OVERVIEW OF THE CITY BANK LTD. Organizational set-up Bank is a service-oriented organization.

With the wide networking and geographical area coverage it emphasizes on its improved services for existence and prosperity. Private sector commercial banks are private companies operated under the legislative framework, which covers both company Act, and Banking Company Act. Like all business entities, bank's main objective is also profitability and solvency. However, besides the primary objective of profit making, banks also have social responsibilities. A brief overview of The City Bank Ltd.s organizational set-up is enumerated in subsequent paragraphs. Historical Background Privatization of Banking is an outcome of the deliberate policy change by the government of Bangladesh in the late 1970. The emergence of The City Bank Ltd. at the juncture of liberalization of global economic activities, after the URUGUAY ROUND has been an important event in the financial sector of Bangladesh. The experience of the prosperous economies of Asian Countries and in particular of South Asia has been the driving force and the strategic operational policy option of the Bank. The company philosophy- "A Bank with fastest- service " has been precisely the essence of the legend of Asian Success.

The Government of Bangladesh has The City Bank Ltd., as a scheduled bank in the private sector is pursuance of the policy of liberalization of banking and financial services in Bangladesh. The

33

bank was incorporated as a public limited company on 14th March 1983 under Companies Act 1913 and commenced banking operations through the Principal Branch at 10, Dilkusha Commercial Area, Dhaka on 27th March 1983. The bank (head office) was inaugurated by the honorable President of the country Mr. Hussain Mohammad Ershad. Mr. Deen Mohammad was elected as the first Chairman of the board in the bank.

Organizational Structure of City Bank:

Organizational Structure It is the formal arrangement of jobs within an organization developing an organization structure manager go through the process called organizational design, that involves decision about six key elements i.e. Work specialization, departmentalization and formalization etc. Now we analyze the Citibanks organizational structure according to these factors. Work Specialization: As work specialization is used to describe the degree to which activities is organization are divided into separate jobs. This means that an entire task is not done by one individual but instead is broken down into jobs by different persons. In Citibank task are divided into different jobs according to the requirements and work specialization can be seen e.g. in the dealing of debit cards a single person is not involved in the process. There is a CRM (customer relation manager) and a CRO (customer relation officer) while CRM deals with validation of debit cards and CRO deals with the transaction relating debit cards.

33

Departmentalization: The basis by which jobs are grouped together is called departmentalization.

In case of Citibank you can see two major forms of departmentalization i.e. functional and geographical departmentalization. First of all they have divided into departments according to the functions i.e. dealing with cash, banking operation, sales and receive that they provide for each of the above categories there is a separate department as can be seen in organizational charts .then for the completion of these functions. They never further classified these departments. According to the geographical departmentalization. For that purpose there are regional as well as are managers. This shows that Citibank is highly departmentalized organization however the two types i.e. product and process departmentalization is not present.

In Citibank cross functional teams are not made departments works on their own.

Board of Directors and Management: The sponsor directors of the bank are successful group of prominent local and non-resident of Bangladesh investors who have earned high credentials and excellent reputation in their respective fields of business at home and abroad. The board of directors of the bank consists of 23 members. Mr. Aziz Al Kaiser a noted industrialist is the present chairman of the bank. Presently, a team of experienced professionals headed by the MD and CEO manages the bank. Span at the top-level management is fairly narrow and MD has a DMD to look after all the operations of the bank. Thus MD's effective control is possible. Human Resources:

33

Since customer's perception about the bank's service offerings is highly dependent on performance of personnel, commercial banking is a service where customers play a vital role in both fund generation and fund utilization. So, presence of a well-trained professional set of personnel is very crucial for all commercial banks. The City Bank Ltd. has well educated skilled and enterprising work force with wide experience in banking. To achieve The City Bank Ltd.'s objective, management always emphasizes on employing people with pleasing personality and academic background. Since its inception, The City Bank Ltd. practiced officer based banking. This means that the officers of different type basically perform all the banking functions of the branches. As officers come in contact with clients, better service can be provided. Thus, The City Bank Ltd.'s image building campaign has been moved effectively. At the same time the malpractice of trade unionism could be avoided. Categorization of officers: 1. Executive : AVP to MD 2. Officer : Trainee Assistant Officer to Staff Officer 3. Staff : Rest of the employees

BRANCHES:

33

Different branches of The City Bank Ltd.:

SL NO. 1.

NAME OF THE BRANCH

ADDRESS

PRINCIPAL OFFICE

Jibon Bima Tower, 10 Dilkusha C/A, Dhaka-1000.

2. 3. 4.

B.B. AVENUE BRANCH IMAMGONJ BRANCH ISLAMPUR ROAD BRANCH JHONSON ROAD BRANCH BANGSHAL BRANCH NEW MARKET BRANCH KAWRAN BAZAR BRANCH GULSHAN BRANCH

12, B.B. Avenue Dhaka-1000. 72, Mitford Road, Dhaka-1100. 108, Islampur Road, Dhaka-1100.

5.

Aziz Center (1st Floor), 31 Jhonson Road, Dhaka-1100. 45 Bangshal Road, Dhaka-1100. 28, Mirpur Road, Dhaka-1205.

6. 7.

8.

41,

Kazi

Nazrul

Islam

Avenue,

Kawran Bazar, Dhaka-1215. 49, Gulshan South (Near Market1), Gulshan R/A, Dhaka-1212

9.

10.

BEGUM BAZAR BRANCH POSTA BRANCH

19/25 Begumbazar, Golden Super Market, Dhaka-1100. 35, Shaista Khan Road, Dhaka1211.

11.

33

12.

ZINZIRA BRANCH

Islam Mansion (1st Floor) Tinpatty, Zinzira Keranigonj, Dhaka-1310.

13. 14.

NABABGONJ BRANCH BOW BAZAR BRANCH

P.O. Nababgonj, Dhaka-1320. P.O. Deotala, Dolla , Nababgonj, Dhaka-1320.

15.

KALIGONJ BRANCH

P.O.

Shubhadda,

Keranigonj,

Dhaka-1310. MOUCHAK BRANCH 80/A Shiddhayswari Circullar Road, Malibag, Dhaka-1217. FOREIGN EXCHANGE BRANCH MIRPUR BRANCH 58, Dilkusha Commercial Area,

16.

17.

Dhaka-1000. 1, Dar-us-Salam Road, Section-1, Mirpur, Dhaka-1218.

18.

19.

NAWABPUR BRANCH

219-220 Nawabpur Road, Dhaka1100.

20.

URDU ROAD BRANCH

10,

Urdu

Road

Lalbag,

Dhaka-

1100. SADARGHAT BRANCH 78 / 6, Loyal Street, Sadarghat, Dhaka-1100. DHAKA CHAMBER BRANCH TANBAZAR BRANCH Chamber Bhavan, 65-66, motijheel C/A, Dhaka-1000. 52, S.M. Maleh Road, Narayangonj1400. NETAIGONJ BRANCH 217, B.K. Road, Narayangonj-1400.

21.

22.

23.

24.

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25.

REKABI BAZAR BRANCH TONGI BRANCH TANGAIL BRANCH

Binodpur, Panchashar, Munshigonj1501. Tongi Bazar, Gazipur-1710 1869 / 77, Main Road, Habib Super Market, Tangail-1900.

26. 27.

28.

BHAIRAB BAZAR BRANCH MYMENSINGH BRANCH NARSINGDI BRANCH MADHABDI BRANCH FARIDPUR BRANCH

110 / 111 Kalibari Road, Bhairab Bazar Kishorgonj-2350. 20, Choto Bazar. Mymensingh.

29.

30. 31. 32.

C&B Road, Narsingdi-1604. Madhabdi Bazar, Narsingdi-1604. 5 / 1, Shaikh Mujib Road, Neeltuly, Faridpur-7800.

33.

MANIKGONJ BRANCH

106 / 2, Shaheed Rafique Sarak, Manikgonj-1800.

34.

AGRABAD BRANCH

Finlay House, Agrabad Comercial Area, Chittagong-4100.

35. 36.

KHATUNGONJ BRANCH JUBILEE ROAD BRANCH KADAMTOLI BRANCH

282, Khatungonj, Chittagong-4000. 36 / 44, Enayet Bazar, Jubilee Road, Chittagong-4000. Dhaka Trunk Road, Chittagong4100.

37.

38.

BANDARTILA BRANCH

2461,Bandartila, South Halishahar,

33

Chittagong. 39. ANDARKILLA BRANCH 38, Nazir Ahmed Chowdhury Road, Andarkilla, chittagong-4000. PAHARTALI BRANCH Dhaka Trunk Road, Double

40.

Mooring, Chittagong-4202. PATHERHAT BRANCH P.O. Gujra Nowapara, Raozan

41.

Chittagong. O.R. NIZAM ROAD BRANCH COXS BAZAAR BRANCH SATKANIA BRANCH COMILLA BRANCH 28/29, Asian Highway, CDA

42.

Avenue, Chittagong-4000. Safar Hardware Center, East Bazar Ghata, Coxs Bazar-4700. Satkania, Chittagong-4386. Monohorpur, 3500. Kandirpar, Comilla-

43.

44. 45.

46.

DAULATGONJ BRANCH

Daulatgonj, 3570.

Laksham,

Comilla-

47.

CHOUDDAGRAM BRANCH CHANDPUR BRANCH

P.O. Chouddagram Comilla-3550.

48.

57/54, Comilla Road, P.O. Box-44, Chandpur-3600.

49. 50.

HAJIGONJ BRANCH FENI BRANCH

Hajigonj, Chandpur-3610. Panchgachia Road, Feni-3900, P.O. Box-30.

51.

LAXMIPUR BRANCH

Aratpatti, Thana Road, Laxmipur-

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3700. 52. CHOWMUHANI BRANCH BANDAR BAZAR BRANCH ZINDABAZAR BRANCH AMBERKHANA BRANCH DHAKA DAKSHIN BRANCH MOUL VIBAZAR BRANCH 49, Kalitala Road, Begumgonj,

Noakhali-3821. 897, Bandarbazar, Sylhet 3100. P.O. Box-117 Zindabazar, Sylhet-3100. Airport Road Amberkhana, Sylhet3100. Dhaka Dakshin, Golapgonj, Sylhet3161. 335, Sylhet Road, Moulvibazar-

53.

54. 55.

56.

57.

3200, P.O. Box-01. Road, Sreemangal,

58.

SREEMANGAL BRANCH Moulvibazar

Moulvibazar-3210. JAGANNATHPUR BRANCH RAJSHAHI BRANCH P.O. 3060. 125, Natore Road, Shaheb Bazar, Ghoramara, Rajshahi-6100. CHAPAINAWABGONJ BRANCH Zebunnessa Super Market, 11, Jagannathpur, Sunamganj-

59.

60.

61.

Godabari Road, P.O. Nawabgonj Sadar, Nawabgonj-6300.

62.

BOGRA BRANCH

200, Razabazar, Bogra-5800, P.O. Box-17.

63.

SHERPUR BRANCH

Dhunat Road, P.O.Sherpur, Bogra.

33

64. 65.

RANGPUR BRANCH UTTARA BRANCH

Station Road, Rangpur-5400. H# 8, S# 7, Rabinra Sarani, Uttara, Dhaka.

66.

GOBINDAGONJ BRANCH SAIDPUR BRANCH

P.S. 5700. 361, 5310.

Gobindagonj,

Gaibandha-

67.

Shahid

Dr.

Zikrul

Hoque

Sarak, P.O. Saidpur, Nilphamari-

68.

PABNA BRANCH

288 / 1, Aurangzeb Road, Pabna6600.

69.

SIRAJGONJ BRANCH

Shaheed

Sohrawardy

Sarak,

Sirajgonj-6700. DINAJPUR BRANCH KHULNA BRANCH Churipatti, Dinajpur-5200. 7, Sir Iqbal Road, Khulna-9100. P.O. Box-185. JESSORE BRANCH 31, Netajee Subash Chandra Road, Jessore-7400. BENAPOLE BRANCH Selim 7431. Sumon Super Market,

70. 71.

72.

73.

Jessore Road, Benapole, Jessore-

74.

SATKHIRA BRANCH

400

/ 367,

Baro Bazar

Sarak,

Satkhira-9400. KUSTIA BRANCH BARISAL BRANCH 152, N.S. Road, Kustia-7000. Maulana Enayetur Rahman Road,

75. 76.

33

Barishal-8200. Source: Primary & Annual Report.

#############

Capital Structure:
The Authorized Capital of the bank remained unchanged a Tk. 400.00 million in the year ended 2007. Though the Authorized Capital remained unchanged the Paid-up Capital have increased to Tk.240.00 million from Tk.160.00 million through issuing rights share at par 1:2 (one right share against two ordinary share) in the year ended 2007. As against Tk. 263.10 million in 2006 Reserve Fund of the Bank stands at Tk.543.80 million at the end of the year 2007. The growth under this head is 107%. The capital base of the Bank strengthened as a result of augmentation of Authorized Capital and Reserve Fund. The Government of Bangladesh holds 32,940 shares of this bank of which 1, shares have been transferred to the general public through Investment Corporation of Bangladesh (ICB) and the rest of the shares are under process of transfer to the general public.

Balance Sheet as at 31 December 2008

33

PROPERTY AND ASSETS

Cash

NOTE

2008

T.K

2007

T.K

In hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank (s) (including foreign currencies)
Balance with other banks and financial institutions

704,619,630 2,415,553,674
3,120,173,304

771,568,562 2,705,998,489
3,477,567,051 4,672,945,417 109,529,003
4,782,474,420

In Bangladesh Outside Bangladesh

Money at call and short notice

4,474,521,554 99,168,755
4,573,690,309

5
6

Investments

Government Others
Loans and advances / Investments

220,000,000 7,608,214,230 1,423,484,654

9,031,698,884

1,830,000,000 7,094,714,100 455,892,392

7,550,606,492

Loans, cash credits, overdrafts, etc./ general investments Bills purchased and discounted
Fixed assets including premises, furniture and fixtures Other assets Non - banking assets

7 9 10

32,426,746,144 1,994,198,836 2,514,383,969 2,935,556,719 -------------2,104,480,285 6,537,161,488 629,426,422 8,770,274,032 29,097,472,560 ------------45,034,334,502 5,758,284,742 52,897,099,529
1,366,200,000 1,099,775,065 1,518,103,447 28,468,017 204,930,000 4,217,476,529 57,114,576,058 ===========

25,039,792,708 1,748,673,430 1,390,732,198

11
12

Total assets
LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents Deposits and other accounts

2,935,556,719 -----------------57,114,576,058 48,755,403,018 850,000,000 6,735,767,915 889,821,320 7,761,124,764 25,152,920,036 -----------------------------40,539,634,035 4,491,401,997 45,881,036,032
1,188,000,000 896,948,006 573,104,088 38,114,892 178,200,000 2,874,366,986 48,755,403,018 ============

Current deposits and other accounts Bills payable Savings bank deposits Fixed deposits Bearer certificate of deposit Other liabilities Total liabilities
Capital / Shareholders' equity

13

Paid up capital Statutory reserve Other reserve Surplus in profit and loss account / Retained earnings Proposed dividend (stock)
Total Shareholders' equity Total liabilities and Shareholders' equity

14.2 15 16 17

33

OFF- BALANCE SHEET ITEMS Contingent liabilities Acceptances and endorsements Letters of guarantee Irrevocable letters of credit Bills for collection Other contingent liabilities

NO TE
18 18.1 18.2 18.3

2008 T.K
2,033,415,824 2,079,543,071 4,206,478,089 2,601,429,682 -----------------10,920,866,666 --------------------------------------------------------

2007 T.K

Total
Other commitments Documentary credits and short term trade -related transactions Forward assets purchased and forward deposits placed Undrawn note issuance and revolving underwriting facilities Undrawn formal standby facilities , credit lines and other commitments Other commitments Total
Total Off-Balance Sheet items including contingent liabilities

874,890,070 1,569,361,688 2,622,378,064 3,211,005,932 ---------------------8,277,635,754 ----------------------------------------------

----------10,920,866,666 ===========

---------8,277,635,754 =========

33

Profit and Loss Account for the year ended 31 December 2008
33

PARTICULARS Interest income / profit on investments Interest / profit paid on deposits and borrowings, etc. Net interest / net profit on investments Investment income Commission, exchange and brokerage Other operating income

NOTE 20 21

2008 T.K 4,669,370,374 4, (3,162,885,370) 1,506,485,004

2007 T.K 183,260,712 (3,235,362,655)

947,898,057 860,400,285 105 532,246,444 231,647,934 2,572,192,720 877,594,990 141,269,481 9,882,321 25,868,331 52,143,307 5,370,000 892,000 729,375 115,733,404 86,832,367

22 23 24

1,171,667,761 493,021, 339,093,067 3,510,266,937

Total operating income (A) Salaries and allowances Rent, taxes, insurance, electricity, etc Legal expenses Postage, stamp, telecommunication, etc. Stationery, printing, advertisements, etc. Chief Executive's salaries and fees Directors' fees Auditors' fees Depreciation and repair of Bank's assets Other expenses 32 33 25 26 27 28 29 30 31

1,029,038,516 164,711,221 11,084,368 22,988,304 90,353,731 10,380,000 700,000 469,750 169,153,557 256,466,897

Total operating expenses (B) Profit / (loss) before provision (C=A-B) Provision for loans and advances / investments Provision for Off-Balance Sheet exposures Provision for gratuity Provision for diminution in value of investments Other provision Total provision (D) 35 34

1,755,346,344 1,754,920,593 (548,925,007) (64,208,667) (106,544,372) (21,107,250) (740,785,296)

1,316,315,576 1,255,877,144 (297,100,000) (45,000,000) (50,000,000) (10,108,000) (45,206,118)

33

(447,414,118)

Appropriations

Notes

2008 T.K 202,827,059 204,930,000 407,757,059

2007 T.K 161,692,605 178,200,000 339,892,605 38,114,892 25.14

Statutory reserve Proposed dividend (stock)

Retained surplus Earnings per share (EPS)

17

28,468,017 40 29.14

HIGH LIGHTS OF CAPITAL STRUCTURE

33

Sl no. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Particulars Paid-up capital Total capital Capital surplus / (deficit) Total assets Total deposits Total loans and advances / investments Total contingent liabilities and commitments Credit deposit ratio Percentage of classified loans / investments against total loans and advances / investments Profit after tax and provision Amount of classified loans / investments during current year Provisions kept against classified loans / investments Provision surplus/(deficit) against classified loans / investments

2008 1,366.20 3,953.47 361.58 57,114.58 45,034.33 34,420.94 10,920.87 76.43% 6.30%

2007 1,188.00 3,156.25 652.55 48,755.40 40,539.63 26,788.47 8,277.64 66.08% 6.24%

10. 11. 12. 13.

398.11 2,169.81 779.80 0.07

343.46 1,671.83 462.78 40.00

33

14. 15. 16. 17. 18. 19. 20. 21. 22.

Cost of fund Interest earning assets Non-interest earning assets Return on investment (ROI Return on assets (ROA) Income from investment Earnings per share (Taka) Net income per share (Taka) Price earnings ratio (times)

6.90% 49,196.70 7,917.88 14.13% 0.75% 1,171.67 29.14 29.14 15.49

7.55% 42,757.28 5,998.12 12.33% 0.71% 860.27 25.14 25.14 28.85

####################

FUNCTION OF ORGANIZATION:
Products / Services of the Bank:

33

The products / services of The City Bank Ltd. are backed by a moderate level of computerization. The Bank is presently using Local Area Network (LAN) for banking operation, which is capable of generating daily-consolidated statement of affairs of all the branches. The main products and services of the bank are illustrated following: Deposit The category of services includes: 1. Current Deposits: i) Current Account ii) Foreign Currency Account. iii) Sundry Deposits. iv) Bank Deposit. 2. Saving Deposits: i) Bearer certificate of deposit. Note: Bearer certificates of deposit are not issued since October 2002 as per Order of Bangladesh Bank. 3. Term Deposits: i) Fixed Deposits ii) Short Term Deposit iii) Scheme Deposit iv) Bank Account. Credit Service The City Bank Ltd.'s credit portfolio includes term, continues and exports related loans. The City Bank Ltd.'s credit facilities are also reasonably better than other local banks. It's

33

interest rate ranges from 10% to 16.5%. Although the rate is little bit higher than other Nationalized Commercial Banks, but average customers are ready to pay such interests because of their faster and quality services.

At present The City Bank Ltd. finances in the schemes: i. ii. iii. iv. v. vi. vii. viii. ix. Term Loan to Large and Medium Scale Industries. Working Capital & Commercial Lending. Housing finance. Import finance. Export finance. Agriculture. Transport Loan Education Credit Scheme Multipurpose Loan Scheme [specially designed to extend credit facilities to meet Educational (admission & examination fee), Medical & Tourism Expenses to for one to two years]. x. Lease Financing.

Fund transfers
33

The following functions / instruments are included in this category: 1. Telegraphic Transfer (TT). 2. Demand Draft (DD). 3. Mail Transfer (MT). 4. Payment Order (PO). 5. Travelers Cheque. Export The export business includes the following services: 1. Bill purchase / discounts. 2. Bill negotiation. 3. Bill collection. 4. Letter of credit advising and confirming. Import Import business includes: 1. Opening letter of credit (L/C). 2. Retirement of import documents. 3. Issuance of shipping guarantee. Guarantees It includes the following services: 1. Bid bonds. 2. Performance bonds and advance payment guarantees (AGP).
33

3. Guarantees against foreign counter guarantees. 4. Letter of guarantee (LG). Securities It includes the following: 1. Sales and encashment of government securities (BSP, PSP etc.). 2. Banker to the issue for IPO. Agency and Other It includes the following: 1. Clearing / collection of cheques and other instruments on behalf of the customers. 2. Locker service at selected branches. Three (3) sizes of lockers are available: small, medium, and large, annual charges ranging from Tk. 1500 to Tk. 4000 is applicable.

LIST OF NEW PRODUCT:

For the first time in the history of City Bank, SME Banking business processes are going to be driven thru a centralized platform model. This is a fundamental move away from a 25 years legacy system of decentralized geography based branch banking model. We all know this Transformation process and momentum is already in place. This would be completed by 2008.

33

City Onayash earn easy on your savings account, earn profit every month! City Onayash is a unique kind of savings account which calculates interest on your daily balance and pays interest to you every month.

City Shomridhdhi - A unique offer from City Bank. City Shomridhdhi is an exceptional DPS product that is distinctly more attractive than the prevalent DPS products in the market. You receive a hefty sum at the end of the term against your monthly deposit of small installments. It's a perfect way to secure your financial future!

City Projonmo financial safety for your future generations backed by complete immense protection! City Projonmo is a unique monthly deposit scheme that you open for your kids to safeguard their future against all uncertainties and risks. As a guardian of the child you can open this account which builds great & unmatchable savings for you over the years. By the time your child is past his or her school age, there is this sufficient cash in your hand to take care of his / her higher education, marriage or other such large expenses.

City Ichchapurun great opportunity to earn against your savings every month! This product allows you to earn interest and enjoy interest every month that accrues in your fixed deposit account, no matter what the term of the deposit is. It helps make your financial planning
33

more disciplined, and your life more organized. While your fixed deposit remains untouched and well-kept for future, you keep on getting the profit on a monthly basis. What better way to take care of your monthly recurring expenses like childrens education or school fees, house tutors remuneration, utility bill payments, saving money in some DPS scheme.

Owning a car is no longer a luxury. Car for your family is now a matter of fulfilling a necessity. Appreciating that basic need, City Bank introduces City Drive, a tailor-made auto loan scheme for individuals.

Dream Vacation? Son's admission to a foreign university? Medical treatment? Daughter's wedding? House renovation. Whatever the occasion or requirement may be, City Solution - any personal loan from City Bank - is there to solve all your problems and to fulfill all your dreams. You can access this facility from our selected branches across the country.

33

CITY Visa Electron Debit Card - By your side, round the clock. Now comes the Visa Debit Card from City Bank. Your life, therefore, becomes hassle-free and safe; and it is Visa Electron branded, which makes you the proud owner of a meaningful plastic

City Bank is the first bank to issue Dual Currency Credit Card in Bangladesh. This card enables you simultaneous usage of your card both in home and in abroad. You do not need to carry two different cards for the same purpose.

By your side - all the way. The city Bank's Foreign Remittance unit meets growing customer needs for fast, secure & easy money transfers to an extensive range of destinations. Being a committed bank to its customers, we go all the lengths to remit your hard earned money safely to your loved ones. With us, apart from a range of high-class modem remittance solutions, you will get peace of mind which we believe counts to most.

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#####################

33

Scope of the organization:

We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. We observed that: a) Bank is required to make provision on Employee Gratuity Expenses as per requirement of the Bangladesh Accounting Standard (BAS)-19. This year the bank has made actuarial valuation on Gratuity Expenses showing deficit of provision of Taka 255,399,543 as of August 2008 under the assumption of continuing the fund. There is a shortfall of provision amounting to Taka 207,062,200 as of December 31, 2008 after considering additions and payment made in this regard. b) During the year loans and advances aggregating to Taka 372,896,000 has been written off against which provision for bad and doubtful debts were made in the year 2006, 2007 and 2008. The Bank has filed court cases against such advances on different dates in the year 2006, 2007 and 2008 which are pending on the date of Balance Sheet. On verification, we observe that income tax benefit has been claimed against such written off loans and advances which is subject to approval of the Income Tax Authority. In our opinion, except for the effect on the financial statements of the matter referred to in the preceding paragraphs, the financial statements, prepared in accordance with Bangladesh Accounting Standards (BAS), give a true and fair view of the state of the bank's

33

affairs as of December 31, 2008, and of the results of its operations and its cash flows for the year then ended and comply with the applicable sections of the Bank Companies Act 1991, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Subject to the above, we also report that: i) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purposes of our audit and made due verification thereof; ii) In our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us. iii) The bank's balance sheet and profit and loss account dealt with by the report are in agreement with the books of account and returns. iv) The expenditure incurred was for the purposes of the bank's business; v) The financial position of the bank at December 31, 2008 and the profit for the year then ended have been properly reflected in the financial statements; the financial statements have been prepared in accordance with the generally accepted accounting principles; vi) The financial statements have drawn up in conformity with the Bank Companies Act 1991 and in accordance with the accounting rules and regulations issued by Bangladesh Bank; vii) Adequate provisions have been made for advances which are in our opinion, doubtful of recovery;

33

viii) The financial statements conform to the prescribed standards set in the accounting regulations issued by the Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh; ix) The records and statements submitted by the branches have been properly maintained and consolidated in the financial statements. x) The information and explanations required by us have been received and found satisfactory; xi) We were not aware of any other matters, which are required to be brought to the notice of the shareholders of the bank; xii) 80% of the risk-weighted assets of the branches allocated for audit have been audited by us.

SWOT ANALYSIS Strengths: 1. The City Bank Ltd. has gained reputation through clean and posh interior design of lay out. It also provides prompt services with higher degree of secrecy. 2. It has a good management team and disciplined work force.

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3. The City Bank Ltd. abides a set of core values Responsive to customers needs. Professional in manager striving for excellence.

4. Installation of good communication system that enables the Bank to have on time communication with all branches which reduces excessive paper work and saves time for valued customers transaction. Weakness: 5. Service charge in some areas is higher than that of the nationalized banks, which discourage middle class customers. 6. There in no overtime allowance for employees who have to stay in the bank till 8 p.m. It demotivates those employees. 7. Now a day, most of the customers expect personalized service, which The City Bank Ltd. can provide during the business hour. Opportunities: 1. Opportunity retail banking lies in the fact that the country's increased population is gradually learning to adopt consumer

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finance. So, the retail lending products have opportunities to tap the market of middle class service holders. 2. Bangladesh is a developing country. The investment potential of Bangladesh is attracting foreign investors. So, The City Bank Ltd. has opportunity of expansion in business. Threats: Some foreign banks and private banks are threat to The City Bank Ltd. like Dhaka Bank, Prime Bank, Dutch-Bangla Bank etc. CONCLUSION Banking has changed enormously in the last decade. Management of bank credit is becoming complex because of fast growing needs of the economy in the context of changing business scenario in the increasing competitive environment of today in which the banks are functioning. Banking sector is considered to be one of the key areas of financial institutions. I tried to discuss the organizational issues highlighting the positive and negative aspects and opportunities as well as the basic orientation of the bank in the first section. Then I mainly focused on the recovery performance of various types of loans of The City Bank Ltd. as well as tried to compare the credit recovery of classified and

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unclassified loans and advances between The City Bank Ltd. and Prime Bank Ltd. in the center part of the report. During the analysis I have seen that Prime Bank Ltd. is doing better than The City Bank Ltd. in the recovery of unclassified loans and advances but The City Bank Ltd. is ahead in the recovery field of classified loans. The overall view is that The City Bank Ltd. is moderately doing better in the recovery of its outstanding loans and advances. Since the banking sector is getting competitive The City Bank Ltd. must follow a strong recovery and loan management system for faster service to its customers. It is expected that The City Bank Ltd. continues to prosper in the coming days and the management should boldly navigate the organization in this turbulent ocean of competition as the bank embarks in to a new millennium.

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BIBLIOGRAPHY

Annual Report of THE CITY BANK LIMITED.

Google- The city bank ltd.

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