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com

The banking industry came across a scenario of


socio-economic upheaval in the last fiscal and
Mercantile Bank was no exception. Despite all
headwinds, Mercantile navigated itself in the right
direction towards sustained growth, capitalizing on
the strength of its efficient human resources and
strategic corporate outlook.

annual report 2014

Letter of
Transmittal
All Shareholders
Bangladesh Bank
Bangladesh Securities and Exchange Commission
Registrar of Joint Stock Companies & Firms
Dhaka Stock Exchange Limited
Chittagong Stock Exchange Limited

Subject: Annual Report for the year ended December 31, 2014.

Dear Sir (s),


We are delighted to enclose a copy of the Annual Report 2014 together with the Audited Financial Statements
including Balance Sheet as at December 31, 2014 and Income Statement, Cash Flow Statement for the year
ended December 31, 2014 along with notes thereon of Mercantile Bank Limited for kind information and record.

Yours sincerely,

Saiful Alam, ACS

Vice President and

Company Secretary (Acting)

annual report 2014

CONTENTS

Notice of the 16th Annual General Meeting

61

Managing Director & CEOs Review

Vision and Mission

63

Directors Report

10

Strategic Objectives

85

Management Discussion and Analysis (MDA)

11

Core Values

96

Disclosure on Basel II

12

Corporate Priorities

109

CROs Report on Risk Management

12

Corporate Philosophy

115

13

New Technology

Certificate Regarding Compliance of BSEC


Notification

13

Way Forward

116

Directors Responsibility for Internal Control


& Financial Reporting

14

Business Ethics

117

Report on Corporate Governance

15

Code of Conduct

126

Compliance Report on BSEC Notification

16

Corporate Profile

131

Compliance of Meeting

18

MBL Milestones

133

The Pattern of Shareholding

19

Sponsors of the Bank

134

Media Highlights

22

Board of Directors

136

Report of Audit Committee

23

Directors Profiles

137

Sustainability Report

30

Corporate Structure

140

Report on Green Banking

31

MBL Organogram

142

Report on Human Resources

32

Management Team

145

Report on Corporate Social Responsibility

34

Head Office & Branch Network

152

MBL Album

46

Our Coverage

156

CFOs Statement

47

Financial Highlights

158

48

Graphical Presentation

Certification of Financial Statements by the


CEO & CFO

50

Market Performance

159

Auditors Report

51

Financial Calendar

162

Signing of Financial Statements 2014

52

Products & Services

163

Financial Statements-MBL

56

Economic Impact Report

235

Financial Statements-OBU

58

Segment Reporting

240

Financial Statements- MBSL

59

Chairmans Message

252

Financial Statements-Mercantile
Exchange House (UK) Limited

Standard
Disclosure Index
The following disclosure checklist will help the reader to indentify the key section of annual report 2014.
Particulars

Ref. Page No.

Corporate Objectives, Values & Structure


n

Vision and Mission

Overall strategic objectives

10

Core values and code of conduct/ethical principles

Profile of the Company

Directors profiles and their representation on Board of other companies & Organization Chart

11, 14, 15
16-17
23-28, 226-230

Management Report/Commentary and analysis including Directors Report/Chairmans


Review/CEOs Review etc.
n
n

n
n

A general review of the performance of the company


Description of performance of various activities/products/segments of the Bank and its
Group Companies during the period under review
A brief summary of the Business and other Risks facing the organization and steps taken
to effectively manage such risks
A general review of the future prospects/outlook
Information on contribution of the Bank to its responsibilities towards the staff (including
health & safety)
Information on Banks contribution to the national exchequer & to the economy

59-60, 61-62, 66-72, 86-90


47-49, 58, 90-95
109-114
60, 62, 72, 95
62, 95, 142-144
95, 138

Sustainability Reporting
60, 62, 145-151

Corporate Social Responsibility (CSR) Initiatives

Environment related Initiatives

139

Environmental & Social Obligations

139

Disclosure of Accounting Policies and General Disclosure


n

Disclosure of adequate and properly worded accounting policies relevant to assets,


liabilities, income and expenditure in line with best reporting standards

Any specific accounting policies

Impairment of Assets

Changes in accounting policies/Changes in accounting estimates

179-191

Segment Information
n

Comprehensive segment related information bifurcating segment revenue, segment


results and segment capital employed
Availability of information regarding different segments and units of the entity as well as
non-segmental entities/units

annual report 2014

58

www.mblbd.com

Particulars
n

Ref. Page No.

Segment analysis of

Segment Revenue

Segment Results

Turnover

Operating profit

Carrying amount of Net Segment assets

58

Financial Statements
165, 173, 216-217

Disclosures of all contingencies and commitments

Comprehensive related party disclosures

223

Disclosures of Remuneration & Facilities provided to Directors & CEO

220

Statement of Financial Position/Balance Sheet and relevant schedules

Income Statement/Profit and Loss Account and relevant schedules

Statement of Changes in Equity/Reserves & Surplus Schedule

Disclosure of Types of Share Capital

Statement of Cash Flow

Consolidated Financial Statement (CFS)

Extent of compliance with the core IAS/IFRS or equivalent National Standards

Disclosures / Contents of Notes to Accounts

160-259

Information about Corporate Governance


n
n

Board of Directors, Chairman and CEO

118-119

Audit Committee (Composition, role, meetings, attendance, etc.), Internal Control & Risk
Management

Ethics and Compliance

Remuneration and other Committees of Board

Human Capital

Communication to Shareholders & Stakeholders

109-113, 119-120,
124
14, 125-130
118-121, 131-132
142-144

Information Available on Website

51

Other Information

125

Management Review and Responsibility

Disclosure by Board of Directors or Audit Committee on evaluation of quarterly reports

Any other investor friendly information

121-123
136
120, 125

Risk Management & Control Environment


109

Description of the Risk Management Framework

Risk Mitigation Methodology

109-114

Disclosure of Risk Reporting

115

annual report 2014

Standard Disclosure Index

Particulars

Ref. Page No.

Stakeholders Information
n

Distribution of shareholders (Number of shares as well as category wise, e.g Sponsors, FII etc.)

17

Shares held by Directors/Executives and relatives of Directors/Executives

133

Redressal of investors complaints

125

Graphical/Pictorial Data
n

Earnings per Share

49

Net Assets

48

Stock Performance

50

Shareholders Funds

48

Return on Shareholders Fund

87

Horizontal/Vertical Analysis including following


n

Operating Performance (Income Statement)

Total Revenue

Operating Profit

Profit Before Tax

Profit after Tax

EPS

47

Statement of Financial Position (Balance Sheet)

Shareholders Fund

47

Property Plant & Equipment

183

Net Current Assets

192

Long Term Liabilities/Current Liabilities

207-209

Profitability/Dividends/Performance and Liquidity Ratios


n

Gross Profit Ratio

Earning before Interest, Depreciation and Tax

Price earning ratio

47

Current Ratios

Return on Capital Employed

Debt Equity Ratio

Statement of Value Added and Its Distribution


n

Government as Taxes

56

Shareholders as dividend

57

annual report 2014

www.mblbd.com

Particulars

Ref. Page No.

Employees as bonus/remuneration

56

Retained by the entity

56

Economic value added

57

Additional Disclosures
n

144

Human Resource Accounting

Specific Disclosures
n
n

Disclosure of Ratings given by various rating agencies for Instruments issued by/of the Bank

17, 113

Details of Advances portfolio Classification wise as per the direction issued by the central
bank of the respective countries
Disclosure for Non Performing Assets

Movements in NPA

Sector-wise breakup of NPA

Movement of Provisions made against NPA

Details of accounts restructured as per regulatory guidelines

201-202

233

Maturity Pattern of Key Assets and Liabilities (ALM)

Classification and valuation of investments as per regulatory guidelines/Accounting Standards

195-197

Business Ratio/Information
192

Statutory Liquidity Reserve (Ratio)

Net interest income as a percentage of working funds/Operating cost efficiency Ratio

47, 89

Return on Average Asset

47, 89

Cost/income Ratio

47, 89

Net Asset Value per Share

47

Profit per employee

144

Capital Adequacy Ratio

47

Cash Reserve Ratio/Liquid Asset Ratio

192

Dividend Cover Ratio

47

Gross Non-Performing assets to Gross advances/Non-Performing Loans (assets) to Total


Loans (assets)

47, 201-202

Details of credit concentration/Sector-wise exposures


n

The break-up of Provisions and contingencies included in the Profit and Loss Account

Disclosure under regulatory guidelines (Market Discipline- Pillar 3 Disclosures under Basel-II)

Disclosure in respect of assets given on operating & finance lease

Banks Network: List of Branches or Centers

212
196, 108
184
36, 44

annual report 2014

Notice of the
16th Annual General Meeting
Notice is hereby given to all members of Mercantile Bank Limited (the Company) that the 16th Annual General
Meeting (AGM) of the members i.e. shareholders of the Company will be held on May 24, 2015 (Sunday) at 11.00 a.m.
at Bashundhara Convention Centre (Pushpanjoli), Block-C, Umme Kulsum Road, Bashundhara R/A, Dhaka-1229 to
transact the following business and adopt necessary resolutions:
Agenda:
01.

To receive, consider and adopt the Profit and Loss Account of the Company for the year ended December 31,

2014 and the Balance Sheet as at that date together with Reports of the Auditors and the Directors thereon;

02.

To declare Dividend out of the profits for the year ended December 31, 2014 as recommended by the Board of

Directors;
03.

To elect/re-elect Directors;

04.

To appoint Auditors of the Company for the term until conclusion of the next Annual General Meeting and to fix

their remuneration;

05.

To transact any other business with the permission of the Chair.

By order of the Board




Dated: May 04, 2015
Dhaka, Bangladesh

Saiful Alam, ACS


Vice President and
Company Secretary (Acting)

Notes:
a) The Record Date of the 16th Annual General Meeting (AGM) will be on May 06, 2015 (Wednesday).
b) The Shareholders names appearing in the Register of members of the Company or in the Depository on the
Record Date will be eligible to attend the AGM and receive the dividend.
c) A Member of the Company eligible to attend and vote at the Annual General Meeting may appoint a Proxy
to attend and vote on his/her behalf. The Proxy Form, duly filled in and signed by the Member and stamped
(Tk.20.00) must be submitted at the Registered Office of the Company at least 48 hours before the meeting.
d) The Board of Directors have recommended 10% cash dividend for the year ended December 31, 2014 to be
considered in the AGM.
e) The Registration Counter shall be opened at 8.00 a.m. and remain open up to 11.00 a.m.
f)

As per Bangladesh Securities and Exchange Commission circular no. SEC/CMRRCD/2009-193/154 dated
24.10.2013, there will be no arrangement for gift or entertainment at the Annual General Meeting.

annual report 2014

Vision

would make finest corporate citizen

Mission

will become most caring, focused for equitable growth based on diversified
deployment of resources and nevertheless would remain healthy and
gainfully profitable bank

Strategic
Objectives
n

to increase shareholders value

to achieve economic value addition

to be market leader in product innovation

to be one of the top three financial institutions in Bangladesh in terms of efficiency

to be one of the top five financial institutions in Bangladesh in terms of market


share in all significant market segments we serve

annual report 2014

transparent
success
achievement

social responsibility
strategic

teamwork
shareholders value

commitment
integrity

innovation

customer delight
employees value

Core Values
n

Customer delight

Customer satisfaction pervades all our activities. We appreciate that Customers satisfaction is critical for our success.

Innovation

Spurring innovation for reinforcement of our business.

Origination and materialization of change management for attainment of perfection and we believe change is always
constant.

Ethical Values
We continue to be responsible, ethical, sincere and transparent in our thoughts and actions.

Caring for Human Resources


Realization of latent potentialities of employees, respecting individual worth and dignity to ensure smooth career
progression as well as welfare orientation in Human Resources management policy and practices.
Commitment
We always keep high on the agenda our commitment towards valued depositors as their trustworthy custodian and
to maintain the same spirit for all other stakeholders.

Socially Responsible
Constant endeavor to act and respond in a socially responsible manner keeping in mind society and our country.

To care for our environment.

Shareholders Value
Creation and Maximization of values for our shareholders.

11

annual report 2014

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Corporate
Priorities
n

Ensure customers satisfaction by meeting their demands with excellent customer services

Enlarge customers freedom by designing need based banking products and services

Manage credit risk by diversified loan portfolio with emphasis on SME and Agriculture financing

Mitigate different risks through efficient risk management techniques

Strengthen internal control and compliance (ICC) system to establish a very systematic and effective compliant culture
Combination of skilled human resources and state-of-art technology in providing banking services

Focus on green banking by ensuring eco friendly financing

Corporate clients credit rating to remain compliant in terms of regulatory capital requirement

n
n

To be transparent, accountable and trustworthy in all aspects of our banking activities

Corporate
Philosophy
Our customers, employees and shareholders are equally important to us. We want to achieve strong corporate growth
through FINANCIAL INCLUSION. We provide solutions at a minimum cost based on a high level of satisfaction of all
segments of our customers, thus also contributing to the prosperity of our employees and shareholders.

With a firm commitment to provide solutions, we are constantly developing innovative and technologically advanced prod-

ucts and services that satisfy our customer needs. We offer cutting edge compensation package and good work environment to our employees. We never forget our shareholders to make them pleased with financial well-being and increase
their shares value. This has given us a path to the growth and progress.

annual report 2014

12

New
Technology
adopting the state-of-the art technology in banking operations

Way
Forward
We look forward to consolidate our position focusing on the followings:
n
n
n
n
n
n

More emphasis on SME financing

Achievement of agriculture credit target

All out efforts to improve deposits mix by procuring low cost and no cost deposits
Innovation of need based deposits and loans products and services
Incorporate technology based advanced products and solutions

To hire and retain qualified human resources according to need of the Bank

13

annual report 2014

Business
Ethics
MBL believes that business ethics practices provides a foundation for the stability and sustainable growth of the bank, and
supports the banks efforts in achieving its stipulated goals. The bank therefore encourages all parties to conduct business
and perform their duties in accordance with business ethics practices.
n

The bank conducts its business in accordance with the law and regulations set by the central bank and other
regulatory authorities. The bank does not finance in any project, detrimental to the community or country and thus
prohibited by the credit policy of the bank.

The bank complies with various standards which are generally acceptable for conducting the banking business and
always refrain from doing aggressive business while extending credit facilities.

In conducting business, the bank adheres to Bangladesh Banks instructions while setting interest rates of deposits
and loans. It also keeps our interest spread (difference between interest rate charged on loans and interest rate paid
on deposits) at or below 5% as advised by Bangladesh Bank.

The bank offers quality services to its customers with the principles of warm friendship and mutual support. The bank
applies only those charges/fees that are disclosed by the schedule of charges of the bank.

The bank keeps and safeguards the information of its customers in confidential and not discloses such confidential
information to others unless with the consent of the customers or as required by the law.

To continue and increase CSR activities.

To remain compliant in the sprit of law and industry practice.

annual report 2014

14

Code of
Conduct
Salient principles of MBL employees code of conduct:
n

comply with the various rules, regulations and policies framed by the Bank and other Regulating Authorities.

show courtesy and attention to the customers, fellow colleagues and serve the Bank honestly, sincerely, diligently and
with utmost care.

maintain strict secrecy of the affairs of the Bank and the customers.

not accept any outside employment, honorary or stipendiary, or undertake part-time work in any office of profit without
prior written permission of the competent authority.

not engage directly or indirectly in any commercial business, industry or other business pursuits or as agent of others.

not absent from duty, nor leave the station without first obtaining the permission of the competent authority in writing.

not make any personal representation to any director of the Board or any outside authority, to intervene on his/her
behalf in any matter.

not accept or permit any member of his/her family to accept any gift or subscriptions from a constituent of the Bank,
any person likely to have dealings with the Bank, a subordinate employee or a candidate for employment in the Bank.

not participate in gambling and betting or any such activities.

not make or permit any member of his/her family to make, any investment likely to embarrass or influence him/her in
discharging official duties.

not invest money in the business of the Banks clients.

not do any activity which may undermine the prestige or image of the Bank or making/joining any organization which
is not permitted.

not take part directly in any political activity and in any election to parliament or any local authority in Bangladesh or elsewhere.

15

annual report 2014

Corporate
Profile
Background

Subsidiaries

Mercantile Bank Limited incorporated as a public limited


company on May 20, 1999. Subsequently, it commenced
business on June 02, 1999 with a vision for being finest
corporate citizen. MBL enlisted in Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE) on
February 16, 2004 and February 26, 2004 respectively.
MBL is the output of some visionary entrepreneurs
dream of contributing directly to the economy by catering
various banking needs to all segments of people living
home and abroad.

MBL has 2 (Two) subsidiaries namely Mercantile Bank


Securities Ltd. (MBSL) and Mercantile Exchange House
(UK) Limited. MBSL formed on 27 June 2010 to deal with
stock dealing and broking. MBSL started its commercial
operation on September 14, 2011 through obtaining stock
dealer and broker license from concerned authorities.

Principal Activities
MBL has been able to establish itself as a leading third
generation private commercial bank by dint of its prudent
policy guidelines coupled with proper execution, wider
range of banking products and excellent customer
services. The core activities of the Bank are to provide
all kinds of commercial banking services including
deposits mobilization, providing loans, discounting bills,
foreign exchange business, off-shore banking, treasury
function, card business and mobile banking. MBL caters
card services to its customers by VISA dual prepaid card,
VISA Dual Hajj Card, Credit Card and Debit card, and
International/Dual cards with various up-to-date facilities.
MBL is continuously expanding its ATM network and inking
contact with the other banks with a view to making its
card service more attractive and convenient to all. Except
these, MBL is also providing other services through its 2
(two) subsidiary companies.

annual report 2014

16

Mercantile Exchange House (UK) Limited, another


subsidiary company of MBL incorporated as private
limited company on December 01, 2010. It commenced
its business operation on December 06, 2011. Currently,
it is operating with one branch in London with a view to
providing faster, easier and safer remittance services to
the Bangladeshi expatriate living and working in UK.
Network
MBL has broad network coverage across the country.
It has 100 (Hundred) branches including 5 (Five) SME/
Krishi branches as on December 31, 2014. The Bank
has 2 (Two) Off-shore Banking Units (OBU) operating
at Gulshan and Chittagong EPZ areas. MBL has 127
ATM booths and 20 CDMs (Cash Deposits Machine) as
on December 2014 covering important locations across
the country. Mercantile Bank Securities Limited (MBSL),
a subsidiary company of MBL dealing with stock and
broking has 7 (seven) branches across the country.
Mercantile Exchange House (UK) Limited, another fully
owned subsidiary company of MBL is facilitating inflow of
remittance with 1 (one) branch in London.

Number of Employees

1,962

Number of Braches

100

Number of ATMs

127

Number of Credit Cards

Financial Institution

168,474.13
02

General Public
Total

MBL is maintaining strong capital adequacy ratio as per


new risk based capital adequacy framework i.e. Basel II.
Capital adequacy ratio of the Bank remained far above
compared to minimum requirement as on December 31,
2014. The Bank has taken numerous initiatives including
issuance of bonus shares, right share, retention of profit,
corporate clients credit rating etc. in a bid to attain strong
capital adequacy ratio. To further raise the capital fund and
therefore capital adequacy ratio MBL issued subordinated
bond worth BDT 3,000.00 million in the year 2014.
Capital Adequacy Minimum Capital
Ratio (CAR)
Requirement (MCR)

Solo

12.95%

10%

Consolidate

12.96%

10%

Shareholding Composition
Total 739,156,701 ordinary shares of the Bank were
outstanding as on December 31, 2014. Share holding
position as on same date is as under:

% of total
shares

291,182,043

39.39%

49,676,957

6.72%

Foreign

Capital Base

December
2014

Number of Shares

Government

71,800

Number of Subsidiaries

Ownership

Sponsors/Directors

5,017

Number of Debit & Prepaid Cards


Total Assets (BDT in Million)

Composition

398,297,701

53.89%

739,156,701

100.00%

Credit Rating
MBL has strong and stable credit rating over the last couple
of years. Credit Rating Information and Services Limited
(CRISL) has reaffirmed the long term rating of MBL to AA and short term rating to ST-2 based on its financial up to
December 31, 2013 and other qualitative and quantitative
information up to the date of rating. CRISL also placed the
Bank with Stable Outlook.
Rating

Basis of
Information

Date of
Rating

2012

18 June, 2013

AA-

ST-2

CRISL

2013

06 May, 2014

AA-

ST-2

CRISL

Long
Term

Rating
Short Company
Term

* Rating based on December 31, 2014 is under process

17

annual report 2014

MBL
Milestones
May 20, 1999

November 24, 2008

June 02, 1999

June 06, 2009

October 29, 2000

October 22, 2009

July 03, 2002

December 30, 2010

June 30, 2003

March 20, 2011

October 21-22, 2003

September 14, 2011

December 24, 2003

December 06, 2011

Incorporation of the Bank


Commencement of Business
Opening of 10th Branch

Mercantile Bank Brokerage House Operation


Opening of 45th Branch

Opening of 15 Branch

Opening of 65th Branch

th

Publication of Prospectus for IPO


Subscription for Shares

Commencement Operation of Off-shore Banking Unit


Separate Operation of Mercantile Bank Securities Limited (MBSL)

Opening of 20th Branch

Opening of Mercantile Exchange House (UK) Limited

February 16, 2004

Listed in Dhaka Stock Exchange

February 26, 2004

Listed in Chittagong Stock Exchange

December 29, 2004

December 29, 2011


Opening of 75th Branch

September 20, 2012

Opening of Mercantile Exchange House (UK) Limited, London Branch

December 27, 2012

Opening of 25th Branch

Opening of 86th Branch

December 05, 2006

December 29, 2013

Opening of 30th Branch

Opening of 91th Branch

December 17, 2007

December 29, 2014

Opening of 40th Branch

annual report 2014

Opening of 42nd Branch

Opening of 100th Branch

18

Sponsors
of the Bank
whose dreams, aspirations and efforts came into reality.

Md. Abdul Jalil


Founder Chairman
(Deceased)

Shamsur Rahman
(Deceased)

Md. Anwarul Haque

Dr. Toufique Rahman


Chowdhury

Golam Faruk Ahmed


(Deceased)

Alhaj S.M. Shakil Akhter

Engr. Mohd.
Monsuruzzaman

Md. Mizanur Rahman


Chowdhury

Alhaj Tara Meah Khan


(Deceased)

Subrota Narayan Roy

19

annual report 2014

M. S. Ahsan

Jamshed R Khan
(Deceased)

Bilkis Begum

Alhaj Akram Hossain


(Humayun)

Md. Tabibul Huq


(Deceased)

A. S. M. Feroz Alam

M. Amanullah

Md. Abdul Hannan

annual report 2014

20

Mohd. Selim

Jalaluddin Ahmed Yeamin

Feroza Begum

S. M. Shafiqul Islam
(Mamun)

A.K.M. Shaheed Reza

Nargis Anwar

Md. Nasiruddin
Choudhury

Morshed Alam, M.P

Morzina Khan Monzu

Md. Shahabuddin Alam

21

annual report 2014

Board of
Directors
Chairman
Vice Chairman

Morshed Alam, M.P


A. S. M. Feroz Alam
M. S. Ahsan

Alhaj Akram Hossain (Humayun)

Dr. Mahmood Osman Imam, MBA, FCMA


Md. Shahabuddin Alam
Md. Anwarul Haque
Director

M. Amanullah

Md. Abdul Hannan


Mohd. Selim

A.K.M. Shaheed Reza

Alhaj Mosharref Hossain


Dr. Md. Rahmat Ullah
Managing Director & CEO

annual report 2014

22

M. Ehsanul Haque

www.mblbd.com
www.mblbd.com

Directors
Profiles
Mr. Morshed Alam is one of the most eminent business icons of
present time. With perception and technical expertise, he has
become a leading entrepreneur of Bangladesh. He is a member
of parliament of the 10th National Parliament representing the
constituency of 269, Noakhali-2. He was declared CIP for the
Fiscal Year of 1996-1997, 1999-2000, 2008-2009, & 2010-2011
(Export) by the Ministry of Commerce, Government of Peoples
Republic of Bangladesh for his remarkable contribution in
business arena. He was also awarded National Export Trophy
for Export for the Fiscal Year of 1997-1998 (Silver), 1999-2000
(Gold), 2000-2001 (Gold), 2006-2007 (Gold), 2009-2010 (Silver
& Bronze for two different business units) and 2010-2011
(Silver & Bronze for two different business units).
Morshed Alam, M.P
Chairman

He is the founder of Bengal Group of Industries which consists


of Bengal Windsor Thermoplastics Limited, National Television
(RTV) Limited, Bengal Plastics Limited, Bengal Poly and Paper
Sack Limited, Bengal Adhesive & Chemical Products Limited,
Poly Cord Limited, Bengal Polymer Wares Limited, Bengal
Plastic Pipes Limited, Romania Food and Beverage Limited,
Power Utility Bangladesh Limited, Bengal Concept and
Holdings Limited, Bengal Corrugated Carton Industries Limited,
Bengal Overseas Corporation Limited, Hamilton Metal
Corporation Limited, Bengal Feed & Fisheries Limited,
Designer Jeans Limited, and Member of Board of Trustee of
Peoples University of Bangladesh and Chairman of National
Life Insurance Company Limited and Director of Mercantile
Bank Securities Limited. Being a philanthropist, he founded
Morshed Alam High School at Nateswar Noakhali and is a life
donor of Kazi Nagar Madrasha and Bazra High School at
Noakhali and Motijheel Ideal High School, Dhaka.

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annual report 2014

Directors Profiles
Directors' Profiles

Mr. A. S. M. Feroz Alam was born on December 01, 1960 in a respectable


Muslim family of Patuakhali. He is a renowned businessman of the country.
He has traveled about 65 countries for business purposes. He is the
Chairman of Bengal Trading Limited (Japan). He is a Sponsor
Shareholder of Premier Leasing & Finance Ltd. He is the Director of
National Television Ltd. (RTV). He is also Founder of Saheda Gafur
Ibrahim General Hospital, Kaliya, Patuakhali.

A.S. M. Feroz Alam


Vice Chairman

Md. Shahidul Ahsan has established himself as an icon in the business


sector of the country with global reputation of being reliable in various
business sectors and the proud Chairman of Ahsan Group. He is also the
Chairman of AG Limited, AG Green Property Developments Limited, AG
Property Development Limited, AG Agro Industries Limited, Regent
Holdings Development Limited, AG High-Tech Limited, AG Ceramics
Industries Limited, RNS Corporation, Friends Traders, Raima Fashion
Limited, AG Fashion & Textile Limited, AG Ship Breaking Industries. He is
the Sponsor Director of Mercantile Bank Limited, Mercantile Bank
Securities Limited and National Credit Ratings Limited. In different
occasions he held high level position in the Board of Directors of the Bank
& NCR. He had been the Vice Chairman and also the Chairman of
Executive Committee of the bank in several times. At present he is an
honorable member of the Executive Committee, Mercantile Bank Ltd. He is
the Chairman of the Trustee Board of AG Foundation. Mr. Ahsan is also
actively associated with many other Educational and Social Institutions as
a donor founder. Mr. Ahsans contribution towards helping the poor and
other needy groups with economy and society and the country at large is
remarkable. Several industry presence ensures mitigation of
unemployment and positive contribution in GDP and also he pays a very
high amount of income tax to government exchequer.

M. S. Ahsan

Vice Chairman

Alhaj Akram Hossain (Humayun) was born on July 1, 1952 in a


respectable Muslim family of Dagonbhuiyan, Feni. He is a commerce
graduate and one of the known Freedom Fighters of Bangladesh
Liberation War. He is the Founder President of Bangladesh Paper
Importers Association and also Founder President of Greater Noakhali
Paper Merchant Samobay Somittee. Apart from the aforementioned
affiliations, he is also General Body Member of FBCCI, Bangladesh,
Member of Trustee Board of Feni University and Founder Member of All
Community Club, Dhaka.

Alhaj Akram Hossain (Humayun)


Chairman, Executive Committee

annual report 2014

24

www.mblbd.com
www.mblbd.com

Mr. Mahmood Osman Imam is the Professor of Finance and served as


Chairman, Department of Finance, University of Dhaka. He is also the
Executive Director, Center for Corporate Governance and Finance Studies,
University of Dhaka and the Editor, Journal of Institute of Bankers,
Bangladesh. He served also as the Director, Bureau of Business Research,
Faculty of Business Studies, University of Dhaka and as Provost,
Bangabandhu Sheikh Mujibur Rahman Hall.

Dr. Mahmood Osman Imam, MBA, FCMA


Chairman, Audit Committee

Md. Shahabuddin Alam

Chairman, Risk Management Committee

Md. Anwarul Haque

He is an Independent Director and Chairman, Audit Committee, Mercantile


Bank Ltd. He is also the Independent Director and Chairman, Audit
Committee, ICB AMCL and founder director, Bangladesh Institute of Capital
Market. Dr. Imam is a financial analyst and capital market specialist. He has
over 27 years of working experiences in this field. He did MBA (major in
Finance) and Ph.D in Applied Economics at K.U. Leuven, Belgium. He is a
Fellow of Cost & Management Accountant too. In his long tenure of career,
he worked as national and international consultants with a number of both
national and international organizations, viz., World Bank; ADB; UNDP;
Bilance, Netherlands; Pohl Consulting Ltd., Germany; Dhaka Stock
Exchange (DSE); Ontario Centre for Environmental Technology
Advancement (OCETA); Dhaka Chamber of Commerce and Industry
(DCCI) and CIPE, USA, ERRA PROJECT. He also worked as Professor of
Finance, School of Business, Independent University Bangladesh. He is a
prolific researcher and has been awarded twice as best paper author by the
Faculty of Business Studies, University of Dhaka. To his credit, there are
also two published research monographs.

Mr. Md. Shahabuddin Alam was born in a respectable Muslim family of


Chittagong. He completed his post graduation from Chittagong University
with remarkable position. Then he started his business career in the year
1988. During the course of time, he established 20 units in different sectors
such as edible oil refinery, mills/factories that are producing condensed/full
cream milk powder, UHT milk, atta, maida, suji, salt, mineral water, tea,
papers etc. through Samannaz Dairy and Food Products Ltd., Laila
Vanaspati Product Ltd., Sharija Oil Refinery Ltd., Samannaz Condensed
Milk Ltd., S.A. Oil Refinary Ltd., Samannaz Super Oil Ltd., Kamal Vegetables
Oil Ltd., S.A Beverage Ltd., S.A Salt Industries Ltd., Laila Food Products Ltd.,
S.A. Pulp & Paper Products Ltd., South Eastern Paper Mills Ltd., and
infrastructure projects like tank terminal storage facility for imported edible
crude oil, furnace oil etc, namely S. A. Tank Terminal Ltd., high rise
commercial building in posh areas of Dhaka & Chittagong by Dreamland
Resorts Ltd., under S.A. Group of Industries, a renowned Group of the
country with corporate head office at Finlay House, Agrabad, Chittagong. Mr.
Md. Shahabuddin Alam represents S.A Group of Industries as its Chairman.
About 12,000 employees- professional, highly skilled, skilled & non skilled
are directly and indirectly working for the Group. He made business tours in
different countries of the world. He is engaged with different social
organizations and his contributions to the society are noteworthy.

Mr. Md. Anwarul Haque was born on January 03, 1951 in a respected
Muslim family in Dhaka. He is a renowned businessman of the country. He
obtained the B.Sc. Engg (Civil) Degree and engaged himself in business
since last 38 years in different sectors like Construction, Real Estate, Export
& Import and Trading. His business affiliation is versatile and diversified. He
is the Managing Director of Living Plus Ltd. He is a Sponsor Shareholder of
Premier Leasing & Finance Ltd., Director of Holiday Travels Ltd, Premier
Leasing Securities Ltd. and Chairman of Mercantile Bank Securities Ltd. He
is also Director of Securities Broking & Management Ltd. He is a
Shareholder & Ex-Chairman of Global Insurance Ltd. His association with
the abovementioned well-reputed organizations makes him a forward
looking and progressive businessman who has already reached an enviable
height. Furthermore, he has deep affinity and also attachment with various
socio-cultural activities like Gulshan Club Ltd., Dhanmondi Club Ltd., and
Uttara Model Club Ltd.

Director

25

annual report 2014

Directors Profiles
Directors' Profiles

Mr. M. Amanullah was born in a respectable Muslim family of


businessmen in Dhaka. He graduated from a renowned university of
Dhaka. He is one of the distinguished industrialists and entrepreneurs in
Bangladesh. He is the Chairman of Aman Group of Companies and also
holds the Chairman position of all the companies under the umbrella of
Aman Group of Companies Limited. His business acumen has lead to the
successful launch of various, diversified businesses under the umbrella of
Aman Group of Companies.
In the textile sector Mr. Aman set up a manufacturing unit in the name of
Aman Spinning Mills Ltd., which manufactures 100% export oriented
carded yarn from raw cotton. Mr. Aman introduced Arena HRI Ltd., which
is an India-Bangladesh joint venture in the field of cosmetic industry and is
one of the leading manufacturer of Hair Care products in Bangladesh. Mr.
Aman also introduced Arena Industries Ltd., engaged in industrial contract
packaging, Mousumi Enterprises Ltd. and Arena Consumer Products Ltd.,
for distribution and manufacture of consumer products. Mr. Aman also
introduced Arena Securities Ltd. in the financial sector which is a member
of Dhaka Stock Exchange and registered as a corporate house for
operation in the capital market of the country. He is one of the Directors of
Amader Shomoy, one of top circulating daily print media in Bangladesh.
He is one of the founder, Director and Ex-Chairman & present Advisor of
Global Insurance Ltd., a publicly listed general insurance company.

M. Amanullah
Director

Mr. Aman is also recognized for his contribution to the community and to
the nation in the field of education. He is the Chairman of the Board of
Trustee of Presidency University, Dhaka. For the contribution to the
society, as a philanthropist Mr. Amanullah established Aman Group
Foundation as his initiative towards social responsibilities. For this act, he
was honored several times by the Govt. and other organizations. He was
awarded the Sarojini Naidu Gold Medal Award in 2000, C.R. Das Gold
Medal Award in 2002 and the Atish Dipankar Scholar Congress Award in
2004 for his extraordinary contribution in various sectors of Bangladesh.
He was also selected CIP for the year 2012 for his significant contribution
to the countrys export trade sector.

Mr. Md. Abdul Hannan was born on 27th July, 1962 in a respectable
Muslim family of Faridgonj, Chandpur. He is one of the leading
businessmen of the country, especially in export of readymade
garments. He is Chairman & Managing Director of Dabstar Associates
Limited, Reu Fashion Limited, ZHAS Garments Limited, M.H. Trading
and Murad Apparels Limited. He is also Director of Eastern University of
Bangladesh and Pan Pacific Hospital. His contributions towards the
society are quite remarkable.

Md. Abdul Hannan


Director

annual report 2014

26

www.mblbd.com
www.mblbd.com

Mohd. Selim
Director

Mr. Mohd. Selim is a renowned businessman of the country. He was born in


a respectable Muslim family in Shariatpur District. He has specialized
himself in trading business. After graduation he devoted himself fully to
business and he is the proprietor of Sumon Cloth Store, a large cloth store
in Ramna Bhaban, Dhaka and also proprietor of Central Plaza at Eastern
Plaza. He is the Chairman of Synthia Securities Limited (Member of Dhaka
Stock Exchange Limited). He is the Shareholder of Global Insurance
Limited. He has also made notable contribution in socio-cultural activities.
He is life member of Shariatpur Zilla-Kalyan Samity, life member of Greater
Faridpur Kalyan Samity, trustee member of Shariatpur Shikhha Kalyan
Trust, Vice Chairman of Bangladesh Shop Owners Association and Donor
Member of Purba Madaripur College.

Mr. A.K.M. Shaheed Reza is a reputed businessman and entrepreneur of


the country. He has a diversified business portfolio and established himself
as a prominent business individual in the field of Textile and Apparel
industry. Apart from textile segment he is recognized well as a banker &
investor in the financial sector of the country. Also to broaden the horizon of
corporate arena he is in a process to adjoin Media business with a view to
bring positive changes.
His line of business includes Banking- Sponsor & Director of Mercantile
Bank Limited and Clothing - Chairman REZA GROUP, Financial service
such as Vice Chairman, National Credit Rating Ltd, and Publication & Media
as Director, The Daily Observer Limited, Owner, BANGLA RADIO FM 95.2.

A.K.M. Shaheed Reza


Director

He is also an elected Director of The Federation of Bangladesh Chambers


of Commerce & Industry (FBCCI). Recently, Ministry of Commerce, Govt. of
the Peoples Republic of Bangladesh awarded Mr. Reza as CIP. He has
beforehand served as Chairman of the Executive and Audit Committee of
the Board of Directors of Mercantile Bank Limited. Earlier he was the Vice
Chairman of Mercantile Bank Securities Ltd. He was also the Chairman of
Global Insurance Limited.
Mr. A.K.M. Shaheed Reza is moreover associated with many other
educational and social institutions. He is the Chairman of the Managing
Committee of Dholia High School, Bagerhat High School and Thakurhat
Govt. Primary School, Feni. He is also the founder of Progati Balika Bidda
Niketon & Nurul Rownak Diabetics Center, Rajnogor, Feni (An outdoor clinic
for the diabetic patients managed by Feni Diabetic Association). He is a life
member of Diabetic Association and Heart Foundation, Feni and Trustee of
Feni University.
He has strong trade development acumen due to 25 years of experience in
diverse business ground. As a business professional with remarkable
success in corporate business management having profound knowledge on
Apparel & Textile, he is willing to setup a new business - a step ahead in
leading next generation of Banking and financial framework with proficient
grip on Global & Local financial structures and changes by consisting globally
acclaimed banking concepts to build up benchmark & best service to forward
the nation and know-how on leading strategic initiatives in the field of
Corporate Governance. In his success story he has the outstanding feat of
fostering export oriented industries within a short time (from 1997) under
Reza Group which now comprises of seven (7) modern industrial units.
Mr. A.K.M. Shaheed Reza obtained his Post Graduate Degree in Commerce
(Management). Before entering into business, he started his career as
banker in National Bank Limited in the year 1986. He left the service in 1993
to utilize the experience he gathered to become one of the successful
businessmen of the country.

27

annual report 2014

DirectorsProfiles
Profiles
Directors'

Alhaj Mosharref Hossain was born on January 07, 1940 in a respectable


Muslim family at Chhagalnaya, Feni. He had his schooling in the local
educational institutions.
Alhaj Mosharref Hossain is one of the leading businessmen of the country,
especially in trading. He is the Proprietor of M. H. Traders, a renowned
business house engaged in paper trading. Apart from being a
businessman of repute, he is also a prominent personality in Bangladesh.
He is also a Director of Toka Ink (BD) Ltd. and Managing Director of Bulbul
Printers. He is the Founder and Director of Hossainya Hefje Quran
Madrasa & Atimkhana, Chhagalnaya, Feni.

Alhaj Mosharref Hossain


Director

Dr. Md. Rahmat Ullah is a Professor in the Department of Law, and Provost,
Kabi Jashim Uddin Hall, University of Dhaka. He is a Senate member,
University of Dhaka. He holds the position of Executive Director of
Empowerment through Law of the Common People (ELCOP) a human rights
education, research and training centre. Other than these, he is an Advisor to
the Department of Law, City University, Dhaka; Governing body member MH
Somorita Medical College and Hospital, Dhaka; Governing body member,
Alhaz Mockbul Hossain University College, Dhaka; Member, Interuniversity
Sports Council and an Independent Director, Mercantile Bank Ltd.

Dr. Md. Rahmat Ullah


Independent Director

He completed LL.M from Baku State University, Azerbaijan and Ph.D from
Kiev State University, Ukraine. During his professional career he was a
syndicate member to the University of Dhaka and worked as adjunct faculty
member to several private universities. He participated in professional
workshops, seminars and trainings in India, Nepal, China, Belgium,
Netherland, Switzerland and Iran. His field of interest is human rights and
commercial law.
He is a profile researcher in the field of human rights and legal issues. He
worked as national and international consultant under different projects on
human rights and legal issues with UNHCR, UNDP, HRDC, MJF and NHRC.
He has published more than 22 research articles on legal issues and author
of 1 book and co-author of 4 books. He is also Executive Editor of 5 research
Books. He is a committed human rights activist and desires to work for the
poor for their better life.

Mr. M. Ehsanul Haque is a senior banker with over thirty five years of
hands-on experience in diverse fields of Commercial and Micro Small &
Medium Enterprise (MSME) Banking, Finance and Financial consultancy
with Multilateral Agencies. During his career Mr. Haque held senior
positions at different local banks, foreign banks and financial institutions.
He was Managing Director of Prime Bank, IDCOL, BRAC Bank and BRAC
Afghanistan Bank. He implemented Global Best Practices in banking in
Bangladesh, India, Vietnam and Afghanistan. After completion of his
masters in Economics from Jahangirnagar University, Mr. Haque started
his banking career in Grindlays Bank Plc (now Standard Chartered Bank)
as a Management Trainee Officer and was there for 18 years rising up to
Chief Manager.

M. Ehsanul Haque

Managing Director & CEO

annual report 2014

28

He has proven expertise in banking and financial inclusion products,


setting up new organizations, restructuring, risk management, corporate
governance etc. with ability to address compliant and other issues
important for sustainable organizational growth.

We mourn

Sad demise of our beloved once

Md. Abdul Jalil

Founder Chairman
January 21, 1941 - March 6, 2013

Md. Tabibul Huq

August 19, 1952 - June 23, 2014

Shamsur Rahman

January 25, 1933 - January 02, 2012

Golam Faruk Ahmed

April 7, 1953 - January 26, 2013

Alhaj Tara Meah Khan

August 30, 1931 - March 16, 2010

Dr. Matiur Rahman

January 11, 1946 - September 13, 2012

Jamshed R Khan

July 10, 1943 - August 29, 2008

29

annual report 2014

Corporate
Structure
Board of Directors

Risk Management Committee

Morshed Alam, M.P, Chairman

Md. Shahabuddin Alam, Chairman

A. S. M. Feroz Alam, Vice Chairman

A. S. M. Feroz Alam

M. S. Ahsan, Vice Chairman

Mohd. Selim

Alhaj Akram Hossain (Humayun)

A.K.M. Shaheed Reza

Dr. Mahmood Osman Imam, MBA, FCMA, Independent Director

Alhaj Mosharref Hossain

Md. Shahabuddin Alam


Md. Anwarul Haque

Managing Director & CEO

M. Amanullah

M. Ehsanul Haque

Md. Abdul Hannan


Mohd. Selim

Chief Risk Officer (CRO)

A.K.M. Shaheed Reza

Md. Abdul Jalil Chowdhury

Alhaj Mosharref Hossain


Dr. Md. Rahmat Ullah, Independent Director

Chief Financial Officer (CFO)

M. Ehsanul Haque

Monindra Kumar Nath

Executive Committee

Company Secretary (Acting)

Alhaj Akram Hossain (Humayun), Chairman

Saiful Alam, ACS

A. S. M. Feroz Alam
M. S. Ahsan

Auditors

M. Amanullah

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Md. Anwarul Haque


Md. Abdul Hannan

A. Qasem & Co.

A.K.M. Shaheed Reza

Chartered Accountants

Audit Committee

Tax Advisor

Dr. Mahmood Osman Imam, MBA, FCMA, Chairman

K. M. Hasan & Co.


Chartered Accountants

Md. Shahabuddin Alam


Mohd. Selim

annual report 2014

30

31

Board
Division
CSR Desk
Share
Department

Company
Secretariat

AMD & CFO

Financial Administration
Division
General Service
Division
Information Technology
Division
IT Business Team
Treasury Division
(Font Ofce)
Anti Money
Laundering Unit

AMD & CRO

Credit Risk
Management Division
Risk Management
Division
Treasury Division
(Back Ofce)
Special Asset
Management
Division

Executive
Committee

Consumer and
Retail Banking
Division
Branches Division
International
Division
Recovery
(Corporate, SME,
Cards, Consumer
& Retail)

DMD 1

DMD 3

Corporate Banking
Division
Human Resources
Division
Internal Control &
Compliance Division
Mobile Banking
Division
MBL Training
Institute

Risk Management
Committee

Card Division
Institutional
Liability Marketing
Department
Agriculture Credit
Department
Corporate Affairs
Non-Resident
Business Division
Green Banking

Audit
Committee

Garments Cell
(Supervision & Monitoring)
Credit Administration,
Monitoring, Recovery
& Compliance Division
SME Financing
Division
Research &
Planning Division
General Banking
Division

DMD 2

Managing Director & CEO

Board of Directors

Board Audit
Division

www.mblbd.com

MBL
Organogram

annual report 2014

Management
Team

M. Ehsanul Haque
Managing Director & CEO

Md. Abdul Jalil Chowdhury

Monindra Kumar Nath

Additional Managing Director & CRO

Additional Managing Director & CFO

Md. Quamrul Islam Chowdhury

Mohammad Masoom

Mati-ul-Hasan

Mohammad Ismail

Deputy Managing Director

Deputy Managing Director

Deputy Managing Director

Deputy Managing Director

annual report 2014

32

Management
Committee (MANCOM)

M. Ehsanul Haque

Managing Director & CEO

Chairman

Md. Abdul Jalil Chowdhury

Additional Managing Director & CRO

Member

Monindra Kumar Nath

Additional Managing Director & CFO

Member

Md. Quamrul Islam Chowdhury

Deputy Managing Director

Member

Mohammad Masoom

Deputy Managing Director

Member

Mati-ul-Hasan

Deputy Managing Director

Member

Mohammad Ismail

Deputy Managing Director

Member

Syed Ahmadul Karim

SEVP & Head of Board Audit Division

Md. Mahmood Alam Chowdhury

SEVP & Head of HRD

Member

Mohammad Iqbal Rezwan

EVP & Head of Risk Management Division

Member

Md. Enayet Ullah

VP & Head of ICCD

Member

Member Secretary

33

annual report 2014

Head Office &


Branch Network
Head Office

Zonal Office

Training Institute

61, Dilkusha Commercial Area


Dhaka-1000, Bangladesh
PABX : 9559333, 9553892
Fax
: 88-02-9561213
Swift
: MBLBBDDH
E-mail : it@mblbd.com
Website: www.mblbd.com

Chittagong Zone
Mishkat Arcade (Level-1)
21/1, Agrabad C/A, Chittagong
Phone: 031-2529445, 716421
723181, 721772
Fax: 88-031-2529445

Swadesh Tower
41/6 Purana Paltan
Dhaka-1000
Phone: 7174016
Fax: 88-02-9571096
Javed Tariq, Principal

Divisions at Head Office


Credit Administration, Monitoring
Recovery & Compliance Division/
IT Business Team
Nanda Dulal Bhattacharjee, SEVP

Board Division/Share Department/


CSR Desk

Information Technology Division


A.K.M. Atiqur Rahman, EVP

Marketing Division
Purbani Roy, VP

Research & Planning Division


Md. Golam Kibria, FCA, EVP

Internal Control & Compliance Division


Md. Enayet Ullah, VP

Human Resources Division


Md. Mahmood Alam Chowdhury, SEVP

Risk Management Division


Mohammad Iqbal Rezwan, EVP

Treasury Division
Jahangir Javed, VP

Corporate Banking Division


M. Zakir Hossain, SEVP

General Banking Division


Shah Syed Abdul Bari, EVP

Agriculture Credit Department


Liaquat Fazlur Rashid, VP

International Division
Shamim Ahmed, SEVP

Card, Consumer &


Retail Banking Division
Md. Sayeduzzaman Chowdhury, SVP

Financial Administration Division


Tapash Chandra Paul, PhD, FVP

SME Financing Division


Dr. Md. Nurul Islam, SEVP

General Services Division


A.K.M. Minhajul Islam, SVP

Mobile Banking Division


Md. Rafiqul Hoque Bhuiyan, SEVP

Branches Division
K. M. Abdur Razzaque, SVP

Credit Resk Management Division


Mohammad Ismail, DMD
Board Audit Division
Syed Ahmadul Karim, SEVP
Special Asset Management
Division
Ahmedul Haque, SEVP

annual report 2014

34

Saiful Alam, ACS, VP

Corporate Affairs (Media Relations)


Muhammad Lutful Haider, FVP
NRB Division
Md. Mahfuzur Rahman, FVP

Head of Divisions

35

annual report 2014

Branch Network & Head of Branches


Main Branch

Rajshahi Branch

61 Dilkusha C/A, Motijheel


Dhaka-1000
Phone : 02-9571618, 9559333
Mobile : 01714-162042 (HOB)
Fax
: 88-02-9554410, 9551497

ZODIAC Plaza, Shaheb Bazar


(Zero Point), Rajshahi
Phone : 0721-771214, 0721-772261
Mobile : 01711-419079 (HOB)
Fax : 88-0721-771215

Md. Robiul Islam


SEVP & HOB

Dhanmondi Branch

Naogaon Branch

Sima Blossom, House- 390 (Old)


03 (New) Road- 27 (Old), 16 (New)
Dhanmondi R/A, Dhaka -1209
Phone : 02-8124234, 9130500,
Mobile : 01755-500192 (HOB)
Abdullah Md. Zaki Hasan
Fax : 88-02-8126768
SEVP & HOB

J.R. Super Market, Old Bus Stand


Main Road, Chakdev, Naogaon
Phone : 0741-63331, 69181, 69182
Mobile : 01711-419057
Fax : 88-0741-63230

Kawran Bazar Branch

Sylhet Branch

Dhaka Trade Centre


99 Kazi Nazrul Islam Avenue
Kawran Bazar C/A, Dhaka- 1215
Phone : 02-8189613, 8153414, 8141910
Mobile : 01713-044832 (HOB)
Fax : 88-02-8126882

Raisot Tower (1st & 2nd Floor)


Laldighirpar, Sylhet
Phone : 0821-723650, 723651
Mobile : 01711-922810
Fax : 88-0821-723722

Md. Abul Bashar


SVP & HOB

Agrabad Branch

Board Bazar Branch

Mishkat Arcade (Level -1)


21/1 Agrabad C/A, Chittagong
Phone : 031-716459, 716421, 723181
Mobile : 01714-067805 (HOB)
Fax : 88-031-716459

Board Bazar, Gazipur


Phone : 02-9261604
Mobile : 01713-044846 (HOB)
Fax
: 88-02-9291660
Md. Mahibbul Karim
EVP & HOB

Samabay Super Market


Joypara Bazar, Dohar, Dhaka
Phone : 02-7768163
Mobile : 01711-535949 (HOB)
Fax
: 88-02-7768193

25/1 Zinda Bahar (1st Lane)


Nayabazar, Dhaka-1100
Phone : 02-7393827, 7393655
Mobile : 01711-535955 (HOB)
Fax : 88-02-7393655

Banani Branch

Khatunganj Branch

Ahsanullah Tower

599 Ramjoy Mohajan Lane


Khatunganj, Chittagong
Phone : 031-626101, 626102
Mobile : 01711-723051 (HOB)
Fax : 88-031-635514

annual report 2014

F. M. Nawaz Ali
EVP & HOB

36

Imam Kabir Chowdhury


EVP & HOB

VP & HOB

Nayabazar Branch

56 Kamal Ataturk Avenue


Banani C/A, Dhaka-1213
Phone : 9821639-40
Mobile : 01711-535954 (HOB)
Fax : 88-02-9821046

A S M Zakir Hossain
SVP & HOB

Md. Abul Bashar Khan

Joypara Branch

Syed Ezazur Rahman


FVP & HOB

Md. Abdul Mannan,


FVP & HOB

Md. Faruque Ahmed


SVP & HOB

Jashim Uddin
VP & HOB

www.mblbd.com

Branch Network & Head of Branches


Mohakhali Branch

Motijheel Branch

Green Delta Aims Tower


51-52 Mohakhali C/ A, Dhaka-1212
Phone : 02-9863215, 9891520, 9888346
Mobile : 01711-535950 (HOB)
Fax : 88-02-9895797

Malek Mansion
128 Motijheel C/A, Dhaka-1000
Phone : 02-9561178, 9586944-5
Mobile : 01730-320284 (HOB)
Fax : 88-02-9586946

Md. Abdul Halim


SVP & HOB

Mirpur Branch

Madam Bibir Hat Branch

Razia Mansion, 184 Senpara Parbata


Begum Rokeya Sarani
Mirpur- 10, Dhaka- 1216
Phone : 02-9014582, 9008852, 9015661
Mobile : 01730-318186 (HOB)
Fax : 88-02-8034577

Bhatiary, Shitakund, Chittagong


Phone : 031-2780465
Mobile : 01730-076127 (HOB)
Fax : 88-031- 2780686
M. Amirul Islam
SVP & HOB

Farook Iqbal
SVP & HOB

Ashulia Branch

Khulna Branch

Bhuiyan Commercial Complex


Jamgora Chowrasta
Ashulia, Savar, Dhaka
Phone : 02-7788758, 7790491
Mobile : 01711-535948 (HOB)
Fax : 88-02-7790708

Rupsha Plaza

Uttara Branch
House- 10/A, Road- 7/D, Sector- 9
Uttara Model Town
Uttara, Dhaka -1230
Phone : 02-8931729, 8955879
8958177, 8931725
Mobile : 01711-535956 (HOB)
Fax : 88-02-8955881

A B M Eradul Islam
EVP & HOB

A.K.M. Hassanuzzaman
FVP & HOB

73 KDA Avenue C/A, Khulna


Phone : 041-813561-2
Mobile : 01713-400641 (HOB)
Fax : 88-041-813563

Altamash Al-Masood Jamali


FVP & HOB

Rangpur Branch

Farid Ahmed
VP & HOB

Press Club Complex


Biponi Bitan
Station Road, Rangpur
Phone : 0521-51110, 51323, 51299
Mobile : 01713-203586 (HOB)
Fax : 88-0521-51110

Jubilee Road Branch

Satmasjid Road Branch

Kamal Chamber (2nd Floor)


61 Jubilee Road
Kotwali, Chittagong
Phone : 031-621018, 624819
Mobile : 01711-724874 (HOB)
Fax : 88-031-626072

House- 735 (Old), 82/A (New)


Road- 8/A (New), Satmasjid Road
Dhanmondi R/A, Dhaka-1209
Phone : 02-8114672, 9141148
Mobile : 01713-039792 (HOB)
Fax : 88-02-9139183

Anwar Hossain
SVP & HOB

Elephant Road Branch

Jhilongja Branch

Osman Plaza
75 Elephant Road, Dhaka-1205
Phone : 02-9614542, 9677364
Mobile : 01713-083617 (HOB)
Fax : 88-02-9669458

Hotel Sea Palace Ltd.


Kalatoli Road, Coxs Bazar
Phone : 0341-62234
Mobile : 01713-103662 (HOB)
Fax : 88-0341-63734

Md. Fakhruzzaman Chowdhury


VP & HOB

37

Md. Abdul Matin


FVP & HOB

Md. Abdul Awal


SVP & HOB

Paritosh Kumar Dhar


AVP & HOB

annual report 2014

Branch Network & Head of Branches


O R Nizam Road Branch

Feni Branch

191 CDA Avenue


Commercial View Complex
East Nasirabad, Chittagong
Phone : 031-657512, 2550876
Mobile : 01713-103663 (HOB)
Fax : 88-031-2550877

105 S. S. Kaiser Road


Feni Sadar, Feni
Phone : 0331-63558, 63559
Mobile : 01713-452994 (HOB)
Fax : 88-0331-63557

Debabrata Das
VP & HOB

Bogra Branch

Moulvibazar Branch

Barogola, Bogra Sadar Bogra


Phone : 051-69840
Mobile : 01713-044835 (HOB)
Fax : 88-051-69190

152/2 Court Road

A.H.M. Kawsarul Islam


FVP & HOB

Moulvibazar
Phone : 0861-62871, 62872
Mobile : 01713-068126
Fax : 88-0861-62873

Golam Moula
FVP & HOB

Bijoynagar Branch

Chowmuhani Branch
Samobay Bhaban
Karimpur Road Chowmuhani
Begumganj, Noakhali
Phone : 0321-52960
Mobile : 01713-036991 (HOB)
Fax : 88-0321-52966

Mojibul Hoque
AVP & HOB

Akram Centre , 3/3-C & 3/3-D


Purana Paltan (old)
212 S.S. Nazrul Islam Sarani (New)
Dhaka - 1000
Phone : 02-7117830, 7117834
Mobile : 01713-043157 (HOB)
Fax : 88-02-7117114

Konabari Branch

Moghbazar Branch

Motiur Rahman Plaza


Konabari Bazar
Konabari, Joydevpur, Gazipur
Phone : 02-9298484-5
Mobile : 01714-162045 (HOB)
Fax : 88-02-9298486

227 Outer Circular Road


Moghbazar, Ramna, Dhaka
Phone : 02-8333017, 8316279
Mobile : 01713-068194 (HOB)
01755-533142 (HOB)
Fax : 88-02-8333018

Md. Akram Hossain


AVP & HOB

Gulshan Branch

Sapahar Branch

Hosna Center, (1st floor)


106, Gulshan Avenue, Dhaka-1212
Phone : 8835276, 8835277
Mobile : 01713-068127 (HOB)
Fax : 88-02-8835614

Saha Plaza, Main Road


Sapahar, Naogaon
Phone : 07432-74081
Mobile : 01713-068096 (HOB)
Fax : 88-07243-74080

Shah Md. Sohel Khurshid


EVP & HOB

Hemayetpur Branch

Beanibazar Branch

Hatem Ali Complex


Singair Road Hemayetpur
Savar, Dhaka-1340
Phone : 02-7741532, 7741533
Mobile : 01713-452995 (HOB)
Fax : 88-02-7741531

Zaman Plaza
Beanibazar, Sylhet
Phone : 08223-56180
Mobile : 01713-384495
Fax : 88-08223-56181

annual report 2014

Mohammed Masudul Hasan


FVP & HOB

38

Md. Abu Sakin


VP& HOB

Md. Jamal Hossain


SVP & HOB

Md. Kamruzzaman
SVP & HOB

Md. Ruhul Amin Siddiqui


AVP & HOB

Md. Rezaul Hoque Chowdhury


AVP & HOB

www.mblbd.com

Branch Network & Head of Branches


Barisal Branch

Dagonbhuiyan Branch

141 Sadar Road


Barisal-8200
Phone : 0431-2176209
Mobile : 01713-384496
Fax : 88-0431-2176208

Mizan Tower
273 Basurhat Road
Dagonbhuiyan, Feni
Phone : 03323-79105
Mobile : 01730-328684 (HOB)
Fax : 88-03323-79106

Md. Humayun Kabir


FVP & HOB

Bhojeshwar Bazar Branch

Mohammed Mamunur Rashid


FAVP & HOB

Mazar Road Branch

Bhojeswar Bazar
Naria, Shariatpur
Mobile : 01755-530005
01713-384497 (HOB)
M. M. Rafikul Islam
AVP & HOB

Hazrat Shah Ali Girls School & College


Market Complex, Mazar Road
Mirpur-1, Dhaka-1216
Phone : 02-8060752, 8035529
Mobile : 01730-328681 (HOB)
Fax : 88-02-8035529

Comilla Branch

Dinajpur Branch

1042/945 Jhawtola
Comilla
Phone : 081-65275
Mobile : 01713-384498 (HOB)
Fax : 88-081-65276

Dinajpur Plaza, Goneshtola


Sadar Upazilla, Dinajpur
Phone : 0531-61217
Mobile : 01730-328682
Fax
: 88-0531-61218

M A Malek Patwary
VP & HOB

Green Road Branch

Jessore Branch

151/6 Green Road, Dhaka


Phone : 02-8157266, 9136809
9136822
Mobile : 01730-013453 (HOB)
Fax : 88-02-9114108

A. Ali Complex

Md. Moshaddeque Hossain


SVP & HOB

45 R. N. Road, Jessore
Phone : 0421-62933
Mobile : 01713-452667
Fax : 88-0421-65392

Pragati Sarani Branch

304 Sheikh Mujib Road


Chittagong
Phone : 031-2514236, 2524126-7
Mobile : 01730-013454 (HOB)
Fax
: 88-031-2514235

Green Orlando
42/4 Pragati Sarani
Baridhara, Dhaka-1212
Phone : 02-8411503, 8411501-2
Mobile : 01713-199826 (HOB)
Fax : 88-02-8411504

Engineers Institution Branch

Chittagong EPZ Branch

IEB Bhaban
8/A Ramna Dhaka-1000
Phone : 02- 7110651, 7110684
Mobile : 01713-199801 (HOB)
Fax : 88-02-7110610

S A Tower
Airport Road, Chittagong
Phone : 031-740682-3, 742217
Mobile : 01730-318185 (HOB)
Fax : 88-031-740684

Mohammad Faruque Ahmmed


FVP & HOB

Md. Mamunur Rashid


FVP & HOB

Md. Arafat Mostofa


AVP & HOB

Sheikh Mujib Road Branch

Mesbah Uddin Ahamed


VP & HOB

Mohammad Salah Uddin


FVP & HOB

39

Mohammad Hossain
FVP & HOB

Md. Jamal Uddin


SVP & HOB
annual report 2014

Branch Network & Head of Branches


Faridganj Branch

Rajnagar SME/Krishi Branch

Saima Abdullah Plaza


Faridganj Bazar, Chandpur
Phone : 08422-64378
Mobile : 01730-318187 (HOB)
Fax : 08422-64377

Balua Chowmuhani, Dholia


Feni Sadar, Feni
Phone : 0331-73782, 73783
Mobile : 01711-303711 (HOB)
Fax
: 88-0331-73784

A T M Monjurul Karim
AVP & HOB

Narayanganj Branch

Demra SME/Krishi Branch

H R Plaza
64 (Old), 90 (New)
Bangabandhu Road, Narayanganj
Phone : 02-7648242, 7648243
Mobile : 01713-199875 (HOB)
Fax : 88-02-7648244

Matuail New Market Bhaban


Konapara, Demra, Dhaka-1362
Phone : 02-7559708, 7542911
Mobile : 01713-248730 (HOB)
Fax : 88-02-7542904

Md. Ata Rabbani Chowdhury


VP & HOB

Patiya SME/Krishi Branch

Mymensingh Branch

Rahman Mansion
1284/1 Club Road
Gobindokhal, Patiya, Chittagong
Phone : 03035-56579
Mobile : 01730-320813 (HOB)
Fax : 88-03035-56579

Momen Tower (1st Floor)


65 Choto Bazar, Mymensingh
Phone : 091-63313, 63326
Mobile : 01730-340791 (HOB)
Fax : 88-091-63316

A M Monsurul Hoque
AVP & HOB

Amishapara SME/Krishi Branch

Aganagar Branch

Mosharaf Complex (1st Floor)


Moddo Bazar, Amishapara
Shonaimuri, Noakhali
Mobile : 01730-320812 (HOB)

Choto Masjid Road


(Ispahani) Aganagar
South Keranigonj, Dhaka
Phone : 02-7763658, 7763657
Mobile : 01730-340794 (HOB)
Fax : 88-02-7763659

Kamrul Islam Zabed


AVP & HOB
Nabigonj SME/ Krishi Branch

Dholaikhal Branch

Sky Light Tower


476, Sherpur Road
Nabigonj, Habigonj
Phone : 08328-56307
Mobile : 01730-320814
Fax : 880-8328-56306

72 Lal Mohon Shaha Street


Dholaikhal, Dhaka-1100
Phone : 02-9560286, 9564529
Mobile : 01730-709985 (HOB)
Fax : 88-02-7117927

Syed Moniruzzaman
PO & HOB

Patuakhali Branch

Md. Sazzadur Rahman


FVP & HOB

Md. Rezaul Karim


FVP & HOB

Md. Faizur Rahman Mazumder


VP & HOB

Lutful Haidar Chowdhury


SVP & HOB

Rangamati Branch

0063-01, Natun Bazar


Patuakhali, Sadar
Patuakhali-8600
Phone : 0441-62979
Mobile : 01730-340790
Fax : 880-441-62971

annual report 2014

Md. Shahadat Hossain


AVP & HOB

Md. Nasir Uddin


AVP & HOB

40

Hotel Green Castle


1 Pathor Ghata
Reserve Bazar, Rangamati-4500
Phone : 0351-61267-8
Mobile : 01730-709986 (HOB)
Fax : 88-0351-61275

Sarder Mohammad Zobayar


FVP & HOB

www.mblbd.com

Branch Network & Head of Branches


Banglabazar Branch

Thakurgaon Branch

Bangla Bazar
Begumganj, Noakhali
Phone : 0321-53305, 56631
Mobile : 01558-347569 (HOB)
Fax : 88-0321-53164

Afsar Uddin Chowdhury Plaza


College Road, 111 Asrampara
Thakurgaon
Phone : 0561-61368
Mobile : 01755-533143
Fax : 88-0561-61367

Md. Mozammal Hussain


FAVP & HOB

Chapainawabganj Branch
65-67 Jhilim Road
Boro Indara More
Sadar, Chapainawabgonj-6300
Phone : 0781-51719, 51720
Mobile : 01730-709982
Fax : 88-0781-51707

Shishahat Branch
Shisha Khorpa Bazar
175 Khorpa, Porsa, Naogaon
Phone : 01932-710888
Mobile : 01755-533141
Munshi Md. Asif Reza
AVP & HOB

Md. Abdur Razzak


FAVP & HOB

Kushtia Branch

Imamganj Branch

A. Hamid Market, N. S. Road


Boro Bazar, Kushtia-7000
Phone : 071-72411, 72412
Mobile : 01730-709984
Fax : 88-071-72413

Mohammad Hossain Complex


3 Moulvibazar, Dhaka-1211
Phone : 02-7312970, 7312821
Mobile : 01730-303558 (HOB)
Fax : 88-02-7312943

Md. Ashraf-Bin-Azher
AVP & HOB

Maijdee Court Branch

Sunamganj Branch

Honey Dew Point


10 Abdul Malek Ukil
Sarak, Maijdee Court, Noakhali
Phone : 0321-71710
Mobile : 01716-466599 (HOB)
Fax : 88-0321-71712

Zaman Complex
Arpin Nagar (Old Bus Stand)
52-01, Sunamgonj Municipality
Sunamgonj
Phone : 0871-61277
Mobile : 01755-533148 (HOB)
Fax
: 880-871-60280

Md. Shahab Uddin Patwary


FAVP & HOB

Ring Road Branch

Ashuganj Branch

Choice A J Golden Tower


2/1 Ring Road
Shyamoli, Dhaka-1207
Phone : 02-9103329
Mobile : 01730-373896 (HOB)
Fax
: 88-02-9103330

Aziz Plaza (1st & 2nd Floor)


West Bazar, Char Chartala
Ashuganj, Brahamanbaria
Phone : 08528-74592
Mobile : 01755-533145 (HOB)
Fax : 08528-74593

Mahmuda Akhter
VP & HOB

Md Shahidul Alam
FVP & HOB

Md. Zahed Hossain


AVP & HOB

Md. Shamsul Alam Siddique


FAVP & HOB

Rampura Branch

Damudya Branch
Main Road, Damudya Bazar
Damudya, Shariatpur
Phone : 06023-56204
Mobile : 01755-533146 (HOB)
Fax : 88-06023-56201

Md. Hazrat Ali


AVP & HOB

Moniruzzaman Khan
PO & HOB

Circle Alams Height


375 West Rampura
DIT Road, Dhaka- 1219
Phone : 02-8333697
Mobile : 01755-533149 (HOB)
Fax
: 88-02-8322797

41

Md. Moniar Rahman


SVP & HOB
annual report 2014

Branch Network & Head of Branches


Nilphamari Branch

Subidbazar Branch

Bari Plaza, Bara Masjid


Road, Nilphamari
Phone : 0551-62007
Mobile : 01755-533144
Fax : 88-0551-62008

407 Subidbazar, Jalalabad


Sunamganj Road, Sylhet
Phone : 0821-728371, 728372
Mobile : 01713-386896 (HOB)
Fax : 88- 0821-728373

Md. Monjur Hossain


FAVP & HOB

Debiganj Branch

Nazipur Branch

Debiganj Bazar
Debiganj, Panchagarh
Phone : 05654-56151
Mobile : 01755-533147
Fax : 88-05654-56152

Noor Market, Harirampur


Nazipur, Patnitala, Naogaon
Phone : 07428-63293
Mobile : 01713-203585
Fax : 88-07428-63294

Md. Nazrul Islam


PO & HOB

A K Khan Moor Branch

Niamatpur Branch

Anjuman Tower, A K Khan Moor


Zakir Hossain Road, 827 Feroz
Shah Colony, Pahartali, Chittagong
Phone : 031-2773369, 2773367
Mobile : 01730-444134 (HOB)
Fax
: 88-031-2773368

Girls Plaza, 216 Balahore


Niamatpur Sadar, Naogaon
Phone : 07427-56257
Mobile : 01755-637385
Fax : 07427-56256

Chuadanga Branch
Malik Tower
107 Borobazar, Shahid Abul
Kashem Sarak, Chuadanga
Phone : 0761-63641, 63871 (Dir.)
Mobile : 01714-031241, 01712-107802
Fax : 88-0761-63761

Anupam Kumar Paul


FVP & HOB

Md. Iqbal Hossain


FAVP & HOB

S M Shopping Center, Pather Hat


Noapara, Raozan, Chittagong
Phone : 031- 2573351
Mobile : 01713-104508 (HOB)
Fax : 88-031- 2573352

Gobindaganj Branch

Karnaphuli Complex
Sadar Road, Bhola
Phone : 0491-62720-21
Mobile : 01755-637382 (HOB)
Fax : 0491-62720

Anowara Super Market


Gobindaganj, Gaibanda
Phone : 05423-75083
Mobile : 01755-637387 (HOB)
Fax : 880-05423-75168

Masum Iqbal
FAVP & HOB

Kishoreganj Branch

Bhulta Branch

573, M M Shopping Complex


Gouranga Bazar, Kishoreganj
Phone : 0941-51016, 51018
Mobile : 01713-199822 (HOB)
Fax : 88-0941-51017

Haji A. Aziz Super Market


Bhulta, Rupganj
Narayanganj
Phone : 01755-637388
Mobile : 01755-500797 (HOB)

42

Md. A. Kuddus Kazi


FVP & HOB

Md. Atiqur Rahman


PO & HOB

Patherhat Branch

Bhola Branch

annual report 2014

Debojyoti Majumder
FVP & HOB

Md. Abul Kashem Khandaker


FVP & HOB

Pritish Barua
FAVP & HOB

Shah Md. Mizanur Rahman


AVP & HOB

Mohammad Jubair Islam


AVP & HOB

www.mblbd.com

Branch Network & Head of Branches


Sakhipur Branch

Abdullahpur Bazar Branch

Sipa Super Market


Sakhipur Bazar, Sakhipur, Tangail
Phone : 09232-56274
Mobile : 01713-248727 (HOB)
Fax
: 88-09232-56273

Tajimuddin Plaza
Abdullahpur Bus stand
South Keraniganj Dhaka-1311
Mobile : 01777-792509 (HOB)
Md. Showkat Hossain
FAVP & HOB

Md. Khurshid Anwar


VP & HOB

International Airport Road Branch

Jhalokathi Branch

A R A Mansion, 77-78 Airport Road


Amtali, Mohakhali C/A, Dhaka-1212
Phone : 02-9857368
Mobile : 01711-643281 (HOB)
Fax : 88-02-9857435

Al Marzan
30, Kumarpatti,Jhalokathi
Pouroshova, Jhalokathi
Mobile : 0181-9710722
Ahsanul Haq Chowdhury
EVP & HOB

Md. Al Mamunur Rashid


FAVP & HOB

Atibazar Branch

Madanpur Branch

Haji Edu Market


Ati Bazar Union, Shakta
Keraniganj, Dhaka
Phone : 55103289
Mobile : 01755-632616 (HOB)

Ekota Shomobay Super Market


Chanpur Madanpur
Bondor Narayanganj
Mobile : 01777-759526 (HOB)

Nawabpur Road Branch


NBC Tower, 24-25, Nawabpur
Road Wari, Dhaka
Phone : 9592126
Mobile: 01755-632917 (HOB)
Fax : 88-02-9592127

Md. Abu Taher


FAVP & HOB

Mohammad Khabir Hossain


AVP & HOB

Muhammad Fayazur Rahman Biswas


FVP & HOB

Khulshi Branch
Salam Heights
Zakir Hossain Road
South Khulshi, Chittagong.
Phone : 031-612258, 031-612257
Mobile : 01713-048095 (HOB)
01787-681259 (Br.)
Fax : 031-612259

Pabna Branch

Korais Munshi Bazar Branch

Munshi Complex
Hazi Abdul Gani Sarak
Boro Bazar, Pabna
Phone : 0731-63356
Mobile : 01755-632918
Fax : 88-0731-63354

Mamun Super Market


Korais Munshi Bazar
02 Rajapur Union, Somaspur
Dagonbhuiyan, Feni
Mobile : 01787-681252 (HOB)
01787-681258

Md. Ali Haider Chowdhury


FAVP & HOB

Suraya Nasrin
FVP & HOB

Monowar Hossain
SEO & HOB

Laxmipur Branch

Bhelanagar Branch
Khadiza Mansion, Bhelanagar
Nandipara, Chinishpur
Narsingdi Sadar, Narsingdi
Mobile: 01713-279558 (HOB)
Partha Sarkar
AVP & HOB

R B Tower
Thana Road, Laxmipur
Phone : 0381-62389 (HOB)
Mobile : 01713-369352 (HOB)
01715-023387 (MOP)
Fax : 0381-62391

43

Mahbub Jamil
AVP & HOB
annual report 2014

Branch Network & Head of Branches


Chandpur Branch
Techno Hannan Complex
Haji Mohasin Road
Chayabani Moor, Chandpur
Sadar, Chandpur
Phone : 0841-66512 (HOB), 66511
Mobile : 01713-369354 (HOB)
Fax : 0841-66513

Kalaiya Branch

Asish Kumar Paul


FVP & HOB

Shimon Plaza
Kalaiya, Bauphal Patuakhali
Phone : 0442256-221
2256-166 (HOB)
Mobile : 01713-369359 (HOB)
Fax : 0442256-375

Jhitka Bazar Branch

Bazra Bazar Branch

City Market, Jhitka Bazar


Jhitka, Gala Union
Harirampur, Manikgonj
Mobile : 01730-797720 (HOB)
01713-369357 (Officer)

Babul Shopping Complex


Bazra Bazar, Bazra
Sonaimuri, Noakhali
Mobile : 01713-369358
Md. Jana Alam Mollah
FAVP & HOB

Moudud Ahmed
PO & HOB

Md. Zahid Hossain


SEO & HOB

MERCANTILE BANK SECURITIES LIMITED (MBSL)


Head office
Shawdesh Tower, Level-4, 41/6 Purana Paltan Lane, Dhaka-1000
Phone : 7122513, 7122515
Fax : 88-02-7119078
CEO: Md. Manjum Ali

BRANCHES OF MBSL

Dhaka Branch
Swadesh Tower, Level-4
41/6 Purana Paltan Lane
Dhaka-1000
Phone : 7122513, 7122515
Fax : 88-02-7119078

Mirpur Branch
Razia Plaza, Rokeya Sarani
184, Senpara Parbota
Mirpur - 10, Dhaka- 1216
Phone : 02-9014640
Fax : 88-02-9014680

Sylhet Branch
Al-Hamra Shopping City
1052-00 Zinda Bazar
Sylhet-3100
Phone : 0821-711565
Fax : 88-0821-711571

Uttara Branch
House-22, Sonargaon Janapath
Sector-9, Uttara Model Town, Dhaka
Phone : 8959047, 8962945
Fax : 88-02-8961798

Khulna Branch
Rupsha Plaza
73 KDA Avenue C/A
Sonadanga, Khulna-9100
Phone : 041-731396
Fax : 88-041-731397

Satmasjid Road Branch


House-82/A, Road-8/A
Satmasjid Road
Dhanmondi, Dhaka-1209
Phone : 02-9126872
Fax : 88-02-9128541

Agrabad Branch
Mishkat Arcade (1st Floor)
21/1, Agrabad C/A, Chittagong
Phone : 031-721865
Fax : 88-031-716459

MERCANTILE EXCHANGE HOUSE (UK) LIMITED


London Branch

108 Whitechapel Road


London, E1 1JE, UK
Phone : +4420-3638-1919
Fax
: +4420-3638-1919
Mobile : +44-7868161104
E-mail : mercantileexchangelondon@mblbd.com

Operation Director : Mr. Jude Mark Rozario, Chief Executive Officer & Manager
annual report 2014

44

Other Executives of the Bank


Executive Vice President
Kawser Uddin Ahmed
Senior Vice President
Mrinal Paul
Md. Nurul Haque Gazi
Abu Syed Md. Mohiuddin
Md. Shafiqul Islam
Md. Majibur Rahman
Md. Azimuddin
Vice President
Abdus Salam Shaikh
Farhad Malik
Abu Asghar Gholam Haruni
Mostaque Uddin Ahmed
Abu Yusuf Md. Abdullah Haroon
Md. Rezwanul Karim
Golam Mohammed Zaidi
Md. Ashiqur Rahman
Md. Shahadat Hossain Khan
Zareen Ahmed
Md. Masum Ali
Md. Aliullah
Md. Nurul Alam
Md. Farid Uddin Ahmed Bhuiyan
M. Ferdous Chowdhury
S.M. Asifur Rahman
Moynul Islam
First Vice President
Mir Fauzia Rahman
Md. Shahidul Islam
B.M. Saifuzzaman
Basudeb Paul
Lopita Mannan
Sanjib Kumar Sarkar
Zihan Al Fuad
Shamim Ahmed
Md. Nasim Alam
K. M. Anowarul Islam
Md. Mahbubur Rahman
Md. Gias Uddin
Mohammad Jakirul Islam
Pijus Kanti Bala
Muhammad Khorshed Alam
Sahabub Alam Khan
Tashfeen Saleh
Fatema Saida Yasmin

Mohammad Mahtab Uddin


Pratap Kumar Deshmukhya
Abu Saleh Md. Ibrahim
Muhammad Saiful Karim
Md. Salahuddin Khan
Md. Atiqur Rahman
Mohammad Rezaul Karim
Al Mansur
Md. Abul Kashem
Shahnewaz
Md. Sarware Alam
Md. Shaheen Reza
Muhammad Sharif-Ur-Rahman
Tarafder Sushil Kumar
Assistant Vice President
Mahmuda Khatun Munny
Md. Abul Hossain
Ferdausi Sultana
Shanaz Begum
Sharina Quddus
Md. Zillur Rahman
Md. Humayun Kabir Bhuiyan
Md. Nazmul Kabir
Md. Mizanur Rahman
Jannatul Mawa
Md. Ekhlasul Moula
Sayeda Sultana
Ashfa Khanam
Syed Saiful Islam
Khandoker Akram Hossain
Kazi Golam Rasul
Md. Shah Jamal
Md. Delwar Hossain
S M Ruhul Amin
Dilip Chandra Das
Md. Almasuddin Ahmed
Shamir Mitra
Md. Aminul Islam
Aminul Islam Akhand
Asif Karim
Md. Abu Ruheen Chowdhury
Md. Ibna Ala Habib Oliur Rahman
G. M. Abdus Sattar

Abul Kashem Mohammad Fazlul Haque


Mohammad Shafruzzaman Khan
Mohammad Fayzul Islam
Md. Meharub Hossain Khan

Md. Israil Hossain


Amirul Islam
Md. Mukitul Kabir
Mousumi Debnath
Sadek Ali
Mahmudul Bashar
Mekhala Parveen
Mohammad Nazmul Hasan
Farhana Hosain
Md. Ikramul Islam Khan
Md. Mahfuzul Islam
K M Rafiqul Alam Akanda
Md. Jahidul Islam
Syed Tariqul Islam
Md. Sana Ullah
Sheikh Shahjahan
Md. Shahjahan
Kazi Abdul Wadood
Mohammad Nuruzzaman Chowdhury
Md. Musfiqur Rahman
Muhammad Tanvir Hossain
Mohammad Nazrul Islam
Mohammed Jahir Uddin
Md. Sirajul Islam
Md. Faruk Hossain
Shaifuddin Bhuiyan Shoaib
Mohammad Zahidul Islam
Mohammad Shahed Shahriar Sohel
Md. Rasel Ikbal
Mohammad Mustahidur Reza Chowdhury
Helal Uddin
Mohammad Shamim Hossain
Md. Akter Hossain
Abul Basar Muhammad Zakir Hossain
Bijoy Kumar Datta
Abul Kalam Azad
Md. Golam Sarwar
Md. Tanvir Shahid
Md. Shahidul Islam Baten
Md. Toriqul Islam
Md. Nurul Alam Bhuiyan
Mohammad Mahbub Alam
Md. Mokbul Hossain
Mohammad Mahbobur Rahman Khan
Asrar Mahmud Bin Saber
Faisal Rahman

45

annual report 2014

Our
Coverage

CHAPAINAWABGANJ

The green shaded districts represent our branch network coverage across the country.

annual report 2014

46

www.mblbd.com

Financial
Highlights
Particulars
Income Statement
Interest Income
Interest Expenses
Net Interest Income
Non-Interest Income
Non-Interest Expenses
Net Non-Interest Income
Profit before Provision and Tax
Provision for Loans and Assets
Profit after Provision before Tax
Porvision for tax including deferred tax
Profit after Tax
Balance Sheet
Authorized Capital
Paid-up Capital
Shareholders Equity
Deposits
Loans and Advances
Investments
Fixed Assets
Total Assets
Foreign Exchange Business
Import
Export
Remittance
BIS Capital Measure (SOLO)
Total Risk Weighted Assets under Basel II
Core Capital (Tier I)
Supplementary Capital (Tier II)
Total Capital/Regulatory Capital
Core Capital (Tier I) to RWA
Supplementary Capital (Tier 2) to RWA
Capital Adequacy Ratio under Basel II
Credit Quality
Non-performing Loans (NPLs)
Provision for unclassified Loan
Provision for classified Loan
NPLs to total Loans and Advances
Common Share Information
Market price per share (BDT)
No. of Shares Outstanding (Million)
Earning per Share (BDT)
Dividend:
Cash
Stock
Dividend Payout Ratio
Market Capitalization
Book Value per Share
Market Value Book Value multiple
Price Earning Multiple (Times)
Operating Performance Ratio
Net Interest Margin (NIM)
Net Non-interest Margin
Earning base in Assets (average)
Cost Income Ratio
Credit Deposit Ratio
Cost of Deposit
Yield on Loans and Advances
Spread
Return on Average Assets
Return on Average Equity
Equity Multiple (Times)
Other Information
No. of Branches
No. of Employees
No. of Correspondence Relationship

(BDT in Million)

2010

2011

2012

2013

7,669.42
5,176.00
2,493.42
2,282.39
1,928.69
353.70
2,847.12
411.20
2,435.93
1,010.59
1,425.34

10,719.69
8,022.13
2,697.56
3,404.69
2,600.57
804.12
3,501.68
497.50
3,004.18
1,270.00
1,734.18

14,207.72
10,556.79
3,650.93
2,459.83
2,759.98
-300.15
3,350.78
969.33
2,381.45
1,000.00
1,381.45

16,590.37
11,795.76
4,794.61
2,500.35
3,039.26
-538.91
4,255.70
1,027.00
3,228.70
1,250.00
1,978.70

16,758.21
11,385.39
5,372.82
2,623.20
3,585.45
-962.25
4,410.57
2,122.06
2,288.51
1,100.00
1,188.51

8,000.00
4,072.21
7,185.69
75,629.14
66,377.70
10,937.20
1,647.58
87,140.11

8,000.00
4,968.10
9,659.33
102,262.02
79,999.80
24,645.38
2,711.32
116,553.01

8,000.00
6,110.75
10,924.55
132,093.64
93,610.87
41,314.19
2,898.60
152,658.47

12,000.00
6,599.61
12,574.24
124,566.97
97,688.50
30,090.60
3,097.60
144,841.87

12,000.00
7,391.57
13,519.97
140,475.84
117,060.03
32,184.09
3,198.11
168,474.13

89,524.10
59,404.20
5,108.10

95,008.70
81,311.80
7,150.00

113,434.10
81,477.10
15,792.80

100,685.60
71,671.50
12,434.70

107,089.70
78,352.70
18,208.60

95,158.50
7,100.90
1,583.52
8,684.42
7.46%
1.66%
9.13%

101,085.30
8,835.00
1,794.40
10,629.40
8.74%
1.78%
10.52%

111,524.70
10,216.87
1,861.99
12,078.86
9.16%
1.67%
10.83%

119,995.10
11,767.60
1,942.10
13,709.70
9.81%
1.62%
11.43%

147,484.30
12,427.74
6,676.21
19,103.95
8.43%
4.52%
12.95%

1,187.81
749.00
617.53
1.78%

2,084.62
889.63
712.42
2.61%

4,090.92
969.00
1,495.87
4.37%

4,659.75
995.00
2,425.05
4.77%

5,965.63
2,547.49
2,404.18
5.10%

58.05
407.22
4.10
22.00%
22.00%
53.61%
23,639.13
17.65
3.29
14.14

34.80
496.81
3.49
23.00%
23.00%
65.90%
17,288.96
19.44
1.79
9.97

19.10
611.08
2.26
15%
7.00%
8.00%
66.37%
11,671.54
17.88
1.07
8.45

16.70
659.96
2.68
20%
8.00%
12.00%
66.71%
11,021.33
19.05
0.88
5.57

13.70
739.16
1.61
10%
10.00%
62.19%
10,126.49
18.29
0.75
8.52

3.59%
0.51%
90.62%
40.38%
87.77%
7.94%
12.80%
4.86%
1.86%
24.83%
12.13

2.93%
0.87%
90.46%
42.62%
81.68%
9.63%
13.86%
4.23%
1.70%
20.59%
12.07

2.99%
-0.25%
90.61%
45.17%
79.26%
10.02%
14.72%
4.70%
1.03%
13.42%
13.97

3.58%
-0.40%
90.09%
41.66%
77.02%
8.93%
14.28%
5.35%
1.33%
16.84%
11.52

3.82%
-0.68%
89.78%
44.84%
83.33%
8.26%
13.28%
5.02%
0.76%
9.11%
12.46

65
1,526
589

75
1,668
638

86
1,981
627

91
1,814
644

100
1,962
638

47

2014

annual report 2014

Graphical
Presentation
Net Interest Income

Operating Profit

(BDT in Million)

(BDT in Million)
4,794.61

5,372.82

3,650.93
2,493.42

2011

2012

2013

2014

Shareholders' Equity

2012

152,658.47

13,519.97

10,924.55

2010

2014

144,841.087

168,474.13

116,553.01

2011

2012

2013

Total Capital/Regulatory Capital


(BDT in Million)

10,629.40

2011

12,078.86

2012

2014

19,103.95

13,709.70

2013

2010

2014

2011

2010

10.52%

10.83%

2011

2012

2013

2014

11.43%

2013

12.95%

2014

No. of Employees
100

75

86

2011

2012

48

1,981

91
1,526

65

annual report 2014

2012

Capital Adequacy Ratio under Basel II

9.13%

No. of Branches

2010

2013

87,140.11

7,185.69

2010

2011

2010

(BDT in Million)
12,574.24

8,684.42

3,350.78

4,410.57

Total Assets

(BDT in Million)

9,659.33

3,501.68
2,847.12

2,697.56

2010

4,255.70

2013

2014

2010

1,668

2011

2012

1,814

1,962

2013

2014

www.mblbd.com

Deposits

Loans and Advances

(BDT in Million)

132,093.64

102,262.02

124,566.97

140,475.84

75,629.14

2010

117,060.03

66,377.70

2011

2012

2013

2014

79,999.80

2010

93,610.87

2011

2012

81,311.80

81,477.10

97,688.50

2013

2014

Export

Import

(BDT in Million)
89,524.10

(BDT in Million)

113,434.10

95,008.70

(BDT in Million)
100,685.60

107,089.70

71,671.50

78,352.70

59.404.20

2010

2011

2012

2013

2014

Remittance

2010

2011

2012

2013

Book Value per Share

(BDT in Million)

(BDT)
18,208.60

15,792.80

19.44

19.05

12,434.70

5,108.10
-

2010

7,150.00

2011

2012

2013

2014

2010

2011

2012

2013

2014

Earning per Share (EPS-After Split)

(BDT)

(BDT)

58.05

4.10

3.49

34.80

2011

18.29

17.88

17.65

Market price per share

2010

2014

2.26
19.10

16.70

2012

2013

2.68
1.61

13.70

2014

2010

2011

2012

49

2013

2014

annual report 2014

Market
Performance
Dhaka Stock Exchange (DSE)
Month

Chittagong Stock Exchange (CSE)

High

Low

Volume

High

Low

Volume

(Tk.)

(Tk.)

(no. of Shares)

(Tk.)

(Tk.)

(no. of Shares)

January, 2014

17.90

17.40

46,141,500

18.10

16.20

4,914,100

February, 2014

19.90

19.20

67,455,000

20.10

18.20

6,211,600

March, 2014

17.80

17.30

21,501,500

17.90

16.20

1,496,500

April, 2014

17.50

16.60

42,469,000

17.40

15.70

1,960,530

May, 2014

17.00

16.40

34,860,000

16.90

15.20

1,408,100

June, 2014

16.60

15.90

35,070,500

16.80

14.90

1,050,500

July, 2014

14.90

14.50

9,803,500

15.10

13.60

359,200

August, 2014

13.70

13.30

17,488,500

13.90

12.60

1,155,100

September, 2014

13.30

12.80

17,710,000

13.30

11.90

1,783,900

October, 2014

14.70

14.20

20,821,500

14.80

13.30

1,312,500

November, 2014

13.80

13.50

10,754,000

13.80

12.80

608,700

December, 2014

13.90

13.40

15,339,305

13.90

13.20

1,641,900

Dhaka Stock Exchange (DSE)

20

18

16

14

-14

-14

annual report 2014

-14

50

-14

-14

-14

-14

-14

-14

-14

-14

-14

www.mblbd.com

Financial
Calendar
Quarterly Results

Taxation on Capital Gain


Submission
Date

Peculiars
Audited consolidated results for

the 4th quarter ended 31 December 2014


Unaudited consolidated results for the
1st quarter ended 31 March 2014
Unaudited consolidated results for the

2nd quarter and half-year ended 30


June 2014
Unaudited consolidated results for the
3rd quarter ended 30 September 2014

23.04.2015
15.05.2014
24.07.2014
27.10.2014

Particulars

Allotment
Date

Record Date

Distribution of 12% stock


and 8% Cash dividend in
respect of financial year
ended on 31 December
2013

09.04.2014

12.06.2014

Notice Date

Held On

20.05.2014

12.06.2014

Taxation on Dividend Income


Stock dividend is tax exempted. In case of cash dividend,
following is the rate of tax deduction at source on dividend
income as per current fiscal act:

Exchange controls and other limitations affecting equity


security holders.
Non-residents can buy and sell MBLs share and transfer
the dividends after complying with Guidelines for Foreign

Stock Details
Particulars
Stock Symbol

Annual General Meeting (AGM)


15th AGM

Other Information

Exchange Transactions 1996 and BSEC Rules.

Dividends

Particulars

Capital gain arising from transfer or sale of Government


Securities is tax exempted. Capital gain arising from
transfer or sale of Stocks and Shares of publicly listed
companies listed with stock exchanges is taxable at the
rate of 10%. For non-resident the tax exemption on capital
gain shall be allowed if the similar exemption is allowed in
the country of residence of the non-resident.

If the shareholder is a company, either resident or


non-resident, at the rate applicable to the company
i.e. 20%
If the shareholder is a resident person, other than
company, at the rate of 10%
If the shareholder is a non-resident (Other than
Bangladesh) person, other than company, at the rate
of 25%

Since stock dividend is out of the loop of withholding tax


deduction, its effective rate of return is much higher than
cash dividend.

DSE

CSE

MERCANBANK MERCANBANK

Company Code

11128

22023

Listing Year

2003

2003

Market Category

Electronic Share

Yes

Yes

Market Lot (Nos.)

Face Value (Taka)


Total Number of Shares
(31.12.2014)

10

10

739,156,701

739,156,701

Accessibility of Annual Report 2014

Annual Report 2014 and other information about MBL


may be accessed on MBLs website www.mblbd.com.
MBL provides copies of Annual Reports to the Bangladesh

Securities and Exchange Commission, Bangladesh Bank,


Dhaka Stock Exchange and Chittagong Stock Exchange

for their reference. Respectable stakeholders may read


them at their public reference room or library.
Shareholders Inquiries
Share Department
Mercantile Bank Limited
Head Office
61 Dilkusha Commercial Area
Dhaka-1000
Web: www.mblbd.com

51

annual report 2014

MBL
Products & Services

Deposit Products

Current Deposit (CD) Accounts

Savings Bank Deposit (SB) Accounts

Special Notice Deposit (SND)

Fixed Deposit Receipt (FDR)

Scheme Deposits

annual report 2014

52

Monthly Saving Scheme (MSS)

Double Benet Deposit Scheme (DBDS)

Family Maintenance Deposit Scheme (FMDS)

Quarterly Benet Deposit Scheme (QBDS)

1.5 Times Benet Deposit Scheme (1.5TBDS)

Advance Benet Deposit Scheme (ABDS)

Special Savings Scheme (SSS)

Education Planning Deposit Scheme (EPDS)

Super Benet Deposit Scheme (SBDS)

School Banking

Loans & Advances

Retail Loans

Consumer Credit Scheme


Lease Finance

Jj

FKj kJrkJx u

Car Loan Scheme


Home Loan Scheme
Doctors Credit Scheme
Any Purpose Loan (Personal Loan Scheme)
House Furnishing Loan
Overseas Employment Loan Scheme
Cottage Loan
Education Loan
Rural Development Scheme

Corporate Loans

Short Term Finance

Long Term Finance

Real Estate Finance

Import Finance/Trade Finance

Work Order Financing/Construction Business

Export Finance

Structured Finance

Loan Syndication

HING
LOAN

IS
HOUSE FURN

53

uJj

annual report 2014

SME Financing

CHAKA (Term Loan)

SAMRIDDHI (Continuous Loan)

MOUSUMI (Short Term Seasonal Loan)

ANANNYA (Women Entrepreneur's Loan)

SANCALOK (A mix of Term, Time & Continuous Loan)

UNMESH (Trade Finance)

Agriculture Loan

annual report 2014

54

NABANNO (Krishi / Polli Loan)

SAKTI (ETP / Bio-Gas / Solar Energy Loan)

MBL Card

Debit Card

Credit Card (Local Card, International Card, Dual Currency Card)

MBL Pre-Paid Card (Student Card, Hajj Card, Travel card)

Other Services

Online Banking

Mobile Banking (MyCash)

Off-Shore Banking

NRB Banking

SMS Banking

Locker Service

Utility Bills Pay Service

ATM Booth Services

Cash Deposit Machine (CDM) Service

Locker Services

\LmjaJPT xy\ Trj

55

annual report 2014

Economic
Impact Report
Economic Impact refers to the effect of a policy, program,
project, activity or event on the economy. Economic
impact is usually measured in terms of changes in
economic growth (output or value added) and associated
changes in jobs (employment) and income (wages). We
can understand how a bank adds value to the society by
analyzing economic impact.
MBL aims to create optimum value to its stakeholders.
Economic impact report highlights the value that the Bank
caters to its shareholder and to the country as a whole.
Among others, followings are the important measures
taken by the Bank with a view to offering sustainable
values to all the stakeholders.
Capital Adequacy
MBL is maintaining a strong capital base. Total eligible
capital of the Bank stood at BDT 1,910.39 Crore as
on December 2014 which is well above the minimum
requirement of BDT 1,474.84 Crore as on the same date.
Capital Adequacy Ratio was 12.95% as on December
2014 as compared to minimum requirement of 10% as per
Basel II.

Dec-13

Tier-1 (Core Capital)

1,076.76

Dec-14

1,242.77

194.21

667.62

Teir-3 (Additional Supplementary Capital)

1,370.97

1,910.39

Total Risk Weighted Assets (RWA)

11,999.51

14,748.43

Capital Adequacy Ratio (SOLO)

11.43%

12.95%

Core Capital to RWA

9.81%

8.43%

Supplementary Capital to RWA

1.62%

4.52%

Minimum Capital Requirement (MCR)

1,199.95

1,474.84

the

year

ended

Value added statement shows how much value (wealth)


has been added and distributed by MBL in 2014 for its
employees, government and shareholders in the form of
salaries & allowances, income tax, profit after tax respectively
and also indicates depreciation value of fixed assets.
Particulars

Income from Banking Services


Less: Cost of Services & Supplies
Value added by Banking Services
Provision for Loans &
Off-balance sheet items
Total Value Added

Distribution of value addition

2013

(BDT in million)

2014

19,090.72

19,381.41

5,876.04

6,419.50

(1,027.00)

(2,122.06)

4,849.04

4,297.44

(13,214.68) (12,961.91)

2013

(BDT in million)
2014

To Employees

1,428.29

1,787.53

To Government as Income Tax

1,230.00

1,135.03

192.05

221.40

To Statutory Reserve

To Provision for Deferred Tax


Retained Earning

Tier-2 (Supplementary Capital)


Total Eligible Capital

for

Depreciation

(BDT In Crore)

Particulars

Value Added Statement


December 31, 2014

645.74
20.00

1,332.96

Total

4,849.04

457.70

(35.03)

730.81

4,297.44

Distribution of Value Addition


To Employees

21%
35%

5%

To Statutory Reserve
To Government as
Income Tax
Depreciation

27%

12%

Retained Earning

Decembber, 2013
Total Eligible Capital

annual report 2014

1,474.84

1,910.39

1,199.95

1,370.97

Figure 1 Distribution of Value Addition in 2014

Decembber, 2014
Minimum Capital Requirement

56

Economic Value Added Statement for the year ended


December 31, 2014
Economic Value Added (EVA) attempts to capture the
true economic profit of a company. EVA is calculated by
deducting the cost of equity capital employed from the
post-tax profit plus provision for loans and advances.
Companies which earn higher returns than cost of capital
create value. Therefore, Shareholders/Equity providers are

www.mblbd.com

16,493.04 19,054.84

Average Shareholders Equity

15,182.51 17,773.94

Earnings

Profit After Tax

1,978.69

1,188.51

Add: Provision for loans and


advances and off-balance sheet
exposure during the year

1,027.00

2,122.06

Total Earnings (a)

3,005.69

3,310.57

11.20%

11.20%

Total cost of average equity (b)

1,700.44

1,990.68

Economic Value Addition (a-b)

1,305.25

1,319.89

Average
cost
of
equity
(based on first years return
on sanchaypartra by the
Government of Bangladesh)
plus 2% risk premium

Economic Value Addition

2013

1,319.89

1,305.25

(BDT in Million)

2014

Market Value Added Statement for the year ended


December 31, 2014
Market value added (MVA) shows the difference between
the total market value and total book value of shares of a
company. A high Market Value Added indicates that the
company has created substantial wealth for the equity

BDT in
Million

Market value

739,156,701

13.70

10,126.45

Book value

739,156,701

18.29

13,519.18

Market
value added

(3,392.73)

Market Value Added


(BDT in Million)

Market value added

Market value

(3,392.73)

Book value

Though the financial performance of the Bank was


sound during the year 2014, depressed capital market
performance caused to negative Market Value Added.
Payment of Dividends
MBL has continued to pay substantial dividends to its
shareholders while ploughing back sufficient profits to
fund growth and capital adequacy requirements. This
prudent divident policy has contributed in building the
Banks shareholders funds to satisfactory levels and is
considered as one of the major funding sources of the
Banks rapid expansion.
Considering the performance of the Bank over the past
year, the Board of MBL has recommended 10% Cash
dividend for the year 2014.

Dividend

2010

2011

2012

57

2013

10%

5,535.67

Per
Share

20%

3,918.80

No of Shares
Outstanding

13,519.18

Add: Cumulative provision for


loans and advances and
off-balance sheet exposure

12,574.24 13,519.17

Particulars

15%

Shareholders equity

2014

23%

2013

Particulars

10,126.45

(BDT in million)

holders. The share market value of the Bank stood at


BDT 10,126.45 million whereas the book value of the
share stood at BDT 13,519.10 million, resulting a negative
Market Value Added of BDT 3,392.73 million as on
December 31, 2014.

22%

always conscious about their return on capital invested. As


a commercial banking company, MBL is deeply concerned
for delivering higher value to its Shareholders/Equity
providers.

2014

annual report 2014

Segment
Reporting
MBL Operation
(BDT in Crore)
Banking Operations
Particulars

Subsidiaries

Off Shore Banking


(OBU)

Mercantile Exchange
House (UK) Limited

Mercantile Bannk
Securities Limited

1,938.14

3.88

0.96

51.96

Operating Profit

441.06

3.61

(1.72)

1.11

Profit Before Tax

228.86

3.61

(1.72)

1.05

Assets Employed

16,847.41

111.12

2.67

628.99

Capital Employed

1,351.92

68.43

Core Banking

Operating Revenue

Banking Operation
(BDT in Crore)
Particulars

International Division
Operation

Operating Revenue
Operating Profit

annual report 2014

58

Treasury
Operation

Card
Operation

Mobile Banking
Operation

53.71

432.89

10.32

0.12

52.60

(0.85)

(5.90)

Chairmans Message
Bismillahir Rahmanir Rahim
Assalamualaikum
Dear Shareholders,
It is my pleasure to present the Annual Report along with
the Audited Financial Statements for the year ended 31
December, 2014. For over 15 years, Mercantile Bank
Limited (MBL) is contributing to the growth of Bangladesh
economy by creating entrepreneurs and serving the
underserved. Our guiding principle in this regard is
to empower people, businesses and communities by
enhancing their financial well-being. We are proud to
be regarded as a safe, strong and community minded
organization by our customers. It is our delight to be judged
as a good place to work by our employees, a good place
to be associated with by our customers, stakeholders,
and a good place to invest by our shareholders.
Global growth in 2014 was lower than initially expected,
continuing a pattern of disappointing shifts over the past
several years. In the global market oil prices reduced
substantially since September, thus accelerating growth.
However this was largely off-set by negative factors
like investment weaknesses in many markets. Activity
in China, Russia, the European Union and Japan has
weakened, as compared to a buoyant United States.

Interest rate and risk spreads have also risen in many


emerging market economies. Many countries in Asia
have embarked in cross border operations. Such activities
have provided opportunities for increased income and
employment. These global value chain ties will further assist
in increasing gains, establish connection and network.
In the fiscal year 2014, Bangladesh achieved a sturdy
6.12% growth, despite few non-economic factors which
adversely affected the economy. This performance was
due to higher public investment and rise in exports.
Economic activity is also expected to pick up in 2015
as worker remittances increases, public expenditure
rises, and private sector investment to be increased.
Additionally, the government is expected to gear up major
infrastructure developments.
MBL continued to record a steady increase in performance
and revenue in 2014. The Bank registered an increase in
operating profit to BDT 4.41 billion from BDT 4.26 billion,
ever highest since operation of the Bank. This year,
we revamped few products and also launched several

59

annual report 2014

Chairmans Message

new products, services and campaigns that boosted


our revenue. MBLs strategic business operations and
market presence continued to thrive as a result of these
new initiatives. Bank mobilized deposits of BDT 140.48
billion as on December 31, 2014 compared to BDT
124.57 billion in 2013. Total loans and advances stood
at BDT 117.06 billion at the end of 2014, which was BDT
97.69 billion in 2013. Earnings per Share (EPS) stood at
BDT 1.61. Non Performing Loan (NPL) ratio was 5.10%
in 2014. Total Shareholders Equity increased to BDT
13.52 billion in 2014 experiencing 7.51% growth over
that of 2013. Return on Assets was 0.76% and Return
on Equity was 9.11% as on December 31, 2014. Net
Interest Margin (NIM) stood at 3.82% at the end of 2014.
Risk Management, Operational and IT improvements
continued throughout the year as these initiatives are
crucial in supporting business. We hope to fully migrate
to TEMENOS T24 by the first half of 2015.
We believe that good blending of human and financial
capital will definitely help forge ahead in materialization
of our vision. Our employees are a key driver for the Bank
and to develop them will be another key area of focus.
Our human resources will facilitate our growth whilst
retaining our values. We will provide opportunities to
those with talent, ability, and ambition. We are committed
to creating a work place that is a positive experience for
employees, inspiring high level of performance where
there is mutual respect and alignment of organizational
and personal goals. New Human Capital Development
initiatives were carried out to ensure the Bank has a team
of committed professionals with the correct skill sets and
the right experiences to serve our customers.
We are committed to uphold our corporate motto Efficiency
is our strength. The Bank continues to place its brand in
the market and enhance accessibility by expanding our
network of branches and Alternate Delivery Channels.
Nine new branches were opened in 2014 and MBL has
reached the milestone of 100 branches nationwide to
serve a cross-section of customers across Bangladesh.
You will be happy to learn that we have, in the meanwhile
intensified our 'Mobile Financial Services', "My Cash" by
making business and technical alliance with all the cell
phone operators of the country.
We will continue to maintain the highest standards of
Corporate Governance as we believe this is a predominant
issue for banks to obtain stakeholders confidence for
Institution Building. As a measure of compliance with
prudential directives, the Board after dispassionate
assessment of the background, competency and professional
outlook has appointed two Independent Directors. Banks
Auditors are unanimously appointed by the shareholders in
the AGM. In the present state of overall conditions, we are
increasingly focused in establishing better internal control
through reinforcement of various means.
Mercantile Bank's pride stems not only from our monetary
achievements and success but is also based on what we
give back to the community. We place great importance

annual report 2014

60

on Corporate Social Responsibility (CSR) activities. The


Bank reinforced its commitment to society and their
well-being through various donations, and educational
initiatives. For this, Mercantile Bank Foundation was
established in 2000. Our CSR contributions are primarily
in the sectors of Education, Healthcare, Disaster
Management, Art and Culture, and Sports.
We are hopeful that non-economic factors retarding
economic activities and growth will be speedily resolved
and the overall economy of Bangladesh in 2015 will be
better than last year. Whilst business and consumer
confidence remained fragile, the level of underlying
activity and entrepreneurial abilities confirm the strong
foundations of the economy of Bangladesh. In the midst
of this, Banks priority is to maintain a robust and stable
financial and operating platform, which will facilitate
us support our customers better and provide superior
returns to shareholders. The Bank continues to remain
optimistic for the year ahead, as we target to grow our
core businesses, seek new avenues of investment, and
endeavor to remain ahead of competition in the industry.
New products/services and initiatives will be launched
so that we can enhance our value proposition to existing
customers, and acquire new business relationships. We
will reinforce the Banks branding presence by increasing
our network of branches. All these will be made possible
with a team focused towards achieving one common
corporate objective.
My gratitude to the Government of the Peoples Republic
of Bangladesh, officials of Bangladesh Bank, officials
of Bangladesh Securities and Exchange Commission,
Dhaka Stock Exchange, Chittagong Stock Exchange. On
behalf of the Board, I would like to thank our shareholders,
customers and business partners for their constant
support, trust and patronization. We also appreciate
the contribution made by our Auditors, Legal Advisors,
Consultants and Correspondents for their time befitting
and prudent roles.
Last but not the least, I would like to extend my deep
appreciation to the Board of Directors, Management
Team and every staff at MBL. It is your dedication and
hard work that has produced the results we have achieved
thus far. I would also like to urge the Management team
and staff to continue relying on their great teamwork
to achieve our corporate goals. I encourage each staff
to always exhibit prudence and professionalism when
working with customers, and become the embodiment of
a responsible citizen and banker. The Banks Corporate
Values will dictate our actions at work so that we can
continually deliver superior service and meet the needs
of our customers by truly becoming mJuJr mqJT.
With warm regards,

Morshed Alam, M.P

Managing Director and CEOs Review


Dear Shareholders,
We have a very clear vision for the Mercantile Bank
Limited: to be the finest corporate citizen. This is an
enduring, long term vision. At MBL, we aspire to excel
at securing and enhancing the financial well-being of
people, business and communities. Our strategy to
achieve our long-term vision is built around a customerfocused culture comprising people who thrive on
providing outstanding service, a strong balance sheet,
globally tested applications of technology, and a focus
on productivity and efficiency.
In 2014, Bangladesh economy could have performed
better had it not been for the lack of investors eagerness
resulting from political uncertainty, financial scams,
a general downturn in asset quality, and rise in Nonperforming Loans. Banks were faced with a situation
where liability growth mismatched with asset growth.
Despite these, however the economy achieved a GDP
growth of 6.12% in fiscal year 2014.
Amid this, we adopted a strategy of consolidation, by
reducing costs in various fronts including liability cost,
focusing on existing business, increase of our asset base,
managing classification of accounts to keep the growth
momentum. I am happy to share with you that despite
difficult times, the overall performance of MBL was
steady. During the year, we focused on few key financial
indicators. These are maintaining capital adequacy,
focusing on quality of assets, managing classification,

recovery of non-performing loans and broadening low and


no cost deposit base. These ensured risk, return trade-off
in our banking operations. The operating profit of the Bank
edged up to BDT 4.41 billion during the year 2014, from
BDT 4.26 in 2013. The profit growth momentum bears the
testimony that despite challenges, we performed well in
terms of our financial result by achieving targets almost
in all sectors of our banking operations. We maintained
substantial reserves to strengthen the capital base of the
Bank despite continued pressure on interest margins,
exchange earnings, and provisioning requirements.
We have kept our NPL ratio at 5.10 percent through our
prudent asset quality management control and policies,
ethical business practices, and strong corporate governance.
During the year, we have emphasized on restructuring our
deposit mix with a view to keeping down the cost of fund
and at the same time grow a sustainable deposit base by
reducing dependence on price sensitive corporate deposits.
Total deposits stood at BDT 140.48 billion, Loans and
Advances at other hand BDT 117.06 billion at the end of 2014,
registering a growth of 12.77% and 19.83% respectively.
Banks Cost of deposit reduced to 8.26% in 2014, from
8.93%. Total Shareholders Equity increased to BDT 13.52
billion in 2014 experiencing 7.51% growth over that of 2013.
MBL also made noteworthy contribution in facilitating Export
and Import business. During the year Exports was BDT

61

annual report 2014

Managing Director and CEOs Review

78.35 billion while import was BDT 107.09 billion. During


2014, Banks inward foreign currency remittance stood at
BDT 18.21 billion, a growth of over 46%.
We continue to strengthen our capital funding and liquidity
position and we are well poised to meet future regulatory
requirements. We issued subordinate debt bond of BDT
3.00 billion, which leveraged our balance sheet and our
capital stood at 19.10 billion and Capital Adequacy Ratio
(CAR) at 12.95%.
Technological transformation was a key strategic priority
for the Bank and in 2014, we embarked on the project of
implementation of our Core Banking Solution TEMENOS
T24- a world class proven technology platform. We are
investing in industry-leading online and Mobile Financial
Services. Our investment in growth areas, including
Agriculture, SME, and Green Banking is rising. Our
objective is to take MBL to global standards and cater to
ever changing customer needs.
As part of Green Banking, MBL is supporting loans
to environment friendly proposals and refraining from
projects which are non-compliant. We have established
a separate Green Banking unit and various measures
have been adopted to increase investment in this sector.
Our encouragement on financing ETP or water treatment
plants in existing Textiles and Readymade Garments
continued, and we are seeking investments in Renewable
Energy and Energy Efficiency sectors.
We are continuously expanding our network across the
country for attaining geographical and demographic
dividend. At the end of 2014, we had 100 branches and
two subsidiaries i.e. Mercantile Bank Securities Limited
with 7 branches and Mercantile Exchange House (UK)
Limited at London, United Kingdom. At the end of 2014,
we have as many as 127 ATM booths and 20 Cash
Deposit Machines (CDM) at different important hubs
across the country. We intend to keep increasing the
number of branches of MBL as well other new products of
Alternate Delivery Channels across the country in 2015.
We believe that employees are key in delivering results.
We are focused on building a culture that encourages
people to be responsible and accountable, and where
leadership is demonstrated at every level of the
organization. Our training centre is well equipped and
organized where the focus is continuous learning. We
have a committed, passionate and skilled workforce and
an excellent customer base, and we are continuously
agile to the fact that we want to make every customers
experience with us delightful.
MBL believes that, true success does not consist in profit
maximization, but in doing something good for the less
privileged. With a view to fulfilling our Corporate Social
Responsibilities (CSR) activities, MBL has established a
Foundation named Mercantile Bank Foundation in 2000
to carry out various benevolent and charitable activities.
Mercantile Bank Abdul Jalil Education Scholarship
provides financial assistance to poor and meritorious
students across Bangladesh. On its founding anniversary
2nd June each year, MBL awards few personalities of
the society for their outstanding contribution in fields of
Education, Healthcare, Culture, Liberation War based
Research, Bengali Language and Literature, Economy
and Economic Research, Commerce and Industry,
Journalism, Sports, Agriculture based Research and
annual report 2014

62

Development, and Science and Technology. Financial


assistance in health sectors, assisting the victims of
natural disasters, development of sports, and distribution
of warm clothing in winter months, sponsorship programs
for the mentally and physically challenged are some of
the CSR activities which Mercantile Bank Foundation
conducts each year.
2014 was a challenging year for the banking industry of
Bangladesh, and hopefully 2015 will be an active year
for the business and economy. The Banking industry is
becoming increasingly competitive. Modern and hi-tech
business is replacing conventional banking. Banks are
handling similar financial products. Hence, customer
delight, differentiation in products and delivery, efficient
management and meaningful governance will make the
difference in achieving sustainable growth and remaining
ahead of competition.
In this ever changing competitive environment we will
pursue a strategy to give what the customer wants, to
manage risks particularly credit risk, maintain strong
capital and liquidity, and manage costs at optimum levels.
All these will drive progress. We hope to curve our niche
and edge on our competitive advantages.
Tackling uncertainty and unexpected challenges of the
economy, coupled with rising tends into classification
meeting expectations of diverse services and demand for
lowering of interest rate on the asset side and raising
interest rate on liability side will be the major factors in
determining and positioning of banks in 2015 and beyond.
We are hopeful of managing these challenges well.
On behalf of management of the Bank, I express my
appreciation and thanks to the Government of the
Peoples Republic of Bangladesh, Governor and other
officials of Bangladesh Bank, Bangladesh Securities
and Exchange Commission (BSEC), Dhaka Stock
Exchange (DSE), Chittagong Stock Exchange (CSE) and
Registrar of Joint Stock Companies and Firms for their
continuous help and assistance, valuable guidelines and
co-operation provided to the Bank from time to time. I am
also very much thankful to all my colleagues in the Bank
for their profuse help and efforts to attain the corporate
vision, mission and strategic objectives by upholding our
ingrained institutional core values. I acknowledge my debt
and gratitude to the respected members of the Board for
their valuable and judicious policy support to navigate
this institution in the right direction for taking it to a higher
place of sustainable growth with competitive edge.
The Bank is well positioned for the future and I am
confident that we have the ability to continue to deliver
superior long term performance for our customers,
our shareholders, our people and the communities in
which we operate. Thank you again for your support
this year. Your management team will continue to
work hard to ensure that Mercantile Bank remains
strong and successful.
We all look forward to building a sound, sustainable
growing institution.

M. Ehsanul Haque

Directors
Report

Directors' Report

7.30

6.12

6.03

6.32

6.66

11
-1
2
20
12
-1
3
20
13
-1
4
20
14
-15
*

6.07

-11

-1
0

20

20

20

09

08

10

5.74

-0
9

6.19

20

20

6.43

-0
7

06

20

10

5.76

5.
36
6.48
5.84
6.1
1

6.4

6.

5.63

60

5.74

ec

em

be

r
D

em

be

er
ct

ob

ov

tem
be

Se
p

st

ly

gu
Au

Non-Food

Food

Ju

ne

r
General

Ju

ay

ril
Ap

ch
ar
M

ry

y
ar
nu

7.

Ja

61

6.2

5.71

91

81

5.45

7.

67

6.

6.

5.16

7.

04

07
7.

5.25

7.

80

97

48

5.20

8.

6.

5.37

01

35

46

5.53

9.

8.

7.

64

96

80

81

7.

annual report 2014

8.

8.

8.

48

In FY 2013-14, Bangladesh Economy achieved 6.12%


GDP growth against the revised target of 6.5%. Volume
of total GDP at current price In FY2013-14 was BDT
13,509.20 billion compared to that of BDT 11,989.23
billion in previous FY2012-13.

-0
8

6.63

-0
6

Monthwise Point-to-Point Inflation (%) in 2014 (base year 2005-06)

7.

GDP Growth

07

5.96

-0
5

Inflation rate did not exceed single digit over the year
2014. Highest overall inflation (point to point) rate was
7.50% in the month of January and reduced to 6.11% in
December 2014. Food inflation (point to point) increased
steadily from 8.81% in January 2014 to 9.09% in May
2014 mainly due to supply chain disruption followed by
frequent nationwide strikes, and simultaneous price
hike in neighboring countries. After that, it decreased
sharply to 5.86% in December, 2014. On the other hand,
point to point non-food inflation was steady at around
5.5% throughout year and increased a little to 6.48% in
December 2014.

50

In 2014, the economy of Bangladesh did not bounce back


as expected as non-economic issues have scathed the
economy during the year. Economists and experts are
very much suspicious regarding the possibility of attaining
6.5% growth in the current fiscal. Inflation rate hovered
around 7.5% during the year. Export and Import flow was
moderate while remittance advanced slowly.

05

04

Inflation

7.

Bangladesh Economy

20

20

Investment is the critically important factor for GDP


growth. According to the BBS data, private investment
declined for the second consecutive year from 22.5%
in FY2012 to 21.8% in FY2013 and then to 21.4% of
GDP in FY2014. On the other hand, public investment
has increased by 0.7 percentage points to 7.3% of GDP
in FY2014. For the incremental growth of GDP, roughly
to the extent of 7%, investment to GDP ratio should be
around 30-32%.

44
7.

Global growth in 2014 was lower than initially expected,


continuing a pattern of disappointing outturns over the
past several years. Growth picked up only marginally
in 2014 to 2.6 percent from 2.5 percent in 2013. While
activity in the US and the UK has gathered momentum
as labor markets heal and monetary policy remains
extremely accommodative, the recovery has been
sputtering in the Euro Area and Japan as legacies of
the financial crisis linger, intertwined with structural
bottlenecks. China, meanwhile, is undergoing a carefully
managed slowdown. Disappointing growth in other
developing countries in 2014 reflected weak external
demand, but also domestic policy tightening, political
uncertainties and supply-side constraints.

* Targeted GDP Growth

ua

Despite setbacks, an uneven global recovery continues


largely due to weaker-than-expected global activity in
2014. Short-term risks include a worsening of geopolitical
tensions and a reversal of recent risk spread and volatility
compression in financial markets. Medium-term risks
include stagnation and low potential growth in advanced
economies and a decline in potential growth in emerging
markets. The global economy is still struggling to gain
momentum as many high-income countries continue to
grapple with legacies of the global financial crisis and
emerging economies are less dynamic than in the past.

br

World Economy

GPD Growth Rate (%)

10

Fe

On behalf of the Board of Directors of MBL, we have


the pleasure to present the 16th Annual Report of the
Bank comprising of audited Balance Sheet, Profit and
Loss Account, Cash Flow Statement, and Statement of
Changes in Equity and Assets Liabilities Maturity Analysis
as on December 31, 2014. On this auspicious gathering
of our most valued shareholders, we are also placing a
brief review of various business operations of the Bank
during 2014 along with the current trend of World as well
as Bangladesh Economy.

Exports
Export earnings registered a growth rate of 11.7%, nearly
missing the target of 12.9% growth set out for FY2014.
The economy earned USD 30.18 billion as export
earning in FY2013-14 as compared to USD 27.03 billion
in FY2012-13. Indeed, export performance was showing
robust trends, and was above the target level, for the first
ten months of FY2014. It was in the last two months, that
export earnings recorded a lowly 5.5% growth.

www.mblbd.com

2,000.00

the central bank continued to use market operation tools


to withdraw excess foreign currencies from the market.
Hence, foreign exchange holdings of the country rose
further by about USD 6.2 billion in FY2014.

1,000.00

BBs Monthly FX Reserve Holding Trend over 2012-2014

4,000.00

Monthwise Export Earnings (million USD) over 2012-2014

2014

December

November

October

September

July

2013

August

May

2012

June

April

March

February

January

3,000.00

Imports

December

November

October

September

July

August

June

May

April

March

er

be

mb

er

be

January

ce

ve

ob

em

February

De

ct

st

2014

No

pt

gu

2013

Se

ly

ry

2012

Au

ne

Ju

Ju

ay
M
ril
Ap
ch
ar

2014

2013

2012

ua

1,000.00

ar

2,000.00

br

3,000.00

nu

Monthwise Import Costs (million USD) over 2012-2014

Fe

4,000.00

Ja

Import payments during FY2013-14 increased by 19.39%


and stood at USD 40.69 billion as compared to USD
34.08 billion in FY2012-13. However, in calendar year
2014, total import payment stood at USD 40.53 billion as
against USD 37.54 billion in calendar year 2013 indicating
growth of 10.65% in 2014 over 2013.

Broad Money (M2)


Broad money recorded an increase of BTD 824.89 billion
or 12.84% at the end of November 2014 against the
increase of BDT 918.25 billion or 16.67% at the end of
November 2013. The sources of changes of Broad Money
are generally change in Net domestic assets (NDA) and
change in Net Foreign Assets (NFA). An increase in NFA
contributes in easing pressure in external sector as well
as casts positive impact on liquidity position. Of the
sources of broad money, net domestic assets (NDA) rose
by BDT 490.24 billion or 9.58% and net foreign assets
(NFA) rose by BDT 334.65 billion or 25.60%.
Domestic Credit

Remittances
Remittance inflow recorded negative growth of 1.6%
during FY2014, a first time in many years. As per the
Bangladesh Bank record, the last time a negative growth
was experienced was in FY2001 when remittance inflow
registered negative 3.6% growth. Remittance inflow
during FY2013-14 was USD 14.23 billion as compared
to USD 14.46 billion in FY2012-13. In calendar year 2014
total remittance inflow increased to USD 14.94 billion from
USD 13.83 billion in 2013 indicating a positive growth of
8.03% in 2014 over the year 2013.
Trends of Monthly Remittance Inflow over 2012-2014

r
be
em r
e
ec
D mb
e
ov
N
er
ob
ct er
O
b
em
pt
Se t
s
gu
Au
ly
Ju
ne
Ju
ay
M
ril
Ap
ch
ar
M ary
u
br
Fe ry
a
nu

Ja

2012

2013

2014

Foreign Exchange Reserve


The gross foreign exchange reserves of BB increased
to USD 22.31 billion as of end December 2014, against
USD 18.07 billion as of end December, 2013. To maintain
stability of the exchange rate of Taka (vis--vis USD),

Domestic credit experienced growth by 11.18% at the end


of December 2014 compared to the corresponding period
of the year 2013. Credit to the public sector increased by
2.46% whereas growth in the private sector credit was
13.50% in December 2014.
Exchange Rate Movement
Domestic currency taka (BDT) gained its value against
USD during early of the year 2014. At the end of
December 2014, Taka has depreciated by 0.41% from
its level at the end of June 2014, showing stability in
the foreign exchange market. Higher inflow of foreign
currencies and lack of payment demand resulted in a
continuing rise in the foreign exchange reserves. This
led to some appreciation in the real exchange rate of
Bangladesh Taka (BDT) against all major currencies.
Indeed, to maintain stability the exchange rate of Taka
(vis-a-vis USD), the central bank continued to use market
operation tools to withdraw excess foreign currencies
from the market.
Balance of Payments
The countrys trade Balance recorded a higher deficit
of USD 4.48 billion in the first five months of FY15
compared to the deficit of USD 2.25 million in the same
period of FY14. Though inflow of remittances was higher
in the period, a larger import payment contributed to a

65

annual report 2014

Directors' Report

current account balance deficit of USD 1.32 billion during


July-November, 2014. Although there is current account
balance deficit, a larger financial account surplus resulted
in a surplus of USD 1.16 billion in overall balances during
July-November, 2014 against a surplus of USD 2.04 billion
during the same period of the preceding fiscal.
Business Review

Sector Wise Loans & Advances Mix


(BDT in million)
Particulars

Volume

Garments

Engineering (Iron and Steel/Electrical)

Trade Finance

Deposits & Deposit Mix

SME

In the year 2014, we have emphasized on restructuring of


our deposit mix with a view to keeping downhill the cost of
fund as well as to build up the sustainable deposit base by
reducing our dependence on big chunk corporate deposits.
As a result, at the end of 2014, total deposits of the Bank
stood at BDT140,475.84 million as compared to BDT
124,566.97 million of 2013. However, we are endeavoring
to make our deposit products even more acceptable to the
prospective clienteles by ensuring delivering superior and
value adding customer services.

(BDT in million)
Type

Volume

Deposit Under Schemes

55,176.86

39.28%

Fixed Deposits

46,057.22

32.79%

Savings Deposits

10,534.22

7.50%

Current Deposits

5,494.16

3.91%

Short Notice Deposits

8,850.41

6.30%

Other Deposits
Total

14,362.97

10.22%

140,475.84

100.00%

13.31%

9,068.66

7.75%

9,508.60
7,363.60

5,910.44

Transportation

3,054.88

Textile

4,158.02

Paper & Publications

Hospital & Medical Services

14.18%

15,585.99

Housing

2,473.35
2,219.59

8.12%
6.29%
5.05%

3.55%

2.61%

2.11%

1.90%

Pharmaceuticals

1,824.45

1.56%

Agriculture

1,785.80

1.53%

34,058.81
117,060.03

29.10%
100.00%

Plastic & Plastic Materials


Jute Industries

Deposit Mix

Food, Beverage, Edible Oil, etc.

16,599.23

1,637.55

Others
Total

14.18%
29.10%

13.31%
8.12%

1.40%

1,811.06

7.75%
6.29%

1.53%
5.05%
1.55%
1.56%
3.55%
1.90% 2.11% 2.61%

1.55%

1.40%

Garments
Engineering (Iron and Steel/Electrical)
Trade Finance
SME
Food, Beverage, Edible Oil, etc.
Housing
Textile
Transportation
Paper & Publications
Hospital & Medical Services
Pharmaceuticles
Plastic & Plastic Materials
Agriculture
Jute Industries
Others

Import Trade
10.22%
6.30%
3.91%

39.28%

7.50%

Deposit Under Schemes


Fixed Deposits
Savings Deposits
Current Deposits
Short Notice Deposits

32.79%

Other Deposits

Like before, this year also MBL has exhibited quality financing
while facilitating import trade. During the year, the Bank
handled a total of BDT 107,089.70 million of Import business
compared to BDT 100,685.60 million of the year 2013. The
Bank is engaged in opening Letter of Credit in different
sectors including machineries, garments & accessories,
wheat, sugar, CDSO, vegetable oil, cement clinkers, hot roll
steel, raw cotton, ships-breaking industries etc.
Export Trade

Loans and Advances


Total loans and advances of the Bank stood at BDT
117,060.03 million as on December 31, 2014 against that
of BDT 97,688.50 million at the end of 2013. The Bank
recorded a 19.83% growth in loans and advances. Major
sectors where the Bank extended credit includes trade and
commerce, garments industries, large and medium scale
industries, construction, agriculture and related sectors,
hospital and medical Services, transport, pharmaceuticals
etc. Besides, the Bank continued its support to Small and
Medium Enterprises (SME) and expanded credit facilities
to them through its SME Division.
annual report 2014

66

The Bank handled total of BDT 78,352.70 million of export


business in 2014 as against BDT 71,671.50 million of the
year 2013. The focal point of our export financing was
garments industry, the lone driving force of the economy
of Bangladesh and the single biggest source of foreign
exchange and employment provider of the country. Other
notable items were jute & jute goods, leather, handicrafts,
tea, frozen food & fish products.
Foreign Remittance
During the year 2014, MBL has strengthened its position
in mobilizing inward foreign remittance from Non-Resident
Bangladeshis (NRB) living and working in different parts

www.mblbd.com

of the world. The Bank has strategic alliance with leading


exchange companies and banks in USA, United Kingdom,
Australia, UAE, Kuwait, Bahrain, Canada, Italy, France
etc. Furthermore, for prompt & safe distribution of this
hard earned money to their near and dear ones in every
corner of the country, we have made an arrangement with
Bangladesh Post Office and some other local banks and
agencies. MBL participated in various fairs/ campaigns
at home and abroad to create awareness and continued
encourage and motivate both remitters and beneficiaries
to use formal banking channel for money transfer from
abroad. In 2014, the bank handled total inward foreign
remittance of BDT 18,208.60 million compared to BDT
12,434.70 million in 2013. We have strengthened
relationship with various global money transfer companies
including Western Union, MoneyGram, Xpress Money,
Placid Express, Instant Cash Worldwide, Prabhu Money
Transfer and Trans-Fast Remittance.
Asset Portfolio
The Banks total assets as on December 31, 2014
amounted to BDT 168,474.13 million as compared to BDT
144,841.87 million at the end of December 2013. Among
the total assets outstanding in 2014, loans and advances
constituted 69.48%, investments 19.10%, cash 7.65%,
balances with other banks 0.44% and other assets 3.32%.
Asset Portfolio
(BDT in million)

In 2014

Components

Amount % of Total

Loans and
Advances

117,060.03 69.48% 97,688.50 67.44%

Investments

32,184.09 19.10% 30,090.60 20.77%

Cash

12,894.26

Balance with
other Banks
Other Assets
(including
Fixed Assets)
Total

In 2013
% of
Amount
Total

7.65% 10,402.42

7.18%

742.38

0.44%

917.82

0.65%

5,593.37

3.32%

5,742.53

3.96%

168,474.13 100.00% 144,841.87 100.00%

0.44%
7.65%

3.32%
Loans & Advances

19.10%

Investments
Cash
Balance with other Banks
69.48%

Other Assets
(including Fixed Assets)

Capital
The Authorized Capital of the Bank stood at BDT
12,000.00 million of 1,200,000,000 Ordinary Shares of
BDT 10 each as on December 31, 2014. Paid-up Capital
of the Bank was BDT 7,391.57 million of 739,156,701
Ordinary Shares, face value of BDT 10 each and listed in
both Dhaka and Chittagong Stock Exchanges.
Statutory Reserve
During the period under review the Bank transferred
BDT 457.70 million to Statutory Reserve as 20% of the
profit after provisions before tax as per Section 24 of the
Bank Companies Act, 1991. The total amount of Statutory
Reserve stood at BDT 4,223.12 million at the end of 2014.
Capital Adequacy
As per new risk based capital adequacy framework,
MBL has adopted Basel II in the Bank. As per Basel II
principles, Capital Adequacy Ratio (solo basis) of the Bank
stood at 12.95% as on December, 2014 against minimum
requirement of 10%.
Capital Adequacy

(BDT in million)
Core Capital (Tier I)
12,427.74
Paid-up Capital
7,391.57
Statutory Reserve
4,223.12
Retained Earnings
767.37
Dividend Equalization Account
45.68
Supplementary Capital (Tier II)
General Provision
Exchange Equalization Account
Revaluation Reserve for Assets
Revaluation Reserve for Equity Investment
Revaluation Reserve for Securities
Subordinate debt
Total Capital
Total Risk-Weighted Assets (RWA)
Capital Adequacy Ratio

Tier I Capital to RWA


Tier II Capital to RWA
Minimum Capital Requirement
Capital Surplus

6,676.21
3,130.49
321.81
223.91
3,000.00
19,103.95
147,484.30

12.95%

8.43%
4.52%
14,748.43
4,355.52

It is noteworthy that within the purview of our capital plan,


we have issued sub-ordinated debt bond to the extent of
BDT 3,000.00 million during the year 2014. Our this effort,
consequentially scaled up our capacity of taking exposures
on the single borrower and group and at the same time we
are very much commitment bound to utilize this enhanced
capacity with prudence and sagacity towards enrichment of
our balance sheet positions in the coming years.
Number of Shareholders
Since the issuance of IPO in 2003, the number of total
shareholders is increasing day by day. At the end of the
year 2014, total number of shareholders of the Bank
stands at 42,176

67

annual report 2014

Directors' Report

Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

No. of
4,459
Shareholders

5,199

5,868

6,692

8,246

12,416

40,283

41,427

44,117

44,462 42,176

Contribution to National Exchequer and Economy


Being a responsible corporate citizen, MBL regularly
pays corporate tax on time. We also deposit excise duty,
withholding tax and VAT to govt. exchequer on time
deducted from employees salary as well as payments to
customers and vendors in due process. In 2014, the Bank
has made provision of BDT 1,100.00 million for corporate
tax against that of BDT 1,250.00 million in 2013. The
Bank has also contributed to the economy by generating
employment opportunities. Number of employees on
our regular payroll figured at 1,962 as on December 31,
2014. In the intermediation process, the Bank mobilized
resources of BDT 140,475.84 million from the surplus
economic unit and deployed BDT 117,060.03 million in
2014. The Bank has made significant contribution to the
growth of Readymade Garments sectors by handling huge
amount of export Letters of Credit.
Acquisition of IDLC Shares
In the year 2005 Mercantile Bank Ltd. acquired 150,000
sponsor shares of IDLC Finance Limited.
Dividend from IDLC Finance
IDLC
Received by MBL
%
Stock
Stock
Total
Total
Cash
Year
Dividend Dividend Sale Dividend Dividend Holding Holding
(Original) (Tk.10/-) (Original) (Tk.10/-)
in BDT
150,000.00 1,500,000.00

Share Holding
2005 37.50% 5,625,000.00
2006
2007
2008
2009
2010

5.00%,
33.33% B
15%,
25% B
15%,
20% B
10%,
100% B
35%,
65% B

750,000.00

- 150,000.00 1,500,000.00

50,000.00 500,000.00 200,000.00 2,000,000.00

2,250,000.00 50,000.00 37,500.00 375,000.00 187,500.00 1,875,000.00


2,812,500.00

37,500.00 375,000.00 225,000.00 2,250,000.00

2,250,000.00

225,000.00 2,250,000.00 450,000.00 4,500,000.00

15,750,000.00

292,500.00 2,925,000.00 742,500.00 7,425,000.00

2011

25%B

185,625.00 1,856,250.00 928,125.00 9,281,250.00

2012

30%B

278,437.50 2,784,375.00 1,206,562.50 12,065,625.00

2013 5%, 25%B 6,032,812.50

301,640.63 3,016,406.00 1,508,203.13 15,082,031.00

Total

35,470,312.50 50,000.00 1,408,203.13 14,082,031.00

From the financial year 2005 to 2013 we have received


cash dividend of BDT 35,470,312.50 along with capital
gain from sale of 50,000 shares BDT 59,650,000.00. Total
receipt from IDLC investment stood at BDT 95,120,312.50.
Present Holding:

At present Mercantile Bank Ltd is 1,50,82,031 ordinary


shares of IDLC FINANCE LIMITED, which is 7.50% of
the total paid up capital of the said Non-Banking financial
institution
Branch Network

The Bank commenced its business on June 2, 1999. The


first branch was opened at Dilkusha Commercial Area in
Dhaka on the inauguration day of the Bank. At the end of
2014, the number of branches of the Bank stood at 100,
including 5 SME/Krishi branches, of which 67 branches
are located at major trade centers of the country while
remaining 33 branches are at the rural areas of the country.
Expansion of branches at rural areas has provided the
lower income group an access to modern banking system
and prompt receipt of remittances.
Board and Committee Meetings
17 (seventeen) meetings of the Board of Directors, 44
(forty four) meetings of the Executive Committee, 11
(eleven) meetings of the Audit Committee, and 03 (three)
meetings of the Risk Management Committee of the
Board were held during the year 2014.
Particulars
Board of Directors
Executive Committee
Audit Committee
Risk Management
Committee

2012
17
40
11

Year
2013
25
34
09

2014
17
44
11

03

External Auditors

Khan Wahab Shafique Rahman & Co., Chartered


Accountants and A. Qasem & Co., Chartered Accountants
are presently engaged as Auditors of the Bank. The Audit
Firm: Khan Wahab Shafique Rahman & Co., Chartered
Accountants will be completing 3 (three) years as
External Auditors and the other Auditor, A. Qasem & Co.,
Chartered will be completing first year successfully at the
end of 2014. As per the guidelines of Bangladesh Bank
and Bangladesh Securities and Exchange Commission,
only A. Qasem & Co., Chartered Accountants is eligible
for re-appointment for further term. The distinguished
Shareholders will decide the appointment/ re-appointment
of 2 (two) Audit Firms as External Auditors of the Bank in
the AGM.
Correspondent Relationship

Capital Gain:
Mercantile Bank Ltd received 50,000 shares as stock
dividend of IDLC Finance Limited in the year 2006. In the
year 2007 we realized capital gain of BDT 59,650,000.00
after completion of sale of 50,000 bonus share.
annual report 2014

Total Receipt:

68

The Bank
across the
number of
December

has established correspondent


world with a number of foreign
correspondent banks stood at
31, 2014 across 64 countries.

relationship
banks. The
638 as on
Through its

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correspondent relationship network, MBL continues to


follow needs and business opportunities of its clients. The
Bank maintains 32 Nostro accounts in 6 major international
currencies with reputed international banks in all the major
financial centers around the world, for settlement of trade
finance and all other cross border transactions. MBL also
enjoys sufficient credit lines from correspondent banks for
add confirmation to LC to facilitate international trade. We
are continuously emphasizing and trying to develop and
improve the relationship with correspondent banks.
Mercantile Exchange House (UK) Limited
With permission from Bangladesh Bank and registration
of Financial Services Authority, UK, MBL stretched its
business in UK through its fully owned subsidiary named
Mercantile Exchange House (UK) Limited to facilitate fast
and reliable medium to remit the hard-earned money of
expatriates to home. After commencement of business in
December 2011, at present we have one branch in London.
Within a very short span of time, the company has been
able to create satisfactory customer base through efficient
and professional service to Bangladeshi expatriates living
in the UK.
Mercantile Bank Securities Limited
Mercantile Bank Securities Limited (MBSL) formed on
27 June 2010, to deal with stock dealing and broking.
As a subsidiary it started its separate operation from 14
September, 2011. At present, MBSL has 7 branches.
Off-shore Banking
Off-shore banking acts as a unique solution for banks
across the globe to carry out international banking
business involving foreign currency denominated assets
and liabilities taking the advantages of low or non-existent
taxes/ levies and higher return on investment. MBL is
offering off-shore banking facilities to cater the banking
requirements of non-resident customers through its
Gulshan and Chittagong Export Processing Zone (CEPZ)
branches.

continuously. Banking operations of the branches have


been computerized to minimize costs and risks and
to optimize benefits and increase overall efficiency for
improved services. After full implementation of our Core
Banking Solution TEMENOS T24, a world class proven
technology platform, banks MIS system will be more robust,
prompt and user friendly. Banks have started moving into
paperless banking as part of Green Banking and MBL
cherishes the idea by accelerating the pace of automation
empowered by IT Division, which will not only reduce
transaction and hardware costs significantly, but also
a greater extent of scalability will be introduced and the
resources exploitation will be maximized to save energy.
Financial Products and Services
The Bank has launched a sound number of attractive
financial products and services to accommodate the
requirement of people of all classes since inception.
Among them Monthly Savings Scheme (MSS), Super
Benefit Deposit Scheme (SBDS), Monthly Benefit Deposit
Scheme (MBDS), Double Benefit Deposit Scheme (DBDS),
Special Saving Scheme (SSS), Education Benefit Deposit
Scheme (EBDS), Quarterly Benefit Deposit Scheme, 1.5
Time Benefit Deposit Scheme, Advance Benefit Deposit
Scheme, Consumer Credit Scheme, Lease Finance
Scheme, Overseas Employment Loan Scheme, Personal
Loan Scheme, Car Loan Scheme, Home Loan Scheme,
Agriculture Loan and SME Loan have received wide
acceptance among the people.
Financial Review
Operating Profit
The operating profit of the Bank stood at BDT 4,410.57

million in 2014 as against BDT 4,255.70 million in 2013.

Net Interest Income of the Bank stood at BDT 5,372.82


million in 2014 as against BDT 4,794.61million in 2013.
Operating Profit

(BDT in million)

Mobile Banking

Total Interest Income

16,758.21

With the permission of Bangladesh Bank, MBL launched its


own mobile banking service in name and style, MyCash.
In Mobile Banking system, basic mobile handsets are
being used as bank accounts and will serve as a wallet
for the transaction of money. This is an innovative idea of
economic inclusion of the low income un-banked people.
This service has already gain popularity among a good
number of people and the number is increasing day by day.

Less: Interest Expenses

11,385.39

Information Technology
From inception, MBL has always been moving with
the latest technology and time-to-time the bank has
adopted different advantages of the technology to enrich
its IT infrastructure and to cope with the ever changing
customer needs. The role and importance of Information
Technology in the banking industry cannot be overemphasized. Technological innovation is adding value

Net Interest Income

5,372.82

Add: Non- Interest Income

2,623.20

Total Operating Income

7,996.02

Less: Non Interest Expenses

3,585.45

Operating profit

4,410.57

Total Income
Total income of the Bank stood at BDT 19,381.41 million
in 2014 from BDT 19,090.71 million in 2013. Interest
income accounted for 86.46%, exchange gains 4.00%,
commission 4.02% and other income 5.52% to total
income in 2014 as against 86.90%, 3.53%, 4.11% and
5.46% respectively in 2013.

69

annual report 2014

Directors' Report

Total Income

Amount
16,758.21
773.43
779.15
1,070.63
19,381.41

Interest Income
Exchange Gains
Commission
Other Income
Total

Interest Expenses

(BDT in million)

% of Total
86.46%
4.00%
4.02%
5.52%
100.00%

(BDT in million)
Components
Interest on Deposits

Interest on Refinance from BB


Interest on Secondary Treasury
Bill Purchased
Interest on subordinate Bond
Total

4.02%
5.52%
4.00%

97.88%

Interest on Loans and Advances


Interest on Treasury Bill & Bond

2,773.71

16.55%

Other Interest Income

142.82

0.85%

Total

16,758.21

100.00%

16.55%

0.85%
Interest on Loans and
Advances

0.01%

195.00

1.71%

Interest on Secondary
Treasury Bill Purchased

86.46%

Components

1.63

Interest on Refinance
from BB

Other Income

(BDT in million)
% of
Amount
Total
13,841.68
82.60%

0.40%

Interest on Deposits

Commission

Interest Income

97.88%

45.22

11,385.39 100.00%

Exchange Gains

Interest income of the Bank stood at BDT 16,758.20 million


in 2014 from BDT 16,590.37 million in 2013. Interest on
loans and advances accounted for 82.60%, interest on
Treasury bill and Bond 16.55% and Other Interest Income
0.85% in 2014.

11,143.54

0.40%
1.71%
0.01%

Interest Income

Interest Income

Amount % of Total

Interest on subordinate
Bond

Net Interest Income


Net interest income increased from BDT 4,794.61 million in
2013 to BDT 5,372.82 million in 2014. Gross interest income
of the Bank amounted to BDT 16,758.21 million and interest
expenses amounted to BDT 11,385.39 million in 2014.
Net Interest Margin (NIM)
Banks net interest margin, which is derived from net
interest income divided by average earning assets, was
3.82% in 2014.
Non-Interest Income
Non-interest income stood at BDT 2,623.20 million in
2014 against BDT 2,500.35 million of 2013. Among the
constituents of Not-Interest Income, Exchange Gains
contributed 29.48%, Commission 29.70%, Income on
Investment 0.85%, and other Non-interest Income 39.96%
in 2014 as against 26.97%, 31.34%, 0.86% and 40.83%
respectively in 2013.
Non-interest Income

Interest on Treasury Bill &


Bond

(BDT in million)

Other Interest Income

Components

82.60%

Amount

% of Total

Exchange gains

773.43

29.48%

Commission

779.15

29.70%

22.32

0.85%

Interest Expenses

Income on Investment

At the end of the year 2014 interest expenses of the


Bank stood at BDT 11,385.39 million in 2014 from BDT
11,795.76 million in 2013.

Other non-interest income

1,048.30

39.96%

Total

2,623.20

100.00%

annual report 2014

70

www.mblbd.com

Non Interest Expenses


(BDT in million)

29.48%

39.96%

Exchange gain
Commission

Other non-interest
income

29.70%

Total Expenses
The total expenses of the Bank stood at BDT 14,970.84
million during 2014 as compared to BDT 14,835.02 million
during 2013. Interest expenses accounted for 76.05%,
salaries and allowances 11.94%, rent, rates, taxes etc.
3.20%, depreciation and repairs 1.79%, stationary,
printing and advertisements 1.37%, postage, stamp and
telecommunication 0.35%, and other expenses 5.30% of
total expenses in 2013 as against 79.51%, 9.63%, 2.90%,
1.57%, 1.01%, 0.36% and 5.02% respectively in 2013.
Total Expenses

Particulars

Interest Expenses

Salaries and Allowances


Rent, Rate, Taxes etc

Depreciation and Repairs

Stationery, Printing & Advertising


Postage, Stamp and
Telecommunication
Other Expenses

Total Expenses

1.37%
1.79%
3.20%

Amount

1,787.53

Rent, Rate, Taxes etc

Income on Investment
0.85%

Particulars

Salaries and Allowances

479.33

Depreciation and Repairs

267.92

Stationery, Printing & Advertising


Postage, Stamp and
Telecommunication
Other Expenses

5.70%

52.39

1.46%
22.14%

100.00%

Salaries and Allowances

49.86%

Rent, Rate, Taxes etc


Depreciation and Repairs
Stationrey, Printing &
Advertising
Postage, Stamp and
Telecommunication

7.47%
13.37%

(BDT in million)

Amount

11,385.39

1,787.53

479.33

% of Total
76.05%

11.94%

3.20%

267.92

1.79%

204.40

1.37%

52.39

0.35%

793.88

5.30%

100.00%

Net Profit before Tax


After transferring all provisions, net profit before tax stood
at BDT 2,288.31 million in 2014 as against BDT 3,228.70
million in 2013.
Provision for Income Tax
Provision against current year tax is BDT 1,100.00 million
in 2014 as against BDT 1,250.00million in 2013.
Profit after Tax
Profit after tax earned by the Bank in 2014 is BDT 1,188.51
million as against that of BDT 1,978.70 million in 2013.
Profit after Tax

Intrest Expenses
Salaries and Allowances
Rent, Rate, Taxes etc
Depreciation and Repairs

76.05%

7.47%

793.88

3,585.45

1.46%
5.70%

0.35%

11.94%
11.11%

13.37%

Other Expenses

14,970.84

5.30%

49.86%

204.40

Total Expenses

22.14%

% of Total

Stationrey, Printing &


Advertising
Postage, Stamp and
Telecommunication

Non-interest Expenses
Non-interest expenses moved up from BDT 3,039.26
million in 2013 to BDT 3,585.45 million in 2014. Salaries
and allowances 49.86%, rent, rates, taxes etc. 13.37%,
depreciation and repairs 7.47%, stationary, printing
and advertisements 5.70%, postage, stamp and
telecommunication 1.46%, and other expenses 22.14%
of total expenses in 2014 as against 47.00%, 14.17%,
7.64%, 4.90%, 1.77% and 24.52% respectively in 2013.

(BDT in million)

Interest Income

16,758.21

Interest Expenses

11,385.39

Net Interest Income

5,372.82

Non- Interest Income

2,623.20

Non Interest Expenses

3,585.45

Net Non interest Income

(962.25)

Profit Before Provision & Tax

4,410.57

Provisions
Provision Un-classified Loans

1,552.49

Provision Classified Loans

484.53

Provision for Off-Balance Sheet Items

84.25

Profit before Tax

2,288.51

Provision for Tax

1,100.00

Profit after Tax

1,188.51

71

annual report 2014

Directors' Report

Dividend
The Board of Directors recommended 10% cash dividend
for the year 2014. The Bank paid out 20% dividend (8%
cash & 12% stock) to the shareholders in 2013.
Earnings Per Share (EPS)
Since the inception and enlistment in Stock Exchange, the
Bank has been making positive EPS. Earnings per share
stood at BDT 1.61 as on December31, 2014 against BDT
2.68 as on December 31, 2013.
Operating Efficiency Ratio
Operating Efficiency Ratio stood at 77.24% in 2014
as against 77.71% in 2013. This measures how much
operating expenses are incurred to generate operating
revenues.
(BDT in million)
Operating Efficiency Ratio
2014

2013

Total Expenses

14,970.84

14,835.02

Total Income

19,381.41

19,090.71

77.24%

77.71%

Operating Efficiency Ratio


Outlook 2015

In 2015, the Bank will be more focused on strengthening/


consolidation of position by expansion of its core business
portfolios with specific importance to diversify the credit
portfolio across the borrowers and business emphasizing
on qualitative asset growth and thereby, attaining
acceptable level of risk and return trade-off. With respect
to liability management, we shall prioritize to buildup
sustainable deposit base with more importance on retail
deposits and gradual reduction of reliance on corporate
deposits. In this year, we are hopeful to cover all of our
branches under the TEMENOS T24 IT network, thereby
to bring more sophistication in our IT platform. We shall
also continue our relentless efforts to upgrade the service
quality by providing real time need based array of services
to our clienteles and at the same time to ramp up the skill
level of our employees so as to make them more proactive

annual report 2014

72

and responsive to the emerging challenges. In pursuit


of sustainable business growth, the Bank will invariably
stick to good corporate governance practices,
sound risk management policies, compliance with
the prudential guidelines with a view to ensuring
sustainable growth and profitability.
Acknowledgements
MBL is well poised to face the challenges of the coming
years with confidence and professional zeal. We believe
that your Bank has the ability to continue delivering
superior value added services to the diversified segments
of clienteles and thereby, to make our position even more
competitive as the first ranking financial service solution
provider of the country.
The Board of Directors take this opportunity to express
its heart-felt appreciation and debt of gratitude to the
Government of the Peoples Republic of Bangladesh,
Ministry of Finance, Bangladesh Bank, Bangladesh
Securities & Exchange Commission, Dhaka Stock
Exchange Limited, Chittagong Stock Exchange Limited
and Registrar of Joint Stock Companies and Firms for
their cooperation, valuable guidance and advice provided
to us from time to time.
The Board of Directors also expresses deep appreciation
to the Management and all Executives, Officers and Staff
for their relentless efforts to the cause of this institution and
also to the clients, sponsors, shareholders, stakeholders,
patrons and well-wishers, whose continued unflinching
support and patronization have enabled us to take this
institution to the present growth trajectory.
On behalf of the Board of Directors,

Morshed Alam, M.P


Chairman

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Management
Discussion and Analysis
World Economy
The global economy is still struggling to gain momentum
as many high-income countries continue to grapple with
the legacies of the global financial crisis and emerging
economies are less dynamic than in the past. After
rising marginally in 2014 to 2.6 percent, World GDP is
now expected to grow at 3.0 percent in 2015 and 3.3
percent in 2016, supported by gradual recovery in
high-income countries, low oil prices, and receding
domestic headwinds in developing countries. Developing
economies are expected to see an increase in growth
from 4.4 percent in 2014 to 4.8 percent and 5.3 percent
in 2015 and 2016, respectively.
A sluggish global recovery still continues. The recovery
in the US is broadening on the back of stronger domestic
consumption, rising investment, and industrial activity.
In the Euro area, headwinds from necessary forces
continue to weaken industrial production and investment
sentiment. Growth may be picking up in Japan, again on
the back of stronger exports, aided partially by further
quantitative easing that led to a depreciation of the yen.
In china, poor activity along with low inflation prompted
rate cuts by the Peoples Bank of China. In other
major emerging market economies, downside risks to
growth from elevated inflation, low commodity prices,
deteriorating labor market condition, and sluggish
domestic demand have become accentuated. Broadly,
in advanced economies, the legacies of the pre-crisis
boom and the subsequent crisis still cast a shadow on
the recovery. Emerging markets are adjusting to rates of
economic growth lower than those reached in the precrisis boom and the post crisis recovery. Overall, the pace
of recovery is becoming more country specific.
The current juncture presents a window of opportunity
for reform. The sharp decline in oil prices means
that policymakers could implement subsidy and tax
reforms to help rebuild fiscal space or finance better
targeted pro-poor policies while removing distortions
that hinder activity.
Bangladesh Economy
The overall economic condition of the country in 2014 was
pretty much on track amidst looming uncertainties both on
the domestic and world economic fronts which indicates
that our domestic economy has developed the resilience
to protect itself from the onslaught of unexpected events.
The economy achieved 6.12% growth, despite few non-

economic factors that adversely affected the economy.


This performance was due to higher public investment
and rise in exports. Although GDP growth was below the
target level but it was in line with 6% average GDP growth
during the last decade.
In 2014 some financial indicators displayed progress but
it was clear that opportunities for improving infrastructure
and revenue mobilization still remained and will need to
be addressed in 2015. Political turbulences in 2013 took
a heavy toll on the economy of the country. As a result,
investment stagnancy was a highly discussed topic in
the whole year of 2014. Investment began to accelerate
around the end of 2014 but appears to have run into a
stone wall again.
Excess liquidity of the US Dollar and Taka in the local
market began to evaporate towards the last quarter in
2014. This suggested a revival of trade and commerce.
The last period of 2014 marked a new momentum in
consumer and business confidence. Imports and exports
reflected an upward trend. So did remittances, and
importantly, foreign currency reserves registered a new
record. Per capita income rose from USD 1,044 dollars
in FY2013 to USD 1,190 in FY2014. Another important
factor was inflations slow but steady decline. This
helped expedite consumption and investment decisions.
A cautious stance of the central bank in money supply
also helped achieve these satisfactory numbers of
growth and inflation.
Being a petroleum importing country whose demand is
rising exponentially, one recent international development
that will have important ramifications, mostly favorable,
for the Bangladesh economy is the sharp fall in the price
of petroleum since June 2014, a more than 50% drop
in price. With petroleum imports of the country growing
at 9.5% a year, this could mean a significant terms of
trade gain for Bangladesh which could free up foreign
exchange resources for other essential imports.
Bangladesh Bank has taken very prudent strategic policy
to keep BDT-USD exchange rate stable for ensuring price
competitiveness of our exportable in the world arena.
Broad Money (M2) registered 16.09% growth in FY2014
and Domestic Credit marked 11.57% growth in the same
fiscal. Inflation rate, hovered at single digit throughout the
FY2014. The 12-month average inflation based on the
consumer price index (CPI) maintained a declining trend
during the last six months and came down to 6.99 percent
in December 2014 from 7.28 percent in July 2014 mainly
because of declining food prices.

85

annual report 2014

Management Discussion and Analysis

Banking Sector of Bangladesh


2014 was a challenging year for the banking sector of
Bangladesh, characterized by excess liquidity and
declining growth in disbursement of credit to private
sector, intermediating lower investment, coupled with
few financial scams resulting in lower profitability to the
shareholders.
It is becoming increasingly clear that the dark clouds
of uncertainty hovering over the countrys investment
scene have further intensified. Investment volume which
had been far below expectation in recent years due to
lack of infrastructural facilities like gas and electricity, is
aggravating due to the ongoing political crisis. As a matter
of fact, investors are now scared. Loan recovery rate of
banks is going sharply down as the businessmen are not
able to repay their bank loans because of the sluggish
business trend and are ultimately becoming defaulters.
Since the defaulters are not allowed to take fresh loans,
many businesses are on the verge of closure and
consequently loan recovery process has slowed down.
According to Bangladesh Bank report on loan deposits
November 24, 2014, compared to the corresponding
period of the preceding year, investment growth was
negative in 17 banks. If the situation continues longer, it
will have a multiplier effect on the entire banking sector.
The operating costs of the banks are not coming down,
while the income is falling. As a result, net income of the
banks is decreasing. Banks have been experiencing zero
investment for quite some time now. Their woes have
been further compounded by the reluctance of potential
investors to invest. Banks collect deposits from their
clients at low interest rates, and lend the same at higher
rates. Real income of banks comes from investment
activities. Since banks are not in a position to invest, fund
management cost is rising. On the other hand, business
people are not able to repay bank loans due to sluggish
business trend, which consequently triggers increase in
the volume of Non-Performing Loans (NPL). The banks
are to preserve higher provision which is drawn from
their income. As a result, real profit of the banks is sliding
down.
Low level of demand for credits by the private sector
is manifested in the excessive money market liquidity.
Total liquid assets of the scheduled banks stood at BDT
2,268.81 billion as on December 2014, whereas required
liquidity of the scheduled banks stood at BDT 1,193.52
billion. Furthermore, the Loan-Ddeposit Ratio (LDR) has
been on a declining trend.
Besides, some financial scams had hard hit the banking
business scenario in 2014 and the banks had taken
restrictive measures with a view to safeguarding them
from the illicit banking transactions. The conservative
stance that banks had taken in case of purchasing
documents of the deemed exporters had adverse chain
annual report 2014

86

effect on the garment sector at large. However, despite


all these difficulties some banks did well by rationalizing
their cost of deposits, efficient treasury management and
minimizing controllable cost components.
FINANCIAL REVIEW
Empirical review on our financial performance in the year 2014:
OPERATING PROFIT
Denotes the profit earnings of the Bank after charging all the
expenses excluding the components of provisions and tax.
Attainment: In the year 2014 operating profit of the
Bank surged by 3.64% to BDT 4,410.57 million. This
increase in our growth is largely attributed to our success
in maintaining and in some cases up-gradation of our
performing risk assets portfolio as well as bringing down
cost of deposits, creation of reasonably better spread
and establishment of better control on the movement of
operating expenses.

Operating Prot
(BDT in Million)

4,255.70
3,501.68

3,350.78

2011

2012

2,847.12

2010

2013

4,410.57

2014

RETURN ON ASSETS (ROA)


ROA measures the efficiency level of the Bank in
utilization of its assets.
Attainment: During the year 2014 ROA stood at 0.76%.

1.86%

1.70%

Return on Assets
1.33%
1.03%

2010

2011

2012

0.76%

2013

2014

www.mblbd.com

RETURN ON EQUITY (ROE)

LOANS AND ADVANCES

ROE is meant for measuring the average earnings on the


shareholders funds/equity.

It is the quantum of loans disbursed as overdrafts, trade


finance, term loans, bill discount facilities etc.

Attainment: During the year 2014 ROE stood at 9.11%


against 16.84% in the year 2013.

Attainment: The size of the credit portfolio of the Bank


has increased by 19.83% to BDT 117,060.03 million in
2014 against BDT 97,688.50 of 2013.

Loans and Advances

Return on Equity

24.83%

(BDT in Million)

20.59%
13.42%

117,060.03

16.84%
9.11%

2010

2011

2012

2013

2014

NIM is one of the most important indicators and by


definition it measures the extent of spread the Bank
creates in course of intermediation of fund.
Attainment: NIM surged to 3.82% in 2014 against
3.58% in 2013. This increase is largely attributable to our
success in the endeavor for keeping down the cost of
fund of the Bank.

2010

2011

2012

2013

2014

It is the quantum of deposits placed by customers in the


Bank through Current, Savings, SND, Scheme Deposits,
Term Deposits i.e. FDR etc accounts.
Attainment: Deposits growth of the Bank was 12.77%
in 2014. Total deposits surged to BDT 140,475.84 million
from BDT 124,566.97 million of 2013.

Deposits

Net Interest Margin (NIM)

(BDT in Million)
3.58%

2.93%

79,999.80

97,688.50

DEPOSITS

NET INTEREST MARGIN (NIM)

3.59%

66,377.70

93,610.87

132,093.64

3.82%

124,566.97

140,475.84

102,262.02

2.99%

75,629.14

2010

2011

2012

2013

2014

2010

2011

2012

87

2013

2014

annual report 2014

Management Discussion and Analysis

COST INCOME RATIO

REVIEW ON PROFIT & LOSS ACCOUNT

Measures operating cost as percentage to operating


income.
Attainment: Cost Income Ratio increased to 44.84% in
2014 from 41.66% of 2013. This due to the increase of
non-interest expenses of the Bank.

Cost Income Ratio


45.17%

44.84%

Gross Income of the Bank surged to BDT 19,381.41 million


registering 1.52% growth in the year 2014 in comparison
to 2013. The increase in the income stream was largely
attributable to maintaining the sound status of the credit
portfolio. Besides, fees based income contributed
significantly towards positive growth of profit. During the
year 2014, we focused on sound portfolio management
and keeping down cost of fund towards maximization of
profitability within the bound of our earning assets.

(BDT in Million)
Particulars

42.62%

2013

2014

Variance

16,590.37

16,758.21

1.01%

21.47

22.32

3.96%

Commission, Exchange
and Brokerage

1,457.89

1,552.57

6.49%

Other Operating Income

1,020.98

1,048.31

2.68%

Total Income

19,090.71

19,381.41

1.52%

Interest Income

41.66%
40.38%

2010

INCOME

Investment Income

2011

2012

2013

2014

COST OF DEPOSITS
It measures the extent of interest expenses on the interest
bearing deposits.
Attainment : Cost of Deposits came down significantly to
8.26% in 2014 from 8.93% in 2013 which is the result of
our efforts to rationalize the interest expenses against our
different deposit products without having adverse impact
on the deposit/liquidity base.

Cost of Deposit
9.63%

10.02%

8.93%

7.94%

8.26%

EXPENSES
In 2014, we made all-out effort to efforts to reduce the
cost of deposit. As a result, interest expenses of the Bank
reduced by 3.48%. The overall expenses increased by
0.92% than 2013. Total expenses recorded for 2014 was
BDT 14,970.84 million as against that of BDT 14,835.02
million in 2013.

Particulars

2014

Interest Expenses

11,795.76

11,385.39

-3.48%

Total Operating Expenses

3,039.26

3,385.45

17.97%

Total Expenses

14,835.02

14,970.84

0.92%

Particulars

2011

annual report 2014

2012

88

2013

2014

Variance

Operating Expenses increased to BDT 3,585.45 million


in 2014 from BDT 3,039.26 million in 2013 registering
17.97% increase. This increase was largely due to
expansion of branches and corresponding increase in the
business volume of the Bank.

Salaries and Allowances

2010

(BDT in Million)

2013

2013

2014

Variance

1,428.29

1,787.53

15.35%

Chief Executives Salary and Fees

9.85

11.69

18.68%

Directors Fees

2.79

2.75

-1.43%
11.28%

Rent, Taxes, Insurance, Electricity etc

430.76

479.33

Legal Expenses

12.54

12.72

1.44%

Postage, Stamps, Telecommunication etc.

53.64

52.39

-2.33%

Stationary, Printing, Advertisement etc.

148.9

204.39

37.27%

Auditors Fees

0.68

0.60

11.96%

Depreciation and Repair of Fixed Assets

232.3

267.92

15.33%

Other Expenses

719.58

766.13

6.46%

Total Operating Expenses

3,039.26

3,585.45

17.97%

www.mblbd.com

Profitability

Asset Composition 2014

The Bank during the year attained another milestone with


respect of operating profit, which surged by 3.64% to BDT
4,410.57 million in 2014 as compared to BDT 4,255.70
million in 2013. In 2014, due to non-economic factors
prevailed in the market; entrepreneurs hurdled to service
their installments properly which ultimately increased nonperforming loans. Though our NPL is in standard rate,
to maintain better cushion against our assets, we kept
provision of BDT 2,122.06 million against BDT 1,027.00
million of 2013. As a result, net profit of the Bank decreased
to BDT 1,188.51 million, registering a negative growth of
39.93% in comparison to the year 2013.

Particulars

(BDT in Million)
Vari2014
ance

2013

Interest Income

16,590.37

16,758.21

1.01%

Less Interest Paid on


Deposits, Borrowing etc

11,795.76

11,385.39

-3.48%

Net Interest Income

4,794.61

5,372.82

12.06%

Plus Non Interest Income

2,500.35

2,623.20

4.91%

Total Operating Income

7,294.96

7,996.02

9.61%

Less Total Operating


Expenses

3,039.26

3,585.45

17.97%

Operating Profit

4,255.70

4,410.57

3.64%

Total Provision

1,027.00

2,122.06

106.63%

Total Profit Before Tax

3,228.70

2,288.51

Less Provision for Tax

1,250.00

Net Profit after Taxation

1,978.70

The core earning assets of the Bank are Loans and


Advances and Investment. The credit portfolio of the Bank
experienced a hefty growth of 19.83% in 2014 over 2013.
As one of the primary dealers (PD) we had large chunk of
investment in government securities i.e. Treasury Bill and
Bonds and during the year 2014 quantum of government
securities holding increased by 6.96% over 2013.

Particulars

(BDT in Million)
2013

Cash

2014

Variance

10,402.41

12,894.26

23.95%

917.82

742.37

-19.11%

Investments

30,090.60

32,184.09

6.96%

Loans and Advances

Balance with other Bank and FI

97,688.50

117,060.03

19.83%

-29.12%

3,097.60

3,198.11

3.24%

1,100.00

-12.00%

Other Assets

2,644.93

2,395.27

-9.43%

1,188.51

-39.93%

2013

2014

Return on Assets (ROA)

1.33%

0.76%

Return on Equity (ROE)

16.84%

9.11%

Cost Income Ratio

41.66%

44.84%

3.58%

3.82%

Net Interest Margin (NIM)

Loans and
Advances
70%

Fixed Assets Including Premises,


Furniture and Fixtures

Balance Sheet wise some Key Performance Indicators


of the Bank are as under:
Particulars

Balance with
Other Assets
other Bank
Fixed Assets
1%
and F1
Including
cash 8%
Premises, Furnit
ure and Fixtures
Investments
19%
2%

Funded Business of the Bank as on December 31, 2014


stood at BDT 117,060.03 million whereas non funded
business stood at BDT 58,300.49 million for the same
time period.

Total Assets Including Non Funded Business


(BDT in Million)

58,300.49

BALANCE SHEET SUMMARY


The Bank posted healthy Balance sheet size with BDT
168,474.13 million assets base as on 31 December 2014.
Loans and advances contributes major part i.e. 70% of
total assets. Investments stand the second largest part
i.e. 19% of total assets.

117,060.03

Funded Business

89

Non Funded Business

annual report 2014

Management Discussion and Analysis

Loan Portfolio

DEPOSIT MIX

MBL maintained a well diversified loan portfolio which


resulted in stable profitability streams to the Bank.
Garments, Trading and Engineering sector held the best
three positions in the loan portfolio.

6%
4%

39%

8%

Credit Portfolio Break up

33%

8%

14%

10%

13%

19%

1%
2%

Deposit Under Schemes

Fixed Deposits

Savings Deposits

5%

Current Deposits

Short Terms Deposits

Other Deposits

6%
2%
1%
4% 1 3%
%
2% 2%
0%
2%
1% 2%

4%
1%

8%

0%

BUSINESS LINE OVERVIEW


SME DIVISION

0%

Garments
Engineering
Leasing Company
Food, Food Products, Beverage

Trading
Contractor Finance
Housing
Pharmaceuticals

Telecommunication

Transport

Leather & Leather Products


Textile
Hospital and Medical Services

Jute Industries
Information Technology
Paper, Paper Production
and Publications

Plastic and Plastic Materials


Agriculture
Credit Card
Loans to Brokerage

Storage
SME Loan
Consumer Loan
Others

Liabilities
In 2014, MBL continued efforts to restructuring its deposits
mix and thereby reducing cost of deposits in the backdrop
of surplus liquidity hangover in the banking sector. We
focused on procuring more no and low cost deposits. As
a measure of rationalization of our intermediation cost of
Deposits decreased to 8.26% as on December 2014 as
compared to 8.93% of previous year. This spectacular
deposits cost cut contributed to attain 6.93%% growth in
operating profit amidst the gloomy business environment
followed by uncertain political situation over the year 2014.
Particulars

2013

2014

Variance

Deposit Under
Schemes

50,214.55

55,176.86

9.88%

Fixed Deposits

41,945.69

46,057.22

9.80%

Savings Deposits

8,510.14

10,534.22

23.78%

Current Deposits

4,105.43

5,494.16

33.83%

Short Notice Deposits

7,795.86

8,850.41

13.53%

11,995.30

14,362.97

19.74%

124,566.97

140,475.84

12.77%

Other Deposits
Total

Among the deposits mix, deposits under scheme contributed


39% and Fixed Deposits contributed 33% in 2014.

annual report 2014

90

Small and Medium Enterprises (SMEs) admittedly play


the catalyst role towards ensuring incremental GDP
growth. As the report has it that, around 6 million SMEs
operate in Bangladesh contributing about 50% of the
countrys industrial output employing 82% of its industrial
labor force. Appreciating the significant contribution of
SME in amelioration of the economic condition of cross
section of populace, MBL has accorded added priority to
this sector in its pursuit of expansion of lending portfolio.

CHAKA YJTJ (Term Loan).


ANANNYA IjjqJ (Women Entrepreneurs Loan).
SAMRIDDHI xoOK (Continuous Loan).
MOUSUMI PoRxMoL (Short Term Single Payment
Seasonal Loan).
SANCHALAK xJuT (A mix of term, time &
Continuous credit).
UNMESH CPv (Trade Financing).

MBL executed the participation agreement with


Bangladesh Bank (BB) under the Scheme of Refinance
for Setting up Agro-based Product Processing Industries
in Rural Areas in 37 categories as specified by BB.
MBL in its stride to ensure balanced steady growth of its
portfolio has set up SME Dedicated Desk & Women
Entrepreneurs Dedicated Desk at all branches for the
sake of hassle free services to the clienteles in this
segment. The size of portfolio in SME sector as at end of
December 2014, figured at around BDT 1,000.00 crore.
The Management of the Bank prioritizes to expand
the portfolio in this segment by fixing target to the
extent of Tk 2,000.00 crore for the year 2015 focusing
on diversification across the borrowers, business and
geographical dispersion, thereby to make distinctive
value addition in this thrust sector of the economy.

www.mblbd.com

AGRICULTURAL CREDIT DEPARTMENT


MBL started agriculture credit disbursement since 2010
by formation of a separate and dedicated department
namely Agri Finance Department. From the beginning,
Agriculture Credit Department is operating agricultural
credit activities of the Bank as per Bangladesh Banks
Agricultural & Rural Credit Policy and Guidelines.
As per Agriculture Credit Policy & Guidelines of
Bangladesh Bank, MBL disbursed agriculture/rural credit
under the following ways:

Directly Farmers (Individual/Group-wise)


Through Contract Farming with reputed Companies
Through partnership with MFIs/NGOs (MRA
Certified only)

Bangladesh Bank prescribes the Agri Credit disbursement


target for the scheduled commercial bank for next fiscal
year based on 2% of the loan and advances position
as on 31st March of the current fiscal year. In line with
Bangladesh Banks policy directives MBL fixed its Agri
finance target for the FY 2013-14 to the tune of BDT
1,650.00 million. Here it is gratifying to note during the
year we succeeded in attainment of our Agri financing
target for the FY 2013-14. Year wise agricultural credit
target and our achievement status are as under:
(BDT in Million)
Fiscal Year

Target

Disbursement

Achievement

Unachieved
Portion

2010-2011

470.00

126.60

26.93%

343.40

2011-2012

1,430.00

1,254.90

87.75%

175.10

2012-2013

1,755.10

1,757.20

100.12%

2013-2014

1,650.00

1,671.64

101.31%

2014-2015*

1,900.00

1,054.50

55.50%

* up to January 2015

RETAIL BANKING DIVISION


MBL extends consumer & retail facilities by launching
array of products since its inception in a bid to satisfy
the diversified demand of customers across the different
segment of the society. MBL offers the following range of
consumer and retail loan products:

Home Loan
Cottage Loan
Car Loan
Any Purpose Loan
House Furnishing Loan
Doctors Loan
Education Loan
Prantik Loan

Number of accounts under retail loans at the end of


year 2014 was 4,987 and outstanding balance was
BDT 14,691.94 lac. In the year 2014, MBL focused on

quality loan disbursement. In 2015, Bank has targeted to


increase its Home Loan portfolio from BDT 81.28 crore to
BDT 150.00 crore.
We are inspiring our branches to gear up their efforts for
making necessary alignment and realignment of their
respective credit portfolio emphasizing on expansion of
retail credit. In 2014, Bank recruited 97 Sales Executives
under Consumer & Retail Banking Division for marketing
of Current Account and Savings Account (CASA). 16,219
accounts were opened by these sales people, eventually
which reduced banks cost of fund and net profit achieved
Tk.35.33 lac at the end of the year 2014. The Bank
is going to recruit another 100 Sales Executives for
marketing of CASA and expecting to reduce cost of fund
to a great extent in 2015.
NON RESIDENT BUSINESS (NRB) DIVISION
Being a largest source of earning net foreign currency,
appreciating its importance to the cause of national
economy, since inception MBL has given utmost priority to
pave the way of remitting hard earned foreign exchange
by the expatriate Bangladeshi worker in a safe and
speedy manner using banking channel. NRB Division of
the bank is dedicatedly involved in channelizing foreign
remittances ensuring quality services to the Bangladeshi
Expatriates living and residing abroad as well as their
target beneficiaries in Bangladesh.
Mercantile Bank Ltd. has remittance drawing
arrangement with 29 Exchange Companies all over the
world including 10 reputed global web based companies
named as Western Union, MoneyGram, RIA Financials,
NEC, Italy, Xpress Money Services, Placid Express,
Tarns-Fast, Prabhu, Al Ansari Cash Express & Instant
Cash Worldwide etc. Currently we are channeling inward
foreign remittance from 135 countries round the globe
through our global partners. Recently we have signed
remittance drawing arrangement with SBX Money
Pty. Ltd. to untapped market in Australia. Besides, we
have our fully owned subsidiary named Mercantile
Exchange House (UK) Ltd. in London, United Kingdom.
This subsidiary renders best remittance services to the
expatriates in UK and remits about 2 millions of GBP in
each and every month to Bangladesh.
In year 2014, Mercantile Bank Ltd. fetched inward
Foreign Remittance for BDT 18,208.60 million
equivalents to USD 233.80 million by routing 307,821
numbers of transactions. It registers 46.43% growth in
comparison to previous year.
MBL Performs as one of the most prominent principal
agents of Western Union Money Transfer in Bangladesh
having seven Sub Agent Banks including The City Bank
Ltd., Al Arafah Islami Bank Ltd., Standard Bank Ltd.,
Bangladesh Commerce Bank Ltd., NRB Commercial
Bank Ltd., Modhumati Bank Ltd. & NRB Bank Ltd. With
our rigorous efforts and effective marketing & promotional
activities, we conducted 81,414 numbers of Western
Union Payments through our network in 2014.

91

annual report 2014

Management Discussion and Analysis

International Division
Foreign Correspondents: MBL has been maintaining
smooth correspondent relationship with as many as
637 top ranked and best rated banks covering 64 (Sixty
Four) countries across the world. Furthermore, as part
of continuous endeavor to expand the correspondent
network, MBL has been continuously establishing RMA
with best rated banks having sound fundamentals around
the globe to facilitate its increasing foreign trade business.
Foreign correspondents play a vital role in trade finance
through advising, adding confirmation, discounting bills
etc. Commerzbank AG, JP Morgan Chase Bank, Wells
Fargo Bank NA, Standard Chartered Bank, Bank of Tokyo
Mitshubishi Ltd, HSBC, Mashreqbank Psc, Habib Bank AG
Zurich, UBAF, Unicredito Italiano Spa, Banca UBAE etc.
are some of the major Foreign Correspondents of MBL.
Off-shore Banking: At present Mercantile Bank Limited
is operating two Off-shore Banking Units, as a separate
business unit in compliance with the Rules and Guidelines
of Bangladesh Bank under their permission letter no.
BRPD(P-3)744(114)/2010-1743 dated 04/05/2010. The
Bank has commenced operation through these units
since July 04, 2010 at its Gulshan Branch, Dhaka and
CEPZ Branch, Chittagong. Since inception, MBLs OBU
unit is exhibiting excellent growth trend by dint of efficient
and effective customer services. As on December 31,
2014 total loans and advances of OBUs reached to USD
13.82 million equivalents to BDT 1,077.42 million. During
the year 2014, OBUs made net profit of USD 0.46 million
equivalent to BDT 36.09 million as against USD 0.23
million equivalent to BDT 18.09 million in 2013 registering
remarkable growth of 100% in 2014 over 2013.
CARD BUSINESS
MBL started Card and ATM operation in 2002 by
participating in a Local network Q-Cash consortium aiming
to extend modern banking facilities to its customers.
In 2006 MBL becomes the principal member of VISA
International and started issuing VISA cards. Since
inception, the Bank launched different card products
including Credit card, Debit Card and Prepaid Cards.
Presently, MBL has three types of Credit Cards - Local,
International and Dual in three categories- Platinum, Gold
and Classic. MBL has prepaid Cards also of thee typeslocal, International and Dual. In 2013 MBL launched
three new pre-paid products - MBL VISA Medical Card for
Bangladeshi nationals visiting abroad for treatment, MBL
VISA International Student card for the students going
different countries for higher education, MBL VISA Virtual
card for individual who needs to use the number only for a
specific E-commerce transaction. As on December 2014,
Card base of MBL is around 5,600 credit cards having
outstanding about BDT 270.00 million and around 73,000
debit & Pre-paid cards.
MBL expanded ATM network throughout the country
located at different important places to serve the customer
outside the Bank premises. At the end of the year 2014,
annual report 2014

92

MBL has 127 ATMs & 20 CDM (Cash Deposit Machine)


at different important locations of the country. No fee is
needed for withdrawal of cash from MBL ATM booth by
MBLs cardholders and from any other Q-cash ATM the fee
is BDT 10 only. Moreover, our VISA cardholders can also
withdraw cash from any Visa ATMs in home and abroad.
Recently, MBL has been connected with National Payment
Switch of Bangladesh (NPSB) network implemented by
Bangladesh Bank.
International / Dual credit card is accepted all over the
world at numerous outlets and ATMs covering various
types of merchants like hotels, restaurants, airlines &
travel agents, shopping malls and department stores,
hospitals and diagnostic centers, jewelers, electronics &
computer shops, leather goods and shoe stores, mobile
phone and internet service providers, fuel station and
what not having VISA logo.
MBL also introduced card cheque service for its credit
cardholders through which cardholder can enjoy a
full-fledged cheque book facility. A cardholder can
make payment (account payee only) to any person or
organization of his choice. This cheque book is useful
at situations when cardholder cannot use his credit card
(e.g. tuition fees, rent, or any other purpose).
Treasury Division
MBL Treasury Division is involved in both Local
and Foreign Currency Management, Asset Liability
Management (ALM) and investment. Besides, MBL
has been acting as a Primary Dealer nominated by
Bangladesh Bank since November 23, 2009. Treasury
Division maintains CRR and SLR and as a whole on
behalf of the bank. Treasury Division mitigates fund
shortage through Liquidity Support, Call Borrowing, Fixed
Term Borrowing, REPO with Bangladesh Bank and other
Banks, Special REPO with Bangladesh Bank etc and
invests fund at optimum rates in case of surplus situation.
Besides these, Treasury Division also generates income
through arbitrage & hedging of funds.
ALM Desk of Treasury Division prepares the ALCO paper
wherein, Liquidity Risk, Interest Rate Risk, Maturity
Mismatch Risk, Balance Sheet Risks and Foreign
Exchange Transaction Risks including VaR (Value at
risk) are assessed and discussed to tone down the risks
and also to aid the Top Management for formulation of
policies and guidelines in accordance with the Market
situation. The money market desk is involved in
maintaining CRR & overall liquidity of the Bank through
active participation in the interbank market. As part of
Primary Dealer function, Treasury Division buys and
sells Government securities through its Fixed Income
Securities Desk. The Foreign Exchange Desk plays an
important role in case of meeting up LC commitment,
funding requirement of the customers, manage export
proceeds and inward remittance. Our investment desk
operates with the banks portfolio in the equity and
secondary share market. Treasury Division is continuously

www.mblbd.com

working directly with branches and International Division,


Financial Administration Division, NRB Division of Head
office to ensure the maximum profitability of the bank.
Profitability of Treasury Division is calculated separately
and during 2014, Treasury Division observed an impressive
profit growth of 30.81% over that of 2013.
Corporate Social Responsibilities
Being a corporate citizen, MBL plays an important
role for the wellbeing of the society where it conducts
business. MBL believes that, true success does not
consist in profit maximization only rather in doing
something for the betterment of deprived part of the
society. With this consideration, MBL has established
a foundation in the name and style, Mercantile
Bank Foundation in 2000. MBL contributes 1% of its
Operating Profit to the Mercantile Bank Foundation
every year but not less than BDT 4.00 million. The Bank
has established a separate CSR Desk to support
CSR activities. During the year 2014 MBL donated BDT
53.00 million for conducting CSR activities.
Basel II Accord
In Bangladesh, Risk Based Capital Adequacy Framework
for Banks (Revised regulatory capital framework in line
with Basel II) came into force fully from January 2010 after
parallel existence with Basel I during the year 2009. As
per Basel II, each bank of Bangladesh needs to maintain
capital adequacy ratio of at least 10%.
As per Basel II total regulatory capital fund of the Bank
stood at BDT 1,910.39 crore and Capital Adequacy
Ratio (CAR) stood at 12.95% on SOLO basis as on
December 2014.
Distribution Networks
MBL distributes its products and services through
various access points ranging from branches to ATMs
and mobile devices.
Branch Network
Since inception, MBL has expanded its branch network at
a smooth rate. During the year 2014 MBL launched 9 new
branches and therefore as on December 2014, MBL has
100 branches including 05 SME/Krishi branches across
the country. In the year 2014 MBL is contemplating
to open more than 10 new branches to reach our
products and services to the door steps of mass people
and thereby attaining inclusive growth of the country.
Besides, MBL has established 127 ATM booths and 20
Cash Deposit Machines (CDM) at important locations
across the country. Furthermore, MBL made contract
with other banks for using their ATM network for providing
its customers 24 hours money withdrawing facility. In
the year 2013, we have launched our mobile financial
service, MyCash, responding the increased usage of
this device in daily life of people.

Mobile Financial Services


MBL launched its own mobile financial service, MyCash
in a bid to fulfill our vision of Inclusive Banking. In Mobile
Banking system, basic mobile handsets are being used as
bank accounts and will serve as a wallet for the transaction
of money. This service will enable to bring the low income
un-banked people under the financial services of MBL.
Additionally this service will cater the need the much
needed domestic and international money transfer services
through mobile phones for all categories of people.
MBL Products
MBL offers various types of products and services to its
customers and developed several deposit and loan based
schemes and products. A brief overview of its products
and services are as under:
Deposit Products:
Monthly Saving Scheme
Monthly Savings Scheme (MSS) is one of the popular
deposits schemes of MBL. The prime objective of this
scheme is to encourage the people to develop their habit
of saving. Under this scheme, monthly installments are
in various sizes and one can adopt the schemes for a
period of 03 years, 05 years, 08 years or 10 years. Total
outstanding balance against MSS account was BDT
30,617.69 million as on December 2014 registering
14.65% growth over the year 2013.
Super Benefit Deposits Scheme
Under this scheme, one can earn BDT 1,000 on
monthly basis by depositing BDT 150,000 for one year
provided that he/she has up-to-date TIN certificates.
Benefit start right from the first month of opening an
account under the scheme and continue up to one year.
As on December 2014 outstanding balance against this
scheme was BDT 3,336.94 million.
Double Benefit Deposit Scheme
Under this scheme, deposited amount will be double in
tenure of seven years. Minimum deposited amount is BDT
10,000 or its multiples. As on December 2014 outstanding
balance against this scheme was BDT 18,713.41 million
as compared to BDT 16,488.48 million in 2013 marking
13.49% growth in 2014 over 2013.
Family Maintenance Deposit Scheme
Under this scheme, one can deposit a certain amount
of money for five years and in return he/she will receive
benefits on monthly basis. Benefit start right from the
first month of opening an account under the scheme
and continue up to five years. On maturity the principal
amount will be paid back. As on December 2014, total
outstanding balance against this scheme was BDT
1,839.65 million as compare to BDT 1,604.24 million as
on December 2012, registering growth of 14.67%.

93

annual report 2014

Management Discussion and Analysis

Quarterly Benefit Deposit Scheme

Lease Finance

Under the Quarterly Benefit Deposit Scheme, one can


deposit for a period of three years and in return depositor
will receive benefits on quarterly basis. Benefit starts right
from the first quarter of opening an account under the
scheme and continues up to three years. On maturity the
principal amount will be paid back. As on December 2013
outstanding balance against this scheme was BDT 13.40
million.

This scheme has been designed to assist and encourage


the genuine and capable entrepreneurs and professionals
for acquiring capital machineries, medical equipments,
computers, vehicle and other items. Flexibility and easier
terms and conditions of this scheme have attracted the
potential entrepreneurs to acquire the products and
services and repay gradually from earnings on the basis
of Pay as you earn.

1.5 Time Benefit Deposit Scheme

Doctors Credit Scheme

Under the 1.5 Times Benefit Deposit Scheme, one can


deposit a certain amount of money for 45 months or 3.75
years. On maturity, the depositor will receive 1.5 time of
the deposited amount. As on December 2014 outstanding
balance against this scheme was BDT 30.47 million.

Doctors Credit Scheme is designed to facilitate


financing to fresh medical graduates and established
physicians to acquire medical equipments and set up
clinics and hospitals.

Special Savings Scheme

Rural Development Scheme

Under this scheme, depositors will get more than three


times of their deposited amount after maturing of the
scheme i.e. 10 years. Minimum amount of deposits is
BDT 50,000. Main attraction of this scheme is even in
case of premature encashment, depositors will enjoy
lucrative interest rate. As on December 2014 outstanding
balance against this scheme was BDT 395.25 million,
marking 21.89% growth.

Rural Development Scheme is targeted for the rural


people of the country to make them self-employed
through financing various income-generating projects.
This scheme is operated on group basis.

Education Planning Deposits Scheme


This scheme aims to meet the education expenses of
depositors children. A person aging 40 years or less can
open this scheme for 10 or 15 years for his/her children
not more than 10 years old. The scheme holder will
deposit monthly installment of BDT 1,000 or multiples
for 10 or 15 years and at maturity he/she will be paid
200% of the installment for further 10 years for 10 years
scheme and 350% of the installment amount for further
15 years for 15 years scheme. However, at customers
desire he/she can withdraw principal and interest amount
at maturity of the scheme. This scheme is fully insured.
As such, in case of death of any scheme holder, Bank
will pay the remaining installment in favor of the scheme
holder until maturity. As on December 2014, outstanding
balance against this scheme was BDT 2.05 million.
Loan Products
Consumer Credit Scheme
Consumers Credit Scheme is one of the popular areas
of collateral-free finance of the Bank. People with limited
income can avail the credit facility to buy household
goods including computer and other consumer durables.
Small Loan Scheme

This scheme has been designed especially for the


businessmen who need credit facility for their business
and cant provide tangible securities.

annual report 2014

94

Woman Entrepreneurs Development Scheme


Women Entrepreneurs Development Scheme has been
introduced to encourage women in doing business.
Under this scheme, the Bank finances the small and
cottage industry projects sponsored by women.
SME Loan Scheme
Small and Medium Enterprise (SME) Loan Scheme has
been introduced to provide financial assistance to new or
experienced entrepreneurs to invest in small and medium
scale industries with a comparatively low rate of interest
as the same is assisted by the Bangladesh Bank with
refinancing facilities.
Personal Loan Scheme
Personal Loan Scheme has been introduced to extend
credit facilities to cater the needs of low and middleincome group for any purpose. Government and semiGovernment officials, employees of autonomous bodies,
banks and other financial organizations, multinational
companies, reputed private organizations and teachers
of recognized public and private schools, colleges and
universities are eligible to avail this loan.
Car Loan Scheme
Car Loan Scheme has been introduced to enable
middle-income people to purchase Cars/SUVs/
Jeeps. Government and semi-Government officials,
employees of autonomous bodies, banks and other
financial organizations, multinational companies,
reputed private organizations, teachers of recognized
public and private universities and businessmen are
eligible to avail this loan.

www.mblbd.com

Home Loan Scheme


To meet the growing need of housing for middle and lowermiddle income people, MBL has introduced Home Loan
Scheme. The Scheme boosts up the growth of housing
sector. Such loan shall be available for purchase or
construction of new apartments for self-residing purpose.
Overseas Employment Loan Scheme
Overseas Employment Loan Scheme is designed to
facilitate the Bangladeshi youths seeking employment
aboard but who are unable to meet the expenses to
reach the workplace from their own sources. By availing
loan under this scheme, the active youths of middle and
lower middle class can get overseas employment by
avoiding borrowing from the illustrious class or village
mohajon at a very high cost or selling their paternal
properties. The scheme helps fetching foreign currency
for the country as well as fulfills the Banks commitment
to encourage micro-lending for poverty alleviation,
improve the quality of life and thereby contribute to socioeconomic development of the country.
MBL Subsidiaries
MBL has 2 (Two) subsidiaries namely Mercantile
Bank Securities Ltd and Mercantile Exchange House
(UK) Limited.
Mercantile Bank Securities Ltd
Mercantile Bank Securities Ltd (MBSL), formed on 27 June
2010 to deal with stock dealing and broking. The main
operation of the subsidiary is to buy and sell off securities
listed with Dhaka and Chittagong stock exchange or
approved by BSEC for open market operation for its
customer. MBSL with its 07 (seven) branches extends
margin loan facility to the customers against their equity
for investment in the listed companies. During 2014
MBSL made BDT 11.07 million as operating profit.
Mercantile Exchange House (UK) Limited
Mercantile Exchange House (UK) Limited, a fully
owned subsidiary company of MBL commenced
its business operation at Birmingham in UK on
December 06, 2011. Bangladeshi expatriates living
and working in the UK are remitting their hard earned
money through the banking channel by leveraging
our service oriented facilities. Mercantile Exchange
House is committed to provide faster, easier and safer
remittance services to its clienteles.
Future Prospects
After a year of relative calm in 2014, political rivalry
and violence have encroached into our daily lives once
again. This resurfacing of instability has already severely

affected normal trade, commerce and economic activities.


Thus economic performance of the country in the year
2015 mostly depends on political stability and thereby
rebuilding foreign buyers and investors confidence. Once
investors confidence is restored, investment activities will
be geared up and consequently banks credit demand will
be increased. For this reason it is perceived that, how
well banking industry of Bangladesh will perform in the
coming years depends mostly on the stable political
situation. MBL believes that with a stable political and
congenial business environment, it would be able to
achieve its business targets set for the year 2015.
Responsibilities towards the staff (including health
and safety)
Human Resources are one of the most important
resources of MBL. What we have achieved so far
has been possible for the efficient and dedicated
workforce of MBL. We, therefore ensure an open and
enabling environment where our people can work with
self respect, dignity and scope of showing creativity.
We offer continuous and need based training for our
employees to cope up with the ever changing banking
industry. We offer attractive salary package to our
employees and make upward revise to the salary
structure with regular interval targeting to adjust the
inflationary pressure in the pay structure.
In addition to monthly salary, the Bank also offers festival
and incentive bonus, house furnishing allowance, annual
increment, loan facilities at a privileged rate, retirement
benefits, e.g., provident fund; gratuity fund, disability
benefit and leave fare assistance. Each year we provide
financial award to the children of our employees for doing
better result in the educational institutions.
We remain proactive in implementing strategies and
systems to help preventing injury or harm to employees
whilst at work. Health and safety measures are in
place to ensure that our people have an optimum work
environment. Time to time, the Bank conducts a variety
of safety and wellness activities. The Bank also extended
the maternity leave from 03 months to 06 months for
its female employees. MBL has appointed a Medical
Consultant attached at head office to provide prompt
medical service to its employees at office time.
Contribution to the National Exchequer
Being a responsible corporate body, MBL regularly
pays corporate tax in time. We also deposit excise duty,
withheld tax and VAT to govt. exchequer in time through
deduction from employees salary as well as payments
to customers and vendors. In 2014, the Bank has made
provision of BDT 1,100.00 million for corporate tax as
against that of BDT 1,250.00 million in 2013.

95

annual report 2014

PILLAR I
Minimum
Capital
Requirement

PILLAR II
Supervisory
Review
Process

PILLAR III
Market
Discipline

Disclosure on
Basel II
Overview
The Basel Committee on Banking Supervision published
a framework for international convergence of capital
measurement and capital standards commonly termed
as Basel II which replaced the original 1988 Basel I
accord. In Bangladesh, Risk Based Capital Adequacy for
Banks (Revised regulatory capital framework in line with
Basel II) came into force fully from January 2010 following
the BRPD circular # 20 on December 29, 2009 after parallel
existence with Basel I during the year 2009.
MBL believes that Basel II is not merely a reporting
system rather it is a new risk management technique
for the Bank. Therefore, it has put extensive care and
attention to implement Basel II inside the Bank. With a
view to facilitating the way of implementation, the Bank
has formed a high powered committee under the heading
of Basel II implementation Unit. This committee forecast
the future; follow up the overall implementation status and
way out the probable solution to cope with the international
best practices and to make the banks capital more risk
sensitive as well as more shock resilient. The Bank has
also formed a Supervisory Review Process (SRP) team
to participate the dialogue with the Supervisory Review
Evaluation Process (SREP) team of BB for measuring the
adequate capital requirement.
annual report 2014

96

The Basel II principle stands on the following three pillars:

Pillar-I: Minimum Capital Requirement

Banks must hold minimum regulatory capital against


Credit, Market and Operational Risk inherent with
Banking Business.

Pillar-II: Supervisory Review Process (SRP)


The key principle of SRP is that banks have a process
for assessing overall capital adequacy in relation to their
risk profile and a strategy for maintaining their capital at
an adequate level. The assessment of adequate capital
would be the outcome of the dialogue between the banks
SRP and Bangladesh Banks SREP team.

Pillar-III: Market Discipline

The purpose of Market Discipline in the Revised Capital


Adequacy Framework is to complement the minimum
capital requirement and the supervisory review process.
The aim of introducing Market Discipline in the revised
capital framework is to establish more transparent and
more disciplined financial market so that stakeholders
can assess the position of a bank regarding holding of
assets and to identify the risks relating to the assets and
capital adequacy to meet probable loss of assets.

www.mblbd.com

Disclosure Framework
The following detailed qualitative and quantitative disclosures of the Bank is furnished to provide our stakeholders with
consistent and understandable disclosure framework to assess the Banks position regarding holding of assets and to
identify the risks relating to the assets and capital adequacy to meet probable loss of assets as on December 31, 2014 in
line with Bangladesh Banks Risk Based Capital Adequacy (RBCA) guideline.

a) Scope of application
Qualitative Disclosures
(a)

The name of the corporate


entity in the group to which the
guidelines applies.

(b)

An outline of difference in
the basis of consolidation for
accounting and regulatory
purposes,
with
a
brief
description of the entities
within the group (a) that are
fully consolidated ; (b) that are
given a deduction treatment
; and (c) that are neither
consolidated nor deducted
(e.g. where the investment is
risk-weighted).

Mercantile Bank Limited (MBL)

MBL, the leading third generation private commercial bank incorporated as


a public limited company in Bangladesh on May 20, 1999 and commenced
business on June 02, 1999. It was listed in DSE and CSE on February 16,
2004 and February 26, 2004 respectively. MBL has 100 (Hundred) branches
including 5 (Five) SME/Krishi branches as on reporting date i.e. December
31, 2014. The Bank has 2 (Two) Off-shore Banking Units (OBU) operating at
Gulshan and Chittagong EPZ areas. The cardinal activities of the Bank are to
serve commercial banking services to its customers.
The Bank has 2 (Two) subsidiaries namely 'Mercantile Bank Securities
Limited' and 'Mercantile Exchange House (UK) Limited'.
Mercantile Bank Securities Limited
Mercantile Bank Securities Limited (MBSL), a subsidiary company of MBL
formed on 27 June 2010 to deal with stock dealing and broking. MBSL has
started its commercial operation from 14 September 2011 through obtaining
stock dealer and broker license from Bangladesh Securities and Exchange
Commission (BSEC). The main operation of the subsidiary is to buy and sell
off securities listed with Dhaka and Chittagong stock exchange or approved
by BSEC for open market operation for its customer. Margin loan facility is
also extended to its customers against their equity for investment in the listed
companies.
Mercantile Exchange House (UK) Limited
Mercantile Exchange House (UK) Limited, a fully owned subsidiary company
of MBL incorporated as private limited company with companies for England
and Wales under registration no. 07456837 dated December 01, 2010.
The company commenced its business operation on December 06, 2011.
Mercantile Exchange House is committed to provide faster, easier and safer
remittance services to the Bangladeshi expatriate living and working in UK.

(c)

Any restriction, or other major


impediments, on transfer of
funds or regulatory capital
within the group.

Not applicable.

Quantitative Disclosures
(d)

The aggregate amount of


capital deficiencies in all
subsidiaries not included in
the consolidation that are
deducted and the name(s)
of such subsidiaries.

Not applicable.

97

annual report 2014

Disclosure on Basel II

b) Capital Structure

Qualitative Disclosures
(a)

Summary information on the


terms and conditions of the
main features of all capital
instruments, especially in the
case of capital instruments
eligible for inclusion in Tier 1
or in Tier 2.

Conditions set by BB for maintaining Regulatory Capital i.e. Tier 1 capital, Tier
2 capital and Tier 3 capital are as under:
a) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1 Capital.
b) 50% of revaluation reserves for fixed assets and securities eligible for Tier 2 Capital.
c) Subordinated bond shall be limited to a maximum of 30% of the amount of Tier 1 Capital.
d) Limitation of Tier 3: A minimum of about 28.50% of Market risk needs to
be supported by Tier 1 Capital. Supporting of Market Risk from Tier 3 Capital
shall be limited up to maximum of 250% of a Banks Tier 1 Capital that is
available after meeting credit risk capital requirement.

In order to obtain the eligible regulatory capital for the purpose of


calculating Capital Adequacy Ratio (CAR), the following deductions are
required from banks Tier 1 capital:
a) Book Value of Intangible Assets that have been shown as assets.
b) Shortfall in provisions required against classified assets.
c) Shortfall in provisions required against investment in shares.
d) Remaining deficit on account of revaluation of investments in securities after
netting off any other surplus on the securities.
e) Reciprocal/Crossholding of banks capital/subordinated debt.
f) Unauthorized amount of share holding.
g) Investments in subsidiaries which are not consolidated.
Quantitative Disclosures
(b) The amount of Consolidated Tier 1 capital, with separate disclosure of:
Solo

Particulars

Consolidated
BDT in Crore

i.

Paid Up Capital

739.15

739.15

ii.

Statutory Reserve

422.31

422.31

iii.

Non-repayable Share Premium account

iv.

General Reserve

v.

Retained Earning

76.74

75.76

vi.

Minority Interest in Subsidiaries

5.26

vii.

Non-Cumulative Irredeemable Preferences Shares

viii.

Dividend Equalization Account

4.57

4.57

ix.

Others (If any item approved by Bangladesh Bank)


Sub-Total (A)

1,242.77

1,247.05
667.62

i.

Amount of Tier-2 capital

667.62

ii.

Amount of Tier-3 capital

667.62

667.62

Sub-Total amount of Teri-2 and Tier-3 capital (B)


Other deductions from capital
Total Eligible Capital (A+B)

Consolidated Tier 1 Capital


Paid-up Capital

0.42%

Statutory Reserve
Minority Interest In
Subsidiaries
Retained Earning
Dividend Equilization
Account

6.08%

33.86%

annual report 2014

0.37%
59.27%

1,914.67

Consolidated Tier 2 Capital

44.95%

46.87%

General Provision
(Unclassified loan + OffBalance Sheet exposure)
Assets Revaluation
Reserves up to 50%

4.82%
3.36%

98

1,910.39

Revaluation Reserve for


securities up to 50%
Subordinated Debt

Total Consolidated Capital Fund

35%

Tier 1
65%

Tier 2

www.mblbd.com

c) Capital Adequacy

Qualitative Disclosures
(a)

A summary discussion of the


Banks approach to assessing
the adequacy of its capital to
support current and future
activities.

MBL has adopted Standardized Approach for computation of Capital Charge


for Credit Risk and Market Risk while Basic Indicator Approach for Operational
Risk. Total Risk Weighted Assets (RWA) of the Bank is determined by multiplying
the capital charge for market risk and operational risk by the reciprocal of the
minimum capital adequacy ratio i.e. 10% as on December 2014 and adding
the resulting figures to the sum of risk weighted assets for credit risk. Total
RWA is then used as denominator while total Eligible Regulatory Capital as on
numerator to derive Capital Adequacy Ratio (CAR) i.e.
CAR =

Eligible Regulatory Capital x 100


RWA

The Banks CAR on the basis of Consolidated and Solo are 12.96% and
12.95% respectively against minimum requirement of 10% as on December
31, 2014. MBLs policy is to manage and maintain its capital at an adequate
level to raise its CAR well above than minimum requirement in line with Basel
II. Ultimate goal of the capital management process of MBL is to ensure
that the Bank maintains its capital base at a level to absorb all the material
risks. The Bank also ensures that the capital levels comply with all regulatory
requirements.

Quantitative Disclosures

Solo

Particulars

Consolidated
BDT in Crore

(b)

Capital Requirement for Credit Risk

12,833.42

12,857.77

(c)

Capital Requirement for Market Risk

669.72

669.73

(d)

Capital Requirement for Operational Risk

1,245.30

1,249.35

(e)

Total and Tier 1 capital ratio


Total CAR

12.95%

12.96%

Tier-1 CAR

8.43%

8.44%

Tier-2 CAR

4.52%

4.52%

Consolidated as on December 31, 2014

Required
10.00%

Required

12.96%

Maintained

Maintained

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annual report 2014

Disclosure on Basel II

d) Credit Risk
Qualitative Disclosures
(a)

The general qualitative disclosure requirement with respect to credit risk, including:
i) Definition of past due and
impaired
(for
accounting
purposes);

As per guideline of Bangladesh Bank, All Loans and Advances are grouped
into 4 (four) categories namely- Continuous Loan, Demand Loan, Fixed Term
Loan and Short-Term Agricultural Credit & Micro Credit for the purpose of
classification.
Any continuous Loan will be classified as:

Sub-standard- if it is past due/overdue for 03 (three) months or beyond but


less than 06 (six) months.

Doubtful- if it is past due/overdue for 06 (six) months or beyond but less than
09 (nine) months
Bad/Loss- if it is past due/overdue for 09 (nine) months or beyond.
Any Demand Loan will be classified as:

Sub-standard- if it remains past due/overdue for 03 (three) months or beyond


but not over 06 (six) months from the date of expiry or claim by the bank or
from the date of creation of forced loan.

Doubtful- if it remains past due/overdue for 06 (six) months or beyond but not
over 09 (nine) months from the date of expiry or claim by the bank or from the
date of creation of forced loan.

Bad/Loss- if it remains past due/overdue for 09 (nine) months or beyond from


the date of expiry or claim by the bank or from the date of creation of forced
loan.
Fixed Term Loan will be classified as:

If Fixed Term Loan amounting up to BDT 10 Lacs:

Sub-standard- If the amount of past due installment is equal to or more than


the amount of installment(s) due within 06 (six) months, the entire loan will be
classified as Sub-Standard.
Doubtful-If the amount of past due installment is equal to or more than the
amount of installment(s) due within 09 (nine) months, the entire loan will be
classified as Doubtful.

Bad/Loss- If the amount of past due installment is equal to or more than the
amount of installment(s) due within 12 (twelve) months, the entire loan will be
classified as Bad/Loss.

If Fixed Term Loan amounting more than BDT 10 Lacs:

Sub-standard- If the amount of past due installment is equal to or more than


the amount of installment(s) due within 03 (three) months, the entire loan will
be classified as Sub-Standard.

Doubtful-If the amount of past due installment is equal to or more than the
amount of installment(s) due within 06 (six) months, the entire loan will be
classified as Doubtful.
Bad/Loss- If the amount of past due installment is equal to or more than the
amount of installment(s) due within 09 (nine) months, the entire loan will be
classified as Bad/Loss.
Short-Term Agricultural Credit & Micro Credit:

Sub-standard- If the irregular status continues, after a period of 12 (twelve)


months the credit will be classified as Sub-standard.
Doubtful- If the irregular status continues, after a period of 36 (thirty Six)
months the credit will be classified as Doubtful.

Bad/Loss- If the irregular status continues, after a period of 60 (sixty) months


the credit will be classified as Bad/loss.
A Continuous Loan, Demand Loan or a Term Loan which will remain overdue
for a period of 02 (two) months or more, will be put into the Special Mention
Account (SMA).

annual report 2014

100

www.mblbd.com

ii) Description of approaches


followed for specific and
general
allowances
and
statistical methods;

As per Bangladesh Banks guideline, MBL maintains


Specific provision in the following way:

General and

Particulars

Rate
(%)

General provision on all unclassified loans/SMA of Small and


Medium Enterprise (SME)

0.25%

General provision against all unclassified loans/SMA (other than


loans under Consumer Financing, Loans to Brokerage House,
Merchant Banks, Stock Dealers etc., Special Mention Account as
well as SME
Financing.)

1%

General provision on the unclassified/SMA amount for Consumer


Financing (other than Housing Finance and Loans for professionals
to set up business)

5%

General provision on the unclassified/SMA amount for Housing


Finance and Loans for professionals to set up business under
consumer financing scheme

2%

General provision on the unclassified/SMA amount for Loans to


Brokerage House, Merchant Banks, Stock Dealers, etc.

2%

General provision on the Off-Balance sheet exposures

1%

Specific Provision for classified Continuous, Demand and Fixed


Term Loans:
Substandard

20%

Doubtful

50%

Bad/Loss

100%

Specific Provision for Short-Term Agricultural and Micro-Credits


All credits except Bad/Loss

5%

Bad/Loss
iii) Discussion of the Banks
credit risk management policy

100%

The Bank bas adopted numerous strategies to manages its credit risk
including:
Creating credit risk awareness culture
Approved credit policy by the Board of Directors
Separate credit risk management division
Formation of law and recovery division
Formation of Recovery Team with Senior Executives
Independent internal audit and direct access to Board/Audit committee
Credit quality and portfolio diversification
Early warning system
Provision and suspension of interest
Scientific lending and credit approval process
Counterparty credit rating
Strong NPL management system

101

annual report 2014

Disclosure on Basel II

Quantitative Disclosures

(b)

Total gross credit risk exposures Total Gross Credit Risk exposures broken down by major types of credit exposure
broken down by major types of as on December, 2014 is as under:
Particulars
BDT in Crore
credit exposure.
Loan General
206.11
Term Loan
Time Loan

Small and Medium Enterprise


Consumer Finance

Loan against Trust Receipt

Home Loan

Packing Credit

1,460.74

906.87

99.67

533.56

0.72

115.56

House Building Loan

291.46

Hire Purchase

680.06

Lease Finance
EDF Loan

Payment Against Documents


Cash Credit (Hypo)

Overdraft

Personal Loan

Consumer Credit Scheme


Other Credit Scheme

Staff Loan

Credit Card

Agricultural Credit

Bill Purchased and Discounted-Inland

Bill Purchased and Discounted-Foreign

(c)

2,495.24

100.06
453.88

46.48

1,136.13
2,166.55

32.43
2.30

1.19

65.18
26.42

178.58

521.77
185.04

Total
11,706.00
Geographical distribution of Geographical Distribution of total exposure as on December, 2014 is as under:
exposure, broken down in
Particulars
BDT in Crore
significant areas by major types
of credit exposure
Urban:
Dhaka

Chittagong
Rajshahi
Sylhet

Khulna

Rangpur
Barisal

Sub-Total (A)
Rural:

Dhaka

Chittagong
Rajshahi
Sylhet

Rangpur

Sub-Total (B)

Grand Total (A+B)


annual report 2014

102

8,065.48
2,166.37

680.87

72.63
87.99

169.86

75.58

11,318.78

133.54
166.26
67.49

3.66

16.27

387.22

11,706.00

www.mblbd.com

(d)

(e)

(f)

Industry or counterparty type


distribution
of
exposures, Industry or counterparty type distribution of exposures, broken down by
broken down by major types of major types of credit exposure.
credit exposure.
Particulars
BDT in Crore
Garments
1,659.92
Trading
950.86
Engineering
1,558.60
Contractor Finance
80.68
Leasing Company
218.08
Housing
591.04
Food, Food product, Beverage, Edible oil etc
736.36
Pharmaceuticals
182.45
Tele-communication
46.11
Transport
305.49
Leather & Leather Product
113.85
Jute Industries
163.75
Textile
415.80
Information Technology
18.87
Hospital & Medical Service
221.96
Paper, Paper Production & Publication
247.33
Plastic & Plastic Materials
181.11
Storage
63.01
Glass & Glass Product
0.35
Agriculture
178.58
SME Loan
906.87
Credit Card
26.48
Consumer Loan
148.09
Loans to Brokerage House
487.90
Others
2,202.46
Total
11,706.00
Residual contractual maturity Residual contractual maturity breakdown of total
BDT in Crore
breakdown of the whole exposure as on December, 2014 is as under:
portfolio, broken down by major
Up to 1 (one) month
3,220.33
types of credit exposure.
Over 1 (one) month but not more than 3 (three) months
1,529.29
Over 3 (one) months but not more than 1 (one) year
3,309.49
Over 1 (one) year but not more than 5 (five) years
2,445.64
Over 5 (five) years
1,201.25
Total
11,706.00
By major industry and counter party type:
i) Amount of impaired loans
Impaired Loan under 4 (four) broad categories as on December 31, 2014 is as
and if available, past due loans, under
provided separately.
Particulars
BDT in Crore
Continuous Loan

95.69

Demand Loan

140.63

Term Loan

246.17

Short Term Agro Credit and Micro Credit

0.67

Total
ii) Specific and general
provisions; and

483.16

Specific and general provisions made following Bangladesh Banks


guideline as on December 31, 2014 is as under
Particulars

BDT in Crore

General Provision (including SMA)

254.48

Specific Provision (SS, DF, Bad/Loss)

240.51

Provision for Off-balance Sheet Exposure

58.30

103

annual report 2014

Disclosure on Basel II

iii) Charges for specific


allowances and charge-offs
during the periods

During the year 2014 following provisions were made on un classified,


classified and off-balance sheet exposure as per Bangladesh Banks
guideline
Particulars
BDT in Crore
Provision against Un Classified Loans

155.25

Provision against Classified Loans


(g)

Gross non-performing
assets (NPAs):

48.53

Other Provision (Off Balance Sheet Items)

8.42

Gross non-performing assets as on December 31, 2014 is as under


Particulars

BDT in Crore

Gross non-performing assets (NPAs):


Non-performing Assets (NPAs) to Outstanding Loans & Advances

4.12%

Movement of Non Performing Assets


Opening balance
Additions

465.97
49.56

Reductions

31.20

Closing Balance

484.33

Movement of specific provisions for NPAs


Opening balance
Recoveries of amount from pre-written off

242.50
2.48

Provisions made during the period

52.89

Write-off

52.40

Write-back of excess provisions


Closing Balance

240.51

e) Equities: Disclosure for Banking Book Positions


Qualitative Disclosures

The general qualitative disclosure requirement with respect to equity risk, including:

(a)

Differentiation between holdings on which


capital gains are expected and those
taken under other objectives including for
relationship and strategic reasons.

MBLs total equity share holding comprises of two purposes i.e.


capital gain and other strategic reason like equity participation and
investment diversification. MBL is the director of IDLC finances
Ltd and sole purpose of such investment is not capital gain, rather
maintain relationship as well as diversify its investment portfolio.
Investment in equity securities are broadly fall under 2 categories:
Quoted Securities (traded in the secondary market; trading book
assets) &

Discussion of important policies covering


the valuation and accounting of equity
holdings in the banking book. This
includes the accounting techniques and
valuation methodologies used, including
key assumptions and practices affecting
valuation as well as significant changes in
the practices.

annual report 2014

104

Unquoted Securities (not traded in secondary market; banking


book assets)
Quoted shares are recorded at cost prices and after every quarter
end if the total cost of entire portfolio is higher than the market value,
provision is maintained to the extent of differential amount of cost and
market value of the portfolio as per terms and condition of regulatory
authority. On the other hand, unquoted share is valued at cost price
or book value as per latest audited accounts.

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Quantitative Disclosures
Particulars
(b)

Value disclosed in the balance sheet of investment, as well as the fair value of
those investments; for quoted securities, a comparison to publicly quoted share
values where the share price is materially different from fair value.

Quoted shares

(c)


(d)

Un Quoted shares

The cumulative realized gain (losses) arising from sales and liquidations in the reporting periods.
Realized gain (losses) from equity investments

Total unrealized gains (losses)

Any amount of the above included in tier 2 Capital

60.03

186.37

186.37

1.29

1.29

79.15

139.19

139.19

Market value of investment in equities as on December 31, 2014

139.19

139.19

13.92

Qualitative Disclosures

The
general
qualitative
disclosure
requirement including the nature of IRRBB
and key assumptions, including assumptions
regarding loan prepayments and behavior
of non-maturity deposits, and frequency of
IRRBB measurement.

Quantitative Disclosures

The increase (decline) in


earnings or economic value
( or relevant measure used
by management) for upward
and downward rate shocks
according to managements
method for measuring IRRBB,
broken down by currency (as
relevant)

g) : Market Risk

Quantitative Disclosures

Views of BOD on trading/


investment activities

Methods used to measure

13.92

13.92

f) : Interest rate risk in the banking book ( IRRBB)

(a)

60.03

Market value of investment in equities as on December 31, 2014

General Risk- Capital Requirement is 10% of the said value

(b)

BDT in Crore

Specific Risk- Capital Requirement is 10% of the said value

(a)

Consolidate

79.15

Total latent revaluation gains (losses)

(e)

Solo

13.92

Interest rate risk in the banking book arises from mismatches


between the future yield of an assets and their funding cost. Assets
Liability Committee (ALCO) monitors the interest rate movement on
a regular basis. MBL measure the Interest Rate Risk by calculating
Duration Gap i.e. positive Duration Gap affects banks profitability
adversely with the increment of interest rate and negative Duration
Gap increase the banks profitability with the reduction of interest rate.

Increase of Interest Rate will affect the Bank in the following ways:
Particulars

Minor
Shock

Magnitude of Shock
Duration Gap (Years)
Total Regulatory Capital (BDT in Cr)
Risk Weighted Assets
CAR
Revised Capital (After Shock)
Revised RWA
Revised CAR (%)

1%
0.46
1,910.39
14,748.43
12.95%
1,832.66
14,396.80
12.73%

Moderate
Shock
2%
0.46
1,910.39
14,748.43
12.95%
1,761.11
14,396.80
12.23%

Major
Shock
3%
0.46
1,910.39
14,748.43
12.95%
1,689.56
14,396.80
11.74%

Market Risk is the possibility of losing assets in balance sheet and off-balance
sheet positions arising out of volatility in market variables i.e. interest rate,
exchange rate and price. Total capital requirement for MBL against its market
risk is the sum of the following
i) Interest Rate risk
ii) Equity position risk
iii) Foreign Exchange risk
iv) Commodity risk
All the Market Risk related policies/guidelines are duly approved by BOD.
The BOD sets limit, review and update the compliance on regular basis
aiming to mitigate the Market risk.

In order to calculate the market risk for trading book purposes the Bank uses

105

annual report 2014

Disclosure on Basel II

Market risk

Standardized (rule based) Approach where capital charge for interest rate
risk, price and foreign exchange risk is determined separately. For instance,
MBLs total market risk is calculated as below:
i)

Market Risk Management


system

Capital Charge for interest Rate Risk = Capital Charge for Specific
Risk + Capital Charge for General Market Risk.
ii) Capital Charge for Equity Position Risk = Capital Charge for Specific
Risk + Capital Charge for General Market Risk.
iii) Capital Charge for Foreign Exchange Risk = Capital Charge for
General Market Risk.
iv) Capital Charge for Commodity Position Risk = Capital Charge for
General Market Risk.
Treasury Division and International Division manage the Market Risk with the
help of Asset Liability Committee (ALCO) and Asset Liability Management
(ALM) Desk.

Policies and Processes


for mitigating market risk

annual report 2014

106

has been given on Loan Deposit Ratio, Whole Sale Borrowing Guidelines,
Medium Term Funding, Maximum Cumulative Outflow, Liquidity Contingency
Plan, Local Regulatory Compliance, Recommendation / Action Plan etc.
Furthermore, special emphasis has been put on the following issues for
mitigating market risk:
Interest Rate Risk Management

Treasury Division reviews the risks of changes in income of the Bank as


a result of movements in market interest rates. In the normal course of
business, the Bank tries to minimize the mismatches between the duration
of interest rate sensitive assets and liabilities. Effective Interest Rate Risk
Management is done as under:
Market Analysis

Market analysis over interest rate movements are reviewed by the Treasury
Division of the Bank. The type and level of mismatch interest rate risk of the
Bank is managed and monitored from two perspectives, being an economic
value perspective and an earning perspective.
Gap Analysis

ALCO has established guidelines in line with central Banks policy for the
management of assets and liabilities, monitoring and minimizing interest rate
risks at an acceptable level. ALCO in its regular monthly meeting analyzes
Interest Rate Sensitivity by computing GAP i.e. the difference between Rate
Sensitive Assets and Rate Sensitive Liability and take decision of enhancing
or reducing the GAP according to prevailing market situation aiming to
mitigate interest rate risk.
Foreign Exchange Risk Management

Risk arising from potential change in earnings resulted from exchange rate
fluctuations, adverse exchange positioning or change in the market prices
are considered as Foreign Exchange Risk. Treasury and International
Division manage this risk in the following fashion:

Continuous Supervision

Treasury Back Office separated from Treasury Front Office

Banks Treasury Division manages and controls day-to-day trading activities


under the supervision of ALCO that ensures continuous monitoring of the
level of assumed risks. Treasury Division monitors the foreign exchange
price changes and Back Office of the Treasury Division verifies the deals and
passes the entries in the books of account.
Treasury Back Office is conducting its operation in separate locations apart
from the Treasury Front Office. Treasury Back Office is responsible for
currency transactions, deal verification, limit monitoring and settlement of
transactions independently. Treasury Back Office gathers the market rates
from an independent source other than dealers of the same organization,
which helps to avoid any conflict of interest.

www.mblbd.com

Mark-to-Market Method for Approved Securities and Foreign Exchange


Revaluation
All foreign exchange reserves and balances along with approved securities
are revalued at Mark-to-Market method according to Bangladesh Banks
guidelines. Such valuation are made after specific time interval as
prescribed by Bangladesh bank.
Nostro Accounts
Nostro accounts are maintained by the Bank with various currencies and
countries. These Accounts are operated by the International Division
of the Bank. All Nostro accounts are reconciled on monthly basis. The
management reviews outstanding entry beyond 30 days for settlement
purpose.
Equity Risk Management
Equity Risk is the risk of lo.ss due to adverse change in market price of
equities held by the Bank. Equity Risk is managed by the following fashion:
Investment Portfolio Valuation
Mark-to-Market valuations of the share investment portfolio is followed in
measuring and identifying risk. Mark-to-Market valuation is done against a
predetermined cut loss limit.
Diversified Investment to minimize Equity Risk
MBL minimizes the Equity Risks by Portfolio diversification as per
investment policy of the Bank.
Margin Accounts are monitored very closely
Where Margin loan is allowed, security of investment, liquidity of securities,
reliability of earnings and risk factors are considered and handled
professionally.

Quantitative Disclosures

Solo

Particulars

Capital requirement for:

Interest Rate Risk

23.29

23.29

Equity Position Risk

27.84

27.84

Foreign Exchange Risk

15.84

15.84

66.97

66.97

Commodity Risk
h) : Operational Risk
Qualitative Disclosures
(a)

Consolidate
BDT in Crore

Total Capital Requirement for Market Risk

Views of BOD on system to reduce Operational Risk

All the policies/guidelines including Internal Control and


Compliances and Board audit are duly approved by
BOD. Audit Committee of the Board directly oversees the
activities of internal control and compliances aiming to
check all types of lapses and irregularities inherent with
operational activities of the Bank and thereby may create
a notable downfall risk for the Bank.
Operational risk includes legal risk, but excludes strategic
and reputation risk. Operational Risk includes:

Transaction processing
Operation control
Technology and systems
Risks of physical and logical security
Unique risk arises due to outsourcing

107

annual report 2014

Disclosure on Basel II

Performance gap of executives and staffs

The BOD of the Bank is always keen to provide a


competitive, attractive and handsome remuneration
package for its employees. Besides, the recruitment
policy of the Bank always emphasizes on sorting out
fresh graduate from the reputed universities and nurture
them until transformation to a Human Capital of highest
quality. Besides, the Banks name and fame as top tier
Bank of the country acts as moral boosting factor for the
employees. An accommodating, welcoming, co-operative
and congenial work atmosphere motivates its employees
to act as a family towards achievement of goal. As such,
there exists no performance gap in the Bank.

Potential external events

Policies and processes for mitigating operational


risk

Operational Risks results from inadequate or failed


internal process, people and systems or from external
events. Within the Bank, Operational Risk may arise
from negligence and dishonesty of the employees, lack
of management supervision, inadequate operational
control, lack of physical security, poor technology, lack of
automation, non- compliance of regulatory requirements,
internal and external fraud etc. Operational Risk
Management Framework has been designed to provide
a sound and well-controlled operational environment and
thereby mitigate the degree of operational risk.

Approach for calculating


operational risk

Operational Risk is defined as the risk of loss resulting


from inadequate or failed internal processes, people and
system or from external events. The Bank use Basic
Indicator Approach for calculating capital charge against
operational risk i.e. 15% of average positive annual gross
income of the Bank over the last three years.

Quantitative Disclosure

(b)

No potential external events have been detected yet at


the time of reporting of the capital accord.

charge

for

Solo

Particulars
Capital requirements for

annual report 2014

capital

108

124.53

BDT in Crore

Consolidate
124.93

CROs Report on
Risk Management
Risk is the possibility that outcome of an action or event
may leads to entails certain magnitude of risk elements
but at the same time bank cannot be risk averse. Being
a financial intermediary, banking business is always
exposed to multi dimensional risks including systemic
one. Therefore, risks must be measured and managed
adroitly in order to ensure sustainable growth. Proper risk
management culture facilitates identification, measurement
and monitoring of risks in the right perspective towards
securing the interest of the bank.

MBLS RISK MANAGEMENT STRATEGIES


Mercantile Bank Limited adopted well-articulated Risk
Management strategies for ensuring long-term sustainable
growth of the Bank. The Board of Directors has the overall
responsibility of ensuring that organizational structure,
policies, standards, guidelines and procedures are in place
for efficient risk management and being implemented
properly. The Board approves risk management policies
and also sets prescribed internal risk level/appetite, to
identify and manage risks with efficacy. Effective risk
management warrants the need of availability of skilled
pool of manpower to adopt and implement good practices
to keep up the institutional interest with reputation. Our
banks adopted Risk management process is as follows:

Risk Origination (core risk area)


Risk Identification
Measurement & Impact Evaluation of Risk
Risk Control

(by adopting appropriate risk mitigation technique)

Risk Monitoring

(to establish better oversight on the risk dynamics)

Risk-Return Trade-off
Fig: Risk Management Process of MBL

109

annual report 2014

CROs Report on Risk Management

CREDIT RISK MANAGEMENT


Credit Risk / counter party risk is the potential risk that
a bank borrower or counterparty may fails to meet its
financial obligation in accordance with agreed terms,
resulting in financial loss to the Bank. Credit Risk
Management of MBL capitulates is passed through the
following procedures:

Articulated Credit Policy Guideline


Credit Risk Grading Process
Proper Assessment of Credit Proposal
Rationalize Lending Process
Segregated Credit Administration Department
Credit Monitoring & CL Provisioning Department
Special Asset Management Department

The Bank has segregated duties of the officers/ executives


involved in credit related activities. Separate Corporate/
SME/Retail divisions have been formed at Head Office
which is entrusted with the dudes of maintaining effective
relationship with customers, marketing of credit products,
exploring new business opportunities etc. Moreover,
credit approval, administration; monitoring and recovery
functions have been segregated towards reinforcement
of credit risk management activities. For this purpose,
four separate units have been formed within the Credit
Risk Management (CRM) Division. These are (a) Credit
Risk Measurement & Approval Department (b) Credit
Administration Department and (c) Credit Monitoring and
CL Provisioning Department d) Special Asset Management
Department. Credit Risk Management Division is entrusted
with the duties of Formulating policies/strategy for lending
operations, maintaining asset quality, assessing risk in
lending, sanctioning credit, etc.
A thorough ex-ante/pre investment analysis is done before
sanction of any credit facility at Credit Risk Management
Division by the Risk review committee. The risk assessment
includes borrower risk analysis, financial analysis, industry
analysis, historical performance of the customer, security of
the proposed credit facility, etc. The assessment process at
Head Office starts at Corporate Division by the Relationship
Manager/Officer and ends at Credit Risk Management
Division when it is approved/declined by the competent
authority. Credit approval authority has been delegated
to the individual executives based on their capability,
experience & business acumen. Proposals beyond their
delegation are disposed to the Management of the Bank
and /or the Executive Committee or Board of Directors for
approval as per define delegated authority.

annual report 2014

110

MARKET RISK MANAGEMENT


Market risk is defined as the risk of loses in on and offbalance sheet positions arising from movements in market
price. Major market risks include: Interest rate risk,
Foreign Exchange Risk and Equity Risk. MBLs strategies
to address these risks are as under:

A. MANAGING INTEREST RATE RISK


Interest Rate Risk is the risk which occurs due to adverse
movement of interest rate either on the assets (credit
portfolio and investment) or on the liabilities (deposits
and borrowing) having impact on profitability of the
Bank. Profitability depends largely on the capacity of the
Bank to create comfortable Net Interest Margin (NIM)
i.e. difference between the interests Bank receives from
loans and investments and the interest Bank pays on
the different mix of deposits and borrowings. Change in
interest rate(s) may adversely affect banks profitability
which can largely be attributed for narrow spread or razor
thin margin in financial intermediation.
Mercantile Bank Limited addresses its Interest Rate
Risk in an efficient and effective manner. Interest rate
risk management strategies of the Bank include Market
Trend Analysis, Interest Rate Sensitivity Analysis and Gap
Analysis. Asset Liability Committee (ALCO) in its regular
monthly meeting analyzes interest rate sensitivity by
computing GAP i.e. the difference between Rate Sensitive
Assets and Rate Sensitive Liabilities and take decision
for necessary adjustment with the market dynamics and
taking into consideration of predictable events that may
impinge on the money market scenario.
MBLS INTEREST RATE
STRATEGIES AT A GLANCE

RISK

MANAGEMENT

Market Trend Analysis


Interest Rate Sensitivity Analysis
GAP analysis

B. MANAGING FOREIGN EXCHANGE RISK


Foreign Exchange Rate Risk refers to the potential change
in earnings resulted from exchange rate fluctuations,
adverse exchange positioning/holding and market volatility.
guideline with a view to reducing the foreign exchange risk.
We have set apart treasury operations by materializing the
back office, mid office and front office concept to separate
the responsibilities towards reinforcement of the process
in line with the prudential guidelines prescribed by the
Bangladesh Bank. Front office is responsible for currency
transactions and preparation of deals in accordance with
the market trend. Back Office verifies the deals, monitors the
limits and settles the transactions autonomously. All foreign

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exchange transactions are revalued at Mark-to-Market


basis in conformity with Bangladesh Bank Guidelines. All
Nostro accounts are reconciled on fortnightly and monthly
intervals and in the process it is ensured through the
oversight of senior management that no entries remain
unattended beyond the specific time threshold.

MBLS FOREIGN EXCHANGE RISK MANAGEMENT


STRATEGIES

Prudent policy guideline and Manuals with a view


to reducing the Foreign Exchange Risk
Treasury Division of the Bank manages and
controls day-to-day trading activities under the
supervision of ALCO that ensures continuous
monitoring of the level of assumed risks.
All the transactions are carried out on behalf of the
customers, i.e. MBLs foreign exchange trading
exposures are principally derived from customer
driven transactions, and major risk arises from
movement of price.
All foreign exchange transactions are revalued at
Mark-to-Market method according to Bangladesh
Banks guidelines and position maintained by the
Bank at the end of day within the stipulated limit
prescribed by Bangladesh Bank.
All Nostro accounts are reconciled on fortnightly
and monthly basis. All the Nostro accounts are
verified by the external auditors and reports are
submitted to Bangladesh Bank.

C. EQUITY PRICE RISK MANAGEMENT


Equity price risk is the risk that one's investments will
depreciate because of stock market dynamics causing
one to lose money. Equity Price Risk may arise from
general or specific risk or for both.

Equity Price
Risk

General Risk

MBLS EQUITY
STRATEGIES

Specific Risk

PRICE

RISK

MANAGEMENT

Investment Policy
diversification

Mark-to-Market valuations procedures

emphasizing

on

Portfolio

Where Margin loan is allowed, security of investment,


liquidity of securities, reliability of earnings and risk
factors are considered professionally.

LIQUIDITY RISK MANAGEMENT


Liquidity risk refers to the risk that comprises failure of a
bank to meet its obligation due to shortfall of cash and
cash equivalents and also loss of opportunity to invest in
potential high yielding assets. Liquidity Risk also triggers
from other financial risks like that of excessive non-funded
exposure perceiving the opportunity loss equivalent to
actual loss of non funded business (off balance sheet).
The main objective of managing liquidity risk is to maintain
sufficient liquid assets, optimization of the capacity to build
up comfortable liquidity base for meeting short and long
term financial obligation/commitment as well as to face
any contingency affecting liquidity of the Bank.

MANAGING OPERATIONAL RISK


Operational risk is the risk of loss resulting from inadequate
or failed internal processes, people and systems or from
externalities. It is a broad concept which focuses on the
risks arising from the people, systems and processes
through which a company operates. It also includes other
categories such as fraud, forgery and non compliance on
legal matters.
Board of Directors and Senior Management of Mercantile
Bank Limited has established an organizational culture
that places high priority on the agenda to ensure effective
operational risk management and adherence to sound
operating controls. Senior management transforms the
strategic direction given by the Board through operational
risk management policy. In addition, the management has
focused on reinforcement of segregation of responsibilities
and establishing accountability as well as transparency in
its different spheres of business activities through written
procedures, regular training and awareness programs.
Departmental Control Function Checklist (DCFCL),
Quarterly Operations Report, Loan Documentation
Checklists, etc are in place covering all probable risks
associated with banks business and operations. Regular
and Surprise inspection are also made on a routine basis
to make sure that all control is functioning properly.

MANAGING INTERNAL CONTROL AND


COMPLIANCE RISK
Better internal control pre supposes introduction of
standardize operating procedures in all the core risk areas
to maximize the attainment of preset objects be ensuring
compliance with the prescribe rules & regulation adopted
by the regulatory bodies synchronizing with the internal
policy perception/guidelines.

111

annual report 2014

CROs Report on Risk Management

MBLS INTERNAL CONTROLAND COMPLIANCE


RISK MANAGEMENT STRATEGIES
According to the Central Banks guideline, the Bank has
formed separate Internal Control and Compliance Division
for an effective internal control system. Compliance Unit
of ICCD ensures that Bank complies with all regulatory
requirements of the legislative bodies in conducting its
business.
Managing
Director

Board of Directors

Head of Monitoring
Units

Head of Audit &


Inspection

MANAGING MONEY LAUNDERING RISK


Money laundering risk is defined as the loss of reputation
and expenses incurred as penalty for being negligent
in prevention of money laundering. Bangladesh Bank
through BRPD Circular No. 17 dated October 07, 2003
advised the scheduled commercial banks operating in
the country to put in place effective risk management
system which includes, among others, Money Laundering
Risk Management, since money laundering, a criminal
act recognized all over the world, has very severe
consequences in the economy, security and the society.

MBLS ANTI-MONEY LAUNDERING POLICY


Bangladesh Banks Anti-Money Laundering policy contains
the following major issues which have been incorporated
in the Banks Anti Money Laundering policy:

Duly filled in KYC (Know Your Customer) form is


mandatory for account opening
TP (Transaction Profile) in which every customer
must specify what will be the frequency and
amount of transaction
Preservation of correct and full information for
identification of its clients during operation of
accounts
Monthly Cash Transaction Report to be sent to
Bangladesh Bank for the customers depositing or
withdrawing cash BDT 1 million or above in any day.
Monitoring of unusual/suspicious transaction and
reporting the same to Bangladesh Bank
Prohibited any types of transaction/relation with
shell banks
Ensure enhanced due diligence while opening
annual report 2014

112

Head of Internal
Control & Compliance

Head of Compliance
Units

account or handling transactions of Influential


Persons/ Head of High Officials of International
Organizations
Prevention of financing of terrorism and financing
of proliferation of weapons of mass destruction
Previous records should be maintained for at least
five years after closing of clients account
Appoint BAMLCO in every branch & CAMLCO and
deputy CAMLCO at Head Office
KYC and TP to be changed on the basis of
customers transaction
Classification of customers on the basis of risk
Creating awareness among employees
arranging training on Anti Money Laundering

by

MANAGING INFORMATION
TECHNOLOGY RISK
IT risk is the process of managing the risk associated with
implementation of new technology. If a new technology
is not compatible with business function of the company,
the company may suffer eventually. IT risk is the business
risk associated with the use, ownership, operation,
involvement, influence and adoption of IT within an
enterprise. Risks surrounding Information Technology,
such as network failure, software failure, lack of skills,
hacking and viruses and poor system integration poses
threat for the organization.
IT risk of the Bank is addressed by initiating appropriate
measures within the clear cut policies and procedures as
well as defining roles and responsibilities of all relevant
officials; dedicated IT audit team as per the central banks
guidelines to conduct audit at branch and divisional
levels; Segregated job descriptions and responsibilities
to minimize IT Risk; Need based trainings are being
conducted time to time to grip the IT Risk in an efficient
manner. MBL protects and secures its data in various ways.
Data is kept in secured place prescribed by the Banks
policy. Furthermore, MBL has adopted TEMENOS T24,
one of the highly sophisticated real time banking software
with a view to ensuring superior customer services and
at the same time controlling technology related hazards.
State of Art Data Centre and Disaster Recovery Site (DRS):
MBL procured and implemented state of the art Hardware,
Software and system in its data centre and Disaster
Recovery Site keeping in mind future scalability, efficiency,
fault tolerance and high availability. The environmental
security features of the data centre and DRS have been
provided high priority. The network system of the Bank
has been reconfigured with latest technologies for highest
availability, efficiency and security.

www.mblbd.com

INFORMATION TECHNOLOGY RISK MANAGEMENT


STRATEGIES

Clear policies and procedures by defining roles


and responsibilities of all relevant officials.

Dedicated IT Audit Team as per the Central banks


guidelines to conduct audit at branch and divisional
levels

Segregated job descriptions and responsibilities to


minimize IT Risk

MBL protects and secured its data in various ways.


Data is kept in secured place prescribed by the
Banks policy.

Need based trainings are being conducted time to


time to handle the IT Risk in an efficient manner

MBL has adopted TEMENOS T24, a highly


sophisticated real time banking software with a
view to ensuring superior customers services and
at the same time controlling technology related
hazards.

BASEL II & III AND BORROWERS RATING


Risk Based Capital Adequacy Framework i.e. Basel II,
came into force fully in the banking industry of Bangladesh
from January 2010 following the BRPD circular # 20 on
December 29, 2009 after parallel existence with Basel I
during the year 2009.
The Basel II principle stands on the following three
pillars. Pillar 1: Minimum Capital Requirement; Pillar 2:
Supervisory Review Process; Pillar 3: Market Discipline.
Under Pillar I of Basle II principle, minimum capital
requirement is 10% to total Risk Weighted Assets (RWA).
Therefore, reduction in RWA will lead to lower capital
requirement.
Meantime, Bangladesh Bank has issued Revised
Regulatory Capital Framework for banks in line with Basel
III in December 2014. Here the reforms are the response
of Basel Committee on Banking Supervision (BCBS) to
improve the banking sectors ability to absorb shocks
arising from financial and economic stress, whatever the
source, thus reducing the risk of spillover from the financial
sector to the real economy. To ensure smooth transition to
Basel III, appropriate transitional arrangements have been
provided for meeting the minimum Basel III capital ratios,
full regulatory adjustments to the components of capital,
etc. Consequently, Basel III capital regulations would be
fully implemented as on January 1, 2019.

Since, corporate exposures constitutes the major part of


MBLs loan portfolio, corporate clients credit rating play
key role in determining Risk Weighted Assets (RWA)
and thus total capital requirement of the Bank. As such,
MBL has taken the issue of Borrowers rating as a matter
of utmost priority. Customers having good rating enjoy
privilege for renewal, approval of loan facility and pricing
thereby to ensuring risk adjusted rate of return of our
portfolio. As a result of our continuous persuasion and
vigorous effort, a good number of corporate and SME
customers have conducted their credit rating by External
Credit Assessment Institution (ECAI) as on 31 December
2014. We have targeted to bring eighty percent of our
Corporate and SME customers under the credit rating by
the year 2015.

STRESS TESTING
Stress Testing is a risk management technique used to
evaluate the potential effects of an institutions financial
condition of a specific event and/or movement in a set of
financial variables. It refers to the process to cover multiple
risk measures across categories and complements
traditional risk models. It is also an integral part of the
Capital Adequacy Framework. The traditional focus of
stress testing relates to exceptional but plausible shocking
events. Each shocking events contains Minor, Moderate
and Major levels of shock.
MBL accomplish the quarterly Stress Testing covering
Credit Risk, Market Risk and Liquidity Risk in accordance
with Bangladesh Bank DOS (Department of Offsite
Supervision) circular # 01 dated February 23, 2011.
Post shock capital adequacy status at different shock
levels as per Stress Testing Report on 31 December 2014
is as under:
Stress Test: Sensitivity Analysis

Quarter: Q4

Year: 2014

Stress Test Results:


Changes in Capital Adequacy at different shock levels
Regulatory CAR %

10.00

CAR before shock (%)

12.95

113

annual report 2014

CROs Report on Risk Management

Minor

Moderate

Major
Changes
in CA

CAR after
Shock
(%)

Changes
in CA

CAR after
Shock (%)

Changes
in CA

CAR after
Shock
(%)

Performing Loan directly downgraded to B/L:


Sectoral Concentration 1

-0.11

12.80

-0.34

12.57

-0.57

12.34

Performing Loan directly downgraded to B/L:


Sectoral Concentration 2

-0.06

12.85

-0.17

12.74

-0.29

12.62

Increase in NPLs due to default of Top large loan


borrowers

-5.43

7.48

-7.50

5.41

-8.02

4.89

Negative Shift in NPLs categories

-0.06

12.85

-0.53

12.38

-0.78

12.13

Decrease in the FSV of the Collateral

-0.11

12.80

-0.22

12.68

-0.45

12.46

Interest Rate

-0.33

12.58

-0.65

12.26

-0.98

11.93

FEX: Currency Appreciation

-0.01

12.90

-0.02

12.89

-0.03

12.88

Equity Shock

-0.15

12.76

-0.29

12.62

-0.59

12.32

Individual Shocks

Effect of Combined Shock is as under:


Minor

Moderate

Major

Changes in CA

Changes in CA

Changes in CA

Decrease in the FSV of the Collateral

-0.11

-0.22

-0.45

Increase in NPLs

-0.50

-1.36

-3.18

Negative Shift in NPLs categories

-0.06

-0.53

-0.78

Interest Rate

-0.33

-0.65

-0.98

FEX: Currency Appreciation

-0.01

-0.02

-0.03

Equity Shock

-0.15

-0.29

-0.59

Total Change

-1.16

-3.09

-6.00

CAR after shock (%)

11.75

9.82

6.91

Combined Shock

When all the shocks are considered together, Capital Adequacy Ratio (CAR) of MBL becomes 11.75%, 9.82% and 6.91%
respectively against minor, moderate and major levels of shock. So, the bank can absorb minor level of shock only when
all the shocks are considered together. However, for absorbing other levels of shock which is very unlikely in the industry,
the bank may require additional capital and reserve.

Md. Abdul Jalil Chowdhury


Additional Managing Director and CRO

annual report 2014

114

www.mblbd.com

SURAIYA PARVEEN & ASSOCIATES


Chartered Secretaries

Certificate on compliance of conditions of Corporate Governance Guidelines of Bangladesh


Securities & Exchange Commission to the shareholders of Mercantile Bank Limited.

We have examined the Statement of Compliance of Corporate Governance Guidelines issued by Bangladesh Securities &
Exchange Commission dated 7 August 2012 through Notification #. SEC/CMRRCD/2006-158/134/Admin/44, of Mercantile
Bank Limited for the year ended 31st December 2014, as has been produced before us for our examination by the Bank.
The compliance of conditions of Corporate Governance Guidelines is the responsibility of the Banks management. Our
examination was limited to the procedures and implementation thereof, adopted by the Bank for ensuring compliance
of the conditions of Corporate Governance Guidelines. It is a scrutiny and verification only and not an expression of an
opinion on the financial statements of the Bank.
In our opinion and to the best of our information and according to the explanations given to us, the Bank has complied with
the conditions of Corporate Governance Guidelines of Bangladesh Securities & Exchange Commission.
We state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or effectiveness
with which the management has conducted the affairs of the Bank.

For Suraiya Parveen & Associates



Chartered Secretaries


Suraiya Parveen, FCS
Membership No: F-98

Dhaka, 05 February 2015


House # 144 (3rd Floor), Block-G, South Banasree Project, Eastern Housing, Goran, Dhaka-1219, contact: 7293530, Cell:
01552-363837, 01911-421998, E- mail:parveensuraiya2@yahoo.com

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annual report 2014

Statement of Directors Responsibility for


Internal Control & Financial Reporting
Responsibility to Financial Statements
The Directors are responsible for ensuring that the Bank keeps proper books of accounts of all the transactions and
prepares financial statements, which give a true and fair view of the state of affairs and profit/loss for the year.
The Board of Directors accepts responsibility for the integrity and objectivity of the financial statements. It ensures that
the estimates and judgments relating to the financial statements were made on a prudent and reasonable basis, so that
they reflect in a true and fair manner, the form and substance of transactions, and reasonably present the Companys true
state of affairs.
The Board of Directors confirms that the International Financial Reporting Standard (IFRS) and International Accounting
Standards, as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh, have been adhered to,
subject to any material departure being disclosed and explained in the notes to the accounts. The Board also confirms
that the Company keeps accounting records, which enables it to ensure that the financial statements comply with
the requirements of the Companies Act, 1994, Bangladesh Securities and Exchange Rules 1987, Financial Institution
Act 1993 and Listing Regulations of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and
amendments thereto.
Responsibility to Internal Control Systems
To ensure this, the Bank has taken proper and sufficient care in installing a system of internal control, which is
reviewed, evaluated and updated on an ongoing basis. The Internal Control & Compliance Division of the Bank
conducts periodic audits to provide reasonable assurance that the established policies and procedures of the Company
were consistently followed.
Opinion of the External Auditors
The auditor of the Bank, M/s Khan Wahab Shafiqur Rahman & Co., Chartered Accountants and A. Qasem & Co., Chartered
Accountants, have carried out annual audits to review on the system of internal controls, as they consider appropriate and
necessary, for expressing their opinion on the financial statements. They have also examined the financial statements
made available by the management together with all the financial records, related data, minutes of shareholders and Board
Meetings, relevant policies and expressed their opinion.

Morshed Alam, M.P


Chairman

annual report 2014

116

Report on
Corporate Governance

Report on Corporate Governance

Corporate Governance is concerned with holding the


balance between economic and social goals, and
between individual and communal goals. The corporate
governance framework is there to encourage the efficient
use of resources and equally to require accountabilitty
for the stewardship of those resources. The aim is to
align as nearly as possible the interests of individuals,
corporations, and society which should be incorporated
into every part of the organization. At MBL, the Board
is committed to maintain high standards of corporate
governance with a view to enhancing stakeholder value,
increasing investor confidence, establishing customer
trust and building a competitive organization to pursue
the Bank's corporate vision to be a financial services
leader in the country.
To ascertain Corporate Governance, MBL always brushwood
to the principles, which cover the following areas:

Board of Directors, its formation, roles and


responsibilities;
Delegation of financial, business and administrative
power to the Management;
Accountability, Internal Control and Compliance;
Transparent and neutral Audit Function;
All-out compliance in Legal Matters;
Rights and equitable treatment of shareholders;
Integrity and ethical behavior.

interests of all Stakeholders, including the Depositors who


always remain concerned by the Board of Directors. The
Board approves the banks budget and business plan and
reviews those on quarterly basis so as to give directions
as per changing economic and market environment. The
Board has the responsibility to periodically review and
approve the overall strategies, business, organization,
and significant policies of the Bank. The management
operates within the policies, manuals and limits approved
by the Board. Regular meeting of the Board is held,
at least once in a month. The Board of directors holds
meetings on a regular basis to discuss and decide on
major corporate, strategic and operational issues, as well
as to evaluate major investment opportunities. In 2014,
17 Board Meetings were held wherein; policies and major
business strategic decisions were formulated.
Role and Responsibilities of the Chairman of the
Board and the Managing Director & CEO
To ensure apposite supervision of the Management with
the lined up best practices, the roles and responsibilities
of the Chairman and the CEO are separated with clear
division of responsibilities, defined and documented
as approved by the Board. This distinction allows for a
better understanding and distribution of jurisdictional
responsibilities and accountabilities. The clear
hierarchical structure with its focused approach and
attendant authority limits also facilitates efficiency and
expedites informed decision-making.

THE BOARD OF DIRECTORS

Chairman

Board Composition

Mr. Morshed Alam, M.P is the Chairman of MBL


who directs the Board for the appropriateness and
effectiveness of the succession-planning program for
the Board and senior management levels. He is also
responsible for the effective performance of the Board.
The Chairman continuously works together with the rest
of the Board members in setting the policy framework
and strategies to align the business activities driven by
the senior management with the Banks objectives and
aspirations and monitors its implementation.

MBL's Board of directors comprises of 14 members,


including the Managing Director & CEO. It is well-structured
with a Chairman, two Vice Chairmen and two Independent
Directors. Mr. Morshed Alam, M.P is the Chairman, while
Mr. A.S.M. Feroz Alam and Mr. M. S. Ahsan are the
Vice Chairmen of the Board. The Board is committed to
ensure diversity and inclusiveness in its deliberations. The
Directors who are esteemed professional and/or successful
businessman bring to the Board a wealth of knowledge,
experiences and skills in the key areas of accountancy,
law, international business operations and development,
finance and risk management, amongst others.
Board Appointment Process and Remuneration
A prescribed and transparent practice exists for the
appointment of Directors to the Board. The members of
the Board are selected each year in the Annual General
Meeting (AGM) by the Shareholders of the Bank. The
members of the Board are appointed in compliance with
Central Banks Guidelines and other applicable rules
of the country. As per Bangladesh Banks Guidelines,
the Board of Directors is paid remuneration as they
compensate their valuable time and efforts.
Board Effectiveness
In recognition that robust and well thought-out corporate
governance practices are essential to safeguard the
annual report 2014

118

The Chairman ensures orderly conduct and proceedings


of the Board, where constructive debate on issues
being deliberated is encouraged. He also promotes a
healthy working relationship with the CEO and provides
the necessary support and advice as appropriate. He
continues to demonstrate the highest standards of
corporate governance practices and ensures that these
practices are regularly communicated to the stakeholders.
Managing Director & CEO
Mr. M. Ehsanul Haque is the Managing Director & CEO
of MBL, functions as the intermediary between the
Board and the management. As CEO, he ensures that
the financial management practice is performed at the
highest level of integrity and transparency for the benefit
of the shareholders and that the business and affairs of
the Bank are carried out in an ethical manner and in full

www.mblbd.com

compliance with the relevant laws and regulations. He has


been delegated certain responsibilities by the Board and
is primarily accountable for overseeing the day-to-day
operations to ensure the smooth and effective operation
of the Bank. Furthermore, he is responsible for mapping
the medium to longer term plans for Board approval, and
is accountable for implementing the policies and decisions
of the Board, as well as coordinating the development
and implementation of business and corporate strategies.

Composition of Executive Committee

Position

Alhaj Akram Hossain (Humayun)

Chairman

Mr. A. S. M. Feroz Alam


Mr. M. S. Ahsan

Member

Mr. M. Amanullah
Mr. Md. Anwarul Haque
Mr. Md. Abdul Hannan

The CEO, by virtue of his position as a Board member,


is also responsible for developing and maintaining
strong communication programs and dialogues with the
shareholders, investors, analysts as well as employees,
and providing the effective leadership to the organization.
His other responsibilities include ensuring that whilst the
ultimate objective is maximizing shareholders wealth,
social and environmental factors are not neglected also.

Among others, Executive Committee according to its


Charter discharges the following duties:

Roles of the Company Secretary

Mr. Saiful Alam, Vice President in his function as


the Company Secretary (acting) of the Bank, who is
responsible for advising the Board on issues relating
to corporate compliance with the relevant laws, rules,
procedures and regulations, as well as best practices
of governance. He provides assistance to the Board of
Directors and the Management. He is also responsible
for advising the Directors of their obligations and duties
to disclose their interest in securities, disclosure of any
conflict of interest in a transaction involving the Bank,
prohibition on dealing in securities and restrictions on
disclosure of price sensitive information. The Company
Secretary keeps the records of the Banks compliance/
non-compliance status of the conditions imposed by
the Bangladesh Securities and Exchange Commission
(BSEC) which has been shown in the Compliance Report
on BSEC Notification.
BOARD COMMITTEES
The Board delegates some of its responsibilities to the
following Board Committees, which operate within clearly
defined terms of references, primarily to assist the Board
in the execution of its duties and responsibilities. As
per Bangladesh Banks guidelines, all banks have to
form an Executive Committee, an Audit Committee and
a Risk Management Committee of the Board to take
decisions on urgent matters of the banks. Complying
with Central Banks guidelines, Board of Directors of the
Bank has formed 3 Committees: i) Executive Committee
ii) Audit Committee and iii) Risk Management Committee.
Without these Committee, Banks cannot form any other
Committee or Sub Committee of the Board.
Executive Committee - Composition and Roles
Executive Committee (EC) of the Board constitutes with 7
members from the Board. Beyond the delegated power of
the Management, EC makes a decision upon all routine
and day-to-day operational functioning of the Bank. 44
meetings of Executive Committee were held in the year
2014. The Composition of Executive Committee is as
follows:

Mr. A.K.M. Shaheed Reza

Reviews the policies and guidelines issued by the


Central Bank regarding credit, foreign exchange,
treasury and other operations of the Bank;
Ensures implementation of policies, as per approval
from the Board of Directors;
Approves all revision, restructure and amendments
made to the credit proposals as per the approved
policy of the Board of Directors.

Audit Committee - Composition and Roles


Audit Committee plays its role according to its Charter,
approved by the Board of Directors. The Committee
constituted by the Board with 3 members. The Audit
Committee is authorized by the Board to investigate
any activities within its Terms of Reference and has
unrestricted access to both the internal and external
auditors and members of the senior management of the
Bank. The activities carried out by the Audit Committee,
which met 11 times during the year 2014. The Composition
of the Audit Committee is as follows:
Composition of Audit Committee

Position

Dr. Mahmood Osman Imam, MBA, FCMA

Chairman

Mr. Md. Shahabuddin Alam

Member

Mr. Mohd. Selim

Member

Salient Features of the Audit Committee of the Board


Audit Committee Charter has some salient features, such as:

The Audit Committee should be composed of at

The Chairman of the Audit Committee should have


professional knowledge and relevant financial
expertise;

least 3 (three) members from the Board;

The Chairman of the Board of Directors shall not be


a member of the Audit Committee;
Audit Committee meetings must be held quarterly to
monitor internal and external audits;
Audit Committee must prepare reports on all
meetings for the Board of Directors and report
annually to Shareholders;

119

annual report 2014

Report on Corporate Governance

The Managing Director & CEO or the Chairman


of the Board may be invited to attend on the Audit
Committee meetings as and when required.

Roles and Responsibilities of the Audit Committee


The audit Committee is mainly responsible for the following:
I. Compliance Activities

To review whether the laws and regulations framed


by the regulatory authorities (central bank and other
bodies) and internal regulations approved by the
Board have been complied with;
Guide implementation of Corporate Governance in
the organization;
To appraise, improve and reinforce the Banks
system risk analysis and to ensure that they work in
a cost-effective manner.

II. Internal Control

To review the measures taken by the management


for building a suitable Management Information
System (MIS) including computerization system and
its applications;

To evaluate whether management is setting the


appropriate compliance culture by communicating
the importance of internal control and the
management of risk and ensuring that all employees
have understanding of their roles and responsibilities;
To review internal control strategies recommended
by internal and external auditors have been
implemented by the management.

III. Financial Reporting

To review the financial statements (quarterly, half


yearly and annual) and determine whether those
are complete and consistent with the accounting
standards set by the regulatory authority before
submission to the Board for approval;
To assess the financial statements before their
finalization with the support of management and the
external auditors:
To discuss with management the banks major
financial risk exposures and the steps that
management has taken to monitor and control such
exposures:
To guide banks management in view of optimum
usage and allocation of financial resources.
annual report 2014

120

To guide and review Internal Audit Process and


Procedure;
To monitor whether internal audit working
independently from the management;
To assess the efficiency and effectiveness of internal
audit function;
To review the activities and organizational structure
of the internal audit function and ensure that no
unjustified restrictions or limitations are made;
To review whether the findings and recommendations
made by the internal auditors are duly considered by
the management or not.

V. External Audit


Regarding the reports relating to fraud, forgery,


deficiencies in internal control or other similar
issues detected by internal and external auditors
and inspectors of the regulatory authority and place
it before the board after reviewing the corrective
measures taken by the management.

IV. Internal Audit

To assess the performance of the external auditors


and their audit reports;
To review whether the findings and recommendations
made by the external auditors are duly considered
by the management or not;
To make recommendations to the Board regarding
the appointment of the external auditors.

VI. Other Responsibilities


To submit compliance report to the Board on


quarterly basis on regularization of the omission,
fraud and forgeries and other irregularities detected
by the internal and external auditors and inspectors
of regulatory authorities;
To perform other oversight functions as requested
by the Board and evaluate the committees own
performance on a regular basis.

RISK MANAGEMENT COMMITTEE


To carry out the responsibilities efficiently and to play an
effective role in mitigating impending risks arising out from
strategies and policies, MBLs Board has been formed
Risk Management Committee with 5 (five) members.
After identifying and assessing several risk factors like
credit risks, foreign exchange risks, internal control and
compliance risks, money laundering risks, information
and communication risks, management risks, interest
risks, liquidity risks etc.; the risk management committee
will scrutinize whether appropriate risk management
measures are being put in place and applied and whether
adequate capital and provision is being maintained
against the risks identified. The Composition of Risk
Management Committee is as follows:
Composition of Risk Management Committee

Position

Md. Shahabuddin Alam

Chairman

Mr. A. S. M. Feroz Alam


Mr. Mohd. Selim
Mr. A.K.M. Shaheed Reza
Alhaj Mosharref Hossain

Member

www.mblbd.com

Roles and Responsibilities of the Risk Management Committee


I. Formation of Organizational Structure
An abundant organizational structure for managing risk
within the Bank is ensured by the Risk Management
Committee. The committee supervises formation of
separate management level committees monitor their
activities for the compliance of instructions of lending
risk, foreign exchange transaction risk, internal control
& compliance risk, money laundering risk, information &
communication risk including other risk related guidelines.
II. Risk Recognition & Control Policy
Risk Management Committee monitors risk management
policies & methods and amends it if necessary. The
responsibility of Risk Management Committee is the
formulation and implementation of appropriate strategies
for risk assessment and its control. The committee
reviews the risk management process to ensure effective
prevention and control measures.
III. Analysis and Sanction of Risk Management Policy
Verifies risk management policies & guidelines of the
Bank annually and proposes amendments if necessary
and sends it to the Board of Directors for their approval.
Also reviews, other limits including lending limit and
amends, if necessary.
IV. Monitoring the Implementation of Overall Risk
Management Policy
To mitigate all risks including lending risk, market risk,
and management risk, Risk Management Committee
monitors whether proper steps have been taken.
V. Storage of Data & Reporting System
The risk management committee reserves adequate record
keeping & reporting system developed by the management
of the Bank and ensures proper use of the system.
Managing Director and Directors Remuneration or
Benefit
The determination of remuneration packages for Directors
including the Managing Director is a matter for the Board
as a whole following the Bangladesh Bank BRPD Circular
no. 09 dated 19th September 1996 after independent
benchmarking with relevant external peers. MBL can
provide only the following facilities to the:

The Chairman of the Board of Directors may be


provided car, telephone, office chamber and private
secretary;
In addition to the above, Directors are entitled to fees
and other benefits for attending the Board, EC;
Managing Director is paid salaries and allowances
as per approval of the Board and the Bangladesh
Bank;
The Bank has fully complied with the Bangladesh
Bank Circular and Instructions.

MANAGEMENT REVIEW & RESPONSIBILITY


Bank has approved Organizational Structure with clear
functional separation and segregation of functioning
authorities. This ensures Core Risk Management practice
and compliance across the Bank. The Bank is governed by
the rules, regulations, guidelines, directions and policies
as applicable for the banking business and operations.
Managing Director is the Chief Executive Officer (CEO) of
the Bank. MBL has formed a number of committees with a
view to support the management in carrying out banking
operation smoothly. Management Committee (MANCOM)
is the main body of management and decision making in
the Bank. Besides, there are Asset Liability Committee
(ALCO), Basel II Implementation Unit, Risk Management
Committee, ICAAP Preparation Committee, Management
Reporting System (MRS) Committee, Share Investment
Committee, Credit Assessment Committee, Purchase
Committee, etc. are supporting the Banks management
in discharging its duties efficiently and effectively.
MANAGEMENT COMMITTEE (MANCOM)
For setting a sturdy internal control framework, each
bank must have an effective Management Committee
(MANCOM) as per directives of Bangladesh Bank.
MANCOM is considered the highest decision and policy
making authority of the Bank which is responsible for
overall management of the Bank. MBLs MANCOM
consists of all Corporate Level Executives and Divisional
and Departmental Heads. Meetings of MANCOM are
presided over by Managing Director & CEO of the
Bank. A regular MANCOM meeting sits once in a month
preferably, fourth Monday of each month or any suitable
day of every alternative week. MBLs MANCOM is
comprised of following members:
Composition of MANCOM

Position

Managing Director & CEO


Chairman
Additional Managing Directors at Head Office
Deputy Managing Directors at Head Office
Head of Human Resources Division, Head Office
Member
Head of Risk management Division, Head Office
Head of Internal Control & Compliance Division
Member
Head of Board Audit Division
Secretary

Responsibilities of MANCOM

Monthly business and financial performance


analysis;
Review overall effectiveness of the control system of
the Bank;
Monitor adequacy and effectiveness of the internal
control system;
Formulate procedures to identify, measure, monitor
and control all risks;
Assign clear responsibility, authority and reporting
relationship;
Recommend/rectify alternatives in case of any
deviation from desired goal.

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Report on Corporate Governance

ASSET LIABILITY COMMITTEE (ALCO)


Asset Liability Committee (ALCO) is mainly accountable
to manage the market risks. The results of Balance Sheet
analysis along with recommendations are placed before
ALCO meeting to aid the decision making process of the
Senior Management. Meetings of ALCO are presided
over by Managing Director & CEO of the Bank. ALCO
sits at least once in a month. Special ALCO meeting is
arranged as and when any contingent situation arises.
In each ALCO meeting following issues are addressed:

Engaged in setting strategies and revamping


previously taken strategies to cope with current
market scenario;
Review of the assets and liabilities pricings;
Review of interest rate structure in different economic
scenarios;
Review of actions taken in previous ALCO;
Economic and market scenario;
Liquidity risk related to the Balance Sheet.

RISK MANAGEMENT COMMITTEE


As per Bangladesh Banks circular letter no DOS (EW)
1164/14 (Mercantile) 2009-457 dated June 10, 2009, MBL
has formed a separate Risk Management Committee.
Managing Director & CEO is the Chairman of the committee.
The responsibilities of the Risk Management Committee for
risk oversight include, amongst others, the following:

To review and assess adequacy of risk management


policies and framework in identifying, measuring,
monitoring and controlling risks and the extent to
which they operate effectively;
To develop and foster a risk aware culture within the Bank;
To ensure infrastructure, resources and systems
are in place for risk management, i.e. the staff
responsible for implementing risk management
systems perform those duties independently of the
financial institutions risk taking activities;
To review and approve risk management strategies,
risk frameworks, policies, risk tolerance and risk
appetite limits;
To oversee the specific risk management concerns
in the business units that leverage on the Embedded
Risk Units in the business units;
To review and approve model risk management and
validation framework.

SUPERVISORY REVIEW PROCESS (SRP) TEAM


Banks are necessitated to design their own Supervisory
Review Process (SRP) to ensure maintenance of
adequate capital to fully cover all risk exposures under
Pillar-2 of Basel-II (Supervisory Review Process). As
per strategy on Supervisory Review Evaluation Process,
annual report 2014

122

the level of Capital Adequacy will be determined after


evaluation and dialogue between Bangladesh Bank and
the SRP Team of the Bank. The assessment of capital
adequacy will be the outcome of a dialogue between
the Banks own SRP Team and BBs Supervisory
Review Evaluation Process (SREP) Team. Banks own
assessment and SREP Teams review will be linked up
during this dialogue.
BASEL II IMPLEMENTATION UNIT
Basel II Capital Standard in the banking sector solely
implemented by Bangladesh Bank from January
2010. MBL has formed a Committee, namely Basel
II Implementation Unit. The Committee acts for
successful adoption of Basel II.
Functions of Basel II Implementation Unit

Basel II implementation Unit discusses the implementation


progress of Basel II Capital Accord in its each meeting.
Moreover, it

Formulate the strategies to raise the capital to cope


with Basel II, if required;
Reviews the current total Capital Fund (Core and
Supplementary) of the Bank;
Reviews the Total Risk Weighted Assets (RWA) of
the Bank;
Arranges training programs for the Reporting
Officers of the Branches so that they can prepare
Basel II report efficiently and precisely;
Assesses the Capital requirement of the Bank;
Takes initiatives for corporate clients rating of the Bank;
Ensures timely submission of Basel II Report to
Bangladesh Bank;
Recommends the Management to raise Capital, if
necessary;
Reviews the Capital Adequacy Ratio and compare
with the Standard set by Bangladesh Bank.

ICAAP PREPARATION COMMITTEE


To prepare the Internal Capital Adequacy Assessment
Process for the Bank MBL has outlined ICAAP
Preparation Committee. The Committee is supposed
to assess the overall capital adequacy of the Bank in
relation to risk profile. The Committee clearly bears
primary responsibility for ensuring that MBL has
adequate capital to support its risks.
MANAGEMENT REPORTING SYSTEM (MRS)
A committee namely, Committee for Management
Reporting Systems (MRS) has been formed by MBL as
per Central Banks requirement. MRS/MIS Committee
has been constituted on Wednesday, 29 October 2014 in
the 160th Management Committee (MANCOM) meeting.
The Composition of Management Reporting Systems
Committee is as follows:

www.mblbd.com

Composition of Management Reporting System

Position

Mr. Mohammad Masoom, DMD

Chairman

Mr. Md. Golam Kibria, FCA


EVP & Head of R&P Division

Member
Secretary

Mr. Nanda Dulal Bhattacharjee


SEVP & Head of CAMRCD
Mr. A.K.M. Atiqur Rahman
EVP & Head of IT Division

MBL has formed an Investment Committee, which is


primarily responsible to take investment decision in
Capital Market. The committee also has to achieve
diversification in asset portfolio and generating a healthy
revenue (as income from buy/sale of shares through
secondary market). The responsibilities of investment
committee include:
Responsibilities of Investment Committee

Mr. Shah Md. Sohel Khurshid


EVP & Head of Gulshan Branch
Mr. Mohammad Iqbal Rezwan
EVP & Head - Risk Management Division

INVESTMENT COMMITTEE

Member

Mr. Javed Tariq, Principal, MBTI

Mr. Md. Enayet Ullah


VP & Head of ICC Division

Mr. Tapash Chandra Paul, Ph.D


FVP & Head of FAD

MRS fulfills the following objectives:

Identify the actual weakness/defects for taking


appropriate decision by the Management/Board of
Directors;
Locate the reason of weak performance of any of the
branches through collection of relevant information
of other banks of the same locality;
Collection of information from the internal as well as
external sources against any product of the Bank
which is apparently found ineffective or unacceptable
to the ultimate user;
Other internal/external issues may be raised by the
Committee to the Management / Board of Directors
for proper solution.

PURCHASE COMMITTEE
With a group of executives headed by a senior most
Executive, MBL Purchase Committee is functioning to
examine the procurement procedure of goods, services
or works whether it has been placed on the basis of
actual requirement and maintained necessary formalities
as per guidelines of the purchase policy. Among others,
the followings are the main responsibilities of Purchase
Committee of the Bank:

To prepare a report on the basis of evaluation of the


purchase proposal (s) with recommendation and
send to concerned division for obtaining approval
from the competent authority against procurement of
goods, services or works;
To evaluate the proposal (s) received and find out
the effectiveness of each proposal;
To supervise the entire activities against procurement.

The Committee will take primary decision for


investment in shares;
The Committee will sit for meeting as and when
necessary after having consent from the Chair;
The Committee will determine buy range, sale range
and loss limit for every share in the portfolio and Member
Secretary will convey the same to the Front Office;
The Committee will ensure compliance of investment
policy while maintaining portfolio of shares.

The Member Secretary will prepare a weekly report on


status on investment and report the same to Managing
Director & CEO through Chairman.
ACCOUNTABILITY
The innermost concept of good corporate governance
is Accountability. It mainly arises from the Agency
Relationship among the Stakeholders. Due to agency
relationship, agents are accountable to the principals to
carry out their assigned duties with due care in the interest
of the principals. The Management team is subject to check
and balance which ensures that managements action
is reviewed by the Board. MBLs Board of Directors is
accountable to the Shareholders (owners of the Bank). The
Management is accountable to the Board for their activities.
Directors Responsibility Statement in preparing
Financial Reporting
The Board has a fiduciary responsibility to present to the
shareholders and the public at large, a clear, balanced
and meaningful evaluation of the Banks financial position,
financial performance and prospects. In preparing the
financial statements, the Directors have applied suitable
accounting policies and applied them consistently and
made judgments and estimates that are reasonable
and prudent. The Directors have also ensured that all
applicable accounting standards have been followed and
financial statements are prepared on a going concern
basis as the Directors have a reasonable expectation,
having made enquiries that the Bank has adequate
resources to continue in operational existence for the
foreseeable future.
MBL Board of Directors ensures that the financial
statements of the Bank reflect a true and fair view of the
state of affairs of the Bank as at the end of the accounting
period and of the profit and loss and cash flow for the
period then ended. The Directors also have responsibility
for ensuring that the Bank keeps accounting records
which disclose with reasonable accuracy the financial
position of the Bank and which enable them to ensure

123

annual report 2014

Report on Corporate Governance

that the financial statements comply with the provisions of


the Companies Act, 1994. The Directors generally have
the duty to take such steps as are reasonably open to
them to safeguard the assets of the Bank to prevent and
detect fraud and other irregularities.
Disclosure of Material Facts
In order to meet the depositary responsibility expected
of the Board, the Board with the assistance of the Audit
Committee oversees the financial reporting process
and the quality of the Banks financial statements. The
Board also ensures that the financial treatment of the
consolidated accounts under the Bank is based on
the more stringent requirements and that the financial
statements of MBL are in compliance with Generally
Accepted Accounting Principles (GAAP), International
Financial Reporting Standards (IFRS), Bangladesh
Accounting Standards (BAS), Bangladesh Financial
Reporting Standards (BFRS), Bangladesh Banks
Circulars, Schedule of Bank Companies Act of 1991,
the Companies Act-1994, the Securities and Exchange
Rules-1987 and other applicable laws and regulations.
The compass of the disclosure includes a review of
the main sources of revenue by business activity
and geography, past year performance analysis and
financial adequacy, together with detailed explanation of
the changes in the Balance Sheet and Profit and Loss
Statement, to facilitate better understanding of the Banks
operations. In addition to the Audited Report, the Bank
also releases its unaudited quarterly financial results on a
timely basis. These are also accessible on MBLs website.
Privacy of Information
The customers, prospective customers, suppliers,
shareholders and employees information is kept off the
record. Information is used solely for corporate purposes
and never to be discussed with or divulged to unauthorized
people including family, friends and acquaintances.
Examples of confidential information broadly include: (a)
customers account or business details, (b) shareholders
holding or transaction details, (c) employees job records,
pay perquisites, benefits, tax issues etc. (d) suppliers
price, sales strategy etc. (e) Internal documents like
strategy papers, Product Program Guidelines (PPG) etc.
INTERNAL CONTROL & COMPLIANCE
MBLs Board has established a management structure
that clearly defines roles, responsibilities and reporting
lines for Internal Control and Compliance. The Board of
Directors has overall responsibility for maintaining sound
internal control systems that cover financial controls,
operational compliance controls and risk management
to ensure that shareholders investments, customers
interests and the Banks assets are safeguarded. The
systems of internal controls are continuously reviewed
to ensure that they are working via the ongoing review
through internal audit process.
The Audit Committee regularly evaluates the effectiveness
and adequacy of the Banks internal control systems by
annual report 2014

124

reviewing the actions taken on internal control issues. The


Audit Committee (AC) reviews audit recommendations
and managements responses to these recommendations.
Related party transactions are enclosed in the Notes of the
Financial Statements. Lending to the members of the Board
or Controlling Shareholders is strictly prohibited by the Bank
Memorandum and Articles of Association since inception.
Internal Control on key Risks of the Bank and Risk
Management Policies
The Statement on Risk Management and Internal Control
provides an overview of the state of internal controls within
the Bank. There exists risk in every transactions of a
bank. The effectiveness of risk management and internal
controls is crucial in financial sector. Bangladesh Bank
has identified six Core Risks and provided guidelines to
identify and thereafter minimize the risks. The Board of
Directors of the Bank formulated policies for identifying,
measuring and controlling the risks involved with banking
activities. The Board makes sure that employees have
been assigned responsibilities for managing risks, and
proper training has been provided to enable them to
understand and identify risks as well.
AUDIT FUNCTION
A concept influenced by both quantitative (numerical)
and qualitative factors, in case of financial audits, a set
of financial statements are said to be true and fair when
they are free of material miss-statements. Traditionally,
audits were mainly associated with gaining information
about financial systems and the financial records of a
company or a business. However, recent auditing has
begun to include non-financial subject areas, such as
safety, security, information systems performance and
environmental concern and compatibility.
Internal Audit Function
Board Audit Function
In order to review the business performance of the Bank,
MBL has formed a separate Audit Division, namely,
Board Audit Division. Mr. Sayed Ahmadul Karim, Senior
Executive Vice President is working now as the Head of
the Division. The Division reviews the compliance status
of Policy Guidelines of the Board of Directors of the Bank
and also of the regulators. Board Audit Division visits the
Branches and Other Divisions of the Bank for verification
and inspection purpose.
Internal Control and Audit Function Compliance
With the objectives of minimizing the Operational Risks
of the Bank, a separate, independent and an effective
control system has been established namely Internal
Control and Compliance Division (ICCD). ICCD provides
assurance to the Banks Management that systems
are operating effectively; internal controls are effective;
laid down procedures are followed; financial and other
information being produced is sound and reliable.
The Audit regularly evaluates the effectiveness of the risk
management process, review the operating effectiveness

www.mblbd.com

of the internal controls system and compliance control across


the bank. The Internal Audit team conducts regular audit
functions on the business activities of the Bank based on
different manuals, instructions, guidelines and procedures
laid down by local regulatory bodies time to time.

Bangladesh Accounting Standards (BAS), Bangladesh


Financial Reporting Systems (BFRS), IAS/IFRS
guidelines, SAFA & CAPA guidelines, BIS and UCPDC
and other ICC rules. The bank runs its business activities
in full compliance with relevant rules and regulations.

Access of ICCD

ECOLOGICAL AND SOCIAL COMMITMENTS

MBLs ICCD is independent from the Management, with


a direct access to the Board of Directors and the Audit
Committee of the Board. It has a broad scope of work
to investigate at all levels. ICCD has the authority to
propose initiatives and changes directly to the Board of
Directors. Accordingly, The Board of Directors formulates
policy for the Bank.
Information Technology (IT) Audit
A number of inherent risks such as data collapse, data
loss, data modification, unauthorized access to data
etc. may arise within the Bank. MBL service delivery is
designed on IT platform. IT Audit Team has been formed
as per the Central Banks Guidelines to identify the
inherent risks and manage those risks in an effective and
efficient manner. IT Audit Team follows the prescribed
guidelines, solves the unsettled issues and also suggests
to the higher Management for needful action.
External Audit Function
External Auditors
External Auditors ware entitled to require from the Banks
officers and employees such information and explanation
as they thought necessary for the performance of their
duties as External Auditors. Bank employees provided
them accurate, timely information and explanations as
and when required by the External Auditors. A Qasem &
Co. and Khan Wahab Shafique Rahman & Co. have been
appointed as the External Auditors of the Bank in the 15th
AGM of the Shareholders. They audited the Financial
Statements of the Bank namely, Balance Sheet, Profit
and Loss Account, Cash Flow Statement, Statement of
Changes in Equity, Statement of Liquidity Analysis and
explanatory notes to financial statements.
Central Banks Inspection
Central Banks Inspection Team exchanges their views
with the Banks Auditors regarding Financial Operation,
Treasury Operation, IT Operation, and various process
of the audit. Inspection report of the Central Bank is
reviewed by the Board of Directors and corrective actions
are taken regarding lapses mentioned in the report.
Bangladesh Bank conducts comprehensive inspection at
Head Office and Branches of the Bank.
COMPLIANCE AND REGULATORY MATTERS
Fulfillment of pertinent Rules and Regulations
While conducting its operation, MBL follows strictly Bank
Companies Act, 1991, The Companies Act, 1994, Central
Banks Guidelines, Securities and Exchange Rules -1987,
Dhaka and Chittagong Stock Exchange Listing Rules,

Environmental Promotion
MBL always encourages projects which take care of
following points while financing them viz., (a) sustainable
development and use of renewable natural resources (b)
protection of human health, bio-diversity, occupational
health and safety, efficient production, delivery and use of
energy (c) pollution prevention and waste minimization.
The issue of climatic change is being addressed seriously
all over the world. MBL concentrates on environment
preservation by financing Projects in the field of renewable
energy, organic agriculture across the entire value chain
including health food shops and environment technology
such as recycling companies and nature conservation
projects.
EXCHANGE OF IDEAS WITH STAKEHOLDERS
Communication with Shareholders
MBL takes critically its corporate responsibility to provide
shareholders with the information necessary to form
an informed opinion of the Banks performance. Press
releases, interim and final results announcements, interim
and annual reports, and other information of interest
to shareholders are uploaded to Companys corporate
website www. mblbd.com. Half Yearly and Annual Reports
of the Bank are also sent to shareholders within the
respective deadlines stipulated by the regulatory bodies.
Communication with Employees
To enhance mutual understanding and promote
cooperation at all levels, the Board of Directors and
the senior management of the Bank always maintains
communication with the employees; discuss matters such
as safety and the work environment, as well as broader
issues relating to staff welfare.
Communication with the General Public
The Banks website www.mblbd.com serve as an easy
access for key information source for business, financials
and other relevant information about the businesses of the
Bank. In addition, from time to time, the Bank publishes
reports and information brochures which set out specific
aspects of the Banks operations for the general public.
Investors Friendly Essentials
MBLs share has better capital adequacy, good asset
quality, steady financial performance, comfortable liquidity,
strong market position and experienced Management.
So investment in it is reliable. Since inception, MBL is
declaring good dividends for the investors. MBL is also a
Corporate Shareholder of IDLC Finance Ltd., a growing
leasing company of the country, holding 7.50% of its total
shares.

125

annual report 2014

Status of compliance with the condition imposed by the Bangladesh Securities and
Exchange Commission, Notification No. SEC/CMRRCD/ 2006-158/134/Admin/44
dated 07 August 2012 (Report under condition No. 7)
Condition
No.

Title

Status

1.

Board of Directors:

1.1

Boards Size: The number of the board members of the company shall not
be less than 5 (five) and more than 20 (twenty).

1.2

Independent Directors

Remarks (if any)

All companies shall encourage effective representation of independent


directors on their Board of Directors so that the Board, as a group, includes
core competencies considered relevant in the context of each company. For this
purpose, the companies shall comply with the following:1.2(i)

At least one fifth (1/5) of the total number of directors in the companys
board shall be independent directors.

1.2(ii) a)

For the purpose of this clause independent director means a director


who either does not hold any share in the company or holds less than one
percent (1%) shares of the total paid-up shares of the company.

1.2(ii) b)

who is not a sponsor of the company and is not connected with the
companys sponsors or directors or shareholder who holds one percent
(1%) or more shares of the total paid-up shares of the company on the
basis of family relationship. His/her family members also should not hold
above mentioned shares in the company.

who does not have any other relationship, whether pecuniary or otherwise,
with the company or its subsidiary/associated companies

1.2(ii) d)

who is not a member, director or officer of any stock exchange,

1.2(ii) e)

who is not a shareholder, director or officer of any member of stock


exchange or an intermediary of the capital market.

1.2(ii) f)

Who is not a partner or an executive or was not partner or an executive


during the preceding 3 (three) years of the concerned companys statutory
audit firm

1.2(ii) g)

Who shall not be an Independent Director in more than 3 listed companies

1.2(ii) h)

Who has not been convicted by a Court of Competent jurisdiction as defaulter in


payment of any loan to a Bank or Non-Banking Financial Institution (NBFI)

1.2(ii) i)

1.2(ii) c)

Who has not been convicted for a criminal offence involving moral turpitude

1.2(iii)

The independent director(s) shall be appointed by the Board of Directors


and approved by the shareholders in the Annual General Meeting (AGM).

1.2(iv)

The post of independent director(s) cannot remain vacant for more than
90 (ninety) days.

1.2(v)

The Board shall lay down a code of conduct of all Board members and
annual compliance of the code to be recorded.

1.2(vi)

The tenure of office of an Independent Director shall be for a period of


3(Three) years, which may be extended for 1(One) term only

1.3

Qualification of Independent Director (ID)

`1.3 (i)

Independent Director shall be a knowledgeable individual with integrity who


is able to ensure compliance with financial, regulatory and corporate laws
and can make meaningful contribution to business.

1.3 (ii)

The person shall be a Business Leader/Corporate Leader/ Bureaucrat/


University Teacher with Economics or Business Studies or Law background
/Professionals like Chartered Accountants, Cost & Management
Accountants, Chartered Secretaries.
The Independent Director must have at least 12 (twelve) years of corporate
management/professional experiences.

In special cases the above qualifications may be relaxed subject to prior


approval of the Commission.

1.3 (iii)

annual report 2014

126

No such incidence
arose

www.mblbd.com

Condition
No.
1.4

1.5

Title

Status

Remarks (if any)

Chairman of the Board and the Chief Executive Officer(CEO)

The positions of the Chairman of the Board and the Chief Executive Officer
(CEO) of the companies shall be filled by different individuals. The Chairman
of the company shall be elected from among the directors of the company. The
Board of Directors shall clearly define respective roles & responsibilities of the
Chairman & the Chief Executive Officer (CEO)

The Directors Report to Shareholders (sec#184):

The directors of the companies shall include the following additional


statements in the Directors Report prepared under section 184 of the
Companies Act, 1994 (Act No. XVIII of 1994):-

1.5(i)

Industry outlook and possible future developments in the industry

1.5(ii)

Segment-wise or product-wise performance

1.5(iii)

Risks and concerns

1.5(iv)

A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit
Margin

MBL being a bank, cost


of interest expenses and
GP% along with profit
margin were discussed

No such incidence
arose

1.5(v)

Discussion on continuity of any Extra-Ordinary gain or loss

1.5(vi)

Basis for related party transactions-a statement of all related party


transactions should be disclosed in the annual report

1.5(vii)

Utilization of proceeds from public issues, rights issues and/or through


any others instruments

1.5(viii)

An explanation if the financial results deteriorate after the company goes


for Initial Public Offering(IPO), Repeat public offering, Right(s) offer, Direct
Listing etc.

N/A

1.5(ix)

If significant variance occurs between Quarterly Financial performance


and Annual Financial Statements the management shall explain about the
variance on their Annual Report

N/A

N/A

1.5(x)

Remuneration to directors including independent directors

1.5(xi)

The financial statements prepared by the management of the issuer


company present fairly its state of affairs, the result of its operations, cash
flows and changes in equity.

1.5(xii)

Proper books of account of the issuer company have been maintained.

1.5(xiii)

Appropriate accounting policies have been consistently applied in


preparation of the financial statements and that the accounting estimates
are based on reasonable and prudent judgment.

1.5(xiv)

International Accounting Standards (IAS)/Bangladesh Accounting Standards


(BAS)/International Financial Reporting Standards (IFRS)/Bangladesh
Financial Reporting Standards (BFRS), as applicable in Bangladesh, have
been followed in preparation of the financial statements and any departure
there-from has been adequately disclosed.

1.5(xv)

The system of internal control is sound in design and has been


effectively implemented and monitored.

1.5(xvi)

There are no significant doubts upon the issuer companys ability to continue as
a going concern. If the issuer company is not considered to be a going concern,
the fact along with reasons thereof should be disclosed.

1.5(xvii)

Significant deviations from the last years operating results of the issuer company
shall be highlighted and the reasons thereof should be explained.

1.5(xviii)

Key operating and financial data of at least preceding 5 (five) years shall
be summarized

1.5(xix)

If the issuer company has not declared dividend (cash or stock) for the
year, the reasons thereof shall be given

N/A

1.5(xx)

The number of Board meetings held during the year and attendance by
each director shall be disclosed.

127

During 2014 there were


no public or right issue
of shares
No such incidence
arose

annual report 2014

Condition
No.

Title

Status

1.5(xxi)

The pattern of shareholding shall be reported to disclose the aggregate


number of shares (along with name wise details where stated below) held
by:-

1.5(xxi) a)

Parent/Subsidiary/Associated Companies and other related parties (name


wise details);

1.5(xxi) b)

Directors, Chief Executive Officer, Company Secretary, Chief Financial


Officer, Head of Internal Audit and their spouses and minor children
(name wise details);

1.5(xxi) c)

Executives;
[Explanation: Executive means top 5 salaried employees of the
company, other than the Directors, CEO, Company Secretary , CFO and
Head of Internal Audit.

1.5(xxi) d)

Shareholders holding ten percent (10%) or more voting interest in the


company (name wise details).

1.5(xxii)

In case of the appointment/re-appointment of a director the company shall


disclose the following information to the shareholders:-

1.5(xxii) a)

A brief resume of the director;

1.5(xxii) b)

nature of his/her expertise in specific functional areas;

1.5(xxii) c)

names of companies in which the person also holds the directorship and
the membership of committees of the board.

2.
2.1.

2.2

3.

3 (i)

Chief Financial Officer (CFO), Head of Internal Audit and Company


Secretary (CS):

Appointment: The company shall appoint a Chief Financial Officer (CFO),


a Head of Internal Audit (Internal Control and Compliance) and a Company
Secretary (CS). The Board of Directors should clearly define respective
roles, responsibilities and duties of the CFO, the Head of Internal Audit
and the Company Secretary (CS).

Requirement to attend the Board Meetings: The CFO and the Company
Secretary of the companies shall attend the meetings of the Board of Directors,
provided that the CFO and/or the Company Secretary shall not attend such
part of a meeting of the Board of Directors which involves consideration of an
agenda item relating to their personal matters.

Audit Committee:

The company shall have an Audit Committee as a Sub-Committee of the


Board of Directors.

3 (ii)

The Audit Committee shall assist the Board of Directors in ensuring that the
financial statements reflect true and fair view of the state of affairs of the
company and in ensuring a good monitoring system within the business.

3 (iii)

The Audit Committee shall be responsible to the Board of Directors. The


duties of the Audit Committee shall be clearly set forth in writing.

3.1

Constitution of the Audit Committee

The Audit Committee shall be composed of at least 3 (three) members.

3.1 (ii)

The Board of Directors shall appoint members of the Audit Committee


who shall be directors of the company and shall include at least 1 (one)
independent director.

3.1 (iii)

All members of the audit committee should be financially literate


and at least 1 (one) member shall have accounting or related financial
management experience.

3.1 (iv)

When the term of service of the Committee members expires or there is any
circumstance causing any Committee member to be unable to hold office until
expiration of the term of service, thus making the number of the Committee
members to be lower than the prescribed number of 3 (three) persons, the
Board of Directors shall appoint the new Committee member(s) to fill up the
vacancy(ies) immediately or not later than 1 (one) month from the date of
vacancy(ies) in the Committee to ensure continuity of the performance of
work of the Audit Committee.

The company secretary shall act as the secretary of the Committee.

3.1 (i)

3.1 (v)

Remarks (if any)

annual report 2014

128

No such incidence
arose

www.mblbd.com

Condition
No.
3.1 (vi)

Title

Status

The quorum of the Audit Committee meeting shall not constitute without
at least 1 (one) independent director.

Chairman of the Audit Committee

3.2 (i)

The Board of Directors shall select 1 (one) member of the Audit Committee
to be Chairman of the Audit Committee, who shall be an independent
director.

3.2 (ii)

Chairman of the audit committee shall remain present in the Annual


General Meeting (AGM).

3.2

3.3
3.3 (i)

Role of Audit Committee


Role of audit committee shall include the following:Oversee the financial reporting process.

3.3 (ii)

Monitor choice of accounting policies and principles.

3.3 (iii)

Monitor Internal Control Risk management process.

3.3 (iv)

Oversee hiring and performance of external auditors.

3.3 (v)

Review along with the management, the annual financial statements


before submission to the board for approval.

3.3 (vi)

Review along with the management, the quarterly and half yearly financial
statements before submission to the board for approval.

3.3 (vii)

Review the adequacy of internal audit function.

3.3 (viii)

Review statement of significant related party transactions submitted by


the management.

3.3 (ix)

Review Management Letters/ Letter of Internal Control weakness issued


by statutory auditors.

3.3 (x)

When money is raised through Initial Public Offering IPO)/Repeat Public


Offering (RPO)/Rights Issue the company shall disclose to the Audit
Committee about the uses/applications of funds by major category
(capital expenditure, sales and marketing expenses, working capital,
etc), on a quarterly basis, as a part of their quarterly declaration of
financial results. Further, on an annual basis, the company shall prepare a
statement of funds utilized for the purposes other than those stated in the
offer document/ prospectus.

3.4
3.4.1

Reporting of the Audit Committee


Reporting to the Board of Directors:

3.4.1(i)

The Audit Committee shall report on its activities to the Board of Directors.

3.4.1(ii)

The Audit Committee shall immediately report to the Board of Directors on


the following findings, if any:-

3.4.1(ii) a)

report on conflicts of interests;

3.4.1(ii) b)

suspected or presumed fraud or irregularity or material defect in the


internal control system;

3.4.1(ii) c)

suspected infringement of laws, including securities related laws, rules


and regulations;

3.4.1(ii) d)

any other matter which shall be disclosed to the Board of Directors


immediately.

3.4.2

Remarks (if any)

Reporting to the Authorities


If the Audit Committee has reported to the Board of Directors about
anything which has material impact on the financial condition and results
of operation and has discussed with the Board of Directors and the
management that any rectification is necessary and if the Audit Committee
finds that such rectification has been unreasonably ignored, the Audit
Committee shall report such finding to the Commission, upon reporting
of such matters to the Board of Directors for three times or completion of
a period of 6 (six) months from the date of first reporting to the Board of
Directors, whichever is earlier.

129

annual report 2014

Condition
No.
3.5

Title
Reporting to the Shareholders and General Investors

Report on activities carried out by the Audit Committee, including any


report made to the Board of Directors under condition 3.4.1 (ii) above
during the year, shall be signed by the Chairman of the Audit Committee
and disclosed in the annual report of the issuer company.
External/Statutory Auditors:

4.

The issuer company should not engage its external/ statutory auditors to
perform the following services of the company; namely:-

4(i)

Appraisal or valuation services or fairness opinions.

4(ii)

Financial information systems design and implementation.

4(iii)

Book-keeping or other services related to the accounting records or


financial statements.

4(iv)

Broker-dealer services.

4(v)

Actuarial services.

4(vi)

Internal audit services.

4(vii)

Any other service that the Audit Committee determines.

4(viii)

No partner or employees of the external audit firms shall possess any


share of the company they audit at least during the tenure of their audit
assignment of that company.

4(IX)

Audit/Certification services on compliance of Corporate Governance as


required under clause (i) of condition no. 7

5.

Status

Subsidiary Company:

5(i)

Provisions relating to the composition of the Board of Directors of the


holding company shall be made applicable to the composition of the
Board of Directors of the subsidiary company.

5(ii)

At least 1 (one) independent director on the Board of Directors of the


holding company shall be a director on the Board of Directors of the
subsidiary company.

5(iii)

The minutes of the Board meeting of the subsidiary company shall be


placed for review at the following Board meeting of the holding company.

5(iv)

The minutes of the respective Board meeting of the holding company shall
state that they have reviewed the affairs of the subsidiary company also.

5(v)

The Audit Committee of the holding company shall also review the financial
statements, in particular the investments made by the subsidiary company

6.
6(i)

Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
The CEO and CFO shall certify to the Board that:-

they have reviewed financial statements for the year and that to the best
of their knowledge and belief;

6(i) a)

These statements do not contain any materially untrue statement or omit


any material fact or contain statements that might be misleading;

6(i) b)

These statements together present a true and fair view of the companys
affairs and are in compliance with existing accounting standards and
applicable laws.

6(ii)

There are, to the best of knowledge and belief, no transactions entered


into by the company during the year which are fraudulent, illegal or
violation of the companys code of conduct.

7.
7(i)

7(ii)

Reporting and Compliance of Corporate Governance:


The company shall obtain a certificate from a practicing Professional
Accountant/Secretary (Chartered Accountant/ Cost and Management
Accountant/Chartered Secretary) regarding compliance of conditions of
Corporate Governance Guidelines of the Commission and shall send the
same to the shareholders along with the Annual Report on a yearly basis.

The directors of the company shall state, in accordance with the Annexure
attached, in the directors report whether the company has complied with
these conditions.

annual report 2014

130

Remarks (if any)

www.mblbd.com

Compliance of
Meeting

Board Meeting held during 2014 and attendance of each Director


Sl.
no.

Name

Total No. of Board Meeting


Held

Attended

Remuneration

(@ BDT 5,000.00 per


meeting)

Morshed Alam, M.P

17

15

75,000.00

A. S. M. Feroz Alam

17

16

80,000.00

M. S. Ahsan

17

15

75,000.00

Alhaj Akram Hossain (Humayun)

17

17

85,000.00

Dr. Mahmood Osman Imam (Independent Director)

17

15

75,000.00

Md. Shahabuddin Alam

17

14

70,000.00

Md. Anwarul Haque

17

16

80,000.00

M. Amanullah

17

15

75,000.00

Md. Abdul Hannan

17

16

80,000.00

10

Mohd. Selim

17

16

80,000.00

11

A.K.M. Shaheed Reza*

40,000.00

12

Alhaj Mosharref Hossain

17

12

60,000.00

13

Dr. Md. Rahmat Ullah (Independent Director)**

25,000.00

* Appointed Director as on 25.06.2014


** Appointed Director as on 17.07.2014

Directors who could not attend meeting were granted leave of absence by the Board.

Executive Committee (EC) meeting held during 2014 and attendance of each Director
Sl.No.

Name

Total No. of EC Meeting

Remuneration

(@ BDT 5,000.00 per


meeting)

Held

Attended

Alhaj Akram Hossain (Humayun)

44

43

215,000.00

A. S. M. Feroz Alam

44

38

190,000.00

M. S. Ahsan

44

33

165,000.00

Md. Anwarul Haque

44

36

180,000.00

M. Amanullah*

22

20

100,000.00

Md. Abdul Hannan

44

32

160,000.00

A.K.M. Shaheed Reza***

22

19

95,000.00

Mohd. Selim**

22

22

110,000.00

Morshed Alam, M.P**

22

35,000.00

* Appointed as member of Executive Committee on 13.06.2014


** Continued as member of Executive Committee Up to 12.06.2014
*** Appointed as member of Executive Committee on 25.06.2014
131

annual report 2014

Audit Committee (AC) meeting held during 2014 and attendance of each Director
Sl.
no.

Name

Total No. of AC Meeting


Held

Attended

Remuneration

(@ BDT 5,000.00 per


meeting)

Dr. Mahmood Osman Imam (Independent Director)

11

11

55,000.00

Md. Shahabuddin Alam

11

10,000.00

Mohd. Selim*

30,000.00

Alhaj Mosharref Hossain**

25,000.00

* Appointed as member of Audit Committee on 13.06.2014

** Continued as member of Audit Committee Up to 12.06.2014


Risk Management Committee (RMC) meeting held during 2014 and attendance of each Director
Sl. no.

Name

Total No. of RMC Meeting


Held

Attended

Remuneration

(@ BDT 5,000.00 per


meeting)

Md. Shahabuddin Alam*

5,000.00

A. S. M. Feroz Alam*

5,000.00

Mohd. Selim

15,000.00

A.K.M. Shaheed Reza***

5,000.00

Alhaj Mosharref Hossain*

5,000.00

M. S. Ahsan**

5,000.00

Alhaj Akram Hossain Humayun**

10,000.00

Md. Abdul Hannan**

5,000.00

Dr. Mahmood Osman Imam (Independent Director)**

5,000.00

* Appointed as member of Risk Management Committee on 13.06.2014

** Continued as member of Risk Management Committee Up to 12.06.2014


*** Appointed as member of Risk Management Committee on 25.06.2014

annual report 2014

132

www.mblbd.com

The Pattern of
Shareholding
l
l

Parent/Subsidiary/Associated companies and other related parties : Nil


Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit.

Sl.
01

Name

Shares
Held

% of
Holding

Name of
Spouses

Shares
Held

% of
Holding

Directors
Morshed Alam, M.P

18,408,471

2.49%

Bilkis Nahar

251,358

0.03%

A.S.M. Feroz Alam

26,821,233

3.63%

Yoko Inamori

Nil

Nil

M. S. Ahsan

18,475,226

2.50%

Farah Ahsan

Nil

Nil

Alhaj Akram Hossain(Humayun)

16,042,750

2.17%

Ferdousi Begum

1,849,239

0.25%

Nil

Nil

Md. Shahabuddin Alam

14,820,172

2.01%

Yeasmin Alam

1,849,239

0.25%

Md. Anwarul Haque

14,961,652

2.02%

Nargis Anwar

433,827

0.06%

Dr. Mahmood Osman Imam, MBA, FCMA

M. Amanullah

22,200,000

3.00%

Tazneen Aman

33,600

0.00%

Md. Abdul Hannan

16,898,828

2.29%

Israt Jahan

1,388,727

0.19%

Mohd. Selim

21,020,649

2.84%

Farida Begum

2,172,109

0.29%

A.K.M. Shaheed Reza

39,048,992

5.28%

Zobeda Begum

144,791

0.02%

Alhaj Mosharref Hossain

17,692,058

2.39%

Feroza Begum

2,342,373

0.32%

Nil

Nil

Nil

Nil

Dr. Md. Rahmat Ullah

Asma Jahan

02

Chief Executive Officer

M. Ehsanul Haque

Nil

03

Company Secretary(Acting)

Saiful Alam, ACS

Nil

04

Chief Financial Officer

Monindra Kumar Nath

Nil

05

Head of Internal Audit

Md. Enayet Ullah

Nil

Sl.

Executives ( top five salaried employees of the company, other than the Directors, Chief Executive Officer,
Company Secretary, Chief Financial Officer and Head of Internal Audit) :
Designation

Name

Shares Held

01

Additional Managing Director

Md. Abdul Jalil Chowdhury

Nil

02

Deputy Managing Director

Md. Quamrul Islam Chowdhury

Nil

03

Deputy Managing Director

Mohammad Masoom

Nil

04

Deputy Managing Director

Md. Mati-Ul-Hasan

Nil

05

Deputy Managing Director

Mohammad Ismail

Nil

Shareholders holding ten percent or more voting interest in the company: Nil

133

annual report 2014

Media Highlight

annual report 2014

134

www.mblbd.com

Media Highlight

135

annual report 2014

The Audit Committee also reviewed the adequacy


of Internal Control system, structure of Internal
Control & Compliance Division and Board Audit
Division and discussion with internal auditors/
inspectors on any significant findings and follow-up
action thereon. It further reviews the financial and
risk management policies of the Bank.

The Audit Committee elaborately discussed the


Risk Based audit reports of different branches and
suggested necessary/corrective measures. It also
specially focuses on the follow-up of:
n
n

Report of
Audit Committee

The Audit Committee of the Bank has been formed as


per guidelines of Bangladesh Bank and Bangladesh
Securities and Exchange Commission. The Audit
Committee provides direction and oversees the
operations of total audit function of the Bank including
the organization, operation and quality control of internal
audit and inspection within the Bank and follow-up on the
Statutory/External Audit of the Bank and inspection of
Bangladesh Bank.
The Audit Committee of Mercantile Bank Ltd. is comprised
of 3 members including 1 Independent Director. The
composition of Audit Committee is as follows:
Name

Status

Position

Independent
Director

Chairman

Mr. Md. Shahabuddin Alam

Director

Member

Mr. Mohd. Selim

Director

Member

Dr. Mahmood Osman Imam


FCMA, MBA

During the year ended December 31, 2014 the Audit


Committee of the Board of Directors conducted 11
(Eleven) meetings in which among other things the
following issues were discussed/evaluated/reviewed and
provided guidelines and necessary instructions:

Reviewed Quarterly, half yearly and Annual


financial statements with the External Auditors
before submission to the Board of Directors for
approval.

Approved Risk Based Audit Plan for the year 2015


as submitted by Internal Control & Compliance
Division and Board Audit Division.
annual report 2014

136

Inter Branch adjustment accounts.


Un reconciled long outstanding entries in Inter
bank accounts and Nostro accounts.

Balancing of books at various branches.

All other major areas of housekeeping.

Reviewed the inspection report of Bangladesh


Bank and compliance thereof.

The Audit Committee reviewed the status of


classified loans & advances of different branches
and also advised to make all out efforts regarding
regularization of overdue and rescheduled loans.

Reviewed the findings of any investigations by


the Audit team into actual or suspected fraud or
irregularity and convey to the Board any comments
of the committee or action initiated by it on the
findings.

Discussed with Internal Audit team about their


findings and many significant issues and provided
directions and guidelines in mitigating the concern.

Recommended for appointment of External


Auditors in Annual General Meeting (AGM) of the
Bank and to fix their remuneration.

Reviewed the Management Letter issued by the


External Auditors, its response by the Management
and corrective measures taken by the Bank.

Reviewed
Compliance
on
observations,
recommendations and decisions of the Audit
Committee Meetings.

Reviewed the implementation status of Core


Banking Software and with the full implementation
of IT Software management of the Bank will be
able to eliminate any IT related fraud & forgery
in future.

Dr. Mahmood Osman Imam, MBA, FCMA


Chairman, Audit Committee

Sustainability
Report

Sustainability Report

Corporate sustainability formulates strategies to build


a company that fosters longevity through transparency
and proper employee development. It is a business
approach that creates long-term consumer and employee
value by creating a green strategy aimed toward the
natural environment and taking into consideration every
dimension of how a business operates in the social,
cultural, and economic environment. Phrases such
as corporate social responsibility (CSR) or corporate
citizenship continue to be used but are increasingly
superseded by the broader term, corporate sustainability.
Leading sustainability companies display high levels of
competence in addressing global and industry challenges
in a variety of areas, such as Strategy, Financial,
Customer & Product, Governance and Stakeholder,
Human resources.

Playing our part in the Economy


The Bank has contributed to the economy by generating
employment of 1,962 full time employees. It also plays
a vital role in creating job opportunities by financing the
productive sectors. The Bank recruits a number of fresh
graduates and experienced officers every year. In the
intermediation process, the Bank mobilized resources of
BDT 140,475.84 million from the surplus economic unit
and deployed BDT 117,060.03 million in 2014 to deficit
group. Following table depicts the Banks performance
in terms of deposit mobilization, its deployments,
international business, inward foreign remittance and
employments as at December 31 of 2014 and 2013:
(BDT in million)
Particulars

In 2014

In 2013

Mobilization of Deposit

140,475.84

124,566.97

Deployment of Loans and Advances

117,060.03

97,688.50

Export Business

78,352.70

71,671.50

Import Business

107,089.70

100,685.50

18,208.60

12,434.70

1,962

1,814

Inward Foreign Remittance


Employment (in numbers)

Contribution to National Exchequer


MBL made significant contribution to the government
revenue. Being a responsible corporate body, Bank plays
its responsibility to the Government of Bangladesh paying
corporate tax regularly in time. As per tax law, we also
deposit excise duty, withheld tax and VAT to government
annual report 2014

138

exchequer in time through deduction from employees


salary as well as payments to customers and vendors.
In 2014, the Bank has made provision of BDT 1,100.00
million for corporate tax against that of BDT 1,250.00
million in 2013.
Financial Inclusion
We are continuously expanding our branch network
across the country for attaining geographical and
demographical dividend. At the end of 2014, we touch a
millstone of 100 branches. Bearing our slogan of mJuJr
mqJT, our commitment in providing financial service to
any viable business of any size or nature derives us
in flourishing in corporate financing, SME financing,
Agriculture financing etc. A key agenda of our fair banking
is reaching more people with a wider array of financial
solutions. Agriculture and SME are the priority sectors
of financing in MBL. In order to facilitate the agricultural
activities and promote small and medium enterprises,
MBL is financing these two sectors with the assistance
of Bangladesh Bank and different Micro Financing
Institutions (MFIs). To facilitate Agriculture & SME Credit,
the Bank has already established separate Agriculture
Credit Department and SME Financing Division. It has
also inaugurated 5 SME/Krishi branches in remote areas
of the country.
Supplier Payment Policy
Mercantile Bank always stick to well set payment policies
for all suppliers and explains them in details about the
payment method and system and reviews process before
providing work order. Bills are paid according to the
payment terms and VAT and other withholding taxes are
deducted from bills as per law.
Community Responsible
Activities of our Corporate Responsibility are focused to
encourage our culture and uphold our tradition; extending
a helping hand to the deprived and the destitute; victims
of natural calamities and the disabled. Even we extend
our hands of cordial co-operation to the meritorious poor
students. A significant contribution of BDT 53.00 million
has been made by MBL under CSR in 2014, along
with many other CSR initiatives in the offering, which
demonstrates our commitment to the Community people
as well as to the principles of a good Corporate Citizen.
MBL CSR, overseen by the MBL Foundation, has over
the years aided us to ensure that our funding to many
corporate all over the country been never void of five
key philanthropy pillars: community outreach, education,
medical research, the arts, and the environment.

www.mblbd.com

Environment Related Initiatives

Environment and Social Obligations

We believe that every small GREEN step taken today


would go a long way in building a green future and
that each one of us can work towards a better global
environment. Going Green in our Bank can not only bring
awareness among our customers and our employees but
also build awareness and consciousness to our society.
The core business model of MBL clearly expresses its
sustainability towards environment and unveils its ecofriendly motives i.e. not to harm or damage Green Life
Belt of mother nature which eventually ensures a pollution
free breathing atmosphere for our future generations.
MBL has established a separate unit naming GREEN
BANKING UNIT to raise the environment related issues
in front and take necessary steps have been adopted
including green financing, creating awareness among the
employees for efficient use of water, electricity & paper
and giving preference to eco friendly financing to turn our
bank as a Green Bank.

Our obligation to Social Responsibility maintains a


long-term point of view to make economically sound,
environmentally responsible and socially supportive
decisions. MBL always maintains a business policy
conducive to environment and the society as a whole. We
never finance any project detrimental for the environment.
Furthermore, we facilitate the eco friendly business
project or green finance like Bio-Gas Plants, solar
energy, ETP etc. We are relentlessly working to create
awareness among our employees to ensure proper use
of non renewable resources like water, electricity, Gas
etc. as part of our continuous endeavor to make the world
livable for the human being. Furthermore, as a footstep
towards implementation of paperless banking, we have
already launched e_circular system in the bank, under
which all the instructions and information circular will be
available only at soft copy.

139

annual report 2014

Report on
Green Banking
Sustainable development and preservation of environment
are now recognized globally as overriding imperatives
to protect our planet from the ravages inflicted on it by
mankind. Various global initiatives are underway to counter
the ill effects of development that we encounter today such
as global warming and climate change. As such, green
environment is one of the most important issues in todays
world where people from all over the world are raising their
voice against environmental pollution.
The geographical location of Bangladesh makes it one
of the most climate vulnerable regions of the world. Lack
of awareness, environmental education, compliance
and negligence on the part of the businesses and the
mass people are also resulting in fast deterioration of the
environment. Air pollution, water pollution and scarcity,
encroachment of rivers, improper disposal of industrial
waste, medical and house-hold waste are the main areas
causing environmental degradation.
Urgent measures are, therefore, required by the
stakeholders for sustainable development and thereby
make the planet a better place to live in. In Bangladesh, as
one of the key stakeholders, banks can play a vital role by
assessing the impact of climate change in daily operations
and financing of nature conservation projects and response
to the environment through green banking practices.
Taking into account the adverse effects of climate change
and progressive action worldwide, Bangladesh Bank, the
central bank of Bangladesh, has shown a deep commitment
towards the vision of green world through green initiatives.
As a part of indicative initiatives, Bangladesh Bank issued
directives for the banks in this regard. Being a responsible
corporate citizen, Mercantile Bank Limited is committed to
develop the green banking practices in safeguarding of the
planet.
Considering the environmental degradation situation as
mentioned above, Bank has already taken steps to address
the issue for utmost positive impact on environment. MBL
is proactive to ensure necessary measures to protect
environmental pollution while financing a new project or
providing working capital to the existing enterprises.
Policy Formulation and Governance
With a view to developing green banking practices in
the country, Mercantile Bank Limited has formulated a
comprehensive and realistic Green Banking Policy of the
bank in a formal and structured manner, which has already
been approved by the Board of Directors of the Bank.
Bank has formed the Risk Management Committee of the
Bank comprising the members of Board of Directors, which
will work as High Power Committee to review the banks
green or environmental policies, strategies and program for
governing the overall green banking activities of the bank.
annual report 2014

140

There is a separate Green Banking Unit (GBU) was


formed in the year 2011 comprising the members of
different Division/Department of the Bank, which can be
reformed time to time for smooth operation of the Unit.
The GBU is responsible for designing, evaluating and
implementation of relevant green banking issues across
the organization within the stipulated time, as well as for
reporting to the High Power Committee time to time.
Incorporation of Environmental Risk in CRM
MBL has integrated the Environmental Risk Management
and Climate Change Risk with its Credit Risk Management
(CRM) as part of the credit approval process.
Environmental Risk Management (ERM) helps identify
possible sources of Environmental Risk such as land
use, climate change, animal diseases, solid waste, etc.
While financing business enterprises, MBL actively review
their environmental commitment through administering
Environmental Due Diligence (EDD) checklists.
In-house Environment Management
MBL has already developed a comprehensive Green
Office Guide consisting of a set of general instructions
to be followed by its head office and branches. The
main objective of the Green Office Guideline would
be better management of in-house environmental
issues: generating awareness among the employees;
responsible utilization of electricity, water, paper and
energy and maintenance of a cleaner and more hygienic
office environment, in participation of all the employees
of the Bank. Already 17 branches have been powered by
solar energy and installation of solar panels in the rest of
branches and Head Office is also in progress.
Green Financing
Green finance as a part of green banking makes great
contribution to the transition to resource efficient and low
carbon industries i.e., green industry and green economy.
MBL financed various projects which are environment
friendly. The projects which contribute to degradation
or deterioration of the environmental issues are usually
avoided. The Bank financed Effluent Treatment Plants
(ETP) of RMG and textile sectors and other bio-gas
projects. In 2014, the Bank extended finance of BDT
439.28 million for Solar Home System, BDT 114.00 million
for setting up of HHK/Tunnel Kiln/equivalent Improve
Brick Kiln Project, BDT 10.00 million for installation of
ETP and BDT 152.07 million for financing projects having
ETP.
Designing and Introducing Innovative Products
MBL has introduced various products such as MBL
Shakti to finance for installation of ETP, Solar Energy &
Bio-Gas Plant and MBL Hybrid Hoffman Kiln (HHK) for
environment friendly Brick Field finance. Bank is giving

www.mblbd.com

focus on financing in the other environment-friendly


sectors and/or projects and energy efficient industries,
such as adoption of renewable energy and/or energyefficient technology, supply of clean water, solid and
hazardous waste disposal plant, bio-fertilizer plant etc.
MBL Green Activities
Initiative for green banking is the key in shaping our
future. We, together with Bangladesh Bank are effectively
working to sustain and keep our planet green. Role of
Bangladesh Bank has made our job easy to enter into
green banking initiatives like Online CIB, Bangladesh
Automated Clearing House (BACH), Electronic Fund
Transfer Network (EFTN), Enterprise Data Warehouse
System (EDWS) etc. These are not only analogous to
green banking but also has made us efficient.
To reduce paper use, time, fuel consumption, MBL has
introduced Online Banking, SMS Banking and Mobile
Banking which are gaining popularity day by day. These
are allowing the customers to do banking transactions
without coming to the bank physically. Expansion of ATM
network is greatly reducing the need for cheque book and
reducing consumption of security papers etc.
Bangladesh Bank is also assisting us to empowering
women and farmers giving them access to finance. We are
allowing substantial loan facilities to woman entrepreneurs
and farmers at lower interest rate and getting refinance
from Bangladesh Bank. Furthermore, we are getting
refinance against Bio-gas, ETP and Solar energy finance.

ecological as well as social balance and safeguarding the


globe for all living beings and their future generation.
From this point of view, Bank has made a Green Strategic
Planning with a set of achievable targets to do the
following activities related to Green Banking:

Employee Training & Awareness


The employees are receiving training on regular basis to
take responsibility for implementation of Green Banking
initiatives taken by the Bank. Training and awareness
development on various environmental and social risk
related issues and green banking aspects has become a
part of regular training programs of the Bank undertaken
by Mercantile Bank Training Institute. Banks officials
also attained training & workshops arranged by outside
organizations such as Bangladesh Bank, BIBM, BAB, etc.
Consumer Awareness
Bank is also committed to arrange and sponsor,
individually and/or jointly, seminars, workshops or events
on a continuous basis aimed at improving understanding
and awareness on environmental and social issues by
clients and other stakeholder groups. In this, different
Green Stickers has been prepared & distributed to increase
consumer awareness about importance of tree plantation,
use of water, electricity and gas. Green Slogans have been
included in New Year greeting cards.
MBL Green Strategic Planning toward Green Future
Mercantile Bank Limited as a 3rd generation Bank in
Bangladesh is always committed to ensure proactive and
prudent management for the environmental degradation
from our banking operations. Bank is also committed to
comply with environmental regulation for maintaining

As per Bangladesh Banks directives on Green


Banking, Bank will take necessary initiatives to
implement the Green Banking Policy within the
deadline fixed by Bangladesh Bank.
Bank has already circulated a detailed Green
Office Guide to strengthen the green practices
throughout the Bank. We will continuously monitor
the meticulous compliance of green practices in
internal operations & environment of the Bank and
thus we can protect the environment.
Encouraging Going Green through financing in ecofriendly projects, such as: adoption of renewable energy
and/or energy efficient technology, supply of clean
water, establishment of effluent and/or waste water
treatment plant, solid and hazardous waste disposal
plant, bio-gas plant, bio-fertilizer plant, improved brick
kiln projects etc. at lower interest and utmost care.
Designing and introducing more innovative Green
Products in the near future highlighting eco-benefit
from green products and adding value to the existing
products by inserting environmental features.
Checking necessary environmental due diligence
factors
before
lending
a
loan/investment
and reducing of extending loans to certain
environmentally harmful projects.
17 (seventeen) branches of the Bank have already
been powered by solar energy and we are expecting
that more branches will start their journey with solar
panel in the coming days.
Bank will enhance more services through Alternative
Delivery Channels (ATM, Debit / Credit Card, Online
Banking, BACPS, BEFTN, issuance of e-statement,
Mobile Banking, Internet Banking etc.).
Introducing new technology in banking operations
that would not only benefit the customers but also
increase the productivity of the employees.
Bank will provide more monetary support, relief
and loans at lower interest rates etc. in the natural
disaster areas by which the victims will survive in the
newer environment.
Organizing rigorous Trainings/Workshops on Green
Banking issues to educate the employees and that
will continue in the coming days.
Arranging more seminars and symposiums to make
our clients conscious regarding environmental
issues as well as to introduce our Green Products.

141

annual report 2014

Report on
Human Resources
Human resources are the set of individuals who make
up the workforce of an organization, business sector,
or economy. Human capital is sometimes used
synonymously with human resources, although human
capital typically refers to a more narrow view. Human
capital is a collection of resources all the knowledge,
talents, skills, abilities, experience, intelligence, training,
judgment, and wisdom possessed individually and
collectively by individuals in a population. These resources
are the total capacity of the people that represents a form
of wealth which can be directed to accomplish the goals
of the nation or state or a portion thereof.
From the corporate objective, employees have been
traditionally viewed as assets to the enterprise, whose
value is enhanced by further learning and development,
referred to as human resource development.
Organizations will engage in a broad range of human
resource management practices to capitalize on those
assets. Employees of the banks play significant role
in providing better customer service. A talented officer
can win the heart of a customer by providing efficient
service blended with personal care which eventually
builds a strong and ever-lasting business relationship
with that customer.
MBLs Human Resources
Human resources (HR) are main elements behind
the success and future sustainability of the bank.
MBL is developing and motivating the workforce with
contemporary HR policies and attractive benefits. Our
people are our most valuable asset, embodying our
commitment to maximizing wealth of the Bank. We
rely on them to communicate this value to our many
stakeholders. With the Bank stepping up to entrenching
its business strength, Bank Human Resource initiatives
continued to focus on building capacity and confidence
to keep up the momentum and employees resilience in
pursuit to become most caring and gainfully profitable
Bank. Finding the right employees, developing, rewarding
and retaining them are some of our highest priorities.
MBL has formulated an efficient recruitment policy to
recruit new employees, both fresh and experienced to
meet the customers ever-increasing demand and to
support the business expansions of the Bank. Our human
resources are competent enough to handle the challenges
of modern banking. Total Manpower of the Bank over the
last two years is shown in the following table:

annual report 2014

142

Manpower

December, 2014

December, 2013

Executives

246

190

Officers & Staff

1,716

1,624

Total

1,962

1,814

We believe that the investment we make in our people,


culture and reputation sets us apart from our peers. Our
people want to feel proud of our organization, and this
is an essential factor in lifting employee engagement,
unlocking creativity and innovation, and driving a
better outcome for our customers and shareholders.
At a time when the industry is frequently criticized,
employee engagement and confidence are critical to
performance. Our people are an important asset and a
key driver of our performance.
Employees Benefits
We target a fair human resources management
by using a performance based system. MBLs
management strategy is a multi-pronged one; that
includes compelling employee value proposition with a
competitive reward package. Our total rewards strategy
has evolved with our business transformation and basic
pay is benchmarked against the market to ensure
competitiveness. The Bank offers satisfactory financial
and nonfinancial benefits for the employees of the Bank
to ensure a better life style. Such as










Attractive compensation package


Festival and incentive bonus
Fair promotion
Annual increment
Career growth opportunities
Training and workshop (home and abroad)
Favorable work environment
Health care facilities
Loan facilities at a privileged rate
Retirement benefits, e.g., provident fund;
gratuity fund, disability benefit and
Leave fare assistance

Besides this we have platforms which provide recognition


for outstanding performance, we offer career development
opportunities, and we are dedicated to our employees
well-being. To boost motivation, we recognize and reward
top performers, long service employees, best managers,
executives and officers. Human Resource Management
is playing a more active role in shaping the future and
the success of our Employees. Bank is maintaining a
welfare fund taking contribution from both employees and

www.mblbd.com

the bank to support the employees and their families on


the ground of medical, maternity, retirement, disability and
death claim. The Fund has been established to provide
coverage in the event of accidental death or permanent
disabilities, a portion of retirement benefit & stipend to the
employees children.
Fostering Health
Safe and healthy work place is a precondition for sound
mentality of employees to deliver desired services to
valued customers. MBL is fully committed to offering its
employees a hygienic work environment where they can
identify and develop their skills with optimal advantage.
Bank is always careful about ensuring modern, healthy
and safe workplace for its employees. We remain
proactive in implementing strategies and systems to
help prevent injury or harm to employees whilst at work.
Health and safety measures are in place to ensure that
our people have an optimum work environment. Time to
time, the Bank conducts a variety of safety and wellness
activities. The Bank also extended the maternity leave
from 03 months to 06 months for its female employees.
All the branches, SME branches, and every department &
divisions of its corporate office are well decorated having
sufficient breathing spaces.
Recruiting the Best People
In order to set our business up for success over the
long term, MBL recognizes the importance of attracting
and retaining the talent. As part of MBLs investments
in Human Capital, it has formulated Human Resources
Policy including a strategic imperative for recruiting
the best people from the society. MBL recruits fresh
graduates from different academic backgrounds of
renowned universities, which act as a source of creativity.
Fresh graduates are recruited through comprehensive
written test and Viva voce. MBL also recruits experienced
bankers from the industry having sound banking
knowledge and expertise.
Managing People
MBL has formulated its HR Policy incorporating benefits
to be provided and returns to be expected from the
employees. HR Policy acts as a key mechanism to make
the employees responsible professionally and morally.
Ethical codes of conduct, behavioral patterns of the
employees and what the employees should do and what
they shouldnt, are elaborately incorporated in the Policy.
MBL manages its employees putting into practice its
HR Policy. Our core behaviors encourage our people
to speak up and have open, honest conversations. Our
Codes of Conduct, Compliance Standards, and Policies
guide our day-to-day decisions, actions and behaviors
and govern our business. Any known or suspected
incidents of illegal/ unacceptable/undesirable conduct
are viewed with zero tolerance.

Training and Development


MBL has a strong focus on imparting training towards
enhancement of the skills and competencies of the
employees to take over the challenges of modern
banking. We believe that, trained, skillful, experienced
employees are the most important strategic resource in
a more competitive business environment. Employees
are given on-the-desk training so that they can carry out
their deskwork confidently remaining compliant. As well,
classroom trainings are also arranged for the employees
to make them up-to-date with the changing requirements.
The Bank has established Mercantile Bank Training
Institute (MBTI), run by experienced and talented faculty
members. MBTI has brought all the employees of the
Bank to the training net.
Mercantile Bank Training Institute
Mercantile Bank Training Institute (MBTI) is the flagship
learning centre of Mercantile Bank Limited where human
resources of the Bank are trained and couched in
achieving professional excellence throughout the year.
In 2002, MBTI the career learning and development
institution in the private banking sector, was created to
deliver value across the business by building a workforce
with leading capability to drive sustainable, enhanced
performance and strengthen our reputation. MBTI
provides employees with experiences and tools to develop
the skills they require to be successful in their current role
and to prepare our people for career opportunities of
tomorrow. The learning modules are primarily focused on
innovation, high customer engagement and fast problem
resolution as well as on products and processes and are
knowledge driven.
MBTI training programs are designed specially to meet
employees specific need and to build up professional
expertise at workplace. Training activities consist of
comprehensive foundation courses for entry level
Management Trainees, officers and specialized training
programs covers relevant areas of banking & finance
such as general banking, credit, foreign exchange,
marketing and accounts etc.

Team of Mercantile Bank Training Institute

143

annual report 2014

Report on Human Resources

Mercantile Bank Limited always focus to helping


employees to grow and develop their skills, knowledge,
and abilities. In 2014, we invested BDT 4.38 million in
training & development purpose consisting 75 courses
and covered 2,492 employees of MBL across the
country. During 2014, the MBTI fulfill its yearly target
by training a large number of employees through
different training programs.
Total
Courses
Conducted

Total
Sessions

No.
of Trainees

Days
Utilized

75

860

2,492

176


The Training Institute has fixed a target with three main
dimensions

To bring all the employees with uniformity of work,

ensure Tailor-made training for the employees,

To build succession of competent employees and


enable them to occupy more responsible positions
as situation emerge.

MBTI is fully equipped with a modern library, a well furnished


dormitory, contemporary class rooms with state-of-the-art
audio visual equipment with data projectors, laptops and
screens and professional faculty who have extensive
banking experience. The library has adequate books
on banking law & regulations, economics, accounting,
management, marketing and other related subjects.

Human Resource Accounting in MBL


Human Resource Accounting (HRA) involves accounting
for the companys management and employees as
Human assets or capital that provide future benefits.
The function of HRA is to provide information with which
management can analyze its decisions in relation to
human services. Accounting of human resources is
nothing but the valuation of human asset in monetary
terms and the process of their recording and disclosure.
It also affords investors the opportunity to truly evaluate
and understand the complete picture of an organization.
We are considering the following variables as our Human
Resource Accounting Reporting variables(BDT in Million)

Ratios related to HRA

2014

Salary cost per employee

0.91

0.82

Operating cost per employee

1.83

1.73

Operating income per employee

4.08

4.12

Profit before
employee

2.25

2.39

1.17

1.78

Salary cost as percentage of


operating cost

49.85%

47.16%

Salary cost as percentage of


operating income

22.35%

19.82%

provision

per

Profit before tax per employee

annual report 2014

144

2013

ion

t
ra

po

r
Co

o
vir

So

cia

En

n
e
m

Report on
Corporate Social Responsibility (CSR)

Report on CSR

Corporate Social Responsibility (CSR) as a companys


sense of responsibility towards the community and
environment (both ecological and social) in which it
operates. A more common approach to CSR is corporate
philanthropy. This includes monetary donations and
aids, given to nonprofit organizations and communities.
Donations are made in areas such as the arts, education,
housing, health, social welfare and the environment,
among others, but excluding political contributions and
commercial event sponsorship.
CSR aims to embrace responsibility for the Banks actions
and encourage a positive impact through its activities on
the environment, customers, employees, communities,
stakeholders and all other members of the public sphere.
As the days progress, CSR is increasingly becoming an
elemental part of a large number of companies around the
world. Common CSR actions include:

year across the country. Furthermore, the funding policy


has focused on five major areas: Community outreach,
Health & Medical research, Education, Arts & Culture,
development of Sports.
Objectives of Mercantile Bank Foundation
Mercantile Bank Foundation has been formed with the aim
of achieving some underlying objectives including:

To take possible initiatives in increasing social wellbeing and poverty alleviation.

To support the education by establishing new


educational
institutions,
providing
stipends/
scholarships to the poor but brilliant students.

To provide awards to the Scholars in different


significant arenas for their outstanding contribution,
as they uphold nations pride brightly even across the
geographical boundaries. These arenas are:

Environmental sustainability: recycling, waste


management, water management, renewable energy,
reusable materials, greener supply chains, reducing
paper use and adopting Leadership in Energy and
Environmental Design building standards.

Bengali Language and Literature


Education
Culture

Community involvement: This can include raising


money for local charities, providing volunteers,
sponsoring local events, employing local workers,
supporting local economic growth, engaging in fair
trade practices, etc.
Ethical marketing: Companies that ethically market
to consumers are placing a higher value on their
customers and respecting them as people who are
ends in themselves. They do not try to manipulate
or falsely advertise to potential consumers. This is
important for companies that want to be viewed as
ethical.

Mercantile Bank Foundation


Mercantile Bank Foundation has always been playing an
imperative role in the social life of the country throughout its
course of compassionate operation. MBL has established
Mercantile Bank Foundation in 2000, just after a year
of its inception, to work for the distressed and disabled
people. Actually, the Foundation has been promoting a
dialogue between the Bank and its community people.
MBLs social responsibilities are overseen by the Mercantile
Bank Foundation. MBL contributes 1% of its Operating
Profit or BDT 4.00 million, which one is maximum, to the
Mercantile Bank Foundation every year, and from this
amount, the Foundation cares the distressed and disabled
people of the country. Since inception, the foundation has
been awarding some noted intellectual personalities of the
society for their outstanding performance and contribution
in their respective fields. From 2011, Mercantile Bank
Foundation (MBF) launched a new scholarship program,
Mercantile Bank Abdul Jalil Education Scholarship.
Under this program, MBL provided scholarship among
the meritorious but poor students who have secured
considerable brilliant results in JSC, SSC and HSC in same
annual report 2014

146

Liberation War based Research


Economics and Economics related Research
Healthcare
Science and Technology
Industry and Commerce
Journalism
Agriculture based Research and Development
Sports

to assist research activities on Bengali Literature


through Bangla Academy

to assist the unemployed young to make them selfsufficient

to assist the rootless and distressed orphans and


mentally retarded children through taking appropriate
steps for their mental perfection and self-support

to support in establishing hospitals, clinics, etc. for


improvement of the health sector, to donate one
time financial endowment to poor artists, literaturepatron, for ailing fatal disease-affected poor patients,
to support poor fathers for arranging their daughters
marriage and to support writers and publishers
through purchasing their books.

CSR Activities in MBL


MBL has always been active in social responsible projects
since the inception. Basically, we deem CSR as MBLs
most static business model which is socially responsible
and environmentally sustainable. CSR is an integral part

www.mblbd.com

of MBL culture. CSR is indeed a fundamental part of the


long term business and sustainable growth and success,
which plays an important role in promoting values both
locally and internationally. Through different projects we
presume to contribute to the community, but our main
focus is to help millions of underprivileged children and
poor people in Bangladesh.
The Bank promotes CSR activities, apart from its own
fund, through Mercantile Bank Foundation, which acts as
a helping hand to the distressed people of the country.
Investment in CSR programs is always supported and
encouraged by the Board of Directors. Through CSR
Desk, the Management reports to the Board and
Regulatory Bodies on CSR activities. The funding policy
has focused on five major areas: Community outreach,
Health & Medical research, Education, Arts & Culture, and
Development of Sports.
Segment-wise contribution under CSR activities of
Mercantile Bank Foundation in 2014 is furnished below:
Segments

Monthly
Scholarship
(BDT)

Category

Health

13.50

Disaster Management

22.40

Sports

0.60

Art & Culture

0.80

Others

13.80

Total

53.00

4%
25%

2%
1%
42%

Education (4%)
Health (25%)
Disaster Management (42%)
Sports (1%)
Art and Culture (2%)
Others (26%)

750.00

454

1 Year

S.S.C

1,000.00

263

1 Year

H.S.C

1,500.00

153

1 Year

Numbers of Students

Division

Figure: Segment-wise contribution under CSR activities

As CSR activities, MBL foundation has always contributed


in Education & Research purpose. In 2011, Mercantile
Bank Foundation launched a Scholarship program in the
name and style, Mercantile Bank Abdul Jalil Education
Scholarship for the meritorious and poor students across
the country under the category of J.S.C, S.S.C and H.S.C.
Education Scholarship program is an explicit expression
of MBLs motive towards building the nation through
extending hands of assistance to the future generation of
the country.

Total

J.S.C

S.S.C

H.S.C

Dhaka

57

49

35

141

Chittagong

197

93

36

326

Rajshahi

74

39

25

138

Khulna

26

15

13

54

Sylhet

19

17

17

53

Barisal

26

20

12

58

Rangpur

55

30

15

100

Total

454

263

153

870

11%
7%

16%

6%

Education Scholarship Program

Tenure

J.S.C

1.90

26%

No. of
Beneficiary

Division wise information of scholarship awardees:

BDT in Million

Education

Mercantile Bank Foundation is proud to have another year


of success of its Education Scholarship Program in this year.
In 2014, MBL provided scholarships among the students
who have successfully passed (with minimum CGPA of
4.50) J.S.C, S.S.C and H.S.C in 2013 to continue their
further studies. Through this program, we engage to build
self-respect and capabilities to make career, educational
and life-changing journey. The details information of the
education scholarship program is as under:

6%
16%

37%

Dhaka (16%)
Chittagong (37%)
Rajshahi (16%)
Khulna (6%)
Sylhet (6%)
Barisal (7%)
Rangpur (11%)

In 2014, MBL awarded scholarship among 870 students.


We aspire to increase the number of beneficiary students
in the coming days. For awarding scholarship, we sought
application from eligible candidates all over the country
through advertisement in leading national dailies and
selected 870 awardees by a committee.

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annual report 2014

Report on CSR

Mercantile Bank Award-2014


MBL always has encouraged the motive in mind to build
an ever-lasting warm relationship with the customers,
employees, finance providers, regulatory bodies and
the community people at large. From foundation, MBL
each year on its founding anniversary award some noted
intellectual personalities of the society for their outstanding
performance in their respective fields.
In continuation, during 2014, the Foundation of the Bank
provides awards to 11 (eleven) Scholars for their outstanding

contribution in different areas under the heading


Mercantile Bank Award-2014. The Award includes
a Gold Medal (2 Vori), a Crest and one time financial
endowment worth BDT 1.00 lakh. Honble Commerce
Minister of Bangladesh Government of Bangladesh, Mr.
Tofail Ahmed was the Chief Guest of the program. M.
Amanullah, Honble Chairman of the Bank presided over
the program. The Scholars who have been honored with
Mercantile Bank Award-2014 are as under:

Arenas

Scholars Rewarded

Education

National Professor Dr. A F Salauddin Ahmed

Healthcare

Valerie Ann Taylor

Culture

Artist Mostafa Monowar

Liberation War based Research

Air Vice Marshal (Rtd.) A K Khandaker, Bir Uttam

Economics and Economics based Research

Dr. Salehuddin Ahmed

Bengali Language and Literature

Selina Hossain

Commerce and Industry

Mahbubur Rahman

Journalism

Nurjahan Begum

Sports

Zobera Rahman Linu

Agriculture based Research & development

Bangladesh Institute of Nuclear Agriculture (BINA)

Science & Technology

Prof. Ainun Nishat

Mercantile Bank Award-2014


annual report 2014

148

www.mblbd.com

Responsibility to the Society


Community Outreach: a helping hand for populations at-risk
As a corporate citizen, MBL is set to fulfill its social
obligations through a broad range of activities. MBL
Foundation receives requests for financial aid from
disabled people, disaster victims and various organizations
including educational and professional institutions. In
response to these requests, the Foundation comes
forward and provides financial assistance to these people
and institutions every now and then. MBL as a legal
corporate entity is fully aware of its responsibility about
how its operational activities impact on its stakeholders,
the economy, the society, its staff and last but not least,
the environment.
Donation to Flood Effected People
MBL has donated BDT 10.00 million to Prime Ministers
Relief Fund for flood affected people.
MBL continues Financial Support to BDR Mutiny
affected Families
BDR mutiny in February, 2009 caused an irretrievable
loss to the nation. MBL has widened its arms to share the
sufferings of the revolt-affected families. In continuation,
this year also MBL donated BDT 0.96 million to two BDR
mutiny-affected families.
Distribution of Winter Clothes among the Poor People
MBL has distributed winter clothes among the distressed
people of the cold affected areas of the country. About
30,000 pieces of new winter clothes worth BDT 6.60
million has been distributed in the different cold affected
areas of the country.
Health and Medical
Every year Bank provides financial support to different
medical and health institutions. Apart from institutional
support, the Bank also provides financial assistance to
individuals for their treatments. In 2014, Bank contributed
BDT 13.50 million to different individuals and hospitals.
Following are the major contribution of MBL in same arena:

Donated an Ambulance to Shaheda Gafur Ibrahim


Diabetics & General Hospital.

Financial aid of BDT 8.53 million to 269 individuals for


their treatment.

Donation of BDT 1.00 million to SEID Trust for


development of Autistic children.

Donation of BDT 0.30 million to Mental Autism School,


Jhalikhathi.

Donation to Dhanmondi Buddhi Potibondhi Biddalaya.

Donation of BDT 3.00 million to Proyash Ghatail area,


Tangail

Education: teaching the young and spreading


knowledge
MBL is continuing its supports to the education sector.
This year, Bank contributed BDT 1.90 million to individual
students and institutions in addition to MBL scholarship
programme. The Bank encourages the employees to have
professional degrees and also gives opportunities to the
employees who wish to get higher studies in abroad. The
Bank provides cash money incentives to the employees
who passed the Banking Diploma. Following are the major
contribution of MBL in same arena-

Financial support of BDT 0.70 million to 25 meritorious


students for their higher studies.

Donation of BDT 0.18 million to Dhanmondi School


for Intellectually Disabled.

Donation of BDT 0.20 million to Dhaka University


Rokeya Hall Alumni Association.

The Arts: preserving cultural heritage and sponsoring


the performing arts
As a recognized benefactor of culture, MBL takes some
non-profit initiatives every year. Cultural institutions have
been donated to organize cultural events in different times.
Moreover, the Bank supports the writers, musicians and
other performers in their inventive and creative activities.
As earlier, in 2014 MBL contributes to organize and
celebrate different cultural and traditional festivals.
Celebration of Bangla New Year-1421
MBL has celebrated the Bangla New year-1421 as it has
been doing since inception. All its offices were decorated
to a colorful festive look. Customers in the Branches
were invited to share the joy of festival and they were
entertained with sweets as a traditional ritual. Apart from
that, MBL also donated to various cultural and educational
institutes to celebrate the Bangla New Year.
Besides, the followings are the few beneficiaries of MBLs
contribution in the Arts & Culture sector during 2014:

Muktijoddha Sangshad
Bijoy Dibash Celebration
Bonomali Institute, Pabna
Kamrul Hasan Art School

Traditional Games and Sports


MBL always encourages the development of games and
sports of the country. In different times, the Bank has
contributed to organize a variety of traditional games and
sports. In 2014, Bank contributes to different institutions/
clubs to arrange games and sports such as-

Alhaj Abdur Razzaque Gold Cup Football Tournament


Dhaka University Intra IBA Futsal Tounament 2014
Nilphamari District Sports Association
Zafar Imam Tennis Complex, Rajshahi

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annual report 2014

Report on CSR

Care to Environment: Encouraging new thinking


about Environmental Challenges
Our aim is to minimize any harmful effects and consider
the development and implementation of environmental
standards. MBL have established a separate unit to turn
our Bank as a Green Bank. A lot of measures have been
adopted including green financing, creating awareness
among the employees for efficient use of water, electricity
and paper, giving preference to eco friendly while financing
and reuse of equipments. Green Banking is to provide
innovative green products to support the activities that
are not hazardous to environment and help to conserve
the environment. MBL always try to manage the impact
of operations and develop initiatives to improve its
environment conducive footprint.
Contribution to the Economy
The Bank has contributed to the economy by generating
employment of over 1,962 full time employees. It also
plays an imperative role in creating job opportunities by
financing to the productive sectors. The Bank mobilized
resources of BDT 140,475.84 million from the surplus
economic unit and deployed BDT 117,060.03 million in
2014 to deficit group.
The Bank plays its responsibility to the Government of
Bangladesh paying corporate tax regularly. As per tax law,

the bank deducts at source income tax, VAT, excise duty


from various payments and services for ultimate credit to
government exchequer. This year, 42.50% Tax is to be
paid to the National Exchequer from its operation profit.
The Bank has made provision of BDT 1,100.00 million for
corporate tax in 2014 against BDT 1,250.00 million in 2013.
Involving Employees in the CSR Approach
As a Corporate Citizen, Mercantile Bank Limited is
striving to play its responsibility in this regard. The
involvement of employees in the CSR approach is one
of the most effective ways to CSR awareness. In the
new CSR strategy, we have developed activities to keep
employees up-to-date with our CSR goals and principles.
We believe that they will put their knowledge to both at
work place and in their private lives.
Raising CSR awareness among the employees
MBL arranged a full day workshop program to raise the
awareness of its employees regarding key CSR issues and
its policies in this area. To build on this training, environmental
awareness-raising actions have been set up locally.
Informing and encouraging dialogue
MBLs employees are also kept updated about day-to-day
CSR events, and are invited to exchange on new issues
and the Groups actions in this area.

Mercantile Bank Abdul Jalil Education Scholarship Distribution


program- 2014

Scholarship Distribution Ceremony of Dhaka Region

Scholarship Distribution Ceremony of Dhaka Region

Scholarship Distribution Ceremony of Dhaka Region

Scholarship Distribution Ceremony of Dhaka Region

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150

www.mblbd.com

MBLs Responsibilities to the Society

MBL Donated Blankets to Prime Ministers Relief Fund

Donation to Prime Ministers Relief Fund for Flood Effected People

MBL Donated an Ambulance to Shaheda Gafur Ibrahim Geleral Hospital, Patuakhali

MBL Sponsored First Division Cricket tournament-2014, Feni

MBL Donation to SWAC for Autistic Children

MBL Winter Cloth Distribution

MBL Winter Cloth Distribution

Art Competition arranged by MBL

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annual report 2014

MBL
ALbum

15th Annual General Meeting (AGM) of the Bank

Shareholders participation in 15th AGM

Shareholders participation in 15th AGM

Annual Business Conference 2014

Half Yearly Business Conference 2014

Quarterly Business Performance Review Meeting 2014

annual report 2014

152

www.mblbd.com

Branch Opening Ceremony at Chandpur

Branch Opening Ceremony at Korais Munshi Bazar, Feni

Branch Opening Ceremony at Khulshi, Chittagong

100th Branch Opening Ceremony at Basra, Noakhali

Banani Branch shifting at new premises

Opening of New look of Main Branch, MBL

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annual report 2014

MBL Album

ICAB awarded Certificate of Recognition to MBL

Agreement with Farazy Hospital Ltd. for providing


medical services to our employees and stakeholders

Remittance Agreement signing

Remittance Agreement signing

MBL signed an Agreement with Swiss contact to promote Mobile Banking Services

Remittance Agreement signing

annual report 2014

154

www.mblbd.com

Iftar Mahfil was arranged by MBL

Certificate Award Ceremony for MTO

BAMLCO Conference 2014

Customer Gathering Program at UK

MBTI Organizes a Seminar on Corporate Governance &


Its Impact on Financial Institutions

A Friendly Cricket Match between MBL and Bangladesh Bank

155

annual report 2014

CFOs Statement
Mercantile Bank Limited demonstrated improvements
in key financial indicators and developed strong
fundamentals along with healthy capital base. Considering
the overwhelming economic challenges and unpleasant
political situation over the country, Mercantile Bank Limited
kept the growth momentum achieved cheering results in
the year 2014.
Prudent fund management, reduction of cost of deposits,
good return from investment in government bonds and
bills aided to achieve such growth. In the year 2014 we
have also emphasis on procuring more low cost and no
cost deposits to upgrade the deposit mix which will lead to
reduce the cost of deposit. MBL successfully restrained its
controllable expenses in the year 2014.
Key Performance Indicators of the Bank as on December
31, 2014 are as follows:
(BDT in Million)
Particulars
Loans and Advances

2013

2014

97,688.50

117,060.03

Deposits

120,857.89

134,996.49

Import

100,680.00

107,089.70

Export

71,670.00

78,352.70

Remittance

12,440.00

18,208.50

annual report 2014

156

(BDT in Million)
Particulars
Investments
Operating Profit

2013

2014

30,090.60

32,184.08

4,255.70

4,410.57

Net Profit

1,978.70

1,188.51

Paid-up Capital

6,599.61

7,391.56

12,574.24

13,519.17

Shareholders Equity

Fund Management and Liquidity


In the year 2014, the management handles its operation
very efficiently and smoothly. Loan-Deposits ratio reached
to 86.71% which is almost similar with standard level.
During the reporting period, the Bank has been able to
ensure optimum level of cash inflow and thereby effectively
managing its liquidity risk.
Dividend
The Bank has been maintained persistent dividend payout
ratio over the years. As on December 31, 2014 the Banks
dividend payout ratio stood at 62.19%. In a bid to maximize
shareholders value and strengthen our core capital, the
Bank is maintaining a stable dividend policy.

www.mblbd.com

Assets Quality

Dividend Payout Ratio (%)


2009

71.73

2010

53.61

2011

65.9

2012

66.37

2013

66.71

2014

62.19

During the year 2014, MBL successfully restricted its Non


Performing Loans around 5% by dint of prudent application
of Bangladesh Banks circular loan rescheduling and
classification and effective recovery measures of the Bank.
Total nonperforming loan of MBL stood at 5.10% in 2014.
However, we have consolidated our position by making
adequate provision amounting to BDT 495.18 million
against the requirement of BDT 494.99 million.

Dividend Payout Ratio (%)

Operating Efficiency

Dividend Pay out Ratio (%)


66.71

66.37

65.9

62.19

53.61

2010

2011

2012

2013

2014

The Bank exhibited its prudence in limiting cost of deposits


by emphasizing on procuring more low cost and no cost
deposit while keeping yield on advances at a reasonable
level. As on December 31, 2014 MBL successfully brought
down its cost of deposits to 8.26% from 8.93% over the
previous year. Net interest Margie (NIM) increased to
3.96% as on December 2014 as compared to 3.07% as
on December 31, 2013.
Particulars

Capital Fund
The bank is committed to maintain adequate capital base
to remain compliant as per risk based capital adequacy
framework i.e. Basel II. For this, the bank has framed a
five year capital plan incorporating its future outlook of
achieving capital adequacy ratio far above than minimum
requirement in the future. Furthermore, MBL issued
subordinated bond worth BDT 3,000.00 million to further
strengthen its capital base. As on December 31, 2014
regulatory capital and capital adequacy ratio of the Bank
is as under:

(BDT in Crore)
Particulars

2013

Tier 1 or Core Capital

1,176.76

1,242.77

194.21

667.62

Tier 2 or Supplementary Capital


Total Eligible Capital
Total Risk Weighted Assets
Capital Adequacy Ratio
Minimum Capital Requirement

2014

1,370.97

1,910.39

11,999.51

14,748.43

11.43%

12.95%

1,199.55

1,474.84

171.02

435.55

Capital Surplus
Capital Fund
Total Eligible Capital
Minium Capital Requirement
Capital Surplus
1370.97

1199.55

2014

i. Interest Income

13,344.90

13,984.49

ii. Interest Expense

11,795.76

11,385.38

iii. Net Interest Income (i-ii)

1,549.13

2,599.10

iv. Non Interest Income

5,745.81

5,396.91

v. Operating Income (iii+iv)

7,294.96

7,996.02

vi. Non Interest Expense

3,039.26

3,585.44

41.66%

44.84%

vii. Cost Income Ratio (vi/v)

Contribution to Government Exchequer


Being a corporate stakeholder of the country since
inception MBL has been paying a commendable amount
of corporate tax every year. It also deposit excise duty,
withheld tax and VAT to Govt. Exchequer on time deducted
from employees salary as well as payments to customers
and vendors. In 2014, the Bank has made provision of
BDT 1,100.00 million for corporate tax.
The Bank always remains compliant, transparent and
accountable in every segment of its appearance. We
ensure uncompromising commitment towards all our
stakeholders. We believe that our unconditional endeavor
for SHAPEING the FUTURE will make the upcoming
years more rewarding for all the stakeholders.

1,910.39
1,474.84
435.55

171.02

2013

2013

2014

Monindra Kumar Nath


Additional Managing Director & CFO

157

annual report 2014

Date: 22 April 2015

To
The Board of Directors
Mercantile Bank Limited
61, Dilkusha C/A
Dhaka 1000.

Certification of Financial Statements by the CEO & CFO

In accordance with the notification of Bangladesh Securities and Exchange Commission No. SEC/CMRRCD/2006-158/134/
Admin/44 dated 07, August 2012 we declare the followings regarding the financial statements of Mercantile Bank Limited
for the year ended 31 December 2014:

i) We have reviewed the financial statements for the year and that to the best of our knowledge and belief:

a)

These statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading;

b)

These statements together present a true and fair view of the companys affairs and are in compliance
with existing accounting standards and applicable laws;


ii) There are, to the best of knowledge and belief, no transactions entered into by the Bank during the year which
are fraudulent, illegal or violation of the Banks code of conduct.

M. Ehsanul Haque

Monindra Kumar Nath

Managing Director &

Additional Managing Director &

Chief Executive Officer (CEO)

annual report 2014

158

Chief Financial Officer (CFO)

Auditors
Report

Independent Auditors Report to the Shareholders of

Mercantile Bank Limited

We have audited the accompanying consolidated financial statements of Mercantile Bank Limited and its subsidiaries,
(the Group) as well as the financial statements of Mercantile Bank Limited (the Bank) which comprise the consolidated
balance sheet and the separate balance Sheet as at 31 December 2014 and the consolidated and separate profit & loss
accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements
for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements and Internal Controls
Management is responsible for the preparation of consolidated financial statements of the Group and also separate
financial statements of the Bank that gives a true and fair view in accordance with International Financial Reporting
standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRSs) as explained in notes and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements of the Group and
also the separate financial statements of the Bank that are free from material misstatement, whether due to fraud and
error. The Bank Companies Act, 1991 and the Bangladesh Bank Regulations require the Management to ensure effective
internal audit, internal control and risk management functions of the Bank. The Management is also required to make a
self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud
and forgeries.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate
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 about whether the consolidated financial statements of the Group and separate 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 separate financial statements of the Bank. The procedures selected depend on the
auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements
of the Group and separate financial statements of the Bank, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entitys preparation of consolidated financial statements of the Group
and separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances. 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 also separate financial statements of the Bank.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion the consolidated financial statements of the Group and also separate financial statements of the Bank give
a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as
at 31 December 2014 and of its consolidated and separate financial performance and its consolidated and separate cash
flows for the year then ended in accordance with International Financial Reporting standards (IFRS)/ Bangladesh Financial
Reporting Standards as explained in notes.
Report on Other Legal and Regulatory Requirements
In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act, 1991 and the
rules and regulations issued by the Bangladesh Bank, we also report the following:
(a) we have obtained all the information and explanation which to the best of our knowledge and belief were
necessary for the purpose of our audit and made due verification thereof;
(b) to the extent noted during the course of our audit work performed on the basis stated under the Auditors

annual report 2014

160

www.mblbd.com

Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the
financial statements of the Bank and considering the reports of the Management to Bangladesh Bank on antifraud internal controls and instances of fraud and forgeries as stated under the Managements Responsibility for
the Financial Statements and Internal Control:
i)

Internal audit, internal control and risk management arrangements of the Group and the Bank, as disclosed
in note 2.10 of the financial statements. appeared to be materially adequate;

ii) Nothing has come to our attention regarding material instances of forgery or irregularity or administrative error
and exception or anything detrimental committed by employees of the Bank and its related entities .
(c) financial statements of subsidiary companies of the Bank namely Mercantile Bank Securities Limited have been
audited by K.M.Hasan & Co., Chartered Accountants and Mercantile Exchange House (UK) Limited has been
audited by Jahan & Co., Chartered Management Accountants have been properly reflected in the consolidated
financial statements;
(d) 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;
(e) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance
sheet and separate profit and loss account of the Bank dealt with by the report are in agreement with the books
of account;
(f) the expenditure incurred was for the purposes of the Banks business;
(g) the consolidated financial statements of the Group and the separate financial statements of the Bank have been
drawn up in conformity with prevailing rules, regulations and Bangladesh Financial Reporting Standards as
explained in notes as well as with related guidance , circulars issued by Bangladesh Bank;
(h) adequate provisions have been made for loans and advances which are, in our opinion, doubtful of recovery;
(i) the records and statements submitted by the branches have been properly maintained and consolidated in the
financial statements;
(j) the information and explanation required by us have been received and found satisfactory; and
(k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 5,620 person
hours for the audit of the books and accounts of the Bank.

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Place: Dhaka
Dated: April 22, 2015

161

annual report 2014

Signing Ceremony of the

Financial Statements 2014

annual report 2014

162

Mercantile Bank Limited


Consolidated Financial Statements
As at December 31, 2014

Mercantile Bank Limited


Consolidated Balance Sheet
As at 31 December 2014

Notes
Property and Assets
Cash in hand
Cash in hand (Including foreign currencies)
Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)

Amount in Taka
2014
2013

3(a)

12,894,309,930
1,430,510,899
11,463,799,031

10,402,462,532
1,551,949,396
8,850,513,136

Balance with other banks and financial institutions


In Bangladesh
Outside Bangladesh

4(a)

754,524,728
368,830,617
385,694,111

921,764,840
434,127,130
487,637,710

Money at call and short notice

5(a)

Investments
Government
Others

6(a)

32,414,084,966
29,720,024,802
2,694,060,164

30,320,602,619
28,642,766,416
1,677,836,203

Loans and Advances


Loans, Cash Credit, Overdraft etc.
Bills Purchased and Discounted

7(a)

117,241,097,332
110,173,008,505
7,068,088,827

97,582,383,031
91,084,470,329
6,497,912,702

Fixed assets including premises, furniture and fixtures


Other assets
Non- banking assets

8(a)
9(a)

3,229,353,467
2,567,367,706
-

3,137,872,330
2,737,292,404
-

169,100,738,129

145,102,377,756

3,692,368,038

1,378,752,480

Total property and assets


Liabilities and Capital
Liabilities
Borrowings from other banks, financial institutions and agents

10(a)

Deposits and other accounts


Current Accounts and Other Accounts
Bills Payable
Savings Bank Deposits
Fixed Deposits
Deposits Under Schemes

11.1(a)
11.2(a)
11.3(a)
11.4(a)
11.5(a)

135,000,511,870
21,844,985,397
1,387,228,039
10,534,217,297
46,057,219,028
55,176,862,109

120,912,479,182
18,853,306,986
1,388,795,686
8,510,143,963
41,945,686,077
50,214,546,470

Subordinated bond

11.2(b)

3,000,000,000

13,845,780,155
155,538,660,063

10,178,709,385
132,469,941,047

13,509,436,941
7,391,567,010
4,223,124,428
1,137,109,118
757,636,385

12,579,838,919
6,599,613,410
3,765,422,762
852,291,348
1,362,511,399

52,641,124
13,562,078,006
169,100,738,129

52,597,790
12,632,436,709
145,102,377,756

Other liabilities
Total Liabilities

12(a)

Capital/Shareholders Equity
Paid-up Capital
Statutory Reserve
Other Reserve
Surplus in Profit & Loss Account
Non Controlling Interest
Total Shareholders Equity
Total Liabilities & Shareholders Equity

annual report 2014

164

13.1
14(a)
15(a)
16(a)
16(b)

www.mblbd.com

Mercantile Bank Limited


Consolidated Balance Sheet
As at 31 December 2014

Amount in Taka
2014
2013

Notes
Off-Balance Sheet Items
Contingent Liabilities
Acceptances and endorsements
Letters of guarantee
Irrevocable Letters of Credit
Bills for collection
Other contingent liabilities(BLW)

17.1
17.2
17.3
17.4
17.5

20,279,437,342
7,508,920,077
24,344,028,198
6,168,104,039
2,498,091,318
60,798,580,974

21,519,338,210
7,196,610,686
20,947,675,954
207,495,891
1,882,488,279
51,753,609,020

60,798,580,974

51,753,609,020

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

Total Off-Balance Sheet Items including contingent liabilities

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015

165

annual report 2014

Mercantile Bank Limited

Consolidated Profit & Loss Account

For the year ended 31 December 2014


Notes

Amount in Taka
2014
2013

Interest Income
Less: Interest Paid on Deposits, Borrowings etc.
Net Interest Income

19(a)
21(a)

13,959,793,130
11,385,387,903
2,574,405,227

13,415,739,973
11,795,763,777
1,619,976,196

Investment Income
Commission, Exchange and Brokerage
Other Operating Income

20(a)
22(a)
23(a)

2,796,034,926
1,639,270,591
1,067,400,996
5,502,706,513
8,077,111,740

3,266,941,399
1,538,375,863
1,043,262,245
5,848,579,507
7,468,555,703

24(a)
27(a)
28(a)

1,815,704,997
493,876,705
12,847,613
54,700,176
204,808,220
13,183,947
3,235,395
1,000,826
273,023,643
794,770,488
3,667,152,010
4,409,959,730

1,469,123,441
444,562,167
13,337,113
56,354,638
149,427,782
11,350,076
3,523,250
1,266,785
238,697,626
751,921,869
3,139,564,747
4,328,990,956

2,122,064,054
6,000,000
2,128,064,054
2,281,895,676

1,027,000,000
67,500,000
1,094,500,000
3,234,490,956

1,145,120,442
(35,030,921)
1,110,089,521
1,171,806,155
46,173,020
1,217,979,175

1,236,641,207
20,000,000
1,256,641,207
1,977,849,749
32,998,440
2,010,848,189

Total Operating Income


Salaries and Allowances
Rent, Taxes, Insurances, Electricity etc.
Legal Expenses
Postage, Stamps, Telecommunication etc.
Stationery, Printings, Advertisements etc.
Chief Executives Salary and Fees
Directors Fees
Auditors Fees
Depreciation and Repair to Banks property
Other Expenses
Total Operating Expenses
Profit/(loss) before provision

29(a)
25(a)
26(a)
30(a)
31(a)

Provision for loans and advances including off Balance Sheet items
Provision for diminution in value of investments in shares
Other Provision
Total Provision
Total Profit before taxes

12.5(a)
12.3.1(a)

Provision for Current Tax


Provision for Deferred Tax

12.4.1(a)
12.4.2(a)

Net Profit after Taxation


Retained Surplus brought forward from previous year
Profit available for appropriation
Appropriation
Statutory Reserve
Non Controlling Interest in Profit
Retained Surplus

16(b)
16(a)

457,701,666
2,641,124
757,636,385
1,217,979,175

645,739,000
2,597,790
1,362,511,399
2,010,848,189

Consolidated Earnings Per Share (EPS)

32(a)

1.59

2.68

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date
A. Qasem & Co.
Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015
annual report 2014

166

167

annual report 2014

Dated: Dhaka
22 April 2015

A. Qasem & Co.


Chartered Accountants

Managing Director and CEO

45,680,250

Balance as at 31 December 2013

643,611,955

943,171
-

Director

J=(H+I)

Total

1,171,849,489
(527,969,073)
13,562,078,066

943,171
-

Chairman

52,597,790 12,632,436,709

52,641,124

43,334
-

52,597,790 12,632,436,709
284,817,770

Non
Controlling
Interest

Amount in BDT

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

852,291,348 1,362,511,399 12,579,838,919

This is the Consolidated Balance sheet referred to in our separate report of even date

Director

943,171
-

- 1,171,806,155 1,171,806,155
- (791,953,600)
- (527,969,073) (527,969,073)
643,611,955 1,137,109,118 757,636,385 13,509,436,942

H=(A+B+F+G)

Total

852,291,348 1,362,511,399 12,579,838,919


(457,701,667)
284,817,770
284,817,770

The annexed notes form an integral part of these financial statements.

162,999,143

447,816,913

45,680,250

6,599,613,410 3,765,422,762

643,611,955
-

162,999,143
284,817,770

45,680,250
-

Statutory
Reserve

Paid-up
Capital

Balance as at 01 January 2014


6,599,613,410 3,765,422,762
Changes in accounting policy
Statutory reserve
- 457,701,667
Market adjustment of approved
securities (HTM)
Surplus/deficit on account of
revaluation of properties
Surplus/deficit on account of
revaluation of investments
Currency transaction difference
Net gains and losses not
recognised in Income Statement
Net profit for the year after taxation
Transfer
Issuance of bonus shares
791,953,600
Bonus share premium
Cash dividend
Dividend equalization fund
Non controlling share capital/profit
Issue of right share
Balance as at 31 December 2014 7,391,567,010 4,223,124,428

Particulars

Other Reserve
Surplus
Adjustment Revaluation
Net Balance
Dividend
for
Surplus
of Other
Profit/(loss)
Equalization
Approved
for Fixed
Reserve
Fund
Securities
Assets
C
D
E
F=(C+D+E)
G

For the year ended 31 December 2014

Consolidated Statement of Changes in Equity

Mercantile Bank Limited

www.mblbd.com

Mercantile Bank Limited

Consolidated Cash Flow Statement

For the year ended 31 December 2014


Notes
A)

Cash flows from operating activities

Amount in Taka
2014
2013

519,160,515

Interest received

13,220,634,464

99,520,228

12,610,901,790

Interest paid

(9,996,108,341)

(10,551,408,332)

Payment to the employees

(1,815,704,997)

(1,469,123,441)

Income tax paid

(1,659,238,142)

(1,205,386,356)

Received from other operating activities

4,620,520,597

4,976,072,892

Other operating income

3,847,092,533

4,301,661,378

(1,420,131,560)

(1,322,566,113)

Fees and commission received

865,842,527

Payment to suppliers

(96,264,996)

Exchange gain

773,428,064

Payment for other operating activities


Rent, taxes, insurances and electricity

(493,876,705)

Legal expenses

(12,847,613)

Postage, stamps and telecommunication


Auditors fees

Chief Executives salary and fees

674,411,514

(444,562,167)

(13,337,113)

(56,354,638)

(46,516,410)

(40,250,215)

(13,183,947)

Directors fees

(149,427,782)

(54,700,176)
(1,431,104)

Repair and maintenance

863,964,349

(3,235,395)

(1,586,785)

(11,350,076)

(3,523,250)

Other expenses

(794,340,210)

(751,601,869)

Operating cash flows before changes in operating assets & liabilities

3,719,549,552

3,753,027,007

(Increase)/ decrease in operating assets and liabilities

(20,735,972,687)

Trading securities (Treasury Bills & Bonds)


Loans and advances to other banks

Other assets (Item-wise)


Suspense account

Demand Draft paid without advice

9.1

Advance rent

Advance deposits

(19,658,714,301)

(4,198,091,485)

67,441,366

(1,744,907,839)

(4,533,285)

(1,988,009)

Stamps in hand

Clearing adjustment account

On-line client adjustment account


Adjusting account debit

Mercantile Exchange House (UK) Limited.

168

(220,042)

2,860,426

(15,184,952)

54,961

(4,872,620)

6,092,337
9.2

(399,865,714)

(291,657,035)

(91,927)

Premium on bond

11,113,869

(3,584,515)

Stock of stationery

annual report 2014

11,391,982,185

Loans and advances to customer

7,193,890,700

(1,077,258,386)

61,747,559

(4,230,050)

(2,731,788)
(3,521,040)
(6,884,268)

(27,771,532)

(954,889,290)

(37,309,558)

www.mblbd.com

Mercantile Bank Limited

Consolidated Cash Flow Statement

For the year ended 31 December 2014


Notes

Deposit from other banks


Deposit from customers
Other liabilities on account of customers
Other liabilities
Net cash flows from operating activities

Amount in Taka

2014

2013

18,114,323,316
2,313,615,558
14,088,032,688
1,712,675,070

(9,584,285,417)
(14,548,580,443)
2,867,454,399
2,096,840,627

1,165,341,547

(382,275,550)

16,343,389
(312,884,616)
8,776,039
(1,025,000,000)
(1,312,765,188)

8,542,266
(384,104,339)
(10,890,334)
(157,500,000)
(543,952,407)

B)

Cash flows from investing activities


Brokerage House customer account
Dividend received
(Purchase)/ sale of property, plant and equipment
(Purchase)/sale of shares
(Purchase)/sale of bond
Other investment (Treasury bills & Bonds)
Net cash flows from investing activities

C)

Cash flows from financing activities


Receipts from issue of loan capital and debt Securities
Paid for repayment of loan and debt securities
Received by issue of right share
Dividend paid
Net cash flows from financing activities

3,000,000,000
(527,969,073)
2,472,030,927

(427,752,721)
(427,752,721)

Net increase/(decrease) in cash & cash equivalent (A+B+C)

2,324,607,286

(1,353,980,678)

11,324,227,372
13,648,834,658

12,678,208,050
11,324,227,372

Cash and cash equivalent at beginning of the year


Cash and cash equivalent at the end of the year

16.A(2)

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015

169

annual report 2014

annual report 2014

170
2,877,497,153

Net Liquidity

31,444,031,281

Provision and other liabilities

Total Liabilities

1,387,228,039

30,056,803,242

34,321,528,434

1,148,285,554

22,203,307,383

130,560,310

114,956,763

10,724,418,424

Up to 01
Month

Subordinated bond

Other accounts

Deposits

Borrowing from Bangladesh Bank, other banks, financial institutions and agents

Liabilities:

Total Assets

Non-banking assets

Other assets

Fixed assets including premises, furniture and fixtures

Loans and advances

Investments

Money at call and short notice

Balance with other banks and financial institutions

Cash in hand

Assets:

Particulars

80,002,425

18,068,416,749

145,934,683

17,922,482,066

18,148,419,174

338,523,642

14,292,940,647

1,125,159,494

221,903,885

2,169,891,506

01-03
Months

As at 31 December 2014

896,169,065

20,565,695,341

1,600,770,294

15,272,557,009

3,692,368,038

21,461,864,406

670,196,114

490,102,001

14,094,914,177

5,801,134,151

405,517,963

03-12
Months

Consolidated Liquidity Statement


Asset and Liability Maturity Analysis

Mercantile Bank Limited

875,855,159

82,460,516,692

12,099,075,178

70,361,441,514

83,336,371,851

410,362,396

686,694,787

57,002,825,396

25,224,343,155

12,146,117

01-05
Years

8,832,554,264

3,000,000,000

3,000,000,000

11,832,554,264

2,052,556,679

9,647,109,729

132,887,856

More than
05 years

13,562,078,066

155,538,660,063

13,845,780,155

3,000,000,000

1,387,228,039

133,613,283,831

3,692,368,038

169,100,738,129

2,567,367,706

3,229,353,467

117,241,097,332

32,414,084,966

754,524,728

12,894,309,930

Total

Amount in BDT

Mercantile Bank Limited


Financial Statements (Main Banking Operation)
As at December 31, 2014

Mercantile Bank Limited


Balance Sheet

As at 31 December 2014
Notes

Amount in Taka
2014

2013

Property and Assets


Cash in hand

12,894,264,363

10,402,414,466

Cash in hand (Including foreign currencies)

3.1

1,430,465,332

1,551,901,330

Balance with Bangladesh Bank & its agent bank(s)

3.2

11,463,799,031

8,850,513,136

742,378,611

917,821,434

In Bangladesh

4.1

356,894,971

430,200,971

Outside Bangladesh

4.2

385,483,640

487,620,463

Investments

32,184,085,090

30,090,602,749

Government

6.4

29,720,024,802

28,642,766,416

Others

6.5

2,464,060,288

1,447,836,333

(including foreign currencies)


Balance with other banks and financial institutions

Money at call and short notice

117,060,025,369

97,688,501,593

Loans, Cash Credit, Overdraft etc.

Loans and Advances

7.A

109,991,936,542

91,190,588,891

Bills Purchased and Discounted

7.B

7,068,088,827

6,497,912,702

Fixed assets including premises, furniture and fixtures

3,198,110,451

3,097,595,988

Other assets

2,395,268,905

2,644,932,970

Non- banking assets

168,474,132,789

144,841,869,200

10

3,692,368,038

1,378,752,480

Total Property and Assets


Liabilities and Capital
Liabilities
Borrowings from other banks, financial institutions and agents
Deposits and other accounts

11

134,996,493,244

120,857,891,422

Current accounts and other accounts

11.1

21,840,966,771

18,798,719,226

Bills payable

11.2

1,387,228,039

1,388,795,686

Savings bank deposits

11.3

10,534,217,297

8,510,143,963

Fixed deposits

11.4

46,057,219,028

41,945,686,077

Deposit under schemes

11.5

55,176,862,109

50,214,546,470

11.2(b)

3,000,000,000

Subordinated bond
Other Liabilities

12

Total Liabilities

annual report 2014

172

13,266,098,308

10,030,987,033

154,954,959,590

132,267,630,935

www.mblbd.com

Mercantile Bank Limited


Balance Sheet

As at 31 December 2014
Notes
Capital/shareholders equity
Paid-up capital
Statutory reserve
Other reserve
Surplus in profit & loss account
Total shareholders equity
Total Liabilities & Shareholders Equity

Amount in Taka
2014
2013

13.1
14
15
16

7,391,567,010
4,223,124,428
1,137,109,118
767,372,642
13,519,173,199
168,474,132,789

6,599,613,410
3,765,422,762
852,291,348
1,356,910,745
12,574,238,265
144,841,869,200

17.1
17.2
17.3
17.4
17.5

20,279,437,342
7,508,920,077
24,344,028,198
6,168,104,039
2,498,091,318
60,798,580,974

21,519,338,210
7,196,610,686
20,947,675,954
207,495,891
1,882,488,279
51,753,609,020

60,798,580,974

51,753,609,020

Off-Balance Sheet Items


Contingent Liabilities
Acceptances and endorsements
Letters of guarantee
Irrevocable letters of credit
Bills for collection
Other contingent liabilities(BLW)

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
commitments

Total Off-Balance Sheet items including contingent liabilities

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015

173

annual report 2014

Mercantile Bank Limited


Profit and Loss Account

For the year ended 31 December 2014


Notes

Amount in Taka
2014
2013

Interest income
Less: Interest paid on deposits, borrowings etc.
Net interest income

19
21

13,984,496,217
11,385,387,903
2,599,108,314

13,344,900,827
11,795,763,777
1,549,137,050

Investment income
Commission, exchange and brokerage
Other operating income

20
22
23

2,796,034,926
1,552,573,148
1,048,305,620
5,396,913,694
7,996,022,008

3,266,941,399
1,457,893,757
1,020,981,499
5,745,816,655
7,294,953,705

24
27
28

1,787,532,478
479,327,244
12,716,373
52,391,894
204,395,829
11,688,710
2,745,395
600,000
267,919,889
766,131,809
3,585,449,621
4,410,572,387

1,428,294,247
430,755,661
12,542,954
53,642,117
148,896,162
9,854,839
2,793,250
600,000
232,296,630
719,582,847
3,039,258,707
4,255,694,998

2,122,064,054
-

1,027,000,000
-

2,122,064,054
2,288,508,333

1,027,000,000
3,228,694,998

12.4

1,135,030,921
(35,030,921)
1,100,000,000
1,188,508,333
36,565,976
1,225,074,309

1,230,000,000
20,000,000
1,250,000,000
1,978,694,998
23,954,747
2,002,649,745

14

457,701,667
767,372,642
1,225,074,309

645,739,000
1,356,910,745
2,002,649,745

1.61

2.68

Total operating income


Salaries and allowances
Rent, taxes, insurances, electricity etc.
Legal expenses
Postage, stamps, telecommunication etc.
Stationery, printings, advertisements etc.
Chief Executives salary and fees
Directors fees
Auditors fees
Depreciation and repair to Banks assets
Other expenses
Total operating expenses
Profit/(loss) before provision

29
25
26
30
31

Provision for loans and advances including off Balance Sheet items

12.5

Other provision
Total provision
Total profit/(loss) before taxes
Provision for Current tax
Provision for Deferred Tax
Net profit after taxation
Retained surplus brought forward from previous year
Profit available for appropriation
Appropriation
Statutory reserve
General reserve
Retained earnings
Earnings per share (EPS)

16
32

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015

annual report 2014

174

www.mblbd.com

Mercantile Bank Limited


Cash Flow Statement

For the year ended 31 December 2014


Notes
A)

Cash flows from operating activities

Amount in Taka
2014
2013

485,751,069

Interest received

13,245,337,551

66,145,041

12,540,062,644

Interest paid

(9,996,108,341)

(10,551,408,332)

Payment to the employees

(1,787,532,478)

(1,428,294,247)

Income tax paid

(1,659,238,142)

(1,205,386,356)

Received from other operating activities

4,601,425,221

4,953,792,146

Other operating income

3,827,997,157

4,279,380,632

(1,480,061,059)

(1,346,262,134)

(12,716,373)

(12,542,954)

Fees and commission received

779,145,084

Payment to suppliers

(95,852,605)

Exchange gain

773,428,064

Payment for other operating activities


Rent, taxes, insurances and electricity

(479,327,244)

Legal expenses

Postage, stamps and telecommunication

(52,391,894)

Auditors fees

(430,278)

Repair and maintenance

(46,516,410)

Chief Executives salary and fees

(11,688,710)

Directors fees

(2,745,395)

Other expenses

(874,244,755)

Operating cash flows before changes in operating assets and liabilities

3,607,115,231

(Increase)/ decrease in operating assets and liabilities

(20,448,782,162)

Trading securities (Treasury bills & Bonds)


Loans and advances to other banks

Other assets (Item-wise)


Suspense account

Demand Draft paid without advice

9.1

Advance rent

Advance deposits
Stamps in hand

On-line client adjustment account


Adjusting account debit

Mercantile Exchange House (UK) Ltd.


Mercantile Bank OBU unit

(575,000)

(40,250,215)
(9,854,839)

(2,455,000)

(796,186,348)

3,673,675,053
7,314,355,005

67,441,366

1,496,513,466

(4,533,285)
(1,988,009)

159,770,114

(60,042)

11,113,869

19,793,967

2,860,426

7,709,165

6,092,337
9.2

(53,642,117)

(4,077,627,180)

54,961

Clearing adjustment account

(430,755,661)

(19,371,523,776)

(91,927)

Premium on bond

674,411,514

11,391,982,185

(3,584,515)

Stock of stationery

(72,310,911)

(1,077,258,386)

Loans and advances to customers

783,482,243

(422,046)

(894,401)

25,998,101

(23,348,515)

(4,230,050)

(7,223,259)

61,747,559

175

77,361,830

1,237,828,552

annual report 2014

Mercantile Bank Limited


Cash Flow Statement

For the year ended 31 December 2014


Amount in Taka
2014
2013

Notes

17,940,400,226

Deposit from other banks

2,313,615,558

Deposit from customers

14,138,601,822

Other liabilities

1,488,182,846

Other liabilities on account of customers

1,166,174,661

Net cash flows from operating activities


B)

Cash flows from investing activities


Sale proceeds of fixed assets

Dividend received

16,343,389

Purchase/sale of property, plant and equipment

(321,917,942)

Purchase/sale of shares

8,776,039

(14,548,580,443)

2,751,007,717

1,412,317,301

(725,346,503)

8,542,266

(6,953,533)

(10,890,337)

Purchase/sale of bond

(1,025,000,000)

(157,500,000)

Net cash flows from investing activities

(1,321,798,514)

(166,801,604)

Other investment activities

C)

(13,209,890,027)

Cash flows from financing activities

Receipts from Issue of loan capital and debt securities

3,000,000,000

Paid for repayment of loan and debt securities

Net cash flows from financing activities

(527,969,073)

2,472,030,927

(427,752,721)

Net increase/(decrease) of cash & cash equivalent (A+B+C)

2,316,407,074

(1,319,900,828)

Received by issue of right share

Dividend paid

Cash and cash equivalent at the beginning of the year

Cash and cash equivalent at the end of the year

16.A(1)

11,320,235,900

13,636,642,974

(427,752,721)

12,640,136,728

11,320,235,900

The annexed notes form an integral part of these financial statements.

Managing Director and CEO

Director

Director

Chairman

This is the Consolidated Balance sheet referred to in our separate report of even date

A. Qasem & Co.


Chartered Accountants

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

Dated: Dhaka
April 22, 2015

annual report 2014

176

6,599,613,410

Balance as at 31 December 2013

177

Dated: Dhaka
April 22, 2015

A. Qasem & Co.


Chartered Accountants

Managing Director and CEO

45,680,250

4,223,124,428
45,680,250

162,999,143

643,611,955

Director

This is the Consolidated Balance sheet referred to in our separate report of even date

Director

The annexed notes form an integral part of these financial statements.

3,765,422,762

791,953,600
7,391,567,010

457,701,667
-

Dividend
Equalization
Fund
C
45,680,250
-

B
3,765,422,762
-

Statutory
reserve

A
6,599,613,410
-

Paid-up capital

Amount in BDT

Chairman

1,356,910,745 12,574,238,265

Khan Wahab Shafique Rahman & Co.


Chartered Accountants

852,291,348

Other reserve
Surplus profit/
Adjustment
Revaluation
Total
Net balance of
(loss)
for Approved
surplus for
other reserve
Securities
Fixed assets
D
E
F=C+D+E
G
H=A+B+F+G
162,999,143
643,611,955
852,291,348 1,356,910,745 12,574,238,265
(422,096)
(422,096)
(457,701,667)
284,817,770
284,817,770
284,817,770
- 1,188,508,333 1,188,508,333
(791,953,600)
(527,969,073)
(527,969,073)
447,816,913
643,611,955
1,137,109,118
767,372,642 13,519,173,199

For the year ended 31 December 2014

Balance as at 01 January 2014


Changes in accounting policy
Transfer from income of OBU
Statutory reserve
Market adjustment of approved securities (HTM)
Surplus/deficit on account of revaluation of properties
Surplus/deficit on account of revaluation of investments
Currency transaction difference
Net gains and losses not recognised
in the income statement
Net profit for the year after taxation
Transfer
Issuance of bonus share
Bonus share premium
Cash dividend
Dividend equalization fund
Issue of right share
Balance as at 31 December 2014

Particulars

Mercantile Bank Limited

Statement of Changes in Equity

www.mblbd.com

annual report 2014

annual report 2014

178

Liabilities:
Borrowing from Bangladesh Bank, other banks, financial
institutions and agents
Deposits
Other accounts
Subordinated Bond
Provision and other liabilities
Total liabilities
Net Liquidity

Assets:
Cash in hand
Balance with other banks and financial institutions
Money at call and short notice
Investments
Loans and advances
Fixed assets including premises, furniture and fixtures
Other assets
Non-banking assets
Total assets

20,575,895,500
145,934,683
20,721,830,183
46,543,424

33,996,343,264
1,387,228,039
35,383,571,303
8,937,957,131

2,169,845,939
221,903,885
1,125,159,494
16,912,940,647
338,523,642
20,768,373,607

10,724,418,424
114,956,763
130,560,310
32,203,307,383
1,148,285,554
44,321,528,434

01-03
Months

Up to 01
Month

As at 31 December 2014

25,985,252,855
1,814,670,294
31,492,291,187
4,119,784,111

3,692,368,038

405,517,963
5,801,134,151
28,244,914,177
490,102,001
670,407,006
35,612,075,298

03-12
Months

Liquidity Statement
Asset and Liability Maturity Analysis

Mercantile Bank Limited

31,056,450,542
550,219,508
31,606,670,050
347,577,425

8,224,343,155
22,836,399,845
655,451,772
238,052,703
31,954,247,475

01-05
Years

Total

Amount in BDT

3,692,368,038
21,995,323,044 133,609,265,205
1,387,228,039
3,000,000,000
3,000,000,000
10,755,273,823
13,266,098,308
35,750,596,867 154,954,959,590
67,311,108
13,519,173,199

12,894,264,363
742,378,611
16,902,887,980
32,184,085,090
16,862,463,317 117,060,025,369
2,052,556,678
3,198,110,451
2,395,268,905
35,817,907,975 168,474,132,789

More than
05 years

www.mblbd.com

Mercantile Bank Limited

Notes to the consolidated financial statements


As at & for the year ended 31 December 2014

1.4.1 Mercantile Bank Securities Limited

1.0 Legal Status & Nature of the Bank


Mercantile Bank Limited (the Bank) was
incorporated in Bangladesh as a Public Company,
Limited by shares under the Companies Act 1994 on
20 May 1999 and subsequently obtained Banking
operation license from Bangladesh Bank under
the Bank Companies Act 1991 and commenced its
commercial operation on 02 June 1999. The Bank
went for public issue of shares in the year 2003 and
its shares are listed with Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE).
Presently the Bank has 100 Branches and two
subsidiary companies.
1.1 Principle Activities
The principal activities of the Bank are to provide all
kind of commercial banking activities encompass a
wide range of services including accepting deposits,
making loans, discounting bills, conducting money
transfer and foreign exchange transactions
and performing other related services such as
safe keeping, collections, issuing guarantees,
acceptances and letters of credit to the customers
through the branches in Bangladesh.

1.2 Off-shore Banking Unit (OBU)

The Bank obtained the Off-shore Banking Unit


permission vide letter no. BRPD (P-3)744(114)/20101743, dated 04 May 2010. The Off-shore Banking
Unit commenced its commercial operation on 20
March 2011. Presently the bank has 3 (three) units
in operation in Bangladesh. The Off-shore Banking
Unit is governed under the rules and guidelines of
Bangladesh Bank. The principal activities of the
Units are to provide all kinds of commercial banking
services to its customers in foreign currencies
approved by the Bangladesh Bank. Separate
Financial Statements of Off-shore Banking Unit has
been drawn up in Annexure-G.
1.3 Mobile Banking Operation
The Bank obtained the permission for conducting the
mobile banking operation under reference letter #
DCMPS/PSD/37(D)/2011-753, dated 02 November
2011of Bangladesh Bank. The Bank started its testrun in November 2012. The main activities of the
mobile banking services are to serve the customers
through Mobile Phone within the applicable rules &
regulations and guidelines of Bangladesh Bank.
1.4 Information about Subsidiaries

In line with Bangladesh Bank directives, Mercantile


Bank Securities Limited (MBSL), a subsidiary
company of Mercantile Bank Limited has been
formed on 27 June 2010 to deal with stock dealing
and brokering. MBSL has started its commercial
operation on 14 September 2011 through obtaining
stock dealer & broker license from the Bangladesh
Securities and Exchange Commission (BSEC).
The main operation of the subsidiary is to buy and
sale securities as well as extend margin loan to the
customers against their margin for investment in
the listed companies. The required margin level is
monitored daily and margin loan is provided as per
established guidelines. Financial Statements of the
Company are shown in Annexure-H.
1.4.2 Mercantile Exchange House (UK) Limited
Mercantile Exchange House (UK) Limited was
incorporated as private limited company with
Companies of England and Wales under registration
no. 07456837 on 01 December 2010. The company
is a wholly owned subsidiary company of Mercantile
Bank Limited incorporated in Bangladesh, which
is also the ultimate holding company. Earlier on
17 June 2010, Mercantile Bank Limited got the
permission from Bangladesh Bank for opening a
fully owned subsidiary in UK. Mercantile Exchange
House (UK) Limited obtained Money Laundering
registration on 21 February 2011 issued by HM
Customs and Excise.
The company got registration from Financial
Services Authority (FSA) on 7 October 2010 as Small
Payment Institution to carry out business under
Payment Services Regulations 2009. The company
started its commercial operation in London, UK on
20 September 2012. Financial Statements of the
company are shown in Annexure-I.
2.0 Basis of Preparation of Financial Statements
& Other Significant Accounting Policies

Principle activities

Country of incorporation

Mercantile Bank Securities Limited

Trading securities

Bangladesh

Controlling
interest
92.31%

Mercantile Exchange House (UK) Limited

Financial services

UK

100%

Name

179

annual report 2014

2.1 Basis of Accounting


2.1.1 Statement of Compliance
The Financial statements of the Bank and its
subsidiaries are prepared in accordance with
International Accounting Standards (IAS) &
International Financial Reporting Standars (IFRS)
adopted by the Institute of Chartered Accountants
of Bangladesh (ICAB) Bangladesh Accounting
Standards (BASs) & Bangladesh Financial
Reporting Standards (BFRSs).
The financial statements have been prepared
on a going concern basis under historical cost
convention, except for certain investments which
are stated at fair/market value and freehold land
which are measured at revalued amount, in
accordance with first schedule of Bank Companies
Act of 1991 as amended on 25 June 2003 section 38
(4), Bangladesh Bank Circulars, Bangladesh Financial
Reporting Standards (BFRSs), the Companies Act
1994, the Bangladesh Securities and Exchange Rules
1987, DSE & CSE listing regulations and other laws
and rules applicable in Bangladesh.
2.1.2 Basis of Consolidation
The consolidated financial statements include the
financial statements of Mercantile Bank Limited, its Offshore Banking Units and its subsidiaries, Mercantile
Bank Securities Limited and Mercantile Bank Exchange
House (UK) Limited, made up to the end of the financial
year. The consolidated financial statements have been
prepared in accordance with BAS 27 Consolidated
and Separate Financial Statements. The consolidated
financial statements are prepared to a common
financial year ending 31 December 2014.
The conversion policy of subsidiary companies and
Off-shore Banking Units are given below.

The liquidity statement of assets and liabilities has


been prepared in accordance with the residual
maturity grouping as on 31 December 2014 under
the guidelines of BRPD Circular# 14 dated 25 June
2003 as per the following basis:
a.

Balance with other Banks and financial institutions,


money at call and short notice etc. are on the basis
of their maturity term;

b.

Investments are on the basis of their respective


maturity;

c.

Loans and advances/ investments are on the basis


of their repayment schedules;

d.
e.

Fixed assets are on the basis of their useful lives;


Other assets are on the basis of their realizations/
amortizations;
Borrowing from other banks, financial institutions
and agents etc. are as per their maturities/
repayment terms;

f.

g.

Provisions and other liabilities are on the basis of


their payments/ adjustments schedule;

h.

Deposits and other accounts are on the basis of


their maturity term and past trend of withdrawal by
the depositors.
Off-shore Banking Units

Closing Price

1 = BDT 124.0252

USD 1= BDT 77.80

Closing Price

1= BDT 124.0252

USD 1= BDT 77.80

Price

For Assets & Liabilities


For Income & Expenses

Transactions eliminated on consolidation


All intra-group transactions, balances, income and
expenses are eliminated on consolidation. Profit and
loss resulting from transactions between groups is
also eliminated on consolidation.

180

2.1.4 Liquidity Statement

Mercantile Bank Exchange


House (UK)

Particulars

annual report 2014

2.1.3 Cash Flow Statement


Information about the cash flows of an entity is useful
in providing users of financial statements with a basis
to assess the ability of the entity to generate cash and
cash equivalents and the needs of the entity to utilize
those cash flows. The cash flow statement has been
prepared in accordance with the BAS 7 Statement of
Cash Flows under direct method as recommended in
the BRPD Circular# 14, dated 25 June 2003 issued
by the Banking Regulation & Policy Department of
Bangladesh Bank.

2.1.5 Use of Estimates & Judgments


The preparation of financial statements requires
management to make judgments, estimates and
assumptions that affect the reported amount
of assets, liabilities, income, expenses, the

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accompanying disclosures & the disclosure of


contingent liabilities. Actual result may differ
from these estimates. Uncertainty about these
assumptions & estimates could result in outcomes
that require a material adjustment to the carrying

amount of assets or liabilities affected in future


periods.

In the process of applying the accounting policies,


management

has

made

various

judgments,

estimates & assumptions. These estimates and


underlying assumptions are reviewed on an ongoing

basis by the management of the Bank. And any


revision to accounting estimates are recognized
in the period in which the estimates are revised.

Existing circumstances and assumptions about

future developments, however, may change due to


market changes or circumstances arising that are

beyond the control of the Bank. Such changes are


reflected in the assumptions when they occur.
2.1.6 Foreign Currencies Transaction
i) Functional & Presentational Currency
Items included in the financial statements of
subsidiary are measured using the currency of the

primary economic environment in which the entity


operates (Functional Currency). The consolidated

financial statements are presented in BDT which is


the groups presentation currency.
ii) Foreign Currency translation
Transactions in foreign currencies are converted into

equivalent BDT applying the ruling rate at the date


of such transactions. Foreign currencies balances

held in US dollar are converted into BDT at weighted

average rate of interbank market as determined

by Bangladesh Bank on the closing date of every


month. Balance held in foreign currency other than

US dollar are converted into equivalent US dollar at


buying rates of New York closing of the previous day
and converted into BDT equivalent.

Foreign currencies are translated into BDT at


the following rates:

USD 1= BDT 77.80, GBP 1= BDT 124.0252, EURO


1= BDT 87.7117 and JYEN 1= BDT 0.6597 as on 31
December 2014.

Other foreign currency related transactions have


been converted by using the rate of exchange
prevailing on the dates of such transactions.

iii) Commitments
Commitments for outstanding forwarded foreign
exchange contracts disclosed in these financial

statements are translated at contracted rates.


Contingent commitments for letter of credits
and letter of guarantees denominated in foreign

currencies are expressed in BDT terms at the rate


of exchange ruling on the balance sheet date.
iv) Translation gains or losses
The resulting exchange transactions gains or losses

are included in the profit or loss account, except


those arising on the translation of net investment in
foreign subsidiary.
2.1.7 Reporting Period
These financial statements cover period from 01
January 2014 to 31 December 2014.
2.1.8 Offsetting
No asset or liability has been offset or reduced by

any other asset unless a legal right of set-off exists

and the offsetting represents the expectation as to


the realization or settlement of the asset or liability.
2.2 Assets & Basis of their Valuation
2.2.1 Cash & Cash Equivalents
Cash and cash equivalents include notes and coins
in hand, unrestricted balances held with Bangladesh

Bank and highly liquid financial assets which are

subject to insignificant risk of changes in their fair

value and are used by the Bank for its short term
commitments.

2.2.2 Loans & Advances


a. Loans and advances are stated in the balance sheet
on gross basis.

b. Interest is calculated on a daily product basis but

charged and accounted for on accrual basis. Interest


on classified loans and advances is kept in suspense

account as per Bangladesh Bank instructions and


such interest is not accounted for as income until
realized from borrowers. Interest is not charged on
bad and loss loans as per guidelines of Bangladesh

Bank. Records of such interest amounts are kept in


separate accounts.

181

annual report 2014

c. Commission and discounts on bills purchased and


discounted are recognized at the time of realization.

d. Provision for loans and advances is made on the


basis of period-end review by the management
following instructions contained in Bangladesh Bank

BRPD Circular no. 14 dated 23 September 2012.The


classification rates are given below:
For Unclassified Loans and Advances

coupon payments and are revalued annually on


amortized cost method as directed by Bangladesh
Bank. The change in revaluation of the securities
is reflected in the Changes in Equity Statement.
Please see annexure-D.
Held For Trading (HFT)
Investments classified in this category are acquired
principally for the purpose of selling or repurchasing
in short-trading or if designated as such by the
management. After initial recognition, investments

Particulars

Small and Medium Enterprise (SME)


All unclassified loans (other than loans under Consumer financing, Loan to Brokerage House,
Merchant Banking, Stock dealers etc. and Special Mention account)
Unclassified loans against Housing and Professionals to set up business under Consumer Financing

Rate

0.25%
1%
2%

Unclassified loans to Brokerage House, Merchant Banking, Stock dealers etc.

2%

Unclassified loans against other Consumer Financing

5%

Margin Loan Account

Outstanding amount of loans kept in the Special Mention Account after netting off the amount of
Interest Suspense.

2%
0.25% -5%

For Classified Loans and Advances


Particulars

Rate

Specific Provision on substandard loans and advances

20%

Specific Provision on doubtful loans and advances

50%

Specific Provision on bad/loss loans and advances

100%

e. Loans and advances are written off to the extent that


(i) there is no realistic prospect of recovery, (ii) and
against which legal cases are pending as per guidelines
of Bangladesh Bank. These write off, however, will
not undermine/affect the claim amount against the
borrower. Detailed memorandum records for all such
write off accounts are meticulously maintained and
followed up.
2.2.3 Investments

All investment in securities is initially recognized


at cost, being fair value of the consideration given,
including acquisition charges associated with the
investment. Premiums are amortized and discounts
accredited, using the effective yield method is taken to
discount income as per BAS 32 Financial Instruments:
Presentations and BAS 39 Financial Instruments:
Recognition and Measurements. Details of investment
in shares/securities are given in annexure- G. The
valuation methods of investments include:

Held To Maturity (HTM)


HTM consist the Government approved securities
in the mode of Treasury Bond & Bills which are
classified as per Bangladesh Bank DOS Circular#
5, dated 26 May 2008. These securities bear fixed

annual report 2014

182

are measured at fair value and any change in the fair


value is recognized in the statement of income for
the period in which it arises. These investments are
subsequently measured at present value as per the
Bangladesh Bank Guideline. Investments in securities
have been revalued as mark-to-market as at 31
December 2014 and have been shown in the equity.
Please see annexure-D.
Investment in Listed Securities
These securities are bought and held primarily
for the purpose of selling them in future or held
for dividend income. These are reported at cost.
Unrealized gains or losses are not recognized in the
profit and loss account.
Investment in Unquoted Securities
Investment in unlisted securities is reported at cost
under cost method. Adjustment is given for any
shortage of book value over cost for determining the
carrying amount of investment in unlisted securities.

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All investments are stated as per following basis:


Investment Class

Initial
Recognition

Measurement after initial


recognition

Recording of changes
Increase or decrease in value of
equity
Loss to P&L, gain to revaluation through
B/S

Govt. T-Bond (HTM)

Cost

Amortized Cost

Govt. T-Bill (HFT)

Cost

Fair Value

Govt. T-Bond (HFT)

Cost

Fair Value

Do

Share (Quoted)

Cost

At cost or market price whichever


is lower at balance sheet date

Loss to P&L but no unrealized gain


booking

Share (Un-Quoted)

Cost

Cost

None

Prize bond

Cost

Cost

None

Investments in Subsidiary
The Bank recognizes investment in subsidiaries
under cost method in the Group financial
statements in accordance with BAS 28 Investment
in Associates. The investments in subsidiaries are
reviewed impairment test regularly to recognize
investment at cost.
Offsetting Financial Instruments
Financial assets and financial liabilities are offset
and the net amount reported in the balance sheet
when there is a legally enforceable right to offset
the recognized amounts and there is an intention to
settle on a net basis or realize the asset and settle
the liability simultaneously as per BFRS 7 Financial
Instruments: Disclosures.

b) The bank recognizes the carrying amount of an item


of property, plant and equipment the cost of replacing
part of such an item when that cost is incurred if it is
probable that the future economic benefit embodied
with the item will flow to the company and the cost
of the item can be measured reliably. Expenditure
incurred after the assets have been put into operation,
such as repairs and maintenance is normally charged
off as revenue expenditure in the period in which it is
incurred.
c)

Depreciation is charged on property, plant and


equipment at the following rates on reducing balance
method from the date of acquisition whereas
depreciation of vehicles and building have been
calculated on the basis of straight line method.

Category of Assets

Rate

Land and Land Development

Nil

Building

2.5%

Furniture and Fixtures

10%

Office Equipment

20%

Vehicles

20%

Books

20%

2.2.4 Property, Plant & Equipment (Fixed Assets)


a) All fixed assets are stated at cost less accumulated

d) Depreciation on assets addition during the period is


charged from the month of addition. Whole month
depreciation charged for the month of addition.

attributable cost of bringing the asset to its working

e) On the month of disposal of fixed assets no


depreciation is charged. The cost and accumulated
depreciation of disposed assets are eliminated from
the fixed assets schedule and gain or loss on such
disposal is reflected in the income statement.

condition for its intended use inclusive of inward

f)

depreciation as per BAS 16 Property, Plant and


Equipment. The cost of acquisition of an asset
comprises its purchase price and any directly

freight, duties and non-refundable taxes.

Capital Work-in-Progress is stated at cost. These


are expenses of a capital nature directly incurred in

183

annual report 2014

the construction of building, system development,


awaiting capitalization.
g) Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying
assets have been capitalized as part of the cost of
the assets.
h) Useful life and method of depreciation of fixed assets
are reviewed periodically. If useful lives of assets do
not differ significantly as it was previously estimated,
Bank management does not consider revaluing its
assets by the meantime.
2.2.5 Intangible Assets
Intangible asset is an identifiable non-monetary asset
without physical substance. An intangible asset is
recognized if it is probable that the future economic
benefits that are attributable to the assets will flow to
the entity and the cost of the asset can be measured
reliably in accordance with BAS 38 Intangible Assets.
Subsequent expenditure on intangible asset is
capitalized only when it increases the future economic
benefits embodied in the specific assets to which it
relates. All other expenditure is expensed as incurred.
2.2.6 Assets Revaluation Reserve
The Bank has revalued assets in 2011 by an
independent valuation firm as per BAS 16 Property,
Plant & Equipment by the approval of Board of
Directors of the Bank. And the revaluation amount
is eligible up to 50% for the supplementary capital
(Tier-II) as per BRPD circular# 10, dated 24
November 2002.
2.2.7 Impairment of Assets
As per BAS 36 Impairment of Assets an asset
is impaired when its carrying amount exceeds its
recoverable amount. The Bank assesses at the end
of each reporting year whether there is any indication
that an asset may be impaired and/ or whenever
events or charges in circumstances indicate that the
carrying value of the assets may not be recovered.
If any such indication exists, the Bank makes an
estimate of the recoverable amount of the assets.
The carrying amount of the asset is reduced to its
recoverable amount, if the recoverable amount is less
than its carrying amount and impairment losses are
recognized in the profit and loss account. However,
impairment of financial assets is guided by the relevant
Bangladesh Bank circular/ instructions and BAS 39
Financial Instruments: Recognition & Measurement.

annual report 2014

184

2.2.8 Non-Convertible Subordinated Bond


The Bank has issued 7 (Seven) years term
subordinated bond during the year 2014 for BDT
3,000,000,000 to raise subordinated debt as part of
the Tier-II Regulatory Capital following Guideline
of Risk Capital Adequacy of Bangladesh Bank
circular# BRPD (BIC) 661/14B (P)/ 2014 dated 15
April 2014.
2.2.9 Other Assets
Other assets of the Bank include all balance sheet
items which are not covered specifically in other
areas of the supervisory activity and such items may
be insignificant in terms of overall financial condition
of the Bank. Please see annexure-I for maturity
analysis.
2.2.10 Lease
Leases are classified as finance lease whenever the
terms of the lease transfer substantiality all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases as per BAS 17 Leases.
The Bank as leasor:
Amount due from leases under finance leases are
recorded as receivables at the amount of the banks
net investment in the leases. Finance Leases income
is allotted to accounting periods so as to reflect a
constant periodic rate to return on the Banks net
investment outstanding in respect of the leases as
per BAS 17 Leases.
The Bank as lessee:
Assets held under finance leases are recognized

as assets of Bank at the fair value at the date of

acquisition or if lower, at the present value of the

minimum lease payments. The corresponding


liability to the lessor is included in the Balance Sheet

as a Finance Lessee Obligation. Lease payments


are apportioned between finance charges and
reduction of the lease obligation so as to achieve a

constant rate of interest on the remaining balance


of the liability. Finance charges are charged directly
against income as per BAS 17 Leases.
2.2.11 Receivables
The Bank recognizes receivables when there is a
contractual right to receive cash or in form of another
financial asset from another entity.

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2.2.12 Non- Banking Assets


There are no assets acquired in exchange for loan
in the financial statements of the Bank.
2.2.13 Reconciliation of Inter- bank & Inter- branch
Account
Accounts with regard to inter-bank (in Bangladesh
and outside Bangladesh) are reconciled regularly
and there are no material differences, which
may affect the financial statements significantly.
Un-reconciled entries/ balances in inter-branch
transactions as on the reporting date are not
material.
2.3 Revenue Recognition
2.3.1 Interest Income
According to the BAS 18 Revenue, the interest
income is recognized on an accrual basis. Interest
from loans and advances ceases to be accrued when
they are classified as non-performing. It is then kept
in interest suspense in a memorandum account.
Interest on classified advances is accounted for on
a cash receipt basis.
2.3.2 Investment Income
Interest income on investments is recognized on
accrual basis using effective interest rate as per
BAS 18 Revenue. Capital gain on investments
in shares is recognized as income and credited to
investment income in the profit and loss statement
as per BAS 39 Financial Instruments: Recognition
and Measurements. Capital Gain is recognized
when it is realized.
2.3.3 Fees & Commission Income
Fees and Commission income arises on services
provided by the Bank are recognized on a cash
receipt basis. Commission charged to customers on
letters of credit and letters of guarantee is credited
to income at the time of effecting the transactions in
accordance with BAS 18 Revenue.
2.3.4 Dividend Income on Shares
Dividend income on shares is recognized during the
period in which it is declared and right to receive is
established as per BAS 18 Revenue.
2.3.5 Interest Paid & Other Expenses
In terms of the provisions of BAS 1 Presentation of
Financial Statements interest and other expenses
are recognized on accrual basis.

2.3.6 Dividend Payments


Final dividend is recognized when the shareholders
approve it and right to receive of dividend is
established to the shareholder.
2.4 Share Capital
Ordinary shares are classified as capital/
shareholders equity which has no contractual
obligation to transfer cash or in terms of other
financial assets.
2.5 Statutory Reserve
Bank Companies Act 1991 requires the Bank to
transfer 20% of its current periods profit before tax
to reserve until such reserve equals to its paid up
capital. Accordingly Bank has transferred requisite
portion of current periods profit to the statutory
reserve account.
2.6 Non Controlling Interest
Non controlling interest is the equity in a subsidiary
not attributable, directly or indirectly, to a parent.
Non controlling interest belongs to other investors &
their interest is reported on the consolidated balance
sheet of the parent company to reflect the claim on
that subsidiarys assets. And their share of profit
in the subsidiary is presented on the consolidated
income statement as a non controlling interest.
2.7 Deposits & Other Accounts
Deposits by customers & banks are recognized
when the bank enters into contractual arrangement
with counterparties to repay the amount. The
amount is initially measured by the Bank at the
consideration received.
2.8 Borrowings from
Institutions & Agents

Other

Banks,

Financial

Borrowings include call deposits, Bangladesh


Bank refinance, other banks borrowings, off-shore
banking unit. The amounts are recognized at the
repayable amount. An interest expense on this
amount is charge to the profit or loss account.
2.9 Basis for Valuation of Liabilities & Provisions
2.9.1 Current Tax
Provision for current income tax has been made as
prescribed in the Finance Act 2014 on the accounting
profit made by the Bank after considering some
of the add backs to income and disallowances of
expenditure as per income tax laws in compliance
with BAS 12 Income Taxes.

185

annual report 2014

Provident Fund

2.9.2 Deferred Tax


Deferred tax is provided using the liability method,
providing for temporary differences between the
carrying amounts of assets and liabilities for financial
reporting purposes and the tax base of assets and
liabilities, which is the amount attributed to those
assets and liabilities for tax purposes. Deferred tax
assets and liabilities are recognized for the future
tax consequences of timing differences arising
between the carrying value of assets, liabilities,
income and expenditures and their respective
tax basis. Deferred tax assets and liabilities are
measured using tax rate and tax laws that have
been enact or substantially enacted at the balance
sheet date. The impact on the account of changes in
the deferred tax assets and liabilities has also been
recognized in the profit and loss account as per BAS
12 Income Taxes.
2.9.3 Provision for Contingent Assets & Liabilities
A provision is recognized in the balance sheet when
the Bank has a legal or constructive obligation as a
result of a past event and it is probable that an outflow
of economic benefit will be required to settle the
obligations, in accordance with the BAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
2.9.4 Off- Balance Sheet Items & Provisions
Off-balance sheet items have been disclosed under
contingent liabilities and other commitments as
per Bangladesh Bank guidelines. As per BRPD
Circular# 10, dated 18 September 2007, Banks
are required to maintain provision @1% against
off-balance sheet exposures (L/C and Guarantee)
effective from December 2008.
2.9.5 Provisions for Nostro Accounts
As per instruction contained in the circular letter No.
FEPD (FEMO)/ 01/ 2005-677, dated 13 September
2005 issued by Foreign Exchange Policy Department
of Bangladesh Bank, Bank is not required to make
provision regarding the un-reconciled debit balance
of nostro account as on the reporting date in these
financials.
2.9.6 Benefits to the Employees
The retirement benefits accrued for the employees
of the Bank as on reporting date have been
accounted for in accordance with the provisions of
BAS 19 Employee Benefit. Bases of enumerating
the retirement benefit schemes operated by the
Bank are outlined below:
annual report 2014

186

Provident fund benefits are given to the permanent


employees of the Bank in accordance with Banks
service rules. Accordingly, a trust deed and provident
fund rules were prepared. The Commissioner of
Income Tax, Taxes Zone -3, Dhaka has approved
the Provident Fund as a recognized provident fund
within the meaning of section 2(52), read with the
provisions of part - B of the First Schedule of Income
Tax Ordinance 1984.
The recognition took effect from 02 June 1999. The
Fund is operated by a Board of Trustees consisting
of six members (03 members from the management
side and other 03 members from the Board of
Directors including Managing Director) of the Bank.
All confirmed employees of the Bank are continuing
their contribution @10% of their basic salary as
subscription to the Fund. The Bank also similarly
contributes equal amount of the employees
contribution. Interest earned from the investments
is credited to the members account on yearly basis.
Gratuity Fund
The Bank has started providing Gratuity fund, which
was approved by the National Board of Revenue on
05 October 2006. The Fund is operated by a Board
of Trustees consisting of 7 (seven) members of
whom 03 members are from the Board of Directors
including Managing Director of the Bank.
Welfare Fund
Mercantile Bank Limited Employees Welfare
Fund is subscribed by monthly contribution of the
employees. The Bank also contributes to the Fund
from time to time. The Fund has been established to
provide coverage in the event of accidental death or
permanent disabilities, a portion of retirement benefit
& stipend to the employees children. Disbursement
from the fund is done as per prescribed rules of
employees Welfare Fund.
Incentive Bonus
Mercantile Bank Limited started a scheme under
the name and style Incentive Bonus for imperative
motivation to all the employees work under the
Bank. The criterion of payment of Incentive bonus
does not exceed 10% of disclosed net profit of the
Bank as per section 30(j) of Income Tax Ordinance
1984. This Bonus amount is distributed amongst the
employees on annual basis based on their individual
job performance.

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2.10 Risk Management


The risk of Mercantile Bank Limited is defined as
the possibility of losses, financial or otherwise. The
risk management of the Bank covers core risk areas
of banking viz. credit risk, liquidity risk, market risk
that includes foreign exchange risk, interest rate
risk, equity risk, operational risk and reputation
risk arising from money laundering incidences.
The prime objective of the risk management is
that the Bank evaluates and takes well calculative
business risks and thereby safeguarding the Banks
capital, its financial resources and profitability from
various business risks through its own measures
and through implementing Bangladesh Banks
guidelines and following some of the best practices
as under:
2.10.1 Credit Risk
Credit risk arises mainly from lending, trade finance,
leasing and treasury businesses. This can be
described as potential loss arising from the failure
of a counter party to perform as per contractual
agreement with the Bank. The failure may result from
unwillingness of the counter party or decline in his/
her financial condition. Therefore, the Banks credit
risk management activities have been designed to
address all these issues.
The Bank has segregated duties of the officers/
executives involved in credit related activities.
A separate Corporate Division has been formed
at Head Office, which is entrusted with the duties
of maintaining effective relationship with the
customers, marketing of credit products, exploring
new business opportunities, etc. Moreover, credit
approval; administration, monitoring and recovery
functions have been segregated.
For this purpose, three separate units have been
formed within the credit division. These are (a) Credit
Risk Management Unit (b) Credit Administration
Unit and (c) Credit Monitoring and Recovery Unit.
Credit Risk Management Unit is entrusted with the
duties of maintaining asset quality, assessing risk in
lending to a particular customer, sanctioning credit,
formulating policy/ strategy for lending operation,
etc. Adequate provision has been made on classified
loans.
A thorough assessment is done before sanction
of any credit facility at Credit Risk Management
Unit. The risk assessment includes borrower risk

analysis, financial analysis, industry analysis,


historical performance of the customer, security of
the proposed credit facility, etc. The assessment
process starts at Corporate Division by the
Relationship Manager/ Officer and ends at Credit
Risk Management Unit when it is approved/ declined
by the competent authority. Credit approval authority
has been delegated to the individual executives.
Proposals beyond their delegation are approved/
declined by the Executive Committee and/ or the
Management of the Bank.
In determining Single borrower/ large loan limit, the
instructions of Bangladesh Bank are strictly followed.
Internal audit is conducted at periodical intervals
to ensure compliance of Banks and Regulatory
policies. Loans are classified as per Bangladesh
Banks guidelines.
2.10.2 Liquidity Risk/ Assets Liability Management
The objective of liquidity risk management is to
ensure that all foreseeable funding commitments
and deposit withdrawals can be met when due.
To this end, the Bank is maintaining a diversified
and stable funding base comprising of core retail
and corporate deposits and institutional balance.
Management of liquidity and funding is carried out
by Treasury Department under approved policy
guidelines. Treasury front office is supported by
a very structured Mid Office and Back Office.
Asset Liability Committee (ALCO) monitors the
Liquidity Management on a regular basis. A written
contingency plan is in place to manage crisis
situation.
2.10.3 Market Risk
Market risk is the possibility of loss arising from
changes in the value of a financial instrument
as a result of changes in market variables such
as interest rates, exchange rates, equity and
commodity prices.
Foreign Exchange Risk
Foreign exchange risk is defined as the potential
change in earnings due to change in market prices.
The foreign exchange risk of the Bank is minimal as
all the transactions are carried out on behalf of the
customers against underlying L/C commitments and
other remittance requirements. No foreign exchange
dealing on Banks account was conducted during
the half year.

187

annual report 2014

Treasury Department independently conducts


the transactions and the back office of treasury is
responsible for verification of the deals and passing
of their entries in the books of account. All foreign
exchange transactions are revalued at Mark-toMarket rate as determined by Bangladesh Bank at
the month-end. All Nostro accounts are reconciled
on a monthly basis and the management for its
settlement reviews outstanding entry beyond 30
days. The position maintained by the bank at the
end of day was within the stipulated limit prescribed
by the Bangladesh Bank.

control tools. They assess the operational risk and


take appropriate measures to mitigate the same for
smooth operation of the Bank. ICC Division reports
serious non-compliances detected by internal
and external auditors with up-to-date compliance
position i.e. large financial risk exposures, control
weaknesses etc. to the Audit Committee of the
Board for review and taking appropriate measures.
The ICC division also ensures the clear definition
of organizational structure, appropriate assignment,
accountability and delegation of authorities to
functional management to create control and
compliance culture within organization with
the active guidance and supervision of senior
management and Board of Directors.

Interest Rate Risk


Interest rate risk may arise either from trading
portfolio and non-trading portfolio. The trading
portfolio of the Bank consists of Government
Treasury Bills and Treasury Bonds with maturity
varied from 1 to 20 years. The short-term movement
in interest rate is negligible or nil. Interest rate risk
of non-trading business arises from mismatches
between the future yield of an asset and its funding
cost. Asset Liability Committee (ALCO) monitors the
interest rate movement on a regular basis.

2.10.5 Reputation Risk Arising from Money Laundering


Incidences
Money laundering risk is defined as the loss of
reputation and expenses incurred as penalty for
being negligent in prevention of money laundering.
For mitigating the risks, the Bank has a designated
Chief Compliance Officer at Head Office and
Compliance Officers at branches, who independently
review the transactions of the accounts to verify
suspicious transactions. Manuals for prevention
of money laundering have been established and
transaction profile has been introduced. Training is
continuously given to all the category of Officers and
Executives for developing awareness and skill for
identifying suspicious activities/ transactions.

2.10.4 Operational Risk


Operational risk is the risk of loss resulting
from inadequate or failed internal processes,
people and systems or from external events.
Operational risks in the Bank are managed
through a comprehensive and well-articulated
internal control framework. Material losses
are regularly analyzed by cause and actions
are taken to improve system and controls to
prevent recurrence in the future.
Bank has restructured Internal Control and
Compliance Division (ICC) headed by a senior
level executive in light of Core Risk guidelines of
Bangladesh Bank. As a tool of Internal Control,
the Audit and inspection teams undertake
periodic and special audit and inspection on the
branches and departments/ divisions of Head
Office in order to sort out the weaknesses and
defects in the control process and report to the
management for taking corrective measures to
protect the interests of the Bank.
The Compliance & Monitoring Units ensure timely
and proper compliance of all regulatory instructions
and internal policies and procedures in the day-today operation of the Bank by way of using various

annual report 2014

188

2.10.6 Internal Control & Compliance Risk

To ensure the integrity of liquidity risk management


process, Bank has adequate internal controls.
These are an integral part of the Banks overall
system of internal control. An effective system of
internal control for liquidity risk includes:
a strong control environment;

an adequate process for identifying and


evaluating liquidity risk;
the establishment of control activities such as
policies and procedures;
adequate information systems; and

continual review of adherence to established


policies and procedures.

Our all aspects of the internal control system are


effective, including those aspects that are not
directly part of the risk management process. The
system is evaluated and reviewed regularly by the
Management.

www.mblbd.com

2.10.7 Fraud and Forgeries

Audit Committee
The Audit Committee constituted by the Board of
Directors of the Bank consisting following three
members:
Name

Fraud Detection and Management Process:


Internal Audit (IA) team conducts surprise audit
on all branches and departments/ divisions of the
Designation

Educational qualification

Dr. Mahmood Osman Imam, FCMA

Chairman

M. Com., MBA, FCMA, PhD

Mohd. Selim

Member

Graduate

Md. Shahabuddin Alam

Member

M. Com

During the year ended 31 December 2014, the Audit


Committee of the Board of Directors conducted 11
(Eleven) meetings in which among other things the
following issues were discussed/ evaluated/ reviewed and
provided guidelines and necessary instructions:

Reviewed the Banks financial statements - Balance


Sheet, Profit & Loss Account, Cash Flow Statement,
Statement of Changes in Equity, Liquidity Statement
and related Explanatory Notes.

Approval of Risk Based Audit Plan.

Reviewed the performance of Mercantile Bank


Securities Limited.

Reviewed the Banks quarterly/half-yearly UnAudited financial statements.

Reviewed
Compliance
on
observations,
recommendations and decisions of the Audit
Committee Meetings.

Reviewed the Comprehensive Inspection Reports


on different branches of the Bank conducted by the
Team of ICCD from time to time.

Internal Audit
The Banks compliance risk management system is
subject to implementation by the senior management
and a qualified compliance officer/ staff and reviewed
by an effective and comprehensive internal audit
function.
Compliance risk included in the risk assessment
methodology of the internal audit function and
an audit program that covers the adequacy
and effectiveness of the Banks compliance
function established, including testing of controls
commensurate with the perceived level of risk.
This principle implies that the compliance function
and the internal audit function separate to ensure
that the activities of the compliance function are
subject to independent review. However, the audit
function keep the head of compliance informed of
any audit findings related to compliance.

Head Office at least one in a year. While auditing


branches and offices, the IA team thoroughly
checks the operational activities of the branches/
offices including transactions in various accounts
and search for any irregularities occurred in
those accounts. IA team also monitors the
staff accounts and if necessary investigate the
suspicious transactions and report the same to the
management. IA team also conducts investigation
into specific allegations and submits report to the
management for action. Senior management of the
Bank also conduct regular visit to branches and
advise the branch officials to comply with all the
regulatory instructions, policies and procedures of
the Bank. Proper financial impact has been given
in the books of accounts of the Bank as well as
appropriate action has been taken for any financial
irregularities due to fraud or forgery.
2.10.8 Information Technology Risk
Financial information is mostly depends on strong,
reliable & secured technology for smooth banking
operation & other services provided by the Banks to
the stakeholders. The Bank has IT policy to maintain
sound IT system to minimize risk.
Information System Audit
Systems audit is a part of the overall audit process,
which is one of the facilitators for good corporate
governance. IT audit is basically the process of
collecting and evaluating evidence to determine
whether a computer system (information system)
safeguards assets, maintains data integrity, achieves
organizational goals effectively and consumes
resources efficiently.To comply the ICT Guideline
of Bangladesh Bank and to ensure the smooth
operation of business, an independent IT Audit &
Security department has been formed in May 2007.
The main aim of the department is to identify the
inherent risks and vulnerabilities associated with the
use of IT operated banking system PC Bank 2000,
other duties are to implement controls to mitigate the
risks and provide recommendations for improvement
in controls for reducing risks. Internal IT Audit
provides an objective means of reviewing the risks
faced by the Bank in relation to use of Information
Technology and assesses whether they are being
controlled/ mitigated in an effective and efficient

189

annual report 2014

manner; provides an assessment of the Banks IT


control against Guideline on ICT for Scheduled
Banks by Bangladesh Bank. Internal Control and
Compliance contains self-monitoring mechanisms,
and actions are taken to correct deficiencies as they
are identified. Even with effective internal control, no
matter how well designed, has inherent limitations
including the possibility of the circumvention or
overriding of controls and therefore can provide
only reasonable assurance with respect to financial
statement preparation. Further, because of changes
in conditions, internal control effectiveness may vary
over time. MBL has taken all-out efforts to mitigate all
sorts of risk as per guidelines issued by Bangladesh
Bank. As a part of robust risk management process,
the Bank has formulated a comprehensive Credit
Risk Management Policy to address credit risk.
2.11 Earnings per Share
The company calculates Earnings per Share (EPS)
in accordance with BAS 33 Earnings per Share
which has been shown on the face of the Profit
and Loss account and the computation of EPS is
elaborated in Note-32.
Basic Earnings per Share
Basic earnings per share have been calculated
in accordance with BAS 33 Earnings per Share
which has been shown on the face of the profit and
loss account. This has been calculated by dividing
the basic earnings by the weighted average number

of ordinary shares outstanding during the period.


Diluted Earnings per Share
No diluted earnings per share is calculated as there
is no scope for dilution during the year.
2.12 Directors responsibility on financial statements
The Board of Directors responsibility is the
preparation & presentation of financial statements.
2.13 Memorandum items
Memorandum items are maintained to have
control over all items of importance and for such
transactions where the Bank has only a business
responsibility and no legal commitment. Stock of
travelers cheque, savings certificates, wage earners
bonds and other fall under the memorandum items.
2.14 Compliance report on Bangladesh Accounting
Standards (BASs) and Bangladesh Financial
Reporting Standards (BFRSs)
The Institute of Chartered Accountants of
Bangladesh (ICAB) is the sole authority for adoption
of Bangladesh Accounting Standards (BASs) and
Bangladesh Financial Reporting Standards (BFRSs).
While preparing the financial statements, Mercantile

Name of the BAS


Presentation of Financial Statements
Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting Estimates & Errors
Events after the Reporting Period
Construction Contracts
Income Taxes
Property, Plant & Equipment
Leases
Revenue
Employee Benefits
Accounting for Government Grants & Disclosure of Government Assistance
The Effects of Changes in Foreign Exchange Rates
Borrowing Costs
Related Party Disclosures
Accounting & Reporting by Retirement Benefit Plans
Consolidated & Separate Financial Statements
Investments in Associates
Interests in Joint Ventures
Financial Instruments: Presentation
Earnings per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent Liabilities & Contingent Assets
Intangible Assets
Financial Instruments: Recognition & Measurement
Investment Property
Agriculture
annual report 2014

190

BAS No
1
2
7
8
10
11
12
16
17
18
19
20
21
23
24
26
27
28
31
32
33
34
36
37
38
39
40
41

Status
Applied
Applied
Applied
Applied
Applied
N/A
Applied
Applied
Applied
Applied
Applied
N/A
Applied
Applied
Applied
Applied
Applied
N/A
N/A
Applied
Applied
Applied
Applied
Applied
Applied
Applied
Applied
N/A

www.mblbd.com

Name of the BFRS

BFRS No

Status

First- time Adoption

N/A

Share- based Payment

N/A

Business Combinations

N/A

Insurance Contracts

N/A

Non- current Assets Held for Sale & Discontinued Operations

N/A

Exploration for & Evaluation of Mineral Resources

N/A

Financial Instruments: Disclosures

N/A

Operating Segments

Applied

Consolidated Financial Statements

10

Applied

Joint Arrangement

11

N/A

Disclosure of Interest in Other Entities

12

N/A

Fair Value Measurement

13

N/A

long term. The above gradation has been done


in consideration with its financial viability and
consequent improvement in asset quality, capital
adequacy, stable source of fund, diversified
product lines etc. Financial institutions rated in this
category are adjudged the financial institution that is
subservient to have high safety to timely repayment
of financial obligations. It means Bank rated in the
category is adjudged to be of high quality, offer
higher safety and have high credit quality. This level
of rating indicate a corporate entity a sound credit
profile and without significant problems. Risks are
modest and may vary slightly from time to time
because of economic conditions. CRISL rated the
Mercantile Bank Limited to ST-2 in the short term.
This rate shows High Grade of the Bank it indicates
high certainty of timely payment. Liquidity factors
are strong and supported by good fundamental
protection factors. Risk factors are very small. The
long-term rating is valid for only one year and shortterm rating is for six months.

Bank Limited applied most of BASs and BFRSs as


adopted by the ICAB. Details are given below:
2.15 Approval of financial statements
The Board of Directors approved the financial
statements on April 22, 2015
2.16 Component of Financial Statements
As per BAS 1 Presentation of Financial Statements
and as recommended in the BRPD Circular#
14, dated 25 June 2003 issued by the Banking
Regulation and Policy Department of Bangladesh
Bank the Financial Statement includes;
a)

Balance Sheet
Position);

b)

rofit & Loss account (Statement of Profit


P
or Loss & Other Comprehensive Income);

c)

Statement of Changes in Equity;

d)

Statement of Cash Flows;

e)

Liquidity Statement; and

f)

Significant
Accounting
Explanatory Notes to
Statements.

(Statement

of

Financial

Policies
and
the Financial

2.17 Rating
Credit Rating and Information Services Limited
(CRISL) on the basis of Financial Statements as
rated Mercantile Bank Limited. The summary of
their ratings is given below:
CRISL
CRISL rated the Mercantile Bank Limited to
AA- (Pronounced as Double A Minus) in the

2.18 General
a) Wherever considered necessary, previous periods figures
have been rearranged for the purpose of comparison;
b) Figures appearing in the Financial Statements have
been rounded off to the nearest Taka;
c)

The expenses, irrespective of capital or revenue


nature, accrued/ due but not paid have been provided
for in the books of the Bank.

191

annual report 2014

3
3.1

Amount in Taka
2014
2013

Cash

Cash in hand

In local currency

In foreign currency
3.2

Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)
Bangladesh Bank
In local currency

In foreign currencies
Agent banks(s)

Sonali Bank Limited. - Local Currency

1,406,436,619

1,508,129,127

1,430,465,332

1,551,901,330

9,317,981,805

7,619,900,061

11,292,164,168

8,700,028,032

24,028,713

1,974,182,363

171,634,863

11,463,799,031

12,894,264,363
3.3

43,772,203

1,080,127,971

150,485,104

8,850,513,136

10,402,414,466

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)


Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been maintained on the basis of total time and
demand liabilities and in accordance with the Section 33 of the Bank Companies Act, 1991 and clause (1) of Article 36
of Bangladesh Bank order,1972 (as amended up to 2003), DOS Circular# 01 Dated 19 January 2014 and MPD Circular
# 01 dated 23 June 2014. The Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) calculated on the Banks
total demand and time liabilities and maintained on a fortnight average basis. CRR 6.5% maintained with the Bangladesh
Banks current account and and SLR 13% is to be maintained in the form of securities which include Treasury Bills,
Government Treasury Bonds, Bangladesh Bank Bills and Other Securities approved by the Bangladesh Bank, such as,
T&T Bonds and also balance held with Sonali Bank Limited., cash in hand and vault, balance of FC clearing account
maintained with Bangladesh Bank. Both the reserves are maintained by the Bank in excess of the statutory requirements,
as shown below:

a)

Cash Reserve Ratio (CRR): 6.5% of average demand and time liabilities:
Required Reserve

Actual reserve held with Bangladesh Bank (Note-3.2)


Surplus
b)

6,707,989,000

373,381,805

911,911,061

9,317,981,805

7,619,900,061

Statutory Liquidity Ratio (SLR): 13% of average demand and time liabilities:
Required reserve

17,889,200,000

Surplus

13,634,671,938

Actual reserve held (Note-3.5)

3.4

8,944,600,000

16,465,064,000

31,523,871,938

31,106,578,807

12,894,264,363

10,402,414,466

14,641,514,807

Maturity grouping of cash


Maturity-wise groupings (inside and outside Bangladesh)
Payable on demand

Up to 1(one) month

Over 1(one) month but not more than 3 (three) months


Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

annual report 2014

192

12,894,264,363

10,402,414,466

www.mblbd.com

Amount in Taka
2014
2013
3.5

Held for Statutory Liquidity Ratio


Cash in hand (Note-3.1)
Balance with Bangladesh Bank and its agent bank(s) (Note-3.3a)
Government securities (Note-6.2a)
Government bonds (Note-6.2b)

3(a)

Consolidated Cash
Cash in hand (Including foreign currencies)
Mercantile Bank Limited
Mercantile Bank Securities Limited
Mercantile Exchange House (UK) Limited
Balance with Bangladesh Bank and its agent bank. (Including foreign currencies)
Mercantile Bank Limited
Mercantile Bank Securities Limited
Mercantile Exchange House (UK) Limited

4.
4.1

Balance with other banks and financial institutions


In Bangladesh
Current accounts
Sonali Bank Limited.
Agrani Bank Limited.
Short-notice deposits accounts
National Bank Limited.
Trust Bank Limited.
Arab Bangladesh Bank Limited.
Janata Bank Limited.
Standard Bank Limited.
Eastern Bank Limited.
Mercantile Bank Sec. Limited.
Pubali Bank Limited.
Rupali Bank Limited.
Standard Chartered Bank
Modhumoti BanK Limited.
NRB Bank Limited.
Al Arafa Islami BanK Limited.
NRB Commercial Bank Limited
United Commercial Bank Limited.
Bangladesh Commerce Bank Limited
Brac Bank Limited
Southeast Bank Limited.
Off-shore Banking Unit
Financial institutions
Phonix Leasing
Prime Financial investment Limited./ MBL
IIDFC Finance Limited.
Sub-Total

1,430,465,332
373,381,805
2,384,342,176
27,335,682,625
31,523,871,938

1,551,901,330
911,911,061
28,642,766,416
31,106,578,807

1,430,465,332
45,567
1,430,510,899

1,551,901,330
48,066
1,551,949,396

11,463,799,031
11,463,799,031
12,894,309,930

8,850,513,136
8,850,513,136
10,402,462,532

16,119,225
98,837,538
114,956,763

37,714,172
15,677,977
53,392,149

3,639,300
12,255,208
35,400
55,673,719
1,000,000
42,770
1,805
11,771
7,386,979
951,541
556,170
2,500,000
1,067,954
366,158
100,996,225
2,395,262
221,563
189,101,825
32,802,060
336,860,648

42,136,479
1,097,885
36,577
5,673,719
1,000,000
21,571
4,943
49,835
11,770
1,386,570
2,000,000
366,388
996,225
200,197,163
221,775
255,200,900
1,602,866
310,195,915

34,323
20,000,000
20,034,323
356,894,971

100,000,000
5,056
20,000,000
120,005,056
430,200,971

193

annual report 2014

Amount in Taka
2014
2013
4.2

Outside Bangladesh (Nostro accounts)


Standard Chartered Bank, New York
Mashreq Bank, New York
HSBC, New York
Wachovia Bank, New York
Commerzbank, Frankfurt
Standard Chartered Bank ,London
The Bank of Tokyo Mitsubishi Limited., Tokyo
Arab Bangladesh Bank Limited., Mumbai
Commerzbank, Frankfurt
Standard Chartered Bank, Frankfurt
Unicredito Italiano, Milan
Hatton National Bank, Colombo
Bank of Bhutan, Phuentsholing
United Bank of India, Kolkata
Sonali Bank, Kolkata
Nepal BD Bank Limited., Kathmandu
Standard Chartered Bank, Mumbai
HSBC, Mumbai
HSBC, Karachi, Pakistan
ICICI, Mumbai
Habib Bank AG Zurich
Mashreq Bank, Mumbai
Habib American Bank
JP Morgan Chase Bank Canada
JP Morgan Chase Bank NY
Habib Metropolitan Bank
Habib Allied Bank UK
ICICI Bank Limited. Hongkong
Sonali Bank, UK($)
Sonali Bank, UK(EURO)
Sub-Total
Total

4.3

43,345
27,550,870
14,321
376,505,067
2,219,323
21,260,859
5,879,169
30,189
96,456
1,645,741
1,736,008
17,195
43
1,658,936
4,743
261
397,424
4,132
1,215
156
1,510,944
36,273
39,530,444
1,510,047
22,067
31,259
1,281,165
4,592,817
39,994
487,620,463
917,821,434

336,860,648
385,483,640
20,034,323
742,378,611

310,195,915
487,620,463
120,005,056
917,821,434

356,894,971
72,378,180
429,273,151
(60,442,534)
368,830,617

430,200,971
9,371,744
439,572,715
(5,445,585)
434,127,130

385,483,640
210,471
385,694,111
754,524,728

487,620,463
17,247
487,637,710
921,764,840

Maturity-wise groupings (inside and outside Bangladesh)


Payable on demand
Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

4(a)

52,470,916
112,456,996
227,157
30,218,809
165,273
26,200,311
7,977
7,215
8,285
95
17,790,495
268,083
5,364,016
758
43,340
28,004
515,377
1,218
1,451,956
2,007,036
49,334,410
64,137,525
8,902,664
1,949,520
2,987,044
8,864,390
74,770
385,483,640
742,378,611

Consolidated Balance with Other Banks and Financial Institutions


In Bangladesh
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter Company Transaction
Outside Bangladesh (Nostro Accounts)
Mercantile Bank Limited.
Mercantile Exchange House (UK) Limited

annual report 2014

194

www.mblbd.com

Amount in Taka
2014
2013
5.

5(a)

Money at call and short notice


Financial institutions

29,720,024,802
2,464,060,288
32,184,085,090

28,642,766,416
1,447,836,333
30,090,602,749

7,567,672,542
21,143,379,263
1,008,972,997
29,720,024,802

6,466,462,766
22,040,536,106
135,767,544
28,642,766,416

912,501,675

1,034,478,331
437,362,170
2,384,342,176

Consolidated money at call and short notice


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

6.

6.1

6.2

Investments
Government securities (Note- 6.1)
Other investments (Note- 6.5)

Investment classified as per Bangladesh Bank circular:


Held for trading (HFT)
Held to maturity (HTM)
Other securities

Investment classified as per nature:


a) Government securities:
30 days BB Bills
91 days Treasury Bills
182 days Treasury Bills
364 days Treasury Bills

b) Government bonds:
2 Years Treasury Bond
5 Years Treasury Bond
10 Years Treasury Bond
15 Years Treasury Bond
20 Years Treasury Bond
Prize Bonds

385,368,802
7,192,558,131
10,305,179,056
12,383,393,532
11,379,127,148
4,291,285,132
4,027,256,917
3,080,116,718
2,927,243,795
2,960,310
3,959,500
27,335,682,625
28,642,766,416
Total (a+b)
29,720,024,801
28,642,766,416
Other investments (Note- 6.5)
2,464,060,288
1,447,836,333
32,184,085,089
30,090,602,749
Note:- Value of securities for the year 2014 are also adjusted with the values determined by mark-to-market method.
6.3

Maturity grouping of Government bonds :


Payable on demand
Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

2,960,310
127,600,000
1,125,159,494
3,337,073,863
8,224,343,155
16,902,887,980
29,720,024,802

195

3,959,500
180,126,263
100,239,254
907,977,982
11,612,221,330
15,838,242,087
28,642,766,416

annual report 2014

Amount in Taka
2014
2013
6.4

Types of Government securities


A. Held to Maturity (HTM) securities

5 Years Treasury Bond


10 Years Treasury Bond
15 Years Treasury Bond
20 Years Treasury Bond

B. Held for Trading (HFT) securities

91 days BB Bills
182 days Treasury Bills
364 days Treasury Bills
2 Years Treasury Bond
5 Years Treasury Bond
10 Years Treasury Bond
15 Years Treasury Bond
20 Years Treasury Bond

C. Other Securities

Encumbered Treasury Bond (lien with Bangladesh Bank)


Prize Bonds
Total (A+B+C))

6.5

6,751,557,818
9,680,259,757
3,019,047,758
1,692,513,930
21,143,379,263

7,460,011,954
9,868,951,470
3,019,049,942
1,692,522,740
22,040,536,106

475,659,203
1,034,478,331
385,368,802
441,000,313
2,703,133,775
1,272,237,374
1,255,794,744
7,567,672,542

2,845,167,102
1,510,175,679
1,008,206,974
1,102,913,011
6,466,462,766

1,006,012,687
2,960,310
1,008,972,997
29,720,024,802

131,808,044
3,959,500
135,767,544
28,642,766,416

5,138,890
1,575,829
600,000,000
124
2,000,000
10,000,000
618,714,843

5,138,890
1,575,829
600,000,000
130
2,000,000
10,000,000
618,714,849

2,074,410
10,238,073
10,029,928
2,414,961
30,947,879
5,164,616
1,852,762
2,013,220
-

2,074,410
858,517
10,029,927
1,803,385
30,947,879
152,745
2,006,506
5,164,616
849,544
2,013,220
8,042,301

Other Investments
A. Investment in shares

a) Unquoted
Central Depository Bangladesh Limited.
SWIFT
Mercantile Bank Securities Limited.
Mercantile Exchange House UK Limited,
Market Stabilization Fund Asset Management Co. Limited.
ITCL

b) Quoted
Al-Arafah Islami Bank Limited
Aftab Auto mobiles
Atlas Bangladesh
Bank Asia Limited.
BEDL
Beximco Limited
Beximco Pharmaceuticals Limited
BSRM Steels Limited,
Eastern Bank Limited.
Eastland Insurance
Fu- Wang Food Limited.
GPH Ispat Limited.
Grameen Phone Limited.

annual report 2014

196

www.mblbd.com

Amount in Taka
2014
2013
IDLC Finance Limited.
IFIC Bank Limited.
Islami Bank Bangladesh Limited.
Keya Cosmetics
Khulna Power Company Limited
Lanka Bangla Finance Limited.
MBL 1st Mutual Fund
MI Cement Limited
MJL Bangladesh
National Bank Limited.
Navana CNG
NCCBL Mutual Fund
Olympic Limited.
One Bank Limited.
Prime Finance & Investment Limited.
Pubali Bank Limited.
R N Spinning Mills
RAK Ceramics Limited.
Rupali Insurance
Saiham Cotton
Salam
Social Islami Bank Limited.
Southeast Bank Limited.
Square Pharmaceuticals Limited.
Summit Power Company Limited.
The City Bank Limited
Titas Gas
Unique Hotel
United Air.
Uttara Bank Limited.
Zahen Textiles Limited.
Market price of quoted shares
Gain/(Loss) arises
Gain/(Loss) has been determined on consolidated basis
B. Bonds
FSIBL Mudaraba Subordinated Bond
N B L Subordinated Bond
The City Bank Subordinated Bond
Southeast Bank Subordinated Bond
6.6

136,887,000
1,019,348
2,518,396
23,501,702
200,000,000
16,449,020
3,609,852
5,729,116
3,488,726
2,837
1,251,988
8,517,764
12,980,620
643,166
1,457,001
1,546,662
3,868,613
12,872,395
86,999,885
3,880,736
4,706,629
993,426
1,792,193
892,521
600,345,445

136,887,000
814,533
7,246,486
565,230
2,518,396
23,501,702
200,000,000
11,991,423
3,609,852
5,729,116
3,488,726
1,500,486
2,530,169
8,517,764
1,330,400
291,700
12,980,620
543,317
3,868,613
1,520,180
15,351,537
86,999,885
3,880,736
4,706,629
489,638
2,213,519
1,792,193
308,584
609,121,484

1,391,859,481
791,514,036

1,059,324,045
450,202,561

180,000,000
32,000,000
783,000,000
250,000,000
1,245,000,000
2,464,060,288

180,000,000
40,000,000
220,000,000
1,447,836,333

(i) Disclosures regarding outstanding Repo


Counterparty name
Bangladesh Bank
Sonali Bank Limited.
Basic Bank Limited.

Total

Agreement
date

Reversal date

30-Dec-14
30-Dec-14
30-Dec-14

1-Jan-15
1-Jan-15
1-Jan-15

"Amount
(1st leg cash
consideration)
779,960,000
495,662,349
2,294,453,962
3,570,076,311

(ii) Disclosures regarding outstanding Reverse Repo as on 31 December 2014:


Counterparty name

Agreement date

Reversal date

Amount
(1st leg cash
consideration)

Maximum
outstanding

Daily average
outstanding

Nil
(iii) Disclosure regarding overall transaction of Repo and Reverse Repo
Minimum outstanding
Counterparty name
during the year
Security sold under Repo
I) with Bangladesh Bank
56,810,000
ii) with other Banks & FIs
307,934,578
Security purchased under Reverse Repo
I) From Bangladesh Bank
150,000,000
ii) From other Banks & FIs
209,713,770

2,882,495,000
8,000,017,815

418,630,406
1,221,469,089

2,800,000,000
4,402,427,121

602,173,913
237,146,211

197

annual report 2014

Amount in Taka
2014
2013
6(a)

Consolidated Investment
Investment - Government Securities
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

29,720,024,802
29,720,024,802

28,642,766,416
28,642,766,416

2,464,060,288
830,000,000
3,294,060,288
(600,000,124)
2,694,060,164
32,414,084,966

1,447,836,333
830,000,000
2,277,836,333
(600,000,130)
1,677,836,203
30,320,602,619

109,991,936,542
7,068,088,827
117,060,025,369

91,190,588,891
6,497,912,702
97,688,501,593

2,061,098,109
24,952,406,551
14,607,403,491
9,068,661,336
996,710,990
5,335,609,554
7,285,674
1,155,569,379
2,914,634,283
1,000,610,151
6,800,612,477
4,538,788,455
464,817,362
11,361,289,800
21,665,487,513
324,266,820
23,025,433
11,875,829
651,824,752
264,158,776
1,785,799,807
109,991,936,542

2,011,632,950
20,706,350,220
13,740,551,155
7,893,733,187
956,914,450
5,115,645,883
8,727,911
1,191,707,985
2,785,877,673
1,038,822,802
5,373,804,234
2,485,934,232
376,060,374
7,332,873,097
16,636,840,782
358,302,195
25,897,522
13,698,239
618,125,986
301,180,283
2,217,907,731
91,190,588,891

5,217,722,800
1,850,366,027
7,068,088,827

4,906,212,415
1,591,700,287
6,497,912,702

Gross performing loans, advances and leases/ investment (Note-7)

117,060,025,369

97,688,501,593

Non-performing loans, advances and leases/ investment (Note-7.13(x))


Provision for loans, advances and leases/ investment (Note-12.5.1)

(4,831,630,604)
(4,952,667,020)
(9,784,297,624)
107,275,727,745

(4,659,752,881)
(3,420,050,356)
(8,079,803,237)
89,608,698,356

Other Investments
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter company transaction

7.

Loans and Advances


Loans, Cash Credit and Overdraft etc. (Note A)
Bills Purchased and Discounted (Note B)
A. Loans, Cash Credit and Overdraft, etc.

Loan General
Term Loan
Time Loan
Small and Medium Enterprise(SME) Loan
Consumers Finance
Loan Against Trust Receipt (LTR)
Home Loan
Packing Credit
House Building Loan
Lease Finance
Hire Purchase
EDF Loan
Payment Against Documents (PAD)
Cash Credit (Hypo)
Overdraft
Personal Loan
Consumers Credit Schemes
Other Credit Schemes
Staff Loan
Credit Card
Agricultural Credit

B. Bills Purchased and Discounted

Payable in Bangladesh
Payable outside Bangladesh
7.1

Net loans, advances and leases/ investment

annual report 2014

198

www.mblbd.com

Amount in Taka
2014
2013
7.2

7.3

Residual maturity grouping of loans, advances and leases/ Investments


including bill purchased and discounted
Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

17,485,550,877
8,965,898,208
14,130,408,657
23,545,813,149
11,836,878,187
75,964,549,078

13,872,817,902
6,295,197,674
15,794,374,215
20,986,659,121
9,232,883,298
66,181,932,210

41,540,482
783,853,117
216,868,991
1,042,262,590
(41,652,439)
1,000,610,151

392,588,570
834,835,400
208,527,500
1,435,951,470
(397,068,668)
1,038,882,802

2,119,891,610
1,765,927,839
7,421,120,818
54,349,533
11,361,289,800

1,803,056,003
813,377,399
4,716,439,695
7,332,873,097

4,011,310,068
2,110,224,402
946,554,357
7,068,088,827

3,040,659,058
2,705,943,047
751,430,597
6,498,032,702

Residual maturity grouping of cash credit


Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

7.3.4

97,688,501,593
66,181,952,210
1,038,822,802
7,332,873,097
6,498,032,702
16,636,820,782
97,688,501,593

Residual maturity grouping of leases / investments


Lease rental receivable within 1 year
Above 1 year but within 5 years
Above 5 years
Total lease rental receivable
Unearned interest receivable

7.3.3

117,060,025,369
75,964,549,078
1,000,610,151
11,361,289,800
7,068,088,827
21,665,487,513
117,060,025,369

Residual maturity grouping of loans and advances


Up to 1(one) month
Over 1(one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

7.3.2

21,291,098,415
9,791,345,809
32,629,418,737
24,329,528,903
9,647,109,729
97,688,501,593

Loans and advances (broad categories)


In Bangladesh
Loans and advances
Leases/investments
Cash credits
Bill Purchased and discounted
Overdraft
Outside Bangladesh
Total

7.3.1

32,203,307,383
15,292,940,647
33,094,914,177
24,456,399,845
12,012,463,317
117,060,025,369

Residual maturity grouping of bill purchased and discounted


Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

199

annual report 2014

Amount in Taka
2014
2013
7.3.5

Residual maturity grouping of overdraft


Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

7.4

Significant Concentration of Credit


Advances to Directors and Others
Advances to Managing Director and Chief Executive
Advances to customers
Industry-wise
Staff loan

7.5

Geographical location-wise break-up


Urban
Dhaka
Chittagong
Rajshahi
Sylhet
Khulna
Rangpur
Barisal
Rural
Dhaka
Chittagong
Rajshahi
Rangpur
Sylhet

7.6

Sector wise break-up of Loans


Garments
Trading
Engineering (Iron & Steel, Electrical Equipment etc.)
Contractor finance
Leasing company
Housing
Food, food product, beverage, edible oil etc.
Pharmaceuticals
Tele-communication
Transport
Leather & leather products
Jute industries
Textile
Information technology
Hospital & medical services
Paper, paper production & publications
Plastic & plastic materials
Storage
Glass & glass product
Agriculture
SME Loan
Credit Card
Consumer Loan
Loans to Brokerage House
Others
Total

annual report 2014

200

8,896,550,478
2,450,102,209
10,247,973,139
70,861,687
21,665,487,513

2,905,163,036
1,852,837,101
11,878,840,645
16,636,840,782

39,631,300,617
76,776,900,000
651,824,752
117,060,025,369

37,699,375,607
59,371,000,000
618,125,986
97,688,501,593

80,654,783,112
21,663,697,942
6,808,695,365
726,287,084
879,872,511
1,698,632,142
755,866,078
113,187,834,234

64,683,903,262
19,977,610,717
5,566,751,415
644,368,115
724,981,078
1,112,453,862
813,742,271
93,523,810,720

1,335,412,862
1,662,563,360
674,898,698
162,728,837
36,587,378
3,872,191,135
117,060,025,369

2,366,962,716
1,158,150,937
444,799,887
21,676,749
173,100,584
4,164,690,873
97,688,501,593

16,599,226,931
9,508,604,643
15,585,994,698
806,786,124
2,180,835,016
5,910,441,527
7,363,596,198
1,824,450,213
461,058,085
3,054,881,038
1,138,512,110
1,637,552,519
4,158,021,714
188,755,470
2,219,593,624
2,473,347,517
1,811,061,948
630,110,621
3,538,653
1,785,799,807
9,068,661,336
264,725,776
1,480,896,923
4,878,988,250
22,024,584,628
117,060,025,369

12,437,028,002
9,007,868,757
13,140,267,927
833,424,285
1,415,300,000
5,040,613,115
9,435,641,209
1,040,742,255
516,764,977
2,367,382,760
483,439,818
1,427,930,287
4,816,324,274
407,741,692
1,908,796,281
2,307,033,485
1,089,262,516
622,691,875
4,181,711
2,217,907,731
7,913,613,057
301,180,283
1,708,559,467
4,508,533,483
12,736,272,346
97,688,501,593

www.mblbd.com

7.7

Loan and advances allowed to each customer exceeding 10% of Banks total capital
Total loans and advances
No. of customers
Classified amount thereon
Measures taken for recovery

25,698,100,000
22
nil
nil

24,808,097,000
29
nil
nil

The amount represents the sum of total loan allowed to each customer exceeding @ 10% of Capital Fund.
7.8

Details of large loans and advances


Number of clients with outstanding amount exceeding 10% of total capital of the Bank. Total capital fund of the Bank was
BDT 1,752.88 crore as at 30 September 2014.
(Figures in Lac)
Out standing
Name of Clients
Total (BDT)
Branch
Funded (BDT) Non-funded (BDT)
Azmat Group
5,695.90
6,194.30
11,890.20
Main
Hasan Flour Mill
188.55
9,230.93
9,419.48
Main
Natural Group
1,865.18
8,235.80
10,100.98
Main
Jamuna Group
20,917.21
12,997.24
33,914.45
Main
United Group
182.28
15,677.81
15,860.09
Main
Bashundhara Group
14,189.12
6,347.64
20,536.76
Main
Pioneer Group
3,743.39
6,504.39
10,247.78
Main
Creative Group
10,756.38
4,621.75
15,378.13
Main
Mercantile Bank Securities Limited.
48,789.88
48,789.88
Main
Interstoff Group
9,698.78
10,687.71
20,386.49
Dhanmondi
Abul Khair Group
17,691.61
27,110.18
44,801.79
Agrabad
T.K. Group
4,600.47
9,964.02
14,564.49
Agrabad
Sanmar Hotels
22,108.48
447.36
22,555.84
Agrabad
BSRM Group
6,087.02
11,721.75
17,808.77
Jubille Road
Starlight Group
10,665.42
37,797.42
48,462.84
Mohakhali
Nitol Motors
11,597.31
535.29
12,132.60
Mohakhali
Rising Group
7,653.50
8,977.56
16,631.06
Banani
KDS Group
6,447.79
4,682.35
11,130.14
Khatungonj
S. Alam Group
17,036.79
24,025.97
41,062.76
Khatungonj
Deshbandhu Group
12,304.82
19,648.54
31,953.36
Motijheel
Jamuna Industrial Agro.
16,502.21
103.22
16,605.43
Rajshahi
Sheema Group
8,259.09
9,232.10
17,491.19 O R Niziam Road
256,981.18
234,743.33
491,724.51

7.9

Loans & advances classified as per Bangladesh Bank circular

Amount in Taka
2014
2013

Unclassified
Sub-standard
Doubtful
Bad Loss

112,228,394,765
217,364,090
755,868,745
3,858,397,769
117,060,025,369

Details of loans and advances as follows:


Status of loans and advances
Unclassified loans and advances:
Unclassified (including staff loan)
Special Mention Account
Total unclassified loans and advances:
Classified loans and advances:
Sub-standard
Doubtful
Bad/loss
Total classified loans and advances:
Total loans and advances:

(Figure in Thousand)

Year

Mix %

2014
Outstanding
amount (BDT)

93,028,748,712
243,720,973
228,602,848
4,187,429,060
97,688,501,593

Mix %

2013
Outstanding
amount (BDT)

94.90%
0.97%
95.87%

111,094,387
1,134,008
112,228,395

94.21%
1.02%
95.23%

92,030,363
998,385
93,028,748

0.19%
0.65%
3.30%
4.13%
100%

217,364
755,869
3,858,398
4,831,631
117,060,025

0.25%
0.23%
4.29%
4.77%
100%

243,721
228,603
4,187,429
4,659,753
97,688,501

201

annual report 2014

Amount in Taka
2014
2013
7.9.1

Base for provision


SMA
Base for provision
Sub-standard
Doubtful
Bad Loss

7.10

Nature wise loans & advances


Continuous
Demand Loan
Term Loans up to 5 ( five) years
Term Loans above 5 (five) years
Term Loans above 5 (five) years - Staff Loan

7.11

Provision for loans and advances


General provision (including SMA)
Specific provision (classified loans and advances)
Sub-standard
Doubtful
Bad/ Loss
Total
Required provision for loans and advances
Total provision maintained (Note-12.5.1)
Excess/(short) provision

1,134,008,499

907,822,780

126,994,143
307,579,118
2,225,994,191
2,660,567,452

88,341,988
141,331,185
2,307,612,926
2,537,286,099

33,903,740,903
40,291,534,045
40,427,125,862
1,785,799,807
651,824,752
117,060,025,369

25,479,580,406
35,766,080,653
35,805,123,489
19,591,059
618,125,986
97,688,501,593

2,544,774,222

995,000,000

25,398,829
153,789,000
2,225,994,191
4,949,956,242
4,949,956,242
4,952,667,020
2,710,778

20,000,000
75,000,000
2,330,050,356
3,420,050,356
3,360,970,623
3,420,050,356
59,079,733

Provision for loans and advances:

(Figure in Thousand)

Status of loans and advances


Unclassified loans and advances:
Unclassified ( SMEF)
Unclassified (other credit)
Unclassified ( HF, LP & BH/MBS/SDS against share)
Unclassified (other than HF, LP & short term agri. Loan)
Agri Loan
Unclassified ( staff loan)
Special Mention Account
Total unclassified loans and advances :
Classified loans and advances :
Sub - standard
Doubtful
Bad/ loss
Total classified loans and advances :
Total loans and advances :
7.12

Outstanding
Amount (BDT)

Base for
Provision

Provision
%

Provision
Amount (BDT)

7,595,746
7,595,746
94,296,076 94,296,076
5,815,834
5,815,834
955,821
955,821
1,779,084
1,779,084
651,825
651,825
1,134,008
1,134,008
112,228,394 112,228,394

0.25%
1%
2%
5%
2.5%
0%
0.25% -5%

18,989
2,305,200
116,317
47,791
44,477
12,000
2,544,774

217,364
126,994
755,869
307,579
3,858,398
2,225,994
4,831,631
2,660,567
117,060,025 114,888,961

20%
50%
100%

25,399
153,789
2,225,994
2,405,182
4,949,956

Provision for off-balance sheet exposures


Particulars of off-balance sheet exposures
Acceptances and endorsements less margin
Letter of guarantee less margin
Letter of credit less margin
Bills for collection
Other contingent liabilities(BLW)
Required provision on off-balance sheet exposures
Total Provision maintained
Excess/(short) provision

annual report 2014

202

Base
Rate 1%
Provision
for provision
Amount (BDT) Amount (BDT)
20,279,437,342
202,794,372
7,508,920,077
75,089,201
24,344,028,198
243,440,282
6,168,104,039
61,681,040
2,498,091,318
58,300,489,656
583,004,896
583,004,896
(583,004,896)
-

www.mblbd.com

Amount in Taka
2014
2013
7.13

Particulars of loans and advances

i)

Loans considered good in respect of which the Bank Company is fully secured

ii)

Loans considered good for which the Bank holds no other Security than the debtors
personal security

iii)

Loans considered good and secured by the personal security

iv)

of one or more parties in addition to the personal security of the debtors


Loans adversely classified; provision not maintained there against

110,200,578,975

91,055,810,322

1,052,371,730

996,510,209

324,266,820
111,577,217,525

358,302,195
92,410,622,726

v)

Loans due by directors or executives of the Banking Company or any of them taken
either severally or jointly with any other person (Staff Loan)

651,824,752

618,125,986

vi)

Loans due by companies or firms in which the directors of the Bank Company are
interested as directors, partners or managing agents or in case of private companies,
as members.

vii)

Maximum total amount of advances, including temporary advances made at any


time during the year to directors or managers or officers of the Banking Company or
any of them either separately or jointly with any other person (Staff Loan)

651,824,752

618,125,986

Maximum total amount of advances, including temporary advances granted during


the year to the companies or firms in which the directors of the Banking Company
are interested as directors, partners or managing agents or in the case of private
companies, as members

ix)

Due from other banking companies

x)
a.

Total amount of classified advances on which interest is not credited to income


Movement of classified loans and advances
Opening balance 01 January 2014
Increase/(decrease) during the period

4,831,630,604

4,659,752,881

4,659,752,881
171,877,723
4,831,630,604

4,090,921,667
568,831,214
4,659,752,881

b.

Amount of provision kept against loan classified as Bad/Loss on the reporting


date of Balance Sheet

2,225,994,191

2,330,050,356

c.

Interest creditable to the Interest Suspense Account

1,588,170,608

1,198,879,031

xi)

Amount of written off loans


Opening Balance
Amount written off during the Period
Amount Recovered / Adjustment
Cumulative Balance

1,896,879,517
625,964,099
(24,752,298)
2,498,091,318

1,726,232,704
174,964,813
(4,318,000)
1,896,879,517

7.14

Listing of assets pledged as security/ collaterals


Nature of the secured assets:
Fixed assets
Cash & quasi-cash
Others

117,356,111,000
16,720,255,000
2,575,515,000
136,651,881,000

91,764,895,000
15,128,845,000
4,645,969,000
111,539,709,000

viii)

203

annual report 2014

7.15

Suits filed by the bank branch-wise details


Main Branch
Dhanmondi Branch
Motijheel Branch
Nayabazar Branch
Kawran Bazar
Rajshahi Branch
Noagaon Branch
Agrabad Branch
Sylhet Branch
Comilla Branch
Khatungonj Branch
Sapahar Branch
Jubliee Road Branch
Green Road Branch
Banani Branch
Uttara Branch
O R Nizam Road Branch
Madam Bibi Hat Branch
Mogh Bazar Branch
Faridgonj Branch
Board Bazar Branch
Khulna Branch
Rangpur Branch
Sk.Mujib Road

7(a)

Consolidated loans and advances


Loans and advances
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter company transactions
Bills purchased and discounted
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter company transaction
Total

8.

Amount in Taka
2014
2013
3,245,461,000
521,890,000
17,742,000
49,984,000
170,801,000
39,832,000
232,255,000
2,170,219,000
50,557,000
23,626,000
571,723,000
5,185,000
6,902,000
999,064,000
7,746,000
395,000
495,229,000
9,136,000
2,778,000
263,104,000
2,695,000
12,085,000
12,672,000
8,911,081,000

3,129,630,293
118,247,958
17,742,100
49,984,468
170,801,482
39,832,330
232,255,333
2,167,820,301
88,739,938
23,625,915
566,103,761
2,737,053
6,902,326
784,343
909,990,873
7,746,464
395,000
495,228,771
8,013,000
2,778,652
8,039,360,361

109,991,936,542
5,210,555,797
115,202,492,339
(5,029,483,834)
110,173,008,505

91,190,588,891
4,441,614,400
95,632,203,291
(4,547,732,962)
91,084,470,329

7,068,088,827
7,068,088,827
7,068,088,827
117,241,097,332

6,497,912,702
6,497,912,702
6,497,912,702
97,582,383,031

1,341,807,978
710,748,700
482,749,486
594,929,859
60,521,913
190,039
3,190,947,975

1,310,444,376
692,522,431
471,697,253
547,148,818
57,138,981
112,245
3,079,064,104

3,269,135
3,893,341
7,162,476
3,198,110,451

5,333,855
13,198,029
18,531,884
3,097,595,988

Fixed assets including premises, furniture and fixtures-at cost less


accumulated depreciation (Annex-A)
Freehold properties
Land & land development
Building
Furniture & fixtures
Office equipment
Vehicles
Books
Leasehold properties
Vehicles
Automated Teller Machine (ATM)
Total

annual report 2014

204

www.mblbd.com

Amount in Taka
2014
2013
8(a).

Consolidated fixed assets including premises, furniture and fixtures


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

3,198,110,451
24,898,011
6,345,005
3,229,353,467

3,097,595,988
28,535,970
11,740,372
3,137,872,330

Fixed assets of the Bank specially land & land development been revalued by a professional valuation firm M/s Jarip O
Paridarshan. Gain arisen from such revaluation is duly accounted for in the year 2011.
9

Other assets
Suspense account (Note 9.1)
Demand Draft paid without advice
Advance rent
Advance deposits
Stock of stationery
Stamps in hand
Premium on bonds
Clearing adjustment account
Adjusting account debit (Note 9.2)
Mercantile Exchange House (UK) Limited.
Mercantile Bank OBU Unit
Mercantile Bank general account
Intra company transaction (OBU)

404,398,999
2,208,051
280,543,166
6,316,303
12,324,526
3,612,967
4,817,659
791,931
893,141,731
41,539,608
931,479,182
891,517,038
3,472,691,161
(1,077,422,256)
2,395,268,905

399,865,714
220,042
291,657,035
2,731,788
15,184,952
3,521,040
4,872,620
6,884,268
954,889,290
37,309,558
156,454,163
924,161,937
2,797,752,407
(152,819,437)
2,644,932,970

194,500
7,859,646
9,514,000
66,034,679
320,796,174
404,398,999

37,000
8,219,624
1,756,844
18,076,817
371,775,429
399,865,714

739,158,666
153,983,065
893,141,731

804,838,183
150,051,107
954,889,290

31,253,610
3,351,850
4,577,946
88,124,365
637,225
26,038,069
153,983,065

2,428,425
3,732,000
3,688,146
109,452,590
1,212,597
29,537,349
150,051,107

9.1

Suspense accounts
Advance against TA/DA
Advance against mobile banking
Advance against new branches
Encashment of PSP/BSP
Others

9.2

Adjusting account debit


Accrued interest
Other accruals (Note - 9.2.1)

9.2.1

Other accruals
Other receivables
Fees receivable
Prepaid insurance premium
Discount receivable
Protested bills
Prepaid expenditure others

9.3

Mercantile Bank General Account


Mercantile Bank General Account represents outstanding inter-branch and Head Office transactions (Net) originated but
yet to be responded by the Balance Sheet date. However, the un-respondent entries of 31 December 2014 (position on
18 March 2015) are given below:
Numbers of Un-respondent
entries
Dr.

Un-respondent entries
(Amount - BDT)

Cr.

Dr.

Cr.

Up to 3 months

49,000

44,000

Over 3 months but within 6 months

100,000

Over 6 months but within 1 year

200,000

Over 1 year but within 5 years

10

349,000

44,000

205

annual report 2014

Amount in Taka
2014
2013
9(a)

Consolidated other assets


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

10.

Borrowings from other banks, financial institutions and agents


Inside Bangladesh - Interest bearing
Call Deposits
State Bank of India
Dutch Bangla Bank Limited
Rupali Bank Limited
Bank Alfala Limited
National Bank Limited
United Commercial Bank Limited
IFIC Bank Limited
Trust Bank Limited
ONE Bank Limited
Standard Bank Limited
City Bank Limited
A B Bank Limited
Uttara Bank Limited
Sonali Bank Limited
Janata Bank Limited
Pubali Bank Limited
Jamuna Bank Limited
Agrani Banl Limited
Other Borrowings
Bangladesh Bank Refinance
Other Bank Borrowings
Off-shore Banking Unit
Inter company transaction
Outside Bangladesh

10.1

Security wise grouping


Secured borrowings
Unsecured borrowings

10.2

Nature of repayment
Repayable on demand
Others

10.3

Maturity grouping of borrowings from other banks, financial institutions and agents
Up to 1 (one) month
Over 1 (one) month but not more than 3 (three) months
Over 3 (three) months but not more than 1 (one) year
Over 1 (one) year but not more than 5 (five) years
Over 5 (five) years

annual report 2014

206

2,395,268,905
152,016,145
20,082,656
2,567,367,706

2,644,932,970
77,368,773
14,990,661
2,737,292,404

1,509,025,640
2,150,000,000
1,110,764,654
4,769,790,294
(1,077,422,256)
3,692,368,038
3,692,368,038

1,076,098,119
300,000,000
155,473,798
1,531,571,917
(152,819,437)
1,378,752,480
1,378,752,480

1,509,025,640
3,260,764,654
4,769,790,294

1,076,098,119
455,473,798
1,531,571,917

3,260,764,654
1,509,025,640
4,769,790,294

455,473,798
1,076,098,119
1,531,571,917

3,260,764,654
1,509,025,640
4,769,790,294

455,473,798
1,076,098,119
1,531,571,917

www.mblbd.com

Amount in Taka
2014
2013
10(a)

Consolidated borrowings from other banks, financial institutions


Inside Bangladesh
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Outside Bangladesh
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter company transaction

11.

3,692,368,038
4,987,315,266
42,168,568
8,721,851,872

1,378,752,480
4,508,533,492
39,199,470
5,926,485,442

8,721,851,872
(5,029,483,834)
3,692,368,038

5,926,485,442
(4,547,732,962)
1,378,752,480

134,996,493,244
15,156,208,164
119,840,285,080
134,996,493,244

120,857,891,422
13,090,882,374
107,767,009,048
120,857,891,422

11,785,254,545
23,598,527,650
21,675,895,500
25,985,252,855
29,956,450,542
21,992,524,813
2,798,231
134,996,704,136

9,987,221,513
22,295,257,510
19,679,555,415
23,987,212,822
27,895,742,521
17,010,103,410
2,798,231
120,857,891,422

5,494,155,539
948,079,557
680,201,297
7,913,650
1,387,228,039
3,109,240,866
3,529,389,216
15,156,208,164

4,105,431,461
765,912,957
417,290,256
3,500,513
1,388,795,686
2,988,871,126
3,421,080,375
13,090,882,374

9,586,137,740
46,057,219,028
8,850,411,852
55,176,862,109
127,945,233
41,709,118
119,840,285,080

7,744,231,006
41,945,686,077
7,795,859,160
50,214,546,470
53,225,220
13,461,115
107,767,009,048

Deposits and other accounts


A. Deposits received from Banks (Note- A-1)
B. Other than Bank

Payable on demand (Note- B-1)


Time Deposits (Note - B-2 )
Maturity Analysis (Deposits received from other than Banks)
Repayable on demand
Repayable within 1 (one) month
Repayable over 1 (one) month but within 3 (three) months
Repayable over 3 (three) months but within 1 (one) year
Repayable over 1 (one) year but within 5 (five) years
Repayable over 5 (five) years but within 10 (ten) years
Unclaimed deposits 10 (ten) years and above

A-1 Deposits received from Banks

Maturity wise grouping


Repayable within 1 (one) month
Repayable over 1 (one) month but within 3 (three) months
Repayable over 3 (three) months but within 1 (one) year
Repayable over 1 (one) year but within 5 (five) years
Repayable over 5 (five) years but within 10 (ten) years
Unclaimed deposits 10 (ten) years and above
B-1 Payable on demand

Current deposits
Saving deposits (9%) - (Note 11.3)
Foreign currency deposits (non interest bearing )
Security deposit receipt
Bills payable (Note-11.2)
Sundry deposits (Note - 11.6)
Foreign currency held against Back to Back L/C

B- 2 Time deposits

Saving deposits (91%) - (Note-11.3)


Fixed deposits (Note-11.4)
Short Term deposits
Deposits under schemes (Note-11.5)
Non-resident taka deposit
Deposit under Q-cash

207

annual report 2014

Amount in Taka
2014
2013
11.1

Current accounts & other accounts


Deposit under Q-cash & M-Pay
Short term deposits
Non-resident taka deposits
Foreign currency deposits
Deposit under Q-cash & M-Pay
Security deposit receipt
Sundry deposit
Foreign currency held against Back to Back L/C

11.2

Bills payable
Demand Draft
Pay Order
Pay Slip
Maturity wise Grouping Bills Payable
Repayable within 1 (one) month
Repayable over 1 (one) month but within 3 (three) months
Repayable over 3 (three) months but within 1 (one) year
Repayable over 1 (one) year but within 5 (five) years
Repayable over 5 (five) years but within 10 (ten) years
Unclaimed deposits 10 (ten) years and above

11.3

11.4

Savings Bank deposits


As per BRPD Circular No. 03 of 07 July 1997, total saving bank deposits amount
is distributed into:
9% of total Savings Bank deposits (Demand deposits)
91% of total Savings Bank deposits (Time deposits)
Fixed deposits
Customer deposits (Note-11.4.1)

11.4.1 Fixed Deposits - maturity wise Grouping

Repayable within 1 (one) month


Repayable over 1 (one) month but within 3 (three) months
Repayable over 3 (three) months but within 1 (one) year
Repayable over 1 (one) year but within 5 (five) years
Repayable over 5 (five) years but within 10 (ten) years
Unclaimed deposits for 10 (ten) years and above

11.5

Deposits under schemes

Monthly Savings Scheme


Double Benefit Deposit Scheme
Family Maintenance Deposit Scheme
Super Benefit Scheme
Special Savings Scheme
Pension and Family Support Scheme
Quarterly Benefit Deposit Scheme
One & Half Time Benefit Scheme
Advance Benefit Deposit Scheme
Education Planning Deposit Scheme

annual report 2014

208

5,494,155,539
8,850,411,852
127,945,233
680,201,297
41,709,118
7,913,650
3,109,240,866
3,529,389,216
21,840,966,771

4,105,431,461
7,795,859,160
53,225,220
417,290,256
13,461,115
3,500,513
2,988,871,126
3,421,080,375
18,798,719,226

15,245,191
1,370,862,865
1,119,983
1,387,228,039

34,823,490
1,352,851,503
1,120,693
1,388,795,686

1,387,228,039
1,387,228,039

1,388,795,686
1,388,795,686

948,079,557
9,586,137,740
10,534,217,297

765,912,957
7,744,231,006
8,510,143,963

46,057,219,028
46,057,219,028

41,945,686,077
41,945,686,077

18,908,723,685
15,405,327,550
11,743,167,793
46,057,219,028

16,807,273,967
13,204,237,505
11,934,174,605
41,945,686,077

30,617,688,941
18,713,405,342
1,839,647,878
3,336,941,708
395,253,905
228,005,565
13,400,000
30,467,095
2,051,675
55,176,862,109

26,704,321,145
16,488,481,246
1,604,241,300
4,795,952,244
324,259,601
227,827,738
15,602,570
52,091,122
1,769,504
50,214,546,470

www.mblbd.com

Amount in Taka
2014
2013
11.6

Details of sundry deposit


Sundry Creditors
Withholding Tax - IT
Withholding Tax - Excise Duty
Withholding Tax - VAT
Margin on Letter of Guarantee
Margin on L/C
Margin on FDBP/IBP
Margin on Inward bill collection
Other Margin Account
Sale proceeds of PSP/BSP
Advance deposit against lease
FC held against back to back L/C
Security deposit
FC TT/DD payable
Payable to provident fund
Payable to employee welfare fund
Export bill agency commission
Export bill reserve margin
Other sundry deposit

11(a)

Consolidated deposits and other accounts

265,587,665
105,617,247
98,710,843
48,929,371
391,328,545
1,350,471,463
40,645,103
1,565,800
5,864,419
9,200,015
37,158,500
92,823,695
8,462,858
121,360
29,660
133,998,216
134,319,897
384,406,209
3,109,240,866

582,672,357
136,597,720
99,166,624
31,318,270
457,859,369
1,020,794,973
75,504,767
4,089,380
13,587,637
4,550,000
36,232,500
72,355,662
7,319,229
7,023,610
161,607
24,087
127,906,307
75,921,396
235,785,631
2,988,871,126

21,840,966,771
64,461,160
21,905,427,931
(60,442,534)
21,844,985,397

18,798,719,226
60,033,345
18,858,752,571
(5,445,585)
18,853,306,986

1,387,228,039
1,387,228,039

1,388,795,686
1,388,795,686

1,387,228,039
1,387,228,039

1,388,795,686
1,388,795,686

11.1(a) Current and other accounts

Deposits Received from Banks


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Other than Bank
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter Company Transaction

11.2(a) Bills Payable

Mercantile Bank Limited.


Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Maturity wise Grouping Bills Payable
Repayable within 1 (one) month
Repayable over 1 (one) month but within 3 (three) months
Repayable over 3 (three) months but within 1 (one) year
Repayable over 1 (one) year but within 5 (five) years
Repayable over 5 (five) years but within 10 (ten) years
Unclaimed Deposits 10 (ten) years and above

209

annual report 2014

Amount in Taka
2014
2013
11.2(b)

Subordinated Bond

11.3(a)

Savings Bank Deposits


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

11.4(a)

Fixed Deposits
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

11.4.1(a)

Fixed Deposits - Maturity wise Grouping


Repayable within 1 (one) month
Repayable over 1 (one) month but within 3 (three) months
Repayable Over 3 (three) months but within 1 (one) year
Repayable Over 1 (one) year but within 5 (five) years
Repayable Over 5 (five) years but within 10 (ten) years
Unclaimed Deposits for 10 (ten) years and above

11.5(a)

Deposits Under Schemes


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

12.

Other liabilities
Provision for Gratuity (Note-12.1)
Provision for Fixed Assets (Note-12.2)
Other Provision
Provision for Off Balance Sheet Items (Note-12.3)
Provision for Incentive Bonus
Provision for Current Tax (Note-12.4.1)
Provision for Deferred Tax (Note-12.4.2)
Provision for Loans and Advances (Note-12.5.1)
Adjusting Account Credit (Note-12.6)
Interest Suspense Account (Note-12.7)
Provision for Audit fees
Foreign Currency held against EDF L/C
Provision for Loans Loss
Offshore Banking Unit
On Line Clearing Adjustment Account
Lease Payable (Note-12.8)

12.1

Provision for Gratuity


Provision held at the beginning of year
Provision made during the period
Transferred to savings Account for Gratuity

annual report 2014

210

3,000,000,000
3,000,000,000

10,534,217,297
10,534,217,297

8,510,143,963
8,510,143,963

46,057,219,028
46,057,219,028

41,945,686,077
41,945,686,077

18,908,723,685
15,405,327,550
11,743,167,793
46,057,219,028

16,807,273,967
13,204,237,505
11,934,174,605
41,945,686,077

55,176,862,109
55,176,862,109

50,214,546,470
50,214,546,470

85,000,000
96,000
583,004,896
145,334,683
384,454,117
34,819,424
4,952,667,020
1,514,652,144
1,588,170,608
600,000
3,964,699,730
12,599,686
13,266,098,308

85,000,000
498,752,154
89,160,333
908,661,338
69,850,345
3,420,050,356
1,481,096,605
1,198,879,031
825,000
2,227,985,256
889,024
36,989
27,771,532
22,029,070
10,030,987,033

10,000,000
10,000,000
(10,000,000)
-

www.mblbd.com

Amount in Taka
2014
2013
12.2

Provision for Fixed Assets


Provision held at the beginning of the year
Provision made during the period
Other Provision

85,000,000
85,000,000
85,000,000

85,000,000
85,000,000
85,000,000

A Land is included under freehold properties- land (Note-8), located at Gulshan, Plot# 3, Block# CWN (C), Gulshan
Avenue, Gulshan, Dhaka-1212, Municipality Holding# 105, Gulshan Avenue, Gulshan. Area of land is 1 bigha 2 chattaks
purchased in the year 2005 for Banks own use as per decision of the Board of Directors in its 73rd meeting held on 23
August 2005. The land is under litigation and possession of the land is yet to be taken. In this connection a provision has
been made as per Bangladesh Banks instruction.
Provision was made for land as per instruction of Bangladesh Bank vide letter no. DBI-1(vigilance) / 5050 (15)/ 2006-400,
20 March 2006.
12.3

Provision for Off Balance Sheet Items


Provision held at the beginning of the year
Provision made during the period

12.3 (a)

Consolidated current years provision for off-balance sheet


Mercantile Bank Limited
Mercantile Bank Securities Limited
Mercantile Exchange House (UK) Limited

12.3.1 (a) Consolidated current years other provision

Mercantile Bank Limited


Mercantile Bank Securities Limited
Mercantile Exchange House (UK) Limited

12.4

Provision for Tax including Deferred Tax


Provision held at the beginning of the year
Provision made during the period
Deferred tax provision
Total provision
Tax paid during the period
Advance tax paid up to last year
Balance held at the end of the year

498,752,154
84,252,742
583,004,896

482,552,154
16,200,000
498,752,154

84,252,742
84,252,742

16,200,000
16,200,000

6,000,000
6,000,000

67,500,000
67,500,000

8,269,065,755
1,135,030,921
(35,030,921)
9,369,065,755
(1,659,238,142)
7,709,827,613

7,019,065,755
1,230,000,000
20,000,000
8,269,065,755
(1,205,386,356)
7,063,679,399

(7,290,554,072)
419,273,541

(6,085,167,716)
978,511,683

Current tax liabilities for the current and prior periods have been measured at the amount expected to be paid to (recovered
from) the taxation authorities, using the tax rates and tax law that have been enacted or substantively enacted by the
Balance Sheet date (BAS 12 Income Taxes ; Para 46).
12.4.1 Tax liabilities

Provision held at the beginning of the year


Provision made during the period
Advance tax paid

12.4.2 Deferred Tax liabilities

Provision held at the beginning of the year


Provision made during the Period

8,199,215,410
1,135,030,921
9,334,246,331
(8,949,792,214)
384,454,117

6,969,215,410
1,230,000,000
8,199,215,410
(7,290,554,072)
908,661,338

69,850,345
(35,030,921)
34,819,424

49,850,345
20,000,000
69,850,345

211

annual report 2014

Amount in Taka
2014
2013
12.4.1(a)

12.4.2(a)

12.5

Consolidated tax provision


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Consolidated deferred tax provision
Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Provision made for loans & advances including off-balance sheet items
Provision against Un Classified Loans
Provision against Classified Loans
Other Provision (Off-Balance Sheet Items) (Note-12.3)

12.5(a) Provision made for loans & advances including off-balance sheet items

Mercantile Bank Limited.


Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

12.5.1 Provision for loans and advances

Provision against Classified Loans (Specific Provision)


Provision against Unclassified Loans (General Provision)

1,135,030,921
10,089,521
1,145,120,442

1,230,000,000
6,641,207
1,236,641,207

(35,030,921)
(35,030,921)

20,000,000
20,000,000

1,552,485,000
485,326,312
84,252,742
2,122,064,054

26,000,000
984,800,000
16,200,000
1,027,000,000

2,122,064,054
2,122,064,054

1,027,000,000
1,027,000,000

2,405,182,020
2,547,485,000
4,952,667,020

2,425,050,356
995,000,000
3,420,050,356

2,425,050,356
(523,970,375)
18,775,727
485,326,312
2,405,182,020

1,495,869,678
(59,905,322)
4,286,000
984,800,000
2,425,050,356

995,000,000
1,552,485,000
2,547,485,000
4,952,667,020

969,000,000
26,000,000
995,000,000
3,420,050,356

4,952,667,020
6,000,000
4,958,667,020

3,420,050,356
67,500,000
3,487,550,356

1,389,279,562
125,372,582
1,514,652,144

1,244,355,445
236,741,160
1,481,096,605

Movement of Provision against Classified Loans and Advances (Specific Provision)


Provision held at the beginning of the year
Fully Provided Debts written off
Recoveries of amounts previously written off
Net Charge to Profit and Loss Account
Provision held at the end of the period
Provision against Unclassified Loans
Provision held at the beginning of the year
Adjustment during the period
Addition during the period
Provision at the end of the year
12.5.1(a)

Consolidated Provision for Loans and Advances


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

12.6

Adjusting Account Credit


Interest provision
Other provision

annual report 2014

212

www.mblbd.com

Amount in Taka
2014
2013
12.7

Interest Suspense Account


Opening balance
Amount transferred during the period

1,198,879,031
828,408,000
2,027,287,031
353,372,000
85,744,423
(439,116,423)
1,588,170,608

717,154,768
745,526,000
1,462,680,768
241,319,799
22,481,938
(263,801,737)
1,198,879,031

22,029,070
(9,429,384)
12,599,686
12,599,686

28,835,728
(6,806,658)
22,029,070
22,029,070

13,266,098,308
553,782,657
25,899,190
13,845,780,155

10,030,987,033
134,600,852
13,121,500
10,178,709,385

12,000,000,000

12,000,000,000

Opening balance
Issued for cash
Right shares
Issued for other than cash ( Bonus shares)
Closing balance

6,599,613,410
791,953,600
7,391,567,010

6,110,753,160
488,860,250
6,599,613,410

Issued for cash


IPO
Right shares
Bonus shares

245,000,000
319,765,000
1,438,942,300
5,387,859,710
7,391,567,010

245,000,000
319,765,000
1,438,942,300
4,595,906,110
6,599,613,410

Amount recovered and waiver during the period


Amount written off during the period
Balance at the end of the period
12.8

Obligation Under Finance Lease (Lease Payable)


Lease rental payable within 1 year
Above 1 year but within 5 years
Total lease rental payable
Finance charge payable

12(a)

Consolidated Other Liabilities


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

13.

Capital
Authorized capital
1,200,000,000 Ordinary shares of BDT 10 each

13.1

13.2

Issued, Subscribed and Fully Paid-up Capital


Total 739,156,701 Ordinary shares (79,195,360 Ordinary shares during 2013) of BDT
10 each were issued, subscribed and fully paid up as at 31 Decmbember 2014.

History of Paid-up capital


Accounting year
1999
2000
2001
2002
2003
2003
2004
2005
2006
2007
2008
2009
2010
2010
2011
2012
2013

Total

Declaration
Initial
Bonus
Bonus
Bonus
IPO
Bonus
Bonus
Bonus
Bonus
Bonus
Bonus
Bonus
Right Share
Bonus
Bonus
Bonus
Bonus

No. of shares
24,500,000
3,185,000
2,768,500
1,523,000
31,976,500
15,988,250
19,985,310
19,985,310
29,977,960
29,977,960
35,973,550
47,485,090
143,894,230
89,588,540
114,266,116
48,886,025
79,195,360
739,156,701

Value in capital (BDT)


245,000,000
31,850,000
27,685,000
15,230,000
319,765,000
159,882,500
199,853,100
199,853,100
299,779,600
299,779,600
359,735,500
474,850,900
1,438,942,300
895,885,400
1,142,661,160
488,860,250
791,953,600
7,391,567,010

Cumulative (BDT)
245,000,000
276,850,000
304,535,000
319,765,000
639,530,000
799,412,500
999,265,600
1,199,118,700
1,498,898,300
1,798,677,900
2,158,413,400
2,633,264,300
4,072,206,600
4,968,092,000
6,110,753,160
6,599,613,410
7,391,567,010
-

213

annual report 2014

13.3

Particulars of Fully Paid-up Share Capital


Sponsor
Financial Institutions
General Public

13.4

2014
No. of Shares

291,182,043
49,676,957
398,297,701
739,156,701

261,490,541
50,713,132
347,757,668
659,961,341

2014
(%)

2013
(%)

39.39%
6.72%
53.89%
100%

39.62%
7.68%
52.69%
100%

Classification of Shareholders by Holding as on 31 December 2014


No. of Share
Holders

1 to 499 Shares
500 to 5,000 Shares
5,001 to 10,000 Shares
10,001 to 20,000 Shares
20,001 to 30,000 Shares
30,001 to 40,000 Shares
40,001 to 50,000 Shares
50,001 to 100,000 Shares
100,001 to 1,000,000 Shares
1,000,001 to 99999999 Shares

13.5

2013
No. of Shares

14,263
21,187
3,327
1,792
517
248
156
298
295
93
42,176

( % ) of
Holdings

No. of Shares
2,613,743
38,051,515
23,699,325
25,465,085
12,828,847
8,674,966
7,086,384
20,760,462
85,345,554
514,630,820
739,156,701

0.35%
5.15%
3.21%
3.45%
1.74%
1.17%
0.96%
2.81%
11.55%
69.62%
100.00%

Capital Adequacy Ratio (CAR)


According to section 13 (2) of the Bank Companies Act, 1991 and BRPD circulars# 01, 14, 10, 05 and 35 dated 08 January
1996, 16 November 1996, 25 November 2002, 14 May 2007 and 29 December 2010 respectively, required capital based on
Risk Weighted Assets (RWA) of the Bank at the end of the 31 December 2014 was BDT 147,484,304,975 against available
core capital of BDT 12,427,744,331 and supplementary capital of BDT 6,676,204,330 which comes to total capital of BDT
19,103,948,661 resulting a surplus capital/ equity of BDT 4,355,518,163 at that date.
Tier I (Core Capital)
Paid up Capital
Statutory Reserve
Retained Earnings
Dividend Equalization Fund
Tier II (Supplementary Capital)
General Provision
Exchange Equalization Account
Revaluation Reserve for Fixed Assets
Revaluation Reserve for Equity Investment
Subordinated bond
Revaluation Reserve for Securities
A. Total Capital
B. Total Risk Weighted Assets
C. Required Capital based on Risk Weighted Assets (10% on B)
D. Surplus/ (Deficiency) (A - C)
Capital Adequacy Ratio (%)

Capital Requirement

% Required

2014

% Held

7,391,567,010
4,223,124,428
767,372,642
45,680,250
12,427,744,331

6,599,613,410
3,765,422,762
1,356,910,745
45,680,250
11,767,627,167

3,130,489,896
321,805,978
3,000,000,000
223,908,457
6,676,204,330
19,103,948,661
147,484,304,975
14,748,430,498
4,355,518,163
12.95%

1,493,752,154
321,805,978
45,000,000
81,499,572
1,942,057,703
13,709,684,870
119,995,100,000
11,999,510,000
1,710,174,870
11.43%

% Required

2013

% Held

Tier - I

5.0%

8.43%

5.0%

9.81%

Tier -II

5.0%

4.52%

5.0%

1.62%

Tier-III

0%

0%

0.00

10.0%

12.95%

10%

11.43%

Total

annual report 2014

214

www.mblbd.com

Amount in Taka
2014
2013
13.6

Capital Adequacy Ratio (CAR)


There remains a surplus of BDT 4,355,518,163 on capital and reserve fund of the Bank as per requirement of section 13A of
Bank Companies Act, 1991 and BRPD circular# 09, dated 31 December 2008 respectively details of which are placed below :
(a) Required Capital (10% of Risk weighted Assets)
(b) Actual Capital:
i) Core Capital (Total Shareholders Equity)
ii) Supplementary
General provision
Exchange Equalization Account
Revaluation Reserve for Fixed Assets
Revaluation Reserve for equity Investment
Subordinated bond
Revaluation Reserve for securities
Surplus/ (Deficiency) (b-a)

14.

Statutory Reserve
Opening balance
Transferred during the year from Profit & Loss Account
Closing balance

14,748,430,498
19,103,948,661
12,427,744,331
6,676,204,330
3,130,489,896
321,805,978
3,000,000,000
223,908,457
4,355,518,163

11,999,510,000
13,709,684,870
11,767,627,167
1,942,057,703
1,493,752,154
321,805,978
45,000,000
81,499,572
1,710,174,870

3,765,422,762
457,701,667
4,223,124,428

3,119,683,762
645,739,000
3,765,422,762

4,223,124,428
4,223,124,428

3,765,422,762
3,765,422,762

45,680,250
45,680,250

45,680,250
45,680,250

59,634,176
(9,926,314)
49,707,862

47,373,708
12,260,468
59,634,176

398,109,051
643,611,955
1,041,721,006

103,364,967
643,611,955
746,976,922

1,137,109,118

852,291,348

This has been made according to Sec. 24 of Bank Companies Act, 1991 and shall
be maintained until it equals to Paid-up Capital.
14(a)

Consolidated Statutory Reserve


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

15.

Other reserves
A. Dividend Equalization Fund

Opening balance
Addition during the period
Closing balance

B. Adjustment for Approved Securities HTM

The above amount represents the adjustment made of approved securities


held for adjusting against Treasury Bond held for Statutory Liquidity Reserve
Requirements (SLR).
Opening balance
Last years adjustment
Adjustment during the period
Closing balance
C. Reserve from revaluation

HFT securities
Revaluation Reserve for Fixed Assets

Total other reserves (A+B+C)

215

annual report 2014

Amount in Taka
2014
2013
15(a)

Consolidated other reserves


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

16.

Retained earnings/ movement of profit and loss account


Opening balance
Transfer income of OBU
Cash dividend
Bonus share issued
Retained earnings
Profit before income tax
Statutory reserve
Provision for income tax
Provision for deferred tax
Closing balance

16.1

Consolidated retained earnings last year


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

16(a)

Consolidated Surplus in Profit and Loss Account


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

16(b)

Non Controlling Interest


Non controlling share capital
Share of profit

16.A(1)

Cash and cash equivalent


Cash
Balance with other Banks and Financial Institutions

16.A(2)

Consolidated cash and cash equivalent


Cash
Balance with other Banks and Financial Institutions

17

Contingent liabilities

17.1

Acceptance and endorsements


Back to Back Bills
Back to Back Bills (EDF)
Bankers Liabilities PAD (DEF)

annual report 2014

216

1,137,109,118
1,137,109,118

852,291,348
852,291,348

1,356,910,745
(422,096)
(527,969,073)
(791,953,600)
36,565,976
2,288,508,333
2,325,074,309
457,701,667
1,867,382,642
1,135,030,921
732,341,721
(35,030,921)
767,372,642

940,567,718
(427,752,721)
(488,860,250)
23,954,747
3,228,694,998
3,252,649,745
645,739,000
2,606,910,745
1,230,000,000
1,376,910,745
20,000,000
1,356,910,745

36,565,976
33,880,264
(24,273,220)
46,173,020

23,954,747
23,115,519
(14,071,826)
32,998,440

767,372,642
31,693,493
(41,429,750)
757,636,385

1,356,910,745
31,173,474
(25,572,820)
1,362,511,399

50,000,000
2,641,124
52,641,124

50,000,000
2,597,790
52,597,790

12,894,264,363
742,378,611
13,636,642,974

10,402,414,466
917,821,434
11,320,235,900

12,894,309,930
754,524,728
13,648,834,658

10,402,462,532
921,764,840
11,324,227,372

9,164,352,468
54,528,947
11,060,555,927
20,279,437,342

10,707,590,464
1,359,787,000
9,451,960,746
21,519,338,210

www.mblbd.com

Amount in Taka
2014
2013
17.2

Letter of guarantees
Money for which the Bank is contingently liable in respect of guarantees are given favoring:
Directors
Government
Bank and other Financial Institutions
Others ( Note-17.2.1)

4,218,756,590
1,745,503,500
1,544,659,987
7,508,920,077

4,999,002,439
591,469,730
1,606,138,517
7,196,610,686

1,544,659,987
1,544,659,987

1,546,573,517
59,565,000
1,606,138,517

234,505,835
17,631,053,143
6,478,469,220
24,344,028,198

83,857,047
14,123,690,259
6,740,128,648
20,947,675,954

5,449,315
5,376,894,535
785,760,189
6,168,104,039

8,988,891
198,507,000
207,495,891

2,498,091,318
2,498,091,318

1,882,488,279
1,882,488,279

Interest, discount and similar income


Dividend income
Fees, commission and brokerage
Gain less losses arising from dealing securities
Gain less losses arising from investment securities
Gain less losses arising from dealing in foreign currencies
Income from non-banking assets
Other operating income
Sub Total

16,759,204,087
16,343,389
779,145,084
262,550,529
5,979,090
773,428,064
1,291,988
783,467,680
19,381,409,911

8,183,762,538
4,282,796
408,873,685
170,184,568
1,201,336
156,262,837
947,561
324,965,145
9,250,480,466

Expenses:
Interest, fees and commission
Administrative expenses
Other operating expenses
Depreciation on banking assets
Sub Total
Operating profit before provision

11,385,387,903
1,801,966,583
1,562,079,559
221,403,479
14,970,837,524
4,410,572,387

5,964,868,416
604,411,111
770,455,811
81,662,668
7,421,398,006
1,829,082,460

114,949,779
27,867,270
13,841,679,168
13,984,496,217

26,202,064
6,689,254
13,312,009,509
13,344,900,827

17.2.1 Letter of guarantees others

Local
Foreign

17.3

Letter of credit
Inland
General
Back to Back L/C

17.4

Bills for collection


Outward Bills for Collection
Outward Foreign Bills for Collection
Outward Foreign Bills Lodge

17.5

Other contingent liabilities


Bankers Liabilities (BLW)

18

Income Statement
Income:

19

Interest income
Interest from Banks & other Financial Institutions (Note-19.1)
Interest from F.C. Clearing Account
Interest from Loans and Advances (Note-19.2)

217

annual report 2014

Amount in Taka
2014
2013
19.1

Interest received from Banks & other Financial Institutions


Interest from money at call and short notice
Interest from other Banks
Interest from Reverse REPO/SWAP
Interest from Q-cash Settlement Deposits

19.2

Interest from loans and advances


Loan General
Term Loan
Time Loan
Loan Against Trust Receipt
Packing Credit
Lease Finance
Hire Purchase
Payment Against Documents
Cash Credit (Hypo)
Overdraft
Consumers Credit
House Building Loan
Staff Loan
EDF Loan
Bill Purchase and Discounted
SME
Other Credit Schemes
Personal Loan

19(a)

Consolidated interest income


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter Company Transaction

20

Investment income
Interest on Investments (Note-A)
Income on Investment in Shares (Note-B)

A Interest on Investments

Interest on Treasury Bills


Interest on Treasury Bonds
Interest on Bangladesh Bank Bill
Interest on Zero Coupon Bond

B Income on Investment in Shares

Gain on sale of shares


Gain on sale of DSC Shares
Gain on sale of CSC Shares
Dividend on shares

annual report 2014

218

73,077,264
25,224,022
16,648,493
114,949,779

2,673,596
23,413,400
115,068
26,202,064

199,505,339
3,137,985,927
1,567,053,444
761,946,220
102,975,179
178,280,781
852,976,456
50,913,926
1,443,740,192
2,487,905,965
161,685,497
438,988,652
31,221,049
11,019,185
762,573,889
1,610,262,498
669,288
41,975,681
13,841,679,168

168,834,251
2,395,564,143
1,696,932,629
1,469,906,667
91,892,372
162,137,068
777,601,618
85,226,412
1,186,415,544
2,522,198,505
162,785,996
437,385,143
31,161,826
12,441,285
971,748,464
1,086,102,007
831,051
52,844,528
13,312,009,509

13,984,496,217
426,656,683
14,411,152,900
(451,359,770)
13,959,793,130

13,344,900,827
684,937,050
14,029,837,877
(614,097,904)
13,415,739,973

2,773,712,447
22,322,479
2,796,034,926

3,245,467,353
21,474,046
3,266,941,399

84,510,235
2,585,717,257
51,408,780
52,076,175
2,773,712,447

589,880,666
2,602,874,865
16,352,830
36,358,992
3,245,467,353

5,979,090
16,343,389
22,322,479

12,931,780
8,542,266
21,474,046

www.mblbd.com

Amount in Taka
2014
2013
20(a)

Consolidated Investment Income


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

21

Interest paid on deposits & borrowings etc.


Interest on Deposits
Interest on Refinance BB
Interest on Secondary Treasury Bill Purchased
Interest on Subordinated Bonds
Interest on Borrowings
Interest on Overseas Accounts

21(a)

Consolidated interest expenses


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited
Inter Company Transaction

22

Commission, exchange & brokerage


Commission
Exchange (Note-22.1)
Commission income arises on services provided by the Bank and recognized on
a cash receipt basis. Commission charged to customers on letter of credits and
letter of guarantees are credited to income at the time of effecting the transactions.

22.1

Exchange
Gains arising from dealing securities
Losses on dealing securities
Gains arising from investment securities
Losses on investing in securities
Gains arising from foreign trade business (including dealings)
Losses on foreign trading

22(a)

Consolidated Commission, Exchange & Brokerage


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

23

Other Operating Income


Charges on L/C
Services & other Charges
Income from rent of locker
Telephone, telex and e-mail charges
On Line client fees
ATM card
VISA card
Co-brand services
BLW recovered
Discount
Gain on sale and revaluation of securities
Gain on sale on assets
Miscellaneous earnings (Note-23.1)

2,796,034,926
2,796,034,926

3,266,941,399
3,266,941,399

11,143,544,180
45,217,281
1,626,442
195,000,000
11,385,387,903

11,745,378,005
50,385,772
11,795,763,777

11,385,387,903
451,359,770
11,836,747,673
(451,359,770)
11,385,387,903

11,795,763,777
614,097,904
12,409,861,681
(614,097,904)
11,795,763,777

779,145,084
773,428,064
1,552,573,148

783,482,243
674,411,514
1,457,893,757

773,595,388
(167,324)
773,428,064

704,339,781
(29,928,267)
674,411,514

1,552,573,148
77,083,009
9,614,434
1,639,270,591

1,457,893,757
52,114,626
28,367,480
1,538,375,863

81,295,651
94,883,716
5,239,169
5,449,944
52,199,175
33,615,158
74,292,021
5,003,207
995,423
262,550,529
1,291,988
431,489,639
1,048,305,620

75,941,828
56,566,775
4,437,484
5,810,360
24,352,320
36,982,893
68,742,942
7,002,251
15,000
7,121,299
285,793,465
3,415,674
444,799,208
1,020,981,499

219

annual report 2014

Amount in Taka
2014
2013
23.1

Miscellaneous earnings
Postage charge recovery
SWIFT charge recovery
Incidental charges
Foreign correspondence charges
Others

23(a)

Consolidated Other Operating Income


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

24

Salaries and Allowances


Basic salary
Bonus (Festival and incentive)
Banks contribution to employees provident fund
House rent allowances
Conveyance allowance
Medical allowance
Dearness allowance
Overtime allowance
Other allowances

24(a)

Consolidated Salaries and Allowances


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

25

Chief Executives Salary and Allowances


Salary
Other allowances

25(a)

Consolidated Chief Executives Salary and Allowances


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

26

Directors Fees
Director fees
VAT on director fees

26(a)

Consolidated Directors Fees


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

27

Rent, Taxes, Insurance, Lightings etc


Office rent
Rates, taxes & excise duty and VAT on rent
Insurance
Lighting, gas & water

annual report 2014

220

11,327,519
82,522,391
66,825,545
68,442,904
202,371,280
431,489,639

14,906,785
60,700,111
91,162,081
71,702,677
206,327,554
444,799,208

1,048,305,620
15,842,692
3,252,684
1,067,400,996

1,020,981,499
19,095,397
3,185,349
1,043,262,245

728,902,853
405,467,800
66,762,464
259,064,390
39,982,050
149,414,635
137,363,636
374,550
200,100
1,787,532,478

664,594,776
177,336,920
59,747,409
220,989,406
35,729,864
134,686,805
134,572,567
409,200
227,300
1,428,294,247

1,787,532,478
20,242,596
7,929,923
1,815,704,997

1,428,294,247
28,899,619
11,929,575
1,469,123,441

6,588,710
5,100,000
11,688,710

5,903,226
3,951,613
9,854,839

11,688,710
1,495,237
13,183,947

9,854,839
1,495,237
11,350,076

2,389,895
355,500
2,745,395

2,455,000
338,250
2,793,250

2,745,395
490,000
3,235,395

2,793,250
730,000
3,523,250

263,440,255
25,518,984
112,199,226
78,168,779
479,327,244

233,905,036
20,235,067
105,292,164
71,323,394
430,755,661

www.mblbd.com

Amount in Taka
2014
2013
27(a)

Consolidated Rent, Taxes, Insurance, Lightings etc


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

28

Legal Expenses
Legal fees & charges
Stamps & notary public expenses registration fees

28(a)

Consolidated Legal Expenses


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

29

Stationary, Printing and Advertisements


Printing & stationery
Advertisement
Computer expenses

29(a)

Consolidated Stationary, Printing and Advertisements


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

30

Depreciation and Repair of Fixed Assets


Depreciation on fixed assets (Note-30.1)
Repairs & Maintenance

30.1

Depreciation on fixed assets (Annexure - A)


Free hold property
Lease hold property

30(a)

Consolidated Depreciation and Repair of Fixed Assets


Mercantile Bank Limited.
Mercantile Bank Securities Limited.
Mercantile Exchange House (UK) Limited

31

Other Expenses
Bank charges
Other charges
Donation
Car expenses
Discount & commission paid
Training expenses
Securities & cleaning
Subscription
Entertainment expenses
Travelling expenses
Conveyance
Business development
Liveries & uniforms
Medical expenses
Newspapers and magazines
Cook servant
Professional service fees
Interest expenses lease
Q-cash/ATM cards/VISA cards
House furnishing
Leave encashment & LFA
Gratuity
Credit rating fees
Loss on sale of assets
Loss on sale of securities
Loss on market adjustment (Securities)
Mobile banking
Miscellaneous expenses (Note-31.1)

479,327,244
7,398,044
7,151,417
493,876,705

430,755,661
5,238,809
8,567,697
444,562,167

6,313,587
6,402,786
12,716,373

7,383,299
5,159,655
12,542,954

12,716,373
34,500
96,740
12,847,613

12,542,954
243,668
550,491
13,337,113

61,772,051
108,543,224
34,080,554
204,395,829

50,385,476
76,585,251
21,925,435
148,896,162

204,395,829
285,265
127,126
204,808,220

148,896,162
347,383
184,237
149,427,782

221,403,479
46,516,410
267,919,889

192,046,415
40,250,215
232,296,630

210,034,071
11,369,408
221,403,479

173,348,936
18,697,479
192,046,415

267,919,889
4,706,998
396,756
273,023,643

232,296,630
5,831,166
569,830
238,697,626

7,193,332
25,975,267
47,943,215
113,900,521
981,497
12,662,300
215,966,145
3,543,073
34,723,260
21,869,478
7,651,485
14,284,740
3,294,176
1,676,270
1,563,240
602,000
430,278
3,649,086
39,014,918
7,629,015
121,594,074
230,000
4,084,159
10,320,700
21,426,285
16,407,179
27,516,116
766,131,809

3,296,816
8,518,690
94,441,613
96,775,631
1,543,145
11,241,209
187,133,160
3,666,207
32,342,527
21,379,639
7,504,556
32,896,610
814,315
259,144
1,310,799
521,923
147,500
2,581,792
48,046,102
6,562,207
108,362,120
10,000,000
172,500
15,901,537
24,163,105
719,582,847

221

annual report 2014

Amount in Taka
2014
2013
31.1

Miscellaneous expenses
Laundry & cleaning

2,827,598

2,595,993

Cash caring charge

8,886,034

7,042,984

Photocopy

716,176

Nursery

1,159,040

Cash incentive

520,167

Sundry expenses

31(a)

Mercantile Bank Limited.

Mercantile Bank Securities Limited.

Mercantile Exchange House (UK) Limited

32

Earnings per Share (EPS)


Net profit after tax

Number of Ordinary Shares outstanding in the year


Weighted average no. of share outstanding
Earnings per Share (EPS)
32(a)

Consolidated Earnings per Share (EPS)


Consolidated net profit after tax

Weighted average no. of share outstanding


Consolidated Earnings per Share (EPS)

1,260,495

13,407,101

12,740,928

766,131,809

719,582,847

27,516,116

Consolidated Other Expenses

522,705

14,951,754
13,686,925

24,163,105

12,039,183
20,299,839

794,770,488

751,921,869

1,188,508,333

1,978,694,998

739,156,701

739,156,701

739,156,701
1.61

659,961,341
2.68

1,171,806,155

1,977,849,749

1.59

2.68

739,156,701

739,156,701

Note: EPS has been calculated in accordance with BAS 33 Earnings per Share. Previous years figures have been
restated for the issue of 79,195,360 bonus share during the year.
33

Number of Employees
The number of employees engaged for the entire period who received a total remuneration of BDT 36,000 or above were 1826.
Break - up of No. of employees as per salary range wise
Range of Salary

No. of Employees

Tk. 0.00 to Tk. 20,000

27

Tk 20,001 to Tk. 50,000

1,012

Tk. 50,001 to Tk. 1,00,000

704

Tk. 100,001 to Tk.


2,00,000

200

Tk. 2,00,001 and above

15

Total

1,958

34

Related Party Disclosure (BAS-24)

34.1

Name of Directors and their interest in the Bank and different entities-shown in Annexure - B.

annual report 2014

222

www.mblbd.com

34.2

Significant contracts where Bank is a party and herein Directors have interest:

Nature of contract

Name of Director and related by

Remarks

The lease agreement was approved


by the Bangladesh Bank vide its letter
no.BRPD (P-3)745(44)/2006-3776
dated 22.11.2006
The lease agreement was approved
Lease agreement with Arena Industries Mr. M. Amanullah
by the Bangladesh Bank vide its letter
Ltd. where Mrs. Tazneen Aman,
Director of the Bank, Husband of Mrs.
no.BRPD(P- 3)745(44)/2006-3776
Director of the said Company.
Tazneen Aman
dated 22.11.2006
The lease agreement was approved
Lease agreement with Mr. Md.
Mr. Md. Shahabuddin Alam
by the Bangladesh Bank vide its letter
Shahabuddin Alam
Director of the Bank
no.BRPD(P-3)745(44)/2009-2706
Director of the Bank
dated 29.07.2009
The lease agreement was approved
Lease agreement with
Ms. Israt Jahan Wife of
by the Bangladesh Bank vide its letter
Mr. Md. Abdul Hannan
Mr. Md. Abdul Hannan
no.BRPD(P-3)745(44)/2009-4159
Director of the Bank
Director of the Bank
dated 10.11.2009
The lease agreement was approved
Lease agreement with
Mr. M. S. Ahsan
by the Bangladesh Bank vide its letter
Mr. M. S. Ahsan
Vice Chairman of the Bank
no.BRPD(P-3)745(44)/2010-313 dated
Vice Chairman of the Bank
31.01.2010
The lease agreement was approved
Lease agreement with Mr. Md. Baharul Mr. M. S. Ahsan
by the Bangladesh Bank vide its letter
Ahsan, Brother of M. S. Ahsan, Vice
Vice Chairman of the Bank
no.BRPD(P-3)745(44)/2010-1814
Chairman of the Bank
Brother of Md. Baharul Ahsan
dated 06.05.2010
The lease agreement was approved
Lease agreement with Mr. Mohd.
Mr. Mohd. Selim
by the Bangladesh Bank vide its letter
Selim, Director of the Bank
Director of the Bank
no.BRPD(P-3)745(44)/2011--3260
dated 25.08.2011
The lease agreement was approved
Lease agreement with
Mr. Alhaj Akram Hossain (Humayun)
by the Bangladesh Bank vide its letter
Mr. Alhaj Akram Hossain (Humayun)
Director of the Bank
no.BRPD(P-3)745(44)/2011--3455
Director of the Bank
dated 25.09.2011
The lease agreement was apporved
Lease agreement with
Ms. Israt Jahan Wife of
by the Bangladesh Bank vide letter no
Mr. Md. Abdul Hannan
Mr. Md. Abdul Hannan
BRPD (P-3)745 (44)/2011-4574 dated
Director of the Bank
Director of the Bank
01.12.2011
The lease agreement was approved
Lease Agreement with
Mr. M.S.Ahsan
by the Bangladesh Bank vide its letter
Mr. M.S.Ahsan
Vice Chairman of the Bank
no.BRPD(P-3)745(44)/2010-3888
Vice Chairman of the Bank
dated 20.10.2011
The lease agreement was apporved
Lease agreement with
Mr. Md. Abdul Hannan
by the Bangladesh Bank vide letter no
Mr. Md. Abdul Hannan
Director of the Bank
BRPD (P-3)745 (44)/2011-4574 dated
Director of the Bank
01.12.2011
The lease agreement was approved
Lease Agreement with
Mr. M. Amanullah
by the Bangladesh Bank vide its letter
Mr. M. Amanullah
Director of the Bank
no.BRPD(P-3)745(44)/2012-3497
Director of the Bank
dated 27.08.2012
The lease agreement was approved
Lease agreement with
Mr. Md. Shahabuddin Alam
by the Bangladesh Bank vide its letter
Mr. Md. Shahabuddin Alam
Director of the Bank
no.BRPD(P-3)745(44)/2013-1121
Director of the Bank
dated 24.10.2013
The Lease agreement was approved
Lease Agreement with
Mr. Md. Abdul Hannan
by the Bangladesh Bank vide letter
Mr. Md.Abdul Hannan
Director of the Bank
no.BRPD(P-3)745(44)/2014-5723
Director of the Bank
dated 03.09.2014
The lease agreement was approved
Lease Agreement with
Mr. A.S.M. Feroz Alam
by the Bangladesh Bank vide letter
Mr. A.S.M. Feroz Alam
Vice Chairman of the Bank
no.BRPD(P-3)745(44)/2014-7245
Vice Chairman of the Bank
dated 10.12.2014

Lease agreement with Mr. M. S. Ahsan, Mr.M. S. Ahsan


Vice Chairman of the Bank
Vice Chairman of the Bank

34.3

Shares issued to Directors & Executives without consideration or exercisable at discount: Nil

223

annual report 2014

34.4

Related Party Transaction:


Transaction with related Party
Mercantile Bank Securities Limited.

Nature of transaction
Loan (SOD)

Amount in taka
5,210,555,797

34.5

Lending Policies to related Parties :


Lending to related parties is effected as requirements of Section 27 (1) of Bank Companies Act 1991

34.6

Loan and Advances to Directors and their related concern : Nil

34.7

Business other than Banking business with any related concern of the Directors as per Section 18 (2) of Bank
Companies Act 1991 : Nil

34.8

Investments in the Securities of Directors and their related concern : Nil

35

Reconciliation of Inter-Bank/Books of Accounts


Books of Accounts with regards to inter-bank (in Bangladesh and outside Bangladesh) are reconciled and there are no
material differences, which may affect the financial statements significantly.

36

LAND UNDER LITIGATION


A Land is included under free hold properties - land (Note-8), located at Gulshan, Plot # 3, Block # CWN (C), Gulshan
Avenue, Gulshan, Dhaka-1212, Municipality Holding # 105, Gulshan Avenue, Gulshan. Area of land is 1 bigha 2 chattaks
purchased in the year 2005 for Banks own use as per decision of the Board of Directors in its 73rd meeting held on August
23, 2005. The land is under litigation and possession of the land is yet to be taken. In this connection a provision has been
made as per Bangladesh Banks instruction (Note-12.2).

37

STATEMENT OF LIQUIDITY
The Liquidity Statement has been prepared in accordance with the remaining maturity grouping of the value of the assets
and liabilities as on December 31, 2014 and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated June
25, 2003.

38

RESTATEMENTS
Wherever considered necessary, Previous years figures have been rearranged for the purpose of comparison with
current periods presentation without any impact on the profit and value of assets and liabilities as reported in the Financial
Statements.

39

Events after the reporting period


As per BAS 10 Events after the Reporting Period are those events favorable and unfavorable, that occurs between the
end of the reporting period and the date when financial statements are authorized for issue. Two types of events can be
identified:
Those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after balance
sheet date); and
Those are indicative of conditions that arose after the reporting period (Non-adjusting events after balance sheet date).
(a) The Board of Directors of the company in its meeting held on 22 April, 2015 approved the financial statements of the
company for the year ended 31 December 2014 and authorized the same for the issue. The Broad of Directors also
recommended 10% cash dividend for public shareholders only for the year ended 31 December 2014 subject to
approval in the next Annual General Meeting.
(b) There is no other significant event that has occurred between the Balance sheet date and the date when the financial
statements were authorized for issue by the Board of Directors.

Managing Director and CEO

Dated: Dhaka
April 22, 2015
annual report 2014

224

Director

Director

Chairman

225

3,488,027,593

Balance as at 31 Dec 13

59,143,310

3,860,083,214

Total

Grand Total

Books

10,323,595

Office Equipment

Vehicles

48,819,715

01 January
2014

Balance
as on

Furniture & Fixtures

ATM

Particulars

Leasehold Property

3,800,939,904

Total

115,776,783

Vehicles

568,966

901,318,992

Office Equipment

Books

720,991,492

Furniture & Fixtures

1,310,444,376

751,839,295

Land

01 January
2014

Balance
as on

Building

Particulars

Freehold Property

394,912,026

326,384,873

Additions
during
the Period

Cost

326,384,873

111,348

17,706,395

174,961,027

66,477,952

35,764,549

31,363,602

Additions/
Revaluation
during
the Period

Cost

22,856,405

18,480,474

Sales
during
the Period

18,480,474

5,583,733

4,716,682

8,180,059

Sales
during
the Period

3,860,083,214

4,167,987,613

59,143,310

10,323,595

48,819,715

31 December
2014

Balance
as at

4,108,844,303

680,314

127,899,445

1,071,563,337

779,289,385

787,603,844

1,341,807,978

31 December
2014

Balance
as at

589,431,553

762,487,226

40,611,426

4,989,740

35,621,686

01 January
2014

Balance
as on

Depreciation

721,875,800

456,721

58,637,802

354,170,174

249,294,239

59,316,864

01 January
2014

Balance
as on

192,046,415

221,403,479

11,369,408

2,064,720

9,304,688

Charge
for
the Period

210,034,071

33,554

14,273,461

126,903,012

51,285,764

17,538,280

Charge
for
the Period

Depreciation

18,990,742

14,013,543

Adjustment
on
during
the Period

14,013,543

5,533,731

4,439,708

4,040,104

Adjustment
on
during
the Period

Fixed Assets schedule as at 31 December 2014

Mercantile Bank Limited

762,487,226

969,877,162

51,980,834

7,054,460

44,926,374

31 December
2014

Balance
as at

917,896,328

490,275

67,377,532

476,633,478

296,539,899

76,855,144

31 December
2014

Balance
as at

3,097,595,988

3,198,110,451

7,162,476

3,269,135

3,893,341

31 December
2014

Written down
value at

3,190,947,975

190,039

60,521,913

594,929,859

482,749,486

710,748,700

1,341,807,978

31 December
2014

Written down
value at

Amount in Taka

Annexure-A

www.mblbd.com

annual report 2014

annual report 2014

226

2
MR. MORSHED ALAM, MP
House No. 12/A, Road No. 63,
Gulshan-2, Dhaka-1213.

MR. A. S. M. FEROZ ALAM


ANKUR,
House No.163,
Road No.03,Block No. A,
Abu Sayem Road, Bashundhara R/A,
Dhaka-1229

02.

Name and address

1
01.

SL
No.

Vice
Chairman

3
Chairman

Designation

26,821,233

18,408,471

2014
4

27,983,244

18,403,932

2013

No. of Shares held in Bank

Bengal Poly and Paper Sack Ltd.

4.

Romania Food and Beverage Ltd.

Bengal Plastic Pipes Ltd.

Bengal Polymer Wares Ltd.

Poly Cord Ltd.

Bengal Adhesive & Chemical Products Ltd.

Chairman

3. Bengal Trading Ltd. (Tokyo)

2. RTV (National Television Limited)

16. Designer Jeans Ltd.


1. Premier Leasing & Finance Ltd.

15. Bengal Feed & Fisheries Ltd.

Managing Director

Director

Chairman
Sponsor Shareholder

Chairman

Chairman

14. Hamilton Metal Corporation Ltd.

13. Bengal Overseas Corporation Ltd.

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

6
Chairman

Position (as
proprietor, partner,
director, managing
agent, guarantor,
employee etc.)

12. Bengal Corrugated Carton Industries Ltd.

11. Bengal Concept and Holding.

10. Power Utility Bangladesh Ltd.

9.

8.

7.

6.

5.

Bengal Plastics Limited.

National Television Limited

2.
3.

5
Bengal Windsor Thermoplastics Limited.

1.

Name of Firms/ Companies in which


interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.

100.00%

30.95%
6.09%

39.97%

42.00%

33.33%

36.36%

23.00 %

35.00%

30.00%

20.00%

26.00%

30.00%

27.27%

08.19%

37.50%

18.00%

7
11.17%

Nature and
Value of
interest in
the firm/
companies
in which
interested.

NAME OF DIRECTORS AND THEIR INTEREST IN THE BANK AND DIFFERENT ENTITIES

Annexure-B

04.

1
03.

SL
No.

2/C, Purana Paltan, Dhaka.

ALHAJ AKRAM HOSSAIN


(HUMAYUN)

MR. M. S. AHSAN
Road No-24
House No-16
Gulshan-01
Dhaka

Name and address

Chairman,
EC

3
Vice
Chairman

Designation

16,042,750

18,475,226

2014
4

14,323,884

16,495,738

2013

No. of Shares held in Bank

Sponsor Director

227

7. Indigo Packaging & Accessories

6. Akram Center

5. Akram Tower

4. Shawon Tower

3. Fars Hotels & Resorts Ltd.

2. Fars Holding & Associates Ltd.

14. Mercantile Bank Securities Ltd.


1. Akram Traders

Managing Partner

Proprietor

Proprietor

Proprietor

Managing Director

Managing Director

Sponsor Director
Proprietor

50.00%

100%

20.00%

100%

25.00%

25.00%

100%

100%

100%

13. National Credit Ratings Ltd.

Proprietor

Proprietor

100%

Raima Fashion

AG Ship Breaking Industries.

12. R.N.S Corporation.

11.

10.

9.

Proprietor

40.00%

70.00%

70.00%

50.00%

45.00%

M/S Friends Traders

Chairman

Chairman

Chairman

Chairman

100%

AG Fashions & Textile Ltd.

AG Green Property Development Ltd.

AG Ceramic Industries Ltd.

AG Limited.

70.00%
Chairman

Chairman

60.00%

7
70.00%

6
Chairman
Chairman

Position (as
proprietor, partner,
director, managing
agent, guarantor,
employee etc.)

Proprietor

8.

7.

6.

5.

AG Hi-Teck Ltd.

Regent Holdings Development Ltd.

4.

3.

AG Property Development Ltd.

5
AG Agro Industries Ltd.

1.
2.

Name of Firms/ Companies in which


interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.

Nature and
Value of
interest in
the firm/
companies
in which
interested.

NAME OF DIRECTORS AND THEIR INTEREST IN THE BANK AND DIFFERENT ENTITIES

Annexure-B

www.mblbd.com

annual report 2014

annual report 2014

228

MD. ANWARUL HAQUE


Apartment-4-A, House-45, Road-15/A,
Dhanmondi R/A, Dhaka.

07.

06.

2
DR. MAHMOOD OSMAN IMAM, MBA,
FCMA
Professor
Department of Finance and Banking
University of Dhaka
Dhaka-1000
MD. SHAHABUDDIN ALAM
S A Group of Industries
Finlay House
(3rd floor), Agrabad C/A,
Chittagong.

Name and address

1
05.

SL
No.

Director

Chairman
Risk
Management
Committee &
Director

3
Chairman
Audit
Committee &
Independent
Director

Designation

14,961,652

14,820,172

2014
4

13,358,618

24,220,172

2013

No. of Shares held in Bank

1.
2.
3.
4.
5.
6.
7.

Living Plus Ltd.


Global Insurance Ltd.
Premier Leasing & Finance Ltd.
Holiday Travels Ltd.
Premier Leasing Securities Ltd.
Securities Broking & Management Ltd
Mercantile Bank Securities Ltd

1. S.A. Oil Refinery Ltd.


2. Samannaz Super Oil Ltd.
3. Laila Vanashpati Products Ltd.
4. Kamal Vegetable Oil Ltd.
5. Sharija Oil Refinery Limited.
6. South Eastern Oil Refinery Ltd.
7. Samannaz Condensed Milk Ltd.
8. Samannaz Dairy & Food Products Ltd.
9. S. A. Pulp & Paper Products Ltd.
10. South Eastern Paper Mills Ltd.
11. S.A. Consumer Products Ltd.
12. S.A. Beverage Ltd.
13. S.A. Salt Industries Ltd.
14. Laila Food Products Ltd.
15. S.A Tank Terminal Ltd.

Name of Firms/ Companies in which


interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.

Managing Director
Shareholder
Sponsor Shareholder
Director
Director
Director
Chairman

Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Chairman

6
-

Position (as
proprietor, partner,
director, managing
agent, guarantor,
employee etc.)

32.00%
0.01%
1.85%
35.00%
0.40%
0.30%

85.00%
50.00%
50.00%
75.00%
70.00%
90.00%
87.50%
80.00%
70.00%
40.00%
40.00%
70.00%
75.00%
70.00%
50.00%

7
-

Nature and
Value of
interest in
the firm/
companies
in which
interested.

NAME OF DIRECTORS AND THEIR INTEREST IN THE BANK AND DIFFERENT ENTITIES

Annexure-B

10.

09.

1
08.

SL
No.

MOHD. SELIM
158-160 Motijheel C/A,
Dhaka

MD. ABDUL HANNAN


190 Arambag, Inner Circular Road,
Dhaka

M. AMANULLAH
House No.06, Road No. 80,
Gulshan-2, Dhaka.

Name and address

Director

Director

3
Director

Designation

21,020,649

16,898,828

22,200,000

2014
4

17,594,330

15,088,240

33,100,000

2013

No. of Shares held in Bank

5
1. Aman Spinning Mills Ltd.
2. Mousumi Enterprises Ltd.
3. Arena HRI Limited
4. Arena Securities Ltd.
5. Arena Industries Ltd.
6. Arena Consumer Products Ltd.
1. Dabstar Associates Limited
2. Reu Fashion Limited
3. ZHAS Garments Limited
4. M.H. Trading
5. Murad Apparels Limited
6. Unnayan Engineers Ltd.
7. Unnayan Housing Ltd.
8. Triffany Marble Ltd
9. Logistic Suport Ltd
10. Global Insurance Ltd
11. Bafwa Best Buy
12. Pan Pacific Hospital Ltd
13. Eastern University
1. Synthia Securities Ltd
2. Sumon Cloth Store
3. Global Insurance Ltd.
4. Central Plaza

Name of Firms/ Companies in which


interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.

6
Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Proprietor
Chairman
Proprietor
Managing Director
Director
Director
Shareholder
Director
Director
Director
Chairman
Proprietor
Shareholder
Proprietor

Position (as
proprietor, partner,
director, managing
agent, guarantor,
employee etc.)

7
20.00%
50.00%
05.00%
10.00%
25.00%
25.00%
90.00%
50.00%
50.00%
100%
70.00%
100%
50.00%
23.00%
30.00%
00.01%
25.00%
5.00%
35.00%
100%
0.27%
100%

Nature and
Value of
interest in
the firm/
companies
in which
interested.

NAME OF DIRECTORS AND THEIR INTEREST IN THE BANK AND DIFFERENT ENTITIES

Annexure-B

www.mblbd.com

229

annual report 2014

annual report 2014

230

2
A.K.M.SHAHEED REZA
36 Green Road, Dhanmondi,
Dhaka 1205

ALHAJ MOSHARREF HOSSAIN


M.H.Traders, 30 Nawab Yusuf Road,
Zinda Bahar 1st Lane, Dhaka.

DR. MD. RAHMAT ULLAH


PROVOST BUNGLOW, KABI JASIM
UDDIN HALL, DHAKA UNIVERSITY
CAMPUS, DHAKA-1000

12.

13

Name and address

1
11.

SL
No.

Independent
Director

Director

3
Director

Designation

17,692,058

39,048,992

2014
4

15,796,481

1,829,458

2013

No. of Shares held in Bank

1.
2.
3.
4.
5.
-

M/S M.H. Traders.


Bulbul Printers
Toka Ink (BD) Ltd.
Eastern Paper House
Hossain Traders

5
1. Allure Apparels Ltd.
2. Fashion Plus Ltd.
3. Reza Fabrics Ltd.
4. Global Insurance Ltd.
5. Fashion Exports
6. Reza Fashions Ltd.
7. National Credit Ratings Ltd.
8. Mercantile Bank Securities Ltd.
9. Padma Bleaching & Dying Ltd.
10. Padma Weaving Ltd.
11. Padma Yarn Mills Ltd.
12. The Daily Observer
13. Bangla Radio FM 95.2

Name of Firms/ Companies in which


interested as proprietor, partner,
director, managing agent, guarantor,
employee etc.

6
Chairman
Chairman
Chairman
Shareholder
Proprietor
Chairman
Vice Chairman
Director
Chairman
Chairman
Chairman
Director
Owner
Proprietor
Managing Director
Director
Partner
Proprietor

Position (as
proprietor, partner,
director, managing
agent, guarantor,
employee etc.)

7
40.00%
30.00%
25.00%
0.08%
100%
25.00%
7.00%
25.00%
25.00%
25.00%
07.00%
100.00%
100%
100%
5.00%
50.00%
100%

Nature and
Value of
interest in
the firm/
companies
in which
interested.

NAME OF DIRECTORS AND THEIR INTEREST IN THE BANK AND DIFFERENT ENTITIES

Annexure-B

231

CDBL
SWIFT
ITCL Equity Share
Mercantile Bank Securities Ltd
Mercantile Exchange House UK Ltd
MSF Asset Mgt. Co, Ltd

Name of the Company


Un-Quoted
Un-Quoted
Un-Quoted
Un-Quoted
Un-Quoted
Un-Quoted

Type of Shares

Quoted
Quoted

MBL1STMF
NCCBLMF1

B. Un-Listed Company

Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted
Quoted

Type of Shares

AFTABAUTO
ALARABANK
BANKASIA
BEDL
BEXIMCO
CITYBANK
EASTLAND
EBL
GPHISPAT
IDLC
IFIC
KPCL
LANKABAFIN
MJLBD
MICEMENT
Navana CNG
NBL
ONEBANKLTD
PRIMEFIN
RUPALIINS
RAKCERAMIC
SAIHAMCOT
SALAMCRST
SIBL
SQURPHARMA
SUMITPOWER
TITASGAS
UTTARABANK
UNIQUEHRL
ZAHINTEX

Name of the Company

A. Listed Company

Investment in Shares/Securities
As on 31 December 2014

10

10
196979
10
10

Face Value

10
10

10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10

Face Value

200000

1142362
8
1000000
60000000

No of Shares

20000000
307

119800
72627
364625
82485
247135
123750
40980
101250
33957
15082031
35650
37380
230450
33695
190946
31464
166788
77000
65956
21776
100526
60000
40000
165000
80744
1649591
58500
34787
11900
39050

No of Shares

10.00
Sub-Total (B)
Grand Total (A+B)

4.50
196,978.59
10.00
10.00

Avg. cost

85.46
28.56
27.51
29.28
125.23
31.36
45.21
51.01
59.29
9.08
28.59
67.37
101.98
107.13
86.14
110.88
34.35
16.26
129.14
29.54
129.13
24.28
38.67
23.45
159.42
52.74
80.46
51.52
83.48
22.86
Shares
10.00
9.24
Mutual Funds
Sub-Total (A)

Avg. cost

5,138,890
1,575,829
10,000,000
600,000,000
124
2,000,000
618,714,843
1,219,060,288

Total cost

10,238,073
2,074,410
10,029,928
2,414,961
30,947,879
3,880,736
1,852,762
5,164,616
2,013,221
136,887,000
1,019,349
2,518,396
23,501,702
3,609,852
16,449,020
3,488,726
5,729,116
1,251,988
8,517,764
643,166
12,980,620
1,457,001
1,546,662
3,868,613
12,872,395
86,999,885
4,706,629
1,792,193
993,426
892,521
400,342,608
200,000,000
2,837
200,002,837
600,345,445

Total cost

Rate as on
Total market value as on
31.12.2014
31.12.2014
4.50
5,138,890
196,978.59
1,575,829
10.00
10,000,000
10.00
600,000,000
124
10.00
2,000,000
618,714,843
2,010,574,324

Rate as on
Total market value as on
31.12.2014
31.12.2014
67.20
8,050,560
14.90
1,082,142
16.70
6,089,238
33.00
2,722,005
36.40
8,995,714
21.80
2,697,750
34.30
1,405,614
27.20
2,754,000
45.90
1,558,626
74.70
1,126,627,716
26.10
930,465
57.00
2,130,660
44.00
10,139,800
125.60
4,232,092
72.20
13,786,301
65.40
2,057,746
11.40
1,901,383
15.80
1,216,600
21.40
1,411,458
23.60
513,914
57.70
5,800,350
18.10
1,086,000
34.50
1,380,000
13.60
2,244,000
258.50
20,872,324
38.30
63,179,335
79.70
4,662,450
25.90
900,983
65.90
784,210
16.50
644,325
1,301,857,762
4.50
90,000,000
5.60
1,719
90,001,719
1,391,859,481

Amount in Taka

Annexure - C

www.mblbd.com

annual report 2014

Adjustment for Approved Securities HTM:


As on 31 December 2014

Annexure-D

As per Bangladesh Banks DOS Circular Letter# 5 dated 26 May 2008 all Government Securities holding by scheduled banks
with effect from 01 July 2008 must be segregated into HTM (Held to Maturity) and HFT ( Held for Trading). HTM securities are to
be amortized at the end of each year and any increase/ decrease due such amortization is to be adjusted in the changes in equity
system. HFT securities are to revalued weekly as per Mark to Market method. Any increase/ decrease due to such valuation
(Mark to Market) can not be taken into Profit & Loss Account until sale or maturity rather the same is to be transferred to Reserve
for Revaluation Account.

Market Adjustment on Approved Securities HTM

(Amount in BDT)

Balance as on 01 January 2014

59,634,176

Less : Adjustment due to Bond Maturity

20,951,381

Add. Adjustment of Amortization of HTM securities

11,025,068

Balance as on 31 December 2014

49,707,862

Reserve for Revaluation (for HFT securities)


Balance as on 01 January 2014
Add adjustment during the year in Mark to market Method on Treasury Bond
Add adjustment during the year in Mark to market Method on Treasury Bill
Less adjustment due to sale & Repo Treasury Bond
Less adjustment due to MTM, sale & Repo Treasury Bill
Balance as on 31 December 2014
(Market adjustment on Treasury Bond is reported as per DOS circular no.220 Dated. 08 December 2010.)

annual report 2014

232

103,364,967
439,959,690
33,189,675
145,281,743
33,123,537
398,109,051

4,817,659

Premium on Bonds

338,523,642

1,148,285,554

Mercantile Bank OBU Unit


-

Placement of Fund

151,985,645

1,044,850

4,062,850

75,654,850

105,775,447

01-03
Months

891,517,038

Reverse Repo

Mercantile Bank General Account

153,894,520

Mercantile Exchange House UK. Ltd.

Adjusting Account Debit (Note 9.2)

791,931

1,058,785

Stamps in Hand

Clearing Adjustment Account

7,267,018

Stock of Stationery

25,035,049

2,208,051

22,537,895

Up to 01
Month

Advance Deposits

Advance Rent

Demand Draft paid without Advice

Suspense Account (Note 9.1)

Particulars

Maturity Analysis of Other Assets


As at 31 December 2014

670,407,006

(145,943,074)

41,539,608

259,894,565

1,509,332

994,658

89,578,650

276,085,657

03-12
Months

232,263,595

327,367,001

6,316,303

90,274,617

01-05
Years
6

More than
05 years

2,395,268,905

891,517,038

(145,943,074)

41,539,608

893,141,731

791,931

4,817,659

3,612,967

12,324,526

6,316,303

280,543,166

2,208,051

404,398,999

Total

Amount in Taka

Annexure - E

www.mblbd.com

233

annual report 2014

annual report 2014

234
11,706.00
6,079.86

Total Loans and Advances

Total Contingent Liabilities and Commitments

279.60
1.61
1.61

Income from Investment

Earning Per Share (Tk.)

Net Income Per Share (Tk)

9 Times

0.76%

Return on Assets (ROA) (in %)

Price Earning Ratio (approximate)

9.11%

2,876.22

13,971.20

Return on Equity (ROE) (in %)

Non-interest Earning Assets

Interest Earning Assets

7.90%

240.52

Provission kept against classified Loans

Cost of Fund (in %)

483.16

Amount of Classified Loans during the year


0.27

118.85

Profit after Tax and Provision

Provision Surplus

4.13%

Percentage of Classified Loans against Total Loans and Advances (in %)

86.71%

13,499.65

Total Deposits

Credit Deposit Ratio (in %)

16,847.41

435.55

1,910.39

739.16

31.12.2014

Total Assets

Capital Surplus/deficit

Total Capital Fund

Paid-up Capital

Particulars

Highlights of Mercantile Bank Limited

6 Times

3.00

3.00

326.69

1.33%

16.84%

2,500.87

11,983.34

8.93%

5.91

242.51

465.98

197.87

4.77%

80.83%

5,175.36

9,768.85

12,085.79

14,484.19

171.02

1,370.97

659.96

31.12.2013

9 Times

2.09

2.09

166.88

1.03%

13.42%

2,659.51

12,593.67

10.02%

0.99

93.29

409.09

138.15

4.37%

79.26%

5,175.36

9,361.09

11,810.69

15,253.18

75.34

1,207.87

611.08

31.12.2012

10 Times

2.84

2.84

167.13

1.70%

20.59%

1,357.84

10,307.69

9.63%

0.75

71.82

89.68

175.57

2.61%

81.68%

4,194.84

7,972.80

9,405.42

11,665.53

60.57

1,070.09

496.81

31.12.2011

14 Times

2.87

2.87

91.95

1.86%

24.83%

925.30

7,869.45

7.94%

0.83

61.75

(7.25)

142.53

1.77%

87.77%

3,798.95

6,637.77

7,562.91

8,714.01

12.00

868.43

407.22

31.12.2010

(BDT in crore)

Annexure-F

Annexure-G

Mercantile Bank Limited


Off-Shore Banking Unit (OBU)
Financial Statements

For the year Ended on 31 December 2014

Mercantile Bank Limited


Offshore Banking Unit
Balance Sheet

As on December 31, 2014


Particulars

Notes

USD

Taka

Property and Assets:


Cash:
Cash in Hand
Balance with Bangladesh Bank
Balance With other Banks and Financial Institutions
In Bangladesh

420,808.98

32,802,060

4
4

4,273,952.95
9,548,013.14

333,154,632
744,267,624

5
6

1,864.79
10,321.18

145,360
804,536

14,254,961.04

1,111,174,212

12,121,183.76

944,846,274

2,128,523.16

165,918,380

Outside Bangladesh
Money at Call and Short Notice:
Investments
Loans and Advances:
Loans, Cash Credit, Overdraft 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
Bangladesh Bank and Other Banks in Bangladesh
Outside Bangladesh

Deposit and Other Accounts:


Current Deposits and Other Accounts
Fixed Deposits

24.75

1,929

Other Liabilities

5,229.37

407,629

Total Liabilities

14,254,961.04

1,111,174,212

Capital/Shareholders Equity:
Retained Earnings carried forward from previous year
Surplus in Profit & Loss Account
Total Liabilities and Shareholders Equity:

14,254,961.04

1,111,174,212

USD 1.00 = BDT77.9500

annual report 2014

236

www.mblbd.com

Mercantile Bank Limited


Offshore Banking Unit
Profit and Loss Account
As on December 31, 2014

Particulars
Interest Income
Less: Interest paid on Deposits, Borrowings etc.
Net Interest Income
Investment Income
Commision, Exchange and Brokerage
Other Operating Income
Total Operating Income
Salary and Allowances
Rent, Taxes, Insurances, Electricity etc.
Postage, Stamps, Telecommunication etc.
Depreciation and repair of Fixed Assets
Other Expenses
Profit before Provision
Provision against Classified Loans
Provision against Unclassified Loans
Other Provision
Total Provision
Total Profit before Taxes
Provision for Taxation
Net Profit after Taxation

Notes

USD

10
11

1,085,877.03
629,583.87

84,644,114
49,076,063

13

36,754.91

2,865,045

14

1,079.63
37,834.54
507,606.28
507,606.28
507,606.28

84,157
2,949,202
39,267,917
39,267,917
39,267,917

12

456,293.16
44,573.83
42,974.43
1,599.40
545,440.82

Taka

35,568,052
3,474,530
3,349,857
124,673
42,217,119

** Provisions would be calculated with central operation


*** Taxes would be calculated with central operation

USD 1.00 = BDT77.9500

237

annual report 2014

Mercantile Bank Limited

Offshore Banking Unit


Notes to the Financial Statements

For the Year ended December 31, 2014


1.

Background Information
Mercantile Bank Limited is operating two Off-shore Banking units as a separate business unit under the Rules
and Guidelines of Bangladesh Bank as per the permission vide letter no. BRPD(P-3)744(114)/2010-1743 dated
04/05/2010. The Bank commenced operation of these units from July 04, 2010 at its Gulshan, Dhaka and CEPZ,
Chittagong Branches.

2.

Significant Accounting Policy

2.1 Basis of Accounting:


The Unit maintains its accounting records in USD form which accounts are prepared according to the Bank
Companies Act 1991, Bangladesh Financial Reporting Standards (BFRS), Bangladesh Accounting Standards
(BAS) and other applicable directives issued by Bangladesh Bank.
2.2 Common Expenses:
a. Establishment expenses have not been separately accounted for in the Financial Statements
b. Provision for taxation, loans & advances and Off-balance sheet items have not been separately accounted for
in the Financial Statements
These are accounted for in the central accounts of Mercantile Bank Limited
USD
3

Balance with other Banks and Financial Institutions


In Bangladesh

Outside Bangladesh

Loans & Advances

Loans, Cash credit and Overdraft etc.

Bill purchased and discounted

Software

420,808.98

32,802,060

420,808.98

32,802,060

4,273,952.95

333,154,632

9,548,013.14

744,267,624

13,821,966.09

1,077,422,256

1,671.28

130,276

193.51

15,084

1,864.79

145,360

10,321.18

804,536

10,321.18

804,536

12,121,183.76

944,846,274

2,128,523.16

165,918,380

14,249,706.92

1,110,764,654

Fixed Assets including Premises, Furniture and Fixtures


Computer, Printer & Peripherals

BDT

Other Assets

Interest Receivable

Borrowing from other Banks, Financial Institutions and Agents


In Bangladesh

Head Office, ID

Bangladesh Bank

Outside Bangladesh

annual report 2014

238

www.mblbd.com

Deposit and Other Accounts:

USD

BDT

Current Deposit
Fixed Deposit
Foreign Currency Deposit FCAD (Gen)
9

Other Liabilities
Accrued Interest

24.75

1,929

5,229.37

407,629

5,229.37

407,629

1,085,877.03

84,644,114

1,085,877.03

84,644,114

24.75

1,929

Payable to Head Office


Accumulated Depreciation
10

Interest Income
Interest on Advances
Interest on Money at Call and Short Notice
Interest on fund placement with ID, HO
Interest on foreign Currency Balances

11

Interest paid on Deposit, Borrowings etc.


Interest on Deposit
Interest on Borrowings

629,583.87

49,076,063

Discount
Interest on REPO
12

49,076,063

42,974.43

3,349,857

1,599.40

124,673

44,573.83

3,474,530

32,454.84

2,529,855

1,518.52

118,369

2,683.37

209,168

98.18

7,653

36,754.91

2,865,045

1,079.63

84,157

1,079.63

84,157

Other Income
Investment Income
Commission, Exchange Gain & Brokerage
Other Operating Income/Foreign Correspondence Charge

13

629,583.87

Salary & Allowances


Provident Fund
Bonus
Traveling Expenses (TA/DA)

14

Free Hold Properties-Depreciation


Depreciation and repair of Fixed Assets

15

General
Provision will be calculated with the central accounts
Taxes are computed with the central operation

Assets and liabilities have been converted into BDT @ USD1.00 = BDT 77.95

Depreciation of Premises, Furniture and Fixtures has been charged @20% p.a.

239

annual report 2014

Annexure-H

Mercantile Bank Securities Limited


Auditors Report and Audited Financial Statement
For the year Ended on 31 December 2014

www.mblbd.com

Auditors Report

to the Shareholders of Mercantile Bank Limited


We have audited the accompanying consolidated financial statements of Mercantile Bank Limited and its subsidiaries,
(the Group) as well as the financial statements of Mercantile Bank Limited (the Bank) which comprise the consolidated
balance sheet and the separate balance Sheet as at 31 December 2014 and the consolidated and separate profit & loss
accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements
for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements and Internal Controls
Management is responsible for the preparation of consolidated financial statements of the Group and also separate financial
statements of the Bank that gives a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRSs)
as explained in notes and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements of the Group and also the separate financial statements of the Bank that are free
from material misstatement, whether due to fraud and error. The Bank Companies Act, 1991 and the Bangladesh Bank
Regulations require the Management to ensure effective internal audit, internal control and risk management functions of
the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls
and report to Bangladesh Bank on instances of fraud and forgeries.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate
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 about whether the consolidated financial statements of the Group and separate 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 separate financial statements of the Bank. The procedures selected depend on the
auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements
of the Group and separate financial statements of the Bank, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entitys preparation of consolidated financial statements of the Group
and separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances. 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 also separate financial statements of the Bank.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion the consolidated financial statements of the Group and also separate financial statements of the Bank give a
true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31
December 2014 and of its consolidated and separate financial performance and its consolidated and separate cash flows
for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in notes.
Report on Other Legal and Regulatory Requirements
In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act, 1991 and the
rules and regulations issued by the Bangladesh Bank, we also report the following:
a. we have obtained all the information and explanation which to the best of our knowledge and belief were necessary
for the purpose of our audit and made due verification thereof;
b. to the extent noted during the course of our audit work performed on the basis stated under the Auditors Responsibility
section in forming the above opinion on the consolidated financial statements of the Group and the financial statements
of the Bank and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and
instances of fraud and forgeries as stated under the Managements Responsibility for the Financial Statements and
Internal Control:

241

annual report 2014

i. Internal audit, internal control and risk management arrangements of the Group and the Bank, as disclosed in note
2.10 of the financial statements. appeared to be materially adequate;
ii. Nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and
exception or anything detrimental committed by employees of the Bank and its related entities .
c. financial statements of subsidiary companies of the Bank namely Mercantile Bank Securities Limited have been
audited by K.M.Hasan & Co., Chartered Accountants and Mercantile Exchange House (UK) Limited has been audited
by Jahan & Co., Chartered Management Accountants have been properly reflected in the consolidated financial
statements;
d. 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;
e. the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet
and separate profit and loss account of the Bank dealt with by the report are in agreement with the books of account;
f.

the expenditure incurred was for the purposes of the Banks business;

g. the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn
up in conformity with prevailing rules, regulations and Bangladesh Financial Reporting Standards as explained in
notes as well as with related guidance , circulars issued by Bangladesh Bank;
h. adequate provisions have been made for loans and advances which are, in our opinion, doubtful of recovery;
i.

the records and statements submitted by the branches have been properly maintained and consolidated in the financial
statements;

j.

the information and explanation required by us have been received and found satisfactory; and

k. we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 5,620 person hours for
the audit of the books and accounts of the Bank.

K. M. Hasan & Co.


Chartered Accountants

Dated: Dhaka
January 24, 2015

annual report 2014

242

www.mblbd.com

Mercantile Bank Securities Limited


Statement of Financial Position
As on December 31, 2014

Particulars

Notes

ASSETS

Amount in Taka
2014
2013

Non Current Assets


Property, Plant and Equipment
Investment in Share with TRE
Dhaka Stock Exchange Ltd.
Chittagong Stock Exchange Ltd.

24,898,011

28,535,970

650,000,000
180,000,000
8,30,000,000
854,898,011

650,000,000
180,000,000
8,30,000,000
858,535,970

5,210,555,797
4,739,269
91,315,134
54,498,349
72,423,747
1,463,392
5,434,995,688
6,289,893,699

4,441,614,400
10,175,638
47,600,683
19,592,452
9,419,810
4,528,402,983
5,386,938,953

650,000,000
34,334,617
684,334,617

650,000,000
33,771,264
683,771,264

4,987,315,265

4,508,533,492

9
10

64,461,160
33,276,925
520,505,732
618,243,817
5,605,559,082
6,289,893,699

60,033,345
23,187,404
111,413,448
194,634,197
4,703,167,689
5,386,938,953

Current Assets
Receivable from Client
Receivable from DSE & CSE
Advance, Deposit & Prepayment
Advance Income Tax
Cash and Bank Balances
Mbsl A/C Ipo
Total Current Assets
Total Assets

4
5
6
7

EQUITY AND LIABILITIES


Share Capital
Retained Earnings
Total Equity
Liabilities
Borrowing from Banks
Current Liabilities
Payable to Clients
Other Liabilities
Payable to DSE
Provision for Tax
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities

Chief Executive Officer

11

Vice Chairman

Chairman

Signed in terms of our report of even date annexed

Dated: Dhaka
January 24, 2015

K. M. Hasan & Co.


Chartered Accountants

243

annual report 2014

Mercantile Bank Securities Limited


Statement of Comprehensive Income
For the year ended December 31, 2014
Notes

Particulars

Amount in Taka
2014
2013

Operating Income

12

514,108,291

752,634,231

Less: Operating Expenses


Gross Profit

13

466,085,780
48,022,511

625,432,578
127,201,653

Less: Administrative and General Expenses


Operating Profit

14

36,952,731
11,069,780

45,917,543
81,284,110

Add: Other Income


Profit Before Provision

15

5,474,094
16,543,874

3,512,842
84,796,952

Less: Provision for margin loans


Profit Before Tax
Less: Provision for Tax
Net Profit after Tax

16

6,000,000
10,543,874
10,089,521
454,353

67,500,000
17,296,952
6,641,207
10,655,745

17

The annxed notes form an integral part of these financial statements

Chief Executive Officer

Dated: Dhaka
January 24, 2015

annual report 2014

Vice Chairman

Signed in terms of our report of even date annexed

Chairman

K. M. Hasan & Co.


Chartered Accountants

244

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Mercantile Bank Securities Limited


Statement of Cash Flows
As on December 31, 2014

Amount in Taka

A.

2014

2013

10,543,874

17,296,952

109,000
4,196,949
14,849,823

4,953,460
22,250,412

4,427,815
409,092,284

18,475,577
100,481,887

5,436,369
(768,941,397)
(1,463,392)
(34,905,896)
(43,714,451)
(430,068,668)
(415,218,846)

(9,745,977)
(594,263,279)

Purchase of Property,Plant & Equipment


Disposal of Property,Plant & Equipment
Net cash used in Investing activities

(965,185)
406,196
(558,989)

(38,500)
1,816,080
1,777,580

Cash flows from Financing activities:


Proceeds from Long Term Borrowing
Net cash flow from financing activities

478,781,774
478,781,774

434,599,504
434,599,504

Net surplus / (deficit) in cash & bank balance for the year (A+B+C)

63,003,936

(77,484,984)

Cash & Bank Balance at the beginning of the year


Cash & Bank Balance at the end of the year (*)

9,419,810
72,423,747

86,904,795
9,419,810

45,567
72,378,180
72,423,747

48,066
9,371,744
9,419,810

Cash flows from operating activities:


Net profit before tax
Adjustment for :
Last year Adjustment
Depreciation
Cash generated from operating activities before changes in operating assets and liabilities
Increase / (Decrease) in Operating Liabilities
Payable to clients
Other Liabilities
(Increase) / Decrease in Operating Assets
Receivable from DSE
Receivable from client
MBSL IPO a/c
Advance Income Tax
Advance,Deposit & Prepayment
Net cash used in Operating activities

B.

C.

(9,234,668)
(41,826,020)
(536,112,480)
(513,862,068)

Cash flows from Investing activities:

(*) Cash & Bank Balance :


Cash in hand
Cash at Bank

Statement of Changes in Equity


For the year ended December 31, 2014

Particulars

Balance as at 01 January 2014


Previous years adjustment
Net profit for the year
Balance as at 31 December 2014
Balance as at 01 January 2013
Net profit for the year
Balance as at 31 December 2013

Chief Executive Officer

Share Capital

650,000,000
650,000,000

650,000,000
650,000,000

Amount in Taka

Retained Earnings

33,771,264
109,000
454,353
34,334,617

23,115,519
10,665,745
33,771,264

Vice Chairman

Total

683,771,264
109,000
454,353
684,334,617

673,115,519
10,665,745
683,771,264

Chairman

Signed in terms of our report of even date annexed

Dated: Dhaka
January 24, 2015

K. M. Hasan & Co.


Chartered Accountants

245

annual report 2014

Mercantile Bank Securities Limited


Notes to the Financial Statements

1.

Background Information:

For the year ended December 31, 2014

Marcantile Bank Securities Limited was established on 27 June 2010 to facilitate development of sound capital
market and to provide higher, better and diversified services to a wide range of customer. MBSL is offering high
quality products and services at a competitive rate.
Marcantile Bank Securities Limited offers full-fledged international standard brokerage service with margin loan
facility. MBSL is also a full service Depository Participant (DP) of central Depository Bangladesh Limited (CDBL).
The brokerage service is designed to provide customer with necessary support and profitability in the stock market.
The main objective of the Mercantile Bank Securities Limited is to act as a full- fledged high standard brokerage
service with margin facility services. The company obtained DSE Membership on 04 september 2011 and CSE
Membership on 25 september 2011 and started operation since 14 september 2011.
2.

Significant Accounting Policies:

2.1 Basis of Accounting


The financial statements of the Marcantile Bank Securities Limited have been prepared applying accrual basis
of accunting under the historical cost convention in accordance with Bangladesh Financial Reporting Standards.
2.2 Property, Plant & Equipment and Depreciation
PPE are stated in the financial statements at cost less accumulated depreciation. Depreciation is charged on
assets at the following rates & methods for the full year irrespective of their date of purchase:
Name Of Assets

Rate of Depreciation

Method

Vehicles

20%

Straight line

Office Equipment &Machinaries

20%

Reducing Balance

Furniture &Fixtures

10%

Reducing Balance

Books

20%

Reducing Balance

2.3 Revenue Recognition:


Revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow
to the company.Revenue during the year are recognised as follows:
(i) Brokerage commission is recognised as income when selling or buying order is executed;
(ii) Interest income on STD account is recognised when respective banks credited the interest to the companys
account
(iii) Interest income from margin loan is calculated quarterly.
2.4 General
i. Figures appearing in these accounts have been rounded off to the nearest Taka.
ii. Previous years figures have been re-arranged where necessary to conform to current years financial
presentation.

annual report 2014

246

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Mercantile Bank Securities Limited


Notes to the Financial Statements
For the year ended December 31, 2014

Amount in Taka

3.

2014

Property, Plant and Equipment

2013

A. Cost
Opening balance
Add: Addition during the period
Less: Adjustment

42,515,408
965,185
43,480,593
406,196
43,074,397

44,292,988
38,500
44,331,488
1,816,080
42,515,408

13,979,438
4,196,949
18,176,387
24,898,011

9,025,978
4,953,460
13,979,438
28,535,970

B. Accumulated depreciation
Opening balance
Add: Charged during the period
C. Written Down Value (A-B)
A schedule of Property, Plant and Equipment is given in Annexure-A.
The Company has not maintained Fixed Assets Register as required by sec-18 (i) (c) of the companies Act, 1994 and also
not carried physically inventory of the Fixed Assets as on December 31, 2014
4.

Receivable from clients


General Client
Margin Client

5.

Advance, Deposit & Prepayment


Advanced Rent
Other advance
Prepaid Expenses (LFA)
Prepaid Expenses (Furniture Allowance)
Investment in dealer A/C
Printing Stationery
Security Deposite

6.

413,918
441,200,483
441,614,401

1,042,550
91,000
4,000
109,334
90,000,000
68,250
91,315,134

2,477,350
94,333
45,000,000
29,000
47,600,683

19,592,452
20,000,000
39,592,452
10,311,539
49,903,991
4,594,358
54,498,349

10,357,784
10,357,784
6,641,207
16,998,991
2,593,461
19,592,452

45,567
72,378,180
72,423,747

48,066
9,371,744
9,419,810

8,679,302
11,936,160
51,762,718
72,378,180

658,330
3,921,159
4,787,255
5,000
9,371,744

Advance Income Tax


Opening Balance
Add: Advance Tax Paid for the year 2014-15
Add: Tax deducted at source during the year
Add: Tax deducted at source againest cash devident
Closing Balance

7.

371,912
5,210,183,885
5,210,555,797

Cash and Bank Balance


Cash in Hand
Cash at Bank (Note: 7.1)

7.1 Cash at Bank


Name of Bank
Mercantile Bank Ltd.,Main Branch (Income exp A/C)
One Bank Ltd.,Principal Branch (SND A/C)
Mercantile Bank Ltd.,Main Branch (MBSL cons Cust,SND)
Modhumoti Bank Ltd. Motijheel Branch (Current A/C)

Account No.
0101-13100002230
0013-000000616
0101-13100002437
1101-11100000085

247

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Mercantile Bank Securities Limited


Notes to the Financial Statements
For the year ended December 31, 2014

Amount in Taka

8.

Borrowing from Banks


MBL Loan
The Farmers Bank ltd.
Modhumoti Bank Ltd.

9.

Payable to Clients
General Client
Margin Client

10. Provision for Tax


Opening Balance
Add: Provision made during the period (TDS)
Closing Balance
11. Other Liabilities
Sundry Deposit
Income Tax on Rent
Vat on Rent
CDBL Charges (A/C opening & M Chg)
Provision for Audit fee
Provision for Margin Loan
Provision for CDBL charges
DSE Clearing A/c
Interest Suspense A/C
Other Provision
IPO Application (IPO)
12. Operating Income
Brokerage Commission DSE & CSE
Account Opening Fee
Interest on Margin Loan
Account Closing Fee
IPO Commission
Income From Investment Dealer A/C
Interest Charge On Cash Client
Service Charge on margin loan
13. Operating Expenses
Howla Charge DSE & CSE
Laga Charge DSE & CSE
CDBL Charges
Audit Fees
Directors Fee
Bank Charges
Interest on MBL & Farmers bank Loan A/c & Modhumoti Bank
Other Operating Expenses
Depreciation **

annual report 2014

248

2014

2013

4,878,988,250
3,279,338
105,047,677
4,987,315,265

4,508,533,492
4,508,533,492

50,684,372
13,776,788
64,461,160

37,023,405
23,009,940
60,033,345

23,187,404
10,089,521
33,276,925

16,546,197
6,641,207
23,187,404

447,024
7,600
19,200
1,405,148
25,000
82,391,361

1,314,157

434,551,399
1,659,000
520,505,732

28,750
77,113,367
604,800
32,243,375
109,000
111,413,449

77,083,009
237,300
426,656,683
41,779
2,241
10,000,000
87,279
514,108,291

52,114,626
207,301
684,937,050
47,170
-

795,778.00
4,039,881.62
4,943,713.00
28,750.00
490,000.00
55,939.00
451,359,769.71
174,999.98
4,196,949.00
466,085,780

639,828.00
2,655,134.00
1,550,585.00
28,750.00
730,000.00
101,883.00
614,097,904.00
675,034.00
4,953,460.00
625,432,578

15,328,084
752,634,231

www.mblbd.com

Mercantile Bank Securities Limited


Notes to the Financial Statements
For the year ended December 31, 2014

Amount in Taka

2014
14.

Administrative and General Expenses


Salaries & Allowances (Note: 14.1)
Rent, Taxes, VAT, Insurances, Electricity etc.
Postage, Stamps, Telecommunication etc.
Printing & Stationery
Repairs and Maintenances
Security & Cleaner
Legal Fees
VAT Expenses
Miscellenious
Refreshment
Utility Expenses
Fuel Costs
Travel Expenses

14.1 Salaries & Allowances


Basic Salary
Bonus
Car Allowances
House Rent
Conveyance Allowances
Medical Allowances
House maintenance Allowances
Utilities Allowance
PF Contribution
Furniture Allowance
Leave Fare Assistance

2013

23,250,865
7,398,044
2,045,597
285,265
510,049
1,986,147
34,500
107,851
812,891
198,221
49,411
273,890
36,952,731

30,394,856
5,238,809
2,398,401
347,383
877,706
3,760,582
243,668
18,558
760,930
1,096,397
90,884
341,661
347,709
45,917,543

9,433,616
2,479,350
0
3,249,540
1,156,000
2,108,767
1,352,933
1,341,933
615,694
23,999
1,489,033
23,250,865

11,716,145
2,210,950
385,000
4,940,400
1,404,267
3,510,466
1,495,733
1,495,733
1,043,664
195,230
1,997,268
30,394,856

5,217,993
136,101
120,000
5,474,094

2,465,271
107,971
939,600
3,512,842

15.

Other Income
Bank Interest
Miscellaneous Earnings
Office Rent Income

16.

Provision for margin loans


The market value of shares of the client account having negative equity stood at Tk. 2,454,261,333 as on December
31, 2014 against outstanding loan amount of Tk. 4,648,271,385 leaving equity erosio of Tk. 2,194,010,054. If the
market price of the shares goes up in future this equity erosion will be reduced.
The Bangladesh Securities and Exchange Commission vide its Instruction no. SEC/CMRRCD/2009-193/166 dated
12 January 2015 allowed the stock broker to provide the loss on margin loan in 5 quarters in equal amount (20%)
beginning from December 2014 to December 2015. However, an amount of Tk. 82,391,361 has been provided in
the books of account up to December 31, 2014 for above erosion including provision of Tk. 6,000,000 made during
the year. In addition the company has also transferred Tk. 434,551,399 being interest on margin loan to interest
suspense account as mentioned under Note - 11.

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annual report 2014

Mercantile Bank Securities Limited


Notes to the Financial Statements
For the year ended December 31, 2014

17.

Amount in Taka
2014
2013

Provision for Tax


TDS final settlement 82@

10,060,121

Office Rent Income

120,000

Less: Repair & maintenance 30%

36,000
84,000

29,400
10,089,521

18

19.

Investment in DSE Shares and TREC


(a)

As per the provision of the Exchange Demutualization Act, 2013 and in accordance with the Bangladesh
Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange
allotted 7,215,106 ordinary shares of Taka 10 each and Trading Right Entitlement Certificate (TREC) in favor
of the company against the membership of DSE. Out of the total 7,215,106 Shares of DSE transferred and
credited 2,886,042 shares directly to Companys BO Account and rest 4,329,064 share were credited to the
Demutualization Blocked Account maintained by the DSE.

(b)

As per the provision of the Exchange Demutualization Act, 2013 and in accordance with the Bangladesh
Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Chittagong Stock
Exchange allotted 4,287,330 ordinary shares of Taka 10 each and Trading Right Entitlement Certificate
(TREC) in favor of the company against the membership of CSE. Out of the total 4,287,330 Shares of CSE
transferred and credited 1,714,932 shares directly to Companys BO Account and rest 2,572,398 share were
credited to the Demutualization Blocked Account maintained by the CSE.

Events after the reporting period


i)

The Board of Directors in its meeting held on January 24, 2015 approved the financial statements of the
company for the year ended December 31, 2014 and authorized the same for issue.

ii)

No material events occurred after the date of statement of financial position, non-disclosure of which could
affect the ability of the users of these financial statements to make appropriate evaluation.

Chief Executive Officer

Dhaka Bangladesh
Date : January 24, 2015

annual report 2014

250

Vice Chairman

Chairman

K. M. HASAN & Co.


Chartered Accountants

19,627,675

22,247,655

42,515,408

44,292,988

Equipment & Machineries

As at 31 December 2014

As at 31 December 2013

640,078

Balance
as on
01.01.2014

Furniture & Fixture

Vehicle

Particulars

38,500

965,185

75,806

889,379

Addition
during the
Period
-

1,816,080

406,196

401,396

4,800

Adjustment/
Disposal

Cost

42,515,408

43,074,398

21,922,066

20,512,254

640,078

Balance
as on
31.12.2014

20

10

20

Rate
%

As at December 31,2014

9,025,978

13,979,439

9,047,539

4,291,822

640,078

Balance
as on
01.01.2014
-

4,953,460

4,196,949

2,574,905

1,622,043

Charged
During the
Period

Depreciation

Schedule of Property, Plant and Equipment

Mercantile Bank Securities Limited

13,979,438

18,176,388

11,622,444

5,913,865

640,078

Balance
as on
31.12.2014.

28,535,970

24,898,011

10,299,622

14,598,389

Written Down
Value as on
31.12.2014

Amount in Taka

Annexure- A

www.mblbd.com

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annual report 2014

Mercantile Exchange House (UK) Limited


Financial Statements
For the year Ended on 31 December 2014

www.mblbd.com

Mercantile Exchange House (UK) Limited


Financial Statements

For the year ended December 31, 2014

Directors

Morshed Alam
Akram Hossain
Mohammed Ehsanul Haque

Secretary

Jude Mark Rozario

Registered office

108 Whitechapel Road


London E1 1JD

Company Number

7456837

Bankers

Habib Bank UK

Accountants

Jahan & Co.


Chartered Management Accountants
22 Osborn Street, London, E1 6TD

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Mercantile Exchange House (UK) Limited


Directors Report

For the year ended December 31, 2014

The directors present their report and accounts for the year ended 31 December 2014
PRINCIPAL ACTIVITIES
The principal activity of the company in the year under review was MONEY REMITTANCE.
DIRECTORS
The directors who served during the year were as follows:
MORSHED ALAM

AKRAM HOSSAIN

MOHAMMED EHSANUL HAQUE


DIRECTORS RESPONSIBILITIES
The directors are responsible for preparing the Directors Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial statements for each financial year under that law they have elected
to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the
profit or loss for that period.
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the company made no donations exceeding 2000.
The report of the directors has been prepared in accordance with the special provisions within Part 15 of the Companies
Act 2006.
This report was approved by the board on 29 January 2015.

Mohammed Ehsanul Haque


Director

annual report 2014

254

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Mercantile Exchange House (UK) Limited

Accountants Report To The Board Of Directors On The Unaudited Accounts


Of Mercantile Exchange House (Uk) Limited, For The Year Ended 31
December 2014

In order to assist you to fulfill your duties under the Companies Act 2006, we have prepared for your approval the accounts
of MERCANTILE EXCHANGE HOUSE (UK) LIMITED for the year ended 31 December 2014 as set out on pages 5 to 10
from the companys accounting records and from information and explanations you have given us.
As a practicing member of the Chartered Institute of Management Accountants (CIMA), we are subject to its ethical and
other professional requirements which are detailed on their website.
This report is made solely to the Board of Directors of MERCANTILE EXCHANGE HOUSE (UK) LIMITED, as a body, in accordance with the terms of our engagement letter dated. Our work has been undertaken solely to prepare for your approval
the accounts of MERCANTILE EXCHANGE HOUSE (UK) LIMITED and state those matters that we have agreed to state
to the Board of Directors of MERCANTILE EXCHANGE HOUSE (UK) LIMITED, as a body, in this report, in accordance
with the requirements of the Chartered Institute of Management Accountants (CIMA) as detailed on their website. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than MERCANTILE EXCHANGE
HOUSE (UK) LIMITED and its Board of Directors as a body for our work or for this report.
It is your duty to ensure that MERCANTILE EXCHANGE HOUSE (UK) LIMITED has kept adequate accounting records
and to prepare statutory accounts that give a true and fair view of the assets, liabilities, financial position and profitability of
MERCANTILE EXCHANGE HOUSE (UK) LIMITED.
We have not been instructed to carry out an audit or a review of the accounts of MERCANTILE EXCHANGE HOUSE (UK)
LIMITED, verified the accuracy or completeness of the accounting records or information and explanations you have given
to us and we do not, therefore, express any opinion on the statutory accounts.

Jahan & Co.

Chartered Management Accountants


22 Osborn Street
London, E1 6TD

Date : January 29, 2015

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Mercantile Exchange House (UK) Limited


Profit And Loss Account

For the year Ended December 31, 2014


Particulars

Note

TURNOVER
GROSS PROFIT
Distribution costs
Administrative expenses
Other operating incom
OPERATING LOSS
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION
LOSS FOR THE FINANCIAL YEAR

2014

2013

77,520
77,520
(8,967)
(233,110)
26,226
(138,331)
(138,331)
(138,331)
(138,331)

217,101
217,101
(5,640)
(323,858)
24,378
(88,019)
(88,019)
(88,019)
(88,019)

Mercantile Exchange House (UK) Limited


Balance Sheet

AS AT 31 DECEMBER 2014
Particulars

2014

Note

FIXED ASSETS
Tangible assets
CURRENT ASSETS
Debtors (amounts falling due within one year)
Debtors (amounts falling due after more than one year)
Cash at bank and in hand
CREDITORS: Amounts falling due within one year
NET CURRENT (LIABILITIES) / ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: Amounts falling due after more than one year
NET LIABILITIES

5
6
6
7

2013

51,159
152,024
9,900
1,697
163,621
208,823
(45,202)

(45,202)
5,957

89,851
98,497
9,900
132
108,529
94,092
14,437

14,437
104,288

340,000
(334,043)

300,000
(195,712)

9
10

1
(334,044)
(334,043)

1
(195,713)
(195,712)

CAPITAL AND RESERVES


Called up share capital
Profit and loss account
SHAREHOLDERS FUNDS

For the year ending 31 December 2014 the company was entitled to exemption under section 477 of the Companies Act
2006 relating to small companies.
The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act
2006. The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to
accounting records and the preparation of accounts.
These accounts have been prepared in accordance with the provisions applicable to companies subject to the small
companies regime.
Approved by the board on January 29, 2015 and signed on their behalf by

Mohammed Ehsanul Haque


Director
annual report 2014

256

www.mblbd.com

Mercantile Exchange House (UK) Limited


Notes To The Accounts
AS AT 31 DECEMBER 2014

1.

ACCOUNTING POLICIES
1a. Basis Of Accounting
The accounts have been prepared under the historical cost convention and in accordance with the Financial
Reporting Standard for Smaller Entities (effective April 2008).
1b. Cash Flow Statement
The Company is exempt from including a statement of cash flows in its accounts in accordance with Financial
Reporting Standard for Smaller Entities (effective April 2008).
1c. Depreciation
Depreciation has been provided at the following rates in order to write off the assets over their estimated useful
lives. Fixtures and Fittings reducing balance 5%.
1d. Turnover
Turnover represents the invoiced value of goods and services supplied by the company, net of value added tax
and trade discounts.

2.

TURNOVER
The turnover and pre-tax result is attributable to MONEY REMITTANCE.
2014

Commissions

3.

77,520
77,520

217,101
217,101

2,475
2,475

4,360
4,360

OPERATING PROFIT
Operating Profit is stated after charging
Depreciation

4.

2013

TAX ON ORDINARY ACTIVITIES

257

annual report 2014

Mercantile Exchange House (UK) Limited


Notes The Financial Statement
AS AT 31 DECEMBER 2014

Particulars
5.

6.

TANGIBLE FIXED ASSETS


Cost
At 1 January 2014
Disposals
At 31 December 2014
Depreciation
At 1 January 2014
Disposals
For the year
At 31 December 2014
Net Book Amounts
At 31 December 2014
At 31 December 2013

DEBTORS

Amounts falling due after more than one year:


Long term debtor

91,716
(40,464)
51,252

98,708
(43,358)
55,350

8,857
(7,143)
2,477
4,191

8,857
(7,143)
2,477
4,191

4,098
6,992

47,061
82,859

51,159
89,851
2013

152,024
152,024

98,497
98,497

9,900
9,900

9,900
9,900

200,903
2,333
5,587
208,823

201
79,165
6,383
8,343
94,092

340,000
340,000

300,000
300,000

1
1

1
1

(195,713)
(138,331)
(334,044)

(107,694)
(88,019)
(195,713)

SHARE CAPITAL
Allotted, issued and fully paid:
1 Ordinary shares of 1 each 1 1

10.

6,992
(2,894)
4,098

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR


Amounts owed to group undertakings
(Mercantile Bank Bangladesh)

9.

Total - 2014

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR


Bank loans and overdrafts
TT Payable
Taxation and social security
Other creditors

8.

Fixtures and
Fittings

2014

Amounts falling due within one year:


Other debtors

7.

Land and
Buildings

PROFIT AND LOSS RESERVE


Opening balance
Loss for the year

annual report 2014

258