Delta Brac Housing Finance Corporation LTD

Date
December 11, 2006

American International University-Bangladesh

 Delta Brac Housing
Finance Corporation
LTD

Table of Content

1. Introduction………………………………………………....………......……......01
1.1 Aim of the Report……………………………………………….....…….………01
1.2 Methodology…………………………………………………….....……….....…01
2. Company Overview…………………………….....…………………………..…01
2.1 DBH and Its Origin…………………….....………………………………….…..01
2.2 Nature of DBH……………………………………………......…...…………….02
2.3 Capital Market…………………………………………....……………....……...02
3. Formation of DBH………………………………………......………………..….03
3.1 Delta Life Insurance Company (DLIC) Ltd……………………………......……03
3.2 BRAC…………………………………………………………………..........…..03
3.3 Green Delta Insurance Company Ltd…………………………………....…........04
3.4 HDFC Investments Ltd…………………………………………......……...……04
3.5 International Finance Corporation (IFC)………......……….………………....….04
4. Management Hierarchy………………………………………………….........….04
5. Types of Product and Services……...……………………………………...…….05
5.1 Home loan………………………………………………......……………………05
5.2 Deposits…………………………………………………......………….…..……05
5.3 Property Services……………………………………………......……………….06
6. SOWT Analysis………………………………………………………….......…..06
6.1 Strength …………………………………………………………......…………...06
6.2 Opportunity……………………………………………………………..........…..06
6.3 Weakness………………………………………………………………......…….06
6.4 Threat………………………………………………………………..........….…..07
7. CSR Activities……………………………………………………..........….……07
8. Contribution to BD Economy……………………………………....…................08
9. Recommendation…………………………………………………..........…..…...08
10. Conclusion.............................................................................................................09
11. Appendices
Appendix
Figure 1: Management hierarchy........................................................................I
Figure 2: Shareholding Pattern..................................................................................II

1. Introduction

1.1 Aim of the Report

We are doing this report for the subject Financial Markets and Institutions. Our topic for this

report is DELTA BRAC HOUSING FINANCE CORPORATION LTD (DBH). Introducing the

whole company to other is our main aim of this report.

1.2 Methodology
To make this project we use both primary and secondary data. We visited the Head Office of

DBH for collecting requires information needed to make this report. We also collect some

information from the website of DBH and other websites.

2. Company Overview

2.1 DBH and Its Origin

Delta Brac Housing Finance Corporation Ltd. (DBH) is a non-banking public limited company

and financial institution licensed by Bangladesh Bank. It is the pioneer and largest housing

finance institution in the private sector of Bangladesh. The company registered on 11 May, 1996

under the Company Act 1994. Among all banks and other financial institution of Bangladesh,

only DBH has rated the highest “AAA” credit rating for long-term and “ST-1” credit rating for

short-term by Credit Rating Agency of Bangladesh (CRAB) depending on financial statements

for recent consecutive 4 years which indicates the financial safety, security, and strength of the

bank or financial institution. DBH has total 6 branches in the whole Bangladesh, of which four

branches are situated Dhaka, one in Chittagong and another one in Sylhet.

Important dates

Incorporation of the Company May 11, 1996

Date of Certificate of Commencement of Business May 11, 1996
License from Bangladesh Bank July 15, 1996

2.2 Nature of DBH

DBH provides services for purchase, sale and transfer of real estate assets. It also provides loans

for construction, improvement, and extension of houses or flats, and purchase of housing plot. It

also has various investment and financing products like term deposit scheme, cumulative deposit
scheme, and double money scheme, monthly income deposit scheme and so on for its individual

and corporate clients.

2.3 Capital Market

Currently DBH floated its 500000 ordinary shares of Tk 100 each with a premium of Tk 110 to

the general public through IPO. The dividend payout of DBH Finance Corporation Ltd. (DBH)

has increased by 38 percent compared to last year as the company has declared 15 percent stock

dividend and 17 percent cash dividend for 2008-09. At the 12th AGM the specialist in housing

finance of DBH declared 30 percent bonus shares for the last fiscal year. Transaction of the DBH

First Mutual Fund unit starts from February 07, 2010 in both the Stock Exchanges (DSE and

CSE) of the country. LR Global Bangladesh Ltd is the Asset Manager of DBH First Mutual

Fund. Bangladesh General Insurance Co. Ltd (BGIC) is the Trustee of the DBH First Mutual

Fund and Standard Chartered Bank is the Custodian of the Fund.

3. Formation of DBH

DBH is an international joint venture between three local promoters and two international

partners.

The local promoters are:

3.1 Delta Life Insurance Company (DLIC) Ltd:

The leading life insurance company in the private sector of the country was established in 1986.

Two projects of the company namely Grameen Bima for the rural people and Gono Bima for the

poor and marginal savers of the urban areas were initiated to devote themselves exclusively to

marketing and management of these innovation products. Delta life can take pride in molding the

saving habits of the lower and middle class people and transforming them into prospective

policyholders.

3.2 BRAC:

The largest national NGO of the world having deep presence in the country and contributing in

the socio economic development of the country was set up in 1972. Their priorities are focus on

women, organizing the poor, unleashing human potential through Comprehensive Approach.

This organization strength is thinking local, acting global increasingly self-reliant, unprecedented

scale and reach, proven track record. The NGO has been called upon to assist a number of

countries including Africa, the Middle East and Afghanistan.

3.3 Green Delta Insurance Company Ltd:

The leading and pioneer general (non life) insurance company in the private sector of the

country. It was incorporated on 14 December 1985 in Bangladesh as a public limited company

under the Companies Act 1913.

The international partners consist of the following:

3.4 HDFC Investments Ltd:

It is the wholly owned subsidiary of HDFC of India (a private sector company and most

successful housing finance company incorporated in 1977) incorporated in 1994 with a view to

invest in a portfolio of different shares and stocks. Being a sponsor of DBH and a pioneer in the

area of private sector housing finance in India and the most successful housing finance institution

in the South Asia, HDFC plays a developmental role with necessary technological and business

expertise making the proper recommendations in relation to products, policies, systems and

procedures for DBH.

3.5 International Finance Corporation (IFC):

The private sector arm of the World Bank Group was founded in 1956 to promote private sector

investments both domestic and foreign in developing member countries. Both local and foreign

shareholders come together with an objective to channel resources into providing finance for the

people basic need for shelter, enhance housing stock of the country and promote affordable home

ownership.

4. Management Hierarchy (see Appendix- Figure 2)

5. Types of Products and Services

DBH provides loans for construction of home, purchase of houses or flats, and improvement of

flats and exiting houses. DBH also offers various investment and others fixed deposit schemes

for both individuals and corporate. DBH has three types of product categories; mainly home

loan, deposits, and property & services; among which home loan and deposits have sub-

categories.
Network of financing:

DBH is able to provide home loans in Dhaka, Chittagong and Sylhet. Anyone can apply at

his/her local DBH office for properties in locations where it finance.

5.1 Home Loan

 Types of home loan

Under Home Loan DBH provide: Apartment Loan, Home Construction Loan, Housing Plot

Loan, Home Extension Loan, Home Improvement Loan, Flexi Plus, Home Loan, Bangladesh

Bank Refinance Scheme for Housing Sector, and Loan protection insurance.

5.2 Deposits

 Types of deposits

Profit First Deposit, Monthly Income Deposit, Quarterly Income Deposit, Annual Income

Deposit, Annual plus Deposit, Cumulative Deposit, Children's Deposit, Easy Way Deposit, and

Easy Home Deposit.

5.3 Property Service

DBH has launched an altogether new service called DBH Property Services, on 1 January 2009,

in order to provide to the yet untapped demand existing in the entire range of transactions related

to buying and selling of property. But at present this kind of service is inactive.

6. SWOT Analysis

6.1 Strength:
  It is the first non-banking financial company in the country.

 “AAA” rated company in the share market.

 Provide loan at most lower interest rate (9%).

 Less then 0.50% non-performing loans (credit risk).

6.2 Weakness:

 It only provide house loan.

 Lack of advertisement. People don’t know about it much.

 Unable to consider the rural people as customer.

6.3 Opportunity:

 Huge market

 Earn enough loyal customers.

 Can expand their business easily, as they have the support of some big businesses.

 Can provide loans to corporations.

6.4 Threats:

 As they are only provide house loan, so there is a chance of other company to grab their

market that provides other loans also. Like :Bank’s

 Many companies with more facilities are coming day by day in this market.

 Banks are the great threat for DBH.

 Competitors: IDLC, National Housing, Phoenix Finance and so on.

7. CSR Activities

Corporate social responsibility (CSR) means taking responsible attitude going beyond the legal

requirements towards society, according to DBH. It is to deal responsibly with customers and

suppliers, work with local community for its betterment, and understand environmental impact.

So, as part of CSR efforts, DBH support number of programs to have greater involvement with

local community. Some of them are as follows:

 DBH contributes to Habitat for Humanity to build home for the poor.

 DBH donates semi-permanent umbrellas for the traffic police of SMC (Sylhet

Metropolitan Police Station at Kumarpara).

 DBH provides assistance to Habitat for Humanity International-Bangladesh (HFHIB) for

building shelters for the Aila affected families.

 DBH employees volunteer building low cost homes at Savar, Ghashfool.

8. Contribution to Bangladesh Economy

In the previous years there were global financial crisis and economic downturn that resulted in

global economic recession. In Bangladesh this led to raise in inflation, slowed down imports,

increased prices in exports and so on. Workers’ remittance decreased along with recruitments in

host countries. Despite of all this, Bangladesh economy has a good recovery. But still this

country’s infrastructure needed to be developed with the rapid increase of demands for

everything and to reduce poverty.

Thus the housing sector in main urban areas of Bangladesh has been adversely affected by high

land prices because of supply constraints in land availability as well as rising demands for homes

from the growing middle classes. Moreover, as new jobs are being created, so demand for

housing increases. To meet this demand, especially in cities like Dhaka, Chittagong and Sylhet,

DBH is providing their services by financing for houses.

9. Recommendations

 DBH can expand business in other areas of Bangladesh.

 It can help poor people by providing them small home loan amount.

 It can associate with other real estate developers to provide loans to people who can buy

houses or flats in metropolitan city/areas.

 Mainly for poor people, it can reduce interest amount by few digits.

 It can provide other services to customers, besides only financing for housing sectors,

thus optimally utilizing market resources and attracting more customers.

10. Conclusion

DBH is the pioneer and largest housing finance institution in the private sector of Bangladesh

compared to other non-banking financial institutions. Currently, it is providing its services in

urban cities of Dhaka, Chittagong, and Sylhet and need to expand its business in other areas. It

can target people living in rural areas and poor people besides lower middle class customers. It

can use market resources to get optimum result and grab/attract more customers. It helped many

families, but still need to expand its business capacity. Shareholders as well as other individual

and corporate investors can invest on shares as its credit risk is low. It can invest more on mutual

fund as it is less risky.

 Appendix

Figure 1: Management hierarchy

Chairman
Mr. Faruq A. Choudhury

Board of Directors-
Mr. Mohammad Aminul Alam, Mr. Nasir A Choudhury, Mr. Nurul Huda,
Dr. Kabir Hussain Choudhury, Dr. Syed Mukarram Ali, Mr. Mohammad Syedul
Islam, Mr. Pradeep Kumar Mukherjee. Mr. Mohammad A. (Rumee) Ali

Managing Director and CEO

Mr. Quazi Mohammad Shariful Ala

Head of Recovery Head of Marketing & Customer Management

Mr. Saiyaf Ejaz Mr. Dominic D’ Cruze

Head of HR Head of Credit

Mr. Tanvir Ahmad Mr. A. K. M. Tanvir Kamal

Head of Home Loans Head of IT

Mr. Nasimul Baten Mr. Hassan I. Yussouf

Head of Finance & Liabilities and Company Secretary

Mr. S. H. Aslam Habib

Financial Controller
Mr. Syed Aminul Islam

Loan Operations Manager Manager- IT

 Appendix

Figure 2: Shareholding Pattern