Commercial Bank of Ceylon PLC - Bangladesh Operations

Head Office
Hadi Tower
NW(K)-1, 50, Kemal Ataturk Avenue
Gulshan 2, Dhaka 1212

Commercial Bank of Ceylon PLC

(Bangladesh Operations)
––––––––––––––––––––
Auditors’ Report and Financial Statements
for the year ended 31 December 2016

S. F. AHMED & CO
Chartered Accountants
House # 51 (3rd Floor), Road # 9, Block # F, Banani, Dhaka 1213, Bangladesh
Telephones: (880-2) 9871018, 9870619, 9894258, 58815101 & 58816467
Fax: (880-2) 984-5135
E-mails : (I) [email protected] (ii) [email protected]
Website : www.sfahmedco.org
Commercial Bank of Ceylon PLC - Bangladesh Operations

Independent Auditors' Report

For the year ended 31 December 2016

We have audited the accompanying financial statements of Commercial Bank of Ceylon PLC - Bangladesh
Operations (“the Bank”), which comprise the balance sheet as at 31 December 2016, the profit and loss
statement, statement of cash flows, statement of changes in equity and liquidity statement for the year then
ended, and a summary of significant accounting policies and other explanatory notes and annextures thereto.
Management's responsibility for the financial statements and internal controls
Management of the Bank is responsible for the preparation of financial statements that give a true and fair view in
accordance with Bangladesh Financial Reporting Standards as explained in relevant note 2.1.1 and for such
internal control as management determines is necessary to enable the preparation of financial statements of the
Bank that are free from material misstatement, whether due to fraud or error. The Banking Companies Act 1991
(amended 2013) and the Bangladesh Bank Regulations require the management to ensure effective internal
audit, internal control and risk management functions of the Bank. 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.
Auditors' responsibility
Our responsibility is to express an opinion on these financial statements of the Bank 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 a reasonable assurance about whether
the financial statements of the Bank are free from material misstatements.
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 and error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances. 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 of the Bank.
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 referred to above which has been prepared in the format prescribed by
Bangladesh Bank vide circular no. 14 dated 25 June 2003 and in accordance with relevant Bangladesh Financial
Reporting Standards as explained in note 2.1.1 give a true and fair view of the state of affairs of the Bank as at 31
December 2016 and results of its operations and its cash flows for the year then ended and comply with the
Companies Act 1994, the Banking Companies Act 1991 (amended 2013), rules and regulations issued by
Bangladesh Bank and other applicable laws and regulations.

1
Commercial Bank of Ceylon PLC - Bangladesh Operations

Independent Auditors' Report

For the year ended 31 December 2016

In accordance with the Companies Act 1994, the Bank Companies Act 1991 and the rules and regulations issued
by Bangladesh Bank, we also report the following:

(a) we have obtained all the information and explanation which to the best of our knowledge and belief were
necessary for the purpose of our audit and made due verification thereof;
(b) to the extent noted during the course of our audit work performed on the basis stated under the Auditors'
responsibility section in forming the above opinion on the financial statements of the Bank 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:
(i) internal audit, internal control and risk management arrangements of the Bank as disclosed in notes 37
and 38 of the financial statements appeared to be materially adequate and
(ii) 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 Bank and its related entities;

(c) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared
from our examination of those books;
(d) the expenditures incurred during the year were for the purposes of the business of the Bank;
(e) the balance sheet and the profit and loss statement of the Bank dealt with by the report are in agreement
with the books of account;
(f) the financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and
accounting standards as well as with related guidance issued by Bangladesh Bank;
(g) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery;
(h) the records and statements submitted by the branches have been properly maintained and consolidated in
the financial statements;
(i) the information and explanation required by us have been received and found satisfactory; and
(j) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 2800
person hours for the audit of the books and account of the Bank.

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 28 February 2017 Chartered Accountants

2
Commercial Bank of Ceylon PLC - Bangladesh Operations

Balance Sheet
As at 31 December 2016
Notes 2016 2015
BDT BDT
PROPERTY AND ASSETS
Cash 3 2,036,889,430 1,708,855,583
Cash in hand (including foreign currencies) 3.1 251,870,066 214,096,243
Balance with Bangladesh Bank and its agent bank(s)
(including foreign currencies) 3.2 1,785,019,364 1,494,759,340
Balance with other banks and financial institutions 4 2,103,081,033 1,863,153,774
In Bangladesh 4.1 513,972,363 1,419,047,258
Outside Bangladesh 4.2 1,589,108,670 444,106,516
Money at call and on short notice 5 2,120,000,000 800,000,000
Investments 6 5,207,153,904 6,529,411,864
Government 6.1 5,197,737,244 6,319,995,204
Others 6.2 9,416,660 209,416,660
Loans and advances 7 24,775,448,686 22,781,874,195
Loans, cash credit, overdrafts, etc 20,170,626,236 18,260,915,591
Bills purchased and discounted 8 4,604,822,450 4,520,958,604
Fixed assets including premises, furniture and fixtures 9 40,797,145 45,576,855
Other assets 10 3,538,290,363 2,778,157,810
Non-Banking Assets - -
Total Assets 39,821,660,561 36,507,030,081

LIABILITIES AND CAPITAL

Liabilities
Borrowings from other banks, financial
institutions and agents 11 3,938,678,015 3,245,900,006
Deposits and other accounts 12 23,129,501,188 21,937,393,552
Current and other accounts 12.1 7,961,920,095 6,714,527,575
Bills payable 12.2 180,418,082 75,276,600
Savings bank deposits 12.3 2,569,688,782 2,123,730,349
Fixed deposits 12.4 12,396,649,543 12,997,578,280
Other deposits 12.5 20,824,686 26,280,748
Other liabilities 13 4,925,847,356 4,085,349,179
Total Liabilities 31,994,026,559 29,268,642,737
Capital/ Shareholders' Equity
Paid-up capital/ Deposit kept with Bangladesh Bank 14 4,544,179,152 4,445,178,830
Statutory reserve - -
Gains on revaluation of treasury bills/ bonds 11,383,935 12,679,047
Retained earnings 15 3,272,070,915 2,780,529,467
Total Shareholders' Equity 7,827,634,002 7,238,387,344
Total Liabilities and Shareholders' Equity 39,821,660,561 36,507,030,081

- -

3
Commercial Bank of Ceylon PLC - Bangladesh Operations

Balance Sheet
As at 31 December 2016

Notes 2016 2015

BDT BDT
OFF-BALANCE SHEET ITEMS
Contingent liabilities 16
Acceptances and endorsements - -
Letters of guarantee 16.2 4,707,786,477 1,370,659,034
Irrevocable letters of credit 16.3 7,551,620,161 5,941,754,015
Bills for collection 16.4 2,083,715,824 1,963,574,625
Other contingent liabilities 16.5 64,638,549 64,638,549
Total contingent liabilities 14,407,761,011 9,340,626,223
Other commitments 17
Documentary credits and short term trade-related transactions - -
Forward assets purchased and forward deposits placed 768,258,260 404,908,040
Undrawn note issuance and revolving underwriting facilities - -
Undrawn formal standby facilities, credit lines and other commitments - -
Total other commitments 768,258,260 404,908,040
Total Off-Balance Sheet Items Including Contingent Liabilities 15,176,019,271 9,745,534,263

These financial statements should be read in conjunction with annexed notes

for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager
See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 28 February 2017 Chartered Accountants

4
Commercial Bank of Ceylon PLC - Bangladesh Operations

Profit and Loss Statement

For the year ended 31 December 2016

Notes 2016 2015

BDT BDT
OPERATING INCOME
Interest income 18 1,661,771,326 1,682,196,967
Less: Interest paid on deposits and borrowings, etc 19 737,037,954 903,636,092
Net interest income 924,733,372 778,560,875
Investment income 20 621,107,231 1,040,405,629
Commission, exchange and brokerage 21 555,567,083 547,992,487
Other operating income 22 40,086,154 25,764,533
Total operating income 2,141,493,840 2,392,723,524
OPERATING EXPENSES
Salary and allowances 23 410,057,818 329,891,129
Rent, taxes, insurance, electricity, etc 24 149,093,394 108,319,637
Legal expenses 25 2,195,441 1,335,828
Postage, stamps , telecommunication, etc 26 7,804,127 10,051,562
Stationery, printing and advertisements, etc 27 10,174,811 10,170,173
Chief executive's salary and fees 28 8,079,611 7,648,045
Directors' fees - -
Auditors' fees 391,000 333,500
Charges on loan losses - -
Depreciation and repairs of bank's assets 29 52 289 660
52,289,660 73 159 628
73,159,628
Other expenses 30 80,352,863 77,961,168
Total operating expenses 720,438,725 618,870,670
Profit before provisions 1,421,055,115 1,773,852,854
Provision against loans and advances 230,513,345 165,249,969
Specific provision 153,813,345 101,099,969
General provision 31 76,700,000 64,150,000
Provision for diminution in value of investment - -
Other provisions - -
Total provision during the year 230,513,345 165,249,969
Total profit before taxation for the year 1,190,541,770 1,608,602,885
Provision for taxation 13.3.1 600,000,000 682,500,000
Current tax 627,148,444 677,408,784
Deferred tax (27,148,444) 5,091,216
Net profit after taxation 590,541,770 926,102,885

These financial statements should be read in conjunction with annexed notes

for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager
See annexed report of the date

Dhaka, Bangladesh S. F. AHMED & CO

Dated, 28 February 2017 Chartered Accountants
5
Commercial Bank of Ceylon PLC - Bangladesh Operations

Cash Flow Statement

For the year ended 31 December 2016
Notes 2016 2015
BDT BDT
Cash flows from operating activities
Interest receipts 1,572,859,230 1,621,820,544
Interest payments (796,441,052) (895,024,334)
Fees and commission receipts 283,680,631 253,293,549
Recoveries on loans previously written off 39,989,145 25,719,535
Payments to employees (347,182,717) (369,597,783)
Payments to suppliers (167,072,332) (128,541,372)
Receipts from other operating activities 32 271,886,452 294,698,938
Corporate income tax paid (600,760,080) (658,983,999)
Payments for other operating activities 33 (436,697,021) (285,981,484)
Interest receipts from investment 621,107,231 1,040,405,629
Cash generated from/ (used in) operating activities before changes
in operating assets and liabilities 441,369,487 897,809,223
(Increase)/Decrease in operating assets and liabilities
Purchase/sale of government securities - -
Loans and advances to other banks - -
Loans and advances to customers (1,993,574,491) (4,294,772,974)
Other assets 34 (70,460,377) 19,215,210
Deposits from other banks (1,407,221,991) 91,998,791
Deposits from customers 3,292,107,636 1,203,581,643
Other liabilities 35 298,606,163 (48,741,454)
Net (increase)/decreased in operating assets and liabilities 119,456,940 (3,028,718,784)
Net cash from/(used in) operating activities (a) 560,826,427 (2,130,909,561)
Cash flows from investing activities
Investment in treasury bills and bonds 1,321,554,660 2,863,926,555
Payments for purchase of shares - -
Purchase/sale of property, plant and equipment 4,779,710 29,926,531
Gains on disposal of property, plant and equipment 97,009 44,998
Net cash from/(used in) investing activities (b) 1,326,431,379 2,893,898,084
Cash flows from financing activities - -
Remittance received from Head Office, Colombo - -
Net cash flows from financing activities (c) - -
Net increase in cash and cash equivalents (a+b+c) 1,887,257,806 762,988,523
Effects of exchange rate changes on cash and cash equivalent - -
Cash and cash equivalents at beginning of the year (*) 4,372,826,857 3,609,838,334
Cash and cash equivalents at end of the year (*) 6,260,084,663 4,372,826,857
(*) Cash and cash equivalents :
Cash 251,870,066 214,096,243
Prize bonds 114,200 817,500
Money at call and on short notice 2,120,000,000 800,000,000
Balance with Bangladesh Bank and its agent bank(s) 1,785,019,364 1,494,759,340
Balance with other banks and financial institutions 2,103,081,033 1,863,153,774
6,260,084,663 4,372,826,857
These financial statements should be read in conjunction with annexed notes
for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager

Dhaka, Bangladesh
Dated, 28 February 2017
6
Commercial Bank of Ceylon PLC - Bangladesh Operations

Statement of Changes in Equity

For the year ended 31 December 2016

Paid-up
capital/ Deposit Gains/loss on
kept with Statutory revaluation of Retained
Bangladesh Bank reserve securities earnings Total
Particulars BDT BDT BDT BDT BDT

Opening balance at 01 January 2016 4,445,178,830 - 12,679,047 2,780,529,467 7,238,387,344

Changes in accounting policy - - - - -
Restated balance 99,000,322 - - (99,000,322) -
Surplus/(deficit) on account of revaluation of properties - - - - -
Adjustment of last year's revaluation on investments - - (12,679,047) - (12,679,047)
Surplus/(deficit) on account of revaluation of investments - - 11,383,935 - 11,383,935
Currency translation differences - - - - -
Net gains and losses not recognised in profit and loss statement - - - - -
Net profit for the year - - - 590,541,770 590,541,770
Dividends/Profit remittance - - - - -
Issue of share capital/(Capital brought from Head Office, Colombo) - - - - -
Balance at 31 December 2016 4,544,179,152 - 11,383,935 3,272,070,915 7,827,634,002

These financial statements should be read in conjunction with annexed notes

for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager

Dhaka, Bangladesh
Dated, 28 February 2017

7
Commercial Bank of Ceylon PLC - Bangladesh Operations

Liquidity Statement (Analysis of Maturity of Assets and Liabilities)

As at 31 December 2016
Up to 1 month 1-3 months 3-12 months 1-5 years Above 5 years
Particulars maturity maturity maturity maturity maturity Total
BDT BDT BDT BDT BDT BDT
Assets:
Cash in hand 2,036,889,430 - - - - 2,036,889,430
Balance with other banks and financial institutions (note 4.4) 1,985,263,533 117,817,500 - - - 2,103,081,033
Money at call and on short notice 1,380,000,000 740,000,000 - - - 2,120,000,000
Investments 1,180,424,892 1,915,843 546,114,586 2,197,982,376 1,280,716,207 5,207,153,904
Loans and advances 7,486,558,873 6,176,221,492 6,602,154,443 4,264,232,570 246,281,308 24,775,448,686
Fixed assets including premises, furniture and fixtures 53,812 - 5,306,135 34,430,046 1,007,152 40,797,145
Other assets 3,538,290,363 - - - - 3,538,290,363
Non-banking assets - - - - - -
Total Assets 17,607,480,903 7,035,954,835 7,153,575,164 6,496,644,992 1,528,004,667 39,821,660,561

Liabilities
Borrowings from Bangladesh Bank, other banks,
financial institutions and agents 2,367,434,276 343,739 1,570,900,000 - - 3,938,678,015
Deposits 13,988,497,076 2,517,470,505 5,968,319,485 655,214,122 - 23,129,501,188
Other accounts - - - - - -
Provision and other liabilities 4,925,847,356 - - - - 4,925,847,356
Total Liabilities 21,281,778,708 2,517,814,244 7,539,219,485 655,214,122 - 31,994,026,559
Net Difference in Liquidity (3,674,297,805) 4,518,140,591 (385,644,321) 5,841,430,870 1,528,004,667 7,827,634,002
These financial statements should be read in conjunction with annexed notes
for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager

Dhaka, Bangladesh
Dated, 28 February 2017
8
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

1. The Bank and its activities

Commercial Bank of Ceylon PLC (“the Bank”) is a publicly quoted company incorporated in Sri Lanka on 25 June
1969. It is a licensed commercial bank operating under the provisions of Sri Lanka Banking Act No. 30 of 1988.
The Commercial Bank of Ceylon PLC - Bangladesh Operations commenced its banking operations in Bangladesh
from 06 November 2003 by acquiring the operations of Credit Agricole Indosuez a French Bank with two branches
and two booths. The principal office of the Bank in Bangladesh is situated at Dhaka having eleven branches
currently in operations at Dilkusha, Dhanmandi, Uttara, Mirpur, Gulshan 1, Gulshan 2, Panthapath, Tejgaon of
Dhaka and each at Narayanganj, Chittagong and Sylhet. The Bank also maintains six SME centers at Old Dhaka,
Shantinagar, Progati Sharani of Dhaka, Tongi of Gazipur, Jublee Road and CDA Avenue of Chittagong.

The Bank started its offshore banking activities through its Motijheel Branch, Dhaka from 18 July 2004 which has
been transferred to Dhanmandi Branch on 16 March 2005 and subsequently transferred to Gulshan Branch on 12
September 2013. Its second offshore banking unit which was started on 27 March 2005 in Agrabad Branch,
Chittagong was also transferred to Chittagong Export Processing Zone Area on 04 February 2007.
The principal activities carried out by the Bank include all kinds of commercial banking and clearing services to its
customers and correspondings all over the world through its branches in Bangladesh.
2. Significant accounting policies
2.1 Basis of preparation of the financial statements
The financial statements of the Bank comprise Balance Sheet, Profit and Loss Statement, Cash Flow
Statement, Statement of Changes in Equity, Liquidity Statement and relevant explanatory notes and
disclosures thereto that are prepared on a going concern basis under historical cost convention and in
accordance with the First Schedule (Section 38) of the Banking Companies Act 1991, BRPD Circular No. 14
dated 25 June 2003,, other Bangladesh
g Bank circulars,, Bangladesh
g Accounting
g Standards ((BASs),),
Bangladesh Financial Reporting Standards (BFRSs) as adopted by the Institute of Chartered Accountants of
Bangladesh from the International Accounting Standards (IASs) and International Financial Reporting
Standards (IFRSs) and other laws and rules applicable in Bangladesh.
2.1.1 Statement of compliance
The financial statements of the Bank are prepared in accordance with Bangladesh Financial Reporting
Standards (BFRSs), which also cover Bangladesh Accounting Standards, and the requirements of the
Banking Companies Act 1991, the rules and regulations issued by Bangladesh Bank, the Companies Act
1994 (amended 2013). In case any requirement of the Banking Companies Act 1991, and provisions and
circulars issued by Bangladesh Bank differ with those of BFRSs, the requirements of the Banking
Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. Material
departures from the requirements of BFRSs are as follows:
i) Investment in shares and securities
BFRS: As per requirements of BAS 39 "Financial Instruments: Recognition and Measurement" investment in
shares and securities generally falls either under “at fair value through profit and loss account” or under
“available for sale” where any change in the fair value (as measured in accordance with BFRS 13 "Fair Value
Measurement") at the year-end is taken to profit and loss account or revaluation reserve respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and
unquoted shares are revalued at the year end at market price and as per book value of last audited balance
sheet respectively. Provision should be made for any loss arising from diminution in value of investment;
otherwise investments are recognised at cost.
Bank's Metholodogy:
Methods of valuation of investment are as follows:
Item Method of valuation
Government treasury bills Revalued as per Bangladesh Bank's guidelines
Treasury bonds Revalued as per Bangladesh Bank's guidelines
Prize bonds At cost
Unquoted shares/ bonds At cost

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Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

ii) Revaluation gains/losses on Government securities

BFRS: As per requirement of BAS 39 where securities fall under the category of Held for Trading (HFT), any
change in the fair value of held for trading assets is recognised through profit and loss account. Securities
designated as Held to Maturity (HTM) are measured at amortised cost method and interest income is
recognised through the profit and loss account.
Bangladesh Bank: HFT securities are revalued on the basis of marked to market and at year end. Any
gains on revaluation of securities which have not matured as at the balance sheet date are recognised in
other reserves as part of equity and any losses on revaluation of securities which have not matured as at the
balance sheet date are charged in the profit and loss account. Interest on HFT securities including
amortisation of discount is recognised in the profit and loss account. HTM securities which have not matured
as at the balance sheet date are amortised at the year end and gains or losses on amortisation are
recognised in other reserve as part of equity.
Bank's Metholodogy:
The Bank's investment in treasury bills and bonds are stated at present value and interest on treasury bonds
is recognised as income on accrual basis as per BRPD circular letter no. 15 dated 31 October 2005 and
DOS circular letter no. 05 dated 26 May 2008.
HTM
Investment classified as HTM is a non-derivative financial instrument with fixed or determinable future
receipt on maturity that the Bank's management has the intention and ability to hold till maturity. This
particular investment has been revalued as marked to market as at 31 December 2016, the revaluation
gains on such securities have been shown in the financial statements as part of equity.

HFT
Investment classified as HFT is acquired mainly for the purpose of selling and repurchasing. Such
investment is measured at marked to market method and anyy changes g in the marked to market method are
recognised in every week during the reporting year as per DOS circular letter no. 05 dated 28 January 2009.

iii) Provision on loans and advances/investments

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.14 (23 September 2012), BRPD circular No. 19 (27 December
2012) and BRPD circular No. 05 (29 May 2013) a general provision @ 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 @
20%, 50% and 100% respectively for loans and advances depending on the duration of overdue. Again as
per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012, a
general provision @ 1% is required to be provided for all off-balance sheet exposures. Such provisioning
policies are not specifically in-line with those prescribed by BAS 39.
Bank's Metholodogy:
In making specific provision against classified loans and advances, general provision on unclassified loans
and advances, wherever required, which may result in a change in the provision required in accordance with
BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012,BRPD
circular no. 05 dated 29 May 2013 and BRPD circular no. 16 dated 18 November 2014 have been complied
with. Any movement in the provision, charged / released in the profit and loss statement.

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Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

iv) Recognition of interest in suspense

BFRS: Loans and advances to customers are generally classified as 'loans and receivables' as per BAS 39
and interest income is recognised through effective interest rate method over the term 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: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified (other
than bad loss), interest on such loans is not allowed to be recognised as income, rather the corresponding
amount needs to be credited to an interest suspense account, which is presented as liability in the balance
sheet.
Bank's Metholodogy:
Interest on classified loans and advances is kept in suspense account as per Bangladesh Bank instruction
and such interest is not recognised as income until it is realised from borrowers. Interest is not charged on
classified loans and advances from the date of filing of money suits against the borrowers.

v) Other comprehensive income (OCI):

BFRS: As per BAS 1: OCI is a component of financial statements or the elements of OCI are to be included
in a single OCI.
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 the other comprehensive income statement.
However, elements of OCI, if any, are shown in the statements of changes in equity.
vi) 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 full disclosure and presentation
requirements of BFRS 7: "Financial Instruments: Disclosures" and BAS 32 "Financial Instruments:
Presentation" cannot be made in the financial statements.
vii) Financial guarantees
BFRS: 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 the 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.
viii) Cash and cash equivalents
BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7 "Statement of Cash
Flows"
Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short notice’,
treasury bills, Bangladesh Bank bills and prize bonds are not shown as cash and cash equivalents. Money at
call and on short notice presented on the face of the balance sheet, and treasury bills, prize bonds are
shown in investments.

ix) Non-banking asset

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

11
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

x) Cash flow statement

BFRS: The cash flow statement can be prepared using either the direct method or the 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, cash flow is the combination of direct and indirect
methods.
Bank's Metholodogy:
Cash Flow Statement is prepared in accordance with BAS 7 under direct method as recommended in BRPD
circular no. 14 dated 25 June 2003 issued by Bangladesh Bank.
xi) Balance with Bangladesh Bank: (Cash Reserve Requirement)
BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to
day operations as per BAS 7.
Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.
xii) Presentation of intangible asset
BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS
38: "Intangible Assets".
Bangladesh Bank: There is no regulation for intangible assets in circular no. BRPD 14.
xiii) \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 on the face of the balance sheet.

Bangladesh Bank: As per BRPD circular no. no 14,

14 off
off-balance
balance sheet items (e.g.
(e g Letter of credit,
credit Letter of
guarantee, etc) must be disclosed separately on the face of the balance sheet.
Bank's Metholodogy:
Off-balance Sheet items have been disclosed under contingent liabilities and other commitments as per
Bangladesh Bank's guidelines. BRPD circular No.14 dated 23 September 2012 requires a general provision
for off-balance sheet exposures to be calculated @ 1% which has been followed by the Bank properly on the
following off-balance sheet Items:
a. Acceptance and endorsements
b. Irrevocable letter of credit
c. Letter of guarantee
xiv) Loans and advances/Investments net of provision
BFRS: Loans and advances/Investments should be presented net of provision.
Bangladesh Bank: As per BRPD 14, provision on loans and advances/investments is presented separately
as liability and can not be netted off against loans and advances.
Bank's Metholodogy:
Loans and advances have been shown at gross amounts at 31 December 2016.
2.2 Consolidation
A separate set of records for consolidating the statements of affairs and income and expenditure statements
of the branches and offshore banking units are maintained at Principal Office of the Bank in Dhaka, based
on which these financial statements have been prepared.
2.2.1 Offshore Banking Unit (OBU)
The Bank's OBU have maintained separate set of books of account for their operations. Assets and liabilities
and income and expenditures of the units are incorporated in similar heads of account of the Bank's financial
statements.

12
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2.3 Foreign currency transactions
(a) Foreign currency transactions are converted into equivalent BDT currency at the ruling exchange rates
on the respective dates of such transactions as per BAS 21: "The effects of Changes in Foreign
Exchange Rates" .
(b) Assets and liabilities in foreign currencies at 31 December 2016 have been converted into BDT
currency at average prevailing buying and selling rates of concerned foreign currencies at that date
except balances with other banks and financial institutions which have been converted as per directions
of Bangladesh Bank vide its circular no. BRPD(R) 717/2004-959 dated 21 November 2004.

(c) Differences arising through transactions of foreign currencies buying and selling on different dates of
the year have been adjusted by debiting /crediting exchange gains or loss account.
(d) Forward contracts outstanding at 31 December 2016 have been shown in the Balance Sheet under off-
balance sheet items.
2.4 Fixed assets (property, plant and equipment) and depreciation
All fixed assets are stated at cost less accumulated depreciation as per BAS 16: "Property, plant and
equipment". The cost of an asset includes its purchase price and any other direct costs to bring the asset to
its working condition.
Depreciation on fixed assets is charged using straight-line method at the following rates:
Category of fixed asset Rate of depreciation
Furniture and fixtures 10%
Computer software 20%
Interior decorations 20%
Equipment and computers 20%
M t vehicles
Motor hi l 20%
Depreciation on addition to fixed assets is charged from the month of acquisition on pro-rata basis while no
depreciation is charged in the year of disposal.
2.5 Stock of stationery
Stock of stationery has been shown under other assets and is valued at cost.
2.6 Deposits
Deposits include various types of deposit in the nature of demand, savings, short-term, term, etc.
2.7 Employee benefits
Retirement benefits accrued for the employees of the Bank as on reporting date have been accounted for in
accordance with the provisions of BAS 19: "Employee benefits". Basis of enumerating the retirement
schemes operated by the Bank are outlined below:
(a) Provident fund
Employees' provident fund is administered by a separate Board of Trustees and is funded by
contributions of both the Bank and employees at 10% of basic pay. These contributions are invested
separately.
(b) Staff gratuity
The Bank runs an unfunded gratuity scheme under which gratuity is paid to its staff upon their
severance. However, the Bank's liability on this account stands fully provided in accounts and BDT
70,954,712 was thus provided in current year's Profit and Loss Statement considering the staff's
accumulated gratuity entitlements for their service with the Bank as per the actuarial valuation.
2.8 Provision for taxation
(a) Current tax
Provision for corporate income tax is made @ 42.5% as prescribed in the Finance Act 2016 on
accounting profit made by the Bank after considering taxable allowances and disallowances as per
income tax laws.

13
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

(b) Deferred tax

The Bank has accounted for deferred tax in accordance with BAS 12: "Income Taxes". Deferred tax
assets and liabilities are recognised for the future tax consequences of timing differences arising
between carrying amount of assets, liabilities, income and expenditure and their respective tax bases.
Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or
subsequently enacted at balance sheet date.
2.9 Reconciliation of books of account
Books of account with regard to inter-bank (in Bangladesh and outside Bangladesh) and inter-branch
transactions are reconciled and no material difference was found which may affect the financial statements
significantly.
2.10 Provision for balances with other banks and financial institutions
Provision for unsettled transactions on nostro accounts is reviewed at each Balance Sheet date by the
management and certified by the Bank's external auditors in accordance with Bangladesh Foreign Exchange
Policy Department ( FEPD) circular no. 677 dated 13 September 2005.
2.11 Statement of changes in equity
Statement of changes in equity is prepared in accordance with BAS 1 and under the guidelines of BRPD
circular no.14 dated 25 June 2003.
2.12 Statement of liquidity analysis
Statement of liquidity analysis as on reporting date has been prepared as per Bangladesh Bank guidelines.
2.13 Revenue recognition
a. In term of provision of BAS 18: " Revenue", the interest income is recognised on an accrual basis and
i l no. 05 d
BRPD circular t d 05 JJune 2006 was followed
dated f ll d properly.
l
b. Interest income on investment is recognised on accrual basis.
c. Dividend income from investment is recognised when the Bank's right to receive dividend is
established.
d. The Bank earns commission and fee income from a diverse range of services provided to its
customers. Income earned from services provided is recognised as revenue as the services are
provided.
2.14 Reporting period
These financial statements cover one calendar year from 01 January to 31 December 2016.
2.15 Regulatory and legal compliance
The Bank complied with the requirements of the following laws and regulation.
a. The Banking Companies Act 1991 (amended 2013)
b. The Companies Act 1994
c. Income Tax laws
d. The Value Added Tax laws
e. Rules, Regulations and Circulars issued by the Bangladesh Bank time to time and other regulatory
authorities.
2.16 General
a. Figures appearing in the financial statements have been rounded to the nearest BDT.
b. Figures and account titles of previous year have been rearranged whenever considered necessary to
conform with current year's presentation.
c. Expenses irrespective of capital or revenue nature accrued but not paid have been provided for in the
books of account of the Bank.

14
Commercial Bank of Ceylon PLC - Bangladesh Operations
Notes to the financial statements
For the year ended 31 December 2016
2016 2015
BDT BDT
3 Cash
3.1 Cash in hand
In local currency 244,333,735 203,218,349
In foreign currencies 7,536,331 10,877,894
251,870,066 214,096,243
3.2 Balance with Bangladesh Bank and its agent bank(s)
Balance with Bangladesh Bank:
In local currency ( note 3.2.1) 1,523,486,258 1,327,686,481
In foreign currencies ( note 3.2.2) 261,528,181 167,067,992
1,785,014,439 1,494,754,473
Balance with agent bank(s): 4,925 4,867
In local currency 4,925 4,867
In foreign currencies - -
1,785,019,364 1,494,759,340
2,036,889,430 1,708,855,583
3.2.1 In local currency
Lien portion (against the Bank's required equity) - -
Non-lien portion 1,523,486,258 1,327,686,481
1,523,486,258 1,327,686,481
3.2.2 In foreign currencies
Lien portion (against the Bank's required equity) - -
Non-lien portion 261,528,181 167,067,992
261,528,181 167,067,992
3.3 Cash Reserve Requirement and Statutory Liquidity Reserve
Cash reserve ratio (CRR) and statutory liquidity ratio (SLR) have been calculated and maintained in
accordance with section 33 of the Banking Companies Act 1991 and Bangladesh Bank MPD's subsequent
circular no. 04 and 05 dated 01 December 2010 and 23 June 2014.
CRR is required @ 6.5% on time and demand liabilities of the Bank. This has been maintained with
Bangladesh Bank in current account. SLR @ 13% on the same liabilities is also maintained in the form of
treasury bills and bonds including balance with Bangladesh Bank. Both the reserves are maintained by the
Bank as per statutory requirements, as shown below:

3.3.1 Cash Reserve

Required reserve 1,421,653,400 1,279,410,470
Actual reserve maintained 1,434,733,380 1,305,452,260
Surplus 13,079,980 26,041,790
3.3.2 Statutory Liquid Reserve
Required reserve 2,843,306,800 2,558,820,940
Actual reserve maintained 7,246,058,010 6,955,012,260
Surplus 4,402,751,210 4,396,191,320
4 Balance with other banks and financial institutions
In Bangladesh (note 4.1) 513,972,363 1,419,047,258
Outside Bangladesh (note 4.2) 1,589,108,670 444,106,516
2,103,081,033 1,863,153,774
4.1 In Bangladesh
Eastern Bank Limited 392,725,000 392,475,000
National Credit and Commerce Bank Limited 117,817,500 -
Standard Chartered Bank 1,673,006 2,415,212
Prime Bank Limited 1,606,262 1,570,726
Islami Bank Bangladesh Limited 150,595 2,151,320
AB Bank Limited - 627,960,000
Brac Bank Limited - 392,475,000
513,972,363 1,419,047,258

15
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
4.2 Outside Bangladesh
At 31 December 2016 At 31 December 2015
Nature of Currency
Name of bank Location Amount in Conversion Equivalent Amount in Conversion Equivalent
deposit name
foreign currency rate BDT foreign currency rate BDT
Kookmin Bank Nostro Seoul USD 10,134 78.70 797,522 130,798 78.51 10,268,980
Standard Chartered Bank Nostro Karachi USD 67,265 78.70 5,293,738 148,951 78.51 11,694,114
Citibank NA Nostro New York USD - 78.70 - (354,998) 78.51 (27,870,869)
Commercial Bank of Ceylon Nostro Colombo USD 28,409 78.70 2,235,767 375,968 78.51 29,517,237
Amex Frankfurt am main de Nostro Frankfurt EUR - 82.76 - (5,213) 85.83 (447,407)
Commerzbank AG Nostro Frankfurt EUR 4,117,665 82.76 340,781,754 (34,728) 85.83 (2,980,612)
Credit Agricole S.A. Nostro Paris EUR 88,916 82.76 7,358,784 15,551 85.83 1,334,732
Standard Chartered Bank Nostro London GBP 224,069 97.11 21,758,876 - 56.53 -
Bank of Montreal Nostro Toronto CAD 36,839 58.59 2,158,347 34,609 56.53 1,956,336
National Australia Nostro Melbourne AUD 142,286 56.79 8,080,418 - 9.33 -
Union Bank of Switzerland AG Nostro Zurich CHF - 77.28 - 3,039 79.53 241,716
Bank of Tokyo Mitsubishi Nostro Tokyo JPY 8,595,714 0.67 5,787,099 35,707,109 0.65 23,265,395
Standard Chartered Bank Nostro Hong Kong HKD 8,146 10.15 82,669 4,835 10.13 48,978
Bank of New Zealand Nostro Wellington NZD 10,054 54.67 549,705 3,087 53.76 165,968
HSBC PLC Nostro London GBP - 97.11 - 108,387 116.30 12,605,486
Standard Chartered Bank Nostro New York USD (365,499) 78.70 (28,764,769) 641,474 78.51 50,362,117
Wells Fargo NA Nostro New York USD (2,221,602) 78.70 (174,840,056) (677,654) 78.51 (53,202,608)
ICICI Bank Nostro Mumbai USD 760,915 78.70 59,884,000 443,534 78.51 34,821,846
Deutsche Bank Nostro New York USD (36,617) 78.70 (2,881,759) (172,530) 78.51 (13,545,351)
Axis Bank Nostro Mumbai USD (260,282) 78.70 (20,484,157) (778,743) 78.51 (61,139,136)
Standard Chartered Bank Nostro Singapore SGD 62,181 54.34 3,378,892 25,653 55.51 1,423,908
HSBC Bank PLC Nostro Sydney AUD - 56.79 - 41,636 57.22 2,382,496
Commercial Bank of Ceylon Placement Colombo USD 17,000,000 78.70 1,337,900,000 8,000,000 78.51 628,080,000
Bank of America (OBU) Nostro Sydney AUD - 56.79 - 221,332 57.22 12,665,049
Standard Chartered Bank (OBU) Nostro London GBP (204,745) 97.11 (19,882,400) - 78.51 -
National Australia (OBU) Nostro Melbourne AUD (40,682) 56.79 (2,310,349) - 63.80 -
Citibank NA (OBU) Nostro New York USD 592,783 78.70 46,652,001 - 78.51 -
Standard Chartered Bank (OBU) Nostro Frankfurt EUR (53,496) 82.76 (4,427,412)
HSBC Bank PLC (OBU) Nostro London EUR - 82.76 - 72,548 85.83 6,226,555
HSBC Bank PLC (OBU) Nostro New York USD - 78.70 - (2,912,769) 78.51 (228,681,480)
HSBC Bank PLC (OBU) Nostro London GBP - 97.11 - 42,244 116.30 4,913,066
Total 1,589,108,670 444,106,516
16
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
4.3 Grouping by maturity
Receivable on demand 508,229,435 210,031,237
Payable to customers on demand (253,590,902) (387,867,463)
254,638,533 (177,836,226)
Below 3 months 1,848,442,500 1,412,910,000
Over 3 months but below 1 year - 628,080,000
Over 1 year but below 5 years - -
Over 5 years - -
2,103,081,033 1,863,153,774
4.4 Account-wise breakdown
Current and other accounts 254,638,533 (177,836,226)
Placement (term) 1,848,442,500 2,040,990,000
2,103,081,033 1,863,153,774
5 Money at call on short notice
Standard Bank Limited 500,000,000 -
Southeast Bank Limited 390,000,000 -
Brac Bank Limited 310,000,000 -
Dhaka Bank Limited 300,000,000 280,000,000
Eastern Bank Limited 230,000,000 -
Jamuna Bank Limited 200,000,000 -
National Bank Limited 190,000,000 -
The City Bank Limited - 290,000,000
National Credit and Commerce Bank Limited - 230,000,000
2,120,000,000 800,000,000

6 Investments
Government (note 6.1) 5,197,737,244 6,319,995,204
Others (note 6.2) 9,416,660 209,416,660
5,207,153,904 6,529,411,864

6.1 Government:
Treasury bonds (note 6.1.1) 4,026,729,012 5,880,304,212
Treasury bills (note 6.1.2) 1,170,894,032 438,873,492
Prize bonds 114,200 817,500
5,197,737,244 6,319,995,204
6.1.1 Treasury bonds
HTM 3,773,180,420 4,036,287,648
HFT 253,548,592 1,844,016,564
4,026,729,012 5,880,304,212
6.1.2 Treasury bills
HTM 800,984,634 438,873,492
HFT 369,909,398 -
1,170,894,032 438,873,492
6.2 Others:
Central Depository Bangladesh Limited (CDBL) (note 6.2.1) 9,416,660 9,416,660
Commercial papers - 200,000,000
9,416,660 209,416,660
Total 5,207,153,904 6,529,411,864

17
Commercial Bank of Ceylon PLC - Bangladesh Operations
Notes to the financial statements
For the year ended 31 December 2016
a.(i) Disclosure regarding outstanding Repo as on 31 December 2016
Sl no. Counter party name Agreement Date Reversal Date Amount
National Bank Limited 29-Dec-16 01-Jan-17 719,848,139
a.(ii) Disclosure regarding outstanding Reverse Repo as on 31 December 2016
Sl no. Counter party name Agreement Date Reversal Date Amount
NIL
b. Disclosure regarding overall transaction of Repo and Reverse Repo:
Minimum Maximum Daily average
Particulars outstanding outstanding outstanding
during the year during the year during the year
Securities sold under repo:
i) with Bangladesh Bank - - -
ii) with other banks and FIs 116,219,211 719,848,139 21,034,235
Securities purchased under reverse repo:
i) from Bangladesh Bank - - -
ii) from other banks and FIs 96,980,741 2,288,494,550 963,157,590
2016 2015
BDT BDT
6.2.1 Central Depository Bangladesh Limited (CDBL)
Particulars Number of shares Cost Cost
CDBL Shares (initial) 600,000 6,000,000 6,000,000
Bonus received for the year 2009 600,000 - -
Purchased on 14 October 2010 341 666
341,666 3 416 660
3,416,660 3 416 660
3,416,660
Bonus declared for the year 2010 1,200,000 - -
Bonus declared for the year 2011 685,417 - -
Total 3,427,083 9,416,660 9,416,660
6.3 Value of investment at 31 December 2016
Particulars Quantity Face Value Cost Market Value Market Value
Treasury bonds 66 3,950,000,000 4,044,738,614 4,026,729,012 5,880,304,212
Treasury bills 3 800,000,000 793,698,750 800,984,634 438,873,492
Bangladesh Bank 1 370,000,000 369,788,730 369,909,398 -
Bills
Prize bonds 1,142 114,200 114,200 114,200 817,500
Commercial - - - 200,000,000
Papers
CDBL shares 3,427,083 34,270,830 9,416,660 9,416,660 9,416,660
5,154,385,030 5,217,756,954 5,207,153,904 6,529,411,864
6.4 Maturity grouping
Repayable on demand 114,200 817,500
Below 3 months 1,172,809,875 440,247,134
Over 3 months but below 1 year 546,114,586 1,421,968,066
Over 1 year but below 5 years 2,197,982,376 3,376,099,587
Over 5 years 1,280,716,207 1,280,862,917
5,197,737,244 6,519,995,204

18
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
7. Loans and advances
7.1 Maturity grouping
Repayable on demand 2,137,357,840 2,347,732,509
Below 3 months 11,525,422,525 7,920,717,465
Over 3 months but below 1 year 6,602,154,443 9,083,210,436
Over 1 year but below 5 years 4,264,232,570 3,334,478,590
Over 5 years 246,281,308 95,735,195
24,775,448,686 22,781,874,195
7.2 Broad category-wise break-up
i) Within Bangladesh
Loans (general) 17,489,042,901 15,339,861,535
Overdrafts 2,100,969,858 2,316,362,653
Loans against trust receipt 355,347,294 386,396,308
Packing credit 91,074,042 98,454,572
Import loan 20,306,426 11,532,971
Credit card 36,387,982 31,369,856
Staff loan 77,497,733 76,937,696
20,170,626,236 18,260,915,591
Loans against accepted bills
ii) Inland bills 16,548,355 29,971,713
Foreign bills 4,588,274,095 4,490,986,891
4,604,822,450 4,520,958,604
Outside Bangladesh - -
( )
Total (i+ii) 24,775,448,686 22,781,874,195
7.3 Significant concentration
Directors and others - -
Managing Director or Chief Executive Officer - -
Other executives 77,497,733 76,937,696
Industries 17,533,724,483 15,492,690,982
Other clients 7,164,226,470 7,212,245,517
24,775,448,686 22,781,874,195
7.4 Advance to customers for more than 10% of Bank's total capital
Number of clients 17 19
Amount of outstanding advances 9,414,800,000 8,460,250,000
Amount of classified advances - -
9,414,800,000 8,460,250,000
7.5 Economic sector-wise distribution
Industry 17,533,724,483 15,492,690,982
Trading 3,434,153,939 3,520,760,572
Agriculture 292,657,790 114,380,782
Others 3,514,912,474 3,654,041,859
24,775,448,686 22,781,874,195
7.6 Geographical location-wise distribution
Urban
Dhaka region 21,878,700,285 19,736,337,456
Chittagong region 2,663,461,669 2,716,106,530
Sylhet region 233,286,732 329,430,209
24,775,448,686 22,781,874,195
Rural
Dhaka region - -
Chittagong region - -
Sylhet region - -
- -
24,775,448,686 22,781,874,195
19
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
7.7 Classification of loans and advances as per Bangladesh Bank 's BRPD circulars
Unclassified: 24,272,211,292 22,276,730,309
Standard 24,235,878,699 22,215,938,563
Special mentioned account (SMA) 36,332,593 60,791,746
Classified: 503,237,394 505,143,886
Sub-standard 22,288,299 146,773,987
Doubtful 14,202,036 66,647,832
Bad/ Loss 466,747,059 291,722,067
24,775,448,686 22,781,874,195
7.8 Particulars of loans and advances
(i) Loans considered good in respect of which the Bank is fully
secured 24,272,211,292 22,276,730,309
(ii) Loans considered good for which the Bank holds no other
security other than the debtor’s personal security - -
(iii) Loans considered good, secured by personal liabilities of one
or more parties in addition to the personal security of the
debtors 111,736,189 120,515,247
(iv) Loans adversely classified; provision not maintained there
against - -
(v) Loans due by Directors or Officers of the Bank or any of them
either separately or jointly with any other persons 77,497,733 76,937,696
(vi) Loans due from companies or firms in which the directors of
the Bank have interest as directors, partners or managing
agents or, in the case of private companies, as members
- -
(vii) Maximum total amount of advances, including temporary
advances, made at any time during the year to directors or
managers or officers of the Bank or any of them either
severally or jointly with any other persons 81,767,052 80,716,690
(viii) Maximum total amount of advances, including temporary
advances, granted during the year to the companies or firms
in which the directors of the Bank are interested as directors,
partners or managing agents or, in the case of private
company, as members - -
(ix) The amount of forced loan was created by converting off
balance items. - -
(ix) Due from banking companies - -

(x) (a) Classified loans on which interest has not been

charged 503,237,394 505,143,886
(b) Provision made during the year against bad debts 153,813,345 101,099,969
(c) Interest creditable to the interest suspense account 73,410,417 52,549,751
(xi) Loan written off 165,705,998 165,705,998
Opening balance 165,705,998 165,705,998
Add : Bad debts written of during the year - -
Less : Bad debts previously written off recovered during
the year - -
Bad debts written off / settled - -
Closing balance 165,705,998 165,705,998
20
Commercial Bank of Ceylon PLC - Bangladesh Operations
Notes to the financial statements
For the year ended 31 December 2016
2016 2015
BDT BDT
(xii) Cases filed for recovery of written off bad debts 131,807,438 131,807,438
8 Bills purchased and discounted
Payable in Bangladesh 16,548,355 29,971,713
Payable outside Bangladesh 4,588,274,095 4,490,986,891
4,604,822,450 4,520,958,604

8.1 Maturity grouping

Payable within 1 month 771,081,496 385,449,974
Over 1 month but below 3 months 1,271,247,743 920,369,292
Over 3 months but below 6 months 2,242,535,389 3,187,819,785
6 months and over 319,957,822 27,319,553
4,604,822,450 4,520,958,604

9 Fixed assets including premises, furniture and fixtures

Details are shown in Annex B. 40,797,145 45,576,855
10 Other assets
Income generating
In Bangladesh - -
Outside Bangladesh - -
- -
Non-income generating:
Advance payment of corporate income tax (note 10.1) 3,026,686,162 2,425,926,082
R
Receivable
i bl from
f Bangladesh
B l d h Bank
B k against
i t Sanchaya
S h Patras
P t 34,440,030
34 440 030 1
1,992,579
992 579
Advance rent and advertisement 143,953,203 38,342,863
Other income receivable 190,178,467 238,766,843
Prepaid expenses 3,535,501 4,497,581
Stock of stationery, stamps, printing materials, etc 3,807,031 3,861,641
Receivable from Head Office 377,500 428,500
Security deposit 4,062,104 3,797,086
Interest receivable from other banks (note 10.2 ) 79,552 50,174
Commission and brokerage receivable - 43,870
Others (note 10.3) 131,170,813 60,450,591
3,538,290,363 2,778,157,810
Classification status of other assets
Unclassified 3,538,290,363 2,778,157,810
Doubtful - -
Bad/Loss - -
3,538,290,363 2,778,157,810
10.1 Advance payment of corporate income tax
Opening balance 2,425,926,082 1,766,942,083
Less: Settlement during the year - -
Add: Income tax paid during the year 582,864,744 650,178,413
Add: Income tax withheld during the year on:
L/C commission 2,766,676 2,872,538
Interest on government treasury bills/bonds/
fixed term deposits 15,128,660 5,933,048
Dividend on shares of CDBL - -
Closing balance (note 10.1.1) 3,026,686,162 2,425,926,082

21
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
10.1.1 Closing balance of advance payment of corporate income tax
2016 307,075,490 -
2015 607,624,347 313,939,757
2014 620,007,926 620,007,926
2013 548,951,457 548,951,457
2012 507,093,987 507,093,987
2011 435,932,955 435,932,955
3,026,686,162 2,425,926,082
10.2 Interest receivable from other banks
Bangladesh Bank 63,489 27,922
Others 16,063 22,252
79,552 50,174
10.3 Others
Deferred tax assets (note 10.3.1) 84,492,557 57,344,113
Forward Equalisation, Sundry Debtors, etc 46,678,256 3,106,478
131,170,813 60,450,591
10.3.1 Deferred tax assets on
Gratuity provision 58,370,819 32,002,441
Fixed assets 26,121,738 25,341,672
84,492,557 57,344,113
Increase / (Decrease) in Deferred Tax Assets 27,148,444 (5,091,216)
Calculation of Deferred Tax Assets :
(Taxable) / Deferred Tax
Carrying
Carr ing
Particulars Tax Base Deductable Assets /
Amount
Temporary (Liabilities)
Gratuity Provision 137,343,104 - 137,343,104 58,370,819
WDV of Fixed Assets 40,797,145 102,260,059 61,462,914 26,121,738
84,492,557
11 Borrowings from other banks, financial institutions and agents
In Bangladesh (note 11.1) 1,631,243,739 38,003,072
Outside Bangladesh (note 11.2) 2,307,434,276 3,207,896,934
3,938,678,015 3,245,900,006
11.1 In Bangladesh
Call borrowings from:
State Bank of India 60,000,000 -
60,000,000 -
Term borrowings from:
Eastern Bank Limited 1,335,265,000 -
Southest Bank Limited 235,635,000 -
Bangladesh Bank (Refinance - SME) 343,739 1,718,671
Pubali Bank Limited - 36,284,401
1,571,243,739 38,003,072

1,631,243,739 38,003,072
11.2 Outside Bangladesh
Bank of Baroda 785,450,000 -
ICICI Bank 785,450,000 -
Commercial Bank of Ceylon 736,534,276 3,207,896,934
2,307,434,276 3,207,896,934

22
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
Analysis by security
Secured - -
Unsecured 3,938,678,015 3,245,900,006
3,938,678,015 3,245,900,006
Grouping by maturity
Repayable on demand 246,719,276 69,815,605
Others 3,691,958,739 3,176,084,401
3,938,678,015 3,245,900,006
12 Deposits and other accounts
12.1 Current and other accounts
Current accounts (note 12.1.1) 7,496,045,127 6,341,840,618
Margin accounts (note12.1.2) 465,874,968 372,686,957
7,961,920,095 6,714,527,575
12.1.1 Current accounts
Local currency
Inter-bank - -
Others 5,295,468,316 4,026,604,338
5,295,468,316 4,026,604,338
Foreign currencies
Inter-bank - -
Others 2,200,576,811 2,315,236,280
2,200,576,811 2,315,236,280
7,496,045,127 6,341,840,618

12.1.2 Margin accounts

Letters of guarantee 32,827,066 27,422,807
Letters of credit 420,629,443 331,058,422
Others 12,418,459 14,205,728
465,874,968 372,686,957
7,961,920,095 6,714,527,575
12.2 Bills payable
Payment orders issued 180,418,082 75,276,600
Inward remittance payable - -
180,418,082 75,276,600
12.3 Savings bank deposits
Local currency
Inter-bank - -
Others 2,449,043,478 1,971,941,748
2,449,043,478 1,971,941,748
Foreign currency
Inter-bank - -
Others 120,645,304 151,788,601
120,645,304 151,788,601
2,569,688,782 2,123,730,349

23
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

2016 2015
BDT BDT
12.4 Fixed deposits
Local currency
Inter-bank - 2,100,000,000
Others 9,716,170,654 9,035,513,977
9,716,170,654 11,135,513,977
Foreign currency
Inter-bank - -
Others 2,680,478,889 1,862,064,303
2,680,478,889 1,862,064,303
12,396,649,543 12,997,578,280
12.5 Other deposits
Stale drafts-foreign currencies 10,277,892 11,848,340
Stale pay orders-local currency 10,546,794 14,432,408
20,824,686 26,280,748
23,129,501,188 21,937,393,552

12.6 Maturity analysis of customer deposits

Repayable on demand 10,732,851,645 8,939,815,272
Repayable within 1 month 3,255,645,431 2,903,353,595
Over 1 month but within 6 months 6,261,133,866 5,346,881,005
Over 6 months but within 1 year 2,224,656,124 2,013,881,476
Over 1 year but within 5 years 655,214,122 633,462,204
Over 5 years but within 10 years - -
Unclaimed deposit for 10 years or more held by the Bank - -
23,129,501,188 19,837,393,552
12.7 Maturity analysis of inter-bank deposits
Repayable on demand - -
Repayable within 1 month - 2,100,000,000
Over 1 month but within 6 months - -
Over 6 months but within 1 year - -
Over 1 year but within 5 years - -
Over 5 years but within 10 years - -
Unclaimed deposits for 10 years or more held by the Bank - -
- 2,100,000,000
23,129,501,188 21,937,393,552

13 Other liabilities
Accumulated general provision against loans and advances and
Off-Balance Sheet items (note 13.1) 408,000,000 331,300,000
Specific provision ( note 13.2) 274,806,970 160,982,770
Interest suspense account (note 13.3) 73,410,417 52,549,751
Interest payable on deposits 242,954,747 308,503,765
Interest payable on borrowings 13,178,170 7,032,250
Provision for corporate taxation (note 13.4) 3,545,493,178 2,918,344,734
Sundry creditors 7,690,951 7,072,313
Expenses payable 105,046,331 122,235,040
Provision for good borrower 9,900,000 -
Provision for gratuity (note 13.5) 137,343,104 75,299,861
Commission and brokerage payable 5,350,843 -
Others 102,672,645 102,028,695
4,925,847,356 4,085,349,179

24
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

2016 2015
BDT BDT
13.1 Accumulated general provision against loans and advances and Off-balance sheet items
Opening balance 331,300,000 267,150,000
Less: Fully provided, written-off during the year - -
Less: Recovery of provision no longer required - -
Add: Provision for the year 76,700,000 64,150,000
Closing balance 408,000,000 331,300,000
Required Provision 377,716,000 304,775,659
13.1.1 General provision
Opening balance 331,300,000 267,150,000
Add: Provision for the year (note 13.1.1.1) 76,700,000 64,150,000
Add: Transferred from specific provision during the year - -
Less: Transferred to specific provision during the year - -
Closing balance (note 13.1.1.2) 408,000,000 331,300,000
13.1.1.1 General provision for the year against
Loans and advances 22,200,000 39,250,000
Off-balance sheet items 54,500,000 24,900,000
76,700,000 64,150,000
13.1.1.2 General provision against
Loans and advances 252,100,000 229,900,000
Off-balance sheet items 155,900,000 101,400,000
408,000,000 331,300,000
13.2 Specific provision
Opening balance 160,982,770 85,602,336
Less: Fully provided, written-off during the year - -
Add: Recovery of advance previously written-off - -
Add: Specific provision during the year 153,813,345 101,099,969
Less: Recovery of provision no longer required (39,989,145) (25,719,535)
Closing balance 274,806,970 160,982,770
Required provision 274,806,970 160,982,770

13.3 Interest suspense account

Opening balance 52,549,751 23,949,182
Add: Amount transferred to interest suspense account during the
year 30,081,618 30,090,977
Less: Transferred to income during the year (9,220,952) (1,490,408)
Less: Amount waived/written-off during the year - -
Closing balance 73,410,417 52,549,751

25
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

2016 2015
BDT BDT
13.4 Provision for taxation
Opening balance 2,918,344,734 2,240,935,950
Add: Provision during the year (note 13.4.1) 627,148,444 677,408,784
Less: Settlement during the year - -
Closing balance (note 13.4.2) 3,545,493,178 2,918,344,734

Filing of corporate income tax return of the Bank has been made up to the assessment year 2016-17.
Corporate income tax return for the income year ended 31 December 2016 has not yet been due for filing.
However, tax clearance certificate from National Board of revenue (NBR) was received up to 2010
(Assessment Year 2011-2012). Provision for corporate income tax for the year ended 31 December 2016
has been made after considering necessary taxable allowances and disallowances as per tax laws.

13.4.1 Provision made during the year

Current tax 627,148,444 677,408,784
Deferred tax (27,148,444) 5,091,216
600,000,000 682,500,000
13.4.2 Provision for taxation
Current year provision 627,148,444 -
Provision carried forward - -
2016 627,148,444
2015 677,408,784 677,408,784
2014 691,420,365
691 420 365 691
691,420,365
420 365
2013 584,939,383 584,939,383
2012 523,647,556 523,647,556
2011 440,928,646 440,928,646
3,545,493,178 2,918,344,734
13.5 Provision for gratuity
Opening balance 75,299,861 112,203,447
Less: Payment made during the year (8,911,469) (4,844,977)
Add : Provision made during the year 70,954,712 (32,058,609)
Closing balance 137,343,104 75,299,861
14 Paid-up capital / Deposit kept with Bangladesh Bank
Fund deposited with Bangladesh Bank - -
Investment in treasury bills/bonds (note 14.1) 4,544,179,152 4,445,178,830
4,544,179,152 4,445,178,830

14.1 Since Commercial Bank of Ceylon PLC, Bangladesh Operations is a branch of a banking company
incorporated outside Bangladesh, the amount of deposit against equity kept with Bangladesh Bank under
section 13(4) of the Banking Companies Act 1991 has been shown under this head as per BRPD circular no.
14 dated 25 June 2003.
The Bank's deposits against equity with Bangladesh Bank at 31 December 2016 represents investment in
treasury bills/bonds of BDT 4,544,179,152.

26
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

2016 2015
BDT BDT
14.2 Capital to Risk Weighted Assets Ratio (CRAR)
In terms of section 13 (2) of the Banking Companies Act, 1991 and Bangladesh Bank BRPD circulars no.
01,14 ,10, 05 and 18 dated 08 January 1996,16 November 1996, 25 November 2002, 14 May 2007 and 21
December 2014 respectively, required capital of the Bank at 31 December 2016 should be BDT
4,000,000,000 or 10% of risk weighted assets whichever is higher as against available capital of BDT
8,144,913,938 (Tier I Capital BDT 7,731,757,510 and Tier II Capital BDT 413,156,428). Details are shown
below:
Total assets including off-balance sheet items 54,997,679,832 46,252,564,344
Total risk weighted assets 19,403,728,274 22,568,569,337
10% of risk weighted assets 1,940,372,827 2,256,856,934
Required capital as per BRPD circular (a) 4,000,000,000 4,000,000,000
Actual capital maintained:
Tier I
Paid-up capital/Deposit kept with Bangladesh Bank 4,544,179,152 4,445,178,830
Statutory reserve - -
Other reserve - -
Retained earnings 3,272,070,915 2,780,529,467
Regulatory adjustments (deferred tax assets) (84,492,557) (57,344,113)
7,731,757,510 7,168,364,184
Tier II
General provision on unclassified loans and off-balance sheet items
(Allowable as per Basel III) 408,000,000 236,081,279
Revaluation reserve as of 31 December 2014 (up to 50% of
revaluation reserve) less phase-in deductions as per Basel III 5,156,428 6,875,237
413,156,428 242,956,516
Total capital (b) 8,144,913,938 7,411,320,700
Capital surplus / (shortfall) (b-a) 4,144,913,938 3,411,320,700
Capital to Risk Weighted Assets Ratio (CRAR) 41.98% 32.84%
15 Retained earnings
Opening balance 2,780,529,467 2,091,389,725
Add: Profit after taxation 590,541,770 926,102,885
Add: Capital from Head Office - -
Less: Profit remittance - (242,171,875)
Less: Amount transferred to paid-up capital/Deposit kept with
Bangladesh Bank (99,000,322) 5,208,732
Closing balance 3,272,070,915 2,780,529,467

16 Contingent liabilities
16.1 Claims lodged with the Bank which are not recognized as loan
- -
- -
16.2 Letter of guarantees
Directors - -
Government 4,594,273,941 1,249,841,253
Banks and other financial institutions 1,034,429 1,374,429
Others 145,305,173 146,866,159
4,740,613,543 1,398,081,841
Less: Margin on guarantees 32,827,066 27,422,807
4,707,786,477 1,370,659,034
27
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

2016 2015
BDT BDT
16.3 Irrevocable letters of credit
Inward bills unsettled 2,828,199,016 2,846,483,430
Documentary credits 5,144,048,888 3,426,327,907
Shipping guarantee 1,700 1,100
7,972,249,604 6,272,812,437
Less: Margin on letters of credit 420,629,443 331,058,422
7,551,620,161 5,941,754,015

16.4 Bills for collection (*)

Cheques for collection 18,593,071 13,548,906
Outward collection 2,065,122,753 1,950,025,719
2,083,715,824 1,963,574,625

(*) The above amount represents cheques in hand for clearing and different outward bills sent on collection
basis against which bank is not taking any responsibilities. Hence, there is no chance for creating any
liabilities for bank in future.

16.5 Other contingent liabilities

Litigation pending against the Bank - -
Motijheel Branch 64,638,549 64,638,549
64,638,549 64,638,549
14,407,761,011 9,340,626,223
17 Other commitments
Forward assets purchased and forward deposits placed 768,258,260 404,908,040
768,258,260 404,908,040

28
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
18 Interest income
Interest on loans and advances
General loan 1,231,332,747 1,231,090,433
Overdrafts 220,714,831 242,914,280
Trust receipts 49,370,277 71,167,418
Import loans 955,300 1,093,319
Pre-shipment loan 6,655,929 8,511,237
Inland bills purchased 3,440,630 3,812,298
House building loan-others 12,461,346 10,301,833
Credit cards 6,201,493 6,407,863
Staff loans 4,815,434 4,681,895
1,535,947,987 1,579,980,576
Interest on
Accounts with foreign banks 2,434,459 24,231,321
Deposits with other banks 123,388,880 77,985,070
125,823,339 102,216,391
1,661,771,326 1,682,196,967
19 Interest paid on deposits and borrowings, etc
Interest on
Fixed deposits 512,673,394 647,222,986
Short notice deposit / Money Market A/C 52,087,355 79,656,616
g deposits
Savings p , ,
70,530,184 , ,
60,598,393
Foreign currency deposits 63,291,105 54,877,263
698,582,038 842,355,258
Interest on
Borrowings from local banks 7,837,664 28,766,378
Borrowings from foreign banks 30,618,252 32,514,456
38,455,916 61,280,834
737,037,954 903,636,092
20 Investment income
Interest and profit on treasury bills 77,336,994 93,348,255
Interest and profit on treasury bonds 483,135,984 670,805,561
Capital gain on treasury bills and bonds 37,648,489 206,635,763
Interest on Commercial Paper / Banglalink bonds 14,418,056 61,048,342
Dividend from CDBL shares 8,567,708 8,567,708
621,107,231 1,040,405,629
21 Commission, exchange and brokerage
Commission 283,680,631 253,293,549
Exchange gain less losses arising from dealing in foreign currencies 271,886,452 294,698,938
555,567,083 547,992,487
22 Other operating income
Recovery of other provision/ written off bad debts 39,989,145 25,719,535
Profit on disposal of fixed assets 97,009 44,998
Profit less loss from interest fluctuation - -
Income from recovery of loans - -
40,086,154 25,764,533

29
Commercial Bank of Ceylon PLC - Bangladesh Operations
Notes to the financial statements
For the year ended 31 December 2016
2016 2015
BDT BDT
23 Salary and allowances
Salaries 235,611,421 220,147,481
Leave fair assistance 18,663,813 17,468,975
Bonus 59,150,444 97,674,294
Bank's contribution to provident fund 11,028,536 10,446,066
Gratuity 70,954,712 (32,058,609)
Other allowances 4,271,138 7,182,286
Medical expenses 10,377,754 9,030,636
410,057,818 329,891,129
24 Rent, taxes, insurance and electricity
Rent, rates and taxes 119,080,091 79,313,449
Lease rent 1,086,135 1,934,325
Insurance 16,989,727 15,367,272
Lighting 11,370,528 11,148,990
Water charges 566,913 555,601
149,093,394 108,319,637
25 Legal expenses
Law charges 655,612 477,568
Other professional fees 1,539,829 858,260
2,195,441 1,335,828
26 Postage, stamps and telecommunication
Telephone 2,464,704 2,211,279
Swift charges 878 444
878,444 2,837,252
2 837 252
Postage and courier 4,460,979 5,003,031
7,804,127 10,051,562
27 Stationery, printing and advertisements
Newspapers and periodicals 241,532 282,728
10,174,811 10,170,173
28 Chief Executive's salary and allowances
Salary 5,172,976 4,938,911
Bonus 2,798,635 2,601,134
Other allowances 108,000 108,000
8,079,611 7,648,045
29 Depreciation and repairs of Bank's assets
Depreciation (Annex B). 18,284,370 41,401,068
Repairs and maintenance of:
Equipment and computers 19,004,637 20,031,448
Premises, furniture and fixtures 8,754,158 5,500,207
Vehicles 6,246,495 6,226,905
52,289,660 73,159,628
30 Other expenses
Fees and charges for services 35,104,936 36,025,338
Travelling and conveyance 6,303,017 7,642,053
Entertainment 2,172,572 1,411,333
Security services 14,017,379 13,462,051
Training, seminar and workshop 1,875,563 1,145,445
Cash carrying expenses 6,015,975 5,548,254
Loss on disposal of fixed asets - 1
Donation and subscription 593,874 1,089,650
Staff welfare 4,263,360 3,288,471
Sundry expenses 10,006,187 8,348,572
80,352,863 77,961,168
30
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
2016 2015
BDT BDT
31 Provision against loans and advances
General provision for:
Unclassified loans 22,200,000 39,250,000
Off-balance sheet items 54,500,000 24,900,000
76,700,000 64,150,000
32 Receipts from other operating activities
Other operating income 40,086,154 25,764,533
Income from commission, exchange and brokerage 555,567,083 547,992,487
Less: Fees and commission (283,680,631) (253,293,549)
Recovery of loans previously written-off (39,989,145) (25,719,535)
Gain on disposal of property, plant and equipment (97,009) (44,998)
271,886,452 294,698,938
33 Payments for other operating activities
Total operating expenses (720,438,725) (618,870,670)
Less: Payments to employees 347,182,717 369,597,783
Less: Payments to suppliers 167,072,332 128,541,372
Less: General and other provisions (230,513,345) (165,249,969)
(436,697,021) (285,981,484)
34 Other assets
Receivable from Bangladesh Bank against Sanchaya patras 34,440,030 1,992,579
Advance rent and advertisement 143,953,203
143 953 203 38,342,863
38 342 863
Prepaid expenses 3,535,501 4,497,581
Stock of stationery, stamps, printing materials, etc 3,807,031 3,861,641
Receivable from Head Office 377,500 428,500
Security deposit 4,062,104 3,797,086
Commission and brokerage receivable - 43,870
Others 17,321,723 84,072,595
207,497,092 137,036,715
Increase /(Decrease) during the year (70,460,377) 19,215,210

35 Other liabilities
Accumulated provision against loans and advances
and off-balance sheet items 408,000,000 331,300,000
Specific provision 274,806,970 160,982,770
Provision for corporate taxation 3,545,493,178 2,918,344,734
Exchange equalisation account - -
Gain on revaluation of treasury bills/bonds 11,383,935 12,679,047
Sundry creditors 7,690,951 7,072,313
Expenses payable 105,046,331 122,235,040
Provision for gratuity 147,243,104 75,299,861
Interest suspense account 73,410,417 52,549,751
Dividends/Profit remittance, etc - (242,171,875)
Commission and brokerage payable 5,350,843 -
Others 102,672,645 102,028,695
4,681,098,374 3,540,320,336
Less: Current year's corporate tax provision (600,000,000) (682,500,000)
Decrease during the year 298,606,163 (48,741,454)

31
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
36 Audit committee
Audit committee of the Bank consists of the following members:
SL. Educational and professional
Name Designation
no. qualifications
GCE A Level, Intermediate of Banking
1 Ajith Naranpanawe Country Manager Diploma from Institute of Bankers, Sri Lanka.

MBA from UK, Diploma in Banking and

2 Najith Meewanage Chief Operating Officer Associate member of Institute of Bankers, Sri
Lanka.
Bachelors, Passed Part one and Two
3 Dilip Das Gupta Senior General Manager subjects of Final Part of Institute of Bankers,
London.
Masters in Accounting, Fellow Member of
Deputy General Manager & The Institute of Chartered Accountants of
4 Binoy Gopal Roy
Financial Controller Bangladesh (ICAB).

Masters in Business Administration

Deputy Chief Manager - Head specialized in Banking & Insurance from
5 Mosharaf Hossain of Internal Control & University of Dhaka, Fellow Member of
Compliance Institute of Chartered Accountants of
Bangladesh (ICAB).
6 Moyeenul Haque Khan Manager, Audit Bachelors of Art's
Art s

Four numbers of Audit Committee meetings were held during the year 2016 where among others, following
issues were discussed:
(i) Summary of the entire audit issues, status and follow up of outstanding recommendations.
(ii) Head Office, Colombo audit issues status and follow up of outstanding recommendations.
(iii) Bangladesh Bank comprehensive inspection report as well as Special Inspection reports.
(iv) Appointment of external auditors.
(v) Review of Internal Control System.
(vi) Compliance with mandatory banking and other statutory requirement.
(vii) Management report on the audit of annual financial statement submitted by the external auditors.
37 Core risks management of the Bank
Bangladesh Bank has issued guidelines in managing core risks by BRPD circular no.17 dated 07 October 2003
and updated from time to time for effective management of six core risk areas of banking business namely:

(i) Credit risks,

(ii) Asset and liability / balance sheet risks,
(iii) Foreign exchange risks,
(iv) Internal control and compliance risks,
(v) Money laundering risks, and
(vi) Information technology risks.

An internal memo has been circulated with the necessary guidelines to the concerned
departments/branches/booths for their implementation.

The status of implementation of above six guidelines are summarised below:

32
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
37.1 Credit risks
An in-depth credit risk assessment is being conducted prior to granting any loan and reviewed at least
annually thereafter for all facilities in order to address overall credit risk issues. The results of
assessment is thereafter presented in a credit application that originated from the Relationship
Manager/Accounts Officer (RM) pursued and commented by the credit risk management and is
approved by the Country Manager/ECC/Head Office approval authority.
The Bank has formally implemented a Credit Policy Manual/Lending Guidelines to enumerate the policy
and procedures for handling credit related operations in Bangladesh.

37.2 Asset and liability/ Balance sheet risks

The Bank has Asset - liability Management Committee (ALCO) for the implementation of asset and
liability management process. This committee reviews cost of liquidity, capital adequacy, loan deposit
ratio, wholesale borrowing guideline, liquidity contingency plan, local regulation, etc. to achieve the
general objective of keeping the interest rate risk within defined parameter, enhancing Bank's net
interest margin, providing adequate liquidity, reviewing and approving risk parameters through managing
exchange rate risk, interest rate risk, etc.

37.3 Foreign exchange risks

The Foreign Exchange risk is mitigated through proper market analysis and potential change arising out
of pricing is addressed with appropriate risk limits. The Bank has formally implemented a manual with
the objective of preventing exchange loss due to error, negligence, recklessness, lack of skill, etc to
comply with Bangladesh Bank guidelines, prepare and enforce foreign exchange authorised dealer's
code
d off conduct.
d t The
Th Management
M t action
ti triggers
ti is
i in
i place
l to
t ensure adherence
dh to
t limits.
li it

37.4 Internal control and compliance risks

The potential operational risk is mitigated through three wings of Internal Control & Compliance (ICC)
Department, Audit & Inspection, Compliance and Monitoring wing thus ensure sound, sustainable and
secured growth of the bank.

Bank has already implemented Internal Control Procedures manual with segmental risk monitoring
procedure. Internal control and Compliance Department undertakes regular and surprise audit/
inspection of the branches and departments to review the operations and compliance of statutory
requirements and to ensure all financial statements are drawn up in conformity with Banking Companies
Act, 1991 (Amendment up to 2013), in accordance with BAS/ BFRS and Bangladesh bank Circulars,
Guidelines are in force.

37.5 Money laundering risks

A detailed operating instruction circular has been issued covering KYC procedures, suspicious
transactions reporting, etc. Bank has implemented a guidelines to cope up with money laundering risks.
To minimize such risks, bank has designated Chief Anti Money Laundering Compliance Officer at Head
Office and Compliance Officers at branches, who independently review the transactions of the accounts
to verify suspicious transactions through system based tools. Bank has introduced automated software
for screening the sanction list at the account opening level and in the trade finance operations. Side by
side we have also introduced another automated software for screening our remittance operations.
Transactions parameters are also being checked through an automated system called AML pop up.

33
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016
37.6 Information Technology Risks
The bank has adequately addressed Information and Communication Technology (ICT) risk
management. Banks own core banking software performs all types of transaction in a highly secured
environment.
Bank has its own IT manual in place and implemented in line with Bangladesh Bank Guideline on
Information and Communication Technology for scheduled Banks and Financial Institutions. It has also
adopted systematic approach to ensure any IT contingencies. Disaster Recovery Plan (DRP) and
Business Continuity Plan ( BCP) are also in place and function.

37.7 Internal Audit

Bank has established an independent Internal Audit department for conducting audit/inspection at
various department/branch/booths in line with the approved annual audit plan. In general, all the
department/branch/booth is audited at least once in a year. Observations are responded by the
respective Department/Branches within the given time frame. Online monitoring (transaction level) is
also being performed by the department in addition to performed IS System Audit. Major findings and
recommendations identified by the internal auditors are thereafter being discussed in the Audit
Committee Meeting. Moreover, Colombo Inspection Department have their own plan of auditing the
bank time to time.

37.8 Fraud and Forgeries

There was no fraud and forgeries occurred during the reporting period.

38 Risk Management Committee (RMC)

Bank has established an independent Risk Management Committee (RMC) under the overall guidance of the
Country Manager where designated management members are responsible for each core risk areas. RMC is
monitoring and measuring risks on the basis of the bank’s approved risk parameters and recommend risk
mitigation tools / procedure for implementation by the concerned line managers to ensure the maintenance of
risks within the tolerable risk parameters. Secretary of RMC prepares the Risk Management Report which
includes details risk observations received from each relevant risk head and discuss thoroughly in the monthly
RMC meeting.

39 Post balance sheet events

No material events have occurred after the Balance Sheet date that could affect the values reported in these
financial statements.

40 Related party disclosure

No transactions exist that require to be disclosed as per BAS 24: "Related Party Disclosures".

34
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

41 Compliance of Bangladesh Accounting Standard (BAS) , Bangladesh Financial Reporting Standards

(BFRSs):
The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of International
Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) as of Bangladesh
Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). While preparing the
financial statements, the Bank applied most of the BASs and BFRSs as applicable.

Sl no. Title of Standard BAS no. Status

1 Presentation of Financial Statements 1 Applicable

2 Inventories 2 Applicable
3 Statement of Cash Flows 7 Applicable
4 Accounting Policies, Changes in Accounting Estimates
and Errors 8 Applicable
5 Events after the Reporting Period 10 Applicable
6 Construction Contracts 11 Not Applicable
7 Income Taxes 12 Applicable
8 Segment Reporting 14 Applicable
9 Property, Plant and Equipment 16 Applicable
10 Leases 17 Applicable
11 Revenue 18 Applicable
12 Employee Benefits 19 Applicable
13 Accounting for Government Grants and Disclosure of
Government Assistance 20 Not
N t Applicable
A li bl
14 The Effects of Changes in Foreign Exchanges Rates 21 Applicable
15 Borrowing Costs 23 Applicable
16 Related Party Disclosures 24 Applicable
17 Accounting for Investments 25 Applicable
18 Accounting and Reporting by Retirement Benefit Plans 26 Applicable
19 Consolidation and Separate Financial Statements 27 Not Applicable
20 Investment in Associates 28 Not Applicable
21 Disclosures of Financial Statements of Banks and
Similar Financial Instructions 30 Applicable
22 Interest in Joint Ventures 31 Not Applicable
23 Earnings Per Share 33 Not Applicable
24 Interim Financial Reporting 34 Applicable
25 Impairment of Assets 36 Applicable
26 Provisions, Contingent Liabilities and Contingent 37 Applicable
27 Intangible Assets 38 Not Applicable
28 Financial Instruments: Recognition and measurement 39 Applicable
29 Investment Property 40 Not Applicable
30 Agriculture 41 Not Applicable

35
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

SL
Title of Standard BFRS no. Status
no.
First-time Adoption of International Financial
1 N/A
Reporting Standards 1
2 Share Based payment 2 N/A
3 Business Combinations 3 N/A
4 Insurance Contracts 4 N/A
5 Non-Current Assets Held for sale and Discontinued Operations 5 N/A
6 Exploration for and Evaluation of Mineral Resources 6 N/A
7 Financial Instruments: Disclosure 7 **
8 Operating Segments 8 Complied
* N/A = Not Applicable
** Relevant disclosures are made according to the requirement of Bangladesh Bank.

42 Others
Assets and liabilities other than balances with other banks and financial institutions at 31 December 2016
denominated in foreign currencies have been converted to local currency, BDT, at the following exchange
rates:

Currency Abbreviation and unit Equivalent BDT

United Arab Emirate Dirham AED 1.00 21.18

A t li Dollar
Australian D ll AUD 1.00
1 00 56
56.60
60
Canadian Dollar CAD 1.00 58.05
Danish Kroner DKK 1.00 11.04
European Currency EUR 1.00 82.07
Hong Kong Dollar HKD 1.00 10.13
Indian Rupee INR 1.00 1.15
Japanes Yen JPY 1.00 0.67
Kuwaiti Dinar KWD 1.00 253.25
New Zealand Dollar NZD 1.00 54.47
Pound Sterling GBP 1.00 96.66
Quatar Riyal QAR 1.00 21.57
Singapore Dollar SGD 1.00 54.18
Swidish Kroner SEK 1.00 8.57
Swiss Franc CHF 1.00 76.55
Malaysian Ringgit MYR 1.00 17.51
Saudia Arabian Riyal SAR 1.00 20.65
US Dollar USD 1.00 78.55

43 Reconciliation of inter-bank and inter-branch transactions

The Bank has automated system for responding inter-branch transactions. All the entries are being responded
on a real time basis. All the inter-bank transactions are being reconciled properly.

44 Secured liabilities
The Bank has no secured liabilities against which assets has been pledged as security.

45 Open position
The Bank's open position as of 31 December 2016 was USD 895,560.50 equivalent to Taka 70,341,799.47
against the approved limit of USD 19,240,000.00

36
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

46 Credit rating
The Bank has been awarded "AAA" (triple A) for long term and ST-1 for short term ratings" by the Credit Rating
Information and Services Limited (CRISL) on 16 June 2016

47 Corporate Social Responsibility (CSR)

CSR is an integral part of the Bank's culture in addition to core business activity. The Bank have contributed to
the underprivileged and disadvantaged through different projects. The Bank has always been active in CSR
projects since inception. During the year 2016 the bank has undertaken wide range of CSR activities covering
Financial Inclusions, Social and Community projects.
In line with DOS Circular letter no. 07 dated 15 July 2010 the details of the activities are appended below:

A. Organization:
Commercial Bank of Ceylon PLC attach great importance to social and community responsibilities. We have
Corporate governance in place for adding value to customers and shareholders and also for the welfare of the
employees in general.

B. Market Environment:
While engaging with borrowers we take into account any adverse impact that the project may have on
environment and extend funding in order to ensure safety of environment.

C. Social Projects:
A
Amountt off N off beneficiaries
No. b fi i i
Description of initiatives
investment
Direct social interventions conducted by the bank, both as
occasional/remedial measures or sustainable/continuous - -
projects:
i. a) Education: Donation of office equipment for "The School of
Hope", Vatara, Dhaka
BDT 28,289 1300 Students
i. b) Education: 5 Computers donated to Kabi Sufia Kamal Hall,
University of Dhaka. BDT 220,000 2000 Students
ii. Disaster Management: 2000 Units of blankets given to poor
the people affected by cold wave through Bangladesh Bank
BDT 365,000 2000 People

37
Commercial Bank of Ceylon PLC - Bangladesh Operations

Notes to the financial statements

For the year ended 31 December 2016

48 Highlights of Activities

Sl. Particulars 2016 2015

1 Paid-up capital / Deposit kept with Bangladesh Bank 4,544,179,152 4,445,178,830
2 Total capital for the purpose of CRAR 8,144,913,938 7,411,320,700
3 Capital to Risk Weighted Assets Ratio (CRAR) 41.98% 32.84%
4 Capital surplus/(shortfall) 4,144,913,938 3,411,320,700
5 Total assets 39,821,660,561 36,507,030,081
6 Total deposits 23,129,501,188 21,937,393,552
7 Total loans and advances 24,775,448,686 22,781,874,195
8 Total contingent liabilities and commitments 15,176,019,271 9,745,534,263
9 Credit-deposit ratio - DBU (%) 80.59% 82.78%
10 Ratio of classified loans against total loans and advances 2.03% 2.22%
11 Profit after tax and provision 590,541,770 926,102,885
12 Loans classified during the year 503,237,394 505,143,886
13 Provision kept against classified loans 274,806,970 160,982,770
14 Provision surplus/(deficit) - -
15 Cost of fund 3.52% 4.69%
16 Interest earning assets 34,465,274,003 31,511,159,599
17 Non-interest earning assets 5,356,386,558 4,995,870,482
18 Return on investment (*) 11.93% 15.94%
19 Return on average investment 7.82% 12.06%
20 Ret rn on assets (*)
Return 1 48%
1.48% 2 54%
2.54%
21 Income from investment 621,107,231 1,040,405,629
22 Earnings per share N/A N/A
23 Net income per share N/A N/A
24 Price earnings ratio N/A N/A

for Commercial Bank of Ceylon PLC - Bangladesh Operations

Binoy G. Roy Najith Meewanage Ajith Naranpanawe

Financial Controller Chief Operating Officer Country Manager

Dhaka, Bangladesh
Dated, 28 February 2017

38
Commercial Bank of Ceylon PLC - Bangladesh Operations Annex A

Disclosures on Risk based Capital Requirement under Pillar III of Basel III Annex-A
For the year ended 31 December 2016

1 Disclosure Policy:
In accordance with Bangladesh Bank's revised guidelines on risk based capital adequacy under Basel III issued through
BRPD circular no. 18 dated December 21, 2014, the purpose of these requirements is to complement the capital adequacy
requirements and Pillar III - Supervisory review process. Commercial Bank of Ceylon PLC has approved policy to observe
the disclosure requirements set out by the Bangladesh Bank (BB).
The major highlighted regulations of the Bangladesh Bank are:
a. To comply with international best practices and make the Bank's capital more risk-absorbent;
b. To maintain minimum capital requirement by the Bank against credit, operational and market risk;
c. To maintain capital adequacy ratio as per Bangladesh Bank's time to time Requirements;
d. To adopt the credit rating agencies as external credit assessment institutions (ECAI);
e. To adopt standardised approach for both credit and market risk and basic indicator approach for operational risk;

f. To submit Capital Adequacy returns to Bangladesh Bank on a quarterly basis.

2 Scope of Applications:
Risk based capital adequacy framework applies to Commercial Bank of Ceylon PLC, Bangladesh Operations, on " Solo
Basis" as the Bank has no subsidiaries or significant investments rather operating as a foreign Branch of Commercial Bank
of Ceylon PLC incorporated in Srilanka.
3 Disclosures Framework:
Disclosures requirements as per Bangladesh Bank Basel III Guidelines are enumerated below:
3.1 Capital Structure
Qualitative Disclosure
The aim is for the capital structure to be as efficient as possible, both in terms of cost and in terms of compliance with
the requirements of Bangladesh Bank. Bank's total capital as of 31 December 2016 was BDT 8,144.91 million out of
which BDT 7,731.76 million was under Tier-I capital (out of that BDT. 4,544.18 million was Deposit kept with
Bangladesh Bank as per section 13 (4) of Banking Companies Act 1991 and remaining BDT 3,187.58 million was
Retained Profit after regulatory deduction) and remaining BDT 413.16 million was under Tier-II capital (General
Provision of BDT 408.00 million and remaining 5.17 million was revaluation gain on treasury bills/bond).

Quantitative Disclosure: BDT

a) Amount of Tier I Capital
i) Common eqityTier 1 (CET 1)
Fully paid-up capital / capital deposited with Bangladesh Bank 4,544,179,152
Statutory Reserve -
Acturial gain/loss -
Retained earnings 3,272,070,915
Non-repatriable interest-free fund -
7,816,250,067
Amount deducted from CET 1 Capital (Regulatory Adjustments)
• Good will -
• Shortfall -
• Deferred tax assets 84,492,557
• Others -
Total CET 1 Capital 7,731,757,510
ii) Additional Tier I capital -
Total Tier I Capital (i+ii) 7,731,757,510
b) Total Tier II capital 413,156,428
Total eligible capital (a+b) 8,144,913,938

39
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

3.2 Capital Adequacy

Qualitative Disclosure of Capital Adequacy
Bank is maintaining adequate capital to cover all material risk and while doing so bank has established an Internal Capital
Adequacy Assessment Process (ICAAP) in-line with Bangladesh Bank. The objective of the Bank's capital planning is to
ensure that the bank is adequately capitalized.
At the end of 31 December 2016 bank maintained capital of BDT 8,144.91 million (Tier 1: going-concern capital of BDT
7,731.76 million plus Tier 2: gone-concern capital of BDT 413.16 million) against its total Risk Weighted Asset (RWA) of
BDT 19,403.73 million which leads to a Capital to Risk-weighted Asset Ratio (CRAR) of 41.98%, where the minimum
requirement is 10.625% as per BRPD circular no. 18 dated 21 December 2014. Tier-I capital was 39.85% of RWA against
minimum requirement of 5.125% of RWA. As a result the Bank has a buffer Capital of BDT 4,144.91 million to maintain to
mitigate the additional uncertain risks which are not covered under Pillar-II.

Quantitative Disclosure of Capital Adequacy

a) Amount of Regulatory Capital to meet unforeseen loss: BDT

Amount of Capital required to meet Credit Risk 1,585,575,535
Amount of Capital required to meet Market Risk 11,470,224
Amount of Capital required to meet Operational Risk 343,327,068
1,940,372,827
b) Actual Capital Maintained:
Total CET 1 Capital 7,731,757,510
Total Tier I Capital 7,731,757,510
Total Tier II Capital 413,156,428
Total capital 8,144,913,938

% of Capital to risk weighted assets (CRAR)

Required Maintained
CET 1 5.125% 39.85%
Tier I 5.500% 39.85%
Tier II 2.13%
Total 10.625% 41.98%

c) Capital conservation buffer 0.625% 0.625%

d) Available capital under piller 2 requirment 4,144,913,938
3.3 Credit Risk
Qualitative Disclosures:
General qualitative disclosure requirement with respect to credit risk includes the following:
Definition of past due and impaired
According to the Bangladesh Bank’s guidelines on Risk Based Capital Adequacy (RBCA), dated December 2014, claims
that are past due for 60 days or more are clubbed under this past due category.
Apart from the Basel III requirement, for accounting purpose bank is maintaining its past due loan in accordance with the
BRPD Master circular no. 14 dated 23 September 2012 on “Loan Classification & Provisioning” and its related subsequent
instructions.
Description of approaches followed for specific & general allowances and statistical methods
Bank is following the general and specific provision requirement as prescribed by Bangladesh Bank time to time.

40
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016
Discussion of the bank’s credit risk management policy
Credit risk is one of the most significant risks in terms of sustainability, regulatory and capital requirements, which the bank
is exposed to. Bank’s policy is to develop a high quality and diversified credit portfolio comprised of corporate, SME and
retail / personal customers in Bangladesh towards better credit risk management.

With a view to segregate credit risk from credit marketing, as also in line with Basel-III requirement, an independent Credit
Risk Department is in existence in the bank since inception. Credit risk management focuses on the quality of customer’s
individual loans as well as the overall loans and advances portfolio, examining and reporting the underlying trends,
concentrations and ensuring a sustainable credit risk culture throughout the Bangladesh operation.

Objectives of the bank’s credit risk management practices are to maintain credit portfolio quality in line with risk appetite,
through risk control and risk management.

Credit risk management system of the bank also closely monitors changes in economic and market conditions and guides
business and functional management, at all levels, on their credit portfolio. It works towards maintaining a robust credit
culture through prudent strategies, credit policies, procedures, and management of credit portfolio. Thus the scope of credit
risk management and identification practices needs to follow the procedures below:

To identify and manage credit risk, the bank engages in procedures such as:
i. Set up strategy for credit origination and relationship management.
ii. Credit risk management.
iii. Loan documentation and credit administration.
iv. Recovery and management of problem loans.
v. Portfolio management
vi. Conveying credit status through reporting

Bank uses internal lending guidelines and procedures to ensure that all lending officers understand the Bank’s appetite for
risk in servicing counter party requirements, and thus facilitates evaluation and approval of individual credit transactions.

Bank has standard methods of analyzing various risk aspects involved in extending credit, considering risk areas such as
business risk, financial risk, management risk, security risk, etc. besides continuously reviewing the exposures and
concentrations of the customer, group, industry, geography and lending type. Outcome of these risk analyses are used to
establish internal credit risk grading for each borrower.

41
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

Quantitative Disclosure BDT

Total exposures of credit risk

A) Broken down by major types of credit exposure

a) Cash and cash equivalents 251,984,266
b) Claims on Bangladesh Government and Bangladesh 6,982,642,408
c) Claims on other sovereigns and Central Banks* -
d) Claims on Bank for international
y settlements,
p -

e) Claims on Multilateral Development Banks (MDBs) -

f) Claims on Public Sector Entities (other than Govt. of Bangladesh) in BGD -
g) Claims on Banks & NBFIs: -
Maturity Over 3 Months 34,209,950
Maturity less than 3 Months 5,186,784,532
h) Claims on Corporate 14,528,365,162
i) Claims under Credit Risk Mitigation 578,975,802
j) Claims categorized as retail portfolio and small & medium enterprise
(excluding consumer finance) 588,095,946
k) Consumer finance 69,686,287
l) Claims fully secured by residential property 43,477,708
m) Claims fully secured by commercial real estate 130,418,414
n) Past due loans/NPL 539,561,485
o) Investments in premises, plant and equipment and all other fixed assets 40,704,484
p) Claims on Fixed Assets under Operating Lease -
q) All Other Assets
i) Claims on GoB and BB (Advance Income Tax) 3,145,618,749
ii) Staff loan/investments 77,497,733
iii) Other assets 2,694,146,262
r) Off-balance sheet items:
Claims on banks:
Maturity Over 3 Months 71,265,721
Maturity less than 3 Months 35,826,135
Claims on corporate 4,279,952,728
Retail portfolio and small & medium enterprises 55,346,406
39,334,560,178

B. Geographical Distribution of Exposure

Category Dhaka Chittagong Sylhet Total
Balance Sheet Items
Claims on sovereigns and central banks 7,146,248,478 72,327,019 16,051,177 7,234,626,674
Claims on banks and NBFIs 5,220,994,482 - - 5,220,994,482
Claims on corporate 13,580,629,399 2,005,763,055 190,928,409 15,777,320,863
Claims on retail portfolio and consumer finance 547,775,620 111,125,998 42,358,323 701,259,941
Fixed assets 37,284,643 2,940,622 479,219 40,704,484
Staff loan 77,497,733 - - 77,497,733
All other assets 3,715,535,584 2,048,383,530 75,845,897 5,839,765,011
Total on balance sheet items 30,325,965,939 4,240,540,224 325,663,025 34,892,169,188
Off Balance Sheet Items
Claims on banks 107,091,856 - - 107,091,856
Claims on corporate 3,075,374,670 1,204,578,058 - 4,279,952,728
Claims on retail portfolio and consumer finance 42,406,604 11,463,648 1,476,154 55,346,406
Total off balance sheet items 3,224,873,130 1,216,041,706 1,476,154 4,442,390,990
Total 33,550,839,069 5,456,581,930 327,139,179 39,334,560,178

42
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

C. Industry or Counterparty type distribution of exposures

Bank and Manufacturing Retail and
Category Others Total
NBFIs industries Consumer
Balance Sheet Items
Claims on sovereigns
and central banks 7,234,626,674 - - - 7,234,626,674
Claims on banks and 5,220,994,482 - - - 5,220,994,482
Claims on corporate - 15,777,320,863 - - 15,777,320,863
Claims on retail portfolio - - 701,259,941 - 701,259,941
Fixed assets - - - 40,704,484 40,704,484
Staff loan - - - 77,497,733 77,497,733
All other assets - - - 5,839,765,011 5,839,765,011
Total on balance sheet
items 12,455,621,156 15,777,320,863 701,259,941 5,957,967,228 34,892,169,188
Off-balance sheet items
Claims on banks 107,091,856 - - - 107,091,856
Claims on corporate - 4,279,952,728 - - 4,279,952,728
Claims on retail portfolio
and consumer finance
- - 55,346,406 - 55,346,406
Total off balance sheet
items 107,091,856 4,279,952,728 55,346,406 - 4,442,390,990
Total 12,562,713,012 20,057,273,591 756,606,347 5,957,967,228 39,334,560,178
-
D. Residual Contractual Maturity
Balance sheet Off-balance
Residual contractual maturity items sheet items Total
Up to 1 month maturity 18,107,564,335 357,383,639 18,464,947,974
1-3 months maturity 5,844,751,399 1,070,838,278 6,915,589,677
3-12 months maturity 4,589,750,338 2,910,075,116 7,499,825,454
1-5 years maturity 4,822,099,229 104,093,957 4,926,193,186
Above 5 years maturity 1,528,003,887 - 1,528,003,887
Total 34,892,169,188 4,442,390,990 39,334,560,178
E. Major Industry or Counterparty Type (past due)
i) Amount of impaired / classified loans by major industry/ sector type
Major industry/sector
Bank and NBFIs -
Manufacturing industries 211,144,606
Retail and Consumer finance 11,451,993
Others 280,640,795
Total 503,237,394
ii) Specific and general provision
General provision
Loans and advances 252,100,000
Off-Balance sheet items 155,900,000
408,000,000
Specific provision 274,806,970
iii) Charges for specific allowance and charges-offs during the year
Specific provisions made during the period 153,813,345
Write-back of excess specific provisions 39,989,145

43
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

F) Gross non-performing assets ( NPAs) 503,237,394

Total loans & advances 17,989,271,816
Non-performing loans and advances 503,237,394
Sub-standard 22,288,299
Doubtful 14,202,036
Bad/ Loss 466,747,059
Non-Performing Assets (NPAs) to Outstanding Loans and advances 2.80%
G) Movement of Non-Performing Assets ( NPAs)
Opening balance 505,143,886
Add: Addition during the year 41,591,697
Less: Reduction during the year 43,498,189
Closing balance 503,237,394
H) Movement of specific provisions for NPAs
Opening balance 160,982,770
Add: Provisions made during the period 153,813,345
Less: Write-off -
Less: Write-back of excess provisions 39,989,145
Closing balance 274,806,970

3.4 Interest rate risk in the banking book (IRRBB)

Qualitative Disclosure

Interest rate risk refers to fluctuations in Bank's net interest income and the value of its assets and liabilities arising from
internal and external factors.
Internal factors include the composition of the Bank's assets and liabilities, quality, maturity, interest rate and re-pricing
period of deposits, borrowings, loans and investments.
External factors cover general economic conditions:
Interest rates volatility has impact on the Bank depending on balance sheet positioning. Interest rate risk in prevalent on
both the assets as well as the liability sides of the Bank's balance sheet.
Assets - Liability Management Committee (ALCO) periodically monitors and controls the risks and returns, funding and
deployment, setting Bank's lending and deposit rates, and directing the investment activities of the Bank. ALCO decides on
the fixation of interest rates on both assets and liabilities after considering the macro or micro economic outlook - both
global and domestic, as also the macro aspects like cost- benefit, financial inclusion and host of other factors.

Credit shock under Basel III (balance sheet exposure)

Magnitude of Shock Minor Moderate Major
Weighted average yield on assets (%) 10.00 10.00 10.00
Total Assets 3,933.46 3,933.46 3,933.46
Total RWA before shock 1,940.37 1,940.37 1,940.37
Total increase in RWA after shock 19.28 38.56 57.83
Total increase Capital requirement after shock 1.93 3.86 5.78
Total RWA after shock 1,959.65 1,978.93 1,998.20
Eligible capital 814.49 814.49 814.49
Capital adequacy ratio after shock (%) 41.56 41.16 40.76
Capital adequacy ratio before shock (%) 41.97 41.98 41.97
Changes in CRAR (%) (0.41) (0.82) (1.21)

44
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016
Credit Shock under Basel III (Off Balance Sheet Exposure)
Magnitude of Shock Minor Moderate Major
Weighted Average yield on assets (%) 10.00 10.00 10.00
Total Assets 3,933.46 3,933.46 3,933.46
Total RWA before shock 1,940.37 1,940.37 1,940.37
Total increase in RWA after shock 3.37 6.75 10.12
Total increase in capital requirement after shock 0.34 0.67 1.01
Total RWA after shock 1,943.74 1,947.12 1,950.49
Eligible capital 814.49 814.49 814.49
Capital Adequacy Ratio after shock (%) 41.90 41.83 41.76
Capital Adequacy Ratio before shock (%) 41.97 41.97 41.97
Changes in CRAR (%) (0.07) (0.15) (0.22)
Combined Shock
Magnitude of Shock Minor Moderate Major
Capital Adequacy Ratio before shock (%) 41.97 41.97 41.97
Decrease in the FSV of the collateral -0.14 -0.28 -0.57
Increase in NPLs -1.09 -3.50 -6.54
Negative shift in NPLs categories -0.15 -0.30 -0.59
Interest rate -0.12 -0.23 -0.35
FEX: Currency appreciation -0.01 -0.02 -0.04
Equity shock 0.00 -0.01 -0.01
Total change -1.51 -4.35 -8.10
CRAR after shock (%) 40.46 37.63 33.88
3.5 Market Risk
Qualitative Disclosure
Market risk is the risk of adverse revaluation or movement of any financial instrument as a consequence of changes in
market prices or rates.
Market risk exists in all trading, banking and investment portfolios but for the purpose of this report, it is considered as a
risk specific to trading book of the Bank.
The major types of market risk as specified in the Risk Based Capital Adequacy (RBCA) are as follows:
i. Interest rate risk
ii. Equity position risk
iii. Foreign exchange risk and
iv. Commodity risk
Among the above list the main type of market risk faced by the Bank are interest rate risk and foreign exchange risk. 'Bank
Management committee of Bangladesh Operations has given significant attention to market risk in trading book, to asses
the potential impact on the Bank's business due to the unprecedented volatility in financial markets.

Methods used to measure market risk:

According to Bangladesh Bank guideline, Commercial Bank of Ceylon PLC, Bangladesh Operation is presently following
the standardized approach for market risk under Basel III.
Market risk management system and policies and processes for mitigating market risk:
Bank has an independent market risk framework to assess, manage and control the risk management function, which is
responsible for measuring market risk exposures in accordance with prescribed policies, and monitoring and reporting
these exposures against the approved limits on a regular basis according to Bank’s appetite for market risk.

Interest rate risk

Interest Rate Risk (IRR) is a major source of market risk and is unavoidable in any financial institution where the re-pricing
of assets and liabilities are not identically matched. The ALCO of Bangladesh Operations manages the potential impact,
which might be caused by the volatility of changes in the market interest rates and yield curves.

The securities (Treasury bills/bonds) acquired with the intention to trade by taking advantage of short-term price and
interest rate movement is classified under the trading book. The marked to market (MTM) of securities in the trading book
is done at market value as per the Bangladesh Bank guidelines.

45
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016
Foreign exchange risk
All foreign exchange exposures and related risks are reviewed by the ALCO monthly, which provides additional guidance to
treasury dealing room in managing the risks. This is to ensure that any adverse exchange rate movements on the results of
the Bank due to un-hedged foreign exchange positions are restrained within acceptable parameters.

In addition to regular revaluation of spot position and forward positions, Value at Risk (VaR) is calculated/exercised for FX
portfolio. VaR provides a single number to the management that reflects the maximum loss, which can occur within a
confidence level over a certain period of time.
Market risk on Trading Book BDT
The capital requirements for:
A. Interest Rate Risk 3,189,004
B. Equity Position Risk -
C. Foreign Exchange Risk 8,281,220
D. Commodity Risk -
11,470,224
3.6 Operational risk
Qualitative disclosure
Views of BOD on system to reduce operational risk
Operational risk is inherent to all products, activities, processes and systems and is generated in all business and support
areas. For this reason, all employees are responsible for managing and controlling the operational risks generated in their
area of action. In order to reduce and manage the operational risk of the bank, Management Committee has implemented
the Operational Risk Management framework approved by the BOD.
Performance gap of executives and staffs
Performance of employees is critically important to achieve organizational goals. Bank has put in place a well defined
performance management process which aims to clarify what is expected from its different level of employees as well as
how it is to be achieved. At the beginning of a year objectives is communicated to the employees who includes what are
expected from him/her during the ensuing period through their direct reporting heads. A half yearly and yearly performance
appraisal practices are in place to review achievements based on which rewards and recognition decisions are made.

Potential external events

By its nature, Operational Risk cannot be totally eliminated. Like other banks, our bank also operates its business with few
external risk factors relating to the socio-economic condition, political atmosphere, regulatory policy changes, technological
changes, natural disaster, external frauds etc. However, bank has established methodology which defines the Bank’s
approach in identifying, assessing, mitigating, monitoring and reporting such operational risks factors which may impact the
achievement of the bank’s business objectives.

Policies and processes for mitigating operational risk

Operational Risk Management in the Bank is governed by the well-defined Operational Risk Management Policy that is
clearly communicated across the Bank. Bank adopts three lines of defense for management of operational risk, the first line
of defense represented by various heads of the departments, different business unit/or support unit; second line of defense
is represented by the Operational Risk Unit under IRMD to oversee the operational risk management, and the third line of
defense represented by Inspection & Audit Division which is challenge function to the first two lines of defense.

Various operational risk aspects like Key operational Risk Indicators (KORIs), analysis of historical loss data, Risk & Control
Self-Assessments (RCSAs) exercise is done and placed before the Risk Management Committee to initiate necessary
corrective actions with respect to management/mitigation of the operational risks. The internal controls are supplemented
by an effective audit function that independently evaluates the control systems within the organization.

46
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

Approach for calculating capital charge for operational risk

Presently bank is following the Basic Indicator Approach (BIA) for calculating its operational risk capital charge and at 31
December 2016 bank’s operational capital requirement was Tk. 34.33 crore which was adequately maintained.

Quantitative Disclosure BDT

The capital requirements for operational risk is Taka 343,327,068

3.7 Liquidity ratio

Qualitative disclosure
Views of BOD on system to reduce liquidity risk
Banks in general are vulnerable to liquidity and solvency problems resulting from asset and liability mismatches. Therefore,
the principle objective in liquidity risk management is to assess the need for funds to meet obligations and to ensure the
availability of adequate funding to fulfill those needs at the appropriate time, both under normal and stressed conditions. In
order to reduce and manage the liquidity risk of the bank, MANCOM has implemented the liquidity risk management
framework approved by the BOD.
Methods used to measure liquidity risk
Bank uses numerous methods to assess/measure its liquidity risk e.g. through gap analysis for maturity mismatch based on
residual maturity in different time buckets as well as various liquidity ratios and management of the same is done within the
prudential limits fixed thereon. Advance techniques such as stress testing, simulation, sensitivity analysis etc. are used on
regular intervals to draw the contingency funding plan under different liquidity scenarios.

Liquidity risk management system

Bank continuously analyses and monitors its liquidity profile, maintains an adequate margin of safety in high quality liquid
assets and access to diverse funding sources such as inter-bank market, assets and investments available-for-sale and
has contingency funding plan to meet liquidity requirements. Bank thereby ensures availability of adequate liquidity to fund
its existing asset base and grow its business whilst maintaining sufficient liquidity buffers to operate smoothly under varying
market conditions including any short-term, medium or long-term market disruptions.

Policies and processes for mitigating liquidity risk

Bank has put in place its Asset Liability Management Policy, Contingency Funding Plan duly approved by the board and
ALCO is managing the liquidity risk of the bank.
Quantitative Disclosure BDT
Liquidity coverage ratio 137.92%
Net stable funding ratio 102.93%
Stock of high quality liquied assets 2,690,328,000
Total net cash outflows over the next 30 calendar days 1,950,644,000
Available amount of stable funding 23,971,405,300
Required amount of stable funding 23,288,215,300
3.8 Leverage ratio
Qualitative disclosure
Views of BOD on system to reduce excessive leverage
High leverage levels can lead to an excessive expansion of bank asset size, which maximizes, in the short to medium term,
banks’ return on equity. At the same time, leverage-fuelled bank capital structures increase bankruptcy risk, since they are
an important cause of bank failures. Therefore, to reduce excessive leverage and to manage the overall asset-liability
position, management has implemented BOD approved ALM framework within the bank.

Policies and processes for managing excessive on and off-balance sheet leverage
Bank has clearly laid down policy and procedure to manage its exposure level (both on and off-balance sheet) enumerated
in its Asset Liability Management policy. Leverage parameter of the policy acts as a credible supplementary measure to the
risk based capital requirement to control the leverage of the bank. This reflects bank’s tier 1 capital over total exposure of
the bank. Reference level of leverage ratio is currently 3% (minimum) and it is expected to be reviewed in 2017 in line with
the BB directive.

47
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016
Approach for calculating exposure
Leverage ratio of the bank is calculated in line with the RBCA Guideline of BB. As at 31st December 2016 bank’s leverage
ratio was 19.52% and it was calculated as follows:
Measured used Description
Tier 1 capital constitutes the components specified in
Numerator Tier 1 Capital
the RBCA Guideline, December 2014.

This is an approximation to the credit risk exposure

used for regulatory capital purposes. It consists of the
Denominator Exposure
sum of the balance sheet assets as specified in the
RBCA Guideline, December 2014.

Quantitative Disclosure BDT

Leverage ratio 19.52%

On balance sheet exposure 35,253,738,493
Off balance sheet exposure 4,442,390,990
Total exposure 39,696,129,483
Less: Regulatory adjustments 84,492,557
Total exposure for the purpose of leverage ratio 39,611,636,926
3.11 Remuneration
The bodies that oversee remuneration
Bank is dedicated to uphold the principle of equality in offering our employees both career opportunities and competitive
remuneration. Bank has its Remuneration Committee at Head Office (Sri Lanka) level which is assisted by the local Human
Resource Steering Committee and the Management Committee, Bangladesh. In 2015 to study the market situation and
compare the salaries up to a certain level of employees’ bank had appointed Cerebrus Consultants Pvt. Ltd., Mumbai,
India.
The Bank does not discriminate employees and/or differentiate employee remunerations by nationality, religion, race, caste
etc. The Bank even does not differentiate the remuneration considering the business lines and/or considering the functions
known as revenue generating activities or revenue-prone work force. Bank maintains the same Remuneration and apply
Human Resource policies for all of its branches, departments and Units.
Employees considered as material risk takers and as senior managers are:

Number of
Material Risk Takers Composition Employees
Members of Management Committee(CM, COO,
Senior Managers SGM, SDGM, DGM, SAGM, AGM) 8
Head of Branches and SME Centers 16
Other material risk takers Head of Units, Corporate Banking 3
Head of Departments, Units 12
Total 39
Design and structure of remuneration processes
Bank is committed to maintain an equitable and consistent reward structure to ensure that employees’ contributions to the
business are recognized in different ways. This helps us to attract and retain staff while encouraging their efforts towards
the achievement of the bank’s strategic goals. In view of that bank is maintaining fair remuneration policy in line with the
Market Standard. Bank believes that employee remuneration should not be inconsistent with the market and the employees
should be provided with the other standard benefits and facilities that commensurate the best in the industry. Bank has
been maintaining the Objectives based Performance Appraisal of the employees and provides the annual increment and
incentive bonus on the basis of their performance and achievement of objectives.

48
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016
The ways in which current and future risks are taken into account in the remuneration processes
The overall compensation package and its structure have to be competitive, making it easier to attract, keep and reward
the employees properly. While doing so bank has considered the following key risks to implement remuneration measures:

i. Staff turnover rate

ii. Identifying the future leaders
iii. Market standard of salary and benefits
iv. Achievement of objectives leading the overall achievement of Bank’s target
v. Succession plan
Keeping in mind the above risk aspects bank used to identify the potential employees i.e. the future leaders and arranges
necessary training for those employees both at home and abroad. In a few cases the bank also looked at accelerated
career advancement of the employees who are identified as potential employees and shown the capacity as future leaders.
Outstanding employees used to get Incentive bonus and salary increment at the rate of the best in the scheme which all
together have impact on the remuneration as a whole.
The ways in which bank seeks to link performance during a performance measurement period
Annual budget of the bank is the main growth factors for performance measurement such as Advance, Deposit and
Profitability is being distributed among the top level business lines and individuals. On achievement of targets for these
broad factors bank achieves its growth in terms of revenue and size of balance sheet. Bank’s overall success depends on
the success of top level business lines and individuals. Following performance matrix is used to determine the level of
Performance Rating of the individual:
This person is an Outstanding Performer, is competent, committed, performance driven and is
O= Outstanding
relatively better than a person rated “Excellent”.

EX = Excellent This person is an Excellent Performer, regularly exceeds requirements in most significant
aspects of the job and is relatively better than a person rated “Very Good”

VG = Very Good This person is rated as Very Good Performer, performs the job in a completely expectable
manner and relatively better than a person rated “Good”

G= Good
This person is rated as Good and relatively better than a person rated “Below Expectation
Below
BE =
Expectations This person is rated as Below Expectations and relatively better than a person rated “Marginal”
Mg = Marginal This person is rated as Marginal and displays Marginal Performance as against others.

On achievement of targets of top level business lines and individuals bank achieves the budgeted profitability and
announces the annual incentive bonus which is known as Annual Performance Bonus. Any individual having proven
achievements of targets get recognition through the upper level of Performance Ratings. The higher the ratings are the
higher the Bonuses are paid and Increments are awarded.

Different forms of variable remuneration

Bank’s overall remuneration can be bifurcated in to two groups i.e. fixed remuneration and variable remuneration. Variable
remuneration is comprised of the performance bonus and the rate of salary increment decided based on the performance
rating of the employee.

Quantitative Disclosure

Quantitative disclosures reflect remuneration payment for senior managers and material risk takers of the bank during the
financial year.

Number of meetings held by the main body overseeing remuneration during the financial year 3

Remuneration paid to the member of the main body overseeing remuneration during the financial year Nil*

*We do not have any system of paying remuneration for attending meeting

49
Commercial Bank of Ceylon PLC - Bangladesh Operations

Disclosures on Risk based Capital Requirement under Pillar III of Basel III
For the year ended 31 December 2016

No. of
Particulars BDT
employee
Variable remuneration awarded 39 30,306,044
Guaranteed bonuses awarded 39 8,429,578
Sign-on awards - -
Severance payments 3 2,112,705

Particulars BDT
Outstanding deferred remuneration:
Cash -
Shares and share-linked instruments and -
Other forms -
Deferred remuneration paid out -

Shares and
Details of remuneration awards Cash share-linked Other forms
instruments
Fixed 112,235,958 -
Variable 30,306,044 -
Deferred and non-deferred -
Employees’ exposure to implicit (e.g. fluctuations in the value of shares or performance units) and explicit adjustments (e.g.
clawbacks or similar reversals or downward revaluations of awards) of deferred remuneration and retained remuneration.

Particulars BDT
Total amount of outstanding for deferred remuneration and retained remuneration exposed to ex-post -
explicit and/or implicit adjustments
Total amount of reductions during the financial year due to ex-post explicit adjustments -

50
Commercial Bank of Ceylon PLC - Bangladesh Operations Annex B

Schedule of Fixed assets including premises, furniture and fixtures ANNEX-B

As at 31 December 2016

Cost Depreciation
Disposal/
Opening balance Addition adjustment Total balance Opening balance Total balance Written down
Rate
Asset category as on during the during the as at as on Charge for On disposal/ as at value at
(%)
01 Jan 2016 year year 31 Dec 2016 01 Jan 2016 the year adjustment 31 Dec 2016 31 Dec 2016
BDT BDT BDT BDT BDT BDT BDT BDT BDT
Furniture and fixtures 79,935,528 450,085 - 80,385,613 10 61,082,022 6,075,041 - 67,157,063 13,228,550
Interior decorations 51,699,239 1,826,668 (497,650) 53,028,257 20 46,403,027 3,502,930 (497,640) 49,408,317 3,619,940
Equipment and computers 120,050,616 7,164,659 (733,000) 126,482,275 20 107,667,995 6,027,811 (732,989) 112,962,817 13,519,458
Computer software 25,451,511 4,063,269 - 29,514,780 20 16,407,005 2,678,588 - 19,085,593 10,429,187
Motor vehicles 28,010,349 - - 28,010,349 20 28,010,339 - - 28,010,339 10
Total at 31 December 2016 305,147,243 13,504,681 (1,230,650) 317,421,274 259,570,388 18,284,370 (1,230,629) 276,624,129 40,797,145

Total at 31 December 2015 293,966,647 11,474,540 (293,944) 305,147,243 218,463,261 41,401,068 (293,941) 259,570,388 45,576,855