Janata Bank

We have audited the accompanying consolidated financial statements of Janata Bank Limited and its subsidiaries, (“the Group ) as well as the financial statements of Janata Bank Limited ( the Bank ) which comprise the consolidated and the separate balance sheet as at 31 December 2010, profit and loss account, statement of changes in equity, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

The financial statements of the subsidiaries, Janata Capital and Investment Limited and Janata Exchange Company Srl, Italy were not audited by us as at 31 December 2010. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements of the Group and also the financial statements of the Bank in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal

control as management determines is necessary to enable the preparation of these consolidated financial statements of the Group and the financial statements of the Bank that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements of the Group and the financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing.

Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements of the Group and the financial statements of the Bank are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and the financial statements of the Bank.

The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and the financial statements of the Bank, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entities preparation and fair presentation of the consolidated financial statements of the Group and the financial statements of the Bank in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entities internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements of the Group and the financial statements of the Bank. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. 1

Rahman Rahman Huq Chartered Accountants Aziz Halim Khair Choudhury Chartered Accountants Basis for Qualified Opinion 1) The bank provided Tk. 14,922. 26 million on account of Super Annuation Fund (SAF) and Gratuity Fund on 31 December 2010 instead of Tk. 17,827. 88 million resulting in short provision of Tk. 2,905. 62 million and in overstatement of profit to that extent and this is because of implementation of pay scale of the year 2009. 2) Tk. 1,322.

94 million identified from 60 branches as bad and loss loan that remains classified as such for more than five years, was not written off, which is a non compliance of BRPD Circular No. 2 dated 13 January 2003. As a result total loans and advances remain overstated by the same amount as also the provision for loans and advances and interest suspense. Total write off on this account for the bank s branches remain to be provided for. 3) Outstanding loan balance of Tk. 1,578.

15 million should be considered as classified loan (bad and loss) by using qualitative judgement. In the profit and loss accounts, however interest income of Tk. 299 million (appx. ) has been shown against of the said loan balance. As a result profit and loss accounts remain overstated by same amount. In addition to this, a further provision for bad and loss is required amounting Tk. 1,130. 34 million. Therefore the net profit before tax of the Bank has been overstated by Tk. 1,429. 54 million (Ref: note-7).

Qualified Opinion In our opinion, except for the effects of the matters described in the basis for Qualified Opinion paragraph and subject to the mandatory compliance with few regulations of Bangladesh Bank that do not conform to the requirements of Bangladesh Financial Reporting Standards (BFRS) which have been adequately disclosed in note-2AA, the financial statements prepared in accordance with the Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the financial position of the Group and of the Bank as at 31 December 2010 and the results of their financial performance and their cash flows for the year ended 31 December 2010 and comply with the Bank Companies Act, 1991, the rules and regulations issued by Bangladesh Bank, the Companies Act 1994, and other applicable laws and regulations.

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; in our opinion, proper books of account as required by law have been kept by the Group and the Bank 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; the consolidated balance sheet and consolidated profit and loss account of the Group and the balance sheet and profit and loss account of the Bank dealt with by the report are in agreement with the books of account and returns; the expenditure incurred was for the purposes of the Group’s and the Bank’s business; ii) iii) iv) 2 Rahman Rahman Huq Chartered Accountants Aziz Halim Khair Choudhury Chartered Accountants v)

The consolidated financial position of the Group and that of the Bank as at 31 December 2010 and the profit for the year then ended have been properly reflected in the consolidated financial statements except the matter described above in the basis for qualified opinion paragraph; and the consolidated financial statements of the Group and the financial statements of the Bank have been prepared in accordance with the generally accepted accounting principles; the consolidated financial statements of the Group and the financial statements of the Bank have been drawn up in conformity with the Bank Companies Act, 1991 and in accordance with the accounting rules and regulations issued by Bangladesh Bank; adequate provisions have been made except the matter described above in the basis for qualified opinion paragraph for advances which are, in our opinion, doubtful of recovery.

The consolidated financial statements of the Group and the financial statements of the Bank conform to the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh; the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; the information and explanations required by us have been received and found satisfactory; we have reviewed over 90% of the risk weighted assets of the Bank and we have spent around 7,000 person hours for the audit of the books and accounts of the Bank; capital adequacy ratio (CAR) as required by law, has been maintained adequately during the year; and guidelines of Core Risk Management issued by Bangladesh Bank vide BRPD circular 17 dated 7/10/2003 were not fully complied with. vi) vii) viii) ix) x) xi) xii) xiii) Sd/- Sd/-

Rahman Rahman Huq Chartered Accountants Dhaka, 18 April 2011 Aziz Halim Khair Choudhury Chartered Accountants 3 Janata Bank Limited and its subsidiaries Consolidated Balance Sheet as at 31 December 2010 Note PROPERTY AND ASSETS Cash In hand (including foreign currencies) Balance with Bangladesh Bank and its agent bank(s) (including foreign currencies) 3(a) 4,138,804,956 13,470,754,109 17,609,559,065 3,616,728,531 12,920,117,768 16,536,846,299 2010 Taka 2009 Taka Balance with other banks and financial institutions In Bangladesh Outside Bangladesh Money at call on short notice Investments Government Others Loans and advances Loans, cash credit, overdrafts etc.

Bills purchased and discounted Fixed assets including premises, furniture and fixtures Other assets Non – banking assets Total assets LIABILITIES AND CAPITAL Liabilities Borrowings from other banks, financial institutions and agents Deposits and other accounts Current accounts and other accounts Bills payable Savings bank deposits Fixed deposits Bearer certificates of deposits Other deposits Other liabilities Total liabilities Capital/shareholders’ equity Paid up capital Share premium Statutory reserve Legal reserve Assets revaluation reserve Foreign investment revaluation reserve Revaluation reserve for HTM Revaluation reserve for HFT Surplus in profit/(loss) account Total shareholders’ equity Non-controlling interest Total liabilities and shareholders’ equity