INITIAL PUBLIC OFFERING

Strictly Private & Confidential

THE OFFER

Strictly Private & Confidential 3

Overview

214.3 Mn Ordinary Shares, with an Option to

Number of Shares to be Issued
issue a further 71.5 Mn Ordinary Shares

Issue Price LKR 7/- per Share

LKR 1.5 Bn (up to LKR 2 Bn if the Option is

IPO Proceeds
exercised)

Listing Diri Savi Board of the Colombo Stock Exchange

Resultant Market Capitalisation LKR 8.6 Bn (LKR 9.1 Bn if the Option is exercised)

Issue Opening Date 11 December 2013

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Objectives Of The Issue

To meet the regulatory minimum capital requirement by end 2013 and

end 2015

To fund the Banks infrastructure, asset growth and expansion whilst

maintaining adequate levels of regulatory capital.

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The Team

Managers to the Issue Acuity Partners (Private) Limited

Lawyers to the Issue F. J. & G. de Saram (Attorneys-at-Law)

Auditors to the Issue Messrs Ernst & Young

Registrars to the Issue S S P Corporate Services (Pvt) Limited

Amana Bank Limited

Bankers to the Issue
Hatton National Bank PLC

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EXECUTIVE SUMMARY

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Why Amana Bank?

1. Unique Opportunity to Partner with the Pioneer of Islamic Banking and

the ONLY Sharia Compliant Banking Sector Investment in Sri Lanka.

2. Valuations Reflect the Unique Nature of the Offering.

Investors should consider this opportunity as a LONG TERM investment in a

growing bank that is a corner stone in the Islamic finance industry in Sri
Lanka.

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1. Unique Opportunity to Partner with the
Pioneer and ONLY Sharia Compliant
Banking Sector Investment in Sri Lanka.

Amana Bank is the pioneer of Islamic banking in Sri Lanka.

Amana Bank is the only 100% Sharia compliant bank in Sri Lanka.

The Bank commenced operations in 2011 and with the backing of

strategic international stakeholders including Bank Islam Malaysia
[17.8%], AB Bank Bangladesh [17.8%] & Islamic Development Bank
Saudi Arabia [11.9%]*.

* Pre-IPO Share Holdings as at 15th Oct 2013

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2. Valuations Reflect the Unique Nature
of the Offering.

Amana Bank has no comparable bank in Sri Lanka. An investment in the Bank
is an investment in a unique entity and with a group that has come to define
the Islamic finance space in Sri Lanka.

USD Country Total Assets Market Cap PBV

(Mn) (Mn)
Amana Bank Sri Lanka 181.24 2.1x
Bank Islam Malaysia BHD Malaysia 13,794.68 1,636.00 2.5x
AM Islamic Bank BHD Malaysia 40,637.76 7,017.96 1.8x
RHB Islamic Bank BHD Malaysia 60,504.96 6,292.69 1.2x
Meezan Bank Limited Pakistan 2,557.89 352.88 2.1x
Source: Bloomberg & Amana Bank Limited

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ISLAMIC BANKING INDUSTRY
Overview

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What is Islamic Banking?

It is a financial system that is compliant with the principles of Sharia.

Based on these principles the fixed or floating payment or acceptance of

specific interest or fees for loans of money are prohibited.

The basic principles underlying Islamic financial transactions are that;

the purpose of financing should not involve activities that are harmful
to society and prohibited by Sharia
financing must not involve Riba (the giving and receiving of interest)
should avoid Gharar (uncertainty, risk and speculation) and Mysir
(gambling).

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Global Islamic Banking Industry

Currently there are more than 450 Islamic Banking Institutions across 75
countries, mainly concentrated in the Middle East and South East Asia,
with growing trends in Central Asia and Europe.

Islamic Banking products that are offered differ from country to country.

Many different Islamic Banking products are offered worldwide. However,

certain variations of these products are not available in some countries.

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 Global Islamic Banking Asset Base

Asset base > USD 1.3 Trillion and avg. annual growth rate (last 4 years) of
19%.
Global Islamic banking industry is growing 50% faster than the overall
banking sector growth and is expected to reach an asset base of USD 1.8
Trillion by end 2013.
1811 Total Islamic Banking asset
2013
base is still less than 1% of
257 global banking assets.
Rest of the World
Higher CAGR of 16.2% in terms
131
GCC (Arabian Countries
excl. Yemen)
of the growth in its assets
89
when compared with the
South East Asia growth rate of 13.9% in the
1334 conventional banking assets,
2011
during the period from 2008-
Global Islamic Assets (USD Trillion) 2011.
Source - Ernst & Young - World Islamic Banking Competitiveness Report 2013

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Sri Lankan Banking Industry

Sri Lankan financial sector As at end 2012

consists of the CBSL, LCBs and Licensed Commercial Banks (LCB) 24
LSBs, other deposit taking Domestic Bank Branches 1,627
financial institutions, other
Foreign Bank Branches 49
specialised financial
institutions and contractual Licensed Specialized Banks (LSB) 9
savings institutions. Total Number of Bank Branches &
6,374
Other Outlets
Banking sector is the dominant
Total Number of ATMs 2,390
player (70.6% of the total
Banking Density (No. of bank branches per
assets of the financial sector). 100,000 persons )
10.8

The banking sector (excluding CBSL);

Total asset base = LKR 5.1 trillion
Total deposit base = LKR 3.6 trillion
Liabilities = LKR 5.1 trillion (incl. of the capital funds, borrowings & deposits)

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Banking Industry Potential for Growth
The asset growth in 2012
200

Money & Quasi Money (M2) as a

remained constant at 20%, 180
160
with loans and advances 140
recording a growth rate of 120

% of GDP
100
21%. 80
60
The slower growth rates 40
20
were attributed to the 0
credit ceiling that was

Thailand
Pakistan

Malaysia
Bangladesh
Cambodia
Sri Lanka

Singapore
Philippines

India

China
Indonesia
imposed by CBSL to control
credit growth. Source World Bank

Deposits are the main funding source with deposits accounting for more
than 70% of the total liabilities.
Borrowings by the financial sector recorded a marginal growth in 2012,
with an increase in the overseas borrowings.
With the growth in the GDP, the monetization of the economy, which is a
measure of the development of the financial sector is expected to
increase.
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Sri Lankan Islamic Finance Sector

Formal introduction of Islamic financing concepts to Sri Lanka can be

traced back to the late 1990s with Amana Investments setting up a Sharia
based financing institution.
Profit-sharing financing methods built on Sharia compliant concepts have
been practiced at village level on an informal basis prior to the 1990s.
Amendments made to the Sri Lanka Banking Act No. 30 of 1988, in 2005
permitted LCBs and specialized Banks to offer certain Islamic banking
instruments.
In January 2011, Amana Bank was issued a commercial banking license to
function as the first and only Sri Lankan Licensed Commercial Bank
operating in full compliance with Islamic banking principles.
In addition to this, some of the conventional commercial banks, foreign
commercial banks, and licensed finance companies are offering Islamic
financial services as window operations.

Strictly Private & Confidential 17

Trajectory of Growth

As a recent introduction to the Sri Lankan financial sector, the Islamic

banking industry is likely to record high growth rates.
Potential Size of the Market
Total Banking Sector Assets (2012) LKR 5,102 Bn
Muslim Population as a % of Total Population 9.43%
Potential Market Size * LKR 361 Bn
400
LKR Bn.

350 The potential for growth is

300 significant with additional growth
GROWTH POTENTIAL

250
200
being possible with the growth in
150 the banking sector assets and the
100 population.
50
* It has been assumed that only 75% of the Muslim
- population will contribute towards the Islamic Banking Sector
Amana Bank Total Potential assets.
Asset Base - Sept Market Size * The growth in the GDP, banking sector assets and the
2013 (LKR Bn.) population growth has not been considered.
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Islamic Banking Sector Players
Type Bank
Licensed Commercial Banks Amana Bank Limited
offering only Islamic
Banking
Local Licensed Commercial Bank of Ceylon An-Noor Islamic Banking Unit
Banks with an Islamic Commercial Bank of Ceylon PLC Al Adalah Islamic Banking
Banking Window Unit
Hatton National Bank PLC Al Najah Islamic Banking Unit
Foreign Licensed Muslim Commercial Bank
Commercial Banks with an
Islamic Banking Window
Licensed Finance Lanka Orix Leasing Company PLC Al-Falah Islamic Finance
Companies with Islamic Unit
finance windows LB Finance PLC Al-Salamah Islamic Finance Unit
Peoples Leasing Finance PLC Al Safa Islamic Finance Unit
Citizen Development Business Finance PLC CDB Meezan
Islamic Finance Unit

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AMANA BANK LIMITED
An Overview

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Overview

Sri Lankas first commercial bank, operating on a fully Sharia compliant

business model.
Commercial banking licence obtained in January 2011, and commenced
operations in August 2011.
The Bank is new and has potential for substantial growth.
Strategic partners include Bank Islam Malaysia Berhad, Islamic
Development Bank of Saudi Arabia and AB Bank of Bangladesh.
Innovative product introductions within the Sharia framework.
The Bank has over 100,000 customers through a reach of 24 branches
countrywide with an aggressive expansion plan for the future

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Product Offering

Consumer Banking
Business Banking Products Treasury & Other Products
Products
Current Accounts Current Accounts Foreign Exchange
Savings & Term Savings & Term Gold Trading
Investments Accounts Investments Accounts
Foreign Currency Working Capital Financing
Accounts Pre shipment/ Post
Childrens Savings shipment financing for
Accounts Exporters
Personal Salary Account Term Financing
Ladies Savings Account Leasing
Senior Citizen Savings Trade Financing and
Account Services
Easy Payment Plan (Small
Asset Financing)
Home Finance
Leasing

All products are Sharia Compliant

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Reach through the Branches

A network of 24 strategically located

branches.

Strong presence in the Eastern province

of the country, and is on par with the
Governments Nagenahira Navodaya
(Reawakening of the East) initiative.

Strictly Private & Confidential 23

Capital Structure

Post IPO Post IPO

Pre IPO LKR 1.5 Bn IPO LKR 2.0 Bn IPO
Name No. of No. of No. of
Ordinary Ordinary Ordinary
Shares % Shares % Shares %
Existing
1,014,982,867 100.00% 1,014,982,867 82.57% 1,014,982,867 78.03%
Shareholders

IPO
- 0.00% 214,300,000 17.43% 285,800,000 21.97%
Shareholders

Total 1,014,982,867 100.00% 1,229,282,867 100.00% 1,300,782,867 100.00%

Strictly Private & Confidential 24

Recent Share Allotments

ABL issued shares through a Rights Issue during 2013, in two tranches.

No . of Shares
Tranche Share Price (LKR) Value (LKR)
Alloted

Allotted in March 2013 7,931,207 7.00 55,518,449

Allotted in June 2013 104,241,596 7 .00 729,691,172

Total 112,172,803 785,209,621

Strictly Private & Confidential 25

Top 10 Shareholders

Top 10 Shareholders as at 15 October 2013

Shareholder No. of Ordinary Shares %
Bank Islam Malaysia Berhad 180,562,011 17.79%
AB Bank Limited 180,562,011 17.79%
Akbar Brothers (Pvt) Limited 120,374,674 11.86%
Islamic Development Bank 120,374,673 11.86%
Expolanka Holdings PLC 90,281,006 8.89%
Millenium Capital Investment PTE. Limited 43,056,201 4.24%
Trans Asia Trading Company 33,756,280 3.33%
Mr. Kevin Mark Pocock 27,084,302 2.67 %
Mr. Afzal Majid Alimahomed 19,498,122 1.92%
Mr. Khaldoon Al Asmar 14,722,200 1.45%
Total 830,271,480 81.80%

Strictly Private & Confidential 26

Board of Directors
Osman Kassim
Tyeab Akbarally
Faizal Salieh
Dato A Tajudin B.H Abdul Rahman
Dr. A. A. M Haroon
Mohamed Jazri Magdon Ismail
Ruzly Hussain
Angelo M. Patrick
Haseeb Ullah Siddiqui
Jeroen P.M.M. Thijs
Wahid Ali Mohd Khalil
Shiran Harsha Amarasekera , PC
Badrul Haque Khan
Dato Wan Ismail Wan Yusoh
Huzefa Inayetally Akbarally
Khairul Muzamel Perera Bin Abdullah
Mohamed Faizel Mohamed Haddad
Kevin Mark Pocock
Chairman
Deputy Chairman, Non-Executive, Non-Independent Director
Managing Director / CEO
Senior Director and Non-Executive, Independent Director
Non-Executive, Non-Independent Director
Non-Executive, Independent Director
Non-Executive, Independent Director
Non-Executive, Independent Director
Non-Executive, Non-Independent Director
Non-Executive, Non-Independent Director
Non-Executive, Non Independent Director
Non-Executive, Non-Independent Director
Non-Executive, Non-Independent Director
Alternate Director to W. A. M. Khalil
Alternate Director to T. Akbarally
Alternate Director to J. P. M. M. Thijs
Alternate Director to O. Kassim
Alternate Director to S. H. Amarasekera, PC
Strictly Private & Confidential 27
Corporate Governance

Four Board sub-committees have

been appointed for the purposed
Independent
of ensuring proper corporate
Directors, 4
governance;
Audit Committee
Human Resources and
Non Remuneration Committee
Executive Nomination Committee
Non
Independent Board Integrated Risk
Directors, 8 Management Committee

Executive
Director, 1

Strictly Private & Confidential 28

Sharia Supervisory Council

Supports the Banks Board of Directors and the senior management.

This council ensure that the conjunctions of Sharia are adhered.

Dr. Muhammad Imran Ashraf Usmani Chairman - Sharia Supervisory Council

Ash-Sheikh Mohd Nazri Bin Chik Vice Chairman - Sharia Supervisory Council

Ash-Sheik M M A Mubarak Member - Sharia Supervisory Council

Ash-Sheik Mufti M I M Rizwe Member - Sharia Supervisory Council

Ash-Sheik Mufti Muhammad Hassan Kaleem Member - Sharia Supervisory Council

Strictly Private & Confidential 29

Management Team

Competent management team with expertise in the banking industry.

Faizal Salieh Managing Director/CEO
Mohamed Azmeer Chief Operating Officer
M.M.S. Quvylidh Vice President Operations and Business Support
M. Pharis Jazeel Vice President Treasury
Christopher Amrit CanagaRetna Vice President Business Banking
Mrs. Preeni Dunuwille Koralege Chief Compliance Officer and Company Secretary
M Ali Wahid Chief Financial Officer
Chandralal Wickramapathirana Chief Information Officer
Irshad Halaldeen Vice President Strategic Planning & Business Process Re-Engineering
Fairoze Burah Vice President Administration
Shahul Hameed Mohamed Giado Chief Internal Auditor
Siddeeque Akbar Vice President Consumer Banking & Strategic Marketing
Ajmal Hamid Naleer Vice President - Credit
Roomy Rahim Vice President Human Resources
Nista Badurdeen Head of Central Operations, Trade Services & Financial Institutions
Moulavi Siraj Najubudeen Head of Sharia Supervision
Irshad Iqbal Risk Officer
H. Mahesha Thrimanne Head of Legal
Fazly Marikar Head of New Product Initiatives and Gold Unit
Chaminda De Silva Assistant Vice President - Leasing and Home Finance
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Future Plans

Aggressively pursue growing its business volumes and revenues largely

through the consumer and SME sectors.

Growing its asset and revenue base by expanding its business with existing
customers and through new customer acquisitions.

Expand its distribution network and channels in territories where it

identifies strategic business opportunities.

Introduce new Sharia compliant products.

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PAST FINANCIALS

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Balance Sheets
LKR Mn. As at
31 Dec 2012 31 Dec 2011
30 Sept 2013
Audited Audited*
Advances 11,225 7,165 4,975
Deposits 16,930 13,303 11,363
Total Assets 20,981 16,717 14,496
Shareholders Funds 3,553 3,071 3,001

Net Assets per Share 3.50 3.40 3.32

* Company commenced operations in August 2011

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Income Statements
For the Period Ended
LKR Mn. 31 Dec 2012 31 Dec 2011
30 Sept 2013
Audited Audited*
Financial Income 1,257 1,301 352
Operating Income
Core Banking 486 569 147
Non Core Banking 284 685 (74)
Total Operating Income 770 1,254 73
Profit Before Tax (299) 206 (370)
Profit After Tax (215) 146 (282)
Earnings Per Share (LKR) (0.23) 0.16 (0.35)
2013 is expected to record a loss due to the non-availability of the other income that
was generated by non-core banking activities in 2012, which contributed towards the
profit in 2012. However, from a core-banking performance aspect, an increase in the
performance is evident up to September 2013.
* Company commenced operations in August 2011

Strictly Private & Confidential 34

 Key Ratios

As at/For the Period Ended Industry

31 Dec 2012 31 Dec 2011 Average
30 Sept 2013
Audited Audited* (2012) **
Net Spread *** 4.3% 4.6% 3.1% 4.1%
Non Financing Income to Total Income 18.4% 34.5% -26.4% 14.7%
Cost to Income Ratio 116.8% 86.5% 223.0% 74.3%
Statutory Liquid Asset Ratio - DBU 30.9% 35.9% 26.0% 30.9%
Statutory Liquid Asset Ratio - FCBU 91.2% 100.0% n/a n/a
Advances to Deposits Ratio 66.3% 53.9% 43.8% 87.6%
Non-Performing Advances Ratio
2.2% 1.0% 1.0% 4.0%
(Gross)
Net Advance Growth 56.7% 44.0% n/a 29.2%
Deposits Growth 27.3% 17.1% n/a 19.3%
Capital Adequacy Ratio
Core Capital 15.11% 20.40% 26.50% 13.3%
Total Capital 15.38% 20.70% 25.46% 15.0%
* Company commenced operations in August 2011
** Financial System Stability Report CBSL - 2012
*** Calculated as Net Interest Income/Average Deposits. Comparable to the Net Interest Margin calculation used in
conventional banks
Strictly Private & Confidential 35
Sound Growth in Core Banking

The Bank will achieve operational breakeven levels supported by sound

growth in core banking. The operational breakeven is estimated to be
reached at a total asset value of LKR 26.18 Bn which the Bank should
achieve in FY2014 based on current growth trends.
Amana Banks asset growth has exceeded the asset growth of peer banks.
With only a 2 year track record of operations (compared to 18 years of its
closest peers), Amana Banks asset base has already reached over 58% of
its closest peer (as at June 2013).
This growth indicates that Amana Bank will achieve its breakeven
operational levels much faster than the duration taken by its peers.

Union Bank of Pan Asia Banking Amana Bank

Colombo PLC Corporation PLC Limited
1 year & 11
Years in Operation 18 years 18 years
months
Total Assets as at 30 June 2013 LKR 34.6 Bn LKR 63.3 Bn LKR 20.1 Bn
Strictly Private & Confidential 39
Key Investment Considerations

Potential for significant growth given the start-up nature of the Bank

Only fully Sharia compliant Sri Lankan commercial bank catering to a

significant and untapped potential Islamic banking market.

Backing of strong strategic partners and shareholders

Strictly Private & Confidential 40

DISCLAIMER

This document has been prepared by Acuity Partners (Pvt) Ltd solely for discussion with potential clients.

The information contained in this document has not been independently verified. No representation or warranty express or
implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such
information or opinions contained herein. None of the Company nor any of its respective affiliates, advisers or representatives
shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document
or its contents or otherwise arising in connection with this document.

This document does not constitute an offer or invitation to purchase or subscribe for any shares in the Company and neither
any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Acuity
cannot provide advice related to tax and legal matters. Prospective clients should conduct their own due diligence including
independent tax and legal advice.

No part of this document may be distributed, reproduced, taken or transmitted.

Acuity Partners (Pvt) Ltd +94 112 206 206 (G)

53 Dharmapala Mawatha, +94 112 437 149 (F)
Colombo 03
www.acuity.lk Strictly Private & Confidential 41