citibank, n.a. bangladesh branches - citigroup.com · with bangladesh standards on auditing. those...

Citibank, N.A. Bangladesh Branches (Offshore Banking Unit)

Report and financial Statements as at and forthe year ended 31 December 2017

INDEPENDENT AUDITOR’S REPORT TO THE MANAGEMENT OF CITIBANK, N.A. BANGLADESH BRANCHES

Offshore Banking Unit

We have audited the accompanying financial statements of the Offshore Banking Unit (“the Unit”) of the Citibank, N.A., Bangladesh Branches (the “Bank”) which comprise the balance sheet as at 31 December 2017 and profit and loss account, cash flow statement and statement of changes in equity for the year then ended, and a summary of significant accounting policies, other explanatory notes and annexure thereto. Management Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements of the Unit that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in Note 2.1 and for such internal control as management determines is necessary to enable the preparation of financial statements of the Unit that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the local central bank (Bangladesh Bank) Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Unit. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of the Unit give a true and fair view of the financial position of the Unit as at 31 December 2017, and of its financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in Note 2.1.

Report on Other Legal and Regulatory RequirementsIn accordance with the Companies Act 1994, the Bank Company Act 1991 and the rules and regulations issued by Bangladesh Bank, we also report that:

(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

(ii) to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility

section in forming the above opinion on the financial statements of the Unit and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Control:

(a) internal audit, internal control and risk management arrangements of the disclosed in the financial statements

appeared to be materially adequate;

(b) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Unit during the year ended 31 December 2017;

(iii) in our opinion, proper books of account as required by law have been kept by the Unit so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us;

(iv) the balance sheet and profit and loss account of the Unit together with the annexed notes dealt with by the report are in agreement with the books of account and returns;

(v) the expenditures incurred was for the purpose of the Unit’s business;

(vi) the financial statements of the Unit have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;

(vii) adequate provisions have been made against classified loans and advances;

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

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

(x) we have reviewed over 80% of the risk weighted assets of the Unit and spending over 250 person hours

Hoda Vasi Chowdhury & CoChartered Accountants

Dhaka, 22 February 2018

S. H. Aslam HabibChief Financial Officer, Bangladesh

As per our report of same date.

Auditor

Hoda Vasi Chowdhury & CoDhaka, 22 February 2018

N. RajashekaranManaging Director and

Citi Country Officer, Bangladesh

AuditorHoda Vasi Chowdhury & Co

N. Rajashekaran

Managing Director and


S. H. Aslam Habib

Chief Financial Officer, Bangladesh

As per our report of same date.

Dhaka, 22 February 2018

Citibank, N.A.

8 Gulshan Avenue, Gulshan - 1, Dhaka 1212, Bangladesh

A company incorporated in the USA with limited liabilities.

© 2018 Citigroup Inc. All rights reserved. Citi, Citi and arc Design are service and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.

Page 8 of 11

Balance Sheet as at 31 December 2017

Notes

4

5

6

7

8

9

10

11

12

13.1

13.2

13.3

Property and assets

Cash (including foreign currencies) Cash in hand Balance with Bangladesh Bank and its agent bank (s)

Balance with other banks and financial institutions Inside Bangladesh Outside Bangladesh

Money at call and short notice Investments Government securities Others Loans and advances Loans, cash credits and overdrafts Bills purchased and discounted

Fixed assets including premises, furniture and fixtures Other assets Non banking assets Total assets Liabilities and capital

Liabilities Borrowings from other banks, financial institutions and agents Deposits and other accounts Current and other accounts, etc. Bills payable Savings bank deposits Fixed deposits Bearer certificates of deposits Other deposits

Other liabilities

Total liabilities

Equity Fund deposited with Bangladesh Bank as capital Other reserve Profit and loss account Total equity Total liabilities and equity Off balance sheet items Contingent liabilities Acceptances and endorsements Letters of guarantee Irrevocable letters of credit Bills for collection Other contingent liabilities Other commitments Documentary credits and short term trade - related transactions Forward assets purchased and forward deposits placed

Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities, credit lines and other commitments Total off-balance sheet items including contingent liabilities

- - -

- 18,291,703 18,291,703

-

- - -

10,636,348

36,969,786

47,606,134

51,369

30,738

- 65,979,944

56,953,855

2,886,851

- - - -

-

2,886,851

1,726,473

61,567,179

-

- 4,412,765 4,412,765

65,979,944

1,120,756 -

2,818,042 - -

3,938,798

-

-

-

- -

3,938,798

- - -

-

1,512,723,883 1,512,723,883

-

- - -

879,625,937

3,057,401,315

3,937,027,252

4,248,249

2,542,047

- 5,456,541,431

4,710,083,809

238,742,578

- - - -

- 238,742,578

142,779,337

5,091,605,724

-

-

364,935,707 364,935,707

5,456,541,431

92,686,504

- 233,052,081

- -

325,738,585

-

-

-

- -

325,738,585

- - -

- 7,085,406 7,085,406

-

- - -

14,324,042

28,327,183

42,651,225

76,338

15,882

- 49,828,851

42,245,550

2,882,751

- - - -

-

2,882,751

1,604,165

46,732,466

-

- 3,096,385 3,096,385 49,828,851

556,853

- 1,757,082

- -

2,313,935

-

-

-

- -

2,313,935

- - -

-

557,621,439 557,621,439

-

- - -

1,127,302,137

2,229,349,273

3,356,651,410

6,007,774

1,249,910

- 3,921,530,533

3,324,724,785

226,872,502

- - - -

-

226,872,502

126,247,812

3,677,845,099

-

- 243,685,434 243,685,434

3,921,530,533

43,824,365

- 138,282,350

- -

182,106,715

-

-

-

- -

182,106,715

2017

USD Taka

2016

USD Taka

The annexed notes 1 to 24 and annexures A to C form an integral part of these financial statements.

Profit and Loss Account for the year ended 31 December 2017

2017

USD Taka

2016

USD Taka

2,008,574 482,190

1,526,384

-

782,156

(606)

2,307,934

110,659 4,483

458 37

50

25,172

6,822

147,681

2,160,253

-

102,408

(25,980)

76,428 2,236,681

(925,789)

5,488 (920,301)

1,316,380

-

166,109,070 39,877,113

126,231,957

- 64,684,300

(50,116)

190,866,141

9,151,499 370,744

37,877 3,060

4,135

2,081,724

564,148

12,213,187

178,652,954

-

8,469,180

(2,148,575)

6,320,605 184,973,559

(76,562,750) 453,858

(76,108,892)

108,864,667

-

1,411,777 169,291

1,242,486

- 501,168

-

1,743,654

95,388 14,773

117 1,306

2,039

40,551

18,152

172,326

1,571,328

-

(227,508)

12,869

(214,639) 1,356,689

(662,105) 9,058

(653,047)

703,642

-

111,106,844 13,323,236

97,783,608

-

39,441,924

-

137,225,532

7,507,022 1,162,659

9,239 102,774

160,454

3,191,359

1,428,541

13,562,048

123,663,484

-

(17,904,863)

1,012,751

(16,892,112) 106,771,372

(52,107,638) 712,874

(51,394,764)

55,376,608

-

Interest income Interest paid on deposits and borrowings Net interest income

Income from investment Commission, exchange and brokerage Other operating income

Total operating income

Salaries and allowances Rent, taxes, insurance, electricity, etc. Legal expenses Postage, stamps, telephone, telex, etc. Stationary, Printing, advertisement, etc. Depreciation & repair-maintenance Other expenses Total operating expenses

Profit before provisions

Provision for loans and advancesSpecific provision for classified loans and advancesGeneral provision for unclassified loans and advances General provision for off balance sheet exposures

Total provisions Total Income before tax

Provisions for income tax: Current tax Deferred tax

Net profit after tax

Appropriations

15 16

17

18

Cash flow statement for the year ended 31 December 2017

A.

B.

C.

D.

E.

F.

G.

Cash flows from operating activitiesInterest receipts in cashInterest paymentsDividend receiptsFee and commission receipts in cash Recoveries of loans previously written offCash payments to employeesCash payment to suppliersIncome taxes paidIncome from trading securityCash paid for other operating activitiesOperating profit before changes in operating assets and liabilities

(Increase)/decrease in operating assets and liabilitiesStatutory depositsSale of trading securitiesLoans and advances to other banksLoans and advances to customersOther assetsDeposits from other banksDeposits from customersBorrowing from other banks and financial institutionsTrading liabilitiesOther liabilities

Net cash flow from operating activities

Cash flows from investing activitiesProceeds from sale of securitiesPayment for purchase of securitiesPurchase of fixed assetsProceeds from sale of assetsNet cash flow from investing activities

Cash flows from financing activitiesProfit remitted to head officeNet cash flow from financing activities

Net increase/(decrease) in cash and cash equivalents (A+B+C)

Cash and cash equivalents at the beginning of the year

Effect of difference in conversion rate

Cash and cash equivalents at the end of the year (D+E+F)

2017

USD Taka

2,042,698 (478,008)

-

782,156 -

(110,659) (6,225)

(693,353) -

(9,926)

1,526,683

- - -

(4,989,032) (14,857)

- 4,100

14,708,305

- (32,394)

9,676,122

11,202,805

-

-

- 3,492 3,492

- -

11,206,297

7,085,406

-

18,291,703

168,931,125 (39,531,251)

-

64,684,301 -

(9,151,499)

(514,841) (57,340,293)

-

(820,894)

126,256,648

- - -

(412,592,946) (1,228,643)

- 339,071

1,216,376,824

- (2,678,984)

800,215,322

926,471,970

-

-

- 288,767 288,767

- -

926,760,737

557,621,439

28,341,707

1,512,723,883

1,621,796 (197,350)

-

501,168 -

(95,388) (31,868)

(514,922) -

(18,144)

1,265,292

- - -

(9,298,962)(2,266)

- (627,899)

3,866,663

- 99,092

(5,963,372)

(4,698,080)

-

-

(2,943) -

(2,943)

(842,939) (842,939)

(5,543,962)

12,629,368

-

7,085,406

127,635,345 (15,531,457)

-

39,441,923 -

(7,507,022) (2,508,012)

(40,524,361) -

(1,427,926)

99,578,490

- - -

(731,828,309) (178,304)

- (49,415,635)

304,306,339

- 7,798,540

(469,317,369)

(369,738,879)

-

-

(231,618) -

(231,618)

(66,339,347) (66,339,347)

(436,309,844)

991,405,393

2,525,890

557,621,439

2016

USD Taka

Notes

19

Background Citibank, N.A. Bangladesh Branches (the "Bank") commenced its banking operations in Dhaka, Bangladesh on 24 June 1995 after obtaining licence from Bangladesh Bank dated 26 January 1995. Citigroup Inc. (formed from the merger of Citicorp Inc. and Travelers Group Inc. on 8 October 1998) a holding company under the law of United States of America, is the sole shareholder of Citibank, N.A. The Bank started its Offshore Banking Unit ("OBU"/the "Unit") on 26 April 2006.

Nature of business The OBU is engaged in offshore banking under a licence granted by Bangladesh Bank. The Unit provides off-shore banking services to Dhaka and Chittagong EPZ customers.

Basis of preparation

Statement of compliance

The financial statements of the Bank are prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Company (amendment) Act, 2013, the rules and regulations issued by Bangladesh Bank and the Companies Act 1994. In case any requirement of the Bank Company (amendment) Act, 2013, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Company (amendment) Act, 2013, and provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of BFRS are as follows:

Provisions on loans and advances BFRS: As per BAS 39 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis. Bangladesh Bank: As per BRPD circular No.16 (18 November 2014), BRPD circular No.14 (23 September 2012), BRPD circular No. 19 (27 December 2012) and BRPD circular No. 05 (29 May 2013) a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad losses has to be provided at 5%, 20%, 50% and 100% respectively for loans and advances depending on time past due. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012 , a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.

Other comprehensive incomeBFRS: As per BAS 1 Other Comprehensive Income (OCI) is a component of financial statements or the elements of Other Comprehensive Income are to be included in a single Other Comprehen-sive Income Statement. Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a single (OCI) statement. As such the Bank does not prepare an OCI statement. However elements of OCI, if any, are shown in the statements of changes in equity.

Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the financial statements.

Financial guaranteesBFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities.

Bangladesh Bank: As per BRPD 14, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin.

1.

1.1

2

2.1

i)

ii)

iii)

iv)

Statement of Changes in Equity for the year ended 31 December 2017

Other reserve Profit and loss accountParticulars

Balance as at 1 January 2016

Net profit for the year

Profit remitted to Head Office

Adjustment for difference in conversion rate

Balance as at 31 December 2016

Net profit for the year

Adjustment for difference in conversion rate

Profit remitted to Head Office

Balance as at 31 December 2017

Fund deposited with

Bangladesh Bank

USD

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Taka USD

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Taka USD

3,235,682

703,642

(842,939)

-

3,096,385

1,316,380

-

-

4,412,765

254,648,173

55,376,608

(66,339,347)

-

243,685,434

108,864,667

12,385,606

-

364,935,707

Taka

Total

USD

3,235,682

703,642

(842,939)

-

3,096,385

1,316,380

-

-

4,412,765

254,648,173

55,376,608

(66,339,347)

-

243,685,434

108,864,667

12,385,606

-

364,935,707

Taka

Notes to the financial statements for the year ended 31 December 2017

The annexed notes 1 to 24 and annexures A to C form an integral part of these financial statements.


Financial Statements as at and forthe year ended 31 December 2017

Cash and cash equivalentBFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7.

Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents. Money at call and on short notice are presented on the face of the balance sheet, and treasury bills, prize bonds are shown in investments.

Non-banking assetsBFRS: No indication of non-banking asset is found in any BFRS. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, there must exist a face item named non-banking asset.

Cash flow statement BFRS: Cash flow statement can be prepared either in direct method or in indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods.

Off-balance sheet items BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement for disclosure of off-balance sheet items. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off-balance sheet items (e.g. L/C, L/G, etc.) must be disclosed separately on the face of balance sheet.

Disclosure of appropriation of profit

BFRS: There is no requirement to show appropriation of profit in the face of statement of comprehensive income. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, an appropriation of profit should be disclosed in the face of profit and loss account.

Loans and advance net of provision BFRS: Loans and advances should be presented net of provisions. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances.

Presentation of Intangible Assets

BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS 38.

Bangladesh Bank: There is no regulation for intangible assets in BRPD 14. Recognition of interest in suspense

BFRS: Loans and advances to customers are generally classified as "loans and advances" as per BAS 39 and interest income is recognised through interest rate method over the life of the loan. Once a loan is impaired, interest income is recognised in profit and loss account on the same basis based on revised carrying amount.

Bangladesh Bank: In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard (SS) and Doubtful (DF) loans are credited to "interest suspense account" included in "other liabilities" instead of income account. Interest from loans and advances ceases to be accrued when they are classified as Bad and loss category. Basis of measurement

The financial statements have been prepared on the historical cost basis.

Functional and presentation currency Items included in the financial statements of the OBU are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements of the OBU are presented in USD which is the OBU’s functional and presentation currency. The balance sheet and profit and loss accounts are also presented in Taka using the exchange rate prevailing at the balance sheet date. Use of estimates and judgments The preparation of these financial statements in conformity with Bangladesh Bank Circulars and BFRSs requires management to make judgments, estimates and assump-tions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below:

Provisions for loans and advances

The Unit assesses its loans and advances for objective evidence of impairment on a regular basis and particularly at year end. While the primary criteria set out in BRPD circular no. 14 dated 23 September 2012, for determining whether a loan is impaired is objective, being based on borrower's ability to make timely repayments, loans and advances may also be classified based on qualitative judgment. This involves making assessments regarding the economic environment in which borrowers operate in addition to making judgments about a borrower's financial situation and net realisable value of any underlying collateral. Taxation The estimation of current tax provision involves making judgments regarding admissibility of certain expenses as well as estimating the amount of other expenses for tax purposes. In addition, the recognition of deferred tax assets requires the Unit to estimate to which it is probable that future taxable profits will be available against which the deferred tax may be utilised. Depreciation Depreciation is provided on a straight line basis over the estimated useful life of each item of property, plant and equipment. The determination of useful life involves the use of estimates regarding expected use of the assets, expected physical wear and tear, technical or commercial obsolescence and legal or similar limits on the use of the asset. Reporting period These financial statements cover one calendar year from 1 January to 31 December 2017. The financial statements were authorised for issue by the Citi Country Officer and the Chief Financial Officer on 22 February 2018. Cash flow Statement Cash flow statement has been prepared in accordance with the BRPD Circular No. 14 dated 25 June 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank. Statement of changes in equity The statement of changes in equity reflects information about the increase or decrease in net assets or wealth.

Liquidity Statements The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term which has been given in the statement. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in the financial statements. Foreign currencies Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translat-ed using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in the profit and loss account.

Cash and cash equivalents Cash and cash equivalents in cash flow statement include notes and coins in hand both restricted and unrestricted balances held with Bangladesh Bank and its agent bank (including foreign currency) balance with other banks and financial institutions, money at call and short notice, 91 days treasury bills, Bangladesh Bank bills, reverse repo and prize bond. Loans and advances and provisions for loans and advances/investments Loans and advances are stated in the balance sheet on gross value. Loans and advances are initially measured at fair value, and subsequently measured at amortised cost. Provision for loans and advances is made on the basis of periodical review by the management and of instructions contained in Bangladesh Bank BRPD Circular No. 15 dated 27 September 2017, BRPD Circular No. 16 dated 18 November 2014, BRPD Circular No. 14 dated 23 September 2012, BRPD Circular No. 19 dated 27 December 2012 and BRPD Circular No. 5 dated 29 May 2013. The guidance in the circular follows a formulaic approach whereby specified rates are applied to the various categories of loans as defined in the circular. These circulars also provide scope for further provision-ing based on qualitative judgments. The rates of provision for different classifications are given below:

2.2

2.3

2.4

2.5

2.6

2.7

2.8

3

3.1

3.2

3.3

v)

vi)

vii)

viii)

ix)

x)

xi)

xii)

a)

b)

c)

a)

b)

In accordance with BRPD Circular No.14 dated September 23, 2012, BRPD circular No. 05 dated 29 May 2013 and BRPD Circular No. 16 dated 18 November 2014, the rate of provision on the outstanding amount of loans kept in the 'Special Mention Account' will be the same as the rates stated above i.e. 0.25% against all unclassified loans of Small and Medium Enterprise (SME), 5% on the unclassified amount for Consumer Financing, 2% on the unclassified amount for Housing Finance, 2.5% on the unclassified amount of agricultural loans and 1% against all other unclassified loans.

Loans and advances are written off in accordance with BRPD circular no. 02 dated 13 January 2003 and BRPD circular no. 13 dated 07 November 2013 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 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. Write-off loans and advances are reported to the Credit Information Bureau (CIB) of Bangladesh Bank. Details are shown in note 5.

Fixed assets and depreciation Recognition and measurement Items of fixed assets excluding land are measured at cost/revaluation less accumulated depreciation and accumulated impairment losses, if any. Land is measured at cost/revalu-ation. Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location and condition necessary for it to be capable of operating in the intended manner. When parts of an item of fixed asset have different useful lives, they are accounted for as separate items (major components) of property and equipment. The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from disposal with the carrying amount of the item of fixed asset, and is recognised in other income/other expenses in profit or loss. Subsequent costs The cost of replacing a component of an item of fixed assets is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Unit and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed assets are recognised in the profit and loss account as incurred. Depreciation Depreciation is recognised in the profit and loss account on a straight line basis, over the estimated useful life of each part of an item of fixed assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. In case of acquisition of fixed assets, depreciation is charged from the month of acquisition, whereas depreciation on disposed off fixed assets is charged up to the month prior to the disposal. Asset category-wise depreciation rates are as follows:

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted, if appropriate. Retirement and disposals

An asset is derecognised on disposal or when no future economic benefits are expected from its use and subsequent disposal. Gains or losses arising from the retirement or disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised as gain and loss from disposal of asset under ""Other operating income"" in the profit and loss account.

Finance and operating leases Agreements which transfer to counterparties substantially all the risks and rewards incidental to the ownership of assets, but not necessarily legal title, are classified as finance leases. When the Unit is a lessee under finance leases, the leased assets are capitalised and included in “fixed assets” and the corresponding liability to the lessor is included in “Other liabilities”. A finance lease and its corresponding liability are recognised initially at the fair value of the asset or, if lower, the present value of the minimum lease payments. Finance charges payable are recognised as interest expense over the period of the lease based on the interest rate implicit in the lease so as to give a constant rate of interest on the remaining balance of the liability. All other leases are classified as operating leases. When the Unit is the lessee under an operating lease, leased assets are not recognised in the balance sheet. Rentals payable, including rent paid in advance, under operating leases are accounted for on a straight-line basis over the period of the lease, unless another systematic basis is more representative of the time pattern of the user’s benefit, and are included in “Rent, taxes, insurance, electricity, etc.” Borrowings from other banks, financial institutions and agents Borrowings from other banks, financial institutions and agents includes interest-bearing borrowings against securities from Bangladesh Bank and call borrowing from other banks. These items are brought to financial statements at the gross value of the outstanding balance. Details are shown in note 9. Deposits and other accounts Deposits and other accounts include non interest-bearing current deposit redeemable at call, interest bearing on demand and short-term deposits, savings deposit and fixed deposit. These items are brought to financial statements at the gross value of the outstanding balance. Details are shown in note 10. Other liabilities Other liabilities comprise items such as provision for loans and advances, provision for taxation, interest payable, interest suspense, accrued expenses etc. Other liabilities are recognised in the balance sheet according to the guidelines of Bangladesh Bank, Income Tax Ordinance 1984 and internal policy of the Bank. Details are shown in note 11. Contingencies Contingent liabilities A contingent liability is: A possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Unit; or A present obligation that arises from past events but is not recognised because: - it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or - the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated.

Contingent assets A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the entity. An example is a claim that an entity is pursuing through legal processes, where the outcome is uncertain. Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. A contingent asset is disclosed where an inflow of economic benefits is probable.

Revenue recognition Interest on loans and advances Interest income for all loans and advances are recognised in the profit and loss account using the effective interest method in accordance with BAS 39. The effective method is a way of calculating the amortised cost of financial asset and allocating the interest income over the relevant periods.

The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through out the expected life of the financial asset or where appropriate, a shorter period, to the carrying amount of the financial asset.

When calculating the effective interest rate, the Unit estimates cash flows considering all contractual terms of the financial instrument but not future credit losses. The calculation includes all amounts paid or received by the Bank that are an integral part of the effective interest rate of a financial asset, including transaction cost and all other premiums or discounts. Interest on loans and advances is calculated on daily product basis and accrued at the end of each month but charged to customer accounts on quarterly basis. In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard (SS) and Doubtful (DF) loans are credited to "interest suspense account" included in "other liabilities" instead of income account. Interest from loans and advances ceases to be accrued when they are classified as Bad and loss category.

Fees and commission income The Unit earns fees and commissions from a diverse range of services provided to its customers. Commission on Letter of Guarantee is recognised on accrual basis. Other fees and commission income is recognised on a realisation basis. Interest paid on borrowing and other deposits Interest paid on deposits and other accounts except fixed deposit is accrued on a monthly basis, but credited to customer account on half yearly basis. Interest on fixed deposit is accrued on a daily basis and credited to customer account on maturity of fixed deposit. Interest on borrowing from other banks is accrued on a daily basis and paid through Bangladesh Bank account on maturity. All other expenses are recognised on accrual basis.

3.4

3.4.1

3.4.2

3.4.3

3.4.4

3.5

3.6

3.7

3.8

3.9

3.9.1

3.9.2

3.10

3.10.1

3.10.2

3.11

Specific provision on: Substandard and doubtful agricultural loans Substandard loans and advances Doubtful loans and advances Bad/loss loans and advances

5.00%20.00%50.00%100.00%

5.00%20.00%50.00%100.00%

Category of assets

Furniture and fixturesEquipmentMotor vehicles

Rate of depreciation

10% - 33.33% 10% - 33.33% 20%

Provisions and accrued expenses In compliance with BAS 37, provisions and accrued expenses are recognised in the financial statements when the Unit 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. Provisions for off balance sheet exposures In compliance with Bangladesh Bank guidelines off balance sheet items are disclosed under contingent liabilities. As per BRPD Circular No.14 dated 23 September 2012, the Bank is required to maintain provision at 1% against gross off-balance sheet exposures (cash margin or value of eligible collateral will not be deducted while computing off-balance sheet exposure). Details are shown in note 11.2. Provisions on balances with other banks and financial institutions (Nostro accounts) Provisions made for unsettled debit transactions for more than three months on nostro accounts are reviewed at each balance sheet date by management and certified by external auditors in accordance with Bangladesh Bank Foreign Exchange Policy Department, Circular No. FEOD (FEMO)/01/2005-677 dated 13 September 2005. Provisions for other assets BRPD Circular no. 14 dated 25 June 2001 requires a provision of 100% on other assets which are outstanding for one year and above. Provision for taxation Income tax Provision for taxation has been calculated using tax rates as prescribed in the Income Tax Ordinance (ITO) 1984 and relevant Special Regulatory Orders (SRO) and any adjustment to tax payable in respect of previous years. Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years. Provision for taxation for the year ended 31 December 2017 has been made on the basis of the provisions of the income Tax Ordinance 1984 and the Finance Act 2017. Currently the income tax rate applicable for banks is 42.5%. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: - temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; - temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and - temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax relating to unrealised surplus on revaluation of held to maturity (HTM) securities and land and buildings are recognised directly in revaluation reserve as a part of equity and is subsequently recognised in profit and loss account on maturity of the security and disposal of land and buildings.

Impairment of non-financial assets The carrying amounts of the Unit's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reconciliation of inter-bank/inter-branch account Books of account with regard to inter-bank (in Bangladesh and outside Bangladesh) are reconciled and no material differences were found which may affect the financial statements significantly. Audit committee According to BRPD Circular No. 12 (23 December 2002), all banks are advised to constitute an audit committee comprising of member of the board. The audit committee will assist the board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and overall business plan set by the board for the effective functioning of the Bank. The committee will review the financial reporting process, the system of internal control and management of the financial risk, the audit process and the Bank’s process for monitoring compliance with laws and regulations and its own code of business conduct.

The Bank, being a foreign bank, does not have a local board of directors from which to select an Audit Committee but there is a Business Risk, Compliance and Control Committee (BRCC) where all risk issues are discussed, action points set to mitigate risks identified and documented. However, the Bank obtained formal dispensation from the Banking Regulation and Policy Department of Bangladesh Bank as regards to the formation of the committee as suggested in the BRPD Circular No 12 dated 23 December 2002.

Changes in accounting policies The Bank has consistently applied the accounting policies as set out in Note 3 to all periods presented in these financial statements. The various amendments to standards, including any consequential amendments to other standards, with the date of initial application of 1 January 2017 have been considered. However, these amendments have no material impact on the financial statements of the Bank. In December 2017, ICAB has decided to adopt IFRS replacing BFRS effective for annual periods beginning on or after 1 January 2018. However, since currently issued BFRS have been adopted from IFRS without any major modification, such changes would not have any material impact on financial statements. A number of standards and amendments to standards are effective for annual periods beginning after 1 January 2017 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements. (a) BFRS 9 Financial Instruments (to be adopted as IFRS 9) BFRS 9, published in July 2014, replaces the existing guidance in BAS 39 Financial Instruments: Recognition and Measurement. BFRS 9 includes revised guidance on the classification and measurement of the financial instruments, a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. As per the Bank's assessment, any material impact of BFRS 9 would be primarily on calculation of impairment provision. However, as Bangladesh Bank has not issued any circular to revise its current impairment, classification and measurement policies to align with BFRS 9 the Bank is unable to quantify any potential impact on its financial statements. (b) BFRS 15 Revenue from Contracts with Customers (to be adopted as IFRS 15) BFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing recognition guidance, including BAS 18 Revenue, BAS 11 Construction Contracts and BFRI 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. Based on preliminary assessment the Bank has determined that BFRS 15 has no material impact on its financial statements.

(c) IFRS 16 Leases

IFRS 16, issued in January 2016 replaces existing leases guidance and effective for reporting period beginning on or after 1 January 2019. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The Bank has not yet assessed any potential impact of IFRS 16 on its financial statements.

(d) IFRS 17 Insurance Contracts

IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or after 1 January 2021. IFRS 17 establishes the principles for the recognition, measure-ment, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant informa-tion that faithfully represents those contracts. The Bank has not yet assessed in potential impact of IFRS 17 on its financial statements.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Bank in the current or future reporting periods and on foreseeable future transactions. Offsetting Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Unit has a legal right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under BFRSs, or for gains and losses arising from a group of similar transactions such as in the Unit’s trading activity. Events after the reporting period All material events after the reporting period are considered and where necessary, adjusted for or disclosed in accordance with BAS 10: Events after the reporting period.

3.12

3.13

3.14

3.15

3.16

3.16.1

3.16.2

3.16.3

3.17

3.18

3.19

3.20

3.21

3.22

C)

Citibank, N.A.




Page 9 of 11

Particulars

General provision on: All unclassified loans and advances except the following: Small and medium enterprise financing Consumer financing Housing finance and loans for professionals to set up business under consumer financing scheme Loan to BHs/MBs/SDs against shares Agricultural loans

Rate2017

1.00%

0.25%5.00%

2.00%2.00%1.00%

2016

1.00%

0.25%5.00%

2.00%2.00%2.50%



6

7

7.1

7.2

7.3

8

9

9.1

10

5.8

5.9

5.9.1

5.10

5.11

Particulars of required

provision for loans and

advances

For loans and advances

Unclassified - general provision All unclassified loans (other than small enterprises, housing finance, loan to MBs, loans for professional, consumer financing and special mention account)

Small and medium enterprise financing Loan to BHs/MBs/SDs against shares Housing and loan for professional Consumer finance

Agriculture finance

Special Mention Account (SMA) Required general provision

Classified - specific provision

Sub-standard & doubtful agricultural loans

Sub-standard Doubtful Bad/loss Required specific provision

Required provision for loans and advances Total provision maintained (Note 11.1) Excess provision as at 31 December

2017 2016

47,606,134

-

-

-

-

-

-

- - - -

47,606,134

-

-

-

-

-

-

- - - -

1.00%

0.25%

2.00%

2.00%

5.00%

1.00%

1.00%

5.00%20.00%50.00%

100.00%

476,061

-

-

-

-

-

-

476,061

- - - - -

476,061

547,471

71,410

426,512

-

-

-

-

-

-

426,512

- - - - -

426,512

649,879

223,367

Outstandingas at

31 Dec 2017USD

Base for

provision USD

% of required provision

Required provision

USD

Required provision

USD Maturity grouping of other assets

On demand

Not more than one month Over one month but not more than three months

Over three months but not more than one year

Over one year but not more than five years

Over five years

2017

USD Taka

18,477

-

-

733

11,528

-

30,738

1,528,062

-

-

60,619

953,366

-

2,542,047

9,108

-

-

733

6,041

-

15,882

716,778

-

-

57,720

475,412

-

1,249,910

2016

USD Taka

Borrowings from other banks, financial institutions and agents

Inside Bangladesh

Outside Bangladesh

Outside Bangladesh

Secured Repayable on demand:

Others - borrowings:

Citibank, N.A. London

Citibank, N.A. Singapore

Unsecured

Maturity wise grouping of borrowings from other banks, financial institutions and agents

Payable on demand

Payable within one month

Payable within one to three months

Payable within three to twelve months

Payable within one to five years

Payable over five years

2017

USD Taka

-

56,953,855

56,953,855

56,953,855

-

56,953,855

-

56,953,855

-

55,819,840

-

1,134,015

-

-

56,953,855

-

4,710,083,809

4,710,083,809

4,710,083,809

-

4,710,083,809

-

4,710,083,809

-

4,616,300,768

-

93,783,041

-

-

4,710,083,809

2016

USD Taka

-

42,245,550

42,245,550

1,045,550

41,200,000

42,245,550

-

42,245,550

-

41,000,000

-

1,245,550

-

-

42,245,550

-

3,324,724,785

3,324,724,785

82,284,785

3,242,440,000

3,324,724,785

-

3,324,724,785

-

3,226,700,000

-

98,024,785

-

-

3,324,724,785

Particulars of required provision for other asset:

Particulars

Nil

Non banking assets

a) Income generating assets

b) Non-income generating assets

2017

Base forprovision

TakaRate (%)

Taka

-

-

- - -

-

-

- -

2016

Base forprovision

TakaRate (%)

Taka

-

-

- -

-

-

- -

2017

USD Taka

2016

USD Taka

Branch adjustments account represents outstanding interbank and head office transactions (net) originated but yet to be responded at balance sheet date. The unrespondent entries as at 31 December 2016 are given below:

Deposits and other accounts

Current and other accounts, etc.

Current account Short notice deposits Sundry deposits

Bills payable

Savings bank deposits

Fixed deposits

On demand Within one month

Over one month but within three months

2017 2016

USD Taka USD Taka

2,886,851

-

-

2,886,851

-

-

-

-

-

238,742,578

-

-

238,742,578

-

-

-

-

-

2,882,751

-

-

2,882,751

-

-

-

-

-

226,872,502

-

-

226,872,502

-

-

-

-

-

Citibank, N.A.




Page 10 of 11

4

4.1

4.2

5

5.1

5.2

Balance with other banks and financial institutions

Inside Bangladesh

Outside Bangladesh (Note 4.1)

2017

USD Taka

2016

USD Taka

Outside Bangladesh

Current account:

Citibank, New York

Citibank, London

Citibank, Tokyo

Citibank, Bangladesh (Onshore branch)

2017

USD Taka

2016

USD Taka

Maturity grouping of loans and advances including bills purchased and discounted

Repayable on demand Within one month More than one month but less than three months More than three months but not more than one year More than one year but not more than five years

More than five years

2017

USD Taka

2016

USD Taka

Loans and advances

Loans, cash credit and overdrafts (Note 5.1) Bills purchased and discounted

Bills purchased and discounted consists of Usance bills paid at sight.

Loans, cash credits and overdrafts

Within Bangladesh:

Continuous loan

Demand loans Fixed term loan

Staff loan

Outside Bangladesh

2017

USD Taka

2016

USD Taka

Maturity grouping of balance with other banks and financial institutions

Repayable on demand Not more than one month Over one month but not more than three months Over three months but not more than one year Over one year but not more than five years Over five years

2017

USD Taka

2016

USD Taka

2017

USD Taka

2016

USD Taka

5.3

5.4

5.5

5.6

5.7

Analysis of significant concentration of loans and advances including bills purchased and discounted

Advances to allied concerns of Directors Advance to chief executive and other senior executives: City Country Officer Other senior executives and staff of the Bank

Advances to customers' group (Note 5.4)

Industry wise (Note 5.5)

Geographical location wise (Note 5.6)

2017

USD Taka

2016

USD Taka

Number of clients with amount of outstanding and classified loans to whom loans and advances sanctioned more than 10% of total capital of the Unit

Number of the clients

Amount of outstanding advances

USD Taka

Particulars of loans and advances - Industry wise

Textiles and garments

Others (UPAS Loan)

2017

USD Taka

2016

USD Taka

Particulars of loans and advances - Geographical location wise

Export Processing Zone - Dhaka

Export Processing Zone - Chittagong

Export Processing Zone - Adam zee

2017

USD Taka

2016

USD Taka

Classification of loans and advances

Unclassified: Standard Special Mention Account Classified: Substandard Doubtful Bad/Loss

2017

USD Taka

- 18,291,703

18,291,703

- 1,512,723,883

1,512,723,883

4,033,423

3,080,912

111,581

11,065,787

18,291,703

333,564,082

254,791,422

9,227,749

915,140,630

1,512,723,883

-

7,836,164

19,244,266

20,525,704

-

-

47,606,134

-

648,050,747

1,591,500,810

1,697,475,695

-

-

3,937,027,252

10,636,348

36,969,786

47,606,134

879,625,937

3,057,401,315

3,937,027,252

-

10,636,348

-

-

10,636,348

-

10,636,348

-

879,625,937

-

-

879,625,937

-

879,625,937

18,291,703

-

-

-

-

-

18,291,703

1,512,723,883

-

-

-

-

-

1,512,723,883

-

-

-

-

47,606,134

47,606,134

-

-

-

-

3,937,027,252

3,937,027,252

2017

USD Taka

-

-

-

-

10,636,348

36,969,786

47,606,134

879,625,937

3,057,401,315

3,937,027,252

34,324,281

13,281,853

-

47,606,134

2,838,617,985

1,098,409,267

-

3,937,027,252

47,606,134 -

47,606,134

- - -

-

47,606,134

3,937,027,252 -

3,937,027,252

- - -

-

3,937,027,252

- 7,085,406

7,085,406

- 557,621,439

557,621,439

2,893,589

765,066

16,091

3,410,660

7,085,406

227,725,442

60,210,730

1,266,342

268,418,925

557,621,439

-

7,320,125

16,527,602

18,803,498

-

-

42,651,225

-

576,093,836

1,300,722,283

1,479,835,291

-

-

3,356,651,410

14,324,042

28,327,183

42,651,225

1,127,302,137

2,229,349,273

3,356,651,410

-

14,324,042

-

-

14,324,042

-

14,324,042

-

1,127,302,137

-

-

1,127,302,137

-

1,127,302,137

7,085,406

-

-

-

-

-

7,085,406

557,621,439

-

-

-

-

-

557,621,439

-

-

-

-

42,651,225

42,651,225

-

-

-

-

3,356,651,410

3,356,651,410

2016

USD Taka

-

-

-

-

14,324,042

28,327,183

42,651,225

1,127,302,137

2,229,349,273

3,356,651,410

23,184,438

19,466,787

-

42,651,225

1,824,615,239

1,532,036,171

-

3,356,651,410

42,651,225 -

42,651,225

- - -

-

42,651,225

3,356,651,410 -

3,356,651,410

- - -

-

3,356,651,410

2016

USD Taka

Particulars of loans and advances

Loans considered good in respect of which the banking company is fully secured (unclassified loans and advances); Loans considered good against which the banking company holds no security other than the debtor's personal guarantee; Loans considered good secured by the personal undertakings of one or more parties in addition to the personal guarantee of the debtor; Loans adversely classified; provision not maintained there against; Loans due by directors or officers of the banking company or any of these either separately or jointly with any other persons; Loans due from companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in case of private companies as members; Maximum total amount of advance including temporary advance made at any time during the year to directors or managers or officers of the banking companies or any of them either separately or jointly with any other person; Maximum total amount of advances, including temporary advances granted during the year to the companies or firms in which the directors of the banking company have interest as directors, partners or managing agents or in case of private companies as members; Due from banking companies Classified loans for which

a) interest has not been charged: Increase/Decrease of provision (specific)

Amount of loans written off

Amount realized against the loan previously written off b) Provision against the loan classified as bad/loss at the date of balance sheet

c) Interest credited to the interest suspense account Loans written off:

Current year Cumulative to-date The amount of written off loan for which law suit has been filed

i)

ii)

iii)

iv)

v)

vi)

vii)

viii)

ix)

x)

xi)

2017

USD Taka

47,606,134

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3,937,027,252

-

-

-

-

-

-

-

-

-

-

-

-

-

-

42,651,225

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3,356,651,410

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2016

USD Taka

Particulars of required provision for loans and advances

Status

For loans and advances

Unclassified - general provision All unclassified loans (other than small enterprises, housing finance, loan to MBs, loans for professional, consumer financing and special mention account)

Small and medium enterprise financing Loan to BHs/MBs/SDs against shares Housing and loan for professional Consumer finance Agriculture finance Special Mention Account (SMA) Required general provision Classified - specific provision Sub-standard & doubtful agricultural loans Sub-standard Doubtful Bad/loss Required specific provision Required provision for loans and advances Total provision maintained (Note 11.1) Excess provision at 31 December

2017 2016

3,937,027,252

-

-

-

-

-

-

-

- - -

3,937,027,252

-

-

-

-

-

-

-

- - -

1.00%

0.25%

2.00%

2.00%

5.00%

1.00%

1.00%

5.00%

20.00%50.00%

100.00%

39,370,273

-

-

-

-

-

-

39,370,273

-

- - - -

39,370,273

45,275,813

5,905,540

33,566,514

-

-

-

-

-

-

33,566,514

-

- - - -

33,566,514

51,145,467

17,578,953

Outstandingas at

31 Dec 2017Taka

Base for

provision Taka

% of required provision

Required provision

Taka

Required provision

Taka

Bills purchased and discounted

Inside Bangladesh

Outside Bangladesh

2017

USD Taka

36,969,786

-

36,969,786

3,057,401,315

-

3,057,401,315

2016

USD Taka

Maturity wise Bills Purchased and Discounted

Payable within one month

Payable over one month but within three months

Payable over three months but within six months Payable over six months

Total

2017

USD Taka

4,487,437

14,648,412

17,474,872

359,065

36,969,786

371,111,037

1,211,423,684

1,445,171,929

29,694,665

3,057,401,315

28,327,183

-

28,327,183

2,229,349,273

-

2,229,349,273

4,682,452

8,399,867

15,008,138

236,726

28,327,183

368,508,965

661,069,551

1,181,140,422

18,630,335

2,229,349,273

2016

USD Taka

Fixed assets including premises, furniture and fixtures Premises used by the bank Furniture and fixtures Office equipment

Less: Accumulated

depreciation

For details refer to Annexure A

2017

USD Taka

- 64,568

152,111

216,679

165,310

51,369

- 5,339,794

12,579,596

17,919,390

13,671,141

4,248,249

- 68,493

157,986

226,479

150,141

76,338

- 5,390,399

12,433,504

17,823,903

11,816,129

6,007,774

2016

USD Taka

Other assets

a) Income generating other assets

b) Non-income generating other assets: I) Investments in shares of subsidiary companies ii) Stationery, stamps, printing materials in stock

iii) Advance rent and advertisement

iv) Interest accrued on investment but not collected, commission and brokerage receivable on shares and debentures, and other income receivables

v) Security deposits

vi) Preliminary, formation and organizational expenses, renovation, development and prepaid expenses

vii) Branch adjustment (Note 7.1) viii) Suspense ix) Deferred tax x) Prepaid expenses xi) Silver xii) Others

Branch adjustment General accounts debit

General accounts credit

Up to three months Over three months but within six months Over six months but within one year Over one year but within five years

-

-

-

-

-

2,033

-

-

18,477 9,495

733 - -

30,738

-

-

-

- -

-

-

-

-

-

-

-

-

168,129

-

-

1,528,062 785,237

60,619 - -

2,542,047

-

-

-

- -

-

-

-

-

-

-

-

-

2,033

-

-

9,108 4,008

733 - -

15,882

-

-

-

- -

-

-

-

-

-

-

-

-

159,997

-

-

716,778 315,415 57,720

- -

1,249,910

-

-

-

- -

-

-

-



2017

USD Taka

2016

USD Taka

2017

USD Taka

2016

USD Taka

2017

USD Taka

2016

USD Taka

2017

USD Taka

2016

USD Taka

2017 2016

20

20.1

20.2

21

22

22.1

22.2

22.3

23

24

Related party transactions

Transactions with key management personnel The key management personnel of the Unit for the purposes of BAS 24 are defined as those persons having authority and responsibility for planning, directing and controlling the Unit. Citibank N.A. offshore banking unit, not being incorporated locally, operate in Bangladesh under the Banking license issued by Bangladesh Bank and therefore for this Unit the key management personnel, who do qualify as related party under BAS 24, refer to Citibank officials located outside Bangladesh. There were no transactions between the Unit and the key management personnel in 2017 (2016 - nil).

Transactions with the onshore branches The Unit receives certain banking and financial services and administrative services from the onshore branches of Citibank, N.A. Bangladesh operating under the banking license issued by Bangladesh Bank. As at year end payable to onshore branch were nil and deposits with onshore were BDT 915,140,630. The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. These transactions arose in the ordinary course of business and are on substantially the same terms, including interest rates and security, as for comparable transactions with third party counterparties. All directly attributable operating expenses are allocated from Onshore Branches to OBU based on usage of the floor space on monthly basis. Also product and sales team expense is allocated based on contribution to total revenue earned. The ratio used for monthly expense allocation is reviewed annually. At every quarter, funds are transferred from OBU to Onshore branches for payment of advance tax.

Contingencies There are no material contingent liabilities at the year end, other than those disclosed as "Off Balance Sheet Items" in the balance sheet. General The assets and liabilities as at 31 December 2017 in foreign currencies have been converted to BDT at the following rates:

Figures of previous year have been rearranged whenever considered necessary to conform to current year's presentation. Figures appearing in these accounts have been rounded off to the nearest integer.

Highlights on the overall activities Highlights on the overall activities of the Unit have been furnished in Annexure - C.

Events after the balance sheet date There are no material events that had occurred after reporting period to the date of issue of these financial statements, which could affect the figures stated in the financial statements.

AUD =CAD =HKD =USD =CHF =GBP =EUR =DKK =SEK =NOK =SGD =JPY =

2017

Taka

64.3530 65.5569 10.5808 82.7000 84.4136 111.0992 98.7190 13.2585 10.0194 9.9981 61.8133 0.7329

2016

Taka

56.7821 58.2101 10.1474

78.7000 76.8592 96.4469 82.2848 11.0679 8.6084 9.0461 54.3171 0.6750

N. Rajashekaran

Managing Director and


S. H. Aslam Habib

Chief Financial Officer, Bangladesh

Citibank, N.A.




Page 11 of 11

Tax expense Current tax expenses:

Current year Adjustments for prior years Deferred tax expenses/ (income)

Reconciliation of effective tax rate

Profit before provision and tax as per profit and loss account

Income tax using the tax rate at 42.5% Factors affecting the tax charge for current period

Non deductible expenses

Deductible expenses

Movement of temporary difference

Total income tax expenses

Cash and cash equivalent

Cash in hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank (including foreign currencies)

Balance with other banks and financial institutions

Money at call and short notice

91 days treasury bills

Reverse Repo Prize bond

925,789

-

925,789

(5,488)

920,301

Percentage

42.50%

0.46%

-1.60%

-0.25%

41.11%

-

-

18,291,703

-

-

- -

18,291,703

76,562,750

-

76,562,750

(453,858)

76,108,892

Taka

184,973,559

78,613,763

842,681

(2,960,825)

(453,858)

76,041,761

-

-

1,512,723,883

-

-

- -

1,512,723,883

662,105

-

662,105

(9,058)

653,047

Percentage

42.50%

6.59%

-0.29%

-0.67%

48.14%

-

-

7,085,406

-

-

- -

7,085,406

52,107,638

-

52,107,638

(712,874)

51,394,764

Taka

119,919,073

45,377,833

7,037,137

(307,332)

(712,874)

51,394,764

-

-

557,621,439

-

-

- -

557,621,439

Commission, exchange and brokerage Commission income L/C commission

Collection

Transfer

Service charge

Others

Previous year's adjustments

Exchange incomeNet profit/(Loss) from foreign currency dealings

312,306

232,067

8,729

-

(98)

-

553,004

229,152

782,156

25,827,706

19,191,941

721,888

-

(8,105)

-

45,733,430

18,950,870

64,684,300

301,328

196,749

19,296

-

(75)

-

517,298

(16,130)

501,168

23,714,514

15,484,134

1,518,595

-

(5,863)

-

40,711,380

(1,269,456)

39,441,924

1,120,756

-

1,120,756

92,686,504

-

92,686,504

- 2,818,042

2,818,042

- 233,052,081

233,052,081

2,008,574

- 553,004

-

-

229,152

-

(606) -

2,790,124

482,190

-

115,687 6,822

25,172

629,871

2,160,253

166,109,070

-

45,733,430

-

-

18,950,870

-

(50,116) -

230,743,254

39,877,113

-

9,567,315 564,148

2,081,724

52,090,300

178,652,954

1,968,500

-

-

40,074

2,008,574

482,190

- -

482,190

162,794,950

-

-

3,314,120

166,109,070

39,877,113

- -

39,877,113

17

18

18.1

19

Particular

Cost

Balanceas at

1 January2017

USD

68,493

157,986

226,479

3,925

5,875

9,800

-

-

-

64,568

152,111

216,679

10-33.33

10-33.33

58,612

91,529

150,141

3,178

20,797

23,975

3,411

5,395

8,806

58,378

106,932

165,310

6,190

45,180

51,369

Additionsduring

the year

USD

(Disposals)/adjustments

duringthe year

USD

Balanceas at

31 December2017

USD

Rate of Depreciation

%

Balanceas at

1 January2017

USD

Chargedfor

the year

USD


duringthe year

USD

Balanceas at

31 December2017

USD

DepreciationWritten

down valueas at

31 December2017

USD

Furniture and fixturesOffice equipment

Total

Particular

Cost

Balanceas at

1 January2017

Taka

5,664,371

13,065,449

18,729,820

-

-

-

324,577

485,853

810,430

5,339,794

12,579,596

17,919,390

10-33.33

10-33.33

4,847,226

7,569,428

12,416,654

262,783

1,719,952

1,982,735

282,123

446,125

728,248

4,827,886

8,843,255

13,671,141

511,908

3,736,341

4,248,249

Additionsduring

the year

Taka


duringthe year

Taka

Balanceas at

31 December2017

Taka


%

Balanceas at

1 January2017

Taka

Chargedfor

the year

Taka


duringthe year

Taka

Balanceas at

31 December2017

Taka

DepreciationWritten

down valueas at

31 December2017

Taka

Furniture andfixturesOffice equipment

Total

Schedule of fixed assetsas at 31 December 2017

Items have been converted into Taka using the closing rate i.e. 82.7

Particular

Cost

Balanceas at

1 January2016

USD

68,493

153,927

222,420

-

4,059

4,059

-

-

-

68,493

157,986

226,479

10-33.33

10-33.33

51,393

69,981

121,374

7,219

20,433

27,652

-

1,115

1,115

58,612

91,529

150,141

9,881

66,457

76,338

Additionsduring

the year

USD


duringthe year

USD

Balanceas at

31 December2016

USD


%

Balanceas at

1 January2016

USD

Chargedfor

the year

USD


duringthe year

USD

Balanceas at

31 December2016

USD

DepreciationWritten

down valueas at

31 December2016

USD

Furniture and fixturesOffice equipment

Total

Particular

Cost

Balanceas at

1 January2016

Taka

5,390,399

12,114,061

17,504,460

-

319,443

319,443

-

-

-

5,390,399

12,433,504

17,823,903

10-33.33

10-33.33

4,044,642

5,507,524

9,552,166

568,135

1,608,038

2,176,173

-

87,790

87,790

4,612,777

7,203,352

11,816,129

777,622

5,230,152

6,007,774

Additionsduring

the year

Taka


duringthe year

Taka

Balanceas at

31 December2016

Taka


%

Balanceas at

1 January2016Taka

Chargedfor

the year

Taka


duringthe year

Taka

Balanceas at

31 December2016

Taka

DepreciationWritten

down valueas at

31 December2016

Taka

Furniture andfixturesOffice equipment

Total

Schedule of fixed assetsas at 31 December 2016

Items have been converted into Taka using the closing rate i.e. 78.7

(Annexure -C) Financial Highlights

Sl. no.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Currency

Currency

Currency

Currency

%

Currency

Currency

Currency

Currency

Currency

Currency

Currency

%

Currency

USD

65,979,944

2,886,851

47,606,134

3,938,798

0.00%

1,316,380

-

-

71,410

-

65,897,837

82,108

2.27%

-

Particulars

Total assets

Total deposits

Total loans and advances

Total contingent liabilities and commitments

Classified advances as (%) of total advances

Net profit after tax and provisions

Amount of classified loans during current year

Amount of provisions against classified loans

Provision surplus/(shortage)

Interest suspense account

Interest bearing assets

Non-interest bearing assets

Return on assets (ROA)

Incomes from Investment

2017

Financial Highlights as at 31 December 2017

Taka

5,456,541,431

238,742,578

3,937,027,252

325,738,585

0.00%

108,864,667

-

-

5,905,540

-

5,449,751,135

6,790,296

2.32%

-

USD

49,828,851

2,882,751

42,651,225

2,313,935

0.00%

703,642

-

-

223,367

-

49,736,631

92,220

1.46%

-

2016

Taka

3,921,530,533

226,872,502

3,356,651,410

182,106,715

0.00%

55,376,608

-

-

17,578,953

-

3,914,272,849

7,257,684

1.47%

-

(Annexure -B) Liquidity Statement

(Asset and Liability Maturity Analysis)as at 31 December 2017

ParticularsMaturity

up to 1 monthMaturity

1 to 3 monthsMaturity

3 to 12 monthsMaturity

1 to 5 yearsMaturity

Over 5 years TotalTakaUSDTakaUSD TakaUSD TakaUSD TakaUSD TakaUSD

-

-

-

-

1,591,500,810

-

-

-

1,591,500,810

-

-

39,509,925

39,509,925

1,551,990,885

-

-

-

-

19,244,266

-

-

-

19,244,266

-

-

477,750

477,750

18,766,516

-

1,512,723,883

-

-

648,050,747

1,528,062

-

-

2,162,302,692

4,616,300,768

238,742,578

19,044,192

4,874,087,538

(2,711,784,846)

-

18,291,703

-

-

7,836,164

18,477

-

-

26,146,344

55,819,840

2,886,851

230,280

58,936,971

(32,790,627)

Assets

Cash balance

Balance with other banks

and financial institutions

Money at call and short notice

Investment in treasury bills

and others

Loans and advances

Other assets

Fixed assets

Non banking assets

Total assets

Liabilities

Borrowings from other banks

and financial institutions

Deposits and other accounts

Other liabilities

Total liabilities

Net liquidity difference

-

-

-

-

1,697,475,695

60,619

-

-

1,697,536,314

93,783,041

-

40,496,768

134,279,809

1,563,256,505

-

-

-

-

20,525,704

733

-

-

20,526,437

1,134,015

-

489,683

1,623,698

18,902,739

-

-

-

-

-

953,366

4,248,249

-

5,201,615

-

-

43,728,452

43,728,452

(38,526,837)

-

-

-

-

-

11,528

51,369

-

62,897

-

-

528,760

528,760

(465,863)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,512,723,883

-

-

3,937,027,252

2,542,047

4,248,249

-

5,456,541,431

4,710,083,809

238,742,578

142,779,337

5,091,605,724

364,935,707

-

18,291,703

-

-

47,606,134

30,738

51,369

-

65,979,944

56,953,855

2,886,851

1,726,473

61,567,179

4,412,765

(Annexure -A) Schedule of fixed assets

-

-

- -

2,886,851

2,886,851

-

-

-

-

-

2,886,851

238,742,578

-

-

-

-

-

238,742,578

547,471

49,120

-

-

995,057

127,452

-

7,374

-

-

-

1,726,473

45,275,813

4,062,200

-

-

82,291,214

10,540,280

-

609,830

-

-

-

142,779,337

53,744,993

-

-

-

53,744,993 8,469,180

45,275,813

649,879

-

-

-

649,879 102,408

547,471

1,913,625

2,148,575

4,062,200

-

4,062,200

23,139

25,980

49,120

-

49,120

63,068,757

75,357,811

138,426,568

(56,135,354)

82,291,214

762,621

911,219

1,673,840

(678,783)

995,057

-

19,044,192

39,509,925

40,496,768

43,728,452

-

142,779,337

256,071,040

108,864,667

364,935,707

-

364,935,707

-

230,280

477,750

489,683

528,760

-

1,726,473

3,096,385

1,316,380

4,412,765

-

4,412,765

-

-

- -

238,742,578 -

- 2,886,851

2,886,851

-

- 238,742,578

238,742,578

517,299 40,711,380

(16,130) (1,269,456)

citibank, n.a. bangladesh branches - citigroup.com · with bangladesh standards on auditing. those...

Documents