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Dear Fellow Shareholders,

This year your bank completes 10 years of journey - a journey of making a difference.

On behalf of the Board of Directors of BRAC Bank it is my privilege to place before you the Annual Report and the financial statements of the Bank for the year ended 31st December 2011. I express my heartfelt gratitude to you for your continued support and the cooperation you have given throughout the year. It is a pleasure to be with you at the 13th Annual General Meeting of the Bank.

Your Bank has delivered another good year despite the uncertain and challenging economic environment. The result is attributable to the Bank’s strong position in the industry and the continued focus on providing sustainable banking services to the community. The Bank’s strategy and focus of serving our customers remains paramount. We continue to move onward with perseverance and at the same time we are sensitive to changes in the external environment, while competing strongly in all the market segments that we serve.

For the world economy, 2011 was closed with diminished optimistic outlook for 2012. This financial crisis underscores the importance of sustainability at the core of building a healthy global economy. I am very happy to state that your bank has always created products and services aligned with the evolving needs of the society from its inception, working with a clear vision and emphasis on sustainable development that continued to attract the trust and loyalty of its stakeholders. Our commitment is for sustainable development. BRAC Bank Limited has adopted the “three P” agenda –Planet, People and Profit as its fundamental guiding principle, a fact that has gained global recognition for the Bank.

Being one of the members of GABV (Global Alliance of Sustainable Banking), BRAC Bank along with thirteen of the world's leading sustainable banks, is engaged in building a viable future for the financial industry. In line with the theme of developing human capital, the bank is also involved in creating an alternative banking and finance system, where social impact is considered as important as financial return.

Your Bank had a vision a decade back, to bring forward the small and medium businesses and it is a constant source of pride to be the first in the industry to have achieved this with flying colors. The SME sector is now recognized by economists as the undisputed symbol of sustainable, gender balanced development and progress of Bangladesh. Your Bank continues to thrive in the SME sector, with a deposit growth of 47% and asset growth of 17% in 2011. We made a record breaking disbursement of BDT 4630 Million in October 2011and our asset grew by BDT 2120 Million in that month alone. SME Banking Division has designed and implemented a number of initiatives to support green banking and encouraging environment-friendly businesses, such as biogas plants, effluent treatment plants, solar panels, etc. In order to optimize environment friendly alternative source of energy, BRAC Bank SME Banking Division has set up solar panels in 46 SME unit offices across the country. Moreover, Bank has financed biogas electricity plants, solar power plants, manufacturing energy efficient bulbs in the country. The Bank has funded several effluent treatment plants in the garments manufacturing sector.

The SME division has captured 5.87% market share within SME Banking arena of Bangladesh. To date, BRAC Bank has served 372,458 borrowers with facilities amounting to BDT 179,181million through its 466 customer touch points (SME Unit Offices, SME Sales and Service Centers, SME Krishi Branches, and Branches). The customer deposit stands at BDT 13,083 million growing by 46% in 2011 compared to 2010 and the current level of asset stands at BDT 43,885 million growing by 18% in 2011 from 2010. Record breaking asset disbursement of BDT 463 crore was seen in October 2011, with a net asset growth of BDT BDT 212 crore in the month alone. Being the youngest Bangladeshi bank, we have emerged as the largest SME bank serving about 370,000 entrepreneurs at grassroots level, an achievement that helped Global Recognition for this Bangladeshi Bank

The year 2011 will be remembered as one of the most challenging year in recent times for the financial sector in Bangladesh. We witnessed the largest crash in the country’s stock market, longest liquidity crisis in the money market, an immensely-fluctuating foreign exchange market and other flashpoints in the economic arena. Given the liquidity scenario, deposits dried up in the market which led to banks breaching their Advance-Deposit Ratio (ADR). BRAC Bank Ltd, in such demanding circumstances, was able to manage and maintain the size of its corporate asset portfolio of over BDT 30 billion. With a stretched liquidity position in the money market, BRAC Bank Ltd managed to grow its Offshore Banking Unit (OBU) by 147% within just a year from BDT 1,841 million to BDT 4,544 million by structuring various lending deals with local clients thorough OBU.

Your Bank has also successfully closed two syndication deals with two of the largest and most prominent players in the commodity business in Bangladesh – City Group and Meghna Group of Industries by arranging local financing of over BDT 2,200 million for the setup of two state-of-the-art seed crushing factories for both conglomerates. BRAC Bank continued to extend its relentless support in the all-important power sector. Where new power generation projects were unable to arrange any local financing for their initial set-up, BRAC Bank for greater national interest, continued facilitating the setup of large power plants of Summit Group and Bangla Trac Group. We extended both non-funded and funded facilities including bridge-financing of over BDT 8,000 million to ensure successful implementation of the projects.

As you know BRAC Bank is one the largest issuer of plastic money in Bangladesh. The bank has contributed to the convenience, improved lifestyle and, above all, an economic freedom for a large number of merchants, intermediaries and customers. Eventually, a sizable market has evolved with a requirement for more privileges in the credit card. As a necessary step to meet this need, in July 2011, BRAC Bank introduced VISA and MasterCard Platinum cards in Bangladesh. At present BRAC Bank is the third bank in Bangladesh to issue Platinum card and first bank to issue Chip based MasterCard Platinum card. Today, the need for a improved lifestyle and secured transactions are now being met as BRAC Bank strives to establish itself as a bank for all Bangladeshis.

The Retail Banking Division of your Bank has emerged as one of the major business divisions holding the largest retail customer base of the country. BRAC Bank has the largest and widest online distribution network with 151 branches (81 Branches, 48 SME/Krishi Branches and 22 SME Service Centers), 293 ATMs, 30 CDMs, 12 Alternate Banking Centers, Internet Banking, SMS banking service for subscribers of four (out of six) telecom operators, a state-of-the-art Call Center service and 12 ATMs under co-branded partnership with Rupali Bank, which is the first Public and Private Sector partnership in the country.

BRAC Bank has been named the winner for Best Retail Bank in Bangladesh at the 10th International Excellence in Retail Financial Services Awards Programme. BBL also received the ICAB National Award for best published accounts & reports for the year 2010.

bKash, a subsidiary of BRAC Bank (a joint venture MIM, USA), became fully operational in July 2011 and launched its operation with the objective of bringing unbanked mass people under formal banking coverage. bKash is using a fully encrypted VISA technology platform for transactions over mobile phones. With the simple business model of 'mobilizing deposits from urban areas and disbursing it to rural areas', bKash is well ahead on its journey of financial inclusion for the 'mass' with its state-of-art technology and security. Your mobile phone will now become your wallet. Our customers can avail financial services through any cell phone, even by the handset that cost the lowest and our menu-driven system is very user-friendly so that anybody can use the service.

As, the country's youngest bank we have already has set some records, we have acquired over 1.3 million customers, bringing full banking services across not just SME, but all strata of the banking industry. Unique industry-initiatives like OMNIBUS, ELDORADO and Public-Private-Partnerships witnessed BRAC Bank leading a tech-savvy platform for the industry to make financial solutions faster and more accessible to people.

Financially, your Bank turned in a solid performance. We took advantage from both the favorable and unfavorable conditions in the banking industry to enable us to reach a position of long-term sustainability. Our strength, confidence and your cooperation helped us make 0.3% growth in operating profit in a challenging environment. In 2011, our operating profit stood at 4,970 million. Our total assets stood at 133 billion, compared to 117 billion in 2010, with a growth rate of 13.5% During the year our total deposits was 104 billion in comparison to 88 billion in 2010, showing a growth rate of 17.7% Our Net Profit was 1,662 million in 2011. The earning per Share (EPS) is 5.03 in 2011. Our Capital and Revenues grew to 9,603 and 10,135 in 2011, respectively, which indicate strengthening of capital base and sustainability of the Bank. Given the volatility of the global and national economy this is of paramount importance.

Your Bank has a strong operating platform and a clear, focused strategy. Tight management of risks, capital and costs will continue to be a priority. We have built leading positions in our core business and we are well-placed to benefit from better quality of assets. While continuing to pursue business targets, your Bank is committed to maintaining a high standard of Corporate Governance in the operations of the Bank. The corporate governance activities of the company during the last year are stated in several statements in the Annual Report.

In accordance with Bangladesh Bank guidelines, we are happy to inform you that our present capital adequacy ratio is 11.24% of our total Risk weighted Assets (RWA) and paid up capital 3,212 million in line with Basel-II Accord to guard against the types of financial and operational risks the banks face. But this fund was not enough for the continuous expanding business. Therefore to meet this capital adequacy as well as to run our business smoothly in the years to come, we have successfully issued BDT 30 billion Subordinated 25% Convertible bond as tier-II capital and paid two-term interests in 2011.

Pursuant to directives issued by the Securities and Exchange Commission, we converted the face-value of our shares to Tk 10 (ten) from existing Tk 100 (hundred) by November 30, 2011. It was also found that the present Authorized capital of BRAC Bank Limited was BDT 480 crore and paid up capital is BDT 321.23 crore. Accordingly we have enhanced our authorized capital from 480 crore to 1200 crore.

BRAC Bank has launched a full-scale exchange house-BRAC Saajan Exchange Limited – in Birmingham, United Kingdom. Non-Resident Bangladeshis (NRBs) from UK now have a secured, fast, online transfer option available for sending remittance to Bangladesh from UK. The company has been formed through acquisition of 75 % shares from the erstwhile Saajan Worldwide Money Transfer Limited by BRAC Bank Limited. The acquisition has strengthened our operation in the remittance market in UK. We are better equipped now to provide the best service to families who receive money from over 3,000 Remittance Delivery Points across Bangladesh. Apart from remittance services, expatriates can avail different schemes of BRAC Saajan to invest in Bangladesh. I am pleased to say we have been able to successfully capture more than 10% of the remittance market in UK and the company is operating profitably.

We are committed to work for the People and with this impetus BRAC Bank has actively engaged in socially responsible projects throughout the year. BRAC Bank has launched a Corporate Social Responsibility (CSR) Desk to further expand, expedite and consolidate its social responsibility activities. The Desk will help the bank put focus its on different CSR activities and ensure transparency. It will also help carry out CSR jobs in an organized way. General people will get access to information about the bank's CSR programs. Your Bank has played a proactive role in the community by sponsoring Autism Awareness Program, setting up a ‘Short Stay Ward’ at ICDDRB, sponsoring programs like Ekushey Boi Mela, Pohela Boishakh Program, Jatio Haor Utshab, National Bird Festival etc. As a latest initiative, the bank has signed up with BRAC to extend financial support to Libya-returnees.

I would like to express my gratitude to the Government of Bangladesh, the Bangladesh Bank, the Securities and Exchange Commission, the Registrar of Joint Stock Companies & Firms, the Dhaka Stock Exchange and the Chittagong Stock Exchange and Central Depository Bangladesh Limited for all their support during this exacting year.

In closing, I would like to thank all our Directors for their guidance and support. I also would like to thank to our respective Shareholders, clients, patrons, well wishers, and all employees for their continued support and cooperation, without which the bank would not be able to attain its current position. As we continue our work to deliver ever-higher standards of service and performance for our customers, our Shareholders, stakeholders and our communities, we look forward to your continued cooperation and support for 2012.

I would like to express our firm commitment to our valuable shareholders as we continue our effort to work for enhancing our long term share holder value.
Muhammad A. (Rumee) Ali
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