank 7,077,507 50.50 357,414,104 349,899,669 Rahimaf 15,310 34.80 532,788 153,100 Rakceramic 260,920 77.90 20,325,668 36,152,688 Ranfoundr 404,000 74.70 30,178,800 58,567,500 Roseheav 4,327 15.00 64,905 64,732 Rupalibank 110,000 135.30 14,883,000 1,000,000 Shahjabank 2,304,041 32.40 74,650,928 135,122,539 Sibl 3,002,620 26.30 78,968,906 51,171,859 Southeastb 3,503,100 29.80 104,392,380 124,236,299 Squrpharma 115,610 236.50 27,341,765 17,789 Standbankl 1,316,320 30.30 39,884,496 204,816 Sumitpower 458,601 74.60 34,211,635 33,695,759 Titasgas 780,450 67.90 52,992,555 21,854,232 Trustb1mf 632,500 8.90 5,629,250 6,608,690 Trustbank 5,182,890 43.30 224,419,137 233,076,953 Ulc 159,980 55.90 8,942,882 17,247,513 Ucbl 432,462 43.90 18,985,082 - Uil 0.00 0.00 - 3,406,880 Uttarabank 676,480 77.90 52,697,792 34,251,437 Uttarafin 312,180 114.10 35,619,738 47,618,205

8,091,653,172 5,145,184,345

No of share Face value

Bcbl 1,125,000 100.00 50,000,000 Belhasa 150,000,000 10.00 - Cdbl 7,174,765 10.00 30,000,000 Grameenbank 30,000 100.00 3,000,000 Iidfc 227,700 100.00 22,770,000 Sjutey 33,790 10.00 337,900 Karmabank 500,000 100.00 50,000,000 Magurapaper 159,970 100.00 15,997,000 Papercon 5,000 100.00 500,000 Pubbank 51,022 10.00 5,702,200 Sppcl 23,075,800 10.00 - Suppcl 15,174,200 10.00 - Swantex 1,022 100.00 10,220 Sub total 178,317,320

Total 5,323,501,665

151,742,000 102,200

2,188,726,295

7,332,904,672

Unquoted

100,508,975 3,000,000

22,770,000 337,900

50,000,000

500,000 15,997,000

112,500,000

Book value2010Book value

2011

2011

510,220 230,758,000

1,500,000,000

33,116,103

950,360

10,000,000

20,664,170

3,315,400

37,929,026

153,100

42,115,304

1,974

144,373,166

62,038,240

64,905

85,421,778 161,724,742

1,000,000 138,019,681

28,433,661 52,603,362

10,164,275

5,144,178,377

49,713,407 67,687,342

Sub total

297,141,437 16,598,639 32,635,413

- 96,564,382 78,162,330

38

2011 2010

BDT BDT

6.4 Private Bond

5 Years Prime Bank Bond 210,000,000 210,000,000 5 Years Orascom Telecom Bond 40,000,000 50,000,000 5 Years Mutual Trust Bank Bond 250,000,000 250,000,000

5 Years Northern Power Solution Bond 150,000,000 24,579,902

5 Years Trust Bank Bond 250,000,000 -

5 Years Dhaka Bank bond 200,000,000 200,000,000

5 Years National Bank Bond bond 200,000,000 200,000,000 1,300,000,000 934,579,902

6 (a) Consolidated Investment

Government Securities

Sonali Bank Ltd. (6.01) 119,359,837,845 96,838,566,107 Sonali Investment Ltd. - - Sonali Exchange Co.,Inc - -

119,359,837,845 96,838,566,107

Others

Sonali Bank Ltd. (6.02) 14,715,912,714 14,906,529,354 Sonali Investment Ltd. 91,288,668 - Sonali Exchange Co.,Inc - -

14,807,201,382 14,906,529,354

Less: Investment in Subsidiary: 2,077,871,500 -

Sonali Investment Ltd. 2,000,000,000 - Sonali Exchange Co.,Inc 77,871,500 -

12,729,329,882 14,906,529,354

132,089,167,727 111,745,095,461

7.00 Loans and Advances/Investments

Inside Bangladesh - Note 7.1 299,132,921,446 256,640,847,118 Outside Bangladesh - Note 7.2 193,367,515 77,104,236 Total Loan and advances (Loans, Cash credit, Overdraft etc.) 299,326,288,961 256,717,951,354

Bills purchased and Discounted - Note 7.3 46,665,059,950 29,380,118,807 Total 345,991,348,911 286,098,070,161

7.1 Inside Bangladesh

Loan - Note 7.1.1 250,379,114,166 220,286,459,910 Cash Credit - Note 7.1.2 37,538,920,661 29,434,496,993 Overdraft - Note 7.1.3 11,214,886,619 6,919,890,215 Total 299,132,921,446 256,640,847,118

Head-wise Loans, Cash Credits and Overdrafts:

Inside Bangladesh:

7.1.1 Loans

Demand Loan 3,027,587,757 3,017,885,543 Small Loan 536,822,767 533,028,094 House Building Loan (General) 679,217,789 1,354,072,745 Staff House Building Loan 23,739,175,891 20,094,474,184

Gains on investment in quoted shares of Tk. 2,977,474,799 is transferred to revaluation reserve as an unrealized gain and alsothe amount of investment in quoted share has shown in fair value in the Balance Sheet as Tk. 2,218,726,295 as per IAS 39. Theabove changes will affect equity and investment amount.

39

2011 2010

BDT BDT

Staff Loan 3,024,307,371 2,671,371,626 Special Small Loan Program 1,024,654,282 957,020,229 Loan Under S.B Industrial Credit Scheme(Project) 34,797,753,278 31,788,057,424 Loan under External Credit Program 137,735,553 171,095,662 Working Capital to Industries. (Hypo) 33,206,696,837 28,866,973,329 Working Capital to Industries.( Pledge) 2,823,885,017 2,543,718,559 Sonali credit 3,899,707 399,479 Loan under'SB Agro Based Industrial Cr.Scheme 6,647,748,614 6,164,336,883 Working Capital to Agrobased Ind. (Hypo) 10,830,606,100 18,355,031,887 Working Capital to Agrobased Ind..( Pledge) 5,929,515,841 4,487,565,187 Agricultural Loan 27,815,898,996 25,217,568,984 Micro Credit (SFL Scheme plus RSTL Scheme) 9,288,565,158 8,650,624,348 Loan under Imported Merchandise(LIM) 1,853,526,484 1,955,166,532 Loan against Trust Receipt 45,495,553,719 27,178,415,300 Forced Loan against Back to Back L/C 32,904,118,121 32,971,309,842 Loan for L/C under WES. 28,698,036 9,757,428 Current Account Barter (Debit Balance) 932,606,463 806,124,311 Bridge Finance 257,822,031 260,452,199 Portfolio Loan Account - - Small Trading Loan 842,774,252 659,287,972 Lease Finance 196,036,083 22,716,380 Rural Small Trading Loan Scheme - - Probasi Karmo Sangsthan Prokalpa 22,605,198 87,688 Consumer Loan 1,578,975,315 392,395,928 Education Loan 11,960,555 - SME Finance(Term Loan to Service) 462,488,928 49,619,550 SME Finance(Term Loan Industries) 140,653,242 9,803,113 SME Finance(Working Capital to Ind.Ser.Tre.) 1,481,710,709 157,320,548 Term Loan to Banks & NBFIs 655,514,072 940,778,956 Total 250,379,114,166 220,286,459,910

7.1.2 Cash Credits:

Cash Credit General (Hypo) 24,136,952,406 17,305,609,621 Cash Credit General (Pledge) 8,690,275,387 7,665,471,296 Packing Cash Credit 4,711,692,868 4,463,416,076 Total 37,538,920,661 29,434,496,993

7.1.3 Overdrafts etc.:

Overdraft Loan 11,214,886,619 6,919,890,215 Total 11,214,886,619 6,919,890,215


Loan - Note 7.2.1 20,482,212 17,865,566 Cash Credit - Note 7.2.2 15,209,438 1,720,310 Overdraft - Note 7.2.3 157,675,865 57,518,360

193,367,515 77,104,236

Head-wise Loans, Cash Credits and Overdrafts:

40

2011 2010

BDT BDT

Outside Bangladesh:

7.2.1 Loan

Demand Loan 11,014,777 8,208,740 House Building Loan 9,467,435 9,656,826 Total 20,482,212 17,865,566

7.2.2 Cash Credit 15,209,438 1,720,310

7.2.3 Overdraft 157,675,865 57,518,360

7.3. Bills Purchased and Discounted (excluding treasury bills)

Payable inside Bangladesh 39,674,585,076 23,175,923,812 Payable outside Bangladesh 6,990,474,874 6,204,194,995

46,665,059,950 29,380,118,807

7.3.1 Payment against Documents (PAD) 22,700,093,098 16,536,756,879 Inland Bills Purchased 16,974,491,978 6,639,166,933 Foreign Bills Purchased/Negotiated (Clean) 1,361,813,124 1,536,476,770 Foreign Bills Purchased/Negotiated (Docu) 5,569,378,028 4,633,915,165

46,605,776,228 29,346,315,747

Foreign Bills Purchased/Negotiated (Docu) of Overseas Branches 59,283,722 33,803,060 46,665,059,950 29,380,118,807

7.4

Loans and Advances

On demand 20,383,733,775 21,214,048,518 Not more than 3 Months 20,508,144,895 15,266,058,658 More than 3 months but not more than 1 Year 146,142,534,109 112,303,516,898 More than 1Year but not more than 5 Years 38,038,448,106 32,214,946,137 More than 5 Years 74,253,428,076 75,719,381,143

299,326,288,961 256,717,951,354

Bills purchased and discounted

Not more than 1 Month 20,307,895,721 16,295,597,728 More than 1 month but not more than 3 Months 4,205,563,905 4,389,506,224 More than 3 months but not more than 6 Months 21,936,268,751 8,693,614,855 More than 6 Months 215,331,573 1,400,000

46,665,059,950 29,380,118,807

7.5 Net Performing loans and advances / Investments

Gross loans and advances / investments 345,991,348,911 286,098,070,161

345,991,348,911 286,098,070,161

7.6

Advances to allied concerns of Directors - -

Advances to Chief Executive and other Senior Executives 47,853,303 47,853,303

Advances to the Customers Group 204,904,494,418 164,293,319,120

Industry based Advances 94,373,941,240 92,376,778,931

299,326,288,961 256,717,951,354

7.6.1 Industrial advances (Category wise)

Loans and advances / Investments on the basis of significant concentration excluding bills purchased and discounted

Residual maturity grouping of loans and advances / investments

including bills purchased and discounted

41

2011 2010

BDT BDT

Loan Under S.B Industrial Credit Scheme(Project) 34,797,753,278 31,788,057,424 Loan under External Credit Program 137,735,553 171,095,662 Working Capital to Industries. (Hypo) 33,206,696,837 28,866,973,329 Working Capital to Industries.( Pledge) 2,823,885,017 2,543,718,559 Loan under'SB Agro Based Industrial Cr.Scheme 6,647,748,614 6,164,336,883 Working Capital to Agrobased Ind. (Hypo) 10,830,606,100 18,355,031,887 Working Capital to Agrobased Ind..( Pledge) 5,929,515,841 4,487,565,187

94,373,941,240 92,376,778,931

7.7

Total Capital 45,794,751,453 30,400,267,857

10% of total capital 4,579,475,145 3,040,026,786

7.8 Geographical Location-wise Loans and Advances:

In Bangladesh% of Total Loans 2011

% of Total Loans 2011

Dhaka Division 71.73% 73.12% 248,164,561,804 209,203,189,348 Chittagong Division 10.09% 8.47% 34,903,333,176 24,224,493,206 Rajshahi Division 3.65% 3.39% 12,618,109,398 9,705,098,194 Khulna Division 7.83% 8.22% 27,098,697,149 23,525,694,332 Sylhet Division 0.91% 0.96% 3,134,631,383 2,754,998,787 Barisal Division 1.22% 1.22% 4,232,511,000 3,487,297,463 Rangpur 4.50% 4.57% 15,586,853,764 13,086,391,536 Total Inside Bangladesh 99.93% 99.96% 345,738,697,674 285,987,162,866

Outside Bangladesh 0.07% 0.04% 252,651,237 110,907,297 100% 100% 345,991,348,911 286,098,070,163

7.9 Classification of advances as per Bangladesh Bank circular

Unclassified% of Total Loans 2011

% of Total Loans 2010

Standard including staff loan 80.10% 74.46% 279,663,374,674 213,021,149,864 Special Mention Account (SMA) 1.30% 1.63% 4,487,151,000 4,651,158,000

81.40% 76.08% 284,150,525,674 217,672,307,864

Classified

Substandard 0.75% 1.60% 2,602,496,000 4,587,987,000 Doubtful 1.56% 0.70% 5,400,423,000 2,004,464,000 Bad / Loss 16.22% 21.57% 53,585,253,000 61,722,404,000

18.53% 23.88% 61,588,172,000 68,314,855,000

Overseas branches 0.07% 0.04% 252,651,237 110,907,297

100.00% 100.00% 345,991,348,911 286,098,070,161

7.10 Particulars of required provision for loans and advances / investments

Status Figure in Crore

During the year 2011, there is no number of client, with amount of outstanding and classified loans, to whom loans and advances santioned more than 10% of total capital of the bank.

Number of clients, with amount of outstanding and classified loans, to whom loans and advances sanctioned morethan 10% of total capital of the bank:

42

2011 2010

BDT BDT

General provision Rate (%)Required Provision

2011Required Provision

2010

Standard 25,780 376.75 316

i) HPZLP 62.00 2% 1.23 0.21

ii) Other than HPZLP 444.00 5% 22.19 16.56

iii) Agri & Micro 1,855.00 5% 92.77 73.41

iv) Others 21,621.00 1% 216.21 194.91

Small enterprise financing 1,140 2% 22.79 9.00

Special mention account (SMA) 431.00 5% 21.56 22.22

376.75 316

Specific provision StatusBase for provision

Rate (%)Required Provision

2011Required Provision

2010

Sub-standard 281 43.59 66.90

i) Short term Micro Credit 84 5% 4.19 5.31 ii) Others 197 20% 39.40 61.59 Doubtful 183 47.17 30.87

i) Short term Micro Credit 98 5% 4.90 6.07 ii) Others 85.00 50% 42.27 24.80 Bad / Loss 3,666 100% 3,665.81 4,450.02

3,757 4,548

Required provision for loans and advances / investments 4,133 4,864 Provision Held (Note-13) 4,133 4,864 Excess / (shortfall) provision at 31 December 2011 - -

7.11 Particulars of Advances / Investments

i) Debts considered good in respect of which the Bank is

fully secured. 223,934,069,026 162,987,766,803 ii) Debts considered good for which the bank holds no

other security than the debtor's personal security 14,083,217,131 15,927,969,664 iii) Debts considered good secured by the personal liabilities

of one or more parties in addition to the personalsecurity of the debtors 107,974,062,754 107,182,333,694

iv) Loans/ adversely classified provision not maintained there against - - 345,991,348,911 286,098,070,161

v) Debts due by directors or officers of the bank or any of them either severally or jointly with any other persons. 26,763,483,262 22,765,845,810

vi) Debts due by companies or firms in which the directors or Officersof the Bank are interested as Directors, partners or managingagents or in the case of private companies, as members. - -

vii) Maximum total amount of advances, including temporary advances made at any time during the year to directors or managers or officers of the bank or any of them either severally or jointly with any other persons. 26,763,483,262 22,765,845,810

viii) Maximum total amount of advances, including temporary - -

Base for provision

* General provision is kept @ 1% on general loans and advances / investments and 2% on Housing Finance & Loan for Professional under consumer financing and 5% on consumer financing

43

2011 2010

BDT BDT

advances granted during the year to the companies or firms in which any of the directors of the bank are interested as partners or managing agent or, in case of private companies as members. - -

ix) Due from other banking companies - - x) Classified loans for which interest/profit not credited to income - - a) Provision on classified loans and advances (Notes 13.1.i) 37,567,700,000 45,481,672,458 b) Increase/decrease of provision (specific) (7,913,972,458) 45,481,672,457 c) Amount of written off debt froonm provision 7,920,261,774 565,057,503 d) Amount recovered against the debt which was

previously written off 179,245,690 85,536,747 e) Amount of provision kept against the amount

classified as bad or loss 37,567,700,000 45,481,672,458 f) Amount of interest charged in suspense account (Note 13.3) 15,883,486,193 16,111,721,606 xi) Cumulative amount of written off loans 18,612,422,688 (2,074,200,403)

Opening balance 21,135,630,688 1,880,258,382 Amount of written off debt during the year 2,102,912,000 1,094,366,995 Amount realized during the year 4,626,120,000 5,048,825,780

xii) Amount of written off loans for which law suitshave been filed for recovery 21,135,630,688 1,880,258,382

7.12 Provision held against loans and advances

This is made up as follows:Classified loans 37,567,700,000 45,481,672,458 Un-classified loans 3,767,500,000 3,157,818,000

41,335,200,000 48,639,490,458

7.13 Provision for Classified and Unclassified Loans

Required Provision:

For Classified Loans 37,567,700,000 45,481,659,059 For Unclassified Loans 3,767,500,000 3,156,818,000

41,335,200,000 48,638,477,059

Less: Provision made:

For Classified Loans 37,567,700,000 45,481,672,458 For Unclassified Loans 3,767,500,000 3,157,818,000

41,335,200,000 48,639,490,458

Surplus/(Deficits)For Classified Loans - 13,399 For Unclassified Loans - -

- 13,399

7 (a)

Loan, Cash Credit and OverdraftsSonali Bank Ltd. 299,326,288,961 256,717,951,354 Sonali Investment Ltd. 2,100,406,894 - Sonali Exchange Co.,Inc - -

301,426,695,855 256,717,951,354

7(b)

Payment against Documents (PAD) 22,700,093,098 16,536,756,879

Consolidated Loans and Advances

Bills Discounted and Purchased

44

2011 2010

BDT BDT

Inland Bills Purchased 16,974,491,978 6,639,166,933

Foreign Bills Purchased/Negotiated (Clean) 1,361,813,124 1,536,476,770

Foreign Bills Purchased/Negotiated (Docu) 5,569,378,028 4,633,915,165

46,605,776,228 29,346,315,747

Foreign Bills Purchased/Negotiated (Docu) of Overseas Branches 59,283,722 33,803,060

46,665,059,950 29,380,118,807

Total 348,091,755,805 286,098,070,161

8.00

(A) Cost

In Bangladesh:

Premises 21,407,790,621 9,380,990,210 Building 396,415,674 284,389,725 Furniture 593,563,009 452,580,406 Electric Installation 467,280,920 291,041,688

Computer 941,275,160 702,326,641

Type Writer Machine 4,586,057 3,028,516 Motor Car & Other Vehicle 215,781,388 132,195,450 Library 1,675,500 881,918

Sub-Total(In Bangladesh) 24,028,368,329 11,247,434,554

Overseas Branches:

Kolkata Branch 7,598,528 8,103,242

Siliguri Branch 544,666 424,257

Sub-Total (Overseas Branches) 8,143,194 8,527,499

Total Cost Value 24,036,511,523 11,255,962,053

(B) Accumulated Depreciation

In Bangladesh:

Prenises 152,604,799 -

Building - 120,581,522

Furniture 187,719,218 135,947,677

Electric Installation 191,316,752 117,121,966

Computer 395,561,329 238,319,862

Type Writer Machine 1,370,884 937,813

Motor Car & Other Vehicle 79,586,421 48,117,405

Library 629,011 337,794

Sub-Total(In Bangladesh) 1,008,788,414 661,364,039

Overseas Branches:

Kolkata Branch 1,253,110 459,022

Siliguri Branch 54,969 46,940

Sub-Total (Overseas Branches) 1,308,079 505,962

Total Accumulated Depreciation 1,010,096,493 661,870,001

Written down value (A-B) 23,026,415,030 10,594,092,052

(Details shown in Annxure-B)

8.1 Movement of Fixed Assets

Cost (Original)/Revaluation 11,255,321,337 10,424,540,343


45

2011 2010

BDT BDT

Addition during the year 12,795,814,987 844,786,663 24,051,136,324 11,269,327,006

Less: Disposal/Adjustment during the year 14,624,802 13,364,953 24,036,511,522 11,255,962,053

Less: Accumulated Depreciation 1,010,096,492 661,870,001 (Details shown in Annexure-B) 23,026,415,030 10,594,092,052

8 (a)

Cost Less Accumulated DepreciationSonali Bank Ltd.(Note-08) 23,026,415,030 10,594,092,052

Sonali Investment Ltd. 27,314,259 -

Sonali Exchange Co.,Inc 6,390,709 - 23,060,119,998 10,594,092,052

9.00 Other Asset Sonali Exchange Co.Inc. USA 289,152,532 273,057,532 Stationery, Stamps and Printing Materials in hand 229,520,756 229,081,068 Advance Rent, Advertisement etc. 122,819,897 101,178,341 Interest, Commission and Exchange Receivable 5,807,200,800 4,955,860,321 Prepaid Expenses 1,981,388,395 1,641,425,212 Branch Adjustment - 27,235,139,537 Suspense A/C 3,868,927,513 1,980,757,219 Others 89,820,974,161 96,783,911,258

102,119,984,054 133,200,410,488

Classification of Assets by CategoryPerforming other assets

i) Sonali Exchange Co. Inc. USA (Note -9.1) 289,152,532 273,057,532 ii) Advance Rent, Advertisement etc. Note(9.3) 122,819,897 101,178,341 iii) Interest, Commission and Exchange Receivable (9.4) 5,807,200,800 4,955,860,321 iv) Prepaid Expenses (9.5) 1,981,388,395 1,641,425,212

8,200,561,624 6,971,521,406

Non performing other assets

v) Stationery, Stamps and Printing Materials in hand (9.2) 229,520,756 229,081,068 vi) Branch Adjustment(9.6) - 27,235,139,537 vii) Suspense A/C (9.7) 3,868,927,513 1,980,757,219 viii) Others (9.8) 89,820,974,161 96,783,911,258

93,919,422,430 126,228,889,082

102,119,984,054 133,200,410,488

9.1 Sonali Exchange Co.Inc. USA & SIL Dhaka

Ordinary Shares - - Long term loan at prevailing rate of Interest 119,152,532 103,057,532 Long term loan at SIL Dhaka - - Long term loan at SIL Dhaka 170,000,000 170,000,000

Taka 2,970,000 and Taka 539,890 paid to the Government through treasury challan for purchasing 0.33 and 0.275 acres of land for construction of bank premises ( Court Building, Tangail and Rajshahi ) as advance. The said plots of land will be registered after obtaining permission form the Ministry of Land, Government of the People's Republic of Bangladesh.

Consolidated Fixed assets including Premises, Furniture and Fixtures

46

2011 2010

BDT BDT

289,152,532 273,057,532

9.2 Stationery, Stamps and Printing Materials in hand

Stamps on hand 10,968,552 11,699,346 Stationery on hand 218,552,204 217,381,722

229,520,756 229,081,068

9.3 Advance Rent and Advertisement etc.

Advance Rent 122,819,897 101,178,341 Advertisement - -

Total 122,819,897 101,178,341

9.4

i) Interest receivable 3,927,209,950 3,206,428,978 ii) Commission receivable 1,868,995,337 1,748,673,709

iii) Exchange receivable 10,995,513 757,634 5,807,200,800 4,955,860,321

9.5

Prepaid Expenses (Transferred from adjusting A/C)

Rent 5,649,487 101,116

Taxes 274,839 220,620

Law charges 39,710 32,052

Postage and Telegram 816,313 4,516

Sundries 1,974,608,046 1,641,066,908

1,981,388,395 1,641,425,212

9.6 Branch Adjustment

Sonali Bank General Account Balance - 30,647,533,435

Main Office Account Balance - (18,506,097,790)

Sonali Bank General Account (RMS+) - -

Sonali Bank General Account (IFRMS) - 15,093,703,892

- 27,235,139,537

9.6.1 Items in transit (Branch Adjustment net & reconciled)

General Accounts Debit 1,206,424,493,152 683,297,764,568 General Accounts Credit 1,212,581,796,253 652,650,231,133

(6,157,303,101) 30,647,533,435

9.7 Suspense A/C

1 Advance Deposit - 155,300

2 Pre-Paid Expenses 681,401 656,200

3 Dead Stock 64,150 183,845

4 Land and Premises 76,688 76,688

5 Bonus to staff - -

6 Advance Recoverable 159,379,692 1,566,442

7 Charges incurred but not accounted for :

Interest accrued but not collected on investment, Commission and

Brokerage, Shares and debentures and other income receivables:

(Transferred from adjusting a/c. Dr. Balance):

Preliminary, Formation and Organization Expenses,Renovation/development Expenses, and prepaid Expenses

47

2011 2010

BDT BDT

a) Salary & Allowances 16,300 362,460

b) Traveling Expenses 4,430,472 4,875,281

c) Rent - 35,000

d) Taxes - -

e) Insurance 27,300 313,390

f) Miscellaneous 3,704,251,510 1,972,532,613

3,708,725,582 1,978,118,744

Total 3,868,927,513 1,980,757,219

9.8 Others :

a Draft Payable Account (Ex-Advice) 640,903,924 1,060,766,858

b Govt. Draft Payable Account (Ex-Advice) 98,140,319 127,809,030

c Protested Bills 232,357,602 223,733,941

d Wage Earners' Fund Purchased Adjustment A/C. 2,448,933,258 5,361,059,039

e Agri-Loan Other Exemption A/C-2004 7,872,944 185,929

f Exchange Equalization 279,480,055 21,967,663

g Agri-Loan Interest Exemption A/C-2004 6,229,641 1,940,568

h Income Tax Deducted at Source 11,020,201,028 10,303,591,445

k BRDB TCCA Crop Loans Penal Int. Exemption 759,049,723 759,049,723

l BRDB UCCA Crop Loans Exemption 1,073,790,753 1,073,790,753

m BRDB TCCA Crop Loans Int & Penal Int. Exemption-2007 757,008,222 757,008,222

n Settlement A/C 12,336,493 4,000,000

o Loan Exemption Under Jute Sectors Reform Proj. 94-95. 5,362,676,930 5,362,676,930

p Demand Drafts purchased 1,246,796,872 1,246,477,686

q Pension bills 7,318,609,408 6,865,991,469

r PSP/BSP Encashment 2,364,774,711 2,077,513,964

s Agri Exemption A/C affected by River Erosion 125,309,456 10,315,100

t UCCA Loan Remission for River Erosion 4,752,730 98,424,139

u NRT A/C Dr. Balance 565,346,186 460,826,475

v Intangible Assets- Valuation Adjustment 10.08.01) 39,443,724,266 46,018,044,982

w Deferred Tax assets (10.8.2) 15,898,679,825 14,821,171,207

x Security Margin - 3,500,000

y Frozen Fish Loan Exemption A/C 101,773,510 101,773,510

z Accounts Receivable - -

z(i) Branch Reconstruction A/C 50,195 50,195

Sub Total (a to z) 89,768,798,051 96,761,668,828

z(ii) Other Assets of India operation 47,530,878 17,587,778

z(iii) Loss Incurred by Siliguri Branch 4,645,232 4,654,652

Total ((a+z)+z(i)+z(ii)) 89,820,974,161 96,783,911,258

9.8.1 Intangible Assets-Valuation adjustment

Opening balance of intangible assets 46,018,044,982 57,243,207,158

Less shortfall of amortization - 4,650,841,460

Restated opening balance 46,018,044,982 52,592,365,698

Less: Charged during the year 6,574,320,716 6,574,320,716

48

2011 2010

BDT BDT

Closing balance 39,443,724,266 46,018,044,982

9.8.2 Deferred Tax assets

Opening Balance 14,821,171,207 12,633,919,309

Addition during the year 1,077,508,618 2,187,251,898 Closing Balance 15,898,679,825 14,821,171,207

i) Written down value of Fixed Assets

Carrying amount at balance sheet date 2,070,622,757 10,594,092,052

Less Land Value Amount - 8,062,686,723

a) Carrying value without cosidering land value 2,070,622,757 2,531,405,329

b) Tax base 1,764,394,093 1,759,497,246

c) Taxable/(Deductible) Temporary Difference (a-b) (306,228,664) 771,908,083

ii) Employees Liabilities

a) Carrying amount at balance sheet date (37,747,780,676) (25,276,852,098)

b) Tax base - -

c) Taxable/(Deductible) Temporary Difference (a-b) (37,747,780,676) (25,276,852,098)

iii) Interest on securities

Interest on securities(Accrued) 8,136,027,393 - Interest on securities(Cash) 7,490,322,325 -

645,705,068 - iii) Provision for Bad & Loss Loan - -

a) Carrying amount at balance sheet date - (10,368,400,001) b) Tax base - - c) Taxable/(Deductible) Temporary Difference (a-b) - (10,368,400,001)

iv) Total temporary difference (37,408,304,272) (34,873,344,016)

v) Tax Rate 42.5% 42.5%

vi) Deferred Tax assets (15,898,529,316) (14,821,171,207)

vii) Opening Deferred Tax (14,821,171,207) (12,633,919,309)

Decrease/(Increase) of deferred Tax (Assets)/Liabilities (1,077,358,109) (2,187,251,898)

9.9 Provision held against Other Assets

a Suspense Account 29,381,705 27,963,348 b Protested Bills 232,357,602 223,733,939 c Branch Adjustment (unreconciled entries) - -

( 50% of Diffn. Betn. Debit & Credit entries of 2003 & before) - 172,400,000 d Branch Reconstruction Account 50,195 50,195

e Sub Total (a to d) 261,789,502 424,147,482

f BRDB UCCA Crops Loans Int.Penal Int. Exempt. A/Ct 1994 759,049,723 759,049,723 g BRDB UCCA Crops Loans Int. Penal Int. Exempt. A/C 2001 1,073,790,753 1,073,790,753 h UCCA Loan Remission for River Erosion 98,424,139 98,424,139 i BRDB UCCA Crops Loans Int.Penal Int. Exempt. A/Ct 2007 757,008,222 757,008,222 j Frozen Fish Loan Exemption A/C 101,773,510 101,773,510

Sonali Bank has recognized deferred tax assets on provision for bad loss loan (i.e. future tax benefits from the write off loans)for the first time. Therefore the Bank has shown retrospective effect for the assets generated from provision for bad loss loanfrom the earlier years. In calculating the deferred tax assets we have not considered SIC 21 guidelines. Had the calculation beenmade as per SIC 21 guidelines SBL would have additional deferred tax liability on carrying value of land at the rate of 2%. Theabove change in deferred tax liability would have affected the closing balance of deferred tax assets and charge for the year.

49

2011 2010

BDT BDT

k Interest Receivable from Govt. against exemption of loan on Sick Industry - 400,262,301

l NRT A/C Dr. Balance 565,346,186 460,826,475

Sub Total (f to o) 3,355,392,533 3,651,135,123

Required Provision (e+p) 3,617,182,035 4,075,282,605

Less: Provision made up to 31 December 2011 (9.10.1 & 9.10.2) 3,617,182,035 9,450,401,225

Surplus - 5,375,118,620

9.10.1 Movement of the Provision against Other Assets

Opening balance 9,450,401,225 9,081,674,153

Less: Written- off during the year 55,687 3,246,953

9,450,345,538 9,078,427,200

Less: Transferrd to P&L A/C 5,833,163,503 - 3,617,182,035 9,078,427,200

Add: Addition during the year - 371,974,025

3,617,182,035 9,450,401,225

9.10.2 Provision made against other assets

Other assets 3,269,581,484 9,102,800,674

Interest reserve against BRDB UCCA Crops Loan 155,528,213 155,528,213

Interest reserve Penal against BRDB UCCA crops Loan 62,546,240 62,546,240

BRDB/UCCA Crop Loan Intt.& P.Intt. Reserve A/C.-2007 84,247,526 84,247,526

Interest Reserve against Agri-Loan Interest Exemption 2004 45,278,572 45,278,572

3,617,182,035 9,450,401,225

9 (a) Consolidated Other Assets

Sonali Bank Limited(Note-9) 102,119,984,054 133,200,410,488

Sonali Investment Ltd.(Note-9.01a) 209,988,232 -

Sonali Exchange Co.,Inc (Note-9.02a) 18,385,544 -

102,348,357,830 133,200,410,488

Less: Investment in Subsidiary:


Sonali Exchange Co.,Inc 119,893,175 -

439,893,175 -

101,908,464,655 133,200,410,488

9.01a Sonali Investment Ltd.

Other Receivable 169,979,675 -

Advance, Deposit and Prepayments 3,988,625 -

Advance Income Tax 36,019,932 -

209,988,232 -

9.02a Sonali Exchange Co.,Inc

Accounts Receivable 12,312,714 -

Security Deposits 3,711,602 -

Prepaid Expenses 2,361,228 -

18,385,544 -

10.00 Non Banking Assets - -

50

2011 2010

BDT BDT

11.00 Borrowings From Other Banks, Financial Institutions & Agents

In Bangladesh 11.1 2,096,263,206 26,385,637 Outside Bangladesh 11.2 - -

2,096,263,206 26,385,637

11.1 In Bangladesh

Bangladesh Bank Demand Loan:

Refinance against RHFG from Bangladesh Bank 10,032,546 23,729,977

Refinance against BPC from Bangladesh Bank - -

Refinance against Jute Sector from Bangladesh Bank 1,043,575,000 -

Refinance against NWRDP from Bangladesh Bank 2,655,660 2,655,660

Money at Call on Short Notice 1,040,000,000 -

2,096,263,206 26,385,637


Overseas Branches - -

11.3

Secured (against bills) - -

Unsecured 2,096,263,206 26,385,637

2,096,263,206 26,385,637

11.4

Maturity Grouping of Borrowing From Other Banks, Financial Institutions & Agents

Payable on demand 1,040,000,000 -

Repayable on within 1 month - -

Over 1 month but within 3 Months - -

Over 3 months but within 1 year 1,056,263,206 26,385,637

Over 1 year but within 5 years - -

Over 5 year but within 10 years - -

2,096,263,206 26,385,637

12.00 Deposit and Other Accounts

Current Deposit & Other Accounts 128,393,661,256 118,947,874,651

Bills Payable 9,211,842,670 8,643,731,434

Savings Deposits 165,670,880,146 153,685,198,818

Fixed Deposits 229,846,653,031 196,857,280,045 533,123,037,103 478,134,084,948

Less:Inter Company Balance Eliminiated 69,129,450 -

533,053,907,653 478,134,084,948

12.1 Deposits and other accounts

Inter bank deposits 26,352,547,807 21,682,028,086 Other deposits 506,839,618,745 456,452,056,862

533,192,166,552 478,134,084,948

12.2 Deposits and other accounts

Payable on Demand

Security against borrowings from other banks, financial institutions andagents

51

2011 2010

BDT BDT

Deposit from banks 20,786,296,163 17,273,152,769 Other than banks 95,622,484,732 90,334,522,821

116,408,780,895 107,607,675,590

Other Deposits

Deposit from banks 5,566,251,644 4,408,875,317 Other than banks 411,217,134,013 366,117,534,041

416,783,385,657 370,526,409,358

533,192,166,552 478,134,084,948 12.3 Deposits and Other Accounts (Category wise)

Domestic Branches

Current and Contingency (12.3.a) 128,214,243,216 118,665,431,416 Bills Payable (12.4.a) 9,211,842,670 8,643,731,434 Savings Bank Account (12.5.a) 165,630,329,622 153,652,775,154 Fixed Deposits (12.6.a) 229,718,597,201 196,771,354,007 Other Deposits - -

532,775,012,710 477,733,292,011

Overseas Branches

Current and Contingency (12.3.b) 248,547,490 282,443,235 Bills Payable (12.4.b) - - Savings Bank Account (12.5.b) 40,550,522 32,423,664 Fixed Deposit (12.6.b) 128,055,830 85,926,038 Other Deposits - -

417,153,842 400,792,937

Total Domestic & Overseas Branches 533,192,166,552 478,134,084,948

12.4 Current and Contingency

a) Domestic Branches

Current A/C (credit Balance) 115,148,708,527 106,470,344,618

Hajj Deposits 27,211,529 77,646,268

Margin on Letter of Credit 958,410,261 742,095,274

Margin on Bank Guarantee 25,903,088 35,146,195

Foreign Bank Deposit 560,831,811 314,401,173

ATM A/c. 39,419,985 274,240,014

Current A/C Barter 2,428,846,464 1,996,492,668

Fixed Deposit Interest 4,205,642,450 3,409,905,584

School Banking Scheme 7,546,329 - Call Deposit 655,536,378 219,053,768 Monthly Earning Scheme Interest 97,932,100 59,065,077 Double Benefit Scheme Interest 834,117,421 541,662,845 S.B. Employees Provident Fund Interest - 1,581,477 Foreign Currency Deposit 2,606,676,291 3,790,153,315

Unsold Balance of N.F.C.D. 364,469,458 474,059,648 Credit Balance of Loan & Advances 252,991,124 259,583,492

128,214,243,216 118,665,431,416

b) Overseas Branches 248,547,490 282,443,235


12.5 Bills Payablea) Domestic Branches

52

2011 2010

BDT BDT

Draft Payable 4,187,112,520 4,059,930,586 Govt. Draft Payable 176,762,859 190,862,138 Payment Order 4,696,393,879 4,131,771,407 Foreign Draft/Travelers Cheque Issued A/c. 59,453,077 20,382,833

Foreign Draft Payable A/c. 92,120,336 240,784,471

9,211,842,670 8,643,731,434

b) Overseas Branches - -


12.6 Savings Bank Deposits

a) Domestic Branches 165,630,329,622 153,652,775,154 b) Overseas Branches 40,550,522 32,423,664

165,670,880,144 153,685,198,818

12.7 Fixed Deposit

a. Domestic Branches

Fixed Deposits 127,987,321,537 116,976,112,367 Short term deposits 43,603,938,877 32,647,671,441 Deposit Pension Scheme 1,392,376,093 1,361,988,995 Special Deposit Pension Scheme 185,324,144 214,470,889 Sonali Deposit Scheme 10,272,485,489 8,790,232,547 Education Deposit Scheme. 6,549,052,336 5,154,027,016 Medicare Deposit Scheme 13,485,340,502 10,130,307,296 Rural Deposit Schemes 1,517,648,251 1,008,868,992 Monthly Earning Schemes 4,814,119,502 3,213,815,928 Marriage Savings Schemes 718,741,242 406,438,929 Double Benefit Scheme 8,736,209,613 7,648,212,549 Daily Profit Scheme 507,333,520 73,110,529 Non Resident Deposit Scheme 99,933,042 348,086,182 Portfolio Deposit 171,203,661 - S.B.Employees Provident Fund (General) 8,515,276,066 1,221,853,418 S.B. Employees Provident Fund (Contributory) 1,162,293,326 7,576,156,929

229,718,597,201 196,771,354,007

b. Overseas Branches 128,055,830 85,926,038

Total 229,846,653,031 196,857,280,045

12.8 Analysis of residual maturity grouping

Repayable on Demand 191,546,483,859 177,615,096,559

Repayable within 1 Month 36,488,587,268 35,443,570,824

Over 1 month but within 6 Months 72,687,727,176 62,959,208,900

Over 6 months but within 1 year 72,684,063,380 84,886,233,395

Over 1 year but within 5 years 114,944,579,413 74,800,786,416

Over 5 years but within 10 years 44,807,363,784 42,428,858,859

Over 10 years 33,361,672.00 329,995.00 533,192,166,552 478,134,084,948

Inter-Bank Deposits


Maturity Grouping of deposits and other accounts ( Including BillsPayable )

53

2011 2010

BDT BDT


Over 1 month but within 6 Months - -



Over 5 years but within 10 years - -

Over 10 years - -

26,352,547,807 21,682,028,086

Other Deposits



Over 1 month but within 6 Months 72,687,727,176 62,959,208,900



Over 5 years but within 10 years 44,807,363,786 42,428,858,859

Over 10 years 33,361,672 329,995

506,839,618,745 447,808,325,428

533,192,166,552 469,490,353,514

Bills Payables

Repayable on Demand 9,211,842,671 8,643,731,434 Repayable within 1 Month - -

Over 1 month but within 6 Months - - Over 6 months but within 1 year - - Over 1 year but within 5 years - -

Over 5 years but within 10 years - - Over 10 years - -

9,211,842,671 8,643,731,434

- 329,995

12 (a) Consolidated Current Accounts and Other Accounts

Sonali Bank Ltd.(Note-12.03) 128,462,790,706 118,947,874,651 Sonali Investment Ltd. - - Sonali Exchange Co.,Inc - -

128,462,790,706 118,947,874,651

Less: Inter Company Balance Eliminated 69,129,450 -

128,393,661,256 118,947,874,651

13 Other liabilities

Domestic Branches

Branch adjustment account 6,157,303,102 -

Provision for Classified loans (13.2.i) 37,567,700,000 45,481,672,457

Provision for Un-Classified loans ( 13.2.ii) 3,767,500,000 3,157,818,000

Provision against diminishing value of Investment (13.3) - 130,028,996

Interest Suspense (13.4) 15,883,486,193 16,111,721,606

Liability for employee benefits ( PDCRB & Pension Fund) (13.5) 4,877,492,088 4,886,852,098

Provision for Income Tax (13.6) 4,304,829,924 3,842,331,849

Un-claimed deposits for 10 years or more held by the bank as on 31

December 2011

54

2011 2010

BDT BDT

Provision for other assets 3,269,581,484 9,102,800,674

Provision for Commission Receivable 60,300,000 -

Exporters' Foreign Currency Retention Quota 99,789,016 133,086,179

Provision against Off Balance Sheet Exposure 1,481,717,038 1,310,535,023

Provision for Exgratia/Bonus etc. 1,352,375,026 1,747,362,625

Foreign Correspondent Charges 5,880,591 13,773,005

Adjusting Account Credit Balance 319,470,315 231,134,517

Foreign Currency Fund Purchased A/C 2,534,390,122 5,378,776,267

Provision for NOSTRO A/C - 11,404,593

Vocational Women's Cr.Scheme Guarantee Fund 256,353 256,353

Agricultural Guarantee Against I.D.A. Credit -724 B.D. 19,562,611 19,562,611

Industrial Cr. Guarantee Claims received Fund 1,834,492 1,834,492

Bangladesh Bank Cr.Guarantee Fee I.D.A Cr. - 825 B.D. 178,997 178,997

I.D.A. Service Charges 765 B.D. 530,812 157,635

BSCIC Service Charges I.D.A Credit -825 B.D. 4,881,123 4,881,123

Revolving fund against I.D.A. Credit -725 B.D. 27,820,800 27,820,800

Sundry Deposits (H.O) 950,921,098 485,236,744

Interest Subsidy Account 3,585,618 3,585,618

SPL A/C's Proceeds of Import Documents Dr.of F.C( NBP) 787,657 787,657

Special accounts surplus Proceeds of Import Goods 8,479 8,479

Unclaimed Dividend (NBP) 149,577 149,577

AST-CIDA Guarantee Fund for MCDSF. 45,312 45,312

Mother Club Women's Cr.Guarantee Fund 2,554,409 2,554,409

Interest Reserve against Agri-Loan Interest Exemption 2004 45,278,572 45,278,572

BRDB/UCCA Crop Loan Intt. P.Intt. Reserve A/C.1994 68,885,308 62,546,240

BRDB/UCCA Crop Loan Interest Reserve A/C.2001 155,528,213 155,528,213

Balance Held with Foreign Bank abroad (Cr Balance) 4,835,968,739 7,802,694,708

Asian Clearing Union (NOSTRO) 419,647,393 26,599,893

Loan from IDA Credit No. 765 BD. 56,824,870 56,824,870

Sirajganj Integrated Rural Development Fund 34,561,878 34,252,105

Agro Based Industrial & Technology Dev. Proj. 16,840 1,094,623

Operational A/C RD--9. 8,568,827 57,238,370

Rebate A/C of Term Loans to NBFI 4,770,927 2,104,408

FC. Clearing A/C (Credit Balance) 14,416,171,204 3,739,987,730

Exchange Equalization 10,000,000 - CSR 50,000,000 -

Security Mergin - 3,500,000

I.D.A. Credit -3917 B.D. 186,441,322 126,073,772

BRDB/UCCA Crop Loan Intt.& P.Intt. Reserve A/C.-2007 84,247,526 84,247,526

Profit Repatriated from Overseas Branch - 11,398,459

Accounts Payable 689,257 -

Asian Clearing Union (VOSTRO) 503,862,582 468,068,959

103,576,395,695 104,763,796,145

OVERSEAS BRANCHES

55

2011 2010

BDT BDT

Profit Earned by Overseas Branch 48,859,063 27,473,281

Other Liabilities of Overseas Branch 103,617,900 67,579,446

Reserve Fund of Kolkata Branch 82,503,754 84,744,330

234,980,717 179,797,057

Total 103,811,376,412 104,943,593,203

13.1 Branch Adjustment

Sonali Bank General Account Balance (26,596,629,621) -

Main Office Account Balance (30,293,416,180) -

Sonali Bank General Account (RMS+) (160,893,666) -

Sonali Bank General Account (IFRMS) 63,208,242,569 -

6,157,303,102 -

13.1.(i)

Debit Credit Credit

- - -

Up to 3 months but within six months - - -

Up to 6 months but within 1 year 218,130.00 238,480.00 9,159.00

Up to 1 year but within 5 years 448,529.00 358,283.00 4,296.82

4,423.00 1,903.00 76.05

Provision required

50%100%

13.2 Accumulated Provision for Loans and Advances

i) Provision for Classified loans

Balance at the beginning of the period 45,481,672,457 43,380,164,155 Less: Loans written off which fully Provided for 7,920,261,774 565,057,504

37,561,410,683 42,815,106,651

Add: Recovery Loans which was Written off earlier 179,245,690 85,536,747 37,740,656,373 42,900,643,398

Add: Special Provision made during the year - - 37,740,656,373 42,900,643,398

Less: Recovered and Provision which no more required 172,956,373 - 37,567,700,000 42,900,643,398

Add: Net Charge on Profit Loss Account - 2,581,029,059 Balance at the end of the period 37,567,700,000 45,481,672,457

ii) Provision for Un-Classified loans

Balance at the beginning of the period 3,157,818,000 2,737,400,000 Less: Loans written off which fully Provided for - -

Branch adjustment account represents outstanding Inter-branch and Head Office transactions (Net)orginated but yet to beresponded at the balance sheet date. However, the status of unrespnded entries 0f 31.12.11 are given below:

Period of non reconciliation

- DoubtfulBad Loss

More than12 months but less than 24 months24 months above

Classification status

Less than 12 months

Over 5 years

Unresponded entries ( Taka)

Outstanding time period

-

5,655.87

-

6,639.00

Unresponded entries

Up to 3 months

Debit

In the financial statement which describes that SBL has un-responded branch adjusting balance which are un-responded (Debitbalance) for period more than 12 months but less than 24 months by BDT 5655.87 Core & over 24 month by BDT 129.51core. Bank has provided a letter extended time to adjust Inter Branch outstanding balances up to 30 June2011 and also instructthe bank to provide for provision any un-reconciled entries which will remain after 30 june 2012.

129.51

56

2011 2010

BDT BDT

3,157,818,000 2,737,400,000

Add: Recovery from the Previous Written Off Loans - - 3,157,818,000 2,737,400,000

Add: Special Provision made during the year - - 3,157,818,000 2,737,400,000

Less: Recovered and Provision which no more required - - 3,157,818,000 2,737,400,000

Add: Net Charge on Profit Loss Account 609,682,000 420,418,000

Balance at the end of the period 3,767,500,000 3,157,818,000

13.3 Provision against diminishing value of Investment

Balance at the beginning of the period 130,028,996 130,028,996

Less: Transferred in P/L account 130,028,996 -

- 130,028,996

Add: Provision made during the year - -

Balance at the end of the period - 130,028,996

13.4 Interest Suspense

Balance at the beginning of the period

Interest Reserve 16,058,204,939 17,115,027,127

Interest Reserve Penal Interest 53,516,667 58,854,299 16,111,721,606 17,173,881,426


Interest Reserve Penal Interest 25,432,570 1,240,610

3,662,195,891 4,386,935,958



2,889,447,465 4,202,052,812

Less: Amount written off during the year


Interest Reserve Penal Interest 419,354 3,588,422

1,000,983,838 1,247,042,966

Balance at the end of the period



15,883,486,193 16,111,721,606

13.5 Lability for employees benefit ( PDCRB & Pension fund)

Fair value of defined benefit obligation (a) 24,777,492,088 25,276,852,098

Less: Fair value of benefit plan assets (b) 19,900,000,000 20,390,000,000

4,877,492,088 4,886,852,098

a) Fair value of defined benefit obligation

Opening Balance

Sonali Bank Ltd. Employees Pension fund 1,660,086,017 1,613,997,132

Add: Amount transferred to "Interest Suspense" Account during the year

Less: Amount Recovered in "Interest Suspense" account during the year

57

2011 2010

BDT BDT

Sonali Bank Ltd. Employees PDCR Benefit fund 23,616,730,447 19,916,590,912

Provision for employees benefit 35,634 1,100,035,634

25,276,852,098 22,630,623,678

Transfer/Adjustment made during the year

Sonali Bank Ltd. Employees Pension fund - -

Sonali Bank Ltd. Employees PDCR Benefit fund - -

Provision for employees benefit - (1,100,000,000)

- (1,100,000,000)

Less: Payment made during the year

Sonali Bank Ltd. Employees Pension fund 203,042,510 155,263,890


Provision for employees benefit - -

3,899,215,315 1,943,856,401

Add: Creation during the year

Sonali Bank Ltd. Employees Pension fund 199,231,439 201,352,775


Provision for employees benefit - - 3,399,855,305 5,690,084,821

Closing Balance

Sonali Bank Ltd. Employees Pension fund 1,656,274,946 1,660,086,017


Provision for employees benefit 35,634 35,634 24,777,492,088 25,276,852,098

Provision Maintained 24,777,492,088 25,276,852,098

Provision Required 23,885,778,571 25,577,466,410

Provision Surplus/(Deficits) 891,713,517 (300,614,312)

Fund Investments

330,000,000 330,000,000

17,800,000,000 18,300,000,000

200,000,000 150,000,000

50,000,000 -

18,380,000,000 18,780,000,000

1,520,000,000 1,320,000,000

FDR- Local Office - 290,000,000

1,520,000,000 1,610,000,000

19,900,000,000 20,390,000,000

13.6 Provision for Income Tax

Balance at the beginning of the period 3,842,331,849 2,772,331,849

Less:payment during the period (500,000,000) -

Add :Amount transferred during the period 946,740,290 1,070,000,000

Add :Income tax on indian operation 15,757,785 - Balance at the end of the period 4,304,829,924 3,842,331,849

13.6(a) Consoidated Income Tax Expenses

b) Fair value of benefit plan assets

Sonali Bank Employees PDCRB Investment

Sonali Bank Employees Pension Fund Investment

FDR-Premier Bank Ltd

FDR-Local Office (SBL)

Bangladesh Govt. Treasury Bond

Bangladesh Govt. Treasury Bond

Total Fair value of benefit plan Assets

FDR- Bank Asia Ltd

58

2011 2010

BDT BDT

Sonali Bank Ltd. 962,498,075 -


Sonali Exchange Co. Inc. 1,810,085 - 994,742,010 -

13.7 Provision for Bonus/ Exgratia

Opening Balance 1,747,362,625 1,050,433,282

Less: Payment during the year 1,604,773,872 462,653,009

Add: Realised during the year 9,786,273 9,582,352

Add: Made during the year 1,200,000,000 1,150,000,000 4,561,922,770 2,672,668,643

13 (a) Consolidated Other Liabilities

Sonali Bank Ltd. 103,811,376,412 104,943,593,203



104,262,013,373 104,943,593,203

13.01(a) Sonali Investment Limited

Portfolio Margin Deposit Control 11,708,746 -

Payable for Client Sale 37,800,469 -

Liabilities for Expenses 5,428,828 -

Other Liabilities 183,659,803 -

Provision against Portfolio Loan 42,008,138 -

Provision against Investment in Shares 12,600,099 -

Liabilities for Income Tax 48,107,900 - 341,313,983 -

13.02(a) Sonali Exchange Co.,Inc

Remittance Payable to Beneficiary 104,553,965 -

Accured Interest 2,497,954 -

Accured Taxes 2,271,061 - 109,322,979 -

14 Share Capital

14.1 Authorized

200,000,000 share 100 each 20,000,000,000 10,000,000,000

14.2 Issued, subscribed and fully paid up Capital

112,500,000 ordinary shares of Taka 100 each 11,250,000,000 9,000,000,000

14.3 Capital Adequacy Ratio of the Bank

In terms of section 13(2) of Banking Companies Act, 1991 and Bangladesh Bank BRPD circular no. 09 dated 31 December 2008, required capital of the Bank at the close of business on 31 December 2011 was Taka 35,087.40 million as against core capital of Taka 28,625.05 million and supplementary capital of Taka 15,583.83 million making a total capital of Taka 44,208.88 million thereby showing a Surplass of capital/equity of Taka 9,121.45 million at the year end.

Details are shown below:

The entire amount of the paid up capital has been subscribed by the Government of the People's Republic of Bangladesh but each Director of the Bank is the holder of one symbolic Share of taka one hundred.

59

2011 2010

BDT BDT

Total risk weighted assets 350,874,300,000 358,965,600,000 Required capital @ 10% of risk weighted assets 35,087,430,000 32,306,904,000 Capital held:

Core capital (Tier-I) 28,625,051,453 16,970,532,545 Supplementary capital (Tier-II) 15,583,829,389 13,429,735,312 Total Capital 44,208,880,842 30,400,267,857 Surplus/ (deficit) 9,121,450,842 (1,906,636,143) Percentage of capital held against risk weighted assets 12.60% 8.47%

14.3.1 Capital requirement Required Held Required Held

Tier - I 5.00% 8.16% 4.50% 7.06%

Tier - II 5.00% 4.44% 4.50% 3.74%

10.00% 12.60% 9.00% 10.80%

14.3.2 Core capital (Tier-I)

Paid up capital 11,250,000,000 9,000,000,000

Statutory reserve 5,924,918,206 3,956,476,533

General reserve 47,000,000 47,000,000

Retained earnings 12,795,033,247 4,806,256,012

Deduction (Invesment subsidiaries which are not condolidated-50% (1,391,900,000) (839,200,000)

28,625,051,453 16,970,532,545

Supplementary capital (Tier-II)

General provision for unclassified loans 3,767,500,000 3,157,818,000

Assets revaluation reserve up to 50%(Fixed Assets) 10,430,312,351 9,800,582,289

Revaluation Reserve for securities up to 50% 968,400,000 -

General provision for off balance sheet exposures 1,481,717,038 -

Revaluation Reserve for equity instrument up to 10% 327,800,000 1,310,535,023

Others - -

Deduction (Invesment subsidiaries which are not consolidated-50% (1,391,900,000) (839,200,000)

15,583,829,389 13,429,735,312

44,208,880,842 30,400,267,857

14.3.3 Calculation of Revaluation Reserves on HTM Securities

Opening balance 10,767,340,286 4,993,072,592

Addition During the year 6,754,485,965 6,754,485,965

Disposal during the year from HTM 980,218,271 980,218,271 Closing balance 16,541,607,980 10,767,340,286

14.4 Computation of Risk-Weighted Asset

a. Balance Sheet ExposureSl Exposure Type BB's Rating

Grade*Risk Weight Exposure Exposure

1 2 3 4 5 5

Capital surplus of SBL as on 31 December 2010 has been reported BDT 646 crore. The Bank has not considered goodwill ofBDT 5,574.32 crore in calculating tier – 1 capital as per Bangladesh Bank Basel II guidelines.

In terms of Bangladesh Bank BRPD Circular No. 03 dated March 12, 2008 has been decided to add a new component namelyRevaluation Reserves of HTM Securities upto 50% of the revaluation reserves.

60

2011 2010

BDT BDT

a) Cash 0 355.01 512.83 b) 0

12,637.50 8,232.18

c) . .

d) 0

- -

e)

0- -

1 0.20 - - 2,3 0.50 - - 4,5 1.00 - - 6 4.50 - -

Unrated 0.50 - - f) 1 0.20

2,921.82 4,405.01

2,3 0.50

4,5 1.00

6 1.50

Unrated 0.50 5,437.35 928.44 g) Claims on Banks & NBFI :

i) Maturity over 3 months 1 0.20 130.00 40.00 2,3 0.50 391.08 848.00 4,5 1.00 100.00 6 1.50 -

Unrated 1.00 203.75 952.73 ii) Maturity less than 3 months(Nostro) 0.20 4,881.86 2,422.80

h) 1 0.2061.45 75.68

2 0.50 1,138.04 107.07 3,4 1.00 50.27 34.07 5,6 1.50

Unrated 1.25 5,642.58 4,136.72 i)

PSE N/ABanks & NBFIs

N/A

Corporate N/ARetail &Small N/A

1,119.06 693.27

i) IBRD, IFC, ADB, AFDB, EBRD,IADB, EIB, EIF, NIB, CDB, IDB, CEDB

Claims on other Sovereigns & Central Banks

Claims on Bangladesh Government and Bangladesh Bank

Claims on Multilateral Development Banks (MDBs):

ii) Other MDBs

Claims on Public Sector Entitles(Other than Government) inBangladesh

Claims on Bank for International Settlements,International Monetary Fund & European Central Bank

Claims under Credit Risk Mitigation

Claims on Corporate (including unquoted Share+Debenture)

61

2011 2010

BDT BDT

Consumer finance

N/A

Reesidential property

N/A

Commercial Real Estate

N/A

j) 0.755,743.21 7,167.03

k) Consumer Finance 1.00 443.78 332.79 l) Claims fully secured by residential property 0.50 41.03 45.18

m) 1.00

n)

1.50949.05 996.76

1.00- -

0.501,708.89 1,852.69

1.00

4.30 74.01

0.75

- -

o) 1.25 - -

p) 1.25

221.87 51.71

q) 1.50

r) 1.002,302.64 1,463.97

s) 1.00

t) 0.00 8,571.60 2,468.31 0.20 2,674.85 2,289.46

Claims fully secured by commercial real estate

Claims on all fixed assets under operating lease.All other assets

1. The Claim (other than claims secured by eligible residential property) that is past due for more than 90 days and/or impaired will attract risk weight as follows:

Past Due Claims (Risk weights are to be assigned net of specific provision) :

Claims categorized as retail portfolio & SME (excluding consumer loan)

Investment in premises, plant and equipment and all other fixed assets

Where specific provisions are less than 20 per cent of the outstanding amount of the past due Claim;

Investments in venture capital

3. Loans and Claims fully secured against residential property that are past due for by 90 days and/or impaired and specific provision held there-against is more than 20% of outstanding amount.

Unlisted equity investments and regulatory capital instruments issued by other banks (other than those deducted from capital) held in banking book

2. Claims fully secured against residential property that are past due for more than 90 days and/or impaired and specific provision held there-against is less than 20% of outstanding.

Where specific provisions are no less than 20 per cent of the outstanding amount of the past due Claim;

capital market exposures

Where specific provisions are more than 50 per cent of the outstanding amount of the past due Claim;

62

2011 2010

BDT BDT

1.00 1,648.25 11,026.35 Total: 59,279.24 51,257.06

b. Off Balance Sheet Exposure (Taka in Crore)

Sl Exposure Type BB's Rating Grade*

Risk Weight

Exposure Exposure

1 2 3 4 5 5a)

0 566.40 1,264.47 b)

- - c)

0 - - d)

- -

0 - -

1 0.20 - -

2,3 0.50 - -

4,5 1.00 - -

6 4.50 - -

Unrated 0.50 - - e) 1 0.20 - -

2,3 0.50

4,5 1.00

6 1.50

Unrated 0.50 - -

Unrated 0.50 2,046.40 1,148.59 f)

1 0.20

2,3 0.50

4,5 1.00

6 1.50Unrated 1.00 23.60 13.80

0.20g) 1 0.20

2 0.50 - -

3,4 1.00

5,6 1.50

Unrated 1.25 208.20 400.57 h) 0.75

240.57 167.18 i) 1.00

Claims on Public Sector Entitles(Other than Government) inBangladesh

ii) Other MDBs

Claims on Bangladesh Government and Bangladesh Bank

Consumer finance

Claims on Bank for International Settlements, International Monerary Fund and European Central Bank

Claims on other Sovereigns & Central Banks

Against retail portfolio & SME (excluding consumer loan)

Claims on Corporate (excluding equity exposure)

Claims on Banks :

i) IBRD, IFC, ADB, AFDB, EBRD,IADB, EIB, EIF,NIB,CDB,IDB, CEDB

ii) Maturity less than 3 months

i) Maturity over 3 months

Claims on Multilateral Development Banks (MDBs):

63

2011 2010

BDT BDT

j) 0.50

k) 1.00

l) 1.50

m) 1.00

Total : 3,085.17 2,994.61

c. Capital Charge for Market Risk

Sl.Capital Charge for

Specific RiskCapital Charge for

General Market Risk

Capital Charge for General Market

Risk

2 3 3

A. Interest Rate Related instruments - 93.14 93.14 B. Equities 80.92 80.92 161.84 C. Foreign Exchange Position - 290.99 290.99

Total (A+B+C): 80.92 465.05 545.97

d. Capital Charge for Operational Risk

Sl. YearGross

Income(GI) Average GI* Average Gl Alpha

A. 2011 2588.88 2,623.11 393.47 15%

B. 2010 2058.83C. 2009 1676.59

Interest Suspense on 31st December 1545.03

7869.33 393.47

Total Risk Weighted Assets (RWA)

A. Credit Risk on

Balance Sheet Exposure 24,205.65 1.00 1.00

Off Balance Sheet Exposure 1,487.48 1.00 1.00 B. Market Risk 545.96 11.11 11.11 C. Operational Risk 393.47 11.11 11.11

14.5 Minimum Capital Requirement Under Basel II

Item no.

Sl.

1 A.

2 1 2628.22

3 2 1716.97

4 3 -

5 4 4345.19

6 B. 35087.43

7 C. 12.38

8 D. 7.49

9 E. 4.89Supplementary Capital to RWA (A2 / B)*100

Particulars

Claims fully secured by commercial real estate

Investment venture capital

Total Risk Weighted Assets (A+B+C)

Details

All other assests

1

Total GL

Claims fully secured by residential property

Total Eligible Capital (1+2+3) :

Total Risk Weighted Assets (RWA):

Capital Adequacy Ratio (CAR) (A4 / B)*100

Core Capital to RWA (A1 / B)*100

Tier-3 (eligible for market risk only)

Eligible Capital :

Tier-1 (Core Capital )

Tier-2 (Supplementary Capital)

Particulars

64

2011 2010

BDT BDT

10 F. 3508.74

14.6 Name of Directors and their Shareholding

Sl No Name of the directors StatusNo of shares

2011 No of shares 2010 Amount @ 100 Amount @ 100

1 Mr. Quazi Baharul Islam Chairman 1 1 100 100

2 Mr. Md. Shahid Ullah Mia Director 1 1 100 100

3 Dr. Nasreen Khundkar Director 1 1 100 100

4 Mr. Md. Anwar Shahid Director 1 1 100 100

5Mr. A.S.M Nayeem, FCA, FCCA Director 1 1 100 100

6 Mr. K. M. Zaman Romel Director 1 1 100 100

7Mr. M. Lutfur Rahman Khan Director 1 1 100 100

8 Mr. Kashem Humayun Director 1 1 100 100

9Mr. Shaimum Sarwar Kamal Director 1 1 100 100

10Advocate Sattayendra Chandra Bhakta Director 1 1 100 100

11 Most. Jannat Ara Henry Director 1 1 100 100

12 Mr. Suvas Singho Roy Director 1 1 100 100

12 12 1,200 1,200

15 Statutory Reserve

Opening Balance 3,956,476,533 3,566,476,533

Add: Transferred during the year (20% of pretax profit ) 1,968,441,673 390,000,000

5,924,918,206 3,956,476,533

16 Surplus in Profit and Loss Account/Retained Earnings

Opening balance 4,806,256,012 10,821,607,786

Less: Shortfall of amortization - 4,650,841,460

Restated opening balance 4,806,256,012 6,170,766,326 Profit during the year

Net Profit After Tax 9,957,218,908 (974,510,314) Transfer to statutory reserve (1,968,441,673) (390,000,000)

7,988,777,235 (1,364,510,314)

Total Retained Surplus 12,795,033,247 4,806,256,012

Transfer from Intangible Assets- Valuation Adjustment A/C - - Transfer to Reserve for Unforeseen Losses - - Issue of bonus share - - Balance at the end of the period 12,795,033,247 4,806,256,012

16(a) Consolidated Surplus in Profit/(Loss) Account

Sonali Bank Ltd.(Note-17) 12,795,033,247 4,806,256,012 Sonali Investment Ltd. 30,706,912 -

Closing Balance

Minimum Capital Requirement (MCR)- as on December 31, 2010

65

2011 2010

BDT BDT

Sonali Exchange Co.,Inc 249,258 - 12,825,989,417 4,806,256,012

Add: Exchange Difference 24,932 -

12,826,014,349 4,806,256,012

17 Other Reserves 26,122,351,452 19,648,164,577

17.1 Reserve for Unforeseen Losses & Others: 47,000,000 47,000,000

17.2 Asset (investment) Revaluation Reserve

Balance at the beginning of the period 10,767,340,286 4,993,072,592 Add: Profit on Revaluation of Govt. Treasury Bond (2,076,090,220) (980,218,271) Add: Profit on Revaluation of Govt. Treasury Bill - - Add: Profit on Revaluation of Other Investments (3,476,523,316) 6,754,485,965 Add: Asset Revaluation (investment) reserve - - Addition during the year (5,552,613,536) 5,774,267,694

Balance at the end of the period 5,214,726,750 10,767,340,286

17.3 Assets (Fixed Assets) Revaluation Reserve

Balance at the beginning of the period 8,833,824,291 8,833,824,291 Addition during the year 12,026,800,411 - Balance at the end of the period 20,860,624,702 8,833,824,291

Total 26,122,351,452 19,648,164,577

Asset Revaluation (investment) Reserve

18 Contingent Liabilities & Commitments

Letters of guarantee (Note18.1) 6,131,165,629 6,790,367,716 Irrevocable Letters of Credit (Note18.2) 124,710,753,123 114,168,814,894 Bills for collection (Note18.3) 17,329,785,045 10,094,319,715

148,171,703,797 131,053,502,325

18.1 Letters of guarantee

Directors or officers - - Government 4,763,122,666 5,539,053,839 Banks and other financial institutions 124,683,378 87,539,435 Others: - - Domestic 1,216,520,159 1,140,272,201 Overseas 26,839,426 23,502,241

6,131,165,629 6,790,367,716

18.2 Irrevocable Letters of Credit

(i) Government

Domestic 35,187,288,824 35,402,983,665 Overseas - -

Claims lodged with the bank company, which is not recognized as loan;

Money for which the bank is contingently liable in respect of guarantee issuedfavoring:

The amount represents revaluation of Treasury Bill/Bond (HTM) as on 31-12-

2011

66

2011 2010

BDT BDT

35,187,288,824 35,402,983,665

Less: Margin - - Sub Total 35,187,288,824 35,402,983,665

(ii) Bank and Other Financial Institutions

Domestic 4,299,457,231 3,541,884,121 Overseas - -

4,299,457,231 3,541,884,121 Less: Margin - - Sub Total 4,299,457,231 3,541,884,121

(iii) Others

Domestic 85,204,297,070 75,223,380,504

Overseas 19,709,998 566,604

85,224,007,068 75,223,947,108

Less: Margin - -

Sub Total 85,224,007,068 75,223,947,108

Total of (i+ii+iii) 124,710,753,123 114,168,814,894

18.3 Bills for collection

Bills for collection (Local) 1,592,402,300 1,696,621,906 Bills for collection (Foreign) 15,737,382,745 8,397,697,809

17,329,785,045 10,094,319,715

19 Income StatementIncome:

Interest, discount and similar income (19.1) 35,348,466,658 28,502,860,265 Dividend Income 64,076,855 251,816,630 Fee, commission and brokerage (19.2) 7,027,313,451 8,033,411,613 Gains less Losses arising from dealing securities - - Gains less Losses arising from investment securities - - Gains less Losses arising from dealing in foreign currencies 351,820,809 1,712,466,026 Income from non-banking assets - - Other operating income 2,860,061,530 1,436,254,869 Profit less Loss on interest rate changes - -

45,651,739,303 39,936,809,403

Expenses

Interest, fee and commission 22,408,490,846 19,293,451,508 Losses on loans and advances/Assets (Intangible Assets) 14,935,000,000 2,862,200,000 Administrative expenses (19.3) 8,820,558,660 9,865,708,561 Other operating expenses 1,846,837,140 1,656,839,206 Depreciation on banking assets 349,909,466 254,179,220

48,360,796,112 33,932,378,495

Operating profit (2,709,056,809) 6,004,430,908

19.1 Interest, discount and similar income

Interest income 27,858,144,333 22,644,598,263 Discount Income - - Interest income on treasury bills, reverse repo, bonds 7,448,678,384 5,823,177,468 Interest on debenture 41,643,941 35,084,534

35,348,466,658 28,502,860,265

67

2011 2010

BDT BDT

19.2 Fees, commission and brokerage

Fees 69,181,421 25,208,234 Commission 6,958,132,030 8,008,203,379 Brokerage - -

7,027,313,451 8,033,411,613

19.3 Administrative expenses

Salaries and allowances 7,950,235,276 9,084,802,461 Rent, Taxes, Insurance, Electricity etc. 597,208,721 500,713,404 Legal expenses 26,052,472 30,380,407

Postage, Stamps, Telecommunication etc. 60,694,119 80,898,613

Stationery, Printing, Advertisement etc. 172,945,089 153,953,292 Managing Directors' salary and fees 6,171,743 3,651,612 Directors' fees 4,517,009 9,158,772 Auditors' fees 2,734,231 2,150,000

8,820,558,660 9,865,708,561

20 Interest Income

On Loan and Advances (20.1) 25,456,814,583 20,848,814,601 Interest on balance with other banks and financial institutions (20.2) 2,474,788,875 1,135,624,537

Interest received from foreign banks (20.3) - 1,038,926

Others (20.4) 338,353,062 910,936,829

Interest Income of Indian operation 23,075,074 28,293,031,594 22,896,414,893

Less: Interest Income transferred to Interest Suspense A/C 390,887,261 55,006,16427,902,144,333 22,841,408,729

20.1 Loan and Advances:

Loans

On Demand 626,900,414 445,593,050

On Small Loan 52,642,504 46,529,847

On House Building Loan (General) 99,246,124 85,154,825

On House Building Loan (Staff) 850,778,862 948,058,139

On Other Staff Loan 159,659,117 144,731,490

On Loan Under SBICS (Project) 2,935,718,973 2,291,161,066

On External Credit 19,582,970 10,846,322

On Working Capital to Industries -Hypo 3,133,144,247 2,204,701,236

On Working Capital to Industries -Pledge 303,956,841 259,635,073

On Loan Under SB Agro based Ind. Credit Scheme 947,169,981 192,431,553

On Working Capital to Agro based Ind. -Hypo 754,681,449 1,030,415,789

On Working Capital to Agro based Ind. -Pledge 421,486,383 331,911,420

On Agricultural Loan 1,674,833,984 1,246,137,049 On Micro Credit 566,376,429 312,270,451

On Loan against Imported Merchandise (LIM) 156,704,013 185,672,961

On Loan Against Trust Receipts (LTR) 3,272,303,137 2,029,471,788

On Force Loan against Back to Back L/C 1,662,974,462 1,868,938,307

On Bridge Finance 490,885 43,168 On Interesr Subsidy - 67,242,701

On Small Business Loan Scheme 74,921,591 49,632,732

On Special Small Loan Program 111,782,578 93,779,004

68

2011 2010

BDT BDT

On Term Loan to Bank and NBFI 121,684,030 121,217,878

On Probasi Karmo Sangsthan Prokalpo 2,488,042 3,329,192

On education Loan 81,093 -

On Lease Finance 13,814,773 1,589,283

On SME Finance(WC to Ind.Serv.Trad.) 51,647,181 4,299,090

On SME Finance 66,133,561 5,588,419

On Small Farming Loan 8,862,186 6,193,840

On Loan for L/C WES 4,751,763 1,009,809 18,094,817,573 13,987,585,482

Cash Credit

On Cash Credit General-Hypo 2,412,385,222 1,715,241,670

On Cash Credit General-Pledge 925,303,370 616,218,626

On Packing Cash Credit 329,173,094 237,564,982 3,666,861,686 2,569,025,278

Overdraft

On Overdraft Loan 1,025,893,662 945,878,624 1,025,893,662 945,878,624

Bills Discounted & Purchased

On Payment against Document 1,956,952,613 1,789,147,821

On Foreign Bills Purchased/Discounted-Clean 229,010,795 1,478,240,738

On Foreign Bills Purchased/Documentary-Documentary 483,278,254 78,936,658

2,669,241,662 3,346,325,217

Total 25,456,814,583 20,848,814,601

20.2

Interest on FDR with Other Bank 2,474,788,875 1,135,624,537

Interest on STD with Other Bank - -

2,474,788,875 1,135,624,537

20.3 Interest received from foreign banks

On B.H.W. Foreign Bank - 1,038,926

20.4 Others income

On Advance Rent 13,295,289 7,971,456

On Interest Recovered from Interest Suspense A/c 16,107,940 22,225,563

On Other Interest Income - 251,816,630

On Money at Call 308,949,833 628,923,180

338,353,062 910,936,829

20 (a) Consolidated Interest Income

Sonali Bank Ltd.(Note-20) 27,902,144,333 22,841,408,729



28,092,050,860 22,841,408,729

21 Interest paid on deposits and borrowings etc.

Interest on Deposits (21.1) 21,489,034,424 18,661,300,009

Interest paid on Borrowings (21.2) 230,729,032 8,558,580

Interest on Foreign Banks Account (21.3) 65,949 97,688

Interest on others (21.4) 669,942,819 461,839,618

Interest paid on Deposit and borrowings of indian operation 12,615,350

Interest on balance held with other banks and financial institutions

69

2011 2010

BDT BDT

22,402,387,574 19,131,795,895

21.1 Interest paid on Deposits

Fixed deposits 10,455,936,040 8,370,132,855

Savings deposits 5,487,009,076 4,901,596,214

Short term deposits 857,607,309 1,620,934,779

Deposit pension scheme 180,588,311 212,572,271

S.B Special deposit & pension scheme 19,511,614 33,611,169

Staff Provident fund 1,016,060,109 932,840,082

External Credit (Exim Bank India) 10,909,473 6,930,793

Foreign currency deposits 1,251,434 7,397,415

Call deposit 16,161,942 19,374,335

Sonali Deposit Scheme 773,085,420 595,509,258

Education Deposit scheme 431,047,165 331,460,684

Medicare Deposit Scheme 881,736,371 654,061,384

Rural Deposit Scheme 105,707,261 60,042,073

Monthly Earning Scheme 375,145,757 238,465,569

School Banking Scheme 177,367,511 -

Double Benefit Scheme 634,604,707 644,579,798

Daily Profit Scheme 10,222,228 9,737,690

Retirement Saving Scheme 3,007,550 -

Non Resident Deposit Scheme 1,501,782 70,664

Marriage Saving Scheme 50,573,364 21,982,976

21,489,034,424 18,661,300,009

21.2 Interest paid on Borrowings

On Bangladesh Bank Demand Loan - -

Call Loan 177,031,528 6,681,736

REPO. - 370,879

Others 53,697,504 1,505,965

230,729,032 8,558,580

21.3 Interest paid on Foreign Banks Account

On Foreign Bank A/C 65,949 97,688 21.4 Interest paid on others

Charged on Written off Loan 638,573,371 430,726,974

Interest paid on CRR - -

Other Interest 31,369,448 31,112,644

669,942,819 461,839,618

21 (a) Consolidated Interest paid on deposits and borrowings etc.

Sonali Bank Ltd.(Note-21) 22,402,387,574 19,131,795,895 Sonali Investment Ltd. 13,376,710 - Sonali Exchange Co.,Inc - -

22,415,764,284 19,131,795,895

22 Income From Investments Interest on Treasury Bill 422,882,616 342,077,573Interest on debentures 41,643,941 35,084,534

70

2011 2010

BDT BDT

Interest on Treasury Bond 6,809,991,903 5,350,101,230 Interest on Reverse Repo 215,803,865 130,998,665 On investment Income of indian operation 7,395,776 Dividend on Investment in Shares with SB London (UK) Ltd. - - Dividend income Others 64,076,855 37,944,995

7,561,794,956 5,896,206,997

22(a) Consolidated Investment Income

Sonali Bank Ltd.(Note-22) 7,561,794,956 5,896,206,997 Sonali Investment Ltd. (88,326,665) - Sonali Exchange Co.,Inc - -

7,473,468,291 5,896,206,997

23 Commission, Exchange and Brokerage

Commission (Note-23.1 ) 6,984,953,060 7,883,204,294 Exchange (Note-23.2 ) 419,083,679 1,663,072,736 Commission ,Exchange.& Brokerage of Indian Operation 83,009,362

7,487,046,101 9,546,277,030

23.1 Commission

Commission A/C Cr. Balance

On Foreign Bills Purchased/Negotiated 954,823,113 226,053,589

On Inland DD,MT,TT Issued/Cancelled 561,722,148 587,009,060

On Inland DD Purchased 28,840,060 27,963,127

On Govt. Receives & Disbursement 1,576,274,429 1,351,563,492

On Commission on Inland L/C Opened 923,208,840 1,164,899,707

On Purchased & Sale of Shares/Securities 452,227,149 2,042,462,782

On Inland Bills & Cheque Collection 135,358,357 190,981,098

On Inland Bank Guarantee Issued 87,956,512 39,210,966

On Payment Order 190,487,027 179,154,557

ON Card 29,142,814 48,678,382

On Incidental Charges 153,419,946 198,798,789

On Lockers Fees 8,753,620 9,739,494

On Payment of Food Procurement Bills 119,608,896 87,469,997

On Foreign DD,MT,TT Issued Cancelled 9,253,485 4,263,292

On Foreign DD Purchased/TT Collection 120,208 149,002

On Foreign L/C Opened 165,479,854 53,792,699

On Foreign Bills & Cheque Collection 9,194,443 2,607,230

On Foreign Bank Guarantee Issued 3,853,087 18,927,721

On Others 1,565,574,268 1712124544On Wage Earners Development Bond 13,839,526 24,408,856

6,989,137,782 7,970,258,384

Less: Commission A/C Dr. Balance

On Debt Recovery Agent 4,184,722 7,815,863

Paid to SECI - 79,238,227 4,184,722 87,054,090

Total 6,984,953,060 7,883,204,294

23.2 Exchange

Exchange gain

71

2011 2010

BDT BDT

Gain on F. Currency Transaction 560,445,689 1,779,599,520 Gain on F. Currency Revaluation 40,096,243 105,484,813

Gain on Others 69,181,421 25,208,234

669,723,353 1,910,292,567

Less: Exchange Loss

Foreign Currency Transaction 248,720,904 172,618,307

Foreign Currency Revaluation 219 -

Loss on Others 1,918,551 74,601,524

250,639,674 247,219,831

419,083,679 1,663,072,736

23 (a) Consolidated Commission, exchange and brokerage




7,703,669,610 9,546,277,030

24 Other Operating Income

Profit of Islamic windows 1,836,493 -

Other operating income of Indian Operation 2,645,934 -

Rent Received 15,282,988 5,673,414

Others 2,840,296,115 1,430,581,455

2,860,061,530 1,436,254,869

24 (a) Consolidated Other Operating Income


Sonali Investment Ltd. 667,225 -

Sonali Exchange Co.,Inc 830,787 -

2,861,559,542 1,436,254,869

25 Salary & Allowances

Salaries (Basic Pay, House Rent & Other Allowance) 5,718,269,157 4,798,524,311

Contribution to Pension & Gratuity Fund 1,237,663,629 2,554,722,110

Bank's contribution to provident fund 123,015,258 110,000,906

Medical Attendance. 229,713,588 174,276,851

Incentive Bonus/Monetary benefit/Exgratia to Staff - 1,150,000,000

Bonus to Staff 566,541,555 528,770,651

Overtime 37,024,426 29,262,237

Salaries and allowances of Indian operation 38,007,663 -

7,950,235,276 9,345,557,066

25 (a) Consolidated Salaries and Allowances




72

2011 2010

BDT BDT

8,140,545,647 9,345,557,066

26 Rent, Tax, Insurance, Electricity, etc.

Rent 220,296,727 198,483,314

Taxes 100,228,243 62,264,726

Insurance 202,220,468 187,449,532 Power and electricity 62,621,359 52,515,832 Rent, taxes, insurance, electricity etc. of Indian operation. 11,841,924 -

597,208,721 500,713,404

26 (a) Consolidated Rent, taxes, insurance, electricity etc.

Sonali Bank Ltd.(Note-26) 597,208,721 500,713,404



604,406,721 500,713,404

27 Legal expenses

Law charges 26,012,725 30,380,407

Law charges of Indian operation 39,747 -

Other professional charges - -

26,052,472 30,380,407

28 Postage, Stamps, Telecommunication

Postage &Telegram, telex and fax etc. 11,221,151 39,106,231

Stamp 820,023 330,314

Telephone 44,594,797 41,462,068

Postage, stamps, telecommunication of Indian operation 4,058,148 -

60,694,119 80,898,613

28 (a) Consolidated Postage, Stamps,Telecommunication


Sonali Investment Ltd. 544,944 -


61,239,063 80,898,613

29 Printing, Stationery and Advertisement, etc.

Stationery & printing 150,957,264 135,991,793

Advertisement 20,871,768 17,961,499

Stationery, printing and advertisement etc. of Indian operation 1,116,057 -

172,945,089 153,953,292

29 (a) Consolidated Printing, Stationery and advertisement etc.

Sonali Bank Ltd.(Note-29) 172,945,089 153,953,292 Sonali Investment Ltd. 857,201 - Sonali Exchange Co.,Inc - -

173,802,290 153,953,292

30 Chief executive's salary and fees

Chief executive's salary and fees 4,800,000 3,651,612 Chief executive's salary and fees of Indian operation 1,371,743 -

6,171,743 3,651,612

73

2011 2010

BDT BDT

31 Directors' Fees

Directors' fees 4,503,082 4,998,772

Directors' fees of Indian operation 13,927 -

Board meeting expense - -

Executive committee meeting expense -

- -

4,517,009 4,998,772

31 (a) Consolidated Directors fees & Honorium




5,541,409 4,998,772

32 Audit fees Audit fee of Indian operation 584,231 - Statutory Audit fee 2,150,000 2,150,000

2,734,231 2,150,000

32 (a) Consolidated Audit fees


Sonali Investment Ltd. 50,000 - Sonali Exchange Co.,Inc - -

2,784,231 2,150,000

33 Depreciation and Repairs at Bank's Property

Depreciation:

A) Premises (Including Land & Building)

Premises 32,023,277 - Building - 33,272,553

32,023,277 33,272,553

B) Dead stock

Furniture 51,972,442 56,728,963

Electric Installation 74,632,132 47,358,155

Computer 157,775,184 140,480,568

Type Writer Machine 435,506 266,864

Motor Car & Other Vehicle 31,471,080 15,206,770

Library 291,767 110,742

316,578,111 260,152,062

C) Dead Stock of overseas Branches

Kolkata Branch 1,253,110 -

Siliguri Branch 54,969 -

1,308,079 -

Total 349,909,466 293,424,615

Each Director is paid Tk.5,000 per meeting for attendance as per Bangladesh Bank's BRPD Circular no.03 dated 18

January 2010.

74

2011 2010

BDT BDT

Repairs:

Repairs to Bank's Assets 64,284,704 41,330,308

Repairs to Bank's assets of Indian operation 96,122

64,380,826 41,330,308

414,290,292 334,754,923

33 (a) Consolidated Depreciation and repair of bank's property



Sonali Exchange Co.,Inc 384,655 -

420,364,042 334,754,923

34 Other Expenditure

Repairs to Rented Property 4,841,001 2,716,480

Conceltent fees 240,000 4,160,000

Books and News Paper 15,983,341 15,393,696

Pay of Police guards. 227,870,141 214,941,749

Motor Car Running and Maintenance 81,579,764 65,760,163

Entertainment 39,793,171 36,419,370

Sundries 447,898,803 363,008,438

Traveling Expenses 121,096,159 80,396,773

Lunch Subsidy 621,438,151 633,080,273

Donation/Subscription 25,484,000 46,286,308

Liveries to Staff 16,668,855 14,798,742

Sports 3,765,039 3,613,431

Cash Transportation 45,588,635 41,186,605

Business Development 4,617,979 40,511,038

Death relief Grant fund 10,800,000 -

Honorarium to staff 1,677,733 1,086,457

Generator Maintanance 24,197,069 10,242,962

Staff welfare 9,705,171 3,462,237

Operation & Maintenance Cost of Executive Car Loan 71,923,411 58,207,606

Provisioning expenses of NOSTRO A/C - 7,831,569

Other expenses of Indian operation 7,287,890 -

1,782,456,313 1,643,103,897

34 (a) Consolidated Other Expanditure

Sonali Bank Ltd.(Note-35) 1,782,456,313 1,643,103,897 Sonali Investment Ltd. 13,890,034 - Sonali Exchange Co.,Inc - -

1,796,346,347 1,643,103,897

35 Provision Against Loans and Advances during the year

172,956,373 2,581,029,059

Provision for Unclassified Loans and Advances (609,682,000) 420,418,000

Total amount of provision made during the year (436,725,627) 3,001,447,059

35(a) Consolidated Provision for Loans and Advances

Provision for Classified Loans & Advances

75

2011 2010

BDT BDT

Sonali Bank Ltd.(Note-36) (436,725,627) 3,001,447,059

Sonali Investment Ltd. (28,923,324) -

Sonali Exchange Co.,Inc - - (465,648,951) 3,001,447,059

36

Dealing securities

Quoted - - Unquoted - -

Investment securities

Quoted 130,028,996 - Unquoted - -

130,028,996 -

130,028,996 -

36(a) Consolidated Provision for diminution in value of Investments

Sonali Bank Ltd.(Note-37) 130,028,996 -

Sonali Investment Ltd. (479,939) -

Sonali Exchange Co. Inc - -

129,549,057 -

37 Other provisions

Provision for other assets 5,833,163,503 371,903,000

Provision against Off Balance Sheet exposure (38.01) (171,182,015) 632,281,181

Provision for Commission Receivable (60,300,000)

Provision for NOSTRO A/C - -

Provision for loss on Revaluation of Foreign Currency held - -

Provision for Bonus & Exgratia (1,200,000,000) -

Provision for X-checker (10,000,000)

CSR (59,120,600) - Other provisions of Indian operation (689,257)

4,331,871,631 1,004,184,181

37.1

38

Exchange 377,476,352 1,664,142,118

Other operating income 2,860,061,530 1,436,254,869 3,237,537,882 3,100,396,987

39

Rent (225,845,098) (193,365,206) Taxes (100,282,462) (62,209,730) Insurance (202,220,468) (187,449,532) Rent,Taxes Insurance of Indian operation (11,841,924) - Law Charges (26,060,130) (30,062,493)

Provision against Off Balance Sheet exposure charge 1% of total off balancesheet exposure.

Payment for Other Operating Activities

Cash Received from Other Operating Activities

Provision for diminution in value o investment

76

2011 2010

BDT BDT

Postage (12,032,948) (39,073,867) Stamp (820,023) (330,314) Telephone (44,594,797) (41,462,068) Postage,Stamp,Telephone of Indian operation (4,058,147) - Auditors' Fees (2,734,231) (2,150,000) Advertisement (20,871,768) (17,961,499) Stationert, Printing Advertisement of Indian operation (1,116,056) - Directors' Fees (4,517,009) (4,998,772) Consultancy fee (240,000) (4,160,000) Amortization of Intangible Assets - (2,862,200,000) Repairs to Bank's Property (64,380,826) (41,330,308) Depreciation (349,909,466) (293,424,615) Repairs to rented property (4,841,001) (2,716,480) Pay of Police Guards (227,870,141) (214,941,749) Motor Car Running (81,579,764) (65,760,163) Executive Car Loan (71,923,411) (58,207,606) Entertainment (39,793,171) (36,419,370) Sundries (781,439,941) (399,739,083) Traveling Expenses (121,096,159) (80,396,773) Lunch Subsidy (621,438,151) (633,080,273)

Donation (25,484,000) (46,286,308) Liveries to Staff (16,668,855) (14,798,742) Sports (3,765,039) (3,613,431) Cash transportation (45,588,635) (41,186,605) Generator Maintanance (24,197,069) (10,242,962) Business Development (4,617,979) (40,511,038) Death Relief Grant Scheme (10,800,000) - Other expenses of Indian operation (7,287,890) - Provisioning Expenses to NOSTRO A/C - (7,831,569)

(3,159,916,559) (5,435,910,555)

40 Increase / (Decrease) of Other Assets

Closing other assets

Sonali Exchange Co, Incorporated - 38,096,685

Long term Loan to Subsidiary Company(SECI). (16,095,000) (94,354,695)

Long term Loan to SIL Dhaka. - -

Long term Loan to SIL Dhaka. - (170,000,000)

Stamps in hand 730,794 (2,593,477)

Stationery in hand (1,170,482) (28,499,999)

Advance Rent (21,641,556) (20,975,477)

Branch Adjustment 27,235,139,535 (11,153,685,490)

Suspense account (1,888,170,294) (1,329,349,540)

Draft Payable account (Ex-Advice) 419,862,935 255,350,582

Govt. Draft Payable Account (Ex-Advice) 29,668,711 (23,835,719)

Protested Bills (8,623,664) (570,252)

Wage Earners' Fund Purchased Adj. A/C. 2,912,125,781 (3,126,330,995)

Agri-Loan Other Exp.Exemption A/C-2004 (7,687,015) 32,218,156

77

2011 2010

BDT BDT

Exchange Equalisation (257,512,391) (21,967,663)

Agri-Loan Interest Exemption A/C-2004 (4,289,073) 5,782,716

Agricultural Loan Exemption-1991. - -

Income Tax Deducted at source (716,609,583) (575,906,003)

S.B Employees pension fund Investment - (80,000,000)

S.B Employees PDCRB fund Investment - (10,790,000,000)

Settlement Account (Islamic) (8,336,493) (4,000,000)

Demand Drafts purchased (319,186) (174,714,913)

Pension Bill Purchased (452,617,939) (1,280,311,032)

PSP/BSP Encashment (287,260,746) (66,309,555)

Agri- Exemption A/C Affected By River Erosion (114,994,356) 103,114,372

UCCA Loan Remission for River Erosion 93,671,409 (85,028,550)

NRT A/C Dr. Balance (104,519,711) 11,063,297

Intangible Assets- Valuation Adjustment 6,574,320,716 2,862,200,000

Security Margin 3,500,000 (3,500,000)

Deferred Tax assets (1,077,508,618) (2,187,251,898)

Account Receivable - 7,487,770

Frozen Fish Loan Exemption A/C - -

BRDB TCCA Crop Loans Int & Penal Int. Exemption-2007 - -

Overseas Branches (29,933,680) 32,136,646

Total 32,271,730,096 (27,871,735,034)

41 Increase / (Decrease) of Other Liabilities

Closing other liabilities

Provision for Classified Loans (7,913,972,458) 2,101,508,303

Provision for Un-Classified loans 609,682,000 420,418,000

Interest Suspense (228,235,412) (1,062,159,821)

Branch Adjustment 6,157,303,102 -

Provision against diminishing value of Investment (130,028,996) -

Provision for Other Assets (5,833,219,190) 368,656,046

Provision for Commission Receivable 60,300,000 -

Sonali Bank Employees' Pension fund 86,188,929 (1,563,911,115)

Sonali Bank Employees' PDCR Benefit fund (95,548,939) (15,079,860,465)

Adjusting A/C Cr. Balance 88,335,798 (218,560,224)

Sundry Deposits(H.O) 465,684,354 133,544,323

Provision for Bonus/Exgratia (394,987,599) 696,929,343

Provision for X-chedker 10,000,000 -

Provision for NOSTRO A/C (11,404,593) 7,765,347

Profit Repatriated from Overseas Branches (11,398,459) -

Provision against Off Balance Sheet Exposure 171,182,015 632,281,181

Provision for Employees Benefit (Additional) - (1,100,000,000)

Provision for Income Tax 962,498,075 1,070,000,000

Interest Reserve against Agri-Loan Interest Exemption 2004 - 71,025

Balance in F.C Clearing Account 10,676,183,474 3,706,918,447

78

2011 2010

BDT BDT

Balance Held with Foreign Bank abroad (Cr Balance) (2,966,725,969) 3,990,116,170

Asian Clearing Union (NOSTRO) 393,047,500 (155,894,429)

Sirajganj Integrated Rural Development Fund 309,773 624,680

Foreign Currency Fund Purchased A/C (2,844,386,145) 3,153,895,510

Loan from IDA Credit No. 765 BD. 373,177 -

Foreign Correspondent Charges (7,892,414) 13,729,449

Exporter Foreign Currency Retention Quota (33,297,163) 57,034,099

Agro Based Industrial & Technology Dev. Proj. (1,077,783) (1,951,058)

Rebate A/C of Term Loans to NBFI 2,666,519 2,024,217

Exchange Equalization - (39,397,757)

Security Margin (3,500,000) 3,500,000

Operational A/C RD--9. (48,669,543) -

I.D.A. Credit -3917 B.D. 60,367,550 105,004,072

BRDB/UCCA Crop Loan Intt.& P.Intt. Reserve A/C.-1994 6,339,068

BRDB/UCCA Crop Loan Intt.& P.Intt. Reserve A/C.-2007 - (1)

CSR 50,000,000 -

Other provision of Indian operation 689,257 -

Account Payable - (17,447,546)

Asian Clearing Union (VOSTRO) 35,793,623 317,253,174

Overseas Branches 55,183,660 17,748,289

(632,216,789) (2,440,160,741)

42 Cash and cash equivalent

Cash in hand (Including foreign currency) 3,992,625,523 5,138,688,934

Balance with Bangladesh Bank 61,642,147,616 28,091,945,637

Money at call on short notice 11,742,379,680 5,547,312,900

Balance held with other bank 12,601,457,703 40,099,345,277

Govt. treasury bills 8,314,158,016 7,680,820,040

Prize bonds in hand 88,891,610 90,252,110

Total 98,381,660,148 86,648,364,898

42(a) Consolidated Cash and Cash Equivalent




98,858,139,131 86,648,364,898

43 Earnings Per Share (EPS):

Net profit after tax 9,957,218,908 (974,510,314)

Number of ordinary shares outstanding 91,875,000 91,875,000

79

2011 2010

BDT BDT

Diluted Earnings per share (EPS) in 2010 108.38 (10.61)

43(a) Consolidated Earnings per Share (EPS):

Net profit after taxation (Numerator) 9,981,947,683 (974,510,314)Number of ordinary shares outstanding (Denominator) 91,875,000 91,875,000 Diluted Earnings per Share (EPS) 108.65 (10.61)

EPS figure for the year 2010 has been restated as per Bangladesh AccountingStandard (BAS) 33 "Earning Per Share"

80

44 Audit Committee

Sl No. Name Status in the Bank Status with the committee Educational qualification

1) Mr. K. M. Zaman Romel Director Chairman B. Com(Honours) in Finance

2) Mr. A.S.M Nayeem Director Member FCA, FCCA

3)Advocate Sattayendra Chandra Bhakta Director Member LLB ( Honurs), LLM

4) Most. Jannat Ara Henry Director Member MSS( Pol Science) B.Ed.

5) Mr. Suvas Singho Roy Director Member M. Pharm MBM

Duties and Responsibilities of the Audit Committee:

i) To Evaluate internal control, risk management, computerization and system of MIS of the bank

ii) To review annual financial statements of the bank and exchange views with external auditors and Bank management in the regard.

iii) To consider if the recommendations made by internal & External Auditors are in order to develop internal control strategy by the Bank Management.

iv)To review as to whether the rules and regulation made by controlling authorities like Bangladesh Bank and other regulatory bodies are duly followed.

ii) Inspection reports of branches/Head Office conducted by Bank's internal inspection team.

iii) Financial Statements of the Bank

iv) Half yearly accounts of 2011 of the bank

v) Status of compliance of different rules and regulations

Annual financial statements have been discussed with the External Auditors in the Audit Committee meeting held on 3 May 2011.

45 Related Party Disclosures

Name of the Directors and the entities in which they had interest as at 31 December 2010

SL. No

Name Status with the Bank

Name of the firms/Companies in which interested as proprietor, partner, director, managing agent, guarantor, employee etc.

Position No. of Shares

1 Mr. Quazi Baharul Islam Chairman Nil 1

2 Mr. Md. Shahid Ulla Mia Director Sadharon Bima Corporation 1

3 Mr. Md. Anwar Shahid Director i) Shimex International Limited Managing Director 1

ii) Shimex Resources

4 Mr. A.S.M Nayeem, FCA, FCCA Director i) Asian Container Lines Ltd. Director 1

ii) Chittagong Stock Exchange Ltd.

iii) Desh Television Ltd.

iv) Finvest Services Ltd.

v) Grameen Fund

vi) Holy Crescent Hospital Ltd.

vii) Karnaphuli industries Ltd.

viii) Karnaphuli works Ltd.

ix) K & T logistics Ltd.

x)Karnaphuli Farms Limited

xi) Karnaphuli Export import Ltd.

xii) Karnaphuli National Associates Ltd.

xiii)Reliable Automobiles Ltd.

i) Comprehensive inspection reports of Bangladesh Bank includng status of Compliance thereof.

Audit Committee of Sonali Bank Limited has been constituted by the Board of Directors as per BRPD Circular No. 12 dated 23 December 2002 comprising the following members:

v) To appraise the Bank’s Board of Directors regarding Lapses and errors/ Frauds & Forgeries/ other irregularities detected by internal auditors, external auditors & Bangladesh Bank inspection team and corrective measures taken for the purpose of effective control.

During the year 2011 the Audit Committee has conducted 7 (Seven) meetings in which, among others, the following issues were discussed:

80

xiv) Karnaphuli Farming & Fishing Ltd.

xv) Karnaphuli Text port Ltd.

xvi) Karnaphuli Engineering Co. Ltd.

xvii) Karnaphuli Leasing services Ltd.

xviii)Karnaphuli lines Ltd.

xix) Karnaphuli Foundries Ltd.

xxx) Republic insurance Ltd.

xxi) Sea consortium bd Ltd.

6 Mr. K. M. Zaman Romel Director Nil 1

7 Mr. M. Lutfur Rahman Khan Director Lucky Traders Proprietor 1

8 Mr. kashem Humayun Director Nil 1

9 Mr. Shaimum Sarwar Kamal Director i) Hotel Nidmahal Cox's Bazar Proprietor 1

ii) Embasedor Real Estate

iii) Weemer Agro limited

10 Advocate Sattayendra Chandra Bhakta

Director Nil 1

11 Mst. Jannat ara Henry Director M/S LAM Enterprise Proprietor 1

12 Mr. Suvas Singho Roy Director Nil 1

46 Related party/(ies) transaction

Amount in Crore

Related by Status with the Related Party Transaction Outstanding Balance

Remarks

Sponsor/Share holder Concerned Department of the Government 476.31 Letter of Guarantee

Sponsor/Share holder Concerned Department of the Government 3,518.73 Letter of Credit

Sponsor/Share holder Concerned Department of the Government 236.47 PSB/BSP Encashment

Sponsor/Share holder Concerned Department of the Government 731.86 Pension bills

Sponsor/Share holder Concerned Department of the Government 5,166.99 Loan

Sponsor/Share holder Concerned Department of the Government 2,717.72 Loan

The Bank Subsidiary Company 7.78 Investment

The Bank Subsidiary Company 11.92 Loan



The Bank Associate 71.71 Investment

47 Event after the Balance Sheet date

Government (Note-9.8.)

The bank generally carried out transactions in the ordinary course of its business at arm's length at commercial rate as per agreements with different related parties. The bank also renders services to the Government in various forms, which are not quantified. However, as of the date of the financial statements the Bank had no transactions with the Director of the Bank as a related party. During the year, the bank had some quantified transactions with the Government (Sponsor/Share holder) as defined on BRPD Circular no14 issued by the Bangladesh Bank on 25 March 2003 are listed below:



Jatio Shanchaya Bureau (Note-9.8)

Name of the Related Party

Power Development Board

Bangladesh Petroleum Corp.

Sonali Exchange Co. N.Y. (note 9.1)

Sonali Exchange Co.N Y(note 6)

In a daily newspaper, an irregularity in disbursment of loan and advances by Ruposhi Bangla Branch, Dhaka has been reported on 24 May 2012 investigation by the managementof the bank is under process.

Sonali Bank (U.K.) Ltd(note 6)

Sonali Investment LTD. (note 9.1)

Sonali Investment LTD. (note 6)


81

Outstanding entries as per statement of Bangladesh Bank(BDT in Crore)

No. of Entries Amount No. of Entries Amount1995 1 0.00083 - -1996 1 0.41959 - -1997 1 0.00020 1 0.000101999 2 0.06564 2 0.009182000 - - 1 0.000012001 1 0.00651 - -2007 1 0.00006 - -2009 3 0.01269 - -2010 6 1.15000 9 36.68892011 34 237.32498 18 259.1502Total 50 238.9805 31 295.84839

Outstanding entries as per statement of Bangladesh Bank(Figure in Taka)

No. of Entries Amount No. of Entries Amount1984 - - 1 26,450.97 1985 1 13,000,000.00 2 1,734.24 1986 1 4,396.57 5 7,595.44 1987 11 32,279.38 3 59,497.51 1988 4 70,143.93 5 12,151.43 1989 2 2,898.00 4 53,974.80 1990 4 5,545.00 5 9,362.45 1991 5 100,623.80 - -1992 3 12,494,877.19 2 729.75 1993 2 8,859,443.07 1 2,391.09 1994 3 9,068,421.06 1 4,735.00 1995 7 9,624,390.51 - -1996 4 5,768,444.53 2 9,393.00 1997 14 432,532,558.45 9 1,979,433.26 1998 82 852,776,678.12 8 63,447,438.82 1999 59 64,113,378.61 6 7,394,664.09 2000 7 63,151,337.39 9 1,143,371.90 2001 6 40,168,249.31 8 3,804,483.91 2002 6 42,191,349.06 7 1,003,061.14

Annexure-A

a) Balance held with Bangladesh Bank:

The Un-reconciled entries of Balance held with Bangladesh Bank as on 31-12-2011 are as follows:1. Maintain by Head office ( TMD) Dhaka with Bangladesh, Dhaka.

Year Debit Credit

2. Maintain by Local office Dhaka with Bangladesh, Dhaka.

Year Debit Credit

82

2003 3 31.10 4 6,648,125.76 2004 11 106,194,647.85 5 67,982,845.44 2005 7 349,951.92 3 4,302,452.50 2006 12 88,070,476.52 8 6,270,256.01 2007 5 14,986,174.10 80 135,097,883.86 2008 5 35,053,820.00 13 35,897,837.23 2009 2 4,958.00 7 66,948,505.65 2010 2 89,438.00 5 16,833,147.63 2011 4 15,193,924.00 18 166,977,235.22 Total 272 1,813,908,435.47 221 585,918,758.10

Outstanding entries as per Ledger of Sonali Bank Limited

No. of Entries Amount No. of Entries Amount2003 - 0 1 0.00022010 1 0.02130 2 4.05942011 5 55.91000 0 0Total 6 55.93130 3 4.0596

Outstanding entries as per Ledger of Sonali Bank Limited.(Figure in Taka)

No. of Entries Amount No. of Entries Amount1984 - - 1 126.00 1986 - - 3 4,352.00 1987 - - 7 17,001.90 1988 3 7,696.00 4 4,634.00 1989 1 20,800.00 3 5,974.00 1990 1 95.00 - -1991 - - 1 1,312.00 1992 1 719.25 - -1993 - - 1 5,048.47 1994 - - 1 0.01 1995 1 0.14 - -1996 8 28,096.98 1 1,095,914.37 1997 32 2,668,818.33 6 404,769,445.42 1998 7 54,886,084.32 10 809,471,699.54 1999 4 10,423,161.69 2 50,450,000.00 2000 6 1,660,667.40 - -2001 11 469,223.12 - -2002 4 6,855,505.28 - -

3. Maintain by Head office ( TMD) Dhaka with Bangladesh, Dhaka.

(BDT in Crore)

Year Debit Credit


Year Debit Credit

83

2005 5 67,798.01 - -2006 1 15,465.00 - -2007 75 129,590,277.06 - -2008 6 3,140,008.77 1 39,503.00 2009 46 44,485,764.30 2 45,056.00 2010 11 57,029,631.01 3 8,912,387.54 2011 16 13,127,531.08 8 10,194,363.54 Total 239 324,477,342.74 54 1,285,016,817.79

Outstanding entries as per statement of Bangladesh Bank

(Figure in Taka)

No. of Entries Amount No. of Entries Amount1984 - - 1 26,450.97 1985 1 13,000,000.00 2 1,734.24 1986 1 4,396.57 5 7,595.44 1987 11 32,279.38 3 59,497.51 1988 4 70,143.93 5 12,151.43 1989 2 2,898.00 4 53,974.80 1990 4 5,545.00 5 9,362.45 1991 5 100,623.80 - -1992 3 12,494,877.19 2 729.75 1993 2 8,859,443.07 1 2,391.09 1994 3 9,068,421.06 1 4,735.00 1995 7 9,624,390.51 - -1996 4 5,768,444.53 2 9,393.00 1997 14 432,532,558.45 9 1,979,433.26 1998 82 852,776,678.12 8 63,447,438.82 1999 59 64,113,378.61 6 7,394,664.09 2000 7 63,151,337.39 9 1,143,371.90 2001 6 40,168,249.31 8 3,804,483.91 2002 6 42,191,349.06 7 1,003,061.14 2003 3 31.10 4 6,648,125.76 2004 11 106,194,647.85 5 67,982,845.44 2005 7 349,951.92 3 4,302,452.50 2006 12 88,070,476.52 8 6,270,256.01 2007 5 14,986,174.10 80 135,097,883.86 2008 5 35,053,820.00 13 35,897,837.23 2009 2 4,958.00 7 66,948,505.65 2010 2 89,438.00 5 16,833,147.63 2011 4 15,193,924.00 18 166,977,235.22 Total 272 1,813,908,435.47 221 585,918,758.10

Year Debit Credit


84

Rate of Depreciation

of

Depreciation

Taka Taka Taka % Taka Taka Taka Taka

A) In Bangladesh:

Premises A/C 9,380,990,210 12,026,800,411 - 21,407,790,621 2.5 120,581,522 32,023,277 152,604,799 21,255,185,822

Building Construction A/C 284,389,725 112,025,950 1 396,415,674 - - - - 396,415,674

Furniture 453,422,016 146,061,256 3,471,598 596,011,674 10 135,989,758 200,900 52,132,748 187,921,606 408,090,068

Electric Installation 299,185,370 190,817,981 1,227,915 488,775,436 20 117,936,334 437,346 77,433,079 194,932,067 293,843,369

Computer 705,472,062 248,648,223 8,672,954 945,447,331 20 238,634,404 533,717 158,444,035 396,544,722 548,902,609

Type Writer Machine 3,028,516 1,571,102 13,561 4,586,057 20 937,813 2,435 435,506 1,370,884 3,215,173

Motor Car & Other Vehicle 137,195,450 84,824,713 1,238,775 220,781,388 20 48,117,405 2,065 31,471,080 79,586,420 141,194,968

Library 881,917 793,582 - 1,675,499 7 337,794 551 291,767 629,010 1,046,489

Sub-total (In Bangladesh) 11,264,565,266 12,811,543,218 14,624,804 24,115,681,588 709,957,574 1,177,014 353,616,145 1,062,396,705 23,053,284,883

B) Overseas Branches:

Kolkata Branch 7,515,804 82,724 - 7,598,528 - 1,253,110 1,253,110 6,345,418

Siliguri Branch 370,979 173,687 - 544,666 - 54,969 54,969 489,697

Sub-total (Overseas Branches) 7,886,783 256,411 - 8,143,194 - - - 1,308,079 1,308,079 6,835,115

Grand Total as on 31 December 2011 (A+B) 11,272,452,049 12,811,799,629 14,624,804 24,123,824,782 709,957,574 1,177,014 354,924,224 1,063,704,784 23,060,119,998

Total as on 31 December 2010 10,424,540,343 844,786,663 13,364,953 11,255,962,053 377,135,736 9,193,312 293,930,577 661,873,001 10,594,089,052

Opening balance as on 01.01.11

Addition during the year

Opening balance as on

01.01.11

Deposals/ adjustments during the

year

Deposals/

adjustments

during the year

Cost/Revaluation Depreciation

Sonali Bank Limited Consolidated Schedule of Fixed Assets


ParticularsNet book value as

on 31.12.11Total balance as on 31.12.2011

Charge for the year

Total balance as on 31.12.11

Annexure B

85

Rate of Depreciation

of

Depreciation

Taka Taka Taka % Taka Taka Taka Taka

A) In Bangladesh:

Premises A/C 9,380,990,210 12,026,800,411 - 21,407,790,621 2.5 120,581,522 32,023,277 152,604,799 21,255,185,822

Building Construction A/C 284,389,725 112,025,950 1 396,415,674 - - - - 396,415,674

Furniture 452,580,406 144,454,201 3,471,598 593,563,008 10 135,947,677 200,900 51,972,442 187,719,218 405,843,790

Electric Installation 291,041,688 177,467,147 1,227,915 467,280,919 20 117,121,966 437,346 74,632,132 191,316,752 275,964,167

Computer 702,326,641 247,621,473 8,672,954 941,275,160 20 238,319,862 533,717 157,775,184 395,561,329 545,713,831

Type Writer Machine 3,028,516 1,571,102 13,561 4,586,057 20 937,813 2,435 435,506 1,370,884 3,215,173

Motor Car & Other Vehicle 132,195,450 84,824,713 1,238,775 215,781,388 20 48,117,405 2,065 31,471,080 79,586,420 136,194,967

Library 881,917 793,582 - 1,675,499 7 337,794 551 291,767 629,010 1,046,489

Sub-total (In Bangladesh) 11,247,434,553 12,795,558,579 14,624,804 24,028,368,326 661,364,039 1,177,014 348,601,388 1,008,788,412 23,019,579,914

B) Overseas Branches:

Kolkata Branch 7,515,804 82,724 - 7,598,528 - 0 1,253,110 1,253,110 6,345,418

Siliguri Branch 370,979 173,687 - 544,666 0 54,969 54,969 489,697

Sub-total (Overseas Branches) 7,886,783 256,411 - 8,143,194 - - 0 1,308,079 1,308,079 6,835,115

Grand Total as on 31 December 2011 (A+B) 11,255,321,336 12,795,814,990 14,624,804 24,036,511,520 661,364,039 1,177,014 349,909,467 1,010,096,491 23,026,415,030

Total as on 31 December 2010 10,424,540,343 844,786,663 13,364,953 11,255,962,053 - 9,193,312 293,930,577 661,873,001 10,594,089,052

Sonali Bank Limited Schedule of Fixed AssetsAs at 31 December 2011

Particulars Addition during the year

Deposals/

adjustments

during the year

Total balance as on 31.12.11

Opening balance as on

01.01.11

Cost/Revaluation Depreciation

Net book value as on 31.12.11Opening balance as

on 01.01.11Charge for the

yearTotal balance

as on 31.12.2011

Deposals/ adjustments during the

year

Annexure C

86

1992 1993-94 Nil DCT Settled Nil 97,895,171 -

Adjusted 5% Demanded Tax

1993 1994-95 Nil DCT Settled Nil 118,229,244 - Adjusted 5% Demanded Tax

1994 1995-96 Nil DCT Settled Nil 107,843,437 5,94,57,743Partial Adjusted 5%

Demanded Tax 1995 1996-97 Nil DCT Settled Nil 327,047,412 327,047,412 Refundable1996 1997-98 Nil DCT Settled Nil 359,391,548 359,391,548 Refundable1997 1998-99 Nil DCT Settled Nil 368,350,061 368,350,061 Refundable

1998 1999-2000 Nil DCTReference Application to the

High Court Nil 442,119,323 442,119,323 Refundable

1999 2000-01 Nil DCT Settled Nil 600,818,273 600,818,273 Refundable


High Court Nil 870,418,795 870,418,795 Refundable

Detail of Tax assessment

Income Year

Assessment Year

Tax

Provision

as per

Account

Sonali Bank LimitedStatement of Tax Position


Assessment made

byPresent Status

Assessed Tax Liabilities

Payment of Advance Tax

Refundable/ (Payable)

Remarks

Tax assessment of Sonali Bank Ltd. has been completed upto assessment year 2002-2003 (Income year upto 2001) resulting tax refund of Tk. 426,30,48,032 infavour of the Bank. As regards latest status of the tax assessments for the income years 2002, 2003, 2008 and 2009 these are not yet finalised by the taxdepartment. The Bank has submitted I.T. Returns showing loss of Tk.(2,122,965,887), Tk.(7,780,112,711) TK. (267,10,36,678) & profit of Tk.93,33,54,939 forthe assessment years 2003-2004, 2004-2005, 2009-2010,2010 - 2011 respectively. The loss shown by bank is inclusive of claim of Bad Debts written off andothers. In the income years 1998, 2000, 2001,2004, 2005, 2006 ,2007 & 2008 the tax department did not accept the claim of Bad Debt written off, Provision forEx-gratia, Provision for NOSTRO A/C., Provision for other Assets, Interest on securities etc. against which the bank has filed appeal to the Honorable HighCourt.

87


High Court Nil 1,135,489,757 1,135,489,757 Refundable

2002 2003-04 Nil DCT Re-opened not yet finalized 712,587,221 not yet finalized

2003 2004-05 Nil DCT Re-opened not yet finalized 588,000,560 not yet finalized


High Court Nil 518,028,392 27,46,73,831 Refundable


High Court 378,072,785 438,169,963 60,097,178 Refundable


High Court 170,34,73,454 538,154,625 (124,65,49,104) Payable


High Court 201,08,03,744 1,218,137,968 (75,27,63,573) Payable

2008 2009-10 Nil DCT Reference Application to the High Court. 216,74,91,869 889,421,612 (132,53,29,527) Payable

2009 2010-11 Nil - Return Submited Not assessed 581,031,291 - Not yet assessed till now.

2010 2011-12 Nil-

Return SubmitedNot assessed

1,123,598,810.27- Not yet assessed till

now.

88

a) Domestic BranchesStamps in hand 10,968,552 11,699,346 Stationery in hand 218,552,204 217,318,722 Advance Rent 122,819,897 101,178,341 Interest Receivable 3,927,209,950 3,206,428,978 Commission Receivable 1,868,995,337 1,748,673,709 Exchange Receivable 10,995,513 757,634 Rent 5,649,487 101,116 Taxes 274,839 220,620 Law charges 39,710 32,052 Postage and Telegram 816,313 4,516 Sundries 1,974,608,046 41,066,908 Branch Adjustment - 27,235,139,537 suspense A/C 3,868,927,513 1,980,757,219 Income Tax Deducted at source 11,020,201,028 10,303,591,445 Drafts Payable account (Ex-Advice) 640,903,923 1,060,766,858 Govt. Drafts Payable Account (Ex-Advice) 98,140,319 127,809,030 Intangible Assets- Valuation Adjustment 39,443,724,266 54,381,007,158 Deferred Tax assets 15,898,679,825 14,821,171,207 Demand Drafts purchased 1,246,796,873 1,246,477,686 Protested Bills 232,357,602 223,733,939 BRDB TCCA Crop Loans Exemption-1994 759,049,723 759,049,723 BRDB UCCA Crop Loans Exemption -2001 1,073,790,753 1,073,790,753 BRDBUCCA Crop Loans Int. & Penel int. Exe 757,008,222 757,008,222 Branch Reconstruction A/C 50,195 50,195 Exchange Equalisation 279,480,055 21,967,663 Pension Bill Purchased 7,318,609,408 6,865,991,469 PSP/BSP Encashment 2,364,774,711 2,077,513,965 Loan Exemption Under J.S Reform Proj.94-95 5,362,676,930 5,362,676,930 Agri-Loan Other Exp.Exemption A/C-2004 7,872,944 185,929 Agri-Loan Interest Exemption A/C-2004 6,229,641 1,940,568 Agri- Exemption A/C Affected By River Erosi 125,309,456 10,315,100 Security Margin - 3,500,000 Account Receivable A/C - -

Frozen Fish Loan Exemption 101,773,510 101,773,510 UCCA Loan Remission for River Erosion 4,752,730 98,424,139 Total 98,752,039,475 133,842,124,187

Statement of Non Income Generating Other Assets

2011 2010

88

SL. 2011 2010

No. Taka Taka

1. Paid-up Capital 11,250,000 9,000,000

2. Total Capital (as per Capital Adequacy) 44,208,881 30,400,268

3. Capital surplus/(deficit) 9,121,451 (1,906,636)

4. Total Assets 695,192,109 620,514,961

5. Total Deposits 533,192,167 478,134,085

6. Total Loans and Advances 345,991,349 286,098,070

7. Total Contingent Liabilities and Commitments 148,171,704 131,053,502

8. Credit Deposit Ratio 64.89% 59.84%

9. Percentage of classified loans against total loans and advances 17.80% 23.88%

10. Profit after tax and provision 9,957,219 (974,510)

11. Amount of classified loans 61,588,172 68,314,855

12. Provisions kept against classified loans 37,567,700 45,481,659

13. Provision surplus/(deficit) - 130,042

14. Cost of fund 7.05% 6.74%

15. Interest earning Assets 446,190,709 404,093,717

16. Non-interest earning Assets 249,001,400 245,174,206

17. Return on investment (ROI) 9.24% 9.39%

18. Return of Asset (ROA) 1.42% 0.32%

19. Income from investment 7,561,795 5,896,207

20. Earnings per Share(figure of 2010 restated ) 108.38 (10.61)

21. Net income per Share(figure of 2010 restated ) 108.38 (10.61)

22. Price Earning Ratio N/A N/A


Particulars

(Amount in Thousand)

For the year ended 31 december 2011

Sonali Bank LimitedHighlights on the overall activities

89