CREDIT RATING REPORT ON

AL-Arafah Islami Bank Limited

Page 1 of 14
Address: CRISL Nakshi Homes (4th Floor), 6/1A, Segunbagicha, Dhaka-1000 Tel: 7173700-1 Fax: 88-02-9565783 Email: crisl@bdonline.com Analysts:

Md. Abdul Wadud Khan wadud@crislbd.org Tanzirul Islam tanzir@crislbd.org Surveillance

Rating: Long term: BBB+ Short term: ST-3 Outlook: Stable

Rating :

Based on Financials of FY 2007

AL-ARAFAH ISLAMI BANK LIMITED

PRINCIPAL

ACTIVITY Islamic banking INCORPORATED ON

June 18, 1995 BOARD CHAIRMAN

Alhajj Md. Anowar Hossain MANAGING

DIRECTOR M.A. Samad Sheikh DEPOSIT

TK 23009.13 million INVESTMENT

TK. 22906.37 million OWNERS EQUITY

TK. 2037.50 million ASSET

TK. 30182.32 million

REPORT: RR/204/08
This is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. CRISL long-term rating

is valid for only one year and short term rating for six months. After the above periods, these ratings will not carry any validity unless the bank goes for rating surveillance.

Long Term Short Term Entity Rating 2006 BBB+ ST-3 Surveillance Rating 2007 BBB+ ST-3 Outlook Stable Date of Rating June 30, 2008 1.0 RATIONALE Credit Rating Information and Services Limited (CRISL) reaffirms BBB+ (pronounced as triple B plus) rating for long term and ST-3 rating for short term to AlArafah Islami Bank Limited (AIBL). The above has been done on the basis of good fundamentals of the bank such as satisfactory asset quality, good non funded income, satisfactory large investment exposure, well managed balance sheet and moderate rescheduling performance. However, above factors are constrained, to some extent, due to high investment deposit ratio, marginal capital adequacy, below average profitability, limited product lines, high cost of fund, investment concentration and limited market share etc. Bank/FIs rated in this category are adjudged to offer moderate degree of safety for timely repayment of financial obligations. This level of rating indicates that a bank is underperforming in some areas. These entities are however, considered to have the capability to overcome the above-mentioned limitations with special care and cautious operation. Risk factors are more variable in periods of economic stress than those rated in the higher categories. The short term ST-

3 rating indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small. CRISL also viewed the bank with stable

outlook on the basis of its consistent operational fundamentals. 2.0 CORPORATE PROFILE

AL-Arafah Islami Bank Ltd- A second generation Islamic Bank Al-Arafah Islami Bank Limited (AIBL) was

incorporated on June 18, 1995 as a public

P aid up C apital Owner's Equity Figure in M illion 0 500 1000 1500 2000 2500 2004 2005 2006 2007 Year Paid up Capital Owners Equity

Deposit vs. Investment Figures inMillion

0 5000 10000 15000 20000 25000 2004 2005 2006 2007 year Deposit Investment

ROAA vs. ROAE

0 10 20 30 40 50 60

70 2004 2005 2006 2007

Year

ROAA ROAE