Amana Bank 2013

Amna Bank
Amna Bank
480, Galle Road, Colombo 3, Sri Lanka.
ANNUAL REPORT 2013
www.amanabank.lk
ANNUAL REPORT 2013
Our Vision
To provide a differentiated banking experience in Sri Lanka, through an equitable financial system
Our Mission
To share risks and rewards with all our customers by delivering Sharia compliant financial solutions based on
innovation and technology
We believe
We believe that you have a right to be treated fairly
We believe that one should not gain at the expense of another
We believe that being responsible and ethical is as important as making profits and gains
We believe that entrepreneurship should be encouraged and given a fair opportunity to succeed
We believe that the best of actions are the ones which create true happiness in people
We believe that you feel the same way we do
We have a unique approach to banking which is in sync with our beliefs
Our financial solutions are responsible, ethical and fair
We are Amna Bank. Its Your Bank
The Buzz
Success and prosperity is hard to come by. It takes hard work and
determination to overcome the odds. There is a hive of activity going on at
Amna Bank. Our people are busy as bees, often facing challenges, yet always
heading towards success. It is only a matter of time before the honey of
prosperity will flow for the Bank and its stakeholders alike to taste the
flavour of our success.
Contents
Financial Highlights 04
Chairmans Message 06
Managing Director/CEOs Review 12
Board of Directors 20
Independent Sharia Supervisory Council 28
Corporate Management Team 30
Profiles of Strategic Shareholders 32
Business and Operations Review 35
Report on Sharia Supervision 55
Corporate Social Responsibility 59
Risk Management 65
Corporate Governance 96
Banks Compliance with Prudential Requirements 110
Directors Statement on Internal Control over Financial Reporting 114
Independent Assurance Report on Internal Control 118
Annual Report of the Board of Directors on the Affairs of the Bank 119
Directors Interest in Contracts 127
Board Audit Committee Report 130
Board Integrated Risk Management Committee Report 135
Board Human Resources and Remuneration Committee Report 139
Board Nomination Committee Report 141
Statement of Directors Responsibility 145
Independent Sharia Supervisory Council Report 148
Financial Reports
Independent Auditors Report 152
Income Statement 153
Statement of Comprehensive Income 154
Statement of Financial Position 155
Statement of Changes in Equity 156
Statement of Cash Flows 157
Notes to the Financial Statements 158
Compliance with Other Disclosure Requirements
Specified by the Central Bank of Sri Lanka 205
Capital Adequacy Computation 208

Shareholder Information 211
Correspondent Banks 213
Branch Network 214
Glossary of Terms 215
Notice of Meeting 217
Form of Proxy Enclosed
Corporate Information Inner Back Cover
4
Amna Bank Annual Report 2013
Financial Highlights
Risk Management 65
2013
2012
Change
LKR
LKR
LKR
Financing Income
1,768,061,705
1,300,618,090
467,443,615
Financing Expenses
1,050,007,868
732,071,273
317,936,595
718,053,837
568,546,817
149,507,020
(317,033,901)
145,994,652
(463,028,553)
Results for the Year
Net Financing Income

Profit/(Loss) for the Year
Position at the Year End
Deposits
17,983,111,581
13,302,501,452
4,680,610,129
Advances
15,015,318,081
7,165,461,019
7,849,857,062
Total Assets
23,397,855,691
16,717,424,084
6,680,431,607
5,062,033,380
3,071,215,500
1,990,817,880
Shareholders' Funds
Information per Share
(0.33)
0.16
(0.49)
4.99
3.40
1.59
Industry
2013
2013
2012
Earnings
Net Assets Value
Ratios
Growth in Income
19.3%
35.9%
269.5%
Growth in Deposits
15.0%
35.2%
17.1%
Growth in Advances
8.8%
109.6%
44.0%
Growth in Total Assets
16.6%
40.0%
15.3%
Growth in
Shareholders' Funds
12.4%
64.8%
2.3%
Advances to Deposits
82.2%
83.5%
53.9%
5
6
Chairmans Message
Risk Management 65
7
10 NEW BRANCHES | TRIPLE DIGIT

GROWTH IN FINANCING ASSETS |
OVER 100,000 CUSTOMERS |
A SUCCESSFUL IPO | LISTED ON THE
BOURSE |
In the Name of Allah the Most Gracious the Most Merciful !

It is after achieving those key milestones that I welcome you to the Fifth Annual General
Meeting of the Bank. As the first and only fully Sharia compliant bank in the country we have
strongly made our presence felt after making a meaningful contribution to the overall growth
of the banking industry in the year 2013. This is an encouraging sign for a new bank and places
us in good stead to further penetrate the industry as we take giant strides in our journey to
become a premier banking institution in Sri Lanka.
GLOBAL AND LOCAL ECONOMIC OVERVIEW

The global economy showed positive signs of bouncing back as it grew by 3% during the year
under review. Global activity and world trade gathered momentum particularly in the second
half of the year. Emerging and developing economies benefited from strong external demand
in the advanced economies and are expected to progressively grow in 2014 and 2015. The
projected growth rates of advanced economies have also been favourable but risks such as
inflation and financial instability remain a concern for policy makers.
On the other hand, the local economy with a sustainable growth model and sound
macroeconomic policies performed to expectations amidst mounting challenges, recording a
growth rate of 7.3% in 2013. In a bid to stimulate economic growth in the country, the Central
Bank of Sri Lanka reduced policy rates on two occasions during 2013 which led to a decline in
market rates. It was a mixed year in terms of the exchange rate with the Rupee gaining ground
8
YOUR BANK, IN LINE WITH ITS

STRATEGIC BUSINESS PLAN,
OPENED 10 NEW BRANCHES IN
KEY LOCATIONS ATTRACTING
NEW CUSTOMERS
Risk Management 65
during the first half of 2013 but on average the Rupee depreciated against the US Dollar by
2.7% during the year. Inflation continued its downward trend with another year of single digit
inflation to end 2013 at 4.7%.
YOUR BANK SETS THE PACE IN 2013

Your Bank, in line with its Strategic Business Plan, opened 10 new branches in key locations
attracting new customers by taking the concept of Islamic finance to the untapped regions
in our country. The expansion in reach was much welcomed and the response so far has been
promising with Consumer and SME being the revenue generating segments.
The 18% credit growth ceiling that was imposed on the banking sector in the previous year
was removed in 2013. As a result, the Bank embarked on an aggressive strategy to ensure
that a substantial level of growth is achieved in the medium term. The targets set for the year
under review were ambitious but the results in terms of balance sheet growth epitomises
that a focused approach can yield tremendous results. In this backdrop, the Bank recorded
remarkable growth in customer financing and a substantial increase in customer deposits with
the former achieving triple digit growth. The balance sheet further strengthened as the total
assets of your Bank increased to LKR 23 billion taking a leap towards achieving the status of a
mid-sized bank in the years to come.
With the growth in assets and the resultant impact on revenue, core banking income
has increased significantly. However, the inauguration of 10 new branches coupled with
investments in key areas such as people, processes, systems and infrastructure meant
that increased costs had to be incurred for expansion purposes. The performance of the
stock market did not help the Bank as the equity portfolio recorded losses after the share
prices declined during the year. This was in contrast to last year, when the Bank recorded a
substantial gain of LKR 247 million. Further, in 2012, the Bank reaped the benefits arising out
of high global gold prices and was able to record a one-off gain of LKR 149 million by disposing
its gold portfolio. As a result, the Bank recorded a loss for the year under review amounting to
LKR 317 million compared to the profit of LKR 146 million in 2012.
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A SUCCESSFUL IPO AMIDST DIFFICULT MARKET CONDITIONS

To fulfil regulatory requirements and support the proposed expansion plans, the Bank raised
more equity capital in 2013 via a Rights Issue at the beginning of the year and an Initial Public
Offering (IPO) in December after which the Banks shares were listed on the Colombo Stock
Exchange in 2014 against tough market conditions. Once again the Bank showed the same
resilience as it did when it raised the required capital funds to set up this institution during the
height of terrorism in the country. I take this opportunity to thank all those who invested in the
Bank that offers a unique value proposition which bears testament to the belief and trust in our
sustainable banking model.
With the decline in market rates the pressure on margins was felt with banks expected to
improve efficiency and manage their assets and liabilities more prudently in pursuit of being
profitable. For a small and new bank which is fast expanding and pursuing operational
profitability this was a challenge on its own to remain competitive. However, the impact of
lower margins was managed effectively by recording higher volumes in terms of customer
financing and acquiring low cost deposits.
LOOKING AHEAD FOR SUSTAINABLE RESULTS

The Central Bank of Sri Lanka estimates the economic growth rate to exceed 8% in the medium
term with six broad sectors identified in the policy document of the Government being the
focal points. As we head towards a USD 100 billion economy it is important that we attract
foreign direct investment to spur growth and create employment opportunities. Whilst
investment remains a focal point it is vital to look at alternative sources of export earnings
diversifying into areas such as technology which will reduce the reliance on traditional exports.
We believe that private sector credit, which took off in the second half of 2013, will continue
to grow with market rates easing and as infrastructure projects get underway connected with
urban and rural development. Your Bank will remain committed in assisting its customers
to flourish in this era of growth and contribute towards the countrys formula in achieving
sustainable economic growth. The Bank is also exploring the possibility of further introducing
new products which would generate non-funds based income. With the squeeze on margins
expected to continue and international trade on the rise it is perfectly apt to have such
offerings boosting the bottom line.
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Risk Management 65
The achievements in 2013 speak volumes of our efforts to mould the Bank for the future and
make this entity a profitable one in the years ahead. In that background, we are certain 2014
will be a challenging year once again and I am confident with the Grace of God Almighty and
the collective strength of Team Amna we can meet the expectations of all our stakeholders
alike.
ACKNOWLEDGEMENTS
My Colleagues on the Board have contributed in every possible way to build the Bank. I would
like to thank all the members for their assistance, commitment and dedication in guiding the
Bank with constructive decision-making amidst challenging times.
I take this opportunity to welcome Dr. Muhammad Imran Ashraf Usmani who was appointed
as Chairman to the Sharia Supervisory Council with effect from 4 July 2013. Dr. Usmani is a
highly respected Islamic Scholar and I trust that the Bank will benefit from his knowledge and
expertise in the field of Islamic finance. My sincere gratitude goes out to the Members of the
Sharia Supervisory Council for having ensured that Amna remains a fully Sharia compliant
bank under the Zero Tolerance approach to Sharia risk management.
The Senior Management and staff have lived up to the challenge as a team and their
collective efforts reaped fruitful results which augurs well for the Bank as the journey towards
profitability gets closer.
I am grateful to the officials of the Central Bank of Sri Lanka for their continued guidance and
supervision.
Our customers will always remain in our hearts and minds as we endeavour to create more
value for the trust and confidence placed in us. I thank all our customers for being loyal and
supportive as the Bank braved another stormy year. We take great pleasure in serving our
customers whilst striving to improve the quality of service and raise their satisfaction levels.
11
Finally, you being the shareholders of the Bank have been inspirational and encouraging. At the
recently concluded IPO, you saw potential in this institution and invested with us anticipating
growth in the medium to long term. All these motivate us to work harder and hunt for success
in order to create value to our valued shareholders in the near future. I must convey my sincere
appreciation to all of you for having utmost faith in us.
Osman Kassim
Chairman
Colombo
24 March 2014
12
Managing Director/
CEOs Review
Risk Management 65
13
HAVING RE-GATHERED MOMENTUM

AND FOLLOWING THE STRATEGIC
INITIATIVES WE MADE DURING 2013,
OUR PRIMARY OBJECTIVE FOR 2014 IS
TO CONSOLIDATE OUR RESOURCES
AND REACH OPERATIONAL BREAKEVEN IN THE COURSE OF THE YEAR.
OPERATING ENVIRONMENT
In 2013, we continued to build our Bank amidst a challenging operating environment.
The Bank operated in an economic environment where global economic growth averaged 3%,
with higher growth rates in the emerging Asian economies compensating for the low growth
rates in the advanced Western economies. Sri Lanka's economy grew at 7.3% which was higher
than the 6.4% growth recorded in the previous year. Despite the country's potential for higher
growth, its dependency on the Western economies for export revenue and the lagged effects of
the tight monetary policy measures taken had considerable impact on the growth rate in the year.
The banking sector saw moderation in profitability, rising Non-Performing Loans (NPLs) and
a continuing trend in asset quality deterioration reflecting the challenges in the operating
environment and the consequential effect of rapid credit growth. Credit expansion decelerated
dramatically during the year in response to the tightening measures implemented by the
Regulator in 2012. There was pressure on borrower credit profiles and cashflows; and there
was pressure on banking spreads in the wake of a declining interest rate regime where asset
portfolios in the industry were getting re-priced faster than the liability portfolios.
Despite such clouds hovering in the environment, we revved our engines and worked hard on
the objectives we had set for the Bank in 2012. As we had envisaged in our 2012 Annual Report,
2013 was the real launch pad year for the Bank. With the Central Bank of Sri Lanka lifting the
ceiling on credit, we re-gathered our momentum, shifted into top gear and rapidly engaged
our full resources in expanding our reach and customer conveniences; increasing our product
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Risk Management 65
offerings; growing our asset book; raising new capital through a Rights Issue and an Initial
Public Offering (IPO) of shares; and listing the Bank's shares on the Colombo Stock Exchange.
STRATEGIC STEPS
Expanding our footprint was of paramount strategic importance to the Bank in order to gain
first mover advantage in the market. We opened 10 new branches in the first 10 months of
the year across selected geographical locations. It is noteworthy to mention that we opened a
new branch every 3 to 4 weeks on the average. This was a commendable feat for a small and
new bank such as ours. The Bank enhanced its customer conveniences and experiences at the
transaction level by adding extended banking services beyond normal hours, cheque deposit
kiosks and utility bills payment facilities to its distribution network.
We introduced 20 new products to the market. As a bank with a clear focus on the Consumer
and SME business segments, our new products and services were specifically directed at these
segments and were supported by appropriate re-engineering of our business processes to
enable faster turn-around times. These initiatives resulted in the Bank penetrating the identified
strategic business segments, acquiring new customers as well as scaling up targeted existing
customers from 'transaction banking' relationships to 'primary banking' relationships.
In mobilising deposits to fund the asset growth we forayed into our new branch territories
with aggressive promotions on Children's saving accounts, Senior Citizens' savings accounts,
Ladies savings accounts and Salary Saver accounts all of which had a strong CASA deposits
focus and contributed to the low cost deposit mobilisation effort of the Bank. Our CASA
balances grew by LKR 1.8 billion (or 23%) in the year. This was of particular relevance in
protecting the Bank's profit spread in a falling interest rate scenario.
PERFORMANCE HIGHLIGHTS
In response to this strategy the Bank's customer assets grew remarkably by over 100% and
reached LKR 15 billion and customer deposits increased by 35% to reach approximately
LKR 18 billion by the year end. The comparative average industry ratios were 8.8% and 15%
respectively. Despite the impressive asset growth on the Bank's balance sheet, the gross NonPerforming Advances (NPA) ratio was contained at 1.8% against an industry level of 5.6%
which speaks well of our risk management policies and procedures. The year ended with the
Advances/Deposits (AD) ratio reaching a desirable 83% which was a marked improvement on
the constrained 54% level achieved in 2012 under the credit ceiling.
15
We closed the year with customer assets and deposits on the Bank's balance sheet registering
growth rates well above the industry averages, and the net financing income exceeding the
previous year's level by LKR 149 million (or 26%). Nevertheless, the Bank posted a bottom line
loss of LKR 317 million in the year primarily due to the strategic costs associated with the 10
new branches and losses arising from non-core banking activities. It would be pertinent to note
here that the profit reported in 2012 included one-off gains from non-core banking activities
and hence is not a good comparison with this year's results. Core banking results were severely
constrained in 2012 by the ceiling on credit growth. A robust and significant take-off on asset
growth began only in 2013. Accordingly the revenue generation benefits arising from such
growth and the strategic network expansion could be expected to flow only in the coming years.
The Statutory Liquid Asset Ratio continues to be comfortably above the required level of 20%.
With the infusion of new capital funds from the Rights Issue and the IPO, the Core Capital
Ratio and the Total Capital Adequacy Ratio are at a healthy 21% each in relation to the required
statutory levels of 5% and 10% respectively.
The capital raising effort through the IPO was indeed a tremendous challenge for the Bank.
We had to respond to the increased minimum capital requirement set by the Regulator by the
year end of 2013 and also raise new capital to fund the Bank's expansion strategy. In doing so,
we were faced with the challenge of raising LKR 1.5 billion in equity investment funds amidst
dwindling stock market confidence and a tide of attractive interest-based debenture issuances
amounting to about LKR 70 billion floated by a number of conventional banks and finance
companies as well as corporates all of which swiftly mopped up the liquidity in the market.
The strategies we adopted to raise the targeted capital under these challenging circumstances
worked out well for the Bank and resulted in an oversubscription of the IPO and a successful
closure of the issue.
SOCIAL RESPONSIBILITY
The Bank continued to play its role in CSR activities specifically in areas such as healthcare,
education and the environment, the details of which are stated elsewhere in this Annual
Report. These were over and above the core level of social responsibility that is inherently
embedded in the Bank's DNA based on the ethical principles of profit and loss sharing and
which is clearly manifested in the way we practice banking and transact business in the market.
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Risk Management 65
2014 AND BEYOND

In our journey since the inception, the Bank has faced tough challenges every year. 2014
is expected to have no less in the number and intensity of challenges. Having re-gathered
momentum and following the strategic initiatives we made during 2013, our primary objective
for 2014 is to consolidate our resources and reach operational break-even in the course of the
year. The Bank will vigorously pursue this goal as it would be a significant milestone in the
journey to create wealth for our shareholders.
In this regard, the Bank will focus on generating more revenue out of the 24 branches whilst
continuing with its tenacious approach to cost management in 2014 and beyond. With
technology in a state of constant change, there would always be better ways of doing things.
The Bank will continuously seek out efficient processing alternatives and reduce operational
expenses. In 2013, a dedicated strategic planning unit was set up. This unit continuously
monitors the progress on the implementation of the Bank's strategic plan, reviews various
business processes and makes appropriate recommendations for the improvement of process
efficiencies across the Bank's business operations. It is currently evaluating alternative
distribution channels to the traditional 'brick and mortar' model.
With a view to further adding value and enhancing customer convenience, the Bank is now
poised to offer VISA enabled debit cards to our customers during 2014. Products that meet
both the needs of our customers and the approval of the Bank's Sharia Supervisory Council
(SSC) continue to be a challenge in our journey. After long deliberations the SSC has approved
essential products such as pawning, bill discounting and overdrafts. When regulatory and
systems support are in place these products would be rolled out in 2014 and are expected to
significantly catalyse the Bank's asset growth.
The lack of Sharia-compliant, gilt-edged Treasury instruments equivalent to the conventional
Treasury Bills and Treasury Bonds continues to pose a considerable challenge to the
management of surplus liquidity and limits the profitability of the Bank's Treasury operations.
We highlighted this matter in our 2012 Annual Report and reiterate the dire need for
alternative Treasury instruments in this report as well.
17
The Bank has fulfilled the regulatory requirement to list its shares on the Colombo Stock
Exchange and has since engaged a reputed international rating agency to provide an external
rating. Preparations are underway to complete this exercise in 2014.
FINANCIAL SECTOR CONSOLIDATION

Consolidation in the Financial Sector is a new challenge the Bank has to face. It is now
Regulator-driven. The Central Bank of Sri Lanka in its Road Map for consolidation is pursuing a
two pronged approach directed at ensuring financial stability and enhancing overall efficiency
in the industry. The consolidation process is eventually expected to result in a few but stronger
players in the financial sector. In this context, banks such as ours are expected to substantially
increase their capital bases and total assets to a minimum of LKR 10 billion and LKR 100
billion respectively within the timelines specified by the Regulator. The Bank will have to
evaluate the ways and means by which it can meet these twin requirements over the next few
years and appropriately fit into the consolidation plan for the industry. The Board is currently
deliberating on the strategies to meet the additional capital required by the dawn of 2016 and
the asset growth over the next 4 to 5 years. Both these requirements constitute a tremendous
sustainability challenge to small banks such as ours. Our response to the consolidation
challenge must be well thought out and deliberated in terms of scalability and return on
investment. In this regard we must strive to rise above emotion-driven considerations and
develop a response based on objective analysis.
PEOPLE
People are fundamental to the existence of our business. They drive our business engine. Our
unique model of banking requires a skills set that is not readily available in the market. Our
human talent is essentially home-grown and our people are our most valuable assets. Our
people in the frontlines of the Bank not only market our products and services but are also the
brand ambassadors for the Banks unique value proposition to the market.
We remain committed to continuously growing this talent pool. With the addition of new
branches to the Bank's distribution network, the training and development of our human
resources are critical success factors. In addition to the various internal training programmes,
the Bank also provides inputs towards the design, content and delivery of certificate level and
diploma level academic programmes of the Institute of Bankers of Sri Lanka as part of our
contribution to the growth and development of the Islamic banking industry in our country.
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APPRECIATION
When we started the Bank in 2011, we had a choice of either building an institution or simply
running a business. A business may be run in many ways but there is only one way to build
an institution - and that is building it on a strong foundation of good corporate values and
governance, sound policies and procedures, efficient business processes, and competent and
reliable people all of which working in harmony to build an admirable and lasting institution
and a sustainable banking business. We chose to build a banking institution based on the
principles of good corporate governance and on the principles of fairness, equity and justice
which are the cornerstones of the Sharia banking model. Every year since our inception we
have seen several challenges to our institution building process and the Bank has faced every
challenge with admirable courage and resolve.
I wish to thank the Chairman and my colleagues on the Board for their confidence in me
and their support during the challenging times we have been through; the Governor and all
officials of the Central Bank of Sri Lanka for their appropriate advices, guidance and support;
the distinguished scholars on the Sharia Supervisory Council for their advice and guidance
on matters of Sharia; my Corporate Management Team and all our employees for their
commitment, perseverance and unstinted support through the many challenges we have faced
and overcome together as a team; our shareholders for their trust and confidence and all our
customers for their continued reliance on the Bank for the right banking solutions.
Faizal Salieh
Managing Director/CEO
Colombo
24 March 2014
19
Range
There has been quite a buzz around the Banks product portfolio during
2013. We have added 20 new products, reaching more customers and
thereby increasing penetration and market share. The cells of our portfolio
are filling up nicely, with many more additions and improvements lined up.
20
Board of Directors
Risk Management 65
Osman Kassim
Tyeab Akbarally
Faizal Salieh
Ruzly Hussain
Angelo M. Patrick
Haseeb Ullah Siddiqui
Badrul Haque Khan
Mrs. Preeni M. Dunuwille Koralege
Chairman
Non-Executive, Independent Director
Non-Executive, Non-Independent Director
Deputy Chairman and Non-Executive,

Non-Independent Director
Secretary to the Board
21
Dato A. Tajudin B.H. Abdul Rahman
Dr. A.A.M. Haroon
Mohamed Jazri Magdon Ismail
Jeroen Thijs
Wahid Ali Mohd Khalil
Harsha Amarasekera
Senior Director and Non-Executive,

Independent Director
Presidents Counsel
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Risk Management 65
Osman Kassim
Faizal Salieh
Chairman
Osman Kassim counts well over 35 years of business management

experience in diverse areas of business and is the founder
Chairman. He is also the founder Chairman of Expolanka Group of
Companies which is a large and well diversified Corporate Group
of 40 companies engaged in the export of tea and non traditional
commodities, import trading, food processing, freight forwarding,
manufacturing, waste management systems, entrept trading, travel
and tours, airline agencies, cargo services and aviation. The Groups
annual turnover exceeds US$ 400 million and it is well respected for
its strong business ethics.
Faizal Salieh has well over three decades of extensive experience in

commercial and development banking both in Sri Lanka and overseas;
has held top management positions in global and local banks such as
Grindlays Bank, ANZ Bank and National Development Bank; Board
Director of several companies in the business of banking, finance, fund
management, stockbroking, manufacturing, trading and education; has
served on State University Boards, and several Government and NonGovernmental Committees in the fields of finance, economic affairs,
housing, construction and tertiary education.
He is also the Chairman of the Asia Pacific Institute of Information

Technology (APIIT) in Sri Lanka, a joint venture with APIIT, Malaysia.
An Honorary Doctorate from the Staffordshire University was
bestowed upon Mr. Osman Kassim in recognition of his achievements
as both a global entrepreneur and visionary educationalist.
He is a member of several Chambers of Commerce and has been a
member of Sri Lankas Investment and Trade Promotion Delegations
to the Middle East from time to time.
Tyeab Akbarally
Deputy Chairman and Non-Executive, Non-Independent Director
Tyeab Akbarally is a Senior Director of Akbar Brothers Limited,

Falcon Trading (Pvt) Limited, Quick Tea (Pvt) Limited and Falcon
Commodities (Pvt) Limited. Akbar Brothers are the leading tea
exporters of the country and have won many awards for their export
performances. He has also served as a member of the Executive
Committee of the National Chamber of Commerce and as a
Committee member of the Ceylon Chamber of Commerce of which
he has been a member for a number of years.
He has also been the Chairman of the Spice and Allied Products
Traders Association and the Chairman of the Colombo Tea Traders
Association. He has considerable experience in the import and export
trade and a large part of his business is with the Middle East.
He led the formation of NDB Housing Bank, the countrys first private
sector housing bank and was its CEO and Board Director. In 2004,
he took a tremendously challenging job as Managing Director of
Amna Investments Limited, an unregulated non-bank financial
institution, transformed its entire business and led the formation and
establishment of Amna Bank in 2011. He also played a key role in
facilitating appropriate changes to the countrys regulatory, fiscal and
legislative framework to support Islamic banking.
He is an active member of the Main Committee of the Ceylon
Chamber of Commerce, the premier Trade Chamber in Sri Lanka
and serves on the Chambers Finance, Banking and Capital Markets
Steering Committee, National Integration Steering Committee
and Ethics Steering Committee. In addition, he currently serves on
the Boards of LankaClear (Private) Limited which is the Countrys
automated cheque clearing house, The Sri Lanka Institute of
Directors, Institute of Bankers of Sri Lanka and Distance Learning
Centre Limited. He is also the Chairman of the Technical Committee
on Islamic Banking of the Sri Lanka Banks Association.
Faizal holds a Bachelors Degree in Economics with First Class
Honours, a Masters Degree in Business Administration and is
a Fellow of the Institute of Certified Professional Managers in
Sri Lanka.
23
Mohamed Jazri Magdon Ismail
Senior Director and Non-Executive, Independent Director
Dato A. Tajudin B.H. Abdul Rahman is the former Managing Director

of Bank Islam, Malaysia. He holds a Masters Degree in Business
Administration and a Bachelors Honours Degree in Economics. He
counts over 30 years of banking experience of which 21 years have
been in Islamic banking.
Mohamed Jazri Magdon Ismail is the Financial Consultant of Ramada

Hotel, Colombo. He has served on the Directorate of Alhambra Hotels
Limited, the owners and operators of Holiday Inn Colombo. He is a
Fellow of The Institute of Chartered Accountants of Sri Lanka and
is a member of the Institute of Certified Management Accountants,
Australia. He is a Nominee of the ICASL on the Governing Council of
the Association of Accounting Technicians of Sri Lanka, of which he
is also a Fellow Member.
His present positions include Chairman of the Board of Trustees of

Malaysian Islamic Economic Development Foundation; Founder
President of the Association of Islamic Banking Institutions in
Malaysia; Director of the Kedah Islamic Institute; Director of the
Islamic University College, Malaysia; and Adjunct Professor of
Banking and Finance, University Utara, Malaysia. He has also held
Board positions with the Accounting and Auditing Organisation for
Islamic Financial Institutions and the General Council for Islamic
Banks and Financial Institutions, Bahrain. He has won several
awards and honours in Malaysia in recognition of his contribution
to banking and society and was conferred the title of Dato in 1994 by
His Majesty the Sultan of Kedah.
Dr. A.A.M. Haroon

Dr. A.A.M. Haroon is a graduate of King Edward Medical College,

Lahore, Pakistan. Dr. Haroon is also the Chairman of Lucky Group
of Companies which is engaged in the manufacturing and export
of ready-made garments and textiles, real estate development and
health care. He is the President of the Sri Lanka-Pakistan Friendship
Association and the Memon Association of Sri Lanka. Dr. Haroon
practices as a family physician in Colombo. He is also a Panel Doctor
for foreign airlines, foreign missions and Hotel Taj Samudra, and is a
Council Member of the Medical Practitioners Association.
Ruzly Hussain
Ruzly Hussain has over 46 years of experience in the field of Industry

and Trading. He is the Company Director/Chairman of M.C. Abdul
Rahims & Brothers Limited and holds Directorates at Worldstar
Lanka (Pvt) Limited, Cleansol (Pvt) Limited and Free Lanka Media
(Pvt) Limited.
Angelo M. Patrick
Angelo M. Patrick holds an MBA from the University of Colombo

and is a Fellow Member of the Chartered Institute of Management
Accountants (UK) and a Member of the Institute of Marketing (UK).
He has held Directorates and Senior Management positions over
the past 40 years in Sri Lanka, Indonesia and Canada. Some of the
positions he held are Group Director, Capital Maharaja Organisation
Limited, Managing Director, NDBS Stock Brokers Limited, Director
(per pro) Carson Cumberbatch Limited, Senior Management
Consultant, Bank of Ceylon, Finance Manager, P.T. Condong Garut,
Jakarta, Indonesia.
24
Risk Management 65
He was the President of the Chartered Institute of Management

Accountants, Sri Lanka Division in 1993-94 and represented
Sri Lanka on the Global Council of CIMA in the United Kingdom for
3 years. He is a Lecturer and Examiner for the Postgraduate Diploma
in Manufacturing Management in the University of Colombo. He was
a Member of the Sri Lanka Accounting Standards Committee and
the Corporate Governance Committee of The Institute of Chartered
Accountants of Sri Lanka.
Haseeb Ullah Siddiqui

Haseeb Ullah Siddiqui is the Division Manager, Advisory and Support,

Islamic Financial Services Department, Islamic Development
Bank, Saudi Arabia (IDB). He holds a Masters Degree in Business
Administration specialising in Finance from the University of
Missouri (USA) and a Bachelors Degree in Business Administration
from Kansas City University (USA).
He brings 17 years of multi-disciplinary experience in corporate
banking and credit, project finance and business advisory with
leading global companies like American Express Bank, Riyadh
Bank and Ernst & Young. Prior to joining IDB in 2010, Haseeb was
heading the Financial Economic Solutions Group at Ernst & Young,
Bahrain, focusing on strategic projects in economic development,
infrastructure and public-private partnership. Until 2009, he led
the Transactions Team in Ernst & Youngs award-winning Islamic
Financial Services Group in Islamic retail/wholesale banks, funds,
and private equity functions. He was the Acting CEO of the Waqf
Fund at Central Bank of Bahrain from 2007-2010, on secondments
from Ernst & Young, charged with developing the Islamic financial
sector in Bahrain.
Jeroen Thijs
Jeroen, holder of a Masters Degree in Business Economics from

the Erasmus University, Rotterdam and bringing with him close
to 22 years of international banking experience, currently holds
the Senior General Manager and Chief Risk Officer positions
at Bank Islam, Malaysia, overseeing and managing all credit,
market, liquidity and operational risks. Since joining in January
2009, he has built up a robust Enterprise Wide Risk Management
Framework resulting in a much improved risk culture and enabling
the Bank to move from reactive risk control to proactive portfolio
management. Having gained extensive hands-on experience in the
Malaysian Islamic banking model, he frequently gives lectures to
various Central Banks in the Asian and Eastern European regions
on Islamic banking Operations and Risk Management in Islamic
banking. Before joining Bank Islam in January 2009, Jeroen had
spent most of his career with Tier I International banks in London,
Amsterdam, Singapore and Tokyo.
He has worked in various senior executive roles with the main
focus on Risk Management, but also on the front office/business
side which has added to his deep understanding of traditional
and complex banking products. Jeroen is a member of the Risk
Management working group, part of the Risk Management Advisory
Council of the Asian Institute of Finance and sits on the Professional
Risk Managers International Association (PRMIA) Malaysian
Chapter Steering Committee.
25
Wahid Ali Mohd Khalil
Badrul Haque Khan
Wahid Ali Mohd Khalil is currently the Chief Operating Officer,

Business Support, of Bank Islam, Malaysia. He holds a Master
of Science in Economic Crime Management and Bachelor of
Economics in Business Management. He is a Member of the Institute
of Bankers Malaysia (MIBM) and an Associate Member of the
Institute of Internal Auditors Malaysia (AIIA). He is also a member
of the Financial Planning Association of Malaysia (FPAM) and the
Federation of Malaysian Unit Trust Managers (FMUTM). He joined
Bank Islam as the Chief Internal Auditor in 2007. Prior to joining
Bank Islam, he spent 5 years at Affin Bank Berhad handling various
portfolios, including Chief Internal Auditor, Director, Banking
Operations and Services, as well as Group Head of Operation Risk
Management. Before joining Affin Bank, he spent more than 20
years in HSBC Bank holding various positions which included stints
at Branches, Head Office departments such as Credit Cards, Credit
Control, Credit Administration and Trade Finance, as well as Deputy
Head of Internal Audit.
Badrul Haque Khan is currently working as the Deputy Managing

Director and Head of Credit in AB Bank Limited, Bangladesh.
Previously he held the posts of Chief Financial Officer and Company
Secretary of the Bank. He is a Nominated Director in the Board of
Central Depository of Bangladesh Limited (CDBL) as a Nominee of
AB Bank Limited. He is also nominated to Head the Arab Bangladesh
Bank Foundation (ABBF), the Philanthropic wing of AB Bank. Badrul
Haque Khan is a Chartered Accountant and a Fellow Member of the
Institute of Chartered Accounts of Bangladesh (ICAB). He holds a
Masters and a Bachelors Degree in Accounting from the University
of Dhaka.
Harsha Amarasekera
Presidents Counsel
Harsha Amarasekera, Presidents Counsel, has a wide practice in the

Original Courts as well as in the Appellate Courts, particularly in the
areas of Commercial Law, Business Law, Securities Law, Banking Law
and Intellectual Property Law. He serves as an Independent Director
in several listed companies in the Colombo Stock Exchange including
Vallibel One PLC, Expolanka Holdings PLC, CIC Holdings PLC,
Chevron Lubricants Lanka PLC, Keells Food Products PLC, Amaya
Leisure PLC and Vallibel Power Erathna PLC.

Secretary to the Board
Mrs. Preeni Manjula Dunuwille Koralege is an Attorney-at-Law and

also holds a LLB Degree from the University of Colombo with 22
years of experience in active Legal Practice and Corporate Law and
Banking. She is also a qualified Company Secretary.
She commenced her career as a Professional Assistant at Messrs F.J. &
de Saram, one of the oldest Law Firms in Sri Lanka and worked there
for 6 years. Thereafter, she joined the ABN Amro Bank and served
for 8 years handling Legal, Recoveries, Credit Risk Management and
Control. Subsequently she joined Confifi Group of Companies as the
General Manager, Legal and Corporate and served for 3 years prior
to joining Peoples Bank on 1 September 2005 as the Legal Advisor to
the Board and Chief Compliance Officer. She was a member of the
Peoples Bank Corporate Management Team. In May 2009, she joined
Amna Investments Limited as the Head of Legal and the first lady
member of its Corporate Management Team and is currently holding
the position of Chief Compliance Officer and Company Secretary of
the Bank.
26
Risk Management 65
2011
We are the first and only Licensed
Commercial Bank in Sri Lanka to conduct
all operations under the principles of
Islamic banking and be fully disengaged
from interest based transactions.
Obtained Commercial Banking License

Building the Banks foundation by setting up
systems, processes and human resources
Opening the doors - The Launch of Amna
Bank - A unique addition to the banking
industry in Sri Lanka
Achieved a Deposit portfolio of
LKR 11.4 billion
27
2012
2013
Consolidating resources, process efficiency

and corporate governance
Expanded our footprint to reach more Sri Lankans

with our unique banking model - Addition of 10 new
branches
Launch of ATM, Saturday Banking and

Prestige Banking Platform
Growth of LKR 1.9 billion in Customer
Deposits and LKR 2.2 billion in Customer
Advances
Globally and locally honoured as the Best
Islamic Bank and Financial Services Provider
in Sri Lanka
Introduction of New Products and Services for

customer convenience
Successful Initial Public Offering raising LKR 1.6
billion worth of shares from over 3,500 shareholders
Growth of over LKR 4.6 billion in Customer Deposits
and LKR 7.8 billion in Customer Advances
More global and local accolades added to our
Trophy cabinet to testify Amna Banks leadership in
Islamic Banking and Financial Services in Sri Lanka
28
Independent Sharia
Supervisory Council
Risk Management 65
Dr. Muhammad Imran Ashraf Usmani

Chairman (Appointed w.e.f. 4 July 2013)
Dr. Muhammad Imran Usmani, son of Justice (Retd) Mufti Muhammad Taqi Usmani, holds
an LLB, M. Phil., and Ph.D. in Islamic Finance and graduated as a scholar with specialisation
(Takhassus) in Islamic Fiqh and Fatwa from Jamia Darul-Uloom, Karachi.
Presently, he is the Sharia Advisor and Group Head of Product Development Sharia Compliance
(PDSC) at Meezan Bank and is in charge of the R&D and Product Development of Islamic
banking products, Training, Advisory and Audit & Compliance of the relevant activities. He
has served as an advisor/member of Sharia Boards of several renowned institutions since
1997 which includes: the State Bank of Pakistan, HSBC - Amnah Finance, UBS - Switzerland,
Guidance Financial Group USA, Lloyds TSB Bank - UK, Japan Bank for International
Cooperation (JBIC), Credit Suisse Switzerland, RBS Global, Old Mutual Albarakah Equity and
Balanced Funds South Africa, AIG Takaful, ACR Retakaful Malaysia, Capitas Group USA, Bank
of London and Middle East Kuwait, BMI Bank Bahrain, Al Khaliji Bank Qatar, Sarasin Bank
Switzerland, DCD Group Dubai and other Mutual and Property Funds, Takaful Companies and
International Sukuk etc. He is also an Executive Committee Member of AAOIFI (Dubai) and
Sharia Supervisory Board member of International Islamic Financial Market (IIFM), Bahrain,
International Centre for Education in Islamic Finance (INCEIF), Malaysia, Institute of Business
Administration (IBA), Karachi and Centre for Islamic Economics (CIE), Karachi.
He is the author of numerous publications related to Islamic finance and other Sharia-related
subjects. He has presented papers in numerous national and international seminars and has
delivered lectures at academic institutions including Harvard, LSE, LUMS and IBA.
Ash-Sheikh Mohd Nazri Bin Chik

Vice Chairman
Mohd Nazri Bin Chik is an Assistant General Manager and the Head of Sharia Division of Bank
Islam Malaysia Berhad. He holds a Bachelor of Sharia (Islamic Jurisprudence) and Masters
of Sharia from the University of Malaya. He initially joined Bank Islam Malaysia in June 2004
and served the Bank for five years in various designations including Senior Manager - Head
of Sharia Division. He left Bank Islam Malaysia in 2009 to join Noor Investment Group,
Dubai, UAE as its Sharia Audit Manager for a brief period. At Noor Investment Group he was
responsible for strengthening the Sharia governance framework of the Noor Investment Group,
Noor Islamic Bank (NIB) and Noor Takaful (NT). During this time, he has been appointed as a
member of the Sharia Supervisory Council until he re-joined Bank Islam in January 2011.
29
A subject expert in the field of Sharia, Mohd Nazri has also lectured at the Ibnu Sina Institute
for Islamic and Science and Technology Studies and Academy of Islamic Studies, University of
Malaya. He is also an Accredited Trainer for Islamic Banking and Finance Institute of Malaysia.
He is currently pursuing his Doctorate in Business Administration.
Ash-Sheik M.M.A. Mubarak

Member
He is the former President and present General Secretary of the All Ceylon Jamiyyathul Ulama.
He is a highly learned and respected scholar who holds a Bachelor of Islamic Law (Sharia) Degree
from the Islamic University of Madina Al Munawwara, Saudi Arabia. He retired as the Principal
of Sri Lankas leading Arabic College - Al-Ghafooria Arabic College of Sri Lanka and is the present
Chairman of Ash-Shaikh Binbaaz Muslim Ladies Arabic College of Malwana, Sri Lanka.
Ash-Sheik Mufti M.I.M. Rizwe

Member
Ash-Sheik Mufti M.I.M. Rizwe is the President of the All Ceylon Jamiyyathul Ulama and is a highly
respected scholar and speaker from Sri Lanka. He is a graduate of Jamiyyathul Uloomil Islamiya,
Karachi where he specialised in Islamic Jurisprudence. He is a Senior Lecturer of the reputed
Kulliyathul Rashard Arabic College, Colombo and visiting lecturer at several leading Arabic colleges.
He has been lecturing on Hadees and other subjects for more than a decade. He is a Member of the
Board and Advisor to Jamiyyah Islamiyya, Colombo, the first Arabic College established for students
in the English Language. He is also a member of the Supreme Council of Congress of Religions and
the present President of the SAARC Halaal Council. He is also a member of Sharia Councils of several
Islamic Banks and Financial Institutes in Sri Lanka and Maldives.
Ash-Sheik Mufti Muhammad Hassan Kaleem

Member
Muhammad Hassan Kaleem is a permanent faculty member of Jamiah Darul-Uloom, Karachi (a

leading Institute of Islamic Sciences in Pakistan) and the Centre of Islamic Economics, Karachi.
He is also a trainer of Sharia standards at the Accounting and Auditing Organisation for Islamic
Financial Institutions (AAOIFI), Bahrain and a visiting faculty member of the National Institute
of Banking and Finance (State Bank of Pakistan). Muhammad Hassan Kaleem is a Sharia Board
member of Pak Kuwait Takaful Company Limited, Pak Qatar Family Takaful, Deloitte (Global
Islamic Finance Team), Siraj UBL Funds, Hanover Re Takaful Bahrain and Takaful Emirate and
has served many years as a Sharia Advisor to Al Baraka Islamic Bank (Pakistan Operations) and
various Sukuk issues. He is also a member of the committee for revising the Takaful rules 2005,
formed by Security and Exchange Commission of Pakistan. He holds an Alimiyyah (Masters in
Islamic Sciences) and Takhassus (Specialisation in Fatwa) Degree from Darul-Uloom, Karachi.
30
Corporate Management Team
Risk Management 65
Faizal Salieh
Mohamed Azmeer
M.M.S. Quvylidh
M. Pharis Jazeel
Amrit C. CanagaRetna
M. Ali Wahid
Chandralal Wickramapathirana
Irshad Halaldeen
Vice President - Treasury and Financial Institutions
Chief Financial Officer
Chief Operating Officer
Vice President - Business Banking
Chief Information Officer
Vice President - Operations and Business Support
Chief Compliance Officer and Company Secretary
Vice President - Strategic Planning and Business

Process Re-engineering
31
M. Fairoze Burah
S.H.M. Giado
Siddeeque Akbar
Ajmal Naleer
Roomy Rahim
Irshad Iqbal
Vice President - Administration
Vice President - Credit
Nista Badurdeen
Head of Central Operations and

Trade Services
Absent:
Mahesha Thrimanne, Head of Legal
Chief Internal Auditor
Vice President - Consumer Banking and Strategic Marketing
Vice President - Human Resources
Moulavi Siraj Najubudeen

Head of Sharia Supervision
Risk Officer
Fazly Marikar
Head of New Product Initiatives/

Gold Unit
Chaminda De Silva
Head of Leasing and Home Finance
32
Profiles of Strategic
Shareholders
Risk Management 65
BANK ISLAM MALAYSIA BERHAD

Since its inception in July 1983, Bank Islam has not only become the symbol of Islamic banking
in Malaysia, it has also played an integral role in setting the stage for a robust growth of the
countrys Islamic financial services industry. True to its pioneering and innovative heritage,
Bank Islam is committed to its role as a leading vehicle in transforming Malaysia into a global
Islamic financial hub. To this end, Bank Islam continuously develops and introduces trendsetting financial solutions, some of which are the first-of-its-kind in the world or at least in the
region in widening the breadth of its innovative end-to-end Shariah-based financial products
and services, comparable to that offered by its conventional counterparts. Today, Bank Islam
parades a wide-ranging list of more than 50 innovative and sophisticated Islamic financial
products and services as well as a fast growing network of 133 branches and more than 1,200
self-service terminals nationwide. In recognition of its prominence in the industry, Bank Islam
was awarded the Readers Digest Platinum Award for being the Most Trusted Brand for Islamic
Financial Services for five consecutive years from 2009 to 2013.
AB BANK LIMITED
AB Bank is known as one of Bangladeshs leading private banks since its commencement 32
years ago. It continues to remain updated with the latest products and services, considering
consumer and client perspectives. AB Bank has thus been able to keep their consumers and
clients trust while upholding their reliability, across time. AB Bank has established its presence
in 82 different Business Centres of the country, one foreign Branch in Mumbai, India and also
established a wholly-owned subsidiary finance company in Hong Kong in the name of AB
International Finance Limited. To facilitate cross-border trade and payment-related services,
the Bank has correspondent relationship with over 220 international banks of repute across 58
countries of the world.
AKBAR BROTHERS (PVT) LIMITED

Export of Internationally renowned Sri Lankan Teas, being their core business, Akbar Brothers
has successfully diversified into a range of sectors through strategic reinvention and expansion,
and today, the Group has a firm presence in the sectors of Tea Export, Power Generation,
Healthcare, Packaging, Property Development and Environmental Services. Akbar Brothers
rank proudly as the largest exporter of Ceylon Tea in the country, a position held for the past 20
consecutive years, and has been the recipient of many top national and international awards
over the years including the prestigious Presidential Award for Sri Lanka Exporter of the Year,
for outstanding exports to over 90 countries worldwide.
33
ISLAMIC DEVELOPMENT BANK

The Islamic Development Bank is an international financial institution established in
pursuance of the Declaration of Intent issued by the Conference of Finance Ministers of Muslim
Countries held in Jeddah in December 1973. The functions of the bank are to participate
in equity capital and grant loans for productive projects and enterprises besides providing
financial assistance to member countries in other forms for economic and social development.
The bank is authorised to accept deposits and to mobilise financial resources through Sharia
compatible modes. The present membership of the bank consists of 56 countries. The vision
of the bank is 'To be the leader in fostering socio-economic development in member countries
and Muslim communities in non-member countries in conformity with Sharia. The IDB Group
is committed to alleviating poverty; promoting human development; science and technology;
Islamic economics; banking and finance and enhancing cooperation amongst member
countries, in collaboration with its development partners.
EXPOLANKA HOLDINGS PLC
Expolankas origins date back to the 1970s, as an exporter of fresh produce. Now more than
30 years later, Expolanka Holdings is one of Sri Lankas finest award-winning enterprises that
has achieved phenomenal successes. The company is listed in the Main Board of the Colombo
Stock Exchange as a diversified conglomerate. With diversified interests in Freight & Logistics,
Travel & Leisure, International Trading & Manufacturing and Strategic Investments sectors,
the Group, which has a global presence in over 12 countries and 38 cities, has 60 subsidiaries
and joint venture companies. The Group firmly believes that entrepreneurship and business
values need to go hand in hand to grow successful, sustainable businesses as Expolankas
businesses have been built on a solid foundation of values, which has remained the bedrock of
its operations. Expolankas dare to do spirit has enabled the company to transcend ordinary
entrepreneurship and be in the forefront of idea and innovation in todays business sector not
only in Sri Lanka, but also in the international arena.
Reach
The Banks expansion initiatives during 2013 were a hive of activity.
We added 10 new branches thus bringing within reach, a unique portfolio
of product and service offerings to a wider clientele.
35
Risk Management 65
Business and
Operations Review
3
2
Current Account
Children's Savings Account
Corporate Banking
2
Term Investment Account

Ladies Savings Account
Easy Payment Plan
3
Foreign Currency Accounts

SME Banking
Leasing
4
Personal Salary Account

Senior Citizen Savings Account
Home Finance
36
Risk Management 65
FINANCIAL PERFORMANCE
Every financial year poses new challenges and this year was no different with the banking
industry compelled to respond to changes in the operating environment. Banks and Financial
Institutions implemented various strategies and took initiatives to counter challenges such as
shrinking margins, plummeting gold prices, higher non-performing advances and low demand
for credit which minimised the impact on their performances.
Your Bank started the year with an aggressive plan to grow its financing assets and customer
deposits substantially targeting the Advances to Deposits (AD) ratio to reach industry
benchmarked levels. The business units worked with a lot of dedication to generate the
anticipated volumes and achieved significant results. Customer financing recorded a triple
digit growth of 109.6% (industry growth being 8.8% in 2013) or LKR 7.8 billion during the year
under review with all the business segments contributing immensely to the growth. This feat
was made possible in a year which saw private sector credit growth being sluggish at least
for the first half albeit showing signs of recovery towards the latter part of 2013. With the
introduction of new product and service offerings the Banks deposits portfolio recorded a
commendable growth of 35.2% or LKR 4.6 billion surpassing industry growth of 15% which sets
the pace for 2014 and beyond in terms of customer acquisitions and deposit mobilisation.
As the year drew to a close, the Bank recorded an impressive AD ratio of 83.5% up from last
years ratio of 54%. Total assets, aided by the growth in customer financing, grew by 40% or
LKR 6.7 billion to reach LKR 23.4 billion. Whilst acknowledging this significant growth in the
balance sheet, the Bank is fully aware of the challenges ahead for which a progressive strategic
plan is being put in place.
37
During the year under review, the Bank raised equity capital via a Rights Issue and a
successful IPO which infused a total of LKR 2.4 billion to last years stated capital base to close
2013 at LKR 5.8 billion. However, the loss posted for the year including the fair valuation of
available for sale equity portfolio had a negative impact in the growth of shareholders funds
which grew by LKR 2.0 billion.
Financing income grew by 35.9% recording LKR 1.7 billion during the year from LKR 1.3 billion
in 2012 whereas financing expenses amounted to LKR 1.0 billion as opposed to LKR 732
million posted in 2012. This led to a net financing income of LKR 718 million an increase of
LKR 149.5 million or 26.3% compared to previous years figure of LKR 568.5 million. Fee and
commission income, gains from forex and equity trading aggregated to LKR 341.5 million for
the year ended 2013 as opposed to LKR 685.3 million in 2012 which included a capital gain
from a single share transaction, non-recurring in nature and gains from gold bullion totalling
to LKR 405 million. With the ever expanding customer base, the Bank expects a steady increase
in fee and commission income in the years ahead. The Bank ended the year with a total
operating income of LKR 1.06 billion compared to LKR 1.3 billion posted in 2012. Impairment
on customer financing and financial assets amounted to LKR 99.3 million for 2013 up from last
years amount of LKR 16 million. Almost 70% of this years provision was made for collective
impairment losses, which is directly attributed to the phenomenal growth in customer
financing. Consequently, the net operating income totalled to LKR 960.2 million reducing from
LKR 1.2 billion in 2012.
The Bank continued its expansion efforts by strengthening its presence and opened 10 new
branches whilst simultaneously investing in people, processes, infrastructure and systems. As
a result the Bank incurred LKR 1.4 billion as total operating expenses, 40.5% more than what
was recorded in the previous year and closed the year under review with an operating loss of
LKR 424.8 million as opposed to recording an operating profit LKR 251.7 million in 2012. The
management identified areas for cost management and a prudent approach was adopted
during the year to contain certain costs whilst maintaining optimal efficiency. After providing
LKR 13.2 million as Value Added Tax on financial services (VAT on FS) the Bank posted a loss
before tax of LKR 438 million for 2013. During 2012, the Bank provided a higher provision for
VAT on FS amounting to LKR 45.9 million which resulted in a profit before tax of LKR 205.8
million. Aided by a tax reversal of LKR 121 million the loss for the year was reduced to LKR 317
million whereas in 2012 a tax expense of LKR 59.8 million was incurred which resulted in last
years profit being LKR 146 million.
38
Risk Management 65
CONSUMER BANKING
Deposit mobilisation was greatly enhanced during the year as the Bank expanded its reach
with the addition of 10 new branches. Meanwhile, the Banks focus to provide tailor-made
solutions to key segments of the market resulted in the launch of Ladies Savings, Senior
Citizens Savings and Salary Savings products, which fuelled the growth of Current Accounts
and Savings Accounts (CASA) deposits.
The Bank sustained its continued focus on key segments such as Institutions, High Net Worth
Customers, Foreign Currency Deposits and Childrens Savings. The Institutional portfolio grew
by 49%, while the Childrens Savings portfolio grew by 40%. The Foreign Currency portfolio
of the Bank also showed a strong growth of over LKR 300 million. The Banks high net worth
banking proposition, Amna Bank Prestige, also recorded a growth of 41%.
Aided by the expansion of its reach and the increase in its product range, the Banks customer
base grew by 38% during the year whilst the overall deposit portfolio grew by 35.2%. The Bank
ended the year with a healthy CASA ratio of 54.5%.
39
Despite challenging market conditions, the Banks Vehicle Financing portfolio grew by 138%
during the year. This growth was fuelled by many strategic tie-ups with vehicle dealers,
attractive rental rates and most importantly the quick turnaround time for approvals. The
Banks Housing Finance portfolio achieved a growth of 27%.
With the objective of reaching out to the needs of the common man, the Bank introduced a
personal financing product titled Easy Payment Plan, through which salaried customers were
offered financing solutions for the purpose of purchasing furniture, electronics, household and
personal appliances, air tickets, etc. This product received an overwhelming response from the
market in terms of results as well as appreciations. The Bank also extended its consumer financing
offering to accommodate motorbike financing, which was very well received by the market.
Consumer financing maintained a healthy NPA ratio of below 2% as at December 2013.
OFFERING CONVENIENCE
Offering customer convenience continued to be a key priority of the Bank in 2013.
Extended Banking Hours was introduced at selected 'high traffic' branches for the
convenience of customers. This timely introduction allowed customers of the Bank to carry out
their day to day transactions at these branches beyond normal banking hours. Amna Bank's
Main Branch in Colombo 3, as well as the Bank's branches in Dehiwala, Kandy and Kattankudy
are open for business up to 4 p.m. on weekdays, while the Pettah branch is open till 6 p.m.
Deposit Kiosk facility was made available at the Banks Main branch in Colombo 3 offering the
convenience of depositing cash and cheques 24 hours of the day.
40
Risk Management 65
Safety Deposit Lockers were introduced at selected branches of the Bank facilitating
customers to keep their valuables under the Banks trusted custody. Safety deposit lockers were
made available in small, medium and large sizes.
24-Hour Approval was introduced to all vehicle financing customers of the Bank. This quick
turnaround time was a result of the Bank aligning its internal processes to serve the customers
promptly to purchase their vehicles without any delays. This convenient offering resulted in a
positive impact regarding the Banks perception.
BUSINESS BANKING
The Business Banking Unit (BBU) recorded highly satisfactory results in 2013 and achieved
over 100% of the targets set at the beginning of the year. This performance was achieved
amidst shrinking financing margins in the industry. Amidst the subdued demand for credit,
2013 was an extremely challenging one not only for Amna Bank but the entire banking
sector. The rate sensitive nature of the client, high liquidity levels in the market and declining
market interest rates led to challenging times for the industry-wide Corporate, SME and FCBU
businesses.
During the year, BBU made a concerted effort to realign its market focus in order to build the
advances portfolio and stem deteriorating margins.
BBU provides financial solutions and related services to Corporates, SMEs and FCBUs via the
Corporate Office in Colombo and a network of branches located in the provinces.
Business Banking contributed significantly to the overall performance of the Bank, largely
due to financing strategies that were adopted which helped maintain the growth momentum
of advances during the year. These strategies also contributed to the growth of fee and
commission income during 2013.
Business Banking customers are served by a dedicated team of Relationship Managers to
provide a customised, efficient and personalised service. The Bank also maintains a very close
relationship with our existing clients, monitoring their utilisation levels, cross selling products
on a regular basis in order to ensure that the Bank remains as their primary banker.
The portfolio of Business Banking advances increased during the year by LKR 6.4 billion from
LKR 6.1 billion to LKR 12.5 billion recording a growth of 104.9%. This 3 digit assets growth was
experienced across diverse areas of economic activity, in Corporate, SME and FCBU sectors.
41
The SME portfolio of Advances increased during the year from LKR 3.1 billion to LKR 5.3 billion
reflecting a healthy growth of 71%. Similarly Corporate/FCBU portfolio of advances increased
from LKR 2.9 billion to LKR 7.2 billion with a growth of 148% during the year. This included
short term advances, long term advances and working capital financing.
The quality of the Advances portfolio of BBU continued to be at a healthy level with a nonperforming advances ratio of 1.84% as at the year end. The Bank uses two credit rating models
for Corporate and SME clients, focusing on aspects of operational risks, financial risks and
account facility conduct.
In 2013, BBU concentrated on streamlining business processes. Profitability improved despite
pressure on financing margins, mainly due to improved macroeconomic conditions that fed a
growing appetite for credit.
The Bank takes pride in partnering with SriLankan Airlines, the national carrier of Sri Lanka.
The Bank extended long term financial support to SriLankan Airlines for infrastructure
development projects such as upgrading its existing Aircraft Hangar for A320 aircrafts at
Bandaranaike International Airport and setting-up a simulator training centre, to create a
regional hub within South East Asia for pilot training. The Bank also financed several Mini
Hydro Power Projects in Sri Lanka, the latest of which includes the Lower Kotmale Oya Mini
Hydro Power project that is being developed with an installed capacity of 4MW in Mahaweli
Waterways. Amna Bank won the Gold Award for Islamic Finance Deal of the Year at the
Sri Lanka Islamic Banking and Finance Industry Awards Ceremony for financing this Project.
Looking ahead, demand for both short and long term funding including non-funds based
facilities is gathering momentum and BBU is ready to capitalise on the opportunities available
in the future.
42
Risk Management 65
TREASURY
The Treasury Department is primarily responsible for managing the Asset and Liability
positions of the Bank and day to day management of Liquidity risk, Profit Rate risk and the
Foreign Exchange risk of the Bank.
In addition, the Treasury assists the Banks Asset and Liability Management process by
providing the Assets and Liabilities Committee (ALCO) with updates on the market interest
and exchange rates movements as well as data on other macroeconomic developments. Based
on these inputs, strategies are formulated by the Banks ALCO for the management of maturity
mismatch risks in the balance sheet. In doing so, it ensures compliance with internal risk
limits established by the Board and regulatory requirements as directed by the Central Bank of
Sri Lanka.
Furthermore, it supports the Corporate, SME and Consumer banking segments with their
funding requirements and manages the foreign currency flows arising out of their business.
The Financial Institutions unit forms a part of the Treasury, which has been mandated to
enhance the Banks correspondent banking network and also serves as a central point of
contact for financial institutions around the world.
As at 31 December 2013, Treasury assets comprised 26% of the Banks total assets. Despite the
fall in market rates and premiums, Amna Banks Treasury division continued to enjoy strong
performance with revenue of LKR 513.4 million or 29% of the total revenue, led by strong
non-funds based Treasury income.
STRATEGIC PLANNING AND BUSINESS PROCESS MANAGEMENT

Close upon three years since the launch, the Bank realised the need for a dedicated
department that can track its Strategic Business Plan and review the performance on a regular
basis among other tasks. With this in mind a separate department named Strategic Planning
and Business Process Management was set up in 2013 with the aim of facilitating the strategic
planning process and review, along with business process improvement.
With respect to Business Process Management this department studies key business processes
for improved customer service delivery, shorter turnaround times and cost efficiencies. As the
Hub Spoke Operating model is an integral part of the Banks structure, it is also tasked with
43
ensuring the effective implementation of the model and derive the targeted service levels and
efficiencies working closely with IT and Operations. Further, as the Bank has embarked on a
bank-wide cost management initiative, this department plays a key role in identifying areas for
prudent and optimal cost management to ensure value enhancement.
BRANCH OPERATIONS AND BUSINESS SUPPORT

Achieving operational excellence is increasingly becoming a key area of focus in the banking
industry.
The Bank is continuously engaging in activities that could improve productivity and service to
a level of true excellence, thus ensuring our customers are offered a competitive advantage and
secure lasting results.
Accepting the first deposit of a newly opened branch by
Amna Bank Managing Director/CEO Mr. Faizal Salieh
In seeking to achieve operational excellence the following were identified as Key Development
Areas (KDA):

Improving end-to-end performance in business development and service
Increase efficiency and effectiveness in the processes
Streamlining the branch organisation structure
Formulating strategies to acquire new customers
A number of insights were drawn from the ways in which the branches performed their
activities and achieved productivity and how these improved their overall performances and
their experience with the customers, through many channels.
A new branch being ceremoniously opened by
a distinguished invitee
Accepting the first deposit of a newly opened branch by

Amna Bank Chief Operating Officer Mr. Mohamed Azmeer
Branch Banking expanded to new markets and diversified significantly in 2013 adding the
undermentioned 10 new branches to bring the total number to 24 offering Anywhere Banking
for greater flexibility and convenience. This will further strengthen the Banks position as the
market leader in Islamic Financial Services in Sri Lanka.
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Risk Management 65
Branch
Province
Dehiwala
Nintavur
Kuliyapitiya
Eravur
Negombo
Badulla
Kaduruwela
Puttalam
Kinniya
Ratnapura
Western
Eastern
North Western
Eastern
Western
Uva
North Central
North Western
Eastern
Sabaragamuwa
The preliminary assessment of expanding the existing branch network is being reviewed.
The implementation of the phased expansion will be decided based on the outcome of a
detailed feasibility study.
The Bank has now successfully consolidated its operating structures and standardised
process flows and procedures to be in line with the 'Hub and Spoke' model. Almost all back
office operations have been centralised to increase efficiency and reduce operating cost,
consistency in maintaining customer centric service standards and to focus on better control
of operational risk by establishing the Central Processing Unit (CPU).
The CPU has successfully segregated the duties of the front line and the back office operations
where the frontline consists of Bank branches which focus on business promotion and
services. The CPU is now fully engaged in the processing of transactions and has consolidated
its operations.
The CPU which consists of seven vertical lines of operations are independent units located in
the Head Office premises and have demonstrated greater efficiency in processing transactions.
The units under the CPU are:
1. Clearing
2. Account Processing
3. Cash and Remittances
45
4. Facility Disbursements
5. Treasury Back Office
6. SWIFT
7. Trade Services
CARD CENTRE
The launch of the ATM service is the first of many convenient solutions Amna Bank offered
its customers during late 2012 by formulating a Card Centre. To aggressively penetrate defined
market segments a strategic alliance was drawn up with Commercial Bank of Ceylon enabling
the Banks customers to access their accounts not only through the Banks own ATMs but also
through more than 600 ATMs of Commercial Bank located across the country.
Since the personalisation of the card is done locally, the Bank is able to issue these cards faster
to its customers, supporting their fast-paced lifestyle. The launch of the ATM card set the
platform to understand the spread of its customer base and need for an enhanced product
with time. During the year 2013, a total of 25,051 ATM cards were issued by the Bank with an
average of more than 2,000 cards per month and has dispensed cash amounting to LKR 1.6
billion only through its own ATM network.
Products are critical to our business and continue to receive priority attention. The move
to introduce VISA Debit cards, which contain embedded chips with integrated circuits in
year 2014 comes at a time of expansion of the Bank and is a timely enhancement of security
and convenience to reach new and existing customers including those who reside overseas
increasing our service offerings to aggressively penetrate our target market. The cards with
secured and enhanced features will provide the Banks customers the flexibility to use the card
at any point of sales in Sri Lanka and anywhere in the world for purchase of goods and services
and for cash withdrawals at ATMs thus offering global access to their accounts.
INFORMATION TECHNOLOGY
In the year under review, the main focus of the Information Technology (IT) Department was
to introduce new information and communication technology based solutions for Amna Bank
to achieve the strategic business objectives of the Bank whilst maintaining and enhancing the
existing systems to support the business operations.
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Risk Management 65
IT Department, while continuing to provide technological solutions to fulfil the evolving

business needs of the Bank throughout the year, extended its support to launch 10 new
branches in different parts of the country offering a wide range of banking products and
services to its customers. During the year, 13 new Automated Teller Machines (ATMs) were
added to the branch locations to encompass a total of 19 Bank owned ATMs in the network,
while maintaining the existing link with Commercial Banks ATM network to provide access to
over 600 ATMs across the country for a wider reach to the growing island-wide customer base.
To facilitate continuous data communication between the branches and the Centralised
IT Data Centre, the implementation of branch data communication redundancy links was
executed. This would further maintain a reliable dataflow throughout the branch network to
support customers and would provide extended business continuity for the remote locations.
According to the guidelines of the Central Bank of Sri Lanka, banks are responsible for the
identification and disclosure of related parties and transactions with such parties. This
responsibility requires management to implement adequate internal controls to ensure that
transactions with related parties are appropriately identified in the information system and
disclosed in the Financial Statements. The development and implementation of the Related
Party Transactions (RPT) system was completed by the IT Department, which ensured that
Amna Bank exercise appropriate control over the RPT to mitigate the risk involved within the
same.
Anti-Money Laundering controls are mainly used to prevent, detect, and report money
laundering activities and Amna Bank as an emergent to the industry was required to focus
on the same. As part of the Anti-Money Laundering system, Name Screening system with
sanctions lists was implemented in 2013.
IT Department together with the support of the IT Business Partners facilitated the
introduction of new banking products to enable the growing Corporate, SME and Consumer
customer needs during the year in the areas of Advances and Deposits with the purpose
of enhancing the product range offered to its customers. In addition, the SWIFT system
was upgraded to provide enhanced business services in supporting the growth in financial
transaction volumes.
47
HUMAN RESOURCES
Internal customers are the most significant contributors towards accomplishing the Banks
strategic goals and objectives. Great emphasis is placed on sufficient training and management
of staff while simultaneously enhancing the Banks Human Capital.
Human Resources Department gives priority to the recruitment of an energetic and skilful
workforce, which assists the organisation in achieving its aspirations and objectives. The Bank
strives to provide an appropriate platform for its employees to develop their career.
The Bank believes that success lies in the motivation of the workforce who adapt to change and
shape the challenges of the future.
The total staff strength of the Bank increased by 134 during the year to support the network
expansion and the new products introduced to the market.
STAFF STRENGTH
2013
Category
Corporate Management
Senior Managers
Executive Officers
Junior Executive Officers
Trainee Banking Associates
Business Development Officers
Office Assistants
Total
No. of Percentage
Employees
15
93
148
176
88
26
11
557
3
17
26
31
16
5
2
100
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Risk Management 65
STAFF STRENGTH BY AGE

2013
Category
61 and Above
51 - 60
41 - 50
31 - 40
21 - 30
Below 21
Total
No. of Percentage
Employees
11
29
55
131
303
28
557
2
5
10
24
54
5
100
NEW EMPLOYEES RECRUITED

2013
Category
Corporate Management
Senior Managers
Executive Officers
Junior Executive Officers
Trainee Banking Associates
Business Development Officers
Office Assistants
Total
No. of Percentage
Employees
2
18
42
43
55
21
0
181
1
10
23
24
30
12
0
100
ENGAGEMENT, LEARNING AND DEVELOPMENT

In 2013, Training had completed a two-year cycle. The key focus was developing staff on
mainstream banking related training. While keeping this in mind, more programmes on
core banking were conducted in 2013 in comparison to 2012. Positive results were obtained,
while a number of staff demonstrated a faster and error free service by the end of 2013. One
of the Banks methods of training was to keep exposing both existing talent and new talent to
strategic areas which was pivotal to the running of the business. Some of our key focuses were
bridging knowledge gaps in SME, Credit and Product Training along with banking operations.
During the year, training was taken to the regions and made more relevant and effective by
leveraging on the panel of experts within the Bank.
49
BBU Training Programme for Branch Staff
External Training Programme for BBU Staff
These approaches at Learning and Development enabled identifying internal talent, resources
and alternatives including a motivated team who were eager to be part of the journey of
success and learning. We believe this integration has reflected positively in many corners of the
Bank paving the way for organisational change.
Whilst the anticipated training man-days of the Bank were 5, the actual training man-days
for the year was approximately 6. Total training man-days for staff was 3,303. A total of 328
programmes were conducted, an increase of 73% from the previous year.
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Risk Management 65
ASSESSMENT AND QUALITY

Learning and Development at Amna is built on a bedrock of quality. These standards
were met by following five simple yet effective steps: the correct content, audience, ensure
participants are focused during the training, assessment and continuous follow-up. This
method has enabled the Bank to maintain an average quality score of 80% whereas our
threshold is 75%.
In addition, the continuous improvement of staff and exposing them to need based training
programmes and post-training projects has secured the quality levels further.
51
Of the 328 programmes that were conducted in 2013, 31% of programmes were conducted
internally, whilst 69% of programmes were conducted externally.
A motivated and engaged workforce is essential for success and performance. In order to
increase interaction and creativity, several engagement projects were initiated in 2013. The
Annual Quiz Competition was targeted to increase comradery and infuse the thirst for
knowledge. The Family Carnival held regionally greatly assisted in bringing together the families
of Amna Banks staff. Knowledge platforms were initiated to bridge knowledge gaps and enable
the staff to network and learn through external resources. Earth Hour was the Banks presence
in the society to demonstrate our commitment towards environment and sustainability. These
projects have broadened the horizons of the Bank and made it closer to achieving set goals.
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Risk Management 65
Winners of the Annual Quiz Competition receiving

their award from MD/CEO, Mr. Faizal Salieh
An Outbound Training Programme in progress
MARKETING AND COMMUNICATION

Amna Bank continued its aggressive marketing and communication activities in line with
the Banks strategic focus. Unique campaigns with high visibility were carried out at each new
branch location creating the necessary awareness. The Banks communications and activities
continued to highlight the values and benefits of its unique banking model. Many awareness
programmes were organised for the public with the assistance of the Sharia Department.
The Bank grew its presence in social media through Facebook, while being noted as one of the
most popular fan pages in the banking industry. The marketing team also had the challenge
of effectively managing the Banks IPO campaign, where a 360 campaign was executed in
attracting potential investors to subscribe to the Banks shares. Marketing also worked hand in
hand with the product teams to create a competitive edge for products, through promotions
and communications.
The Bank once again hosted the Sri Lankan edition of the renowned IFN Road Show which was
held for the second consecutive year, bringing in the local and international Islamic Banking
industry to one forum to share knowledge and expertise in driving the industry forward.
Showcasing the Banks focus on the SME and Agribusiness Sector, the Bank partnered with
the National Agribusiness and Farmer Awards 2013. Many other strategic events were also
sponsored by the Bank during the year.
53
AWARDS AND ACCOLADES FOR 2013

Islamic Finance News Award for the Best Islamic Bank in Sri Lanka awarded by
Malaysian-based RedMoney Group (publishers of Islamic Finance News Magazine)
Amna Bank's MD/CEO Mr. Faizal Salieh receiving the

award from RedMoney Group MD Andrew Morgan at
the Award Ceremony held in Dubai, U.A.E.
Best Islamic Bank in Sri Lanka Award adjudged by Global Banking and Finance Review
Magazine
Gold Award for Islamic Finance Entity of the Year at the Sri Lanka Islamic Banking and
Finance Industry Awards Night
Gold Award for Islamic Finance Deal of the Year at the Sri Lanka Islamic Banking and
Finance Industry Awards Night for financing the Lower Kotmale Oya Mini Hydro Power
Project
54
Amna Bank MD/CEO Mr. Faizal Salieh accepting the

Gold Award for Islamic Finance Entity of the Year from
H.E. Azmi Zainuddin, High Commissioner of Malaysia
Amna Bank VP-Business Banking,

Mr. Amrit CanageRetna and VP - Credit,
Mr. Ajmal Naleer accepting the Gold Award for
Islamic Finance Deal of the Year from
Mr. Reyaz Mihular, Managing Partner, KPMG
Risk Management 65
55
Report on Sharia Supervision
By the Grace of God Almighty, the year under review marks the second full year of commercial
operations for Amna Bank.
During the year, the Sharia Supervisory Council (SSC) of Amna Bank held three Sharia
Council meetings to review various products, concepts, transactions and processes including
the approval of ten new products.
The SSC of Amna Bank conducted a comprehensive review on the activities of the Sharia
Supervision Department on 16 May 2013/5 Rajab 1434 A.H. The areas reviewed included the
following:

Sharia Risk Management Framework

Severity Ranking of Sharia non-compliance issues
Sharia Audit Plan and its Procedures
Internal Sharia Guidelines prepared and introduced by Sharia Supervision Department
Methodology in conducting Sharia Training programmes
Implementation of approved new products
SHARIA AUDIT AND COMPLIANCE REVIEWS
To ensure that all the revenue generated by the Bank strictly adheres to injunctions of Sharia,
the Banks Sharia Supervision Department actively observed various operational activities
of the Bank throughout the year. The credit approvals, restructuring of financing facilities,
customer specific transaction process flows, Letters of Guarantee and security documents were
reviewed to ensure Sharia compliance while offering financing products to the customers.
Income generated from Consumer and Business Banking transactions that were audited are as
follows:
Income Generated from
Consumer Financing LKR 000
Income Generated from

Business Financing LKR 000
Number of
Transactions
Number of
Transactions Audited
284,398,600
1,283,573,102
4,852
4,852
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Risk Management 65
Moreover, physical inspections were conducted on random basis and tangible measures were
taken to verify the relevant purchase evidences/invoices, further enhancing the controls.
All financing products were fully audited by the Sharia Supervision Department and their
alignment with the guidelines given by the SSC was also verified. The process and the scope of
the audit included the following:

Invoices and other related purchase evidences were verified by confirmations and the
existence of suppliers was also confirmed by visiting their premises on sample basis
Genuine purchase evidences were provided to execute Murabaha transactions so that

Murabaha disbursements are not availed to set off previous balances with the supplier and
Murabaha Status Sheets
Sharia documentation and other related security documents and procedures followed by
different functional areas for Murabaha, Ijara (Leasing), Diminishing Musharaka, Istisna,
Thijara and Wakala
Declarations, description of assets, relevant purchase invoices, sequence and order of the
documents and time difference between purchases and declaration in Murabaha
Purchase deeds, treatment of ownership related cost and recovery of rentals in Ijara
transactions, ownership ratio in Diminishing Musharaka for housing facilities and
issuance of timely unit sale receipts
Investments made in Equity with reference to the Equity stock screening criteria.
Import finance transactions and related documentation
Extensive reviews of client payment, purchase cycle and periodic assessment of clients
processes
Profit Sharing Ratio, pool working, asset and deposit allocation for deposit products
MURABAHA STATUS SHEET

A system for continuous monitoring of Murabaha transactions is in place whereby the
branches extending Murabaha financing are required to submit a monthly report, after
thorough review by the branch/department head, to the Sharia Supervision Department
for review and continuous monitoring of Murabaha transactions to avoid any Sharia noncompliance.
57
TRAINING AND DEVELOPMENT

During the year, 14 internal Sharia training sessions were held in which approximately 265
employees participated.
KEY SHARIA TRAINING INITIATIVES IN 2013

A special workshop was conducted for corporate customers with the participation of
Sharia Council members on 5 Rajab 1434 A.H./16 May 2013

Approximately 350 Sharia scholars and students participated at 7 workshops that were
conducted islandwide under the subject Understanding the Practice of Islamic Banking.
The objective of this programme was to educate the Sharia scholars on the application of
Islamic banking in practice and on the level of Sharia compliance at Amna Bank and also
how the Bank operates as an entity in compliance with Sharia principles
Commencement of Amna Certified Islamic Banker which is a comprehensive training

programme designed and intended to enhance the knowledge and skills of staff in Sharia
principles
CHARITY
During the year, an amount of LKR 704,846.73 was transferred to the Charity Payable Account.
As at 31 December 2013 the total balance in this account amounted to LKR 1,367,544.29.
STATEMENT OF SOURCES AND USES OF CHARITY FUND

For the year ended 31 December 2013
Opening balance as at 1 January
2013
LKR
2012
LKR
1,259,987.56
1,131,762.92
Additions during the year

Purification of Dividends/Disposal Gains of Equity
Interest Accumulated in Nostro Accounts
Interest from CSE on Equity Early Settlement
Claim from Conventional Insurance
Profit Write-Offs
Less: Distribution of Charity
Closing balance as at 31 December
111,153.88
83,152.02
85,622.39
44,511.52
9,432.67
498,231.43
406.36
561.10
704,846.73
128,224.64
(597,290.00)
1,367,544.29
1,259,987.56
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Risk Management 65
The total amount of LKR 597,290.00 that was disbursed from the Charity account was with the
approval of Head of Sharia Supervision and it was duly reported to the SSC for its concurrence.
THE WAY FORWARD FOR THE YEAR 2014

Facilitating business units to avoid Sharia violations.
Ensuring a zero tolerance culture for Sharia non-compliance.
Enhancing the Sharia Risk Management Framework with the establishment of Sharia Risk
Management Committee to overlook and mitigate Sharia violations.
Considering the increase in branch network and recruitment of new employees, it is

important to focus on employee training related to Islamic banking products and services
offered by the Bank with special emphasis on training frontline staff enabling to increase
their scope of Islamic banking knowledge.
Conduct special training workshops for financing clients and continue customer
awareness sessions.
May Almighty Allah make us successful in accomplishing His precious tasks and reward us in
this world and in the Hereafter.
Moulavi N.M. Siraj

Head of Sharia Supervision and Secretary to the Sharia Supervisory Council
22 Jumaadal oola 1435 A.H.
24 March 2014
59
Corporate Social
Responsibility
As a Bank that values ethics and responsibility to be as important as making profits and gains,
the Bank continued its CSR endeavours during the year. Given below is a summary of the CSR
activities carried out by the Bank for the year 2013.
HEALTH CARE
Having undertaken the responsibility to maintain the Childrens Ward (Ward 15B) of the
Kalubowila General Hospital, the Bank funded a new face lift to the ward which included
painting the ward, beds, fans and cupboards, as well as construction of a protective mesh,
installation of new direction boards and replacing light bulbs with energy savings lamps.
The Bank also undertook to refurbish the Radiology Unit of the National Cancer Institute
in Maharagama, with the aim of providing an efficient and speedy service to patients. The
refurbishment included supply of furniture, desktop PCs and an X-ray Illuminator to the unit.
The Bank also extended its generous support to the South Asian Institute of Technology and
Medicine (SAITM) to conduct a health camp in Malabe. The medical camp witnessed over
5,000 patients benefiting from the free services offered which was provided by more than 55
practicing doctors and final year students of the institute. During the Health Camp the organisers
conducted comprehensive medical tests such as full body checkups, blood sugar and blood
pressure monitoring, consultation and provided free pharmaceuticals and spectacles.
Donation to Childrens Ward of Kalubowila General Hospital
Health Camp with SAITM
60
Risk Management 65
Gifting of PCs to Maharagama Cancer Hospital
Amna Bank COO Mohamed Azmeer

unveiling the plaque at
the Kalubowila General Hospital
The Bank did not confine its health care programmes only for the Western Province. During
the year, the Bank contributed towards the maintenance of the Childrens Ward of the
Sainthamaruthu District hospital as well as provided 60,000 medical envelops to the Nintavur
District Hospital. The Bank also installed direction boards at the Sainthamaruthu District
Hospital.
61
EDUCATION
The Bank made a generous contribution to the Serendib Educational Foundation (SEF) in
carrying out their primary programme of providing financial assistance to the students who
are capable of pursuing their studies but unable to do so due to financial constraints. The SEF
provided scholarships for more than 300 needy and talented students who were selected from
all over the island following a thorough evaluation process.
The Bank partnered with the Zonal Education Department of Kalmunai to organise a model
exam for the Grade 5 students who were preparing for the 2013 Scholarship Exams in the
Kalmunai zone. More than 2,400 students benefited from this initiative which covered more
than 60 schools in the zone.
Donation to Serendib Educational Foundation
Year 5 Scholarship Model Exam in

Kalmunai Educational Zone
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Risk Management 65
ENVIRONMENT
The Bank pledged its support for the Earth Hour initiative for the second consecutive year. An
event was held at the Banks Head Office premises to mark Earth Hour 2013, where the Bank,
its staff and their families joined hands with millions globally to combat climate change and
raise awareness of its adversities. In commemoration of this global initiative and along with the
Banks environment sustainability programme, a tree planting ceremony was also held at the
Head Office premises and at all the branches.
Earth Hour 2013
Tree planting to commemorate Earth Hour.

Amna Bank MD/CEO Faizal Salieh
planting a tree
63
SOCIAL AWARENESS AND INFRASTRUCTURE

In order to create awareness on security precautions, the Bank together with the Kuliyapitiya
Police Station carried out a public awareness programme in the Kuliyapitiya Area.
As a part of its infrastructure support activities, the Bank donated a water tank to Al-Manar
Girls School, Maruthamunai and an air conditioner to the Kattankudy Jamiyyathul Ulama.
Donation of Water Tank
CARING FOR THE LESS PRIVILEGED CHILDREN

As a part of its CSR activities the Bank has shown a lot of support and care towards the less
privileged children. During 2013, the Bank carried out initiatives to support orphans, special
needs, disabled and needy children.
The Bank celebrated the Holy Month of Ramadan by hosting a special Ifthar (break-fast) for
60 orphaned children with special needs together with the participation of the Bank staff.
The noble endeavour, which took place at Ash-Shifaa Home for Orphans with Special Needs,
was a chance for the Bank, which focuses on ethical banking, to showcase their support to
less privileged children; especially during a time of the year closely associated with charity,
compassion and giving.
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Risk Management 65
Ifthar for Orphans with Special Needs.
The Bank marked World Childrens Day on 1 October 2013 by opening more than 1,200 Children
Savings Accounts for the underprivileged together with Kantha Saviya Foundation. The Bank
also provided school stationery for the children.
The Bank continued to support ESCO Rehab Sri Lanka an organisation committed to the
welfare of the differently abled.
A donation was also made to sponsor a few students of the Ceylon School for the Deaf and
Blind to continue their studies.
The Bank also contributed towards the 51st anniversary fund raising event of the Makola
Orphanage and opened pre-loaded accounts for orphans at the Balapokuna Orphange. The Bank
also made a donation towards the Child Foundation for Inter Religious and Ethnic Harmony.
65
Risk Management
The Bank has developed a Risk Management Framework which provides guidance to the
overall risk management goals and strategy. It acts as a foundation for the management
of risks to be conducted in the most effective manner and in line with the industrys best
practices. The framework is a high-level architecture for the ongoing development and
enhancement of the Banks integrated risk management infrastructure and capabilities. It
forms the basic foundation for development of the risk management guidelines, operation of
risk management structure and implementation of risk management initiatives.
The framework provides a structured approach to the management, measurement and
control of risk - i.e. a way that people and processes ensure that business activities provide an
appropriate balance of return for the risk assumed.
The Banks mission with respect to risk management is to advance its risk management
capabilities, culture and practices so as to be in line with internationally accepted standards
and practices. As such, the Bank has continued to invest in its risk management capabilities in
terms of human resources, processes, policies and introduced newer tools during the period
under review.
In terms of the Risk Management Framework, several initiatives were taken, some of them
include:

Inculcate a risk-awareness culture throughout the Bank. Strong risk cultures ensure that
there is an active consideration and debate about the potential rewards and losses in
making and avoiding risks.
Establish a standard approach and methodology in managing credit, market, liquidity and
operational risks across the Bank.
Define risk appetite and tolerance levels.
Clarify functional structures including objectives, roles and responsibilities.
Develop and use tools, such as Value at Risk (VaR) and stress testing to support the
measurement of risks and enhance risk-based decisions.
Ensure that risk policies and overall risk appetite are in line with business targets.
Ensure that the Banks capital supports the current and planned business needs in terms
of risk exposures.
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Risk Management 65
With the intention of achieving the above objectives as well as to be consistent with the
risk-ownership concept under Basel II Accord, the Banks strategy to manage various risks is
structured into 3 lines of defence as summarised below:
1ST LINE OF DEFENCE: RISK TAKING UNITS

In view of their functions, these units are directly exposed to specific risks daily and must
assume primary responsibility in their management. By identifying and analysing risks and
shortcomings, instituting regular controls, monitoring and reporting procedures and taking
appropriate actions, they are in the best position to mitigate or avoid risks. The overall
ownership of the risk environment and responsibility to manage the risks therefore, reside
with them.
2ND LINE OF DEFENCE: RISK CONTROL UNITS
This refers to the respective risk management team and the Risk Control Committee, including
other control and monitoring departments such as legal, compliance and Sharia supervision.
The risk management team shall be responsible for the development and maintenance of the
Risk Management Framework and its implementation. Other controlling and monitoring
departments are responsible to develop guidelines in managing risks under their purview.
Both, the risk management team and controlling/monitoring departments should ensure
timely receipt of reports; perform analyses before consolidating and submitting them to top
management and the Board of Directors for their oversight. Where appropriate, they should
provide support to the risk taking units and initiate changes to policies and standards.
3RD LINE OF DEFENCE: INDEPENDENT ASSURANCE
This refers to the Internal Audit function whose roles and responsibilities under the Risk
Management Policy are to provide independent assurance to the Board of Directors on the
effectiveness of the Risk Management Framework, that the policy is implemented with integrity.
Going forward, the Bank aims to leverage the risk management system capabilities to drive the
following business benefits:
(i) Increase efficiency and reduce operating cost for risk management through optimised
utilisation of resources and skills (reduction in manual operations).
(ii) Reduce potential losses with enhanced risk management, and increase profitability
through better control over risk appetite.
67
(iii) Adhere to regulatory compliance (i.e. CBSL, SEC, etc).

(iv) Enhance strategic decisions with foresight into risks.
(v) Enhance product and services strategy by providing confidence in introducing innovative
and profitable offerings.
(vi) Timely detection of risks to reduce losses due to risk events.
CREDIT RISK MANAGEMENT

OVERVIEW
Credit Risk is the loss arising from failure of the counterparty to perform according to its
contractual arrangements with the Bank. It includes failure in the repayment of capital plus
the Banks profit/mark-up in full within the agreed tenure and in the agreed currency.
The Banks vision is to accommodate creditworthy customers on its financing portfolio, with
the intention of minimising the non-performing advances and maximising returns within the
Sharia parameters. In this regard, the Bank has adopted a sound risk management practice
with a robust risk governance mechanism in place and a good risk culture in order to mitigate
the Credit Risk in its financing activities.
At a macro level, the Bank manages its Credit Portfolio Risk with a view to avoid over
concentration and to restrict large credit exposures to a single borrower, group or an industry
sector. At a micro level, Credit Risk is managed at a functional level by evaluation of credit
proposals and thereafter managing the risk levels.
MANAGING CREDIT RISK

Credit Origination
The Customer Relationship Manager (CRM)/Branch Manager, guided by the Heads of Business
Banking and Consumer Banking will identify business enterprises/customers to offer the
Banks products and services. Further, the CRM/Branch Manager shall ensure that adequate
information about the borrower is obtained during initial visits in order to carry out a proper
evaluation. An initial preliminary screening of a new prospect shall include the following:

The preliminary analysis would include compliance with Sharia principles, Anti-Money
Laundering (AML) Guidelines, Policy Exceptions and Related Party Transactions.
Ascertain if the customer is within the target market and the relevant Risk Acceptance
Criteria, if applicable.
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Risk Management 65
Check whether the customer falls into an industry/sector which is acceptable.
CRIB clearance - check whether a prospective customer is reflected in the CRIB for default
at another bank/financial institution.
Credit Work Flow

New credit applications are scrutinised through customer inspections, CRIB reports and
other channels to verify the credentials of the customer. Thereafter, the Business Banking Unit
commences credit assessment/appraisal which includes customer visit report, obtaining and
analysing of financials and other pertinent information.
Upon completion, the credit proposal is filtered through the Credit Department to ascertain
credit worthiness of the customer and to impose terms, conditions and covenants to mitigate
perceived credit risk.
Additionally, periodic reviews with regard to existing customers are conducted in a timely
manner with recommendations on renewal enhancement/reduction of facilities based on
merits and credit requirements. Subsequently, such reviews are referred to the appropriate
approving authorities.
Credit Approving Process

The credit approval process is well regulated and streamlined within the Bank based on the
criteria stipulated in the Credit Risk Policy approved by the Board of Directors.
The Board of Directors has delegated the authority to the Board Credit Committee (BCC),
Executive Credit Committees (ECC) and other Senior Executives. All individual delegated
authorities are vested with specific executives based on experience, seniority and limit in order
to mitigate any judgmental errors.
The ECC and Senior Executives exercise delegated authority in a transparent manner. Any
credit application exceeding a certain threshold is referred to the BCC.
Post Approval Credit Risk Monitoring and Recovery

Following disbursement, the facilities are monitored continuously with a view to maintaining
the quality of credit.
69
The maintenance of credit quality depends largely on post credit risk assessment. Post Credit
Risk can be defined as the probability of default or non-payment of an advance either due to
wilful action by the borrower or due to circumstances beyond the control of the borrower.
The continuous maintenance of the quality of the advances portfolio of the Bank resulted in
managing its asset portfolio satisfactorily by maintaining a healthy NPA ratio of 1.84% as at
31 December 2013.
Primary objectives of Post Credit Risk Monitoring and Management can be described as follows:

To ensure that quality of every credit facility extended remains comparable with the
position at the time the facility was originally granted.
Ensuring timely recovery of capital and the Banks share of profit throughout the duration
of the facility.
Monitoring the operational and financial performance of the customer, especially

business banking customers, on a continuous basis.
To take suitable corrective action without delay when quality deterioration of advances
becomes apparent.
To prevent the Bank from further financing of customers who may be facing financial
difficulties.
Status of Basel II Requirements

Currently, the Banks Integrated Risk Management System adopts The Standardised Approach
(TSA) in Credit Risk in accordance with Basel II recommendations as required by the Central
Bank of Sri Lanka (CBSL). The Bank is in the process of formulating a comprehensive Risk
Management System in order to fast-track the process of adopting the Advanced Approach
enumerated in the Basel II guidelines. Simultaneously processes have been set for fine-tuning of
systems and procedures, information technology capabilities and risk governance to meet the
requirements. In this regard, the Board of Directors and the Senior Management have developed
a Road Map to move towards the implementation of the Basel II Advanced Approach.
Managing Credit Risk Through Portfolio Management
One of the key functions of the Risk Management Department (RMD) is to conduct portfolio
analysis on a quarterly basis or even more frequently if the need arises. This exercise covers
analysis of the portfolio based on industry sectors, products and trends in NPA, etc.
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Risk Management 65
In addition, stress tests/scenario analyses are carried out to assess the impact of any material
changes in the external environment with suitable recommendations to restructure the
portfolio.
Concentration Risk
Concentration risk is the probability of loss arising from significantly imbalanced credit
exposure to a particular individual, group, industry sector or geographical area. The Banks
prudential Single Borrower Exposure Limits are more stringent than the ceiling set by the
regulator.
The sector exposure limits, which are also approved by the Board of Directors, are reviewed
periodically taking into account changes in internal/external factors in order to mitigate risk
and explore business opportunities.
In order to mitigate the concentration risk, the Banks appetite for credit exposures is
predefined for:

Single Borrower
Group of Related Borrowers
Major Economic Sectors
Concentration risk is monitored closely, and the relevant limits are reviewed and changed
periodically to suit the changes in economic and environmental outlook, Bank policies
and regulatory requirements. RMD monitors and reports Concentration Risk to the Board
Integrated Risk Management Committee (BIRMC), and concerns, if any, are escalated to the
Board of Directors on a periodic basis.
71
The Bank is aware of the importance of SMEs in the countrys development plans and expects
to tap the potential in the consumer segment. Whilst considering the above to be the thrust
segments, the Bank will supplement its advances portfolio by providing finance to selected
corporates.
As illustrated above, at present the Bank is greatly exposed to the corporate segment, though
in the short term. Until the advances portfolio grows to a reasonable level, the Bank will
continue to finance good corporate businesses. Further, the exposure to the corporate segment
indicates the confidence and capability of catering to the needs of this particular segment
and the Banks appetite towards maintaining a high quality advances portfolio. However, with
the expansion of the branch network and diversification in terms of products, the exposure is
expected to shift more towards SME.
The overall risk of the credit portfolio can be increased or reduced for a level of return,
depending on how the product portfolio is concentrated or diversified. Accordingly, for the
Bank, product-wise concentration risk is considered to be an important element due to the
limitation in product range compared to conventional banks.
Diminishing Musharaka is a widely used product for various types of customer requirements.
Hence as illustrated above, the highest concentration of the Banks advances portfolio is in
Diminishing Musharaka.
Apart from Diminishing Musharaka the rest of the portfolio is well diversified among Wakala,
Local Murabaha, Ijara (Lease) and Import Musawama products respectively. Also PreContracts, which represents 3% of the portfolio, is a Transitional Account where the facility
amount is first disbursed to until Offer and Acceptance is completed.
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Risk Management 65
Industry or Sector Concentration Risk arises when the Credit Portfolio is not sufficiently
diversified. The Bank, according to its risk appetite policies and strategies, has segregated
the main sectors into favoured, selective, cautious and avoid categories. This strategy is
developed to improve penetration of low risk industries and conversely reduce exposure to high
risk industries.
As illustrated above, the overall exposure in 2013 has been distributed among Trading,
Agriculture, Manufacturing, Other Customers (Consumer Banking) and Infrastructure sectors
which is in line with the development plans of the country.
Adopting and assessing Single Customer Borrowing Limits (Individual or Group) is vital to a
bank. This enables a bank to manage its advances portfolio in a well diversified manner. Hence,
the Bank has set its own limits for single/group borrowing, which are more stringent than the
regulatory requirement.
73
By setting these limits, the Bank focuses on having an equally distributed and well diversified
credit portfolio. However, Amna as a new bank just completed two years of operations and
the credit ceiling imposed in 2012 along with the limited product range has restricted the
diversification of portfolio, which resulted in top 20 customers accounting for 43% of advances
portfolio.
Based on tenure, overall advances portfolio is classified as short term (up to 12 months),
medium term (between one and three years) and long term (over three years). Having an ideal
combination of asset maturity is of utmost importance in meeting depositor commitments.
The Bank has maintained a healthy balance in tenure by keeping 56% of its portfolio within
short and medium term range. This benefits the Bank in re-pricing the assets within a quick
span of time.
MARKET RISK MANAGEMENT

MARKET RISK
Market risk is the risk of loss from changes in market prices and rates (including rates, credit
spreads, equity prices, foreign exchange rates and commodity prices), the correlations among
them, and their levels of volatility. A description of each market risk category is provided
below:
RATE RISK
The risk of loss due to changes in the level, slope and curvature of the yield curve, the volatility
of rates and housing prepayment rates.
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Risk Management 65
CREDIT SPREAD RISK

The risk of loss due to changes in the market price of credit, or the creditworthiness of issuers.
FOREIGN CURRENCY RISK
The risk of loss due to changes in spot and forward prices, and the volatility of currency
exchange rates.
EQUITY RISK
The risk of loss due to changes in the prices, and the volatility, of individual equity instruments
and equity indices.
COMMODITY RISK
The risk of loss due to changes in spot and forward prices and the volatility of precious and
base metals.
Market risk mainly arises from activities undertaken by the Banks Treasury and foreign
exchange, equity, commodity and money market portfolios. A Board approved limit structure
has been adopted by the Bank to mitigate and monitor its market risk. Further, the Board of
Directors and the Management have ensured the effective monitoring and management of
market risk with the following:
(i) BIRMC to review market risk policies and limits, and obtain approval from the Board of
Directors for any changes necessary.
(ii) BIRMC, Assets and Liabilities Committee (ALCO) and ERMC to monitor and manage
market risk of the Bank according to the Board approved risk framework.
(iii) Risk Middle Office to independently monitor all significant market risks and submit
reports to MD/CEO, ERMC and ALCO.
As required by the Central Bank of Sri Lanka, the Bank uses the basic approach to calculate the
market risk under Basel II. The Bank classifies quoted equity exposures into either trading or
Available For Sale (AFS) portfolios and manages those portfolios separately. Market risk for the
portfolios is monitored based on a VaR methodology and also using other sensitivity analyses.
75
OBJECTIVES AND LIMITATIONS OF THE METHODOLOGIES USED TO

ASSESS MARKET RISK
Value at Risk
VaR is a method of measuring market risk based upon a common confidence interval and time
horizon. It is a statistical estimate of expected potential loss that is derived by translating the risk
of any financial instrument into a common standard. The Bank calculates VaR daily using a 99%
confidence level, and a one-day holding period for its trading portfolios. This means that 99 days
out of 100, the loss from trading positions is expected to be lower than the VaR estimate.
The Bank calculates general market risk and equity specific risk VaR using historical simulation
based on 365 days of market data. For specific exposure VaR, the Bank intends to implement
a Monte Carlo simulation. Changes in VaR between reporting periods are generally due to
changes in levels of exposure, volatilities and/or correlations among asset classes. VaR is also
used to evaluate risks arising in certain funding and investment portfolios. Back Testing is also
an important and necessary part of the VaR process, by validating the quality and accuracy of
the Banks VaR model. VaR results are included in the BIRMC Chairmans Report to the Board of
Directors on a quarterly basis.
Stress Testing
VaR measures potential losses in normally active markets. An inherent limitation of VaR is that
it gives no information about how much losses could exceed their expected levels. Accordingly,
stress testing examines the impact that abnormally large swings in market factors and periods
of prolonged inactivity might have on trading portfolios. The stress testing programme is
designed to identify key risks and quantify potential losses from abnormal events. The Bank
subjects its trading portfolios to stress tests on a monthly basis and also evaluates risk in its
investment portfolios on a monthly basis, using stress tests based on risk factor sensitivities
and specific market events. The stress testing programme is an essential component of the
Banks comprehensive risk management framework which complements the current VaR
methodology and other risk measures and controls employed by the Bank. The BIRMC reviews
stress testing results on a monthly basis.
Sensitivity Analysis
Sensitivity analysis assesses the effect of changes in rates on current earnings and on the
economic value of shareholders equity related to AFS portfolios. It is applied globally to each of
the major currencies within the Banks operations.
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Risk Management 65
Gap Analysis
Gap analysis is used to assess the rate sensitivity of the Banks operations. Under gap analysis,
rate sensitive assets and liabilities and off-balance sheet instruments are assigned to defined
time periods on the basis of expected re-pricing dates.
In practice, the actual trading results will differ from the VaR calculation and, in particular, the
calculation does not provide a meaningful indication of profits and losses in stressed market
conditions.
VaR Assumptions
The VaR that the Bank measures is an estimate, using a confidence level of 99%, of the potential
loss that is not expected to be exceeded if the current market risk positions were to be held
unchanged for one day. The use of a 99% confidence level means that, within a one day horizon,
losses will be below the VaR limit on average under normal market conditions, for 99 out of
100 days.
Since VaR is an integral part of the Banks market risk management, VaR figures are reviewed
monthly against the loss limits by ALCO and in every BIRMC meeting.
VaR of Foreign
Exchange Exposures
(LKR million)
VaR of Equity
Portfolio
(LKR million)
Approved Loss Limits

for FX Operations
(LKR million)
Approved Loss Limits

for Equity Operations
(LKR million)
End December 2013
0.54
16.91
7.85
65.0
Monthly Average
1.84
21.15
N/A
N/A
High
3.87
35.71
N/A
N/A
Low
0.30
16.40
N/A
N/A
FOREIGN EXCHANGE RISK

Foreign exchange risk in the Banks unhedged financing and investment activities arises
primarily from the Banks net investments in foreign operations as well as foreign currency
earnings in its domestic operations.
Such risks are primarily due to changes in foreign exchange rates, which are managed by
setting and monitoring dealer, currency, counterparty and settlement limits for on and off
balance sheet instruments.
77
Foreign exchange exposures in individual currencies are managed according to the limits
approved by the Board of Directors. In addition to this, it is managed and monitored against
the regulatory/statutory limits approved for the Bank by the Central Bank of Sri Lanka.
The Bank engages in interbank forward transactions to cover positions created due to
customer transactions. Cash flows of currencies are managed by undertaking promissory buy/
sell transactions on a matching basis. In addition, the Bank's activities in the trade finance
business result in off balance sheet exposures.
The concentration of on and off balance sheet foreign currency risk is given in the table below:
Currency
US Dollar
Spot
Forward
Assets
Liabilities
Net
Net Open
Position
Assets
Liabilities
21,987,835
Net
Overall
Position in Exposure in
Other Respective
Exchange
Foreign
Contracts
Currency
Overall
Exposure in
LKR
Net
27,208,583
5,436,886
21,771,697
(216,138)
(216,138)
(28,270,896)
Pound Sterling
160,905
129,137
31,767
31,767
31,767
6,845,675
Euro
110,066
110,010
56
56
56
3,356,411
10,834
3,345,577
3,345,577
3,345,577
Japanese Yen
Indian Rupee
Australian Dollar
209,149
212,954
(21,987,835)
(3,805)
(3,805)
(3,805)
Canadian Dollar
Other Currencies
Total Exposure
Total Capital Funds as per Latest Audited Financial Statements (LKR)
Total Exposure as a % of Total Capital Funds as per Latest Audited Financial Statements (should not exceed 30%)
(6,259)
4,167,923
(406,530)
64,705,845
104,403,126
5,062,033,380
2.06%
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Risk Management 65
During the year 2013 the Rupee depreciated against the US Dollar by 2.7%.
Revaluation of all foreign currency assets and liabilities is carried out daily by the i-Mal core
banking system.
A graph giving monthly VaR figures of the foreign currency exposure is given below:
EQUITY POSITION RISK

The Bank holds investment portfolios to meet liquidity and for investment purposes. These
portfolios expose the Bank to rate risks, credit spread and equity risks. Equity position risk
arises due to changes in individual equity prices. The Banks equity portfolio is classified as Held
for Trading (HFT) and Available for Sale (AFS) portfolios. HFT portfolio comprise of equities
purchased with a view to take advantage of short-term capital gains. The equities in AFS portfolio
are purchased in order to benefit from capital gains in the medium term and for dividend income.
79
The performance of the equity portfolio is monitored by the BIRMC, ALCO and the Equity
Investment Committee (EIC). The Board of Directors has laid down sector, portfolio and loss
limits to control and mitigate the risks of the equity portfolio. The Bank also adheres to the
Guidelines issued by CBSL regarding the exposure to a single entity and the total exposure
limit for the equity portfolio. The Bank conducts transactions only in Sharia compliant equities
which are listed in the published White List.
The sectorial exposure of equity portfolio is given below:
Equity/Sector
Total Cost (including

Brokerage etc.) LKR
MTM Value as at
31.12.2013 LKR
Maximum Exposure
Limit for Sector LKR
Utilisation
of Sector Limit
228,621,889
184,198,357
379,560,000
48.53%
4,791,426
4,771,287
189,780,000
2.51%
Beverage and Food
116,501,227
104,692,200
332,115,000
31.52%
Trading
Manufacturing
Health Care
104,888,067
84,845,584
142,335,000
59.61%
Diversified
20,603,818
21,764,070
284,670,000
7.65%
Power
90,542,372
85,815,424
189,780,000
45.22%
Land
17,356,092
16,214,292
142,335,000
11.39%
229,380
242,313
237,225,000
0.10%
33,891,584
28,700,233
142,335,000
20.16%
617,425,855
531,243,760
250,000,000
96.57%
Plantation
Telecom
Sub Total
Amna Takaful PLC
Total
241,367,383
241,435,843
858,793,238
772,679,602
The Banks Treasury system SunGard, carries out daily marking to market of the equity portfolio
against the closing weighted average prices published by the Colombo Stock Exchange.
A graph indicating the monthly Equity VaR figures is given below:
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Risk Management 65
RATE RISK
Rate risk arising from the Banks financing and investment activities is managed in accordance
with Board approved policies and limits, which are designed to control the risk to net finance
income and economic value of shareholders equity.
Mismatches in maturities of assets and liabilities that mature or are re-priced during a
specified time period, does have an impact on the Banks exposure to rate risk. In order to
manage and mitigate such risks, ALCO reviews the re-pricing of assets and liabilities atleast
on a monthly basis. The Banks rate risk is limited due to the business model adopted where
majority of customer deposits have been taken on profit and loss sharing basis.
However, rate risk is monitored by measuring the impact on rate sensitive maturity gaps
with yield curve shifts of parallel and non-parallel nature. Impact of yield curve shifts on rate
sensitive assets and liabilities which on contractual and behavioral basis are given below:

1 to 30
1-3
3-6
6-9
9 - 12
Days Months Months Months Months
Scenario I
2.00%
2.00%
2.00%
2.00%
Scenario III
- 1.50% - 1.50% - 1.25% - 1.25% - 1.00%

1.25%
2.00%
1.00%
1.50%
1.50%
1.00% - 1.00% - 1.00% - 1.25% - 1.25% - 1.50%
- 1.50%
BEHAVIORAL BASIS
Scenario
Rate Risk
(LKR million)
Impact on
CAR (%)
Scenario I
125.24
Scenario II
(198.89)
0.60
Scenario III
37.31
0.18
Scenario IV
13.43
0.06
0.95
CONTRACTUAL BASIS
Scenario
Rate Risk
(LKR million)
Scenario I
(194.07)
Scenario II
236.85
Scenario III
(100.41)
Scenario IV
67.37
Impact on
CAR (%)
0.93
1.13
0.48
0.32
1.00%
1.25%
2.00%
Unclassified
- 2.00%
1.25%
2.00%
10-15 Over 15
Years
Years
2.00%
1.50%
2.00%
5-10
Years
- 2.00% - 2.00% - 2.00% - 2.00% - 2.00% - 2.00% - 2.00% - 2.00% - 2.00% - 2.00%
1.50%
2.00%
3-5
Years
Scenario II
Scenario IV
2.00%
1-3
Years
1.25%
81
RATE SENSITIVE ASSETS AND LIABILITIES MATURITY GAPS (BEHAVIORAL BASIS) AS AT 31.12.2013
Up to 3 Months
3 - 12 Months
1-3 Years
3-5 Years
Over 5 Years
Total
LKR
LKR
LKR
LKR
LKR
LKR
Assets
Cash and Cash Equivalents
Balance with Central Bank of Sri Lanka
Derivative Financial Assets
Placements with Banks
2,444,552,371
256,302,407
20,461,046
1,009,623
1,737,895,772
Placements with Licensed Finance Companies
254,599,949
Financial Assets - Held for Trading
175,334,631
Financing and Receivables to Other Customers

Financial Investments - Available for Sale
Other Financial Assets
Other Non Financial Assets
177,997,067
6,019,620,557
407,358,289
2,978,736,081
76,802,024
73,482,584
100,736,338
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
3,822,317,221
1,589,501,020
175,334,631
605,143,203
15,015,318,081
243,074,600
600,337,971
357,263,371
227,900,817
281,218,525
10,427,050
519,546,392
28,994,455
35,425,210
176,357,948
240,777,613
Intangible Asset
283,027,619
283,027,619
Property, Plant and Equipment
852,960,574
852,960,574
Deferred Tax Asset
159,355,340
159,355,340
2,244,297,674
23,397,855,691
Total Assets
11,087,356,665
3,960,050,134
4,443,167,614
3,113,249
17,510
4,189,135,320
7,029,814,230
2,070,892,224
283,374,793
1,367,544
6,077,485
1,662,983,604
Liabilities
Derivative Financial Liabilities
Due to Customers
Other Financial Liabilities
Other Non Financial Liabilities
Deferred Benefit Liabilities
13,688,807
1,979,828,709
290,819,822
13,688,807
7,031,199,284
2,076,969,709
Maturity Gap
6,598,044,496
(3,071,149,150)
2,366,197,905
17,983,111,581
4,489,312,169
2,713,441,098
3,130,759
Total Liabilities
1,979,828,709
(316,845,105)
45,071,342
45,071,342
2,758,512,440
18,335,822,311
(514,214,766)
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Risk Management 65
RATE SENSITIVE ASSETS AND LIABILITIES MATURITY GAPS (CONTRACTUAL BASIS) AS AT 31.12.2013
Up to 3 Months
3 - 12 Months
1-3 Years
3-5 Years
Over 5 Years
Total
LKR
LKR
LKR
LKR
LKR
LKR
2,444,552,371
2,444,552,371
685,320,420
685,320,420
21,470,669
1,737,895,772
661,958,238
Assets
20,461,046
1,737,895,772
254,599,949
Financial Assets - Held for Trading
175,334,631

6,019,620,557
1,009,623
407,358,289
2,978,736,081
3,822,317,221
1,589,501,020
175,334,631
605,143,203
15,015,318,081
243,074,600
600,337,971
357,263,371
227,900,817
281,218,525
10,427,050
519,546,392
28,994,455
35,425,210
176,357,948
240,777,613
Intangible Asset
283,027,619
283,027,619
852,960,574
852,960,574
Deferred Tax Asset
159,355,340
159,355,340
2,143,561,336
23,397,855,691
Total Assets
11,594,680,018
3,703,747,728
4,366,365,590
1,589,501,020
Liabilities
Due to Customers
Total Liabilities
Maturity Gap
3,113,249
17,510
11,969,969,310
5,232,968,700
206,780,558
283,374,793
1,367,544
6,077,485
13,688,807
12,270,146,159
(675,466,141)
5,234,353,754
(1,530,606,027)
117,367,875
456,025,138
3,130,759
17,983,111,581
290,819,822
13,688,807
45,071,342
45,071,342
212,858,043
117,367,875
501,096,480
18,335,822,311
4,153,507,547
1,472,133,146
1,642,464,856
83
LIQUIDITY RISK
Liquidity risk is the risk that the Bank is unable to meet its financial obligations in a timely
manner without incurring high cost.
Effective liquidity risk management is essential in order to maintain the confidence of
depositors and counterparties, manage the cost of funds, and to enable the business units to
continue to generate revenue, even under adverse circumstances.
Liquidity risk is managed within the framework of policies and limits that are approved by the
Board of Directors. The Board of Directors receives reports on risk exposures and performance
against approved limits. ALCO provides senior management oversight of liquidity risk and
meets monthly to review the Banks liquidity profile.
Adequate liquid assets are maintained due to the business model adopted by the Bank to
ensure the Statutory Liquid Asset Ratio is maintained according to regulatory requirements.
Liquid assets defined for purposes of the liquidity ratio are mainly cash holdings, bank
balances and short term interbank deposits. The maintenance of SLAR is given below:
LIQUID ASSETS TO LIABILITIES RATIOS

Year-end
Minimum
Maximum
22.60%
21.27%
39.45%
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Risk Management 65
ASSET AND LIABILITY MATURITY GAPS

The contractual and behavioral assets and liability maturity gaps as at end of year are indicated
below:
STRESS TESTING
Stress testing is carried out based on Board approved stress testing guidelines and the results
are reviewed by BIRMC and ALCO regularly. Stress testing is carried out for areas in relation to
exchange exposure, equity portfolio and liquidity to ascertain the impact if the markets faced
stressed situations.
FOREIGN EXCHANGE
Amna Banks foreign exchange exposure has been stress tested using three scenarios which
are based on 10%, 20% and 30% in order to assess adverse rate movements of exchange rates,
for which the result would impact upon the Capital Adequacy Ratio (CAR). The stress testing
results of exchange exposures as of 31.12.2013 are given below:
Particulars
Adverse Change in Exchange Rate

Net Exposure (LKR)
Exchange Loss (LKR)
Scenario 1
Scenario 2
Scenario 3
10%
15%
20%
49,515,517
49,515,517
49,515,517
4,951,552
7,427,328
9,903,103
Tier I Capital Funds - December 2013 (LKR)
4,682,601,000
4,682,601,000
4,682,601,000
Capital adjusted for Loss (LKR)
4,677,649,448
4,675,173,672
4,672,697,897
Risk Weighted Assets - December 2013 (LKR)
22,086,751,000
22,086,751,000
22,086,751,000
Adjusted Risk Weighted Assets (LKR)
22,081,799,448
22,079,323,672
22,076,847,897
21.18%
21.17%
21.17%
21.5%
21.5%
21.5%
0.357%
0.366%
0.374%
Revised Capital Adequacy Ratio

Capital Adequacy Ratio (December 2013)
Decline in CAR
85
EQUITY PORTFOLIO
Amna Banks equity portfolio has been stress tested using three scenarios which are based
on 10%, 20% and 30% in order to assess adverse price movements of equities, for which the
result would impact upon the Capital Adequacy ratio (CAR). The stress testing results of equity
portfolio as of 31.12.2013 are given below:
Particulars
Adverse Change in Equity Price

Net Exposure (LKR)
Loss Due to Decline in Prices (LKR)
Tier I Capital Funds - December 2013 (LKR)
Capital Adjusted for Loss (LKR)
Scenario 1
Scenario 2
10%
20%
Scenario 3
30%
772,679,603
772,679,603
772,679,603
77,267,960
154,535,921
231,803,881
4,682,601,000
4,682,601,000
4,682,601,000
4,605,333,040
4,528,065,079
4,450,797,119
Risk Weighted Assets - December 2013 (LKR)
22,086,751,000
22,086,751,000
22,086,751,000
Adjusted Risk Weighted Assets (LKR)
22,009,483,040
21,932,215,079
21,854,947,119
Revised Capital Adequacy Ratio
20.9%
20.6%
20.4%
Capital Adequacy Ratio - December 2013
21.5%
21.5%
21.5%
Decline in CAR
0.62%
0.89%
1.17%
LIQUIDITY
The Banks ability to maintain regulatory liquidity requirements is undertaken based on stress
testing due to the concentration of liquidity which could lead to the impact of large outflows
due to customer withdrawals.
This analysis takes into consideration the large deposit concentrations and the impact on the
Banks liquidity.
OPERATIONAL RISK MANAGEMENT

Operational risk is the risk of loss resulting from inadequate or failed internal processes,
people, systems or from external events.
Operational risk, at many times, is inter-related to other types of risks and can occur in every
function of the Bank. The resultant loss is not only limited to operational losses, but can be
financial losses, regulatory implications and even reputational damage.
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Risk Management 65
The Bank understands the importance of effective operational risk management to create a
powerful competitive advantage in pursuit of the following objectives:
1. Operational sophistication, speed and flawless execution.
2. Improved customer experiences.
3. Compliance with Basel II and regulatory requirements.
GOVERNANCE AND ORGANISATION

The individual business lines are accountable for management and control of the significant
operational risks to which they are exposed, which means that staff at all levels is accountable
for directing and controlling the operational risks in his/her area of responsibility. In this sense,
everyone in the Bank is an operational risk manager and is responsible and accountable for
his/her own operational risks.
The governing principles of the operational risk management framework of the Bank can be
summarised as follows:

The Board of Directors being responsible for sound corporate governance approves the
Banks operational risk management policy. They are further responsible for ensuring
that senior management takes steps to identify, measure, monitor and control all risks
encountered by the Bank.
BIRMC assesses all risks faced by the Bank, including operational risks, through
appropriate risk indicators and management information. According to its charter, the
Committee shall submit regular operational risk assessments to the Board, seeking its
views, concurrence or specific directions.
Operational Risk Management Committee (ORMC), a senior management level committee

comprising functional heads and chaired by the Chief Operating Officer, provides
consistent, bank-wide oversight of operational risk management.
The three lines of defence model helps the Bank to ensure proper accountability and
clearly defines the roles and responsibilities for operational risk management. The first line
of defence is the business units, who own the risks in their businesses and operations. The
second line of defence is the RMD and other control functions. The third line of defence is
the Internal Audit Department.
87
Operational Risk Management Unit (ORMU) in RMD has the ownership of operational
risk management within the Bank. Head of ORMU reports to the Risk Officer and is
responsible for the functions of operational risk policy and planning, operational risk
assessment, operational risk measurement and analysis and operational risk monitoring,
mitigations and control.
The Internal Audit Department is responsible for independently assessing and testing the
risks and controls respectively, as well as assessing the effectiveness of operational risk
management framework of the Bank.
OPERATIONAL RISK MANAGEMENT (ORM) FUNCTION

ORM is a management function within the Bank and its responsibilities include identifying,
monitoring, measuring and managing operational risks assumed by the Bank.
Operational Risk
Management
Operational
Risk Policy
Function
Operational
Risk Assessment
Function
Function:
Owner of Risk Management Policies
Recommended for BIRMC approval
Risk Strategy
Risk Policies
Risk Organisation
Risk Limits
Monitor and Manage
Risk Policies
Risk Measurement
Risk Limits
Operational
Risk Analytics
Function
Operational
Risk Monitoring,
Mitigation and
Control Function
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Risk Management 65
The key functions of ORM are the operational risk policy and planning function, operational
risk assessment function, operational risk measurement and analytics function and operational
risk monitoring, mitigation and control function as depicted in the diagram above.
A summary of these functions are as follows:
(a) Operational Risk Policy Function:
i.
Creating and maintaining the Banks Operational Risk Policy.
ii. Communicating the Banks operational risk strategy and policy across the Bank.
iii. Ensuring training of the Banks employees on operational risk related areas.
iv. Co-ordinate training to staff members on the Banks operational risk policy and the
operational risks faced in their respective functional areas.
v.
Reviewing standards of control for different processes in all areas of the Bank.
vi. Identifying operational risks in the environment that may have an impact on the risk
profile of the Bank.
vii. Developing operational risk management procedures and control standards.
viii. Reviewing operational limits across the organisational hierarchy such as signing powers,
authorisation hierarchy, etc.
ix. Assigning responsibilities for risk identification, assessment, monitoring and reporting.
x. Ensuring implementation of procedures for operational risk management.
xi. Detailing disaster recovery and business continuity plans; and
xii. Assessing new products and services, provide recommendations and sign-off endorsement
from an operational risk perspective.
(b)
i.
ii.
iii.
Operational Risk Assessment Function:

Assisting in identification of operational risks in new products, services and activities.
Reviewing operational risks in existing products, services and activities on a periodic basis.
Co-ordinating review of major IT systems and software being used/introduced from the
viewpoint of identifying potential operational risks with the IT department and relevant
functional heads. Reviews will include issues relating to integration/interface with existing
applications. Reviews will also ensure adequate mitigating/controlling mechanism in
relation to the risks identified.
iv. Reviewing the operational risk profile of the Bank and the business units, departments
and branches on an ongoing basis.
89
v.
Evaluating control weaknesses in various operational areas and approving appropriate

remedial/corrective actions; and
vi. Periodically reviewing business processes to identify potential risks and control
weaknesses.
(c) Operational Risk Analytics Function:
i. Maintaining loss databases and providing guidance to other employees on the data
collection process.
ii. Specifying the Key Risk Indicators for operational risks for each business unit.
iii. Evaluating methodologies to model and estimate operational risk losses and calculating
economic capital to be allocated in connection with operational risk.
iv. Selecting/implementing technologies for measurement of operational risks.
v. Setting quantitative goals for improvement.
vi. Conducting tests to ensure accuracy and performance of the IT system for operational
risk measurement; and
vii. Co-ordinating with other banks/financial institutions for pooling data/information on
operational risks.
(d) Operational Risk Monitoring, Mitigation and Control Function:
i. Interacting with the Internal Audit Department and other departments/business units
and collating bank-wide operational risk data and creation of operational risk reports.
ii. Periodic reporting of major exceptions to the ORMC and BIRMC.
iii. Monitoring action on significant operational risk issues identified.
iv. Making recommendations to update minimum control standards.
v. Co-ordinating examination of legal implications of activities resulting in possible
operational losses.
vi. Monitoring migration of risk rating of branches and business units; and
vii. Ensuring adequacy of disaster recovery and business continuity plans.
OPERATIONAL RISK MANAGEMENT FRAMEWORK

RMD manages operational risk as a significant component of its Integrated Risk Management
Framework and has engaged in creating effective awareness whilst establishing an appropriate
ORM culture across the Bank.
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Risk Management 65
Risk Definition/Governance/Accountability
Foundation
Operational Risk Policies/Risk Awareness

Internal Controls
Risk Mitigation
Programmes
Business Continuity Management

RCSA
Risk Event Management and Reporting
Key Risk Indicators
Risk Tools
Risk Analysis and Reporting

Process Risk Mapping
New Product and Service Approval Process
Risk
Measurement
Loss Provision
Capital Allocation
Takaful Programme
Based on the operational risk management policy, the Bank has implemented the following
components in setting out an integrated approach to identify, assess, mitigate and report
operational risks across the board.
STANDARD FOR CONTROL OF OPERATIONAL RISK (SCOR)

SCOR provides an overview of the key risks associated with process scopes and the expected
key controls to mitigate these risks. As such they are fundamental to develop operational risk
management in the Bank.
91
The goals of SCOR are:

To provide a clear and brief overview of the key operational risks and controls in different
processes.
To contribute to increased risk awareness.
To provide input for the further development of procedures and guidelines.
To establish best practices in management of operational risks.
To provide a benchmark for audit.
KEY RISK INDICATORS (KRIs)

The function of KRIs is to allow the early detection of operational risk before actual failure
occurs. It is an early warning indicator of the breach of an operational risk appetite or
tolerance. The Bank has developed a comprehensive set of KRIs with two threshold levels,
which are constantly monitored by ORMC and BIRMC respectively.
INTERNAL OPERATIONAL RISK EVENTS AND LOSSES - REPORTING,

COLLECTION AND ANALYSIS
The Bank maintains a centralised operational loss event database, capturing all operational
losses reported by the branches and business/support units. All actual operational losses are
categorised into the business lines and event types in accordance with The Standard Approach
(TSA) under Basel II framework in calculating operational risk. The ORMU, which maintains
the central database, further encourages the branches and business/support units to report
risk incidents and near misses (that have not resulted in an actual loss), as a precursor for
identifying possible operational lapses. Significant operational losses are tabled and discussed
at the ORMC, as well as the BIRMC meetings, if deemed appropriate.
Nevertheless it is pertinent to note that the Bank has been in operation for just over two years,
hence the lack of adequate historical data is a challenge in reaching meaningful conclusions.
RISK AND CONTROL SELF ASSESSMENTS (RCSAs)

Risk & Control Self-Assessment (RCSA) is a structured means for a business line, supporting
unit, product line or process to identify and assess its own risks and introduce measures aimed
at improving operational risk control. The first step in this is Process Risk Mapping (PRM),
where the potential operational risks in the process are identified, followed by the
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Risk Management 65
identification of existing controls and assessing the effectiveness of existing controls. Line
management attests to the accuracy of each assessment and develops action plans to mitigate
risks if controls are not identified as effective. Results of these reviews are summarised and
reported to the ORMC and the BIRMC.
RCSA is ideally conducted by staff of the unit being assessed (i.e. those who know the sub-unit
or process best) with the guidance of the ORMU where necessary. However as the Bank is still
implementing the risk management culture, ORMU is currently taking initiative in the RCSA
process, which will eventually be transferred to the respective business/support unit.
RCSAs will assist business and support units in identifying and assessing the operational risks
for certain key processes for which they are responsible. RCSA will also help address those
risks by evaluating the effectiveness of controls and, if necessary, establishing action plans to
address any identified gaps.
REVIEW OF NEW PRODUCTS

ORMU reviews all new products and operational processes to ensure all inherent operational
risks are identified and controls/mitigants are introduced before launch of such products.
BUSINESS CONTINUITY MANAGEMENT (BCM)
Business Continuity Management (BCM) is a holistic management process that identifies
potential threats to an organisation and the impacts to business operations those threats, if
realised, might cause, and provides a framework for building organisational resilience with
the capability of an effective response that safeguards the interests of its key stakeholders,
reputation, brand and value-creating activities.
The Bank, since its inception, has proactively established and implemented an effective
business continuity and disaster recovery strategy across its network and has achieved a
consistent level of business resilience for sustaining public trust, shareholder confidence, brand
image, financial stability, and market reputation. The Bank has taken appropriate measures to
manage such unforeseen business disruptions and system failures and has adopted a feasible
and systematic approach to recover its essential business operations in the event of sudden
interruptions, natural or man-made disasters.
93
BUSINESS CONTINUITY PLANNING (BCP) AND DISASTER RECOVERY PLANNING

(DRP)
The Bank has developed a comprehensive Business Continuity Plan (BCP) and a Disaster
Recovery Plan (DRP) in respect of its critical business functions. BCP/DRP documents are
reviewed on an annual basis subject to a Business Impact Analysis (BIA) study undertaken
across all business units of the Bank.
Significant changes to vital information contained in the BCP/DRP such as changes in
staff structure, new products introduced, operational processes, organisational structure,
resource requirements, relocation of business units, Service Level Agreements (SLAs) etc. are
periodically updated in the BCP/DRP based on BIA results to maintain a living document for
reference.
Individual unit BCPs are available with all critical business units of the Bank and necessary
knowledge on how to activate its business resumption procedures have been imparted to all
staff members of such units.
BCP/DRP teams and Call Tree structures have been formulated to function under crisis
situations in a timely manner to restore the Banks operations to business-as-usual.
BCP/DRP TEAM STRUCTURE

Business Continuity Management Steering Committee (BCMSC)
Business Unit Damage Assessment & Restoration Team (BUDART)
Information Technology Damage Assessment & Restoration Team (ITDART)
Emergency Coordination Team (ECT)
Location Damage Assessment Team (LDAT)
Emergency Management Team (EMT)
Damage Assessment/Facility Restoration Team (DAFRT)
Communication Infrastructure Support Team (CIST)
System & Application Support Team (SAST)
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Risk Management 65
DISASTER RECOVERY SITE (DRS)

The Bank has established a fully-fledged Disaster Recovery Centre; located off-site in
accordance with the guidelines provided by the regulators with adequate infrastructure
facilities available to take over IT operations in the event of serious failures that may occur at
the Head Office Data Centre that supports the core business activities of the Bank.
The Bank has strategically upgraded the status of the DRS to ensure optimum efficiency by
allocating additional resources and IT infrastructure to facilitate both business users and IT
personnel to operate from the site at the time of an emergency/crisis.
The following business operations of the Bank are assigned dedicated floor areas to function
with adequate infrastructure in place at the DRS.
1. Treasury
2. Central Operations
3. Trade Services
4. Credit
5. Business Banking
6. Finance
7. Call Centre Operations
8. Human Resources
With the enhancement effected at the DRS, the Bank possesses identical Treasury Dealing
Room facilities including middle office and back office operations in addition to facilitating
essential payments & settlement functions such as Society for Worldwide Interbank Financial
Telecommunications (SWIFT), Cheque Imaging & Truncation (CIT), Telegraphic Transfers
(TTs), Real Time Gross Settlements (RTGS) and Sri Lanka Interbank Payment Systems (SLIPS).
Amna Bank has also developed an exclusive Disaster Recovery Plan (DRP) focusing on
recovery and restoration aspects of data and critical Information Technology (IT) applications,
programs, operating systems, networks, data files etc. This assures high availability and system
reliability and achievement of predefined Recovery Time Objectives (RTOs) and Recovery Point
Objectives (RPOs) computed based on the bank-wide Business Impact Analysis (BIA) studies.
95
An online real time data replication/mirroring system to transmit data from the Banks head
office data centre to its DRS has also been successfully implemented by the Bank.
BCP TESTING/ACTIVATION DRILLS

The Bank has successfully conducted DR Testing in June and December 2013 from the
Banks DRS in respect of its critical business operations Treasury, Trade Services, Central
Operations, Credit, Business Banking, Finance, HR, Call Centre Operations and Administration
functions of Head Office.
BCP/DR Drill Reports highlighting test results, technical & operational functions, issues
encountered, lessons learnt and risk mitigation measures adopted during the testing process
were reported to the regulator with the review and recommendation of the BIRMC for
approval of the Board of Directors well within stipulated deadlines of the regulator.
The results of BCP drills revealed that the Banks most essential functions relating to its
payments & settlement processes such as SWIFT, CIT, TTs, RTGS and SLIPS possess the
DR capability to effect financial transactions despite potential adverse impacts caused by
unforeseen business disruptions and system failures.
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Corporate Governance
Risk Management 65
As a bank, the Directors recognise the importance of conducting the business of Amna in a
manner that it meets the highest standards of Corporate Governance. Furthermore, the Board
stresses the importance of adhering to ethical standards to enhance stakeholder confidence.
Since the commencement of banking business, the Bank has taken steps to enhance its
Corporate Governance practices.
During the year under review, many gaps in the governance procedures and policies as
identified by previous audits have been filled. The Bank remains vigilant to identify governance
failures whenever they occur and will work towards addressing them in the future.
The report below sets out in detail the Banks compliance with the requirements of good
governance as set out by Direction No. 11 of 2007 and the subsequent amendments thereof.
STATEMENT OF EXTERNAL AUDITORS

The External Auditors have performed agreed upon procedures on the following Corporate
Governance Principles from 3 (1) to 3 (8) specified in Banking Act Direction No. 11 of 2007 and
amendments thereto on Corporate Governance for Licensed Commercial Banks in Sri Lanka
issued by the Central Bank of Sri Lanka.
97
Rule Number
Rule
3 (1)
The Responsibilities of the Board
Status of Compliance
3 (1) (i)
The Board shall strengthen the safety and soundness of the Bank by ensuring the implementation of the following:
3 (1) (i) (a)
Approve and oversee the Banks strategic objectives and corporate values and ensure that these are communicated Complied.
through the Bank.
3 (1) (i) (b)
Approve the overall business strategy of the Bank, including the Risk Policy and Risk Management procedures and
mechanisms with measurable goals, for at least the next three years.
Complied.
3 (1) (i) (c)
Identify the principal risks and ensure implementation of appropriate systems to manage the risks prudently.
Complied.
3 (1) (i) (d)
Approve implementation of a policy of communication with all stakeholders, including depositors, creditors,
shareholders and borrowers.
Complied.
3 (1) (i) (e)
Review the adequacy and the integrity of the Banks internal control systems and management information
systems.
The Board Audit Committee (BAC) will

be addressing this matter in the year
2014 with the assistance of the IT and
Finance Departments and a report will
be submitted to the Board for review.
3 (1) (i) ( f)
Identify and designate Key Management Personnel, as defined in the International Accounting Standards, who are
in a position to:
Complied.
(i) significantly influence policy;

(ii) direct activities; and
(iii) exercise control over business activities, operations and risk management.
3 (1) (i) (g)
Define the areas of authority and key responsibilities for the Board of Directors themselves and for Key
Management Personnel.
Complied.
3 (1) (i) (h)
Ensure that there is appropriate oversight of the affairs of the Bank by Key Management Personnel that is
consistent with Boards policy.
Complied.
3 (1) (i) (i)
Periodically assess the effectiveness of the Board of Directors own governance practices, including:
Complied.
(i)
Complied.
3 (1) (i) (j)
the selection, nomination and election of Directors and Key Management Personnel;
(ii) the management of conflicts of interest and
Complied.
(iii) the determination of weaknesses and implementation of changes where necessary
A summary of the findings of selfevaluation will be discussed by the Board

once all responses are received.
Ensure that the Board has an appropriate succession plan for Key Management Personnel
A Board approved succession

mechanism is in place. Further,
succession for KMPs has been identified
internally. However, due to the sensitive
nature of the information documenting
the same is still under consideration.
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Risk Management 65
Rule Number
Rule
3 (1) (i) (k)
Ensure the Board has regular meetings with the Key Management Personnel to review policies, establish
communication lines and monitor progress towards corporate objectives.
Complied.
3 (1) (i) (l)
Understand the regulatory environment and ensure that the Bank maintains an effective relationship with
regulators
Complied.
3 (1) (i) (m)
Exercise due diligence in the hiring and oversight of external auditors.
Complied.
3 (1) (ii)
The Board shall appoint the Chairman and the Chief Executive Officer and define and approve the functions and
responsibilities of the Chairman and the Chief Executive Officer in line with Direction 3 (5) of these Directions
Complied.
BOARD PROCEDURE
3 (1) (iii)
The Board shall meet regularly and Board meetings shall be held at least twelve times a year at approximately
monthly intervals.
Complied.
3 (1) (iv)
The Board shall ensure that procedures are in place to enable all Directors to include matters and proposals in the
agenda for regular Board meetings where such matters and proposals relate to the promotion of business and the
management of risks of the Bank.
Complied.
3 (1) (v)
The Board procedures shall ensure that notice of at least 7 days is given of a regular Board meeting to provide all
Directors an opportunity to attend. For all other Board meetings, reasonable notice may be given.
Complied.
3 (1) (vi)
The Board procedure shall ensure that a Director, who has not attended at least two-thirds of the meetings in the
Discussions are in progress to appoint a
Director in Sri Lanka to represent Islamic
period of 12 months immediately preceding or has not attended the immediately preceding three consecutive
Development Bank.
meetings held, shall cease to be a Director. Participation at the Directors meetings through an Alternative Director
shall, however, be acceptable as attendance.
3 (1) (vii)
The Board shall appoint a Company Secretary who satisfies the provisions of Section 43 of the Banking Act No. 30
of 1988, whose primary responsibilities shall be to handle the secretarial services to the Board and shareholder
meetings and to carry out other functions specified in the statutes and other regulations.
Complied.
3 (1) (viii)
All Directors shall have access to advice and services of the Company Secretary with a view to ensure that Board
procedures and all applicable rules and regulations are followed.
Complied.
3 (1) (ix)
The Company Secretary shall maintain the minutes of the Board meetings and such minutes shall be open for
inspection at any reasonable time, on reasonable notice by any Director.
Complied.
99
Rule Number
Rule
3 (1) (x)
Minutes of Board meetings shall be recorded in sufficient detail so that the minutes clearly contain or refer to the
following:
(a) A summary of data and information used by the Board in its deliberations.
(b) The matters considered by the Board.
(c) The fact-finding discussions and the issues of contention or dissent which may illustrate whether the Board
was carrying out its duties with due care and prudence.
(d) The matters which indicate compliance with the Boards strategies and policies and adherence to relevant
laws and regulations.
(e) The understanding of the risks to which the Bank is exposed and an overview of the risk management
measures adopted.
( f) The decisions and Board resolutions.
Complied.
The minutes shall serve as a reference for regulatory and supervisory authorities to assess the depth of
deliberations at the Board meetings.
Complied.
3 (1) (xi)
There shall be a procedure agreed by the Board to enable Directors, upon reasonable request, to seek independent
professional advice in appropriate circumstances, at the Banks expense.
Complied.
3 (1) (xii)
Ensure that there is a procedure to determine, report, resolve and to take appropriate action relating to Directors
to avoid conflicts of interests, or the appearance of conflicts of interest.
The Board Secretary maintains the

interest register.
A Director shall abstain from voting on any Board resolution in relation to which he/she or any of his/her close
relation or a concern in which a Director has substantial interest, is interested.
Complied.
He/She shall not be counted in the quorum for the relevant agenda item at the Board meeting.
Complied.
3 (1) (xiii)
The Board shall have a formal schedule of matters specifically reserved to it for decision to ensure that the direction Complied.
and control of the Bank is firmly under its authority.
3 (1) (xiv)
The Board shall, if it considers that the Bank is, or is likely to be, unable to meet its obligations or is about to
become insolvent or is about to suspend payments due to depositors and other creditors, forthwith inform the
Director of Bank Supervision of the situation of the Bank prior to taking any decision or action.
Such a situation has not arisen during

the year 2013.
3 (1) (xv)
The Board shall ensure that the Bank is capitalised at levels as required by the Monetary Board in terms of the
capital adequacy ratio and other prudential grounds.
Complied.
3 (1) (xvi)
The Board shall publish in the Banks Annual Report, an annual corporate governance report setting out the
compliance with Direction 3 of these Directions.
Complied. Refer pages from 96 to 109.
3 (1) (xvii)
The Board shall adopt a scheme of self-assessment to be undertaken by each Director annually, and maintain
records of such assessments.
Complied.
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Risk Management 65
Rule Number
Rule
3 (2)
THE BOARDS COMPOSITION
3 (2) (i)
The number of Directors on the Board shall not be less than 7 and not more than 13
3 (2) (ii) (A)
The total period of service of a Director other than a Director who holds a position of a Chief Executive Officer shall Complied.
not exceed nine years.
3 (2) (ii) (B)
Ensure that any Director serving more than nine years, the transitional provisions have been applied with.
Complied.
3 (2) (iii)
Ensure that the number of Executive Directors, including the CEO does not exceed one-third of the number of
Directors of the Board.
Complied.
3 (2) (iv)
The Board shall have at least three Independent Non-Executive Directors or one third of the total number of the
Directors, whichever is higher.
Complied.
Complied.
The Board shall not consider the Non-Executive Directors independent if he/she;
Complied.
(a) Holds directly and indirectly shareholdings of more than 1% of the bank.
(b) Has currently or had during the period of two years immediately preceding his/her appointment as Director,
any business transactions with the Bank as described in Direction 3 (7) hereof, exceeding 10% of the
regulatory capital of the Bank.
(c) Has been employed by the Bank during the two-year period immediately preceding the appointment as Director.
(d) Has had a close relation; who is a Director, CEO, a member of Key Management Personnel, a material
shareholder of the Bank or another bank (a close relation means the spouse or a financially dependent child).
(e) Represents a specific stakeholder of the Bank.
( f) Is an employee or Director or a material shareholder in a company or business organisation:
I. Which currently has a transaction with the Bank as defined in, or
II. In which any of the other Directors of the Bank are employed or are Directors or are material shareholder; or
III. In which any of the other Directors of the Bank have a transaction as defined in Direction 3 (7) of these
Directions, exceeding 10% of the regulatory capital of the Bank.
3 (2) (v)
In the event an Alternate Director is appointed to represent an Independent Director, the person so appointed shall Complied.
also meet the criteria that apply to the Independent Director.
3 (2) (vi)
The Bank shall have a process to evaluate the appointment of Independent Directors, who possess credible track
Complied.
records and/or have necessary skills and experience to bring an independent judgment to bear in issues of strategy,
performance and resources.
3 (2) (vii)
The Board shall ensure that the Board meetings are duly constituted only where the quorum includes more than
50% of the Directors out of which 50% should include Non-Executive Directors.
Complied.
3 (2) (viii)
The Board shall disclose the composition of the Board, by category of Directors, including the names of the
Chairman, Executive Directors, Non-Executive Directors and Independent Directors in the annual corporate
governance report.
Complied. Refer page 109.
101
Rule Number
Rule
3 (2) (ix)
There shall be a formal, considered and transparent procedure for the appointment of new Directors to the Board.
There shall also be procedures in place for the orderly succession of appointment of the Board.
Complied.
3 (2) (x)
All Directors appointed to fill a casual vacancy shall be subject to election by shareholders at the first general
meeting after their appointment.
Complied.
If a Director resigns or if removed from office, the Board shall-
Complied.
3 (2) (xi)
(a) Announce the Directors resignation or removal and reasons for such removal or resignation including but
not limited to information relating to the relevant Directors disagreement with the Bank, if any; and
(b) Issue a statement confirming whether or not there are any matters that need to be brought to the attention
of shareholders.
3 (2) (xii)
Ensure that there is a process where the Board shall identify whether a Director or an employee of the Bank is
appointed, elected or nominated as a Director of another bank.
3 (3)
CRITERIA TO ASSESS THE FITNESS AND PROPRIETY OF DIRECTORS
Complied.
In addition to provisions of Section 42 of the Banking Act No. 30 of 1988, the criteria set out below shall apply
to determine the fitness and propriety of a person who serves or wishes to serve as a Director of a bank. Noncompliance with any one of the criteria as set out herein shall disqualify a person to be appointed, elected or
nominated as s Director or to continue as a Director.
3 (3) (i)
A Director shall not exceed the age of 70 years to serve in the Board.
Complied.
3 (3) (ii)
A person shall not hold office as a Director of more than 20 companies/entities/institutions inclusive of
subsidiaries or associate companies of the Bank.
Complied.
Of such 20 companies such Director shall not hold office of a Director or any equivalent position in more than
10 companies that are classified as Specified Business Entities in terms of Sri Lanka Accounting and Auditing
Standards Act, No 15 of 1995.
3 (4)
MANAGEMENT FUNCTIONS DELEGATED BY THE BOARD
3 (4) (i)
The Board shall approve the delegation arrangements and ensure that it is in place.
3 (4) (ii)
The Board shall be responsible for the matters in 3 (1) (i) even in the instances such actions are delegated. The
Complied.
Board shall not delegate any matters to the Board committee, CEO, Executive Directors or Key Management
Personnel, to an extent that such delegation would significantly hinder or reduce the ability of the Board as a whole
to discharge its functions.
3 (4) (iii)
The Board shall review the delegation process in place on a periodic basis to ensure that they remain relevant to
the needs of the Bank.
3 (5)
THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER
3 (5) (i)
The roles of the Chairman and the Chief Executive Officer shall be separated and shall not be performed by the
same individual.
Complied.
Complied.
Complied.
102
Risk Management 65
Rule Number
Rule
3 (5) (ii)
The Chairman shall be a Non-Executive Director.
Complied. Refer page 21.
In the case where the Chairman is not an Independent Director, the Board shall designate an Independent Director
as the Senior Director with suitably documented terms of reference.
The designation of Senior Director shall be disclosed in the Banks Annual Report
3 (5) (iii)
3 (5) (iv)
The Board shall disclose in its Corporate Governance Report, which shall be an integral part of its Annual Report,
the identity of the Chairman and the CEO and the nature of the relationship (including financial, business, family
or other material/relevant relationship(s), if any, between the Chairman and the CEO and the relationships among
members of the Board.
Complied. Refer pages 20 and 207.
The Chairman shall:
Complied.
(a) Provide leadership to the Board;

(b) Ensure that the Board works effectively and discharges its responsibilities; and
(c) Ensure all key and appropriate issues are discussed by the Board in a timely manner.
3 (5) (v)
The Chairman shall be primarily responsible for drawing up and approving the agenda of the Board meeting. The
Chairman may delegate the drawing up of the agenda to the Company Secretary.
Complied.
3 (5) (vi)
The Chairman shall ensure that all the Directors are properly briefed on issues arising at Board meetings and also
ensure that Directors receive adequate information in a timely manner.
Complied.
3 (5) (vii)
The Chairman shall encourage all the Directors to make a full and active contribution to the Boards affairs and
take the lead to ensure that the Board acts in the best interest of the Bank.
Complied.
3 (5) (viii)
The Board shall have a self-evaluation process that assesses the contribution of Non-Executive Directors.
Complied.
3 (5) (ix)
The Chairman shall not engage in activities involving direct supervision of Key Management Personnel or any other On occasions the Chairman has been
involved in certain operational level
executive duties whatsoever.
decision making.
3 (5) (x)
The Chairman shall ensure that appropriate steps are taken to maintain effective communication with
shareholders and that the views of shareholders are communicated to the Board.
Complied.
3 (5) (xi)
The CEO shall function as the apex executive-in-charge of the day-to-day management of Banks operations and
business.
Complied, subject to 3 (5) (ix) and

3 (6) (iii) (d)
3 (6)
BOARD APPOINTED COMMITTEES
3 (6) (i)
The Bank shall have at least the following committees:
Complied.
3 (6) (ii) - Audit Committee

3 (6) (iii) - Human Resources and Remuneration Committee
3 (6) (iv) - Nomination Committee
3 (6) (v) - Integrated Risk Management Committee
Each Committee shall report directly to the Board
Complied.
103
Rule Number
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Each Committee shall appoint a Secretary to arrange the meetings and maintain, minutes, records etc. under the
supervision of the Chairman of the Committee.
Complied.
The Board shall present a report of the performance on each Committee, on their duties and roles at the Annual
General Meeting.
3 (6) (ii)
Audit Committee
3 (6) (ii) (a)
The Chairman of the Committee shall be an Independent Non-Executive Director who possesses qualifications
and experience in accounting and/or audit.
Complied.
3 (6) (ii) (b)
All members of the Committee shall be Non-Executive Directors.
Complied.
3 (6) (ii) (c)
The Committee shall make recommendations on matters in connection with;
Complied.
(a) The appointment of External Auditor for audit services to be provided in compliance with the relevant statues;
Complied.
(b) The implementation of the Central Bank Guidelines issued to Auditors from time to time;
Complied.
(c) The application of the relevant accounting standards; and
Complied.
(d) The service period, audit fees and any resignation or dismissal of the auditor, provided that the engagement
Complied.
of the Audit partner shall not exceed five years, and that the particular Audit partner is not re-engaged for the
audit before the expiry of three years from the date of the completion of the previous term.
3 (6) (ii) (d)
The Committee shall review and monitor the External Auditors independence and objective and the effectiveness
of the audit process in accordance with SLAuS.
Complied.
3 (6) (ii) (e)
The Committee shall have in place an implemented policy on the engagement of an external auditor to provide
non-audit services in accordance with the relevant regulations.
Complied.
3 (6) (ii) ( f)
The Committee shall discuss and finalise the nature and scope of the audit, with the external auditors in
accordance with SLAuS before the audit commences
Complied.
3 (6) (ii) (g)
The Committee shall review the financial information of the Bank, in order to monitor the integrity of the Financial Complied.
Statements of the Bank, its Annual Report, accounts and quarterly reports prepared for disclosure and receive the
following from the Chief Financial Officer:
(i)
(ii)
(iii)
(iv)
(v)
Major judgmental areas;

Any changes in accounting policies and practices;
The going concern assumption; and
The compliance with relevant accounting standards and other legal requirements; and
In respect of the Annual Financial Statements the significant adjustments arising from the audit.
3 (6) (ii) (h)
The Committee shall discuss issues, problems and reservations arising from the financial audit in the absence of
the executive management.
Complied.
3 (6) (ii) (i)
The Committee shall review the External Auditors management letter and the managements response thereto.
Complied.
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Risk Management 65
Rule Number
Rule
3 (6) (ii) (j)
The Committee shall take the following steps with regard to the internal audit function of the bank;
Complied.
(i)
Complied.
Review the adequacy of the scope, functions and resources of the Internal Audit Department, and satisfy
itself that the Department has the necessary authority to carry out its work;
(ii) Review the internal audit programme and results of the internal audit process and, where necessary, ensure
that appropriate actions are taken on the recommendations of the Internal Audit Department;
Complied.
(iii) Review any appraisal or assessment of the performance of the head and senior staff members of the
Internal Audit Department;
The appraisal will be reviewed at the BAC.
(iv) Recommend any appointment or termination of the head, senior staff members and outsourced service
providers to the internal audit function;
Complied.
(v)
Noted for future compliance.
Ensure that the Committee is appraised of resignations of senior staff members of the Internal Audit Department
including the Chief Internal Auditor and any outsourced service providers, and to provide an opportunity to the
resigning senior staff members and outsourced services providers to submit reasons for resigning;
(vi) Ensure that the internal audit function is independent of the activities it audits and that it is performed with
impartiality, proficiency and due professional care.
Complied.
3 (6) (ii) (k)
The Committee shall consider the major findings of internal investigation and managements responses thereto.
Complied.
3 (6) (ii) (l)
The Committee shall meet the External Auditors at least twice a year without the Executive Directors being present.
Complied.
3 (6) (ii) (m)
The Committee shall have:

(i)
(ii)
(iii)
(iv)
Explicit authority to investigate into any matter within its terms of reference;
The resources which it needs to do so;
Full access to information; and
Authority to obtain external professional advice and invite outsiders with relevant experience and attend, if
necessary.
Complied.
3 (6) (ii) (n)
The Committee shall meet at least four times a year and has maintained minutes of such meeting.
Complied.
3 (6) (ii) (o)
The Board shall disclose in an informative way:
(i) Details of the activities of the Audit Committee;

(ii) The number of Audit Committee meetings held in the year;
(iii) Details of attendance of each individual Director at such meetings.
3 (6) (ii) (p)
The Secretary of the Committee may be the Company Secretary or the head of Internal Audit who shall keep and
Complied.
record detailed minutes of the meetings.

3 (6) (ii) (q)
The Committee shall review and ensure that the whistle blower policy is in place which covers the process of
dealing with:
(i) The improprieties in financial reporting, internal control or other matters.
(ii) In relation to (i) the Committee shall ensure that proper arrangements are in place for the fair and
independent investigation of such matters, and
(iii) Appropriate follow-up action.
Complied
105
Rule Number
Rule
3 (6) (iii)
Human Resource And Remuneration Committee
3 (6) (iii) (a)
The Committee shall determine the remuneration policy relating to Directors, CEO and Key Management
Personnel of the Bank by review of the Terms of reference and minutes.
Complied.
3 (6) (iii) (b)
The Committee shall set goals and targets for the Directors, CEO and Key Management Personnel and document
the same.
Complied.
3 (6) (iii) (c)
The Committee shall evaluate the performance of the CEO and Key Management Personnel against the set
targets and goals periodically and determine the basis for revising remuneration, benefits and other payments of
performance-based incentives.
Complied.
3 (6) (iii) (d)
The CEO shall be present at all meetings of the Committee, except when matters relating to the CEO are being
discussed.
On occasion this rule had not been

adhered to and the CEO was not present
when matters relating to COO were
discussed.
3 (6) (iv)
Nomination Committee
3 (6) (iv) (a)
The Committee shall implement a procedure to select/appoint new Directors, CEO and Key Management Personnel. Complied.
3 (6) (iv) (b)
The Committee shall consider and recommend (or not recommend) the re-election of current Directors, taking
Complied.
into account the performance and contribution made by a Director concerned towards the overall discharge of the
Boards responsibilities.
3 (6) (iv) (c)
The Committee shall set criteria such as qualifications, experience and key attributes required for eligibility to be
considered for appointment or promotion to the post of CEO and the key management positions.
3 (6) (iv) (d)
The Committee shall ensure that Directors, CEO and Key Management Personnel are fit and proper persons to hold Complied.
office as specified in the criteria given in Direction 3 (3) and as set out in the Statutes and obtain signed declaration
in this regard.
3 (6) (iv) (e)
The Committee shall consider and recommend from time to time, the requirement of additional/new expertise and A Board approved succession mechanism
is in place. Further, succession for KMPs
the succession arrangements for retiring Directors and Key Management Personnel.
has been identified internally. However,
due to the sensitive nature of the
information documenting the same is still
under consideration.
Complied.
A Policy and Procedure for appointment

of new Directors to fill vacancies on
Board is in place.
3 (6) (iv) ( f)
The Committee shall be chaired by an Independent Director and preferably be constituted with a majority of
Independent Directors.
Complied.
The CEO may be present at the meeting by invitation.
Complied.
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Risk Management 65
Rule Number
Rule
3 (6) (v)
Integrated Risk Management Committee
3 (6) (v) (a)
The Committee shall consist of at least three Non-Executive Directors, CEO and Key Management Personnel
supervising Board risk categories, i.e., credit, market, liquidity, operational and strategic risks.
Complied.
3 (6) (v) (b)
The Committee shall assess all risks, i.e., credit, market, liquidity, operational and strategic risks to the Bank on
a monthly basis through appropriate risk indicators and management information. In the case of subsidiary
companies and associate companies, risk management shall be done, both on a Bank basis and Group basis.
Complied.
3 (6) (v) (c)
The Committee shall review the adequacy and effectiveness of all management level committees, such as the Credit Complied.
Committee and Asset-Liability Committee to address specific risks and to manage those risks within quantitative
and qualitative risk limits as specified by the Committee.
3 (6) (v) (d)
The Committee shall review and consider all risk indicators which have gone beyond the specific quantitative and
qualitative risk limits in accordance to the Banks policies and the regulatory and supervisory requirements.
Complied.
3 (6) (v) (e)
The Committee shall meet at least quarterly to assess all aspects of risk management including updated business
continuity plans.
Complied.
3 (6) (v) ( f)
The Committee shall take appropriate action against the officers responsible for failure to identify specific risks and take
prompt corrective actions as recommended by the Committee, and/or as directed by the Director of Bank Supervision.
Complied.
3 (6) (v) (g)
The Committee shall submit a risk assessment report within a week of each meeting to the Board seeking the
Boards views, concurrence and/or specific directions.
Complied.
3 (6) (v) (h)
The Committee shall establish a compliance function to assess the Banks compliance with laws, regulations,
regulatory guidelines, internal controls and approved policies on all areas of business operations. A dedicated
Compliance Officer selected from Key Management Personnel shall carry out the compliance function and report
to the Committee periodically.
The Compliance function assesses the

Banks compliance with laws, regulations
and regulatory guidelines. Internal
controls are discussed at BAC which
takes up all Internal Audit findings
and issues directions, etc. A formal
process to assess the effectiveness of the
internal controls by Compliance will be
implemented in 2014.
3 (7)
RELATED PARTY TRANSACTIONS
3 (7) (i)
The Bank shall establish and document a process to avoid any conflicts of interest that may arise from any
transaction of the Bank with any person, and particularly with the following categories of persons who shall be
considered as related parties for the purpose of this Direction;
(a)
(b)
(c)
(d)
(e)
( f)
(g)
Any of the Banks subsidiary companies;

Any of the Banks associate companies;
Any of the Directors of the Bank;
Any of the Banks Key Management Personnel;
A close relation of any of the Banks Directors of Key Management Personnel;
A shareholder owning a material interest in the Bank;
A concern in which any of the Banks Directors or a close relation of any of the Banks Directors or any of its
material shareholders has a substantial interest.
Complied.
107
Rule Number
Rule
3 (7) (ii)
The Bank shall identify and report the following types of transactions been identified as transactions with related
parties that is covered by this Directions.
(a) The grant of any type of accommodation, as defined in the Monetary Boards Directions a maximum amount
of accommodation.
(b) The creation of any liabilities of the Bank in the form of deposits, borrowings and investments.
(c) The provision of any services of a financial or non-financial nature provided to the Bank or received from
the Bank.
(d) The creation or maintenance of reporting lines and information flows between the Bank and any related
parties which may lead to the sharing of potentially proprietary, confidential or otherwise sensitive
information that may give benefits to such related parties.
3 (7) (iii)
The Board shall ensure that the Bank does not engage in transactions with related parties as defined in Direction
3 (7) (i) above, in a manner that would grant such parties more favourable treatment than that accorded to other
constituents of the Bank carrying on the same business. In this context, more favourable treatment shall mean
and include treatment, including the:
Complied.
Complied.
(a) Granting of total net accommodation to related parties, exceeding a prudent percentage of the Banks
regulatory capital, as determined by the Board. For purposes of this sub-direction:
(I) Accommodation shall mean accommodation as defined in the Banking Act Directions, No. 7 of 2007 on
Maximum Amount of Accommodation.
(II) The total net accommodation shall be computed by deducting from the total accommodation, the cash
collateral and investments made by such related parties in the Banks share capital and debt instruments
with a maturity of 5 years or more.
(b) Charging a lower rate than the Banks best lending rate or paying more than the Banks deposit rate for a
comparable transaction with an unrelated comparable counterparty.
(c) Providing of preferential treatment, such as favourable terms, covering trade losses and/or waiving fees/
commissions, that extend beyond the terms granted in the normal course of business undertaken with
unrelated parties.
(d) Providing services to or receiving services from a related-party without an evaluation procedure.
(e) Maintaining reporting lines and information flows that may lead to sharing potentially proprietary,
confidential or otherwise sensitive information with related parties, except as required for the performance
of legitimate duties and functions.
3 (7) (iv)
The Bank shall not grant any accommodation to any of the Directors or to any Key Management Personnel unless
such accommodation is sanctioned at a meeting of its Board of Directors, with not less than two-thirds of the
number of Directors other than the Director concerned, voting in favour of such accommodation and that this
accommodation be secured by such security as may from time to time be determined by the Monetary Board as well.
Complied.
3 (7) (v)
(a) Where any accommodation has been granted by a bank to a person or a close relation of a person or to any
Such a situation has not arisen during
concern in which the person has a substantial interest, and such person is subsequently appointed as a Director the year 2013.
of the Bank, that steps have been taken by the Bank to obtain the necessary security as may be approved for that
purpose by the Monetary Board, within one year from the date of appointment of the person as a Director.
108
Rule Number
Risk Management 65
Rule
(b) Where such security is not provided by the period as provided in Direction 3 (7) (v) (a) above, the Bank shall
take steps to recover any amount due on account of any accommodation, together with interest, if any
within the period specified at the time of the grant of accommodation or at the expiry of a period of eighteen
months from the date of appointment of such Director, whichever is earlier.
Not applicable as per 3 (7) (v) a
(c) Any Director who fails to comply with the above sub-directions shall be deemed to have vacated the office of
a Director and the Bank shall disclose such fact to the public.
Not applicable as per 3 (7) (v) a
(d) The sub-direction, however, shall not apply to a Director who at the time of grant of the accommodation was Not applicable as per 3 (7) (v) a
an employee of the Bank and the accommodation was granted under a scheme applicable to all employees of
the Bank.
3 (7) (vi)
The Bank shall not grant any accommodation or more favourable treatment relating to the waiver of fees and/
Complied.
or commissions to any employee or a close relation of such employee or to any concern in which the employee or
close relation has a substantial interest other than on the basis of a scheme applicable to the employees of the Bank
or when secured by security as may be approved by the Monetary Board in respect of accommodation granted as
per Direction 3 (7) (v) above.
3 (7) (vii)
No accommodation granted by the Bank under Direction 3 (7) (v) and 3 (7) (vi) above, nor any part of such
accommodation, nor any interest due thereon shall be remitted without the prior approval of the Monetary Board
and any remission without such approval shall be void and of no effect.
3 (8)
DISCLOSURE
3 (8) (i)
The Board shall ensure that:
3 (8) (ii)
Not applicable due to the reasons

mentioned in 3 (7) (v) and (vi).
(a)
Annual Audited Statements and quarterly financial statements are prepared and published in accordance with the
formats prescribed by the supervisory and regulatory authorities and applicable accounting standards and that
(b) Such statements are published in the newspapers in an abridged form, in Sinhala, Tamil and English.
Complied.
The Board shall ensure that the following minimum disclosures are made in the Annual Report:
Complied.
(a) A statement to the effect that the Annual Audited Financial Statements have been prepared in line with
applicable accounting standards and regulatory requirements, inclusive of specific disclosures.
Complied. Refer Report on Statement of

Directors Responsibility on page 145.
(b) A report by the Board on the Banks internal control mechanism that confirms that the financial reporting
system has been designed to provide reasonable assurance regarding the reliability of financial reporting,
and that the preparation of Financial Statements for external purposes has been done in accordance with
relevant accounting principles and regulatory requirements.
Complied. Refer Report on Directors

Statement on Internal Control over
Financial Reporting on page 114.
(c)
To obtain the External Auditors Certification on the effectiveness of the internal control mechanism referred Complied. Refer Report on Independent
Assurance Report on Internal Control on
to in Direction 3 (8) (ii) (b) above.
page 118.
(d) Details of Directors, including names, qualifications, age, experience fulfilling the requirements of the
guidelines fitness and propriety, transactions with the Bank and the total of fees/remuneration paid by the
Bank.
Complied. Refer Details of Directors from

pages 20 to 25, Note 11 to the Financial
Statements for Directors' Emoluments
and Note 38 to the Financial Statements
for Related Party Disclosures.
109
Rule Number
Rule
(e)

Total net accommodation as defined in 3 (7) (iii) granted to each category of related parties.
The net accommodation granted to each category of related parties shall also be disclosed as a percentage of
the Banks regulatory capital.
Complied. Relevant disclosures have

been made on page 207.
( f) The aggregate values of remuneration paid by the Bank to its Key Management Personnel and the aggregate
values of the transactions of the Bank with its Key Management Personnel, set out by Board categories such
remuneration paid, accommodation granted and deposits or investments made in the Bank.
Complied. Refer Note 38 to the Financial

Statements for Related Party Disclosures.
(g) To obtain the External Auditors Certification of the Compliance with these Corporate Governance
Directions.
The External Auditors Certification

on Compliance with these Corporate
Governance Directions has been obtained.
(h) A report setting out details of the compliance with prudential requirements, regulations, laws and internal
controls and measures taken to rectify any material non-compliance.
Complied. Refer Report on Banks

Compliance with Prudential
Requirements on page 110.
(i)
The Monetary Board has not directed the

Bank to disclose any lapses.
A statement of the regulatory and supervisory concerns on lapses in the Banks risk management, or noncompliance with these Directions that have been pointed out by the Director of Bank Supervision, if so
directed by the Monetary Board to be disclosed to the public, together with the measures taken by the Bank
to address such concerns.
Main Board
Name of Director
Participated
Board Audit
Committee
Eligibility Participated
Board Credit
Committee
Board Nomination
Committee
Mr. Osman Kassim
12
12
Mr. Tyeab Akbarally
12
Mr. Faizal Salieh
12
12
Dato A.T.B.H.A. Rahman
11
12
12
Mr. Angelo M. Patrick
Dr. A.A.M. Haroon
11
12
Mr. M. Jazri Magdon Ismail
12
12
Mr. Ruzly Hussain
11
12
12
9
Mr. Haseeb Ullah Siddiqui

Mr. Jeroen Thijs
12
12
Mr. Wahid Ali
12
12
Ms. Yeo Sock Hwa
Mr. Badrul H. Khan
10
10
10
Mr. Harsha Amarasekera
Board Integrated Risk

Board Human Resources
Management Committee
and Remuneration
Committee
7
9
Please refer profiles of Board of Directors from pages 20 to 25 for additional details.
7
7
6
7
Eligibility
3
8
Board Executive
Committee
110
Banks Compliance with

Prudential Requirements
Risk Management 65
The Compliance Department within Amna Bank is headed by the Chief Compliance Officer
and Company Secretary who reports to the Board Integrated Risk Management Committee
(BIRMC) on concerns pertaining to compliance. The compliance framework of the Bank is
set by the Compliance Policy which has been formulated by the Bank in accordance with
international best practices based on the consultative document on compliance by the BASEL
Committee on Banking Supervision and approved by the Board of Directors. This policy gives
a clear guideline as to the basic principles governing the compliance function and measures to
ensure that the function is independent and has adequate resources to be able to ensure that
Compliance Risks are addressed adequately and in a timely manner.
The Compliance Department functions as an independent department and is in charge
of compliance across the Bank. Whilst it takes an overview approach the Compliance
Department supports other departments and business units to addresses their compliance
concerns. In this regard, the Compliance Department is also engaged in proactively identifying,
documenting and assessing compliance risks that may arise due to non-compliance with
regulatory requirements in the conduct of the Banks day to day business activities.
The Compliance Department has taken steps from the inception of the Bank to address the
Banks compliance with regulations such as Know Your Customer (KYC) and Anti-Money
Laundering (AML) functions. Appropriate mechanisms have been devised by the Department,
to identify and assess the regulatory compliance requirements which are then disseminated to
the Business/Operations Departments on a regular basis.
MONITORING OF COMPLIANCE
The Bank has principally adopted an overview based approach to monitor compliance, while at
times a detail-oriented approach is also undertaken, depending on the severity of the potential
impact of the risk event. As part of the Banks overview-based approach, the Compliance Officer
relies on the compliance reports generated, based on the sign-off given by the heads of business
departments, and focuses on exception reports to follow-up on non-compliance issues.
111
A compliance certificate is submitted to the BIRMC and the Board of Directors at regular
intervals by the Compliance Department which mainly contains:

Compliance with Statutory/mandatory reporting requirements
Status of compliance with the key compliance requirements under the Directions issued
by the Central Bank of Sri Lanka (CBSL)
Significant non-compliance events if any
Regulatory/potential breaches if any
ANTI-MONEY LAUNDERING (AML) COMPLIANCE

The Bank has established a sound framework for Anti-Money Laundering Compliance based
on relevant laws enacted by the Government of Sri Lanka to combat money laundering/
terrorist financing and in line with the rules governing the conduct of all account relationships
issued by the Financial Intelligence Unit (FIU) of CBSL.
A separate policy for AML has been approved by the Board of Directors and is reviewed
periodically. The Compliance Department pays special attention to any suspected money
laundering transactions reported by the business units and carries out investigation to ensure
adherence.
The Banks AML Policy establishes standards of AML compliance which applies to all
branches/departments and ensures strict compliance with all existing laws and regulatory
requirements.
The Bank takes all reasonable steps to verify the identity of its customers and keeps such
information updated in accordance with the Directions issued by the FIU of CBSL.
112
NEW PRODUCT DEVELOPMENT

The Compliance Department plays a key role in product development to ensure legal and
regulatory compliance. Given that the Bank structures all its products in a totally Sharia
compliant manner, the Compliance Department along with the Legal Department ensures that
the new product structures are cleared for regulatory and legal compliance within the normal
regulatory and legal framework of the country.
CAPACITY BUILDING ON COMPLIANCE
Capacity building through various internal and external training forms a critical building
block of the Banks Compliance plan. Internal training and orientation for new recruits include
training modules on Compliance. Existing and new staff are provided training throughout the
year to ensure that sufficient numbers of trained staff members are present in all branches and
departments.
Some of the key training programmes that were conducted during the year included:

Training programmes conducted by Senior Assistant Controller of Exchange for the

Senior Management and Branch Managers on Exchange Control requirements and its
implications on the Bank.
11 Training programmes have been conducted by the Compliance team for the Banks staff
on AML and KYC throughout the year.
A Training programme on Compliance with emphasis on related party transactions

guidelines and managing conflicts was conducted to the Corporate Management Team.
INFORMATION TECHNOLOGY SYSTEMS FOR COMPLIANCE

The Bank acquired a system for name screening during the year and is currently in the process
of obtaining an Anti-Money Laundering software.
113
Reliability
For the honey of prosperity to flow in abundance, it must be produced in a
well-founded, well-constructed enterprise. Amna Bank benefits from scrupulous
adherence to both Sharia precepts as well as the laws and principles promulgated
by the Central Bank of Sri Lanka. The reassurance that we are on the right track
was underscored by a successful IPO recently. The Banks reliability is further
propelled by the trust and confidence placed in the Bank by three international
banking giants, namely; Bank Islam Malaysia Berhad, the Islamic Development
Bank based in Saudi Arabia and AB Bank of Bangladesh, all three of whom
are strategic Shareholders of the Bank.
114
Directors Statement on
Internal Control over
Financial Reporting
Risk Management 65
RESPONSIBILITY
In line with the Banking Act Direction No. 11 of 2007, section 3 (8) (ii) (b), the Board of
Directors present this report on internal control over financial reporting.
The Board of Directors (Board) is responsible for the adequacy and effectiveness of the
internal control mechanism in place at Amna Bank Limited, (the Bank). In considering such
adequacy and effectiveness, the Board recognises that the business of banking requires reward
to be balanced with risk on a managed basis and as such the internal control systems are
primarily designed with a view to highlighting any deviations from the limits and indicators
which comprise the risk appetite of the Bank. In this light, the system of internal controls can
only provide reasonable, but not absolute assurance, against material misstatement of financial
information and records or against financial losses or fraud.
The Board has established an ongoing process for identifying, evaluating and managing the
significant risks faced by the Bank and this process includes enhancing the system of internal
control over financial reporting as and when there are changes to the business environment
or regulatory guidelines. The process is regularly reviewed by the Board and accords with the
Guidance for Directors of Banks on the Directors Statement on Internal Control issued by The
Institute of Chartered Accountants of Sri Lanka. The Board has assessed the internal control
over financial reporting taking into account principles for the assessment of internal control
system as given in that guidance.
The Board is of the view that the system of internal controls over financial reporting in place
is sound and adequate to provide reasonable assurance regarding the reliability of financial
reporting, and that the preparation of Financial Statements for external purposes is in
accordance with relevant accounting principles and regulatory requirements.
The Management assists the Board in the implementation of the Boards policies and
procedures on risk and control by identifying and assessing the risks faced, and in the design,
operation and monitoring of suitable internal controls to mitigate and control these risks.
115
KEY FEATURES OF THE PROCESS ADOPTED IN APPLYING AND REVIEWING

THE DESIGN AND EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEM OVER
FINANCIAL REPORTING
The key processes that have been established in reviewing the adequacy and integrity of the
system of internal controls with respect to financial reporting include the following:

Various committees are established by the Board to assist the Board in ensuring the
effectiveness of the Banks daily operations and that the Banks operations are in
accordance with the corporate objectives, strategies and the annual budget as well as the
policies and business directions that have been approved.
The Internal Audit Department of the Bank checks for compliance with policies and
procedures and the effectiveness of the internal control systems on an ongoing basis
using samples and rotational procedures and highlight significant findings in respect of
any non-compliance. Audits are carried out on all units and branches, the frequency of
which is determined by the level of risk assessed, to provide an independent and objective
report. The annual Audit Plan is reviewed and approved by the Board Audit Committee.
Findings of the Internal Audit Department are submitted to the Board Audit Committee
for review at their periodic meetings.
The Board Audit Committee of the Bank reviews internal control issues identified by
the Internal Audit Department, the External Auditors, Regulatory Authorities and the
Management: and evaluates the adequacy and effectiveness of the risk management and
internal control systems. They also review the internal audit functions with particular
emphasis on the scope of audits and quality of the same. The minutes of the Board Audit
Committee meetings are forwarded to the Board on a periodic basis. Further details of the
activities undertaken by the Board Audit Committee of the Bank are set out in the Board
Audit Committee Report on pages 130 to 134.
In assessing the internal control system over financial reporting, identified officers of the
Bank collated all procedures and controls that are connected with significant accounts
and disclosures of the Financial Statements of the Bank. These in turn were observed and
checked by the Internal Audit Department for suitability of design and effectiveness on an
ongoing basis.
116
Risk Management 65
The Bank adopted the new Sri Lanka Accounting Standards comprising SLFRSs and
LKASs in 2012. The processes and procedures initially applied to adopt the aforementioned
Accounting Standards were further strengthened during the year 2013 based on the
feedback received from the External Auditors, Internal Audit Department, regulators and
the Board Audit Committee. The Bank is in the process of updating relevant procedure
manuals pertaining to these new requirements. The Bank has also recognised the need
to introduce an automated financial reporting process in order to comply with the
requirements of recognition, measurement, classification and disclosure of the financial
instruments more effectively and efficiently.
The comments made by the External Auditors in connection with internal control system
over financial reporting in previous years were reviewed during the year and appropriate
steps have been taken to rectify them. The recommendations made by the External
Auditors in 2013, in connection with the internal control system over financial reporting
will be dealt with in the future.
CONFIRMATION
Based on the above processes, the Board confirms that the financial reporting system of the
Bank has been designed to provide a reasonable assurance regarding the reliability of financial
reporting and the preparation of Financial Statements for external purposes and has been
done in accordance with Sri Lanka Accounting Standards and regulatory requirements of the
Central Bank of Sri Lanka.
117
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

The External Auditors, Messrs Ernst & Young, have reviewed the above Directors Statement on
Internal Control over Financial Reporting included in the Annual Report of the Bank for the year
ended 31 December 2013 and reported to the Board that nothing has come to their attention
that causes them to believe that the statement is inconsistent with their understanding of
the process adopted by the Board in the review of the design and effectiveness of the internal
control over financial reporting of the Bank. Their Report on the Directors Statement of Internal
Control over Financial Reporting is given on page 118 of this Annual Report.
By order of the Board,
Jazri Magdon Ismail

Chairman - Board Audit Committee
Faizal Salieh
Colombo
24 March 2014
118
Independent Assurance
Report on Internal Control
Risk Management 65
INDEPENDENT ASSURANCE REPORT TO THE BOARD OF DIRECTORS OF AMNA BANK LIMITED

INTRODUCTION
We were engaged by the Board of Directors of Amna Bank Limited (Bank) to provide assurance on the Directors Statement on Internal Control
over Financial Reporting (Statement) included in the annual report for the year ended 31 December 2013.
MANAGEMENTS RESPONSIBILITY
Management is responsible for the preparation and presentation of the Statement in accordance with the Guidance for Directors of Banks on
the Directors Statement on Internal Control issued in compliance with section 3 (8) (ii) (b) of the Banking Act Direction No. 11 of 2007, by the
Institute of Chartered Accountants of Sri Lanka.
OUR RESPONSIBILITIES AND COMPLIANCE WITH SLSAE 3050

Our responsibility is to issue a report to the board on the Statement based on the work performed. We conducted our engagement in accordance
with Sri Lanka Standard on Assurance Engagements (SLSAE) 3050 - Assurance Report for Banks on Directors Statement on Internal Control
issued by the Institute of Chartered Accountants of Sri Lanka.
SUMMARY OF WORK PERFORMED

We conducted our engagement to assess whether the Statement is supported by the documentation prepared by or for directors; and
appropriately reflected the process the directors have adopted in reviewing the system of internal control over financial reporting of the Bank.
The procedures performed were limited primarily to inquiries of bank personnel and the existence of documentation on a sample basis that
supported the process adopted by the Board of Directors.
SLSAE 3050 does not require us to consider whether the Statement covers all risks and controls or to form an opinion on the effectiveness of
the Banks risk and control procedures. SLSAE 3050 also does not require us to consider whether the processes described to deal with material
internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems.
OUR CONCLUSION
Based on the procedures performed, nothing has come to our attention that causes us to believe that the Statement included in the annual
report is inconsistent with our understanding of the process the Board of Directors has adopted in the review of the design and effectiveness of
internal control over financial reporting of the Bank.
24 March 2014
Colombo
119
Annual Report of the Board

of Directors on the Affairs of
the Bank
Contents of this Report are in accordance with the statutory requirements, the requirements
of relevant regulatory authorities and best accounting practices. This Report was approved by
the Directors.
GENERAL
Your Directors have pleasure in presenting their Annual Report on the State of Affairs, together
with the Audited Financial Statements for the year ended 31 December 2013. Amna Bank
Limited, a licensed Commercial Bank was incorporated under the Companies Act No. 07
of 2007 as a public limited liability company in Sri Lanka under the registration number
PB 3618 and duly licensed as a Licensed Commercial Bank under the Banking Act No. 30 of
1988 as amended. The Bank listed its shares on the Colombo Stock Exchange with effect from
29 January 2014.
Completion and the contents of this report are in accordance with the statutory requirements,
the requirements of relevant regulatory authorities for listed companies in the financial
services industry and best accounting practices.
PRINCIPAL ACTIVITIES
The principal activities of the Bank are the provision of Sharia based commercial banking
services.
COMPLIANCE AND CORPORATE GOVERNANCE FOR LICENSED COMMERCIAL

BANKS IN SRI LANKA
The Directors of the Bank has adopted a comprehensive policy on compliance and in
accordance with the regulations of the Central Bank of Sri Lanka (CBSL) have established an
independent compliance function in respect of statutory requirements and CBSL Directions
relating to licensed commercial banks. Further, in accordance with the provisions of the
Financial Transaction Reporting Act No. 06 of 2006, Board has appointed a Compliance
Officer at Senior Management level in charge of compliance of the Bank. The Bank has also
a Compliance Policy and Guideline on KYC (Know Your Customer) and AML (Anti-Money
Laundering). The Compliance Department monitors the compliance of the statutory
requirements of the Bank and a report is submitted to the Board Integrated Risk Management
Committee and the Board of Directors on a quarterly basis ensuring the Bank complies with all
such requirements.
120
Risk Management 65
During the year, CBSL carried out a follow-up examination of the statutory examination of the
Banks affairs conducted in the year 2012 and the findings of the examination made available to
the Board of Directors.
The Bank also complies with the Banking Act Direction No. 11 of 2007 on Corporate
Governance issued by CBSL and compliant with the provisions of the said Direction. The
Corporate Governance Report is disclosed in pages 96 to 109.
In addition, the Bank is currently a listed entity and is in compliance with the Directions of the
Securities and Exchange Commission of Sri Lanka, Continuing Listing Rules of the Colombo
Stock Exchange and all other relevant authorities.
FINANCIAL RESULTS
The following is a summary of the operating results of the Bank during the year ended
31 December 2013:
2013
Net Operating Income

Less: Total Operating Expenses
Operating Profit/(Loss) Before Value Added Tax
2012
LKR
LKR
960,239,735
1,237,796,168
1,385,060,580
986,051,191
(424,820,845)
251,744,977
205,803,944
Profits and Appropriations

Profit/(Loss) Before Tax
(438,004,988)
Tax Expenses/(Reversal)
(120,971,087)
59,809,292
(317,033,901)
145,994,652
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Details of the property, plant and equipment of the Bank, additions made during the year and
the depreciation charges for the year are shown in Note 25 to the Financial Statements.
DONATIONS
During the year under review, the Bank made donations amounting to LKR 53,100/(2012 - LKR 49,200/-).
121
EVENTS AFTER THE REPORTING DATE

No circumstances have arisen since the reporting date which would require adjustments to,
or disclosure in the Financial Statements except for the events disclosed in Note 40 to the
Financial Statements.
ACCOUNTING AND VALUATION METHODS
The Bank follows the Sri Lanka Accounting Standards in the preparation of its Financial
Statements. At the date of the Report, the Directors are not aware of any circumstances that
have arisen which would render adherence to such Standards inappropriate.
STATED CAPITAL AND SHAREHOLDERS

At the recent Offering to the Public, 235,712,400 shares at a price of LKR 7/- each have been
subscribed for cash and duly allotted to the subscribers. The Stated Capital of the Bank is
LKR 5,866,808,141/-.
FINANCIAL STATEMENTS
The Financial Statements of the Bank are given in pages 153 to 204.
ACCOUNTING POLICIES
The Accounting Policies adopted in the preparation of Financial Statements are given in pages
158 to 168.
DIRECTORS
The following were the Directors of Amna Bank Limited during the year ending 31 December
2013:
1. Mr. Osman Kassim (Chairman, Non-Executive, Non-Independent Director)
2. Mr. Tyeab Akbarally (Deputy Chairman, Non-Executive, Non-Independent Director)
3. Mr. Faizal Salieh (Managing Director/CEO)
4. Dato Ahamed Tajudin Bin Haji Abdul Rahman (Non-Executive, Independent Senior
Director)
5. Dr. Aboobacker Admani Mohamed Haroon (Non-Executive, Non-Independent Director)
6. Ms. Yeo Sock Hwa (Non-Executive, Non-Independent Director) resigned with effect from
23 March 2013
122
Risk Management 65
7. Mr. Mohamed Jazri Magdon Ismail (Non-Executive, Independent Director)

8. Mr. Ruzly Hussain (Non-Executive, Independent Director)
9. Mr. Angelo Maharajah Patrick (Non-Executive, Independent Director)
10. Mr. Haseeb Ullah Siddiqui (Non-Executive, Non-Independent Director)
11. Mr. Jeroen Petrus Margaretha Maria Thijs (Non-Executive, Non-Independent Director)
12. Mr. Wahid Ali Bin Mohd Khalil (Non-Executive, Non-Independent Director)
13. Mr. Harsha Amarasekera, PC (Non-Executive, Non-Independent Director) appointed with
effect from 23 March 2013
14. Mr. Badrul Haque Khan (Non-Executive, Non-Independent Director) appointed with effect
from 23 March 2013
ALTERNATE DIRECTORS
1. Mr. Huzefa Inayetally Akbarally (Alternate Director to Mr. Tyeab Akbarally)
2. Mr. Khairul Muzamel Perera Abdullah (Alternate Director to Mr. Jeroen Petrus Margaretha
Maria Thijs)
3. Dato Wan Ismail Wan Yusoh (Alternate Director to Mr. Wahid Ali Bin Mohd Khalil)
4. Mr. Mohamed Faizel Mohamed Haddad (Alternate Director to Mr. Osman Kassim)
5. Mr. Kevin Mark Pocock (Alternate Director to Mr. Harsha Amarasekera) appointed with
effect from 25 June 2013
ROTATION OF DIRECTORS
In terms of Article 29 (6) of the Articles of Association of the Company one-third of the
Directors shall retire from office at each Annual General Meeting. The following Directors retire
by rotation and stand for reappointment at the Annual General Meeting of Amna Bank.
(a) Mr. Osman Kassim
(b) Mr. Tyeab Akbarally
(c) Dato Ahamed Tajudin Bin Haji Abdul Rahman
(d) Dr. Aboobacker Admani Mohamed Haroon
INTEREST REGISTER
The Directors interest in shares has been disclosed in the Interest Register.
123
DIRECTORS REMUNERATION AND OTHER BENEFITS

Directors remuneration in respect of the Bank for the financial year ended 31 December 2013
is given in Note 11 to the Financial Statements.
DIRECTORS INTEREST IN CONTRACTS
As at 31 December 2013, none of the Directors had interests in contracts with the Bank, other
than those disclosed in Note 38 to the Financial Statements.
DIRECTORS INVESTMENTS IN SHARES
The shareholdings of Directors who held office as at 31 December 2013 were as follows:
Name of Director
Mr. Osman Kassim
Number of
Shares Held
Percentage of
Shareholding (%)
233,354
0.02%
Mr. Tyeab Akbarally
26
0.00%
Mr. Faizal Salieh
01
0.00%
Nil
Nil
Dr. A.A.M. Haroon
08
0.00%

Mr. Mohamed Jazri Magdon Ismail
Nil
Nil
13,500
0.00%
Mr. Ruzly Hussain
Nil
Nil
Mr. Haseeb Ullah Siddiqui
Nil
Nil
Mr. Jeroen P.M.M. Thijs
Nil
Nil
Mr. Wahid Ali Mohd Khalil
Nil
Nil
Mr. Harsha Amarasekera, PC
Nil
Nil
Mr. Badrul Haque Khan
Nil
Nil
Dato Wan Ismail Wan Yusoh

(Alternate Director to Mr. Wahid Ali Mohd Khalil)
Nil
Nil
Mr. Huzefa Inayetally Akbarally

(Alternate Director to Mr. Tyeab Akbarally)
01
0.00%
Mr. Khairul Muzamel Perera Bin Abdullah

(Alternate Director to Mr. Jeroen Petrus Margaretha Maria Thijs)
Nil
Nil
Mr. Mohamed Faizel Mohamed Haddad

(Alternate Director to Mr. Osman Kassim)
Nil
Nil
27,084,302
2.67%
Mr. Kevin Mark Pocock

(Alternate Director to Mr. Harsha Amarasekera, PC)
124
Risk Management 65
BOARD COMMITTEES
The Board of Directors, while assuming the overall responsibility and accountability for the
management oversight of the Bank has also appointed Board Committees to ensure oversight
and control over certain functions of the Bank conforming to Directions on Corporate
Governance issued by the Monetary Board of the Central Bank of Sri Lanka. Accordingly, the
following committees have been constituted by the Board:
Board Audit Committee
Mr. Jazri Magdon Ismail : Chairman
: Member
Mr. Ruzly Hussain
: Member
Mr. Wahid Ali Khalil
: Member

The Report of the Board Audit Committee is given on pages 130 to 134 which forms part of the
Annual Report of the Board of Directors.
Board Integrated Risk Management Committee
: Chairman
Mr. Jazri Magdon Ismail : Member
Mr. Jeroen Thijs
: Member
Mr. Faizal Salieh
: Member (MD/CEO)

The Report of the Board Integrated Risk Management Committee is given on pages 135 to 138
which forms part of the Annual Report of the Board of Directors.
Board Nomination Committee
Mr. Ruzly Hussain
: Chairman
Dr. A.A.M. Haroon
: Member
: Member
Ms. Yeo Sock Hwa
: Member (resigned with effect from 23 March 2013)
Mr. Harsha Amarasekera : Member (appointed with effect from 23 March 2013)
Mr. Jazri Magdon Ismail : Member (appointed with effect from 18 May 2013)

The Report of the Board Nomination Committee is given on pages 141 to 143 which forms part
of the Annual Report of the Board of Directors.
125
Board Human Resources and Remuneration Committee

Mr. Osman Kassim
: Chairman
: Member/Secretary
Mr. Tyeab Akbarally
: Member
Mr. Faizal Salieh
: Member (MD/CEO) (resigned with effect from 1 October 2013)
Dr. A.A.M. Haroon
: Member (resigned with effect from 1 October 2013)
Mr. Ruzly Hussain
: Member (appointed with effect from 1 October 2013)
Mr. Jazri Magdon Ismail : Member (appointed with effect from 1 October 2013)
The Report of the Board Human Resources and Remuneration Committee is given on pages
139 to 140 which forms part of the Annual Report of the Board of Directors.
In addition to the above mandatory Board appointed Committees, the Board of Directors has
also appointed a Board Credit Committee which oversees the Credit approval functions of the
Bank.
Board Credit Committee
Mr. Osman Kassim
: Chairman
Mr. Tyeab Akbarally
: Member
Dr. A.A.M. Haroon
: Member
: Member
Mr. Ruzly Hussain
: Member

AUDITORS
The Financial Statements for the year ended 31 December 2013 have been audited by Messrs
Ernst & Young, Chartered Accountants, who offer themselves for reappointment. A resolution
relating to their reappointment and authorising the Directors to determine their remuneration
will be proposed at the Annual General Meeting.
The Auditors, Messrs Ernst & Young, Chartered Accountants, were paid LKR 2,834,316/-as
audit fees by the Bank.
As far as the Directors are aware the Auditors do not have any relationship (other than that of
an Auditor and Tax Consultant) with the Bank. The Auditors also do not have any interest in
the Bank.
126
Risk Management 65
ANNUAL REPORT
The Directors approved the Financial Statements together with the reviews which forms
part of the Annual Report. The appropriate number of copies have been be submitted to the
Central Bank of Sri Lanka, Sri Lanka Accounting and Auditing Standard Monitoring Board, the
Registrar of Companies and the Colombo Stock Exchange.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Friday, 23 May 2014 at 4.00 p.m. at Anthurium,
Galadari Hotel, 64, Lotus Road, Colombo 1.
The Notice of the Annual General Meeting is given on page 217.
By order of the Board,
Mrs. P.M. Dunuwille Koralege

Company Secretary
Colombo
127
Directors Interest in
Contracts
Name of Director/Alternate Director
Mr. Osman Kassim
Company Name
Amna Investments
Limited
Position
Nature of Transaction
Chairman
Due to Other Customers
Dr. A.A.M. Haroon
Director
Mr. Tyeab Akbarally
Director
Disposal of Financial
Investments Held for
Trading/Available for Sale
Mr. Faizal Salieh
Director
Director
Mr. Osman Kassim
Vidullanka PLC
Dr. A.A.M. Haroon

Mr. Tyeab Akbarally
Chairman
Director
Financing and Receivables to

Other Customers
Current Limit
LKR
Amount
LKR
Amount
LKR
2013
2013
2012
1,478,344
8,529,229
282,216,261
321,260,011
215,000,000
525,733,306
18,498,829
25,944,655
132,709,099
175,370,508
Amna Capital Limited
Director
1,715
53,545
Amna Asset
Management Limited
Director
83,297
361,004
9,539,387
4,207,084
211,284
1,511,959
241,435,843
275,454,000
Dr. A.A.M. Haroon

Mr. Tyeab Akbarally
Dr. A.A.M. Haroon
Chairman
Mr. Osman Kassim
Mr. Tyeab Akbarally
Amna Takaful PLC
Director

Other Customers
Dr. A.A.M. Haroon
Director
Financial Investments Held

for Trading/Available for Sale
Mr. Osman Kassim
Expolanka Holdings PLC
Chairman

Mr. Osman Kassim

A.P.I.I.T. Lanka (Pvt)

Limited
Chairman

Letters of Guarantee, Shipping
Guarantees and Other
637,510
10,075,884
21,764,070
24,150,000
157,031,201
200,848,362
58,746,383
13,082,736
128
Risk Management 65
Mr. Osman Kassim
Company Name
Ilma Educational
Foundation
Position
Director
Current Limit
LKR
Amount
LKR
Amount
LKR
2013
2013
2012
30,801,758
2,619,962
Mr. Osman Kassim, the Chairman of the Bank is also the Chairman of Cresentrating (Pte) Limited - Singapore, a Director of Alhasan Foundation, Pak Kuwait Takaful Company
Limited - Pakistan and Amna Takaful Maldives Limited - Maldives.
Dr. A.A.M. Haroon
Vanguard Industries (Pvt)

Limited
Chairman

Other Customers
95,000,000

500,007
500,006
3,676,719
18,744,763
56,865,641
63,892,135
Dr. A.A.M. Haroon, a Director of the Bank is the Chairman of Colombo Medi Lab (Pvt) Limited, Liberty Textiles Exports (Pvt) Limited, Liberty Textiles Mills (Pvt) Limited,
Lucky Industries (Pvt) Limited, Lucky Developers (Pvt) Limited, Master Apparels (Pvt) Limited and Vanguard Trading Company (Pvt) Limited.
Mr. Faizal Salieh
Lanka Clear (Pvt) Limited Director

2,000,000
2,000,000
Mr. Faizal Salieh, the Managing Director/CEO of the Bank is a Director of Distance Learning Centre Limited and Sri Lanka Institute of Directors.
Delmege Forsyth and

Company Limited
Director
7,156,377

Other Customers
200,000,000
134,973,151
3,429,229
81,853,152
26,965,171
Mr. Harsha Amarasekera, a Director of the Bank is the Chairman of Bensons Limited and a Director of Amaya Leisure PLC, Keells Food Products PLC, Vallibel One PLC, Vallibel
Power Erathna PLC, Westend Holdings Limited, Ceylon Leisure Holdings (Pvt) Limited, CIC Agri Business Limited, Galle Face Management Company Limited, Leisure Lines
Lanka Limited, Suisse Hotel Kandy (Pvt) Limited, Ceylon Hotels Holdings (Pvt) Limited, Manson Investments (Pvt) Limited, Millennium Airlines (Pvt) Limited, Millennium
Investments Lanka (Pvt) Limited, S H K Travels & Leisure (Pvt) Limited, CIC Holdings PLC and Chevron Lubricants Lanka PLC.
129
Company Name
Mr. Tyeab Akbarally
Akbar Brothers (Pvt)

Limited
Mr. Huzefa Akbarally

Mr. Tyeab Akbarally
Position
Director
Current Limit
LKR
Amount
LKR
Amount
LKR
2013
2013
2012
563,728
539,309
82,988
79,394
Director
Akbar Pharmaceuticals
(Pvt) Limited
Mr. Huzefa Akbarally
Director
Director
Mr. Tyeab Akbarally, a Director of the Bank is also a Director of A B Properties (Pvt) Limited, A B Development (Pvt) Limited, Akbar Brothers Exports (Pvt) Limited, Zahra
Exports (Pvt) Limited, Energy Reclamation (Pvt) Limited, Falcon Apparels (Pvt) Limited, Falcon Developments (Pvt) Limited, Falcon Trading (Pvt) Limited, Land & Buildings
Limited, Lina Manufacturing (Pvt) Limited, Quick Tea Limited, Amna Global Limited and Mosaic Art (Pvt) Limited.
Mr. Huzefa Akbarally, an Alternate Director of the Bank is also a Director of A B Properties (Pvt) Limited, A B Development (Pvt) Limited, Akbar Brothers Exports (Pvt)
Limited, Energy Reclamation (Pvt) Limited, Falcon Developments (Pvt) Limited, Falcon Trading (Pvt) Limited, Land & Buildings Limited, Lina Manufacturing (Pvt) Limited,
Quick Tea Limited, Terraqua International (Pvt) Limited, Daily Life Renewable Energy Limited, Diyaviduli (Pvt) Limited, Seguwantiv Windpower (Pvt) Limited, Vidatamuni
Windpower (Pvt) Limited and Windforce (Pvt) Limited.
Mr. Ruzly Hussain, a Director of the Bank is the Chairman of M C Abdul Rahims (Pvt) Limited, Cleansol (Pvt) Limited and World Star Lanka (Pvt) Limited.
Mr. M.F.M. Hadad, an Alternate Director of the Bank is a Director of Paragon Management Services (Pvt) Limited and Serendib Grand (Pvt) Limited.
Mr. Kevin Mark Pocock, an Alternate Director of the Bank is the Chairman of Millennium Airlines (Pvt) Limited and a Director of Millennium Investments (Pvt) Limited.
Dato Wan Ismail Wan Yusoh, an Alternate Director of the Bank is the Chairman of Farihan Corporation Sdn. Bhd., Al-Wakalah Nominees (Tempatan) Sdn. Bhd. and a Director
of Malaysian Electronic Payment Sdn. Bhd. and MARA Education Foundation and Universiti Sultan Zainal Abidin
Dato Sri Zukri Bin Samat*
Bank Islam Malaysia

Berhad
Mr. Jaafar Bin Abu*

* Ceased to be a Director with effect from 24 August 2012
Managing Director
Chief Operating Officer Letters of Guarantee, Shipping

- Business Support
1,279,205,104
639,500
130

Report
Risk Management 65
1. COMPOSITION OF THE BOARD AUDIT COMMITTEE

The Board Audit Committee conducts its proceedings in accordance with the terms of
reference approved by the Board of Directors. The Committee comprises of four Non-Executive
Directors, three of them being Independent. The Chairman of the Committee, Mr. Mohamed
Jazri Magdon Ismail is an Independent Director and is a Fellow Member of The Institute of
Chartered Accountants of Sri Lanka.
Table below shows the list of members of the Board Audit Committee during the year under
review and their attendance at the Committee meetings held during the year:
Audit Committee Member
Meeting Attendance/
Meetings Eligible to Attend
Mr. Mohamed Jazri Magdon Ismail (Non-Executive, Independent Director)
9/9
Mr. Angelo Maharajah Patrick (Non-Executive, Independent Director)
6/9
Mr. Ruzly Hussain (Non-Executive, Independent Director)
9/9
Mr. Wahid Ali (Non-Executive, Non-Independent Director)
9/9
The Board Secretary functions as the Secretary to the Board Audit Committee.
2. ROLE OF THE BOARD AUDIT COMMITTEE

The Committee assists the Board of Directors in carrying out its responsibilities in relation
to financial reporting requirements and assessment of internal controls. The role and
responsibilities of the Committee is defined in the Committees Terms of Reference document.
The Committee amongst other functions performs the following key tasks:
i.
Reviewing the operations and effectiveness of the Banks internal control system to ensure
that a good financial reporting system is in place to comply with Sri Lanka Accounting
Standards.
ii. Ensuring that the presentation of Financial Statements satisfies all applicable accounting
standards as well as the relevant legal and regulatory requirements.
iii. Recommending appointment or re-appointment of the External Auditor for audit services
to be provided in compliance with the relevant statutes.
iv. Reviewing and monitoring the External Auditors independence and objectivity and the
effectiveness of the audit processes in accordance with applicable standards and best
practices.
131
v.
Discussing and finalising with the External Auditors the nature and scope of the audit
before the commencement of the audit.
vi. Ensuring an Audit Charter and a comprehensive Internal Audit Manual and Guidelines
are in place.
vii. Monitoring the effectiveness of the Banks Internal Audit Function.
viii. Reviewing the adequacy of the scope, functions and resources of the Internal Audit
Department and ensuring that appropriate actions are taken on the findings and
recommendations of the Department.
3. REGULATORY COMPLIANCE
The role and functions of the Board Audit Committee are regulated by the Banking Act
Direction No. 11 of 2007, the Mandatory Code of Corporate Governance for Licensed
Commercial Banks issued by the Central Bank of Sri Lanka and the Best Practices of Corporate
Governance issued by The Institute of Chartered Accountants of Sri Lanka.
Banks compliance with mandatory banking and other statutory requirements as well as
the systems and procedures in place to assess the compliance with such requirements were
regularly reviewed by the Committee.
4. MEETINGS
The Audit Committee met nine times during the year under review. The Managing Director/
Chief Executive Officer and the Chief Internal Auditor attended these meetings by invitation.
On the invitation of the Committee, the Engagement Partner of the Banks External Auditors,
Messrs Ernst and Young also attended five meetings held during the year. Further, Key
Management Personnel from pertinent business and support departments of the Bank were
also invited to attend relevant segments of the meetings to enhance the awareness of the
Committee with regard to issues and/or developments relating to such departments. Such
invitations were extended to ensure that the committee is provided with all the relevant
information to facilitate the discharge of its role and responsibilities.
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Risk Management 65
5. FINANCIAL REPORTING
The Board Audit Committee as part of its responsibility to oversee the Banks financial
reporting process on behalf of the Board of Directors, has reviewed and discussed with the
Management, the Annual Financial Statements for the year 2013, prior to release. These
Financial Statements have been prepared in line with the Sri Lanka Accounting Standards
(SLFRS & LKAS).
Above review by the Committee included the extent of compliance with the Sri Lanka
Accounting Standards, the Companies Act No. 7 of 2007, the Banking Act No. 30 of 1988
and amendments thereto. Matters of special interest in the current environment taken into
consideration as part of the process that supports certifications of the Financial Statements
by the Banks Chief Executive Officer and Chief Financial Officer were also brought up for
discussion. These Financial Statements are an integral part of the Banks Annual Report.
6. RISKS AND INTERNAL CONTROLS

The internal controls within the Bank are designed to provide reasonable but not absolute
assurance to the Directors and assist them to monitor the financial position of the Bank. During
the year, the Committee reviewed the effectiveness of the Banks internal control system and
assessed the effectiveness of the internal controls over financial reporting as of 31 December
2013, as required by the Banking Act Direction No. 11 of 2007, Corporate Governance for Licensed
Commercial Banks in Sri Lanka, Subsection 3 (8) (ii) (b), based on the Guidance for Directors
of Banks on the Directors Statement of Internal Control issued by The Institute of Chartered
Accountants of Sri Lanka. The result of the assessment is given on pages 114 to 117 of the Annual
Report, titled Directors Statement on Internal Control Over Financial Reporting. The External
Auditors have issued an Assurance Report on the Directors Statement on Internal Control
Over Financial Reporting. This report is given on page 118 of the Annual Report. Based on its
assessment of the Internal Control System, the Committee concluded and confirmed to the Board
as of 31 December 2013 that the Banks Internal Control over financial reporting is effective.
7. EXTERNAL AUDIT
The Board Audit Committee reviewed and monitored the independence of the External
Auditors and the objectivity of the effectiveness of the audit process and assisted the Board
with its recommendations to the shareholders on re-appointment of Messrs Ernst & Young,
Chartered Accountants as External Auditors for the financial year ended 31 December 2013.
133
As part of the Committee meetings held during the year, the External Audit approach and
procedures, including matters relating to the scope of such audit and the External Auditors
independence were discussed with the External Auditors. Further, the Committee met
the External Auditors two times during the year without the presence of the executive
management to ensure that there was no limitation of scope in relation to the Audit and any
other related incidents which could have had a negative impact on the effectiveness of the
external audit, and concluded that there was no cause for concern. Moreover Committee also
reviewed the External Auditors Management Letter and the managements responses thereto.
8. INTERNAL AUDIT
During the year, the Board Audit Committee reviewed the independence, objectivity and
performance of the Internal Audit Function. This review also included the findings from
the internal audits completed and the Internal Audit Departments evaluation of the Banks
internal controls including internal control systems. The Committee also reviewed the
adequacy of Internal Audit coverage through the Internal Audit Plan and approved the same.
It also assessed the Internal Audit Departments resource requirements including succession
planning.
During the year, the Committee approved a new set of Key Performance Indicators (KPI) for
the Internal Audit Function of the Bank. These KPIs are designed to enhance the process of
defining the Internal Audit Departments objectives and measuring the progress made towards
fulfilling such objectives.
9. PROFESSIONAL ADVICE
The Committee has the authority to seek external professional advice on matters within its
purview.
10. WHISTLE-BLOWING
This Whistle-Blowing policy of the Bank outlines the process for engaging both internal and
external stakeholders as whistle-blowers, identifies additional channels of communication,
streamlines the governing process relating to whistle-blowing and specifies the means by
which protection of the whistle-blower is ensured.
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Risk Management 65
Amna Bank ethics hotline is a whistle-blowing tool operated with the assistance of an external
service provider (KPMG) to provide employees with the opportunity to assist the management
in adopting a unique approach to banking in sync with the Banks beliefs. The scheme allows
any Staff Member who has a legitimate concern on an existing or potential irregularity within
the Bank, to voluntarily bring such concern to the notice of KPMG anonymously using a
dedicated telephone hotline operated by KPMG. Concerns raised are investigated by KPMG and
forwarded to the Whistle-Blowing Unit of the Bank. Through various awareness sessions and
other publicity means all staff members have been educated and encouraged to use the ethics
hotline when they suspect wrong doings or other improprieties.
11. COMMITTEE EVALUATION

The annual evaluation of the Board Audit Committee was carried out by the members of the
Board and the Committee has taken note of the feedback received.
Jazri Magdon Ismail

Chairman - Board Audit Committee
Colombo
24 March 2014
135
Board Integrated Risk

Management Committee
Report
1. COMPOSITION OF THE COMMITTEE

The Board Integrated Risk Management Committee (BIRMC) comprising of members listed
below conducts its proceedings in accordance with the terms of reference approved by the
Board of Directors. The Committee was appointed by the Board on 30 May 2011 and is chaired
by Mr. Angelo Patrick.
The Committee met 9 times during the year and the attendance is as follows:
BIRMC Member
Meetings Attended/
Meetings Eligible to Attend
Angelo Maharajah Patrick (Non-Executive, Independent Director)
9/9
Mohamed Jazri Magdon Ismail (Non-Executive, Independent Director)
9/9
Jeroen Thijs (Non-Executive, Non-Independent Director)
9/9
Faizal Salieh (Managing Director/CEO)
8/9
The Board Secretary functioned as the Secretary to the BIRMC until July 2013. Thereafter, the
Committee appointed the Risk Officer to the post of Secretary.
2. REGULATORY COMPLIANCE
The BIRMC was established by the Board of Directors, in compliance with the Section 3 (6)
of Direction No. 11 of 2007, on Corporate Governance for Licensed Commercial Banks in
Sri Lanka, issued by the Monetary Board of the Central Bank of Sri Lanka under powers vested
in the Monetary Board, in terms of the Banking Act No. 30 of 1988.
3. MEETINGS
The Chief Financial Officer, Chief Internal Auditor, Vice-President - Credit and the Risk Officer
attended these meetings by invitation. Key Management Personnel from relevant business
and support departments of the Bank were also invited to attend segments of the meetings to
enhance the awareness of the BIRMC with regard to issues and/or developments relating to
such departments. Such invitations were extended to ensure that the BIRMC is provided with
all the relevant information to facilitate the discharge of its role and responsibilities. Minutes of
the Committee meetings are recorded and suitable recommendations are referred to the Board
of Directors for approval. After every BIRMC meeting, a Report from the BIRMC Chairman along
with the respective BIRMC meeting minutes is forwarded to the Board of Directors for perusal.
136
Risk Management 65
4. ROLE AND RESPONSIBILITIES OF THE BIRMC

The BIRMC, a Committee appointed by the Board is primarily responsible for the effective
functioning of the risk management function within the Bank. The BIRMC has authority to
access any information of the Directors, management and staff with regard to carrying out its
role and responsibilities on the risk management process of the Bank. Its main responsibilities
include the following:
i.
Ensure that the Bank has a comprehensive risk management policy and framework and
appropriate compliance policies and systems in place. In addition, BIRMC continuously
monitors the effectiveness of such policy and framework so as to inculcate a proactive risk
management culture within the Bank.
ii. Reviewing the setting of the risk appetite/tolerance of the Bank at enterprise and at
strategic business unit levels.
iii. Assess and oversee credit, market, liquidity, operational and strategic risks (including
Sharia non-compliance risks) of the Bank on a monthly basis through appropriate risk
indicators and management information.
iv. Ensuring implementation of sufficient internal controls to detect any deficiencies in
the internal control environment in a timely manner, reviewing the independence and
robustness of risk management processes and internal controls throughout the Bank and
approving the Banks key risk control and mitigation processes.
v.
Review the adequacy and effectiveness of all management level committees such as
Executive Risk Management Committee, Operational Risk Management Committee and
the Asset Liability Committee to address specific risks and to manage those risks within
quantitative and qualitative risk limits and authorised deviations from limits as specified
by the BIRMC.
vi. Take prompt corrective action to mitigate the effects of specific risks in case such risks
are beyond levels deemed prudent by the BIRMC on the basis of the Banks policies and
regulatory and supervisory requirements and risk appetite.
vii. Quarterly, assess all aspects of risk management including updated business continuity
plans.
viii. Establish a compliance function to assess the Banks compliance with laws, regulations,
regulatory guidelines, internal controls and approved policies on all areas of business
operations.
137
ix. Reviewing and recommending to the Board the allocation of (risk-adjusted) capital across
broad-based business units covering market risk, credit risk, and operational risk and
accordingly approving allocation of such capital across individual business units and
product lines.
The BIRMC has the authority to seek external professional advice on matters within its
purview.
5. RISK MANAGEMENT AND INTERNAL CONTROLS

Risk management controls are implemented across the Bank to provide reasonable assurance
to the Board and senior management that effective mitigation action plans are implemented to
address all risk exposures. During the year, BIRMC has reviewed and assessed the effectiveness
of the Banks risk management controls for the financial year ended as of 31 December 2013. In
pursuit of managing its risk profile, the Bank has further strengthened the Risk Management
Department (RMD) with the objective of effectively managing the core functions of risk: Credit,
Market, Liquidity and Operational risk.
6. COMMITTEE EVALUATION
The Risk Management Department has carried out Risk and Control Self-Assessment (RCSA)
in the critical business units for identifying, assessing, mitigating, monitoring and reporting
of operational risks. This exercise is ideally conducted by staff of the unit being assessed (i.e.
those who know the sub-unit or process best) with the guidance of the Risk Management
Department. However, as the Bank is still implementing the risk management culture, staff of
Risk Management Department have personally visited 8 Departments and 10 Branches during
the year and conducted the exercise on behalf of the respective Department/Branch. The
results of such exercises were also escalated to the relevant management levels and taken up
for discussions at BIRMC meetings for creating awareness and appropriate action.
For the year under review, the Bank has progressed successfully in managing its overall risk
profile especially after it posted strong growth in assets compared to the last year. The Board
and the BIRMC are satisfied with the effective risk management strategies implemented by the
Bank under its Integrated Risk Management Framework (IRMF) and Road Map over the 12 month period ended in December 2013.
138
Risk Management 65
The Bank shall continue to review, monitor and proactively address potential risks identified in
all its operations and implement appropriate mitigation strategies to remain in a steady growth
and expansion phase. The Bank shall also continue to function within its approved risk appetite
as well as comply with Basel II and CBSL requirements of effective risk management practices.
Angelo M. Patrick
Chairman - Board Integrated Risk Management Committee
Colombo
24 March 2014
139
Board Human Resources and

Remuneration Committee
Report
The Board Human Resources and Remuneration Committee (BHRRC) comprises of the
following members:
1. Mr. Osman Kassim (Non-Executive, Non-Independent Director, Chairman)
2. Mr. Angelo M. Patrick (Non-Executive, Independent Director, Secretary)
3. Mr. Tyeab Akbarally (Non-Executive, Non-Independent Director)
4. Dr. A.A.M. Haroon (Non-Executive, Non-Independent Director) - resigned w.e.f.
1 October 2013
5. Mr. Faizal Salieh (Managing Director/CEO) - resigned w.e.f. 1 October 2013
6. Mr. Ruzly Hussain (Non-Executive, Independent Director) - appointed w.e.f. 1 October 2013
7. Mr. Jazry M. Ismail (Non-Executive, Independent Director) - appointed w.e.f. 1 October 2013
All five (5) Directors in the Committee are Non-Executive Directors with three (3) being
Independent Directors.
AUTHORITY AND RESPONSIBILITIES

The BHRRC has the explicit authority to decide on and review the Banks Human Resources
and Remuneration Policy and Structure within its Terms of Reference on behalf of the Board of
Directors. It may however, refer any matter which in the opinion of BHRRC should be decided
by the Board of Directors together with its recommendations.
In discharging its duties and functions the BHRRC has all the resources it needs to do so and
full and unrestricted access to information and the right to obtain external professional advise
and invite outsiders with relevant experience to attend meetings if necessary.
The Roles and Responsibilities of the Committee include:
1. Approving the Human Resource Policies (salaries, allowances and other financial
payments) relating to Directors, MD/CEO and Key Management Personnel of the Bank.
2. Evaluating the performance of the CEO and Key Management Personnel against the set
targets and goals periodically and determine the basis for revising remuneration, benefits
and other payments of performance-based incentives.
3. Approving periodic Human Resource Policy and Procedure revisions.
140
Risk Management 65
MEETINGS
The Committee held four (4) meetings during the year under review. Meetings are held as and
when necessary after providing sufficient notice to all members.
Osman Kassim
Chairman - Board Human Resources and Remuneration Committee
Colombo
24 March 2014
141
Board Nomination
Committee Report
CONSTITUTION OF THE BOARD NOMINATION COMMITTEE (BNC)

Amna Banks Board Nomination Committee (BNC) constitutes of five (5) members from the
Board of Directors as follows :
1. Mr. Ruzly Hussain
- Chairman (Non-Executive, Independent Director)
2. Mr. Tyeab Akbarally
- Member (Non-Executive, Non-Independent Director)

resigned w.e.f. 28 June 2013
3. Dr. A.A.M. Haroon
4. Mr. Angelo M. Patrick
- Member (Non-Executive, Independent Director)
5. Mr. Harsha Amarasekera

appointed w.e.f. 23 March 2013
6. Mr. Jazri Magdon Ismail
- Member (Non-Executive, Independent Director)

appointed w.e.f. 18 May 2013
7. Ms. Yeo Sock Hwa

resigned w.e.f. 23 March 2013
RESPONSIBILITIES OF THE BOARD NOMINATION COMMITTEE

According to the Terms of Reference (TOR) given by the Board to the BNC the following are its
key responsibilities:
(a) Establishing a procedure to select/appoint new Directors, CEO and Key Management
Personnel (KMP)
(b) Considering and recommending (or not recommending) the re-election of current
Directors, taking into account the performance and contribution made by the Director
concerned towards the overall discharge of the Boards responsibilities
(c) Setting the criteria such as qualifications, experience and key attributes required for
eligibility to be considered for appointment or promotion to the post of CEO and the Key
Management Positions
(d) Ensuring the Directors, CEO and KMP are fit and proper persons to hold office as
specified and set out in the Banking Act and other relevant Statutes and in terms of the
Directions issued by the Central Bank of Sri Lanka (CBSL) from time to time
(e) Considering and recommending from time to time, the requirements of additional/new
expertise and the succession arrangements for retiring Directors and KMP
The quorum necessary for transactions of business is four (4) members.
The Company Secretary is Secretary to the BNC.
142
Risk Management 65
FREQUENCY OF MEETINGS
The Committee is required to meet as and when necessary and at least twice during a
financial year.
AUTHORITY
The BNC has the authority to seek any information that it requires from any officer or employee
of the Bank. In connection with its duties, the BNC is authorised by the Board to take such
independent advice (including legal or other professional advice, at the Banks expense) as it
considers necessary, including requests for information from, or commissioning investigations
by external advisers.
PERFORMANCE DURING THE YEAR
During the year 2013 the BNC held seven (7) meetings. The Committee approved the suitability
of the following appointments to the Board of Directors of the Bank.

Mr. Badrul Haque Khan, Deputy Managing Director of AB Bank, Bangladesh as Director of
the Bank in place of retiring Director, Mr. Mohammed Wahidul Haque
Mr. Harsha Amarasekera representing Millennium Capital (Pvt) Limited, Singapore in

place of retiring Director Ms. Yeo Sock Hwa
Mr. Kevin Mark Pocock as Alternate to Mr. Harsha Amarasekera
The Committee also interviewed and recommended the appointment of the following Key
Management positions:

Mr. Ajmal Naleer as Vice President - Credit

Mr. H. Mahesha Thrimanne as Head of Legal
Mr. Roomy Rahim as Vice President - HR
Mr. Irshad Halaldeen as Vice President - Strategic Planning and BPR
As mandated under the Corporate Governance Direction issued by CBSL the Committee also
considered the re-appointment of Directors who retire by rotation in terms of Articles 28 of the
Articles of Association of the Bank.
143
The Board of Directors also reconstituted the BNC at the 30th Board Meeting held on 18 May
2013 by the appointment of Mr. Jazri Magdon Ismail, an Independent Director also to the BNC.
During the year the BNC formerly put in place established criteria for succession planning of
the Key Management positions and also formal procedures for the same.
BNC is actively involved in the selection and appointments of KMP and Directors to ensure
that Directors and KMPs are fit and proper persons to hold their offices as set out in the
Statutes of the CBSL Directions. As a listed company the BNC will now be conforming with the
Colombo Stock Exchange and Securities and Exchange Commission of Sri Lanka guidelines of
Corporate Governance for listed companies as well.
Ruzly Hussain
Chairman - Board Nomination Committee
Colombo
24 March 2014
144
Risk Management 65
Growth
A thriving hive is one that grows. The Bank grew its customer deposits by over
LKR 4.6 billion, whilst customer advances grew by LKR 7.8 billion in 2013.
This is just a foretaste of the sweet success that is ready to flow in the years ahead
all due to the busy bees who are engaged in building a vibrant and prosperous
enterprise that will grow well into the future.
145
Statement of Directors
Responsibility
The responsibility of the Directors, in relation to the Financial Statements of Amna Bank
Limited (Bank) is set out in this Statement. The responsibilities of the External Auditors in
relation to the Financial Statements are set out in the Auditors Report given on page 152.
In terms of Sections 150, 151 and 153 of the Companies Act No. 07 of 2007, the Directors of
the Bank are responsible for ensuring that the Bank keeps proper books of accounts of all the
transactions and prepare Financial Statements that give a true and fair view of the financial
position of the Bank as at end of each financial year and of the financial performance of
the Bank for each year and place them before a general meeting. The Financial Statements
comprise of the Statement of Financial Position as at 31 December 2013, Income Statement,
Statement of Other Comprehensive Income, Statement of Changes in Equity, Statement of
Cash Flows for the year then ended and notes thereto.
Accordingly, the Directors confirm that the Financial Statements of the Bank give a true and
fair view of:
(a) the financial position of the Bank as at reporting date;
and
(b) the financial performance of the Bank for the financial year ended on the reporting date.
The Financial Statements of the Bank have been certified by the Banks Chief Financial
Officer, the officer responsible for their preparation, as required by the Sections 150 and 152
of the Companies Act. In addition, the Financial Statements of the Bank have been signed by
three Directors and the Company Secretary of the Bank on 22 March 2014 as required by the
Sections 150 and 152 of the Companies Act and other regulatory requirements. Under the
Section 148 of the Companies Act, the Directors are also responsible for ensuring that proper
accounting records which correctly record and explain the Banks transactions are maintained
and that the Banks financial position, with reasonable accuracy, at any point of time is
determined by the Bank, enabling preparation of the Financial Statements, in accordance with
the Act to facilitate proper audit of the Financial Statements.
The Financial Statements for the year 2013, prepared and presented in this Annual Report
are in agreement with the underlying books of accounts and are in conformity with the
requirements of the Sri Lanka Accounting Standards, Companies Act No. 07 of 2007, Sri Lanka
Accounting and Auditing Standards Act No. 15 of 1995, Banking Act No. 30 of 1988 and
amendments thereto and the Directions on Corporate Governance No. 11 of 2007 issued by the
Central Bank of Sri Lanka.
146
Risk Management 65
In addition, these Financial Statements comply with the prescribed format issued by the
Central Bank of Sri Lanka for the preparation of Annual Financial Statements of licensed
commercial banks.
The Directors have taken appropriate steps to ensure that the Bank maintains proper books of
accounts and review the financial reporting system directly by them at their regular meetings
and also through the Board Audit Committee. The report of the said Committee is given on
pages 130 to 134.
The Board of Directors accepts responsibility for the integrity and objectivity of the Financial
Statements presented in this Annual Report. The Directors confirm that in preparing the
Financial Statements exhibited on pages 153 to 204 including appropriate Accounting Policies
based on the new financial reporting framework, had been selected and applied in a consistent
manner, while reasonable and prudent judgments have been made so that the form and
substance of the transactions are properly reflected.
The Directors also have taken reasonable measures to safeguard the assets of the Bank and to
prevent and detect frauds and other irregularities. In this regards, the Directors have instituted
an effective and comprehensive system of internal controls comprising of internal checks,
internal audit and financial and other controls required to carry on the business of banking in
an orderly manner and safeguard its assets and secure as far as practicable, the accuracy and
reliability of the records. The Directors Statement on Internal Control over Financial Reporting
is given on pages 114 and 117 of this Annual Report.
The Board of Directors also wishes to confirm that, as required by the Sections 166 (1) and
167 (1) of the Companies Act, they have prepared this Annual Report in time and ensured that
a copy thereof is sent to every shareholder of the Bank, who have expressed desire to receive
a hard copy or to other shareholders a soft copy each in a CD containing the Annual Report
within the stipulated period of time. The Directors also wish to confirm that all shareholders
have been treated equally in accordance with the original terms of issue.
The Banks External Auditors, Messrs Ernst & Young who were appointed in terms of the
Section 158 of the Companies Act and in accordance with a resolution passed at the last
Annual General Meeting, were provided with every opportunity to undertake the inspections
they considered appropriate. They carried out reviews and sample checks on the system of
147
internal controls as they considered appropriate and necessary for expressing their opinion
on the Financial Statements and maintaining accounting records. They have examined the
Financial Statements made available to them by the Board of Directors of the Bank together
with all the financial records, related data and minutes of shareholders and Directors
meetings and expressed their opinion which appears as reported by them on page 152.
COMPLIANCE REPORT
The Directors confirm that to the best of their knowledge, all taxes, duties and levies payable
by the Bank, all contribution, levies and taxes payable on behalf of and in respect of the
employees of the Bank, and all other known statutory dues as were due and payable by the
Bank as at the reporting date have been paid or, where relevant, provided for. The Directors
further confirm that after considering the financial position, operating conditions, regulatory
and other factors and relevant matters the Directors have a reasonable expectation that
the Bank possesses adequate resources to continue in operation for the foreseeable future.
For this reason, the Directors continue to adopt the Going Concern basis in preparing the
The Directors are of the view that they have discharged their responsibilities as set out in this
Statement.
By Order of the Board,

Company Secretary
Colombo
24 March 2014
148
Independent Sharia
Supervisory Council Report
Risk Management 65
In the Name of Allah the Most Gracious the Most Merciful

To the Shareholders of Amna Bank Limited
We have reviewed the Sharia audit and review report conducted by the Sharia Supervision
Department and the contracts relating to the transactions and applications introduced by
Amna Bank Limited during the year ended 31 December 2013.
We have also conducted our review to form an opinion as to whether Amna Bank Limited has
complied with Sharia Rules and Principles and also with the specific rulings and guidelines
issued by us.
The Sharia review also included examining on a test basis each type of transactions, the
relevant documentations and procedures adopted by the Bank.
We planned and performed our review so as to obtain all the information and explanations
which was considered necessary in order to provide us with sufficient evidence to give
reasonable assurance that the Bank has not violated Sharia Rules and Principles and any
guidelines provided by us.
The Management is responsible for ensuring that the Bank conducts its business in accordance
with the Sharia Rules and Principles. It is our responsibility to form an independent opinion,
based on our review of the operations of the Bank and to report to you.
149
In our Opinion:
a. The contracts, transactions and dealings entered into by Amna Bank Limited during the
year ended 31 December 2013, that have been reviewed are in compliance with the Sharia
Rules and Principles.
b. The allocation of profit and charging of losses relating to Investment Accounts conform to
the basis that had been approved by us in accordance with Sharia Rules and Principles.
Allah Knows Best.
Ash-Sheik Dr. Muhammad Imran Ashraf Usmani

Chairman
Ash-Sheik Mohd Nazri Chik

Vice Chairman
Ash-Sheik Mufti M.I.M. Rizwe

Member
Ash-Sheik M.M.A. Mubarak

Member
Ash-Sheik Mufti Hassan Kaleem

Member
Financial Reports
Independent Auditors Report
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
152
153
154
155
156
157
158
152
Independent Auditors Report
INDEPENDENT AUDITORS REPORT

TO THE SHAREHOLDERS OF
AMNA BANK LIMITED
REPORT ON THE FINANCIAL
STATEMENTS
We have audited the accompanying financial
statements of Amna Bank Limited (the
Bank), which comprise the statement of
financial position as at 31 December 2013,
and the income statement, statement
of comprehensive income, statement
of changes in equity and statement of
cash flows for the year then ended, and a
summary of significant accounting policies
and other explanatory notes.
MANAGEMENTS RESPONSIBILITY
FOR THE FINANCIAL STATEMENTS
Management is responsible for the
preparation and fair presentation of
these financial statements in accordance
with Sri Lanka Accounting Standards.
This responsibility includes: designing,
implementing and maintaining internal
control relevant to the preparation and fair
presentation of financial statements that are
free from material misstatement, whether

due to fraud or error; selecting and applying

appropriate accounting policies; and making
accounting estimates that are reasonable in
the circumstances.
SCOPE OF AUDIT AND BASIS OF

OPINION
Our responsibility is to express an opinion
on these financial statements based on our
audit. We conducted our audit in accordance
with Sri Lanka Auditing Standards. Those
standards require that we plan and perform
the audit to obtain reasonable assurance
whether the financial statements are free
from material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures
in the financial statements. An audit also
includes assessing the accounting policies
used and significant estimates made by
management, as well as evaluating the
overall financial statement presentation.
We have obtained all the information
and explanations which to the best of our
knowledge and belief were necessary for the
purposes of our audit. We therefore believe
that our audit provides a reasonable basis
for our opinion.
OPINION
In our opinion, so far as appears from
our examination, the Bank maintained
proper accounting records for the year
ended 31 December 2013 and the financial
statements give a true and fair view of the
Banks financial position as at 31 December
2013 and its financial performance and cash
flows for the year then ended in accordance
with Sri Lanka Accounting Standards.
REPORT ON OTHER LEGAL AND

REGULATORY REQUIREMENTS
These financial statements also comply with
the requirements of Sections 151(2) of the
Companies Act No. 07 of 2007.
24 March 2014
Colombo.
153
Income Statement

Branch Network 214
Notice of Annual General Meeting 217
Year ended 31 December

Note
2013
2012
Rs.
Rs.
1,300,618,090
Financing Income
1,768,061,705
Financing Expenses
(1,050,007,868)
Net Financing Income
(732,071,273)
718,053,837
568,546,817
Net Fee and Commission Income
100,223,308
68,923,319
Net Trading Gain
219,719,256
621,773,009
Net Other Operating Income/(Expenses)
21,579,603
1,059,576,004
Total Operating Income

Impairment for Financing and Receivables to Other Customers and Financial Assets
Net Operating Income

Personnel Expenses
10
Depreciation of Property, Plant and Equipment

Amortisation of Intangible Assets
Other Operating Expenses
11
Total Operating Expenses

Operating Profit/(Loss) Before Value Added Tax
Profit/(Loss) Before Tax
12

Earnings Per Share

The Accounting Policies and Notes on pages 158 through 204 form an integral part of the Financial Statements.
13
(16,093,890)
960,239,735
1,237,796,168
720,351,418
438,453,212
121,287,043
125,557,539
36,995,102
25,472,863
506,427,017
396,567,577
1,385,060,580
986,051,191
(424,820,845)
Value Added Tax on Financial Services

Tax Expenses/(Reversal)
(99,336,269)
(5,353,087)
1,253,890,058
251,744,977
(13,184,143)
(45,941,033)
(438,004,988)
205,803,944
(120,971,087)
59,809,292
(317,033,901)
145,994,652
(0.33)
0.16
154
Statement of Comprehensive
Income


Note
2013
2012
Rs.
Rs.
(317,033,901)
145,994,652
(67,036,666)
(76,230,054)
Other Comprehensive Loss

Financial Investments - Available for Sale:
Net Gain/(Loss) on Financial Investments - Available for sale
(6,741,123)
Re-measurement Gain/(Loss) on Defined Benefit Plans
(73,777,789)
Total Other Comprehensive Loss

Deferred Tax Effect on Defined Benefit Plans
Other Comprehensive Loss for the Year Net of Tax
Total Comprehensive Income/(Loss) for the Year Net of Tax

27
1,887,514
(76,230,054)
(71,890,275)
(76,230,054)
(388,924,176)
69,764,598
155

Branch Network 214
As at 31 December
2013
2012
Note
Rs.
Rs.
Assets
Financial Investments - Held for Trading
Intangible Assets
Deferred Tax Assets
Total Assets
15
16
17
18
19
20
21
22
23
24
25
26
27
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
175,334,631
15,015,318,081
600,337,971
519,546,392
240,777,613
852,960,574
283,027,619
159,355,340
23,397,855,691
3,866,793,015
865,294,214
104,181,576
825,235,383
1,661,226,754
59,768,906
7,165,461,019
486,122,612
553,493,038
232,258,744
636,709,910
224,382,174
36,496,739
16,717,424,084
Liabilities
Retirement Benefit Liability
Total Liabilities
28
29
30
31
32
3,130,759
17,983,111,581
290,819,822
13,688,807
45,071,342
18,335,822,311
4,978,614
13,302,501,452
304,236,288
13,843,550
20,648,680
13,646,208,584
Shareholders Funds
Stated Capital
Statutory Reserve Fund
Other Reserves
Retained Earnings
Total Equity
33
Total Liabilities and Shareholders Funds

Commitments and Contingencies
37
5,866,808,141
7,299,733
(282,089,961)
(529,984,533)
5,062,033,380
3,431,611,720
7,299,733
(170,555,104)
(197,140,849)
3,071,215,500
23,397,855,691
16,717,424,084
7,641,018,045
11,121,347,724
I certify that these Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
M. Ali Wahid
Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by:

Faizal Salieh
Osman Kassim
Chairman

Jazri Magdon Ismail
Director
22 March 2014
Colombo
Mrs. P.M.D. Koralege

Company Secretary
156
Statement of Changes in Equity
As at 1 January 2012

Stated Capital
Stated
Capital Funds
Capital Raised Pending
Allotment of
Shares
Rs.
Rs.
Investment
Fund
Other Reserves
Revenue
Reserve
Available for
Sale Reserve
Retained
Earnings
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
(161,471,963)
38,686,303
(307,375,158)
3,001,450,902
145,994,652
145,994,652
Profit for the Year
Transfers to Statutory
Reserve Fund
(7,299,733)
Transfers to Investment Fund
(28,460,610)
As at 31 December 2012
Rights Issue
3,431,611,720
Statutory
Reserve
Fund
3,431,611,720
785,209,621
(161,471,963)
Loss for the Year
28,460,610
4,216,821,341
7,299,733
28,460,610
Share Issue Expenses
IPO Share Issue Pending Allotment
Transfers to Investment Fund
7,299,733
1,649,986,800
1,649,986,800
7,299,733
10,956,174
39,416,784
(76,230,054)
(37,543,751)
(76,230,054)
(197,140,849)
3,071,215,500
785,209,621
1,649,986,800
(55,454,365)
(216,926,328)
(67,036,666)
(104,580,417)
(55,454,365)
(317,033,901)
(317,033,901)
(4,853,609)
(71,890,275)
(10,956,174)
(529,984,533)
5,062,033,380
157
Statement of Cash Flows

Branch Network 214
2013
2012
Rs.
Rs.
Cash Flow from Operating Activities

Financing Income Received
Fees and Commission Received
Financing Expenses Paid
Foreign Exchange Income Received
Gratuity Payments
Payments to Employees and Suppliers
Operating Profit/(Loss) Before Changes in Operating Assets
and Liabilities (Note A)
1,711,324,779
126,226,193
(1,002,545,163)
243,378,962
(891,457)
(1,191,350,645)
Increase/(Decrease) in Due to Other Customers

(Increase)/Decrease in Financing and Receivables to Other Customers
(Increase)/Decrease in Other Financial Assets
(Increase)/Decrease in Other Non Financial Assets
(Increase)/Decrease in Statutory Deposit
Increase/(Decrease) in Other Liabilities
Net Cash Flow from Operating Activities Before Income Tax
Income Tax Paid
Net Cash Flow from Operating Activities
Cash Flows from/(used in) Investing Activities
Acquisition of Property, Plant and Equipment
Proceeds from Sale of Property, Plant and Equipment
Acquisition of Intangible Assets
Investments in Placements with Licensed Finance Companies
Investments/(Withdrawal) in Inter Bank Placements
Sale/(Acquisition) of Gold
Sale/(Acquisition) of Financial Investments - Available for Sale
Sale/(Acquisition) of Financial Investments - Held for Trading
Net Cash Flows Used in Investing Activities
4,633,147,425
(7,907,274,865)
97,876,078
(10,406,382)
179,973,794
(15,419,059)
(3,135,960,340)
(3,135,960,340)
1,794,590,228
(2,195,257,598)
(305,453,255)
40,209,441
(147,531,185)
322,989,807
(231,227,798)
(231,227,798)
(337,537,707)
(95,640,546)
999,826,778
(907,770,146)
(175,374,378)
(149,526,360)
(666,022,359)
(282,473,784)
16,124,274
(114,384,694)
1,452,494,352
693,336,325
948,856,390
(13,394,402)
344,401,237
3,044,959,698
Cash Flows from/(used in) Financing Activities

Proceeds from Rights Issue of Shares
Proceeds from IPO Share Issue
Share Issue Expenses
Net Cash Flows from Financing Activities
Net Increase/(Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of the Year
Cash and Cash Equivalents at the End of the Year
A. Reconciliation of Operating Profit
Profit/(Loss) Before Taxation
Depreciation of Property, Plant and Equipment
Amortisation of Intangible Assets
(Profit)/Loss on Disposal of Gold
(Profit)/Loss on Disposal of Property, Plant and Equipment
Impairment for Financing and Receivables to Other Customers and Financial Assets
Provision for Gratuity
(Increase)/Decrease in Placement Income Receivable
Increase/(Decrease) in Profit Payable
Other Non Cash Items
Gratuity Payments
(113,857,331)
785,209,621
1,649,986,800
(55,454,366)
2,379,742,055
(1,422,240,644)
3,866,793,015
2,444,552,371
(438,004,988)
121,287,043
36,995,101
99,336,269
18,572,996
(5,448,510)
47,462,705
6,833,510
(891,457)
(113,857,331)
1,329,153,756
558,987,773
(659,549,993)
126,226,620
(791,645)
(1,094,801,746)
259,224,765
2,813,731,900
1,053,061,115
3,866,793,015
205,803,944
125,557,539
25,472,863
(149,273,881)
(14,535,937)
16,093,890
8,388,964
39,861,074
72,521,280
(69,873,326)
(791,645)
259,224,765
158
Notes to the
Financial Statements

1. CORPORATE INFORMATION
2.1 BASIS OF PREPARATION
1.1 GENERAL
2.1.1 Basis of Measurement
Amna Bank Limited (the Bank) is a

licensed commercial bank established under
the Banking Act No. 30 of 1988. It is a public
limited liability company incorporated on
5 February 2009 and is domiciled in
Sri Lanka. The registered office of the Bank
is located at No. 480, Galle Road, Colombo 3.
The Bank commenced commercial banking
operations on 1 August 2011.
The Financial Statements are prepared

under the historical cost basis except for,
Financial Assets and Liabilities designated at
Fair Value through Profit or Loss, Financial
Investments and Liabilities Held for Trading,
Financial Investments Available For Sale, all
of which have been measured at fair value.
The Financial Statements are presented
in Sri Lankan Rupees (Rs.), except when
otherwise indicated.
Financial Assets and Financial Liabilities

are offset and the net amount reported in
the Statement of Financial Position only
when there is a legally enforceable right to
offset the recognised amounts and there
is an intention to settle on a net basis, or
to realise the assets and settle the liability
simultaneously. Income and expense is
not offset in the Income Statement unless
required or permitted by any accounting
standard or interpretation, and as
specifically disclosed in the accounting
policies of the Bank.
2.1.2 Statement of Compliance
2.1.4 Going Concern
The principal activities of the Bank continues

to be providing Sharia compliant banking
and related activities such as accepting
customer deposits, personal banking, trade
financing, import and export financing,
equipment and machinery financing, lease
financing, home and property financing,
working capital financing, project financing,
resident and non-resident foreign currency
operations.
The Financial Statements of the Bank which

comprise of the Statement of Financial
Position, Income Statement, Statement of
Other Comprehensive Income, Statement of
Changes in Equity, Statement of Cash Flows
and Significant Accounting Policies and
Notes have been prepared in accordance with
Sri Lanka Accounting Standards (SLFRSs
and LKASs) laid down by The Institute of
Chartered Accountants of Sri Lanka and are
in compliance with the requirements of the
Companies Act No. 07 of 2007.
The Banks management has made an

assessment of its ability to continue as
a going concern and is satisfied that it
has the resources to continue in business
for the foreseeable future. Furthermore,
management is not aware of any material
uncertainties that may cast significant
doubt upon the Banks ability to continue
as a going concern. Therefore, the Financial
Statements continue to be prepared on the
going concern basis.
1.3 PARENT ENTITY AND

ULTIMATE PARENT ENTITY
2.1.3 Presentation of Financial

Statements
The Bank does not have an identifiable

parent of its own.
The Bank presents its Statement of Financial

Position broadly in order of liquidity. An
analysis regarding recovery or settlement
within 12 months after the Statement of
Financial Position date (current) and more
than 12 months after the Statement of
Financial Position date (non-current) is
presented in Note No. 36.
The staff strength of the Bank as at 31

December 2013 was 557 (2012 - 423).
1.2 PRINCIPAL ACTIVITIES
1.4 DATE OF AUTHORISATION OF

ISSUE
The Financial Statements of Amna Bank
Limited for the year ended 31 December
2013 was authorised for issue in accordance
with a resolution of the Board of Directors
on 22 March 2014.
2.2 SIGNIFICANT ACCOUNTING

JUDGMENTS AND ESTIMATES
In the process of applying the Banks
accounting policies, management has
exercised judgment and estimates in
determining the amounts recognised in the
Financial Statements. The most significant
uses of judgment and estimates are as follows:
a. Fair Value of Financial Instruments

Where the fair values of Financial Assets
and Financial Liabilities are recorded
on the Statement of Financial Position
cannot be derived from active markets,
159
they are determined using a variety of

valuation techniques that include the use
of mathematical models. The valuation of
Financial Instruments is described more
detail in Note No. 34.
b. Impairment Losses on Financing

and Receivables to Other Customers
The Bank reviews its individually significant
Financing and Receivables to Other
Customers at each reporting date to assess
whether an impairment loss should be
recorded in the Income Statement. In
particular, managements judgment is
required in the estimation of the amount
and timing of future cash flows when
determining the impairment loss. These
estimates are based on assumptions about
a number of factors and actual results may
differ, resulting in future changes to the
allowance.
Customers that have been assessed
individually and found not to be impaired
and all individually insignificant Financing
and Receivables to Other Customers are then
assessed collectively, in groups of assets with
similar risk characteristics, to determine
whether provision should be made due
to incurred loss events for which there is
objective evidence, but the effects of which
are not yet evident.
The impairment loss on Financing and
Receivables to Other Customers is disclosed
in more detail in Note Nos. 2.3.5 (g), (i), 21.4
and Note No. 35.3 (a), (b) and (c).

Branch Network 214
c. Impairment of Financial
Investments - Available for Sale
The Bank also records impairment charges
on Available for Sale equity investments
when there has been a significant or
prolonged decline in the fair value below
their cost. The determination of what is
significant or prolonged requires judgment.
In making this judgment, the Bank evaluates,
among other factors, historical share price
movements, duration and extent to which
the fair value of an investment is less than
its cost.
d. Taxation
The Bank is subject to income taxes and
other taxes including Value Added Tax (VAT)
on Financial Services. Significant judgment
was required to determine the total
provision for current, deferred and other
taxes pending the issue of tax guideline on
the treatment of the adoption of SLFRS in
the Financial Statements and the taxable
profit for the purpose of imposition of
taxes. Uncertainties exist, with respect to
the interpretation of the applicability of tax
laws, at the time of the preparation of these
The Bank recognised assets and liabilities for
current, deferred and other taxes based on
estimates of whether additional taxes will be
due. Where the final tax outcome of these
matters is different from the amounts that
were initially recorded, such differences will
impact to the income.
e. Deferred Tax Assets

Deferred tax assets are recognised in respect
of tax losses to the extent that it is probable
that taxable profit will be available against
which the losses can be utilised. Judgment
is required to determine the amount of
deferred tax assets that can be recognised,
based upon the likely timing and level of
future taxable profits, together with future
tax planning strategies.
f. Defined Benefit Plans

The cost of the defined benefit plan is
determined using an actuarial valuation.
The actuarial valuation involves making
assumptions about discount rates, salary
increment rate, age of retirement, and
mortality rates. Due to the long term nature
of these plans, such estimates are subject
to significant uncertainty. The assumptions
used for valuation is disclosed in more detail
in Note No. 32.
g. Useful life-time of the Property,

Plant and Equipment
The Bank reviews the residual values, useful
lives and methods of depreciation of assets
as at each reporting date. Judgment of the
management is exercised in the estimation
of these values, rates, methods and hence
they are subject to uncertainty.
2.3 SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES
2.3.1 Foreign Currency Translation
These Financial Statements are presented in
Sri Lankan Rupees (Rs.) which is the Banks
functional and presentation currency.
160
Transactions and Balances

Transactions in foreign currencies are
initially recorded at the spot rate of exchange
ruling at the date of the transactions.
Monetary assets and liabilities denominated
in foreign currencies are retranslated at the
functional currency rate of exchange at the
reporting date. All differences arising on
non-trading activities are taken to Net Other
Operating Income/(Expenses) in the Income
Statement.
Non monetary items that are measured in
terms of historical cost in a foreign currency
are translated using the exchange rates as
at the dates of the initial transactions. Non
monetary items measured at fair value in
a foreign currency are translated using the
exchange rates at the date when the fair
value was determined. Forward exchange
contracts are valued at the forward market
rates ruling on the date of the reporting date,
resulting net unrealised gains or losses are
dealt within the Income Statement.
2.3.2 Cash and Cash Equivalents

Cash and cash equivalents as referred to in
the Statement of Cash Flows comprises cash
in hand and balances with banks on demand
or with an original maturity of three months
or less.
2.3.3 Balance with Central Bank of

Sri Lanka
The Monetary Law Act requires that all
commercial banks operating in Sri Lanka
maintain reserves against all deposit
liabilities (Due to Other Customers)
denominated in Sri Lankan Rupees.

2.3.4 Derivative Financial

Instruments
erivative Financial Instruments (Assets/
D
Liabilities) are classified as either trading
or hedging if they qualify for hedge
accounting.

Derivatives are initially recognised at fair
value at the date the derivative transaction
is entered into and are subsequently
re-measured to their fair value at the end
of each reporting period. The resulting
gain or loss is recognised in profit or
loss immediately unless the derivative is
designated and effective as a hedging
instrument.
2.3.5 Non Derivative Financial

Instruments
party to the contractual provisions of the

instrument). This includes regular way
trades: purchases or sales of Financial
Assets that require delivery of assets within
the time frame generally established by
regulation or convention in the market place.
(b) Initial measurement of

Financial Instruments
The classification of Financial Instruments at
initial recognition depends on their purpose
and characteristics and the managements
intention in acquiring them. All Financial
Instruments are measured initially at their
fair value plus transaction costs, except in
the case of Financial Assets and Financial
Liabilities which are recorded at Fair Value
through Profit or Loss.
Financial Assets
(c) Financial Assets
Non Derivative Financial Assets are

classified as Financial Investments Held for
Trading, Financing and Receivables to Other
Customers and Financial Assets Available for
Sale. The Bank determines the classification
of its Financial Assets at initial recognition.
The Bank categorises its Financial Assets as

follows:
Financial Liabilities
Non Derivative Financial Liabilities are
classified as Financial Liabilities at Fair
Value through Profit or Loss or Other
Financial Liabilities in accordance with the
substance of the contractual agreement and
the definition of Financial Liabilities.
(a) Date of Recognition

All Financial Assets and Liabilities are
initially recognised on the trade date,
(i.e., the date that the Bank becomes a
(i) Financial Investments at Fair Value

through Profit or Loss
Financial Investments acquired or incurred
principally for the purpose of selling or
repurchasing it in the near term or it is part
of a portfolio that are managed together and
for which there is evidence of a recent actual
pattern of short term profit-taking.
Financial Assets at Fair Value through Profit
or Loss are recorded in the Statement of
Financial Position at Fair Value. Changes in
Fair Value are recorded in Net Trading Gain
when the right to the payment has been
established.
This has been classified in the Statement of
Financial Position as Financial Investments Held for Trading.
161
(ii) Financing and Receivables to Other

Customers
Customers, include Non Derivative Financial
Assets with fixed or determinable payments
that are not quoted in an active market,
other than:

Those that the Bank intends to sell

immediately or in the near term
and those that the Bank upon initial
recognition designates as at Fair Value
Through Profit or Loss.
Those that the Bank, upon initial

recognition, designates as Available for
Sale.
Those for which the Bank may not

recover substantially all of its initial
investment, other than because of credit
deterioration.

Customers are subsequently measured at
Amortised Cost using the Effective Profit
Rate (EPR), less allowance for impairment.
Amortised cost is calculated by taking
into account any discount or premium on
acquisition and fees and costs that are an
integral part of the EPR. The amortisation
is included in Financing Income in the
Income Statement. The losses arising from
impairment are recognised in the Income
Statement in Impairment for Financing
and Receivables to Other Customers and
Financial Assets.
(iii) Financial Investments - Available

for Sale
Financial Investments Available for Sale
consist of equity investments. Equity
investments classified as Available for Sale

Branch Network 214
are those which are neither classified as

Held for Trading nor designated at Fair
Value through Profit or Loss. The Bank
has not designated any Financing and
Receivables to Other Customers as Available
for Sale.
After initial measurement, Available for Sale
Financial Investments are subsequently
measured at fair value.
Unrealised gains and losses are recognised
directly in equity (Statement of
Comprehensive Income) in the Available
for Sale reserve. When the investment is
disposed of, the cumulative gain or loss
previously recognised in equity is recognised
in the Income Statement in Net Other
Operating Income/(Expenses). Where the
Bank holds more than one investment in the
same security gains or losses arising from
the disposal of the investment is calculated
based on the weighted average basis.
Dividends earned whilst holding Available
for Sale Financial Investments are recognised
in the Income Statement as Net Other
Operating Income/(Expenses) when the
right to receive the dividend is established.
The losses arising from impairment of such
investments are recognised in the Income
Statement in Impairment Losses on
Financial Investments and removed from
the Available for Sale Reserve.
(iv) Day 1 Profit or Loss

When the transaction price differs from
the fair value of other observable current
market transactions in the same instrument
or based on a valuation technique whose
variables include only data from observable
markets, the Bank immediately recognises

the difference between the transaction
price and fair value (a Day 1 profit or loss)
in Financing Income. In cases where fair
value is determined using data which is
not observable, the difference between the
transaction price and model value is only
recognised in the Income Statement when
the inputs become observable, or when the
instrument is derecognised.
(d) Financial Liabilities

Initial recognition and measurement
Financial Liabilities within the scope of
LKAS 39 are classified as Due to Other
Customers (Deposits) and Other Financial
Liabilities. The Bank determines the
classification of its Financial Liabilities at
initial recognition.
The Bank classifies Financial Liabilities into
Financial Liabilities at Fair Value through
Profit or Loss or Other Financial Liabilities
in accordance with the substance of the
contractual arrangement and the definitions
of Financial Liabilities.
The Bank recognises Financial Liabilities in
the Statement of Financial Position when
the Bank becomes a party to the contractual
provisions of the Financial Liability.
(i) Financial Liabilities at Fair Value

Financial Liabilities at Fair Value through
Profit or Loss include Financial Liabilities
Held for Trading or designated as such
upon initial recognition. Subsequent to
initial recognition, Financial Liabilities
at Fair Value through Profit or Loss are
measured at fair value, and changes therein
are recognised in Income Statement.
162
Upon initial recognition, transaction cost

directly attributable to the acquisition are
recognised in Profit or Loss as incurred.
The criteria for designation of Financial
Liabilities at Fair Value through Profit or
Loss upon initial recognition are the same
as those of Financial Assets at Fair Value
through Profit or Loss.
As at the reporting date Bank does not have
any Liabilities under this classification.
(ii) Other Financial Liabilities

Other Financial Liabilities including Due
to Other Customers and Other Financial
Liabilities are initially measured at
fair value less transaction cost that are
directly attributable to the acquisition and
subsequently measured at Amortised Cost
using the EPR method.
Amortised Cost is calculated by taking into
account any discount or premium on the
issue and costs that are an integral part of
the EPR.
(e) Derecognition of Financial

Assets/Liabilities
(i) Financial Assets
A Financial Asset (or, where applicable a
part of a Financial Asset or part of a group
of similar Financial Assets) is derecognised
when:

the rights to receive cash flows from the

asset have expired;
the Bank has transferred its rights to

receive cash flows from the asset or
has assumed an obligation to pay the
received cash flows in full without

material delay to a third party under a

pass-through arrangement; and either:

the Bank has transferred substantially all

the risks and rewards of the asset;
Or,
the Bank has neither transferred nor
retained substantially all the risks and
rewards of the asset, but has transferred
control of the asset
When the Bank has transferred its rights
to receive cash flows from an asset or has
entered into a pass through arrangement,
and has neither transferred nor retained
substantially all of the risks and rewards of
the asset nor transferred control of the asset,
the asset is recognised to the extent of the
Banks continuing involvement in the asset.
In that case, the Bank also recognises an
associated liability. The transferred asset and
the associated liability are measured on a
basis that reflects the rights and obligations
that the Bank has retained.
Continuing involvement that takes the form
of a guarantee over the transferred asset
is measured at the lower of the original
carrying amount of the asset and the
maximum amount of consideration that the
Bank could be required to repay.
(ii) Financial Liabilities

A Financial Liability is derecognised
when the obligation under the liability is
discharged or cancelled or expires. Where
an existing Financial Liability is replaced
by another from the same party on
substantially different terms, or the terms
of an existing liability are substantially
modified, such an exchange or modification
is treated as a derecognition of the original
liability and the recognition of a new liability.
The difference between the carrying value

of the original Financial Liability and the
consideration paid is recognised in the
Income Statement.
( f ) Determination of Fair Value

The fair value for Financial Instruments
traded in active markets at the reporting
date is based on their quoted market price
or dealer price quotations (bid price for long
positions and ask price for short positions),
without any deduction for transaction costs.
For all other Financial Instruments not
traded in an active market, the fair value is
determined by using appropriate valuation
techniques. Valuation techniques include the
discounted cash flow method, comparison
with similar instruments for which market
observable prices exist, parity differential,
and other relevant valuation models.
An analysis of fair values of Financial
Instruments and further details as to how
they are measured are provided in Note
No. 34.
(g) Impairment of Financial Assets

The Bank assesses at each reporting date,
whether there is any objective evidence that a
Financial Asset or a group of Financial Assets
is impaired. A Financial Asset or a group of
Financial Assets is deemed to be impaired
if, and only if, there is objective evidence
of impairment as a result of one or more
events that have occurred after the initial
recognition of the asset (an incurred loss
event) and that loss event (or events) has an
impact on the estimated future cash flows of
the Financial Asset or the group of Financial
Assets that can be reliably estimated.
163
Evidence of impairment may include:

indications that the borrower or a group of
borrowers is experiencing significant financial
difficulty; the probability that they will enter
bankruptcy or other financial reorganisation;
default or delinquency in profit or principal
payments; and where observable data
indicates that there is a measurable decrease
in the estimated future cash flows, such as
changes in arrears or economic conditions
that correlate with defaults which are more
fully described in Note No. 35.3.
(i) Financial Assets Carried at

Amortised Cost
For Financial Assets carried at Amortised
Cost (Placements with Banks, Placements
with Licensed Finance Companies, Financing
and Receivables to Other Customers and
Other Financial Assets), the Bank first
assesses individually whether objective
evidence of impairment exists for Financial
Assets that are individually significant, or
collectively for Financial Assets that are
not individually significant. If the Bank
determines that no objective evidence
of impairment exists for an individually
assessed Financial Asset, it includes the asset
in a group of Financial Assets with similar
credit risk characteristics and collectively
assesses them for impairment. Assets that are
individually assessed for impairment and for
which an impairment loss is, or continues to
be, recognised are not included in a collective
assessment of impairment. The criteria that
the Bank uses to determine that there is
objective evidence of an impairment loss
include:
(a) Customer is experiencing significant
financial difficulties.

Branch Network 214
(b) Breach of covenants or conditions.

(c) Economic and legal reasons relating to
the customers financial difficulty.
(d) Likelihood of client becoming bankrupt.
(e) Concessions given to customer in view of
deteriorating financial condition.
( f) Statutory indicators such as new
regulations/Government policies would
prevent the operations to repay the dues
as agreed.
If there is objective evidence that an
impairment loss has been incurred, the
amount of the loss is measured as the
difference between the assets carrying
amount and the present value of estimated
future cash flows (excluding future
expected credit losses that have not yet
been incurred). The carrying amount of
the asset is reduced through the use of
an allowance account and the amount
of the loss is recognised in the Income
Statement. Financing Income continues to
be accrued on the reduced carrying amount
and is accrued using the profit rate used
to discount the future cash flows for the
purpose of measuring the impairment loss.
Individually Assessed Financing and

Receivables to Other Customers
Impairment on Individual Significant
Customers are identified by the
management based on the circumstances
evidencing overdue payment of profit/
return, downward adjustment of risk rating
and breach of contract terms. In order to
ascertain presence of such evidence, Bank
uses a detailed questionnaire, which is to
be completed by the respective Customer
Relationship Manager, who has a better

understanding of the customers financial
condition as at each reporting date.
If there are any indications of impairment,
the future cash flows with regard to the
financing is estimated. Subsequently,
Amortised Cost and the impairment loss are
calculated.
Allowance amount is decided considering
many integrated factors, i.e. possibility
of achieving the business plan, ability
to withstand the financial difficulties,
projected cash flow should bankruptcy
ensue, supplementary financial support, net
realisable value of collateral and timing of
anticipated cash flow.
Collectively Assessed Financing and

For the purpose of a collective evaluation
of impairment, the Bank will determine
the provisioning for collective assessment
using data in relation to the performance of
its financing portfolio. However, since the
Bank only commenced operations recently,
historical data that is required to arrive at
the collective assessment is not sufficient.
Further, based on the data that is available
an acceptable behavioural pattern could not
be established. Under such circumstances,
the Bank shall consider the basis adopted by
proxy Bank/s in determining the collective
assessment. In addition to the above,
economic factors both at macro-economic
and at Bank levels are considered in arriving
at the collective assessment.
See Note No. 9 for details of impairment
losses on Financial Assets carried at
Amortised Cost.
164
(ii) Financial Investments - Available

for Sale
For Available for Sale Financial Investments,
the Bank assesses at each reporting date
whether there is objective evidence that an
investment is impaired.
In the case of debt instruments classified
as Available for Sale, the Bank assesses
individually whether there is objective
evidence of impairment based on the
same criteria as Financial Assets carried at
Amortised Cost.
However, the amount recorded for
impairment is the cumulative loss measured
as the difference between the Amortised
Cost and the current fair value, less any
impairment loss on that investment
previously recognised in the Income
Statement. Future profit or income is
based on the reduced carrying amount and
is accrued using the rate of return used
to discount the future cash flows for the
purpose of measuring the impairment loss.
In the case of equity investments classified as
Available for Sale, objective evidence would
also include a significant or prolonged
decline in the fair value of the investment
below its cost. Where there is evidence of
impairment, the cumulative loss measured as
the difference between the acquisition cost
and the current fair value, less any impairment
loss on that investment previously recognised
in the Income Statement, is removed
from equity and recognised in the Income

Statement. Impairment losses on equity

investments are not reversed through the
Income Statement; increases in the fair value
after impairment are recognised in Other
Comprehensive Income.
2.3.6 Other Non Financial Assets

Other Non Financial Assets are valued net of
specific provision, where necessary, so as to
reduce the carrying value of such assets to
their estimated realisable value.
2.3.7 Property, Plant and

Equipment
(a) Cost
Property, Plant and Equipment is stated
at cost, excluding the costs of day to day
servicing, less accumulated depreciation
and accumulated impairment in value. Such
cost includes the cost of replacing part of the
Property, Plant and Equipment when that
cost is incurred, if the recognition criteria
are met.
(b) Depreciation
The provision for depreciation is calculated
by using a straight line method on the
cost or valuation of all Property, Plant &
Equipment other than freehold land, in
order to write-off such amounts over the
estimated useful lives by equal installments.
Depreciation of an asset begins when it
is available for use, i.e. when it is in the
location and condition necessary for it to be
capable of operating in the manner intended
by management.
The assets residual values, useful lives and
methods of depreciation are reviewed, and
adjusted if appropriate, at each financial
year end.
The useful lives of the assets are estimated as follows:

Freehold Buildings
2013
2012
40 years
40 years
5 years
5 years
Office Equipment
5 - 6 years
3 years
Computer Equipment
5 - 6 years
3 years
Motor Vehicles
4 years
3 years
Computer Servers
5 years
5 years
Over the Period of Lease or

Useful Life whichever is Lower
Over the Period of Lease or

Useful Life whichever is Lower
Furniture and Fittings
Improvements to
Leasehold Premises
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(c) Derecognition
An Item of Property, Plant and Equipment
is derecognised upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated
as the difference between the net disposal
proceeds and the carrying amount of the
asset) is included in the Income Statement
in the year the asset is derecognised.
2.3.8 Intangible Assets

The Banks Intangible Assets include the
value of computer software. An Intangible
Asset is recognised only when its cost can be
measured reliably and it is probable that the
expected future economic benefits that are
attributable to it will flow to the Bank.
Amortisation is calculated using the straight
line method to write down the cost of
Intangible Assets to their residual values
over their estimated useful lives as follows:
Computer Software
10 years
The useful lives of Intangible Assets are

assessed to be either finite or indefinite.
Intangible Assets with finite lives are
amortised over the useful economic life. The
amortisation period and the amortisation
method for an Intangible Asset with a finite
useful life are reviewed at least at each
financial year end.
Changes in the expected useful life or the
expected pattern of consumption of future
economic benefits embodied in the asset are
accounted for by changing the amortisation
period or method, as appropriate, and
treated as changes in accounting estimates.
The amortisation expense on Intangible

Assets with finite lives is recognised in
the Income Statement in the expense
category consistent with the function of the
Intangible Asset.
2.3.9 Leasing
The determination of whether an
arrangement is a lease, or it contains a
lease, is based on the substance of the
arrangement and requires an assessment of
whether the fulfilment of the arrangement
is dependent on the use of a specific asset or
assets and the arrangement conveys a right
to use the asset.
L eases where the Bank does not transfer
substantially all the risk and benefits of
ownership of the asset are classified as
operating leases. Initial direct costs incurred
in negotiating operating leases are added to
the carrying amount of the leased asset and
recognised over the lease term on the same
basis as rental income. Contingent rents are
recognised as revenue in the period in which
they are earned.
2.3.10 Impairment of Non Financial

Assets
e Bank assesses at each reporting date
Th
or more frequently if events or changes in
circumstances indicate that the carrying
value of a Non Financial Asset may be
impaired. If any such indication exists, or
when an annual impairment testing for
an asset is required, the Bank makes an
estimate of the assets recoverable amount.
When the carrying amount of an asset (or
cash-generating unit) exceeds its recoverable
amount, the asset (or cash-generating unit)
is considered impaired and is written down

to its recoverable amount.
For assets excluding goodwill, an assessment
is made at each reporting date as to whether
there is any indication that previously
recognised impairment losses may no
longer exist or may have decreased. If such
condition exists, the recoverable amount
is estimated. A previously recognised
impairment loss is reversed only if there
has been a change in the estimates used
to determine the assets recoverable
amount since the last impairment loss was
recognised. If that is the case, the carrying
amount of the asset is increased to its
recoverable amount.
2.3.11 Retirement Benefit

Obligations
(a) Defined Benefit Plan - Gratuity
Based on the Sri Lanka Accounting Standard
LKAS 19 - Employee Benefits, the Bank has
adopted the actuarial valuation method
for employee benefit liability. An Actuarial
Valuation is carried out by a qualified
actuary using Projected Unit Credit Method.
The principal assumptions, which have the
most significant effects on the valuation, are
the rate of discount, rate of increase in salary,
rate of turnover at the selected ages, rate of
disability, death benefits and expenses.
The liability is measured on an actuarial
basis using the Projected Unit Credit
Method, adjusted for unrecognised actuarial
gains and losses. The defined benefit plan
liability is discounted using rates equivalent
to the market yields at the date of Statement
of Financial Position that are denominated
166
in the currency in which benefits will

be paid, and that have a maturity
approximating to the terms of the related
pension liability.
(b) Defined Contribution Plan Employees Provident Fund and

Employees Trust Fund
Employees are eligible for Employees
Provident Fund Contributions and
Employees Trust Fund Contributions in line
with the respective Statutes and Regulations.
The Bank contributes a minimum 12% and
3% of gross salary.
2.3.12 Provisions
Provisions are recognised when the Bank has
a present obligation (legal or constructive)
as a result of a past event, and it is probable
that an outflow of resources embodying
economic benefits will be required to settle
the obligation and a reliable estimate can
be made of the amount of the obligation.
The expense relating to any provision is
presented in the Income Statement net of
any reimbursement.
2.3.13 Taxes
(a) Current Tax
Current tax assets and liabilities for the
current and prior years are measured at
the amount expected to be recovered from
or paid to the taxation authorities. The
tax rates and tax laws used to compute
the amount are those that are enacted or
substantively enacted by the Statement of
Financial Position date.

The provision for Income Tax is based on

the elements of income and expenditure as
reported in the Financial Statements and
computed in accordance with the provisions
of the relevant tax legislations.
(b) Deferred Tax

Deferred income tax is provided, using the
liability method, on temporary differences
at the Statement of Financial Position date
between the tax bases of assets and liabilities
and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are recognised
for all taxable temporary differences except
where the deferred income tax liability
arises from the initial recognition of an asset
or liability in a transaction that is not a
business combination and, at the time of the
transaction, affects neither the accounting
profit or loss nor taxable profit or loss.
Deferred income tax assets are recognised
for all deductible temporary differences,
carry forward of unused tax assets and
unused tax losses, to the extent that it
is probable that taxable profit will be
available against which the deductible
temporary differences, and the carry
forward of unused tax assets and unused
tax losses can be utilised except where the
deferred income tax asset relating to the
deductible temporary difference arises
from the initial recognition of an asset
or liability in a transaction that is not a
business combination and, at the time of the
transaction, affects neither the accounting
profit or loss nor taxable profit or loss.
The carrying amount of deferred income

tax assets is reviewed at each Statement
of Financial Position date and reduced to
the extent that it is no longer probable that
sufficient taxable profit will be available to
allow all or part of the deferred income tax
asset to be utilised.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected
to apply to the year when the asset is realised
or the liability is settled, based on tax rates
(and tax laws) that have been enacted or
substantively enacted at the Statement of
Financial Position date.
Deferred income tax relating to items
recognised directly in equity is recognised in
equity and not in the Income Statement.
(c) Value Added Tax on Financial

Services
The Banks total value addition is subjected
to a 12% Value Added Tax on Financial
Services as per Section 25A of the Value
Added Tax Act No. 14 of 2002 and
amendments thereto.
(d) Economic Service Charge (ESC)

As per the provisions of the Economic Service
Charge Act No. 13 of 2006, ESC is payable on
the liable income at specified rates. ESC paid
is deductible from the income tax liability.
Any unclaimed liability can be carried forward
and set off against the income tax payable for
a further four years.
2.3.14 Equity Reserves

The reserves recorded in equity (Other
Comprehensive Income) on the Banks
Statement of Financial Position include
167
Available for Sale reserve which comprises

changes in fair value of Financial
Investments Available for Sale.
2.3.15 Recognition of Financial

Income and Expenses
Revenue is recognised to the extent that it
is probable that the economic benefits will
flow to the Bank and the revenue can be
reliably measured. The following specific
recognition criteria must also be met before
revenue is recognised.

Branch Network 214
The Bank earns Fee and Commission Income

from a diverse range of services it provides to
its customers comprising of fees receivable
from customers for issuing letters of credit,
guarantees, account servicing fees, legal fees
and other services provided by the Bank and
are recognised as the related services are
performed.
(c) Dividend Income

Dividend Income is recognised when the
Banks right to receive the payment is
established.
(a) Income
Financing income and expenses are
recognised in Income Statement using the
Effective Profit Rate (EPR).

The EPR is the rate that exactly discounts the
estimated future cash payments and receipts
through the expected life of the Financial
Asset or Liability (or where appropriate a
shorter year) to the carrying amount of the
Financial Asset or Liability.
When calculating the EPR, the Bank
estimates future cash flows considering
all contractual terms of the Financial
Instrument, but not future credit losses. The
calculation of the EPR includes all fees and
points paid or received that are an integral
part of the Effective Profit Rate. Transaction
costs include incremental costs that are
directly attributable to the acquisition or
issue of a Financial Asset or Liability.
(b) Fee and Commission Income

Fee and Commission Income and Expense
that are integral to the EPR on a Financial
Asset or Liability are included in the
measurement of the EPR.
(d) Net Trading Gain

Results arising from trading activities
include all gains and losses from changes
in fair value and related Income or Expense
and Dividends for Financial Assets and
Financial Liabilities that are classified as
Held for Trading.
2.3.16 Financial Guarantees

In the ordinary course of business, the Bank
gives Financial Guarantees, consisting of
letters of credit, guarantees and acceptances.
Financial Guarantees are initially recognised
in the Financial Statements (within Other
Liabilities) at fair value, being the premium
received. Subsequent to initial recognition,
the Banks liability under each guarantee is
measured at the higher of the amount initially
recognised less cumulative amortisation
recognised in the Income Statement, and the
best estimate of expenditure required to settle
any financial obligation arising as a result of
the guarantee.
Any increase in the liability relating to
Financial Guarantees is recorded in
the Income Statement in Impairment
for Financing and Receivables to Other

Customers'. The premium received is
recognised in the Income Statement in Net
Fee and Commission Income on a straight
line basis over the life of the guarantee.
2.3.17 Segment Reporting

A Segment is a distinguishable component
of the Bank that is engaged in providing
services (Business Segments) or in providing
services within a particular economic
environment (Geographical Segment) which
is subject to risks and rewards that are
different from those of other segments.
In accordance with the Sri Lankan Accounting
Standard SLFRS 8 - Segmental Reporting,
segment information is presented in respect
of the Bank based on Banks management and
internal reporting structure.
The Banks segment reporting is based on the
following operating segments:
- Consumer Banking: Individual
customers deposits and consumer
financing including overdrafts,
equipment financing, lease financing,
home and property financing;
- Business Banking: Trade financing,
overdraft, equipment and machinery
financing, working capital financing,
lease financing and other credit facilities
and deposits of corporate and SME
customers;
- Treasury: Placements of funds with
other banks and financial institutions,
equity investments and exposures in
foreign exchange and gold bullion.
Management monitors the operating results
of its business units separately for the
purpose of making decisions about resource
168
allocation and performance assessment.

Segment performance is evaluated based
on operating profit or loss of respective
segment.
2.3.18 Earnings Per Share (EPS)

Basic EPS is calculated by dividing profit or
loss attributable to Ordinary Shareholders of
the Bank by the weighted average number of
ordinary shares outstanding for the period.
2.4 CHANGES IN ACCOUNTING

POLICIES AND DISCLOSURES
LKAS 19 - Employee Benefits
(Revised 2013)
The Bank applied LKAS 19 (Revised 2013) in
the current period in accordance with the
transitional provisions set out in the revised
Standard. Some of the key changes that had
an impact on the Bank include the following:
The Bank previously recognised only the net
cumulative unrecognised actuarial gains
and losses of the previous period, which
exceeded 10% of the greater of the defined
benefit obligation and the fair value of the
plan assets in accordance with LKAS 19.93
(previous).
As a consequence, the Banks Statement
of Financial Position did not reflect a
significant part of the unrecognised net
actuarial gains and losses.
This method is no longer allowed under
revised LKAS 19 and hence the Bank
changed its accounting policy to recognised
actuarial gains and losses in the period
in which they occur in total in Other
Comprehensive Income Statements

2.5 STANDARDS ISSUED BUT NOT

YET EFFECTIVE
Standards issued but not yet effective up
to the date of issuance of the Financial
Statements are set out below. The Bank will
adopt these standards when they become
effective. Pending a detailed review, the
financial impact is not reasonably estimable
as at the date of publication of these
(i) SLFRS 9 - Financial Instruments:

Classification and Measurement
SLFRS 9, as issued reflects the first phase
of work on replacement of LKAS 39 and
applies to classification and measurement
of Financial Assets and Liabilities. This
Standard was originally effective for annual
periods commencing on or after 1 January
2015. However, effective date has been
deferred subsequently.
(ii) SLFRS 13 - Fair Value

Measurement
SLFRS 13 establishes a single source of
guidance under SLFRS for all fair value
measurements and provides guidance on all
fair value measurements under SLFRS.
This Standard will be effective for the
financial period beginning on or after 1
January 2014. However, use of fair value
measurement principles contained in this
Standard are currently recommended.
In addition to the above, following Standards
will also be effective for the annual periods
commencing on or after 1 January 2014:
SLFRS 10 - Consolidated Financial
Statements
SLFRS 11 - Joint Arrangements
SLFRS 12 - Disclosure of Interests in

Other Entities
The above parcel of three Standards will
impact the recognition, measurement and
disclosures aspects currently contained
in. LKAS 27 - Consolidated and Separate
Financial Statements, LKAS 28 - Investments
in Associates, LKAS 31 - Interest in Joint
Ventures and SIC - 12 and SIC - 13 which
are on consolidation of Special Purpose
Entities (SPEs) and jointly controlled
entities respectively.
Establishing a single control model that
applies to all entities including SPEs
and removal of option to proportionate
consolidation of jointly controlled entities
are the significant changes introduced under
SLFRS 10 and SLFRS 11 respectively.
SLFRS 12 establishes a single standard on
disclosures related to interests in other
entities. This incorporates new disclosures
as well as the ones previously captured in
earlier versions of LKAS 27, LKAS 28 and
LKAS 31.
The Bank will adopt these Standards
when they become effective. Pending the
completion of detailed review, the financial
impact is not reasonably estimable as at
the date of publication of these Financial
Statements.
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Branch Network 214
3. SEGMENT INFORMATION
The following table presents income and profit and certain asset and liability information regarding the Banks operating segments:

Total
2013
Unallocated/
Elimination
2013
Rs.
Rs.
Rs.
272,156,006
28,151,420
1,768,061,705
219,719,256
21,579,603
513,454,865
28,151,420
100,217,423
219,719,256
21,579,603
2,109,577,987
60,546,440
476,629,664
(854,210,005)
Consumer
Banking
2013
Business
Banking
2013
Total
Banking
2013
Treasury
Rs.
Rs.
Rs.
Income
Financing Income
248,958,296
1,218,795,983
1,467,754,279

Net Trading Gain
Net Other Operating Income/(Expense)
Total Income
35,440,304
284,398,600
64,777,119
1,283,573,102
100,217,423
1,567,971,702
Profit/(Loss) After Tax

Total Assets
Total Liabilities
Income
Financing Income
Net Trading Gain/(Expense)
Net Other Operating Income/(Expense)
Total Income
Total Liabilities
(317,033,901)
2,470,390,940
12,544,927,141
15,015,318,081
6,072,296,655
2,310,240,954
23,397,855,691
16,076,317,742
1,906,792,839
17,983,110,581
4,731,339,300
(4,378,627,569)
18,335,822,311
Consumer
Banking
2012
Business
Banking
2012
Total
Banking
2012
Treasury
Rs.
Rs.
Rs.
186,619,589
14,473,891
201,093,480
702,045,119
54,449,428
756,494,547
888,664,708
68,923,319
957,588,027
Profit/(Loss) After Tax

Total Assets
2013
Total
2012
Unallocated/
Elimination
2012
Rs.
Rs.
Rs.
2012
411,953,382
621,773,009
(19,889,024)
1,013,837,367
14,535,937
14,535,937
1,300,618,090
68,923,319
621,773,009
(5,353,087)
1,985,961,331
739,210
205,064,734
(59,809,292)
145,994,652
1,154,223,868
6,069,563,736
7,223,787,604
7,476,624,375
2,017,012,104
16,717,424,084
12,185,039,971
1,117,461,481
13,302,501,452
6,575,435,499
(6,231,728,367)
13,646,208,584
4. FINANCING INCOME
2013
2012
Rs.
Rs.
Financing Income
1,495,905,699
888,664,708
Placement Income
272,156,006
411,953,382
1,768,061,705
1,300,618,090
170

5. FINANCING EXPENSES
Financing Expenses
Expenses on Other Liabilities
2013
2012
Rs.
Rs.
1,047,908,899
732,024,157
2,098,969
47,116
1,050,007,868
732,071,273
2013
2012
6. NET FEE AND COMMISSION INCOME
Rs.
Rs.
100,223,308
68,923,319
2013
2012
Rs.
Rs.
7. NET TRADING GAIN
Gain/(Loss) on Financial Investments - Held for Trading

Gain/(Loss) on Gold Bullion
Commission Income on Gold Trading
(39,743,244)
247,069,546
149,273,881
16,083,537
Gain/(Loss) from Derivative Financial Instruments Transactions
(80,863,054)
99,202,962
Foreign Exchange Income
324,242,016
126,226,620
219,719,256
621,773,009
Gain/(Loss) on Financial Investments - Held for Trading includes the results of buying and selling, and changes in the fair value of equity
securities. Foreign Exchange Income includes gains and losses from spot and promissory forward transactions and other currencies.
8. NET OTHER OPERATING INCOME/(EXPENSES)
Income from Dividends

Gain/(Loss) from Financial Investments - Available for Sale
Gain/(Loss) on Disposal of Property, Plant and Equipment
2013
2012
Rs.
Rs.
15,701,956
6,142,452
5,877,647
(26,031,476)
21,579,603
14,535,937
(5,353,087)
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9. IMPAIRMENT FOR FINANCING AND RECEIVABLES TO OTHER CUSTOMERS AND FINANCIAL ASSETS
2013
2012
Rs.
Rs.
Financing and Receivables to Other Customers (Note 21.4)

- Individual Impairment Losses/(Reversal)
12,336,669
(2,986,702)
- Collective Impairment Losses
68,218,125
19,080,591
80,554,794
16,093,890
Impairment on Other Financial Assets (Note 23)
18,781,475
99,336,269
16,093,890
2013
2012
Rs.
Rs.
525,724,630
338,335,971
68,152,751
43,334,860
10. PERSONNEL EXPENSES
Salaries and Bonus

Defined Contribution Plan - EPF/ETF
Defined Contribution Plan - Gratuity
Other Staff-Related Expenses
18,572,996
8,388,964
107,901,041
48,393,417
720,351,418
438,453,212
2013
2012
Rs.
Rs.
16,405,159
13,186,206
11. OTHER OPERATING EXPENSES
Directors Emoluments
Auditors Remuneration

- Audit Fee and Expenses
2,834,316
2,100,000
- Non-Audit Service
1,823,588
1,230,000
32,367,332
37,777,015
Professional and Legal Fees
210,891,184
138,522,019
Advertising Expenses
43,736,640
14,659,871
Deposit Insurance Premium
16,123,716
14,123,398
System Support Fee
82,829,698
56,795,515
Others
99,415,384
118,173,553
506,427,017
396,567,577
Establishment Expenses
172

12. INCOME TAX EXPENSES

2013
2012
Rs.
Rs.
Current Tax:
Current Income Tax
8,722,702
Deferred Tax:
Deferred Taxation Charged/(Reversal) (Note 27)
(120,971,087)
51,086,590
(120,971,087)
59,809,292
12.1 A RECONCILIATION BETWEEN CURRENT TAX EXPENSE AND THE PRODUCT OF ACCOUNTING PROFIT
Accounting Profit/(Loss) before Income Tax

Statutory Tax Rate
At the Statutory Income Tax Rate
Income Exempt from Tax
Non-Deductible Expenses
Deductible Expenses
Adjustment for Tax Losses Arisen/(Utilised)
Income Tax Expense/(Reversals)
2013
2012
Rs.
Rs.
(438,004,988)
205,803,944
28%
(122,641,397)
5,085,819
28%
57,625,104
(51,556,368)
172,420,780
61,065,611
(180,668,109)
(58,411,645)
125,802,906
8,722,702
The effective income tax rate for 2013 is 28% (2012 - 29.1%).
13. EARNINGS PER SHARE

Basic Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
The following reflects the income and share data used in the Basic Earnings/(Losses) per Share computations.
2013
2012
Rs.
Rs.
Amount used as the Numerator:

Net Profit/(Loss) Attributable to Ordinary Shareholders
(317,033,901)
145,994,652
969,566,067
902,810,064
Number of Ordinary Shares used as Denominator:

Weighted Average Number of Ordinary Shares in Issue
Earnings/(Loss) Per Share
(0.33)
0.16
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14. ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT BASIS

14.1 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT AS AT 31 DECEMBER 2013
Financial instruments are measured on an ongoing basis either at fair value or at amortised cost. The summary of significant accounting policies
describes how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised.
The following table analyses the carrying amounts of the financial instruments by category as defined in LKAS 39 and by headings of the Statement
of Financial Position.
Held for
Trading
Amortised
Cost
Held to
Maturity
Available for Sale
Total
As at 31.12.2013
Rs.
Rs.
Rs.
Rs.
Rs.
Financial Assets
2,444,552,371
2,444,552,371
685,320,420
685,320,420
21,470,669
1,737,895,772
661,958,238

21,470,669
1,737,895,772
661,958,238
175,334,631
Total Financial Assets
196,805,300
15,015,318,081
175,334,631
15,015,318,081
519,546,392
21,064,591,274
600,337,971
600,337,971
600,337,971
519,546,392
21,861,734,545
3,130,759
17,983,111,581
17,983,111,581
290,819,822
290,819,822
18,273,931,403
18,277,062,162
Total Financial Liabilities
3,130,759
3,130,759
174

14.2 ANALYSIS OF FINANCIAL INSTRUMENTS BY MEASUREMENT AS AT 31 DECEMBER 2012

Held for
Trading
Amortised
Cost
Held to
Maturity
Available for
Sale
Total
As at 31.12.2012
Rs.
Rs.
Rs.
Rs.
Rs.
Financial Assets
3,866,793,015
865,294,214
865,294,214
104,181,576
104,181,576
3,866,793,015
825,235,383
825,235,383
1,661,226,754
1,661,226,754
59,768,906
7,165,461,019

59,768,906
Total Financial Assets
163,950,482
7,165,461,019
553,493,038
14,937,503,423
486,122,612
486,122,612
486,122,612
553,493,038
15,587,576,517
4,978,614
13,302,501,452
13,302,501,452
304,236,288
304,236,288
13,606,737,740
13,611,716,354
Total Financial Liabilities
4,978,614
4,978,614
15. CASH AND CASH EQUIVALENTS
Cash in Hand
Balances with Banks
2013
2012
Rs.
Rs.
938,355,580
559,686,706
1,506,196,791
3,307,106,309
2,444,552,371
3,866,793,015
2013
2012
Rs.
Rs.
685,320,420
865,294,214
685,320,420
865,294,214
16. BALANCE WITH CENTRAL BANK OF SRI LANKA
Statutory Deposit with the Central Bank of Sri Lanka
As required by the Provisions of Section 93 of the Monetary Law Act, a cash balance is required to be maintained with Central Bank of Sri Lanka.
As at 31 December 2013, the minimum cash reserve requirement was 6% (2012 - 8%) of Rupee liabilities of the Domestic Banking Unit. There is
no reserve requirement for foreign currency deposit liabilities of the Domestic Banking Unit.
The Statutory Deposit with Central Bank of Sri Lanka is not available for financing the Banks day to day operations and therefore it is not
considered as part of Cash and Cash Equivalents.
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17. DERIVATIVE FINANCIAL ASSETS
Derivative Financial Instruments
2013
2012
Rs.
Rs.
21,470,669
104,181,576
21,470,669
104,181,576
2013
2012
Rs.
Rs.
18. PLACEMENTS WITH BANKS
Saving Deposits
Short Term Deposits
424,954,439
564,418,043
1,312,941,333
260,817,339
1,737,895,772
825,235,383
2013
2012
Rs.
Rs.
19. PLACEMENTS WITH LICENSED FINANCE COMPANIES
Saving Deposits
Short Term Deposits
Term Deposits
50,567
1,343
755,102,460
661,907,671
906,122,952
661,958,238
1,661,226,754
2013
2012
Rs.
Rs.
175,334,631
59,768,906
175,334,631
59,768,906
20. FINANCIAL INVESTMENTS - HELD FOR TRADING
Investments in Equity Securities - Quoted (Note 20.1)
176

20.1 INVESTMENTS IN EQUITY SECURITIES - QUOTED

No. of Ordinary Shares
2013
Carrying Value
2012
2013
2012
Rs.
Rs.
44,418
2,882,728
Amna Takaful PLC
846,402
1,354,243
Bairaha Farms PLC
139,060
109,751
17,910,928
17,263,832
C.W. Mackie PLC
106,012
52,097
6,445,530
4,053,147
Ceylon Grain Elevators PLC
208,079
79,471
7,386,805
4,728,525
Ceylon Leather Products PLC
393,067
26,138,956
ACL Cables PLC
84,408
363,746
Kotagala Plantations PLC
6,549
9,360
12,877
Colombo Dockyard PLC
Lanka Floor Tiles PLC

Laughs Gas PLC
Nawaloka Hospitals PLC
Panasian Power PLC
590,429
11,370,179
18,907,392
2,546,222
242,313
569,441
608,400
329,651
1,771,287
28,425,448
1,423,603
Piramal Glass Ceylon PLC
6,711,898
30,203,541
Renuka Agri Foods PLC
4,925,508
18,224,379
Renuka Shaw Wallace PLC
999,101
16,485,166
Royal Ceramic Lanka PLC
38,338
30,699
3,243,394
Seylan Developments PLC
934,772
8,412,948
10,362
1,100
922,218
112,393
142,831
62,295
5,284,747
2,772,128
Singer Sri Lanka PLC

Sri Lanka Telecom PLC
3,039,201
Textured Jersey Lanka PLC
987
8,784
Tokyo Cement Company (Lanka) PLC
139,008
3,975,629
Total Carrying Value
175,334,631
59,768,906
21. FINANCING AND RECEIVABLES TO OTHER CUSTOMERS

2013
2012
Rs.
Rs.
15,139,029,466
7,208,617,610
Summary
Gross Financing and Receivables to Other Customers
Less: Individual Impairment (Note 21.4)
(12,664,005)
(327,336)
Less: Collective Impairment (Note 21.4)
(111,047,380)
(42,829,255)
15,015,318,081
7,165,461,019
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21.1 BY PRODUCT
2013
2012
Rs.
Rs.
16,544,124
397,490
Trade Finance
1,308,647,023
863,881,155
Lease Receivables
1,282,417,771
883,165,029
138,078,110
85,029,898
Overdrawn Current Accounts
Staff Facilities
Term Financing:
- Short Term
1,887,749,426
1,013,301,686
- Long Term
6,858,383,109
2,671,089,468
Others
3,647,209,903
1,691,752,883
15,139,029,466
7,208,617,610
Less: Individual Impairment
(12,664,005)
(327,336)
Less: Collective Impairment
(111,047,380)
(42,829,255)
15,015,318,081
7,165,461,019
2013
2012
Rs.
Rs.
14,301,366,477
7,079,817,610
837,662,989
128,800,000
15,139,029,466
7,208,617,610
21.2 BY CURRENCY
Sri Lankan Rupees

United States Dollars
(12,664,005)
(327,336)
(111,047,380)
(42,829,255)
15,015,318,081
7,165,461,019
178

21.3 BY INDUSTRY
2013
2012
Rs.
Rs.
Agriculture and Fishing
3,076,420,982
981,761,221
Manufacturing
2,385,794,528
997,965,290
Tourism
147,687,248
1,963,750
Transport
365,707,417
19,331,024
Construction
1,681,263,075
786,662,054
Traders
3,491,900,357
2,502,729,491
33,217,210
35,160,616
New Economy
Financial and Business Services
439,070,721
85,038,656
Infrastructure
732,020,941
171,562,083
545,938,614
569,071,640
1,676,399,380
711,790,300
563,608,993
345,581,485
15,139,029,466
7,208,617,610
Services
Consumers
Others
(12,664,005)
(327,336)
(111,047,380)
(42,829,255)
15,015,318,081
7,165,461,019
21.4 IMPAIRMENT ALLOWANCE FOR FINANCING AND RECEIVABLES TO OTHER CUSTOMERS

A reconciliation of the allowance for impairment losses for financing and receivables to customers, is as follows:
Charge/(Write Back) for the year
Individual
Impairment
Collective
Impairment
Total
Impairment
Rs.
Rs.
Rs.
3,314,038
23,748,664
27,062,702
(2,986,702)
19,080,591
16,093,890
Recoveries
Amounts Written Off
Profit Accrued on Impaired Financing and Receivables
Charge/(Write Back) for the year
Recoveries
Amounts Written Off
Profit Accrued on Impaired Financing and Receivables
327,336
42,829,255
43,156,591
10,852,398
68,218,125
79,070,523
1,484,271
12,664,005
111,047,380
1,484,271
123,711,385
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22. FINANCIAL INVESTMENTS - AVAILABLE FOR SALE

2013
2012
Rs.
Rs.
597,344,971
483,129,612
2,993,000
2,993,000
600,337,971
486,122,612
Investments in Securities
Equity - Quoted (Note 22.1)
Equity - Unquoted (Note 22.2)
22.1 INVESTMENTS IN EQUITY - QUOTED

2013
ACL Cables PLC
316,372
Amna Takaful PLC
150,051,000
Bairaha Farms PLC

C.W. Mackie PLC
Ceylon Grain Elevators PLC
Ceylon Leather Products PLC
Colombo Dockyard PLC
Lanka Floor Tiles PLC
Laugfs Gas PLC (Non-Voting)
Laugfs Gas PLC
Nawaloka Hospitals PLC
Panasian Power PLC
Carrying Value
2012
2013
2012
Rs.
Rs.
20,532,543
153,030,000
240,081,600
379,703
57,249
48,905,746
9,005,268
634,658
473,903
38,587,206
36,869,653
657,218
368,029
23,331,239
21,897,726
36,849
2,901,876
44,016
1,000,000
22,577,453
33,592
3,086,254
132,640
482,123
1,598,559
2,450,459
21,764,069
946,344
3,000,000
56,443,633
275,454,000
7,524,608
21,603,778
8,621,600
12,342,349
3,996,398
Piramal Glass Ceylon PLC
614,888
2,766,996
Regnis Lanka PLC
223,094
14,501,110
79,434
293,906
Renuka Shaw Wallace PLC
174,065
2,872,072
Royal Ceramic Lanka PLC
500,000
Seylan Developments PLC
866,816
7,801,344
Singer Sri Lanka PLC
115,744
55,900
10,301,216
5,718,570
Sri Lanka Telecom PLC
632,851
313,705
23,415,488
13,959,873
Renuka Agri Foods PLC
Textured Jersey Lanka PLC

Tokyo Cement Company (Lanka) PLC
1,300,000
216,301
254,013
1,484,660
42,300,000
21,413,799
2,260,716
37,050,000
42,461,276
597,344,971
483,129,612
180

22.2 INVESTMENTS IN EQUITY - UNQUOTED

2013
Carrying Value
2012
2013
2012
Rs.
Rs.
50,000
50,000
2,000,000
2,000,000
300
300
993,000
993,000
2,993,000
2,993,000
2013
2012
Rs.
Rs.
Receivable from Amna Investments Limited
300,000,000
321,260,011
Less: Impairment
(18,781,475)
Net Receivable from Amna Investments Limited
281,218,525
321,260,011
Other Assets (23.1)
238,327,867
232,233,028
519,546,392
553,493,038
2013
2012
Rs.
Rs.
LankaClear (Private) Limited

Credit Information Bureau of Sri Lanka
Total Carrying Value
23. OTHER FINANCIAL ASSETS
23.1 OTHER ASSETS
Refundable Deposit
10,427,050
9,371,000
Pre-paid Staff Costs
34,821,902
15,591,771
193,078,915
207,270,257
238,327,867
232,233,028
2013
2012
Rs.
Rs.
Other Receivables
24. OTHER NON FINANCIAL ASSETS
Stationery Stock
Prepayments and Advances
Other Receivables
3,954,864
2,524,909
88,284,982
116,815,297
148,537,767
112,918,537
240,777,613
232,258,744
181

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25. PROPERTY, PLANT AND EQUIPMENT

25.1 SUMMARY
Freehold Land
and Building
Improvements
to Leasehold
Premises
Furniture and
Fittings
Office
Equipment
Computer
Equipment
Motor Vehicles
Computer
Servers
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Cost:
Additions
Disposals
Additions
Disposals
322,800,532
30,848,284
18,440,908
49,039,807
45,717,655
20,664,073
14,600,832
502,112,092
3,255,165
17,889,093
12,849,486
145,633,552
30,262,401
13,944,643
58,639,444
282,473,784
(4,303,328)
(4,303,328)
326,055,697
48,737,377
31,290,394
194,673,360
75,980,056
30,305,388
73,240,276
780,282,548
23,542,976
81,867,918
61,654,971
85,941,375
74,187,888
418,535
9,924,044
337,537,707
349,598,673
130,605,295
92,945,365
280,614,735
150,167,944
313,886
2,472,840
1,468,100
3,884,734
3,575,581
30,723,923
83,164,320
1,117,820,255
5,785,852
3,229,097
20,730,090
Depreciation
Disposals
(2,714,991)
(2,714,991)
Depreciation Charge for the Year
564,216
21,920,488
5,869,662
50,661,324
18,469,995
10,457,043
17,614,811
125,557,539
878,102
24,393,329
7,337,762
54,546,058
22,045,576
13,527,904
20,843,908
143,572,638
Disposals
851,354
27,978,148
13,200,656
42,074,527
20,996,164
1,221,297
14,964,897
121,287,043
1,729,456
52,371,477
20,538,418
96,620,585
43,041,740
14,749,201
35,808,805
264,859,681
347,869,217
78,233,818
72,406,947
183,994,150
107,126,204
15,974,722
47,355,515
852,960,574
325,177,595
24,344,048
23,952,633
140,127,301
53,934,480
16,777,484
52,396,368
636,709,910
Depreciation Charge for the Year

Net Book Value:
25.2 During the year, the Bank acquired Property, Plant and Equipment to the aggregate value of Rs. 337,537,707/- (2012 - Rs. 282,473,784/-). Cash
payments amounting to Rs. 337,537,707/- (2012 - Rs. 282,473,784/-) were made during the year for purchase of Property, Plant and Equipment.
25.3 Property, Plant and Equipment includes fully depreciated assets having a gross carrying amount of Rs. 29,611,850/- (2012 - Rs. 17,248,694/-).
25.4 No assets have been pledged by the Bank.
182

26. INTANGIBLE ASSETS

Computer
Software
Total
Rs.
Rs.
254,559,764
254,559,764
95,640,546
95,640,546
Cost:
Additions
Disposal
350,200,310
350,200,310
30,177,590
30,177,590
Amortisation Charge for the Year
36,995,102
36,995,102
Amortisation
Disposal
As At 31 December 2013
67,172,692
67,172,692
283,027,619
283,027,619
224,382,174
224,382,174
Net Book Value:
27. DEFERRED TAX

Income Statement
Other Comprehensive Income
2013
2012
2013
2012
2013
2012
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
133,871,082
88,196,541
133,871,082
88,196,541
(10,732,461)
(5,781,630)
Deferred Tax Liability

Capital Allowances for Tax Purposes
(45,674,541)
(48,636,871)
4,950,831
2,127,249
Deferred Tax Assets

Defined Benefit Plans
Defined Benefit Plans - Other Comprehensive Income
Others
(1,887,514)
(280,606,447)
(118,911,650)
(293,226,422)
(124,693,280)
Deferred Tax/(Expense)
Net Deferred Tax Liability/(Asset)
(159,355,340)
(36,496,739)
161,694,798
(4,576,968)
120,971,087
(51,086,590)
1,887,514
1,887,514
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28. DERIVATIVE FINANCIAL LIABILITIES
Derivative Financial Instruments
2013
2012
Rs.
Rs.
3,130,759
4,978,614
3,130,759
4,978,614
2013
2012
Rs.
Rs.
17,983,111,581
13,302,501,452
2013
2012
Rs.
Rs.
1,072,404,849
29. DUE TO OTHER CUSTOMERS
29.1 TOTAL AMOUNT DUE TO OTHER CUSTOMERS

29.2 BY PRODUCT
Demand Deposits
1,581,807,095
Savings Deposits
8,219,965,061
6,885,234,508
Time Deposits
8,181,339,425
5,344,862,095
17,983,111,581
13,302,501,452
2013
2012
Rs.
Rs.
17,228,254,133
13,006,919,969
671,232,990
262,328,507
83,624,458
33,252,976
17,983,111,581
13,302,501,452
29.3 BY CURRENCY
Sri Lankan Rupees

United States Dollars
Other
184

30. OTHER FINANCIAL LIABILITIES

2013
2012
Rs.
Rs.
Accrued Expenses
87,547,226
92,539,068
Balance Held in Margin
27,276,843
7,723,228
Other Liabilities
171,642,004
199,710,868
Sundry Creditors
4,353,750
4,263,124
290,819,822
304,236,288
2013
2012
Rs.
Rs.
13,688,807
13,843,550
13,688,807
13,843,550
2013
2012
Rs.
Rs.
As at 1 January
20,648,680
13,051,361
Expenses Recognised in the Income Statement (Note 32.1)
18,572,996
8,388,964
31. OTHER NON FINANCIAL LIABILITIES
Statutory Payable
32. RETIREMENT BENEFIT LIABILITY - GRATUITY
Actuarial (Gains)/Losses Due to Changes in Assumptions (Note 32.1)

Benefits Paid
At 31 December
6,741,123
(891,457)
(791,645)
45,071,342
20,648,680
2013
2012
Rs.
Rs.
13,587,338
5,978,822
4,985,658
2,410,142
18,572,996
8,388,964
32.1 EXPENSES RECOGNISED IN THE INCOME STATEMENT
Current Service Cost

Finance Cost
Components Recognised in the Income Statement
Remeasurement of Net Defined Benefit Obligations
Recognition of Actuarial Loss/(Gain)
6,741,123
Components Recognised in Other Comprehensive Income (OCI)
6,741,123
As at 31 December 2013 the gratuity liability of the Bank was actuarial valued under the Projected Unit Credit Method by Mr. Piyal Goonetilleke
(Fellow of the Society of Actuaries - USA).

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Branch Network 214
Appropriate and compatible assumptions were used in determining the cost of Retirement Benefits. The principal assumptions used are as follows:
2013
2012
11.0
11.0
b. Salary Increment Rate (%)
9.0
9.0
c. Age of Retirement (Years)
55
55
GA 1983
Mortality Table
GA 1983
Mortality Table
a. Discount Rate (%)
d. Mortality
32.2 SENSITIVITY OF ASSUMPTIONS EMPLOYED IN ACTUARIAL VALUATION

The following table demonstrates the sensitivity to a reasonably possible change in the key assumptions employed with all other variables held
constant in the employment benefit liability measurement.
e sensitivity of the Income Statement and Statement of Financial Position is the effect of the assumed changes in discount rate and salary
Th
increment rate on the profit or loss and employment benefit obligation for the year.
Increase/(Decrease)
in discount rate
Increase/(Decrease)
in Salary Increment
2013
Sensitivity Effect on Comprehensive
Income Increase/(Reduction)
in Results for the Year
(Rs. Mn.)
Sensitivity Effect on Employment

Benefit Obligation Increase/(Decrease)
in the Liability
(Rs. Mn.)
1%
3.29
(1%)
(2.84)
(3.29)
2.84
1%
(3.20)
3.20
(1%)
2.81
(2.81)
S ensitivity disclosures for the Defined Benefit Obligation for comparative period (year ended 31 December 2012) have not been presented as the
sensitivity analysis for 2012 has been done based on the previous Accounting Standard.
32.3 DISTRIBUTION OF DEFINED BENEFIT OBLIGATION OVER FUTURE LIFETIME

e following table demonstrates distribution of the future working lifetime of the Defined Benefit Obligation as at the reporting period.
Th

2013
Rs.
Less than 1 Year
1,356,766
Between 1 and 2 Years
11,758,527
Between 2 and 5 Years
28,394,349
Beyond 5 Years
28,125,153
Total Expected Payments
69,634,795
186

33. STATED CAPITAL

33.1 SUMMARY
2013
2012
Number
Fully Paid Ordinary Shares (Note 33.2)

Pending Share Allotment*
1,014,982,867
Rs
Number
Rs
4,216,821,341
902,810,064
3,431,611,720
1,649,986,800
1,014,982,867
5,866,808,141
902,810,064
Number
Rs
Number
Rs
Balance as at 1 January
902,810,064
3,431,611,720
902,810,064
3,431,611,720
Issue of Shares for cash (Right Issue)
112,172,803
785,209,621
1,014,982,867
4,216,821,341
3,431,611,720
33.2 FULLY PAID ORDINARY SHARES

2013
Balance as at 31 December
2012
902,810,064
3,431,611,720
* Pending Share Allotment refers to subscriptions received at the Initial Public Offering which was open from 11 to 24 December 2013. Applications for 235,712,400 shares valued at
Rs. 1,649,986,800/- were received and more fully described in Note No. 40.
34. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Financial Instruments comprise of Financial Assets, Financial Liabilities, Derivatives Financial Instruments and Off-Balance Sheet Instruments.
Fair value is the amount at which the Financial Assets could be exchanged or a Financial Liability settled, between knowledgeable and willing
parties in an arms length transaction. The information presented herein represents the determination of fair values as at the reporting date.
34.1 FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

The following is a description of how fair values are determined for Financial Instruments that are recorded at fair value as at the reporting date.
These incorporate the Banks estimate of assumptions that a market participant would make when valuing the instruments.

Derivative Financial Assets and Liabilities:

Derivative products are promissory forward foreign exchange transactions, valued using a valuation technique with market observable inputs.
The most frequently applied valuation techniques include promissory forward foreign exchange spot and forward premiums.
Financial Investments - Held for Trading, Financial Investments - Available for Sale:
The estimated fair values are based on quoted and observable market prices.
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FAIR VALUE HIERARCHY

SLFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.
Observable inputs reflect market data obtained from independent sources and unobservable inputs reflect the Banks market assumptions. The
fair value hierarchy is as follows:
Level 1: Quoted price (unadjusted) in active markets for the identical assets or liabilities. This level includes listed equity securities and debt
instruments.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for asset or liability that are not based on observable market data (unobservable inputs). This level includes equity
instruments and debt instruments with significant unobservable components.
The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
31 December 2013
Financial Assets
Level 1
Level 2
175,334,631
597,344,971
772,679,602
21,470,669
2,993,000
24,463,669
21,470,669
175,334,631
600,337,971
797,143,271
3,130,759
3,130,759
3,130,759
3,130,759
104,181,576
2,993,000
107,174,576
104,181,576
59,768,906
486,122,612
650,073,094
Level 3
Total
31 December 2012
Financial Assets
59,768,906
483,129,612
542,898,518
4,978,614
4,978,614
4,978,614
4,978,614
188

34.2 FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE

Set out below is a comparison, by class, of the carrying amounts and fair values of the Banks Financial Instruments that are not carried at fair
value in the Financial Statements. This table does not include the fair values of Non Financial Assets and Non Financial Liabilities.
2013
2012
Carrying Value
Fair Value
Carrying Value
Fair Value
Rs.
Rs.
Rs.
Rs.
2,444,552,371
2,444,552,371
3,866,793,015
3,866,793,015
685,320,420
685,320,420
865,294,214
865,294,214
1,737,895,772
1,737,895,772
825,235,383
825,235,383
Financial Assets
661,958,238
661,958,238
1,661,226,754
1,661,226,754
15,015,318,081
14,533,720,945
7,165,461,019
6,865,148,192
519,546,392
519,546,392
553,493,038
553,493,038
21,064,591,274
20,582,994,138
14,937,503,423
14,637,190,596
17,983,111,581
17,983,111,581
13,302,501,452
13,302,501,452
290,819,822
290,819,822
304,236,288
304,236,288
18,273,931,403
18,273,931,403
13,606,737,740
13,606,737,740
The following describes the methodologies and assumptions used to determine fair values for those Financial Instruments which are not
recorded at fair value in the Financial Statements:
Balances with Banks, Balances with Licensed Finance Companies, Other Financial Assets and Other Financial
Liabilities
For the above which includes only instruments with maturities of less than 12 months, the carrying value is a reasonable estimate of fair values.

The fair value of the above are estimated by discounting the estimated future cash flows using the prevailing market rates of financing as at the
reporting date with similar credit risks and maturities. The fair values are represented by their carrying value, net of impairment loss, being the
recoverable amount.

The fair values of the above are deemed to approximate their carrying amounts as rate of returns are determined at the end of their holding
periods based on the profit generated from the assets invested.
189

Branch Network 214
35. RISK MANAGEMENT

35.1 INTRODUCTION
Risk is inherent in the Banks activities but is managed through a process of ongoing identification, measurement and monitoring, subject to risk
limits and other controls. This process of risk management is critical to the Banks continuing profitability and each individual within the Bank is
accountable for the risk exposures relating to his or her responsibilities. The Bank is mainly exposed to:
1. Credit Risk
2. Liquidity Risk
3. Market Risk
35.2 RISK MANAGEMENT STRUCTURE

The Board of Directors is responsible for the overall risk management approach and for approving the risk management strategies and
principles. Risk Management Department (RMD) oversees the risks faced by the Bank in its internal operations and from external environment.
The Board Integrated Risk Management Committee (BIRMC)

The Board Integrated Risk Management Committee (BIRMC) which is a subcommittee of the Board meets quarterly or more regularly as
required to review and assess the Banks overall risk and to focus on policy recommendations and strategies in an integrated manner. The BIRMC
is commissioned and officiated by the Board of Directors. BIRMC functions as an overall supervisory body comprising of four Directors.
Assets and Liabilities Committee (ALCO)

The Banks Assets and Liabilities Committee (ALCO) regularly reviews and monitors the maintenance of liquidity position of the Bank and the
concentration of large deposits in order to avoid undue dependence on individual deposits. Bank monitors liquidity by way of various ratios as
required by the Board approved Asset Liability Management Policy.
Risk Measurement and Reporting Systems

The Banks risks are measured using a method which reflects the expected loss likely to arise in normal circumstances. These are an estimate of
the ultimate actual loss based on statistical models.
Monitoring and controlling risks is primarily performed based on limits established by the Bank. These limits reflect the business strategy and
market environment of the Bank as well as the level of risk that the Bank is willing to accept, with additional emphasis on selected industries.
Information compiled from all the businesses is examined and processed in order to analyse, control and identify risks on a timely basis. This
information is presented and explained to the Board of Directors, the BIRMC, and the head of each business unit.
The report includes aggregate credit exposure, Value at Risk (VaR), liquidity ratios and risk profile changes.
190

Risk Concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or have similar economic features that would
cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations
indicate the relative sensitivity of the Banks performance to developments affecting a particular industry.
35.3 CREDIT RISK

Credit risk is the risk that the Bank will incur a loss because its customers or counterparties fail to discharge their contractual obligations. The
Bank manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties and industry
concentrations, and by monitoring exposures in relation to such limits.
(a) Impairment Assessment

The approach used for the assessment of impairment is elaborated under Accounting Policies (Note No. 2.3.5).
(b) Credit Related Commitment Risk

The risk arising from transactions relating to contingent liabilities (Letters of Credit, Letters of Guarantees and undrawn amount under approved
authorisations) is included under this caption. Notwithstanding the non-funded nature of said products, the Bank is prone to a resultant
financial loss due to the nature of such products, i.e. claim on guarantees, negotiation of LCs and utilisation of facilities.
(c) Collateral and Other Credit Enhancement

An assessment of the credit risk of an individual at the time of issuing or enhancing a facility shall determine the amount and type of collateral
that is required.

In the event of default, the Bank may, as a remedial measure, exercise its charge of the collateral obtained at the time of approval of credit
facilities. Hence, the credit risk is eliminated to the extent of the net realisable value of such collateral, which has a weightage depending on
nature of the collateral. Management monitors the market value of such collateral and requests additional collateral if required when reviewing
the adequacy of the allowance for impairment losses.
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Branch Network 214
(d) Credit Quality by Class of Financial Assets (Gross)

The credit quality of financial assets is managed by the Bank using internal credit ratings. The table below shows the credit quality by class
of asset for all financial assets exposed to credit risk, based on the Banks internal credit rating system. The amounts presented are gross of
impairment allowances.
Neither Past Due Nor Impaired
Financial Assets as at 31 December 2013
High
Grade
Standard
Grade
Rs.

Balance with Central Bank of
Sri Lanka
Placements with Licensed Finance
Companies
Financial Investments Held for Trading
Other Customers
Rs.
Sub-Standard
Grade
Rs.
Un-Rated
Rs.

Sri Lanka
Placements with Licensed Finance
Companies
Other Customers
Rs.
Individually
Impaired
Rs.
Total
Rs.
2,444,552,371
2,444,552,371
685,320,420
21,470,669
1,737,895,772
685,320,420
21,470,669
1,737,895,772
661,958,238
661,958,238
175,334,631
25,889,180
149,445,451
5,473,774,109
9,116,731,924
269,935,671
137,173,559
11,188,034,318
460,171,411
9,726,348,786
269,935,671
High
Grade
Standard
Grade
Rs.
Rs.
134,575,209
144,012,553
15,139,029,466
2,993,000
238,327,867
241,320,867
134,575,209
300,000,000
444,012,553
600,337,971
538,327,867
22,004,227,405
Un-Rated
Past Due But

Not Impaired*
Individually
Impaired
Total
Sub-Standard
Grade
Rs.
Rs.
Rs.
Rs.
Rs.
Neither Past Due Nor Impaired

Past Due But

Not Impaired*
3,866,793,015
3,866,793,015
865,294,214
104,181,576
825,235,383
865,294,214
104,181,576
825,235,383
1,661,226,754
1,661,226,754
59,768,906
2,772,128
56,996,779
3,412,130,521
3,596,396,405
131,821,351
13,959,873
10,751,593,464
469,169,740
4,122,562,923
131,821,351
2,993,000
553,493,038
556,486,038
Less than
30 days
31 to 60
days
61 to 90
days
More than
91 days
Rs.
Rs.
Rs.
Rs.
Rs.
Financing and Receivables to Other Customers - 31 December 2013
11,449,828
22,410,125
18,798,777
81,916,479
134,575,209
Financing and Receivables to Other Customers - 31 December 2012
1,000,749
1,898,952
8,058,786
6,246,630
17,205,117
17,205,117
51,064,217
7,208,617,610
17,205,117
51,064,217
486,122,612
553,493,038
15,630,733,109
* Age Analysis of Past due but not impaired financing by class of Financial Assets.
Past Due But Not Impaired
Past Due But Not Impaired

Total
192

(e) Analysis of Risk Concentration

Maximum exposure to credit risk is reviewed/monitored without taking account of any collateral and other credit enhancements .The
Concentration risk is monitored by industry. The following table shows the maximum exposure to credit risk for the components of the
Statement of Financial Position, including sector.
Industry Analysis
The following table shows the risk concentration by industry for the components of the Statement of Financial Position.

Government
Banks, Financial
and Business
Services
Agriculture and
Fishing
Manufacturing
Tourism
Transport
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
685,320,420
2,444,552,371
21,470,669
1,737,895,772
661,958,238
1,354,243
18,466,693
101,930,342
439,070,721
3,076,420,982
2,385,794,528
243,074,600
293,906
195,656,509

429,040,968
147,687,248
365,707,417
685,320,420
5,978,417,582
3,095,181,580
2,683,381,379
147,687,248
365,707,417
Government
Banks, Financial
and Business
Services
Agriculture and
Fishing
Manufacturing
Tourism
Transport
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
865,294,214
3,866,793,015
104,181,576
825,235,383
1,661,226,754
17,263,832
14,906,761
85,038,656
981,761,221
997,965,290
278,447,000
9,005,268
118,258,894
321,260,011
865,294,214
7,142,182,394
1,008,030,321
1,131,130,945
1,963,750
19,331,024
1,963,750
19,331,024
193

Branch Network 214
Construction
Traders
New Economy
Infrastructure
Services
Consumers
Other
Customers
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
175,334,631
1,681,263,075
9,688,924
3,491,900,357
48,888,422
33,217,210
8,412,948
35,481,482
732,020,941
545,938,614
7,801,344
104,623,189
109,286,899
1,676,399,380
563,608,993
15,139,029,466
600,337,971
538,327,867
1,681,263,075
3,550,477,704
33,217,210
748,235,233
795,330,184
1,676,399,380
563,608,993
22,004,227,405
Construction
Traders
New Economy
Infrastructure
Services
Consumers
Other
Customers
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
3,866,793,015
865,294,214
104,181,576
825,235,383
1,661,226,754
18,907,392
786,662,054
7,524,608
813,094,054
4,165,540
2,502,729,491
42,588,223
2,549,483,254
35,160,616
35,160,616
1,753,254
2,772,128
171,562,083
569,071,640
16,338,746
189,654,083
711,790,300
345,581,485
59,768,906
7,208,617,610
13,959,873
486,122,612
232,233,027
553,493,038
818,036,667
711,790,300
345,581,485
15,630,733,109
194

( f ) Analysis of Maximum Exposure to Credit Risk and Collateral and Other Credit Enhancements
The following table shows the maximum exposure to credit risk by class of financial asset and the value of financial assets covered by the collateral.

Maximum Exposure to
Credit Risk
Net Exposure
Rs.
Rs.
21,470,669
21,470,669
1,737,895,772
1,737,895,772
661,958,238
661,958,238
175,334,631
175,334,631
15,139,029,466
4,690,109,907

600,337,971
600,337,971
519,546,392
519,546,392
18,855,573,139
8,406,653,580
35.4 LIQUIDITY RISK AND FUNDING MANAGEMENT

Liquidity risk implies the potential for loss to the Bank due to inability to meets its obligation or to fund the increase in assets as they fall due
without incurring high cost.
Internal control processes and contingency plans for managing liquidity risk have been developed by the Bank under the Assets and Liabilities
Management policy of the Bank. This incorporates an assessment of expected cash flows and the availability of liquid funds which could be used
if required.
As required by the Provisions of Section 93 of the Monetary Law Act, a cash balance is required to be maintained with Central Bank of Sri Lanka.
As at 31 December 2013, the minimum cash reserve requirement was 6% (2012 - 8%) of the rupee liabilities of the Domestic Banking Unit. There
is no reserve requirement for foreign currency deposit liabilities of the Domestic Banking Unit.
The Bank monitors the mix of deposits closely and concentrates on mobilising of zero or low cost deposits such as current accounts and savings
accounts as a source of major funding.
Liquid assets are defined for the purposes of the liquidity ratio which are mainly cash and cash equivalents, placements with banks and
placements with licensed finance companies. Adequate liquid assets are maintained due the Bank's operational business model adopted and
ensure the Statutory Liquid Asset Ratio is maintained as per regulatory requirements.
195

Branch Network 214
(a) Liquidity Ratios

Financing and Receivables to Other Customers to Due to Other Customers Ratio (Net)
2013
2012
Year end
83.50%
53.87%
2013
2012
Year end
22.57%
35.92%
Statutory Liquid Assets Ratio
(b) Analysis of Assets and Liabilities by Remaining Contractual Maturities

The table below summarises the maturity profile of the undiscounted cash flows (Gross) of the Banks financial assets and liabilities as at the end
of the reporting period.
On Statement of Financial Position as at
31 December 2013
Up to 3
Months
3-12
Months
1-3
Years
3-5
Years
Over
5 Years
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Financial Assets
Sri Lanka
2,444,552,371
177,997,067
256,302,407
20,461,046
1,009,623
1,737,895,772
Placements with Licensed

Finance Companies
254,599,949
175,334,631

Other Customers
7,186,807,997
407,358,289
3,821,831,871
76,802,024
73,482,584
100,736,338
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
175,334,631
5,055,945,233
1,917,499,443
357,263,371
227,900,817
281,218,525
10,427,050
Total Undiscounted
Financial Assets
12,225,549,650
4,767,720,714
5,500,437,679
1,990,982,027
744,310,023
18,726,394,567
243,074,600
600,337,971
1,088,120,961
519,546,392
25,572,811,031
3,113,249
17,511
4,189,135,320
7,029,814,230
2,070,892,224
1,979,828,709
2,713,441,097
3,130,759
17,983,111,581
283,374,793
1,367,544
6,077,484
Total Undiscounted
290,819,822
4,475,623,362
7,031,199,285
2,076,969,709
1,979,828,709
2,713,441,097
18,277,062,162
Total net Financial

Assets/(Liabilities)
7,749,926,288
(2,263,478,571)
3,423,467,970
11,153,319
(1,625,320,136)
7,295,748,869
196

On Statement of Financial Position as at

31 December 2012
Up to 3
Months
3-12
Months
1-3
Years
3-5
Years
Over
5 Years
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Financial Assets
Sri Lanka
Placements with Licensed
Finance Companies
Other Customers
3,866,793,015
507,159,746
325,564,462
95,022,813
9,158,763
825,235,383
1,342
59,768,906
2,044,084,557
3,683,223,102
7,590,658
6,209,758
18,769,590
3,866,793,015
865,294,214
104,181,576
825,235,383
1,661,226,754
59,768,906
1,661,225,412
2,361,417,314
1,068,407,475
207,675,612
308,104,111
236,017,927
9,371,000
Total Undiscounted
Financial Assets
7,706,169,874
4,253,964,254
4,247,279,995
1,074,617,233
193,818,952
9,350,951,400
278,447,000
486,122,612
491,035,542
553,493,038
17,773,066,898
4,978,614
7,599,913,638
4,773,741,592
508,811,208
96,969,740
323,065,274
4,978,614
13,302,501,452
303,048,605
1,187,683
Total Undiscounted
304,236,288
7,907,940,857
4,774,929,275
508,811,208
96,969,740
323,065,274
13,611,716,354
Total net Financial

Assets/(Liabilities)
(201,770,983)
(520,965,021)
3,738,468,787
977,647,493
167,970,268
4,161,350,544
(c) Contractual Maturities of Commitments and Contingencies

Off Statement of Financial Position as at
31 December 2013
Up to 3
Months
3-12
Months
1-3
Years
3-5
Years
Over
5 Years
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Acceptances
625,554,218
33,019,877
658,574,095
Letters of Credit
353,804,615
43,719,273
397,523,888
Guarantees, Bonds
214,875,662
360,505,488
608,800,744
1,843,410,126
1,032,598,735
2,876,008,861
2,866,655,941
233,454,516
7,641,018,045
Promissory Forward exchange sales

Promissory Forward
exchange purchases
Commitments for
unutilised facilities
716,663,985
Bills for Collection
233,454,516
3,987,763,122
2,149,991,956
3,619,835,329
33,419,594
33,419,594
197

Branch Network 214
Off Statement of Financial Position as at

31 December 2012
Up to 3
Months
3-12
Months
1-3
Years
3-5
Years
Over
5 Years
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Acceptances
462,253,112
48,541,716
Letters of Credit
814,598,989
133,582,717
948,181,706
Guarantees, Bonds
675,754,053
164,217,225
839,971,278
4,188,166,124
255,800,000
4,443,966,124
977,880,304
3,319,419,425
Promissory Forward exchange sales

Promissory Forward
exchange purchases
977,880,304
Commitments for
unutilised facilities
626,045,196
2,693,374,229
81,134,059
7,825,831,837
3,295,515,887
510,794,828
81,134,059
11,121,347,723
35.5 MARKET RISK

Market Risk denotes the risk of losses arising out of Statement of Financial Position positions due to changes in market prices. Market risk
mainly arises from activities undertaken by the Banks treasury and foreign exchange, equity, commodity and money market portfolios mainly
contribute towards market risk of the Bank. A Board approved comprehensive limit structure has been adopted by the Bank to mitigate and
monitor the market risk of the Bank.
(a) Rate Risk

The rate risk arise due to changes in value of financial instruments due to changes in market rates. The Bank is exposed to this risk due to the
mismatches in maturities of assets and liabilities that mature or are re-priced during a specified time period. In order to manage and mitigate
rate risk, the Banks ALCO reviews the re-pricing of assets and liabilities at the ALCO meetings held regularly. Bank's rate risk is limited due to
the model adopted where all due to other customers (customer deposits) have been accepted on the profit and loss sharing basis.
Rate Sensitive Assets and Liabilities Maturity Gaps (Contractual Basis) as at 31 December 2013
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Non-Rate Bearing
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
1,737,895,772
254,599,949
6,019,184,967
407,358,289
2,979,080,053
3,822,408,839
1,589,501,020
605,143,203
2,444,552,371
685,320,420
21,470,669
175,334,631
600,337,971
519,546,392
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
175,334,631
15,015,318,081
600,337,971
519,546,392
Total Assets
8,011,680,688
3,386,438,342
3,822,408,839
1,589,501,020
605,143,203
4,446,562,454
21,861,734,545
2,607,328,225
7,029,814,230
2,070,892,224
1,979,828,709
2,713,441,097
3,130,759
1,581,807,095
290,819,822
3,130,759
17,983,111,581
290,819,822
18,277,062,162


Total Liabilities
2,607,328,225
7,029,814,230
2,070,892,224
1,979,828,709
2,713,441,097
1,875,757,677
Rate Sensitivity Gap
5,404,352,463
(3,643,375,888)
1,751,516,614
(390,327,688)
(2,108,297,895)
2,570,804,777
198

Rate Sensitive Assets and Liabilities Maturity Gaps (Contractual Basis) as at 31 December 2012
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Non-Rate Bearing
Total
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
825,235,383
1,342
1,570,602,870
1,661,225,412
3,003,984,589
1,728,396,690
754,510,925
107,965,945
3,866,793,015
865,294,214
104,181,576
59,768,906
486,122,612
553,493,038
3,866,793,015
865,294,214
104,181,576
825,235,383
1,661,226,754
59,768,906
7,165,461,019
486,122,612
553,493,038
Total Assets
2,395,839,596
4,665,210,001
1,728,396,690
754,510,925
107,965,945
5,935,653,361
15,587,576,517
6,527,508,789
4,773,741,592
508,811,208
96,969,740
323,065,274
4,978,614
1,072,404,849
304,236,288
4,978,614
13,302,501,452
304,236,288
6,527,508,789
4,773,741,592
508,811,208
96,969,740
323,065,274
1,381,619,751
13,611,716,354
(4,131,669,193)
(108,531,591)
1,219,585,482
657,541,185
(215,099,330)
4,554,033,610


Total Liabilities
Rate Sensitivity Gap
35.6 FOREIGN EXCHANGE RISK

Foreign Exchange risk which arises due to the changes in foreign exchange rates is managed by the Bank by setting and monitoring dealer,
currency, counterparty and settlement limits for on and Off Statement of Financial Position instruments.

Banks activities in the Trade Finance business results in Off Statement of Financial Position financial instruments. In addition, the Bank engages
in interbank promissory forward foreign exchange transactions to cover the positions created due to customer transactions. Such transactions
are carried out on a matched basis to manage the cash flows of currencies.

The currency risk is managed and monitored against the regulatory/statutory limits approved for the Bank by the Central Bank of Sri Lanka. The
foreign exchange exposures in individual currencies are managed according to the limits approved by the Board of Directors.
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35.7 CURRENCY RISK

Currency risk arises as a result of price fluctuations in assets due to change in exchange rates. The Board of Directors has set limits for currency
wise exposures. The currency exposures are monitored on a daily basis as required by the risk management policy of the Bank.
The table below indicates the exposures in currencies the Bank carried as at 31 December 2013 and the effect of the gains/losses if the market
rates appreciate/depreciate by 5%. The calculation indicates a reasonably practical movement of currency rates against the Sri Lankan Rupee.
If market rates appreciate or depreciate by 5% the effect of the same to the exchange gain/(loss) would be:
2013
Currency
2012
Appreciation 5%
Depreciation 5%
Appreciation 5%
Depreciation 5%
Rs.
Rs.
Rs.
Rs.
AUD
(22,190)
22,190
31,677
GBP
345,787
(345,787)
(16,387)
16,387
JPY
208,379
(208,379)
175,714
(175,714)
USD
1,399,981
(1,399,981)
Other Currencies
3,347,343
(3,347,343)
481,082
(481,082)
5,279,300
(5,279,300)
(434,518)
434,518
(1,106,604)
(31,677)
1,106,604
35.8 EQUITY PRICE RISK

Equity price risk arises due to changes in individual equity prices.
The Board of Directors of the Bank has laid down sector, portfolio and loss limits to control and mitigate the risks of the equity portfolio. The
Bank also adheres to the guidelines issued by Central Bank of Sri Lanka regarding the exposure to a single entity and the total exposure limit for
the equity portfolio. The performance of the equity portfolio is monitored by the BIRMC, ALCO and the Equity Investment Committee (EIC). The
Bank engages in transactions only in Sharia compliant equities which are listed in the published White List of stocks.
Daily Mark to Market of portfolios are carried out based on the weighted average closing prices of the Colombo Stock Exchange.
200

36. MATURITY ANALYSIS

Balances with Central Bank of Sri Lanka
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
As at 31.12.2013
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
2,444,552,371
256,302,407
20,461,046
1,009,623
1,737,895,772
Balances with Licensed Finance Companies
254,599,949
175,334,631

177,997,067
6,019,184,967
407,358,289
2,979,080,053
76,802,024
2,444,552,371
685,320,420
21,470,669
1,737,895,772
661,958,238
175,334,631
3,822,408,839
1,589,501,020
357,263,371
281,218,525
10,427,050
28,994,456
35,425,210
176,357,948
100,736,338
227,900,817
73,482,584
605,143,203
243,074,600
852,960,574
15,015,318,081
600,337,971
519,546,392
240,777,613
852,960,574
Intangible Assets
283,027,619
283,027,619
Deferred Tax Assets
159,355,340
159,355,340
2,244,297,673
23,397,855,691
Total Assets
11,086,921,076
3,960,394,106
3,113,249
17,511
4,189,135,320
7,029,814,230
283,374,793
1,367,544
4,443,259,232
1,662,983,604
Liabilities
Due to Customers
13,688,807
2,070,892,224
1,979,828,709
2,713,441,097
6,077,484
Total Liabilities
4,489,312,169
7,031,199,285
2,076,969,709
Maturity Gap
6,597,608,907
(3,070,805,179)
2,366,289,523
1,979,828,709
(316,845,104)
3,130,759
17,983,111,581
290,819,822
13,688,807
45,071,342
45,071,342
2,758,512,439
18,335,822,311
(514,214,766)
5,062,033,380
201

Balances with Central Bank of Sri Lanka
Balances with Licensed Finance Companies

Branch Network 214
Up to 3 Months
3 - 12 Months
1 - 3 Years
3 - 5 Years
Over 5 Years
Total
As at 31.12.2012
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
3,866,793,015
507,159,746
325,564,462
95,022,813
9,158,763
825,235,383
1,342
59,768,906
1,570,602,870
1,661,225,412
3,003,984,589
6,209,758
3,866,793,015
865,294,214
104,181,576
825,235,383
1,661,226,754
1,728,396,690
754,510,925
207,675,612
236,017,927
9,371,000
52,476,980
62,644,646
117,137,118
18,769,590
308,104,111
7,590,658
107,965,945
278,447,000
59,768,906
7,165,461,019
486,122,612
553,493,038
232,258,744
636,709,910
636,709,910
Intangible Assets
224,382,174
224,382,174
Deferred Tax Assets
36,496,739
36,496,739
1,302,771,357
16,717,424,084
Total Assets
7,285,165,167
5,298,595,799
2,070,171,077
760,720,682
Liabilities
Due to Customers
Total Liabilities
Maturity Gap
4,978,614
7,599,913,638
4,773,741,592
303,048,605
1,187,683
13,843,550
7,921,784,408
(636,619,241)
508,811,208
96,969,740
323,065,274
4,978,614
13,302,501,452
304,236,288
13,843,550
20,648,680
20,648,680
4,774,929,274
508,811,208
96,969,740
343,713,954
13,646,208,584
523,666,525
1,561,359,869
663,750,943
959,057,403
3,071,215,500
202

37. COMMITMENTS AND CONTINGENCIES

37.1 CAPITAL EXPENDITURE COMMITMENTS
The Bank does not have significant capital commitments as at the reporting date.
37.2 CONTINGENCIES
In the normal course of business the Bank makes various irrevocable commitments and incurs certain contingent liabilities with legal recourse
to its customers. Even though these obligations are not recognised on the Statement of Financial Position, they do contain credit risk and
therefore form part of the overall risk profile of the Bank.
2013
2012
Rs.
Rs.
2,866,655,941
3,319,419,425
2,866,655,941
3,319,419,425
Letters of Credit
397,523,888
948,181,706
Guarantees, Bonds
608,800,744
839,971,278
Acceptances
658,574,095
510,794,828
233,454,516
81,134,059
1,898,353,243
2,380,081,870
2,876,008,861
4,443,966,124
Commitments on Direct Advances and Indirect Advances

Commitments for unutilised facilities
Contingent Liabilities
Forward Foreign Exchange Transactions

Forward promissory sales
Forward promissory purchases
Total Commitment and Contingencies
38. RELATED PARTY DISCLOSURES

38.1 PARENT AND ULTIMATE CONTROLLING PARTY
The Bank does not have an identifiable parent of its own.
977,880,304
2,876,008,861
5,421,846,428
7,641,018,045
11,121,347,724
203

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38.2 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL (KMP)

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any Director of that entity. Accordingly, the Board of Directors of the Bank and Members of the Corporate
Management Team have been identified as Key Management Personnel of the Bank.
2013
2012
Rs.
Rs.
144,305,496
109,079,608
Key Management Personnel Compensation

Short Term Employee Benefits
38.3 TRANSACTIONS, ARRANGEMENTS AND AGREEMENTS INVOLVING KMPs AND THEIR CLOSE FAMILY
MEMBERS (CFMs)
Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual
in their dealings with the entity. They may include: the individual's domestic partner and children; children of the individual's domestic partner;
and dependents of the individual or the individual's domestic partner.
2013
2012
Rs.
Rs.
43,747,270
53,269,620
64,630,157
40,875,573
Financing Income
2,928,031
3,493,650
Financing Expenses
4,186,613
1,415,493
Income Statement
38.4 TRANSACTION, ARRANGEMENTS AND AGREEMENTS INVOLVING ENTITIES WHICH ARE CONTROLLED AND/
OR SIGNIFICANTLY INFLUENCED BY THE KMP OR THEIR CFM
2013
2012
Rs.
Rs.
6,259,559
19,249,873
7,539,573
5,869,785
1,104,159
1,412,398
22,598,284
117,769
Income Statement
Financing Income
Financing Expenses
Commitment and Contingencies
Undrawn Facilities
Letters of Credit
Letters of Guarantee and Shipping Guarantees
LC Acceptance
34,676,344
29,135,842
50,812,531
19,392,425
6,053,110
15,363,868
204

38.5 TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE BANK
2013
2012
Rs.
Rs.
Bank Balances
1,279,205,104
Letters of Guarantee and Shipping Guarantees
639,500
39. INVESTMENT FUND ACCOUNT

In terms of Budget Proposals 2011, the Bank has made transfers to the Investment Fund Account to build up a permanent fund within the Bank.
39.1 UTILISATION OF INVESTMENT FUND ACCOUNT

2013
2012
Rs.
Rs.
Balance Available for Utilisation
39,416,784
28,460,610
Total Disbursement
35,200,000
17,700,000
40. EVENTS AFTER REPORTING DATE

Subsequent to an Initial Public Offering that was concluded on 24 December 2013, the Bank listed its 1,250,695,267 ordinary shares on the Colombo
Stock Exchange on 29 January 2014. Subscriptions received at the Initial Public Offering amounting to 235,712,400 shares were fully allotted.
Other than the above there were no events after the reporting date which requires adjustments to or disclosures in Financial Statements.
41. MATERIAL LITIGATION AGAINST THE BANK

As at the reporting date, there are no litigation matters pending or threatened against the Bank.
205
Compliance with Other

Disclosure Requirements
Specified by the Central Bank
of Sri Lanka

Branch Network 214
The following explains the Other Disclosure Requirements under the prescribed format issued by the Central Bank of Sri Lanka for the
Preparation of Annual Financial Statements of Licensed Commercial Banks.
1.
INFORMATION ABOUT THE SIGNIFICANCE OF FINANCIAL INSTRUMENTS FOR FINANCIAL POSITION AND PERFORMANCE
1.1
STATEMENT OF FINANCIAL POSITION
1.1.1
Disclosures on categories of financial assets and financial liabilities.
1.1.2
Note 14 to the Financial Statements - Analysis of

Financial Assets and Liabilities by Measurement Basis
Other Disclosures
(i) Special disclosures about financial assets and financial liabilities designated to be measured
at fair value through profit or loss, including disclosures about credit risk and market risk,
changes in fair values attributable to these risks and the methods of measurement.
Note 34 to the Financial Statements - Fair Value of

Financial Assets and Liabilities
(ii) Reclassifications of financial instruments from one category to another.
Not Applicable
(iii) Information about financial assets pledged as collateral and about financial or non financial
assets held as collateral.
Not Applicable
(iv) Reconciliation of the allowance account for credit losses by class of financial assets.
Note 21.4 - Impairment Allowance for Financing and

(v) Information about compound financial instruments with multiple embedded derivatives.
Not Applicable
(vi) Breaches of terms of loan agreements.
None
1.2
STATEMENT OF COMPREHENSIVE INCOME
1.2.1
Disclosures on items of income, expense, gains and losses.
1.2.2
Other Disclosures
Notes 4 - 12 to the Financial Statements
(i) Total financing income and total financing expense for those financial instruments that are
not measured at fair value through profit and loss.
Notes 4 and 5 to the Financial Statements - Financing

Income and Financing Expenses
(ii) Fee income and expense.
Note 6 to the Financial Statements - Net Fee and

Commission Income
(iii) Amount of impairment losses by class of financial assets.
Note 9 to the Financial Statements - Impairment for

Financing and Receivables to Other Customers and
Financial Assets
(iv) Financing income on impaired financial assets.
Note 4 to the Financial Statements - Financing Income
1.3
OTHER DISCLOSURES
1.3.1
Accounting policies for financial instruments.
Notes 2.3.4, 2.3.5 and 2.3.15 to the Financial Statements

- Derivative Financial Instruments and Non-Derivative
1.3.2
Information on hedge accounting
Not Applicable
Information about the fair values of each class of financial asset and financial liability, along with:
(i) Comparable carrying amounts.
(ii) Description of how fair value was determined.
(iii) The level of inputs used in determining fair value.
Note 34 to the Financial Statements - Fair Value of

Financial Assets and Liabilities
(iv) (a) Reconciliations of movements between levels of fair value measurement hierarchy.
Not Applicable
Not Applicable
(b) Additional disclosures for financial instruments that fair value is determined using level 3 inputs.
(v) Information if fair value cannot be reliably measured.
Not Applicable
206
2.

INFORMATION ABOUT THE NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS
2.1
QUALITATIVE DISCLOSURES
2.1.1
Risk exposures for each type of financial instrument.
Note 35 to the Financial Statements - Risk Management
2.1.2
Managements objectives, policies, and processes for managing those risks.

and please refer section relating to Risk Management
in the Annual Report for additional information
2.1.3
Changes from the prior period.
Not Applicable
2.2
QUANTITATIVE DISCLOSURES
2.2.1
Summary of quantitative data about exposure to each risk at the reporting date.
2.2.2
Disclosures about credit risk, liquidity risk, market risk, operational risk, rate risk and
how these risks are managed.

and please refer section relating to Risk Management
in the Annual Report for additional information
(i) Credit Risk

(a) Maximum amount of exposure (before deducting the value of collateral), description of
collateral, information about credit quality of financial assets that are neither past due nor
impaired and information about credit quality of financial assets.
(b) For financial assets that are past due or impaired, disclosures on age, factors considered in
determining as impaired and the description of collateral on each class of financial asset.
Note 35.3 to the Financial Statements - Credit Risk
(c) Information about collateral or other credit enhancements obtained or called.

(d) Other disclosures as per the Banking Act Direction No. 7 of 2011 on Integrated Risk
Management Framework for Licensed Banks (Section H).
(ii) Liquidity Risk
(a) A maturity analysis of financial liabilities.
Note 35.4 to the Financial Statements - Liquidity Risk

and Funding Management
(b) Description of approach to risk management.

and Funding Management
(c) Other disclosures as per the Banking Act Direction No. 7 of 2011 on Integrated Risk

and Funding Management and please refer section
relating to Risk Management in the Annual Report for
additional information
(iii) Market Risk

(a) A sensitivity analysis of each type of market risk to which the entity is exposed.
(b) Additional information, if the sensitivity analysis is not representative of the entitys risk exposure.
Notes 35.5, 35.6 and 35.7 to the Financial Statements Market Risk
(c) Other disclosures as per the Banking Act Direction No. 7 of 2011 on Integrated Risk
(iv) Operational Risk disclosures as per the Banking Act Direction No. 7 of 2011 on Integrated Risk
Please refer section relating to Risk Management in the

Annual Report
(v) Equity Risk in the Banking Book

(a) Qualitative Disclosures
- Differentiation between holdings on which capital gains are expected and those taken
under other objectives including for relationship and strategic reasons.
Note 35.8 to the Financial Statements - Equity Price

Risk and please refer section relating to Risk
Management in the Annual Report
- Discussion of important policies covering the valuation and accounting of equity holdings
in the banking book.
Summary of Significant Accounting Policies Note 2.3.5 (c)

to the Financial Statements
(b) Quantitative Disclosures

Value disclosed in the Statement of Financial Position of investments, as well as the fair value of
those investments; for quoted securities, a comparison to publicly quoted share values where the
share price is materially different from fair value, the types and the nature of investments and the
cumulative realised gains/(losses) arising from sales and liquidations in the reporting period.
Notes 20 and 22 to the Financial Statements - Financial

Investments - Held for Trading and Financial
Investments - Available for Sale respectively. Also please
refer Notes 7 and 8 to the Financial Statements Net Trading Gain and Net Other Operating Income/
(Expenses)
207

Branch Network 214
(vi) Rate Risk in the Banking Book

(a) Qualitative Disclosures

Nature of rate risk in the banking book and key assumptions.
(b) Quantitative Disclosures

The increase/(decline) in earnings or economic value (or relevant measure used by
management) for upward and downward rate shocks according to managements method
for measuring rate risk in the banking book broken down by currency (as relevant)
2.2.3
Information on concentrations of risk
3.
OTHER DISCLOSURES
3.1
CAPITAL
3.1.1
Capital Structure
Note 35.5 to the Financial Statements - Market Risk and

please refer section relating to Risk Management in the
Annual Report
Note 35.2 to the Financial Statements - Risk Management

Structure and please refer section relating to Risk
Management in the Annual Report
(i) Qualitative Disclosures

Summary information on the terms and conditions of the main features of all capital instruments,
especially in the case of innovative, complex or hybrid capital instruments.
Note 33 to the Financial Statements - Stated Capital and

please refer Capital Adequacy Computation on page 208
of the Annual Report.
(ii) Quantitative Disclosure

(a)

The amount of Tier I capital, with separate disclosure of

- Paid-up share capital/common stock
- Reserves
- Non-controlling interests in the equity of subsidiaries
- Innovative instruments
- Other capital instruments
- Deductions from Tier I capital
(b) The total amount of Tier II and Tier III capital

(c) Other deductions from capital
(d) Total eligible capital
3.1.2
Please refer Capital Adequacy Computation on page 208

of the Annual Report
Capital Adequacy
(i) Qualitative Disclosures

A summary discussion of the Bank's approach to assessing the adequacy of its capital to support
current and future activities.
(ii) Quantitative Disclosures
(a) Capital requirements for credit risk, market risk and operational risk
(b) Total and Tier I Capital Ratio
DISCLOSURE IN TERMS OF BANKING ACT DIRECTION NO. 11 OF 2007 ON CORPORATE GOVERNANCE OF

LICENSED COMMERCIAL BANKS, THE FOLLOWING DISCLOSURES ARE MADE
1. NET ACCOMMODATION TO KEY MANAGEMENT PERSONNEL AND RELATED PARTIES IN TERMS OF CBSL
REQUIREMENTS
Net accommodation granted to Key Management Personnel and Companies having a substantial interest amounted to LKR 43,747,270/- and
LKR 97,801,544/- (2012 - LKR 53,269,620/- and LKR 277,032,611/-) which represent 0.92% and 2.1% (2012 - 1.9% and 9.7%) of the Regulatory
Capital respectively.
2. NATURE OF RELATIONSHIPS
(a) The Chairman and the CEO
- None
(b) Among the members of the Board - The Chairman is related to one of the Directors, Dr. A.A.M. Haroon by family ties.

- Mr. Jazri Magdon Ismail is related to one of the Directors, Mr. Ruzly Hussain.
208
Capital Adequacy
Computation

CAPITAL BASE AS AT 31 DECEMBER 2013

Basel II
LKR 000
Tier I
Paid Up Ordinary Shares/Stated Capital
Published Retained Profits
General and Other Reserves
Net Deferred Tax Assets
Other Intangible Assets
50% Investments in the Capital of Other Banks and Financial Institutions
Total Tier I Capital
5,866,808
7,300
(700,963)
(46,664)
(159,355)
(283,028)
(1,497)
4,682,601
Tier II
Revaluation Reserves
General Provisions
Debentures
50% Investments in the Capital of Other Banks and Financial Institutions
75,425
(1,497)
Total Tier II Capital
73,928
Total Tier I and Tier II Capital
4,756,529
Capital Base
4,756,529
Computation of Ratios
Core Capital (Tier I)
4,682,601
Total Capital Base
4,756,529
Risk-Weighted Assets
Risk-Weighted Amount for Credit Risk
Risk-Weighted Amount for Market Risk
Risk-Weighted Amount for Operational Risk
Total Risk-Weighted Amount
Core Capital Ratio (Minimum Requirement 5%)
Total Tier I Capital
Total Risk-Weighted Assets
Total Capital Ratio (Minimum Requirement 10%)

Total Capital
Total Risk-Weighted Assets
19,376,482
1,608,940
1,101,330
22,086,751
4,682,601
22,086,751
21.2%
4,756,529
22,086,751
21.5%
209

Branch Network 214
COMPUTATION OF RISK-WEIGHTED AMOUNT FOR CREDIT RISK - (BASEL II)

ON-BALANCE SHEET EXPOSURES
Balance
Risk
Weights
Risk-Adjusted
Balance
LKR 000
LKR 000
Assets - Exposures
- To Central Government and CBSL
685,320
- To Public Sector
183,518
20-150
183,518
3,233,237
20-150
1,858,547
- To Banks
650,001
20-150
130,001
- To Corporates
- To Financial Institutions
7,280,008
20-150
7,003,927
- To Retail Sector
3,535,840
75-100
3,138,738
- Secured on Residential Property Mortgages
1,595,413
50-100
1,447,887
265,989
50-150
367,648
2,570,535
100
2,570,535
938,356
0-20
1,339,008
100
1,339,008
- Classified as Non-Performing Advances

- Claims Secured by Commercial Real Estate
- Cash Items
- Other Assets
Total Assets
22,277,225
18,039,809
OFF-BALANCE SHEET EXPOSURES

Amount of
Off-Balance
Sheet Items
Credit
Conversion
Factor
Credit
Equivalent
Amount
Risk
Weights
Risk
Adjusted
Balance
LKR 000
LKR 000
LKR 000
448,736
100
448,736
0-100
447,236
73,848
Direct Credit Substitutes

General Guarantees of Indebtedness
Transaction-Related Contingencies
Performance Bonds, Bid Bonds and Warranties
Others
147,696
50
73,848
0-100
50
0-100
12,368
20
2,474
0-100
Short-Term Self-Liquidating Trade-Related

Contingencies
Shipping Guarantees
2,474
Documentary Letters of Credit
397,524
20
79,505
0-100
78,863
Trade-Related Acceptances
658,574
20
131,715
0-100
131,715
2,866,656
20
573,331
0-150
567,861
103,456
20
20,692
0-100
20,450
2,876,009
57,520
0-100
14,225
Undrawn Term Financing

Others
Foreign Exchange Contracts
Total Off-Balance Sheet Exposures
14,606,094
1,387,821
1,336,672
210

COMPUTATION OF RISK-WEIGHTED AMOUNT FOR MARKET RISK

Rate
Equity
Foreign Exchange and Gold
Total Risk Adjusted Balance for Market Risk
Capital Charge
Risk Adjusted
Balance
LKR 000
LKR 000
153,101
1,531,010
7,793
77,930
160,894
1,608,940
COMPUTATION OF RISK-WEIGHTED AMOUNT FOR OPERATIONAL RISK

Average Gross Income
734,220
15% of Average Gross Income
110,133
Total Risk Adjusted Balance for Operational Risk
110,133
1,101,330
211

Branch Network 214
Shareholder Information
ANALYSIS I
Resident
Range of Shareholding
No. of
Shareholders
Non-Resident
No. of Shares
1 -
1,000
311
302,312
0.03
1,001 -
10,000
1,421
6,769,592
0.67
No. of
Shareholders
Total
No. of Shares
No. of
Shareholders
No. of Shares
0.00
311
302,312
0.03
2,000
0.00
1,422
6,771,592
0.67
10,001 -
100,000
986
38,237,682
3.77
248,890
0.02
991
38,486,572
3.79
100,001 -
1,000,000
201
66,872,144
6.59
2,335,323
0.23
208
69,207,467
6.82
15
243,199,935
23.96
13
657,014,989
64.73
28
900,214,924
88.69
2,934
355,381,665
35.00
26
659,601,202
65.00
2,960
1,014,982,867
100.00
No. of
Shareholders
No. of
Shareholders
311
302,312
0.0
0.0
1,422
6,771,592
0.7
1,000,001 and Above

Total
ANALYSIS II
Individuals
Range of Shareholding
No. of
Shareholders
No. of Shares
Institutions
1 -
1,000
311
302,312
0.0
1,001 -
10,000
1,418
6,747,592
0.7
Total
No. of Shares
24,000
No. of Shares
10,001 -
100,000
973
37,338,796
3.7
18
1,147,776
0.1
991
38,486,572
3.8
100,001 -
1,000,000
193
61,765,011
6.1
15
7,442,456
0.7
208
69,207,467
6.8
15
93,939,176
9.3
13
806,275,748
79.4
28
900,214,924
88.7
2,910
200,092,887
19.7
50
814,889,980
80.3
2,960
1,014,982,867
100.0
1,000,001 and Above

Total
212

TOP 20 SHAREHOLDERS
No.
Name
No. of Shares
1. Bank Islam Malaysia Berhad
180,562,011
17.79
2. AB Bank Limited
180,562,010
17.79
3. Akbar Brothers (Pvt) Limited
120,374,674
11.86
4. Islamic Development Bank
120,374,673
11.86
5. Expolanka Holdings PLC
90,281,006
8.89
6. Millennium Capital Investment (PTE.) Limited
43,056,201
4.24
7. Trans Asia Trading Company
33,756,280
3.33
8. Mr. Kevin Mark Pocock
27,084,302
2.67
9. Mr. Afzal Majid Alimohamed
19,498,122
1.92
10. Mr. Khaldoon Al Asmar
14,722,200
1.45
11. ABC International Limited
11,920,000
1.17
12. Peteroa Limited
9,200,013
0.91
13. Mrs. Nabila Qureshi
6,534,733
0.64
14. Al Bogari Islamic Gold DMCC
5,300,000
0.52
15. Mr. Mohammad Muslim Salahudeen
4,666,667
0.46
16. Sandwave Limited
4,444,444
0.44
17. Lucky Industries (Pvt) Limited
4,444,436
0.44
18. Mr. Kali Mudiyanselagedara Seyed Mohamed Rasan Mohamed
3,500,000
0.34
19. Mr. Kali Mudiyanselagedara Seyed Mohamed Rajubudeen
3,500,000
0.34
20. Mr. Kali Mudiyanselagedara Seyed Mohamed Razeek
3,500,000
0.34
Total of Top 20
887,281,772
87.4
Others (2,940 Shareholders)
127,701,095
12.6
1,014,982,867
100.0
TOTAL
213

Branch Network 214
Correspondent Banks
United Kingdom
United States of America
Netherlands
Germany
China
Switzerland
Korea
Italy
Turkey
Bahrain
Kuwait
Qatar
Egypt
Pakistan Hong Kong
Saudi Arabia
UAE India
Bangladesh
Malaysia
Singapore
Country
Bangladesh
Name of the Bank
AB Bank Limited - Dhaka, Bangladesh
SWIFT Code
ABBLBDDH
Bahrain
Mashreq Bank PSC - Manama, Bahrain
BOMLBHBM
China
Deutsche Bank (China) Company Limited Beijing, China
DEUTCNBJ
Standard Chartered Bank - Shanghai, China
SCBLCNSX
Egypt
Mashreq Bank - Cairo, Egypt
MSHQEGCA
Germany
Commerzbank AG - Frankfurt, Germany
COBADEFF
Commerzbank AG - Hamburg, Germany
COBADEHH
Deutsche Bank AG - Frankfurt, Germany
DEUTDEFF
Hong Kong
Mashreq Bank PSC - Hong Kong Branch,

Hong Kong
MSHQHKHH
UBAF (Hong Kong) Limited - Hong Kong
UBAFHKHX
India
AB Bank Limited - Mumbai, India
ABBLINBB
Mashreq Bank - Mumbai, India
MSHQINBB
Standard Chartered Bank - Mumbai, India
SCBLINBB
Indonesia
Standard Chartered Bank - Jakarta, Indonesia SCBLIDJX
Italy
Banca UBAE SPA - Roma, Italy
UBAIITRR
Japan
UBAF Tokyo Branch, Tokyo, Japan
UBAFJPJX
Korea
UBAF Seoul, Korea
UBAFKRSX
Kuwait
Mashreq Bank PSC - Kuwait
MSHQKWKW
Malaysia
Bank Islam Malaysia Berhad, Kuala Lumpur,

Malaysia
BIMBMYKL
Citibank Berhad - Kuala Lumpur, Malaysia
CITIMYKL
Malayan Banking Berhad (Maybank) - Kuala

Lumpur, Malaysia
MBBEMYKL
Commerzbank AG - Kantoor, Amsterdam,

Netherlands
COBANL2X
Netherlands
Country
Pakistan
Japan
Indonesia
Name of the Bank
Meezan Bank Limited - Karachi, Pakistan
SWIFT Code
MEZNPKKA
Standard Chartered Bank - Karachi, Pakistan SCBLPKKX

Qatar
Saudi Arabia
Singapore
Mashreq Bank - Doha, Qatar
MSHQQAQA
Standard Chartered Bank - Doha, Qatar
SCBLQAQX
Bank Al-Jazira - Jeddah, Saudi Arabia
BJAZSAJE
Deutsche Bank AG - Riyadh Branch,

Saudi Arabia
DEUTSARI
DBS Bank Limited - Singapore
DBSSSGSG
Deutsche Bank AG - Singapore
DEUTSGSG
UBAF Singapore
UBAFSGSX
Switzerland
Habib Bank AG Zurich - Zurich, Switzerland
HBZUCHZZ
Turkey
Turkiye Finans Katilim Bankasi A.S. Istanbul, Turkey
AFKBTRIS
Turkiye Garanti Bankasi A.S. Istanbul, Turkey
TGBATRIS
Al Hilal Bank - Abu Dhabi, UAE
HLALAEAA
Dubai Islamic Bank - Dubai, UAE
DUIBAEAD
Mashreq Bank PSC - Dubai, UAE
BOMLAEAD
UAE
UK
Standard Chartered Bank - Dubai, UAE
SCBLAEAD
Bank of Ceylon - London, United Kingdom
BCEYGB2L
Deutsche Bank Trust Company Americas London, United Kingdom
BKTRGB2L
Mashreq Bank PSC - London, United Kingdom MSHQGB2L
USA
Standard Chartered Bank - London,

United Kingdom
SCBLGB2L
Deutsche Bank AG - New York, USA
BKTRUS33
Mashreq Bank PSC - New York, USA
MSHQUS33
Standard Chartered Bank - New York, USA
SCBLUS33
214
Branch Network
MAIN BRANCH

480, Galle Road, Colombo 3

Telephone: 011-7756000
Fax: 011-4718148
PETTAH
129, Main Street, Colombo 11

Fax: 011-2380688
KANDY
105, Kotugodella Street, Kandy

Fax: 081-2200238
KATTANKUDY
LADIES BRANCH
KALMUNAI
GALLE
187, Main Street, Kattankudy

Fax: 065-2247399
Fax: 011-7756389
32, Main Street, Kalmunai
Fax: 067-2223599
158, Main Street, Galle
Fax: 091-2226610
KURUNEGALA
AKKARAIPATTU
DEHIWALA
NINTHAVUR
KULIYAPITIYA
ERAVUR
NEGOMBO
137, Puttalam Road, Kurunegala

Fax: 037-2221925
240-1B, Main Street, Akkaraipattu
Fax: 067-2279319
28, Galle Road, Dehiwala,
Fax: 011-2722505
40/5, Main Street, Ninthavur 24
Fax: 067-2251591
215-1/1, Main Street, Kuliyapitiya
Telephone: 037-7756018,
Fax: 037-2282280
108/5, Punnakuda Road, Eravur
Telephone: 065-7756019,
Fax: 065-2241410
97, Colombo Road, Negombo
Fax: 031-2231765
ODDAMAWADI
Main Street, Mawadichenai

Fax: 065-2258099
BADULLA
AKURANA
91E, Matale Road, Akurana

Fax: 081-2304761
KADURUWELA
379, Main Street, Kaduruwela

Fax: 0272227009
GAMPOLA
119, Kandy Road, Gampola

Fax: 081-2350786
PUTTALAM
23 , Colombo Road, Puttalam

Fax: 032-2267188
SAMMANTHURAI
43/2, Main Street, Sammanthurai

Fax: 067-2261299
KINNIYA
MAWANELLA
22B, New Kandy Road, Mawanella

Fax: 035-2248181
RATNAPURA
18/1, Lower Kings Street, Badulla

Fax: 055-2228280
264, Main Street, Kinniya

Fax: 026-2236656
131-133, Main Street, Ratnapura
Fax: 045-2230245
215
Glossary of Terms
A
Accounting Policies
The specific principles, bases, conventions,
rules and practices adopted by an entity
in preparing and presenting Financial
Statements
Accrual Basis
Recognising the effects of transactions
and other events when they occur without
waiting for receipt or payment of cash or its
equivalent
Actuarial Gains and Losses
Actuarial gains and losses comprise the
effects of differences between the previous
actuarial assumptions and what has actually
occurred and the effects of changes in
actuarial assumptions
Actuarial Valuation
Fund value as determined by computing
its normal cost, actuarial accrued liability,
actuarial value of assets and other relevant
costs and value
Acceptances
Promise to pay created when the drawee
of a time draft stamps or writes the words
accepted above his signature and a
designated payment date
Amortisation
The systematic allocation of the depreciable
amount of an intangible asset over its
useful life
Available for Sale
Available for sale investments are nonderivative financial assets that are not
designated as financing and receivables, held
to maturity or fair value through profit or
loss. It does not necessarily mean that the
Bank is holding the investments for disposal
in the short term
B
Bills of Collection
A bill of exchange drawn by an exporter
usually at a term, on an importer overseas
and brought by the exporter to his bank with
a request to collect the proceeds
C
Capital Gain
The gain on the disposal of an asset calculated
by deducting the cost of the asset from the
proceeds received on its disposal
Capital Adequacy Ratio (CAR)
The ratio between capital and risk-weighted
assets as defined in the standards developed
by the Bank for International Settlement
(BIS) and as modified by the Central Bank
of Sri Lanka

Branch Network 214
Capital Reserve
A reserve identified for specific purposes
which is not available for distribution
Cash Equivalents
Short term highly liquid investments that
are readily convertible to known amounts
of cash and which are subject to an
insignificant risk of changes in value
Collectively Assessed Impairment
Impairment assessment on a collective basis
for homogeneous groups of advances that
are not considered individually significant
and to cover losses which have been
incurred but have not yet been identified on
advances subject to individual assessment
Commitments
Credit facilities approved but not yet utilised
by customers as at the Balance Sheet date
Contingencies
A condition or situation, the ultimate
outcome of which, gain or loss, will be
confirmed only by occurrence or nonoccurrence of one or more future events
Contractual Maturity
Contractual maturity refers to the final
payment date of a facility or other financial
instrument, at which point all the remaining
outstanding principal will be repaid and
financing charges is due to be paid
Corporate Governance
The process by which corporate entities
are governed. It is concerned with the
way in which power is exercised over the
management and the direction of the Bank,
the supervision of executive actions and
accountability to stakeholders
Correspondent Bank
A bank in a foreign country that offers
banking facilities to customers of a bank in
another country
Cost/Income Ratio
Operating expenses compared to net income
Credit Risk
Credit risk is the risk that the Bank will
incur a loss because its customers or
counterparties fail to discharge their
contractual obligations
Currency Risk
The risk that the fair value or future cash
flows of a financial instrument will fluctuate
because of changes in foreign exchange rates
Customer Deposits
Money deposited by account holders. Such
funds are recorded as liabilities
D
Dealing Securities
Securities acquired and held with the
intention of reselling them in the short term
Deferred Taxation
Sum set aside for income tax in the Financial
Statements that may become payable/
receivable in a financial year other than the
current financial year. It arises because of
timing differences between tax rules and
accounting conventions
Depreciation
The systematic allocation of the depreciable
amount of an asset over its useful life
Derivatives
A derivative is a financial instrument
or other contract, the value of which
changes in response to some underlying
variable that has an initial net investment
smaller than would be required for other
instruments that have a similar response
to the variable, and that will be settled at
a future date
Derecognition
Removal of a previously recognised financial
asset or financial liability from an entitys
E
Earnings Per Share (EPS)
Profit attributable to ordinary shareholders,
divided by the weighted average number of
ordinary shares in issue
Effective Profit Rate (EPR)
The rate that exactly discounts estimated
future cash payments or receipts through
the expected life of the financial instrument
or, when appropriate, a shorter period to the
net carrying amount of the financial asset or
financial liability
Effective Tax Rate
The Effective Tax Rate is computed by
dividing the total tax expenses by the Banks
Profit Before Tax
Equity Instrument
An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities
Equity Risk
The risk arising from positions, either
long or short, in equities or equity based
instruments, which create exposure to a
change in the market price of the equities or
equity instruments
Events After the Reporting Date
Events after the Reporting Date are those
events, both favourable and unfavourable,
that occur between the Reporting date and
the date when the Financial Statements are
authorised for issue
Expected Loss (EL)

A regulatory calculation of the amount
expected to be lost on an exposure using a
12 month time horizon and downturn loss
estimates. EL is calculated by multiplying
the probability of default by the exposure at
default and loss given default
F
Fair Value
Fair value is the amount for which an
asset could be exchanged between a
knowledgeable, willing buyer and a
knowledgeable, willing seller in an arms
length transaction
Fair Value Adjustment
An adjustment to the fair value of a financial
instrument which is determined using a
valuation technique to include additional
factors that would be considered by a market
participant that are not incorporated within
the valuation model
Financial Asset or Financial Liability at
Fair Value through Profit or Loss
Financial asset or financial liability that is
held for trading or upon initial recognition
designated by the entity as at Fair Value
Financial Assets
Any asset that is cash, an equity instrument
of another entity or a contractual right to
receive cash or another financial asset from
another entity
Any contract that gives rise to a financial
assets of one entity and financial liability or
equity instrument of another entity
Financial Liability
Financial liability is a contractual obligation
to deliver cash to another entity or to
exchange financial assets or financial
liabilities with another entity under
conditions that are potentially unfavourable
to the entity
Financing and Receivable
Non-derivative financial assets with fixed
or determinable payments that are not
quoted in an active market other than those
intended to sell immediately or in the near
term and designated as fair value through
profit or loss or available for sale on initial
recognition
Foreign Exchange Income
The gain recorded when assets or liabilities
denominated in foreign currencies are
translated into Sri Lankan Rupees on the
reporting date at prevailing rates which
differ from those rates in force at inception
or on the previous reporting date. Foreign
exchange income also arises from trading in
foreign currencies
216
Forward Exchange Contracts

An agreement between two parties to
exchange one currency for another at a
future date at a rate agreed upon today
Financial Guarantee Contracts
A contract that requires the issuer 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 original or modified
terms of a debt instrument
G
General Provisions
General provisions are established for
advances for anticipated losses on aggregate
exposures where credit losses cannot yet be
determined on an individual facility basis
Guarantees
A promise made by a third party (Guarantor),
who is not a party to a contract between
two others, that the guarantor will be liable
on behalf of whom the guarantee is issued
if the individual fails to fulfil the contractual
obligations
H
Held for Trading
Investments that are purchased with the
intent of selling them within a short period
of time
Historical Cost Convention
Recording transactions at the actual value
received or paid
Held to Maturity Financial Assets
Held to maturity investments are nonderivative financial assets with fixed or
determinable payments and a fixed maturity
that an entity has the positive intention and
ability to hold to maturity
I
Impairment
This occurs when the recoverable amount of
an asset is less than its carrying amount
Impairment Allowances
Managements best estimate of losses
incurred on its assets as at the Reporting
date
Impairment Charge/(Reversal)
The difference between the carrying value of
an asset and the sum of discounted future
cash flows generating from the same asset
Individually Assessed Impairment
Exposure to loss is assessed individually for
assets that are individually significant above
a certain threshold

Intangible Asset
An identifiable non-monetary asset without
physical substance
Investing Activities
The acquisition and disposal of long term
assets and other investments not included in
cash equivalents
Investment Securities
Securities acquired and held for yield and/or
capital growth
K
Key Management Personnel
Key Management Personnel are those
persons having authority and responsibility
for planning, directing and controlling the
activities of the entity, directly or indirectly,
including any Director (whether executive or
otherwise) of the Bank
Key Performance Indicators (KPIs)
KPIs are quantifiable measurements, agreed
beforehand that reflect the critical success
factors of the Bank
L
Letter of Credit
Written undertakings by a Bank on behalf
of its customer (typically an importer),
authorizing a third party (e.g. an exporter) to
draw drafts on the Bank up to a stipulated
amount under specific terms and conditions.
Such undertakings are established for the
purpose of facilitating international trade
Liquid Assets
Qualifying assets that are held in cash or in
a form that can be converted to cash readily,
such as deposits with other banks, bills of
exchange etc
Liquidity Risk
Liquidity risk implies the potential for loss
to the Bank due to inability to meets its
obligation or to fund the increase in assets as
they fall due without incurring high cost
M
Materiality
The relative significance of a transaction
or an event, the omission or misstatement
of which could influence the economic
decisions of users of Financial Statements
Market Risk
Market risk denotes the risk of losses
arising out of positions in the Statement of
Financial Position due to changes in market
prices
N
Net Realisable Value
The estimated selling price in the ordinary
course of the business, less the estimated
cost of completion and the estimated
necessary costs to make the sale
Non-Performing Advance Ratio
Non-Performing advances expressed as a
percentage of the total outstanding advances
O
Off Balance Sheet Transactions
Transactions that are not recognised as
assets or liabilities in the Statement of
Financial Position , but which give rise to
commitments and contingencies
Operational Risk
Operational risk refers to the losses arising
from fraud, negligence, oversight, human
error, process errors, system failures,
external events, etc
P
Provisions
A provision is an amount set aside for
probable, but uncertain, economic
obligations of the Bank
Past Due
A financial asset is past due when a
counterparty has failed to make a payment
when contractually due
Probability of Default (PD)
Probability of Default is an internal estimate
for each borrower grade of the likelihood
that an obligor will default on an obligation
Rights Issue
Issue of shares to the existing shareholders
at an agreed price, generally lower than
market price
Risk Weighted Assets
On Balance Sheet assets and the credit
equivalent of off Balance Sheet assets
multiplied by the relevant risk weighting
factors
S
Segment Reporting
Segment reporting indicates the
contribution to the revenue derived from
business segments
Shareholders Funds
Shareholders funds consist of stated capital
plus capital and revenue reserves
A capital reserve created in accordance with
the provisions of the Banking Act No. 30 of
1988
T
Tier I Capital (Core Capital)
Core capital includes stated capital,
statutory reserve, retained profits, general
and other reserves
Tier II Capital (Supplementary Capital)
Supplementary Capital includes, approved
revaluation reserves, general provisions and
hybrid capital instruments
Total Capital
Capital base is the summation of core capital
(Tier I) and the supplementary capital (Tier II)
Projected Unit Credit Method

An actuarial valuation method that sees
each period of service as giving rise to an
additional unit of benefit entitlement and
measures each unit separately to build up
the final obligation
Transaction Costs
Transaction costs are incremental costs that
are directly attributable to the acquisition,
issue or disposal of a financial asset or
financial liability
R
Related Parties
Parties where one party has the ability to
control the other party or exercise significant
influence over the other party in making
financial and operating decisions, directly
or indirectly
V
Value Added
Value added is the wealth created by providing
banking services less the cost of providing such
services. The value added is allocated among
the employees, the providers of capital, to
government by way of taxes and retained for
expansion and growth.
Revaluation Reserve
Part of the shareholders equity that arises
from changes in the current value of
property, plant and equipment
Revenue Reserves
Reserves set aside for future distribution and
investment
Value Added Taxes on Financial

Services (VAT on FS)
Value Added Taxes on Financial Services is
computed based on profit before tax from
financial services subject to adjustment for
depreciation and emoluments payable to
employees and Directors
217
Notice of Annual General

Meeting

Branch Network 214
NOTICE IS HEREBY GIVEN THAT the fifth Annual General Meeting of Amna Bank Limited will be held on Friday, the Twenty Third day of May
2014 at 4.00 p.m. at Anthurium, Galadari Hotel, 64, Lotus Road, Colombo 1 for the following purposes:
AGENDA
1. To receive and consider the Annual Report of the Board and the Financial Statements of the Company for the financial year ended
31 December 2013 together with the Report of the Auditors thereon.
2. To re-appoint Messrs Ernst & Young, Chartered Accountants, as the Auditors, to hold office until the conclusion of the next Annual General
Meeting of the Company at a remuneration to be agreed upon with them by the Board of Directors and to audit the Financial Statements of
the Company for the ensuing year.
3. (a) To re-elect Mr. Osman Kassim, a Director who comes up for re-election in terms of Article 29 (6) of the Articles of Association of the
Company, and being eligible has offered himself for re-election.
(b) To re-elect Mr. Tyeab Akbarally, a Director who comes up for re-election in terms of Article 29 (6) of the Articles of Association of the
Company, and being eligible has offered himself for re-election.
(c) To re-elect Dato Ahamed Tajudin Bin Haji Abdul Rahman, a Director who comes up for re-election in terms of Article 29 (6) of the
Articles of Association of the Company, and being eligible has offered himself for re-election.
(d) To re-elect Dr. Aboobacker Admani Mohamed Haroon, a Director who comes up for re-election in terms of Article 29 (6) of the Articles of
Association of the Company, and being eligible has offered himself for re-election.
4. To re-appoint the Sharia Supervisory Council consisting of:
(a) Ash-Sheikh Dr. Muhammad Imran Ashraf Usmani (appointed with effect from 4 July 2013)
(b) Ash-Sheik Nazri Bin Chik
(c) Ash- Sheik M.M.A. Mubarak
(d) Ash-Sheik Mufti M.I.M. Rizwe
(e) Ash-Sheik Mufti Muhammad Hassan Kaleem
5. The Shareholders to take note that the Company having become a listed company pursuant to its ordinary voting shares of the Company
being listed on the Diri Savi Board of the Colombo Stock Exchange on 29 January 2014 the Company is deemed to have resolved by way of
a special resolution to change its name in terms of Section 11 (3) of the Companies Act No. 07 of 2007 from Amna Bank Limited to Amna
Bank PLC with effect from 29 January 2014.
6. To consider and if thought fit to pass the Resolutions as Special Resolution to amend the Articles of Association of the Company as
set out in the printed document annexed hereto.
By Order of the Board,

Company Secretary
Colombo
24 April 2014
218

ANNEXURE
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
OF AMNA BANK
(a) Immediately following subsection (3) of Article 14 of the existing articles, the following
subsection be inserted as 14 (4):
14 (4) The accidental omission to give notice to, or the non-receipt of any person entitled
thereto, shall not invalidate the proceedings at any general meeting.
(b) Articles 14 (4) and 14 (5) of the existing articles be re-numbered as 14 (5) and 14 (6) and
inserted immediately following the aforesaid subsection (4) to Article 14 and be read as
follows:
14 (5) If a meeting of shareholders is adjourned for less than thirty (30) days, it is not
necessary to give notice of the time and place of the adjourned meeting, other than
by announcement at the meeting, which is adjourned.
14 (6) Two (2) or more shareholders holding shares which carry not less than ten per
centum (10%) of the votes which may be cast on an issue may call a meeting to
consider and vote on that issue only in accordance with the provisions of Section
134 of the Act.
(c) Article 16 (1) of the existing articles be amended by the deletion of the words members
and be replaced by the words shareholders where appropriate so that the amended article
reads as follows:
16.
Quorum
(1) Subject to paragraph (2) of this Article, no business may be transacted at a

meeting of shareholders if a quorum is not present: same as herein otherwise
provided five (5) shareholders present in person or by proxy, attorney or (in the case of
a corporation) by an authorised representative, shall be a quorum for all purposes.
(d) Article 30 (2) of the existing articles be deleted and the following to be inserted The
number of Non-Executive Independent Directors should be at least 3 or 1/3 of the number
of Directors whichever is higher so that the amended article reads as follows:
30 (2) The number of Non-Executive Independent Directors should be at least 3 or 1/3 of
the number of Directors whichever is higher.
(e) Immediately following subsection (4) of Article 42 of the existing articles, the following
subsection be inserted as 42 (5) to read as follows:
42 (5) A Director shall abstain from voting on any Board Resolution in relation to which
he/she or any of his/her close relation or a concern in which a Director has
substantial interest is interested and he/she shall not be counted in the quorum for
the relevant agenda item at the Board meeting.
Form of Proxy
I/We*
of
being a Shareholder/s* of the above named Company, hereby appoint
(NIC No. )
of or
1. Mr. Osman Kassim
or failing him
2. Mr. Tyeab Akbarally
or failing him
3. Mr. Faizal Salieh
or failing him
4. Dato Ahmad Tajudin Bin Haji Abdul Rahman
or failing him
5. Dr. Aboobacker Admani Mohamed Haroon
or failing him
6. Mr. Mohamed Jazri Magdon Ismail
or failing him
7. Mr. Ruzly Hussain
or failing him
8. Mr. Angelo Maharajah Patrick
or failing him
9. Mr. Haseeb Ullah Siddiqui
or failing him
10. Mr. Jeroen Petrus Margaretha Maria Thijs
or failing him
11. Mr. Wahid Ali Bin Mohd Khalil
or failing him
12. Mr. Harsha Amarasekera
or failing him
13. Mr. Badrul Haque Khan

as my/our* Proxy to represent me/us* and vote for me/us* on my/our* behalf at the Annual General
Meeting of the Company to be held on Friday, 23 May 2014 at 4.00 p.m. at Anthurium, Galadari Hotel, 64,
Lotus Road, Colombo 1 and at any adjournment thereof.
Signed this day of 2014.
....................................................
Signature

Note : *Please delete the inappropriate words.
Notes
1.
A member entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her place.
2.
A proxy need not be a member of the Bank.
INSTRUCTIONS FOR THE COMPLETION OF PROXY FORM

1. The Proxy Form must be duly completed and signed by the member/s in block capitals giving the name and address of shareholder/s and the
name, address and NIC of the proxyholder clearly and legibly. Where necessary delete the inapplicable words indicated by asterisk.
2. The completed Form of Proxy should be deposited at the Registered Office of the Company at 480, Galle Road, Colombo 3 (c/o the Company
Secretary) not less than 24 hours before the time appointed for the holding of the meeting (by 4.00 p.m. on Thursday, 22 May 2014).
3. If the proxy has been signed by an Attorney, the relative Power of Attorney should accompany the completed Proxy Form for registration,
if such Power of Attorney had not been registered with the Company.
4. In the case of a Company/Corporation, the proxy must be under its Common Seal (where applicable) which should be affixed and attested
in the manner prescribed by its Articles of Association/Act of Incorporation signed by two Directors or a Director and Secretary of the
Company with the Company rubber stamp placed on it.
5. In case of joint shareholders the first named shareholder only can sign the Proxy Form.
Corporate Information
Name of the Institution
Alternate Directors
Amna Bank Limited
1. Mr. Huzefa Akbarally - Alternate Director to

Mr. Tyeab Akbarally
2. Mr. Khairul Muzamel Perera Abdullah - Alternate
Director to Mr. Jeroen Thijs
3. Dato Wan Ismail Wan Yusoh - Alternate Director to
Mr. Wahid Ali Khalil
4. Mr. Mohamed Faizel Mohamed Haddad - Alternate
Director to Mr. Osman Kassim
5. Mr. Kevin Mark Pocock - Alternate Director to
Legal Form
A Public Limited Liability Company incorporated in
Sri Lanka on 5 February 2009 under the Companies Act
No. 07 of 2007. Commenced business operations as a
licensed commercial bank regulated under the Banking Act
No. 30 of 1988 (as amended) on 1 August 2011.
At the recent Offering to the Public, 235,712,400 shares at a
price of LKR 7/- each have been subscribed for cash and duly
allotted to the subscribers. The Bank has now been listed on
the Colombo Stock Exchange with effect from 29 January 2014.
Sharia Supervisory Council

(a) Ash-Sheikh Dr. Muhammad Imran Ashraf Usmani
(appointed with effect from 4 July 2013)
Business
(b) Ash-Sheik Nazri Bin Chik
Commercial banking entirely based on Sharia Principles.
(c) Ash-Sheik M.M.A. Mubarak
Board Human Resources and Remuneration

Committee
Mr. Osman Kassim - Chairman
Mr. Angelo M. Patrick - Member/Secretary
Mr. Tyeab Akbarally - Member
Mr. Ruzly Hussain - Member
Mr. Jazri Magdon Ismail - Member
Company Secretary
Mrs. Preeni M. Dunuwille Koralege (LLB)
Attorney-at-Law
Auditors
Messrs. Ernst & Young
Chartered Accountants
201, De Saram Place, Colombo 10
Sri Lanka
(d) Ash-Sheik Mufti M.I.M. Rizwe
Registration Number
(e) Ash-Sheik Mufti Muhammad Hassan Kaleem
Lawyers
Messrs. F J & G De Saram

Attorneys-at-Law and Notaries Public
216, De Saram Place, Colombo 10
Sri Lanka
PB 3618
Registered Office
480, Galle Road, Colombo 3, Sri Lanka
Tel : (94) - (11) - 7756000
Fax : (94) - (11) - 4718148
Mr. Jazri Magdon Ismail - Chairman

Mr. Angelo M. Patrick - Member
Mr. Ruzly Hussain - Member
Mr. Wahid Ali Khalil - Member
SWIFT
Board Integrated Risk Management Committee
AMNALKLX
Mr. Angelo M. Patrick - Chairman

Mr. Jeroen Thijs - Member
Mr. Faizal Salieh - Member (Managing Director/CEO)
Web
www.amanabank.lk
Board Nomination Committee

Tax Payer Identification Number (TIN)
134036184
VAT Registration Number

134036184-7000
Accounting Year End

31 December
Board of Directors
1. Mr. Osman Kassim - Chairman
2 Mr. Tyeab Akbarally - Deputy Chairman
3. Mr. Faizal Salieh - Managing Director/CEO
4. Dato Ahamed Tajudin Bin Haji Abdul Rahman Senior Director
5. Dr. A.A.M. Haroon - Director
6. Mr. Jazri Magdon Ismail - Director
7. Mr. Ruzly Hussain - Director
8. Mr. Angelo M. Patrick - Director
9. Mr. Haseeb Ullah Siddiqui - Director
10. Mr. Jeroen Thijs - Director
11. Mr. Wahid Ali Khalil - Director
12. Mr. Harsha Amarasekera - Director
13. Mr. Badrul Haque Khan - Director
The bee hive illustrations appearing in this report

were adapted from the original by REDLIME
Mr. Ruzly Hussain - Chairman

Dr. A.A.M. Haroon - Member
Mr. Angelo M. Patrick - Member
Mr. Harsha Amarasekera - Member
For investor relations and clarifications on the report, please

contact:
Manager - Investor Relations and
Company Secretarial Division
Amna Bank
Sri Lanka
Tel : (94) - (11) - 7757511
Mobile : (94) - (77) - 3475087
Email : shamla@amana.lk
Amna Bank
Amna Bank
480, Galle Road, Colombo 3, Sri Lanka.
ANNUAL REPORT 2013
www.amanabank.lk
ANNUAL REPORT 2013

Amana Bank 2013

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Amana Bank 2013

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Amna Bank

ANNUAL REPORT 2013

ANNUAL REPORT 2013

Capital Adequacy Computation 208

Results for the Year

Net Financing Income

Growth in Total Assets

10 NEW BRANCHES | TRIPLE DIGIT

GLOBAL AND LOCAL ECONOMIC OVERVIEW

YOUR BANK, IN LINE WITH ITS

YOUR BANK SETS THE PACE IN 2013

A SUCCESSFUL IPO AMIDST DIFFICULT MARKET CONDITIONS

LOOKING AHEAD FOR SUSTAINABLE RESULTS

HAVING RE-GATHERED MOMENTUM

2014 AND BEYOND

FINANCIAL SECTOR CONSOLIDATION

Haseeb Ullah Siddiqui

Badrul Haque Khan

Mrs. Preeni M. Dunuwille Koralege

Non-Executive, Independent Director

Non-Executive, Non-Independent Director

Deputy Chairman and Non-Executive,

Non-Executive, Independent Director

Secretary to the Board

Non-Executive, Non-Independent Director

Dato A. Tajudin B.H. Abdul Rahman

Dr. A.A.M. Haroon

Mohamed Jazri Magdon Ismail

Wahid Ali Mohd Khalil

Senior Director and Non-Executive,

Non-Executive, Non-Independent Director

Non-Executive, Non-Independent Director

Non-Executive, Non-Independent Director

Non-Executive, Independent Director

Osman Kassim counts well over 35 years of business management

Faizal Salieh has well over three decades of extensive experience in

He is also the Chairman of the Asia Pacific Institute of Information

Tyeab Akbarally is a Senior Director of Akbar Brothers Limited,

Dato A. Tajudin B.H. Abdul Rahman

Mohamed Jazri Magdon Ismail

Senior Director and Non-Executive, Independent Director

Non-Executive, Independent Director

Dato A. Tajudin B.H. Abdul Rahman is the former Managing Director

Mohamed Jazri Magdon Ismail is the Financial Consultant of Ramada

His present positions include Chairman of the Board of Trustees of

Dr. A.A.M. Haroon

Dr. A.A.M. Haroon is a graduate of King Edward Medical College,

Ruzly Hussain has over 46 years of experience in the field of Industry

Angelo M. Patrick holds an MBA from the University of Colombo

He was the President of the Chartered Institute of Management

Haseeb Ullah Siddiqui

Haseeb Ullah Siddiqui is the Division Manager, Advisory and Support,

Jeroen, holder of a Masters Degree in Business Economics from

Wahid Ali Mohd Khalil

Badrul Haque Khan

Non-Executive, Non-Independent Director

Non-Executive, Non-Independent Director

Wahid Ali Mohd Khalil is currently the Chief Operating Officer,

Badrul Haque Khan is currently working as the Deputy Managing

Harsha Amarasekera, Presidents Counsel, has a wide practice in the

Mrs. Preeni M. Dunuwille Koralege

Mrs. Preeni Manjula Dunuwille Koralege is an Attorney-at-Law and

Obtained Commercial Banking License

Consolidating resources, process efficiency