directors’ report Bismillahir Rahmanir Rahim Dear Fellow Shareholders The Board of Directors is pleased to welcome the honorable shareholders in the 13th Annual General Meeting of the Bank. The Directors' Report along with audited financial statements and auditors' report thereon for the year ended December 31, 2008 are presented before your kind-self. In the report, DBBL's operational performance of 2008 as compared to 2007 have been evaluated and analyzed within the prevailing business environment. The information and analysis may be read in conjunction with the DBBL's audited financial statements which have been prepared in accordance with Bangladesh Accounting Standards and applicable legal and regulatory requirements. ECONOMY AND FINANCIAL MARKET World Economic Environment and Outlook The world economy is facing a major downturn in the face of the most devastating financial shock in mature financial market since 1930s. The financial crises first erupted with the collapse of US sub prime mortgage in August 2007 following major corrections in housing markets in US and a number of advanced countries. The crises deepened further and entered a tumultuous new phase in September 2008, when among other, the insolvency of Lehman Brothers, One of the biggest investment banks in Wall Street threatened collapse of the entire financial system and badly shaken the confidence of consumers and investors so much so that credit market became almost frozen i.e. banks were not lending to consumers and businesses and inter-bank transactions were also stopped. The impact has been felt across the global financial system including emerging markets. US and European authorities have taken extraordinary measures aimed at stabilizing markets, including massive liquidity provision, prompt intervention and to resolve weak institutions, extension of deposit insurance, lower interest rates and big stimulus package to support targeted institutions or groups or public investments to create employments and generate income. However, the situation remains highly uncertain and subject to considerable downside risk. Many advanced economies are already in recession while growth in emerging economies is also weakening. Looking ahead financial conditions are likely to remain very difficult restraining global growth prospects. The world economy registered an unprecedented average growth of 5.0 percent a year for consecutive four years before 2008. The October 2008 issue of the IMF World Economic Outlook (WEO) projected 3.9 percent global output growth in 2008, down from the 5.0 percent rate registered in 2007. The advanced economies as a group (with 56.4 percent share in 2007 global output) are projected to grow by 1.5 percent, while the emerging market and developing countries as a group (with 43.6 percent share in 2007 global output) are projected to grow by 6.9 percent in 2008. Oil prices increased in February and stayed above USD 100 a barrel before declining to around USD 50 a barrel in November 2008 following severe crisis in the international financial markets. The non-fuel commodity price boom picked up at much higher levels in real terms than at any time in the past 20 years, despite some correction since mid-July 2008 amid the slowdown of the global economy. The growth of world trade volume in 2008 is projected to decline to 4.9 percent compared to 7.2 percent in 2007. The growth of exports from both the advanced economies and other emerging markets and developing countries are projected to decline to 4.3 percent and 6.3 percent, respectively, in 2008. The latest Global Financial Stability Report (GFSR) released by the IMF in October 2008 indicates that the global

financial system has undoubtedly come under increasing strains and risks to financial stability that erupted in August

2007 have developed into the largest financial shock since the Great Depression. Equity markets have turned

downward. Liquidity remains seriously impaired despite aggressive responses by major central banks, while concern

about credit risks has intensified.

Looking forward in 2009, in the face of financial crisis entering a new, more severe stage in September 2008, the global economy is projected to slow further to 3.0 percent growth, 0.9 percentage point lower than the July 2008 WEO

projection, with slowed activity in the advanced economies, while growth will also be moderate in the emerging and developing economies. The major downside risks include the risk arising from the still-unfolding events in financial markets. Global financial markets continue to be fragile and indicators of systemic risk remain strong. There is a need to continue strong efforts by the policymakers to deal with financial market turmoil in order to avoid a full-blown crisis of confidence or a credit crunch. The immediate priorities are to rebuild counterparty confidence, reinforce the capital and financial soundness of institutions, and ease liquidity strains. Longer-term reforms will be needed including improving mortgage market regulation, promoting the independence of rating agencies, broadening supervision, strengthening the framework of supervisory cooperation, and improving crisis resolution mechanisms. The key actions for adjustment in the imbalances suggested by the IMF include measures to increase savings in the United States; exchange rate appreciation, along with measures to boost domestic demand in emerging Asia; structural reform to boost domestic demand and growth in the euro area and Japan; and measures to increase demand in oil exporting countries. Monetary policymakers in the advanced economies face a delicate balancing act between alleviating the downside risks to growth and guarding against a buildup in inflation. In the United States, rising downside risks to output, amid considerable uncertainty about the financial turbulence and the deterioration in labor market conditions, justifies the Federal Reserve's interest rate cuts and a continuing bias toward monetary easing. Despite the weaker growth prospects for advanced economies, a number of emerging market economies still face overheating pressures and rising food prices, and further tightening may be required to contain inflation. With a flexible exchange rate regime, currency appreciation will tend to provide useful support for monetary tightening. Negotiations under WTO's Doha Development Round, restarted in August 2008 and ended without agreement because of sharp divisions among the US, India and China about access to agricultural markets in the developing world. A successful outcome to the negotiations is needed to strengthen the multilateral trading system and provide impetus to global economic growth.

▲ A partial view of a Blowroom section of a modern Spinning Mill at Narshingdi, financed by DBBL.

▲ A partial view of a fully compliant Ring Spinning Mill at Bhaluka, Mymensingh financed by DBBL.

State of the Bangladesh economy GDP growth The performance of the Bangladesh Economy in the face of a number of unfavorable factors in FY 2008 was remarkable showing signs of resilience of the economy and its strong growth potential. Despite political uncertainty, shaken business confidence, labor unrest in RMG sector and a spike in prices of oil, rice and most commodities in the international market real GDP grew by 6.2 percent in FY 2008, slightly lower than 6.4 percent of FY 2007. At current market price GDP of Bangladesh in FY 2008 was estimated at Taka 5,419.0 billion (Taka 4,675.0 billion in FY 2007). The strong growth was underpinned, on the supply side, by a moderate growth in the agricultural sector and continued strong growth in the industry sector and in the service sector. Economic growth was also aided by rapid growth in exports and surging remittances. The industry sector attained a satisfactory growth of 6.9% in FY 2008, lower than 8.4% of FY 2007. The growth was supported mainly by sustained growth in export-oriented manufacturing activities and expansion in domestic demand and sustained growth in the mining and quarrying sub sector as well as power, gas and water sub sector. Overall, the service sector grew by 6.7% in FY 2008, slightly lower than 6.9% recorded in FY 2007 and remaining well above the trend level. Agriculture sector achieved a moderate growth of 3.6% in FY 2008 following two consecutive floods, cyclone Sidr and a widespread outbreak of the avian flu in the country resulting mainly from a lower growth in animal farming and crops and horticulture sub-sector. The long term trend showing a shift of sectoral composition of GDP away from agriculture towards industry continued in FY 2008 while the share of industry sector increased to 29.7% from 29.4%, the share of agriculture sector in GDP came down to 20.9% from 21.4 % ; the share of the service sector in GDP increased to 49.4% from 49.2%. Government and Bangladesh Bank policy towards economic development With a view to achieving higher economic growth, the Government and Bangladesh Bank (BB) continued to adopt policies in bringing the economy back to its growth momentum. The Government’s growth stimulating and poverty reduction programs coupled with prudent monetary policies of Bangladesh Bank contributed toward a strong GDP growth of 6.2% in FY 2008.

The fiscal policy in FY 2008 was meant for pro-poor economic growth and supporting private sector investment. The Government pursued a set of objectives which were attuned to poverty reduction. These strategies included, among others, creation of employment opportunities, removal of infrastructure constraints, improvement of law and order situation, establishment of fiscal discipline, unfettered development of private sector, human resources development, social sector investment, further widening of social safety net programs, and strengthening of financial management. Bangladesh Bank pursued growth supportive and prudent monetary policy stance during FY 2008 to ease the uptrend in inflationary tendency and to provide support for the highest sustainable real output growth.

External sector Exports and imports achieved robust growth in FY 2008, and remittances from workers abroad showed a strong and steady growth. Export increased by 15.7% from US$ 12,053 .0 million in FY 2007 to US$ 13,945.0 million in FY 2008 while imports increased by 25.6% from US$ 15,511.0 million to US$ 19,486.0 million. At the same time remittance increased by 32.4% from US$ 5,979.0 million in FY 2007 to US$ 7,915.0 million in FY 2008. As a result, country's current account balance exhibited a notable surplus of US$ 672.0 million in FY 2008 compared to surplus of US$ 936.0 million in FY 2007. The current account balance as a percentage of GDP stood at 0.85% in FY 2008 against 1.37% in FY 2007. The surplus in overall balance of payments came down to US $ 604.0 million in FY 2008 from US$ 1,493.0 million in FY 2007. Gross foreign exchange reserve increased by US$ 1,072.0 million to US$ 6,149.0 million at the end of FY 2008 that was equivalent to 3.8 months' import. Inflation The rising trend of inflation measured by CPI continued throughout FY 2008 mainly due to higher prices of oil, food and some other imported goods in the international market, disruptions of productions and supply caused by repeated floods and cyclone, higher domestic production cost of essential goods and business syndications. Annual average inflation measured by 12-months average movements in CPI, increased from 7.2% in June 2007 to 9.9% in june 2008. There was a notable increase in food prices component of CPI inflation from 8.1% in June 2007 to 12.3% in June 2008 and non-food component of CPI also increased from 5.9% in June 2007 to 6.3% in June 2008. Savings and investments Domestic savings -GDP ratio decreased from 20.4% in FY 2007 to 20.1% in FY 2008 while investment -GDP ratio decreased marginally from 24.5% of FY 2007 to 24.2% in FY 2008. The savings -investment gap, correspondingly, remained the same at 4.1% in FY 2008 and FY 2007, financed by net factor income from abroad. Public finance Revenue receipts in FY 2008 were Taka 605.4 billion, 22.4% higher than revenue of Taka 494.7 billion in FY 2007. Tax revenue was 79.3% within total revenue. Public expenditure amounted to Taka 936.1 billion in FY 2008, 40.1% higher than Taka 668.4 billion in FY 2007. Public expenditure comprised of Taka 522.5 billion current expenditure, Taka 188.6 billion other expenditure and Taka 225.0 billion development expenditure which was reduced by 15.1% from original target of Taka 265.0 billion. Consistent with the growth and poverty reduction objectives, 29.1 % of total outlay was spent for the infrastructure sector and 24.7 % for the social sector. The deficit in revised FY 2008 budget stood at Taka 330.7 billion or 6.2% of GDP at current prices. The domestic borrowing component of the deficit financing was Taka 199.2 billion (3.7% of GDP) in FY 2008 in which bank borrowing was Taka 104.0 billion (1.9% of GDP). Revenue as a percentage of GDP increased to 11.3% as compared to 10.6% in FY 2007, while public expenditure as a percentage of GDP increased from 14.3% in FY 2007 to 17.5 % in FY 2008. Accordingly, overall budget deficit increased from 3.7% of GDP in FY 2007 to 6.2% in FY 2008.

A partial view of a Ring Spinning Mill at Bhaluka, Mymensingh financed by DBBL.

Future outlook for the Bangladesh economy By maintaining macroeconomic stability through prudent fiscal and monetary policy with supportive external sector policy and progress in advancing structural reforms, against the backdrop of recent natural disasters and food crisis, the near and medium term economic prospects of Bangladesh appear favorable. In the updated Medium Term Macroeconomic Framework (MTMF) of Poverty Reduction Strategy Paper (PRSP) under the base case scenario, the real GDP growth has been projected to increase gradually to 6.5 percent in FY09, 7.0 percent in FY10, and 7.2 percent in FY11, aided by sustained macroeconomic stability, increased business and investment facility, increased growth in the industry and services sector, buoyancy in the overall agricultural sector growth, expansion and diversification of the export base, increased efficiency and technological progress, and ongoing implementation of economic reform programs.

partial view of export oriented Knit Composite Factory at Kanchpur, Rupganj, Narayanganj financed by DBBL.

To support the pro-poor growth targets envisaged in the MTMF, the gross domestic investment is projected to increase gradually from 24.4 percent of GDP in FY09 to 26.3 percent in FY10 and 27.0 percent in FY11 supported by introduction and implementation of pro-industrialization and investment friendly economic policies and strategies. Inflation is projected to decline gradually from 9.0 percent in FY09 to 7.0 percent in FY11, with an appropriately monetary policy stance aimed at ensuring reasonable price stability and providing support to sustainable and high output growth. The outlook envisaged in the MTMF faces several near and medium term downside risks and uncertainties originating from (i) the probable rising inflationary pressures, (ii) the probable volatility in prices of oil and other commodities in the world market, (iii) floods and other natural disasters, and climate change, (iv) infrastructure constraints (especially power, gas, ports, and transportation), (v) probable adverse effects in the RMG export growth due to falling growth prospects in U.S. and the country's other major trade partners, and (vi) probable adverse impact of global slowdown on aid inflow and workers' remittances. Besides, failure to meet following challenges may add to the problems: (i) ensuring food security, (ii) increasing productivity, (iii) diversifying export products and markets, and (iv) smooth transition to democracy. The depth and severity of the recent global financial crisis as well as its impact on Bangladesh Economy is still unfolding. However, Bangladesh is relatively insulated from the financial slide, but the global growth outlook, especially the growth prospect in the U.S. and the country's other major trade partners, has weakened which could create adverse impact on foreign aid, remittances and export growth, particularly export growth of RMGs.

Bangladesh needs to remain alert regarding its competitiveness of exports especially in the price-sensitive RMGs.

Therefore, for survival in the increasingly competitive global garment trade, a competitive RMG sector needs to be

built with upgrading infrastructures, developing financial capacity of manufacturers, labour compliance standards,

design and product development capability, advanced production facilities, long term business relationship, and the

development of internationally reputed customer bases. Efforts need to be made for larger access for our RMG

products in the markets where access still remains limited such as Australia and Japan. On the other- hand, to reduce

the overwhelming dependence on RMG, measures need to be taken to diversify the exports.

Recently, the World Bank in its report "Doing Business 2009" ranked Bangladesh above China, India, Pakistan and

the median Low Income Country (LIC) for required time and procedures to start a business. Simplifying foreign

borrowing by the private sector, rationalizing the foreign exchange transactions to encourage increased FDI and

foreign portfolio investment, particularly in medium and large-scale industries and enterprises, including infrastructure

building, and above all sound macro-economic management and positive political developments with a sound

economic environment would make Bangladesh a middle income economy by the end of the next decade.

Money, Credit and Financial Market

Money and credit growth

Bangladesh Bank pursued prudent monetary policy in FY 2008. Broad money grew by 17.6% in FY 2008 which was

higher than 17.0% growth in FY 2007 while domestic credit grew by 21.8% higher than 14.4% growth in FY 2007.

Credit to the private sector increased by 24.9% compared to 15.0% in FY 2007 reflecting increased activities in real

sector. On the other hand, public sector credit grew by 11.9 % compared to 12.4% in FY 2007 mainly due to

downsizing of ADP.

Monetary policy stance and interest rate scenario

Bangladesh Bank pursued growth supportive and prudent monetary policy stance during FY08 to ease the uptrend in

inflationary tendency and to provide support for the highest sustainable output growth. To adhere to its pro-growth

monetary policy stance, BB prudently used monetary policy instruments at its disposal during FY08. As part of its

policy stance BB emphasized more on increased credit flow to the agriculture, SMEs and housing sector. The major

policy rates remained unchanged at preceding year’s level. The spread between short term and long-term rates of

government securities narrowed down reflecting BB’s commitment to reduce inflationary pressure. Moreover, BB’s

continuous efforts to rationalize lending rate also succeeded in FY 2008.

The declining trend of interest rates continued in FY08. Weighted average interest rate on bank advances recorded a

decrease to 12.3 percent as of end June 2008 from 12.8 percent as of end June 2007, while that on bank deposits

increased slightly to 7.0 percent from 6.9 percent in FY 2007. As a result, net spread between advances and deposits

declined to 5.3% from 5.9%.

A partial view of export oriented Knit Composite Factory

having kintting, dyeing, finishing and garments facitiles

at Jarun, Konabari, Gazipur financed by DBBL.

Money market

A healthy, transparent and dynamically evolving

financial system helps mobilize savings and allocate

resources, ensure safe and efficient payment and

settlement arrangements and ease financial crisis

management. Efforts continued in FY 2008 to establish

a healthy and transparent financial system in the

country. There were signs of strain both in the inter-

bank call market and forex market. Volatility in these

two markets was tamed through repo operation and

intervention by BB.

Efficient monetary operation, especially use of shorter

term monetary instruments such as repo , reverse

repo, collateralized continuous liquidity support from

Bangladesh Bank to the primary dealers and

Bangladesh Bank Bills helped to keep the money

market sound and stable during the FY 2008. A

A partial view of a dyeing section of an export oriented

Textile Industry at Bhobanipur, Gazipur financed by

DBBL.

number of steps were taken for activation of secondary

markets of bills/bonds. As a result, the overall money

market situation was moderate during FY 2008. The

weighted average interest rates in call money market

started increasing from March 2008 to come down by

June 2008. Credit growth driven by growing economic

and business activities created some liquidity pressure

in the banking system. BB provided liquidity support to

keep call money rate reasonably stable in FY 2008. As

a result, the weighted average interest rate in the call

money market moved within the range of 6.9% to

14.8% during FY 2008.

The repo injects required money in the system and

provides banks with necessary funds to maintain their

liquidity. While pursuing a cautious monetary policy,

Bangladesh Bank kept this window open for the banks

to maintain the market liquidity at desired level. The

interest rate on repo auctions was 8.5% in FY 2008 as

against 8.0% - 9.0% in FY 2007. While repo injects

money in the system, the reverse repo takes it away

from the system. As a counterpart of repo auctions,

the daily reverse repo auctions were held in FY 2008. The reverse repo auctions were used to maintain intended level

of liquidity in the market as well as to contain credit growth. The interest rate on reverse repo auctions remained

unchanged at the previous year level of 6.5% per annum during FY 2008.

A carefully coordinated use of repo and reverse repo transactions, liquidity support to primary dealers and auction of

Bangladesh Bank bills played key role in stabilizing the money market and interest rates in banking sector during FY

2008.

Foreign exchange market

Bangladesh Bank introduced floating exchange rate in May 2003 for Taka. Under the arrangement, the banks are free

to set their own rates for inter-bank and customer level transactions. Taka is convertible for current international

transactions. Repatriation of profits or disinvestment proceeds on non-resident FDI and portfolio investments are

freely permitted. The exchange rate is being determined in the market on the basis of market demand and supply

forces of the respective currencies. However, to avoid any unusual volatility in the exchange rate BB occasionally

intervenes in the market when it deems necessary to maintain stability in the foreign exchange market designed to

ensuring the competitiveness of Bangladeshi products in the international markets, encouraging inflow of remittances,

maintaining internal price stability and maintaining balance in external account position.

Foreign exchange market of the country enjoyed good liquidity in FY 2008 mainly due to more than expected foreign

currency inflow (equivalent to US $ 7.9 billion) throughout the year from Bangladeshi nationals working abroad along

with the usual export proceeds. As a result, the exchange rate of Bangladesh Taka remained almost stable in FY 2008

and moved within the range of Taka 68.48 to 68.85 during FY 2008. However, in 1st quarter of FY 2008 foreign

exchange market experienced modest pressure due to higher demand in the market which subsequently eased .

The exchange rate started at 68.85 in FY 2008 and closed at 68.53 at the close of FY 2008.

Remittance

Inward remittance from Bangladeshi nationals abroad continued to play an important role in strengthening the current

account balance. Over the last few years, various steps have been taken to boost the flow of remittance through the

banking channel. These include expansion of activities of drawing arrangements, review of statements received from

foreign banks /exchange houses, close monitoring and supervision of banks. Besides, scheduled banks have ensured

quick delivery of remittances by reducing lead-time to the beneficiaries in Bangladesh, which brought substantial

development in the delivery system. Drawing arrangements have been made between 39 Bangladeshi banks and 270

foreign banks/exchange houses situated throughout the globe. Annual remittance threshold from various regions of

the world has been refixed upward. For these measures remittances recorded substantial growth by 32.4% from US

$ 5,979 million in FY 2007 to US$ 7,915 milion in FY2008. Remittance as a percentage of GDP increased to 10.02%

in FY 2008 from 8.72% in FY 2007.

Development in banking sector

During FY 2008, Bangladesh Bank continued ongoing reforms in financial market by tightening of prudential

regulations, improvement of supervisory oversight, expanding transparency and market disclosures with a view to

improving overall efficiency and stability of the financial system. The banking sector in the country is mainly divided

into three segmentsState-owned banks, private commercial banks and foreign commercial banks. PCBs are the

fastest growing segment in the market, having more than 50% market share.

Capital market

The capital market passed another year of growth in 2008 raising the total market capitalization to GDP ratio to 19.26

% against 15.88% of 2007. Dhaka Stock Exchange (DSE) total market capitalization crossed Taka 1.0 trillion -mark in

2008 for the first time. DSE Market capitalization stood at Taka 1,043.8 billion on December 30, 2008 while it was

Taka 759.6 billion on January 01, 2008. The daily average turnover at DSE recorded its highest achievement at Taka

2.818 billion in 2008 against Taka 1.362 billion in 2007. Turnover at the DSE recorded its highest mark with total

transaction of Taka 5.905 billion on October 12, 2008. The benchmark General Index declined by 7.10 % to 2,795.34

points on the closing session from 3,008.91 of the opening session.

A partial view of dyeing, printing and finishing section of

an export oriented home textile industry at QC Nagar,

Pagar, Tongi, Gazipur financed by DBBL.

A partial view of embroidery unit of a composite knit

garments industry at Fatullah, Narayanganj financed

by DBBL.

The following policy measures were taken in FY 2008 by

Bangladesh Bank to improve corporate governance and

stability of the banking sector and to extend services of

banking companies towards customers and SMEs:

Total capital requirement of banking companies

increased from Taka 2.0 billion to Taka 4.0 billion

that should be maintained on or before August 11,

2011 that is over & above 10% capital adequacy

ratio.

.50% of revaluation reserve against held to

maturity securities has been also accepted as

Tier-2 capital.

General provision against off balance sheet items

was increased from 0.5% to 1.0% in 2008.

During the year opening of SME centers were

allowed with a view to support growing and high

potential SMEs in the country with permission to

receive application, disburse, monitor and recover

SME loans and receive foreign remittance &

deliver the same in local currency. Priority will be

given to women entrepreneurs involved in the

promotion of SMEs.

Oriental Bank was reconstructed under "The

Oriental Bank Ltd (Reconstruction) Scheme,

2007" and renamed as ICB Islamic Bank Limited

to safeguard the interest of depositors and

banking sector as a whole. It may be noted that

the bank had been suffering from a huge shortfall

in capital and provision, large amount of classified

loans, inefficient management and acute liquidity

crises which brought it on the brink of collapse.

.SCBs were further strengthened in 2008 to allow

them to operate on a prudent and commercial

basis to make them efficient, profitable and

accountable to the respective authorities and to

make the banking sector more competitive.

.Bangladesh Bank continued to strengthen

corporate governance system in commercial

banks by making a provision for appointing two

depositor directors in every bank.

Global stock markets have taken a beating in the year 2008 due to global financial crises. Stock prices in all the major

stock exchanges in USA, EU, Japan and regional exchanges like India and Pakistan have fallen sharply. In

comparison, DSE has performed reasonably well. According to Bloomberg, New York based prestigious information

services company, for the first eleven months of 2008, the DSE was the sixth best performing exchange in the world

on a currency-adjusted basis. According to 23 world indices, DSE has performed the best.

Investors remained enthusiastic on the securities market until last quarter as their confidence was restored due to

concerted efforts by SEC and DSE to develop the securities market. Institutional investors channeled huge funds into

the market. However, in the last quarter of 2008 performance of DSE (both price and turnover) remained depressed

due to lack of confidence for uncertainty in global financial crises which may adversely affect our export, remittance

and foreign aid flow.

The securities market has been facing some fundamental problems due to lack of adequate shares in the market. As

a result, some of the issues marked unusual rise in 2008 only to decline later in the year. Under this background, the

DSE sees investors’ awareness as cornerstone of the country’s growing securities market. It is advised that investors

should make their investment decision based on company fundamentals, price level and disclosed information

avoiding rumor based speculation. It is expected that the momentum in country's stock market will be sustained with

growing awareness of investors, enabling policy environment pursued by the authority and listing of fresh securities

from attractive sectors like telecommunications, power, gas, energy and other infrastructure sectors.

REVIEW OF BUSINESS OPERATIONS AND STRATEGY

Principal activities

The principal activities of DBBL are to provide all kinds of commercial banking products and services to the customers

including project finance, working capital finance and trade finance for corporate customers, SME loans to small

traders & businesses; and house building loan, car loan and wide range of life style and need based loans for retail

customers. There are various deposit products particularly suitable for retail and institutional customers. DBBL's state

of the art IT platform and online banking system provide the largest ATM network and POS services of the country

through which customers are getting any branch and anytime banking. IT network also provides SMS banking, alert

banking and internet banking services. EMV compliant various Debit and Credit cards of MasterCard Worldwide and

VISA International, and DBBL's propriety cards are in operation. The EMV feature shields DBBL customers from any

kind of frauds as per the guidelines provided by MasterCard and VISA. In addition, international cards (VISA and

MasterCard) of different local and international banks are accepted at DBBL's ATMs for withdrawal of money and at

POS terminals for payments of shopping, hotel and dining bills etc.

A partial view of an export oriented composite knit

garments industry at Bhobanipur, Gazipur financed by

DBBL.

A partial view of an export oriented Cycle Manufacturing

Industry at Mawna, Sreepur, Gazipur financed by DBBL.

Strategic plan for positioning the company for future

growth through capacity building

As part of its strategic plan, DBBL continued to invest

heavily to improve and expand IT network, ATM services

and card services along with branch network, business

promotion and CSR activities. Though expenses on such

investments in 2008 apparently reduced expected profit

growth, however, these will substantially improve our

capacity to deliver customer services with a wide range of

products and services that can be matched with the best

in the industry by strengthening IT platform, expanding

distribution channels and communication networks and

improving productivity. DBBL's strategic objective is to

have a clear competitive advantage over its competitors

to provide the full range of banking services via multiple

delivery channels through state-of-the-art-technology at

the lowest cost.

Brand positioning

Throughout its operation for last 13 years, DBBL has

established itself as a different bank from others. It has

differentiated itself as a leader in technology by reaching

the latest banking services to its customers through

largest ATM network in the country at free or affordable

cost. DBBL has created an unprecedented example by

providing this unique service at subsidized cost not only

to its own customers but also to customers of many other

banks. It has also established itself as a Bank that cares

for the society. All the business activities of DBBL are

done in full conformity with social, ethical and

environmental standards. DBBL is the pioneer in CSR

programs in the country. It has been intensifying its

resources and efforts on a continuous basis to reach the

distressed & needy people of the society to bring smile on

their face and to improve their quality of living.

Customer focus and customers' right

DBBL's performance cannot be judged by just looking at profit figures. DBBL considers that it is the customers' right to

get modern, online and full ranges of banking services at an affordable price at anytime and anywhere. DBBL's

service cost is the lowest in the industry and in many cases services provided through ATM are free. DBBL is

committed to put the customers’ interest first. In line with its central vision; DBBL is promise-bound to extend

personalized services to the full satisfaction of the customers that should be the best in the industry.

Capital management plan and capital adequacy ratio

During 2008, Shareholders' equity (Tier-1 capital) increased to Taka 2,911.2 million being 6.91% of risk-weighted

assets (RWA) and supplementary capital (Tier-2 capital) increased to Taka 1,704.8 million being 4.05% of RWA. Tier-

2 capital was also strengthened by revaluation of held to maturity securities as of December 31, 2008. It will

strengthen the capital base of the company and provide long-term growth and stability to the Bank. It may be noted

that as per Bangladesh Bank regulation subordinated loan is eligible as Tier-2 capital up to 30% of Tier-1 capital. 50%

of assets revaluation reserve and 50% of revaluation reserve on held to maturity securities are eligible as Tier-2

capital. In line with long-term capital management plan of the Bank and keeping in view the implementation of Basel II

requirement, strong capital adequacy ratio was maintained in 2008 which reached 10.96% at the end of the year that

was well above statutory requirement of 10.00%.

Expansion of branches

The Bank opened 15 new branches in 2008 to reach 64 branches at the end of the year spreading the branch network

throughout the country. Another 15 branches will be opened in 2009 to expand the branch and distribution network.

These will bring up-to-date banking services to our existing and potential customers. At the same time it will optimize

utilization of our strong delivery channels, increase our resource position and business potentials that will maximize

profitability and shareholders' value. DBBL's strategy is to reach the doorsteps of customers to provide full range of

banking services based on state- of -the- art- technology and IT platform at free or affordable cost.

Further development in Information Technology

Dutch-Bangla Bank is the first and only bank in Bangladesh which invested more than Taka 1.5 billion in developing

the largest ICT infrastructure in the banking sector of the country. Since its inception, the Bank has been continuously

striving towards bringing world-class technology driven banking services, conveniences and satisfaction to its

customers setting a milestone in the banking sector of the country.

As a technology driven bank, we have implemented world reputed online banking software - Flexcube at all its 64

branches and 5 SME Service Centers with the following delivery channels:

Any Branch Banking

Online ATM/POS service

Internet Banking service under the domain www.dbbl.com.bd

SMS and Alert banking service

The Bank has upgraded its IT system successfully for further strengthening and securing the automation of banking

services. The Bank also implemented Online Synchronous Disaster Recovery Site (DRS) to provide uninterrupted and

reliable banking services to the valued customers. DBBL’s synchronous DRS is the first time in Bangladesh.

Dutch-Bangla Bank’s ATM network is the largest ATM network in the country comprising of 350 units of ATMs at the

end of 2008. DBBL has 750 units of POS terminals at various merchant locations. All the ATMs and POS terminals

are made EMV (Europay, MasterCard and VISA)

A partial view of a Pharmaceutical Industry at Tongi,

Gazipur.

A partial view of UAE-Bangladesh joint-venture

pharmaceutical company at Sreepur, Gazipur financed by

DBBL

compliant for the first time in Bangladesh to ensure the

security of our valued customers. The ATM/POS network

of the DBBL accepts the following cards:

EMV compliant chip cards of all the Banks in the

world

Non-EMV Visa and MasterCard Cards of all the

Banks in the world

DBBL’s Proprietary Cards (NEXUS).

DBBL has also introduced EMV compliant Chip based

VISA Credit Card for the first time in Bangladesh which is

the most secured multi-currency card in the world. The

EMV security policy has been introduced by Europay,

MasterCard and VISA jointly to protect capturing card

data and duplication of a card.

DBBL has set another milestone in the history of banking

sector by adding two units of Mobile ATM booths to its

exiting ATM network. DBBL has become the first bank in

the country to provide such unique service and

convenience to the customers. The DBBL Mobile ATM

Booth, which is outfitted in a custom-made van, is

available anywhere anytime and allow customers to

deposit cash/cheque, withdraw cash, inquire account

balance, print mini statement and to access all other

services offered by a standard ATM.

DBBL has opted other banks for joining and enjoying its

ATM/POS network. Customers of the following member

banks are now enjoying the DBBL ATM/POS network:

01. Mutual Trust Bank Limited

02. Standard Chartered Bank

03. Prime Bank Limited

04. Bank Asia Limited

05. Southeast Bank Limited

06. National Credit & Commerce Bank Limited

07. United Commercial Bank Limited

08. Commercial Bank of Ceylon Plc, Dhaka

09. The City Bank Limited

10. First Security Bank Limited

11. Mercantile Bank Limited

12. Trust Bank Limited

13. Jamuna Bank Limited

14. Shahjalal Islami Bank Limited

EMV Visa Credit card

DBBL has started issuing EMV Credit Card (Visa) for the first time in Bangladesh. With this security feature (EMV), all

the DBBL credit cardholders are protected from any kind of frauds at home and abroad.

At present, all the non-EMV credit card holders need to inform their respective banks before going and after coming

back from abroad to avoid unwanted transaction using the card. But even after undertaking these precautions,

occasionally cards are found to be hacked or data compromised.

While an EMV card may look similar to a normal card, the technology on it and supporting it is revolutionary. It uses an

onboard computer chip instead of a magnetic strip and relies on DBBL’s data center for on the spot verification. It

features built-in encryption algorithms mandated by Visa and MasterCard which are impossible to duplicate or modify.

It was designed and researched by Visa and MasterCard to be the most advanced card and eliminates the security

problems of normal cards.

Future initiatives

Dutch-Bangla Bank will install another 500 ATMs and 50 Deposit Kiosk by the end of June, 2009.

Bangladesh Bank has taken several reform measures to improve safety and effieciency in the payment systems. As

part of this reform, Bangladesh Bank is going to introduce first paperless Automated Clearing House in the country

which is called as Bangladesh Automated Cheque Processing System (BACPS) and Bangladesh Electronic Fund

Transfer Network (BEFTN).

DBBL has undertaken necessary initiatives to comply with the above-noted policy of the Bangladesh Bank. As a first

step, DBBL has introduced Magnetic Ink Character Recognition (MICR) encoded cheque books for its customers as

per the standard set by Bangladesh Bank.

Dutch-Bangla Bank has also taken initiatives to make its IT infrastructure as “Green IT”. Environment friendly options

like virtualization, power management and proper recycling habits towards certifying our data centers as “Green” are

under our active consideration.

A payment gateway is an essential part of an Online Payment System. It is necessary in order to process all of the

following inter-bank on-line transactions:

1. Account-to-account transfer transactions or debit/credit card transactions on the web for on-line

merchant payment against purchase of goods and services,

2. Inter-bank ATM/POS transactions using debit/credit cards, and

3. Inter-bank Internet or SMS banking transactions for fund transfer (instant remittance) and utility bill

payment.

Since there is no such system in Bangladesh, Dutch-Bangla Bank is actively considering to implement a payment

gateway to facilitate the above inter-bank transactions. This will be the first payment gateway setup in the country to

drive e-commerce transactions.

Retail banking and lending under SME scheme

Considering future market direction and to capitalize on our robust IT platform and the strongest ATM network DBBL

strengthened its Retail Banking Division in 2008. The Division has been operating in new premises with central

processing and monitoring of retail loans. A number of retail loan products aimed at specific target groups were

introduced in 2008 to cater the growing mprove yield and spread on total loan portfolio. The loan products included

housing loan, auto loan, professional loan and other consumer loans to purchase consumer durables and to meet

other needs of customers related to healthcare, education, travel, marriage, festival etc. A number of retail deposit

schemes were also added in 2008 including Power Account i.e. interest bearing current account for salaried

customers.

In future retail banking operation will be further intensified to increase DBBL's market share in this segment with

introduction of more products and services.

SME lending scheme was launched in 2008 as a priority sector. Expansion of retail banking operation and SME

lending will be strongly supported by adequate manpower, robust IT and ATM network, various promotional activities

as well as faster and better customer services.

A partial view of a reputed Ice Cream Manufacturing

Industry at Kadamtali, I/A, Shyampur, Dhaka.

Human resource development

A competent, committed and fully motivated team of

human resources is the main driving force for performing

at the highest level in a fiercely competitive financial

market like Bangladesh. Accordingly, the Bank's strategy

is to attract, retain and motivate the most talented people

in the industry. The Bank's HR policies are based on trust

and relationship. The Bank's policy is to look after people

who want to make a long-term career with the Bank

because trust and relationship are built over time.

Remuneration package may be an important factor to

motivate for joining a company, but it is not the only one.

In case of DBBL, it is excellence of DBBL with good

values, fairness, potential for success, scope to develop a

broad interesting career etc. which attract people to join

and work with DBBL.

The number of DBBL staff increased by 440 in 2008. At

the end of 2008, number of staff stood at 1,229 compared

to 789 at the end of 2007. The corporate culture at DBBL

as grew over last 13 years is such that the members of

the staff have ample opportunities to take initiative and

responsibilities.

The challenge is to maintain a business like, committed

corporate culture that matches DBBL's mission.

Achieving results and taking responsibility are important

components of the culture we pursue, one in which

management and staff work together and are mutually

accountable. DBBL always encourages excellence in

performance by rewards and recognition.

In addition, to strive hard for winning the challenges in a fiercely competitive market, the management has been

constantly pursuing the following areas:

To attract and retain best professionals in the industry.

Job evaluation, job enrichment, performance target, performance evaluation and performance based

compensation and incentives.

.Evaluating the training need of individual employees including training need for introducing new products,

services and technology.

Arranging high quality training at home and abroad so that DBBL executives can have competitive advantage

in the market.

Encouraging its employees to develop and broaden existing knowledge and skills and to acquire new skills

and expertise.

Reviewing and updating organiz ational structure on a regular basis to have a structure which can give strong

support to the strategic objectives of the Bank.

Correspondent banking relationship

At present, DBBL has correspondent banking relationship with 115 countries through more than 85 foreign banks. As

a result, we can route Letters of Credit (L/C) to all important business centers of the world. We are maintaining

adequate number of nostro accounts in major currencies with the key players in the world market to facilitate export

and import transaction needs of our valued clients.

DBBL's excellent service with competitive charges provides a good correspondent banking solution for the valued

clients of DBBL. We are also enjoying L/C confirmation limits for more than US$35.00 million from different leading

banks and financial institutions of the world.

DBBL has established Taka Drawing Arrangements with various exchange houses located in USA, UAE, Kuwait, Italy,

Canada etc. Moreover, arrangements of DBBL with Western Union, USA and Express Money of UAE Exchange

Center, UAE enable people to get direct inward remittances from every corners of the globe. Remittance inflow of

DBBL rose significantly by 136.7 % to US $ 75.7 million during the year 2008 from US $ 31.9 million in 2007.

REVIEW OF FINANCIAL POSITION AND RESULTS

Summary

Healthy business and profit growth despite political uncertainty and global financial crises

Despite political uncertainty and global economic crises, DBBL registered healthy business and profit growth in 2008

while being cautious to protect against any risk that may be arising from political or economic crises. The deposit of

the Bank increased by 22.5% from Taka 42,110.1 million in 2007 to Taka 51,575.7 million in 2008, loans & advances

increased by 41.8% from Taka 29,403.1 million in 2007 to Taka 41,698.3 million in 2008, while import business

increased by 23.4% and export business increased by 17.7%. Operating profit grew by 47.9% from Taka 1,438.7

million to Taka 2,127.2 million and net profit after tax increased from Taka 479.8 million to Taka 821.6 million showing

an impressive growth of 71.2%. Lower cost of fund resulting in higher net interest income, increase of non- interest

income particularly from online –banking services and comparatively lower growth in operating expenses due to

improved operational efficiency and productivity contributed to notable growth in operating profit. Impressive growth in

net profit after tax grew at a faster rate than operating profit for lower loan loss provision in 2008. Return on equity was

29.6% in 2008 compared to 24.0% in 2007.

Higher investments in branch expansion, IT platform, ATM network, card services and human resource though

contained profit growth in 2008, however, these will increase resource capacity, increase distribution network, improve

efficiency in operations, augment resource flow to expand customer base and to provide much better and faster

customer services. As a result, in the long term it will bring substantial and sustainable benefits for the Bank.

Summary of operating results is given below:

In million Taka

Particulars

Amount Change

(%) 2008 2007

Interest income 5,454 4,879 11.8%

Interest expenses 3,636 3,690 -1.4%

Net interest income 1,818 1,190 52.8%

Investment income 622 631 -1.4%

No interest income 1,200 857 40.0%

Total operating income 3,640 2,678 35.9%

Total operating expenses 1,512 1,239 22.0%

Profit before provision 2,127 1,439 47.9%

Provision for loans and adavances (including off-balance

sheet exposures) and charges on loan losses

256 363 -29.3%

Other provisions 1 -

Contribution to Dutch-Bangla Bank Foundation 93 54 73.7%

Profit before taxes 1,776 1,022 73.7%

Provision for taxation (current and deferred) 954 542 75.9%

Net profit after taxation 822 480 71.2%

Composition of revenue 2008

(%)

Net interest income

During the year 2008, the net interest income of the Bank rose by Taka 627.8 million or 52.8% to Taka 1,817.7 million

from Taka 1,189.9 million of the previous year. Net interest income increased mainly due to higher average loan

portfolio and lower cost of fund resulting from improved depoist mix. Cost of fund declined from 8.44% of 2007 to

7.66% in 2008 while yield on loans and advances declined from 13.85% in 2007 to 13.62% in 2008 mainly due to

reduction in interest rate for regulatory compliance. However, the share of net interest income to the total income of

the Bank increased to 49.9% in 2008 compared to 44.4% of the previous year.

Non- interest income

The non interest income consists of the commission, exchange and other operating income of the Bank. Total non-

interest income of DBBL increased by Taka 342.8 million or 40.0% in 2008 over the previous year. Commission and

exchange income increased by Taka 149.4 million or 21.0% during the year 2008. Notable growth was achieved in

other operating income which grew by Taka 193.4 million to Taka 340.5 million in 2008 from Taka 147.1 million in

2007 marking a rise by 131.5%. Other operating income increased due to growing services provided by online

banking network of the Bank.

Total operating expenses

Total operating expenses of the Bank during the year grew by Taka 272.9 million or 22.0%. Higher operating

espenses were necesary to support the overall business and profit growth of the Bank during the year 2008. Higher

expenses were also required to support capacity building and expansion of distribituion network and delivery

channels. 15 new branches and 5 SME centers were opened in 2008. 143 ATM units including 2 mobile ATM units

were installed in 2008. Recruitment of new personnel, maintenance and upgradation of IT network, introduction of new

retail products, increasing CSR activities are attributable to higher operating expenses.

The Bank’s cost (excluding the charges for loan losses) to income ratio improved to 41.6% for the year 2008 from

46.3% of the previous year which signifies improvement in overall operating efficiency and productivity of resources.

Provision for loans and off-balance sheet exposures

Total provision for loans and off-balance sheet exposures decreased by Taka 185.2 million or 74.1% during the year

2008. However, the specific provisions against loans substantailly reduced by Taka 301 million or 120.4% during the

year due to maintaining overall quality of loan portfolio resulting from better screening and close monitoring and

supervision of loan portfolio particularly non-performing loans. While the provision for off-balance sheet exposures

increased by Taka 33.2 million to Taka 126.2 million from Taka 93.0 million of the preceding year due to higher

volume of off-balance sheet exposures and compliance with the Bangladesh Bank requirement for increasing the level

of provision from 0.50% of previous year to 1.00% at the end of 2008.

A partial view of a waste recycling project (with

composting facility) at Bhulta, Rupganj, Narayanganj

financed by DBBL.

The project is approved and registered as a Clean

Development Mechanism (CDM) project under the Kyoto

Protocol.

Contribution to Dutch-Bangla Bank Foundation

In addition to the Bank’s direct contribution to corporate

social responsibility programs, DBBL established the

Dutch-Bangla Bank Foundation in 2001 for carrying out

CSR programs aimed at social causes and distressed

people in the society. It is the Bank’s policy to contributre

5% of its pretax profit to Dutch-Bangla Bank Foundation

which increased to Taka 93.5 million in 2008 compared to

Taka 53.8 million in the previous year.

Profit before taxes

During the year 2008, the net profit before taxes of the

Bank increased significantly by Taka 753.8 million or

73.7% to Taka 1,776.1 million from the previous year’s

amount of Taka 1,022.2 million. This increase was mainly

attributed to higher operating profit and lower loan loss

provisions for improvement of the quality of assets that

required lower specific provision for loans & advances.

Provision for taxation

As per Income Tax Ordinance, 1984, an amount of Taka

913.7 million has been charged as provision for current

tax compared to Taka 756.4 million of 2007. However,

Taka 40.7 million has been charged as deferred tax

expenses in 2008 compared to Taka 214.0 million as

deferred tax income for the year 2007. The effective tax

rate increased to 53.7% as compared to 53.1% in 2007

against a nominal rate of 45%. Effective tax rate was

higher mainly because loan loss provision was not

considered tax-deductible expense in line with prevailing

Income Tax law.

Net profit after taxation

Net profit after taxation grew by Taka 341.8 million to

Taka 821.7 million from Taka 479.8 million of the

preceding year marking a growth of 71.2%. The growth in

after tax profit contributed to higher Tier-1 capital and

total capital adequacy ratio.

Significant profitability ratio

Review of balance sheet

Total Liabilities

The Bank’s liabilities (except shareholders’equity) as at 31 December 2008 increased to Taka 57,461.5 million

compared to Taka 47,036.9 million at the end of 2007 showing a growth of 22.2%.

The liability mainly included deposits which increased to 89.8% of the total liabilities in 2008 from 89.5% in 2007.

Summary of liabilities is given below:

In million Taka

Deposits

The deposit grew by Taka 9,465.5 million (22.5%) in 2008 from Taka 42,110.1 million to Taka 51,575.7 million. The

growth was supported by expansion of branch network, opening of new ATM booths and SME service centers at

different business hubs of the country. In 2008 deposit mix improved substantially. Online banking with expanded

ATM network and tailor made customer services helped increase confidence of customers in DBBL. As a result,

number of savings and current accounts as well as amount of deposits increased significantly. Share of cost free or

low cost deposits increased to 50.7% of total deposits in 2008 (44.7% in 2007). Because of improved deposit mix,

weighted average cost of fund declined to 7.66% in 2008 from 8.44 % in 2007

The savings deposits of the Bank increased by Taka 4,502.1 million to Taka 12,212.0 million from Taka 7,709.9

million of the preceding year showing a significant growth of 58.4% in 2008. The share of savings deposits along with

other low cost deposits increased to 50.7% in 2008 from 44.7% in 2007. The share of high cost fixed depoists came

down to 49.3% of total deposits in 2008 from 55.3% though absolute amount of fixed deposit increased by Taka

2,120.8 million (9.1%).

The deposit mix is given below:

Borrowing from other banks, financial institutions and agents

Borrowing from other banks, financial institutions and agents stood at Taka 593.6 million at the end of 2008 compared

to Taka 632.7 million at the end of 2007.

The Bank’s borrowing includes borrowing against refinance from Bangladesh Bank for financing under SME scheme

and financing under housing scheme. Besides, the Bank has been availing credit lines facilities from the Rupantarita

Prakritik Gas Company Limited (RPGCL) for financing CNG buses / chassis under Dhaka Clean Fuel project and

credit lines from FMO, The Netherlands.

In order to support some of the preferred sectors of the economy, DBBL has extended soft term credit facilities

financed by FMO, The Netherlands as follows:

Under a foreign currency loan for US$ 8.75 million from Netherlands Development Finance Company (FMO) DBBL is

advancing credit lines to export oriented RMG units at an interest rate of 11.85 percent p.a. for procurement of capital

machinery.

To develop small-scale entrepreneur, a long-term local currency loan equivalent to EURO 5.00 million was also

arranged from Netherlands Development Finance Company (FMO) to finance small-scale enterprises engaged in

manufacturing, agriculture, transport, tourism and productive trade & commerce and service industries. The loan

amount was increased to EURO 7.50 million to include residential housing finance only for fixed income group.

Subordinated debt

With another Subordinated loan for Taka 487.2 million obtained in 2008 total amount of subordinated loan increased

to Taka 1,423 million at the end of 2008. Subordinated loans have been arranged from FMO for financing housing

sector of the country and to strengthen Tier-2 capital of the Bank. Subordinated loan is eligible as Tier -2 capital of the

Bank subject to regulatory limit.

Shareholders’equity

As at 31 December 2008, DBBL’s shareholders’equity increased to Taka 3,220.6 million from Taka 2,334.4 million of

2007 registering an increase by Taka 886.2 million (37.9%). The increase resulted from Taka 821.7 million after tax

profit and Taka 64.5 miilion revaluation reserve on held to maturity securities. After issuing bonus shares @3.94719

shares for existing 1 share of Taka 100 each paid-up share capital of the Bank increased by Taka 797.87 million and

stood at Taka 1,000 million at the end of 2008. The statutory reserve increased to Taka 1,197.5 million at the end of

2008 from Taka 842.3 million of 2007. The paid–up capital and statutory reserve together stood at Taka 2,197.5

million as at December 31, 2008. As per Bangladesh Bank regulation, paid-up capital and statutory reserve should be

increased to at least Taka 4,000.0 million latest by Aug 11, 2011 of which paid up capital should be minimum Taka

2,000.0 million.

Capital management plan and capital adequacy ratio

Strong Capital Adeauacy ratio was maintained in 2008 which reached 10.96% at the end of the year that was well

above statutory requirement of 10.00%. Shareholders' equity (Tier-1 capital) increased to Taka 2,911.2 million being

6.91% of risk weighted assets (RWA) and supplementary capital (Tier-2 capital) increased to Taka 1,704.8 million

being 4.05% of RWA.

The details of risk-weighted assets, requirement of capital, actual capital and capital adequacy ratio are given below:

Risk weighted assets

Total assets

Total assets of DBBL as at 31 December 2008 stood at Taka 60,682.1 million compared to Taka 49,371.3 million of

2007 depicting a growth by Taka 11,310.7 million (22.9%). Loans and advances is the largest component of assets

followed by investments.

The summary of assets is given below:

In million Taka

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

As at 31 December 2008, cash in hand and balances with Bangladesh Bank and its agent banks (including foreign

currencies) stood at Taka 5,126.7 million as against Taka 4,193.1 million of 2007 registering a growth by Taka 933.6

million (22.3%). The increased cash was required to provide uninterrupted cash services to our growing customer

bases and customer needs. Online transaction facilities with 64 branches, 350 ATMs and growing number of accounts

substantially increased cash requirement in branches and ATMs. Higher balance with Bangladesh Bank was required

to maintain CRR Ratio consistent with higher deposits.

Balance with other banks and financial institutions

The Treasury Division of the Bank has to maintain some short term deposit (STD) accounts and current deposit (CD)

accounts with other banks in and outside the country for smooth functioning of treasury operations and trade finance.

A portion of the excess fund, if any, after meeting the requirement to finance loan portfolio and investments including

SLR, is placed with other banks and financial institutions as term deposits for optimizing the profit of the Bank. As at

31 December 2008, balance outstanding with other banks and financial institutions substantially reduced to Taka

1,901.5 million from Taka 4,853.6 million at the end of 2007 for higher utilisation of funds in loan portfolio.

Money at call & short notice

Money at call and short notice stood at Taka 2,500.0 million at the end of 2008 compared to Taka 2,050.0 million at

the end of 2007. The average yield on fund placement at call & short notice of the Bank was 12.82% for 2008 as

against 7.92% of 2007. Short term excess fund is placed in money market to augment return on fund.

Investments

The Bank's investment stood at Taka 5,385.4 million at the end of 2008 that was lower by 8.9% from Taka 5,909.3

million in 2007. The surplus investment was shifted to loans & advances in 2008. The investments mainly included

Government securities for Taka 5,366.4 million (99.6% of total investment) maintained mainly to cover SLR

requirement. In addition, investments were planned in a way to provide sufficient liquidity and flexibility in treasury

operations and to boost aggregate yield which increased from 11.38% in 2007 to 11.72% in 2008.

Treasury team of the Bank was very much watchful to manage market risk & uncertainty and ensure maximum return

from investments in security, term deposits and call money market. During the year under review, the Bank was able

to maintain cash reserve requirements (CRR) and statutory liquidity requirements (SLR) successfully.

Loans and Advances

Loans and advances stood at Taka 41,698.3 million at the end of 2008, a growth of 41.8% over Taka 29,403.1 million

in 2007. The Bank continued to consolidate and diversify its portfolio in 2008 to have a diversified client base and

portfolio distributed across the sectors to reduce client specific and industry specific concentration and to reduce

overall portfolio risk. Considering future market direction and to capitalize on our robust IT platform and the strongest

ATM network a number of retail loan products aimed at specific target group were launched in 2008 to augment fee

income and improve yield and spread on total loan portfolio. At the end of 2008, DBBL’s total outstanding retail

portfolio stood at Taka 621.9 million compared to Taka 9.8 million of 2007.

Weighted average rate of return decreased to 13.62% in 2008 from 13.85% in 2007.

Classified loan as a percentage of portfolio remained close to last year at 3.27%. However, full provision was made

against classified loans. Serious efforts are being continued to bring down the amount and percentage of classified

loan by exploring all options including legal actions and out of court settlements depending on merit of the cases.

To clean up the balance sheet, loans considered to be bad were written off for a further amount of Taka 289.9 million

in 2008 that was in addition to Taka 123.7 million written off up to 2007. As a result, a cumulative amount of Taka

615.4 million was written off up to December 31, 2008.

The summary of loans and advances along with risk status is given below:

Review of off-balance sheet items as at 31 December 2008

Total outstanding amount (net off margin) of off-balance sheet exposures of the Bank increased to Taka 21,916.2

million at the end of 2008 from Taka 18,599.0 million of 2007 registering a growth of 17.8%.

The letters of credit (net off margin) stood at Taka 6,871.4 million at the end of 2008 compared to Taka 6,256.9 million

of 2007 registering a growth of 9.8%.

The letters of guarantee (net off margin) increased to Taka 2,264.4 million in 2008 from Taka 1,662.3 million of 2007

showing a growth of 36.2%.

Import and Export business

During the year under review, import business of DBBL recorded growth of 23.4% (11.2% in 2007) while export trade

grew by 17.7% (2.2% in 2007).

Outlook for 2009

In the business plan and budget for 2009, deposits are projected to grow by 55.1% to Taka 80,000.0 million and loans

are projected to increase by 31.9% to Taka 55,000.0 million. Import and export business are expected to rise by

36.4% to Taka 60,000.0 million and 44.7% to Taka 58,000.0 million respectively. With better quality of assets, higher

net interest income as well as growing non-founded business, healthy growth in operation and tax profit is expected in

2009.

The above growth will be supported by expansion of branches, ATM network, up gradation of IT and online banking

system to provide better and faster customer services. Human resource will be strengthened to improve operational

efficiency and productivity. A number of new products and services particularly in SME and retail segments will be

introduced to provide winder choice to the customers.

Appropriation of profit

The financial results and recommended appropriation of profit for the year 2008 are given below:

In million Taka

Particular 2008 2007

Net profit tax 821.67 479.81

Retained earning brought forward from previous years 210.88 733.39

Profit available for appropriations 1032.55 1213.20

Appropriations recommended by the Board of Directors Transfer to statutory reserved fund. 355.21 204.45

Proposed dividend (bonus share @50% i.e. 1 share for existing 2 shares of Taka 100 each) 500.00 797.87

Relational earnings carried forward 177.33 210.88

The Bank earned a net after tax profit of Taka 821.7 million in 2008 that was 71.3% higher than Taka 479.8 million in

2007.

Dividend policy and utilization of retained profit

The Bank has been pursuing a dividend policy that must ensure satisfactory return for shareholders as well as

sustainable growth of the Bank with strong capital adequacy ratio to protect greater interest depositors and

shareholders.

Election of the Directors

In terms of Article 113 of the Articles of Association of the Company, at every Ordinary General Meeting, one-third of

the Directors for the time being if their number is not three or multiple of three, then the number nearest to one-third

shall retire from the office. Accordingly, as per Article 114, Mr. Shahabuddin Ahmed will retire from the General

Shareholders’ Group. As per Bangladesh Bank regulation, he is not eligible for re-election. A new director from

General Shareholders’ Group will be elected by the shareholders in the Thirteen Annual General Meeting. Mr.

Bernhard Frey continued as a nominated Director as nominated by Ecotrim Hong Kong Limited in 2008 and Mr.

Bernhard Frey continued as nominated Dirctor as nominated by Ecotrim Hong Kong Limited. As per Aricle 114, Mr.

Bernhard Frey will retire from Sponsor Shareholders’ Group and he is eligible for re-election and accordingly offered

himself for re-election from the Sponsor Shareholders’ Group.

In term of Article 108 of the Articles of Association, the following Directors were appointed by the Board since last

Annual General Meeting held on April 17, 2008.

Mr. Abedur Rashid Khan (Sponsor Director).

Mr. Sayem Ahmed (Sponsor Director)

Dr. Irshad Kamal Khan (Independent Director)

Dr. Syed Fakhrul Ameen (Director from Depositors)

Mr. Chowdhury M. Ashraf Hossain (Director from Depositors)

Dr. Irshad Kamal Khan was appointed as an Independed Director in compliance with SEC regulations. Dr. Syed

Fakhrul Ameen and Mr. Chowdhury M. Ashraf Hossain were appointed as Directors from depositors of the Bank in

compliance with Bangladesh Bank regulations.

All the directors appointed since last Annual General Meeting will retire from the office of the directors in this Annual

General Meeting and they are eligible for re-election. Accordingly, they offered themselves for re-election.

Meetings of the Directors

Nine (09) Meeting of the Board of Directors and 52 (fifty two) meeting of the Executive Committee fo the Board were

held during the year under review. The Audit Committee of the Board also held five (05) meetings during the year

under review.

Appointment of Auditors

Our existing Auditors M/s. Hoda Vasi Chowdhury & Co. Chartered Accountants (Independent Correspondent Firm to

Deloitte Touche Tohmatsu) has completed audit of 2008 as second year of their audit and as per Bangladesh Bank’s

BRPD Circular Letter No.12 dated July 11, 2001’ they are eligible for re-appointment. They have experessed their

willingness to continue as auditors for 2009. The auditors will be appointed and their remuneration will be fixed for the

year 2009 by the honorable shareholders in this Annual General Meeting.

Gratitude

The members of the Board of Directors fo DBBL would like to express their gratitude to all shareholders, valued

clients, patrons, all employees and well-wishers for their continued support and cooperation, without which the Bank

would not be able to achieve its present position. We are also indebted to the Government of Bangladesh,

Bangladesh Bank, Securities and Exchanges for their continued support and co-operation.

We look forward for your continuous support and best wishes for meeting the formidable challenges lying ahead.

With best regards

On behalf of the Board of the Directors

Abul Hasnat Md. Rashidul Islam

Chairman.