bml annual report 2013 - enfile:///c:/users/sofy/desktop/renal_diet.pdfglish

8/11/2019 BML Annual Report 2013 - Enfile:///C:/Users/sofy/Desktop/renal_diet.pdfglish

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ANNUAL2013REPORT


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2 |


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03 | Contents

Contents05 Business Strengths 07 Chief Executives Statement09 Financial Highlights10 Financial Review11 2013 Highlights18 Board of Directors

22 Executive Team26 Subsidiary Companies27 Directors Report40 Independent Auditors Report43 Financial Statements97 Investor Information


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05 | Corporate Pro e

Our BusinessStrengths So id Financia P atform

Deposit base MVR 9.7 billion at end 2013

Assets MVR 12.7 billion

Strong capital posi on well above regulatoryrequirement

Strong Customer Base Leading market share in Retail, Corporate

and SME segments

Over 235,000 customers

Over 48,000 lending rela onships

Leadership in Innovation First to launch POS services in Maldives

First to launch cash and cheque depositmachines

First to launch Internet Banking

First to launch AMEX and Visa Credit andDebit cards

Leadership in ServiceDe ivery

Largest network of branches, ATMs and POSterminals in Maldives

Exclusive acquirer and issuer of AmericanExpress cards in Maldives

Only principal member in Maldives for Visaand MasterCard

Worldwide network of foreigncorrespondent banking rela onships

Experienced and Dedicated Team

Largest employer in the banking sector with

over 800 dedicated employeesOver 99% of our workforce are locals

Most of the execu ve leadership team areexperienced local professionals

Almost one third of our sta are employedin the Atolls

Internationa Recognition During 2013, the Bank received twointerna onal awards; Outstanding

Community Ini a ve Award for our DhoniBanking service and Service ExcellenceAward for BML Lite.


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06 | Corporate Pro e

BranchIslands served through our Dhoni Banking service

BML LITE

Our BranchNetwork


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07 | Chief Executives Statement

Chief ExecutivesStatement


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08 | Chief Executives Statement

On the right track Bank of Maldives con nued to make good progressin 2013, par cularly in terms of addressing thehistorical loan book problems that have held usback from exploi ng our full poten al over recentyears.

It is extremely noteworthy that the Bank managedto pay a dividend to shareholders for the rstme in four years when an interim payment wasdeclared in the second half of last year. This ou urn

resulted from the hard work of our sta and ourBoard who have demonstrated tremendous focusand perseverance. We are very thankful also to ourshareholders and customers for their pa ence andsupport.

Last years dividend was rendered possible by areturn to pro tability. It must be said, however,that this pro tability is somewhat fragile as muchof it has come about through the recovery of loanmonies from indebted customers. Unless the Bankcon nues to increase earnings and to broadenits sources of income, we remain vulnerable toreturning to those di cult loss-making years.Therefore we are focused on developing a strongearnings pla orm and our recent growth in non-interest income suggests we are on the right path.

The Bank achieved an interna onal award duringthe year for our Dhoni Banking service. Thiswarrants special men on as it re ects the kindof commitment to the community that I amdetermined we will build upon as we move forward.

During 2014 we will con nue on our journey tomodernise the Bank and to deliver the level ofcustomer service that the people of Maldives havea right to expect from their na onal bank. We will

invest in new technology which will improve ourservices and our reach. We will support businessand social development through a number ofini a ves that will have a las ng impact on oureconomy and our society.

I would like to thank the sta of Bank of Maldives,our Board of Directors, the Ministry of Finance andTreasury and the Maldives Monetary Authority fortheir support and co-opera on during the year.

Andrew HealyCEO and Managing Director


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09 | Financia High ights

FinanciaHighlights(All amounts in MVR 000) Group Bank Change

2013 2013 2012 (%)

Results for the year

Gross Income 1,976,940 1,970,093 1,351,160 46

Net Interest Income 572,016 572,016 491,045 16

Pro t Before Provision and Tax 1,355,724 1,352,530 792,109 71

Net Pro t A er Tax 664,656 662,230 374,476 77

Results at the end of the year

Shareholders Equity 1,844,376 1,841,950 1,239,725 49Deposits from Customers 9,725,687 9,725,687 7,876,965 23

Customer Advances (Net) 5,572,925 6,103,296 5,069,916 20

Total Assets 12,684,075 12,680,808 10,158,195 25

Informa on per ordinary share

Earnings - Basic (MVR) 123.50 123.05 69.58 77

Net Asset Value (MVR) 342.71 342.25 230.35 49

Market Value at Year End (MVR) N/A 100.00 135.00 -26

Ra os

Return on Shareholders Equity (%) 36.04 35.95 30.21 5.7

Return on Assets (%) 5.24 5.22 3.69 1.5

Price Earning Ra o ( mes) N/A 0.81 1.94 -1.1

NPA (Net) % 16.92 15.64 19.14 3.5

Statutory ra os

Capital Adequacy (%)(Statutory Requirement 12%)

22.85 21.22 17.10 4.1


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11 | Financia Review

2013Highlights


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12 | Retai Banking

RetaiBankingWith the aim of improving customerexperience, 2013 saw the rst full year ofopera on of our BML Lite outlet whichcontains a range of state-of-the-art self-service facili es for our personal bankingcustomers.

The Bank supported small businesses bothdirectly and through various Governmentand Interna onal funding ini a ves. InNovember, we partnered with the Ministry ofEconomic Development to launch a MVR 23million concessionary loan scheme targetedat SMEs. This scheme provides credit facili esto a range of sectors, with 40% of fundsearmarked for entrepreneurship amongyouth and women.

The Bank is also playing its part indeveloping the future minds of the na onby administering the Na onal Student LoanScheme. In 2013 MVR 237 million wasdisbursed to 1,400 students to enable them

to study both locally and abroad.


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13 | Corporate Banking

CorporateBankingThe Banks focus on this key segment of our business con nued to strengthen

during 2013. Heavy emphasis was placed on providing the highest possiblerela onship management support to our corporate/large business customers andthis focus was augmented by improvements which were introduced to our cardsand internet banking services.

We grew our corporate lending book through suppor ng a range of businessesacross the spectrum of sectors. Ancillary services in areas such as Trade Financeand Point of Sale card acquiring also saw growth during the year. In order tocater for the growing construc on sector in the greater Male region, project andworking capital nance for commercial and residen al development was alsoprovided.


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14 | Is amic Banking

Is amicBankingBank of Maldives is

commi ed to mee ng thebanking needs of the peopleof the Maldives. With ourcountry being 100% Muslim,a natural progression is theprovision of Islamic Bankingservices.

We have created an IslamicBanking Division which iscurrently developing Shariah

compliant alterna ves tothe banking products and

services o ered at the Bank.

We are building up ourcapacity so that we can o erIslamic Banking services thatare aligned with interna onalbest prac ces and standards.

We have formed a ShariahAdvisory Commi ee,consis ng of a team ofthree interna onal expertsand a highly reputed local

scholar, to advise the Bankon Islamic Banking ma ers.

The Commi ee has approved

various deposit and nancingproducts.

We have recruited quali edand experienced sta toll key posts within ourIslamic Banking team andsta training is ongoing. Adedicated Customer ServiceCentre has been set up. Weexpect to launch our rst

product during the secondhalf of 2014.


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15 | Investment in the Community

Investmentin theCommunityUnique to the Maldives, our Dhoni Banking service made over 2,000 visitsduring the year to inhabited islands that would otherwise be deprived offace-to-face banking facili es. Our team takes great pride in this service,par cularly in delivering pension bene ts to senior ci zens across thecountry.

We con nue to support na onal level ac vi es and ini a ves thatbene t local communi es. We par cipated as a key sponsor in theFishermans Day celebra ons and the events held to mark Interna onalAn -Corrup on Day. In addi on to playing an ac ve role in managing theMosque Fund, our sta also engaged in various volunteer ac vi es acrossthe country - for instance we visited hospitals and the Centre for Peoplewith Special Needs where we brought gi s for the residents.


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17 | Investment in Techno ogy

Investment inTechnologyDuring 2013, signi cant investmentswere made in our internet banking, cardand ATM technologies which providecustomers with an easy and reliablealterna ve to visi ng a branch. Ourinvestments are also helping to providenancial inclusion for people wholive in the more outlying areas of ourcountry, an aspect of our responsibilityas the na onal bank which will receive

increasing a en on going forward.

Over the course of 2014, we will replaceour core banking system (the enginethat supports our branches) and we willmove from a dated system to a state ofthe art model. Much me, training andinvestment is currently being devotedto this project which will deliver bothcustomer service and opera onale ciency bene ts.


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18 | Board of Directors

Board of

Directors


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Mr. Mohamed UmarThundeege, F. Nilandhoo(Non-Independent, Non-Execu veDirector)

Mr. Mohamed Umar is Chief Accountant atSun Island Resort and Spa, a posi on he hasheld since 2010. Prior to this he was the ChiefAccountant at Villa Hakatha Private Limited.

From December 2003 to January 2006, Mr.Umar worked for HSBCs Male Branch and hasvast experience of the banking and nancialindustry.

Mr. Umar is a CIMA-quali ed CharteredAccountant.

Mr. Umar has no shares in the Bank.

Mr. Abdul HarisG. Ekra, Male(Non-Independent, Non- Execu veDirector) Mr. Abdul Haris is Managing Director of IslandAvia on Services Limited. Mr Haris startedhis career in avia on with Air Maldives in1985 where he gained hands-on experiencein accoun ng and nancial management.While at Air Maldives, he was instrumentalin achieving IATA membership and acquiringthe IATA billing and se lement plan for theag carrier. Mr. Haris was also a memberof the technical advisory commi ee to thegovernment on establishing an interna onalairline in the Maldives.

A er joining Island Avia on as Director ofFinance and Accounts in 2000, Mr. Haris playeda key role in making Maldivian a regionalcarrier. He became Managing Director in 2012.

Mr. Haris served as a Non-Execu ve Directorof Dhiraagu Plc from 2004 to 2006. He

holds an Honours Degree in Accoun ng andManagement Systems from Thames ValleyUniversity, United Kingdom and was the rstMaldivian to achieve membership of the UKAssocia on of Accoun ng Technicians.

Mr. Haris has no shares in the Bank.

Mr. Mohamed LuveizMa. Dhilaasaage, Male(Non- Independent, Non-Execu veDirector)

Mr. Mohamed Luveiz has been working asAdviser on Investments at the Ministry ofFinance and Treasury since January 2013. Heis also the Managing Director of Zebra CrossPrivate Limited. In his public service career, Mr Luveiz servedas Director, Economic A airs at the Ministry ofEconomic Development from 2007 to 2010.

Mr Luveiz holds a Master of BusinessAdministra on degree from Victoria Universityof Technology, Australia, a post graduatediploma in Educa on from University ofAdelaide, Australia as well as a Bachelor ofCommerce degree from the University of SouthAustralia.

Mr. Luveiz has no shares in the Bank.

Directors Nominated by the GovernmentThe six directors elected at the 30th Annual General Mee ng held on 06th February 2014 are as follows.


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Mr. Mohamed Shareef M. Ifau, Male(Non- Independent, Execu ve Director)

Mr. Mohamed Shareef joined the Bank in 1995and currently holds the posi on of Opera onsDirector. He has 18 years of banking experienceand has held various senior roles within theBank.

Prior to his appointment as Opera onsDirector, Mr. Shareef was Head of Card Centrewhere he successfully led the development ofthe Banks edgling cards business.

Mr. Shareef holds a Master of BusinessAdministra on (Finance) degree fromUniversity of Manchester, United Kingdom.

Mr. Shareef has no shares in the Bank.

Mr. Andrew John Healy(Non-Independent, Execu ve Director)

Mr. Andrew John Healy is Chief Execu veO cer and Managing Director of the Bank. Acareer banker, Mr. Healy has over 18 years ofexecu ve banking experience, including at CEOand Board level.

Prior to joining Bank of Maldives, Mr. Healyworked for two interna onal banking groups,most recently as Irish CEO and GroupExecu ve Commi ee member of Scandinavianins tu on, Danske Bank Group. He has alsoworked for Royal Bank of Scotland Group in

senior roles in both Ireland and the UnitedKingdom.

Mr. Healy has extensive experience in al laspects of banking. He has held a numberof respected industry leadership posi onsincluding Chairman of the Northern IrelandBanking Associa on and President of theIns tute of Banking in Ireland. He holds arst class Masters degree in Business fromUniversity College Cork, Ireland and a Bachelorof Science degree in Financial Services fromUniversity College Dublin, Ireland. He is aFellow of the Ins tute of Banking in Ireland

and a Chartered Member of the UK Ins tute ofPersonnel and Development.

Mr. Healy holds no shares in the Bank.

Mr. Murthala Mohamed DidiMa. Alhivilaa, Male(Independent, Non-Execu ve Director)

Mr. Murthala Mohamed Didi is a DirectorGeneral of Maldives Civil Service Commissionand holds a Masters of BusinessAdministra on from Edith Cowan University,Western Australia.

Mr. Murthala started his Government servicein 1985 as a Banking O cer at the MaldivesMonetary Authority and worked his way upthe career ladder holding various posi onsat the Civil Avia on Authority, Department

of Civil Avia on, Department of Immigra onand Emigra on including Assistant Controllerof Immigra on and Emigra on and as theDirector of Na onal Disaster ManagementCentre.

In addi on to his Government career, Mr.Murthala is also partner and ManagingDirector of Conus Investments Pvt. Ltd.

Mr. Murthala holds 50 shares in the Bank.


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Mr. Ibrahim MohamedNelum, N. Holhudhoo(Independent, Non-Execu ve Director)

Mr. Ibrahim Mohamed is Managing Director ofTropical Island Holidays Pvt. Ltd. He has servedon the Board both as a Government appointeddirector and as a director elected by the publicshareholders.

A nance and tourism sector professional,Mr. Ibrahim currently serves on the boards ofseveral companies.

Mr. Ibrahim is the current Chairman of theBanks Audit and Risk Management Commi ee.

Mr. Ibrahim holds a postgraduate degree inTourism from University of Strathclyde, UnitedKingdom and a Higher Na onal Diploma inBusiness and Finance (Tourism) from SouthGlamorgan Ins tute of Higher Educa on(Cardi Metropolitan University), UnitedKingdom.

Mr. Ibrahim holds 960 shares in the Bank.

Mr. Mohamed Abdul SattarMa. Tulip Villa, Male(Non- Independent, Non-Execu veDirector)

Mr. Mohamed Abdul Sa ar is ManagingDirector of Coco Huts Pvt. Ltd. He was rstelected to the Board of Directors of theBank by the public shareholders from 08thSeptember 2004 to 29th June 2005. On 30thOctober 2005, he was appointed to the Boardby the Government and was last re-appointedon 13th June 2008. Since 07th August 2009,he has been elected to the Board by the publicshareholders.

Mr. Sa ar is the current Chairman of the BanksAppointment, Nomina on and Remunera onCommi ee.

He holds a Master of Business Administra ondegree from University of Wales, UnitedKingdom.

Mr. Sa ar has 2,300 shares in the Bank.

Mr. Ismail MukhthabaM. Kuribee Lodge, Male(Non-Independent, Non-Execu veDirector)

Mr. Ismail Mukhthaba is Marke ng Execu veand Assistant Managing Director of KihahShipping Co, Pvt Ltd. Prior to this he served asMedia Coordinator and Marke ng Manager atState Trading Organisa on PLC (STO).

Mr. Ismail holds a Bachelor of MassCommunica on degree from Cur nUniversity, Australia and a Master of BusinessAdministra on degree from University ofBallarat, Australia. He is currently reading forhis Doctor of Business Administra on fromHeriot-Wa University, United Kingdom.

Mr. Ismail holds 105 shares in the Bank.

Directors Elected by the Public ShareholdersThe three directors elected by the shareholders on 06th February 2014 are as follows.


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22 | Executive Team

Executive Team


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23 | Executive Team

Andrew HealyCEO and Managing Director Andrew Healy joined the Bank inJanuary 2014. He has over 18 yearsof execu ve banking experience,including at CEO and Board level.Prior to joining Bank of Maldives, heworked for two interna onal banking

groups, most recently as Irish CEO andGroup Execu ve Commi ee memberof Scandinavian ins tu on, DanskeBank Group. He has also worked forRoyal Bank of Scotland Group in seniorroles in both Ireland and the UnitedKingdom. Andrew has held a number ofrespected industry leadership posi onsincluding Chairman of the Northern

Ireland Banking Associa on andPresident of the Ins tute of Banking inIreland. He holds a rst class Mastersdegree in Business and a Bachelor ofScience degree in Financial Servicesas well as a number of other bankingand professional quali ca ons. Andrewis a Fellow of the Ins tute of Bankingin Ireland and a Chartered Memberof the UK Ins tute of Personnel andDevelopment.

Aishath NoordeenDeputy Chief Execu ve O cer Aishath Noordeen joined the Bankin 1982. She became Deputy CEO in2012 and served as a government-appointed Director on the Banks Boardof Directors from 2008 un l February2014.

Aishath has a career spanning over 30years in the banking industry and hasworked in numerous areas of the Bank.She has served the Bank as Ac ngCEO and Managing Director on twoseparate occasions.

Aishath has represented the Bankin various fora both locally andinterna onally and is extremely well

known among the Maldives businesscommunity. She was instrumental inestablishing the Banks award winninginterna onal banking business.

Mohamed Shareef Opera ons Director Mohamed Shareef joined the Bank in1995. He became Opera ons Directorin 2012.

Shareef has 18 years of experiencein the banking industry and prior to

his appointment to the posi on ofOpera ons Director, he served theBank as Head of Card Centre.

Shareef holds a Master of BusinessAdministra on (MBA) in Finance fromUniversity of Manchester, UnitedKingdom.


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24 | Executive Team

Nandana SenevirathneChief Financial O cer Nandana Senevirathne joined the Bankas Finance Director in January 2014.He has over 16 years of experience inthe nancial services sector in banks,leasing and insurance companies.

Prior to joining Bank of Maldives,Nandana was the Chief FinancialO cer of AIG Insurance Limited,Sri Lanka. During his career, he alsoworked for four years at KPMGMaldives. Nandana holds a BSc. in Accountancyand Financial Management fromUniversity of Sri Jayawardenapura,Sri Lanka and is an Associate

Member of the Ins tute of CharteredAccountants of Sri Lanka.

Allan McFarlaneRetail Banking Director Allan McFarlane joined the Bank in2012 as Retail Banking Director. Hehas over 29 years of experience in thebanking industry and has served in keyposi ons at various pres gious banksincluding Barclays and Santander/

Bradford and Bingley. Allan is an Associate Member of theUKs Chartered Ins tute of Bankers(ACIB) and a Member of the UK LifeInsurance Associa on (MLIA).

Aminath ShaheenRisk Director Aminath Shaheen joined the Bank in2002 and was appointed Risk Directorin 2012. She has held a number of keyposi ons at the Bank, most notably inthe Credit and Card areas.

Shaheen has spearheaded theprogress made by the Bank overrecent years in addressing historicalloan book challenges. She holds aMaster of Interna onal Businessdegree from University of Auckland,New Zealand and a Bachelors degreein Marke ng and Organisa onalStudies from University of Lancaster,United Kingdom.


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26 | Subsidiary Companies of Bank of Ma dives P c

SubsidiaryCompanies ofBank of Maldives PlcBML Investments Pvt Ltd & BML Properties Pvt LtdBank of Maldives Plc established two wholly owned subsidiary companies in the name ofBML Investments Pvt Ltd and BML Proper es Pvt Ltd on 21st January 2013 with the aim ofacquiring assets mortgaged to the Bank as part of the recovery of long overdue debts.

The nancial statements of these subsidiaries have been consolidated with the parentcompany, Bank of Maldives Plc at year end 2013.

The Directors of the two companies are as follows:

Subsidiary company Directors

B.M.L Investments Pvt Ltd1. Ms. Aishath Noordeen, Managing Director

2. Mr. Mohamed Shareef, Director

B.M.L Proper es Pvt Ltd1. Ms. Aishath Noordeen, Managing Director

2. Mr. Mohamed Shareef, Director


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27 | Directors Report

DirectorsReport


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Board CompositionAr cle 47 of the Banks Ar cles of Associa on s pulates that the Board of Directorsshall comprise of 11 directors, from which 08 directors are nominated by theGovernment and elected by the shareholders while the remaining 03 directors areelected by the General Shareholders. Addi onally, as per Ar cles 79 and 80, theChairman and the Managing Director are also appointed by the Board of Directorsfrom among the elected Directors nominated by the Government. This composi onfalls in line with the Maldives Banking Act (24/2010), which came into force on 12thDecember 2010.

In compliance with the Corporate Governance Code of the Capital MarketDevelopment Authority (CMDA), the Board of Directors of the Bank represents a mix ofExecu ve, Non-Execu ve and Independent Directors so that it is capable of providingequitable, competent and e ec ve guidance for the Bank, upholding an environmentof good governance. The Board of Directors encompasses a range of talents, skillsand exper se required to provide sound and prudent guidance with respect to theopera ons and interests of the Bank.

The year 2013 began with the following members of the Board of Directors of theBank.

1. Dr. Abdullah Shiham HassanChairman Government Nominee, Independent & Non-Execu ve

2. Mr. Peter HortonManaging Director & CEO

Government Nominee, Non-Independent &Execu ve

3. Ms. Aishath NoordeenDeputy CEO

Government Nominee, Non-Independent &Execu ve

4. Mr. Mohamed Jaish Ibrahim Government Nominee, Non-Independent &Non-Execu ve

5. Mr. Adam Azim Government Nominee, Non-Independent &Non-Execu ve

6. Mr. Hassan Shameem Government Nominee, Independent & Non-Execu ve

7. Dr. Ismail Shafeeu Government Nominee, Independent & Non-Execu ve

8. Mr. Abdulla Naseem Government Nominee, Independent & Non-Execu ve

9. Mr. Mohamed Abdul Sa ar Elected by Public Shareholders, Independent &Non-Execu ve

10. Mr. Ibrahim Mohamed Elected by Public Shareholders, Independent &Non-Execu ve

11. Ms. Fathimath Niuma Elected by Public Shareholders, Independent &Non-Execu ve


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On 12th September 2013, Managing Director and CEO, Mr. Peter Horton resignedfrom the services of the Bank. Mr. Abdulla Naseem resigned on 18th November2013. With these changes, the Boards strength reduced to 09 directors.

As the Board of Directors of the Bank should comprise of 11 members, thequorum required for Board mee ngs as s pulated in Sec on 15 (g) of the BankingAct (24/2010) is 09 members, which is three fourths (3/4) of the en re Board.Nevertheless the mee ngs of the Board were con nuously held during 2013. TheBoard of Directors, under its discre onary powers as provided for under Ar cles 65and 66 of the Banks Ar cles of Associa on, formed an Execu ve Commi ee of theBoard comprising all Board members and delegated certain powers of the Board tothe Execu ve Commi ee to ensure business con nuity.

Frequency of MeetingsRegular Board mee ngs were held at least once a month as per regulatoryrequirements, while excep onal Board mee ngs were convened whenevernecessary.

The Board of Directors held 22 mee ngs from 01st January 2013 to 31st December2013, with a endance as below:

Directors No. ofmee ngsto a end

No. ofmee ngsa ended

Dr. Abdullah Shiham Hassan 22 21Mr. Peter Horton 17 17

Ms. Aishath Noordeen 22 19

Mr. Mohamed Abdul Sa ar 22 21

Mr. Ibrahim Mohamed 22 22

Mr. Mohamed Jaish Ibrahim 22 16

Mr. Adam Azim 22 16

Dr. Ismail Shafeeu 22 18

Mr. Hassan Shameem 22 18

Mr. Abdulla Naseem 20 19Ms. Fathimath Niuma 22 19


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The Execu ve Commi ee of the Board held 09 mee ngs during 2013 with a endance asbelow.

Directors No. ofmee ngsto a end

No. ofmee ngsa ended

Dr. Abdullah Shiham Hassan 09 09

Mr. Peter Horton 05 05

Ms. Aishath Noordeen 09 08

Mr. Mohamed Abdul Sa ar 09 05

Mr. Ibrahim Mohamed 09 08

Mr. Mohamed Jaish Ibrahim 09 04

Mr. Adam Azim 09 06Dr. Ismail Shafeeu 09 02

Mr. Hassan Shameem 09 06

Mr. Abdulla Naseem 05 05

Ms. Fathimath Niuma 09 08

Re ationship withShareho ders and

CustomersThe Bank ensures that all the necessaryfacili es and informa on are made availableto its shareholders and customers to enablethem to exercise their rights. In this regard,important developments including quarterlynancials of the Bank, announcements andno ces are displayed on the Banks websitefor the informa on of shareholders as wellas the general public.

The Corporate A airs Department ofthe Bank handles all ma ers related toshareholders. The Board of Directors and theManagement of the Bank always welcomesac ve par cipa on from shareholders at theGeneral Mee ngs.

Dec aration of InterimDividend during the year

2013On 28th July 2013, the Board of Directorsresolved to declare an interim dividend ofMVR 50 million which equates to MVR 9.29per share. Subsequently, on 14th November2013, the Board of Directors further resolvedto distribute the declared interim dividendto all shareholders registered in the BanksShareholders Register as at 31st October2013.


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Decision to ho d anExtraordinary GeneraMeetingAn Extraordinary General Mee ng of theShareholders was held on 28th December2013 in order to appoint the External Auditors.PricewaterhouseCoopers were reappointed asthe External Auditors of the Bank for 2013.

Financia ReportingThe Group publishes its Annual consolidatednancial statements which are preparedin accordance with Interna onal FinancialRepor ng Standards (IFRS), Maldives MonetaryAuthority (MMA) Regula ons and CapitalMarket Development Authority (CMDA)Regula ons, with comprehensive disclosures,enabling both exis ng and prospec veshareholders to make a mely and fairassessment of the Groups performance andprospects. The Bank, on a quarterly basis,publishes its latest nancial performance on its

website.

Emp oyeesThe Bank con nued to invest in the quality ofits employees during 2013, with the followingappointments made by the Board of Directorsduring the year.

Appointment of Ac ng ManagingDirector and Chief Execu ve O cer

Subsequent to the no ce of resigna onof Mr. Peter Horton, the Board ofDirectors in their 525th mee ng heldon 10th September 2013, approvedto appoint Ms. Aishath Noordeen,Deputy Chief Execu ve O cer as Ac ngManaging Director and CEO of the Banke ec ve 12th September 2013.

Appointment of Chief Execu ve o cerFollowing Mr. Peter Hortons resigna on,the Bank completed the recruitmentprocess for the post of the ChiefExecu ve O cer and in the 526thmee ng held on 02nd October 2013, theBoard of Directors approved to appointMr Andrew Healy as the Chief Execu veO cer of the Bank.

Appointment of Chief Financial O cerAs the Chief Financial O cer posi onat the Bank was vacant, the Bankcompleted the recruitment process to

appoint a candidate for the posi on.At the 526th mee ng of the Boardheld on 02nd October 2013, the Boardof Directors approved to appoint Mr.Nandana Senevirathne as Chief FinancialO cer of the Bank.

Other Major Decisions Selec on of Core Banking Vendor

At the 518th mee ng of the Boardheld on 23rd April 2013, the Board ofDirectors approved to select TemenosT24 as the Core Banking System of theBank.

Selec on of Enterprise ResourcePlanning (ERP) VendorThe Board of Directors in the 521stMee ng held on 16th June 2013,approved to select Microso DynamicsAX as the Banks provider of ERP

solu ons.

Approval of Document Reten on Policyof the BankThe rst Document Reten on Policy ofthe Bank was approved by the Board ofDirectors in their 522nd Mee ng held on21st July 2013.


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Corporate

GovernanceCompliance with Corporate GovernanceCode of Capital Market DevelopmentAuthority (CG Code):

The audited accounts prepared inaccordance with the Interna onalAccoun ng Standards were madeavailable to shareholders and otherstakeholders.

To ensure rm adherence to goodcorporate governance prac ces asstated in the CG Code, the Bankabides by the Corporate GovernanceCode of Bank of Maldives PLC.

Performance assessment of individualDirectors and of the Board as a wholewere conducted on an annual basis.

The Bank published its AnnualReport for the year 2012 within theregulatory meframe.

The Bank was unable to conveneits Annual General Mee ng withinthe s pulated me and a ne ofMVR125,000 was imposed for thisdelay by Maldives Stock Exchange asper Appendix 5 of the Lis ng Rules.

The Non-Execu ve and IndependentDirectors of the Banks Board wereunable to hold one mee ng in theabsence of the Management and

the Execu ve Directors as requiredby Part 2 Clause 1.6 (c) of the CGCode of Capital Market DevelopmentAuthority.

In accordance with the Trainingrequired under the CorporateGovernance Code, members of theBoard of Directors par cipated in aDirectors Training Programme andsuccessfully completed two modulesof the Programme conducted by

Singapore Ins tute of Directors/Singapore Management University(SID/SMU).

Overa Duties of theBoardThe overall du es of the Board are:

Providing control and direc on to theBank, including providing apex levelleadership and se ng strategic aims /objec ves for the Bank in conjunc onwith the Management;

Delibera ng on the Business Plan andthe Annual Budget for the Bank;

Reviewing the business and nancialperformance of the Bank measuredagainst the business plan and theAnnual Budget on a quarterly basis;

Ensuring the establishment ofe ec ve internal controls within theBank which will enable risks to beassessed, managed, and monitorand assess the e ec veness of suchinternal controls;

Ensuring that the Bank has adequatehuman resources to meet theobjec ves of the Bank;

Ensuring that obliga ons toshareholders and other stakeholdersare understood and met; and

Ensuring that the Bank complies withall relevant laws and regula ons,including the Corporate GovernanceCode and other codes of bestprac ces;

In order to ful l the aforemen oneddu es or any other func on that theBoard is obliged to adhere to, the Boardmay responsibly delegate its authori es tothe most suitable subcommi ee(s) of theBoard, Corporate Management, externalprofessional(s), consultant(s) or to any suchparty or par es that the Board deems t inthe best interests of the Bank.


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Responsibi ity StatementThe Board of Directors hereby cer es that;

i. The relevant accoun ng standardswere considered and followed allthrough the prepara on of Banksannual accounts with properexplana ons rela ng to materialdepartures;

ii. It selected such accoun ng policiesand applied them consistently and

made judgements and es mates thatare reasonable and prudent so as togive a fair and true view of the state ofa airs;

iii. It has taken proper and su cient carefor the maintenance of adequateaccoun ng records in accordancewith the provisions of CompaniesAct of the Republic of Maldives(Law no. 10/96), Maldives BankingAct (Law no. 24/2010), Pruden alRegula ons issued by the MaldivesMonetary Authority for safeguardingthe assets of the Bank and preven ngand detec ng frauds and otherirregulari es, Maldives Securi es Act(Law no. 02/2006), the Lis ng Rulesof the Maldives Stock Exchange andSecuri es (Con nuing DisclosureObliga ons of Issuers) Regula ons2010 issued by the Capital MarketDevelopment Authority;

iv. It has followed the CorporateGovernance Code issued by theCapital Market DevelopmentAuthority and;

v. All statements and accounts wereprepared on an ongoing basis.

vi. There were no unexpired service

contracts within one year withoutpayment of compensa on of anyDirector proposed for elec on.

vii. The borrowings of the Group as atthe end of the accoun ng period arerepresented as follows:

(In MVR 000)

Not later than 1 year 105,617

Between 1 to 2 years 108,487

Between 2 to 3 years 95,812

Over 3 years 228,780

viii. The Total Liabili es for thecompara ve year is:

Bank(In MVR 000)

Group(In MVR 000)

2012 8,918 nil

2013 10,839 10,840

ix. The Board of Directors a rms that

there are no other interests of theDirectors of the Bank except thosedisclosed in this report and theaccompanying nancial statements.Please refer notes to the nancials,page no. 94 for details on relatedparty transac ons.

x. The Board of Directors further a rmsthat no major events have occurredsince the balance sheet date whichwould require adjustments to, ordisclosure, in the nancial statements.


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36 | Audit and Risk Management Committee Report

Interna Contro sTo further reinforce the internal controlmechanism of the Bank, the Commi ee withthe assistance of the Chief Internal Auditor(CIA) and the Internal Audit Department(IAD), reviewed the e ec veness of the Banksinternal controls, which includes nancial,opera onal and compliance controls, andprocedures for iden ca on, assessment andrepor ng of risks. In this regard the Commi eehad discussions with the Management andappropriate guidelines were drawn up.

The CIA reports directly to the Audit andRisk Management Commi ee of the Board.As per the approved Audit Plan, the CIAreported to the Commi ee on a quarterlybasis. Ac on points were highlighted andconveyed to Management for strategizingand implementa on to enable a stronger riskmanagement framework and enhanced internalcontrols.

During 2013, the Commi ee reviewed and

followed up on issues raised through theWhistle Blowing System which strengthenedthe internal controls of the Bank.

Externa AuditPricewaterhouseCoopers were con rmed asthe Banks external auditors pursuant to thedecision of the Extraordinary General Mee ngheld on 28th December 2013.

During the year 2013, the external auditors didnot provide any non-audit related services.

On behalf of the Audit and Risk ManagementCommi ee

Ibrahim MohamedChairpersonAudit and Risk Management Commi ee


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37 | Appointment, Nomination and Remuneration Committee Report

Appointment,Nomination andRemuneration

Committee ReportThe 06th Appointment, Nomina on andRemunera on Commi ee (ANR Commi ee)of the Bank was cons tuted a er the 29thAnnual General Mee ng, in accordancewith Ar cles 54 and 63 of the Ar cles ofAssocia on of the Bank and Sec on 1.8 ofthe Corporate Governance Code issued bythe Capital Market Development Authority(CMDA).

The Commi ee performs the func onsof both a Nomina ng Commi ee and aRemunera on Commi ee. The purposeof the ANR Commi ee is to establish andrecommend to the Board a frameworkof remunera on packages for Directorsand Execu ve Management. With respectto appointment and nomina on issues,the Commi ee iden es and makesrecommenda ons on Board appointments

and conducts an annual review of the Boardsperformance and needs. The Commi ee alsoundertakes tasks which a ect sta across thebusiness including and not limited to reviewof Employee Handbook, salaries and bene ts.

Major roles and responsibili es of theCommi ee s pulated under Ar cle 54 of theAr cles of Associa on of the Bank are:

a. Iden fy and shortlist suitablecandidates to be nominated by theGovernment as Independent Directors;

b. Iden fy suitable candidates who meet

the requirements of Ar cle 53 to benominated by the Government forBoard appointment or reappointmentto ensure a suitable mix of Execu veand Non-Execu ve members on theBoard of Directors; in this regard,a minimum of 14 names must berecommended to the Government forconsidera on;

c. Review the quali ca ons and

experience of candidates nominated tothe Board prior to the General Mee ngto ensure that the informa on providedto the Shareholders are accurate; and

d. Iden fy suitable candidates withsu cient banking quali ca on andexperience to be nominated forappointment as the Managing Directorof the Company by the Board ofDirectors pursuant to Ar cle 80.


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Composition and Frequency of MeetingsThere were 41 mee ngs of the Appointment, Nomina on and Remunera onCommi ee of the Board during 2013. Membership and a endance details asbelow.

Directors No. ofmee ngsTo a end

A ended

Mr. Mohamed Abdul Sa arChairperson of the Commi eeNon-Execu ve and Independent

41 36

Mr. Ibrahim Mohamed

Non-Execu ve and Independent

41 40

Mr. Mohamed Jaish IbrahimNon-Execu ve & Non-Independent

41 23

Dr. Ismail ShafeeuNon-Execu ve & Independent

41 18

Mr. Hassan ShameemNon-Execu ve & Independent

41 34

RemunerationDirectors were remunerated as perAr cle 63 of the Ar cles of Associa onof the Bank.

The following table depicts thebreakdown of remunera on paid from01st January 2013 to 31st December2013 for the Board of Directors andKey Management Personnel.

Remunera on Details

Remunera onDetails

Amount (MVR)

Board of Directors 1,566,966.67

Key Management 14,625,444.88

Board Eva uationFostering good governance has beenand con nues to be a high priority ofthe Bank. An evalua on of individualDirectors and an evalua on of theBoard as a whole was conductedduring the 04th quarter 2013 asmandated under the CorporateGovernance Code of the Bank. Theresults of the evalua ons werediscussed by the Board of Directors.


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Committee ActivitiesThe Commi ee undertook the following tasks during the year:

Finaliza on of candidates for the posi ons of Chief Execu ve O cer, Chief FinancialO cer and Chief Internal Auditor

Review of the proposed Pay and Reward Structure of the Bank

Review of applica ons received for Public Directorship Posi ons

Review of the names to be suggested to the Government as Nominee Directors

On behalf of the Appointment, Nomina on and Remunera on Commi ee

Mohamed Abdul Sa arChairpersonAppointment, Nomina on and Remunera on Commi ee


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41 | Independent Auditor's Report


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42 | Independent Auditor's Report


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43 | Financia Statements

FinanciaStatements


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BANK OF MALDIVES PLC

Consolidated Financial Statements - 31 December 2013

The notes on pages 51 to 96 are an integral part of these nancial statements.

Conso idated Income Statement(All amounts in MVR 000 unless otherwise stated)

Year ended 31 December

Group Bank

Notes 2013 2013 2012

Gross income 6 1,976,940 1,970,093 1,351,160

Interest income and similar income 7 718,179 718,179 637,551

Interest expense and similar charges 7 (146,163) (146,163) (146,506)

Net interest income 572,016 572,016 491,045

Fee and commission income 8 416,475 416,475 364,729

Fees and commission expenses 8 (138,534) (138,534) (131,658)

Net fees and commission income 277,941 277,941 233,071

Net foreign exchange income 6 35,348 35,348 31,293

Other opera ng income 9 806,938 800,091 317,587

Opera ng pro t 1,692,243 1,685,396 1,072,996

Less : Opera ng expenses

Sta costs 10 (194,539) (194,539) (167,633)

Premises, equipment and establishment expenses 11 (68,565) (67,498) (64,780)

Provision for bad and doub ul debts 12 (336,544) (336,544) (292,895)

Other opera ng expenses 13 (73,415) (70,829) (48,474)Pro t before tax 1,019,180 1,015,986 499,214

Tax expense 14 (354,524) (353,756) (124,738)

Pro t a er tax 664,656 662,230 374,476

A ributable to:

- Equity holders of the parent / Bank 664,632 662,230 374,476

- Non-controlling interests 36 24 - -

664,656 662,230 374,476

Earnings per share a ributable to equity holders ofthe Parent / Bank during the year (expressed in MVRper share) - basic

15 123.50 123.05 69.58


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Conso idated Statement of Other ComprehensiveIncome(All amounts in MVR 000 unless otherwise stated)

Year ended 31 December

Group Bank

Notes 2013 2013 2012

Pro t for the year 664,656 662,230 374,476

Other comprehensive income:

Items that will not be reclassi ed to pro t or loss

Gains on revalua on of land and bank premises 25 - - 98,369

Revalua on of land and bank premises - tax 27 (10,534) (10,534) -

Other comprehensive (loss) / income for the year (10,534) (10,534) 98,369Total comprehensive income for the year 654,122 651,696 472,845

A ributable to:

- Equity holders of the parent / Bank 654,098 651,696 472,845

- Non-controlling interests 36 24 - -

654,122 651,696 472,845


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Conso idated Statement of Financia Position(All amounts in MVR 000 unless otherwise stated)

As at 31 December

Group Bank

Notes 2013 2013 2012

Assets

Cash and short term funds 17 3,461,755 3,458,879 2,426,041

Balances with Maldives Monetary Authority 18 2,327,136 2,327,136 2,108,928

Loans and advances 19 5,572,925 6,103,296 5,069,916

Assets held for sale 21 530,803 - -

Financial assets held to maturity 22 252,262 252,262 -

Available-for-sale investments 23 320 320 320

Investments in subsidiaries 24 - 20 -

Property, plant and equipment 25 286,232 286,232 207,282

Intangible assets 26 29,250 29,250 16,653

Deferred tax assets 27 104,201 104,201 209,046

Other assets 28 119,191 119,212 120,009

Total assets 12,684,075 12,680,808 10,158,195

Equity and liabili es

Liabili es

Deposits from non-bank customers 29 9,725,687 9,725,687 7,876,965

Custodian account of Maldives Re rementPension Scheme

30 20,614 20,614 19,861

Borrowings 31 538,696 538,696 636,016

Bills, acceptances and other documentary credits 32 7,929 7,929 4,296

Other liabili es 33 318,492 318,419 298,891

Tax liabili es 14 228,281 227,513 82,441

Total liabili es 10,839,699 10,838,858 8,918,470


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Equity a ributable to owners

Share capital 34 269,096 269,096 269,096

Share premium 34 93,000 93,000 93,000

Statutory and assigned capital reserves 35 156,000 156,000 156,000

General reserves 35 623,260 623,260 248,784

Revalua on reserves 86,255 86,255 98,369

Retained earnings 616,741 614,339 374,476

1,844,352 1,841,950 1,239,725

Non-controlling interest 36 24 - -

Total equity 1,844,376 1,841,950 1,239,725

Total equity and liabili es 12,684,075 12,680,808 10,158,195

Commitments and con ngencies 37 & 38 1,249,202 1,249,202 909,905

These nancial statements were approved by the Board on 22 April 2014 and signed on their behalf by:

Conso idated Statement of Financia Position (cont)(All amounts in MVR 000 unless otherwise stated)

As at 31 DecemberGroup Bank

Notes 2013 2013 2012

Nandana Senevirathne Andrew Healy Murthala Mohamed Didi

Chief Financial O cer Chief Execu ve O cer & Managing Director Ac ng Chairman


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Statement of Changes in Equity - Bank (All amounts in MVR 000 unless otherwise stated)

Notes Sharecapital

Sharepremium

Statutoryand

assignedcapital

reserves

Generalreserves Revalua on

reserves

Retainedearnings

Non-controlling

interest

Total

Balance at 1 January2012

269,096 93,000 156,000 248,784 - - - 766,880

Pro t for the year - - - - - 374,476 - 374,476

Other comprehensiveincome

- - - - 98,369 - - 98,369

Balance at 31December 2012

269,096 93,000 156,000 248,784 98,369 374,476 -1,239,725


269,096 93,000 156,000 248,784 98,369 374,476 -1,239,725

Pro t for the year - - - - - 662,230 - 662,230

Other comprehensiveloss

- - - - (10,534) - - (10,534)

Transfer to the generalreserves

35 - - - 374,476 - (374,476) - -

Deferred tax liability

reversal on revalua onsurplus

27 - - - - 527 - - 527

Deprecia on transfer onrevalued assets

- - - - (2,107) 2,107 - -

Interim dividend 16 - - - - - (49,998) - (49,998)


269,096 93,000 156,000 623,260 86,255 614,339 - 1,841,950


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Conso idated Statement of Changes in Equity(All amounts in MVR 000 unless otherwise stated)

Notes Sharecapital Sharepremium Statutoryandassigned

capitalreserves

Generalreserves Revalua onreserves

Retainedearnings Non-controllinginterest

Total


269,096 93,000 156,000 248,784 98,369 374,476 - 1,239,725

Pro t for the year - - - - - 664,632 24 664,656

Other comprehensiveloss

- - - - (10,534) - - (10,534)

Transfer to the general

reserves

35 - - - 374,476 - (374,476) - -

Deferred tax liabilityreversal on revalua onsurplus

27 - - - - 527 - - 527

Deprecia on transfer onrevalued assets

- - - - (2,107) 2,107 - -

Non controlling interestarising on businesscombina on

36 - - - - - - 0.2 0.2

Interim dividend 16 - - - - - (49,998) - (49,998)


269,096 93,000 156,000 623,260 86,255 616,741 24 1,844,376


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51 | Notes to the Conso idated Financia Statements

Notes to the Conso idated Financia Statements1 General information

Bank of Maldives PLC (the Bank) is engaged in the business of commercial banking and other nancialservices including trade nancing, custodial services and development nancing. The registered o ce issituated at 11, Boduthakurufaanu Magu, Male, 20094, Republic of Maldives.

The Bank is a public limited liability Company and is incorporated and domiciled in the Republic ofMaldives. The Bank is listed in the Maldives Stock Exchange.

The consolidated nancial statements of the Group for the year ended 31st December 2013 comprise theBank and its subsidiaries (together referred to as the Group).

2 Summary of signi cant accounting policies

The principal accoun ng policies adopted in the prepara on of these nancial statements are setout below. These policies have been consistently applied to all the years presented, unless otherwisestated.

2.1 Basis of preparationThe consolidated nancial statements of Bank of Maldives PLC have been prepared in accordance withInterna onal Financial Repor ng Standards (IFRS) and IFRIC interpreta ons, with the modi ca on ofthe requirements of IAS 39 - Financial Instruments : Recogni on and measurement in respect of loanloss provisioning and modi ca on of the requirement of IFRS 7 - Financial instruments on disclosures inrespect of credit risk grading by pruden al regula on No.05 - 2009 on Asset classi ca on, provisioningand suspension of interest issued by Maldives Monetary Authority (MMA). The consolidated nancialstatements have been prepared under the historical cost conven on, as modi ed by the revalua on ofGroups premises, available-for-sale nancial assets and nancial assets and liabili es.

2.2 New accounting standards issued but not e ective as at the balance sheetdate(a) New and amended standard adopted by the Group

The following standards have been adopted by the group for the rst me for the nancial year beginningon or a er 1 January 2013 and have a material impact on the group:

y Amendment to IAS 1, Financial statement presenta on regarding other comprehensive income.The main change resul ng from these amendments is a requirement for en es to group itemspresented in other comprehensive income (OCI) on the basis of whether they are poten allyreclassi able to pro t or loss subsequently (reclassi ca on adjustments).

y Amendment to IFRS 7, Financial instruments: Disclosures on asset and liability o se ng. Thisamendment includes new disclosures to facilitate comparison between those en es thatprepare IFRS nancial statements to those that prepare nancial statements in accordance withUS GAAP.

y IFRS 10, Consolidated nancial statements builds on exis ng principles by iden fying theconcept of control as the determining factor in whether an en ty should be included withinthe consolidated nancial statements of the parent company. The standard provides addi onalguidance to assist in the determina on of control where this is di cult to assess.


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y IFRS 11, Joint arrangements focuses on the rights and obliga ons of the par es to thearrangement rather than its legal form. There are two types of joint arrangements: jointopera ons and joint ventures. Joint opera ons arise where the investors have rights to the assetsand obliga ons for the liabili es of an arrangement. A joint operator accounts for its share of theassets, liabili es, revenue and expenses. Joint ventures arise where the investors have rights tothe net assets of the arrangement; joint ventures are accounted for under the equity method.Propor onal consolida on of joint arrangements is no longer permi ed.

y IFRS 12, Disclosures of interests in other en es includes the disclosure requirements for allforms of interests in other en es, including joint arrangements, associates, structured en esand other o balance sheet vehicles.

y IFRS 13, Fair value measurement aims to improve consistency and reduce complexity byproviding a precise de ni on of fair value and a single source of fair value measurement anddisclosure requirements for use across IFRSs. The requirements, which are largely alignedbetween IFRSs and US GAAP, do not extend the use of fair value accoun ng but provide guidanceon how it should be applied where its use is already required or permi ed by other standardswithin IFRSs.

(b) New standard and amendments issued but not yet adoptedCertain new standards and amendments are e ec ve for annual periods beginning a er 1 January 2013,and have not been applied in preparing these nancial statements. The following amended standard isnot expected to have a material impact on the nancial statements of the Group:

y IAS 19, Employee bene ts (amendment), (e ec ve from 1 January 2013).

(c) New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpreta ons are e ec ve forannual periods beginning a er 1 January 2013, and have not been applied in preparing these nancialstatements. A summary of new accoun ng standards are set out below:

y IAS 27, Separate Financial Statements (amendment), (e ec ve from 1 January 2014).

y IAS 32,Financial instruments: Presenta on (amendment), (e ec ve from 1 January 2014).

y IAS 36, Impairment of assets (amendment), (e ec ve from 1 January 2014).

y IAS 39, Financial Instruments: Recogni on and Measurement (amendment), (e ec ve from 1January 2014).

y IFRS 9,Financial instruments, (e ec ve from 1 January 2015): and

y IFRIC 21, Levies, (e ec ve from 1 January 2014).

2.3 Consolidation(a) Subsidiaries

Subsidiaries are all en es (including structured en es) over which the group has control. The groupcontrols an en ty when the group is exposed to, or has rights to, variable returns from its involvementwith the en ty and has the ability to a ect those returns through its power over the en ty. Subsidiariesare fully consolidated from the date on which control is transferred to the group. They are deconsolidatedfrom the date that control ceases.

The group applies the acquisi on method to account for business combina ons. The considera ontransferred for the acquisi on of a subsidiary is the fair values of the assets transferred, the liabili esincurred to the former owners of the acquiree and the equity interests issued by the group. Theconsidera on transferred includes the fair value of any asset or liability resul ng from a con ngentconsidera on arrangement. Iden able assets acquired and liabili es and con ngent liabili es assumedin a business combina on are measured ini ally at their fair values at the acquisi on date. The group


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recognises any non-controlling interest in the acquiree on an acquisi on-by-acquisi on basis at the non-controlling interests propor onate share of the recognised amounts of acquirees iden able net assets.

The excess of the considera on transferred, the amount of any non-controlling interest in the acquireeand the acquisi on-date fair value of any previous equity interest in the acquiree over the fair value ofthe iden able net assets acquired is recorded as goodwill. If the total of considera on transferred, non-controlling interest recognised and eviously held interest measured is less than the fair value of the netassets of the subsidiary acquired in the case of a bargain purchase, the di erence is recognised directly inthe consolidated income statement.

Inter-company transac ons, balances and unrealised gains on transac ons between group companiesare eliminated. Unrealised losses are also eliminated but considered an impairment indicator of theasset transferred. Accoun ng policies of subsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the Group.

(b) Transactions and non-controlling interests

Non-controlling interest is that por on of the pro t or loss and net asset of a subsidiary a ributable toequity interests that are not owned, directly or indirectly through subsidiaries, by the parent.

The Group applies a policy of trea ng transac ons with minority interests as transac ons with par esexternal to the Group. Disposals to minority interests result in gains and losses for the Group that arerecorded in the consolidated income statement. Purchases from minority interests result in goodwill,being the di erence between any considera on paid and the relevant share acquired of the carryingvalue of net assets of the subsidiary.

2.4 Foreign currency translation(a) Functional and presentation currency

Items included in the nancial statements of each of the Groups en es are measured using the

currency of the primary economic environment in which an en ty operates (the func onal currency).These consolidated nancial statements are presented in Maldivian Ru yaa (MVR), which is the Groupsfunc onal and presenta on currency.

(b) Transactions and balances

Foreign currency transac ons are translated into the func onal currency using the exchange ratesprevailing at the dates of the transac ons or valua on where items are re-measured. Foreign exchangegains and losses resul ng from the se lement of such transac ons and from the transla on at year-endexchange rates of monetary assets and liabili es denominated in foreign currencies are recognised inthe consolidated income statement, except when deferred in other comprehensive income as qualifyingcash ow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate toborrowings and cash and cash equivalents are presented in the consolidated income statement within

net foreign exchange income.Transla on di erences on non-monetary nancial assets and liabili es such as equi es held at fair valuethrough pro t or loss are recognised in pro t or loss as part of the fair value gain or loss. Transla ondi erences on non-monetary nancial assets, such as equi es classi ed as available for sale, are includedin consolidated statement of other comprehensive income.

2.5 Non-current assets (disposal groups) held for saleNon-current assets (or disposal groups) are classi ed as assets held for sale when their carrying amountis to be recovered principally through a sale transac on and a sale is considered highly probable. They arestated at the lower of carrying amount and fair value less costs to sell.


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2.6 Financial assets

The Group classi es its nancial assets in the following categories: at fair value through pro t or loss,loans and receivables; held-to-maturity investments; and available-for-sale nancial assets. Managementdetermines the classi ca on of its nancial assets at ini al recogni on.

(a) Loans and receivables

Loans and receivables are non-deriva ve nancial assets with xed or determinable payments that arenot quoted in an ac ve market, other than: (a) those that the Group intends to sell immediately or inthe short term, which are classi ed as held for trading, (b) those that the Group upon ini al recogni ondesignates as available for sale, or (c) those for which the holder may not recover substan ally all of itsini al investment, other than because of credit deteriora on.

Loans and receivables are ini ally recognised at fair value which is the cash considera on to originatethe loan including any transac on costs and carried subsequently with accrued interest. Loans andreceivables are reported in the balance sheet as loans and advances to customers. Interest on loans isincluded in the consolidated income statement and is reported as Interest and similar income. In thecase of an impairment, the impairment loss is reported as a deduc on from the carrying value of the loanand recognised in the consolidated income statement as Provision for bad and doub ul debts.

(b) Held-to-maturity nancial assets

Held-to-maturity investments are non-deriva ve nancial assets with xed or determinable payments andxed maturi es that the Groups management has the posi ve inten on and ability to hold to maturity,other than: (a) those that the Group upon ini al recogni on designates as at fair value through pro t orloss; (b) those that the Group designates as available for sale; and (c) those that meet the de ni on ofloans and receivables.

These are ini ally recognised at fair value including direct and incremental transac on costs andmeasured subsequently at amor sed cost, using the e ec ve interest method. Interest on held-to-maturity investments is included in the consolidated income statement and reported as Interest and

similar income. In the case of an impairment, the impairment loss is reported as a deduc on from thecarrying value of the investment and recognised in the consolidated income statement as net gains /(losses) on investment securi es. Held-to-maturity investments only include treasury bills.

(c) Available-for-sale nancial assets

Available-for-sale investments are nancial assets that are intended to be held for an inde nite period ofme, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates orequity prices, that are not classi ed as loans and receivables, held-to-maturity investments or nancialassets at fair value through pro t or loss.

Available-for-sale nancial assets are ini ally recognised at fair value, which is the cash considera onincluding any transac on costs, and measured subsequently at fair value with gains and losses beingdirectly recognised in the consolidated statement of comprehensive income, except for impairment lossesand foreign exchange gains and losses, un l the nancial asset is derecognised. If an available-for-salenancial asset is determined to be impaired, the cumula ve gain or loss previously recognised in theconsolidated statement of comprehensive income is recognised in the consolidated income statement.Dividends on available-for-sale equity instruments are recognised in the consolidated income statementin Dividend income when the Groups right to receive payment is established.

The fair values of quoted investments in ac ve markets are based on current bid prices. In case ofinvestments in unquoted equity shares, they are stated at cost less allowance for falling value ofinvestment, since the fair value of those cannot be measured reliably.


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2.7 Financial liabilitiesDeposits from customers and borrowings

Financial liabili es of the Group include deposits from customers, long term debts and other liabili es.Savings deposits are carried with accrued interest. Long term borrowings are carried a er deduc on of

principals repayment from ini al borrowings. Interest accrued on xed deposits and long term debts areincluded under other liabili es. Financial liabili es are derecognised when ex nguished.

2.8 O setting nancial instrumentsFinancial assets and liabili es are o set and the net amount reported in the consolidated statement ofnancial posi on when there is a legally enforceable right to o set the recognised amounts and there isan inten on to se le on a net basis, or realise the asset and se le the liability simultaneously. This is notthe case with the assets and liabili es presented gross in the consolidated statement of nancial posi on.

2.9 Interest income and expensesInterest income and expense for all interest-bearing nancial instruments, except for those classi ed asheld for trading, are recognised within interest income and interest expense in the consolidated incomestatement on accrual basis by applying the agreed interest rate. However, interest income is suspendedwhen loans become doub ul of collec on, such as when overdue by more than 90 days. Such income isexcluded from interest income un l received.

2.10 Fee and commission incomeThe income mainly comprise fees receivable from customers for card related services, guarantees, foreignand domes c payment tari and other services provided by the Group. Such income is recognised asrevenue as the services are provided.

Income on the endorsement of bills of exchange is recognised only when the bill is received and eitherissued or endorsed, and the payment under the par cular instrument has been e ected.

2.11 Dividend incomeDividends are recognised in the consolidated income statement when the Groups right to receivepayment is established.

2.12 Impairment of nancial assets(a) Loans and advances

All loans and advances are recognised when the cash is advanced to borrowers.

A speci c credit risk provision for loan impairment is established to provide for managements es mate ofcredit losses as soon as the recovery of an exposure is iden ed as doub ul.

Provision for loan impairment is made on the basis of con nuous review of all advances to customers,in accordance with the pruden al regula on No.05 - 2009 on Asset classi ca on, provisioning andsuspension of interest and the circular no: CN-CBSS/2012/5 issued by MMA on aged classi ca on ofadvances as follows:


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If a loan is renego ated and all overdue interest is paid by the borrower in cash at the me ofrenego a on, the renego ated loan is classi ed as Sub-standard. If a loan is renego ated but all overdueinterest is not paid by the borrower in cash at the me of renego a on, the loan is classi ed accordingto Part III of pruden al regula on No.05 - 2009 on Asset classi ca on, provisioning and suspension ofinterest issued by MMA.

A renego ated loan is upgraded to performing category only a er the payments made according tothe restructured loan terms for a period of at least six months and sa sfactory performance of the loanduring such period. If any por on of principal or interest of a renego ated loan subsequently becomespast due 90 days or more, the en re loan is placed in non-accrual status and remain so un l all overdueprincipal and interest is brought current by payment in cash.

2.13 Property, plant and equipment

Groups premises are shown at fair value, based on valua ons by an external independent valuer. Anyaccumulated deprecia on at the date of revalua on is eliminated against the gross carrying amount ofpremises, and the net amount is restated to revalued amount of the assets.

All other property, plant and equipments are stated at historical cost less deprecia on. Historical costincludes expenditure that is directly a ributable to the acquisi on of the items.

Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic bene ts associated with the item will owto the Group and the cost of the item can be measured reliably. All other repairs and maintenanceare charged to the consolidated income statement during the nancial period in which they areincurred.

Deprecia on is calculated using the straight-line method to allocate their cost or revalued amounts totheir residual values over their es mated useful lives, commencing from the date on which the assetswere put to use, as follows:

Bank premises - 20 years

Computer hardware and so ware - 3 - 5 years

Furniture and equipment - 5 years

Motor vehicles / vessels - 5 years

Leasehold buildings are amor sed over the unexpired period of the lease.

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each date ofthe statement of nancial posi on. Assets that are subject to amor sa on are reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.An assets carrying amount is wri en down immediately to its recoverable amount, if the assets carryingamount is greater than its es mated recoverable amount. The recoverable amount is the higher of theassets fair value less costs to sell and value in use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These areincluded in other opera ng income or other opera ng expenses, as the case may be, in the consolidatedincome statement.

2.14 Intangible assetsIntangible assets comprise separately iden able intangible items. Computer so ware licences and other

intangible assets are considered as intangible assets, are recognised at cost. Intangible assets with ade nite useful life are amor zed using the straight-line method over their es mated useful economic life.Intangible assets with an inde nite useful life are not amor sed. Generally, the iden ed intangible assetsof the Group have a de nite useful life. At each date of the statement of nancial posi on, intangible


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assets are reviewed for indica ons of impairment or changes in es mated future economic bene ts. Ifsuch indica ons exist, the intangible assets are analysed to assess whether their carrying amount is fullyrecoverable. An impairment loss is recognised if the carrying amount exceeds the recoverable amount.

2.15 Operating leasesLeases of assets under which all the risks and bene ts of ownership are e ec vely retained by the lessorare classi ed as opera ng leases. Payments made under opera ng leases are charged to the premises,equipment and establishment expenses in the consolidated income statement on a straight-line basisover the period of the lease.

When an opera ng lease is terminated before the lease period has expired, any payment required to bemade to the lessor by way of penalty is recognised as an expense in the period in which termina on takesplace.

2.16 Cash and cash equivalents

For the purposes of the cash ow statement, cash and cash equivalents comprise balances with less thanthree months maturity from the date of acquisi on, including cash in hand, deposits held at call withother banks and other short-term highly liquid investments with original maturi es of three months orless.

2.17 Provisions

Provisions are recognised when: the Group has a present legal or construc ve obliga on as a resultof past events; it is more likely than not that an ou low of resources will be required to se le theobliga on; and the amount has been reliably es mated. Provisions are not recognised for futureopera ng losses.

Where there are a number of similar obliga ons, the likelihood that an ou low will be required inse lement is determined by considering the class of obliga ons as a whole. A provision is recognisedeven if the likelihood of an ou low with respect to any one item included in the same class of obliga onsmay be small.

Provisions are measured at the present value of the expenditures expected to be required to se le theobliga on using a rate that re ects current market assessments of the me value of money and the risksspeci c to the obliga ons.

2.18 Financial guarantee contractsFinancial guarantee contracts are contracts that require the issuer to make speci ed payments toreimburse the holder for a loss it incurs because a speci ed debtor fails to make payments when due, in

accordance with the terms of a debt instrument. Such nancial guarantees are given to banks, nancialins tu ons and other bodies on behalf of customers to secure loans, overdra s and other bankingfacili es.

Financial guarantees are ini ally recognised in the nancial statements at the amount guaranteed onthe date the guarantee was given. Subsequent to ini al recogni on, the Groups liabili es under suchguarantees are measured at the ini al amount, less the best es mate of the expenditure required tose le those guarantees.

Any increase in the liability rela ng to guarantees is taken to the consolidated income statement underother opera ng expenses.


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2.19 Employee bene ts

(a) Sta Provident Fund

The Group operates a Sta Provident Fund. All the local employees of the Group who have subscribed tothe fund are the members of this Fund to which the Group contributes 3%. This contribu on is recognised

as employee bene t expense when they are due.

(b) Retirement Pension Scheme

The Group has enrolled the employees in the Re rement Pension Scheme with e ect from 1 May2011 based on the Regula on on Maldives Re rement Pension Scheme published by the Governmentof Maldives and deducts at the rate of 7% from the employees pensionable wages on behalf of theemployees of age between 16 and 65 years and pays to the pension o ce. Group contributes tore rement pension scheme at the rate of 7% on pensionable wages. Obliga ons for contribu ons tore rement pension scheme is recognised as an employee bene t expense in the consolidated incomestatement.

2.20 Current and deferred tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidatedincome statement, except to the extent that it relates to items recognised in consolidated statement ofother comprehensive income or directly in equity. In this case, the tax is also recognised in consolidatedstatement of other comprehensive income or directly in equity, respec vely.

The current tax charge is calculated on the basis of the tax laws enacted or substan vely enacted at thedate of statement of nancial posi on in the countries where the Bank and its subsidiaries operate andgenerate taxable income. Management periodically evaluates posi ons taken in tax returns with respectto situa ons in which applicable tax regula on is subject to interpreta on. It establishes provisions whereappropriate on the basis of amounts expected to be paid to the tax authori es.

Deferred tax is recognised on temporary di erences arising between the tax bases of assets and liabili esand their carrying amounts in the consolidated nancial statements. However, deferred tax liabili es arenot recognised if they arise from the ini al recogni on of goodwill; deferred tax is not accounted for if itarises from ini al recogni on of an asset or liability in a transac on other than a business combina onthat at the me of the transac on a ects neither accoun ng nor taxable pro t or loss. Deferred tax isdetermined using tax rates (and laws) that have been enacted or substan vely enacted by the date ofstatement of nancial posi on and are expected to apply when the related deferred tax asset is realisedor the deferred tax liability is se led.

Deferred tax assets are recognised only to the extent that it is probable that future taxable pro t will beavailable against which the temporary di erences can be u lised.

Deferred tax liabili es are provided on taxable temporary di erences arising from investments insubsidiaries, except for deferred tax liability where the ming of the reversal of the temporary di erenceis controlled by the Group and it is probable that the temporary di erence will not reverse in theforeseeable future.

Deferred tax assets are recognised on deduc ble temporary di erences arising from investments insubsidiaries only to the extent that it is probable the temporary di erence will reverse in the future andthere is su cient taxable pro t available against which the temporary di erence can be u lised.

Deferred tax assets and liabili es are o set when there is a legally enforceable right to o set current taxassets against current tax liabili es and when the deferred taxes assets and liabili es relate to taxes leviedby the same taxa on authority on either the same taxable en ty or di erent taxable en es where thereis an inten on to se le the balances on a net basis.

2.21 Acceptances Acceptances comprise undertakings by the Group to pay the bills of exchange drawn on customers. TheGroup expects most acceptances to be se led simultaneously with reimbursement from the customers.Acceptances are accounted for as o balance sheet transac ons and are disclosed as con ngent liabili esand commitments.


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2.22 Share capitalOrdinary shares are classi ed as equity.

2.23 Fiduciary activitiesThe Bank acts as trustees and in other duciary capaci es that result in the holding or placing of assets onbehalf of individuals, trusts, re rement bene t plans and other ins tu ons. Those assets that are held ina duciary capacity are not included in these consolidated nancial statements of the Group.

Custodian account of Maldives Retirement Pension Scheme

Pursuant to the agreement entered with Maldives Pension Administra on O ce (MPAO), theadministrator of Maldives Re rement Pension Scheme, the Bank performs custodial and other servicesrela ng to the establishment and maintenance of contribu on collec on and contribu on holdingaccounts of Maldives Re rement Pension Scheme, in which the Bank keeps the funds and, at the direc onof MPAO or a person authorised by MPAO, invests the funds in the designated nancial instruments, in

considera on for which MPAO pays a fee to the Bank. The movement in Contribu on holding accountheld by the Bank on behalf of MPAO has been separately disclosed in Note 30.

2.24 ComparativesThis is the rst set of consolidated nancial statements prepared following forma on of two subsidiarycompanies during the year and therefore there are no compara ves for the Group. In case of Banksnancial statements, where necessary, compara ve gures have been adjusted to conform with changesin presenta on in the current year.

3 Financial risk management

The Groups ac vi es expose it to a variety of nancial risks and those ac vi es involve the analysis,evalua on, acceptance and management of some degree of risk or combina on of risks. Taking riskis core to the nancial business, and the opera onal risks are an inevitable consequence of being inbusiness. The Groups aim is therefore to achieve an appropriate balance between risk and return andminimise poten al adverse e ects on the Groups nancial performance.

The Groups risk management policies are designed to iden fy and analyse these risks, to set appropriaterisk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date informa on systems. The Group regularly reviews its risk management policies and systems to re ectchanges in markets, products and emerging best prac ce.

Risk management is carried out by the Group under policies approved by the Board of Directors. TheGroup iden es and evaluates nancial risks in close co-opera on with the Groups opera ng units. TheBoard provides wri en principles for overall risk management, as well as wri en policies covering speci careas, such as credit risk and liquidity risk. In addi on, internal audit is responsible for the independentreview of risk management and the control environment. The most important types of risk are credit risk,liquidity risk, market risk and other opera onal risk. Market risk includes currency risk, interest rate andother price risks.

3.1 Credit riskThe Group takes on exposure to credit risk, which is the risk that a counterparty will cause a nancial lossfor the Group by failing to discharge an obliga on. Credit risk is the most important risk for the Groupsbusiness; management therefore carefully manages its exposure to credit risk. Credit exposures ariseprincipally in lending ac vi es that lead to loans and advances. There is also credit risk in o -balancesheet nancial instruments, such as loan commitments.


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Exposure to credit risks arises from lending, sales and trading. Lending exposures are typically representedby the principal amount of on-balance sheet nancial instruments. Financial guarantees and standbyle ers of credit, which represent undertakings that the Group will make payments in the event that acustomer cannot meet its obliga ons to third par es, carry the same credit risk as loans even though theyare of con ngent nature. Documentary and commercial le ers of credit, which are undertakings by theGroup on behalf of a customer, are usually collateralised by the underlying shipments of goods to whichthey relate and therefore exhibit di erent risk characteris cs from direct borrowing. Commitments toextend credit include unused por ons of loan commitments, guarantees or le ers of credit. The majorityof unused commitments are con ngent upon customers observing or mee ng certain credit terms andcondi ons.

Credit policies were formulated to cover the Groups credit ac vi es and establishment of individuallimits of authority for ini a ng, reviewing and approving credit. The risk organisa on is structured suchthat there is segrega on of du es between risk taking and risk controlling units. A Credit Commi eecomprising ve members, chaired by the Head of Credit (HOC), meets regularly to discuss credit proposalsin line with credit policies.

3.1.1 Credit risk measurementThe Group has not introduced the system of internal ra ng, probability of default and consequen alprobability of losses. The credit risk management of the exposures is conducted through credit gran ngprocess which includes the assessment of the creditworthiness and the establishment of appropriatecredit limits. Credit approvers have the responsibility to ensure that credits are properly assessed andclassi ed. The sta of the Group also assume the responsibility to ensure all crucial informa on isincluded in the applica on for the purpose of analysis and approval. The analysis suppor ng the cred

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