LEADING THE GROWTH

With steady economic growth, Bangladesh is going to move up within the middle-income country by
2021 and into a developing country by 2024. It’s expected that sustained & inclusive growth coupled
with socio-economic progress will enable the country to reach the developed country status within 2041.
Keeping aligned with the development objectives of the government, the Banking sector has been playing
a leading role in this pursuit. Consequently, Mercantile Bank Limited (MBL) has reinforced its business
strategy by increasing financing in the growth-promoting sectors like power & energy, transportation,
information technology (IT), health & education, pharmaceuticals and so on. Moreover, the Bank has been
continually investing in human resources development to ensure a skilled & quality workforce. The Bank
has adopted cutting-edge technology to provide secure and better customer service. The Bank has also
been widening up its coverage to the unbanked population to accelerate financial inclusion. Besides, the
Bank is contributing to the socio-economic progress of the country by carrying out various CSR programs.
All these endeavors of MBL are aimed at contributing to national development at large. Thus, MBL remains
upfront in leading the growth.
2 Mercantile Bank Limited
Annual Report 2019

MBL
MILESTONES

Opening of
Commencement Mercantile
Publication Listed in Mercantile Bank of Operation of Exchange
Incorporation of Prospectus Dhaka Stock Brokerage Offshore House
of the Bank for IPO Exchange House Operation Banking Unit (UK) Limited

May June February June March December

20 30 16 06 20 06
1999 2003 2004 2009 2011 2011

June October February December September September

02 21-22 26 30 14 20
1999 2003 2004 2009 2011 2012
Commencement Subscription Listed in Opening of Separate Opening of
of Business for Shares Chittagong 50th Branch Operation Mercantile
Stock of Mercantile Exchange
Exchange Bank Securities House (UK)
Limited (MBSL) Limited,
London Branch
 OVERVIEW

MBL achieved
‘Certificate
Incorporated of Merit’
Achieved Launch MBL Asset Obtained in 19th ICAB
National of ‘MBL Management permission for National
Productivity Young Limited, a Agent Banking Awards for
Opening and Quality Bankers’ subsidiary of from Best Presented
of 100th Excellence Appreciation Mercantile Bank Bangladesh Annual Reports
Branch Award- 2016 Award 2018’ Limited (MBL) Bank 2018

December April June November August November

29 18 02 29 05 30
2014 2018 2018 2018 2019 2019

December May October December August December

29 11 03 24 21 29
2017 2018 2018 2018 2019 2019
Opening Moody's Inauguration MBL achieved Obtained Inauguration
of 129th assigns of ‘MBL ‘Certificate of Merit’ permission of 148th Branch
Branch first-time Contact Center’ under the category for Islamic
B1 ratings of Corporate Banking
to Mercantile Governance Window
Bank Ltd. Disclosure operation
in 18th ICAB from
National Award Bangladesh
Bank
4 Mercantile Bank Limited
Annual Report 2019

PERFORMANCE
AT A GLANCE 2019

Net Interest Income (NII) Operating Profit Loans & Advances

BDT in Million BDT in Million BDT in Million

8,600.64 7,355.75 236,890.45

Net Interest Margin (NIM) Net Profit after Tax Non-performing

BDT in Million Loan (NPL) Ratio

3.12% 2,175.50 4.86%

Non-Interest Income Total Assets Deposits

BDT in Million BDT in Million BDT in Million

4,575.36 316,363.47 262,961.05

 OVERVIEW

Import Inward Remittance Capital to Risk Weighted

BDT in Million BDT in Million Assets Ratio (CRAR)

184,650.00 35,239.10 13.92%

Export Shareholders’ Equity Earnings Per Share (EPS)

BDT in Million BDT in Million BDT

163,152.30 20,908.29 2.32

Letter of Transmittal 8 Segment Analysis 67
Notice of the 21st Annual General Meeting 9 Key Events 2019 68
About Mercantile Bank Limited 10
Awards & Recognition 12 Directors’ Report
Vision, Mission, & Core Values 13 World Economic Overview 70
Business Ethics 14 Bangladesh Economy 72
Code of Conduct 15 Banking Industry 74
Strategic Objectives & Corporate Philosophy 16 Business Review 75
Corporate Priorities 17 Review of Subsidiaries Performance 79
Corporate Profile 18
Corporate Organogram 19 Divisional Overview 81
Sponsors of the Bank 20
Directors’ Profile 22 Subsidiary Overview
We Mourn 30 Mercantile Bank Securities Limited 116
Our Pride 31 Mercantile Exchange House (UK) Limited 120
Top Management Team 32 MBL Asset Management Limited 121
Senior Management Team 33 MBL MyCash Limited 122
Head of Divisions, Departments,
Units & Cells at Head Office
34
Integrated Reporting
Divisions, Departments,
Units & Cells at Head Office
36 Integrated Reporting Framework 124
Regional Offices 37 Strategic Framework 125
Mercantile Bank Training Institute (MBTI) 37 Strategic Focus 2020 127
Branches Network 38 Value Creation Activities 128
Heads of Branches 39 Business Model 129
Corporate Structure 49
Message from the Chairman 50 Risk Management Report
Message from Managing Director & CEO 54 Board Risk Management Committee Report 131
Progress we made in 2019 57 Risk management Report 134
Five Years' Performance 58 Report on Risk Based Capital (Basel-III) 139
Horizontal & Vertical Analysis 62 Non-performing Loan (NPL) Management 157
DuPont Analysis 66
Sustainability Analysis Financial Statements
Sustainable Banking Highlights-2019 162 Independent Auditor’s Report to
the Shareholders of Mercantile Bank Limited
244
Report Parameter 163
Consolidated Financial Statements 250
Products & Services 164
Solo Financial Statements 257
Stakeholder Engagement 165
Notes to the Financial Statements 264
Determining Material Topics 168
Financial Statements of Off-shore Banking Unit 346
Environmental Performance 169
Economic Impact Report 173
Financial Statements of Subsidiaries
Human Resource Management Report 176
Independent Auditor’s Report to the
Corporate Social Responsibility (CSR) 181 Shareholders of Mercantile Bank 352
Securities Limited
Customer Satisfaction 187
Financial Statements of Mercantile Bank
Market Performance 189 Securities Limited
354
MBL Integrity Strategy 190 Directors’ Report of Mercantile
Exchange House (UK) Limited
375
Grievance Redressal 192
Accountants’ Report of Mercantile
Exchange House (UK) Limited
376

Corporate Governance Financial Statements of Mercantile

Exchange House (UK) Limited
377
Letter from the Board of Directors Presented
by the Company Secretary
194

Corporate Governance Report 195 Supplementary

Certificate of Compliance 224 MBL Album 381
Compliance Report on BSEC Notification Media Highlights 384
on Corporate Governance
225
Abbreviations 385
Compliance of Meeting & Remuneration 236
Proxy Form 387
Report of the Audit Committee 238
Chief Financial Officer (CFO)’s Review 240
CEO & CFO’s Declaration to the Board 242
8 Mercantile Bank Limited
Annual Report 2019

LETTER
OF TRANSMITTAL

All Shareholders of Mercantile Bank Limited

Bangladesh Bank
Bangladesh Securities and Exchange Commission
The Registrar of Joint Stock Companies and Firms
Dhaka Stock Exchange Limited
Chittagong Stock Exchange Limited and
All other Stakeholders

Subject: Annual Report for the year ended December 31, 2019

Dear Sir(s):

We are pleased to present before you the Annual Report-2019 together with the Audited Financial Statements (consolidated and solo) as at
December 31, 2019 and statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes
in equity, and notes to the accounts for the year ended December 31, 2019 of Mercantile Bank Limited for your kind information and record.

Thanking you,

Yours sincerely,

Abu Asghar G. Haruni

Senior Vice President &
Company Secretary
 OVERVIEW

Head Office
61 Dilkusha Commercial Area, Dhaka-1000

Notice of the 21st Annual General Meeting

Notice is hereby given to all members of Mercantile Bank Limited (the “Company”) that the 21st Annual General Meeting
(AGM) of the members i.e., shareholders of the Company will be held on Wednesday, June 24, 2020 at 11:00 am virtually by
using digital platform through the link http://mbl.bdvirtualagm.com (in pursuance with BSEC Order SEC/SRMIC/04-231/932
dated 24 March 2020) to transact the following businesses and to adopt necessary resolutions:

Agenda:
1. To receive, consider and adopt the Audited Financial Statements for the year ended December 31, 2019, Reports of
the Auditors’ and Directors’ thereon;
2. To declare Dividend for the year ended December 31, 2019 as recommended by the Board of Directors;
3. To elect/re-elect Directors and to accord post-facto approval for appointment of Dr. Md. Hamid Ullah Bhuiyan as an
Independent Director of the Bank;
4. To appoint External Auditors of the Company for the term until conclusion of the next Annual General Meeting and to
fix up their remuneration;
5. To appoint Corporate Governance Compliance Auditors of the Company for the term until conclusion of the next
Annual General Meeting and to fix up their remuneration;

 By order of the Board



 Abu Asghar G. Haruni

Dated: June 04, 2020  SVP & Company Secretary
Dhaka, Bangladesh

Notes:

a) The “Record Date” was Tuesday, June 02, 2020. The shareholders, whose name appeared on the Register of members of the Bank or
in the Depository (CDBL) on the Record Date are eligible to attend the 21st AGM and entitled to the dividend, as approved.

b) Shareholders entitled to attend and vote at this virtual AGM may appoint a proxy to attend and vote. The “Proxy Form”, duly filled,
signed and stamped at BDT 20 must be sent through email to share@mblbd.com not later than 48 hours before commencement of
the AGM.

c) Annual Report-2019 alongwith Attendance Slip and Proxy Form, and Notice of the AGM are being sent to all the members by courier
service / post / email address available as per CDBL record. Members may also collect the Annual Report & Proxy Form from the
registered Office of the company or from the website of the company, i.e. www.mblbd.com.

d) Concerned Depository participants (DP) / Stock Brokers are requested to provide us with a list of their margin loan holders who hold
MBL shares, as on record date with the details of Shareholders’ name, BO ID, shareholding position, cash dividend receivable, tax rate
etc. within June 16, 2020, along with the name of the contact person to the Share Department of the Company or at share@mblbd.
com, otherwise dividends will be paid to bank accounts of the members whose name would appear on the ‘Record Date’. The DP /
Stock Brokers are requested to provide us with their Bank Account name & number, routing number etc. to mentioned email address
for receiving the dividends of their margin loan holders.

e) The shareholders will join the virtual AGM through the link http://mbl.bdvirtualagm.com. The shareholders will be able to submit
their questions/comments electronically before 24 (twenty-four) hours of commencement of the AGM through this link and also
during the Annual General Meeting. In order to login for the virtual AGM, the shareholders need to click on the link and provide their
16 digit Beneficiary Owners (BO) account number or Folio number, name of shareholders, their number of shares and mobile no
or email number. Mercantile Bank Limited emphasizes on maintaining transparency and highest corporate governance throughout
this process and conduction of the AGM using the digital platform during this pandemics of COVID-19 when social distancing is the
highest priority to ensure health and safety for its shareholders and other stakeholders.

f) Shareholders are requested to login to the system prior to starting of the meeting at 10.30 am on June 24, 2020 Wednesday. The
webcast will start at 10:20 am. For any IT related guidance and help with the login process the respected members may contact at
+8802 9559333, +8802 9559352 or visit www.mblbd.com website.
10 Mercantile Bank Limited
Annual Report 2019
ABOUT
MERCANTILE BANK LIMITED
A Vibrant Journey
Mercantile Bank Limited (MBL) was
established by a group of perceptive
investors of aiming significant
contribution to the financial system
for sustainable economic growth of
Bangladesh. Since its inception in
June 2, 1999, the Bank has created
a credible brand impression and
achieved its customers trust and
loyalty. MBL is enlisted in Dhaka Stock
Exchange (DSE) and Chittagong
Stock Exchange (CSE) on February
16, 2004 and February 26, 2004
respectively.
The Bank has been driven by a bold
transformation strategy, dynamic
leadership and decisive management
interventions which have afforded it a
strong platform to capture emerging
opportunities. MBL renders customer
services with evolving technology
by the cluster professionals and also
working for innovative and need
based banking product and services.
Public confidence is of outmost
importance for the development
of banking industry in Bangladesh.
Keeping that in mind, MBL ensures
a culture of good corporate
governance to thrive. MBL promotes
greater efficiency, accountability
and transparency in its business
decision. Another crucial step of
MBL is to synchronize the attitudes,
belief and culture in accordance with
the needs of our human resources,
clients, stakeholders and the overall
financial system of Bangladesh.
The Bank serves a large customer
base comprising individuals and
institutions through a network of
148 branches supplemented by 181
MBL’s contribution to the economy during the year 2019
Economic value distributed
2,547.53
(BDT in Million)
ATMs, 2 subsidiaries, Agent Banking
and Islamic Banking Window- in the
name of ‘Taqwa’. Moreover, two (02)
new subsidiaries in the name of “MBL
Asset Management Limited” and
“MBL MyCash Limited” are in the
process of finalization.
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 admirable customer services.
The core activities of the Bank are
to provide all kinds of commercial
banking services including Deposits
Mobilization, Corporate Banking,
SME and Consumer Businesses,
Discounting bills, Foreign Exchange
Business, Off Shore Banking, Treasury
function, Card business, Mobile
Banking (MyCash), Internet Banking,
Locker Service and Islamic Banking
etc. MBL caters card services to its
customers by VISA dual prepaid card,
Credit Card, Debit card, VISA Medical
Card, VISA International Student
Card, VISA Dual Hajj Card and
International/Dual cards with various
up-to-date facilities. Mercantile Bank
has started centralized ‘MBL Contact
Center’ to provide banking services
to customers’ doorstep on 24/7 basis.
Innovative Solutions and
Endless Possibilities
MBL is incessantly giving efforts
to improve competitive edge and
reinforce its position as one of the
leading banks across the country
Deposited to Government exchequer
5,209.27
(BDT in Million)
by actively managing its balance
sheet to address external volatilities
in order to consistently increase the
value shared among stakeholders,
leveraging on digital solutions to drive
cost competitiveness and deliver
a superior customer experience,
continuously assessing the efficiency
and effectiveness of its operations
against best in class benchmarks and
transforming MBL’s human resources
as agents of change with the
capacity to deliver economic value to
stakeholders.
Sustainable Business Practices
MBL demonstrates strong
commitment to implement
sustainable business practices. Hence,
it formulates business strategies in
consideration with UN Sustainable
Development Goals (SDGs) and
focus robustly on asset growth is
underpinned by a solid business
strategy that ensures its operations
are managed safely, reliably and
optimally. At the same time MBL is
committed to improve the resilience
of its business model to ensure a
strong balance sheet position even
amidst the volatile macroeconomic
environment. Meanwhile MBL strives
to become a competitive market player
through continuous and ongoing
investment in systems, processes
and governance mechanism to
create a solid foundation to improve
performance and the quality of
service. To achieve these aspirations,
MBL aims to build a pool value-driven,
high performing employees who are a
true embodiment of MBL’s vision.
Community engagement
156.77
(BDT in Million)
 OVERVIEW

Credit Rating

Emerging Credit Rating Limited (ECRL) 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, 2018 and other qualitative and quantitative information up to the date of rating.
ECRL also placed the Bank with “Stable Outlook”.

Rating
Basis of Information Date of Rating
Long Term Short Term

2016 22 May, 2017 AA ST-2

2017 22 May, 2018 AA ST-2

2018* 22 May, 2019 AA ST-2

*Rating based on December 2019 is under process.

Moody’s has assigned ‘B2’ rating to MBL that reflects MBL’s good Profitability, well matched Maturity Profile, modest Asset
Quality and Solvency Profile.

Affiliations

Dhaka Stock Exchange Chittagong Stock Society for Worldwide International Chamber of
Limited (DSE) Exchange Limited (CSE) Interbank Financial Commerce Bangladesh
Telecommunication Limited (ICCB)

Bangladesh Association Association of Bankers, The Institute of Bankers Bangladesh Institute of

of Banks (BAB) Bangladesh Limited (ABB) Bangladesh (IBB) Bank Management (BIBM)

Bangladesh Foreign Bangladesh Association Primary Dealers Bangladesh

Exchange Dealer of Publicly Listed Limited (PDBL)
Association (BAFEDA) Companies (BAPLC)
12 Mercantile Bank Limited
Annual Report 2019

AWARDS AND
RECOGNITION
Since its inception, Mercantile Bank has created a credible brand impression
nurtured with the visionary leadership style of our late founder Chairman, Md.
Abdul Jalil, with a view to aiming significant contribution towards Bangladesh
economy. The Bank has ensured customer satisfaction; build up stakeholders’
confidence, community engagement, regulatory compliance and good
governance which are well supported by its compliance status. The effect is
more evident than ever a bank with a clean image, excellent reputation, firm
structure and a competent & committed team. MBL is now all set to focus more
on the growth trajectory, with an unyielding attitude towards upholding the
notions, upon which the organization has been built.

ICAB Best Presented Annual Report

Mercantile Bank has achieved ‘Certificate of Merit’ for the
category of Private Bank in 19th ICAB National Award for
Best Presented Annual Report 2018. Md. Quamrul Islam
Chowdhury, Managing Director & CEO of Mercantile Bank
Limited received the crest from Honorable Commerce
Minister Mr. Tipu Munshi, MP.

Dhaka WASA Bill Collection Award

Dhaka WASA has awarded Mercantile Bank Limited as the
recognition of one of the highest bill collecting banks. In
a gala program titled ‘Dhaka WASA Bill Collection Award’
organized at Pan Pacific Sonargaon, Dhaka, Honorable
LGRD minister Mr. Md. Tazul Islam handed over the
certificate and crest to Md. Quamrul Islam Chowdhury,
Managing Director & CEO of Mercantile Bank.

Most Loved Brand

MBL MyCash Limited obtained third position as most loved
brand from Bangladesh Brand Forum Award 2019.
 OVERVIEW

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

CORE VALUES
Our seven core values are the foundation of our culture, our brand and our business
strategy. These Core Values embody who we are as a Company, guide our decisions
and inspire us to go ahead.

Customer Delight
Customer satisfaction pervades all our activities. We appreciate that Customer’s
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 of 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.
14 Mercantile Bank Limited
Annual Report 2019

BUSINESS
ETHICS
MBL believes that business ethics practices provide a foundation for the stability
and sustainable growth of the bank, and supports the bank’s 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.

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 Bank’s
instructions while setting interest
rates of deposits and loans. It also
keeps interest spread (difference
between interest rate charged
on loans and interest rate paid
on deposits) at or below the rate
prescribed 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 To continue and increase
the information of its customers in CSR activities.
confidential and does not disclose
such confidential information to
others unless with the consent of the
customers or as required by the law.

To remain compliant
in the spirit of law and
industry practice.

CODE
OF CONDUCT
Salient features of MBL employees’ code of conduct:
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.
subordinate employee or a candidate
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
for employment in the Bank.
Not participate in gambling and
betting or any such activities.
OVERVIEW
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 Bank’s 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.
16 Mercantile Bank Limited
Annual Report 2019

STRATEGIC
OBJECTIVES

To increase shareholders’ value To be one of the top three financial

institutions in Bangladesh in terms
of efficiency

To achieve economic value addition To be one of the top five financial institutions in
Bangladesh in terms of market share in all significant
market segments we serve.

To be market leader in product

innovation

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 better customer services, we are constantly developing innovative and technologically advanced
products 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.
 OVERVIEW

CORPORATE
PRIORITIES

Ensure customers satisfaction Combination of skilled human

by meeting their demands with resources and state-of-art technology
excellent customer services. in providing banking services.

Enlarge customers freedom by Focus on green banking by

designing need based banking ensuring eco friendly financing.
products and services.

Manage credit risk by diversified loan Corporate clients credit rating to remain
portfolio with emphasis on SME, Retail compliant in terms of regulatory capital
and Agriculture financing. requirement.

Mitigate different risks through To be transparent, accountable and

efficient risk management trustworthy in all aspects of our
techniques. banking activities.

Strengthen Internal Control and Compliance To introduce effective products and

(ICC) system to establish a very systematic and services for achieving Sustainable
effective compliant culture. Development Goals (SDGs).
18 Mercantile Bank Limited
Annual Report 2019

CORPORATE
PROFILE
Registered Name Mercantile Bank Limited

Legal Status Public Limited Company

Incorporation No. C-37775 (2075)/99

Bangladesh Bank License No. BL/DA/6289/99

Date of Incorporation May 20, 1999

Date of commencement of Business June 02, 1999

Registered & Head Office 61, Dilkusha Commercial Area, Dhaka-1000, Bangladesh

Authorized Capital BDT 12,000 million

Number of Employees 2,418

Number of Branches 148

Number of AD Branches 22

Number of ATMs 181

Number of CDMs 20

Swift Code MBLBBDDH

Telephone 880-2-9559333, 9553892

Fax 880-2-9561213

Web www.mblbd.com

Accounting Year End December 31

Ahmed Zaker & Co.

Auditor
Chartered Accountants
K M Hasan & Co.
Tax Advisor
Chartered Accountants
1. Mercantile Bank Securities Limited
2. Mercantile Exchange House (UK) Limited
3. MBL Asset Management Limited
Name of Subsidiaries
(Obtained certificate of incorporation)
4. MBL MyCash Limited
(Separate subsidiary company in the process of finalization)
 BOARD OF DIRECTORS

Executive Risk Management Audit

Committee Committee Committee

Company Board Managing Director

Secretary (CS) Audit Cell & CEO

Audit Unit
CORPORATE

Board
Division
ORGANOGRAM

Share Chief Risk Deputy Chief Chief Small Chief Anti Chief Operating Chief Financial
Department Officer (CRO) Business Officer Business Money Laundering Officer (COO) & Officer (CFO)
(DCBO) Officer (CSBO) & Compliance Head of ICCD
Officer (CAMLCO)

Human
Resources
Division Credit Risk Corporate Mobile Banking International Division Regional Offices Financial
Management Division Banking Division Division & all other Administration
Treasury CTPC
Branches Division
Division (Front RMG Cell Agriculture Credit IT Division
Branches Division (Operations
Office) Structured Finance Division Treasury
Card & ADC Division Only)
Offshore Banking Mid Office
Corporate Supply Chain Finance Research &
Consumer & Retail Division General Services
Affairs Division Planning Division
Special Asset Banking Division Division
Islamic Banking NRB Division
MBL Training Management Division SME Financing MIS Division
Institute Division
Central Law Division Division General Banking
Central Clearing
Division
Agent Banking Department
Credit Administration
Division AML & CFT Division
Division Compliance Unit
Risk Management Institutional Liability Treasury Back Office
Monitoring Unit
Marketing
Division
Department
Sustainable Finance Unit Public Relations
ICT Security Unit Department
OVERVIEW
20 Mercantile Bank Limited
Annual Report 2019

SPONSORS
OF THE BANK

Md. Abdul Jalil Shamsur Rahman Khan Md. Anwarul Haque

Founder Chairman (Deceased) (Deceased)

Dr. Toufique Rahman Chowdhury Golam Faruk Ahmed Alhaj S.M. Shakil Akhter
(Deceased)

Engr. Mohd. Monsuruzzaman Md. Mizanur Rahman Chowdhury Alhaj Tara Meah Khan
(Deceased)

Subrota Narayan Roy Md. Shahidul Ahsan Jamshed R Khan

(Deceased)

Bilkis Begum Al-Haj Akram Hossain (Humayun) Md. Tabibul Huq

(Deceased)
 OVERVIEW

A. S. M. Feroz Alam M. Amanullah Md. Abdul Hannan

Mohd. Selim Feroza Begum S. M. Shafiqul Islam (Mamun)

A.K.M. Shaheed Reza Nargis Anwar Md. Nasiruddin Choudhury

Mohammed Salam Hossain Jalaluddin Ahmed Yeamin Morshed Alam, MP

Morzina Khan Monzu Md. Shahabuddin Alam

22 Mercantile Bank Limited
Annual Report 2019

DIRECTORS'
PROFILE

Morshed Alam, MP
Chairman

Mr. Morshed Alam is one of the most eminent business
icons of present time in the country. With perception and
technical expertise, he has become a leading entrepreneur
of Bangladesh. He has been the member of parliament
of 10th & 11th National Parliament representing the
constituency of 269, Noakhali-2 (Senbagh-Sonaimuri). 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 the People’s Republic of
Bangladesh for his remarkable contribution in the business
arena. He is also recipient of Prime Minister’s National
Export Trophy - Gold during the FY 2013-2014, 2012-2013,
2011-2012, 2006-2007, 2000-2001. Recipient of Prime
Minister’s National Export Trophy – Silver during the FY
2013-2014, 2012-2013, 2010-2011, 2009-2010. Recipient of
Prime Minister’s National Export Trophy - Bronze during
the FY 2010-2011. Recipient of “Best Enterprise Award
2007” (Awarded by DHL / The Daily Star).
He is the founder of Bengal Group of Industries which consists
of as following;
01. Bengal Windsor Thermoplastics Limited – Chairman
02. Bengal Media Corporation Limited (Rtv) – Chairman
03. Bengal Plastics Limited – Chairman
04. Bengal Poly Paper Sack Limited – Chairman
05. Bengal Flexipak Limited – Chairman
06. Bengal Adhesive & Chemical Products Limited –
Chairman
07. Bengal Polymer Wares Limited – Chairman
08. Bengal Plastic Pipes Limited – Chairman
09. Romania Food & Beverage Limited – Chairman
10. Power Utility Bangladesh Limited – Chairman
11. Hamilton Metal Corporation Limited – Chairman
12. Bengal Feed & Fisheries Limited – Chairman
13. Designer Fashion Limited – Chairman
14. Bengal Retails Limited - Chairman
15. Bengal Renewable Energy Limited – Chairman
16. Bengal Hotel and Resort Limited – Chairman
17. Bengal Cement Limited – Chairman
Besides, he is the member of trustee board of The People’s
University of Bangladesh and Director of Mercantile
Bank Securities Limited. He was the Chairman of Board
of Directors of Mercantile Bank Limited during the year
2013-2014. Being a philanthropist, he founded Morshed
Alam High School at Nateswar Noakhali and is a life donor
member of Kazi Nagar Madrasa and Bazra High School at
Noakhali and Motijheel Ideal High School, Dhaka.

Al-Haj Akram Hossain (Humayun)
Vice Chairman
Al-Haj 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 has
established himself as an icon in the business sector of the
country with global reputation of being reliable in various
business sectors. He is the Chairman and Managing
Director of FARS group and Vice Chairman of Mercantile
Bank Limited. He was the Chairman of Mercantile Bank
Limited for the period of 2015-2016.
He is the founder of Rajapur High School & College, Al-Haj
Shamsul Hoque Miah Adarsha Academy, Khaja Ahmed
Bidda Niketon. He was also the Founder President of
Bangladesh Paper Importers Association, Former General
Secretary of Bangladesh Paper Merchants Association and
Founder President of Greater Noakhali Paper Merchants
Samobay Somittee. He is also the Chairman of Managing
Committee of Rajapur High School and College, Al Haj
Shamsul Hoque Miah Adarsha Academy and Sindurpur
Rowshan Ulum Wadudia Madrasha. He is the founder
member and Vice President of Board of Trustee of Feni
University and Life Member of Feni Heart Foundation,
Feni Diabetic Somittee, Officers Club, Feni, Feni Somittee,
Dhaka, and Founder Member of All Community Club,
Dhaka. Apart from the aforementioned affiliations, he is
also General Body Member of FBCCI, Bangladesh.
OVERVIEW
Mohd. Selim
Vice Chairman
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. He is the
Chairman of Synthia Securities Limited and Sponsor of
Mercantile Bank Securities Limited, both are members 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 the Chairman of Abdur Razzaque & Mohd.
Selim Trustee Foundation, Life Member of Shariatpur Zilla-
Kalyan Samity, Life Member of Greater Faridpur Kalyan
Samity, Trustee Member of ‘Shariatpur Shikhha Kalyan
Trust’, and Donor Member of Purba Madaripur College. He
is a proud father of 3 sons & 1 daughter, while 3 sons are
directors of 3 Insurance Companies and also director of
Synthia Securities Limited and only daughter lives in UK.
24 Mercantile Bank Limited
Annual Report 2019
Md. Shahidul Ahsan
Chairman, Executive Committee
Mr. Md. Shahidul Ahsan, an entrepreneur and industrialist
of the country, 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 Agro Industries
Limited, AG Foods Limited, AG Property Development
Limited, Regent Holdings Development Limited, AG
High-Tech Limited, AG Green Property Development
Limited, AG Ceramics Limited, AG Poly & Fiber Industries
Limited, Joina Breeders Limited, AG Broilers Limited,
AG Plastic & Accessories Industries Limited, Begumganj
Feed Mill Limited, Delta Jute Mills Limited, Priyo.com &
i-pay System Limited and Proprietor of RNS Corporation,
Friends Traders & AG Ship Breaking Industries.
He is the Managing Director of a TV channel namely
DBC 24/7 News and Delta Jute Mills Limited. He is the
Sponsor Director of Mercantile Bank Limited, National
Credit Ratings Limited and Sponsor of Mercantile Bank
Securities Limited. He is the sponsor of Meghna Bank
Limited, Swadesh Life Insurance Company Limited and
South Asia Insurance Company 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. 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.
He is the Chairman of Janakalyan High School and Joy
Narayanpur Senior Madrasha. Mr. Ahsan’s contribution
towards helping the poor and other needy groups
with economy and society and the country at large is
remarkable. Several industry presences ensure mitigation
of unemployment and positive contribution in GDP
and also he pays a very high amount of income tax to
government exchequer.
Dr. Md. Rahmat Ullah
Independent Director,
Chairman, Audit Committee
Dr. Md. Rahmat Ullah is the Dean of the Faculty of Law
and a Professor in the Department of Law under the
same Faculty of the University of Dhaka. He was the
Provost of Kabi Jashim Uddin Hall (2013-2019), University
of Dhaka. He holds the position of the Director of the
‘Quality Assurance Cell’ of the University of Dhaka and is
a Syndicate & Senate member of the University of Dhaka.
He held the position of General Secretary of the Dhaka
University Teachers Association (DUTA) in the year 2016-
2017. In December 2017, he has been appointed as a
member to the Bangladesh Judicial Service Commission
(BJSC) by his Excellency President of the People’s
Republic of Bangladesh for 5 years. Other than these, he
is an Adviser to the Department of Law, City University,
Bangladesh; Governing body member, Alhaz Mockbul
Hossain University College, Dhaka, and an Independent
Director of the Mercantile Bank Limited.
He completed LL.M from Baku State University, Azerbaijan
and PhD from Kiev State University, Ukraine. During his
professional career, he was a syndicate member (2005-
2009) to the University of Dhaka and other Universities
and worked as adjunct faculty member to several private
universities. He participated in professional workshops,
seminars and trainings in India, Nepal, China, Belgium,
Mongolia, Malaysia, Netherland, Switzerland, Thailand,
Qatar and Iran. His fields of interest are human rights and
commercial laws.
He is a prolific researcher in the field of human rights and
legal issues. He worked as a national and international
consultant to different projects on human rights and legal
issues with UNHCR, UNDP, HRDC, European Union, MJF
and National Human Rights Commission, Bangladesh. He
has published more than twenty two research articles
on human rights and legal issues and is an author of one
book and co-author of four books. He is also Executive
Editor of five research books. He is a committed human
rights activist and desires to work for the people for a just
and better society.
 OVERVIEW

Md. Anwarul Haque A. S. M. Feroz Alam

Chairman, Risk Management Committee Director

Mr. Md. Anwarul Haque was born on January 03, 1951 in Mr. A. S. M. Feroz Alam was born on December 01, 1960
a respected Muslim family in Dhaka. He is a renowned in a respectable Muslim family of Patuakhali. He is a
businessman of the country. He obtained the B.Sc. Eng renowned businessman of the country.
(Civil) Degree and engaged himself in business since
last 44 years in different sectors like Construction, He has traveled about 65 countries for business purpose.
Real Estate, Export & Import and Trading. His business He is the Chairman of Bengal Trading Limited (Japan). He
affiliation is versatile and diversified. He is the Managing is the Sponsor Shareholder of Premier Leasing & Finance
Director of Living Plus Limited. He is a Director of Holiday Limited and Chairman of Premier Leasing Securities
Travels Limited, Premier Leasing Securities Limited and Limited. He was the Director of renowned Television
Mercantile Bank Securities Limited. He is also Director channel “RTV”. He is also Founder of Saheda Gafur
of Securities Broking & Management Limited. He is a Ibrahim General Hospital, Kalaiya, Patuakhali.
Shareholder & Ex-Chairman of Global Insurance Limited
and Sponsor Shareholder of Premier Leasing & Finance
Limited. His association with the above mentioned well-
reputed organization 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 Limited, Dhanmondi Club Limited and
Uttara Model Club Limited.
26 Mercantile Bank Limited
Annual Report 2019

M. Amanullah Md. Abdul Hannan

Director Director

Mr. M. Amanullah, the founder of the conglomerate, Aman Group Mr. Md. Abdul Hannan was born on 27th July, 1962 in a
of Companies, is a very respected and distinguished industrialist respectable Muslim family at Faridgonj, Chandpur. He is
in Bangladesh. His business acumen has lead to the successful one of the leading businessmen of the country, especially
launch of many, diversified businesses, under the umbrella in export of readymade garments.
of Aman Group of Companies and he holds the position of
Chairman of the group. He is the Chairman & Managing Director of Dabster &
Associates Limited, Reu Fashion Limited, ZHAS Garments
Born and brought up in a business family, Mr. M. Amanullah Limited, M.H. Trading and Murad Apparels Limited. He
started pursuing his own business endeavors since 1968. He is Director of Eastern University of Bangladesh and Pan
introduced Arena Industries Limited, engaged in industrial Pacific Hospital Limited. He is also the Chairman of the
contract-packaging and Mousumi Enterprises Limited and Arena Trustee Board of Sholla A. Ali School & College, Faridgonj,
Consumer Products Limited, for distribution and manufacturing Chandpur. His contributions towards the society are quite
of consumer products. He introduced the India-Bangladesh joint remarkable.
venture, HRI BD, in the field of cosmetic industry and holds the
position of Chairman of the leading manufacturer of Hair Care
products in Bangladesh. He also introduced Arena Securities
Limited in the financial sector and is the current chairman of
Dayton Securities, which are members of Dhaka Stock Exchange
and registered as corporate houses for operation in the capital
market of the country. In the textile sector Mr. Amanullah set
up a manufacturing unit in the name of Aman Spinning Mills
Limited, which manufactures 100% export oriented carded
yarn & leading the sector as one of the top value added yarn
suppliers. He is one of the Directors of “Amader Shomoy’, a top
circulating daily print media in Bangladesh. He is one of the
founders, Ex Chairman & present Advisor of the publicly listed
company Global Insurance Limited, and serves as an advisor
of Desh General Insurance Company Limited. He is the past
Chairman of Mercantile Bank Limited and contributed heavily
towards the efficiency optimization of Mercantile Bank during
his tenure. He is currently holding the position of Chairman of
Mercantile Bank Foundation.

Mr. M. Amanullah is also recognized for his contribution to the

community and to the nation in the field of education. He is the
past Chairman of the Board of Trustees of Presidency University,
Dhaka. He is also the founder president of Gulshan North Club. For
his 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 has been declared CIP, Commercially Important
Person, for many years for his significant contribution to the
country’s export trade sector.
 OVERVIEW

A.K.M. Shaheed Reza Md. Nasiruddin Choudhury

Director Director

Mr. A.K.M. Shaheed Reza is an entrepreneur and renowned Mr. Md. Nasiruddin Choudhury is a businessman and
businessman of the country. By dint of perseverance and talent, entrepreneur of the country. His versatile and diversified
he established himself as a far-sighted and well-known industrialist business affiliation and keen perception in construction
and business personality. Among his establishments, Textile and and real estate has made him a leading businessperson.
Readymade Garments are the prime sectors. With new zeal for After obtaining B. Sc. Engg (Civil) degree from BUET, he
creation, he has also spread his step into the arena of mass media.
is engaged in business for almost 43 years. His affiliations
He has praiseworthy pioneer role in social service and benevolent
mainly consist of construction, real-estate, export and
works of the society.
import, trading and travel business.
Mr. Reza is the Chairman of Reza Group, Sponsor Director of
Mercantile Bank Limited, worked as Chairman of the Board of Md. Nasiruddin Choudhury is the Managing Director of
Directors, Chairman of the Executive Committee & the Audit Technocon Limited, a renowned construction company
Committee of the Board of Directors of the Bank. He is the sole at home & abroad and also a partner of Techno-Con. He
proprietor of Bangla Radio FM 95.2, Director of National Credit is the Chairman of Mercantile Bank Securities Limited,
Rating Limited and Director of reputed English Daily “The Daily Premier Leasing Securities Broking Limited and Holiday
Observer”. He is the elected President of Feni Chamber of Travels Limited. He is a sponsor shareholder and former
Commerce and Industry and also Director of The Federation of Vice-Chairman of Premier Leasing & Finance Limited and
Bangladesh Chamber of Commerce and Industry (FBCCI), the apex shareholder of Delta Hospital Limited.
body of business community of Bangllades. Besides, Mr. Reza holds
memberships in many elite clubs including Dhaka Club Limited. He His contributions toward socio-cultural and professional
was the Chairman of Global Insurance Limited. He has been declared
activities are quite remarkable. He is a fellow of Institute
CIP by the Ministry of Commerce, People’s Republic of Bangladesh.
of Engineers, Bangladesh, donor member of Gulshan Club
Mr. Reza is associated with number of educational and social Limited, life member of Dhaka Club Limited, Dhanmondi
institutions. He has been working as Chairman of the Managing Club Limited, Uttara Model Club Limited and BUET
Committee of Dhalia High School, Bagerhat High School and Graduates Club Limited.
Thakurhat Government Primary School of Feni district for a pretty
long time. Apart from these, he has massive role for the overall
development of infrastructural and educational environment of some
other educational institutions. He is the founder of Progati Balika
Bidda Neketan and Nurul-Rawnak Diabetics health care centre,
Rajnagor, Feni. He is the life member of Feni Diabetic Association
and Vice President of Heart Foundation, Feni. He is also the Trustee
Member and Vice President of Feni University. Many meritorious
poor students are availing opportunity for getting higher education
regularly through his donation.

Around 26 years of experience in establishing export-oriented

industries put Mr. Reza on the peak of success and his excellency in
corporate management is also exemplary. His experience in textile
and readymade garments will be a guideline for future generation.
Active role of Mr. Reza in enforcing compliance in fast growing
Banking sector will encourage pushing the sector forward.

Mr. A.K.M. Shaheed Reza after completion of Post Graduation

degree in Management started his career as a Banker in 1986.
But creative aptitude did not allow him to confine in the services.
Ultimately, he quitted the job in 1993 and started his journey as a
business entrepreneur. During this short period he proved himself as
a successful business conglomerate of the country.
28 Mercantile Bank Limited
Annual Report 2019
Alhaj Mosharref Hossain
Director
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) Limited. He is the
Founder and Director of Hossainya Hefje Quaran Madrasa
& Atimkhana, Chhagalnaya, Feni.
M.A. Khan Belal
Director
Mr. M.A. Khan Belal was born on of 2nd November, 1958 in
a respectable Muslim family of Begumgonj, Noakhali. Mr.
Belal obtained M.Sc (Chemistry) from Dhaka University.
Mr. Belal has a high academic background and
commendable experience in the field of Trade, Industry,
Shipping, Banking and other businesses in Bangladesh.
Shamrat Group of Companies Limited is one of the
leading Group of Companies in Bangladesh and he is the
Chairman of the Group.
Mr. Belal always remain engaged himself with various
social, cultural, educational and religious organizations.
He is the founder of Gopal Pur Foundation, Al-Haj Aman
Ullah Khan Ideal Kindergarten and Al-Haj Aman Ullah
Khan Hafezee Madrasha. He is also the Chairman of Podi
Para Fazil Madrasha, Kachihata Dakhil Madrasha and
K.M Bohumukhi Mohila Alim Madrasha. Mr. Belal was the
Chairman of Gopal Pur Ali Haider High School and Ex-
executive Member of the Siddheswari University College.
He is also the Vice President of Noakhali Zilla Samity,
Executive Member of the Mohammedan Sporting Club,
Dhaka, Member of the Dhaka Club Limited and also the
Member of the Noakhali Club. He assumed the office of
Region Chairman of the Lions Club of Dhaka Premier Dist
315-B1, Chairman Mannikka Nagar Dhakil Mohila Madrasha.
Mr. Belal is also Advisor, Begumgonj Jubo Kallyan Samity,
Advisor, Tulachara Manob Kallyan Club and President,
Gopal Pur Ali Haider High School Ex- Student Kalyan
Parishad.
Mr. Belal donated in various sectors like orphanages,
School, Mosque, Madrasha, Sports etc.

Dr. Md. Hamid Ullah Bhuiyan
Independent Director
Dr. Md. Hamid Ullah Bhuiyan, Professor of Department of
Accounting & Information Systems, University of Dhaka
was appointed as an Independent Director at Mercantile
Bank Limited (MBL) in October 2019. Mr. Bhuiyan
completed his Bachelor and Masters in Accounting from
University of Dhaka with first class first position in 1994
and 1995 respectively. He has also awarded PhD Degree
in Accounting and Finance from La Trobe University,
Melbourne, Australia in 2014. His main area of interest is
“Earnings Management around the IPO’s and Seasoned
Equity Offerings”. Mr. Bhuiyan has several peer reviewed
articles in both national and international journals. He has
also presented several research papers in international
business conferences. In addition to, MBL, Mr. Bhuiyan is
also served ICB Asset Management Company Ltd., and
BDBL Investment Services as an Independent Director.
OVERVIEW
Md. Quamrul Islam Chowdhury
Managing Director & CEO
Mr. Md. Quamrul Islam Chowdhury is the Managing
Director and CEO of Mercantile Bank Limited. He was the
Additional Managing Director of the same bank.
He joined Mercantile Bank Limited in February 2001 and
posted as Branch Incumbent of Khatungonj Branch,
Chattogram. He served as Head of Agrabad Branch,
Chattogram, Zonal Head of Chattogram Region and Head
of Main Branch, Dhaka.
He started his banking career in National Bank Limited
in 1983 as Probationary Officer. Mr. Chowdhury later
joined in NCCBL holding position of Senior Asstt. Vice
President and Branch In-Charge of Jubilee Road Branch,
Chattogram.
Mr. Chowdhury obtained Master's degree in Marketing
from Dhaka University. He is highly committed and
successful banker especially in exploring business
opportunities and providing creative solutions for the
difficulties in banking operations. He has a wide range of
experience in International Trade, Card & Retail Banking
and Mobile Financial Services. He converged training
program, seminar & workshop in both home and abroad
viz: USA, Japan, India, Hong Kong, Malaysia, Singapore
etc.
30 Mercantile Bank Limited
Annual Report 2019

WE
MOURN
Our deepest condolence on the departure of our beloved ones

Md. Abdul Jalil

Founder Chairman
January 21, 1941 - March 6, 2013

Md. Tabibul Huq Golam Faruk Ahmed Dr. Matiur Rahman

August 19, 1952 – June 23, 2014 April 7, 1953 – January 26, 2013 January 11, 1946 – September 13, 2012

Shamsur Rahman Khan Alhaj Tara Meah Khan Jamshed R Khan

January 25, 1933 – January 2, 2012 August 30, 1931 - March 16, 2010 July 10, 1943 – August 30, 2008
 OVERVIEW

OUR
PRIDE
Ex Chairmen

Md. Abdul Jalil Alhaj Mosharref M. Amanullah Morshed Alam, MP

Founder Chairman Hossain

Al-Haj Akram Md. Shahidul Ahsan A.K.M. Shaheed

Hossain (Humayun) Reza

Ex Managing Director & CEOs Ex Chief Advisor

M. Taheruddin Shah Md. Nurul Alam Dewan Mujibur Lutfar Rahman Sarkar
Rahman Ex-governor
Bangladesh Bank

A.K.M. Shahidul M. Ehsanul Haque Kazi Masihur

Haque Rahman
32 Mercantile Bank Limited
Annual Report 2019

TOP MANAGEMENT
TEAM

7 6

5 4

2 3

1. Md. Quamrul Islam Chowdhury 5. Adil Raihan

Managing Director & CEO Deputy Managing Director & CSBO

2. Mati ul Hasan 6. Shamim Ahmed

Additional Managing Director & CRO Deputy Managing Director & CAMLCO

3. G.W.M. Mortaza 7. Dr. Md. Nurul Islam

Deputy Managing Director Deputy Managing Director & COO

4. Md. Zakir Hossain

Deputy Managing Director & DCBO
SENIOR
MANAGEMENT TEAM
Sitting from left:
Dr. Md. Nurul Islam
Deputy Managing Director & COO
G.W.M. Mortaza
Deputy Managing Director
Mati ul Hasan
Additional Managing Director & CRO
Md. Quamrul Islam Chowdhury
Managing Director & CEO
Md. Zakir Hossain
Deputy Managing Director & DCBO
Adil Raihan
Deputy Managing Director & CSBO
Shamim Ahmed
Deputy Managing Director & CAMLCO
Standing from left:
Basudeb Paul
Vice President
A.K.M. Atiqur Rahman
Senior Executive Vice President & CTO
Ashim Kumar Saha
Senior Executive Vice President
Md. Rafiqul Hoque Bhuiyan
Senior Executive Vice President
Shah Md. Sohel Khurshid
Senior Executive Vice President
Liaquat Fazlur Rashid
Senior Vice President
Md. Moshaddeque Hossain
Senior Vice President
Tapash Chandra Paul, PhD
Chief Financial Officer
Mohammad Iqbal Rezwan
Senior Executive Vice President
Md. Mahmood Alam Chowdhury
Senior Executive Vice President
OVERVIEW
34 Mercantile Bank Limited
Annual Report 2019

HEADS OF DIVISIONS, DEPARTMENTS,

UNITS & CELLS AT HEAD OFFICE
OVERVIEW
36 Mercantile Bank Limited
Annual Report 2019

DIVISIONS, DEPARTMENTS,
UNITS & CELLS AT HEAD OFFICE
Risk Management Division Board Audit Cell
Mati ul Hasan, AMD & CRO Md. Nurul Alam, VP

Special Asset Management Division MIS Division

Md. Mahmood Alam Chowdhury, SEVP Mohammad Faruqe Ahmed, VP

Mobile Banking Division AML & CFT Division

Md. Rafiqul Hoque Bhuiyan, SEVP Md. Nasim Alam, VP

Information Technology Division SME Financing Division

A.K.M. Atiqur Rahman, SEVP & CTO Basudeb Paul, VP

Treasury Division (Front Office) General Banking Division

Ashim Kumar Saha, SEVP Mohammad Khorshed Alam, VP

Corporate Banking Division Treasury Division (Back Office)

Shah Md. Sohel Khurshid, SEVP Muhammad Sharif-Ur-Rahman, VP

Human Resources Division General Services Division

Mohammad Iqbal Rezwan, SEVP Md. Gias Uddin, VP

Corporate Affairs Division Branches Division

Ahsanul Haq Chowdhury, EVP Mohammad Hossain, VP

Credit Administration Division Off-Shore Banking Unit (OBU)

Md. Ata Rabbani Chowdhury, EVP Md. Shaheen Reza, VP

Research & Planning Division International Division

Abu Syed Md. Mohiuddin, SVP S. M. Mahbubul Alam, VP

Central Law Division Compliance Unit

Md. Moshaddeque Hossain, SVP Md. Abul Kashem, FVP

Board Division/Share Department Monitoring Unit

Abu Asghar Gholam Haruni, SVP Syed Tariqul Islam, FVP

Audit Unit Central Clearing Department

Md. Enayet Ullah, SVP Md. Almasuddin Ahmed, FVP

Card & ADC Division NRB Division

Md. Abu Sakin, SVP Md. Toriqul Islam, FVP

Agriculture Credit Division Agent Banking Division

Liaquat Fazlur Rashid, SVP Darpan Kanti Roy, FVP

Consumer & Retail Banking Division Treasury Mid Office

Md. Ashiqur Rahman, SVP Mohammad Zahid Hafiz Khan, AVP

Credit Risk Management Division Institutional Liability Marketing Department

Shamim Ahmed, SVP Tapon James Rozario, AVP

Financial Administration Division ICT Security Unit

Abhijit Kumar Saha, FCA, DCFO Md. Faisal Hossain, AVP
 OVERVIEW

REGIONAL
OFFICES
Chattogram Regional Office, Chattogram
Mishkat Arcade (Level-1)
21/1, Agrabad C/A, Chattogram
Phone: 031-2529445 (ZH), 716421, 723181, 721772
Fax: 88-031-2529445
Regional Head: Jashim Uddin

North Bengal Regional Office, Bogura

Zamzam Tower, Jaleswaritola,
Kalibari Moor, Bogura Sadar, Bogura - 5800
Phone: 01701-209794, 051-71002
Regional Head: A.S.M. Zakir Hossain

Cumilla Noakhali Regional Office, Feni

361, S.S.K Road, Rajnagar Complex,
Feni Sadar, Feni - 3900
Phone: 01713-193961, 01701-209793
Regional Head: Md. Mahfuzul Karim

MERCANTILE BANK
TRAINING INSTITUTE (MBTI)
Mercantile Bank Training Institute (MBTI)
Swadesh Tower
41/6 Purana Paltan, Dhaka-1000
Phone: 7174016
Fax: 88-02-9571096
Principal: Javed Tariq
38 Mercantile Bank Limited
Annual Report 2019

BRANCHES
NETWORK

RANGPUR

SYLHET

B a y o f B e n g a l

HEADS
OF BRANCHES
DHAKA REGION
Main Branch
Mia Amanullah Bhaban,
63 Dilkusha C/A, Dhaka-1000
Phone: 02-9571618, 9559333
Mobile: +88-01976002070
Fax: 88-02-9554410
HOB: G.W.M. Mortaza, DMD
Kawran Bazar Branch
Dhaka Trade Centre, 99 Kazi Nazrul Islam
Avenue, Kawran Bazar, Dhaka- 1215 Road- 16 (New), 27 (Old)
Phone: +88-02-8189613, 5815687
Mobile: 01730-320284 (HOB)
Fax: 88-02-58156870
HOB: A B M Eradul Islam, EVP
Motijheel Branch
Malek Mansion
128 Motijheel C/A, Dhaka-1000
Phone: +88-02-9561178, 9586944-5
Mobile: +88-01713-044832 Mobile: 01713-083617,
Fax: +88-02-9586946
HOB: Md. Abul Bashar, EVP
Mohakhali Branch
Green Delta Aims Tower
51-52 Mohakhali C/ A, Dhaka-1212
Phone: +88-02-9863215,
9891520, 9888346
Mobile: 01713-068127, Fax: 88-02-9895797
HOB: Md. Abdul Awal, EVP
Satmasjid Road Branch
House- 39/A, Road- 14/A, Satmasjid
Road, Dhanmondi , Dhaka-1209
Phone: 02-9141148, 9129335
Mobile: 01713-067451, 01713-039792
Fax: 88-02-9139183
HOB: Md. Moniar Rahman, EVP
Gulshan Branch
Hosna Center, (1st floor), House no. 106
Gulshan Avenue, Gulshan, Dhaka-1212
Phone: 02-55068965-6, 55068969
Mobile: +88-01711-535950
Fax: +88-02-55068967
HOB: Md. Jamal Hossain, EVP
Bijoynagar Branch
Akram Centre, Purana Paltan (old), 212 S.S.
Nazrul Islam Sarani (New), Dhaka - 1000
Phone: 02-47118741-42
Mobile: 01713-063586 (HOB)
Fax: 88-02-47118680
HOB: Lutful Haidar Chowdhury, EVP
OVERVIEW
Uttara Branch
House-10/A, Road-7/D, Sector-9
Uttara Model Town, Uttara, Dhaka -1230
Phone: +88-02-48931729, 48958244,
48958177, 48955879
Mobile: +88-01787-681253, 01711-546396
HOB: Abu Yusuf Md. Abdullah Haroon, SVP
Dhanmondi Branch
Sima Blossom, House- 03,
Dhanmondi R/A, Dhaka -1209
Phone: 02-5815384, 9130500, 9142691
Mobile: 01711-409191, Fax: 88-02-58151844
HOB: Farid Ahmed, SVP
Banani Branch
Ahsan Tower, 56 Kemal Ataturk Avenue,
Banani, Dhaka-1213
Phone: +88-02-9821962, 9821639-40
Fax: 88-02-9821046
HOB: Md. Fakhruzzaman Chowdhury, SVP
Rampura Branch
Circle Almas Height, 375, DIT Road,
West Rampura, Dhaka- 1219
Phone: 02-8333697, 8333703
Mobile 01819-407600(HOB)
Fax: 88-02-8322797
HOB: Zareen Ahmed, SVP
Green Road Branch
151/6, Gazi Tower, Green Road, Dhaka
Phone: 02-8157266, 9136809, 9136822
Mobile: 01730-013453 (HOB)
Fax: 88-02-9114108
HOB: Md. Farid Uddin Ahmed Bhuiyan,
SVP
Nayabazar Branch
25/1 Zinda Bahar (1st Lane)
Nayabazar, Dhaka-1100
Phone: +88- 02-57390869, 57393827
Mobile: 01730-048019
Fax: +88-02-57393655
HOB: Muhammad Fayazur Rahman Biswas, SVP
Narayanganj Branch
H R Plaza, 64 (Old), 90 (New)
Bangabandhu Road, Narayanganj
Phone: 02-7648241, 7648243
Mobile: 01713-199875 (HOB)
Fax: 88-02-7648244
HOB: Md. Shahadat Hossain Khan, VP
40 Mercantile Bank Limited
Annual Report 2019
Ashulia Branch
Bhuiyan Commercial Complex, Jamgora
Chowrasta, Ashulia, Savar, Dhaka
Phone: +88-02-7788758, 7790491
Mobile: +88-01708490257
01711-535948 (HOB)
Fax: 88-02-7790708
HOB: Md. Abul Bashar Khan, VP
Elephant Road Branch
Osman Plaza, 75 Elephant Road,
Dhaka-1205 Housing Estate Mirpur Road, Dhaka-1207
Phone: 02-9614542, 9677364
Mobile: +88-01713-199827, 01730-447368
Fax: 88-02-9669458
HOB: Md. Humayun Kabir, VP
Engineers’ Institution Branch
IEB Bhaban, 8/A, Ramna, Dhaka-1000
Phone: +88-02-47110651
Mobile: +01819-252228 (HOB)
Fax: 88-02-47110610
HOB: Lopita Mannan, VP
Moghbazar Branch
217/A, Noor Bhandari, Dommino Benvenito,
Outer Circular Road, Moghbazar, Ramna, Dhaka.
Phone: 02-8333017, 8316279, 8333016
Mobile: +88-01713-068194 (HOB) Phone: 02-7911434, 7914444
Fax: +88-02-8333018
HOB: Md. Rezaul Karim, VP
Dholaikhal Branch
Chishti Bhaban, 72, Lalmohon Shaha
Street, Dholaikhal, Dhaka-1100
Phone: 02-9560286, 9564529
Mobile: 01730-709985 (HOB)
Fax: 88-02-7117927
HOB: Syed Ezazur Rahman, VP
Joypara Branch
Samabay Super Market
Joypara Bazar, Dohar, Dhaka
Phone: 02-7768163
Mobile: 01711-535949
Fax: 88-02-7768193 Fax: 88-02-8035529
HOB: Md. Abdul Mannan, VP
Imamganj Branch
Mohammad Hossain Complex
3 Moulvibazar Road, Calkbazar, Dhaka-1211
Phone: 02-57312970, 57312821,
57312861 Mobile: 01755-533142 (HOB)
Fax: 88-02-57312943
HOB: Md. Zillur Rahman, VP
Bhulta Branch
Haji A. Aziz Super Market
Bhulta, Rupganj, Narayanganj
Phone: 01755-637388-9
Mobile: 01713-199817 (HOB)
HOB: Mohammad Salah Uddin, VP
Aftab Nagar Branch
Power Grid Company of Bangladesh Ltd.,
Head Office (1st Floor), Jahurul Islam
City, Avenue-3, DNCC, Dhaka-1212
Phone: 02-09612142344
Mobile: +88-01713-048869
HOB: Md. Aminul Islam, VP
Asad Gate Branch
Dream by Icon, Holding # 2/4 ,Block-A Mohammadpur
Phone: 02-9115320, 9114350
Mobile: 01708-454399
Fax: 02-9115360
HOB: A T M Monjurul Karim, VP
Pragati Sarani Branch
Green Orlando, 42/4 Pragati Sarani
Baridhara, Dhaka-1212
Phone: 02-8411503, 8411501-2
Mobile: 01714-094446
Fax: 88-02-8411504
HOB: Md. Shahidul Alam, VP
Gareeb-E-Newaz Branch
22, Gareeb-E-Newaz Avenue,
Sector# 13, Uttara, Dhaka.
Mobile: 01730-453497
Fax: 88-02-7911434
HOB: Abul Kashem Mohammad Fazlul Hoque, VP
International Airport Road Branch
A R A Mansion, 77-78 Airport Road
Amtali, Mahakhali C/A, Dhaka-1212
Phone: 02-9857368, 9757480
Mobile: 01755-532810 (HOB)
Fax: 88-02-9857435
HOB: Al Mansur, VP
Darus Salam Road Branch
Holding-2/A, Darus Salam Road
Mirpur-1, Dhaka-1216
Phone: +88-02-9035044
Mobile: 01730-328681 (HOB)
HOB: A.K.M Saifuddin Masuk, VP
Baipail Branch
Zahir Plaza, Baipail, North Gazirchat, Shanirvar,
Dhamsona Union, Ashulia, Savar, Dhaka
Phone: 02-7789322 (PABX)
Mobile: 01709 652410
Fax: 88-02-7789321
HOB: Md. Salahuddin Khan, FVP
Konabari Branch
Motiur Rahman Plaza, Konabari Bus
Stand, Konabari, Joydevpur, Gazipur
Phone: 02-9298485
Mobile: +88-01777-764999, 01713-199822
Fax: 88-02-9298486
HOB: Md. Abul Kashem Khandaker, FVP

Ring Road Branch
Choice A J Golden Tower, 2/1 Ring
Road, Shyamoli, Dhaka-1207
Phone: +88-02-9103329, 9131972
Mobile: 01730-373896 (HOB)
Fax: 88-02-9103330
HOB: Paritosh Kumar Dhar, FVP
Board Bazar Branch
Mansur Super Market (1st & 2nd Floor)
Board Bazar, Gazipur
Phone: +88-02-9293639, 9291604
Mobile: 01713-044846 (HOB)
Fax: 88-02-9291660
HOB: Md. Akram Hossain, FVP
Demra SME/Krishi Branch
Matuail New Market Bhaban,
Konapara, Demra, Dhaka
Phone : 02-7559708, 02-7542911
Mobile: 01730-340795
Fax: 88-02-2752904
HOB: Md. Sana Ullah, FVP
Mirpur Branch
Razia Plaza, 184 Senpara Parbata, Begum
Rokeya Sarani, Mirpur-10, Dhaka- 1216 Ati Bazar Union, Shakta
Phone: +88-02-9014582, 9008852
Mobile: 01755-502191
Fax: 88-02-8034577
HOB: Mohammad Nuruzzaman Chowdhury, FVP
Nawabpur Road Branch
NBC Tower, 24-25, Nawabpur Road
Wari, Dhaka
Phone: 9592126, 9592125
Mobile: 01755-632917 (HOB)
Fax-880-2-9592127
HOB: Mohammad Khabir Hossain, FVP
Abdullahpur Bazar Branch
Tajimuddin Plaza, Kalakandi
Abdullahpur Bus stand
South Keraniganj, Dhaka.
Mobile: 01755-632919 (HoB), 01777-
792509
HOB: Abul Kalam Azad, FVP
Arambag Branch
190 Inner Circular Road
Motijheel, Dhaka-1000
Phone: 02-09612142343
Mobile: +88-01713-013799
HOB: Partha Sarkar, FVP
Hemayetpur Branch
Hatem Ali Complex, Singair Road Momen Tower
Hemayetpur, Savar, Dhaka-1340
Phone: +880-02-44065050
Mobile: +88-01713-452995 (HOB),
01730-452979
HOB: Md. Mokbul Hossain, FVP
OVERVIEW
Gazipur Chowrasta Branch
Shah Jilani Tower, Tangail Road, Gazipur
Chowrasta, Gazipur Sadar, Gazipur
Phone: 02-49261245, 49261243
Mobile: 01709-633758 (HOB)
Fax: 880-2-49261399
HOB: Mirza Yahia Uddin Ahmed, FVP
Tejgaon Gulshan Link Road Branch
Impetus Center, Holding # 242/B, Bir Uttam Mir
Shawkat Ali Road (Tejgaon Gulshan Link Road),
Tejgaon Industrial Area, Dhaka.
Phone: 02-8878937, 8878936
Mobile: 01713-423763 (HoB), 01701-209784
HOB: Md. Showkat Hossain, FVP
Aganagar Branch
Choto Masjid Road (Ispahani), Aganagar,
South Keranigonj, Dhaka-1310
Phone: 02-7763658, 7763657
Mobile: 01730-340794 (HOB)
Fax: 88-02-7763659
HOB: Dilip Chandra Das, FVP
Atibazar Branch
Haji Edu Market
Keraniganj, Dhaka.
Phone: 02-55103289, 55103290
Mobile: 01755-632916 (HOB)
HOB: Md. Shamsul Alam Siddique, FVP
Sakhipur Branch
Shipa Super Market
Sakhipur Bazar, Sakhipur, Tangail
Phone: 09232-56274
Mobile: 01755-587439 (HOB)
Fax: 88-09232-56273
HOB: Mohd. Zulfikar Haider, FVP
Donia Branch
661, Donia Road, Purba Dholaipar
Jatrabari, Dhaka
Phone: +88-02-7443306
Mobile: +88-01755-618140
Fax: +88-02-7443308
HOB: Abul Basar Muhammad Zakir Hossain, AVP
Kishoreganj Branch
573, M M Shopping Complex
Gouranga Bazar, Kishoreganj
Phone: 0941-51016, 51018
Mobile: 01755-637381 (HOB)
Fax: 88-0941-51017
HOB: Md. Mehboob Hossain Khan, AVP
Mymensingh Branch
65 Choto Bazar, Mymensingh
Phone: 091-63313, 63326
Mobile: 01787-660381 (HOB)
Fax: 88-091-63316
HOB: Shampad Kumar Chanda, AVP
42 Mercantile Bank Limited
Annual Report 2019
Rajbari Branch
Khorshed Plaza, Holding - 240,
College Road, Rajbari Municipality,
Rajbari
Phone: 09612142340
Mobile: 01713-013797, 01962-420525
HOB: Md. Abul Kalam Azad, AVP
Madanpur Branch
Akota Somabay Market
Madanpur, Bandar, Narayanganj.
Mobile: 01777-759525 (HOB),
01777-759526
HOB: Mohammad Jahangir Alam, AVP
Gouripur Branch
Razu Plaza, Gouripur,
Ashulia, Savar, Dhaka
Phone: 01708-454394
PABX: 01708-494132
HOB: Mohammed Samaun Mollah, FAVP
Netrokona Branch
A Rashid Market, Holding # 0703-00,
Mukterpara Sarak, Netrokona.
Mobile : 01701-209780,
PABX: 095162687, 095162686 (Direct)
HOB: A K M Mahbubur Rahman, FAVP
Shimrail Branch
S. M. Tower, Holding No: B-11/1
Siddirganj, Narayangonj
Mobile: 01708-454391 (HOB)
PABX: 7691562, 7691563
HOB: Asif Ahmed Porag, FAVP
Velanagar Branch
Khadiza Mansion, Jailkhanamoor,
Velanagar, Narsingdi.
Phone: 02-9452497-8
Fax-880-2-9452499
Mobile: +88-01713-279558 (HOB)
HOB: Md. Bashir Ahmed, FAVP
Shariatpur Branch
Italy Plaza, Shariatpur Sadar Road
Palong, Shariatpur
Mobile: +88-01713-048886
HOB: Moniruzzaman Khan, FAVP
Jhitka Bazar Branch
City Plaza, Jhitka Bazar,
Harirampur, Manikgonj
Mob: 01713-369357 (HoB)
Phone: 02-7729192
Fax: 02-7729193
HOB: Kishor Ray, FAVP
Manikganj Branch
City Center, Holding#16, Manikganj
Bus Stand, Dhaka-Aricha Mahasarak,
Manikganj.
Phone: 02-7720370, 7720329
Mobile: 01701-209786,
HOB: Bikash Kumar Biswas, FAVP
Nawabganj Branch
Sajeda Complex, Kashimpur, Kolakopa,
Nawabgonj, Dhaka.
Phone: 09612-142334
Mobile: 01816-550686, , 01716-881097
HOB: Md. Abu Nasir Shofiur Rahman
Bhuiyan, FAVP
Gorai Branch
S. M. Mansion, Gorai Hatuvanga Road,
Mirzapur, Tangail
Phone: 01708-454393
PABX: 01708-494133
HOB: Ardhendu Sen, FAVP
Madaripur Branch
137 & 138/1, Monohar Putti, Puran
Bazar, Sadar Thana, Madaripur
Phone: 0661 - 62885 (HOB)
0661 - 62898 (PABX), 01717-698283
Fax: 0661 - 62884
HOB: H. M. Shah Alam, PO
Barodi Bazar Branch
Barodi Plaza, Mouza & Union - Barodi,
Sonargaon, Narayanganj
Phone: 09612142337
Mobile: 01713-013782, 01916-269306
HOB: Md. Yaseer Arafat, PO
Damudya Branch
Synthia Plaza, 318 Main Road,
Damudya Bazar, Damudya, Shariatpur
Phone: 06023-56204
Mobile: 01755-533146 (HOB)
Fax: 88-06023-56201
HOB: Mohammad Moniruzzaman, PO
Bhedarganj Branch
High School Road
Bhedarganj, Shariatpur
Mobile: +88-01713-048879
HOB: Muhammad Israfil Khan, PO
Goshairhat Branch
Hazi Super Market
Mitrasen potti, Goshairhat, Shariatpur
Phone: 06024-75216, 75219
Mobile: 01708-454392
HOB: Mohammad Shahidul Alam, SEO
Bhojeshwar Bazar Branch
Khan Tower, Bhojeswar Bazar,
Naria, Shariatpur
Mobile: 01713-384497 (HOB)
01730-048067
HOB: Monjour Ahmed, SEO

CHATTOGRAM REGION
Agrabad Branch
Mishkat Arcade, 21/1 Agrabad C/A,
Double Morring, Chattogram
Phone: +88-031-716421, 723181
Mobile: 01713-491779 (HOB)
Fax: 88-031-716459
HOB: Mesbah Uddin Ahamed, SVP
Khatunganj Branch
599 Ramjoy Mohajan Lane
Khatunganj, Chattogram
Phone: 031-626101, 626102, 031-622751
Mobile: 01711-723051 (HOB)
Fax: 88-031-635514
HOB: Mohammad Nizamul Hoque, SVP
Khulshi Branch
Salam Heights, Zakir Hossain Road,
South Khulshi, Chattogram
Phone: 031-612258, 031-612257
Mobile: 01713-048095 (HoB)
Fax: 031-612259
HOB: Suraya Nasrin, VP
O R Nizam Road Branch
191, CDA Avenue, Commercial View
Complex, East Nasirabad, Chattogram
Phone: 031-657512, 2550876
Mobile: 01713-103663 (HOB)
Fax: 88-031-2550877
HOB: Anupam Kumar Paul, VP
Jubilee Road Branch
Kamal Chamber (2nd Floor)
61 Jubilee Road, Kotwali, Chattogram
Phone: 031-621018, 624819
Mobile: 01713-384485
Fax: 88-031-626072
HOB: Sardar Mohammad Zobayar, VP
Sheikh Mujib Road Branch
304, Sheikh Mujib Road,
Chattogram
Phone: 031-2514236, 2524126-7
Mobile: 01755-651980 (HOB)
Fax: 88-031-2514235
HOB: Moynul Qasem Chowdhury, FVP
Jhilongja Branch
Hotel Sea Palace
Kalatoli Road, Cox’s Bazar
Phone: 0341-62234
Mobile: 01713-103662 (HOB)
Fax: 88-0341-63734
HOB: Md. Meharub Hossain Khan, AVP
A K Khan Moor Branch
Anjuman Tower, A K Khan Moor
Chattogram
Phone: 031-2773367-69
Mobile: 01755-533140 (HOB)
Fax: 88-031-2773368
HOB: Mohammad Nazmul Hasan, AVP
OVERVIEW
Access Road Branch
Amin Tower, Holding # 601/722
Agrabad Access Road, Hali Sahar
Chattogram.
Phone: 031-723926-8, 01713-161483
(HoB), 01701-209787 (Br.)
HOB: Md. Abu Taher, AVP
Chattogram EPZ Branch
S. A. Tower, Airport Road, South
Halishahar, Bandar, Chattogram
Phone : 031-740682-3, 742217
Mobile: 01730-318185 (HOB)
Fax: 88-031-740684
HOB: M. Nazrul Islam, AVP
Madam Bibir Hat Branch
S.A. Tower, Madambibir Hat
Bhatiary, Shitakund, Chattogram
Phone: +88-031-2780465,
Mobile: +88-01730-076127
01755-564372, Fax: +88-031- 2780686
HOB: Abul Hasan Mohammad Masum Billah, AVP
Patiya SME/Krishi Branch
Rahman Mansion, 1284/1 Club Road,
Patiya, Chattogram
Phone: 03035-56185
Mobile: 01730-320813 (HOB)
Fax: 88-03035-56579
HOB: Shyamal Kanti Barua, FAVP
Baraiyarhat Branch
Feroza Saleha Center, Asian Highway
(Shantirhat Road), Baraiyarhat
Paurashava, P.S: Jorarganj, Mirsharai
Chattogram
Mobile: 01709-652417, 01709-652414
HOB: Abu Ahsan, FAVP
Patherhat Branch
S M Shopping Center, (1st & 2nd Floor)
Pather Hat, Noapara, Raozan, Chattogram
Phone: 031- 2573351
Mobile: 01755-637384 (HOB)
Fax: 88-031- 2573352
HOB: Mohammad Nuruddin Chowdhury, FAVP
Rangamati Branch
Hotel Green Castle, 1 Pathor Ghata,
Reserve Bazar, Rangamati-4500
Phone: 0351-61267-8
Mobile: 01730-709986 (HOB)
Fax: 88-0351-61275
HOB: Ranjit Bahadur Roy, FAVP
Sadarghat Branch
Humayun Heights, Holding no. 70
Sadarghat Road, Sadarghat,
Chattogram
Phone: 031-633291-2
Mobile: 01708-454397,
HOB: Nizam Uddin Md. Mamun, FAVP
44 Mercantile Bank Limited
Annual Report 2019
CUMILLA-NOAKHALI REGION
Amishapara SME/Krishi Branch
Mosharaf Complex
Maddha Bazar, Amishapara
Shonaimuri, Noakhali
Mobile: 01819-234889 (HOB),
01730-340792 (Br)
HOB: Md. Mizanur Rahman, FVP
Feni Branch
Kazi Plaza, 105, S. S. Kaiser Road
Feni Sadar, Feni
Phone: 0331-63558, 63559
Mobile: 01713-452994 (HOB)
Fax: 88-0331-63557
HOB: Md. Shahadat Hossain, FVP
Chowmuhani Branch
Morshed Alam Complex, 2nd Floor,
Railgate, Chowmuhani, Begumganj, Noakhali
Phone: +88-0321-52960
Mobile: +88- 01713-036991 (HOB)
Fax: +88-0321-52966
HOB: Mahbub Jamil, FVP
Faridganj Branch
Saima Abdullah Plaza, Chandra Road,
Faridganj Bazar, Chandpur
Phone: 08422-64378
Mobile: 01812-314077 (HOB)
Fax: 08422-64377
HOB: Kamrul Islam Zabed, FVP
Maijdee Court Branch
Honey Dew Point, 10 Abdul Malek Ukil
Sarak, Maijdee Court, Noakhali
Phone: 0321-71710
Mobile: 01730-709983(HOB)
Fax: 88-0321-71712
HOB: Mohammad Mamunul Haque, AVP
Comilla Branch
1042/945 Jhawtala, Comilla.
Phone: 081-65275, 65276
Mobile: 01713-384498 (HOB)
HOB: Mohammed Mamunur Rashid,
AVP
Chandpur Branch
285,Techno Hannan Complex, 1st floor
Hazi Mohasin Road, Sadar, Chandpur.
Phone: 0841-66511-12
Mobile: 01713-369354, 01715024353,
01708515398, Fax: 880-841-66513
HOB: Md. Murad Hossain Chow., AVP
Lakshmipur Branch
R B Tower, Thana Road,
Laxmipur Sadar, Laxmipur
Phone: 0381-62390, 62389 (HoB)
Mobile: 01713-369352 (HoB)
Fax: 0381-62391
HOB: H.S. Shahreer, FAVP
Suaganj Bazar Branch
Noor Mansion, Puratan Road,
Suaganj Bazar, Cumilla
Phone: 01709-652411,
01701-209798 (HOB)
HOB: Rajon Saha, FAVP
Mandari Bazar Branch
Kamalur Rahim Super Market,
Mandari Bazar, Chandragonj, Laxmipur
Phone: 0381-62377, 62375
Mobile: 01708-454396
HOB: Mohammed Kalu Mia, FAVP
Ashuganj Branch
Aziz Plaza (1st & 2nd Floor), West Bazar,Char
Chartola, Ashuganj, Brahmanbaria.
Phone: 08528-74592
Mobile: 01755-533145 (HOB)
Fax: 08528-74593
HOB: Ahsan Sikder, FAVP
Udoy Shadur Hat Branch
Malek Bhaban,Ramanandi,
Union-1 No. Charmatua, Sadar,
Noakhali.
Phone: 01819319027, 01708490258
HOB: M. M. Fazle Rabbee, FAVP
Samir Munshir Hat Branch
Patowary Market, Samir Munshir Hat,
6 No. Kabilpur Union,
Senbug, Noakhali
Mobile: 01709-633759 (HOB)
01709-652415 (Branch)
HOB: Mohammad Zia Uddin, FAVP
Bazra Bazar Branch
Babul Shopping Complex, Islamgonj
Bazara, Bazra, Sonaimuri, Noakhali.
Phone: 0321-51374, Ext. 101,
Mobile: 01713-369358, 01717135339.
Fax: 880-321-51375
HOB: Abul Hasnat Muhammad Zaber, PO
Hajiganj Branch
Canada Tower
Chanpur-Cumilla Highway Road
Haziganj, Chandpur
Mobile: +88-01713-048876
HOB: Robel Ahmed, PO
Rajnagar SME/Krishi Branch
Balua Chowmuhani, Dhalia, Rajnagar
Feni Sadar, Feni.
Phone: 0331-73782, 73783
Mobile: 01730-340793 (HOB)
Fax: 88-0331-73784
HOB: Md. Ziaul Karim, PO

Dagonbhuiyan Branch
Mizan Tower, 273, Basurhat Road
Dagonbhuiyan, Feni
Phone: 03323-79105
Mobile: 01730-328684 (HOB)
Fax: 88-03323-79106
HOB: Monowar Hossain, PO
Munshirhat Branch
Patwary Tower, Main Road,
Fatehpur, Munshirhat, Fulgazi, Feni.
Phone: 01701-209789, 01708-494137
HOB: Zia Uddin Ahmed, PO
Kabirhat Branch
Fuad Centre, Holding-37,
Hospital Road, Kabirhat Municipality,
Noakhali.
Phone: 09612142336
Mobile: 01713-013790, 01676-286089
HOB: Fazlul Huq, PO
Banglabazar Branch
Baroichatal, Banglabazar,
Begumganj, Noakhali.
Phone: 0321-53305, 56631
Mobile: 01730-709987(HOB)
Fax: 88-0321-53164
HOB: Mohammad Jafar Ullah Chowdhury, PO
Senbag Branch
DK Plaza, Upazila Road
Senbag, Noakhali
Mobile: +88-01713-048870
HOB: Zahir Alam, PO
Chandina Branch
Alhaj Abdul Hamid Member Market
Chandina, Cumilla.
Mobile: +88-01713-048874
HOB: Gautam Chandra Debnath, PO
Chhagalnaiya Branch
Sofura Arcade, 1340/1341, College
Road, Chhagalnaiya Municipality, Feni.
Phone: 09612142341
Mobile: 01713-013792, 01818-291928
HOB: Md. Zahid Hossain, PO
OVERVIEW
Rahimanagar Branch
Shahjalal Shopping Complex
North Union Parishad
Kochua, Chandpur
Mobile: +88-01713-048900
HOB: Mohammad Lokman Hossain, PO
Kankirhat Branch
R. K. Chowdhury Shopping Complex
Kankirhat, Senbag, Noakhali
Phone: 01708-454390, 01708-494131
HOB: Nizam Uddin, PO
Korais Munshi Bazar Branch
Mamun Super Market, Korais Munshi
Bazar, Somaspur, Dagonbhuiyan, Feni
Mobile: 01787-681252 (HoB)
01711-486615
HOB: Mohammad Shafiqul Islam, SEO
Chandragonj Branch
Matrichaya Bhaban, Deopara, Afzal
Road, Chandragonj Union Parishad,
Chandragonj, Lakshmipur.
Phone: 0382-581196-7
Mobile: 01701-209781, 01711-186030
HOB: A S M Mohi Uddin, SEO
Subarnachar Branch
Haris Chowdhury Bazar, West
Char Jubili, PO+PS: Char Jabbar,
Subarnachar, Noakhali.
Phone: 01709-652412 (HOB)
Mobile: 01815-918790
HOB: Mohammad Shamsul Haque, SEO
Chitoishi Branch
Rokeya Super Market, Chitoishi,
Chitoishi Purbo Union Parisad,
Shahrasti, Chandpur.
Phone: 01713-586009, 01678-392040,
01701-209782 (Br)
HOB: Mohammad Abdullah-Al-Mamun, EO
46 Mercantile Bank Limited
Annual Report 2019

NORTH BENGAL REGION

Rajshahi Branch Bogura Branch
ZODIAC Plaza, Shaheb Bazar (Zero Borogola, Tinpotti, Bogura Sadar,
Point), Rajshahi Bogura
Phone: +88-0721-771214, 772261 Phone: 051-69840
Mobile: +88-01711-419079 (HOB) Mobile: 01713-044835 (HOB)
Fax: 88-0721-771215 Fax: 88-051-69190
HOB: Md. Abdul Matin, VP HOB: Md. Alauddin, FVP

Dinajpur Branch Sapahar Branch

Dinajpur Plaza, Goneshtola
Dinajpur Sadar, Dinajpur
Phone: 0531-61217, 66912(HOB)
Mobile: 01730-328682 ,01730-47971(HOB)
Fax: 88-0531-61218
HOB: Md. Mamunur Rashid, VP
Saha Mansion, Sapahar Bazar, Main
Road, Sapahar, Naogaon
Phone: 07432-74081
Mobile: 01713-068096 (HOB)
Fax: 07432-74080
HOB: Sarwar Md. Mahbub Murshed, AVP

Naogaon Branch Niamatpur Branch

J.R. Super Market, Old Bus Stand,
Main Road, Chakdev, Naogaon
Phone: 0741-63331, 61981, 61982
Mobile: 01711-419057
Fax: 88-0741-63230
HOB: Abdullah Al Mahmud, VP
Girls Plaza, 216 Balahore
Niamatpur Sadar, Naogaon
Phone: 07427-56257
Mobile: 01755-637385
Fax: 88-07427-56256
HOB: Md. Abdur Razzak, AVP

Chapainawabganj Branch Natore Branch

65-67 Jhilim Road (1st & 2nd Floor)
Boro Indara More, Chapainawabgonj
Sadar, Chapainawabgonj
Phone: 0781-51719, 51720
Mobile: 01713-365090, Fax: 88-0781-51707
HOB: A.H.M. Kawsarul Islam, FVP
Julekha Complex
Holding No.81, Dhaka Road, Alaipur
Natore Sadar, Natore
Phone: 0771-61740
Mobile: 01708-454398 (HoB)
HOB: Milon Kumar Sarker, AVP

Sheesha Hat Branch Thakurgaon Branch

Main Road, Sheesha Hat, Porsa, Afsar Uddin Chowdhury Plaza
Naogaon College Road, Asrampara, Thakurgaon
Phone: 01932-710888 Phone: 0561-61368
Mobile: 01755-501879 Mobile: 01755-533143
HOB: Shah Md. Mizanur Rahman, FVP Fax: 88-0561-61367
HOB: Abu Ala Md. Mazharul Islam, AVP

Nazipur Branch Debiganj Branch

Noor Market, Harirampur Holding no. 1892, Haque Plaza,
Nazipur,Patnitala, Naogaon Debigonj, Panchagarh .
Phone: 07428-63293 Phone: 05654-56151
Mobile: 01755-637386 Mobile: 01755-533147
Fax: 88-07428-63294 Fax: 88-05654-56152
HOB: Md. Ruhul Amin Siddiqui, FVP HOB: H. M. A Razzaque, AVP

Rangpur Branch Gobindaganj Branch

Press Club Complex Biponi Bitan (1st
Floor), Station Road, Rangpur.
Phone: 0521-51324, 51299
Mobile: 01713-201636, 01755-500543
Fax: 88-0521-51110
HOB: Md. Hazrat Ali, FVP
Anowara Super Market
Gobindaganj, Gaibandha
Phone: 05423-75083, 75387
Mobile: 01755-637387 (HOB)
Fax: 880-05423-75168
HOB: Md. Hasanat-E-Rabbi, FAVP

Nilphamari Branch Pabna Branch

Bari Plaza, Bara Masjid Road,
Nilphamari
Phone: 0551-62007
Mobile: 01755-533144 (HOB)
Fax: 88-0551-62008
HOB: Md. Arafat Mostofa, FVP
Munshi Complex, Hazi Abdul Gani
Sarak, Boro Bazar, Pabna
Phone: 0731-63356,
Mobile: 01755-632918
Fax: 88-0731-63354
HOB: Md. Shafiqul Islam, FAVP

Lalmonirhat Branch
Shahan Shopping Complex
Holding No: 0369-00, Puran Bazar
Lalmonirhat Sadar, Lalmonirhat
Phone: 01708-454395
PABX: 0591-62189, 62190
HOB: Md. Toufiqul Islam, FAVP
Sirajganj Branch
Matam Tower, Holding - 50, S S Road,
Sirajganj Municipality, Sadar, Sirajganj
Phone: HoB: 01713-013776,
09612142335, 01717-575137
HOB: Md. Kamrul Hasan, FAVP
GREATER KHULNA REGION
Khulna Branch
Rupsha Plaza,, 73, KDA Avenue C/A,
Sonadanga, Khulna
Phone: 041-813561, 813562
Mobile: 01713-453018, 01713-400641
Fax: +88-41-813563
HOB: Altamash Al-Masood Jamali, VP
Jassore Branch
A. Ali Complex
45 R. N. Road, Jashore
Phone: 0421-62933
Mobile: 01713-0328683
Fax: 88-0421-65392
HOB: Md. Monjur Hossain, FVP
Chuadanga Branch
Malik Tower, Holding# 43 & 107 Borobazar,
Shahid Abul, Kashem Sarak, Chuadanga
Phone: 0761-63641, 63871
Mobile: 01716-704544
Fax: 88-0761-63761
HOB: Md. Atiur Rahman Khan, FAVP
OVERVIEW
Ishwardi Branch
Center Point, Holding# 283/257,
Pabna-Ishwardi Main Road,
Ishwardi, Pabna
Phone: 07326-64768
Mobile: 01701-209788, 01733-779974
HOB: Md. Nazrul Islam, FAVP
Kalai Branch
Samad Talukder Shopping Complex,
Holding-0048/01, Joypurhat Mokamtola
C&B Road, Kalai Municipality, Joypurhat.
Phone: 09612142342
Mobile: 01713-013794, 01712-854300
HOB: Md. Ali Martuza, PO
Kushtia Branch
A. Hamid Market, N. S. Road, Holding no.
1, WARD no. 03, Kushtia-7000
Phone: 071-72411, 72412
Mobile: 01713-199807
Fax: 88-071-72413
HOB: Belal Ahmed Rony, FAVP
Satkhira Branch
Haji Market
South Polashpole
Satkhira Sadar, Satkhira
Mobile: +88-01713-0489902
HOB: Md. Shahan Shah Alam, FAVP
Jhenaidah Branch
Sultan Market, Holding - 31, Huseyn
Shaheed Suhrawardy Road, Jhenaidah
Municipality, Jhenaidah
Phone: 09612142338
Mobile: 01713-013781, 01715-396462
HOB: Md. Touhiduzzaman, PO
48 Mercantile Bank Limited
Annual Report 2019

GREATER BARISAL REGION

Barishal Branch Jhalakathi Branch
141 Sadar Road, Barishal-8200 Al - Marjan,
Phone: 0431-2176209 30, Kumarpatti, Jhalakathi
Mobile: 01713-384496, 01713-386879 Mobile: 01777-759524
Fax: 88-0431-2176208 Phone: 0498-62911, 62947
HOB: Golam Moula, VP Fax: 0498-62948
HOB: Md. Mosleh Uddin, FAVP

Bhola Branch Mathbaria Branch

Karnaphuli Complex, House # 3373 Samabay Bank Limited Authority
Sadar Road, Bhola. Building, Mathbaria Patharghata Road,
Phone: 0491-62721-2 Mathbaria, Pirojpur
Mobile: 01755-637382 (HOB) Phone: HoB: 01713-013786,
Fax: 0491-62720 09612142339, 01717-065900
HOB: Masum Iqbal, AVP HOB: Md. Faruque Sikder, FAVP

Patuakhali Branch Khepupara Branch

151-152, Ashrab Noor Mansion, Natun
Bazar, Patuakhali Sadar, Patuakhali-8600
Phone: 0441-62979
Mobile: +88-01730-340790
Fax: 880-441-62971
HOB: Md. Masudur Rahman, FAVP
Society Super Market, Notun Bazar
Sarak, Khepupara, Kolapara, Patuakhali
Mobile: 01701-209785, 01718-439798
Phone: 04425-56610, 56611
HOB: Ashikul Islam, PO

Kalaiya Branch
Shimon Plaza Kalaiya Union,
Bauphal, Patuakhali
Phone: 04422-56166,04422-56221
Mobile: 01713-369359 (HoB)
Fax: 880- 4422-56375
HOB: Moudud Ahmed, FAVP

GREATER SYLHET REGION

Sylhet Branch Sunamganj Branch
Raisot Tower Zaman Complex, Arpin Nagar, (Old
Laldighirpar, Sylhet Bus Stand), 52-01, Sunamgonj
Phone: 0821-723650, 723651 Phone: 0871-61277-8
Mobile: 01713-386896 Mobile: 01755-533148 (HOB)
HOB: Debojyoti Majumder, VP Fax: 880-871-61280
HOB: Ahmedur Rahman, FAVP

Moulvibazar Branch Goala Bazar Branch

152/2 Court Road,
Moulvibazar Sadar, Moulvibazar
Phone: 0861-62871, 62872
Mobile: 01713-068126
Fax: 88-0861-62873
HOB: Md. Rezaul Haque Chowdhury, VP
Bhutu Babu Super Market
Goala Bazar, Osmaninagor
Balagonj, Sylhet
Mobile: +88-01713-048904
HOB: Syed Murshed Ali, PO

Subidbazar Branch Nabigonj SME/ Krishi Branch

16, Prantik, Subid Bazar, Sylhet Skylite Tower, Sherpur Road,
Phone: 0821-728371, 728372 Nabigonj, Habigonj
Mobile: 01730-452924 Phone: 08328-56307
Fax: 88- 0821-728373 Mobile: 01730-320814
HOB: : Hasan Quedrotul Ferdoush Fax: 880-8328-56306
Chowdhury, AVP HOB: Alomoy Roy, FAVP

Beanibazar Branch
Zaman Plaza
Beanibazar, Sylhet
Phone: 08223-56180
Mobile: 01713-384495, 01777-767920
Fax: 88-08223-56181
HOB: Md. Badrul Islam, FAVP
 OVERVIEW

CORPORATE
STRUCTURE

Mercantile Bank Limited

and its subsidiaries

Mercantile Bank Subsidiary

Limited Companies

Conventional Mercantile Bank

Banking Securities Limited

Off-shore Mercantile Exchange

Banking House (UK) Limited

MBL Asset Management

Agent
Limited (obtained
Banking
certificate of incorporation)

Islamic Banking MBL MyCash Limited

(obtained Bangladesh Bank (separate subsidiary company
permission during the year) in the process of finalization)
50 Mercantile Bank Limited
Annual Report 2019

MESSAGE FROM THE CHAIRMAN

OF THE BOARD OF DIRECTORS

Morshed Alam, MP
Chairman

Dear Shareholders,
AS-SALAMU-ALAIKUM
The year under review saw Mercantile
Bank Limited (MBL) clearly forging
ahead, and becoming an impactful
player within the banking industry
of Bangladesh. The Bank’s strategic
and financial performance during the
year was commendable given the
challenging operating environment
and it is indeed my pleasure to
welcome you all to the twenty first
Annual General Meeting and present
to you the Annual Report for the
financial year ended 31 December
2019.
The Bank continued to deliver on its
commitment to shareholders with a
Return on Equity (ROE) of 10.99% and
an Earnings per Share (EPS) of BDT
2.32. Bank’s Net Asset Value Per Share
(NAVPS) stood at BDT 22.31 which is
a clear indication that the bank is on
the right track of value creation. The
Board has proposed a 16% dividend
(11% Cash & 5% Stock) for approval
at the forthcoming annual general
meeting, up from 15% Stock Dividend
in the previous year. The dividend
declared is a clear affirmation of our
commitment to deliver consistent
value to our shareholders whilst
ensuring we enhance our equity base,
to empower our growth strategy
and comply with the regulatory and
prudent capital requirements.
OPERATING ENVIRONMENT
Against a difficult backdrop that
included intensified US-China trade
and technology tensions as well as
uncertainty on Brexit, momentum
in global activity remained soft in
2019. There were positive surprises
to growth in advanced economies,
but weaker-than-expected activity
in emerging markets and developing
economies. Growth was better than
expected in the United States, Japan
and the Euro area. Among emerging
market and developing economies,
GDP in China was stronger than
forecast. Elsewhere in emerging Asia,
as well as in Latin America, activity
has disappointed. Despite the upside
surprises in headline GDP for some
countries, data more broadly paint
a picture of subdued global final
demand, notably in fixed investment.
Inventory accumulation of unsold
goods lifted first quarter GDP in
the United States and the United
Kingdom, while soft imports boosted
output in China and Japan.
Bangladesh is steadily maintaining
economic growth. The country
achieved on average more than
6 percent growth rates for more
than one decade. From FY2015-16,
Bangladesh has achieved GDP growth
rate of more than 7 percent over four
consecutive years. In FY2018-19, GDP
growth stood at the record highest
8.15 percent which was 7.86 percent
in the previous fiscal year. Continuing
the earlier trend, the average per
capita national income increased to
US$1,909 in FY2018-19, up by US$58
from the previous fiscal year.
PERFORMANCE IN 2019
In this operating context, the Bank
performed satisfactorily to record total
assets and operating profit growth of
8.57% and 15.92% respectively during
the year. MBL’s NPL ratio remains
below 5% which compares favourably
against the industry average. The Bank
continued to deliver on its commitment
to shareholders with a Return on Equity
(ROE) of 10.99% and an Earnings per
share (EPS) of BDT 2.32. The Bank’s
gross loans and advances growth of
5.65% to BDT 23,689.04 crore was
supported by 7.71% growth in its
deposit base, reflecting the bank’s
strengthening deposit base and brand
recognition.
KEY STRENGTHS OF MBL
Our people are the backbone of our
business and main driving force of
the MBL brand. The commitment to
our employee is a continuous and
ongoing process. Our aim is to create
an environment where our employees
stay motivated, empowered and
feel recognized for their work which
enables them to learn and grow with
the company. In 2019, we recruited
201 new employees who will enrich
our diverse workforce.
MBL has 148 branches including 22
AD Branches across the country
to provide seamless services to its
customers. Besides, we have 181
ATMs, 20 CDMs and 2 subsidiaries
namely ‘Mercantile Bank Securities
Ltd (MBSL)’ and ‘Mercantile Exchange
House (UK) Limited’. We have 2 Off-
shore Banking Units (OBU) operating
at Gulshan and Chattogram EPZ
areas. In addition, we now have the
state of art centralized ‘MBL Contact
Center’ to provide banking services
to customers’ doorstep on 24/7
basis. At Mercantile Bank we are
upgrading our Core Banking Solutions
(CBS) Temenos T24 to version R19
which ensures real time integrated
OVERVIEW
banking services. Mercantile Bank
is strengthening its foothold, both
in terms of latest technology and
need-based products for its clients.
Moreover, the Bank has broadened its
horizon through rendering banking
services to underserved population
with ‘MBL Agent banking’ which
will expand the financial inclusion of
the country. By being operationally
excellent in all we do ensures that we
invest sustainably to unlock future
growth opportunities, while managing
our cost base by unlocking synergies
and efficiencies.
SOLID BALANCE SHEET AND
STRONG LIQUIDITY
The successful consolidation of all our
business segments is one of the things
we determined we needed in order to
maintain our growth. The second is our
financial strength: in a number of key
dimensions, Mercantile Bank has been
stable and doing better than almost all
of our leading peers.
Our capital to risk weighted ratio
(CRAR) satisfactorily meets our
regulatory requirement.
We have strengthened our
balance sheet considerably over
the years and improved its quality.
Our market risk levels and our
credit risk losses have been low.
Our liquidity reserves are better
and well above the levels required
by our regulators.
Our NPL ratio is 4.86% which is
far below the industry average
rate.
STRONG GOVERNANCE PRACTICES
Backed with a strong and experienced
Board, befitting its aspiration to
become a leading bank of prominence,
the Board of Directors remains
committed to ensure the highest
standards of corporate governance
throughout the organization with
the objectives of safeguarding the
interests of all stakeholders and
enhancing the shareholders’ value and
financial performance of the Bank.
The Board of MBL always takes
strategic decisions emphasizing good
corporate governance to protect the
interests of Shareholders and other
stakeholders at large, increasing their
confidence and establishing their trust.
They always guide the Bank towards
the goal set by the Shareholders,
ensuring the highest standards of
integrity, accountability, transparency,
ethics and professionalism of the
52 Mercantile Bank Limited
Annual Report 2019
management dealing with banking
business. For smooth functioning of
the Bank, three supporting committee
of the Board; Executive Committee,
Risk Management Committee and
Audit Committee are relentlessly
providing guidance and direction to
the Management since the inception
of the Bank.
MBL discloses all material facts to the
Stakeholders for taking their timely
economic decisions. MBL, depending
on the structure, size, and location
of the Branches and strength of its
manpower, has delegated duties and
powers to the Management. The Bank
has appointed Chief Financial Officer
(CFO) to look after the overall financial
affairs meticulously. Company
Secretary has also been appointed
to provide advice to the Board of
Directors/Management and to comply
with statutory requirements.
We firmly believe that sound control
culture has been established within
the Bank. External Auditors are
appointed by the Shareholders in the
AGM. They audit the accompanying
Financial Statements of the Bank and
provide opinion whether the Financial
Statements reflect the true and fair
views and have been prepared in
accordance with applicable rules and
regulations. For an effective control
system, separate and independent
Divisions, namely Internal Control
& Compliance Division (ICCD) and
Board Audit Division are functioning
within the Bank. Internal Audit team
of the Bank conducts their regular
audit functions based on different
manuals, instructions, guidelines and
procedures laid down by regulatory
bodies and the Board of the Bank from
time to time. The Board undertakes
prompt actions to protect the Bank
and shareholders wealth based on
internal audit reports.
COMMITMENT TO SUSTAINABILITY
At Mercantile Bank Limited (MBL), our
sustainability strategy is connected to
our vision of making finest corporate
citizen. Guided by our core values of
customer delight, innovation, socially
responsible, shareholders value,
ethical values, caring for human
resources and commitment, we are at
the heart of society and we want to be
a positive force in it. One of the ways
we do this is with corporate social
responsibilities (CSR) under various
programs including sponsorship of
arts, culture and sports programs,
donations to charitable organizations
and education scholarships. As a
responsible corporate citizen, we have
made concerted efforts to embed
the principles of sustainability to our
daily operations and processes. These
efforts are reflected in the Bank’s
diverse workforce, environmental
and social screening criteria, lending
towards underserved segments of
the economy and ongoing investment
in community engagement projects.
These initiatives are discussed in
further detail in subsequent sections
of this Annual Report. The Bank’s
holistic approach to value creation
is also reflected in its corporate
reporting and the Bank has continued
to enhance the quality and readability
of its Integrated Annual Report.
The Bank’s commitment towards
transparent reporting was recognised
at the ICAB Best Presented Annual
Report Awards 2018 and at several
times.
OUTLOOK 2020
In 2020, our top most challenges shall
be to attain quality asset portfolio,
to reduce the amount of classified
loans, to increase non-interest earning
businesses, and to avail low cost
refinance schemes so that the cost
of funds could be reduced and the
desired reduction in lending rate
(single digit) can be achieved. Our
strategies next year will include:
exploiting the growing rural deposit
basket by setting up smaller low
cost rural sub branches and agent
banking booths. We are also going
to start Islamic banking window
operations. Cross selling of different
products and services including retail
to corporate customers will also get
the top most priorities in the year.
In addition, we are going to explore
new business avenues for ensuring
a wide range of services through
establishing two subsidiaries in the
name of ‘MBL Asset Management
Limited’ and ‘MBL MyCash Limited’.
As I write to you, the global as well
as Bangladesh’s economic growth is
expected to be significantly impacted
by the spread of the COVID-19 and
the resulting disruption of economic
activity. As the global supply chain
interrupted due to international
shutdown, demand for manufactured
goods has declined, particularly
posing risks to the garment sector
of Bangladesh. Worldwide lockdown
situation could further worsen the
export and remittance income of
the country. Besides, The national
shutdown also impacts private
consumption risking loss of many
businesses. Continuing for long,
this situation could lead to the
unemployment problem. However, the
government has ramped up action to
curb the health emergency, protect
people, especially the poorest and
most vulnerable, and came up with
various financial stimulus packages,
scaled-up social protection programs
and an easing of financial conditions
for fast economic recovery. We are
committed to help the government
tackle the pandemic, accelerate
recovery, and build resilience. We
expect that the outbreak can be
brought under control quickly and the
economic activity can recover within
the second half of 2020.
ACKNOWLEDGEMENTS
The Board members are committed
to work relentlessly for protecting the
interest of our valued shareholders
and depositors and make distinctive
value additions on their contributions
to the cause of this Bank. 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.
My heartfelt appreciation goes to
the management, all executives and
officers for their dedicated services
to forge ahead the interest of our
beloved institution. My gratitude to the
Government of the People’s Republic
of Bangladesh, Officials of Bangladesh
Bank, officials of Bangladesh Securities
and Exchange Commission, Financial
Reporting Council, Bangladesh
Dhaka Stock Exchange, Chittagong
Stock Exchange and National Board
of Revenue. Last but not the least,
thanks to my colleagues in the Board
who have always been supportive and
agile in our endeavor to navigate the
institution in the right direction.
Warm regards,
Morshed Alam, MP
Chairman

†Pqvig¨v‡bi e³e¨
m¤§vwbZ †kqvi‡nvìviMY, cwiPvjbv cl©‡`i
m`m¨e„›`, e¨vsK e¨e¯’vcbvi m`m¨e„›`
Avm&mvjvgy AvjvBKyg| gv‡K©›UvBj e¨vs‡Ki
21Zg evwl©K mvaviY mfvq Avcbv‡`i
mevB‡K ¯^vMZ Rvbvw”Q| †`‡ki A_©bxwZ‡Z
Ae`vb ivLvi cÖZ¨q wb‡q 2iv Ryb 1999 mvj
†_‡K gv‡K©›UvBj e¨vsK my`„ß c`PviYvq
GwM‡q P‡j‡Q| P¨v‡jwÄs cwiPvjb cwi‡ek
we`¨gvb m‡Z¡I e¨vs‡Ki wewfbœ †KŠkjMZ
I Avw_©K m~P‡K 2019 mv‡ji AR©b wQj
cÖksmbxq|
wcÖq †kqvi‡nvìviMY,
2019 mv‡j wiUvb© Ab BKz¨BwU Ges †kqvicÖwZ
Avq (BwcGm) `vuwo‡q‡Q h_v‡µ‡g 10.99
kZvsk Ges 2.32 UvKv| e¨vs‡Ki †kqvicÖwZ
wbUm¤ú` g~j¨ (Net Asset Value Per
Share) 22.31 UvKv Ges g~j¨-Avq AbycvZ
(Price Earnings Ratio) `uvwo‡q‡Q 5.68
¸Y hv †kqvi‡nvì‡vi‡`i cwim¤ú` e„w×
wb‡`©k K‡i| mvwe©K we‡ePbvq cwiPvjbv
cl©` evwl©K mvaviY mfvq Aby‡gv`‡bi
Rb¨ 16 kZvsk nv‡i (11 kZvsk bM` Ges
5 kZvsk ÷K) jf¨vs‡ki cÖ¯Íve K‡i‡Q|
ch©vß g~jab msiÿ‡Yi gva¨‡g e¨vs‡Ki
BKz¨BwU wfwË gReyZ K‡i, e¨emv‡qi cÖe„w×i
†KŠk‡ji mv‡_ mvgÄm¨ †i‡L I wbqš¿K
ms¯’vi hveZxq bxwZgvjv mwVKfv‡e cwicvjb
K‡i †kqvi‡nvìvi‡`i jf¨vsk cÖ`v‡bi
avivevwnKZvI eRvq ivLv n‡q‡Q|
GQvovI, 2019 mv‡j †ek wKQy cÖwZeÜKZv
_vKv m‡Z¡I e¨vs‡Ki †gvU m¤ú` I cwiPvjb
gybvdv m‡šÍvlRbK nv‡i e„w× †c‡q‡Q hv h_vµ‡g
8.57 I 15.92 kZvsk| †kÖYxK…Z F‡Yi nvi
`uvwo‡q‡Q 4.86 kZvsk hv e¨vswKs Lv‡Z
†kÖYxK…Z F‡Yi Monvi †_‡K Kg| †gvU
F‡Yi cwigvY 5.65 kZvvsk e„w× †c‡q
23,689 †KvwU UvKvq `vuwo‡q‡Q| Aciw`‡K
7.71 kZvsk AvgvbZ e„w× cvIqvq FY-
AvgvbZ AbycvZ `uvwo‡q‡Q 84.10 kZvsk|
m¤§vwbZ †kqvi‡nvìviMY,
e¨vs‡Ki cÖe„w×i aviv eRvq ivL‡Z e¨emvq
ˆewPÎKiY I AvaywbK †mev wbwðZ Kivi
cÖwZ we‡kl ¸iæZ¡ †`Iqv n‡”Q| †ek wKQy
D‡jøL‡hvM¨ m~P‡K, gv‡K©›UvBj e¨vsK
w¯’wZkxj Ges cª_g mvwii e¨vsK¸‡jvi mv‡_
cªwZ‡hvwMZvg~jKfv‡e GwM‡q hv‡”Q| G
cÖm‡½ D‡jøL Kiv hvq, gv‡K©›UvBj e¨vsK-
SyuwKfvwiZ m¤ú‡`i (RWA) Gi
wecix‡Z g~jab AbycvZ (CRAR)
wbqš¿K ms¯’v KZ©…K †eu‡a †`Iqv by¨bZg
nvi A_©vr 12.50 kZvs‡ki ¯’‡j 13.92
kZvsk ivL‡Z mÿg n‡q‡Q|
avivevwnKfv‡e e¨vjvÝkx‡Ui AvKvi
e„w×i cvkvcvwk ¸YMZgvb eRvq
†i‡L‡Q|
evRvi SyuwKi ¯Íi Ges FYSyuwK
†jvKmv‡bi cwigvY mnbxq ch©v‡q ivLvi
mÿgZv AR©b K‡i‡Q|
wbqš¿K ms¯’v KZ©…K wba©vwiZ wewfbœ
Zvij¨ AbycvZ nvi Kvg¨ ¯Í‡i ivL‡Z
mÿg n‡q‡Q|
†kÖYxK…Z FY nvi e¨vswKs †m±i Mo
nv‡ii wb‡P ivL‡Z mÿg n‡q‡Q|
myôy SyuwK e¨e¯’vcbvi cvkvcvwk e¨vs‡Ki cÖwZwU
¯Í‡i myôy K‡c©v‡iU Mf‡b©Ý wbwðZ Kivi
j‡ÿ¨ cwiPvjbv cl©` I e¨vsK e¨e¯’vcbv
KZ©„cÿ K‡c©v‡iU mykvm‡bi †kÖô Abykxjb
I gvb wbwðZKi‡Yi welqwU wewfbœ KwgwUi
Øviv ch©‡eÿY K‡i P‡j‡Q|
wcÖq †kqvi‡nvìviMY,
cÖwZôvjMœ †_‡KB †kªô K‡c©v‡iU bvMwiK
nIqvi j‡ÿ¨ e¨vs‡Ki GKwU mywbw`©ó
`k©b i‡q‡Q Ges Gi mv‡_ †UKmB Dbœqb
†KŠkjI I‡Zv‡cÖvZfv‡e RwoZ| g~j¨‡eva
I ˆbwZKZvq cwiPvwjZ n‡q mgv‡Ri
†K›`ªwe›`y‡Z G e¨vs‡Ki Ae¯’vb| Avi ZvB,
wkíKjv, ms¯‹…wZ I µxov cÖwZ‡hvwMZv¸‡jvq
c„ô‡cvlKZv, AwUw÷K wkï‡`i Dbœq‡b
mnvqZv, ¯^v¯’¨LvZ I `vZe¨ ms¯’v¸wj‡Z
Aby`vb Ges wkÿv e„wËmn mvgvwRK wewfbœ
Kg©m~wPi AvIZvq K‡c©v‡iU mvgvwRK `vwqZ¡
cvj‡b gv‡K©›UvBj e¨vsK Zrci †_‡K
mgv‡R BwZevPK cwieZ©‡b f~wgKv cvjb
K‡i P‡j‡Q| `vwqZ¡kxj K‡c©v‡iU bvMwiK
wn‡m‡e, e¨vsKwU ˆ`bw›`b Kg©Kv‡Û †UKmB
Dbœqb bxwZ Abykxjb K‡i P‡j‡Q|
m¤§vwbZ †kqvi‡nvìviMY,
2020 mv‡j Avgv‡`i P¨v‡jĸ‡jvi g‡a¨
Ab¨Zg n‡jv m¤ú‡`i ¸YMZ gvb eRvq ivLv,
g›` F‡Yi cwigvY n«vm Kivi cvkvcvwk wd
wfwËK e¨emv m¤cÖmviY Kiv Ges ¯^í-e¨‡q
cybtA_©vqb cÖKí MÖnY Kiv hvi gva¨‡g Znwej
e¨q n«vm Kiv Ges miKvi/wbqš¿K ms¯’v KZ©…K
†eu‡a †`Iqv F‡Yi my` nvi ev¯Íevqb Kiv|
ZvQvov, Bmjvwg e¨vswKs DB‡Ûv, DckvLv
Ges G‡R›U e¨vswKs ey_ ¯’vc‡bi gva¨‡g
µgea©gvb cÖvwšÍK ch©v‡qi AvgvbZ msMÖ‡ni
w`‡K cieZ©x eQi¸‡jv‡Z Avgv‡`i me‡P‡q
†ewk bRi _vK‡e|
COVID-19 Gi d‡j A_©‰bwZK Kvh©µg
e¨vnZ nIqvq †MvUv we‡k¦i mv‡_ evsjv‡`‡ki
A_©bxwZI ûgwKi g‡a¨ co‡e e‡j Avk¼v
Kiv n‡”Q| D™¢~Z cwiw¯’wZ‡Z ˆewk¦K
OVERVIEW
mieivn k„•Ljv evavMª¯’ nIqvq, AvšÍR©vwZK
evRv‡i evsjv‡`‡ki wewfbœ c‡b¨i Pvwn`v
n«vm †c‡q‡Q, we‡kl K‡i evsjv‡`‡ki ˆZwi
†cvkvK wkí SyuwKi g‡a¨ c‡o‡Q| wek¦e¨vcx
jKWvDb cwiw¯’wZ †`‡ki ißvwb Av‡qi mv‡_
†iwgU¨vÝ Avq‡KI cªfvweZ Ki‡e e‡j g‡b
Kwi| GQvovI, Af¨šÍixY kvUWvD‡bi d‡j
Drcvw`Z c‡Y¨i h_vh_ e¨envi wbwðZ
bv Ki‡Z cvi‡j †`‡ki A_©bxwZ ÿwZMª¯Í
n‡Z cv‡i| `xN©‡gqv‡` G Ae¯’v Ae¨vnZ
_vK‡j †eKvi mgm¨v cªKU n‡Z cv‡i| Z‡e,
Gme SyuwK †gvKv‡ejvq miKvi BwZg‡a¨
wewfbœ c`‡ÿc MªnY K‡i‡Q| †hgb ¯^v¯’¨
SyuwK wbim‡b, we‡klZ `wi`ªZg I me‡P‡q
SyuwKc~Y© †jvK‡`i iÿv Kivi Rb¨ c`‡ÿc
MªnY K‡i‡Q| wewfbœ Avw_©K DÏxcbv c¨v‡KR,
†QvU †QvU mvgvwRK myiÿv Kg©m~wP MªnY Ges
Avw_©K myweav mnR Kivi gva¨‡g A_©‰bwZK
Ae¯’v `ªæZ ¯^vfvwe‡K wdwi‡q Avb‡Z cª‡Póv
Pvwj‡q hv‡”Q| gnvgvix †gvKv‡ejvi gva¨‡g
`ªæZ G msKU †_‡K DËiY Ges A_©bxwZi
cybM©V‡b mK‡ji mv‡_ gv‡K©›UvBj e¨vsKI
miKvi‡K mn‡hvwMZv Ki‡Z cªwZkÖæwZe×|
Avgiv cªZ¨vkv Kwi, mw¤§wjZ cª‡Póvq G
gnvgvix `ªæZ wbqš¿‡Y Avbv m¤¢e n‡e Ges
2020 mv‡ji †klv‡a© A_©‰bwZK Kg©Kv‡Û
¯^vfvweK MwZ wd‡i Avm‡e|
cwi‡k‡l, cwiPvjbv cl©‡`i cÿ †_‡K
e¨vs‡Ki mKj †kqvi‡nvìvi, MÖvnK Ges
e¨emvwqK Askx`viM‡Yi Aweivg mg_©b,
Av¯’v Ges c„ô‡cvlKZvi Rb¨ ab¨ev` RvbvB|
e¨vs‡Ki ewntwbixÿK, AvBbx Dc‡`óvMY Ges
U¨v·/f¨vU civgk©KMY‡K mgqvbyeZ©xZvi
mv‡_ cÖ‡qvRbxq †mev cÖ`v‡bi Rb¨ ab¨ev`
Ávcb Kwi| Avwg Awfev`b Ávcb Kwi
e¨vs‡Ki mKj ¯Í‡ii Kg©xevwnbx‡K hv‡`i
`ÿZv I mg‡qvc‡hvMx c`‡ÿ‡c wbqš¿K ms¯’v
Av‡ivwcZ wewa-weavb cwicvj‡bi gva¨‡g
e¨vs‡Ki AMÖhvÎv‡K Ae¨vnZ †i‡L‡Q|
MYcÖRvZš¿x evsjv‡`k miKvi, evsjv‡`k
e¨vsK, wdbvwÝqvj wi‡cvwU©s KvDwÝj,
evsjv‡`k, evsjv‡`k wmwKDwiwUR A¨vÛ
G·‡PÄ Kwgkb, XvKv ÷K G·‡PÄ, PÆMÖvg
÷K G·‡PÄ Ges RvZxq ivR¯^ †evW©mn mswkøó
mKj‡K RvbvB Avgvi K…ZÁZv| cl©‡` Avgvi
mnKg©x‡`iI ab¨ev` Rvbvw”Q hvuiv mwVK
w`K wb‡`©kbv w`‡q e¨vsK cwiPvjbvq Zrci
wQ‡jb|
†gvi‡k` Avjg, Ggwc
†Pqvig¨vb
54 Mercantile Bank Limited
Annual Report 2019

MESSAGE FROM
MANAGING DIRECTOR & CEO

Dear Fellow Stakeholders

Md. Quamrul Islam Chowdhury
AS-SALAMU-ALAIKUM
Managing Director & CEO
We have delivered a credible result
in 2019 for shareholders, customers
and employees given the significant
challenges facing MBL and the
industry. Our possibilities are deeply
interwoven and energized by
Bangladesh’s rapidly developing
economy. As one of the country’s third
generation private sector banks, MBL
has always strived to play a pivotal
role in the economy and society. We
look towards the future with optimism
and a deep sense of responsibility
towards nation-building. A fast-paced
economy like our country needs a
robust financial ecosystem to flourish;
and the banking sector has always
been at the vanguard in supporting
the country’s growth aspirations.
We have expanded our reach across
the country and have emerged as a
reliable banker for the society we
operate in. As one of the leading
private sector bank in one of the
world’s fastest-growing economies,
MBL offers a wide spectrum of
financial solutions to a diverse range
of customer segments spanning
retail, small and medium enterprises
and corporate businesses.

As we completed our 20th year of

operations, I feel honored and proud
to lead the Bank – a local bank striving
to serve a million of lives every day
in a meaningful and humane manner.
Trust and customer centricity have
always been the key of the Bank’s
association with its customers. There
have been slowdowns in the growths
of some of the developed economy’s
banks. The developing economy
has not been spared either i.e. India.
It’s under these circumstances we
find ourselves comparatively well
positioned.

Our Bank has over these years stood
by customers as a reliable friend in
need – by not only being approachable
and available at all times, but also
helping them to meet their needs
and life aspirations. I would like to
thank all my predecessors over the
years for their vision and contribution
towards building this great institution.
I believe that our culture is one of the
biggest unsung strengths. This has
been one of the key driving forces
for us to build a great institution and
ensure that we survive tough times.
Over the last decade, the Bank has
gone from strength to strength, and
in addition built a lot of hidden gems
among its businesses. Let me spell
out some of them. The Bank has a
strong deposit base which stands at
BDT 26,296.11 crore as on December
31, 2019. Amongst the private sector
banks, we currently have one of the
largest branch & ATM network in
the country. In mobile banking, we
feature amongst the top players in
terms of innovation. Whereas, in the
credit card business, we positioned
ourselves as a strong contender and
have been growing at a much faster
pace than others. Our Corporate,
Retail & SME business has been built
into an enviable financial institution
with extremely healthy metrics.
However, I must also acknowledge
that in the recent years, the Bank
has faced some headwinds; our bank
has also been affected by the overall
financial sector trend of asset quality
deterioration due to slowdown in
the overall corporate segment of the
economy. There was also an increase
in operational risks in recent years.
We are not yet out of the woods, but
we are cautiously optimistic about
the future. We need to learn from
the mistakes of the past and ensure
that they are never repeated again.
We realize changing ourselves will be
arduous and time consuming but we
also strongly believe we are ready for
the battle ahead and have the team in
place to overcome any odds. Over my
tenor, I have spent time extensively
with the various business units across
the Bank. I have also met many of our
large corporate customers. Based on
these interactions, I do believe there
is lot of potential for us to grow and
be among the top three players in
each of our business segments and
aspire for larger market share as per
our corporate mission.
I am pleased to state that we have
taken some strong and positive
strides towards defining our priorities,
the goals that we want to accomplish
and how we will get there. We intend
to sustain our winning mind-set,
continue our growth momentum
and get our fair share of business
from our customers. We also want
to strengthen our core business
technology platform in view to
improve our execution. That is why we
are planning to upgrade of Temenos
T24-the CBS. The strategy pivots
around delivery of three important
vectors – Growth, Profitability and
Sustainability.
The entire senior management team
is in place to execute the strategy and
convert our aspirations into reality
over the years. We have reoriented
the organizational structure that
would enable us to streamline and
simplify our functioning and bring in
greater accountability, productivity
and efficiencies we have also made
considerable progress in building
cost consciousness across the Bank,
and expect to improve our cost
efficiency over the next few years.
We have incorporated the learning
from the past to improve our policies
and processes. We have raised the
bar further for the credit filters
applicable to new credit proposals
and strengthened our early warning
systems.
Moving on to financial performance,
the profitability and the asset quality
metrics for the Bank in fiscal year
2019 improved materially after having
witnessed challenging year. The Bank
continues to have a strong balance
sheet with a capital adequacy ratio
of 13.92%. Our subsidiaries had
another good year as they continued
to gain market share in their
respective segments. On the Credit
Operation, we have been focusing
on portfolio diversification, reduction
in concentration to selected sectors
and project loans and have further
increased our focus on transaction
banking and working capital business.
The performance of the corporate
segment in fiscal 2019 improved as
compared to the past few years. In this
segment, we are focusing on building
a relationship based model with SME
and Corporate business customers to
drive growth across both assets and
liabilities. MBL continues to remain a
strong customer centric bank and has
shifted its deposit strategy to focus
on getting higher CASA plus term
deposits. Finding out the favorable
deposit mix for the Bank is to be top
priority for us in coming days.
OVERVIEW
MBL is successfully achieved to
stabilized its’ spread (3.30%) in this
year of interest rate turbulences by
strategically maintain our cost of
deposit stoutly at 6.92% and manage
to uphold the yield on advance at
10.22%-which I consider remarkable
compared to the yield of last year i.e.
9.59%. Thus, our net interest income
has reached BDT 860.06 crore
which is almost 13% higher than that
of previous year. But the net non-
interest income of the Bank has been
a concern for us. Although, the fee
and commission based income has
increase, it has not been able to cope
up with the non-interest expense
resulting in a negative figure which is
higher than last year. It is because the
foreign exchange business exposure
of the Bank has not flourished. The
import, export & foreign inward
remittance has stood at BDT
18,465.00 crore, BDT 16,315.23 crore
and BDT 3,523.91 crore respectively.
The coming year will be massive
challenge for the Bank to expand the
existing portfolio sharply. The coming
year would be a watchful year for the
Bank in view to scan our existing loan
portfolio for optimized result by the
way of alignment and re-alignment of
sectoral allocation and identification
of new thirst zone of the existing loan
portfolio.
For us, branch banking continues
to be an integral part of our growth
strategy. The role of branches in
deposit mobilization from new
customers drives the Bank’s
acquisition strategy across products
and provides customer service and
builds trust. However, the branch
formats continue to get smaller
with enhanced productivity led by
automation and digitization of service
operations. We are now focusing on
agent banking in a view to enhance
our network resulting of which will
conqueror unbanked population of
the country.
The Bank’s ability to innovate and
offer right product proposition to
its customers has helped the credit
portfolio to grow, which reached BDT
23,689.05 crore, at a growth rate of
5.65% while the overall deposit of the
Bank stood at BDT 26,296.11 crore
at a growth rate of 7.93%. We have
achieved significant diversification
within our credit portfolio and deposit
mix with a strong risk management
architecture that has ensured that our
asset quality has improved more than
peer average. The Bank has always
been ahead of the curve in terms of
56 Mercantile Bank Limited
Annual Report 2019
building its digital capabilities and
has made significant investments in
technology and digital analytics to
manage risk outcomes and optimize
costs. In the year 2019, the cost-
income ratio was 44.17% while Burden
coverage ratio was 78.61%. We also
manage to bind the Non-Performing
Loan at 4.86%.
The Commercial Banks have
traditionally used Savings Accounts
as a product to start its relationship
with customers and then build on
it by cross-selling other products
and services- it has not changed
substantially over the past years.
We are now increasingly looking
beyond deposit base for customers.
We are now looking to leverage our
all business platforms for cross-
sell opportunities. The organization
structure and the KPIs have
been re-aligned to ensure direct
accountability, greater differentiation
and focus on developing relationship-
based long-term business model
instead of focusing on shorter term
targets. Our idea here is to have a full
team with all the requisite banking as
well as digital expertise and skill sets
required to rethink traditional banking
processes. It will start afresh, end-to-
end customer journeys, which will
be completely digitalized. This will,
however, take time to materialize and
we will share our progress over the
coming years. The Bank continues
to invest in enhancing employee
capabilities and provides career
development opportunities to its
employees. During the year, the Bank
revamped its internal job posting
process to allow internal talent to
take on leadership positions based
on their merit.
MBL has always believed that its
long-term success depends on the
progress of communities and the
people we serve. The Bank continues
to play an active part in extending
credit to the economically active
but under-banked rural population,
particularly women, through its
retail credit initiative ‘MBL Annanya’.
MBL Foundation continues to work
towards providing sustainable
livelihoods and creating value for
the target communities through its
educational scholarship programs
and providing assistance towards
helpless and distressed class of
society. During the year, under CSR
activities, the Bank through its’
Foundation spend an amount of BDT
15.68 crore .
In 2019, MBL won the ‘Best Presented
Annual Report-2018’ from the ICAB.
In terms of maintaining Anti Money
Laundering (AML) global standard,
MBL is currently one of the top
five banks of Bangladesh as per
information provided by Bangladesh
Bank in a meeting with our Board.
The ranking jumps to 2nd when
we consider only local Banks. This
is a matter of great pride for us.
Hopefully the coming years will bring
some more excellence awards and
acknowledgements as the whole
Bank is performing in same harmony.
Our aspiration is to deliver around a
healthy Return on Equity (ROE) on
a sustainable basis. The reduction in
cost, optimize portfolio management
driven by a risk-adjusted returns
framework and improvement in
operational efficiency would be the
key drivers for RoE improvement
over the next couple of years as well.
Notwithstanding the forthcoming
challenging and unrest market
conditions, we are strictly committed
& positive to our goals. We stay
behind in view to minimize the risks of
the current economic situation, world
trade tensions and the uncertain
future path of interest rates. We
will be proactive in managing costs
and investment for revenue growth
where necessary, but we will not take
short-term decisions over long-term
interests of the business. The forward-
looking approach of us will cater the
requirement of our customers.
Bangladesh continues to be a fast-
growing economy with significant
opportunities and possibilities. From
the perspective of the financial
industry as a whole, the liquidity
issues faced by some of the financial
organizations over the last couple
of years which also can create some
friction going ahead, but it presents
opportunities for banks. Banks with
a healthy capital position, quality
assets and strong risk management
capabilities can go far than their peers
in coming years for sure. Great product
mix, vast physical footprint, cutting-
edge digital capabilities, robust
corporate governance practices and
one of the most valuable brands in
Bangladesh- all these combined open
many possibilities for the Mercantile
Bank Ltd. in the near future. I believe
that MBL is a great place of superior
culture and manpower. If we execute
well, we have the potential to improve
our market share rankings without
sacrificing anything whatsoever. While
delivery of growth and profitability is
important, sustainability forms the
foundation of the Bank’s strategy.
We want to build sustainability in our
business performance and operations
with disciplined execution and
conservatism at the core.
At the time of writing, the Covid-19
virus outbreak has caused some
uncertainty. The banking industry is
likely to face a challenging operating
environment and lower profitability
in 2020. If the outbreak is contained
within a few months, there would
be only a modest shaving to total
income growth. To respond to the
situation, our priorities are clear.
Based on our financial strength,
we aim to continue to support our
clients; look after our people; manage
our bank in line with the interests of
our shareholders; and play our part in
limiting the impact of this virus in our
communities. We are determined to
help all our stakeholders to confront
this challenge.
I would like to take this opportunity
to thank my colleagues for believing
in MBL and the vision of the Bank.
I am also deeply grateful to all the
customers and shareholders for
standing by us and showing their
faith in us all these years. My heartfelt
thanks to our prudent and dynamic
Board of Directors of the Bank for
keeping their trust intact in me and
provide valuable guidelines in timely
manner with a view to steer the Bank
for being the finest corporate citizen.
Lastly, on behalf of my team, I
would like to express my sincere
gratitude and acknowledgement, to
all our regulatory authorities such as
Bangladesh Bank, NBR, BSEC, DSE,
CSE and RJSC&F for their continuous
support and guidelines from time to
time.
Wishing you all the best.
Md. Quamrul Islam Chowdhury
Managing Director & CEO
 OVERVIEW

PROGRESS
WE MADE IN 2019
Focus area Objectives Progress made

Enhancement of loan portfolio in

6.47% growth in SME loan compared to 2018
Business diversification consumer and retail banking,
SME and agriculture 23.85% growth in agriculture credit compared to 2018

Enhancing operating To maintain consistent growth of

15.92% growth in operating profit
efficiency profit

Up gradation of CBS for better

Technological
technological advancement as Successfully upgraded CBS Temonos T24 (R10 to R19)
transformation
well as better customer service.

Growing with
To expand community services Total CSR expenditure of BDT 15.67 crore
community

Obtained permission for agent banking

Exploring new business
To increase customer base Obtained permission for islamic banking window
avenues
operation

MBL Asset Management Limited (obtained certificate of

Formation of new subsidiary
Opening new ventures companies and strategic business
units
incorporation)
MBL MyCash Limited (separate subsidiary company in
the process of finalization)

Enhancing employee 154 training courses have been conducted during the
To enrich employee knowledge
efficiency year

CRAR stood at 13.92%

Proposed 16% dividend (11% cash dividend & 5% stock
Capital strengthen Compliance with Basel III
dividend) for the year 2019
Enhanced rated clients

Compliance with Bangladesh

Fund planning Bank instruction for maintaining AD Ratio maintained at 84.10% in December, 2019
AD Ratio

Revise risk management

Focus on risk Successfully updated risk management guidelines which
guidelines in line with present
management is highly appreciated by Bangladesh Bank
context
58 Mercantile Bank Limited
Annual Report 2019

FIVE YEARS'
PERFORMANCE
BDT in Million Unless Otherwise Specified
Particulars 2019 2018 2017 2016 2015
BALANCE SHEET MATRIX
Authorized Capital 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Paid-up Capital 9,371.58 8,149.20 7,761.15 7,391.57 7,391.57
Shareholders' Equity 20,908.29 18,683.55 17,584.02 16,809.61 15,513.73
Deposits * 262,961.05 243,643.42 220,516.63 165,257.45 154,869.52
Loans and Advances 236,890.45 224,230.61 199,660.72 150,912.52 126,338.83
Investments 49,755.98 38,977.94 34,772.14 32,920.69 33,829.46
Fixed Assets 3,142.45 3,288.45 3,057.50 3,175.03 3,325.79
Total Assets 316,363.47 291,385.64 260,169.93 204,127.47 182,800.17
Total Off Balance Sheet Items 101,993.74 104,569.47 112,379.02 81,697.78 64,036.65
Interest Earning Assets 291,195.32 267,358.90 238,681.52 169,784.40 138,809.50
Non-Interest Earnings Assets 25,168.15 24,026.74 21,488.40 34,343.10 30,471.20
INCOME STATEMENT MATRIX
Interest Income ** 26,716.80 23,759.83 19,101.30 16,769.12 16,967.11
Interest Expenses 18,116.16 16,277.03 12,897.32 10,750.30 11,808.55
Net Interest Income 8,600.64 7,482.80 6,203.98 6,018.82 5,158.56
Non-Interest Income 4,575.36 4,357.71 5,650.33 4,076.48 2,785.45
Non-Interest Expenses 5,820.25 5,494.93 5,283.74 5,658.87 4,008.26
Net Non-Interest Income (1,244.90) (1,137.22) 366.59 (1,582.38) (1,222.81)
Total Income 31,292.16 28,117.54 24,751.63 20,845.60 19,752.56
Total Expenditure 23,936.42 21,771.96 18,181.06 16,409.17 15,816.81
Profit before Provision and Tax 7,355.75 6,345.58 6,570.57 4,436.43 3,935.75
Provision for Loans and Advances & Other Provision 3,875.25 1,994.63 2,252.85 949.08 1,292.47
Profit after Provision before Tax 3,480.50 4,350.95 4,317.73 3,487.35 2,643.28
Porvision for tax including deferred tax 1,305.00 1,350.00 1,300.00 1,260.00 1,250.00
Profit after Tax 2,175.50 3,000.95 3,017.73 2,227.35 1,393.28
FOREIGN EXCHANGE BUSINESS
Import 184,650.00 196,389.70 190,753.60 139,766.40 119,982.40
Export 163,152.30 158,307.70 134,752.90 113,035.20 94,027.10
Remittance (Inward) 35,239.10 35,943.00 29,976.40 24,048.20 19,003.20
CAPITAL MEASURES
Total Risk Weighted Assets (RWA) 236,412.62 221,984.99 206,080.14 171,704.24 151,438.72
Tier-1 Capital 20,098.89 17,950.97 16,299.02 14,330.00 12,908.59
Tier-2 Capital 12,800.94 11,535.32 8,282.36 8,037.17 5,063.39
Total Capital/Regulatory Capital 32,899.83 29,486.29 24,581.38 22,367.17 17,971.98
Capital Surplus/ (Deficit) 3,348.25 3,128.17 1,397.36 4,123.59 2,828.10
Tier-1 Capital to RWA 8.50% 8.09% 7.91% 8.35% 8.52%
Tier-2 Capital to RWA 5.42% 5.20% 4.02% 4.68% 3.34%
Capital to Risk Weighted Assets Ratio (CRAR) 13.92% 13.28% 11.93% 13.03% 11.87%
CREDIT QUALITY
Non-performing Loans (NPLs) 11,502.61 10,802.43 7,564.72 7,745.88 6,250.77
Provision for Unclassified Loan 7,614.30 5,627.49 4,584.18 3,916.60 3,703.87
Provision for classified Loan 4,519.98 4,763.91 3,967.46 3,117.14 2,551.00
 OVERVIEW

BDT in Million Unless Otherwise Specified

Particulars 2019 2018 2017 2016 2015
Provision for Contingent Liabilities 986.63 998.56 1,079.90 793.14 616.44
NPLs to total Loans and Advances 4.86% 4.82% 3.79% 5.13% 4.95%
INVESTORS INFORMATION
Market price per share (BDT) 13.20 18.00 26.40 15.10 10.70
No. of Shares Outstanding (Million) 937.15 814.92 776.11 739.16 739.16
Earning per Share (BDT) 2.32 3.68 3.70 3.01 1.88
Dividend 16% 15% 22% 20% 12%
Cash 11.00% 0.00% 17.00% 15.00% 12.00%
Stock 5.00% 15.00% 5.00% 5.00% 0.00%
Dividend Payout Ratio 68.92% 40.73% 59.46% 66.37% 63.66%
Market Capitalization 12,370.38 14,668.56 20,489.30 11,161.32 7,909.01
Book Value per Share 22.31 22.93 22.66 22.74 20.99
Market Value Book Value multiple 0.59 0.78 1.17 0.66 0.51
Price Earning Multiple (Times) 5.68 4.89 7.14 5.01 5.68
OPERATING PROFIT RATIO
Net Interest Margin (NIM) 3.12% 2.96% 2.92% 3.43% 3.27%
Net Non-interest Margin -0.45% -0.45% 0.17% -0.90% -0.77%
Earning base in Assets (average) 91.91% 91.05% 91.53% 90.61% 89.85%
Credit Deposit Ratio 84.10% 86.30% 84.25% 91.32% 81.58%
Cost of Deposit 6.92% 6.47% 5.85% 6.25% 7.52%
Yield on Loans and Advances 10.22% 9.59% 9.06% 10.37% 11.68%
Spread 3.30% 3.12% 3.21% 4.12% 4.16%
Return on Average Assets 0.78% 1.09% 1.30% 1.15% 0.79%
Return on Average Equity 10.99% 16.55% 17.55% 13.78% 9.60%
Equity Multiple (Times) 15.13 15.60 14.80 12.14 11.78
PERFORMANCE RATIO
Profit per Employee 3.04 2.75 3.00 2.17 1.86
Operating Profit as % of Working Fund 2.33% 2.18% 2.53% 2.17% 2.15%
Net Interest Income as % of Working Fund 2.72% 2.57% 2.38% 2.95% 2.82%
Burden Coverage 78.61% 79.30% 106.94% 72.04% 69.49%
Burden 21.39% 20.70% -6.94% 27.96% 30.51%
Ratio to Fees Income 22.39% 20.14% 21.97% 18.54% 21.06%
Salary Exp. to total Operating Exp. 41.74% 44.72% 47.39% 43.84% 45.26%
Salary Exp. To Fees Income 82.35% 103.06% 96.13% 132.52% 108.42%
Cost Income /Efficiency Ratio 44.17% 46.41% 44.57% 56.05% 50.46%
OTHER INFORMATION
No. of Branches 148 138 129 119 109
No. of Employees 2,418 2,305 2,192 2,043 2,117
No. of Correspondence Relationship 614 635 640 641 641

* Deposit amount includes Deposit and other accounts, Refinance against EDF from BB and adjusting accounting credit balance shown on
Financial Statements
** Interest Income includes interest income and interest on investment shown on Financial Statements
60 Mercantile Bank Limited
Annual Report 2019

Deposits & Advances (BDT in Million) Import & Export (BDT In Million) Remittance (BDT in Million)

35,943.00
196,389.70
190,753.60
262,961.05

35,239.10
243,643.42

184,650.00
236,890.45
224,230.61

29,976.40
220,516.63

163,152.30
158,307.70
199,660.72

139,766.40

24,048.20
134,752.90
165,257.45
154,869.52

119,982.40
150,912.52

113,035.20

19,003.20
126,338.83

94,027.10
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Total Assets ( BDT in Million) No. of Branches No. of Employees

148
316,363.47

2,418
138
291,385.64

129
260,169.93

2,305
119
109
204,127.47

2,192
182,800.17

2,117

2,043
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Total Capital/Regulatory Capital Capital to Risk Weighted Earning per Share (EPS) (BDT)
(BDT in Million) Assets Ratio (CRAR)
32,899.83

3.70
13.92%

3.68
13.28%
29,486.29

2.32
13.03%
24,581.38

3.01
22,367.17
17,971.98

1.88
11.93%
11.87%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Net Asset Value Per Share (BDT) Total Shareholders’ Equity Market Price Per Share (BDT)
(BDT in Million)
20,908.29

26.40
22.93
22.74

22.66

18,683.55
17,584.02
16,809.61
22.31

15,513.73

18.00
15.10

13.20
10.70
20.99

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
 OVERVIEW

Return on Average Assets (ROA) Profit before Provision and Tax Profit after Tax (BDT in Million)
(BDT in Million)

3,017.73

3,000.95
7,355.75
1.30%

6,570.57

6,345.58
1.15%

1.09%

2,227.35

2,175.50
0.79%

4,436.43
0.78%

1,393.28
3,935.75
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Fixed Assets (BDT in Million) Net Interest Margin (NIM) Price Earning Multiple (Times)

3.43%

7.14
3,325.79

3,288.45

3.27%

5.68

5.68
5.01

4.89
3,175.03

3.12%
3,142.45

2.96%
2.92%
3,057.50

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Return on Average Equity (ROE) Credit Deposit Ratio Operating Profit as % of

Working Fund
91.32%

2.53%
17.55%

16.55%
13.78%

2.33%
86.30%
10.99%
9.60%

84.25%

84.10%

2.18%
2.17%
2.15%
81.58%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
62 Mercantile Bank Limited
Annual Report 2019

HORIZONTAL & VERTICAL

ANALYSIS
Horizontal Analysis
For the last five years' Balance Sheet

2019 2018 2017 2016 2015

PROPERTY AND ASSETS
Cash 126.89% 117.96% 118.55% 94.51% 100.00%
In hand (including foreign currencies) 181.47% 165.92% 143.52% 123.26% 100.00%
Balance with Bangladesh Bank and its agent bank (including
120.44% 112.30% 115.60% 91.12% 100.00%
foreign currencues)
Balance with other banks and financial institutions 30.48% 64.92% 21.49% 92.52% 100.00%
In Bangladesh 26.04% 19.09% 16.20% 89.83% 100.00%
Outside Bangladesh 88.69% 665.26% 90.68% 127.83% 100.00%
Money at Call and short notice 100.00% 100.00% 100.00% 0.00% 0.00%
Investments 147.08% 115.22% 102.79% 97.31% 100.00%
Government 154.00% 115.30% 101.89% 84.23% 100.00%
Others 107.31% 114.75% 107.94% 172.57% 100.00%
Loans and advances/investments 187.50% 177.48% 158.04% 119.45% 100.00%
Loans, cash credits, overdrafts, etc. 190.94% 176.66% 153.18% 117.16% 100.00%
Bills purchased and discounted 140.82% 188.73% 224.01% 150.63% 100.00%
Fixed assets including premises, furniture and fixtures 94.49% 98.88% 91.93% 95.47% 100.00%
Other assets 565.11% 456.87% 417.03% 74.25% 100.00%
Non- banking assets 100.00% 0.00% 0.00% 0.00% 0.00%
Total assets 173.07% 159.40% 142.32% 111.67% 100.00%
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks, financial institutions and agents 3730.31% 3632.23% 2927.53% 1592.48% 100.00%
Subordinated non-convertible bonds 140.00% 160.00% 80.00% 100.00% 100.00%
Deposits and other accounts 167.52% 155.54% 141.47% 105.59% 100.00%
Current accounts and other accounts 159.19% 157.58% 162.02% 114.55% 100.00%
Bills payable 186.32% 179.81% 158.71% 148.16% 100.00%
Savings bank deposits 187.56% 168.39% 153.15% 130.31% 100.00%
Fixed deposits 276.81% 251.23% 183.34% 87.50% 100.00%
Deposits under schemes 91.53% 85.07% 99.33% 107.24% 100.00%
Other liabilities 144.54% 112.54% 93.47% 122.06% 100.00%
Total liabilities 176.62% 163.02% 145.01% 111.97% 100.00%
Total liabilities and Shareholders’ equity
Total Shareholders’ equity 134.77% 120.43% 113.34% 108.35% 100.00%
Paid up capital 126.79% 110.25% 105.00% 100.00% 100.00%
Statutory reserve 165.81% 151.16% 132.85% 114.68% 100.00%
General reserve 100.00% 100.00% 100.00% 0.00% 100.00%
Other reserve 30.14% 28.76% 52.28% 98.07% 100.00%
Retained earnings 169.28% 138.81% 192.13% 172.40% 100.00%
Total liabilities and Shareholders’ equity 173.07% 159.40% 142.32% 111.67% 100.00%

Horizontal Analysis (Balance Sheet):

Horizontal Analysis on Balance Sheet refers to the analysis of growth of each component of balance sheet items from
the base period.Here base period is considered the year 2015 giving a value of 100% and after that period value above
100% means positive growth and below 100% means negative growth compared to base year.Here,assets,liabilities and
shareholder' equity are showing consistent growth over the last five years which symbolize sustainable balance sheet
growth of the bank as a whole.
 OVERVIEW

Horizontal Analysis
For the last five years Profit and Loss Statement

2019 2018 2017 2016 2015

Operating Income
Interest income on investments 163.55% 144.42% 115.36% 97.75% 100.00%
Interest paid on deposits, borrowings, etc. 153.42% 137.84% 109.22% 91.04% 100.00%
Net interest income 215.51% 178.12% 146.83% 132.13% 100.00%
Investment income 133.04% 123.66% 119.92% 105.95% 100.00%
Commission, exchange and brokerage 176.36% 142.52% 155.69% 111.88% 100.00%
Other operating income 131.40% 164.69% 221.81% 195.60% 100.00%
Total operating income 103.35% 149.05% 149.22% 127.08% 100.00%
Salaries and allowances 134.11% 135.42% 138.09% 137.06% 100.00%
Rent, Taxes, Insurance, Electricity, etc. 67.26% 146.57% 124.51% 115.27% 100.00%
Legal expenses 491.07% 376.23% 240.12% 131.79% 100.00%
Postage, Stamp, Telecommunication, etc. 100.53% 106.95% 92.97% 95.57% 100.00%
Stationery, Printing, Advertisements, etc 145.73% 162.77% 104.52% 98.17% 100.00%
Managing Director's salary and fees 106.47% 142.45% 130.19% 91.85% 100.00%
Director's fees 136.23% 114.41% 126.22% 140.35% 100.00%
Auditors’ fees 108.33% 213.04% 224.01% 133.33% 100.00%
Depreciation and Repair of Fixed Assets 295.94% 146.39% 125.61% 124.81% 100.00%
Other expenses 161.62% 128.60% 133.08% 176.05% 100.00%
Total operating expenses 145.21% 137.09% 131.82% 141.18% 100.00%
Profit / (loss) before provision 186.90% 161.23% 166.95% 112.72% 100.00%
Provision for loans and advances
Provision against Unclassified Loans (General provision) 302.00% 90.23% 57.73% 18.40% 100.00%
Provision against Classified Loans (Specific provision) 104.75% 993.79% 1265.11% 545.08% 100.00%
Provision for off-balance sheet items -35.69% -243.21% 857.54% 528.41% 100.00%
Other provisions 100.00% 100.00% 0.00% 0.00% 0.00%
Total provision 299.84% 154.33% 174.31% 73.43% 100.00%
Total profit / (loss) before taxes (PBT) 131.67% 164.60% 163.35% 131.93% 100.00%
Provision for taxation
Current tax 107.28% 111.83% 107.91% 100.77% 100.00%
Deferred tax 797.32% 1030.71% 1045.11% 93.28% 100.00%
Net profit after taxation (NPAT) 156.14% 215.38% 216.59% 159.86% 100.00%

Horizontal Analysis(Profit and Loss Statement):

Horizontal Analysis on Profit and Loss Statement refers to the analysis of growth of each component of income statement
items from the base period.Here base period is considered the year 2015 giving value 100% and after that period value
above 100% means positive growth and below 100% means negative growth compared to base year. The above table
shows that total operating income, exoenses and operating profit of MBL are growing cinsistently over the periods.
64 Mercantile Bank Limited
Annual Report 2019

Vertical Analysis
For the last five years' Balance Sheet

2019 2018 2017 2016 2015

PROPERTY AND ASSETS
Cash 5.30% 5.35% 6.03% 6.12% 7.23%
In hand (including foreign currencies) 0.80% 0.80% 0.77% 0.84% 0.76%
Balance with Bangladesh Bank and its agent bank (including
4.50% 4.56% 5.26% 5.28% 6.47%
foreign currencues)
Balance with other banks and financial institutions 0.37% 0.85% 0.32% 1.73% 2.09%
In Bangladesh 0.29% 0.23% 0.22% 1.56% 1.94%
Outside Bangladesh 0.08% 0.62% 0.09% 0.17% 0.15%
Money at call and on short notice 0.12% 0.05% 0.04% 0.00% 0.44%
Investments 15.73% 13.38% 13.37% 16.13% 18.51%
Government 14.03% 11.40% 11.29% 11.89% 15.76%
Others 1.70% 1.97% 2.08% 4.24% 2.74%
Loans and advances 74.88% 76.95% 76.74% 73.93% 69.11%
Loans, cash credits, overdrafts, etc. 71.02% 71.35% 69.29% 67.54% 64.38%
Bills purchased and discounted 3.85% 5.61% 7.46% 6.39% 4.74%
Fixed assets including premises, furniture and fixtures 0.99% 1.13% 1.18% 1.56% 1.82%
Other assets 2.60% 2.29% 2.34% 0.53% 0.80%
Non- banking assets 0.01% 0.00% 0.00% 0.00% 0.00%
Total assets 100.00% 100.00% 100.00% 100.00% 100.00%
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks, financial institutions and
6.52% 6.89% 6.22% 4.31% 0.30%
agents
Subordinated non-convertible bonds 1.33% 1.65% 0.92% 1.47% 1.64%
Deposits and other accounts 78.27% 78.90% 80.38% 76.46% 80.86%
Current accounts and other accounts 15.38% 16.53% 19.03% 17.16% 16.72%
Bills payable 0.96% 1.01% 1.00% 1.19% 0.89%
Savings bank deposits 7.55% 7.36% 7.50% 8.13% 6.97%
Fixed deposits 36.77% 36.24% 29.62% 18.02% 22.99%
Deposits under schemes 17.60% 17.77% 23.23% 31.97% 33.29%
Other liabilities 7.27% 6.15% 5.72% 9.52% 8.71%
Total liabilities 93.39% 93.59% 93.24% 91.77% 91.51%
Capital/Shareholders’ equity
Total Shareholders’ equity 6.61% 6.41% 6.76% 8.23% 8.49%
Paid up capital 2.96% 2.80% 2.98% 3.62% 4.04%
Statutory reserve 2.49% 2.47% 2.43% 2.67% 2.60%
General reserve 0.44% 0.48% 0.19% 0.00% 0.00%
Other reserve 0.24% 0.24% 0.50% 1.19% 1.36%
Retained earnings 0.48% 0.43% 0.66% 0.75% 0.49%
Total liabilities and Shareholders’ equity 100.00% 100.00% 100.00% 100.00% 100.00%

Vertical Analysis (Balance Sheet):

Vertical Analysis on Balance sheet refers to the components of balance sheet items as a % of total Assets over the
periods which would be termed as common sizing of balance sheet. In assets side, loans and advances (74.88%) and
investment (15.73%) holds major portion. Investment decreased insignificantly on other investment portfolio where Loan
and advances had a consistency growth except year 2015 in line with growth of overall industry. In liability side, deposit
holds major portion (78.27%) and shows a consistent trend over the last five years as per overall industry deposit trend.
 OVERVIEW

Vertical Analysis
For the last five years Profit and Loss Statement

2019 2018 2017 2016 2015

Operating Income
Interest income 73.76% 72.49% 65.78% 66.18% 71.45%
Interest paid on deposits, borrowings, etc. 57.89% 57.89% 52.11% 51.57% 59.78%
Net interest Income 15.87% 14.60% 13.67% 14.60% 11.67%
Investment income 12.24% 12.66% 13.94% 14.63% 14.57%
Commission, exchange and brokerage 9.43% 8.48% 10.52% 8.98% 8.47%
Other operating income 4.57% 6.38% 9.76% 10.22% 5.51%
Total operating income 42.11% 42.11% 47.89% 48.43% 40.22%
Salaries and allowances 7.72% 8.68% 10.05% 11.85% 9.12%
Rent, Taxes, Insurance, Electricity, etc. 1.17% 2.83% 2.73% 3.00% 2.75%
Legal expenses 0.10% 0.09% 0.06% 0.04% 0.03%
Postage, Stamp, Telecommunication, etc. 0.21% 0.25% 0.25% 0.30% 0.33%
Stationery, Printing, Advertisements, etc 0.85% 1.06% 0.77% 0.86% 0.92%
Managing Director's salary and fees 0.04% 0.06% 0.07% 0.05% 0.06%
Director's fees 0.02% 0.01% 0.02% 0.02% 0.02%
Auditors’ fees 0.00% 0.01% 0.01% 0.00% 0.00%
Depreciation and Repair of Fixed Assets 2.86% 1.57% 1.54% 1.81% 1.53%
Other expenses 5.63% 4.98% 5.86% 9.20% 5.52%
Total operating expenses 18.60% 19.54% 21.35% 27.15% 20.29%
Profit / (loss) before provision 23.51% 22.57% 26.55% 21.28% 19.93%
Provision for loans and advances
Provision against Unclassified Loans (General provision) 11.16% 3.71% 2.70% 1.02% 5.85%
Provision against Classified Loans (Specific provision) 0.34% 3.63% 5.25% 2.68% 0.52%
Provision for off-balance sheet items -0.04% -0.29% 1.16% 0.85% 0.17%
Other provisions 0.92% 0.04% 0.00% 0.00% 0.00%
Total provision 12.38% 7.09% 9.10% 4.55% 6.54%
Total profit / (loss) before taxes (PBT) 11.12% 15.47% 17.44% 16.73% 13.38%
Provision for taxation
Current tax 4.30% 4.99% 5.47% 6.07% 6.35%
Deferred tax -0.13% -0.19% 0.00% -0.02% -0.03%
Total profit / (loss) before taxes (NPAT) 6.95% 10.67% 11.97% 10.69% 7.05%

Vertical Analysis (Profit and Loss Statement):

Vertical Analysis on Profit and Loss Statement refers to the components of income statement items as a % of total income
over the periods which would be termed as common sizing of income statement. In income side, interest income (73.76%),
income from investment (12.24)% and commission, exchange and brokerage (9.43%) hold major portion. Income from
commission, exchange and brokerage also increased accordingly in 2019. Investment income was in increasing trend but
decreased in current year due to reduction of yield on treasury bill/bond. Operating expenses as a % of total income in
constant over the periods except year 2016 due to network expansion and establishment of new departments in line with
business model/strategies.
66 Mercantile Bank Limited
Annual Report 2019

DU PONT ANALYSIS:
A BROADER VIEW OF MBL’S
RETURN ON EQUITY (ROE)
MBL’s ROE has been decomposed in this section in terms of Net Profit Margin,
Asset Turnover, and Financial Leverage which allows its investors to focus on
the key metrics of financial performance individually. In addition, Five factors
model has been applied by decomposing Net profit margin to operating profit
margin, effect of non-operating items and tax effects.

DuPont analysis breaks ROE into
its constituent components to
determine which of these factors are
most responsible for changes in ROE.
Net Profit Margin
Net profit margin consists of three
important components namely
operating profit margin, effects on
non-operating items and tax effects as
mentioned in second level break down.
Operating profit margin of 2019 has
increased to 23.51% compared to that
of 22.57% in 2018 due to higher growth
of net interest income which was 21%
over previous year.
Effects on non-operating items
include loan loss and other provision
which decreased to 0.4732 from
0.6857 for the increase of provision
by 94.28%. Tax effect decreased
to 0.6251 from 0.6897 in 2019. The
combined effects of these three
components (increase of operating
profit margin and decrease of two
other components, i.e. effect
non-operating items and tax effect)
resulted in decrease of net profit
margin to 6.95% in 2019 compared to
10.67% of last year.
Total Asset Turnover
Efficiency of utilization of assets
as implied by average total assets
turnover was higher than previous
year.
Financial Leverage
During the year 2019, the Bank keeps
optimum level of financial leverage
ratio in consideration with enhancing
of
earnings, favorable tax treatment
and proportionate risks. Hence,
MBL’s financial leverage increased to
15.3504 from last year’s 15.2080 for
the higher growth of assets.

ROE
2019:10.99%
2018: 16.55%

Net Profit Margin Total Asset Turnover Financial Leverage

2019: 6.95% 2019: 0.1030 2019: 15.3504
2018: 10.67% 2018: 0.1020 2018: 15.2080

Operating Effect of Tax Effect

Profit Margin Non-Operating 2019: 0.6251
2019: 23.51% Items 2018: 0.6897
2018: 22.57% 2019: 0.4732
2018: 0.6857 Figure: DuPont Analysis
 OVERVIEW

SEGMENT
ANALYSIS
Total Operating Revenue for the year 2019 BDT in Million

Interest Investment Commission, Other Operating Total

Operating Revenue
Income Income exchange & Brokerage Income Income
Mercantile Bank Limited 22,392.21 3,828.90 2,894.91 1,427.37 30,543.40
Off-shore Banking Unit 689.60 - 55.79 3.38 748.78
Mercantile Bank Securities Limited - - - 180.94 180.94
Mercantile Exchange House (UK) Ltd. - - - 35.35 35.35
31,508.46

Total Operating Revenue for the year 2019

1% 0%
2%

Mercantile Bank
Limited
Off-shore Banking
Unit
Mercantile Bank
Securities Limited
Mercantiel Exchange
House (UK) Ltd.
97%

Profit Before Tax BDT in Million Profit Before Tax

Particulars 2019 2018 2% 0%

Mercantile Bank Limited 3,103.57 4,059.83 11%

Mercantile Bank
Limited
Off-shore Banking Unit 376.93 291.10
Off-shore Banking
Mercantile Bank Securities Unit
64.31 (65.05) Mercantile Bank
Limited
Securities Limited
Mercantile Exchange House
7.05 (1.61) Mercantiel Exchange
(UK) Ltd. House (UK) Ltd.
87%
Total Profit before Tax 3,551.86 4,284.27

Total Assets Position BDT in Million Total Assets Position

0%
Particulars 2019 2018 4% 0%
Mercantile Bank
Mercantile Bank Limited 316,363.47 291,385.65 Limited
Off-shore Banking
Off-shore Banking Unit 12,861.26 12,998.34 Unit
Mercantile Bank Securities Mercantile Bank
568.04 591.34 Securities Limited
Limited
Mercantiel Exchange
Mercantile Exchange House House (UK) Ltd.
21.60 14.55
(UK) Ltd.
96%
68 Mercantile Bank Limited
Annual Report 2019

KEY
EVENTS 2019
13 January, 2019
Strategic Business Conference-2019 of Mercantile Bank
Limited held at FARS Hotel & Resorts, Dhaka.

12 February, 2019
Signed an agreement with Fortress Data Services (FDS)
Bangladesh Ltd. for re-implementation of Temenos T24
R18 TAFJ

8 March, 2019
Celebrated International Women’s Day

25 April, 2019
Strategic Business Conference 2019
Inaugurated 139th Branch at Arambagh, Dhaka.

12 June, 2019
‘’Mercantile Bank Abdul Jalil Education Scholarship-2018”
awarding ceremony at FARS Hotel and Resorts, Dhaka.

17 June, 2019
Mercantile Bank Award-2019.

17 June, 2019
MBL Young Bankers’ Appreciation Award-2019.

20 June, 2019
20th Annual General Meeting (AGM) held at FARS Hotel &
20th Annual General Meeting
Resorts, Dhaka.
15% Stock Dividend has been approved by the
shareholders.

22 June, 2019
Workshop on ‘Internal Credit Risk Rating System (ICRRS)

4 July, 2019
Reformation of Board of Directors, Executive Committee,
Audit Committee, and Risk Management Committee at
345th Board Meeting

18 July, 2019
Workshop on ‘ICT Security Awareness for IT Contact
persons of Branches’ Bangladesh Bank and Mercantile Bank Limited signed an agreement
under ‘Programme to Support of Safety Retrofits and Environmental
27 July, 2019 Upgrades
Half Yearly Business Conference 2019 held at Le Méridien,
Dhaka.
30 November, 2019
14 September, 2019 Awarded ‘Certificate of Merit’ in 19th ICAB National Award
Dhaka WASA recognized MBL as one of the highest bill for Best Presented Annual Reports 2018
collecting Banks.
29 December, 2019
21 September, 2019 Inaugurated 148th Branch at Satkhira.
Mercantile Bank, as a lead Bank in Bhola, organized
school Banking Conference.

26 November, 2019
Bangladesh Bank and Mercantile Bank Limited signed
an agreement under ‘Programme to Support of Safety
Retrofits and Environmental Upgrades in the Bangladeshi
RMG Sector Project’
 OVERVIEW

DIRECTORS’
REPORT
70 Mercantile Bank Limited
Annual Report 2019
WORLD ECONOMIC
OVERVIEW
On behalf of the Board of Directors of Mercantile Bank Limited, we have the
pleasure to present the 21st 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,
2019. On this auspicious gathering of our most valued shareholders, we are also
placing a brief review of various business operations of the Bank during 2019
along with the current trend of World as well as Bangladesh Economy.
World Econominc Review &
Forecast
Global growth is projected at 2.5
percent in 2020, just above the
post-crisis low registered last year.
While growth could be stronger if
reduced trade tensions mitigate
uncertainty, the balance of risks is to
the downside. A steep productivity
growth slowdown has been underway
in emerging and developing
economies since the global financial
crisis, despite the largest, fastest, and
most broad-based accumulation of
debt since the 1970s. Nevertheless,
downside risks predominate,
including the possibility of a re-
escalation of global trade tensions,
sharp downturns in major economies,
and financial disruptions. Emerging
market and developing economies
need to rebuild macroeconomic
policy space to enhance resilience to
adverse shocks and pursue decisive
reforms to bolster long-term growth.
15
10
5
0
-5
-10
-15
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Country Growth World Growth
Figure: Bangladesh Country Growth vs
World Growth vs GDP Growth
Growth in this region is expected
to rise to 5.5% in 2020, assuming
a modest rebound in domestic
demand and as economic activity
benefits from policy accommodation
in India and Sri Lanka and improved
business confidence and support
from infrastructure investments
in Afghanistan, Bangladesh, and
Pakistan. In India, where weakness
in credit from non-bank financial
companies is expected to linger,
growth is projected to slow to 5%
in FY 2019/20, which ends March 31
and recover to 5.8% the following
fiscal year. In Bangladesh, growth
is expected to ease to 7.2% in
FY2019/2020, which ends June 30,
and edge up to 7.3% the following
fiscal year. Global price pressures
remain largely subdued due to
weak crude prices and mild growth.
The same factors will likely keep
inflation broadly unchanged in 2020,
notwithstanding some likely further
monetary easing. Major central
banks kept rates unchanged in
recent weeks, amid an international
panorama which is slightly less
uncertain due to apparent progress
on U.S.-China trade talks. Looking
ahead, on balance panelists see some
further monetary loosening in 2020—
albeit to a much smaller extent
than in 2019—as central banks take
advantage of generally mild inflation
to boost growth.
The pace of global economic
activity remains weak. Momentum in
manufacturing activity, in particular,
has weakened substantially, to levels
not seen since the global financial
crisis. Rising trade and geopolitical
GDP Growth tensions have increased uncertainty
about the future of the global trading
system and international cooperation
more generally, taking a toll on
business confidence, investment
decisions, and global trade. A notable
shift toward increased monetary
policy accommodation—through
both action and communication—
has cushioned the impact of
these tensions on financial market
sentiment and activity, while a
generally resilient service sector has
supported employment growth. That
said, the outlook remains precarious.
Bangladesh’s economy will make one
of the biggest jumps between 2020
and 2034 on the back of demographic
dividend and rising per capita income,
according to the World Economic
League Table 2020. Bangladesh ranks
40th among 193 countries this year
and will rise to 25th in 2034, a spot
currently held by Belgium, showed
the latest edition of the WELT,
produced by London-based Centre
for Economics and Business Research
(CEBR), an international economic
forecaster. With a purchasing power
parity adjusted GDP per capita of
$5,028 in 2019, Bangladesh is a lower
middle-income country. The economy
performed well in 2019, expanding
by an impressive 7.8 percent. This is,
however, below the 7.9 percent GDP
growth rate recorded in 2018.
On the other hand, Bangladesh
has slipped two notches to 105th
in economic competitiveness
ranking in 2019, according to Global
Competitiveness Index (GCI) 2019
released by World Economic Forum.
The GCI, carrried out among 141
countries, ranks Singapore as the most
competitive economy followed by the
USA and Hong Kong. Chad was ranked
as the least competitive economy.
Bangladesh’s position eroded in 10
out of 12 pillars. The 12 pillars include
institution, infrastructure, ICT adoption,
macroenomic stability, health, skills,
product market, labour market,
financial system, market size, business
dynamism and innovation capability.

While U.S.-China trade war intensifies,
countries like Bangladesh, Vietnam,
and Chile that may reap the most
benefits from a widening trade
dispute between the world’s two
biggest economies. The impending
effect of the trade war on supply
chains dynamics and investment
patterns could help Bangladesh
emerge as a potential winner from
the conflict. China and the United
States have been stable trade
partners to Bangladesh for decades.
The volume and value of trade
Bangladesh has with both countries
is significant. However, the nature of
trade with both countries is different.
Bangladesh’s top import partner is
China. Meanwhile, the United States
is the second largest destination for
Bangladesh’s exports. The changes in
the geopolitical relationship between
the United States and China through
this trade war have alarmed many
countries that have trade stakes
with these two nations – though this
raises hope for Bangladesh. The RMG
sector is expected to reap the most
benefits, as it accounts for 80 percent
of Bangladesh’s total exports. As
the trade war escalated thus far,
the garment industry observed
significant growth as American
retailers are placing more work
orders with Bangladesh in order to
offset increasing tariffs. Bangladesh
would become the next hotspot
for textile manufacturing, and the
Bangladeshi market would triple in
value by 2020 – up from USD $15
billion in 2010. This forecast entails
China’s gradual phase out from labor-
intensive industries to a higher value-
added, high-tech, capital-intensive
manufacturing sector and a greater
Bangladeshi stake in labor-intensive
industries such as the textile industry.
As factories are relocating from China
to elsewhere in Asia to avoid higher
tariffs, Bangladesh is comparatively
more attractive than its competitor
countries such as Cambodia
and Vietnam as a destination for
relocation. Bangladesh’s abundance
of labor gives it a competitive edge in
this labor-intensive industry.
World
Real GDP forcast total growth rate (%) 2012-2021
3.72
3.45
3.36
3.32
3.28
3.14
2014
2016
2012
2013
2015
2017
Heading into 2020, however, the
winds could shift, setting up the
global economy for a third “mini-
cycle recovery” in this decade-long
expansion. It can be forecasted that,
a recovery in global GDP growth
from 2.9% in 4Q’19 to 3.4% in 4Q’20
(averaging 3.2% GDP growth in
2020). It may also forecast that, a
3.5% growth in 2021, up from an
estimated 3% in 2019. This growth will
come predominantly from emerging
markets and, to a lesser degree, an
improving outlook in Europe. The
U.S. economy continues to sit on
stable ground, but its pace of growth
may slow down. However, there is
an asterisk with this outlook. As we
may also observe additional tariffs
to be enacted in the global sphere
and therefore the global growth
could decelerate further. Moreover,
central bankers around the world
will be more limited than before to
respond to any global shocks. The
synchronous easing of trade tensions
and monetary policy will be a key
theme for the year 2020. Though
U.S.-China trade will remain a factor
in 2020, the current sentiment is
positive.
Global Economic growth
2019 figure is estimate by the international monetary fund,
while 2020 and 3032 numbers are IMF projections
3.6%
2.9%
2018 2019
Meanwhile, 20 central banks have
eased monetary policy over the past 12
months it is expected to more easing,
with the global weighted average
DIRECTORS’ REPORT
policy rate reaching a seven-year low
by March 2020. Throughout 2018,
tighter policy and escalating trade
tensions both weighed on growth,
3.55
and even though monetary policy
began to ease from first quarter 2019,
it was offset by rising trade tensions.
Today, these two forces are reinforcing
3.02 each other in supporting the global
2.94 economy. Beyond this convergence,
2.91
consumption improvements could
2020
2018
2019
2021
also propel a mini-recovery. Today the
consumer in aggregate is in relatively
good shape, with healthy household
balance sheets, low unemployment
in developed markets and moderate
wage growth. On the other hand,
Growth in Europe continues to be
sluggish, but economists see flickers
of life as less uncertainty about trade,
policy and Brexit unleash pent-up
demand. Although real GDP growth
in the Euro area is likely to dip below
1% in 2020, economists expect it to
pick up again by 2021. The U.K. may
follow a similar trajectory, assuming
an orderly resolution of Brexit.
Uncertainty over the U.K.’s exit from
the European Union has played no
small role in dampening growth.
With a resolution on the horizon,
the economy could soon accelerate
above trend. Economists are calling
for a 1.4% bump in GDP growth for
2020 followed by 2% in 2021. Most
mainstream forecasters expect that
the worst of the storms are past, and
they are expecting global growth to
rebound: the International Monetary
Fund by 3.4 percent, the World Bank
by 2.7 percent. One big reason for
the dose of optimism is the generally
looser approach to the money supply
taken by central banks around the
world, which helped offset some of
the pain of trade wars and falling
investment in 2019 and promises to
allow a modest rebound next year.
3.4%
Growth Of Gross Domestic Product, 2019-2029
3.3%
United States
Euro Area
United Kingdom
Japan
Other Mature Economies
All Mature Economies
China
India
Other Developing Asian Economies
Latin America
Middle East & North Africa
Sub-Saharan Africa
Russia, Central asia and south europe
2020 2021 All emerging Devoloping Economies
World
0 1 2 3 4 5 6
Annual percent change
2019 2020 2020-2029
Notes: ‘ For more details regarding deviations from officially reported gdp growth rates, as well
as a list of countries included in each region, please refer to the methodology tab.
Source: The Conference Board Global Economic Outlook 2020, january 2020
72 Mercantile Bank Limited
Annual Report 2019

BANGLADESH
ECONOMY
Bangladesh economy has been able to keep the momentum during 2019 on
a sustained basis, inflicting irreparable damage. This may be attributed to the
limited degree of globalization effected by Bangladesh economy till now. But
some headwind stemmed from slowed-down export and import growth due to
shrinking global economic growth. The reverberation of destabilization caused
by USA unilateral trade policy contributed to the turbulence in global economy,
affecting Bangladesh exports to some extent. Loss of market to competitors with
greater comparative advantage, particularly in garment manufacturing, could
also have played its part in whatever decline in exports took place during 2019.

GDP
GDP growth for FY2018-19 reached
8.13 percent, significantly higher than
the growth of 7.86 percent in the
preceding fiscal year. For the coming
a increase of Tk. 5,183.6 crore (5.60%)
during the same period of the last
year and credit to other public
sector increased by Tk. 5,356.3crore
(24.80%) compared to an increase of
Tk. 3,453.0crore (19.03%) during the
million (5.16%) compared to the same
period of the last year.
Import (In million US$)
6,000.00
5,000.00

year expected GDP growth is 8.20 same period of the last year. 4,000.00
percent .Hope fully we will able attain
this target by attaining private sector 3,000.00

growth 14 to 15 percentage. Reserve Money 2,000.00

2,000
0.00
00

In Nov’19 reserve money decreased 1,000.00

1,000.00

Broad Money (M2) by Tk. 0.8 crore (0.00%) from -

Tk.2,46,187.7crore in June’19 while
Ja 9
Jan'19

Feb'19

Mar'19
Mar19

Apr'19

May'19
May 19

Ju 9
Jun'19

Jul'19

Aug'19

Sep'19

Oct'19
c '19

9
Nov'19
In Nov’19 Broad money (M2) increased the decrease in reserve money was

Oct
p
by Tk. 1,43,973.8 crore (12.72%) over Tk. 8,415.4 crore (0.30%) in Nov’18 Export
Nov’18 as compared to an increase compared to that of June’18. The
of Tk. 91,138.0crore (8.76%) during In December’19 higher export
amount of reserve money stands at
the same period of the last year. The receipts are recorded compared to
Tk. 2,46,186.9 crore in Nov’19.
growth of broad money in Nov’19 that of December’18. Export receipts
over Nov’18 was due to an increase in December’19 amounted to US$
Reserve Money (BDT in crore)
of Tk. 1,31,313.0 crore (15.03%) in net 3,525.1 million which is higher than
domestic assets and an increase 255,000.00 the amount in December’18 by US
of Tk. 12, 660.8crore (4.91%) in net 250,000.00 $99.0 million (2.89%). Moreover,
foreign assets 245,000.00 during July’19-Dec’19 export receipts
240,000.00
decreased by US$ 1,197.68 million
235,000.00
(5.84%) compared to the same period
230,000.00
Domestic Credit 225,000.00
of the last year.
In Nov’19 domestic credit increased 220,000.00
Export (In million US$)
215,000.00
by Tk. 1,54,027.7 crore (14.50%) over
210,000.00 4,000.00
Nov’18 as compared to an increase 19 19 19
g’ p’ ct’
Ju ’19
M ’19
Ap ’19

Ju ’19
Ma 19

’19
Fe 19

l’19
n’

r’

Au Se O
3,500.00
y

ov
b

of Tk. 1,24,486.5 crore (13.28%)

ar
Ja

during the same period of the last 3,000.00

year. The growth in domestic credit Import 2,500.00

in Nov’19 over Nov’18 was mainly 2,000.00

due to an increase of credit to the In November’19 lower import
1,500.00
private sector by Tk. 93,021.8crore payments are recorded compared
1,000.00
(9.87%) compared to an increase of to that of November’18. Import
Tk. 1,15,849.9 crore (14.01%) during payments in November’19 amounted 500.00

the same period of the last year. to US$ 3,986.6million which is lower -

than the amount in November’18 by

Jan'19
Feb'19
Mar'19
Apr'19
May'19
Jun'19
Jul'19
Aug'19
Sep'19
Oct'19
Nov'19
Dec'19

In components of credit to the

Government (net) increased by Tk. US$ 474.2 million(10.63%).Moreover,
55,649.6 crore (56.91%) compared to during July’19-Nov’19 import
payments decreased by US$ 1,177.4
 DIRECTORS’ REPORT

Foreign Exchange Reserves remittance in Dec’19 is recorded 5.75% in December’19 from 5.35% in
US$1,687.15 million. During Jul’19- December’18 setting up 2005-06 as
Foreign exchange reserves held
Dec’19 workers’ remittances increased the base year.
by the Bangladesh Bank stands at
by US$1,908.05 million (25.46%)
US$ 32,689.2 million at the end of Rate of Inflation (point-to-point basis)
compared to that of the same period
December’19 while it was US$ 32,716.5
of the last year.
million at the end of June’19.Thus Inflation
foreign exchange reserves decreased
by US$ 27.3 million (0.08%) at the Workers' Remittances (In million US$)
6.20
2,000.00
end of December’19 compared to the
1,800.00
reserves hold at the end of June’19. 1,600.00
6.00
Comparing with the reserves hold at 1,400.00
5.80
the end of same period of last year, 1,200.00
the current reserves increased by 1,000.00
5.60
800.00
US$ 672.9 million (2.10%) at the end
600.00
of December’19. 400.00
5.40

200.00
5.20
-
Foreign Direct Investment
Jan'19
Feb'19
Mar'19
Apr'19
May'19
Jun'19
Jul'19
Aug'19
Sep'19
Oct'19
Nov'19
Dec'19
5.00
(FDI) Inflows Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Workers' Remittances
2019 2018
Foreign direct investment (FDI)
inflows during FY 2018-19 increased Inflation
by US$ 1,308.55million (50.71%) from Savings and Investment
US$ 2,580.44 million during FY2017- The rate of inflation measured by During FY2018-19, domestic savings
18. The FDI inflows during FY 2018-19 consumer price index (12-month increased to 23.93 percent of GDP,
was US$ 3,888.99 million. average) setting up 2005-06 as which was 22.83 percent in the
the base year ascended to 5.59% in previous year. Likewise, national
FDI (In million US$) December’19 while it was 5.55% in savings as percent of GDP increased
4,000.00
December’18. to 28.41 percent from 27.42 percent.
3,500.00 Inflation Both public and private investment
3,000.00
increased as percent of GDP in
FY2018-19 from previous fiscal year.
2,500.00 5.90
The total investment rose to 31.56
2,000.00 5.80 percent in FY2018-19, which was 31.23
1,500.00
0 5.70 percent of GDP in FY2017-18. Public
1,000.00
0 sector and private sector investment
5.60
500.00
0 increased to 8.17 percent and 23.40
5.50
percent of GDP respectively in
2014-15
20 4-115 2015-16
014 20 5-16 2016-17
015 20
0116 2017-18
0117-118 2018-19
6-117 20 20
0118-19 5.40 FY2018-19; which were 7.97 percent
Workers’ Remittances 5.30
and 23.26 percent of GDP respectively
in preceding fiscal year.
Worker’s remittances received from 5.20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
the Bangladeshi nationals working
abroad increased by US$ 131.92 2019 2018
million (8.48%) in Dec’19 from US$
Furthermore, the rate of inflation
1,555.23million in Nov’19. Workers’
(point-to-point basis) ascended to
74 Mercantile Bank Limited
Annual Report 2019
BANKING
INDUSTRY
As a developing economy, Bangladesh
has encouraged to develop its banking
industry to promote economic
growth. Over the last three decades
the country has seen spectacular
expansion of the banking industry.
The banking industry in Bangladesh
has even gone a step further by
promoting financial inclusion of the
very poor in rural areas of which
microfinance and microcredit are
the policy instruments to achieve
that objective. This has helped to
expand the monetization of the rural
economy, and as a consequence it
has become more market-oriented.
Such market orientation of the rural
economy also facilitated continuous
resource transfer from rural areas to
urban areas. The rapid advancement
in information and communication
technology has significantly
influenced our banking industry in
Bangladesh. Banks and financial
organizations have improved their
services as a financial intermediary
through adopting various IT solution
services.
Digitalization in banking does not
only mean online banking, internet
banking, mobile banking or paperless
banking rather it is the application of
new technologies to transform the
existing banking business model into
a new banking business model. A
model which will itself produce new
customer base, unveil new financial
services, ensure faster and seamless
services to clients with reduced
operational cost, zero error, ease
of use and apparently, maximum
security. Therefore, it’s not only a new
channel; rather it’s a whole new way
of transforming existing transaction-
based banking into the experience-
based banking. So that, banking can
be accessed by customers anytime
and from anywhere.
During the period July-September,
2019, Banking sector’s indicators
show a mixed performance, reflected
in rising non-performing loans (NPL),
stable capital adequacy, rising
liquidity condition and improving
provision maintained. Overall NPL
and net NPL edge up driven mainly
by increasing NPL of the private
commercial banks (PCBs) during the
same period.
Overall NPL of the banking industry
increased to 11.99 percent in July-
September, 2019 from 11.69 percent
in April-June, 2019. Gross NPL for
PCBs increased from 7.13 percent
in April-June, 2019 to 7.43 percent
in July-September, 2019, witnessed
weaker provisioning. However, gross
NPL of State owned Commercial
Banks (SCBs) moderated to 31.52
percent in July-September, 2019 from
31.58 percent in April-June, 2019. The
system-wide net NPLs of the banking
industry rose to 3.66 percent in July-
September, 2019 from 2.53 percent in
April-June, 2019.
Overall capitalization of the banking
system remained stable and CRAR
reached at 11.7 percent in April-
June,2019. Private commercial banks
remained well capitalized with CRAR
at 12.7 percent. Capital position of
SCBs went up from 6.7 percent in
January-March, 2019 to 8.5 percent
in April-June, 2019, indicating
improvement in capitalization.
Capital to Risk Weighted Asset
Ratios (CRAR) of PCBs
13.00%
12.80%
12.60%
12.40%
12.20%
12.00%
11.80%
11.60%
Mar' Jun' Sep' Dec'
2018 2018 2018 2018
CRAR
Source: Department of Off-site supervision,
Bangladesh Bank
Profitability Ratios of PCBs
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2017 2018 2019
ROE 12.00% 11.00% 9.50%
ROA 0.90% 0.80% 0.70%
Source: Department of Off-site supervision,
Bangladesh Bank.
*Annualized data based on June.
Deposit growth rose to 12.0 percent
at the end of July-September, 2019
from 10.2 percent at the end of
same period of previous year. On the
other hand, the growth of advances
continued its downward trend and
stood at 11.7 percent at the end of July-
September,2019. At the end of first
quarter of FY20, deposit growth has
exceeded the growth of advances as
a result of slowdown the subscription
of national saving certificates. Thus
overall advance deposit ratio declined
by almost one percentage point
to 76.6 percent in July-September,
2019. 6.5 Overall liquidity condition
in the banking system remained
well-adequate and stable at the
end of July-September,2019. Excess
liquidity, the excess of CRR and SLR
as percent of total demand and time
liabilities (TDTL), narrowly moderated
from 7.3 percent in April-June 2019 to
7.2 percent in July-September 2019.
Excess liquidity (as percent of TDTL)
declined almost three percentage
point to 11.0 percent for SCBs and
rose almost one percentage point
Mar' Jun' to 5.1 percent for PCBs at the end of
2019 2019
July-September, 2019.
 DIRECTORS’ REPORT

BUSINESS
REVIEW
Deposits & Deposit Mix
In 2019, we have emphasized on
restructuring our deposit mix with
a view to keeping down the cost
of funds 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 2019, total deposits of the Bank
stood at BDT 247,624.47 million as
compared to BDT 229,907.33 million
of 2018. However, we are endeavoring
to make our deposit products even
more attractive to the prospective
clienteles by ensuring delivering
superior and value adding customer
services.

Deposit Mix BDT in Million

2019 2018 1.23%

Type
Volume % Volume %
Deposit Under Schemes
Deposit Under 10.27%
55,695.38 22.49 51,767.02 22.52
Schemes 22.49% Fixed Deposits
Fixed Deposits 116,338.77 46.98 105,589.35 45.93 9.38%
Savings Deposits
Savings Deposits 23,894.40 9.65 21,453.10 9.33
Current Deposits 9.65% Current Deposits
23,231.08 9.38 23,078.06 10.04
& other accounts
Short Notice Deposits
Short Notice
25,419.21 10.27 25,080.50 10.91
Deposits Bills Payable
Bills Payable 3,045.63 1.23 2,939.30 1.27 46.98%
Total 247,624.47 100.00 229,907.33 100.00

Loans and Advances
Total loans and advances of the Bank
stood at BDT 236,890.38 million as
on December 31, 2019 against that
of BDT 199,660.72 million at the
end of 2018. The Bank recorded a
5.65% growth in loans and advances. Services, transport, pharmaceuticals
Major sectors where the Bank etc. Besides, the Bank continued
extended credit includes trade and
its support to Small and Medium
commerce, garments industries,
Enterprises (SMEs) and expanded
large and medium scale industries,
construction, agriculture and related credit facilities to them through its
sectors, hospital and medical SME Financing Division.

Sector Wise Loans & Advances Mix  BDT in Million

Sectors Dec-19 % Dec-18 %

Education (School/College, University, Research institute) 326.95 0.14 247.79 0.11
Health 246.28 0.10 1,640.98 0.73
Agriculture 3,988.29 1.68 5,030.99 2.24
Commodities (Sugar/ Edible Oil/ Wheat/ Rice/ Dal/ Peas/ Maize
19,646.37 8.29 11,931.18 5.32
etc), Food & Beverage
Trade Finance 36,648.56 15.47 36,115.28 16.11
Transport 1,216.53 0.51 2,362.12 1.05
Shipping 146.66 0.06 7,542.63 3.36
Textile (Excluding IDBP) 11,250.39 4.75 6,993.62 3.12
Textile (IDBP) 1,804.69 0.76 1,281.55 0.57
Readymade Garments (RMG) [excluding IDBP] 42,935.27 18.12 40,064.69 17.87
Readymade Garments (RMG) [IDBP] 276.41 0.12 340.95 0.15
Tele communication 941.61 0.40 944.05 0.42
IT & Computer/Trade 368.48 0.16 332.72 0.15
Power & Fuel 7,633.70 3.22 2,103.03 0.94
Real Estate 7,708.73 3.25 7,370.70 3.29
Cement 1,085.58 0.46 1,089.69 0.49
Chemicals 4,463.61 1.88 1,141.88 0.51
Leather & Leather products 4,418.41 1.87 4,320.49 1.93
Plastic & Plastic products 1,055.02 0.45 1,866.70 0.83
76 Mercantile Bank Limited
Annual Report 2019

Sectors Dec-19 % Dec-18 %

Electrical & Electronic goods 4,537.80 1.92 4,830.09 2.15
Paper & Packaging 5,142.11 2.17 5,135.13 2.29
Jute & Jute products 3,184.60 1.34 2,953.46 1.32
Glass & Glass products 0.01 0.00 7.47 0.00
Ceramics (Table ware, Sanitary ware, Tiles etc.) 1,114.34 0.47 934.58 0.42
Iron & Steel 20,279.39 8.56 12,943.48 5.77
Engineering & Construction 7,313.01 3.09 10,811.33 4.82
Contractor Finance 4,046.99 1.71 2,669.36 1.19
Capital Market Intermediaries 623.61 0.26 843.58 0.38
Backward Linkage 3,895.94 1.64 4,087.66 1.82
Consumer & Retail Products 8,110.03 3.42 7,912.13 3.53
Non Bank Financial Institution (NBFI) 9,049.27 3.82 8,559.92 3.82
Service (Hotel, Restaurant, Travelling, Tickets, etc.) 1,658.30 0.70 6,440.62 2.87
Others 21,773.45 9.19 23,380.78 10.43
Total 236,890.38 100.00 224,230.61 100.00

0% Education (School/College Cement

0% 2% University, Research institute) Chemicals
Health Leather & Leather products
1% 9% 8% Plastic & Plastic products
Agriculture
2% Commodities (Sugar/ Edible Oil/ Electrical & Electronic goods
4% Paper & Packaging
Wheat/ Rice/ Dal/ Peas/ Maize
0% 3% 15% Jute & Jute products
Trade Finance
2% Glass & Glass products
Transport
3% Ceramics (Table w are, Sanitary w are, Tiles etc.)
1% Shipping
Iron & Steel
5% 0% Textile (Excluding IDBP)
Engineering & Construction
9% Textile (IDBP)
1% Contractor Finance
0% Readymade Garments (RMG) [excluding IDBP] Capital Market Intermediaries
0% Readymade Garments (RMG) [IDBP]
1% Backw ard Linkage
2% 18% Tele communication Consumer & Retail Products
2% 0% 3% 3% IT & Computer/Trade Non Bank Financial Institution (NBFI)
2%
2% Pow er & Fuel Service (Hotel, Restaurant, Travelling, Tickets, etc.)
0% 0% 0% 0% Real Estate Others

Import Trade Foreign Remittance relationships with various global

Like before, this year also MBL has
exhibited quality financing while
facilitating import trade. During the
year, the Bank handled a total of BDT
184,650.00 million of Import business
compared to BDT 196,389.70 million
of the year 2018. 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
The Bank handled a total of BDT
163,152.30 million of export business in
2019 as against BDT 158,307.70 million
of the year 2018. The focal point of
our export financing was the garment
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.
During the year 2019, MBL has
strengthened its position in
mobilizing inward foreign remittance
from Non-Resident Bangladeshis
(NRB) living and working in different
parts of the world. The Bank has
strategic alliances with leading
exchange companies and banks
in the USA, United Kingdom, 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 to encourage and motivate
both remitters and beneficiaries to
use formal banking channels for
money transfer from abroad. In 2019,
the bank handled a total inward
foreign remittance of BDT 35,239.10
million compared to BDT 35,943.00
million in 2018. We have strengthened
money transfer companies including
Western Union, Money Gram, Xpress
Money, Placid Express, Instant Cash
Worldwide, Prabhu Money Transfer
and Trans-Fast Remittance.
Review of Divisional
Performance
MBL has several business divisions.
Detail overview of business divisions
during 2019 has been presented in a
separate segment under ‘Divisional
Overview’.
Operating Performance
MBL continued to keep pace in
delivering growth in every aspect of
its operating performance during the
year 2019. The bank strengthened
its focus on cost optimization and
improving operating efficiency, a
balanced approach that has enabled
us to upgrade its capabilities to
respond to market needs and
prepare it to become the best Bank
in Bangladesh. Its relentless focus on
customer needs and our stakeholder

expectations has made us
competitive in the banking industry.
The long-running low interest rates,
slow growth environment of the
previous years has made the Bank
vigilant. The banking industry is
facing an unusual combination of
circumstances that are giving special
impetus to its drive for efficiency.
The Bank is cautious of its strategies
as margins on loan operations has
been driven down in the industry due
to significant amount of bad loans.
Customer of the Bank preferences
in terms of banking products and
services are also changing and
the Bank has particularly focused
on the channels that are used to
access these products. The Bank has
invested our resources into acquiring
technology to provide better services
Particulars
Interest Income
Investment Income
Commission, Exchange and Brokerage
Other Operating Income
Total Income
Interest Income
Total interest income grew by 13.25%
year-on-year to BDT 23,081.81 million
in 2019 with improved business
volumes and increasing rates. All the
major businesses segments such as
Corporate Banking, Retail Banking,
SME Banking, Cards Operation and
Treasury contributed to the growth.
MBL managed its risk and return
considering top down and bottom up
line approach .
Operating Expenses
Operating expenses increased by 5.92%
year-on-year to BDT 5,820.26 million
in 2019 consistent with the business
growth opening new 10 branches
and resources hunting. Salaries and
employee benefits decreased 0.01% to
BDT 2,416.25 million and represented
41.51% of the total operating expenses
in 2019. Office administration and
establishment expenses mainly include
rent on premises, taxes, electricity,
legal expenses, insurance, security
printing and stationery, postage and
telecommunication. The growth of
office administration and establishment
expenses was driven by higher
and reduce security risks. Added to
these pressures is the cost of being
compliant with enhanced regulatory
requirements of Bangladesh Bank.
The Bank's carefully executed
efficiency initiatives under these
exceptional pressures have enabled
it to achieve significant results, our
revenue stream and asset base are
growing while overhead costs are
growing at a slower rate. The key
operating performance indicators are
depicted below:
Financial Performance
Analysis- Profitability
During the year 2019 operating profit
of the bank stood to BDT 7,355.75
million as compare to BDT 6,345.58
million in the year 2018. In the year
2019, to maintain better cushion
transaction volumes, opening new
branches and growth in employment.
The bank was able to maintain its cost
per employee and administration and
establishment expenses per branch
within the budgeted levels for the last
five years consecutively. MBL firmly
believes that the continuous reminders
and awareness will generate solid
business growth.
Net Interest Margin (NIM)
Net Interest Income (NIM) grew by
14.90% to BDT 8,600.64 million in
2019 with constant growth 5.65% of
loan volumes despite of having a lot
of challenges for interest on loan and
advances throughout the year.
Total interest earnings assets
increased by 8.92% year-on-year
to BDT 291,195 million while net
interest margin (net interest income
as percentage of average earnings
assets) increased by 5.41% as of
December 2019.
DIRECTORS’ REPORT
against its assets, MBL kept provision
of BDT 3,875.25 million for the year
2019 against BDT 1,994.63 million of
2018. As a result, net profit after tax of
the Bank decreased to BDT 2,175.50
million.
Total Income
Gross Income of the Bank surged
to BDT 31,292.16 million registering
11.29% growth in the year 2019 in
comparison to 2018. The increase
in the income stream was largely
attributable to maintain the sound
credit portfolio. Besides, fees based
income contributed lightly towards
positive growth of profit. During the
year 2019, MBL focused on sound
portfolio management and kept
down cost of fund at optimum level.
BDT in Million
2019 2018
23,081.81 20,381.11
3,828.90 3,558.85
2,950.70 2,384.41
1,430.75 1,793.17
31,292.16 28,117.54
Non-Interest Income
Other operating income (i.e. total
income other than interest income
i.e. investment income, commission,
exchange and brokerage, other
operating income) increased 5.00%
and stood at BDT 4,575.36 million
during the year 2019. Investment
income grew by 7.59% against last
year.
Financial Position Analysis
Asset Portfolio
The Bank has a healthy Balance sheet
size with BDT 316,363.47 million
assets base as on 31 December 2019.
Loans and advances contribute
major part i.e. 74.88% of total assets.
Investments stand the second largest
part i.e. 15.73% of total assets.
The core earning assets of the
Bank are Loans and Advances and
Investment. The credit portfolio of
the Bank experienced a constant
growth of 5.65% in 2019 over 2018.
Government investment consists
of Treasury bills & Bonds quantum
of government securities holding
increased by 33.56% over 2018.
78 Mercantile Bank Limited
Annual Report 2019
Funded Business of the Bank as
on December 31, 2019 stood at
BDT 236,890.45 million whereas
non-funded business stood at BDT
101,993.73 million for the same time
period.
Liabilities
Total liabilities increased by 8.34%
year-on-year to BDT 295,455.17
million in 2019, driven by increases in
customer deposits by 7.71% to BDT
247,624.47 million. B orrowing from
other banks financial institutions
and agents balance increased by
2.70% to BDT 20,623.05 million and
non-convertible Subordinated bond
decreased by 12.50% to BDT 4,200
million.
Deposit
It is the quantum of deposits placed
by customers in the Bank through
Current, Savings, SND, Scheme
Deposits, and Term Deposits i.e.
FDR etc accounts. Deposits growth
of the Bank was 7.71 % in 2019. Total
deposits surged to BDT 247,624.47
million from BDT 229,907.33 million
of 2018.
Capital
MBL is committed to maintain a
strong capital base to support
business expansion, provide a
cushion against unforeseen risks,
safeguard shareholder wealth and
foster investor confidence. The policy
allows taking advantage of emerging
opportunities and invests further
in the core business to enhance
shareholder returns. The Bank’s
capital management framework
includes a capital adequacy
assessment process to ensure that it
can mitigate current and future risks
and achieve its strategic objectives.
Market Performance Analysis
Shareholder Equity
Total Shareholders’ Equity stood to
BDT 20,908.29 million in 2019 from
BDT 18,683.55 million in the previous
year.
Dividend
The Board of Directors is continuously
making efforts to uphold and protect
the interests of all categories of
shareholders as well as to ensure
stable growth of the bank. In order
to maintain a satisfactory capital
adequacy ratio of the bank, the Board
has recommended a 16% (11% cash
& 5% stock) dividend for the year
ended 31 December 2019, subject
to the approval at the 21st Annual
General Meeting.
Credit Rating
Emerging Credit Rating Limited
(ECRL) 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, 2018
and other qualitative and quantitative
information up to the date of rating.
ECRL also placed the Bank with
'Stable Outlook'.
In addition, Moody’s has assigned
‘B2’ rating to MBL that reflects MBL’s
good Profitability, well matched
Maturity Profile, modest Asset Quality
and Solvency Profile.
Contribution to National
Exchequer
As a corporate entity, MBL pays
tax and VAT on its own income
according to prevailing laws of
the country. By this way, the Bank
has contributed extensively to the
government's revenue. During the
year 2019, The Bank contributed an
amount of Tk.5,209.27 million toward
national exchequer in the form of tax
and VAT on its earnings. Besides the
Bank deducts tax, vat, excise duties
etc. from various payments and
deposits the same to government
exchequer.
Status of Asset Quality
The non-performing loan (NPL) ratio
of the Bank was 4.86% as of 2019, a
little bit increase from 4.82% at the
end of 2018 and still well below the
industry average. A comprehensive
and prudent process is adopted
by the Bank from loan origination,
approval through disbursement up to
timely recovery, which has helped to
maintain the NPL at below industry
average. Precise diversification of
the portfolio and avoidance of over-
concentration on any one sector have
also helped maintain the quality of
the loan portfolio. Provision has been
charged against classified loans &
advances to profit and loss account
for BDT 3,875.25 million for 2019.
Internal Control System
Internal control systems are designed,
implemented and maintained by
the Mercantile Bank Limited (MBL)
in order to provide reasonable
assurance to fulfill the objectives that
is, reliability of financial reporting,
efficiency and effectiveness of
operations, compliance with laws
and regulations and risk assessment
of material misstatement. The major
components of MBL’s internal control
include control environment, Bank’s
risk assessment process, information
system (including the related business
processes, control activities relevant
to the audit, relevant to financial
reporting, and communication)
and monitoring of controls. Further
has been discussed in “Corporate
Governance” segment of this Annual
Report.
Risk Management
The Board Risk Management
Committee (BRMC) reviews and
monitors the overall risk management
system of the Bank and updates
the Board from time to time. In
addition, it has been emphasized
to follow DOS Circular No.04, ‘Risk
Management Guidelines for Banks’
issued by Bangladesh Bank dated
8 October, 2018. Risk management
functions are subject to continuous
scrutiny of ICCD and supervision of
RMD to ensure appropriateness and
integrity of the risk management
mechanism. The risk management
system of MBL has been described
in “Risk Management Report” section
of this annual report. Also the major
areas focused by BRMC in 2019
have been presented in “Board Risk
Management Committee (BRMC)
Report” section of this annual report.
Financial Reporting
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.
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.
Supportive Disclosure
It is hereby confirmed that proper
disclosures have been made in Annual
Report regarding:
Basis for related party
transactions.
Remuneration to directors
including independent directors.
The number of Board meetings
held during the year and
attendance by each director.
The pattern of shareholding by:
Parent/Subsidiary/
Associated Companies and
other related parties (name
wise details).
Directors, Chief Executive
Officer, Company Secretary,
Chief Financial Officer, Head
of Internal Audit and their
spouses and minor children
(name wise details).
Disclosure on Executives
(Top 5 salaried employees of
the company, other than the
Directors, CEO, Company
Secretary, CFO and Head of
Internal Audit). Shareholders
holding ten percent (10%)
or more voting interest in
the company (name wise
details).
Shareholders holding
ten percent (10%) or
more voting interest in
the company (name wise
details).
Disclosure on the appointment/
re-appointment of directors the
Bank:
Brief resumes of the
directors,
Nature of expertise in
specific functional areas,
Names of companies in
which the person also holds
the directorship and the
membership of committees
of the board.
ToR/Code of Conduct
The Board of Directors of Mercantile
Bank Limited has adopted all
the policies, guidelines, circulars
etc. (issued from time to time by
Bangladesh Bank) as its Terms of
Reference (ToR) and/or Code of
Conduct and therefore separate
documents like (i) Code of Conduct
for Board Members, (ii) ToR for Audit
Committee, (iii) ToR for Chairman
and (iv) ToR for Managing Director
& CEO have not been framed/laid
down by the Board. The Directors
have complied with such Code of
Conduct/ToR. A separate Report on
Corporate Governance has also been
furnished with this Annual Report.
Going Concern Basis
Going concern is one of the
fundamental assumptions in
accounting on the basis of which
financial statements are prepared.
Financial statements are prepared
assuming that a business entity will
continue to operate in the foreseeable
future without the need or intention
on the part of management to
liquidate the entity or to significantly
curtail its operational activities. It is
the responsibility of the management
of a bank to determine whether
the going concern assumption
is appropriate in the preparation
of financial statements. The
management of MBL has calculated all
the ratios related to the maintenance
of regulatory capital & liquidity such
as CRAR, LCR, NSFR, Leverage ratio,
CRR & SLR and assessed adequacy
of bank’s liquidity as per structured
liquidity profile, and has performed
stress testing to determine bank’s
shock absorbent capacity in different
distress scenario. All the ratios and
results thus calculated reveal that
MBL is running well above the level
of different parameters set by the
respective guidelines of Bangladesh
Bank.
Branch Network
At the end of 2019, the number of
branches of the Bank stood at 148.
The branches are located at major
trade centers as well as at the rural
areas of the country. Expansion of
branches at rural areas has provided
the lower income group an access
to the modern banking system and
prompt receipt of remittances.
DIRECTORS’ REPORT
Correspondent Relationship
MBL has been maintaining widespread
correspondent banking relationship
around the globe. As on December
31, 2019 MBL maintained Relationship
Management Application (RMA)
with 614 top ranked and best rated
banks in 63 (Sixty Three) countries
across the world. Currently, we are
enjoying Credit Limit of almost USD
900 million from various renowned
banks across the world. Major foreign
Correspondent Banks of MBL includes
but not limited to Commerzbank
AG, JP Morgan Chase Bank, Wells
Fargo Bank NA, Standard Chartered
Bank, MUFG Bank, Mizuho Corporate
Bank Ltd., HSBC, Mashreq Bank Psc,
Habib American Bank, Habib Bank
AG Zurich, UBAF, Unicredito Italiano
Spa, Swed Bank AB, Nordea Bank
AB, Banca UBAE S.P.A., Bank Muscat,
Emirates NBD and United Bank
Limited. Besides, we maintained 25
(Twenty Five) Nostro Accounts in
major currencies of the world as on
December 31, 2019.
Minority Interest
Minority shareholders have been
protected from abusive actions
by, or in the interest of, controlling
shareholders acting either directly or
indirectly and have effective means of
redress.
Review of Subsidiaries
Performance
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. Mercantile Exchange House
(UK) Ltd. has been carrying out
remittance business since 2011 in
UK. Besides, they are also engaged
in promoting different products and
services of Mercantile Bank Ltd. in UK
market. Details have been discussed
in ‘Subsidiary Overview’ segment.
80 Mercantile Bank Limited
Annual Report 2019
Mercantile Bank Securities Limited
Mercantile Bank Securities Limited is
developed to provide higher, better
and diversified services to a wide
range of customers. MBSL is offering
high quality products and services at
a competitive rate. Mercantile Bank
Securities Limited (MBSL) was 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. Mercantile Bank
Securities Limited offers full-fledged
international standard brokerage
service with margin loan facility.
Details have been discussed in
‘Subsidiary Overview’ segment.
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.
The Bank commenced operation
at these units through its Gulshan
Branch, Dhaka and Chittagong
EPZ Branch, Chittagong on July 04,
2010. As on December 31, 2019 total
exposure of OBUs decreased to USD
141.68 million from USD 144.91 million
on December 31, 2018. However, net
profit of OBU increased to USD 4.44
million equivalent BDT 376.93 million
during the year 2019 as compared to
that of USD 3.47 million equivalent
BDT 291.10 million in 2018.
Mobile Banking
Mercantile Bank Limited has started
its Mobile Banking operation in 2012
with the vision to be one of the leading
Service Providers of the country.
Later on, the Bank has re-branded it’s
Mobile financial Service as ‘MYCash’.
Being one of the Pioneers in the
industry, MYCash has transaction
connectivity with every telecom
operator of the country. At present,
MYCash has more than 33,000
agents where “Utility Bill Payment”
and “Corporate Payment Collection”
(B2B) are the key transaction drivers.
Besides providing basic mobile
financial services, MYCash system
is integrated with different service
providers to make value added service
available to their customers. Recently,
MYCash has been nominated as one
of the most loved MFS brand of the
country by Bangladesh Brand Forum
through the research conducted by
Nielsen Bangladesh.
Outlook 2020
The year 2020 will be a year of
‘consolidation’ for Mercantile Bank.
As it stands right now, there has been
a huge push from the government
for single digit interest rates, i.e., 6
percent for deposits and 9 percent for
loans. From the last quarter of 2019,
MBL wholeheartedly consolidating its
resources to bring in our businesses
in alignment with the mood of the
nation. Our top most challenges in
2020 shall be to attain quality asset
portfolio, to reduce the amount of
classified loans, to increase non-
interest earning business, and to avail
low cost refinance scheme so that the
cost of fund could be reduced and the
desired reduction in lending rate can
be achieved. Our strategies next year
will include: exploiting the growing
rural deposit basket by settingup
smaller size low cost rural sub
branches and agent banking booths,
cross Selling of different products and
services including retail to corporate
customers will get the top most focus
next year. In our loan portfolio, we will
remodel the concentration of segment
wise loans & focus on Good rated
business and retail business. New
emerging sectors like ICT Sector,
Energy & Power Sector, Health care
sector, Light Engineering, Tourism
Industry, Ceramic Sector, to be more
emphasized. Special attention will be
given to expand SME credit portfolio
to achieve relatively higher yields and
also to reduce adverse effects of large
volume defaults. Existing thrust sectors
like agro based industries, leather,
frozen food, textile industry to be
more focused. Agri-business sectors
like sugar, edible oil, wheat, rice, maze,
pulses, peas, Food & Beverage to be
more focused. We will also continue
encouraging young entrepreneurs
(Start-ups) through the product
“Udayan”. Further, MBL perceives
‘compliance first’ is no longer a mere
slogan, instead a necessity to sustain
in the long run. MBL is committed
to practicing compliance in every
aspect of its operations in 2020. In
addition, we are going to explore new
business avenues for ensuring wide
range of customer services through
establishing two subsidiaries in the
name of ‘MBL Asset Management
Limited’ and ‘MBL MyCash Limited’
and a new wing in the name of ‘MBL
Islamic Banking’.
Acknowledgements
My gratitude goes to the Government
of the People’s Republic of
Bangladesh, Officials of Bangladesh
Bank, officials of Bangladesh
Securities and Exchange Commission,
Dhaka Stock Exchange, Chittagong
Stock Exchange and National Board
of Revenue. Specially, we owe a great
debt to the officials of the Central
Bank for their advice and guidance
throughout the year and to our
external auditors for their valuable
feedback. I also express my sincere
gratitude to my colleagues for their
commitment and dedication towards
achieving a common goal. Last but
not the least, my whole-hearted
appreciation goes to our shareholders
and customers for their continued
support and for believing in us.
On behalf of the Board of Directors,
Morshed Alarm, MP
Chairman
 DIRECTORS’ REPORT

DIVISIONAL
OVERVIEW
82 Mercantile Bank Limited
Annual Report 2019

CORPORATE
BANKING DIVISION
Overview though Branches are working as also presented opportunities to
the business collecting agents CBD grow in different sectors, particularly
Corporate Banking Division (CBD) also deploy their efforts to collect Construction, ICT & Power sector.
acts as “Gateway” for the corporate corporate business centrally. CBD as usual keeps vigilant eyes to
business proposals. Branches send grab the opportunities presented by
their corporate business proposals Operating Environment the growing indigenous economy
to CBD. After analyzing a proposal and international trade.
Economic vulnerability during last
CBD prepares a summary on the year & fall down of export business CBD has been acclaimed for tailoring
merit/ feasibility of the proposal especially in Garments sector of the appropriate products based on
and place it to the Credit Risk country and the downward trend of customer’s genuine requirement
Management (CRM). CBD designs its lending rate triggered a challenging in line with the Bank’s strategic
credit portfolio matching with the risk situation for the industry. Frequent plan, credit policies and business
appetite statement of the bank and changes in the financing policies & objectives. Under broad head, the
formulate strategic plan for business increased competition in the industry products and services offered are as
growth. It is pertinent to note that was also a challenge. The economy follows:

Project Finance Working Capital Finance

The Bank encourages financing (Project The bank lends short – term working capital
Finance) long-term infrastructure and finance to entities engaged in manufacturing,
industrial projects towards economic assembling, processing, re-packaging of
upliftment and well being of the people/ goods and commodities for domestic
country by way of setting up a new stand consumption or export market. However,
alone, capital intensive project or for BMRE unsecured loans (not collateralized) for
of an existing project. CBD is equipped with working capital without justification is not
the acumen essential for appraising projects considered.
and sorting out the viable projects to finance.

Strategic Focus deals with corporate customers of loan to facilitated un-erroneous

having total corporate portfolio of Tk
During the year 2019, the Division 191,715.34 million as on 31.12.2019. Out of
Strategy centered on consolidating its the total corporate customers this year
portfolio, strengthening the fee based we have dealt the credit proposals of
income. Emphasis was also placed on 31 prominent groups namely Square,
leveraging our strong relationship to Transcom, Abul Khair, Bashundhara,
retain customers as well as crating Jamuna, Nitol-Niloy, Pran-RFL, ACI,
new customer. Habib, Meghna, Akij, Orion, T.K.,
Apex, BSRM, Navana, Rangs, Labib,
Performance Interstoff, Mahmud, Golden Harvest,
Creative, Mark, Natural, Dekko, Utah,
In 2019, branches sent 1,330 proposals
Runner, Crosswear, , S.Q., Max, Sajeeb
of Corporate Customers to this division
and Rahimafrooz group.
(new, renewal, enhancement & re-
arrangement). Presently this division Major Activities in 2019
BDT in million
CBD took major role for
implementation of ICRRS at MBL
191,715.34
reporting of Bangladesh Bank’s
SBS-3 returns.
Outlook 2020
MBL management declared year
2020 will be the year of consolidation.
Bank will not go for aggressive
marketing of Corporate Business.
Keeping that in view, CBD will go for
very selective business marketing
considering quality and reputation
of the customer. CBD will focus on
utilization of already sanctioned loans
and its proper use. CBD will emphasis
the enrichment of soft/negotiation
skill of the Head of Branch, educating

the credit officers in ICRR system

182,848.92

as per directives of Bangladesh

168,428.21

and ensuring the customer credit

Bank.
rating and its surveillance to reduce
CBD jointly with MIS division
111,766.19

provision load on risk weighted

97,234.00

contributed to enrich the assets.

database of MBL by continuous
development & monitoring of
“SBS-3 Generation software”
to determine correct Sector
Code, Economic Purpose Code,
2015 2016 2017 2018 2019 Product Code and Security Code
However, a reasonable credit growth
is also inevitable for the sake of
total of growth of the bank. CBD is
committed to maintain the pace in
play.
 DIVISIONAL OVERVIEW

CONSUMER & RETAIL

BANKING DIVISION
Operating Environment

The operational functionality of the Division consists of three units i.e. Credit Risk Management Team, Liability Sales Team
and Recovery Team.

Credit Risk Management Team mainly assesses the proposals received from all branches across the country and submits
those enumerating applicants’ character, capacity, capital, conditions and collateral before competent authority to seek
approvals. Afterward the division approves new limit and enhancement of existing limit, provide permission of renewals
for Secured Overdraft (SOD) facilities, makes reschedules and provide full & final settlement approval of non-collateralized
financing.

Liability Sales Team consists of Total 149 trained members, who are attached with different branches across the country,
hunt CASA accounts from individual customers. Besides this team also cross sells asset products like Car Loan, Home
Loan, Personal Loan and House Furnishing Loan to salaried and business persons having high net worth. They are also
entitled to cross sell all types of credit card products and mobile financial services products.

Recovery Team takes care of the special assets under the division. Team members monitor repayment of the customers
and communicate with branches and respective customers for recovery and regularization of non-performing loans

Products and Services Product-wise Loan Outstanding BDT in Million

Asset Products Liability Products Particulars 2019 2018

Home Loan 2,161.40 1,925.80
Home Loan Savings Account
Car Loan 177.30 208.20
Cottage Loan Current Account
Cottage Loan 117.90 109.20
Car Loan SND Account
Personal Loan 354.00 360.30
Personal Loan Fixed Deposit Account
House Furnishing
Secured Overdraft Digun Briddhi Amanat Prokolpo 56.50 54.70
Loan
(SOD) (DRAP) Staff Loan 1,087.20 1,131.73
Masik Munafa Amanat Prokolpo Others
Education Loan 3.30 3.90
(MMAP)
Secured Overdraft 3,670.00 4,803.06
Doctor’s Loan Masik Sanchaya Prokolpo (MSP)
Total Consumer
House Furnishing Loan MBL Bonus Sanchay Hishab 7,627.60 8,596.89
Loan

Performance

The division experienced growth rate of 7.69% in consumer financing (excluding staff & SOD facilities) during the year 2019
in comparison to 2018. Total outstanding stands Tk.76,275.40 lac with percentage of CL 2.40% as on December 31, 2019.

Received Files (HO) Approved Files (HO) Disbursed Files (Global) Total Outstanding
Year Nos. of Amount in Nos. of Amount in Nos. of Amount in Nos. of Amount in CL
File Lac File Lac File Lac File Lac
2019 1,680 35,223.37 1,566 31,984.96 16,792 76,730.07 18,517 76,275.40 2.40%

Outlook 2020

The Per Capita Income of people has been growing steadily for the past several years. In the last decade, the country
has recorded remarkable GDP growth rates due to development of different sectors which continuously offering new
employments. As a result, the consumer market of 170 million people entails increased number of flat, car, TV, AC etc.
thanking to their rise in income. To respond with the customers’ pulse the division has decided to add another feather in
its success by launching “National Sales Network” in the year 2020. Besides the division initiates to introduce dedicated
“Retail Banking Officer” for establishing relationship team at Branch level. Hence, Centralized System will be introduced
within short span of time. Apart from reformation of the division, it has targeted to achieve the milestone of Tk.1,000.00
crore portfolio by this year.
84 Mercantile Bank Limited
Annual Report 2019
SME FINANCING
DIVISION
Overview
SME Financing Division at Head
Office is the largest business unit
of the bank. Since the inception,
SME Division is providing financing
solutions for the SME Finance Division
customers across the country with the
purview of prudential guidelines of
Bangladesh Bank for SME Financing.
Our Bank has undertaken extensive
program to increase credit exposure
in the SME sector. A dedicated
Team is working at Head Office to
process all activities to help branches
related to file preparation, document
collation, site visit, verification, credit
approval, credit monitoring and
recovery and credit administration.
Consequently, the SME portfolio of
the bank has been increased notably
over the last five years. As such, SME
Financing Division is contributing in
the sustainable growth of the bank.
Operating Environment
The role of Small and Medium
Enterprises (SMEs) is indispensable
for overall economic development of
a country particularly a developing
country like Bangladesh. About 95%
private sector enterprises are SMEs
and major portion of non-agricultural
workforce is working in this sector.
The SMEs contributed up to 25% of
GDP including about 40% of gross
manufacturing output and around
25% of the total labor force.
Major Activities in 2019
MBL has been participating in
different refinance schemes of
Bangladesh Bank (for example BB
Fund, ADB Fund, JICA Fund, EGBMP
Fund etc.) and presently availing
refinance facility against the SME
loan disbursed favoring Women
Entrepreneurs, Agro Based Product
Processing Industries and other
eligible SMEs. Mercantile Bank Ltd.
got about Tk 90.00 crore refinance
facility from Bangladesh Bank during
2019.
In the year 2019, MBL participated
a fair titled as “Banker-SME Women
Entrepreneurs’ Conference and
Product Exhibition-2019” organized
by Bangladesh Bank held at
Bangladesh Shisu Academy), Dhaka
from 8th March to 10th March 2019.
In that event, one of our women
entrepreneurs was allotted a stall for
displaying and selling her array of
products. In addition to this, our Bank
participated 4th International SME
fair-2019 organized by Chittagong
Chamber of Commerce and Industry
and International Women’s SME
Expo Bangladesh-2019 organized
by Chittagong Women Chamber of
Commerce and Industry. Our women
entrepreneur participants in the 4th
International SME Fair got 1st prize in
2019.
Strategic Focus
Considering the immense possibility
of SME sector to explore, we have
chalked out the strategies as under
in our bid for expansion of SME
portfolio towards making value
added contribution in this sector of
economy as well as maximization our
yield on lending activities:
Time to time review of existing
products launched for the
SME entrepreneur and where
necessary to make value
addition/enrichment and to
them even more attractive and
acceptable to the entrepreneurs.
To induce the branches for
exploring the opportunities
in their respective command
area(s) for scouting credible and
credit worthy SME clients.
Activation of our 5 (Five) clusters
i.e. Light Engineering, Chatal/Rice
Mill, Poultry Feed, Steel & Ship
Scraps and Medical & Surgical
Equipments, to churn out better
results from the cluster concept.
SME credit exposure may be
extended up to BDT 75.00 crore,
which not only instrumental
in portfolio extension but at
the same time will enable us to
derive technical benefit like that
of provisioning requirement.
Our existing pool of corporate
clients may be persuaded to link
up their suppliers of different
accessories and raw materials
i.e. those who maintain their
supply chain as backward linkage
support providers.
Performance
Consequent upon the prudent
initiatives of the Board and
Management of the Bank, the
outstanding portfolio of SME loan has
increased over the years. For instance,
the outstanding balance of SME loan
has reached to Tk 3,220.73 crore as
BDT in Million
32,210
30,250
28,660
14,540
11,650
2015 2016 2017 2018 2019
on December 2019 constituting 176%
growth compared to 2015.
Products & Services
MBL has a good array of products
befitting the requirements of different
segments of the borrowers in the
trade, manufacturing and service
sectors, as under:
CHAKA ÒPvKvÓ (Term Loan)
ANANNYA ÒAbb¨vÓ (Women
Entrepreneur’s Loan)
SAMRIDDHI Òmg„w×Ó (Continuous
Loan)
MOUSUMI Ò‡gŠmygxÓ (Short Term
Single Payment Seasonal Loan)

SANCHALAK ÒmÂvjKÓ (A mix of
term, time & continuous credit)
UNMESH ÒD‡b¥lÓ (Trade Finance)
UDAYAN ÒD`qbÓ (Start-up
Financing for the young
entrepreneurs)
FACTORING OF RECEIVABLES
Lastly, MBL launched two
new products titled as
UDAYAN” and “FACTORING
OF RECEIVABLES”. “UDAYAN”
is targeted for financing the
start-up business of young
educated entrepreneurs with a
view to materialize their specific
business plan. “FACTORING OF
RECEIVABLES” is targeted for
financing of receivables of the
corporate clients and suppliers
of raw materials.
MBL has high on its agenda to finance
the women entrepreneurs at a lower
rate of interest to facilitate business
growth in this area. The outstanding
portfolio of SME loan for the women
entrepreneurs has reached at Tk
116.33 crore as on December 2019.
Outlook 2020
The Management of the Bank
prioritizes more to expand the
portfolio in the SME segment in the
current year 2020 by focusing on
DIVISIONAL OVERVIEW
diversification of loans across the
borrowers, business and geographical
dispersion, thereby to make
distinctive value addition in this thrust
sector of the economy. Our Bank set
TK.44,00.00 crore disbursement
target for the year 2020.
Going forward, MBL will place high
emphasis to responsible lending
and developing the SME sector by
focusing on geographical dispersion,
thereby to make distinctive value
addition in this thrust sector of the
economy. Thus, our SME Financing
Model would be a great success in
driving sustainable growth of SMEs
throughout Bangladesh.
86 Mercantile Bank Limited
Annual Report 2019

AGRICULTURE
CREDIT DIVISION
Introduction
Mercantile Bank Limited started
agriculture credit disbursement since
2010 by formation of a separate
department namely “Agriculture
Credit Department” which was
renamed as “Agriculture Credit
Division” in January 10, 2016. Directly to farmers To farmers through To farmers through
(Individual/ partnership with Contract Farming
From the inception, the division is Group-wise)/ MFIs/NGOs (MRA with reputed
operating agriculture credit activities Concerns Certified only) Companies
as per Bangladesh Bank’s Agricultural
& Rural Credit Policy and Program
depicted in the diagram (right side).

Operating Environment
The economic and political landscape presented mixed fortunes for the division in 2019 due to severe competition of interest
rates. The economy also presented opportunities for growth, particularly given the governments ambition to be self sufficient
on food and agri. products production. Mercantile Bank Limited always sought to align itself with national growth.
Products & Services
The division mainly deals with 04 (four) products based on nature of loan:

Short Term Loan [Agri] SOD (Gen) [Agri]: CC (Hypo) [Agri] Term Loan [Agri]

For finance For meeting up For meeting up For fixed assets

directly to working capital working capital development of the
farmers requirement of the requirement of the agricultural farm as
agricultural farm. agricultural farm. well as to finance in
NGO/MFIs.

The division is also giving policy support and advocacy to the end user as well as to regulatory authority.
Performance
It is noteworthy that we achieved the disbursement target of Agriculture Credit for last consecutive 07 fiscal years (FY
2012-13, FY 2013-14, FY 2014-15 , FY 2015-16, FY 2016-17, FY 2017-18 & FY 2018-19) successively and achieved letter of
appreciation from Bangladesh Bank for our feat of performance in the attainment of the target.
BDT in million
Outstanding Outstanding
Particulars No. of Beneficiaries No. of Beneficiaries
as on 31.12.2019 as on 31.12.2018
Directly 1,041.88 1,157 1,059.50 1,352
Indirectly (NGOs) 2,946.41 34 2,154.65 36
Total 3,988.29 1,191 3,214.15 1,388

Key Activities in 2019 BDT in Crore

401

We focused on compliance of Bangladesh Bank’s directives

379.07
354

to achieve agriculture credit disbursement target for the

335.38

fiscal years through direct farmers/individuals, contract

301.68
283

farming with reputed companies and partnership with

different MFIs/NGOs. In last fiscal year we achieved
220
226.84

208.13
205

disbursement of Tk.379.07 crore against target amount

of Tk354.00 crore and in the current fiscal year 2019-
2020 we already disbursed Tk.208.13 crore against target 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
amount of Tk.401.00 crore and opt to achieve the target Target fixed by BB Disbursed Amount
amount within stipulated time i.e. within June’2020.
 DIVISIONAL OVERVIEW

Outlook 2020

Our expansion strategy for 2019-2020 will continue to reflect significant growth in agriculture sectors. We see significant
potentials in fisheries and livestock sectors. We also see immense potentials in import substitute agri. products like Dal, Oil
Seed, Maize and Spices. We hope to diverse our agri. financing sectors during the fiscal year.

FINANCIAL INCLUSION
DEPARTMENT
Introduction
With the aim to uphold the living
standard of marginal people and also
to bring them under formal financial
services, a department namely
“Financial Inclusion Department”
under Agriculture Credit Division,
Head Office was formed in the year
2016.
As per Bangladesh Bank’s directives,
our bank is extending credit facilities
to 10 Taka account holders under
financial inclusion scheme” of
Bangladesh Bank.
Operating Environment
Access to formal financial sector can
economically and socially empower
individuals, in particular poor people,
allowing them to better integrate
into the economy, contribute to the
development and protect themselves
against economic shocks.
Considering the above, Bangladesh
has introduced a Refinance Scheme
for Tk.200.00 crore for banks to
onward finance to 10 taka Account
Holders Small/ Marginal/ Landless/
Natural Disaster Affected Farmers
and Small or Micro Traders.
Products & Services
There are mainly 02 (two) products
based on nature of loan:
i) Time Loan [FIS]
ii) Term Loan [FIS]
Performance
We are achieving the disbursement
target of financing to 10 Taka account
holders under Financial Inclusion
Scheme of Bangladesh Bank for last
five consecutive years.

Year-wise achievement  BDT in Lac

Fiscal Year Target Amount Disbursed Amount Achievement
2015 20.00 22.15 110.75%
2016 50.00 50.10 100.20%
2017 180.00 199.30 110.72%
2018 200.00 215.50 107.75%
2019 215.00 238.25 110.81%

Key Activities in 2019
In the year 2019, we have disbursed
the amount of Tk.238.25 lac against
the target of Tk.215.00 lac, fixed by
Bangladesh Bank.
Major Adoption in Policy &
Guideline in 2019
Mercantile Banking is extending credit to
10 taka Account Holders Small/ Marginal/
Landless/ Natural Disaster Affected
to time circulated by Financial Inclusion
Department of Bangladesh Bank.
According, Agriculture Credit Division is
issuing the necessary circulars against
the Bangladesh Bank’s directives time
to time regarding Financial Inclusion
Scheme for 10 taka Account Holders
Small/ Marginal/ Landless/ Natural
Disaster Affected Farmers and Small or
Micro Traders.
Partnering with Different NGOs
our Bank, we extend credit through
partnership with MRA certified MFIs/
NGOs. The followings are the NGOs/
MFIs through which we are disbursing
to 10 taka Account Holders under
Financial Inclusion Scheme:
i. BASTOB- Initiatives for People’s Self
Development
ii. Grameen Unnayan Sangstha
iii. Alor Pothey Unnayna Sangstha (APUS)

Farmers and Small or Micro Traders as To achieve the disbursement target iv. Technical Assistant for Rural
per Bangladesh Bank’s directives time under Financial Inclusion Scheme for Development

Performance of 'Financial Inclusion Department as on December 31, 2019 BDT in Lac

Particulars Disbursement as on 31.12.2019 No. of Beneficiaries No. of Beneficiaries No. of Beneficiaries
Directly 42.11 131 21.56 65
Indirectly (NGOs) 212.21 3 246.90 4
Total 254.32 134 268.46 69
88 Mercantile Bank Limited
Annual Report 2019

INTERNATIONAL
DIVISION
Mercantile Bank Limited (MBL) is
a Foreign Trade focused Bank with
market share of around 3.5% and
albeit it is a third generation private
commercial bank but its position
is among the top few banks in
Bangladesh in terms of Foreign Trade
Transactions. This seed was sown
on the very first day of operation of
MBL. Since inception, MBL has been
rendering the trade finance needs
of the customers of the Bank. And
International Division (ID), from the
very first day of this journey has
been playing a pivotal role to ensure
seamless services to the customers
by facilitating, monitoring and
supervising all AD branches of the
Bank under the purview of prevailing generation private commercial banks
local and international regulatory in terms of foreign trade transactions.
rules & regulation and internal policy The Bank has also been rated by
of the Bank. world’s renowned rated agency i.e.
Moody’s in a bid to give extra comfort
Going forward, to accommodate
to its correspondent banks across the
the growing need of customers, ID
world.
introduced Off Shore Banking Unit
(OBU) as separate business unit on
Foreign Trade Business
July 04, 2010 and also introduced the
Performance in 2019 and
Centralized Trade Processing Center
(CTPC) on June 02, 2016 to ensure
Performance trend
superior customer services to the
During the year 2019, MBL issued
foreign trade related customers of
total 43,003 Import LCs among
non AD branches only.
which 22,059 was Local LCs and
Being a third generation private remaining was Foreign LCs. In terms
commercial bank, MBL has surpassed of percentage, composition of Local
many first generation and second and Foreign LC was 51:49.

Year-wise Achievement  BDT in Lac

Particulars 2019 2018 2017 2016

No. of Foreign LC Opened 20,944 20,559 20,209 17,677

No. of Local LC Opened 22,059 22,426 20,243 19,133

No. of Total LC Opened 43,003 42,985 40,452 36,810

MBL posted 3% growth in Export business and experienced negative growth of 6% in Import business during the year
2019. On the other hand, remittance business was more or less same in the year 2019 as compared to 2018.

Year-wise achievement 
Year-2016 Year-2017 Year-2018 Year-2019 Growth
in 2019
Particulars BDT in USD in BDT in USD in BDT in USD in BDT in USD in over
Million Million Million Million Million Million Million Million 2018
Import 139,770 1,780 190,753 2,307 196,390 2,341 184,650 2,175 -6%

Export 113,040 1,440 134,753 1,629 158,308 1,887 163,151 1,922 3%

Remittance 24,960 320 31,454 380 37,552 448 37,376 440 0%

Major Changes in Trade MBL’s International Business Volume Trend USD in Million
Finance Structure
2,341
2,307

2,175

In order to further strengthening

1,922
1,887

trade finance compliance structure

1,780

1,629

and thereby protecting the Bank

1,440

from Trade Based Money Laundering,

Maritime crime and malpractices and
also to comply with the requirement
448

440

of Bangladesh Bank’s Trade Based

380
320

Money Laundering Guidelines, we

adapted Vessel Tracking service from
Lloyd’s List Intelligence (LLI) in the Import Export Remittance
year 2019. LLI would support us in the 2016 2017 2018 2019
following areas:

Tracking Movement of Ship i.e.
where the vessel is currently
staying, which port the vessel
touched during the entire
voyage i.e. from port of loading
to port of destination.
Sanctions screening i.e. whether
the ship is sanctioned or ports
touched by the ship during the
journey is sanctioned or not
Ownership and Beneficial
Ownership’s status of the Ship
under the purview of sanctions
screening
Besides, during the year 2019 we
opened a Nostro Account in JPY
with Standard Chartered Bnak, Tokyo,
Japan which would substitute our
closed A/c in JPY with MUFG, Tokyo,
Japan.
Foreign Correspondent
MBL has been maintaining widespread
correspondent banking relationship
around the globe. As on December
31, 2019 MBL maintained Relationship
Management Application (RMA)
with 614 top ranked and best rated
banks in 63 (Sixty Three) countries
across the world. Currently, we are
enjoying Credit Limit of almost USD
900 million from various renowned
banks across the world. Nevertheless,
in a bid to further strengthening our
foreign correspondent network and
thereby facilitating the increasing
foreign trade business of the Bank,
we conducted 62 meetings with
different foreign correspondent
bank at our office over the year 2019.
Furthermore, MBL participated the
SIBOS-2019 held in London, UK to
reap the maximum benefit by meeting
the existing correspondent banks as
well as potential new correspondent
banks locating at a SIBOS premise.
Major foreign Correspondent Banks
of MBL includes but not limited to
OBU Profit
5.14
2.68
0.851
2015 2016 2017
Commerzbank AG, JP Morgan Chase
Bank, Wells Fargo Bank NA, Standard
Chartered Bank, MUFG Bank,
Mizuho Corporate Bank Ltd., HSBC,
Mashreq Bank Psc, Habib American
Bank, Habib Bank AG Zurich, UBAF,
Unicredito Italiano Spa, Swed Bank
AB, Nordea Bank AB, Banca UBAE
S.P.A., Bank Muscat, Emirates NBD
and United Bank Limited. Besides, we
maintained 25 (Twenty Five) Nostro
Accounts in major currencies of the
world as on December 31, 2019.
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 commenced
operation at these units through
its Gulshan Branch, Dhaka and
Chittagong EPZ Branch, Chittagong
on July 04, 2010. As on December
31, 2019 total exposure of OBUs
decreased to USD 141.68 million from
USD 144.91 million on December
31, 2018. However, net profit of
OBU increased to USD 4.44 million
equivalent BDT 376.93 million during
the year 2019 as compared to that
of USD 3.47 million equivalent BDT
291.10 million in 2018. New policy for
Off Shore Banking Operation issued
by Bangladesh Bank through BRPD
Circular # 02 dated February 25, 2019
lead the Bank for not increasing OBU
exposure during the year 2019.
Centralized Trade Processing
Center (CTPC)
Centralized Trade Processing Center
(CTPC) started its operation under
International Division on June 02,
2016 with a view to facilitating trade
finance business need of customers
of Non AD branches. As on December
USD in Million OBU Exposure
4.44
3.47
13.82
1.97
2018 2019 2013 2014
DIVISIONAL OVERVIEW
31, 2019 total 21 (Twenty One) Non
AD branches was attached with
CTPC and during the year 2019, CTPC
handled total 1,641 number of Import
LC amounting BDT 6,985.50 million in
2019 as compared to 1,401 number of
import LC amounting BDT 7,536.90
million in the year 2018.
SWIFT Operation
Following the delisting of our
previous vendor from whom we used
to receive SWIFT related services
caused by non compliance of security
related issues, we cancelled their
agreement and made new agreement
with ‘Nolito System Limited’ to avail
SWIFT related services In the year
2019. Besides, in the year 2019 we
switched to 7.3.5 version in SWIFT
from earlier version of 7.3.1 to remain
updated in SWIFT. In the year 2020,
we would adapt SWIFT’s customer
security programme (CSP) as part
of our endeavor to further bolstering
SWIFT security system to prevent
and detect fraudulent activity.
Outlook 2020
During the first half of FY2019-20
Import and Export of Bangladesh
Economy registered negative growth.
For example, Import experienced
negative growth of 5.26% during
July-November of FY2019-20 and
Export decreased by 5.84% during
July-December of FY 2019-20 as
compared to same period of last fiscal
year i.e. FY2018-19. If this downtrend
continues in the remaining part of
the year, foreign trade transaction
of banking industry will be adversely
affected as well. However, we expect
to navigate the downturn in the year
2020 by dint of our strong foreign
trade customer base, efficient and
effective customer services and
strong correspondent banking
network.
USD in Million
181.4
144.91 141.68
109.17
41.05
2015 2016 2017 2018 2019
90 Mercantile Bank Limited
Annual Report 2019
NON-RESIDENT
BUSINESS (NRB) DIVISION
Operating Environment
Remittance has increased the extent
of investment in the country by the
migrant workers. Bangladesh now
has been eligible for graduating to a
developing country by 2024. It is no
more a least developed country. We
are in the race to become a developed
nation by 2041. The economy of our
country is not self-dependent or self-
sufficient. Therefore, wage earners
remittances contribute significantly
to the economy in Bangladesh. Since
most of the wage earners working
in overseas mainly come from rural
areas, Mercantile Bank Ltd. provides
the best remittance services to them
befitting with their customs, social
values and culture.
Non-Resident Business (NRB) division
comprises of a group of young
professionals working to ensure
best services to the non-resident
Bangladeshis as well as their family
members in Bangladesh with full
dedication, devotion and enthusiasm.
This team spirit certainly helps us
securing remittances and contributing
to the national economy through
building utmost rapport among the
different stakeholders of the Bank.
Product & Services
For about two decades remittance
has been contributing around 35%
of export earnings. Moreover, it is
greater than foreign aid and thus
helps in lessening dependence on
foreign aid.
There are about 8.5 million
Bangladeshi nationals are living
and working in different countries
in the world. The inflow of foreign
remittances is increasing day by
day. Considering the importance
of remittances and providing
best services to the Bangladeshi
expatriates, we have made remittance
drawing arrangement with 34 world
reputed exchange houses round the
globe. Currently, we do have the
opportunity to route remittances
from approximately 155 countries of
the world. It may be mentioned here
that these exchange houses cover the
untapped areas of the Middle East,
Asia, Europe and America. We have
arrangement with prominent partners
from most of the remittance sending
countries including UAE, Kuwait, State
of Qatar, Italy, Malaysia, United States
of America and United Kingdom.
Besides, we have some reputed
global remittance players like Western
Union, MoneyGram, RIA Financials,
NEC Money Transfer, Xpress Money
Services Ltd. etc. through whom the
expatriates can send remittances from
any part of the world.
Now a day, the remittance services
are becoming very much competitive
and challenging. Conventional services
are not enough to create optimum
confidence among the beneficiaries.
Considering the urge of customers’
expectation, The complete remittance
services include the followings:
Account Transfer
The expatriates can transfer
their hard earned money to their
account directly as well as to
the account of their dearest and
nearest ones.
Cash Over the Counter
If the beneficiaries do not
have account with us, they can
receive remittances from any
of our outlets using PIN (Secret
Number) provided by the
sending agent.
Account Opening for the NRBs
The Bangladeshi Expatriates
living in abroad can open
different types of account
with any of our branches in
Bangladesh through NRB Division.
These accounts includes-
SL Particulars
1 Number of Exchange Houses
2 Number of Sub Agent Banks
3 Number of Transactions
4 Volume of Remittances in BDT (Crore)
5 Volume of Remittances in USD (million)
6 Global market share
Savings Account
MSS (Monthly Savings
Scheme)Account
Fixed Deposit Account
Foreign Currency Account etc.
Purchasing of Bond
We also promote different
types of bonds among the
Bangladeshi expatriates through
our representatives in different
countries as well as through
different exchange houses
complying prevailing laws of
that particular countries. These
bonds include-
Wage Earners’ Development
Bond
US Dollar Premium/
Investment Bond etc.
Non-Resident Bangladeshis living
abroad feel comfortable to have
all sorts services from far away in
a decent and trustworthy manner.
Through ensuring diversified services,
Mercantile Bank Ltd. has become
one of the loyal Bangladeshi Banks
among the remitters in different parts
of the world.
Key Accomplishments in 2019
In year 2018, Mercantile Bank Ltd.
fetched inward Foreign Remittance
for USD 433.58 Million equivalent to
BDT3,594.30 crore by channelizing
469,520 transactions having a
substantial growth for 19.90% in
comparison to the last corresponding
year. Mercantile Bank Ltd. has awarded
Top Ten Remittance Award-2017 with
their outstanding remittance service
throughout the year. The summarized
position of the division is given as
follows:
Achievement
2019 2018
34 33
9 9
588,729.00 469,520.00
3,523.91 3,594.30
408.24 433.58
2.28% 2.79%
 DIVISIONAL OVERVIEW

Mercantile Bank Ltd. is determined to
ensure utmost customer satisfaction
through providing wide range of
remittance services to the expatriates
as well as their relatives in Bangladesh.
The remittance inflows of mercantile
Bank Limited from different countries
of the world can be expressed by the
following pie-chart.
Remittance
Qatar
Italy
up inward foreign Remittance Sector.
As part of their strategy to strengthen
this sector, government has recently
introduced 2% cash incentive against
wage earners remittance routed to
Bangladesh through banking channel.
This initiative will surely increase the
inflow of remittances. Mercantile Bank
Ltd. has taken many initiatives in the
year 2020 to attain SDG initiated by
government. As a part of this strategy
we will cover the following arena in
smooth flow of remittance
business.
Minimization of the error that
occurs in the branch locations
could be avoidable by arranging
workshop/training for the
remittance disbursing officials.
Ensuring due diligence and zero
tolerance on AML compliance,
circulars and to disseminate the
messages to the beneficiaries.

UK
2020. Increasing Fee based income
UAE Fully automated remittance of the Bank by increasing sub-
USA service agent bank based relationship.
Canada Bring all of our counterparts Enhancement of distribution
O,am under automation through API facility by increasing remittance
Global product sharing.
Enhancing superior customer
Bahrain service to our payout locations Introducing remittance services
that could lead us for the to the agent locations of the
It is clearly noticeable that we Bank.
concentrate the countries where most
of the Bangladeshi wage earners
reside. Mercantile Bank Ltd. is the
pioneer remittance player in Qatar
Market. Besides, we are one of the most
potential market leaders in UAE, UK
and Italy as well. Moreover, we receive
a significant volume of remittances
through our global partners round the
globe.

The performance of NRB Division

in terms of number of transaction,
amount of remittance in BDT and USD
can be shown in the following chart.
4000 2015 2016 2017 2018 2019
3500

3000

2500

2000

1500

1000

500

0
Transaction USD (Million) BDT (Crore)
(Thousand)

Besides, we have our fully owned

subsidiary named “Mercantile
Exchange House (UK) Ltd.” in London,
United Kingdom. This subsidiary
renders the best remittance services
to the expatriates living and
working in UK. We usually receive a
substantial amount of remittances
through Mercantile Exchange House
(UK) Ltd. In the year 2019, we routed
remittance equivalent to BDT 129.97
Crore through this Exchange House.

Outlook 2020

Government of peoples Republic of

Bangladesh emphasizes a lot to boost
92 Mercantile Bank Limited
Annual Report 2019

TREASURY
DIVISION
Operating Environment continuously nurturing the quality Treasury Division has been significantly
and growth of its asset portfolio contributing to the profitability of the
Treasury Division of Mercantile with proactive collaboration with Bank since the formation of Centralized
Bank Limited always strives for Treasury activities. The following graph
other Divisions and Branches while
optimum result from their activities represents Treasury Division as the
in the interbank market and thereby enhancing the efficiency of the
major contributor in the profitability of
contributes to the profitability of treasury dealers and officers.
the Bank.
the Bank at a stable rate along with
The operating environment can be
proper compliance of internal and Money Market Operations
regulatory requirements. In order precisely defined by the following
to achieve such, Treasury Division is four dimensions – Money market continued to be
moderately liquid in 2019. The
interbank call money rates ranged
from 3.40% to 5.05%, while the policy
FOREIGN MONEY
rates were unchanged at 4.75% and
EXCHANGE MARKET
DESK DESK 6.00%, which implies moderate
stability in the money market.
TREASURY
DIVISION The money market desk of our
FIXED Treasury Division has remained
ASSET
INCOME & vigilant in the interbank market
LIABILITY
CAPITAL throughout the year and through
MANAGEMENT
MARKET
DESK application of their forecasting skills
DESK
& management of liquidity gaps,
they have ensured a 45.37% growth
Major Activities in 2019 from the banking sector, immense in revenue from money market
fall in shanchaypatra sales, intense operations.
2019 was a challenging year for the competition in the deposit market
financial sector of Bangladesh. Central have made the treasury business Foreign Exchange Operations
Bank was targeting to lower the and the banking business as a whole
inflation along with an expansionary much more tough in 2019. The Bangladeshi Taka observed a
target in the private sector credit depreciation of BDT 1.00 i.e. to Tk.
growth and a 8+ GDP growth target Amidst such challenging scenario, 84.90 from Tk. 83.90 during the year
of the government. Treasury Division of Mercantile Bank
of 2019. Widened trade deficit, illiquid
Limited has outperformed all the
Increasing loan classification, foreign currency market, highly
obstacles in their business horizon
continuous devaluation of BDT and attained a sustainable profit competitive expatriate remittance
against the green back, increasing target of BDT 260.39 crore in 2019. flow etc were the major challenges
capital shortfall in govt. banks were for the foreign exchange dealers of
the major challenges in 2019. Beside Five Years' Performance at a our Treasury Division.
these, escalating govt. borrowing Glance
Amidst such challenges and volatility,
our prolific foreign exchange
Treasury Profit of last 05 years BDT in Crore desk stayed ahead of the market
through their prudent activities in the
735.58

interbank foreign exchange market,

657.06

634.56

remittance market and corporate

levels. The foreign exchange dealers
443.64
393.58

367.68

have acted efficiently throughout the

260.4

unwavering & intensely competitive

249.71
168.21

market to secure a substantial growth

61.25

of 76.97% in the income from foreign

exchange business in 2019. The foreign
2015 2016 2017 2018 2019 exchange desk of our treasury Division
Treasury Profit Operating Profit of Bank have earned BDT 1370.60 million as

exchange gain against that of BDT
721.17 million in 2018.
Fixed Income & Capital Market
Desk
The government securities market
of Bangladesh started in 2019
with the sluggish trend of 2018.
But automation of Shanchaypatra
purchase system and introduction of
Tax Identification Number in case of
purchasing Shanchaypatra more than
01 lac has fueled the drastic fall in
Shanchaypatra sales. Consequently,
the deficit financing of national budget
has been more & more dependent
on government borrowing from
the banking sector, which has been
interpreted through large auction
sizes and hikes in rates of government
securities. Another salient feature of
government securities market in 2019
was introduction of Floating Rate
Treasury Bond (FRTB) and revival of
the Central Bank REPO facility. The
capital market of the economy was in
a gloomy outlook almost throughout
2019 due to lack of confidence in
investors.
The fixed income securities dealers
of Treasury Division have adjusted
promptly with the swing in the rates
of government securities. The annual
turnover of Mercantile Bank Limited
in fixed income securities was BDT
5825.54 crore in 2019, which is a
substantial portion of the total market
turnover. Treasury Division had also
acted promptly in the capital market
according to market measures and
has earned significant revenue of
BDT 9.39 crore in 2019 from capital
market.
Asset Liability Management
(ALM) Desk
The ALM desk of Treasury Division
strives to come up with the optimum
balance sheet strategy to ensure the
highest possible profitability of the
Bank while ensuring the compliance
of regulatory requirements. Our ALM
desk has been vigilant all through the
year to comply with the regulatory
requirements while reviewing the
interest rate structure in a competitive
manner, contingency plans and
managing market & liquidity risks in
an efficient manner. ALM desk also
provides economic & market outlook
and runs the ALCO process to assist
the Bank Management to adopt
relevant, prudent and compliant
policies & strategies to boost up the
growth & profitability of the Bank.
In 2019 our ALM desk has arranged 12
ALCO meetings and has implemented
39 decisions out of 42 taken in
those ALCO meetings with the rest
decisions under implementation
process.
DIVISIONAL OVERVIEW
Outlook 2020
Treasury Division has started 2020
with a vision of extracting the optimum
from interbank market confronting
with the probable encumbrances
in the business environment. The
bank management has declared
an approach of consolidation and
reformation for 2020.
Implementation of single digit policy
in advance may hinder the private
sector credit growth more than
expected. On the other hand large
increase in government borrowing
from banking sector may also affect
the liquidity scenario in money
market. Central bank’s approach to
increase M2 by increasing money
circulation in the market may be
transmitted through devolvement
of government securities on Central
bank itself, which in turn may lessen
the expected liquidity crisis along
with a possible rise in inflation.
Government initiatives and measures
are expected in the upcoming days
in order to restore the confidence
among the investors for greater
interest of the capital market.
Foreign currency liquidity shortage
may continue in 2020 due to widening
trade deficit in spite of positive
growth in the remittance sector.
Devaluation of local currency against
the greenback may also persist in the
upcoming days.
94 Mercantile Bank Limited
Annual Report 2019
CREDIT RISK MANAGEMENT
DIVISION
Credit Risk Management
It is very essential that banks have
robust credit risk management policies
and procedures that are sensitive
and responsive to the fast changing,
dynamic global economy and the
increasing pressure of globalization,
liberalization, consolidation and
disintermediation. Bangladesh has
been maintaining a robust growth
in recent years, but the high NPL is
a major challenge for the economy
and hitting the financial health and
stability of the banks. The industry
NPL rate is close to 12.00% (by end
of 2019) and it’s in upward trend
in spite of several measures taken
by Bangladesh Bank as well as the
Government. The main goal of credit
risk management is to maximize a
bank’s risk-adjusted rate of return
by maintaining credit risk exposure
within acceptable parameters. A
team of well-experienced bankers
led by the Managing Director &
CEO of Mercantile Bank Limited is
engaged in monitoring the credit risk
and adherence to agreed controls.
Mercantile Bank Limited manages
credit risk in line with norms set
by the Central Bank and through
bank’s adapted processes & policies
relating to the pre-sanction and post-
sanction stages of credit approval.
CRM Division is engaged in periodic
revision and continual standardization
of the Credit Policy of the Bank in
commensurate with the “Guidelines
on Credit Risk Management (CRM) for
Banks”, “Guidelines on Environment
and Social Risk Management (ESRM)
for Banks and Financial Institutions in
Bangladesh” & “Internal Credit Risk
Rating System” of Bangladesh Bank
and circulars of Bangladesh Bank.
For obtaining comprehensive and
reliable survey report on the collateral
securities, CRM Division prepared
Policy for Valuation of Security. CRM
Division is continually engaged in
augmenting the overall Asset quality
and contributing to the growth and
success of the bank
The main objectives of our CRM
strategies are:
To maximize bank’s risk-adjusted
rate of return by maintaining
credit risk exposure within
acceptable parameters
To maintain the quality of the
credit portfolio by minimizing the
non-performing loans
To maintain a diversified portfolio
as per regulatory guidelines by
prudentially managing the risk
of the asset portfolio in terms of
concentration to any industry,
sector or individual customer.
To ensure that business profiles
and plans are consistent with risk
appetite.
To ensure that exposures to any
customer/group are determined
by the regulatory guidelines and
bank’s adapted credit policy.
To mitigate the identified risks
with appropriate measures/
initiatives, proper disclosures and
collection of relevant applicable
supporting documents.
To ensure compliance of all regulatory
norms/guidelines.
Operating Environment
In the outset of 2019, Bangladesh
Bank unveiled a cautiously optimistic
monetary policy for the second half
of the fiscal year 2018-19, keeping
room to provide adequate supply
of quality credit to support the
growth and inflation targets, while
amid of the year 2019, the central
bank remarked ongoing global trade
war and geopolitical tensions as
uncertainties in the external front that
may or may not impair attainment of
Bangladesh Bank’s FY20 monetary
program outcomes. MBL always
try to focus on creating a culture of
operational fineness and efficient
performance which accordingly
makes the Bank competent to swiftly
respond to constantly and rapidly
changing market as well as changing
macroeconomic, environmental,
social, technological, sociopolitical
and legal issues and to deliver fast,
simple and real time banking services
to its customer coping up with those
changes.
Products and Services
Mercantile Bank Limited always
provides suitable credit products
and services for the markets in which
it operates. For this purpose, Bank
designs new product from time to
time, re-engineers the existing one
emphasizing on customers’ demand
to keep the same competitive in the
market.
Performance
In the year 2019, total 1172nos.
of proposal have been approved
amounting Tk. 30,223.59 crore
(funded & non-funded facilities) for
new sanction, renewal, enhancement
and rescheduling through Credit Risk
Management Division of the Bank.
Major Activities in 2019
To strengthen the risk
management practice of the
bank, to manage new sources
& dimensions of credit risk as
well as to cope with the recent
changes & directional guidelines,
MBL has initiated process to
review the existing Credit Policy
of the Bank.
To adhere with the guidelines
of Bangladesh Bank, Mercantile
Bank Limited has introduced
Internal Credit Risk Rating
System (ICRRS), a modern and
effective rating technique to
assess the creditworthiness of
the borrower since October 01,
2019.
With a view to integrating
sustainability into overall credit
management of bank, MBL has
initiated process to formulate
Environmental and Social Risk
Management (ESRM) policy
in line with Bangladesh Bank’s
Guidelines.

Syndication and Structured
Finance
Syndication allows any of the
lenders to provide large loans, while
maintaining prudent and manageable
risk exposure. Syndication Finance
diversifies the risk of a bank on a
single borrower and increases the
quality of loan through collective
judgment and monitoring of different
banks/financial institutions.
Mercantile Bank Limited has
successful track record for acting
as both lead Bank and participating
bank in loan syndication for long
term, large scale projects. To raise and
meet large credit needs of leading
corporate houses, MBL has been
raising fund from the banking sector
on behalf of the customers through
syndication arrangement.
Mercantile Bank Limited has so far
arranged syndicated facility for
04 projects all have already been
adjusted and participated in 30
projects. Besides, Mercantile Bank
Limited is also providing working
capital facilities for several projects.
Refinance from Bangladesh
Bank under LTFF
Bangladesh Bank has initiated to
provide long term financing for
private sector firms, mainly mid-size
manufacturing firms i.e. exporters,
small and medium scale enterprises
and other private sector firms under
the Financial Sector Support Project
(FSSP) financed by the International
Development Association (IDA)
through Participating Financial
Institutions (PFIs). The main objective
of this facility is to contribute to
increase outputs in the country
which will contribute to job creation
and economic growth as well as
improvement in compliance with health
and safety standards in Bangladesh.
MBL has entered into an agreement
with Bangladesh Bank as PFI and
disbursed LTFF fund for USD2.2 million
in 2019 to its customers.
Credit Rating & ICRRS
Credit Rating is considered as
effective tools for assessing the
creditworthiness of the borrower.
Exposure of the borrowers is
calculated on the basis of Risk
Weighted Assets as per respective
grade. Top graded customers are
allowed for concessional credit
price while customers of non-
investment grade faces difficulties
in consideration. Customer’s credit
rating contains weight in ICRRS.
As part of the CRM policies, we
encourage our customers to rate
their business entities and to get the
expert view of the External Credit
Rating Agencies. At present we have
957 business entities having valid
credit rating. Borrowers are also rated
on the basis of Internal Credit Risk
Rating System (ICRRS) as introduced
by Bangladesh Bank. In order to
deal with growing complexities in
a more dynamic banking industry,
Bangladesh Bank has developed
a modern and effective rating
technique namely “Internal Credit Risk
Rating System”. The ICRRS is a fully
automated credit risk scoring system
that calibrates the characteristics of
different sectors and industries in
single model. From October 01, 2019
it has been mandatory for all banks
to implement ICRRS instead of CRG.
Compliance with Regulatory
Framework
MBL provides full concentration
on the compliance with regulatory
framework. The entire Credit Risk
Management system is based on the
central bank’s directives.
Risk Management Process
Because of the vast diversity in risk
that banking institutions take, there is
no single prescribed risk management
system that works for all. Mercantile
Bank Limited tailors risk management
program on the basis of needs and
circumstances covering at least the
followings
Risk Identification
In order to properly manage risks,
recognition and understanding
of risks is mandatory that may
arise from both existing and new
business initiatives; for example,
risks inherent in lending activity
include credit, liquidity, interest
rate and operational risks. Risk
identification is a continuing
process, and is being understood
at both the transaction and
portfolio levels.
Risk Measurement
Once risks have been identified, it
is measured in order to determine
their impact on the bank’s
DIVISIONAL OVERVIEW
profitability and capital. Accurate
and timely measurement of
risk is essential for effective risk
management systems. Absent
of a risk measurement system
has limited ability to control or
monitor risk levels. Bank tests
their risk measurement tools
periodically to make sure that
the tools are accurate. Good risk
measurement systems assess
the risks of both individual
transactions and portfolios.
Risk Monitoring
MBL has an effective
management information system
(MIS) in place to monitor risk
levels and facilitate timely review
of risk positions and exceptions.
Monitoring the reports are
frequent, timely, accurate,
and informative and should
be distributed to appropriate
individuals to ensure action,
when needed.
Risk Control/Management
After measuring risk, bank
establishes and communicates
risk limits through policies,
standards, and procedures
that define responsibility and
authority. These limits serve as
a means to control exposure
to various risks associated with
the bank’s activities. Bank also
applies various mitigating tools
in minimizing exposure to various
risks. Bank also has a process
to authorize and document
exceptions to risk limits when
needed.
Outlook 2020
CRM Division intends to implement
robust processes to mitigate all the risk
measures instructed by the Central Bank
and internally designed by the Bank for
lowering the percentage of NPL as well
as to maintain a better quality Asset
Portfolio that will ultimately yield to
maximize profit for the bank. Moreover,
a well-measured and risk-controlled
credit portfolio of the bank is something
exemplary for the industry, to take
initiative to implement risk control
measures in all financial institutions,
for the betterment of the economy.
Moreover, in 2020, there will be a great
challenge to maximize bank’s rate of
return with the managed interest rate
prescribed by the Government through
Bangladesh Bank.
96 Mercantile Bank Limited
Annual Report 2019
GENERAL BANKING
DIVISION
Overview
General Banking Division receives
operational problems, scrutinizes &
analyzes the same in view of Policy/
Guideline/Circular/Law of Banking
& Practices and provides support to
branches/divisions for accelerating
their operational efficiency and
ensures quality customer service by
making effective decisions.
Operating Environment
‘MBL General Banking Division’ as
well as ‘Central Customer Service &
Complaints Management Cell (CCS &
CMC)’ constituted as per Bangladesh
Bank Guideline is operating smoothly
for the service of the Bank.
Function of GBD
To assist in supporting the branch
operational performance by
identifying the challenges of the
circulars/guidelines and operational
process of the bank and suggest
appropriate measures to streamline
the process for effective and smooth
operations and also preparing/
reviewing the Guidelines/Manuals/
Circulars for minimizing risk/
p r o b l e m s / t h r e a t s /c h a l l e n g e s
regarding operations of General
Banking and Central Customer
Service & Complaint Management;
Justify the business prospect of
the Bank and arrange approval to
branches regarding different kinds of
waiver (charges, fees, commission),
reimbursement, due payments
favouring customers;
Implementation of any new
operations such as “National
Saving Scheme Online
Management System”, up-
gradation, instruction in
compliance with Bangladesh
Bank instruction on different
issues and subsequently
providing operational support to
the branches;
Attaining other regulatory
requirements of Anti Corruption
Commission (DUDOK), CIC, NBR,
Law Enforcement Authority,
Information Commission etc. by
providing required information,
Freezing/Unfreezing accounts (if
any) etc. in due time;
To receive Queries/instruction
related to General Banking from
Regulatory Authorities and follow
up to Branches.
Follow-up/Monitoring of Scheme
accounts, Sundry Creditors
accounts, Liquidation accounts
status;
To provide approval for issuance
of duplicate instrument through
senior management of our Bank;
To implement/attain any new
operations/ up-gradation/
instruction such as Bangladesh
Bank, Bangladesh Financial
Intelligence Unit, Anti Corruption
Commission (DUDOK), NBR etc.
on different issues.
GBD prepare/collect returns/
statements, scrutinize & ensure
conformity in compliance with
Regulatory guideline, compile
& consolidate then send to
regulatory authorities duly:
Functions of CCS & CMC
To Strengthen Customer service/
satisfaction for minimizing
customers dissatisfaction so as to
uphold bank’s brand image
To ensure customer service
improvement through complaint
management efficiently.
Major Activities in 2019
(A) General Banking Division
i. Regularization of Liquidation
Accounts;
ii. Implemented “Auto Generated
Cash Debit Voucher” instead of
Existing Cash Debit Voucher;
iii. Implemented a mandatory field
of collateral number in T24
System against SOD loan so that
multiple SOD cannot be opened
against one deposit/schemes;
iv. Implementation of Auto
Generated account number in
T24 System;
v. Efficiently handled customer
complaints, ensure smooth
operations and thus minimized
number of customer complaints
compared to 2018 (from 334 to
191);
vi. Implemented ‘National Saving
Scheme Online Management
System’ as per Bangladesh Bank
instruction;
vii. Awareness regarding Real Time
Authorization has been created
to expedite customer service and
minimize customer complaints;
viii. Kept close liaison with the
regulatory authorities and
avoided dispute or complaint
during the year 2019;
ix. Introduced 02 Deposit Products
namely ‘Savings Bank Account
for MSS’ and ‘Poribar Surokkha
Amanat Prokolpo’ (the then
FMDS) (launching is under
process);
x. In 2019, we received no
explanation/regression letter
from Regulatory Authorities
(NBR,CID,DUDOK) relating to
provide customers account
information/documents.
(B) CCS & CMC
i. Queue Management System in
Main Branch has been installed
for better customer service;
ii. Implemented Bangladesh
Bank compliance by displaying
‘Customer Charter’ in all
branches;
iii. Conducting surprise visit and
surveying customer satisfaction
in different branches;

iv. Number of complaints
decreased by 43% from 334 to
191 in 2019 compared to 2018.
Strategic Focus
We at MBL are optimistic in exceeding
our exceptional performance records
and to contribute more to the growth
of the bank by, among others, the
following:
(A) General Banking Division
i. Tapping into cross-selling
opportunities through
collaboration of all the enabling
branches of the bank such as
Waiver of account maintenance
BRANCHES
DIVISION
In order to achieve the goal of the
organization, Branches Division is also
working with others in its own areas.
The division acts at the fore-front of
business expansion operations of
the Bank by conducting feasibility
studies, area & premises selection of
branch/business centers & finally by
obtaining licence from Bangladesh
Bank & executing lease agreement
with the landowners. The division
also looks after the cases regarding
premises shifting, rent revision,
renewal of contract etc. In the
fees & service charges/
commission;
ii. Merging of Branch Support Unit
with different Divisions to ensure
operational efficiencies;
iii. Restructuring business process
to increase operational efficiency
by minimizing procedural
barriers.
(B) CCS & CMC
i. Streamlining current policy,
process and operation to ensure
excellence in customer services.
year 2019, Branches Division made
feasibility studies of 40 areas across
the country, out of which the Bank
finally opened 5 urban branches & 5
rural branches with permission from
central bank. At present, the Bank has
branch operation at total 51 districts
& 88 upazilas. In future, as a cost-
effective alternative to traditional
branch banking, the division is poised
to shift its focus on opening more
“Uposhakha”s with a view to bring
more unbanked underprivileged
population under service coverage of
DIVISIONAL OVERVIEW
Outlook 2020
(A) General Banking Division
I. Accelerating business processes
through implementation of
centralized process;
II. Implementation of Grade wise
Limit of Inputer and Authorizer
of the officials;
III. Implementation of Uniform
format of GB related document.
(B) CCS & CMC
I. Implementation of Queue
Management System.
the Bank. At the same time, the bank
is getting prepared to commence its
Islamic Banking windows at various
branches and Branches Division
is expecting to play its part in the
endeavor. In course of materializing
expansion program taken by the
Management, the division engages
manpower of various enterprises,
opens avenues of earnings and
thereby contributes in its own way in
running the wheel of economy of the
country.
98 Mercantile Bank Limited
Annual Report 2019
CARD
DIVISION
Operating Environment
MBL started Card operation in 2002 and ATM operation
in 2004 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. Card division has been operating 181 ATMs attached
with Branches and at different important locations all over
the country along with 20 CDMs (Cash Deposit Machine).
MBL Cardholders can withdraw cash from MBL ATMs free
of cost and Cardholders of Q-Cash Member banks can
withdraw Cash at only Tk.10 per instance and Tk.15 on
NPSB (National Payment Switch Bangladesh). Moreover,
our VISA cardholder can also withdraw cash from any Visa
ATMs in home and abroad.
Product & Services
Since inception, the Bank launched different card products
such as Credit, Debit and Prepaid Cards. At present, MBL
issues Local, International and Dual Credit Cards under three
categories- Platinum, Gold and Classic. MBL also issues Local,
International & Dual Currency Prepaid Cards. MBL provides
three specialized prepaid card services- MBL VISA Medical
Card for Bangladeshi nationals visiting abroad for treatment,
MBL VISA International Student card for the students going
to different countries for higher education, MBL VISA Virtual
card for individuals who need to use the card number only for
a specific E-commerce transaction.
MBL provides card cheque facility 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 in his/her need.
Besides, MBL Credit Cardholders maintaining savings/
current account with any branch of Mercantile Bank Limited
can enjoy fund transfer facility from his/her Credit Card to
his/her MBL Account by requesting through MBL Contact
Centre 16225 from his/her registered phone number or
through a prescribed application or through an email to
ftcard@mblbd.com.
MBL introduced free access facility to Balaka Executive
lounge (Operated by Intercontinental Dhaka) at Hazrat
Shahjalal International Airport for MBL Gold and platinum
International/Dual Credit Cardholders along with one
accompanying guest. Under the facility, MBL Gold and
Platinum International/Dual Credit Cardholders can get
free access to Balaka Executive lounge and can enjoy
buffet snacks, hi-speed internet and bottomless tea-coffee
at the lounge free of charge.
MBL also provides Priority Pass Membership Card at free of
cost for MBL VISA Platinum Credit Cardholders under which
any platinum cardholder and his/her accompanying guest
can enjoy free access to over 700 airport executive lounges
over the world regardless of which class or airline he/she flies,
trips become a stress –free VIP experience with priority Pass
membership. Members simply show the card upon entrance
to the lounge. The lounge provides excellent leisure and
working facilities along with following facilities:
Drinks and snacks
Wi-Fi
Flight information monitor
Computer access
Conference room
Free internet browsing
Newspaper and magazines space comfort and quiet
to catch up on work, prepare for your activities ahead
or stay in touch with the office
Entertainment facilities
Showers, beds and more
 DIVISIONAL OVERVIEW

To create competitive advantages, MBL has taken No. of ATM & CDM (Urban, Rural & Onsite, Offsite)
numerous promotional Program like SimplePay Facility
(Installment based purchase plan using MBL Credit Cards SL No ATM Type No. of ATM
at 0% Interest), Cash Back offer, Discount facilities etc. 1 Urban 117
Under SimplePay arrangement, MBL Credit Cardholders
can purchase offered products from around 1200 outlets 2 Rural 64
of Electronics, Furniture, Airlines, Medical Services, Total 181
Motor Bikes, Tour Packages and many more items using
MBL Credit Cards and pay in 3, 6, 9 or 12 equal monthly SL No CDM Type No. of CDM
installments (EMI) at 0% interest. MBL Debit/Credit/
Prepaid Cardholders also enjoy up to 60% Discount 1 Urban 15
Facility at 800 outlets of Restaurants, Lifestyle Products, 2 Rural 5
Hotel & Resorts, Airlines, Electronics. Besides, MBL Credit
Total 20
Cardholders now enjoy 10% Cash Back Offer at lifestyle
brand Aarong and retail chains- Agora, Shwapno, Meena
Bazar & Prince Bazar. No. of ATM transaction along with volume

Performance SL No Particulars Qty./Amount

1 Number of transaction 18.65 Lac
MBL Card business is growing rapidly. On 31st December
2019, total number of Cards is 257,704 having total 2 Volume of transaction Tk.1,760.54 Crore
outstanding Tk.4824.85 Lac. No. of Cards with total
outstanding is as follows:
Outlook 2020
No of Debit/Credit/ Total Outstanding against
Year Mercantile Bank Limited has taken a number of measures
Pre-paid Cards credit card (BDT in Lac)
to create competitive advantages for MBL Cardholders
2015 100,900 2,864.00 over other banks. MBL is going to launch Dual Interface
2016 150,305 2,847.00 (Chip/NFC) Cards that will create more user convenience.
MBL is also going to launch two specialized Debit Cards
2017 197,488 3,399.82
for Male & Female Customers shortly. MBL has also plans
2018 231,069 4,150.32 to arrange eventual offers in special occasion/season/
2019 257,704 4,824.85 period -Woman Day, Birth Day of Bangabandhu Sheikh
Mujib/Children Day, Independence Day, evsjv beel©, Labour
Card Business has a significant contribution to the Day, `~M©vc~Rv, Victory Day, Christmas Day, 31st Night & New
operating profit of Mercantile Bank Limited in 2019 with a Year and Ramadan, Eid-Ul-Fitr & Eid-Ul-Azha. This entire
steady growth. The operating profit of the Division from program will strengthen the Card base and No. of Card will
card business is increasing. Operating Profit from MBL reach to 3 Lac.
Card Business in last 5 years are follows:

Year Operating Profit (BDT in Lac)

2015 15.14
2016 280.97
2017 550.33
2018 746.08
2019 907.75
100 Mercantile Bank Limited
Annual Report 2019

MOBILE FINANCIAL
SERVICES
Operating Environment
Being introduced in Bangladesh in 2011,
mobile financial service has gained
popularity within a short span of time
.Most importantly, Bangladesh one
of the fastest growing MFS markets
in the world. Currently, there are 16
providers of Mobile Financial Service
in Bangladesh. In November 2019, total
transactions was BDT37,918.86 crore,
total Number of Agents 965,471,total
Number of Customer was 785.94 Lac
among which number of active MFS
account is 350.92 Lac.
Mercantile Bank Limited has started
its Mobile Banking operation in
2012 with the vision to be one of
the leading Service Providers of the
country. Later on, the Bank has re-
branded it’s Mobile financial Service
as ‘MYCash’. Being one of the
Pioneers in the industry, MYCash has
transaction connectivity with every
telecom operator of the country.
Products and Services
Currently MYCash is providing a
wide range of financial products
and services through mobile phone
which is a combination of convenient
and secured services to ‘Make Life
Easy’. Besides providing basic mobile
financial services, MYCash system
is integrated with different service
providers to make value added
service available to their customers.
Right now, following services are
delivered in line with Bangladesh
Bank guidelines and permission:

Product
1. Cash-in/Cash out
2. P2P
3. Fund Transfer
4. Airtime Top-up
5. Utility Bill Payment
6. Merchant Payment
7. Online/E-commerce Payment
8. Salary Disbursement
9. Business to Business payment Business to Business payments(B2B) like vendor payments, supply chain management payments etc.
Description
‘Cash-in’ to and ‘Cash-out’ from MFS accounts through agent locations, bank branches, ATM,
and other methods permitted by BB.
One MYCash personal account to another MYCash account or other MFS provider as well as
the payments from one MYCash account to a bank account with Mercantile Bank and vice
versa or of another bank.
One MYCash account to a bank account with Mercantile Bank/other bank and vice versa.
Person to Business payments (P2B) like utility bill payments, merchant payments, mobile top
up, deposits into savings accounts/schemes with banks, loan repayments to banks/ NBFIs/
microfinance institutions (MFIs), insurance premium payments to insurance companies,
School fees and so forth.
Business to Person payments (B2P) like salary disbursements, dividend/refund warrant/
discount payments etc.

Major Activities in 2019 Started Business to Business Started Business to Business

Launch of Prepaid Utility Bill
Payment Collection of Dhaka
Electric Supply Company
Limited (DESCO).
Launch of Utility Bill payment
collection of Bangladesh Rural
Electrification Board (BREB)
(B2B) payment collection of
National Life Insurance through
automated printing slip.
Launched more attractive
and user friendly QR enabled
MYCash application in both
android and IOS version.
(B2B) payment collection of
Provita Agro Limited.
Completed Pilot Project of KYC
automation and verification.
Completed Pilot Projection
transaction through CDM Machine
based digital MYCash Agent

No of Outlet & Volume of Transaction (Daily)

Number of Outlet: 93,268  Amount in BDT
Particular Number of Transaction Volume of Transaction
Monthly 248,616 868,194,645
Daily 8,173 28,543,385

Outlook 2020
Major objective will be to transform
Mobile Banking Division into MBL
MYCash Limited through attaining
necessary approval and recruitment
of skilled manpower. We aim to
complete formation of MBL MYCash
Limited with in first quarter of
2020. Through diversified product
placement, strong market position will
be created among the all competing
market player.
In 2020, MYCash plans for rapid
adoption, by activating customers,
agents and merchants. Moreover,
keeping increasing transaction
growth by active participation of
existing customers, MYCash has
planned to acquire new active
customer base through different
marketing initiatives. Product wise,
we will be concentrating on payment
collection which includes Business
to Business, Utility Bill payment
collection and Merchant payment
collection. For these, initiatives like
customer/client acquisition, branding
activities will take place.
 DIVISIONAL OVERVIEW

SPECIAL ASSET
MANAGEMENT DIVISION
Introduction of Overdue and SMA accounts by non-performing loans. The agents
recovery of Tk. 7,790.38 crore during recovered a substantial amount of
Special Asset, Management Division the Year 2019. The performance of non-performing loans under direct
(SAMD) working for monitoring, M&EAD restricted the percentage of supervision of the Central Collection
recovery and regularization of the non-performing loans from increasing Department (CCD) of Special Asset
loans which became irregular and trend during the most challenging Management Division. Overall
non-performing. To perform the Year 2019. Besides the in-house efforts performances of Monitoring & Early
works smoothly, Special Asset, of SAM Division, 9 (nine) numbers Alert, Central Collection and Recovery
Management division has 3 wings of 3rd Party Debt Collection Agents Department of SAM Division are
named (i) Monitoring and Early Alert have been deployed for recovery of mentioned below:
Department (ii) Recovery Department
and (iii) Central Collection Department a) Monitoring and Early Alert Department :
i.e. recovery through 3rd Party Debt
Collecting Agents. Objective of the SL No Year No. Regularization Amount (BDT in crore)
Division is to keep the irregular and 1 2019 27,067 7,790.38
non-performing loan assets regular 2 2018 9,887 3,087.11
by close monitoring, recovery and
rescheduling thus makes considerable 3 2017 8,998 1,422.62
contribution in the profit and growth 4 2016 18,940 2,401.75
of the bank. Activities of the Division
are being supervised by the Additional
b) Central Collection Department :
Managing Director & CRO of the bank.
Recovery from NPL by 3rd Party
Operation Environment SL No Year
Debt Collection Agent (BDT in crore)
1 2019 0.96
During 2019, the overall banking sector
was in sluggish trend due to liquidity 2 2018 0.66
crisis. New Investments and turnover
3 2017 0.72
in existing business were below
the satisfaction level. Resultantly 4 2016 2.22
business growth and managing the 5 2015 0.09
existing loan portfolio including non
** At present Total Tk.27.67 crore remains to 3rd Party Debt Collection Debt Agent
performing loans (special assets) of
out of total NPL amount Tk.1136.81 crore
the banks were in big challenge.

Mercantile Bank, however, on its part c) Recovery Department :

deployed extra potentials through
SL No Year No. Rescheduling Amount (BDT in crore)
Special Asset Management Division
(SAMD) for regularization/recovery 1 2019 191 1,546.19
of the problematic loans/Non- 2 2018 39 293.71
performing Loans through formulation 3 2017 52 392.64
of strategies as applicable.
4 2016 80 304.46
5 Years Performance 5 2015 130 672.67

Through continuous off-site

monitoring / follow up on the loan
portfolios of the Branches from
Head Office, Monitoring and Early
Alert Department (M&EAD) of SAM
Division recovered or regularized
partially and fully in total 27,067 nos.
Outlook 2020
We will enable the business process
and structure to facilitate the NPL
Management. Our expansion strategy
for 2020 will be continued to reduce
the NPL and to reflect the increasing
trend of recovery/regularization of
Non Performing Loans. SAMD will
extend all-out effort for recovery
or regularization of Non Performing
Loans for the year 2020.
102 Mercantile Bank Limited
Annual Report 2019

FINANCIAL ADMINISTRATION
DIVISION (FAD)
The Financial Administration Division of Mercantile Bank Limited has been entrusted with the responsibility of managing
all accounting and financial affairs of the bank in a disciplined manner. The activities of the Division cover a wide range
from basic bookkeeping to providing information to assisting senior management in making strategic decisions. The
division is responsible for reporting to the Chief Financial Officer (CFO) of the Bank. Following are the important functions
of the division:

Functions of FAD
Preparation of
Financial Statements
Preparation of Quarterly/Half
Yearly/Annual Consolidated
Financial Statements
Preparation of Annual Report
Fixed Asset Schedule MIS
Management
Daily Position
Management of Fixed
Monthly Operational
Assets of Different
Divisions & branches. Results

VAT & Tax Bill Processing Chart of Accounts

Management Maintenance

Payroll Management Post-Facto Approval Branch Monitoring

Preparation & Disbursement
of Monthly Salary
Preparation of Tax Certificates
of Officers
Employee Fund Management
of Expenditure
Approval for exceeding limit
having Financial Delegation
Approval without having
Financial Delegation
Monitoring of daily transactions
GL Monitoring specially Suspense
& Sundry Accounts
Income & Expenditure Monitoring

Insurance Correspondence Bangladesh

Management of for Rating Bank Reporting
Branches CAMELS Rating
Entity Rating
Bond Rating

In addition to supervising day-to-day operations as well as ensuring the proper functioning of FAD, Office of the CFO
prepares Annual Budget, executes Budgetary Control, arranges yearly/half yearly strategic Business Conference,
coordinates with Bangladesh Bank Inspection Team, statutory audit, tax authorities and other regulatory bodies. Besides,
The office conducts performance analysis of different branches, divisions, and subsidiaries of MBL. Moreover, The office
maintains a separate MIS to provide information to senior management in a timely fashion. The Office also ensures Financial
Statements of the Bank are prepared in compliance with International Accounting Standards (IAS) or International Financial
Reporting Standards (IFRS), as applicable in Bangladesh.

CENTRAL CLEARING
DEPARTMENT (CCD)
Operating Environment
Central Clearing Department (CCD)
endeavors for promoting new
payments through Clearing, BEFTN
and RTGS settlement systems to
ease financial transactions ensuring
circulation of money within all
scheduled Bank. Central Clearing
Department’s core objective is
to include establishing modern
and efficient interbank payments,
clearing and settlement system. Fully
integrated with CBS in all units are
the key features of CCD with several
customized automation, employee
friendly system modules and end to
end dual authentication enabled in
system for better experience. This all
units operational modernize are the
results of development to provide
excellence quality service of all
customer in Mercantile Bank Limited.
Functional Organogram
BACPS BACH
RTGS
Central Clearing department executed
on an average 3,982 transaction
(BACPS, BEFTN & RTGS) daily.
Branches are receiving their IBCA &
IBDA centrally. After implementing
BACH II module of BACPS and
BEFTN, system decrease operation
time along with less operational risk.
Bangladesh Automatic Cheque
Processing System (BACPS)
Our Bank successfully implemented
the BACH II project of Bangladesh
Bank with all new features and
technology. Where system fully
integrated with Core banking system
and fully automated in every aspect
(i.e Outward and Inward). Besides
this we are capable for enabling FC
Cheque transaction through BACPS.
Bangladesh Electronic Funds
Transfer Network (BEFTN)
BEFTN is country’s first paperless
electronic inter-bank funds transfer
system. We handle this network
for credit transfers such as payroll,
foreign and domestic remittances,
social security payments, company
dividends, bill payments, corporate
payments, government tax payments,
and person to person payments. It
Performance Report of BACH for the of Year 2019
BETFN RTGS
BETFN
BACPS
Achievement
Successfully Implemented BACH
II operation (Hardware, software
& connectivity)
Expansion of RTGS services to all
branches.
Reduce the man power due to
system automation.
DIVISIONAL OVERVIEW
lowers the operational cost, reduces
risk and increases the efficiency of the
overall payment process. We are using
multisession to credit/debit facilities of
customer’s accounts with other banks
within same day.
Real-Time Gross Settlement
(RTGS)
Mercantile Bank Limited has
successfully gone live with new
Real-Time Gross Settlement (RTGS)
system since 29 October, 2015. In our
Banking service RTGS is the latest
introduction, where a new technology
in transaction system is a challenge
especially when we have to maintain
the liquidity position instantly. In this
system all our branches are included
together. System is designed to
settle high value (more than or equal
to 1,00,000 BDT) local currency
transactions as well as domestic
foreign currency transactions.
Inward Outward
Outlook 2020
Attract customer for BEFTN
and RTGS through i-banking
(electronic system).
Arrange training and workshop
to build awareness and to prevent
fraud & fraudulent activities.
104 Mercantile Bank Limited
Annual Report 2019

INTERNAL CONTROL
& COMPLIANCE
Mercantile Bank Limited has adequate internal controls systems based on
a robust framework of policies, processes and risk management practices.
These controls identify and mitigate various risks by ensuring effectiveness
and efficiency of operations, adequacy and reliability of financial controls,
compliance with applicable laws and regulations. The internal controls system
ensures authorization, recording and reporting of all transactions, assets &
liabilities and safeguards them from unauthorized changes. The Bank uses an
array of technology systems and processes for its business operations under a
tight control framework.

Objective of Internal Control
and Compliance
The primary objective of Internal
Control and Compliance is to help the
Bank perform better and add value
through use of its resources. Through
Internal Control system, Bank
identifies its weaknesses associated
with the process and adopts
appropriate measures to overcome
that. The main objectives of internal
control are as follows:
a) Operational Objectives:
Achievement of Bank’s basic
mission and vision.
b) Reporting Objectives: Timely,
accurate and comprehensive
reporting of financial and non-
financial issues of the Bank.
c) Compliance Objectives:
Conducting business activities
and taking specific actions in
accordance with applicable laws
and regulations.
Mercantile Bank Limited has
established an effective internal
control system whose primary aim
is to ensure the overall management
of risks and provide reasonable
assurance that the objectives set
by the Bank will be met. The key
functionalities that have been
established in reviewing adequacy
and integrity of the system of internal
controls are as follows:
Formed different committees
by the Board of the Directors
of the Bank to assist the Board
in ensuring the effectiveness of
Bank’s operations, comply to
policies and business directions,
finally to achieve it’s basic mission
and vision.
The internal audit unit of Internal
Control & Compliance (ICC)
Division of the Bank checks for
compliance with policies and
procedures and the effectiveness
of the internal control systems on
an ongoing basis using samples
and rotational procedures and
highlight significant findings in
respect of any non-compliance.
Audits/inspections are carried
out on Branches as well as
various departments of Head
Office in accordance with the
annual audit plan approved by
the Audit Committee of the
Board. The frequency of audits
of branches is determined by the
level of risk assessed. Findings of
the internal audit are submitted
to the Audit Committee of the
Board for review at their periodic
meetings.
The Audit Committee of the
Board of the Bank reviews internal
control issues identified by the
Internal Audit Unit, Bangladesh
Bank Inspection Team, External
Auditors and evaluates the
adequacy and effectiveness of
the risk management and internal
control systems. They also review
the internal audit functions with
particular emphasis on the scope
of audits and quality of internal
audits. The minutes of the Audit
Committee meetings of the Board
are tabled at the meetings of the
Board of Directors of the Bank.
Self-Assessment of Anti-Fraud
Internal Controls is carried out on
semi-annual basis and is sent to
Bangladesh Bank for their review.
Prepare Annual Integrated Health
Report of the Bank and is sent to
Bangladesh Bank for their review.
In assessing the internal control
system, the Bank continued
to review and update all
procedures and controls that
are significantly connected with
banking operations. The ICC
Division of the Bank continued
to verify the suitability of design
and effectiveness of these
procedures and controls on an
ongoing basis.
ICC Division comprises of
three units as per guidelines
of Bangladesh Bank such as -
Audit Unit, Compliance Unit and
Monitoring Unit.
Audit Unit
Internal Auditing is an independent,
objective assurance and consulting
activity designed to add value and
improve Bank’s operations. Audit team
of MBL have combination of business,
Professional and IT knowledge based
personnel. Audit Unit is committed
to meet the standards of best
professional practices. Audit Unit
of the Bank is applying risk based
internal audit methodology for doing
audit functions. Risk based internal
 DIVISIONAL OVERVIEW

audit includes selective transaction Compliance Unit Monitoring Unit

testing, evaluation of the risk
The Bank has established a good Monitoring Unit is dedicated to
management systems and control
compliance culture throughout verify the internal control system &
procedures prevailing in various
the organization by encouraging operational activities of the Bank on
areas of the Bank’s operations.
employees to comply with policies, an ongoing basis through off-site and
Internal Audit Team conducts Audit/ procedures and regulation. To on-site monitoring. Monitoring Unit
Inspection/investigation, submits establish and uphold the momentum ensures maintenance of Departmental
the report to Audit Committee of of compliance culture, the Bank Control Function Check List (DCFCL),
the Board, analyze fraud cases and has strong Compliance Unit for Quarterly Operation Report (QOR),
recommend appropriate measures. ensuring compliance of guidelines/ Loan Documentation Check Lists
o b s e r vat i o n s /re co m m e n d at i o n s (LDCL) and submits reports to the
Internal Audit helps the organization
of Audit/Inspection reports of management for their review. The
to accomplish its objectives by
internal and external as well as unit also prepares Self-Assessment
bringing a systematic, disciplined
Bangladesh Bank. Compliance unit of Anti-Fraud Internal Controls and
approach to evaluate and improve also ensures required reporting to the Annual Integrated Health report of
the effectiveness of risk management, Management, Audit Committee and the Bank and submits the same to
control and governance processes. Regulators accordingly. Bangladesh Bank.
106 Mercantile Bank Limited
Annual Report 2019
ANTI MONEY LAUNDERING (AML)
& COMBATING THE FINANCING
OF TERRORISM (CFT) DIVISION
Operational Environment
MBL as a commercial bank needs
to continue its AML & CFT related
activities meticulously in line with the
policy guidelines set by BFIU in order
to achieve the national goal “Zero
Tolerance” against Money Laundering
and Terrorist Financing. Therefore,
we will comply with the instructions
of Money Laundering Prevention Act,
2012 (amendments in 2015), Anti-
Terrorism Act-2009 (amendment in
2012 & 2013), BFIU Circular-19 (master
circular) dated 17.09.2017 and other
different circular issued by BFIU to
conduct some specific due diligence
aspects so that, we can mitigate our
own ML/TF risks.
Compliance Structure of MBL
Compliance structure of MBL is the
organizational setup that deals with
AML & CFT Compliance of the bank
and the reporting procedure. This
includes-
Central Compliance Committee
(CCC),
Chief Anti Money Laundering
Compliance Officer (CAMLCO),
AML & CFT Division.
Branch Compliance Committee
(BCC),
Branch Anti Money Laundering
Compliance Officer (BAMLCO).
Functions of AML & CFT
Division
Mercantile Bank is determined to
maintain a sound financial system and
to join ‘global’ efforts to minimize the
affect of Money Laundering & Terrorist
Financing. We are also committed to
the highest standards of Anti Money
Laundering (AML) compliance. To
prevent Money Laundering & Terrorist
Financing we must do the following:
To receive the STR from our
different branches and after
evaluating the quality assurance
of the STR we send it to BFIU,
Bangladesh Bank timely.
Prepare & update the Guidelines
of “Money Laundering & Terrorist
Financing Risk Management
Policy”.
Prepare & submission of periodic
reports/policies/strategies on
AML/CFT to Board of Directors.
To prepare MD’s Message
Annually related to AML & CFT.
To arrange AML Meeting of
Central Compliance Committee
(CCC) on Quarterly basis.
Issuance of Inquiry & Freezing
order related Circulars received
from BFIU, Bangladesh Bank and
ensure implementation of the
same.
Issuance of AML Circulars.
Monitoring and follow up to
Branches through letter to ensure
compliance of AML.
To consolidate & review of CTR
and send it to BFIU, Bangladesh
Bank within stipulated time.
To monitor CTR, Structuring
Transactions of the branches.
Monitoring of Exchange House
related transactions.
To conduct Offsite Supervision
of our Mercantile Exchange (UK)
Limited, London on AML System
Checklist.
To prepare Self-Assessment
Report and place to Board of
Directors, Managing Director &
CEO & BFIU on half yearly basis.
To arrange Training Program on
AML & CFT for the Officials of
MBL in regular basis.
To arrange Lead Bank Training
Program in different districts
to comply of Bangladesh Bank
instruction.
Compliance of Internal Control
& Compliance Division and BFIU
Audit Report on Head Office and
different branches.
Major Activities of AML & CFT
Division in 2019
1. MBL has successfully completed
awareness program for all the
members of Board of Directors on
December 11, 2019.
2. AML & CFT Division of Mercantile
Bank Limited (MBL) has conducted an
awareness program on AML/CFT for
the Senior Management of Mercantile
Bank Limited (VP to AMD).
3. Due to effective monitoring of
AML & CFT Division on branches
number of STRs are increasing
intensely. Comparative Analysis are
given below:
4. AML & CFT Division has prepared
“Money Laundering & Terrorist
Financing Risk Management Policy
(Revised) 2019” and approved by
the Board of Directors in its 350th
meeting held on 24.10.2019.
5. AML & CFT Division, Head Office
has obtained “Satisfactory”
rating for the last 02 consecutive
year based on the AML System
Checklist Audit conducted by BFIU,
Bangladesh Bank
6. We have sent total 4, 50,627 CTR
data through goAML to BFIU,
Bangladesh Bank in this year.
7. We have issued 10 AML Circular
regarding AML issues and
circulated 296 Circular letters
regarding account queries.
8. AML & CFT Division, Head Office
conducted AML System Checklist
Audit on 49 branches to oversee
the AML progress and to take
initiative for improving the Anti
Money Laundering activities of the
Branches.
9. MBL along with 10 banks were
selected to implement the e-KYC in
the bank as a pilot project. AML &
CFT Division successfully complete
the e-KYC project.
Strategic Focus
Account Opening Process would
be centrally.
All officers have undergone on
AML & CFT related training

Implementing the Guideline on
Trade Based Money Laundering
to protect Trade Based Money
Laundering in the bank.
To establish Branch Compliance
Committee (BCC) at branch level.
To increase the branch visit to
oversee the AML & CFT activities
of the branches
To increase Suspicious
Transaction Report (STR) &
Suspicious Activities Report
(SAR) in the Bank.
Training Programme Arranged
during 2019
Training for Employees
Every employee of MBL shall have
at least basic AML & CFT training
that should cover all the aspects of
AML & CFT measures in Bangladesh.
Relevant provision of Acts, rules and
circulars, Policies, BFIU requirements,
suspicious transaction or activity
reporting should be covered in basic
AML & CFT training course. To keep
the employees updated about AML &
CFT measures, the bank is arraigning
to impart fresher & refresher training
programs of its employees on a
regular basis.
Total 484 officials of
Mercantile Bank Limited has
got training on AML & CFT in
2019
Customer Awareness
MBL takes proper actions to make
the customers aware regarding
prevention of money laundering and
terrorist financing.
Seminar on Anti Money Laundering & Combating the Financing of Terrorism conducted by MBLTI
Awareness Covers as follows
MBL educates its customers
regarding the information, documents
required for opening of accounts,
deliver leaflets to increase customer
awareness for prevention of money
laundering, terrorist financing and
proliferation of weapons for mass
destruction amongst their customers
at times and arrange for displaying
posters in this regard at auspicious
locations of the branch.
Awareness of Mass People
Prevention of ML & TF largely depends
on awareness at all level. MBL has
arranged public awareness program
like advertisement through poster,
festoon, distribution of handbills,
leaflets and so on.
Outlook 2020
To arrange BAMLCO
Conference-2020.
To prepare and circulate Message
of the Managing Director & CEO
addressing all employees of the
Bank to keep them updated and
compliant regarding AML & CFT
issues.
To collect the name of employees
for AML & CFT Training of those
who have not undergone the
AML training and who have got
AML training before 02 (two)
years .
To arrange Zonal wise Training
Programme to strengthen AML
activities of the branches.
As a part of monitoring AML/
CFT activities of branches AML
& CFT Division has set target for
DIVISIONAL OVERVIEW
conducting AML System Check
of 80 (eighty) Branches this year.
To arrange the meetings of
Central Compliance Committee
(CCC) on quarterly basis of
2020 to review the AML & CFT
activities of the Bank.
The AML & CFT Division will
prepare and submit two half-
yearly reports on the basis of
Independent Checklist prepared
by our Internal Audit Department
and Self-Assessment report
prepared by our Branches within
60 days from the end of each half
year.
To prepare Half-Yearly
performance report on AML
activities of the Bank and this
will be submitted to the Board of
Directors within 60 days from the
end of each half year.
The AML & CFT Division will
ensure submission of reply
to BFIU of Bangladesh Bank
against all queries or inspection
report within the stipulated
time. The AML & CFT Division
will also ensure submission of
following statements to BFIU of
Bangladesh Bank :
AML & CFT Division will
issue different AML Circulars
time to time instructing
all branches to comply
with AML issues against
any instruction given by
Bangladesh Bank.
AML & CFT Division will also
issue Circular Letters against
queries of Bangladesh Bank.
108 Mercantile Bank Limited
Annual Report 2019
GENERAL SERVICES
DIVISION (GSD)
Operating Environment
General Services Division (GSD)
is a very vital functional area of
a Bank which builds necessary
infrastructure and provides essential
support services to all branches
and SBU of MBL in order to achieve
the institutional goal. The Division
operates its activities in a good
environment under guidelines of
Senior Management Team and
approved policy of the Bank.
Functions of General Services
Division
The main functions of GSD are to
procure and supply the tangible/
intangible goods or services to the
branches and Head Office as per their
requirements. For banking business
environment, integrated logistics
support services is a function
of management that provides
planning, design and support of
business operation of infrastructure
development, procurement,
inventory, warehousing distribution,
transportation & customer support
etc. The functions of GSD can be
summarized as follows:
MBL Center, Satmasjid Road, Dhaka
Opening new branches, for
example, interior decoration,
establishment of all logistics.
Printing all security papers and
bank stationeries, forms, registers
and distributing the same to the
branches and Head Office.
Purchase and distribution of
bank’s furniture and fixtures
Assessing the demand of
equipment from the branches
and divisions and arrange to
purchase and delivery of the
same.
Outlook 2020
Installation and maintaining
different facilities in the branches
as per approval of the competent
authority.
Major Activities in 2019
Supply and installation of
required logistics support for 10
(Ten) new Branches opened in
the year-2019.
Construction works of 14th
storied building complex known
as “MBL Centre” at Satmasjid
Road, Dhaka is in progress.
Front elevation work of Head office building
Inventory Management System:
GSD has successfully completed
and introduced an “Inventory
& Requisition Management
System (IRMS)” with the help of
our ITD, HO for automation of
Printing Stationery items for all
the Branches and Divisions of
Head Office. The main objectives
of such automation are to
control the expenditures, to
obtain consumption reports of
Branches/Divisions to estimate
the consumption of the items on-
monthly/half yearly/yearly basis.
Successful completion of
construction works of MBL
Centre and taking handover for
use.
Developing work environment
through renovation of the
Division.
Shifting our ICT division to MBL
Center with R3 based data
center.
Effective maintenance of Central
Warehouse.
 DIVISIONAL OVERVIEW

MBL CONTACT
CENTER
Overview Callback to Abandoned Callers Value Added Services (VAS)
and Inform Complaint Resolution. MyCash Related Services
Mercantile Bank Contact Center
Daily Refresher Training Customers Complaint
has been serving customers since
October 03, 2018. Since then MBL We have also enabled our customer Management
Contact Center has been continuing to get more extended inbound
to grow in complexity as it moves services through MBL Conatct Center Outlook 2020
from handling customers’ queries in 2019. Such as
So, as to make our clients increasingly
such as transaction details or Card Activation (Both Debit and enchanted, we are attempting to
account balance, to addressing more Credit Card) ensure numerous channels for various
complex of issues like transaction services. In this association, in 2020,
dispute, interest calculation of credit Credit Card Cheque Book
we are intending to bring some new
card or card activation. We are Activation
services like Agent Banking services,
eagerly waiting to anticipate more Credit Card Fund Transfer email services, Chatting services, SMS
customized services for our valued services, Green PIN and so on from
Transaction Details Enquiry
customers in near future. MBL Contact Center. We are also
Duplicate Statement Request working to provide some advance
Major Activities in 2019 services to our customers like Card
Cheque Book Related Services
and PIN Replacement, New Cheque
Last year we have faced most Stop Payment of Cheque Book Request and many more. It
pervasive and crippling problems. Request will be more cost effective and time
Such as Customer Service Executives constraint for both customer and
Issuance Request of Bank
didn’t have the immediate access us. We likewise want to expand our
Certificates
to the information they require to seating limit of Contact Center and in
ensure fast and accurate services. Retail Loan Related Services
general activity through presenting a
That is why in 2019 we have Remittance Related Services comprehensive framework overhaul.
launched an integrated POP-UP page
containing all required information of
accountholder and cardholder. This
empowered us more. Major activities
in 2019 are as below.
Successfully launched Integrated
Pop-up CRM (Customer
Relationship Management).
Successfully launched Integrated
Escalation Matrix (Contact
Center E-Matrix).
Initiate Contact Center Executive
monthly KPI (Key Performance
Indicator)
Initiate Outbound Services (Card
Recovery Soft Calls, Debit/Credit
Card and Cheque Book Delivery
Confirmation Call and Card Sales
Campaign)
VOC (Voice of the Customer)
Call
110 Mercantile Bank Limited
Annual Report 2019
INFORMATION TECHNOLOGY
DIVISION
Process Re-engineer-
ing & Standardization
of IT Operation
Information Technology plays a
significant role to establish enhanced
business processes through
automation. The main purpose of the
IT function is to maintain and support
bank’s core business application
through introducing new systems and
processes that would safeguard the
integrity and confidentiality of the
bank’s assets.
Service Enhancement
Programme
The world has now become more
geared towards service orientation
rather than commodity orientation.
MBL has planned for enhancing its
services and moving towards a fully
digital bank. Much of the digital
work will involve migration of its
Core banking system as well as its
Data Center and establishment of a
Security Operations Center (SOC).
Digital Innovation in
2019
The Digitalization Platform
has given a paradigm of shift to the
banking industry. We have done
different segments of automation on
demand basis working in silos but
Digitalization is one step forward which
is considered next level of Banking. If all
the services offered by the Bank can be
accommodated under one umbrella,
which will be an added advantage.
As present scenario it is considered
mobile apps is the most popular tool
for the Digitalization platform. To
cope up with the technological pace,
Mercantile Bank is going to introduce
Digital Banking Platform for its valued
and prospective customers. Through
this platform, electronic on-boarding,
registration, account opening, instant
deposit account creation, merchant
and branch instant payment etc.
Digital Banking Platform will be served
through a robust, secured, convenient
Android & IOS apps of smart mobile
devices and any browser application of
Laptop/PC.
Temenos T24 up-
gradation Status
Mercantile Bank is going to upgrade
and re-implement its Core Banking
System Temenos T24 from R10 to R19
with new modules and also bank is
going to launch the Islamic Banking
Window Service through T24 R19
very soon.
CBS T24 Re-implementation project
already achieved many milestones
like signing-off Business Required
Document, Online Initial System
Build, Interface Required Document,
Installation & Configuration of ISB,
Functional and Technical Training, and
local development & data migration is
running at present.
R3 Based Data Center
Status
MBL is going to set up Tier3 data
center as TIA 942 standard at MBL
center, dhanmondi. Tier3 means N+1
availability. As per TIA 942 standard
we have designed data center where
we have ensured N+1 redundancy
for power source, cooling system.
We will have 2 power room with N+1
redundancy. We will have 4 cooling
system option for cooling data center
equipment (Server, Router, switch
etc.). But initially we will use 3 cooling
system (n+1), 2 cooling system
always active and one cooling system
stand by at data center. We will use
containment solution for server rack
so that we will get proper cooling
facilities for server, storage, router, and
switch. We will have redundant power
source i.e. 2X800 KVA generator will
be used for data center power system
and another 500 KVA generator
will be used as standby/ alternate
power source for data center. We will
have two meet me room where all
redundant data connectivity link will
be connected for branch connectivity.
So, we have ensured N+1 redundancy
for cooling, power system, so that if
any equipment for cooling, power
system get down, our system will not
get impacted at data center.
ICT SECURITY UNIT
IT Training (foreign
and local) Man Hour:
More than 35 officials from IT division
received many local and foreign
training on various topics like re-
implementation of Core Banking
System, SWIFT, Network systems,
Microsoft Exchange, Cyber Security,
etc. for more than 2500 man hours.
Cyber Security
Cyber Security is a global
phenomenon that’s been dominating
the current era. It plays a crucial part
in individual security and an even
bigger part in large companies, banks,
and governments. MBL has newly
formed an ICT Security Unit with
the commitment of building human
firewall and with a view to protect
the bank’s tangible and intangible
asset related to Information &
Communication Technology. During
2019, ICT Security Unit has achieved
a remarkable and amazing feat in
celebrating Cyber Security Awareness
Month of October 2019 within its
short period of its inception. Cyber
Security Awareness Month (CSAM)
was celebrated with diversified
activities and active participation of
most of the employees of MBL. The
key activities included displaying
of desktop wallpapers, displaying
of X-Banners, holding on premise
session, cyber security awareness
quiz and simulated phishing attack.
This activity is apparently the first
of its kind in the banking industry of
Bangladesh.
Major Policy and
Guideline Changes and
Adoption
A policy is a deliberate system
of principles to guide decisions
and achieve rational outcomes. A
policy is a statement of intent, and
is implemented as a procedure
or protocol. Policies are generally
adopted by a governance body
within an organization. Policies
can assist in both subjective and

Cyber Security Awareness Programme
objective decision making. As such
policies are tantamount to the
success of any organization. MBL
has updated its ICT Security Policy
to the version 4.1 which outlines the
security of information systems for
the sustainability of the organization.
The ICT Security Policy has been
developed in order to comply with
Bangladesh Bank ICT Security
guideline version 3, May 2015 and to
fulfill the requirement (External and
Internal). In-addition, this policy also
drive vastly practiced ICT framework
and different international standards
e.g. Control Objectives for Information
Technology (COBIT), Information
Technology Infrastructure Library
(ITIL) etc. The Business Continuity
and Disaster Recovery Plan has also
been adopted which is imperative
for the establishment of workable
Business Continuity Plan (BCP)
based on Business Impact Analysis to
ensure smooth operation in the event
of a disaster.
Vulnerability
Assessment and
Penetration Testing
(VAPT)
Vulnerability Assessment and
Penetration Testing (VAPT) plays
a critical role in assessing and
mitigating the risk of information
technology systems. A vulnerability
assessment is the examination of
network, application, services and
other systems using a variety of
DIVISIONAL OVERVIEW
tools, techniques and skillset to Cyber Security
uncover potential vulnerabilities. Awareness Session
Threats are identified, classified, and
In recent years, the majority of
prioritized for taking action as part
digital attacks attempt to exploit the
of the process. Penetration testing weakest link of Information Security
(commonly referred to as pen testing) i.e. internal employees and MBL
is the process of actively attacking has held rigorous cyber security
your application to determine if awareness session, one of the first
potential vulnerabilities can actually of its kind in the industry to educate
employees and thwart them from
be exploited. In other term, it is a
being the weakest link. Prior to the
simulated attack against systems or session, simulated phishing attack
applications that can be performed was conducted to get real picture of
against the code and systems in user awareness on cyber security.
application, such as servers. MBL has
Outlook 2020
undertaken a comprehensive VAPT
during 2019 on its major Information In view of the inception of the
Technology systems and banking ICT Security Unit in MBL an
services such as Core Banking outlook to form and establish a Secure
Application, Internet Banking, etc. Operations Center in MBL has been
projected. The Secure Operations
Disaster Recovery Plan Center will be a Cyber Fusion
(DRP) Center envisaging state of the art
systems such as Security Information
MBL has approved Business Continuity and Event Management (SIEM),
Privileged Access Management
and Disaster Recovery Plan and
(PAM), Data Loss Prevention (DLP),
DRP consists of recovery strategies Anti-Advanced Persistent Threats
including roles & responsibilities, (A-APT), User behavior Analysis
priorities and recovery time objectives (UBA) and Network Behavior Analysis
to minimize the effects of a disaster (NBA). MBL has also projected to
so that bank can continue to operate become ISO 27001:2013 complaint
Information Security Management
or quickly resume mission-critical
System (ISMS) and become a world
functions. MBL has full-fledged
standard in managing Information
Disaster Recovery Site (DRS) and Security activities. With that the
periodically conducts DR drill for all Outlook of 2020 with bring about a
the major services. bright and vibrant future for MBL.
112 Mercantile Bank Limited
Annual Report 2019

RESEARCH &
PLANNING DIVISION
Overview management with relevant, authentic,
Excellence in banking operation
depends largely on a well equipped
and efficient Research and Planning.
In this highly competitive industry, a
Bank has to explore new or improved
avenues of products and services, line
of businesses in order to consolidate
and make upswing in its growth cycle.
This is where the role of Research
and Planning comes into play and
contributes for the greater interest of
the bank. Sensing the significance of
Research and Development activities
in banking, MBL has established a
core Research and Planning Division
(RPD) furnished with skilled persons
from the very inception of the Bank.
Functions of Research &
Planning Division
Research & Planning Division of
MBL conducts research studies on
business related issues to provide the
reliable and actionable information
and analytical findings so that the
management can take decisions
appropriately and provide services
to customers competitively. RPD
designs and re-engineers products
and services, gathers consumer
insight, analyzes sectors, disseminates
knowledge through economic
publication and undertakes ad-hoc
research. Some important functions
of the division are mentioned below-
Development of new Products
(Asset and Liability)
Market monitoring, tracking
of product performances and
product re-engineering
Updating MBL Website
Appraisal of Peer Banks
comparison
Sector wise Portfolio Analysis
Basel III reporting to Bangladesh Bank
Market Disclosures on Risk
Based Capital under Basel III
Credit Rating of the Bank
Credit Rating of the ‘Mercantile
Bank Subordinated Bond’
Publication of ‘MBL Insight’- a
quarterly publication of RPD on
macro economy, global finance
and banking related issues to
translate market insight into
business needs
Publication of ‘Agragatir Pathe’-
a yearly publication of RPD
during the celebration of Bank’s
foundation day every year
‘MBL Performance Award’
based on yearly performance of
Branches & Divisions of the Bank
National Monetary Policy Review
Addressing the Questionnaire
from different authorities
including IMF, BIBM, BB

Considering the business trend, present scenario and forecast- RPD’s activities can be segmented mainly into four broader
heads.
Product development Operational Publication Banking Industry
Activity Activity Activity Studies

New product Reporting to MBL Insight Sector wise

development different authorities Portfolio Analysis

Agragatir Pathe
Market monitoring Market Disclosures Peer Bank review
and tracking of on Risk Based
deposit Products’ Capital (Basel III)
performances
Credit Rating
Innovation &
renovation of
MBL Performance
existing Products
Award

Maintaining MBL
website

Major Activities in 2019
Product Development Activity
New Product Development: In 2019,
RPD has introduced two new products
named ‘Aparajita Monthly Benefit
Scheme’ (to emphasize specially on
independent, hard working women
who have a fixed amount of idle
money or have retirement benefits)
and ‘MBL Bonus Sanchay Hishab’
(to provide an opportunity to the
customers to earn more interest for
increasing his/her savings) in line
with current demand.
Review & Re-engineering of existing
Products: Last year, RPD reviewed the
features of all deposit products and

a number of recommendations have
been placed before the Management
of the Bank to make our products
more lucrative. Based on those
recommendations the Management
of the Bank gave approval to renovate
the features of few products.
Product Program Guideline (PPG):
PPG of a number of existing products
and new products have been
developed and have been approved
by the Board of Directors of the Bank.
Operational Activity
Reporting to Authority: In 2019, RPD
submitted 8 reports such as quarterly
Basel reporting, Financial Access
Survey (FAS), Survey questionnaire
for NPL, Financial stability reporting
and so on to BB and replied 11
questionnaires of BIBM.
Market Disclosures: RPD prepared
Market Disclosures on Risk Based
Capital under pillar-3 of Basel III and
submitted the same to Bangladesh
Bank. The same is disclosed in MBL
website.
Credit Rating: MBL has been rated by
Local and International Credit Rating
Agencies. Periodical surveillance
rating like Local credit rating related
activities are fully conducted by RPD.
In addition, RPD partially takes part
in the base activities of International
Credit Rating.
MBL Performance Award: Mercantile
Bank Limited has been recognizing
the performance of its Branches and
Divisions at Head Office every year. In
2019, 28 branches and divisions got
this award under 8 categories based
on their performance in 2018. RPD
has been conducting all activities
relating to MBL performance award
to bring the bank at new height.
MBL Website: RPD maintains and
updates MBL website regularly.
Moreover in 2019, we have started
working to develop a more dynamic
& responsive website of the Bank,
which will be launched by 2020.
Publication Activity
MBL Insight: Quarterly publication of
the Bank, ‘MBL insight’ has focused on
contemporary issues that are critical
to global and domestic economy
as well as financial markets and
institutions. In 2019, RPD published
4 unique issues and circulated the
same.
Agragatir Pathe: RPD published
yearly publication ‘Agragatir Pathe’
on the eve of bank’s foundation day
focusing mainly on CSR and other
internal activities of MBL.
Annual Report: RPD has been
publishing bank’s integrated annual
report since its inception. In the
continuation of that last year RPD
published bank’s integrated Annual
Report 2018. This publication has
been awarded ‘Certificate of Merit’ in
‘19th ICAB National Award for Best
Presented Annual Reports 2018’ by
ICAB.
Banking Industry Studies activity
Sector wise review: Research and
Planning Division regularly conducts
different industry/sector specific
research by focusing on recent
business trends and direct the
higher management to invest in right
path & explore the industry/sector
outlook of different industry. In the
year 2019, RPD prepared sector wise
report to observe in which sector
banking industry investment was
high. Besides, a number of industry/
DIVISIONAL OVERVIEW
sector specific research works are on
progress.
Peer Bank Review: RPD make
analysis of Peer Banks status on
quarterly basis focusing on top
private commercial banks’ (PCBs)
performance. This report highlights
the scope of improvement for the
Bank at the same time underlined
strategies for the upcoming years.
Outlook 2020
In the year 2020, RPD is planning
to continue its regular activities and
extend its activities in a dynamic
way including modification of PPG
of all loan products; prepare &
published brochure including MBL’s
product & services; preparing Islamic
Banking products; branch feasibility
study; banking industry analysis;
development of dynamic and
responsive MBL website and other
ad-hoc research works. In addition,
RPD has also plan to conduct survey
on customers’ satisfaction and their
expectation from the bank.
Research & Planning Division is
always endeavoring to light up the
bank's image and to align insightful
manner in the Bank’s vision to be
finest corporate citizen.
114 Mercantile Bank Limited
Annual Report 2019

AGENT BANKING
DIVISION
Agent Banking Division of Mercantile Bank Limited has
been established. MBL wants to reach every corner of the
country through strong Agent Banking network. To bring
unbanked people under the umbrella of financial inclusion
of Bangladesh, it is a great solution.

We have obtained permission from Bangladesh Bank on

5th August, 2019 to start Agent Banking operation across
the country. Initially we received the permission to start
Agent Banking operation with 5 Agent Outlets.

Agent Banking team is working nationwide for Agent

acquisition.

Expansion plan for 2020

EXPANSION EXPANSION EXPANSION

PLAN - i PLAN - ii PLAN - iii

Division Coverage District Coverage Establish 200 Agent

by March, 2020 by September, 2020 Outlets by December, 2020

ISLAMIC BANKING
DIVISION
Keeping the ever increasing interest of the Muslim citizens of the country in mind, MBL has
decided to go for Islamic Banking operation. In MBL, it will be window operation at the
branches. Conventional Banking & Islamic Banking will be operated in the branches parallelly.
Initially, Islamic Banking will be operated in 10 (ten) selected branches throughout the country.

MBL Islamic Banking Operations

Main Branch Islamic Banglabazar Branch Barisal Branch Islamic
Bank Window Islamic Bank Window Bank Window
Dhaka Noakhali Barisal
Dhanmondi Branch Chowmuhani Branch Damudya Branch
Islamic Bank Window Islamic Bank Window Islamic Bank Window
Dhaka Noakhali Shariatpur
Uttara Branch Islamic Faridganj Branch
Bank Window Islamic Bank Window
Dhaka Chandpur
Agrabad Branch Islamic Feni Branch Islamic
Bank Window Bank Window
Chattogram Feni

Gradually, it will be extended throughout the country through MBL's huge branch network. Title or brand name of MBL's Islamic
Banking business is 'Taqwa'. Permission for islamic banking window operation has already been obtained from Bangladesh Bank.
Infrastructural facilities for Islamic Banking Window at branches are underway, software arrangement has been done, Shari'ah
Council has been constructed, manpower & other preparatory arrangements are in process. We are very much confident that
we will go live very shortly and will equip extending Islamic Banking services to the intending clients.
 DIVISIONAL OVERVIEW

SUBSIDIARY
OVERVIEW
116 Mercantile Bank Limited
Annual Report 2019

MERCANTILE BANK
SECURITIES LIMITED (MBSL)
Mercantile Bank Securities Limited is
developed to provide higher, better
and diversified services to a wide
range of customers. MBSL is offering
high quality products and services at
a competitive rate.
Mercantile Bank Securities Limited
offers full-fledged international
standard brokerage service with
margin loan facility. We are also a full
service Depository Participant (DP)
of Central Depository Bangladesh
Ltd. (CDBL). The brokerage service is
designed to provide customers with
necessary support profitably in the
stock market.
MBSL is dedicated to provide
high level of professional and
personalized services to its domestic
and international clients at a
reasonable cost. MBSL’s services are
comprehensive in nature, including
brokerage, margin loan, CDBL
facilities, and research and custodian
needs of customers.

MBSL’s Milestone
June 27, 2010 Date of Incorporation
December 05, 2010 DSE Membership # 224
December 30, 2010 CSE Membership # 140
August 25, 2011 Stock broker / Dealer license of CSE
September 14, 2011 DP registration Certificate
September 14, 2011 Started business in its own name of MBSL

MBSL’s at a Glance
Authorized Capital BDT 500.00 Crore
Paid up Capital BDT 360.00 Crore
Branches 06
Address Shawdesh Tower (3rd floor), 41/6 Purana Paltan, Dhaka-1000
Telephone +88-02-47119084, 47119074, 47119085, 47118885
Fax +88-02-47111256
Email address mblbhd@gmail.com
Website www.mbslbd.com

To be one of the most compliant and customer oriented brokerage service provider, with
priorities in creation of long term and well informed investors which will contribute to the
development of the capital market and eventually to the economy of the country.

To become the best Securities House with a strong brand and enhancing value for the entire
stakeholder through excellence in performance and good governance.
VISION

We aspire to be one of the most compliant and customer oriented company, our priorities lie
in creation of long term and well informed investors which will contribute to the development
of the capital market and eventually to the economy of the country. Our Mission statements
are as follows:
MISSION
 SUBSIDIARY OVERVIEW

BOARD OF DIRECTORS

Md. Nasiruddin M.A. Khan Belal Rakim Reza Rousseau Morshed Alam, MP Mirazul Ahsan
Choudhury Vice Chairman Director Director Director
Chairman

Md. Anwarul Haque M. Amanullah A.S.M. Feroz Alam Alhaj Akram Hussain Engr. Mohd.
Director Director Director Director Monsuruzzaman
Director

Dr. Toufique Rahman Ms. Bilkis Begum Ms. Farida Begum Ms. Israt Jahan Subrota Narayan Roy
Chowdhury Director Director Director Director
Director

Md. Anwar Hossain Dr. Md. Rahmat Ullah Md. Nurer Rahman Md. Quamrul Islam Fahmida Haque
Director Independent Director Independent Director Chowdhury CEO, MBSL
MD & CEO, MBL

KEY STRENGTH
To be the Pioneer, not follower;
To be Compliant in every respect
Knowledge Based Brokerage
Service;
Offer wide array of products and
services that differentiate and
excite all customer segments;
Be the “Employer of choice” by
offering an environment where
people excel and leaders are
created;
Continuously challenge processes
and platforms to enhance
effectiveness and efficiency;
Promote innovation and
automation with a view to
guaranteeing and enhancing
excellence in service;
Ensure respect for community,
good governance and
compliance in everything we do;
We will deliver service excellence
to all our customers, both
internal and external;
We will ensure to maximize
shareholder’s value;
We will constantly challenge our
systems, procedures and training
to maintain a cohesive and
professional team in achieving
service excellence;
We will create an enabling
environment and embrace
a team based culture where
people will excel.
118 Mercantile Bank Limited
Annual Report 2019

PRODUCT & SERVICES

Product: Deposit & withdrawal through BEFTN

Cash A/C Research

Margin A/C Separate institutional help desk

Services: Services for NRB investors

Efficient trade execution by experienced traders Trade facility through phone & mail
Full depository participant services Confirmation through SMS and email

Financial Highlights  (Amount in million)

Particulars 2015 2016 2017 2018 2019

Income Statement

Operating Income 281.72 138.6 221.37 171.43 156.51

Operating Expenses 241.68 55.11 95.1 144.23 16.02

Gross Profit 40.04 83.49 126.27 27.2 140.49

Operating Profit/(Loss) 4.86 31.82 69.94 -28.9 76.08

Profit/(Loss) Before Provision and Income Tax 14.32 62.91 96.35 -0.029 101.71

Profit/(Loss) Before Income Tax 8.62 27.91 31.35 -66.22 63.51

Net Profit After Income Tax 0.01 0.52 5.24 -77.53 42.45

Balance Sheet

Total Assets 6,736.76 6,561.47 5,947.14 5,913.40 5,680.36

Paid Up Capital 650.00 3600.00 3600.00 3600.00 3600.00

Total Equity 684.34 3,634.87 3,640.10 3,562.58 3,605.03

Total Liabilities 6,052.41 2,926.60 2,307.04 2,350.81 2,075.33

Total Equity and Liabilities 6,736.76 6,561.47 5,947.14 5,913.40 5,680.36

Gross Profit BDT in Million Total Assets BDT in Million

6736.76
140.49
126.27

6561.47
83.49

5947.14

5913.4

5680.36
40.04

27.2

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
 SUBSIDIARY OVERVIEW

Major Activities in 2019 Branch offices are monitored Strategic Focus

Through in year 2019 Mercantile
Bank Securities Limited develop
a well-organized website to
make them more accessible
to their existing and potential
clients. In addition they should
introduce online trading facilities
for their clients.
Mercantile Bank Securities
Limited introduce investor
awareness program to produce
wise and educated investor. In
this way both the clients and
house will be benefitted.
Mercantile Bank Securities
Limited give more emphasize on
the research and publications in
2019. And MBSL are confirmed
that research and publications
are available to the clients.
by the management of the
Mercantile Bank Securities
Limited and we visit to the
branch office to have a look on
the office.
In 2019 the new decoration of Uttara
branch is completed & location of said
branch is changed with maintained all
rules & regulations.
Mercantile Bank Securities
Limited arrange seminar and
workshop with the different
stakeholder of this organization
about the investment of capital
market to get the feedback from
the clients.
Mercantile Bank Securities
Limited took effective initiative
to make the all employees up
to date about necessary rules
and regulation about the capital
market of Bangladesh.
Simplify your investments and
save time by consolidating
at Mercantile Bank Securities
Limited—a partner you can trust.
Get help with your portfolio
from knowledgeable associates
rewarded for service, not sales,
so they have only your best
interests in mind.
Enjoy competitive,
straightforward trading rates
and no hidden fees.
Get access to sophisticated tools
and analyses, including charts
and stock screeners, news, and
financial reports.
We impress ourselves looking
at our performance which is a
testament to our strategy and
the quality of our people and
clients around the globe.

Branches of MBSL
Uttara Branch Khulna Branch
House-22, Sonargaon Janapath, Rupsha Plaza (2nd floor)
Sector- 9, Uttara, Dhaka-1230 73 K.D.A Avenue, C/A
Phone: 88-02-8959047, 8962945 Sonadanga, Khulna-9100
Fax: 88-02-8961798 Phone: 041-731396
HOB: Syed AKM Fazley Rabbi Fax: 88-041-731397
HOB: A T M Salahuddin

Agrabad Branch Sylhet Branch

Mishkat Arcade (1st floor), Al-Hamra Shopping City (5th floor)
21/1, Agrabad C/A,Chattogram. 1052-00, Zindabazar, Sylhet-3100
Phone: 031-721865 Phone: 0821-711565
Fax: 031-716459 Fax: 0821-711571
HOB: Abdur Rahim Chowdhury HOB: Mohammed Azmir Hossain

Mirpur Branch Sat Masjid Road Branch

Razia Plaza (4th Floor) House-39/A, Road-14/A,
Rokeya Sarani,184 Senpara Parbata, Satmasjid Road,
Mirpur-10, Dhaka-1216. Dhanmondi, Dhaka-1209
Phone: 88-02-9014640 Phone: 88-02-9126872
Fax: 88-02-9014680 Fax: 02-9128541
HOB: Md Abdul Motin HOB: Md. Salahuddin Imtiaz
120 Mercantile Bank Limited
Annual Report 2019
MERCANTILE EXCHANGE
HOUSE (UK) LIMITED
United Kingdom is one of the most
important countries for Bangladeshi
Expatriates where more than half
a million Bangladeshis are living.
These Bangladeshi Expatriates are
in different categories i.e. scholars,
professionals, skilled and unskilled.
Besides, United Kingdom is the
most important economic hub in
European area. Considering the geo-
Morshed Alam, MP
Chairman
Currently, the subsidiary operates
remittance business in United
Kingdom through London Branch.
Being the part of a very competitive
market in London, the exchange
house offers a wide range of products
and services to the Bangladeshi
expatriates living and residing in
United Kingdom.
Mercantile Exchange House (UK) Ltd.
has been carrying out remittance
business since 2011 in UK. Besides,
they are also engaged in promoting
different products and services of
Mercantile Bank Ltd. in UK market. As
a part of their activities, they usually
Office Address of Mercantile Exchange House (UK) Limited
London Branch
108 Whitechapel Road, London E1 1JE, UK
Phone: +4420-3638-1919
Fax: +4420-3638-1919
Mobile: +44-7984475697
Email: londonmblex@gmail.com
economics importance of UK ensure
better service to the Bangladeshi
expatriates in United Kingdom,
Mercantile Bank Ltd intended to
extend their services to United
Kingdom aiming to enter into the
potential European economic area.
In line with the initiative, the Board
of Directors of Mercantile Bank Ltd.
decided to establish fully owned
A.S.M. Feroz Alom
Director
open a good number of Savings
and scheme account with different
branches in Bangladesh.
The following services are offered to
the Bangladeshi Expatriates living in
United Kingdom:
One stop remittance services to
Bangladesh
Account Transfer
Transfer through Cash Over
the Counter
Currency Exchange Service
(Bureau De Change)
Opening of different types of
accounts
subsidiary of the Bank in London.
Mercantile Exchange House (UK)
Limited commenced its operation
on December 06, 2011 in United
Kingdom complying all sorts of
regulatory formalities in UK and
Bangladesh.
The Board of Directors of Mercantile
Exchange House (UK) Ltd. is
comprised with the following persons:
Md. Quamrul Islam Chowdhury
Director
Savings Account
Foreign Currency Account
MSS (Monthly Savings
Scheme) Account
Fixed Deposit Account
Assist the expatriates in
purchasing different Government
Instruments like
WEDB (Wage Earners’
Development Bond)
US Dollar Bond etc.
In the year 2019, we routed 17,726
numbers of transactions worth of
Tk. 129.98 Crore equivalent to GBP
11.83.02 Million through Mercantile
Exchange House (UK) Ltd.

MBL ASSET
MANAGEMENT LIMITED
Operating Environment
MBL Asset Management Limited will
run its operation under Bangladesh
Securities and Exchange Commission
Mutual Fund Rules 2001 and
Bangladesh Securities and Exchange
Commission Alternative Investment
Fund Rules 2015. We have applied to
Bangladesh Securities and Exchange
Commission for obtaining Asset
Manager and Fund Manager License.
The company will launch its services
immediate after obtaining license and
will provide the services to the target
customers in more dynamic way.
Board of Directors
Rakim Reza Rousseau
Chairman
G.W.M. Mortaza Md. Zakir Hossain
Nominated Director of MBL Nominated Director of MBL
Strategic Objectives of MBL
Asset Management Limited
To improve the quality level
with minimization of cost of
products by making use of latest
technological skills.
To take part in the management,
to manage and act as consultant
and advisers to the business of
share and stock brokers on fees,
commission or such other basis.
To make people aware of the
criticality of financial knowledge
& planning.
Developing reliable and long-
term relationship with the
customer.
Legal Status, Nature and
Principal Activities of MBL
Asset Management Limited
MBL Asset Management Limited, a
subsidiary of Mercantile Bank Limited
(MBL) incorporated as Private
Limited Company on 29th November
2018 with an authorized capital of
BDT 200,000,000/- (Twenty Crore).
The registered office of the company
is situated at 61, Dilkusha C/A,
Dhaka-1000, Bangladesh.
The company is in process to receive
the Asset Management License
Mati ul Hasan Nafisa Saima
Vice Chairman Director
Adil Raihan
Nominated Director of MBL
To aid customers to materialize
their plans through proper
investment vehicles.
To help people feel financially
secure and feel confident of a
brighter and prosperous future.
Outlook 2020
MBL Asset Management Company
will focus on providing a suite of asset
servicing solutions to the valued
individual as well as institutional
investors. MBL Asset Management
Company believes in identifying &
delivering financial goals through
devoted and customized financial
solutions by deep understanding
SUBSIDIARY OVERVIEW
under Mutual Fund Rules 2001 and
Fund Manager License under the
Alternative Investment Rules 2015
from the Bangladesh Securities and
Exchange Commission. The core
objectives of the company are to carry
on the business as Asset Management
Company and Fund Manager or
Fund Management Company. The
principal activities of the company
are to offer Mutual Fund products to
retail and institutional investors, Asset
Management Services and Venture
Capital Services for institutional
investors.
Shimon Inamori
Director
and specialized domain knowledge
through a dedicated and expert
team. MBL Asset Management
will be involved in Mutual Fund,
EFT Management and Alternative
Investment Fund Management.
The Company will also keep its
special focus on venture capital
financing as Venture capital is a
way in which the private and public
sectors can construct an institution
that systematically creates business
networks for the new firms and
industries, so that they can progress
and develop.
122 Mercantile Bank Limited
Annual Report 2019

MBL MYCASH
LIMITED
The mobile banking service of Mercantile Bank Limited is branded as “MyCash” and it aims to connect with the country’s
unbanked population. Being one of the early movers of the industry, MyCash has network connectivity with every telecom
operator of the country. Utilizing the country wide mobile phone connectivity , MyCash intends to reach every single door
of the country with its wide range of services.

In compliance with the new Mobile Financial Services guidelines issued by the Bangladesh Bank on 30 July, 2018; Mercantile
Bank obtained NOC from Bangladesh Bank on 13 January, 2019 for formation of a subsidiary company with an aim to
provide its Mobile Financial Services to the large population of the country in more convenient manner. Mercantile Bank
Limited formed 100% owned subsidiary company in the name of MBL MyCash Limited as a private company limited by
shares incorporated on July 03, 2019 with the Registrar of Joint Stock Companies and Firms, Bangladesh. Currently, the
Bank is in the process to obtain PSP license from Bangladesh Bank for rendering the MyCash services through newly
formed subsidiary company.

Details of MyCash have been discussed at ‘’Divisional Overview” of the report.

 SUBSIDIARY OVERVIEW

INTEGRATED
REPORTING
124 Mercantile Bank Limited
Annual Report 2019

INTEGRATED REPORTING
FRAMEWORK
MBL prepares its annual report to portray the broader range of measures that
contribute to long-term value and the role play in the economy. Central to this
is the proposition that value is increasingly shaped by factors additional to
financial performance, such as reliance on the environment, social reputation,
human capital skills and others. This value creation concept is the backbone
of integrated reporting. In addition to financial capital, integrated reporting
considers five additional capitals that guide MBL’s decision-making and long-
term success-its value creation in the broadest sense. Integrated reporting starts
from the position that any value created as a result of a sustainable strategy -
regardless of whether it becomes a tangible or intangible asset - will translate,
into performance.
This Annual Report 2019
demonstrates-
Six Capitals,
MBL’s strategy, governance and Performance
performance. and
prospects
The links between its financial
performance and its wider social, Corporate Strategy
environmental and economic Governance and
context. and resource
compliance allocation
How the Bank creates value over
the short, medium and long term.

How MBL has performed against Value Financial

its strategy and what are its key Creation Reporting
outcomes Model and
Analysis
Challenges and uncertainties
MBL likely to encounter in
pursuing its strategy, and the
potential implications for its
Determining Materiality of the ambitions and value creation

business model and its future
performance and outcomes.
Comparability
All the information presented in this
report are on the same basis as that
of 2018 report in terms of the entities
covered, the measurement methods
applied and time frames used. The
information provided covers all
material matters related to business
strategy, risk and areas of critical
importance to our stakeholders.
The structure of the report has
been further developed as part of
our continuous focus on improving
communication to our stakeholders.
Report Content
The materiality assessment of
the report content appears on
'Sustainability Analysis' segment.
Reporting Enhancements
MBL seeks to continuously enhance
the quality and readability of the
report and this year features several
key improvements. In determining
material content to be included in this
report, the Bank has gone beyond
what is prescribed by regulatory and
other standards to include topics and
matters that are relevant to economic
and industry landscape, strategic
process. MBL has also increased the
connectivity of information across
the Report. This has enabled to
clearly demonstrate how strategies
are related to six capital inputs and
addresses material concerns of
stakeholders.
Availability of the Annual
Report
The hard copies of the Annual
Report 2019 has been sent to all
the shareholders prior to holding
the Annual General Meeting, giving
due period of notice. Moreover, for
the benefit of all stakeholders, the
report has been made available in the
website http://www.mblbd.com

STRATEGIC
FRAMEWORK
Deposits Strategies
Deposit is the blood of any bank. For
collecting quality deposit, MBL has
formulated several strategies. The
objective of MBL has always been to
maintain a quality deposit pool while
maintaining a very competitive deposit
mix. Here, quality deposit refers to the
source of deposit being unquestionable.
MBL has certainly been able to do that
as the bank has secured ‘one of the
Top five spots’ in the country’s banking
sector when it comes to meeting global
BETTER DIFFERENTIATED
CUSTOMER PRODUCTS
SERVICES AND
SERVICES
The following strategies will be
followed to ensure quality deposit
can be procured while maintaining a
competitive deposit mix:
Cross Selling of different Products
including Retail to Corporate
Customers.
Collections of utility bill from DPDC,
DESCO, PDB, BREB, BTCL. WASA.
Our Branches have given special
efforts for collecting these bills.
Along with the branches, platforms
like ‘My Cash’ and Kiosks are being
used to ensure smooth collection.
Quarterly Basis Deposit Campaign
throughout year for ‘Low Cost’ and
‘No Cost’ Deposit.
Opening Bank Accounts of
minimum balances for BDT10.00
(Ten), 50.00 (Fifty) and 100.00
(Hundred) with our branches for
serving underprivileged people
who are financially excluded such
as farmer, freedom fighter, small
jibon bima policy owner, marginal
standard in following Anti Money
Laundering (AML) guidelines. While
keeping the percentage level of No-
cost and Low-cost deposit to optimum
will ensure that the Bank can maintain
a very competitive deposit mix which
will certainly ensure higher profitability.
Through all these, the Bank has
maintained a good credit rating locally
and internationally over the years, been
able to keep good customer faith while
returning customers’ money, ensured
strong corporate governance practices
for transparency, accountability and
ROBUST EFFICIENT
CORPORATE EMPLOYEES
GOVERNANCE
PRATICES
INTERNATIONALLY
income man and woman, privileged
people under national services
program, beneficiary under social
security facilities, cleaners of north
and south Dhaka City Corporation,
employee of garments industries,
employee of leather and footwear
industries, government grants
from ministry of religious affairs
for rehabilitation of distressed
people, students of school, street
urchin and working children, grants
from Hindu Religious Kallyan Trust
for distressed people, Ila affected
people, blind and all kinds of
disabled people, etc.
We have entered into agreements
for collection of Utility bills with
most of the Utility Service Providers
under Real Time Online Banking
System, Mobile Financial Services
“MyCash”, Internet Banking and
Other Delivery Channels, such
as BTCL, DESCO, DPDC, Dhaka
WASA, TITAS Gas, WZPDCL,
BRTA, Karnaphuli Gas Distribution
INTEGRATED REPORTING
fairness, ensured a strong branch
network with state of the art IT platform.
In the future days, the Bank wants to use
all of these as tools to implement the
deposit strategies. Moreover, in order
to ensure better customer services,
the Bank has efficient employees
over the country under dynamic and
experience Board of Directors and Top
Management.
The main tools with which MBL is
looking to implement the deposit
strategies are as follows:
MAINTAIN STATE-OF-THE-ART
CONSISTENT TECHNOLOGY
CREDIT
RATING
LOCALLY &
Company Ltd., Bakhrabad Gas
Distribution Company Ltd.,
Sundarban Gas Company Ltd.,
Dhaka South City Corporation Ltd.,
Dhaka North City Corporation,
Jalalabad Gas Transmission
& Distribution System Ltd.,
Bangladesh Rural Electrification
Board, Third Wave Technology Ltd.
“Nagad”, etc.
We have signed an agreement
with Life Insurance Companies
for collection of Premium through
Real Time Online Banking System,
Mobile Financial Services “MyCash”
and Other Delivery Channels like
National Life Insurance Company
Ltd., Rupali Life Insurance
Company Limited, Zenith Islami
Life Insurance Ltd., Meghna Life
Insurance Company Ltd., etc.
Enlistment and renewal of General
Insurances (Non- Life) with our
Bank as approved insurer for yearly.
Taping Different Government
agencies e.g. Ministry of Religious
126 Mercantile Bank Limited
Annual Report 2019
Affairs for Pre-registration and
Registration of Haj fees, Ministry
of Planning for participation the
Tender Schedule/Document under
e-GP, Ministry of ICT for using a2i
payment gateway for collection
Utilities, Roads & Highway, LGED,
Bangladesh Bridge Authority, etc,
and also Other Different Corporate
Houses, e.g. Foreign Air Lines,
Telecom Companies, etc. and
maintaining regular intense social
interaction with different segments
of the society.
Exploiting the growing rural deposit
basket by setting- up smaller size
low cost rural branches.
Offering cash management
services, i.e. Collection of
Institutional accounts and effective
use of EFTN Service, Collection
Booth, to ensure fast & secure
cash service such as BREB Booth
at Velanagar, Narsingdi, Notre
Dame University Campus, Shah Ali
College, Majid Zarina Foundation,
etc.
Maintain Different Brokerage
Houses Accounts with our
branches.
Monitoring of the Collection
Accounts for ensuring smooth
operation.
Exploiting Mobile Banking Services
“MyCash” for collection of Utilities
Bills.
Special emphasis is given on the
application of Digital Technologies
to realize Digital Bangladesh Vision
2021.
As part of our bank’s strategy, we
are providing “ONE STOP UTILITY
BILL COLLECTION SERVICE” since
we have entered into agreement for
collection of Utility Bills with most
of the Utility Service providers
under Real time online Banking
System, Mobile Financial Services
“MyCash” such as BTCL, DESCO,
DPDC, Dhaka WASA, TITAS Gas,
Pre-Registration and Registration
Fees of Hajj, KGDCL, and BRTA.
Next, we will provide DSCC, DNCC,
BGCL, SGCL, etc.
Advances Strategies
It is a fundamental precept of banking
everywhere that advances are made
to customers in reliance on his
promise to repay, rather than the
security held by the banker. Although
all lending involves some degree
of risks, to minimize this risk MBL
has develop sound and safe lending
policies where selection of borrower
are clearly define.
Focus on Good rating Company
Remodeling on concentration of
segment wise loan.
Focus on retail business
Backward linkage industries to
be targeted to provide a good
source of SME business through
availing the benefit of supply chain
management
New emerging sectors like
ICT Sector, Energy & Power
Sector, Health care sector, Light
Engineering, Tourism Industry,
Ceramic Sector, to be more
emphasized.
Special attention will be given to
expand SME credit portfolio to
achieve relatively higher yields and
also to reduce adverse effects of
large volume defaults.
Risk Management techniques
should apply to ensure strong
internal control over business
operation.
Identifying probable problem
accounts through Early Warning
System (‘EWS’) and taking
appropriate care of those and
formulating exit plan, where
necessary.
Disbursement of loan to high yield
generating business segments
commensurate with calculative
risk and maintain high quality asset
portfolio.
Existing thrust sectors like agro
based industries, leather, frozen
food, textile industry to be more
focused
Agri-business sectors like sugar,
edible oil, wheat, rice, maze, dal,
peas, Food & Beverage to be more
focused.
Import & Export Strategies
Mercantile Bank Limited is one of the
leading private commercial banks in
Bangladesh with a strong existence
in the foreign exchange market. The
Bank has retained its dominance as
a market leader in buying and selling
of foreign exchange and dealing with
huge volume of Export and Import
business.
Marketing for not only established
business houses but also the
potential clients having strong
entrepreneurship spirit to grow.
Arranging credit lines for foreign
currency from international
agencies to facilitate international
trade business particularly import
clients at a competitive rate and the
country as a whole will get benefit
of building foreign exchange
reserve.
Garments sector will be more
focused where tested and potential
clients will be in the portfolio basket
under the regime of calculative risk
return trade-off.
Emerging ship building and ship
breaking sectors will explore new
opportunities which the Bank will
tap for increasing international
trade.
Industries having backward linkage
will yield better opportunity and
reduce risk exposure.
Focusing on service export sectors
like IT, Education and Health Care
sector.
Remittance Strategies
Remittance has become an important
aspect for the developing countries
like Bangladesh for socio-economic
progress. It is the second-highest
source of foreign currency earnings
for Bangladesh, following the ready-
made garments industry. The inflow
of remittances grew by near about
18 per cent in the year 2019 as the
government has announced a 2.0 per
cent incentive on remittance receipts.
MBL will look to tap into this huge
inflow of remittance. For that-
The Bank has fully owned subsidiary
named “Mercantile Exchange
House (UK) Ltd.” in London, United
Kingdom. This subsidiary renders
the best remittance services to the
expatriates living and working in
UK
The Bank has already taken
effective initiatives to provide
smooth service at the branch level
to the remittance customers.
MBL has already maintained
partnership with various worldwide
remittance service providers
and the Bank will look to further
continue and enhance the
relationship with them to provide
more smooth service.
Our top Management has taken up
this matter seriously and has gone
on to do extensive marketing in
this regard outside of the country
to tap into this inflow.
 INTEGRATED REPORTING

STRATEGIC
FOCUS 2020

A Year of consolidation: Focus on Reduction of overhead costs by

accelerating the growth through applying due diligence.
utilizing all business platforms.

Zero-tolerance against Diversification of Business

non-compliance. Portfolio.

No more new NPL this year. To be flexible in adoption of

modern technology.

Putting effort for recovery of To explore New Business

write off loan. Avenues.

To ensure better customer To obtain stronger Global

service. recognition.
128 Mercantile Bank Limited
Annual Report 2019

VALUE CREATION
ACTIVITIES
Financial Capital
Activities Undertaken to
Indicator for Value Derived 2018 2019
Create Financial Capital
Shareholders Fund BDT 18,683.55 million Increasing business volumes BDT 20,908.29 million
Borrowings from other banks, financial prudently through robust and
BDT 20,080.79 million efficient financial intermediation BDT 20,623.05 million
institutions and agents
and maturity transformation,
Subordinated Bond BDT 4,800.00 million thereby strengthening the BDT 4,200.00 million
Deposits and other accounts BDT 229,907.33 million leadership position. BDT 247,624.47 million

Human Capital
Activities Undertaken to
Indicator for Value Derived 2018 2019
Create Human Capital
Number of employee 2,305 Enriching career 2,418
Number of New Recruits 209 development 201
Reinforcing performance
Salaries and allowances including MD& CEO’s BDT 2457.42 million management and BDT 2,429.44 million
Profit per Employee BDT 2.75 million appraisals BDT 3.04 million

Institutional Capital
Activities Undertaken to
Indicator for Value Derived 2018 2019
Create Institutional Capital
Branch net work 138 Optimum amount of 148
Number of ATMs 162 investment in capital 181
Number of CDM 20 expenditure 20

Intellectual Capital
Activities Undertaken to
Indicator for Value Derived 2018 2019
Create Institutional Capital
Training Expenses BDT 11.14 million Arranging right training BDT 8.35 million
program for employee
Number of Training Courses 161 development 154

Social and Network Capital

Activities Undertaken to
Indicator for Value Derived 2018 2019
network Capital
Economic Value Added BDT 2,266 million Pursuing Sustainable BDT 2,547.53 million
Community Investment BDT 140.63 million Development Goals for BDT 156.77 million
Payment to Suppliers BDT 296.86 million community welfare BDT 265.78 million

Natural Capital
Activities Undertaken to
Indicator for Value Derived 2018 2019
Natural Capital
Resources Consumption (lighting, gas & Reducing paper
BDT 102.20 million BDT 102.59 million
water) consumption and recycling
Increasing usage of
Printing & Stationery Expenses BDT 92.06 million renewable energy BDT 94.50 million
Switching to energy-
Computer Expenses BDT 131.86 million efficient appliances BDT 95.50 million
 INTEGRATED REPORTING

BUSINESS
MODEL

CAPITAL VALUE CREATION STAKEHOLDERS

INPUTS PROCESS

STRATEGY

ECONOMIC IMPACTS
FINANCIAL
CAPITAL

OUTCOMES
HUMAN
VISION, MISSION & VALUES

CAPITAL
STRATEGIC GOALS

CAPITAL TRANSFORMATION

SOCIAL IMPACTS
INSTITUTIONAL
CAPITAL CORE
BUSINESS
OPERATIONS

INTELLECTUAL
CAPITAL
OUTPUTS

ENVIRONMENTAL
SOCIAL &
RELATIONSHIP IMPACTS
CAPITAL

CORPORATE
GOVERNANCE & RISK
NATURAL
CAPITAL MANAGEMENT

STRATEGIC IMPERATIVES

DIGITAL
ENSURING TRANSFORMATION
A YEAR OF CUSTOMER OPERATIONAL
ASSET IN THE CONTEXT
CONSOLIDATION CENTRICITY EXCELLENCE
QUALITY OF STATE OF
ART TECHNOLOGY
130 Mercantile Bank Limited
Annual Report 2019

RISK
MANAGEMENT
REPORT
 RISK MANAGEMENT REPORT

BOARD RISK MANAGEMENT

COMMITTEE REPORT
As per Bank Company Act 1991 (Amendment 2013) and subsequent Bangladesh
Bank BRPD Circular no. 11, dated October 27, 2013, MBL reformed the Risk
Management Committee of the Board in its 345th meeting held on July 4, 2019,
which is as follows:

SL No. Name Status with Bank Status with Committee

1. Mr. Md. Anwarul Haque Director Chairman

2. Mr. Al-Haj Akram Hossain (Humayun) Director Member

3. Mr. Mohd. Selim Director Member

4. Mr. Md. Nasiruddin Choudhury Director Member

5. Mr. M.A. Khan Belal Director Member

Roles and Responsibilities of Board Risk

Management Committee (BRMC)

Board Risk Management Committee of Mercantile Bank Limited always follows the latest circulars and guidelines of
Bangladesh Bank. The roles and responsibilities of BRMC of Mercantile Bank are enumerated below:

Formulating and reviewing (at Ensuring formulation and review Submitting proposal, suggestions
least annually) risk management of risk appetite, limits and & summary of BRMC meetings
policies and strategies for sound recommending these to Board to board of directors at least on
risk management; of Directors for their review and quarterly basis;
approval;
Monitoring implementation Complying with instructions
of risk management policies issued from time to time by the
Approving adequate record
& process to ensure effective regulatory body;
keeping & reporting system and
prevention and control measures; ensuring its proper use; Ensuring appropriate knowledge,
Ensuring construction of experience, and expertise of
Holding at least 4 meetings in lower-level managers and staff
adequate organizational
a year (preferably one meeting involved in risk management;
structure for managing risks
in every quarter) and more if
within the Bank; Ensuring sufficient & efficient
necessary;
staff resources for Risk
Supervising the activities of
Analyzing all existing and Management Division;
Executive Risk Management
probable risk issues in the meeting,
Committee (ERMC) of Mercantile Establishing standards of ethics
taking appropriate decisions for
Bank Limited; and integrity for staff and
risk mitigation, incorporating
enforcing these standards;
Ensuring compliance of the same in the minutes of the
BB instructions regarding meeting and ensuring follow Assessing overall effectiveness
implementation of core risk up of the decisions for proper of risk management functions on
management; implementation; yearly basis.
132 Mercantile Bank Limited
Annual Report 2019

Board Risk Management Committee (BRMC)

Meetings details of MBL during 2019

There were 7 (seven) BRMC meetings held during the year 2019, which are as follows:

Following issues were discussed

in 25th BRMC Meeting held on
January 21, 2019:

Information regarding Risk Information regarding Liquidity Information regarding Aging

Management Report September,
2018.
Information regarding Stress
Testing as on September, 2018.
Quarterly report of restructured
syndicated Term Loan liability of
Jamuna Builders Limited (Lead
arranger & Agent: Janata Bank
Limited) for the quarter ended
on December, 2018.
related issues for the month of
September, 2018.
Information regarding Liquidity
related issues for the month of
October, 2018.
Information regarding Liquidity
related issues for the month of
November, 2018.
Status of Overdue Loans &
Advances of Offshore Banking
Unit.
Information regarding Exposure
of Top 20 Borrowers.
Information regarding Sector
wise classification of Loans and
advances as on 30.09.2018.

Following issues were discussed

in 26th BRMC Meeting held on
February 27, 2019:

Information regarding Stress Approval for Risk Appetite Information Regarding

Testing as on December, 2018. Statement of the Bank for the Comprehensive Risk
year 2019. Management Report as on
Information regarding Risk December, 2018.
Management Report as on
January, 2019.

Following issues were discussed

in 27th BRMC Meeting held on
April 17, 2019:

Approval for Revised Internal
Capital Adequacy Assessment
Process (ICAAP) documents
2017 under Supervisory Review
Process (SRP) i.e. pillar 2 of
Basel III.
Quarterly report of restructured Approval for Bank’s “Business
syndicated Term Loan liability of Continuity and Disaster
Jamuna Builders Limited (Lead Recovery Planning (BCP) V2.0”.
arranger & Agent: Janata Bank
Limited) for the quarter ended
on March 2019.

Following issues were

discussed in 28th BRMC
Meeting held on May 22, 2019:

Information regarding Stress Approval for reformation of Approval for Bank’s “Business
Testing as on March 2019. Supervisory Review Process Continuity and Disaster
(SRP) Team of the Bank. Recovery Planning (BCP) V2.0”.
Approval of Internal Capital
Adequacy Assessment Process
(ICAAP) documents prepared
2018 under Supervisory Review
Process (SRP) i.e. pillar 2 of
Basel III.
 RISK MANAGEMENT REPORT

Following issues were

discussed in 29th BRMC
Meeting held on July 17, 2019:

Implementation of Supervisory
Review Process (SRP) in the
Bank.
Information regarding Risk
Management Report as on April,
2019 & May, 2019.
Approval for Risk Management Limited) for the quarter ended
Guidelines-2019. on June, 2019.
Quarterly report of restructured
syndicated Term Loan liability of
Jamuna Builders Limited (Lead
arranger & Agent: Janata Bank

Following issues were discussed

in 30th BRMC Meeting held on
October 6, 2019:

Information regarding Comprehensive Risk Quarterly report of restructured

Comprehensive Risk
Management Report as on June
30, 2019.
Information regarding Stress
Testing as on June, 2019.
Management Rating as of
December, 2018.
Approval for Bank’s “Internet
Banking Security Policy V 1.0.”
syndicated Term Loan liability of
Jamuna Builders Limited (Lead
arranger & Agent: Janata Bank
Limited) for the quarter ended
on September, 2019.

Following issues were

discussed in 31st BRMC Meeting
held on December 4, 2019:

Information regarding Stress Approval for Risk Register of the Approval for Credit Policy
Testing as on September, 2019. Bank. (Revised-2019).

Md. Anwarul Haque

Chairman
Board Risk Management Committee
134 Mercantile Bank Limited
Annual Report 2019

RISK MANAGEMENT
REPORT
Banking activities always have correlation with risk and to take a certain degree of
risk. Every day MBL takes informed risk decisions while engaging with customers,
granting credit, entering into treasury dealings and providing other services. In
the customers’ interest, we design risk and control processes in order to manage
the risks. We employ a comprehensive approach to risk management, so that we
may mitigate the risks we face with a solid risk management framework without
stopping our appetite for risk. This framework is yearly evaluated and adopted
by the Board Risk Management Committee (BRMC). Our risk management
activities are designed to realize the goals of the bank, our customers and our
stakeholders.

Mati ul Hasan
Additional Managing Director
and CRO

Strengthening Risk
Management in 2019
We further strengthened our overall
risk management framework in 2019.
Reviewed & updated risk management
guideline of the Bank in line with
regulatory requirement as well as
an internal demand for proactively
managing our risks in a timely fashion.
A number of initiatives have focused
on the overall improvement of data
quality, aggregation and risk-reporting
timeliness. Such improved reports
enable us to make decisions faster,
based on more transparent and
consistent data, and they allow us
to improve the quality of fact-based
decisions.
Reviewed risk appetite statement and
internal limit for different credit, market
and operation related indicators.
Despite our efforts to continuous
improve our risk management
framework, losses and incidents
cannot always be avoided.
Operational losses and incidents
are however closely monitored and
analyzed in order to reduce the risk of
reoccurrence in future. We also take
into account in an environment of
innovation and change, it is important
to ensure clear risk ownership and a
correct balance between strategic
changes and risk mitigation.
Risk Governance
The Risk Management Guidelines
define MBL’s governance and
All risk and risk types are identified
to provide an integrated risk profile
of the Bank. We realize this is an
ongoing process in a bank that is
During 2019, we further enhanced
the strength of our compliance risk
management framework. This amongst
others includes Reviewing & updating
of AML guideline and implementation
of measures that build on our capacity
to prevent money laundering and the
financing of terrorism.
We incorporated Core Risks
Management Guideline into the Credit
Policy of the bank in order to better
manage the credit risk.
Initiated Risk Matrix and Risk map for
better analysis of Risk indicators.
decision framework for both Financial
and Operational Risks. The Guidelines
are in place to support efficient and
effective risk management at all levels
of the Bank.
To ensure effectiveness of risk
management across the Bank,
MBL works with the ‘Three Lines of
Defence’ model. First-line functions
own and manage risk within the
bank, the second line functions
(Risk Management and Compliance)
oversee and advise on risk. An
independent third-line function
(Audit) provides assurance on the
effectiveness of the first and second
RISK MANAGEMENT REPORT
continuously changing in demanding
external environment. Some of these
elements we aimed to strengthen the
risk management framework are:
We Introduced new risk register with
appropriate Management Action Trigger
(MAT). We also spent considerable
effort to strengthen the risk data
aggregation in line with the regulatory
requirement. These capabilities and
internal risk reporting practices will
further enhance our risk management
and decision making process.
Reviewed & updated Environmental
& Social Risk Management Guideline
as per regulatory recommendations
to better manage and mitigate
Environmental & social risk.
Initiated process of automation for
calculating different risk indicators.
lines of defence. In this way the Three
Lines of Defence model provides
clear division of activities and
responsibilities in risk management
across the institution. This model is
represented in the following figure.
The risk management framework
covers regular banking risk types, such
as credit risks, market risks, interest
rate risks in the banking book, liquidity
risks, compliance risks and operational
risks. Risk classification allows for clear
definitions and promotes a common
understanding of risk management
throughout the institution.
136 Mercantile Bank Limited
Annual Report 2019

Three Lines of Defense

BoD/Audit committee/BRMC/ERMC

Regulators
BACK RISK
INTERNAL
OFFICE MANAGEMENT
AUDIT

FRONT
OFFICE SUPPORT COMPLIANCE

External Audit
1st 2nd 3rd
Line of defense Line of defense Line of defense
Business owns Functions that oversee Functions that provides
and manages risks and challenge risk independent assurance

Risk Management Strategy dedication to customer satisfaction. supports management in executing

MBL’s vision ‘would make finest MBL’s strategy defines priorities, the business strategy. MBL’s Risk
corporate citizen’ underlines our objectives and targets including a Strategy focuses on the following
cooperative roots and emphasizes our capital strategy. MBL’s Risk Strategy goals:

Support the
Make healthy
business
Protect Maintain Protect risk-return
through the
profit and solid MBL’s decisions
delivery of
profit balance identity and in line with
excellent and
growth sheet reputation the strategic
appropriate
objectives
customer focus.

Our Strategy
MBL’s risk management activities are
an integral part of strategy design and
execution. New strategic initiatives
may open exciting opportunities,
but the expected rewards must be
balanced against the related risks.
The digitalization of the banking
environment does bring along risks
not encountered before. MBL keeps
track of external developments
and closely monitors how future
risk might impact the realization of
our strategic objectives. Regular,
structural top-down and bottom-up
risk assessments are performed to
identify various types of risks, and
specific stress testing are conducted
to calculate the impact of adverse
scenarios. An integrated overview of
these risks, changes and measures
taken to address them are discussed
periodically in the Executive Risk
Management Committee (ERMC) &
Board Risk Management Committee
(BRMC).
Risk Appetite
The Risk Appetite Statement
(RAS) specifies the Strategic Risk
Statements and defines the levels and
types of risk MBL is willing to accept
to achieve its business objectives in
line with Bangladesh Bank guidelines.
The RAS articulates MBL’s overall
desired level of risk exposure, both
quantitatively and qualitatively, and is
used in all business activities to assess
the desired risk profile against the
risk-reward profile of a given activity.
The several material types of risk
inherent in the bank’s business
model and strategic plan are actively
identified, assessed, mitigated and
monitored. Nevertheless, unforeseen
developments could always impede
the overall business plan. On an
aggregated level however, the risk
appetite is articulated for capital,
profitability and reputational impact.
The risk appetite is embedded across
the Bank within principles, policies,
indicators, limits and controls. The
combination of a breach management
process and appropriate governance
ensures an adequate and timely
response. The risk appetite is
reviewed and updated at least once
a year, depending on internal or
external events with material impact.

Core Risk Management
Credit Risk Management
MBL continues to review and update
the credit policy and a balanced
growth of the credit portfolio that
suits the strategy and the reputation
of the Bank. This implies that (i)
the credit portfolio maintains an
overall acceptable risk profile, (ii)
the credit portfolio has consistent
growth and (iii) capital and funding
are used selectively. MBL maintains
a profitable credit portfolio with an
acceptable risk profile in order to limit
the impact of nonperforming loans
on the profitability and reputation of
the bank.
The size of our credit portfolio is
relatively stable and supported by
positive local economies, the quality
is much improved, evidenced by a
Credit Risk Concerns & Mitigation Plan (Operational Level)
Key Risk
Portfolio Growth
Credit Concentration
Security/Collateral/margin Status
Loan Categorization &
Classification
Documentation Lapses
Unplanned conversion & undrawn
Regulatory Adherence Single borrower limit, Environmental Risk rating
Market Risk
The market risk Management is
based on MBL’s market risk appetite
for Capital Market Exposure and
Treasury function. These are the
main components with trading or
banking books exposed to market
risks for Mercantile Bank. Market
risks within other areas are limited.
MBL aims for a modest exposure
to market movements in its trading
environment. Market risk entails that
the bank’s earnings and/or economic
value may be negatively affected by
changes in interest rates or market
price. Exposure to a certain degree
of market risk is inherent in banking
and creates the opportunity to realize
profit and value.
MBL’s risk appetite for interest
rate risk follows from its business
strategy. Being a rock-solid bank
is one of the key themes of MBL’s
business strategy. We aim to generate
predictable net interest income and
to protect the bank in times of stress.
We accept an appropriate level of
slightly reduction to nonperforming
loans (NPL). Credit portfolio quality
improved despite simultaneous
tightening of standards in our credit
risk management process to better
reflect portfolio quality. Prudent
credit acceptance policy is adopted
by careful assessment of clients and
their ability to repay the loan granted
to them. As a result, the risk profile of
the loan portfolio is acceptable even
in less-than-favourable economic
circumstances. MBL forms long-
term relationship that benefits
both the clients and the bank alike.
To further support the pace of
portfolio improvement specific sector
diversification strategies have been
designed to further reduce the NPL.
MBL continuously monitors its clients’
position and reconsiders the strategy
accordingly.
Reference Tool Reference Tool (example)
Reason for growth
HHI, Gini, SEI, SI
Coverage Assessment, Stress Testing
Transition Matrix, Reason for classification,
Stress Testing, Foundation IRB approach
Audit report review
Separate product and periodic review
interest rate risk as an important
driver for the bank’s profit. However,
losses due to changes in interest
rates may never threaten the financial
stability of the bank. MBL is mainly
exposed to interest rate risk in the
banking environment as a result of
mismatches between the repricing
period of assets and liabilities.
Liquidity Risk
In order to optimize funding
availability and funding costs for our
customer requirement, MBL has high
quality and robust liquidity buffer. It
also has a diversified funding base in
terms of retail versus wholesale funds
and in terms of investors, instruments,
maturities, locations and currencies.
Liquidity risk is defined as a major risk
type at MBL. MBL’s policy is to finance
client assets using stable funding, by
which we mean funds that have been
entrusted by clients as well as long-
term wholesale funding. The Treasury
Division handles the day-to-day
liquidity position, the generation of
wholesale funding on the money and
RISK MANAGEMENT REPORT
An important principle in the
acceptance policy for business is
having thorough knowledge of our
clients. We understand our clients’
sector, business, management,
goals, financials, opportunities and
challenges and this helps us to
manage potential risk in the best
possible way. In addition, MBL closely
monitors development in the business
sectors in which its clients operate
so that it can properly assess their
financial performance. Corporate
sustainability also means sustainable
financing. Sustainability guidelines
have been established for the credit
process in addition to the use of
standard credit risk management
models. MBL also uses a wide range
of credit mitigation techniques in
order to reduce specific counterparty
credit risk.
Mitigation Process
MAT
Sectoral Lending Cap, Capital Allocation
MAT
MAT, Escalation, Crash program
Continuous follow-up, Capital allocation
Management Strategy & Capital Allocation
capital markets, and the structural
position.
Operational Risk
Exposure to operational risks is
an inevitable part of executing
business activities; MBL minimizes
this risk within the boundaries set
by the complexity and size of its
organization. Operational risks are
actively managed and controlled
by policies, procedures, limits and
controls including areas such as
Legal, Compliance, IT, Information
Security, Business continuity plan and
Sustainability. Furthermore, we were
able to keep the sum of operational
risk losses approximately 0.09% of
the annual gross income in 2019.
MBL has developed and implemented
an appropriate Risk and Control
Framework throughout the Bank.
Internal Control and Compliance
Division (ICCD) ensures that risks
resulting from inadequate or failing
processes, people, systems and/
or external events are managed
138 Mercantile Bank Limited
Annual Report 2019
within the accepted risk level. To
manage operational risk effectively,
an integrated, forward-looking
view is offered by the first Line
of Defence- risk owner (client-
facing departments), which is then
supported by the second Line of
Defence (Risk Management and
Compliance).
MBL performs a structured and
integrated risk analysis to integrally
manage its risk and control
framework. Performing this risk
assessment across all entities helps to
ensure that MBL’s risk management
system is sound and in compliance
with regulatory requirements. Risk
Management activities are included
in the following process steps:
Step 1 –Communicate and Consult
Step 2 –Establish the context
Step 3 –Identify the risks
Step 4 –Analyze the risks
Step 5 –Evaluate the risks
Step 6 –Treat the risks
Step 7 –Monitor the risks
Strategic Risk
Strategic risk induces operational
losses that consequentially hamper
the capital base. In this context,
strategic risk possesses a significant
space in the ICAAP of our bank.
In 2019 we were able to keep: our
classified loans at below the optimum
level of 5%, written-off loans as %
of total classified loans- below the
optimum level of 15% and Interest
waiver as % of total classified loans-
below the optimum level of 5%. For
better managing our strategic risk,
we are also focused on keeping the
operating expenses as % of operating
income- below the optimum level up
to 45% and classified loan recovery as
% of total classified loans- above the
optimum level of 20%.
Compliance Risk
All our activities must be carried
out with honesty, sincerity, care and
reliability. They must comply with
relevant laws, regulations and MBL’s
Code of Conduct. It is essential
that we conduct our business with
integrity. All our stakeholders count
on this. It is our ambition to provide
customers with the best possible
service, while always exercising
due care. Acting with integrity
and adhering to relevant laws and
regulations is a responsibility of all
MBL employees. Moreover, in order
to mitigate compliance risk, our ICC
Division comprises of three units as
per guidelines of Bangladesh Bank
such as - Audit Unit, Compliance Unit
and Monitoring Unit.
Money Laundering Risk
MBL is strongly committed to
preventing the use of the Bank’s
products and services for Money
Laundering and Terrorist Financing
purposes and to preventing violations
of Sanctions Regulations. In 2019,
MBL has stepped up its efforts in
this area and we will continue this
work in 2020. Activities are being
undertaken across the Bank to ensure
that we meet all regulatory standards
and that we achieve broad oversight
on and consistency in our approach.
This includes an upgrade of our
transaction monitoring capabilities
throughout the entire network. The
bank has a designated Chief Anti
Money Laundering Compliance
Officer (CAMLCO) at Head Office
and Branch Anti Money Laundering
Compliance Officers (BAMLCO) at
branches who independently review
the transactions of the accounts
to verify suspicious transactions.
Last year, the Bank updated and
reviewed its guidelines on Anti Money
Laundering and Combating financing
of terrorism which received enormous
appreciation from the regulatory
bodies for the quality of its contents.
The convergence of several
remarkable changes in the world
markets propelled Money Laundering
to become a worldwide problem.
MBL considers Money Laundering
and Terrorist Financing Risk not only
a compliance requirement of the
regulatory bodies but also as one of
its core business values. The Board
of Directors and the Management are
firmly committed to combat Money
Laundering activities.
Environmental and Climate
Change Risk
MBL is always vigilant to manage
Environmental and climate change
risks that may arise from the
uncertainty or probability of losses
that originates from any adverse
environmental or climate change
events (natural or manmade) and/or
the non- compliance of the prevailing
national environmental regulations.
This is a facilitating element of credit
risk arising from environmental issues.
These can be due to environmental
impacts caused by and / or due to the
prevailing environmental conditions.
Environmental and climate change
risk can hamper the business stability
of the borrowers in respect of both-
i) profitability and ii) reputation.
Consequentially, the extent of risk
for the banks will be higher. Sector
Environmental Due Diligence (EDD)
Check List specified in Guidelines
on Environmental Risk Management
(ERM) issued vide BRPD Circular
No. 01/2011 dated 30/01/2011 is used
to determine this risk. For the loans
under the sectors specified in the
guidelines and which will have EnvRR
of ‘High (H)’ was considered for the
capital charge against this risk.
Cyber Security Risk
The bank is becoming more
vulnerable to cyber threats due to
the increasing reliance on computers,
networks, programs, and data
globally. Data breaches, a common
cyber attack, have massive negative
business impact and often arise from
insufficiently protected data. MBL is
in good position and always vigilant
to protect the customers’ trust
placed on us by strengthening cyber
security measures. To manage this
cyber security risk, MBL took many
effective initiatives during the year
2019 like formation of ICT Security
Unit, Celebration of Cyber Security
Awareness Month (CSAM) of October
2019 and changes of ICT Security
policies and guidelines.
Outlook 2020
As in 2019, MBL will have to remain
prepared in 2020 for what is expected
to remain in a single digit interest rate
environment. Improving our income
being challenging in such conditions,
we will have to focus on recovery and
book only quality assets to maintain
profitability. Further execution of
restructuring measures will also
reduce the overheads more, lowering
operating expenses in 2020. Higher
capital requirements are lowering
returns on equity in the banking
sector. Long-term measures are being
taken to manage operating costs and
improve net profit, but efficiency
and effectiveness must undergo
further improvement to reach our
performance targets in 2020.
Mati ul Hasan
Additional Managing Director and CRO

REPORT ON RISK BASED
CAPITAL (BASEL III)
Introduction
To strengthen global
capital and liquidity rules
with the goal of promoting a more
resilient banking sector, the Basel
Committee on Banking Supervision
(BCBS) issued Basel III: A global
regulatory framework for more
resilient banks and banking systems.
The objective of the reforms was to
improve the banking sector’s 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. Due to the impact
of the 2008 Global Financial Crisis
on banks, Basel III was introduced
The Basel III principle stands on the following three pillars-
PILLAR-I
Minimum
Capital
Requirement
Based on Credit Risk,
Market Risk and
Operational Risk
inherent with Banking
Business Banks must
hold minimum regula-
tory capital
to improve the banks’ ability to
handle shocks from financial stress
and strengthen their transparency
and disclosure. Thus, Basel III is an
internationally agreed set of measures
developed by the Basel Committee
on Banking Supervision in response
to the financial crisis of 2007-09.
The measures aim to strengthen
the regulation, supervision and risk
management within the banking
industry.
Basel III is part of the continuous effort
to enhance the banking regulatory
framework. It was developed in
response to the deficiencies in
financial regulation revealed by the
financial crisis of. It is intended to
BASEL III
PILLAR-II
Supervisory
Review Process
(SRP)
The key principle of SRP
of Risk Based Capital
Adequacy Framework 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”.
RISK MANAGEMENT REPORT
strengthen Bank capital requirements
by increasing bank liquidity and
decreasing bank leverage. It seeks to
improve the banking sector’s ability
to deal with financial stress, improve
risk management, and strengthen
the banks’ transparency. A focus of
Basel III is to foster greater resilience
at the individual bank level in order
to reduce the risk of system-wide
shocks. The Basel Committee raised
the resilience of the banking sector by
strengthening the regulatory capital
framework, building on the three
pillars of the Basel III framework. The
reforms raise both the quality and
quantity of the regulatory capital
base and enhance the risk coverage
of the capital framework.
PILLAR-III
Market Discipline
The aim of introducing
Market discipline in the
revised 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.
140 Mercantile Bank Limited
Annual Report 2019
In line with International standard,
Bangladesh Bank vides its BRPD
Circular 18 dated December 21, 2014
issued ‘Guidelines on Risk Based
Capital Adequacy’ for Banking sector
in Bangladesh. To cope up with the
international best practices and
to make the bank’s capital shock
absorbent, Bangladesh Bank issued
transitional arrangements for Basel III
implementation in Bangladesh. Basel III
is not merely a reporting system rather
it is a new risk management technique
for the Bank. Consequence the above
Mercantile Bank has also put special
attention to implement Basel III inside
the Bank. In view of the above MBL has
formed “Basel Implementation Unit” as
per Bangladesh Bank guidelines which is
under a supervisory committee includes
top management of the Bank. Bank
has also formed a Supervisory Review
Process (SRP) team to participate the
dialogue with the Supervisory Review
Evaluation Process (SREP) team of
Bangladesh Bank for measuring the
adequate capital requirement.
Market Discipline
and its Purpose
Market Discipline requires
the bank activities to be transparent
to the general public. Market discipline
is a market-based promotion of the
transparency and disclosure of the risks
associated with a business or entity.
These disclosures are intended to
inform the general market participants
about the scope of application of new
capital adequacy framework, capital of
the Bank, risk exposures of the Bank,
Bank’s risk assessment processes, its
risk mitigation strategies and practices
and capital adequacy of Bank through
disclosure format in line with the
Bangladesh Bank guidelines. It is an
integral part of the New Basel Capital
Accord and enhances the operation of
its other components.
Bangladesh Bank has specified the
standard of disclosure framework
through guidelines. The standard aim
is to enhance the transparency in
Bangladeshi financial market by setting
minimum requirement for the disclosure
of information on the risk management
practice and capital adequacy. The
purpose of Market discipline in the
Revised Capital adequacy Framework
is to complement the minimum capital
requirements and the supervisory
review process. As a part of Basel-
III compliance, Pillar III- Market
Discipline is formulated with a view 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. For the said
purpose, Mercantile Bank developed a
set of disclosure framework containing
the key pieces of information on the
assets, risk exposures, risk assessment
processes, and hence the capital
adequacy to meet the risks.
Consistency and
Validation
Mercantile Bank has a
Board approved formal disclosure
framework including the qualitative
and quantitative disclosures. The
‘Qualitative Disclosures’ will provide
a general summary of a Bank’s risk
management objectives and policies,
reporting system and definitions.
And the ‘Quantitative Disclosures’
are made on the basis of both Solo
and Consolidated audited financial
statements of Mercantile Bank and
its subsidiaries as at and for the
year ended 31 December 2019. The
financial statements of the Bank have
been prepared in accordance with
the Banking Companies Act 1991
(amended in 2013) and International
Financial Reporting Standards (IFRS)
adopted by the Institute of Chartered
Accountants of Bangladesh (ICAB) and
related circulars/instructions issued
by Bangladesh Bank from time to
time. Besides, Bank complied with the
requirements of rules and regulations
from various regulatory authorities
including Government bodies, BSEC,
DSE and CSE.
Mercantile Bank believes that the
information of this disclosure does
not conflict with requirements
under accounting standards as set
by Bangladesh Bank from time to
time. Moreover, Banks’ disclosures
are consistent with how senior
management and the Board of
directors access and manage the risks
of the Bank. Information presented in
the ‘Quantitative Disclosures’ section
can easily be verified and validated with
corresponding information presented
in the consolidated and solo audited
financial statements of MBL available
on the website of the Bank. Under
Minimum Capital Requirement, Bank
use following specified approaches/
methodologies for measuring the
various risks such as Credit Risk, Market
Risk, Operational Risk as per Basel III
guidelines (Ref: BRPD circular no.18,
dated December 21, 2014)-
Credit Risk: Standardized
Approach.
Market Risk: Standardized
Approach.
Operational Risk: Basic
Indicator Approach.
The disclosure is prepared once a
year. It is also made available for the
stakeholders as a link titled ‘Disclosures
on Risk Based Capital (Basel III)’ on
the home page of the Bank’s website
(www.mblbd.com).
Disclosure Framework
Timely and consistent
implementation of Basel III is
fundamental to a sound and accurately
functioning banking system that is able
to support economic recovery and
growth on a sustainable basis. The public
disclosure of prudential information is
an important component of Basel III. In
line with Bangladesh bank prescribed
standard Disclosure Framework,
Mercantile Bank has developed a set of
formal disclosure framework approved
by the Board of Directors of the Bank
which includes the qualitative and
quantitative disclosures of the Bank.
The Disclosure containing the key
pieces of information on the assets, risk
exposures, risk assessment processes,
and hence the capital adequacy to meet
the risks. In Qualitative Disclosures,
Bank provides a general summary of
a bank’s risk management objectives
and policies, reporting system and
definitions. For each separate risk
area (e.g. credit, market, operational,
banking book interest rate risk, equity)
bank described their risk management
objectives and policies. In Quantitative
Disclosures Bank provides financial
information on the basis the audited
financial statements of the Bank and
its subsidiaries as at and for the year
ended 31 December 2019.

In line with the Bangladesh Bank
guidelines, following detailed qualitative
and quantitative disclosures are
a) Scope of application
Qualitative Disclosures
(a) The name of the corporate entity in Mercantile Bank Limited (MBL)
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).
(c) Any restriction, or other major Not applicable.
impediments, on transfer of funds or
regulatory capital within the group.
Quantitative Disclosures
(d) The aggregate amount of surplus Not applicable.
capital of insurance subsidiaries
(whether deducted or subjected to
an alternative method) included in
the capital of the consolidated group.
RISK MANAGEMENT REPORT
provided covering Scope of application, Rate Risk, Market Risk, Operational
Capital structure, Capital adequacy, risk, Leverage Ratio, Liquidity Ratio,
Credit Risk, Equity Position, Interest Remuneration of the Bank etc.
MBL stated its journey on May 20, 1999 and commenced its business on
June 02, 1999 as a public limited company in Bangladesh. It was listed in
DSE and CSE on February 16, 2004 and February 26, 2004 respectively.
MBL has 148 branches as on December 31, 2019. 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) formed on 27 June 2010 and
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.
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.
142 Mercantile Bank Limited
Annual Report 2019

b) Capital Structure

Qualitative Disclosures
(a) Summary information on the terms The regulatory capital under Basel-III is composed of;
and conditions of the main features
of all capital instruments, especially in Tier 1 (going-concern capital) and
the case of capital instruments eligible
for inclusion in CET 1, Additional Tier Tier 2 (gone-concern capital)
1 or Tier 2.
Tier 1 capital is composed of;

(a) Common Equity Tier 1 (CET-1) and

(b) Additional Tier 1 (AT-1)

Conditions set by BB for maintaining Regulatory Capital are as below;

Common Equity Tier 1 of at least 4.50% of the total RWA.

Tier 1 capital will be at least 6.00% of the total RWA.

Minimum CRAR of 10% of the total RWA.

Additional Tier 1 capital can be admitted maximum up to 1.5% of the

total RWA or 33.33% of CET1, whichever is higher.

Tier 2 Capital can be admitted maximum up to 4.0% of the total RWA

or 88.89% of CET1, whichever is higher.

In addition to minimum CRAR, Capital Conservation Buffer (CCB) is being

introduced which maintained in the form of CET1 from year 2015.

In order to arrive at the eligible regulatory capital for the purpose

of calculating CRAR, banks are required to make some regulatory
adjustments/ deductions from Tier 1 and Tier 2 Capital.

Quantitative Disclosures
(b) The amount of Regulatory capital, with separate disclosure of:

 (BDT in Crore)

Particulars Solo Consolidated

Tier 1 Capital
A Common Equity Tier 1 Capital (CET-1)
Fully Paid Up Capital 937.16 937.16
Non-repayable Share Premium account 0.00 0.00
Statutory Reserve 787.91 787.91
General Reserve 140.00 140.00
Retained Earning 151.09 149.22
Dividend Equalization Account 4.57 4.57
Minority Interest in Subsidiaries 0.00 5.01
Others (If any item approved by Bangladesh Bank) 0.00 0.00
Sub-Total (A) 2,020.72 2,023.86
Regulatory Adjustments/Deductions from CET-1 (10.83) (10.83)
Total Common Equity Tier 1 Capital (CET-1) 2,009.89 2,013.03
B Additional Tier-1 Capital (AT-1) 0.00 0.00
Total Tier 1 Capital (A+B) 2,009.89 2,013.03
 RISK MANAGEMENT REPORT

Particulars Solo Consolidated

Tier 2 Capital
General Provision 860.09 860.09
Subordinated Debt/Instruments 420.00 420.00
Revaluation Reserves (as on 31 December, 2014) 54.57 54.57
Sub-Total 1,334.66 1,334.66
Regulatory Adjustments/Deductions from Tier 2 Capital (54.57) (54.57)
Total Tier-2 capital 1,280.09 1,280.09
Total Eligible Capital (Tier 1+Tier 2) 3,289.98 3,293.12

(c) Regulatory Adjustments/Deductions from Capital

Particulars Solo Consolidated

Regulatory Adjustments/Deductions from CET-1 Capital
Shortfall in provisions required against investment in Share (Quoted Share excluding
10.83 10.83
director Equity Shares)
Regulatory Adjustments/Deductions from Tier 2 Capital
50% of Revaluation Reserves for Fixed assets, Securities & Equity (phase-in deductions 54.57 54.57
as per Basel III guideline)

(d ) Total Eligible Capital

Particulars Solo Consolidated

Total Tier 1 Capital (CET-1 Capital + AT-1 Capital) 2,009.89 2,013.03
Total Tier-2 capital 1,280.09 1,280.09
Total Eligible Capital (Tier 1 + Tier 2) 3,289.98 3,293.12

c) Capital Adequacy

Qualitative Disclosures
(a) A summary discussion of the Bank’s
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 2019 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 to
Risk weighted assets Ratio (CRAR) i.e.

Total Eligible Regulatory Capital x 100

CRAR =

Credit RWA + Market RWA + Operational RWA

The Bank’s CRAR on the basis of Solo and Consolidated are 13.92% and
13.88% respectively against minimum requirement of 10% as on December
31, 2019. MBL’s policy is to manage and maintain its capital at an adequate
level to raise its CRAR well above than minimum requirement in line with
Basel III. 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.
144 Mercantile Bank Limited
Annual Report 2019

Quantitative Disclosures
 (BDT in Crore)

Particulars Solo Consolidated

(b) Capital Requirement for Credit Risk 2,088.76 2,096.98
(c) Capital Requirement for Market Risk 33.86 33.86
(d) Capital Requirement for Operational Risk 241.51 242.57
(e) Individual Capital Ratio
Capital to Risk Weighted Assets Ratio (CRAR) 13.92% 13.88%
CET-1 Capital to RWA Ratio 8.50% 8.48%
Total Tier-1 Capital to RWA Ratio 8.50% 8.48%
Tier-2 Capital to RWA Ratio 5.42% 5.39%
(f) Capital Conservation Buffer (2.50% of RWA) 591.03 593.35
(g) Available Capital under Pillar 2 Requirement 334.82 326.36

d) Credit Risk

Qualitative Disclosures
(a) The general qualitative disclosure requirement with respect to credit risk, including:
i) Definition As per guideline of Bangladesh Bank, All Loans and Advances are grouped into 4 (four) categories namely-
of past Continuous Loan, Demand Loan, Fixed Term Loan and Short-Term Agricultural Credit & Micro Credit for the
due and purpose of classification.
impaired (for Any continuous Loan will be classified as:
accounting Sub-standard- if it is past due/overdue for 03 (three) months or beyond but less than 09 (nine) months.
purposes); Doubtful- if it is past due/overdue for 09 (nine) months or beyond but less than 12 (twelve) months
Bad/Loss- if it is past due/overdue for 12 (twelve) 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 09 (nine) 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 09 (nine) months or beyond but not over 12 (twelve) 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 12 (twelve) 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:
A. 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 09 (nine) 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 12
(twelve) 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”.
B. 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).
 RISK MANAGEMENT REPORT

d) Credit Risk
Qualitative Disclosures
ii) Description of As per Bangladesh Bank’s guideline, MBL maintains General and Specific provision in the following way:
approaches followed Particulars Rate (%)
for specific and General provision on all unclassified loans/SMA of Small and Medium Enterprise (SME) 0.25%
general allowances General provision against all unclassified loans/SMA (other than loans under 1%
and statistical Consumer Financing, Loans to Brokerage House, Merchant Banks, Stock Dealers
methods; etc., Special Mention Account as well as SME Financing.)
General provision on the unclassified/SMA amount for Consumer Financing (other 5%
than Housing Finance and Loans for professionals to set up business)
General provision on the unclassified/SMA amount for Housing Finance and Loans 2%
for professionals to set up business under consumer financing scheme
General provision on the unclassified/SMA amount for Loans to Brokerage House, 2%
Merchant Banks, Stock Dealers, etc.
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 100%
iii) Discussion of the The Bank has adopted numerous strategies to manages its credit risk including:
Bank’s credit risk Creating credit risk awareness culture
management policy 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/Audi 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
(b) Total gross credit risk Total Gross Credit Risk exposures broken down by major types of credit exposure as on
exposures broken December, 2019 is as under:
down by major types Particulars BDT in Crore
of credit exposure. Term Loan 7,938.67
Time Loan 1,945.95
Packing Credit 260.84
Loan against Trust Receipt (LTR) 814.08
Lease Finance 118.86
EDF Loan 1,121.33
Loan General 18.16
House Building Loan 568.46
Hire Purchase 1,223.47
Payment Against Documents (PAD) 42.99
Cash Credit (Hypo) 1,157.77
Overdraft 3,212.00
Home Loan Scheme Refinance 0.14
Personal Loan 32.48
Consumer Credit Scheme 0.52
Consumer Finance 237.08
Staff Loan 108.72
Credit Card 48.25
Small and Medium Enterprise (SME) Loan 3,220.73
Agricultural Credit 398.83
Other Credit Schemes 0.34
Sub Total 22,469.67
Bill Purchased and Discounted 1,219.37
Total 23,689.04
146 Mercantile Bank Limited
Annual Report 2019

(c) Geographical Geographical Distribution of total exposure as on December, 2019 is as under:

distribution of Particulars BDT in Crore
exposure, broken Urban
down in significant Dhaka 16,941.05
areas by major types
Chittagong 3,471.66
of credit exposure
Rajshahi 1,252.33
Sylhet 101.46
Khulna 204.93
Rangpur 346.26
Barisal 235.23
Mymensingh 38.36
Sub-Total (A) 22,591.27
Rural
Dhaka 411.43
Chittagong 526.56
Rajshahi 118.18
Sylhet 13.63
Khulna -
Rangpur 16.38
Barisal 11.58
Mymensingh -
Sub-Total (A) 1,097.77
Grand Total (A+B) 23,689.04
(d) Industry or Industry or counterparty type distribution of exposures, broken down by major types of credit
counterparty type exposure.
distribution of Particulars BDT in Crore
exposures, broken
Education
down by major types
of credit exposure (School/College, University, Research institute) 32.69
Health 24.63
Agriculture 398.83
Commodities (Sugar/ Edible Oil/ Wheat/ Rice/ Dal/ Peas/ Maize etc), Food &
1,964.64
Beverage
Trade Finance 3,664.86
Transport 121.65
Shipping 14.67
Textile (Excluding IDBP) 1,125.04
Textile (IDBP) 180.47
Readymade Garments (RMG) [excluding IDBP] 4,293.53
Readymade Garments (RMG) [IDBP] 27.64
Tele communication 94.16
IT & Computer/Trade 36.85
Power & Fuel 763.37
Real Estate 770.87
Cement 108.56
Chemicals 446.36
Leather & Leather products 441.84
Plastic & Plastic products 105.50
Electrical & Electronic goods 453.78
Paper & Packaging 514.21
Jute & Jute products 318.46
Glass & Glass products -
Ceramics (Table ware, Sanitary ware, Tiles etc.) 111.43
Iron & Steel 2,027.94
Engineering & Construction 731.30
Contractor Finance 404.70
Capital Market Intermediaries 62.36
Backward Linkage 389.59
Consumer & Retail Product 811.00
NBFI 904.93
Service (Hotel, Restaurant, Travelling, Tickets, etc.) 165.83
Others 2,177.34
Total 23,689.04
 RISK MANAGEMENT REPORT

(e) Residual Residual contractual maturity breakdown of total exposure as on December, 2019 is as under:
contractual
Particulars BDT in Crore
maturity
breakdown of the Up to 1 (one) month 3,897.60
whole portfolio,
Over 1 (one) month but not more than 3 (three) months 3,055.93
broken down by
major types of Over 3 (one) months but not more than 1 (one) year 7,278.82
credit exposure Over 1 (one) year but not more than 5 (five) years 4,411.35
Over 5 (five) years 5,045.35

Total 23,689.04
(f) By major industry and counter party type:
i) Amount of Impaired Loan under 4 (four) broad categories as on December 31, 2019 is as under
impaired loans and
if available, past Particulars BDT in Crore
due loans, provided Continuous Loan 6,573.53
separately
Demand Loan 6,299.71
Term Loan 10,808.15

Short Term Agro Credit and Micro Credit 7.65

Total 23,689.04
ii) Specific and According to Bangladesh Bank’s guideline, Specific and general provisions made as on
general provisions; December 31, 2019 is as under
and Particulars BDT in Crore
General Provision (including SMA & OBU) 761.43

Specific Provision (SS, DF, Bad/Loss) 451.99

Provision for Off-balance Sheet Exposure 98.66

iii) Charges for During the year 2019 following provisions were made on un classified, classified and off-
specific allowances balance sheet exposure as per Bangladesh Bank’s guideline
and charge-offs Particulars BDT in Crore
during the periods
Provision against Un Classified Loans 349.22
Provision against Classified Loans 10.75
Other Provision (Off Balance Sheet Items) (1.19)
(g) Gross non- Gross non-performing assets as on December 31, 2019 is as under
performing assets
(NPAs): Particulars BDT in Crore
Gross non-performing assets (NPAs):
Non-performing Assets (NPAs) to Outstanding Loans & Advances 4.86%

Movement of Non Performing Assets

Opening balance 1,080.24

Additions 70.02

Reductions -

Closing Balance 1,150.26

Movement of specific provisions for NPAs

Opening balance 476.39
Recoveries of Amounts previously Write-off 0.51

Provisions made during the period 10.75

Write-off (35.66)

Write-back of excess provisions -

Closing Balance 451.99

148 Mercantile Bank Limited
Annual Report 2019

e) Equities: Disclosure for Banking Book Positions

Qualitative Disclosures
(a) Differentiation between holdings on
which capital gains are expected and
those taken under other objectives
including for relationship and
strategic reasons.
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.
The general qualitative disclosure requirement with respect to equity risk,
including:
MBL’s 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)
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.

Quantitative Disclosures
 (BDT in Crore)

Particulars Solo Consolidated

Value disclosed in the balance sheet of investment, as well as the fair value of those investments; for quoted
(b) securities, a comparison to publicly quoted share values where the share price is materially different from fair
value.
Quoted shares 53.84 53.84

Un Quoted shares 483.99 483.99

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

Realized gain (losses) from equity investments 0.32 0.32

(d) Total unrealized gains (losses) 60.00 60.00

Total latent revaluation gains (losses) 0.00 0.00

Any amount of the above included in tier 2 Capital 0.00 0.00

(e) Market value of investment in equities as on December 31, 2019 113.85 113.85

Specific Risk- Capital Requirement is 10% of the said value 11.38 11.38

Market value of investment in equities as on December 31, 2019 113.85 113.85

General Risk- Capital Requirement is 10% of the said value 11.38 11.38

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

Qualitative Disclosures
(a) 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.
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
bank’s profitability adversely with the increment of interest rate and negative
Duration Gap increase the bank’s profitability with the reduction of interest rate.

Qualitative Disclosures
(b) The increase (decline) in
earnings or economic value (
or relevant measure used by
management) for upward and
downward rate shocks according
to management’s method for
measuring IRRBB, broken down
by currency (as relevant)
g) Market Risk
Qualitative Disclosures
(a) Views of BOD on trading/
investment activities
Methods used to measure Market
risk
Market Risk Management system
Policies and Processes for
mitigating market risk
RISK MANAGEMENT REPORT
Increase of Interest Rate will affect the Bank in the following ways:
Particulars Minor Shock Moderate Shock Major Shock
Magnitude of Shock 1% 2% 3%
Duration Gap (Years) 0.77 0.77 0.77
Total Regulatory Capital 3,289.98 3,289.98 3,289.98
Risk Weighted Assets 23,641.26 23,641.26 23,641.26
CRAR 13.92% 13.92% 13.92%
Revised Capital (After Shock) 3,067.26 2,844.53 2,621.81
Revised RWA 23,319.47 23,319.47 23,319.47
Revised CRAR (%) 13.15% 12.20% 11.24%
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
Standardized (rule based) Approach where capital charge for interest rate risk,
price and foreign exchange risk is determined separately. For instance, MBL’s
total market risk is calculated as below:
i) 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.
Policy for managing Market Risk has been set out by the Board of Directors of
the Bank where clear instructions 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:
150 Mercantile Bank Limited
Annual Report 2019

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 Bank’s 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

Bank’s 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 separated from Treasury Front Office

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.

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 Bank’s guidelines.
Such valuations 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 loss 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.
 RISK MANAGEMENT REPORT

Quantitative Disclosures
 (BDT in Crore)

Particulars Solo Consolidated

Interest Rate Risk 3.30 3.30

Equity Position Risk 22.77 22.77

Capital requirement for:
Foreign Exchange Risk 7.78 7.78

Commodity Risk 0.00 0.00

Total Capital Requirement for Market Risk 33.86 33.86

h) Operational Risk
Qualitative Disclosures
(a) Views of BOD on system to reduce All the policies/guidelines including Internal Control and Compliances and
Operational Risk 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

Views of BOD on system to reduce The BOD of the Bank is always keen to provide a competitive, attractive and
Operational Risk 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 nurtures them until transformation to a ‘Human
Capital’ of highest quality. Besides, the Bank’s name and fame as top tier
Performance gap of executives and Bank of the country acts as moral boosting factor for the employees. An
staffs 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 No potential external events have been detected yet at the time of reporting
of the capital accord.
Policies and processes for Operational Risks results from inadequate or failed internal process, people
mitigating operational risk 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 capital Operational Risk is defined as the risk of loss resulting from inadequate or
charge for operational risk 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.
152 Mercantile Bank Limited
Annual Report 2019

Quantitative Disclosures
 (BDT in Crore)

Particulars Solo Consolidated

Capital requirements for Operational Risk 241.51 242.57

i) Liquidity Ratio
Qualitative Disclosures
(a) Views of BOD on system to reduce Board of Directors of the Bank always has been giving utmost importance to
Liquidity Risk minimize the liquidity risk of the bank. In order to reduce liquidity risk strict
maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Reserve (SLR)
are also being emphasized on a regular basis.

Apart from these as a part of Basel-III requirement Liquidity Coverage Ratio

(LCR) and Net Stable Funding Ratio (NSFR) are also maintained under the
guidance and sharp insight of our honorable Board of Directors.

Methods used to measure In order to measure liquidity risk various methods are being used which are as
follows:
Liquidity Risk
GAP analysis is being done regularly that deals with the mismatch of assets
and liabilities in different time buckets like 0-30 days, 31-90 days, 91-180 days,
181-270 days, 271-365 days and beyond 1 year. In our monthly ALCO paper
we show this GAP analysis based on which different strategic decisions are
taken in order to reduce liquidity risk that may arise due to the mismatch
between assets and liabilities.

Liquidity Risk Management System
Cash flow forecasting is another technique to measure liquidity risk that may
arise due to future cash flow mismatch. In our monthly ALCO paper we
show this cash flow forecasting.
As a part of liquidity risk management system we have board approved liquidity
contingency plan. In this liquidity contingency plan we have incorporated all the
strategic decision to tackle any sort of liquidity crisis. As per the Bangladesh
Bank ALM guideline this liquidity contingency plan is reviewed annually which is
approved by the Board of Directors.

Policies and processes for mitigating We have board approved policies for mitigating liquidity risk. This policy is
Liquidity Risk reviewed annually and placed before the Board of Directors for their kind
approval.

Quantitative Disclosures
 (BDT in Crore)

Liquidity Coverage Ratio (LCR) 149.43%

Net Stable Funding Ratio (NSFR) 110.03%

Stock of High quality liquid assets 6,108.48

Total net cash outflows over the next 30 calendar days 4,087.85

Available amount of stable funding 25,979.49

Required amount of stable funding 23,610.97


j) Leverage Ratio
Qualitative Disclosures
(a) Views of BOD on system to
reduce excessive leverage
Policies and processes for
mitigating excessive on and
off balance sheet leverage
Approach for Calculating
exposure
Quantitative Disclosures
Particulars
Leverage Ratio
On balance sheet exposure
Off balance sheet exposure
Total exposure
(After deduction from On and Off balance sheet exposure)
RISK MANAGEMENT REPORT
Leverage is an inherent and essential part of modern banking business. In other words,
banks are highly leveraged organizations which facilitate leverage for others. Leverage,
in simple terms, it is the extent to which a bank funds its assets with borrowings rather
than capital. More debt relative to capital means a higher level of leverage.
Banks have a range of financial incentives to operate with high leverage. But it creates
risk when it crosses a certain point. Therefore, the board views that sound prudential
controls are needed to ensure that the organization maintains a balance between its
debt and equity. The board also believes that the bank should maintain its leverage
ratio on and above the regulatory requirements which will eventually increase the public
confidence on the organization.
The leverage ratio is a non ¬risk based approach to the measurement of leverage. The ratio
acts as a ‘backstop’ against the risk-based capital requirements and is also designed to
constrain excess leverage. The leverage ratio is intended to achieve the following objectives:
a) Constrain the build-up of leverage in the bank
b) Reinforce the risk based requirements with an easy to understand and a non-risk based
measure.
Under Basel III, the Bank has to maintain a minimum Tier 1 Leverage ratio of 3% is being
prescribed both at solo and consolidated level.
To manage excessive leverage, the bank follows all regulatory requirements for capital,
liquidity, commitment, Advance Deposit Ratio (ADR), Maximum Cumulative Outflow (MCO),
large exposures as well as risk management which are eventually reinforcing standards
set by Bangladesh Bank. The aim is to ensure that the high leverage inherent in banking
business models is carefully and prudently managed.
Leverage ratio refers to the ratio between Bank’s Tier 1 capital (as numerator) and total
exposure (as denominator). Total exposure includes both balance sheet exposures and
off-balance sheet exposures after related deductions.
Tier 1 Capital (after related deductions)
Leverage Ratio=
Total Exposure (after related deductions)
The capital measure for the leverage ratio is based on the Tier 1 capital after related
deductions.
The exposure measure for the leverage ratio follows the accounting measure of
exposure. In order to measure the exposure consistently with financial accounts, the
followings
are applied by the bank:
On balance sheet, non-derivative exposures will be net of specific provisions and
valuation adjustments.
Physical or financial collateral, guarantee or credit risk mitigation purchased is not
considered to reduce on-balance sheet exposure.
Netting of loans and deposits is not considered.
Off-balance sheet (OBS) items are calculated by applying a uniform 100% credit
conversion factor (CCF). For any commitments that are unconditionally cancellable
at any time by the bank without prior notice, a CCF of 10% is applied.
(BDT in Crore)
Solo Consolidated
5.55% 5.54%
31,184.35 31,320.40
5,027.35 5,027.35
36,200.86 36,336.92
154 Mercantile Bank Limited
Annual Report 2019
k) Remuneration
Qualitative Disclosures
(a) Information relating to
the bodies that oversee
remuneration.
(b) Information relating to the
design and structure of
remuneration processes.
(c) Description of the ways in
which current and future risks measures; Keeping consideration of morality of the employees and posting better result,
are taken into account in the reduce turnover, retain the experienced and productive officials, free from biased etc.
remuneration processes.
(d) Description of the ways in
which the bank seeks to
link performance during a
performance measurement
period with levels of
remuneration.
The Human Resources Division comprises of 10 officials (2-executives and 8 officers)
including Divisional Head. Human Resources Division (HRD), Head Office of the Bank
oversees the remuneration and the Division is directly supervising by the Managing
Director of the Bank. The Board/Executive Committee of the Bank approves remuneration
policy time to time.
The Bank does not take any external consultants in preparing remuneration policy.
The remuneration policy shall apply to all regular employees of the Bank and ensures
its Pay Scale equal grade benefit of the employees as per their respective grade.
Remuneration Committee of the Bank also oversees its two subsidiaries i.e. MBL
Exchange House (UK) Limited and MBSL.
The senior management or employees who can take, or influence the taking of, material
risk for Bank or for a material business unit are considered as material risk takers, such
as;
Designation No of Employee No. of Employee
Managing Director & CEO 1
Additional Managing Director 1
Deputy Managing Director 5
Senior Executive Vice President 6
Executive Vice President 9
Senior Vice President 19
Mercantile Bank always considers employee benefits to make them comfortable and get
their commitment. Our human resources management comply a fair process by using
a performance based system. Our remuneration policy is the same in all branches and
head office level. There is no incident of discrimination has been occurred in terms of
remuneration provided to male and female employees.
We believe that competitive remuneration creates opportunity to maintain and retain
the performing and brilliant officers and executives in the Bank. The overall objective of
the Bank’s remuneration policy is to establish a framework for attracting, retaining and
motivating employees, and creating incentives for delivering long-term performance.
The following key risks have been taken into account when implementing remuneration
Now Banking industries becomes very competitive. In the Banking sector performance
plays a very vital role on determining someone’s remuneration. Performance appraisal is
closely linked to other HR processes like helps to identify the training and development
needs, promotions, incentives etc. The focus of the performance assessment is measuring
and improving the actual performance of the employee and also the future potential of the
employee. Its aim is to measure what an employee does.
The Bank has one set of Performance Appraisal Form (PAF) to evaluate the all categories
officials of the Bank. The PAF has 3 (three) parts;
Part-A: Basic information & Business development performance
Part-B: Measurable Performance Rating & PAF Rating
Part-C: Comments of Reporting Officer & Score sheet
Yearly increment, promotions, incentives bonus all had now been linked up with
individual performance. On the basis of grade of an individual of the Performance
Appraisal Report, the Bank takes decision in allowing yearly benefits.
At present the Bank does not consider such type of adjustment.

(e) Description of the ways in
which the bank seek to adjust which are as under;
remuneration to take account
of longer-term performance.
(f) Description of the
different forms of variable
remuneration that the bank
utilizes and the rationale for
using these different forms.
RISK MANAGEMENT REPORT
The Bank has various schemes in regards to deferred and vested variable remuneration
Provident Fund (PF)
Provident Fund is created to provide long term benefit to the employees of the Bank
as per Deed of Trust executed between the company and the trustees of the Provident
Fund. Entitlement to employer’s contribution happens on completion of 05 (three) years
of regular service and the Bank contributes equal amount of contribution as contributed
by the employee.
Gratuity
Entitlement to employer’s contribution happens on completion of 5 (five) years of
regular service in the Bank @ one basic pay for each completed year of service. This
increases depending on years of service completed more than 10 years.
Welfare Fund
These rules called the Mercantile Bank Limited Employees’ Welfare Fund Rules. This
benefits Provides to the employees of the Bank on their death, disability or retirement at
any time or for any other cause that may be deemed fit as per approved policy.
MBL’s compensation and benefits strategy has been devised to foster high performance
culture keeping market competitiveness in mind. Our 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
Provident fund
Gratuity fund
Disability benefit
Leave fare assistance
Career growth opportunities
Training and workshop (home and abroad)
Favorable work environment
Health care facilities
Loan facilities at a privileged rate etc.
Besides the above, 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. Bank is maintaining
a welfare fund taking contribution from both employees and 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. The Bank also extended the maternity leave from 03 months to
06 months for its female employees.
Variable pay, as the term denotes usually does not defer between the employees of the
same rank. Depending on experience, job performance and other traits, new hire in the
same rank are offered remuneration that varies from each other. While in the service
on recommendation and according to performance extra increment or bonus may be
awarded to the employees.
156 Mercantile Bank Limited
Annual Report 2019

Quantitative Disclosures
(g) Number of meetings held by the main body overseeing Meeting regarding overseeing the remuneration was
remuneration during the financial year and remuneration paid held on need basis.
to its member.
(h) Number of employees having received a variable remuneration 202 employees having received variable remuneration
award during the financial year. award during the financial year.
Number and total amount of guaranteed bonuses awarded There are 3 incentive bonuses and 2 festival bonuses are
during the financial year. awarded during the financial year.
Number and total amount of sign-on awards made during the
Nil
financial year.
Number and total amount of severance payments made
Nil
during the financial year.
(i) Total amount of outstanding deferred remuneration, split into
Nil
cash, shares and share-linked instruments and other forms.
Total amount of deferred remuneration paid out in the financial
Nil
year.
(j) Breakdown of amount of remuneration awards for the financial Breakdown of amount of remuneration awards for the
year to show: financial year 2019;

- Fixed and variable.

Basic salary 128.99
- Deferred and non-deferred. Allowances 75.70

- Different forms used (cash, shares and share linked Bonus 26.23
instruments, other forms).
Provision for Gratuity 15.00
Provident fund contribution 12.02
Nil

All the remunerations are provided in the form of cash

(k) Quantitative information about employees’ exposure to implicit (eg fluctuations in the value of shares or performance
units) and explicit adjustments (eg clawbacks or similar reversals or downward revaluations of awards) of deferred
remuneration and retained remuneration:
Total amount of outstanding deferred remuneration and Nil
retained remuneration exposed to ex post explicit and/or
implicit adjustments.
Total amount of reductions during the financial year due to Nil
ex post explicit adjustments.
Total amount of reductions during the financial year due to Nil
ex post implicit adjustments.
 RISK MANAGEMENT REPORT

NON-PERFORMING LOAN (NPL)

MANAGEMENT

Industry Scenario of NPL
Overall banking sector of the country
during the year 2019 appeared
affected due to high overdue and
nonperforming loans. It caused price
hike in deposit market and created
challenges for the banks to achieve
the targeted profits for the year.
Under such scenario, Mercantile Bank
on its part deployed full potentials
through Special Asset Management
Division (SAMD) for regularization/
recovery of the overdue and Non-
performing loans through formulation
of strategies as applicable.
NPL Management Process
SAMD puts its all-out effort in order
to make considerable contribution to
the asset based Bank’s Profitability.
It tries to reduce the NPL and also
tries to keep the loan portfolio of the
bank healthy. Top-most priority of the
SAMD is to regularize the NPL by way
of recovery.
Mercantile Bank always puts collective
effort to overcome the challenges
in managing the overdue and non-
performing loans. With the Special
Asset Management Division and the
Branches, All Divisions of Head Office,
Cluster Heads, Senior Management
works together to keep the loan
portfolio of the bank healthy. At the
same time effective oversight of the
Honorable Board of Directors guides
the bank to achieve astounding feats
towards the NPL management.
Working area of the Special Asset
Management Division (SAMD) is
segregated into 3 (three) departments
for arresting/restricting the increasing
trend of NPL and to regularize/reduce
the NPL of the Bank through recovery
and rescheduling.

a) Monitoring & Early Alert Department (M& EAD)

M&EAD is working as a In order to achieve the goal,
wing of SAMD of the Bank the M&EAD is working to
with an objective to restrict keep a loan limit regular,
sends a sweet reminder
deterioration of overdue
with a list of accounts
and special mention
going to be expired
account towards non
within next (02) months
performing loan accounts.
to alert the Branches for
taking necessary steps to
get renewal of the loan
limit from the concerned
sanctioning authority at
Head Office as well as to
renew the credit limits
which fall within the Branch
delegation.
M&EAD determines M&EAD monitors the
the overdue and SMA expired L/Cs and PAD
accounts at the beginning accounts for adjustment
of each month as Early of the same. M&EAD also
Alert Accounts, tries to provides a list of expired
understand the causes of Bank Guarantees to the
overdue from the branch Branches for reversal of
management through the same before each
telephonic discussion quarter-ends to keep the
and advises accordingly off balance sheet portfolio
clean.
for recovery of the
overdue. Thereafter till
recovery/regularization
of the overdue accounts,
monitoring on the branches
by the department
continues.
158 Mercantile Bank Limited
Annual Report 2019
b) Recovery Department (RD)
RD is also working under SAMD and
gives the top most priority for recovery
of NPLs. RD puts their all-out efforts
for recovery/regularizations of NPLs.
Intense follow-up and monitoring
through frequent customer visits by
the Cluster Head(s)/RD officials is
the key to the efficient and effective
recovery system.
c) Central Collection Department (CCD)
CCD is the another wing of SAMD
and working for recovery of some
non-performing loans (SS/DF/BL/
BLW) including SMA upto Tk.25.00
lac of SME, Retail and Agri segments
through 3rd Party Debt Collection
Agency under guideline(s)/
Circular(s) of the Bank.
RD maintains all the files of the
Branches which became classified
and for recovery/regularization it
takes all possible steps with the co-
operation of the Branches.
Policies, guidelines and procedures
are continuously reviewed and
updated to take further action
regarding recovery/regularization
of the NPL. A continuous effort is in
place to identify routes to recovery
and routes to exit from the problem
loans.
The CCD appoints/engages the
Recovery Agents and monitors their
works to recover the classified loans
within the justified/given time frame
with the approval of the competent
authority.
RD meets with the customers along
with the Branch officials to know the
problems in repayment of the loans, find
out a solution for recovery/regularization
through Rescheduling/ Restructuring/
Full & Final Settlement with waiver facility
(on reasonable grounds, if any) and takes
approval of the action plan of recovery/
regularization of the loan account from
the competent authority of the bank and
communicate the same to the concerned.
As per Bangladesh Bank’s Guidelines/
Circular(s), MBL, in regular course of
business, takes necessary steps to
write off bad debts where all possible
recovery efforts have been exhausted
including taking legal actions and for
which the Bank has already provided
full provision– it is those loans which
would have, otherwise, only been used
to present the Banks balance sheet
chubbier.
CCD contacts with the Branches after
end of the each quarter for collection
of fresh list of NPLs which
appear to be not possible to recover
by the branches. Those loans are
handed over to the 3rd Party Debt
Collection Agents. At present 9 (nine)
3rd Party Debt Collection Agents are
performing for recovery of NPLs.
 RISK MANAGEMENT REPORT

Classification Status of Credit Portfolio

The NPL position at the year ended on 31.12.2019 of MBL is Tk. 1,150.26 crore and in percentage it is 4.86%. A comparative
position is mentioned hereunder:

Total Classified Loan (CL)  (Taka in crore) % of Classified Loan

Year 2019 2018 2017 2016

4.95% 5.13%
SS 129.47 36.87 42.10 186.04 4.82% 4.86%

DF 40.99 118.61 59.35 59.71

3.79%

BL 979.78 924.76 655.02 528.84

TOTAL 1,150.26 1,080.24 756.47 774.59 2015 2016 2017 2018 2019

Cash Recovery During 2019

from Classified loan from Written off loan

Tk.208.48 crore Tk.0.51 crore

Movement of NPL & Write-off

Movement of Write-offs:
During the years 2019 & 2018, the movement of written-off accounts is as under

Amount in Taka (Million)

Particulars
2019 2018

Opening Balance 3,202.37 2,938.74

Add: Addition during the year 2248.42 449.13

Less: Collection/Reduction during the year 5.09 185.50

Closing Balance 5,445.70 3,202.37

160 Mercantile Bank Limited
Annual Report 2019
Strategic Outlook for NPL Management in 2020
The following steps are being made for recovery of NPL:
Special Asset Management Division of
Head Office is working for recovery/
regularization of classified loans.
Regional Offices have been established in
some places in the country (Chattogram
Regional Office, Cumilla-Noakhali
Regional Office and North Bengal
Regional Office) for close monitoring
of business, recovery/rescheduling/
regularization/full and final settlement of
the classified accounts.
Regular meeting are being held between
Branch Managers and Regional Heads
for up to date position of recovery/
regularization of classified/SMA loans.
Recovery Target is set at 40% for the
year 2020 for recovery against NPL
outstanding amount as on December,
2019 and also from BLW amount.
Classified loan accounts have been
segregated in the basis of securities
and the present condition of business
and actions (such as rescheduling, legal
steps, and interest waiver) are being
taken accordingly.
All branches have been structured into
clusters and Cluster Heads supervise the
branches as per direction of the Additional
Managing Director of the bank.
A cell named “Special Monitoring Cell”
has been formed in Head Office for
close monitoring of the top defaulters
having defaulted loans outstanding
Tk.100.00 crore and above in a bid to
bring down the volume of bad loans.
A committee named “NPL Appraisal
Committee” has been formed for
recovery/regularization of loans
classified as BL through special
rescheduling/one time exit.
 RISK MANAGEMENT REPORT

SUSTAINABILITY
ANALYSIS
162 Mercantile Bank Limited
Annual Report 2019

SUSTAINABLE BANKING
HIGHLIGHTS-2019

60 7,540,000 95,004 17,520

Number of Branches Number of SMS Number of Man-hour Invested
Powered by Solar Alerts Sent to the E-Statements in Local &
Energy of 39.65 KW Customers Sent to Customers Foreign Training

BDT 809
Million Investments BDT 156.77
in Renewable Million
Energy and Community
Environment-friendly Investment
Projects

MBL’s Approach to Continuation of stable and portfolio regarding Environment

Sustainability
MBL takes a broad business approach
and it strives to address sustainability
issues that are relevant and meaningful
as a Bank and the markets in which it
operates. MBL stakeholders’ feedback
is instrumental to the success of its
sustainability work. The Bank aims to
identify and seize opportunities for
positive impact as well as avoiding
adverse impacts through its own
activities or financial products,
services and transactions.
The Bank’s approach to sustainability
lies on:
Adaptability with long term
vision challenging the changes
in natural and economic
environment.
Integration of ethical, social
and environmental criteria into
the business decision making
process.
Adherence to compliance,
transparency and corporate
governance.
Contribution to social and
economic progress in the
communities where the bank is
doing business.
enduring relationships with all
related stakeholders including
employees of the Bank.
Promotion of sustainable
finance with strong focus on
the renewable energy and clean
technology sector.
Sustainability Governance
MBL has designed the governance
structure of its sustainability functions
for a long-term, economically positive
result in consideration of key societal
and environmental aspects.
Board of Directors sets the
framework for sustainability
management by formulating
business strategies and budget,
policies for lending decisions,
capital planning, risk appetite,
corporate social responsibility,
etc.
A separate Sustainable Finance
Unit (SFU) has been formed to
oversee the green banking and
CSR activities of the bank as per
Bangladesh Bank Circulars. This
unit is responsible for updating
the Board/ Risk Management
Committee (RMC) through
Sustainable Finance Committee
on the current status of MBL’s
and Social Management System
(ESRM), facilitating the Board/
RMC’s decision making process
where there are unresolved
Environmental and Social (E&S)
issues or non-compliance. The
unit is also responsible for
periodic reporting to Bangladesh
Bank and as/when required.
Head of the SFU may be called
upon by the Board to opine on
critical E&S issues of a particular
transaction. The SFU is also
responsible for tracking latest
E&S issues in the media and
support transaction teams in
identifying and managing E&S
risks in lending.
As a counterweight to the
business activities, risk
management is supervised by
the Risk Management Committee
of the Board through a high level
management committee and
independent risk management
unit.
Besides the risk committee, there
is a Board Audit Committee to
ensure compliance and internal
control.
 SUSTAINABILITY ANALYSIS

Overview of Sustainable
Finance Unit
Sustainable finance refers to any
form of financial service integrating
environmental, social and governance
(ESG) criteria into the business
or investment decisions for the
lasting benefit of both clients and
society at large. Increasing pressure
on the environment, damages to
ecosystems and environmental
changes are presenting a global
challenge. Integrating sustainability
considerations into the financial
system can play an important role in
meeting the objectives agreed upon
in the United Nations’ Sustainable
Development Goals (SDGs). Therefore,
the inclusions of sustainability criteria
in the financial sector are essential
to address the future challenges.
Banking institutions implement
sustainable banking both in their
internal daily operations (in terms
of how they manage their physical
branches/locations, human capital,
costs, opportunities, risks exposures)
and their activities relating to external
interactions with their clients and the
types of projects they fund.
Our sustainability reporting approach
is to identify our material aspects that
are important to our stakeholders and
our business operations realign the
aspects with our business strategies
and prepare ourselves for future
challenges while achieving sustainable
growth with our stakeholders. As
an integral part of MBL’s culture
and core values, our sustainability
initiative is emblematic of our good
corporate citizenship. We believe in
aligning our progress with the overall
economic growth, as we reach out
and engage with the masses to help
make their lives better. The aim of
the report is to give a comprehensive
account of how Mercantile Bank
has fulfilled its sustainability mission
during the reporting period and how
it plans to implement and improve
its sustainability performance in the
future. In addition, this Sustainability
Report complements financial reports
with forward-looking information and
the understanding of key value drivers,
such as human capital formation,
corporate governance, management
of environmental risks and liabilities.
The report shows an understanding
of the external environments in which
MBL conducts its business. Besides, it
assesses the elements that emphasize
in MBL’s competitive advantage.
Sustainability Statement
At Mercantile Bank, it is understood
that the process of sustainability is a
pathway of continual improvement.
MBL’s actions protect and enhance
the natural resources that would be
needed by future generations for
them to enjoy a quality of life equal
to or greater than our own. The
Bank understands its obligation to
ensure that its actions are for the
greater good. Hence, MBL not only
weighs the financial implications of
every decision; but also considers its
potential impacts on sustainability
issues, such as biodiversity, climate
change, human rights, etc. Each and
every operations of the Bank promote
environmental sustainability. Through
MBL’s lending and investment
activities, and procurement practices,
it limits environmental impact of
banking. MBL engages constantly
with its stakeholders to gain ideas on
embedding more sustainable actions
operations, lending and procurement.

REPORT PARAMETER

Reporting period January 1, 2019 to December 31, 2019

Sustainability Analysis Chapter of MBL Annual Report

Date of the most recent previous report
2018

Reporting cycle Annual

We welcome any feedback on this sustainability report.

For further information and comments, please contact
Feedback and Further Information and Suggestions
Sustainability Reporting Team of Office of the CFO of the
Bank.

Disclosure GRI Standards: Core Option

External assurance Under management consideration

"We Support the Global Compact"

164 Mercantile Bank Limited
Annual Report 2019
OUR WIDE RANGE OF
PRODUCTS & SERVICES
We keep developing and innovating. We offer a wide range of products and services that help our valued clients achieve
their goal. MBL has many years of experience across the full range of banking products and services. We are working with
our respected clients to provide the right mix of products and guidance to help their business flourish.
DEPOSIT PRODUCTS
Current Deposit (CD) Accounts
Savings Bank Deposit (SB)
Accounts
Special Notice Deposit (SND)
Fixed Deposit Receipt (FDR)
Scheme Deposits
Masik Sanchaya Prokolpo
(MSP)
(gvwmK mÂq cÖKí)
Digun Briddhi Amanat
Prokolpo (DBAP)
(wظY e„w× AvgvbZ cÖKí)
Masik Munafa Amanat
Prokolpo (MMAP)
(gvwmK gybvdv AvgvbZ cÖKí )
Poribar Surokkha
Amanat Prokolpo (PSAP)
(cwievi myiÿv AvgvbZ cÖKí )
Aporajita Masik Munafa
Prokolpo (AMMP)
(AcivwRZv gvwmK gybvdv cÖKí)
Troi-Masik Munafa Amanat
Prokolpo (TMAP)
(ˆÎgvwmK gybvdv AvgvbZ cÖKí)
Super Munafa Amanat
Prokolpo (SMAP)
(gybvdv AvgvbZ cÖKí)
Shikha Porikolpona
Sanchaya Prokolpo (SPSP)
(wkÿv cwiKíbv mÂq cÖKí)
Dergun Briddhi Amanat
Prokolpo (1.5TBAP)
(†`o¸Y e„w× AvgvbZ cÖKí )
Agrim Munafa Amanat
Prokolpo (AMAP)
(AMÖxg gybvdv AvgvbZ cÖKí)
Bishes Sanchaya Prokolpo
(BSP)
(we‡kl mÂq cÖKí)
Pension ebong Poribar
Support Prokolpo (PPSP)
(†cbkb Ges cwievi mv‡cvU© cÖKí)
Non Chequeable Savings Bank
Account (NSB A/C)
School Banking
LOANS & ADVANCES
Retail Loans
Home Loan
Cottage Loan
Car Loan
Personal Loan
House Furnishing Loan
Doctor’s Loan
Education Loan
Secured Over Draft (SOD)
Refinance Scheme for Green
Product/Initiatives
Krishi / Polli Loan
Corporate Loans
Short Term Finance
Long Term Finance
Real Estate Finance
Import Finance/Trade Finance
Work Order Financing/
Construction Business
Earnest Money Financing Scheme-
SOD (EMF)
Bid Bond
Performance Guarantee (PG)
Advance Payment Guarantee (APG)
Shipping Guarantee
Customs Guarantee
SOD (WO)
Export Finance (Pre-Shipment
Credit/Finance)
Export Cash Credit
(Hypothecation /Pledge)
Export Cash Credit Against Trust
Receipt
Advance Against Anticipatory
Letter of Credit
Back to Back Letter of Credit
Packing Credit
SOD (Export)
Post-Shipment Credit/Finance
Negotiation of Export Documents
(FDBP)
Purchase of Documents against
DP or DA Bills
Structured Finance
Project Finance
Syndication
SME Financing
CHAKA (Term Loan)
SAMRIDDHI (Continuous Loan)
MOUSUMI (Short Term Seasonal
Loan)
ANANNYA (Women
Entrepreneur’s Loan)
SANCHALOK (A mix of Term, Time
& Continuous Loan)
UNMESH (Trade Finance)
UDAYAN (Start-up financing for
the young entrepreneurs)
FACTORING OF RECEIVALBES
Agriculture Loan
NABANNO (Krishi / Polli Loan)
SHAKTI (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
Agent Banking
Islamic Banking
Online Banking
Mobile Banking (MyCash)
Internet Banking
Off-Shore Banking
NRB Banking
SMS Banking
Locker Service
Utility Bills Pay Service
ATM Booth Services
Cash Deposit Machine (CDM)
Service
For more information
please visit www.mblbd.com
 SUSTAINABILITY ANALYSIS

STAKEHOLDER
ENGAGEMENT
Stakeholder engagement includes gathering and sharing information, dealing with concerns and grievances from your
stakeholders, measuring the impact and importance of different stakeholder groups, communicating back and forth
through various methods, and more. Maintaining an open and constructive dialogue with stakeholders is essential
for business. It’s how we understand community expectations, identify issues and discover opportunities to improve.
Communication and understanding are keys to any successful business, especially one with as many diverse stakeholders
as ours. By continually engaging with our wide range of stakeholders we can understand what is expected of us, identify
issues and discover opportunities to improve. In all interactions with stakeholders, we are committed to being respectful,
responsive, open and authentic in our engagement on issues of mutual importance.

The vision of MBL is “would make finest corporate citizen”. It recognizes the important role that the Bank has in the
communities in which we operate and inspire to do our best for the benefit of all of our stakeholders. Achieving our vision
requires us to build trusted and mutually beneficial relationships with our stakeholders, which long term supports our long-
term success and sustainability. Our diverse stakeholder groups hold a range of views on issues that impact our business,
and we know that listening to these different perspectives offers real insight and value. They help us to identify emerging
issues thus contributing to risk management and provide opportunities for us to discover opportunities to improve our
performance. It also helps us understand community expectations, identify emerging issues and discover opportunities
for us to improve our performance. Our values of integrity, accountability, collaboration, excellence and service guide us
in all that we do.

OUR KEY STAKEHOLDERS INCLUDE:

CUSTOMERS EMPLOYEES SUBSIDIARIES GOVERNMENT

& REGULATORY
AUTHORITIES

BOARD & BUSINESS SHAREHOLDERS/ LOCAL

MANAGEMENT PARTNERS INVESTORS COMMUNITIES
166 Mercantile Bank Limited
Annual Report 2019
We value constructive feedback and engagement with a wide range of stakeholders. We take on board their feedback,
information and analysis to assist in the determination of ‘materiality’. Most recent engagements of MBL are shown in the
table below:
MBL’s Stakeholder Engagement Mechanism at a glance
Stakeholder
Engagement Mechanism
group
Customers Customer hotline 16225
(24/7)
Customer Relationship
Management
Multi-channel engagement,
including face-to-face
customer engagement
Customer workshops
Customer feedback channels
(in-branch, email, contact
centre, social media)
Ongoing market research and
product innovation
Customer Service
Enhancement Program &
Complaints Management Cell
Media campaigns/
advertisements
Website information updates
Employees Half Yearly Strategic Business
Conferences
Training, workshops and
orientation program, internal
meeting, group emails
Intranet circulation through
MBL Web Portal (HRD
Circular, Information Circular
and Instruction Circular)
Physical fitness, Future
Leadership Development
Program, safe and clean
working environment
Newsletter in the name of
‘MBL insight’
Subsidiaries Policies formulation
Agreed upon strategic goals
Key Issues and Concerns
for Stakeholders
Customers queries,
complaints and
suggestions
Good return from
deposits
Fast service delivery
with excellence
Product varieties
catering market demand
Online banking
solutions with secured
transactions, privacy and
confidentiality
Ensuring better and
uniform services to the
customers
Financial hardship
Customer interactions
and suggestions
Talents and
performances
Development
Regular training
Inflation adjustment in
pay package planning
Job description setting
as per individual skill
Performance driven
career progression
Healthy working
environment and Policy
formulation for safe
working atmosphere
Future Leadership
Development Program &
Sports Tournament
Goals and Strategic
focuses are based
on local environment
analyses & regulatory
purview
Response of MBL
Affordability of banking, fees and
interest
Reaching out to customers by
widening our geographic footprint in
terms of establishing a larger number
of branches and SME centres
Transforming existing branches/ unit
offices to cater to diversified customer
requirements
Continuously innovating new products
and operational processes for
reinforcing customer benefit
ALCO sits every month to decide
pricing and rates based on market
analyses
All network nodes are run by online
core banking system (CBS)
E-products like SMS banking, EGP
service, E- commerce, E- payment
solution, internet banking
Front desks and relationship managers
ensure fast and high quality service
delivery following one to one
relationship
Proper actions are taken of customers
complaints if any service goes against
the customer service policy of the
Bank
17,520 man hours training for human
capital in 2019
Salary package adjusted in line with
market competitiveness and inflation
Work life balance
Yearly performance bonus for
employee motivation
KPIs for performance and inherent
quality analysis
All sorts of safety measures such as
fire extinguishers, separate stairs are
available and smoke free premise
Review local market and environment
before setting its strategic priorities
ensuring proper representation from
subsidiaries

Stakeholder
Engagement Mechanism
group
Government One-on-one meetings
& Regulatory
Adhering to all local
Authorities
regulations and circulars
issued by Bangladesh Bank
Strict ethics & compliance
with applicable laws, rules
and regulations
Directives, notifications, and
guidelines
Meetings and discussions
with Board and Senior
Management
Submission of necessary
reports, returns and
statements
Board & Decisions based on financial
Management and business delegation of
different levels
Major decisions must be
placed to board for approval
Business Procurement management,
Partners training and communication
Shareholders AGM, EGM, annual &
& Investors semiannual report, publishing
quarterly financials,
announcement to DSE & CSE,
Press Conference and media
releases, credit rating and PSI
in newspapers
Local Promoting financial
Communities inclusion both for banked
and unbanked people, CSR
contribution- Scholarship to
poor meritorious students
Key Issues and Concerns
for Stakeholders
Proper compliance with
laws & regulations
Timely reporting as per
requirement
Timely payment of
income tax and VAT
accurately
Governance principles,
policies & procedures
formulation
Strategic focus & value
creation Strategic
business planning
Fair trade, fair
enlistment,
Sustainable and stable
growth of the bank
Healthy return on
investments and stable
dividend policy
Growing earnings
Sound governance
and risk management,
ratings of the bank
based on overall
financial performances
Provide banking facility
to geographically
dispersed poor segment
of the society
Benefit economy by
poverty reduction
through banking services
to rural poor people
Support under privileged
Apeople through Social
Safety Net programs
SUSTAINABILITY ANALYSIS
Response of MBL
We ensure proper compliance and
timely reporting to government
bodies and regulators
Contributed Tk. 5,209.27 million
to National Exchequer which
significantly contributed to
Government’s revenue collection
At least one board meeting in every
month, frequent executive committee
meeting, audit committee meeting
Board members meet management
on various occasions like annual &
semi- annual business conferences,
bank’s anniversary celebration
Free from any bias or coercion from
influencing quarters
Fair play & competition to award
work order
Timely payment to vendors
Maintained attractive plough back
ratio
Timely payment of debt with stated
return
Established risk management culture
Transparency & integrity in financial
reporting
Maintained consistent ratings through
financial commitments
Each queries of the investors meet
up through our share department
efficiently and fairly
Strongly consider environmental
and social impact and restrain from
adverse impact upon society
Target segment is under developed
and under privileged people
Services to old citizen, widow and
disable beneficiaries
Significant contribution to education,
health, disaster management, art &
culture, environmental and sports
sector
168 Mercantile Bank Limited
Annual Report 2019

DETERMINING
MATERIAL TOPICS
Content to be included in this
Integrated Report has been selected
through a systematic materiality
analysis, which reflects the topics
that could materially affect the Bank’s
ability to create value over the short,
medium and long-term. These issues
and topics are directly or indirectly
integrated into the daily management
of our operations as part of our
strategy or risk management the Bank’s value creation process,
practices. strategy and capital inputs as well as
emerging risks and opportunities in
This year, we have adopted a more
the operating landscape.
holistic approach towards our
reporting and broadened the scope
Identified issues are then assessed
of our material topics to include issues
that are not specifically identified as based on the likelihood of occurrence
material topics by GRI. In determining and magnitude of the effect and
material content, we have taken into prioritized through collective
consideration potential impacts on agreement.

Identify 7, 13
4, 8, 9, 10,
1, 2, 3, 5, 6
11, 12, 14, 15
Material
Importance to Stakeholders

Topics

Assess
Importance
Prioritize
Matters
Importance to the Bank

No Material Topic Corresponding Content

1 Profitable growth Directors' report
2 Operational efficiency Directors' report and chief financial officer's review
3 New markets Branches network
4 Diversity and equal opportunity Human resources management report
5 Employee skill development Human resources management report
6 Risk mitigation Risk management report
7 Facilitating financial inclusion Review of Mercantile Bank’s operations
8 Customer satisfaction Customer satisfaction
9 Technology and digital channels Review of Mercantile Bank’s operations
10 Product portfolio Products and services
11 Business model Business model
12 Managing socio-economic impacts Economic performance
13 Environmental impacts Environmental performance
14 Community engagement Mercantile Bank Foundation & CSR activities
15 Invertors’ relations Market performance

ENVIRONMENTAL
PERFORMANCE
Sustainable Environmental Management
forms part of Mercantile Bank’s
strategy and business model. We
understand that the true cost of
waste is not just in its disposal – it
encompasses the inefficient and
unnecessary use of resources like
energy and water. Hence, we are
committed to a clean environment
and the fight against climate change.
This commitment is reflected in
certain aspects of our business
process, such as analysis of the
social and environmental risks of our
financing activities, and measurement
of our environmental footprint.
Environmental awareness amongst
employees at all levels has been a key
driver for the successful implementation
of all our action plans. Furthermore,
sharing of information at all levels
with employees, business partners,
regulatory authorities and the public in
general has further strengthened our
resolve on responsible environmental
stewardship.
SUSTAINABILITY ANALYSIS
In continuance of our commitment to all paper stationeries used in printing
sustainability, Mercantile Bank took
internal memos are re-used, where
careful measures and implemented apt
systems to enable us comply with all possible.
environmental and social regulations
relating to our banking activities
and operations. We continued
to work towards improving our
sustainability programs and reducing
our environmental footprints. And
as a result, Mercantile Bank did not
suffer any fines, sanctions, penalties,
queries – financial or non-financial –
Also, transactions through our mobile
owing to non-compliance to national
environmental or social laws, or and electronic banking platforms
voluntary codes and standards of
have increased significantly amongst
corporate sustainability to which we
are subscribed. our customers. These approaches
have significantly reduced our paper
Paper Consumption
purchase by 30% and have resulted
Across the Bank, we have automated
in substantial cost-savings. A total of
almost all of our processes, thereby,
reducing the need to print. However, 37,670 reams of paper was consumed
if there is a need to print, we have
in 2019, equivalent to 120,544 kg
ensured that eco-printing practices
are adopted. We also ensured that (Assuming 3.20 kg per ream).
170 Mercantile Bank Limited
Annual Report 2019

Solar Powered Branches
We have already installed solar panels
in our 60 branches out 148 branches
located at different urban and rural
areas where total available capacity
of electricity is almost 39.65 KW.
Energy Savings
MBL ensures the maximum usage
of natural day light to reduce the
energy consumption substantially
in contrast with other mainstream
constructions. Moreover, energy
savings bulbs consist of a third of Banking through SMS
the total lighting system here. As a
result, more than 55% electricity i.e. SMS Banking service provides instant
Tk.75,47,937 is saved using the day notification about clients’ transactions
as and when it happens. It helps them
light throughout the MBL and its
to keep a watch on their accounts
branches. E-mail correspondence has
with a round the clock service. Every
been the focus of both internal and
debit or credit in their accounts over
external communications with an aim
a limit desired by them is intimated
to reduce the paper consumption.
by SMS. MBL SMS Banking services
offer basic banking services to
Energy Consumption
customers for a very little use of
BDT in Million energy. In 2019, a total of 7,540,000
Type 2019 2018 text messages were sent by MBL in
response to customer’s transaction
Electricity 88.69 88.36
debit or credit. This enabled MBL to
Water Bill 6.61 6.59 send and its customers to get their
Natural Gas 0.38 0.38 account information by using little
Generator Fuel 5.63 5.61 energy compared to the traditional
way of getting account information
Other Utility Bills 1.27 1.27 by visiting branches.

SL Instruments Quantity Cost of Conventional Practice Cost of Green Banking Concept

1 E- Statement 95,004 0.10 Nil

2 SMS Alert 7,540,000 8.29 0.050

3 E- Fund Transfer 819 0.0009 Nil

4 Digital Attendance 2,174 0.000785 Nil

5 E-Mail Correspondence 902,684 0.99 Nil

Total amount 0.050

Net Savings BDT 9.33 Million

 SUSTAINABILITY ANALYSIS

Financing Renewable Energy and Carbon offset 3.93%

BDT in Crore

Projects
3%
During the year 2019, we have disbursed total Tk.80.87
Crore in the following sector Solar Energy

Bio-gas/Solar Energy
 BDT in Crore
30% Environmental friendly
Solar Energy 3 brick Manufacturing
Bio-gas/ Solar Energy 30 43.94% Alternative Energy
Environmental friendly Brick Manufacturing 43.94
Alternative Energy 3.93
Total 80.87

Water Efficiency

Water is essential to our operations.

We also take very seriously our
responsibility to carefully manage
our water resources. Over the course
of the year, we took significant steps
to optimize our water consumption.
Throughout the Bank, we aim to halve
our water usage in the coming years.
We will continue to work towards
improving our sustainability programs
and reducing our environmental
impact.

Diesel Consumption

We used a total of 86,667 liters of

diesel in the reporting year. We are
currently exploring other cleaner and
greener alternative means of power
generation in order to reduce our
diesel consumption further in the
coming years.

Solid Waste Management

Over the years, the Bank has adopted

sustainable waste management
practices. In 2019, Mercantile Bank
took effective initiatives for proper
disposal and management of paper,
plastic, glass and can waste at its
head office and annexes. Since its
commencement, we have attained a
significant reduction in the amount of
waste generated that goes to landfills
172 Mercantile Bank Limited
Annual Report 2019

in these locations. This reduction was

achieved through our aggressive
awareness campaigns on various
platforms. Another contributor is the
proven effectiveness of our onsite
recycling bins, which encourage and
enable the appropriate sorting of
waste at the source. We are looking
to reduce our environmental pollution
in the coming years; as such, we are
expanding the recycling initiative to
our branches nationwide.

Compliance with
Environmental Laws and
Regulation

Mercantile Bank did not suffer any

fines, sanctions, penalties, queries –
financial or nonfinancial– owing to
non-compliance with environmental
laws and regulations prevailing in
Bangladesh.
 SUSTAINABILITY ANALYSIS

ECONOMIC IMPACT
REPORT
An Economic Impact Report (EIR) examines the effect of an event on the
economy in a specified area, ranging from a single neighborhood to the
entire globe. An economic impact analysis attempts to measure or estimate
the changes in economic activities in a specified region, caused by a specific
business, organization, policy, program, project, activity, or other economic
event. The effect that an event, policy change or market trend will have on
economic factors such as interest rates, consumer confidence, stock market
activity, or unemployment. Events such as regulatory changes, supply shortages
or natural disasters can have a significant economic impact due to the way that
they affect business activities.

We continue change in MBL; we Capital Adequacy requirement of BDT 3,005.15 Crore as

believe we can become the Bank
of choice for all of our customers
and clients. Our approach delivers
broader economic benefit and more
valuable services to our stake holder
in a unique way we do business.
on the same date. Capital Adequacy
MBL is maintaining a strong capital
base. Total eligible capital of the Ratio was 13.51% as on December
Bank stood at BDT 3,247.48 Crore 2019 as compared to minimum
(Solo Basis) as on December 2019 requirement of 12.5% as per Basel III
which is well above than minimum including buffer.

BDT in crore

32,899.83
Particulars Dec-19 Dec-18

29,486.29
Tier-1 Capital 20,098.89 17,950.98

23,641.26
Tier-2 Capital 12,800.94 11,535.33

22,196.33
Total Eligible Capital 32,899.83 29,486.29
Totak Risk Weighted Assets (RWA) 236,412.62 221,963.29
Capital Adecuacy Ratio (SOLO) 13.92% 13.28%
Tier-1 Capital to RWA 8.50% 8.08%
Tier-2 Capital to RWA 5.42% 5.20%
December, 2019 December, 2018
Minimum Capital Requirement (MCR) 23,641.26 22,196.33
Total Eligible Capital Minimum Capital Requirement

Value Added Statement

Value Added Statement is a financial for its employees, government and
statement that depicts wealth created shareholders in the form of salaries
7,308.39

by an organization and how is that & allowances, income tax, profit after
wealth distributed among various tax respectively and also indicates
stakeholders. In 2019 MBL add value depreciation value of fixed assets.
6,459.12

BDT in million
Particulars Dec-19 Dec-18
Income from Banking Services 31,292.17 28,117.54
Less: Cost of services & Supplies (20,957.80) (18,814.49)
Value added by Banking Services 10,334.37 9,303.05
Provision for loans & off –balance sheet items (3,875.25) (1,994.66)
2018 2019
Total Value Added 6,459.12 7,308.39
174 Mercantile Bank Limited
Annual Report 2019

Distribution of Value added BDT in Million

Particulars Dec-19 In % Dec-18 In %

To Employees & Directors 2,434.17 37.69 2,461.39 33.68
23%
To Statutory Reserve 696.10 10.78 870.19 11.91
38%
To General Reserve - 0.00 900.00 12.31

To Government as Income Tax 1,305.00 20.20 1,349.96 18.47 6%

To Expansion & Growth

Depreciation 387.68 6.00 355.47 4.86 20% 11%

Retained Earning 1,479.40 22.90 1,230.75 16.84 0%

To Employees & Directors Depreciation
To Community Investment 156.77 2.43 140.63 1.92
To Statutory Reserve Retained Earning
Total 6,459.12 100.00 7,308.39 100.00 To Government as Income Tax To Community
Investment

Economic Value Added Statement

Economic Value Added (EVA)
attempts to capture the true
economic profit of a company. EVA
is an estimate of the amount by
which earnings exceed or fall short
of required minimum return for
shareholders at comparable risks.
EVA is calculated by deducting the always conscious about their return
cost of equity capital employed from
on capital invested. As a commercial
the post-tax profit plus provision
for loans and advances. Companies banking company, MBL is deeply
which earn higher returns than cost
concerned for delivering higher value
of capital create value. Therefore,
Shareholders/Equity providers are to its Shareholders/Equity providers.

Invested Fund by Shareholders BDT in Million

Particulars 2019 2018

Shareholders' equity 20,908.29 18,683.55

Add: Cumulative provision for loans and advances and off-balance sheet exposure 13,120.92 11,390.10

Total Shareholders' Equity 34,029.21 30,073.65

Average Shareholders' Equity 32,051.43 28,644.60

Earnings BDT in Million Economic Value Addition

BDT in Million
Particulars 2019 2018
Profit After Tax 2,175.50 3,000.94
2,548

Add: Provision for loans and advances and off- 3,875.25 1,994.64
balance sheet exposure during the year
Total Earnings (a) 6,050.75 4,995.58
2,266

Average cost of equity (based on weighted 10.93% 9.53%

average rate of 10 years treasury bond issued
by Government of Bangladesh plus 2% risk
premium)
Total cost of average equity (b) 3,503.22 2,729.83

Econmic Value Addition (a-b) 2,547.53 2,265.75

2019 2018
 SUSTAINABILITY ANALYSIS

Market Value Added Statement

Market value added statement shows
the difference between the total
market value of the Bank and the
capital contributed by shareholders
i.e. total Book value of equity. A high
Market Value Added indicates that
the company has created substantial
wealth for the equity holders. The Market Value Added (BDT in Million)
share market value of the Bank stood 20,907.82
at BDT 12,370.38 million whereas the
book value of the share stood at BDT
20,907.82 million resulting a negative
Market Value Added of BDT 8,537.44 12,370.38
million as on December 31, 2019.

Particulars No of Shares Outstanding Per Share BDT in Million

Market value 937.15 13.20 12,370.38
Book value 937.15 22.31 20,907.82
Market value added (8,537.44)
(8,537.44)
Though the financial performance performance caused to negative
Market Book Market value
of the Bank was sound during the Market Value Added. value value added
year 2019, depressed capital market

Payment of Dividends
MBL has continued to pay substantial dividends to its
22%
shareholders while ploughing back sufficient profits to
20%
fund growth and capital adequacy requirements. This
prudent dividend policy has contributed in building the 16%
Bank’s shareholders’ funds to satisfactory levels and is 15%
considered as one of the major funding sources of the 12%
Bank’s rapid expansion.

Considering the performance of the Bank over the past

years, the Board of MBL has recommended 16% dividend
(e.i 11% cash dividend and 5% stock dividend) for the year
2019. 2015 2016 2017 2018 2019

Contribution to National Exchequer

As a corporate entity, MBL pays tax and VAT on BDT in Million
its own income according to prevailing laws of the Particulars 2019 2018
country. By this way, the Bank has contributed
extensively to the government efforts in collection Income tax payment on bank’s earnings 1,487.14 2,210.66
of revenue. During the year, Bank has contributed Income tax, vat and excise duty
an amount of Tk.5,209.27 million toward national deducted at source from various 3,627.12 3,939.84
exchequer in shape of tax and VAT on its earnings. payment and services by the bank
Besides the Bank deducts tax, vat, excise duties Income tax payment by the employees 95.01 89.29
etc. from various payments and deposits the same
Total payment 5,209.27 6,239.79
to government exchequer.

1.82% BDT in Million

6,239.79

Direct Tax Paid

5,209.27

by Bank
4,817.42

28.55%
Indirect Taxes paid
by Bank
69.63%
Income tax paid
by employees

2017 2018 2019

176 Mercantile Bank Limited
Annual Report 2019

HUMAN RESOURCE
MANAGEMENT REPORT
Operating Environment

Our employees have significant values to our
achievement, thus we always focus on fostering a mixed
culture, value creation, empowerment and freedom
of expression to share their views and potential to
foster our business. We have solid commitment to our
employees to build a healthy environment and eco
system, so that they can flourish in our organization.
MBL’s long term-success is a team work of its
employees who drive MBL’s strategy and facilitate
the customers’ satisfaction. As an employer of
choice, MBL’s unique value proposition includes
competitive salary & benefit packages and
numerous opportunities for career growth and
skill development in a dynamic and challenging
environment. To obtain Sustainable Development
Goals, decent work and economic growth; MBL
pursues a comprehensive suite of HR policies to
cover all the relevant aspects.

Functions of HRD

The purpose of MBL Human Resources Division is
to create an environment that allows our dedicated
workforce to perform at its best in service to attain
our organizational goals.
The Bank is relentlessly patronizing the employees
to make them more business oriented. The Bank’s
Human Capital initiatives continue to focus on
building capacity and confidence to keep up the
momentum to execute the services to satisfy our
customer needs. Finding the right employees,
developing, rewarding and retaining them are some
of our highest priorities.
Main functions of Human Resources Division are:

Performance Compensation Statutory /

Management & Benefits Regulatory
Compliances

Talent People HR Policies

Sourcing Management

External/Outreach HR Services to Human Resources

Training Employees Information System

Major Activities in 2019
The main purpose of Human Resource Management is
to keep balance between the organization’s goals and
the interests of the employees.
MBL has also emphasized on safe and healthy working
environment. In MBL; the physical, mental and social
well-being of the employees always get priority. We
believe that employees in good physical condition,
productive and motivated employees towards the
work are keystone of a successful organization.
In 2019, MBL has focused on excellent compensation
packages for its employees. Moreover, in 2019 MBL
has recruited a good stack of workforce pool.
Training and Development is another major issue of
HRM Division of the Bank. In 2019, total 2,920 number
of employees has been trained on 154 topics. Amongst
them, 2,874 employees were trained up locally and 46
employees were trained up in abroad.
In 2019, few changes have been made on Mercantile Bank
Limited Human Resource Policy. Those are as follows:
Amendment of Rules for Travelling Allowances
(TA) and Daily Allowances (DA) of Mercantile
Bank Limited.
Strategic Focus
Mercantile Bank Limited appreciates that most
valuable assets is its employees. It also believes that
our people are our business catalysts. Main strategic
focus of Bank’s HRM Division is empowering
business and its people who drive it. Hire, Train &
Retain of employees are our motto. MBL’s Strategic
Human Resource Management is related with Bank’s
Human Resources and its strategies, objectives,
goals, mission and vision.
MBL’s main
strategic
focuses
Optimum Try to achieve
utilization of competitive
Human Resource advantage and
in the Bank profitability
SUSTAINABILITY ANALYSIS
Special Medical Assistance for Cardiac
treatment and Cancer treatment in addition to
existing Rules of Welfare Fund to employees
and outsourced employees of the Bank.
Revision of Pay Scale.
Revision of Charge Allowance and Car Loan
Ceiling Allowance.
Revision of Stipend Policy under Mercantile
Bank Employees’ Welfare Fund and Mercantile
Bank Outsourced Employees’ Welfare Fund.
NOC system for providing personal guarantee
against loans, cards, taking loan/cards from
other Banks/NBFIs.
Cash reward for passing ‘Certificate for
Specialists in Demand Guarantees’.
Mandatory Leave Policy.
Revision of Delegation of Administrative Power.
Automation of Annual Confidential Report.
Human Resources are the back bone of Bank’s
business and main driving force of the MBL brand.
The commitment to the employee is a continuous
and ongoing process. The Bank’s aims are to create
an environment where employees stay motivated,
empowered and feel recognized for their works
which enable them to learn and grow with the Bank.
We have also worked for grooming the professional
banker in the industries. We started with a positive
change to our socio-economic landscape and
renewed hope for higher levels of inclusive growth.
Lead the Our strategies
organization to align with people
make positive and business
growth
178 Mercantile Bank Limited
Annual Report 2019

Training and Development Status

As “Efficiency is Our Strength”, MBL continuously
provide training and arrange workshop/conference
to increase employee efficiency. MBL continuously
thrives to transform Human Resources to
Human Capital through appropriate learning and
development initiatives in every aspects of work
area. MBL effectively designs training programs
through proper training need assessment.
speakers of the country train our employees. Almost
all the employees of the Bank get the opportunity
to being trained up from MBTI. Apart from in-house
training; a good number of employees are sent
for overseas trainings every year as a part of their
efficiency development and enrichment program to
improve the service level.

The Bank has its own well equipped and resourceful Human Resources Division undertakes following
training centre namely “Mercantile Bank Training training programs for improvement of employees
Institute (MBTI)” where prominent bankers and guest efficiency:

1. MBTI conducts, In-house training program - On the Job Trainings/ Off the Job Trainings includes:
Orientation for newly joined fresh entrants
Product training
Management development program
Specialized training programs for experienced Officials
Training programs focusing operational activities
Awareness related training programs
Training programs for preventing fraud, forgeries
Basic training for newly joined fresh entrants
Soft skills training
Specific competency training
Training programs for maximizing customer satisfaction
Training programs for technological adaptability and its threats
Compliance related training program

Foundation Training for Trainee Assistant Officer (TAO)

2. Overseas training program.

3. Open discussion with higher management.

4. Seminar, Work Shop, Strategic Business Conference.

 SUSTAINABILITY ANALYSIS

Employee training related statistics in 2019 Training Expenses 2019 in BDT

Total Course Total Nature of Percentage

Training Category Amount (BDT)
Conducted Participants Training to Total
Local- MBTI 58 2,706 Local Training 7,662,499.77 60.33%
Local- Outside MBTI 75 168 Foreign Training 5,037,945.00 39.67%
Foreign 21 46 Total 12,700,444.77 100%
TOTAL 154 2,920

Recruitment Process

Effective recruitment is an essential part of
MBL’s Human Resources planning. Once needs
for additional employees are identified by the
business units of MBL, the recruitment process is
activated to address this need. MBL has a vast and
contemporary recruitment policy through which
it tries to appoint the best available resources for
the organization. All appointments are made and
carried out in accordance with the industry practice
from time to time. Talent acquisition is done through
systemic recruitment processes both for fresh and
lateral entrants. We are committed to provide equal
employment opportunity to all regardless of gender,
age, race, ethnic origin or marital status.
Human Resources Division has developed a rigorous
Recruitment Policy for recruiting employees for the
Bank at various positions like regular, contractual,
fresh and experienced employees within the purview
of Recruitment Policy of the Bank.

Regional Distribution Of Employees

Region Wise Employee Distribution in 2019:

No. of Percentage No. of Percentage

Division Division
Employees to Total Employees to Total
Dhaka 1,531 63.32% Khulna 56 2.32%
Chattogram 495 20.47% Rangpur 61 2.52%
Sylhet 58 2.40% Mymensingh 21 0.86%
Rajshahi 137 5.67% Total 2,418 100.00%
Barishal 59 2.44%

Employee Distribution in Branch and Division

Employee diversities of MBL as per Head Office & Branches Comparison in 2019:

No. of Employees
Office
Female Male Total % as to total
Head Office 89 453 542 22.42%
Branches 489 1,387 1,876 77.58%
Total 578 1,840 2,418 100.00%

Gender Distribution by Position Gender Distribution in %

Composition of employees in MBL in 2019 by Gender:

23.90%

Gender No of Employees Male

Female 578 Female

Male 1,840 76.10%

Total 2418
180 Mercantile Bank Limited
Annual Report 2019

Age Distribution of the Employees

Age Distribution in %
Segment of the Employee by age in 2019
5%
Age Range Female Male Total 20 years - below
26% 30 years
20 years – below 30 years 125 353 478 20%
30 years - below
30 years – below 40 years 289 888 1,177 40 years
40 years - below
40 years – below 50 years 158 480 638 50 years
50 years and
50 years and above 6 119 125
above
49%
Total 578 1,840 2,418

Performance Management System

Performance Appraisal in MBL is a part of career
development which consists of regular reviews
of employee performance. Other aspects are
considered, such as organizational citizenship
behavior, accomplishments, potential for future
improvement, strengths and weaknesses, etc.
Performance Appraisal has been conducted annually
through obtaining Annual Confidential Report
(ACR). In 2019, we have conducted Employees
Performance Appraisal System through online.

Outlook 2020
In support of implementation of our corporate strategy, Human Resources Division will, in addition to further
simplifying processes and adopting cutting-edge technologies, place added emphasis on substantially
consolidating our human resource management framework. In line with market demands and the strategic
ambitions pursued by the Bank, bold measures will be deployed in order to continually broaden the competency
base and strengthen the employability of our human resources, while relentlessly improving the quality of our
talent pool through attracting and retaining key resources.

We have entered 2020 with a more positive outlook. We all have to contribute to the strong growth track of
our country and to help/improve the lives of all citizen.
 SUSTAINABILITY ANALYSIS

CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Mercantile Bank Foundation has begun operations since 2000 with a view to
enforcing Bangladesh Bank’s guidelines for carrying out broader Corporate
Social Responsibility (CSR) activity through the Foundation. The Foundation
currently performs CSR programs in a more organized, standardized, and
sustainable manner.
MBF has been undertaking a range of Provide facilities for treatment calamities such as grain, burning,
activities over the past twenty years through hospitals, clinics, medical famine, cyclone, earthquake,
with the sole purpose of helping its and eye camps; hurricane, disaster, plague,
target people to improve the quality drought, etc.
of life. Initiatives in increasing social
wellbeing and poverty alleviation. Providing scholarships to poor,
In addition, the Foundation has well-deserved students;
completed the comprehensive exercise Distributions of blankets and
and finalized the list of 1,013 students winter cloths among the needy & Promoting educational, science,
for 2019 Mercantile Bank Abdul Jalil depressed people; social and other related charitable
Scholarship Program and has already activities.
arranged for the distribution of Provide/render monetary and/
scholarship money. The activities of the or other assistance / help for the
Foundation, amongst others, such as rehabilitation of people affected
follows: by natural and other conditions

Mercantile Bank Award-2019

Every year Mercantile Bank Foundation provides an esteemed award to the nationally notable intellectual personalities of
the society for their brilliant performance in their respective fields.

The Scholars who have been honored with Mercantile Bank Award-2019 are as under:
Arenas Scholars Rewarded
Education & Culture Dr. Tofail Ahmed
Freedom Fighter and Liberation war based research Captain Shahabuddin Ahmed, Bir Uttom
Economics and Economics based Research Bangladesh Fisheries Research Institute, Mymensingh
Commerce and Industry Mr. Abul Kashem (Abul Khair Group)
Sports Mr. Mosharraf Hossain Khan (Swimming)
182 Mercantile Bank Limited
Annual Report 2019

MBL Young Bankers’ Appreciation Award 2019

‘MBL Young Bankers Appreciation Award’ is the name of inspiration which boost up the young banker to be future leader
in financial industry. On the occasion of 20th anniversary of Mercantile Bank Limited, Bank awarded 5 young talented
bankers at a flamboyant program held at Hotel Intercontinental Dhaka.

This award was delivered to 5 young bankers selected through a 5-step competitive process. Bangladesh Bank Governor
Mr. Fazle Kabir handed over the certificates, crest & cheques of Tk. 200,000 Lac each to the awardees. The Award recipients
were Mr. Uzzwal Kumar Singha, AVP, IFIC Bank Ltd., Mr. Sirajul Islam, AVP, AB Bank Ltd., Mr. A.K.M. Hossainuzzaman, FAVP,
Mercantile Bank Ltd., Mr. Tawhid Khan Majlish, FAVP, Mutual Trust Bank Ltd., Mr. Mohammad Arafat Hossain, FAVP, Bank
Asia Limited.

MBL Young Bankers’ Appreciation Award-2019

Education Scholarship Program

“Ensure inclusive and equitable quality
education and promote lifelong
learning opportunities for all” with
this motto of SDGs Mercantile Bank
Abdul Jalil Education Scholarship
has made a bridge of hope for poor
meritorious students who enthusiastic
to materialized their dream. Since
2011 we have been walking together
with those strenuous students.
Education Scholarship program is an
explicit expression of MBL’s motive
towards building the nation through
extending hands of assistance to the
future generation of the country.
In 2019, 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 to
carry on 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:

Category Scholarship Amount (BDT in million) No. of Beneficiary Tenure

J.S.C 5.06 421 1 Year
S.S.C 5.27 351 1 Year
H.S.C 5.01 237 1 Year
Graduation 0.23 4 4 Years
Total 15.56 1,013
 SUSTAINABILITY ANALYSIS

In 2019, MBL awarded scholarship worth BDT 15.56 million among 1,013 poor & meritorious students who passed in 2018
under three category of J.S.S, S.S.C & H.S.C.

Mercantile Bank-Abdul Jalil Education Scholarship Awarded at Senbag in Noakhali

Mercantile Bank Abdul Jalil Education Scholarship Distribution program

184 Mercantile Bank Limited
Annual Report 2019

Institutional Support
Mercantile Bank has donated of BDT 17.62 million to different educational institutions during the year 2019.

Disaster Management
Mercantile Bank Limited donated 75 thousand pieces of blanket to Prime Minister’s Relief and Welfare Fund to support
the cold stricken poor people of the country. Morshed Alam, M.P., Chairman of Mercantile Bank Limited handed over the
blankets to the Honorable Prime Minister Sheikh Hasina at Gonobhaban on 02 November 2019.

Mercantile Bank donated 75 thousand blankets to Prime Minister’s Relief and Welfare Fund

Mercantile Bank donated BDT 1 (One) Crore to Prime Minister’s Relief and Welfare Fund
 SUSTAINABILITY ANALYSIS

Blankets distribution by Mercantile Bank Limited

Health & Medical

MBL CSR is working for the end of preventable deaths of newborns, water-borne diseases and other communicable
diseases, deaths and injuries from road traffic accidents, deaths and illnesses from hazardous chemicals and air, water and
soil pollution and contamination. Those areas are also emphasize in SDGs. Mercantile Bank donated BDT 15.55 million to
different hospitals and individual patients during the year.

An initiative of Mercantile Bank Foundation

Mercantile Bank Donates to

Gonoshasthaya Dialysis Centre
Mercantile Bank Limited donated
Tk.25.00 lac to the Gonoshasthaya
Dialysis Centre to establish an Ultra
Modern Dialysis Unit consisting of
specialized bed with audio and video
facilities. Bank’s Managing Director &
CEO Md. Quamrul Islam Chowdhury
handed over the cheque to Dr.
Mohib Ullah Khondoker, coordinator
of Gonoshasthaya Dialysis Centre
on Tuesday (05 March 2019) at the
Bank’s Head Office.
186 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Donates to SWAC

Mercantile Bank Limited donated Tk.10.00 lac to the Society for the Welfare of Autistic Children (SWAC) as part of
Corporate Social Responsibility of the Bank. Bank’s Chairman A.K.M. Shaheed Reza handed over the cheque to SWAC
Chairperson Subarna Chakma on Sunday (31 March 2019) at the Bank’s Head Office.

Sports, Arts & Culture

Mercantile Bank always supports promotion of art and culture. 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 2019 MBL contributes to organize and celebrate different cultural and traditional festivals. Mercantile Bank
donated BDT 0.6 million to various institutions for development of sports, arts and culture during the year.

Other Social Projects

The Bank also donated BDT 5.93 million to other social projects during the year.
 SUSTAINABILITY ANALYSIS

CUSTOMER
SATISFACTION
MBL, as a truly customer centric bank, always gives paramount importance
to provide better customer experiences with fast and efficient transaction
processing, easy access to relevant information and personalized service-
across channels, from ATMs, enriched websites and mobile apps to face-to-face
interactions with branch employees or calls into contact centers.
With a view to bringing continuous improvement in the quality of customer services and strengthening the corporate
governance structure, MBL has already constituted Customer Service & Complaints Management Cells.

MBL’s Approach to Customer Services

MBL establishes strong corporate principles, ethics, culture, moral standards and collective attitudes for providing better
customer services in all respects. The strict exercise of these has resulted in the institutional administrative success as well
as the credibility of MBL to its customers. The fundamental ethics and principles that MBL follows in dealing with customers’
affairs are furnished below:

Key Activities for Better Customer Service

Arranged training program Prepared the guideline for Prepared & distributed to Conducted survey on
through Mercantile Bank “Customer Services and the branches 4 Booklets: Customer Service in 10 (ten)
Training Institute (MBTI) for Compliant Management” branches.
I. Code of Conduct
the officials of the branches
for hassle free/smooth II. Customer Charter
Customer Services and III. Service Standard
Complaint Management
efficiently IV. Customer Awareness
Program

MBL’s fundamental ethics and principles regarding customer services

SL No. Core principles/ethics Details of approach
MBL has clearly and specifically designed accountability and responsibility of each
1. Accountability employee who engaged in customer service. MBL provides service to its customers
with a sense of urgency and commitment.
MBL is dedicated to maintain transparency in all terms & conditions and information
2. Transparency relating to all banking products and services provided by the Bank/FI to the
customers.
MBL is devoted to exhibit its honesty, integrity, loyalty, impartiality to its customers.
3. Equity and integrity The employees who are dedicated to customer services are well concern of ‘Conflict
of Interest’.
MBL is dedicated to comply with all relevant rules & regulations, policies and
4. Compliance
Bangladesh Bank's instructions while rendering services to the customers.
MBL is committed to ensure safety and security in operating system and dealings of
5. Safety and security
its banking products and services.
MBL is committed to maintain privacy and confidentiality of banking transactions of its
6. Privacy and confidentiality customers with except some certain circumstances such as disclosure under compulsion
of law, public interest, bank's interest customer's consent etc.
188 Mercantile Bank Limited
Annual Report 2019

Policy for General Management of the Branches

MBL periodically studies its operating system and its impact on customer service. MBL has a managing authority approved
policy for General Management of the Branches which include the prescribed aspects of “Guidelines for Customer Services
and Complaint Management” (June, 2014) issued by Financial Integrity & Customer Services Department (Customer Services
Division) Bangladesh Bank.

Code of Conduct

MBL has formulated and exercised code of Conduct to make customers happy and improve long term banker-customer
relationship. MBL has designed Code of Conduct for the employees with incorporating five essential areas (5Ps) as listed below:
a. People –The team who serve the customers. b. Premises -The location from which bankers serve and communicate with
customers and colleagues. c. Papers –The documents which are used to provide and receive information. d. Processes -The
operation processes that enable bankers to delight customers. e. Practices -The way in which bankers interact with customers.

Customer Charter

MBL has designed its “Customer Charter” to make conscious the customers about their general rights, obligations, grievance
approach process and thereby help customers taking their own decision. Copies of the Customer Charter are available on
request to all customers at all branches, own ATM booths and at MBL’s web site: http://www.mblbd.com.

Customer Awareness Program

MBL performs the following activities as a part of Customer Awareness Program:

a. MBL publishes or declares customers alert and precautionary message, guidelines etc. on products and services time to
time through brochures, leaflets and advertisement in communication channels on general banking, on Internet banking,
on loan and advances, on local and foreign remittances etc.
b. MBL arranges meeting, seminar, workshop or any other non-formal programs periodically to convey awareness message
and alert tips to the customers relating to banking products and services.
c. During the year 2019, MBL provided training program to its employees for maximizing Customer Satisfaction

On scrutiny the questionnaire (collected through branches) regarding customer service, it is observed that the rating of
the customer service is satisfactory and there is no dissatisfaction so far identified. Besides, MBL has already taken the
following measures for improving the Customer Service:

a. Arranged training program through Mercantile Bank Training Institute (MBTI) for the officials of the branches for
hassle free/smooth Customer Services and Complaint Management efficiently.
b. Already prepared the guideline for “Customer Services and Compliant Management”
c. Already prepared & distributed to the branches 4 Booklets:
I. Code of Conduct
II. Customer Charter
III. Service Standard
IV. Customer Awareness Program

Complaint Resolution

Management of MBL has strong focus on resolving complaints in a systematic manner. In general, The Complaint Resolution
process of the Bank follows such stages:
a) Acknowledgement,
b) Screening of complaints
c) Departmental actions for resolution
d) Appeal and review
e) Response and closure

Outlook 2020

Customer satisfaction is one of the major strategic objectives in 2020. Hence, the Bank has taken effective initiatives to
offer quality products and services for giving utmost satisfaction to existing customers and attract new ones as well.
 SUSTAINABILITY ANALYSIS

MARKET
PERFORMANCE
Financial Calendar Announced On
Audited Consolidated result for the year ended 31 December 2018 April 30, 2019
Unaudited Result for the first quarter ended 31 March 2019 May 13, 2019
Unaudited Result for the second quarter and half year ended 30 June 2019 July 29, 2019
Unaudited Result for the third quarter ended 30 September 2019 October 24, 2019

Distribution of Dividend Details

Stock % 15% Stock
Announcement Date April 30, 2019
Record Date May 30, 2019
Distribution Date June 25, 2019
Notice of 20th Annual General Meeting June 01, 2019
20th Annual General Meeting June 20, 2019

Particulars DSE CSE

Stock Symbol MERCANBANK MERCANBANK
Scrip Code 11128 22023
Listing Year 2004 2004
Market Category A A
Electronic Share Yes Yes
Total Number of Securities 937,158,302 937,158,302

Year End Closing Price on December 31, 2019: Tk. 13.20

DSE Trading Days in 2019: 237
In 2019, Bangladesh Capital Market witnessed a bearish pattern throughout the year due to low investor participation,
currency depreciation, money market uncertainty, rising Non-performing loans in the banking sector. Investors took a
wait-and-see position, so the market was negatively affected.

Market Share
Deposit Advances
12.57% 10.23%

5.65%

2.18% 2.41%
1.63% 2.24% 2.33%

Country Growth (2019 over 2018) MBL Market Share - 2019 Country Growth (2019 over 2018) MBL Market Share - 2019
MBL Growth (2019 over 2018) MBL Market Share - 2018 MBL Growth (2019 over 2018) MBL Market Share - 2018

Information Available on MBL

Annual Report 2019 can be viewed on the Bank’s Website: www.mblbd.com
190 Mercantile Bank Limited
Annual Report 2019

MBL INTEGRITY
STRATEGY
As per government decision as well as instruction from Bangladesh Bank, Mercantile Bank Limited formed an Integrity
Implementation Committee within the bank for implementation of National Integrity Strategy (NIS). The structure of the
committee is as under:

MBL Integrity Implementation Committee

CHAIRMAN

Corporate
MBL Integrity
Memory
Implementation
Management
Cell
System (CMMS)

Focal
Member Member Member Member Member
Point

The committee undertakes following activities to implement NIS:

1. Prepare a progress report on a quarterly basis and submit it to Bangladesh Bank.

2. Arrange seminars and training programs at MBTI for the officers and executives of the bank to make them aware of
its importance and ways of implementation.

3. Publish rhymes in the national daily newspapers quarterly from the published books of rhymes by Bangladesh Bank.

4. Arrange display of rhymes & integrity advice in the TV screen & X banner at head office & branches.

In addition, Mercantile Bank developed a policy as per Bangladesh Bank Guidelines for recognizing the best Integrity
Officer/executive titled "ï×vPvi PP©v cyi¯‹vi bxwZgvjv" which was approved by the Board of directors of the bank. The Bank has
also established a 'Corporate Memory Management System (CMMS) Cell' which reports the information of dismissal from
the job of any officer/executive for moral defalcation. Presently, MBL Integrity Implementation Committee is chaired by Mr.
Mati ul Hasan, AMD & CRO and Mr. Md. Zakir Hossain, DMD & DCBO is the focal point.
SUSTAINABILITY ANALYSIS
192 Mercantile Bank Limited
Annual Report 2019

GRIEVANCE
REDRESSAL
Mercantile Bank Limited strongly believes in holding the stakeholders in a smooth
and engaging partnership. We are proactively following the redressal policy of high
quality stakeholders to manage all forms of concerns, disputes in an accessible
and fair manner. Mercantile Bank Limited strongly believes that every shareholder
receives equitable treatment. We resolve every concern of shareholders on a priority
basis and have dedicated ourselves to providing the correct process to address the
grievance of shareholders within the time frame provided by the Bank.

Shareholder’s Perspective Communicate to the shareholders address queries and complaints

MBL’s redress system deals with the
following:
Receiving complaints for non-
receipt of dividend warrant,
letter of dividend intimation,
cash dividend
Transfer of shares from suspense
account to BO account of
shareholders
Grievance for not receiving the
Annual Integrated Report, half-
yearly financial position timely
Clarification of all price sensitive
telephone information
Concerns relating to share
dematerialization (DEMAT)
Questions and clarifications
about recent or upcoming price
sensitive records over telephone
etc.
Any investor may lodge a complaint
about their investment in the
company through a formal letter,
the Bank’s official e-mail ID and a
telephone call to the Secretary of the
Company and/or Share Department.
we concentrate on answering those
concerns in the shortest possible
time.
Redressal Process of
Mercantile Bank Limited
Investor / shareholder grievances
must be handled with respect
and in a timely manner
Complaints are effectively treated
and handled, and treated fairly
for collection of the dividend
warrants which have been
refunded for non-delivery by the
courier
Revalidate the dividend warrants
upon demand
Correction of bank account
details while sending dividends
through BEFTN system
Re issue of dividend warrants, in
case of failure to send dividend
through BEFTN system
Issue shareholding certificate,
dividend certificate as and when
necessary e-mail or letter must
be sent to all investors who have
complained in writing
Request for e-TIN number in case
of cash dividend
The bank continues to have regular
communication with the shareholders
through periodic performance reports
and at any time when it is generally
believed to be in the best interest of
shareholders.
Customers’
Perspective
Customers are the
key stakeholders of
the Bank. As per our
Customer Service
Policy and Customer
Acceptance Policy
(CAP), we are very
mindful of the demand
of customers and are
always ready to serve Employees
them our best. Like
investors, we also
from our customers through our
appropriate department, division
or unit. General Banking Division
(GBD) is centrally responsible for all
complaints. The Bank received 191
complaints from customers from
various branches in 2019, and all the
problems were successfully resolved
through proper investigation and
remedial action. Some issues have
been addressed within 5 days
(approx.) of which some concerns
have been resolved within 24 hours.
Employees’ Perspective
Employees are the Bank’s principal
resource, human capital. We’re
committed to providing our employees
with a comfortable work environment
to enrich their productivity. We have
different Grievance Resolution Policy
and Women Anti-Harassment Policy
to address problematic problems in
the workplace and create a healthy
and gender responsive working
environment. Our Department
of Human Resources takes the
necessary steps to redress if any
adverse situation arises. We did not
receive any substantial complaints
about our employees in 2019.
Shareholders
Redressal
Policy Customers
 SUSTAINABILITY ANALYSIS

CORPORATE
GOVERNANCE
194 Mercantile Bank Limited
Annual Report 2019

LETTER FROM THE BOARD

OF DIRECTORS PRESENTED
BY THE COMPANY SECRETARY
Dear Valued Shareholders,

It is our immense pleasure to present the Corporate Governance Report of Mercantile Bank Limited (MBL) on behalf of the
Board of Directors for the year ended December 31, 2019.

Stance towards Corporate Governance

At MBL, our commitment to corporate governance is a journey of continuous prudence as well as timely improvements
towards achieving the highest standards of governance by taking into account the developments in the regulatory,
business and internal workplace environments alike. This stance of our Board, Management and all the employees across
the Bank enables us to ensure that the organization carries out its business in a responsible manner leading to long-term
sustainability of the Bank. Our take on governance which is a one beyond mere ticking of boxes is showcased by this
report.

Outline of the Corporate Governance Report

The report portrays how the Board of MBL discharged their governance duties effectively with meticulous compliance of
applicable regulatory framework during the year under review. In this regard, the key Corporate Governance rules applying
to MBL are the Corporate Governance Code Notification No BSEC/CMRRCD/2006-158/207/Admin/80 dated 3 June, 2018
issued by Bangladesh Securities and Exchange Commission (BSEC) in exercise of the power conferred by section 2CC
of the Securities and Exchange Ordinance, 1969 (XVII of 1969), BRPD Circular no. 11 dated October 27, 2013; issued by
Bangladesh Bank, Bangladesh Secretarial Standards (BSS) issued by the Institute of Chartered Secretaries of Bangladesh
(ICSB) and the global best practices applicable for Banks. The said compliances are also reviewed and certified by the
independent auditors, M/s. Suraiya Parveen & Associates, Chartered Secretaries, Financial & Management Consultants
and opined through Certificate of Compliance to the Shareholders as per requirement of BSEC guidelines.

In addition, the report demonstrates the overall responsibilities of Board which include setting the MBL’s strategies,
overseeing, and supporting management in their day to day running of the business, performance monitoring and being
safeguard interest of shareholders.

Adopting best industry practices

Our aim is to raise corporate governance standards to a level that is at par with global standards and ultimately contribute
to the development of Bangladesh economy. Hence, we continue to refine our corporate governance policies in a
continuous manner and look to benchmark the best practices followed by national and international organization and
regulatory bodies.

We welcome engagement with our stakeholders and look forward to your valuable feedback in order to continue our
commitment to further improve on our corporate governance philosophy on a continuing basis.

On behalf of the Board

Sincerely,

Abu Asghar G. Haruni

SVP & Company Secretary
 CORPORATE GOVERNANCE

CORPORATE GOVERNANCE
REPORT
Overview
Corporate Governance is the system
by which business corporations
are directed and controlled. The
corporate governance structure
specifies the distribution of rights
and responsibilities among different
participants in the corporation, such
as the board, managers, shareholders
and other stakeholders and spells out
the rules and procedures for making
decisions on corporate affairs.
During the year 2019, the Bank
continued to maintain the highest
level of standards in corporate
governance. This is to a large extent
driven by the Top Management Team,
Senior Management Team and the
Board of Directors. Most importantly
it is driven by the strong values that
lie at the core of MBL’s culture. MBL
also strongly believe that such high
standards allow the Bank to earn the
respect and trust of the stakeholders
which translates into sustainable
growth in the share value.

Corporate Governance Benchmarks

MBL believes that measures to
implement good corporate governance
must be in place and ingrained in the
Bank’s philosophy. In implementing
the framework for long term value
creation, MBL has established a
foundation of governance excellence
which fortifies its information
gathering and decision making
capabilities, enables it to discharge
its duties towards its stakeholders
with utmost responsibility. MBL gives
utmost importance to key parameters
of corporate governance such as board
system and its independence, function
of board sub-committees, fair financial
reporting, disclosure and compliance,
and consistency of shareholders value
enhancement.
As a locally incorporated Bank, MBL’s
Corporate Governance framework
has been developed and enhanced
based on the basic principles and best
practices outlined in the following:

Regulatory Benchmarks on Internal Benchmarks on

Corporate Governance Corporate Governance

Vision, Mission, Strategic Objectives, Core values,

The Bank Company Act, 1991 (amended up to 2013)
Business Ethics & Corporate Philosophy

Relevant provision/clause of Companies Act 1994 Articles of Association

Corporate Governance Code Notification No. BSEC/

CMRRCD/2006-158/207/Admin/80Dated 3 June, 2018 issued Code of Conduct
by Bangladesh Securities and Exchange Commission
Listing Regulations of Dhaka Stock Exchange and Board and Board Sub Committee Terms of Reference
Chittagong Stock Exchange (ToR)

Bangladesh Bank BRPD Circular no. 11 dated October 27,

Internal Circulars
2013

Other relevant circulars, directions and guidelines published

Internal Policies
by Bangladesh Bank

Corporate governance principles for Bank published by Bank

Manuals
for International Settlements (BIS)

G20/OECD Principles of Corporate Governance

Guidelines
Local and Global best practices
196 Mercantile Bank Limited
Annual Report 2019

Four Pillars of MBL’s Corporate Governance

MBL’s philosophy on Corporate to ensure and achieve excellence a high level of business ethics to
Governance is to bestow a high through professionalism, social maximize the shareholders’ value and
standard of accountability, fairness, responsiveness, sound business to protect their interest.
transparency and independence practices and optimum efficiency.
for performance at all levels and This in turn enables MBL to maintain

Accountability Fairness Transparency Independence

Ensure that Protect Shareholders Ensure timely, Procedures and

management is rights accurate disclosure structures are in
accountable to the on all material place to minimise, or
Board Treat all shareholders matters, including the avoid completely, any
including minorities financial situation, conflicts of interest
Ensure that the Board equitably performance,
is accountable to ownership and Independent Directors
shareholders Provide effective re- corporate governance. i.e. free from the
dress for violations influence of others

Highlights of Corporate Governance 2019

MBL’s philosophy on Corporate for performance at all levels and to efficiency. This in turn enables MBL to
Governance is to bestow a high ensure and achieve excellence through maintain a high level of business ethics
standard of accountability, fairness, professionalism, social responsiveness, to maximize the shareholders’ value
transparency and independence sound business practices and optimum and to protect their interest.

Reformation of Director of the Board Pursuing appropriate board Well-organised 20th Annual General
procedures Meeting conducted

Proposed 16% dividend (11% cash Reviewing & approval of the banks
dividend & 5% stock dividend) policies, procedures, key matrics and
realigning them as & when necessary
in line with the MBL’s strategic plan.
 CORPORATE GOVERNANCE

Board of Directors
The Board of MBL comprises of 15
(fifteen) elected Board of Directors
including the ex-officio Managing
Director & CEO of a high caliber with
diverse backgrounds and experience.
All the directors of MBL possess a wide
array of knowledge and understanding
of both macroeconomic and
microeconomic factors affecting the
Bank, domestic and international
professional experience, operational
experience, and financial, legal,
entrepreneurial & Banking skills.
Their mix of skills, knowledge and
expertise bring a balanced mix of
attributes to the Board and facilitates
broad deliberations and independent
judgment in the decision-making
process.
Indeed, Board of MBL is well-
structured with a Chairman, two
Vice Chairmen and two Independent
Directors. Mr. Morshed Alam, MP is
the Chairman, Al-Haj Akram Hossain
(Humayun) and Mr. Mohd. Selim are
the Vice Chairmen of the Board. The
Chairman and 13 (thirteen) other
Directors are Non-Executive Directors
from which 2 (two) are Independent
Directors and the CEO (Managing
Director) is an Executive Director.

Sl Date of First Date of Last Interval(s) Between Each

Name of the Director
No.
1 Mr. Morshed Alam, MP
Al-haj Akram Hossain
2 29/05/1999
(Humayun)
Status with the Bank
Appointment Appointment Subsequent Appointment
28/05/2006-30/03/2009,
Chairman 28/03/2012-26/04/2013,
29/05/1999 26/06/2019
Non-executive Director 12/05/2016 - 12/06/2016,
20/06/2019-25/06/2019
Vice Chairman 02/08/2003-10/06/2008,
20/05/2018
Non-executive Director 30/04/2018 - 19/05/2018

Vice Chairman 18/05/2005-30/03/2009,

3 Mr. Mohd. Selim 29/05/1999 26/06/2019 12/05/2016 - 12/06/2016,
Non-executive Director 20/06/2019-25/06/2019
Chairman, Executive 26/09/2000-18/08/2001,
4 Mr. Md. Shahidul Ahsan Committee 29/05/1999 12/04/2018 05/01/2003-27/05/2006,
Non-executive Director 16/08/2017- 11/04/2018
Independent Director,
Chairman, Audit
5 Dr. Md. Rahmat Ullah Committee 17/07/2014 02/10/2017

6 Mr. Md. Anwarul Haque
7 Mr. A.S.M. Feroz Alam
8 Mr. M. Amanullah
9 Mr. Md. Abdul Hannan
10 Mr. A.K.M. Shaheed Reza
Mr. Md. Nasiruddin
11
Choudhury
12 Al-haj Mosharref Hossain
13 Mr. M.A. Khan Belal
14 Dr. Md. Hamid Ullah Bhuiyan
15 Md. Quamrul Islam Chowdhury
Non-executive Director
Chairman, Risk
Management 18/05/2005-29/03/2008,
Committee 29/05/1999 20/05/2018
30/04/2018 - 19/05/2018
Non-executive Director
14/06/2004-30/05/2007,
Non-executive Director 29/05/1999 29/03/2018
30/03/2017- 28/03/2018
18/05/2005-30/03/2009,
Non-executive Director 29/05/1999 20/05/2018
30/04/2018 - 19/05/2018
18/05/2005-26/04/2013,
Non-executive Director 29/05/1999 26/06/2019 12/05/2016 - 12/06/2016,
20/06/2019-25/06/2019
27/04/2013- 24/06/2014,
Non-executive Director 26/09/2000 30/03/2017
30/03/2017 - 29/04/2017
Non-executive Director 26/09/2000 26/06/2019 15/7/2012-25/06/2019
28/05/2006-30/03/2009,
Non-executive Director 05/01/2003 29/03/2018 28/03/2012-26/04/2015,
30/03/2017- 28/03/2018
Non-executive Director 30/03/2008 26/06/2019 15/7/2012-25/06/2019
Independent Director
23/10/2019
Non-executive Director
Managing Director
& CEO 24/02/2019
Executive Director
198 Mercantile Bank Limited
Annual Report 2019
1.1 MBL’s Policy on
Appointment of Directors
All the Directors except independent
directors and the CEO were elected
by the shareholders of the company
and the CEO is appointed by the
Board of Directors with the approval
of the Bangladesh Bank. Independent
directors are appointed by the Board
and approved by the shareholders in
the AGM.
MBL always complies with the
direction of the regulatory authorities
regarding the appointment
Directors. Directors are appointed
in compliance with BRPD Circular
no. 11 dated October 27, 2013 issued
by Bangladesh Bank, Corporate
Governance Code Notification No
B S E C /C M R R C D/2 0 0 6 -1 5 8 /2 07/
Admin/80 dated 3 June, 2018
issued by Bangladesh Securities
and Exchange Commission
(BSEC), relevant provisions/clauses
of Companies Act, 1994, Bank
Company Act, 1991 (amended up
to 2018), Articles of Association
of the Bank and other applicable
regulatory frameworks. With regards
to nomination, removal and casual
vacancy of the directors, Bank follows
all relevant rules and regulations of
the respective regulatory bodies. The
members of the Board are elected
each year in the Annual General
Meeting (AGM) by the Shareholders
of the Bank.
1.1.1 Roles and Responsibilities
of MBL’s Board of Directors
The business and affairs of the Bank
are managed under the direction and
oversight of the Board, which also
has the responsibility to periodically
review and approve the overall
strategies, business, organization and
significant policies of the Bank. The
Board also sets the Bank’s core values,
adopts proper standards to ensure
that Bank operates with integrity and
complies with the relevant rules and
regulations.
Key responsibilities in summary are:
Overseeing the sound and
prudent management of the
Bank;
Approving the strategic direction 1.1.2 Code of Conduct for the
of the Bank; Board of Directors
Appointing and determining the The Board of Directors follows a
duration, remuneration of the code of conduct which was adopted
Managing Director & CEO; to provide guidance to directors to
perform their duties in an honest,
Evaluating the performance of responsible and business like manner
the Managing Director & CEO; and within the scope of their authority,
has said for in the laws of country as
Succession planning for the Board, well as memorandum and articles of
Managing Director & CEO and association of the Bank.
Bank’s Top Management Team,
Determining Bank’s dividend 1.1.3 Retirement and Re-
of policy and capital structure; election of Directors
Approving Bank’s risk According to clause 106, 107, and 108 of
management strategy, the Articles of Association of the Bank,
framework and monitoring their 03 Directors retired before the 20th
effectiveness; Annual General Meeting (AGM) held
on June 20, 2019 and all of the retiring
Considering the social, ethical Directors were eligible for re-election
and environmental impact as as Director and 2 (two) new Directors
part of strategy formulation. were elected as Directors at the AGM.
SI.
Name of Directors Mode of Change
No
1 Mr. Md. Abdul Hannan Retired and Re-elected
2 Mr. Morshed Alam, MP Retired and Re-elected
3 Mr. Mohd. Selim Retired and Re-elected
4 Mr. Md. Nasiruddin Choudhury Appointed
5 Mr. M.A. Khan Belal Appointed
In addition, some other changes in directorship during the year were as follows:
SI. Date of
Name of Directors Remarks
No. Change
Office of the Director vacated as
Dr. Mahmood
1 08/05/2019 he completed his 2nd tenor as
Osman Imam
Independent Director of the Bank
Bangladesh Bank accorded
Dr. Md. Hamid Ullah
2 23/10/2019 approval for appointment as
Bhuiyan
Independent Director of the Bank
1.2 Adequate Representation
1
of Non-Executive Directors
2
As per guideline of regulatory bodies,
Mercantile Bank maintains adequate
representation of non-executive
directors in the Board. The Managing
Director is the only Executive Director 12
in the Board of Directors of the Bank.
All other Directors are non-executive
directors.
Nominated Non-Executive director
Independent Non-Executive Derector
Executive Derector

1.3 Board Effectiveness
MBL’s Board plays a fiduciary role
for setting the strategic direction
and long-term goals of the company.
The Board’s responsibilities
include decision-making on major
business strategies; appointment
and confirmation of the Bank’s
leaders; approval on big funding and
investment proposals, annual budget
and financial plans; and reviews to
ensure MBL’s long-term success for
the benefit of the stakeholders. The
Board assures that effective policies
are in place and sound decisions
COMPOSITION
Diversity
Broad range of skills &
experience
Appropriate balance of
independence
BOARDROOM
DYNAMICS
Open dialoges & debates
Access to management &
information
Focus on reputation
1.4 Independence of non-
executive directors from day
to day operations
All Directors are responsible for
bringing independent judgment
on issues of strategy, performance,
resources and standard of business
conduct. Non-Executive Directors are
responsible for providing independent
judgment on the proposals made
by the Managing Director & Chief
Executive Officer.
None of the directors of the Board,
except the Managing Director &
Chief Executive Officer, directly
are made to ensure MBL’s smooth
operation. Regular meeting of the
Board is held, at least once in a month.
In 2019, 20 (twenty) Board Meetings
were held. At these meetings, the
Board reviews the Company’s financial
performance, corporate strategy,
business plans, potential strategic
acquisitions or alliances, strategic
or significant operational issues and
significant matters attended to by
Board committees. The Board also
reviews the Company’s long term
corporate strategy and business
plans and budget, including principal
issues and challenges.
MBL'S BOARD
EFFECTIVENESS
get involved in the supervision of
Senior Management Team or any
other executive duties and day-to-
day operations of MBL; rather, they
provide their strategic direction
and guidance to the management
in the meeting of the Board and its
committees.
1.5 Different position of the
Chairman and the Chief
Executive Officer
The functional responsibilities of the
Chairman of the Board and of the
Managing Director & CEO are kept
CORPORATE GOVERNANCE
MBL’s board effectiveness has been
greatly enhanced through: careful
forward planning of board-related
activities; board meetings being
run in an efficient manner; regular
assessments of board performance;
having a board succession plan; and
the effective use of sub-committees
(Executive Committee, Audit
Committee and Risk Management
Committee).
The board of MBL has structured
and operated in such a way so that
it can meet its strategic objectives
efficiently.
STRUCTURE
Strong & ethical
leadership
Three sub-committee
GOVERNANCE
PRACTICES
Oversight of
Management
performance
Board/Management
succession planning
Candid self-evaluations
separate and independent of each
other. The Chairman of the Bank is
elected by the directors of the Bank
and the Managing Director & CEO is
appointed by the Board of Directors
subject to obtaining permission from
Bangladesh Bank.
1.6 Roles and responsibilities
of the Chairman
The Board elects one of the Non-
executive Directors as Chairman.
Present Chairman is Mr. Morshed
Alam, MP who became Chairman on
July 04, 2019.
200 Mercantile Bank Limited
Annual Report 2019
Leadership to the Board
The Chairman provides leadership to the Board, ensures
that the Board works effectively and discharges its
responsibilities and ensures that all key and appropriate
issues are discussed by the Board in a timely manner.
Oversight of the affairs of MBL
Sometimes the Chairman conducts on-site inspection of
Bank-branch or financing activities under the purview of
the oversight responsibilities of the Board. He has the right
to call for any information relating to Bank’s operation for
investigation into any such affairs and thereby submit such
information or investigation report to the meeting of the
Board or to the Executive Committee and, if considered
necessary, with the approval of the Board, he may adopt
pragmatic initiatives with reference to the set rules through
the Managing Director & CEO. Besides, any complaint raised
against the Managing Director & CEO is required to be
apprised to Bangladesh Bank through the Board along with
the statement of the Managing Director & CEO.
Clear, concise and focused Agenda setting
The Chairman is primarily responsible for drawing up and
approving the agenda for each Board meeting, taking
into account where appropriate, any matters proposed
by the other Directors for inclusion in the agenda. The
Chairman may delegate the drawing up of the agenda to
the Company Secretary.
Ensure all Directors are properly briefed
The Chairman ensures that all Directors are properly briefed
on issues arising at Board Meetings and also ensures that
Directors receive adequate information in a timely manner.
Active Contribution
The Chairman encourages all Directors to make a full and
active contribution to the Board’s affairs and take the lead
to ensure that the Board acts in the best interests of the
Bank.
In addition, the Chairman facilitates the effective
contribution of Non-executive Directors in particular and
ensures constructive relations between Executive and
Non-executive Directors.
Effective communication with shareholders
The Chairman ensures that appropriate steps are taken to
maintain effective communication with shareholders and
that the views of shareholders are communicated to the
Board.

1.6.1 Independence of
Independent Directors
Mercantile Bank complied with
relevant guidelines of Bangladesh
Bank circulars, rules and regulations
of the Bank Companies Act, 1991
(amended up to 2018) and guidelines
of Bangladesh Securities and
Exchange Commission regarding
composition of its board of directors.
While appointing new directors
Mercantile Bank emphasizes the
mix of knowledge, skills, experience
and perception. The directors are
elected by the shareholders in AGM.
In case of nomination, removal, causal
vacancy and alternate directors,
Mercantile Bank follows all relevant
rules and regulations. The Bank’s non-
executive directors are independent
of management and free from day to
day business of the bank.
1.7 Annual Appraisal of the
Board’s Performance
The Board members have always
taken decisions that have benefitted
the Bank as a whole and they have
always performed their duties
accordingly. The Board conducts
an annual assessment of the
performance and effectiveness of
the Board as a whole and of its
Committees and individual directors.
Performance of each Committee of
the Board is initially discussed and
reviewed within each Committee and
then subsequently reviewed as part
of the Board’s annual assessment.
In addition, evaluation of the Board
also takes place at the AGM by the
Shareholders.
1.8 Annual Evaluation of the
Managing Director & CEO by
the Board
Managing Director & CEO’s
performance is evaluated annually
through aligning with business
strategies of MBL. Targets are set at
the beginning of every financial year
by the Board which is in line with
the short- medium- and long-term
objectives of MBL. Then performance
is evaluated at the end of financial
year. The Managing Director & CEO
is also evaluated on an annual basis
and is also given Key Performance
Indicators (KPI’s) for the years
ahead. MBL Board of Directors
clearly defined and approved the
roles, responsibilities and duties of
Managing Director & CEO.
At the end of each financial year,
the Board evaluates the set targets
and the actual performance
Key evaluation indicators for
Managing Director & CEO as well as
Management i.e. Profitability, Yearly
budget achievement, NPL ratio,
Return on Equity, Return on Assets,
Earning per Share, Capital Adequacy
Ratio, CAMELS Rating etc. are the
common ones which are reviewed by
Board of Directors on monthly basis.
Distribution of time spent in Board Meeting
10%
25%
20%
Strategic planning Performance monitoring
Governance &
Risk Management
Financial Reporting
Process & internal
Others Controls
1.9 Policy on Training of Board
of Directors
Mercantile Bank is fully committed
to maintain highest standards
of Corporate Governance and
professionalism. Most of the Directors
of the Bank are on the Board for many
years. They have acquired enough
knowledge and acumen to lead the
Bank well to the path of progress.
Every Director is given appropriate
induction when first appointed to
the Board with regard to the affairs
of the Bank and laws and regulations
applicable to the Bank. Further, MBL
has developed its training policy in
order to attain following objectives;
To empower and equip the Board
with skills and attitudes required
to perform their challenging
CORPORATE GOVERNANCE
tasks and play their role in a
transparent, objective and ethical
manner as per the best corporate
governance practices.
To keep update related to Banking
business such as relevant laws,
policy guidelines, circulars, rules
and regulations issued by the
regulatory authorities; so that
they could effectively discharge
the responsibilities as a Director
of the Bank.
To assist Board members for
formulating right strategies and
effective plans for exploring
both internal and external
opportunities and challenges.
For this purpose, training at home
and abroad especially on the
Corporate Governance is encouraged
25% by the board. As such, whenever
opportunities arise, Bank utilizes the
same to train and orient its members.
1.10 Financial Acumen,
Accounting Knowledge and
Expertise of Directors
The Board as a collective unit is well-
20%
equipped to guide the business and
strategy of MBL in an efficient way.
The Board of Directors of MBL
comprises of members who have
optimal mix of skills, expertise
and experience in finance,
economics, management, business
administration, marketing and law
etc. Majority of other Directors are
either successful entrepreneurs or
seasoned professionals, are also well
conversant in the field of business,
economics and administration. Board
of Directors of MBL can devise the
appropriate policy for the growth
of the Bank while having expertise
skills, ability to perceive matters in
a bigger perspective and adequate
independence to review the
management in a sensible manner.
Members of the Board also possess
experience in finance and banking
thus there is sufficient financial
acumen and knowledge within the
Board to offer guidance on matters
of finance.
202 Mercantile Bank Limited
Annual Report 2019

1.10.1 Length of Professional In addition, the Board considers I. Executive committee

Experience
All members of MBL’s Board are
extensively accomplished in their
respective fields and have professional
experience of over 30 years.
1.11 Board meeting
The Board normally meets on monthly
basis and the meeting dates are
scheduled well in advance to enable
the Directors to plan ahead. When
required, the Board will meet on ad
hoc basis to consider urgent matters.
Mercantile Bank as per requirement
of BSEC conduct Board Meetings and
record the minutes of the meetings as
well as keep the required books and
records in line with the provisions of
the relevant Bangladesh Secretarial
Standards (BSS) as adopted by
Institute of Chartered Secretaries of
Bangladesh (ICSB).
strategic matters at each Board
meeting, the Board also discusses
our strategic plan and approves
Bank’s overall strategic direction on
an annual basis.
The Board also conducts a half
year review of Bank’s strategy. The
Board conducts workshops on
specific subjects relevant to our
business throughout the year. Board
meetings are characterized by robust
exchanges of views, with Directors
bringing their experience and
independent judgment to bear on the
issues and decisions at hand.
2.0 Board Committee
To increase efficiency and allow
deeper focus in specific areas,
Board established following three
specialized Board committees in line
with BRPD Circular No. 11 dated 27
October, 2013;
II. Audit Committee and
III. Risk Management committee.
The committees are created and
mandated by the Board. Each
committee has specified roles and
responsibilities that set out in line
with Bangladesh Bank, Bangladesh
Securities and Exchange Commission
(BSEC) and other regulatory
guidelines.
2.1 Executive Committee
The Executive committee (EC) of the
board of MBL has been formed with
the members of the board to continue
the urgent and daily or routine works
between the intervals of two board
meetings. Executive committee
performs according to their terms of
reference determined by the board of
directors.

Appointment and Composition of the Executive Committee (EC)

i. Members of the committee has been nominated by the board of directors from themselves;
ii. The executive committee has been comprised of following 07 (Seven) members;

Sl. Status with Status with the Educational Meeting

Name
no. the Bank Committee Qualification Attendance
1 Mr. Md. Shahidul Ahsan Director Chairman Masters 41/43

2 Mr. Md. Anwarul Haque Director Member B. Sc. Engg. (Civil), BUET 32/43

3 Mr. A.S.M. Feroz Alam Director Member Graduate 17/20

4 Mr. M. Amanullah Director Member Graduate 37/43

5 Mr. Md. Abdul Hannan Director Member Engineer 15/20

6 Mr. A.K.M. Shaheed Reza Director Member M.Com 18/20

7 Al-haj Mosharref Hossain Director Member Graduate 36/43

iii. Company secretary of the Bank is the secretary of the executive committee.

Roles and Responsibilities of
the Executive Committee:
The executive committee
decides or acts in those cases
as instructed by the Board of
directors that are not specifically
assigned on full board through
the Bank Company Act, 1991 and
other laws and regulations.
The executive committee takes all
necessary decisions or approves
cases within power delegated by
the board of directors.
All decisions taken in the
executive committee are ratified
in the next board meeting.
In addition, The Executive Committee
(EC) of the board of MBL ensures
efficient, competent, compliant and
secured structure for approval of credit
proposals and business decisions. The
EC from time to time reviews policies
and guidelines issued by Bangladesh
Bank regarding credit and other
operations that are customized and
adopted by the management after
approval of the Board of Directors.
EC approves credit proposals as per
approved policy of the Board.
Meetings of the Executive
Committee (EC)
43 (forty-three) meetings of the
Executive Committee were held in
the year 2019.
2.2 Audit Committee
MBL board approves the objectives,
strategies and overall business
plans of the Bank and the audit

committee assists the board in
fulfilling its oversight responsibilities.
The committee reviews the financial
Appointment and Composition of Audit Committee:
i. Members of the committee have been nominated by the board of directors from the directors;
ii. The audit committee has been comprised of following 05 (five) members, with 2 (two) independent directors and all
the members are non-executive directors who don’t take part in the day to day operations of the Bank.
Name
Independent
Dr. Md. Rahmat Ullah
Al-haj Akram Hossain
(Humayun)
Mr. Md. Nasiruddin Choudhury
Mr. M. A. Khan Belal
Independent
Dr. Md. Hamid Ullah Bhuiyan
iii. Company secretary of the Bank is the secretary of the audit committee.
Qualifications of the Member
of Audit Committee:
All members of the Audit Committee
are suitably qualified and having
expert knowledge of Finance,
Banking, Management, Economics,
Accounting and Law.
i. Integrity, dedication, and
opportunity to spare time in
the functions of committee
have been considered while
nominating a director to the
committee ;
ii. Each member is capable of
making valuable and effective
contributions in the functioning
of the committee;
iii. To perform his role effectively
each committee member has
adequate understanding of
the detailed responsibilities of
the committee membership
as well as the Bank’s business,
operations and its risks and
iv. All members of the audit
committee of the Board of MBL
are “financially literate” and
they have extensive knowledge
and expertise in the field of
Finance, Banking, Management,
Economics, Accounting and Law.
The Chairman of the Audit Committee
Dr. Md. Rahmat Ullah is the Dean of the
Faculty of Law and a Professor in the
Department of Law under the same
reporting process, the system of
internal control and management of
financial risks, the audit process, and
Status Position Educational Qualification
Chairman
Director
Director Member
Director Member B. Sc. Engg. (Civil), BUET
Director Member M.Sc. (Chemistry)
Member
Director
Faculty of the University of Dhaka. He
was the Provost of Kabi Jashim Uddin
Hall (2013-2019), University of Dhaka.
He holds the position of the Director
of the ‘Quality Assurance Cell’ of the
University of Dhaka and is a Syndicate
& Senate member of the University of
Dhaka. He held the position of General
Secretary of the Dhaka University
Teachers Association (DUTA) in the
year 2016-2017. In December 2017,
he has been appointed as a member
to the Bangladesh Judicial Service
Commission (BJSC) by his Excellency
President of the People’s Republic
of Bangladesh for 5 years. Other
than these, he is an Adviser to the
Department of Law, City University,
Bangladesh; Governing body member,
Alhaz Mockbul Hossain University
College, Dhaka, and an Independent
Director of the Mercantile Bank
Limited. He completed LL.M from
Baku State University, Azerbaijan
and PhD from Kiev State University,
Ukraine. During his professional
carrier, he was a syndicate member
(2005-2009) to the University of
Dhaka and other Universities and
worked as adjunct faculty member
to several private universities.
He participated in professional
workshops, seminars and trainings
in India, Nepal, China, Belgium,
Mongolia, Malaysia, Netherland,
Switzerland, Thailand, Qatar and Iran.
His fields of interest are human rights
and commercial laws.
CORPORATE GOVERNANCE
the Bank’s process for monitoring
compliance with laws and regulations
and its own code of business conduct.
Meeting
Attendance
LLM, PhD 13/13
Graduate 8/8
8/8
8/8
M. Com., PhD 2/2
Our another Independent Director,
Dr. Md. Hamid Ullah Bhuiyan, one
of the distinguished professors of
Department of Accounting and
Information System, University of
Dhaka. Mr. Bhuiyan completed his
Bachelor and Masters in Accounting
from University of Dhaka with first
class first position in 1994 and 1995
respectively. He has also awarded PhD
Degree in Accounting and Finance
from La Trobe University, Melbourne,
Australia in 2014. His main area of
interest is “Earnings Management
around the IPO’s and Seasoned
Equity Offerings”. Mr. Bhuiyan has
several peer reviewed articles in both
national and international journals. He
has also presented several research
papers in international business
conferences.
Terms of Reference (ToR) for
Audit Committee:
The ToR of the Audit Committee of
MBL has been specified in line with
the provisions of BRPD Circular No.
11 dated 27 October 2013 issued
by Bangladesh Bank, Corporate
Governance Code Notification No
B S E C /C M R R C D/2 0 0 6 -1 5 8 /2 07/
Admin/80 dated 3 June, 2018
issued by Bangladesh Securities and
Exchange Commission (BSEC), DSE
& CSE listing regulations, Bank’s
own policies, procedures, manuals
and other best practice corporate
governance guidelines and standards.
204 Mercantile Bank Limited
Annual Report 2019
Audit Committee takes up the
responsibilities to supervise the
management and control of various
risk factors coming up from Banking
operation. The Committee work to
strengthen the internal control system
and to act as a connecting force
between internal and external auditors
in order to bring a disciplined Banking
operation. Audit Committee reviews
the financial reporting process,
accounting policies & principles,
hiring of external auditors, significant
related party transaction, the system
of internal control and management,
the audit process, compliance with
laws and regulations, and its own
codes of business conduct.
Internal Audit activity
investigation/retain external
counsel:
The Audit Committee established
terms and guidelines so that it
could function effectively and
smoothly. These terms and guidelines
were created to define the roles
and responsibilities of the Audit
Committee. The Committee is also
empowered to investigate/enquiry
employees and retain external
counsel when required.
Members are Non-Executive
Directors:
All members of the Audit Committee
are Non-executive Directors. No
executive of the Bank is eligible to
become a member of the Audit
Committee. In addition, no member
of Executive Committee has been
FINANCIAL INTERNAL
REPORTING AUDIT
nominated as the member of the
Audit Committee.
Head of Internal Control &
Compliance Division’s Access
to Audit Committee:
MBL’s ICCD has a broad scope of
work to investigate at all levels. Audit
Unit under ICCD is independent
from the Management with a direct
access to the Board of Directors and
the Audit Committee of the Board.
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.
Recommendation for
appointment of External
Auditors:
The Audit Committee does an
extensive review on the audit work
done by the auditors after the audited
financial statements have been signed.
The Audit Committee evaluates the
performance of auditors extensively
and ensures that there were no
threats to independence or any other
issues with the auditors. The Audit
Committee scrutinizes the applications
of the auditors and recommends
for appointment/reappointment of
auditors for the next year.
Meetings of the Audit
Committee
The Audit Committee has
conducted 13 (thirteen) meetings
during the year 2019 and has
detailed discussions and reviewed
Audit Committee's Role
INTERNAL EXTERNAL
CONTROL AUDIT
session with the Head of ICC,
Head of Internal Audit, External
Auditors regarding their findings,
observations and suggestions with
corrective measures on the related
areas and on other issues of Bank
affairs that need improvement;
The quorum of the meeting of the
Audit Committee is constituted in
presence of either two members
or two third of the members of
the Audit Committee, whichever
is higher, where presence of an
independent director is a must;
To ensure active participation and
contribution by the members,
a detailed memorandum is
distributed to committee
members well in advance before
each meeting
All decisions/observations of the
committee are noted in minutes and
The Audit Committee instructed
the management to follow those
suggestions and monitored
accordingly from time to time.
Roles and Responsibilities of
Audit Committee
In compliance with BRPD Circular
No. 11 dated 27 October 2013 issued
by Bangladesh Bank, Corporate
Governance Code Notification No
B S E C /C M R R C D/2 0 0 6 -1 5 8 /2 07/
Admin/80 dated 3 June, 2018
issued by Bangladesh Securities and
Exchange Commission (BSEC), the
role of Audit Committee of the Board
of MBL is following:
COMPLIANCE OTHERS

Audit Committee Role on
Financial Reporting
Overseeing the financial
reporting process;
Reviewing the audited financial
statements with management
and the external auditors
to ensure that the financial
statements are fairly presented in
conformity with the accounting
standards set by the regulatory
authority in all material aspects;
Meeting with management and
the external auditors to review
the financial statements before
their finalization;
Discussing with management
the MBL’s major financial
risk exposures and the steps
that management has taken
to monitor and control such
exposures;
Guiding Bank’s management
in view of optimum usage and
allocation of financial resources.
Audit Committee Role on
Internal Audit
Monitoring Internal Audit and
Compliance process to ensure
that it is adequately resourced,
including approval of the Internal
Audit and Compliance Plan and
reviewing of the Internal Audit
and Compliance Report;
Reviewing the adequacy of
internal audit function;
Guiding and reviewing “Internal
Audit Process and Procedure”;
Monitoring whether internal audit
working independently from the
management;
Reviewing the activities and
organizational structure of the
internal audit function and ensure
that no unjustified restrictions or
limitations are made;
Reviewing whether the findings
and recommendations made
by the internal auditors are duly
considered by the management
or not;
Encompasses the examination
and evaluation of the adequacy
and effectiveness of MBL
system of internal controls,
risk management procedures,
governance processes and the
quality of performance in carrying
out assigned responsibilities
Audit Committee Role on
establishing Internal Control
Reviewing the measures
taken by the management for
building a suitable Management
Information System (MIS)
including computerization
system and its applications;
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
Evaluating 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;
Reviewing internal control
strategies recommended by
internal and external auditors
have been implemented by the
management;
Reviewing the existing risk
management procedures for
ensuring an effective internal
check and control system
Review of Audit Committee on
Internal Control
The Internal Audit Unit under ICCD of
the Bank reviews the internal control
systems of the Bank and ensures
that internal controls are considered
properly managed and satisfactorily
supervised. The Internal Audit Unit
reviews internal controls throughout
all divisions/branches of the Bank and
then reports to the Audit Committee
on their findings. The Audit
Committee then reviews the report
submitted by the Internal Audit Unit
and provides feedback on the lapses
CORPORATE GOVERNANCE
found. The Audit Committee also
guides the Internal Audit Unit on how
to properly monitor internal control
and ensure that internal controls
are being correctly administered
throughout the Bank. The Audit
Committee is committed that internal
controls are well conceived, properly
administered and satisfactorily
monitored by the Bank in 2019.
Audit committee Role in
compliance with laws and
regulations
There are several regulatory
authorities, primarily Bangladesh
Bank, who are associated with the
Bank’s operation and performance.
MBL is obliged to act in accordance
with applicable laws and regulations.
The Audit Committee supervises and
guarantees the Board, that the Bank
obeys all the applicable laws, rules
and regulations of various regulatory
authorities. The Audit Committee
takes all measures to ensure that MBL
complies with all laws and regulations
and that all statutory dues are being
settled timely.
Involvement of Audit
committee in the external
audit function
The Audit Committee analyses
the audited financial statements
with management and the external
auditors to ensure that the Company’s
financial statements are objectively
presented in compliance with the
relevant International Financial
Reporting Standards (IFRS) and
Internal Accounting Standards (IAS)
in all substantial aspects, based on
its review and consultations with
management and the external
auditors. External Auditors’ are
requested to attend the Audit
Committee meeting where Financial
Statements of MBL is placed for
review and recommendation. The
Committee also implements an annual
assessment of the efficiency of the
Company’s Internal Audit function
and certifies that Internal Audit has
sufficient resources to accomplish
its duties. The Audit Committee
has quite a few roles regarding the
external audit functions:
206 Mercantile Bank Limited
Annual Report 2019

Involvement of Audit
Commiteee in External
Audit Functions
Effective Recommendation
Co-ordination For Appointmnt /
Re-appointment

Ensuring Reviewing Reviewing

Independence The External And Approving
Auditor's Finding Non-audit Works

1. Ensuring effective coordination the statutory and regulatory the findings and ensures that
of external audit function: It independence requirements they are satisfied with the actions
is important that there is open for auditors. The technical that management has taken.
communication between the competency of the auditor
auditor and the audit committee alone is not appropriate to 4. Reviewing and approving non-
to ensure the best use of their ensure a high-quality audit. audit work assigned to the
resources. This communication The auditor also must exercise external auditor and ensuring
also aids in assessing the a high level of objectivity and that such work does not
auditor’s performance. The professional skepticism. The compromise the independence
quality of communications also Audit Committee’s interactions of the external auditor: External
provides opportunities to assess with the auditor during the audit auditors should not carry out work
the auditor’s performance. The provide numerous opportunities
that does not relate directly to
auditors should correspond to evaluate whether the
the discharge of audit functions,
with the audit committee as auditor demonstrated integrity,
if it would impair the auditors’
noteworthy issues develop. Such objectivity and professional
independence, or might give rise
communications will emphasis skepticism.
to a reasonable perception that
on the key accounting or auditing
3. Reviewing the external auditors’ their independence could be
issues that, in the auditor’s
findings in order to be satisfied impaired. The Audit Committee
finding, give rise to a greater
that appropriate action is being must ensure that external
risk of material misstatement of
taken: There are many reviews auditors do not undertake any
the financial statements, as well
that happen throughout the
as any questions or concerns of work that might compromise
entire process during the Audit
the Audit Committee. Through their independence. If any work
Committee meetings held. The
proper communication, the Audit is being done by the external
Audit Committee extensively
Committee ensures the effective auditors, the Audit Committee
reviews all findings of the
coordination of the external audit must approve before the work
external auditors and ensures
function.
that management is informed commences. In short, the Audit

2. Ensuring independence of and is taking action for resolving Committee is responsible that

external auditors: The auditor any discrepancies. Before the the independence of the external
of MBL must be independent. financial statements are signed, auditors is not comprised under
Audit committee is familiar with the audit committee reviews all any circumstance.

5. Recommending external auditor
for appointment/reappointment:
The Audit Committee does an
extensive review on the audit
work done by the auditors after
the audited financial statements
have been signed. The Audit
Committee evaluates the
auditors on a very detailed level,
and ensures that there were no
threats to independence or any
other issues with the auditors. The
Audit Committee scrutinizes the
applications of the auditors and
recommends for appointment/
reappointment for the next year/
AGM.
Involvement of Audit
committee in selecting
appropriate accounting
policies
The Audit Committee shall support
the Board of Directors in certifying
that the financial statements
reflect a true and fair view of the
company and is maintaining a good
supervising system within the Bank.
The Board delegates the duty to the
Audit Committee to decide on the
appropriate accounting policies that
are in line with applicable accounting
standards like International
Accounting Standards (IAS) and
International Financial Reporting
Standards (IFRS), as per requirements
under Financial Reporting Act, 2015
and circulars, guidelines, policies,
notifications and requirements from
Bangladesh Bank and Bangladesh
Securities and Exchange Commission
(BSEC) as well as other regulatory
authorities. After choosing the
appropriate accounting policies, the
Audit Committee recommends the
Board concerning implementation of
the selected accounting guidelines.
The Board subsequently accepts
the selected accounting policies for
implementation.
CORPORATE GOVERNANCE
Audit committee’s Reporting of the Audit
involvement in the review of Committee
annual and interim financial (a) Reporting to the Board of
reports Directors
(i)
The Audit Committee
In compliance with the Condition-5 reports on its activities to
of Corporate Governance the Board.
Code Notification No BSEC/ (ii)
The Audit Committee
CMRRCD/2006-158/207/Admin/80 immediately reports to the
Board on the following
dated 3 June, 2018 issued by
findings, if any:
Bangladesh Securities and Exchange
(b) Reports on conflicts of interests;
Commission (BSEC) Corporate
(c) Suspected or presumed fraud
Governance guideline of BSEC, the
or irregularity or material defect
Audit Committee reviews along with identified in the internal audit
the management, the quarterly and and compliance process or in the
half yearly financial statements before financial statements;
submission to the Board for approval.
(d) Suspected infringement of laws,
The Audit Committee always ensures
regulatory compliances including
that the financial statements reflect
securities related laws, rules and
a true and fair view of the company regulations; and
and analyzes the financials for any
(e) Any other matter which the Audit
discrepancies.
Committee deems necessary is
Reliability of management disclosed to the Board.
information used for 2.3 Risk Management
computation in financials Committee
The Audit committee ensures that the To play an effective role in mitigating
management information used for impending risks arising out from
computation in the financials is true strategies and policies formulated
and fair. In order to ensure reliability of by the Board and to carry out the
the information, the Audit Committee responsibilities efficiently, a risk
always holds extensive meeting with management committee has been
management regarding issues of formed in line with BRPD Circular
the financial statements. The Audit no. 11 dated October 27, 2013
Committee queries management issued by Bangladesh Bank. After
identifying and assessing several
on issues that they find material to
risk factors like credit risks, foreign
the financial statements and makes
exchange risks, internal control and
sure that management has a proper
compliance risks, money laundering
response to their queries. The Audit
risks, information and communication
Committee is able to understand the
risks, management risks, interest
reliability of the information used
risks, liquidity risks etc.; the risk
for computation in the financials
management committee scrutinizes
through meetings with management. whether appropriate risk management
Management always assures that the measures are being put in place and
information presented is true and fair applied and whether adequate capital
and that all the information is derived and provision is being maintained
from the system of the Bank. against the risks identified.
208 Mercantile Bank Limited
Annual Report 2019

Appointment and Composition

i. Members of the committee are nominated by the board of directors from themselves;

ii. The Risk Management Committee comprises of following 05 (five) members;

Sl. Status with the Status with the Educational Meeting

Name
no. Bank Committee Qualification Attendance
1 Mr. Md. Anwarul Haque Director Chairman B. Sc. Engg. (Civil), BUET 3/3
Al-haj Akram Hossain
2 Director Member Graduate 3/3
(Humayun)
3 Mr. Mohd. Selim Director Member Graduate 3/3
4 Mr. Md. Nasiruddin Choudhury Director Member B. Sc. Engg. (Civil), BUET 3/3
5 Mr. M.A. Khan Belal Director Member M.Sc. (Chemistry) 3/3

iii. Company secretary of the Bank is the secretary of the Risk Management Committee.

Roles and Responsibilities iii) Analysis and approval of Risk lending risk, market risk, and
of the Risk Management Management policy: management risk.
Committee:
Risk management policies vi) Other responsibilities:
i) Risk identification & control & guidelines of the Bank are
policy : reviewed annually by the 1. Committee’s decision and
committee. The committee suggestions are submitted to the
Formulation and implementation proposes amendments if Board of Directors quarterly in
of appropriate strategies for necessary and send it to the short form;
risk assessment and its control Board of Directors for their
is the responsibility of Risk 2. Complies instructions issued from
approval. Besides, other limits
Management Committee. time to time by the controlling
including lending limit should be
Risk Management Committee body;
reviewed at least once annually
monitors risk management and should be amended, if 3. Internal & external auditors
policies & methods and amend
necessary. submit respective evaluation
it if necessary. The committee
report whenever required by the
reviews the risk management iv) Storage of data & Reporting
committee.
process to ensure effective system:
prevention and control measures. Meetings:
Adequate record keeping &
ii) Construction of organizational reporting system developed 1. The Risk Management Committee
structure: by the MBL management held 07 (seven) meetings during
is approved by the risk the year 2019.
The responsibility of Risk
management committee. The
Management Committee
committee ensures proper use 2. The committee invites Managing
is to ensure an adequate
of the system. The committee Director and CEO, Chief Risk
organizational structure for
minutes its proposal, suggestions Officer and any other Officer
managing risk within the Bank.
& summary in a specific format & to its meetings, if it deems
The Risk Management Committee
inform the Board of Directors. necessary;
supervises formation of separate
management level committees v) Monitoring the implementation of 3. To ensure active participation and
and monitors their activities for overall Risk Management Policy: contribution by the members,
the compliance of instructions a detailed memorandum is
of lending risk, foreign exchange Risk Management Committee distributed to committee
transaction risk, internal control monitors proper implementation members well in advance before
& compliance risk, money of overall risk management each meeting;
laundering risk, information & policies. They monitor whether
communication risk including proper steps have been taken 4. All decisions/observations of the
other risk related guidelines. to mitigate all risks including committee are noted in minutes.
 CORPORATE GOVERNANCE

3.0 Directors’ Report on
Compliance with Best Practices
on Corporate Governance:
The status of compliance of corporate
governance guidelines issued by
Bangladesh Bank has been presented
in later part of this report. Suraiya
Parveen & Associates, Chartered
Secretaries, Financial & Management
Consultants, duly certified the
compliance status of corporate
governance guidelines and issued a
report.
3.01 Role of Company
Secretary
The Company Secretary of the Bank
provides advice and support to the
Board and is accountable to the
Board, through the Chairman, for
all matters relating to the proper
functioning of the Board and its
Committees. The Company Secretary
is responsible for advising the Board
on governance matters and ensuring
compliance with Board and Board
Committee Charters and procedures.
The Company Secretary is appointed
and removed by the Board.
3.02 Role of Chief Financial
Officer (CFO)
A Chief Financial Officer (CFO) is
responsible for managing the financial
actions of a company. CFO oversees
all the financial operations of the
organization, including accounting,
financial reporting, tax, business
control. CFO manages all aspects
of financial matters and decision
making. Basically, the CFO directs a
company’s financial goals, objectives
and budgets. He also advises the
Board of Directors on the kind of
actions to be adopted in upholding
the high levels of financial control
and reporting. Key responsibility
and overall financial health of the
Bank is separately disclosed in CFO’s
statement.
3.03 Role of Head of Internal the bank as a whole and its
Audit and Compliance subsidiaries. It exercises adequate
oversight over subsidiaries while
The Head of Internal Audit and respecting the independent legal
Compliance (HIAC) is responsible and governance responsibilities
for Bank’s strategic risk-based
that might apply to its subsidiary
internal audit plan and managing the
boards. In order to fulfill its
internal audit function in accordance
responsibilities, the board of the
with Bank’s internal audit charter.
parent company:
Responsibilities include providing
reasonable assurance on the Established a group structure
effectiveness of the organization’s (including the legal entity
risk management and the strength of and business structure) and
internal controls. The position assesses a governance framework
organization-wide compliance with clearly defined roles and
with Bank’s internal policies and responsibilities, including those
procedures, laws and regulations,
at the parent company level and
contractual terms and conditions.
those at the subsidiary level;
The Head of Internal Audit reports
directly to the Audit Committee of Define an appropriate subsidiary
Bank’s Board of Directors. board and management
structure to contribute to the
3.04 Attendance of CEO, CFO,
effective oversight of businesses
CS & HIAC in Board Meeting
and subsidiaries, which takes into
accounts the different risks to
The CEO, CS, CFO & HIAC of the
which the group, its businesses
Bank attend the meetings of Board
and its subsidiaries are exposed.
of Directors. As Per BSEC that they
are not attending the meeting which
Assess whether the group’s
involve consideration of an agenda
corporate governance
item relating to their personal matters.
framework includes adequate
In addition, they are not entitled for
policies, processes and controls
any remuneration for attending such
and addresses risks across
meetings of the Board of Directors.
the business and legal entity
4.00 Governance of Board structures;
of Directors of Subsidiary
Ensure the group’s corporate
Company
governance framework includes
In group concept, Mercantile Bank appropriate processes and
Limited is parent company with controls to identify and address
having the following two subsidiary potential intergroup conflicts of
companies: interest, such as those arising
from intergroup transactions;
Mercantile Bank Securities
Limited, incorporated in Approve policies and clear
Bangladesh – 98.61% owned strategies for establishing new
structures and legal entities and
Mercantile Exchange House (UK)
ensure that they are consistent
Limited, incorporated in United
with the policies and interests of
Kingdom - 100% owned
the group complied all regulatory
The board of the parent company requirement regarding monitor
is aware of the material risks and and review of subsidiary
issues that might affect both companies;
210 Mercantile Bank Limited
Annual Report 2019

Have sufficient resources It reviews the reports submitted an effective control system namely
to monitor compliance of by its audit committee at Internal Control and Compliance
subsidiaries with all applicable quarterly rests regarding Division (ICCD). ICCD continually
legal, regulatory and governance compliance of recommendations recognizes and assesses all the
requirements; maintain an made in internal and external material risks that could adversely
effective relationship with audit reports and the Bangladesh affect the achievement of the Bank’s
regulator and through the Bank inspection reports. goals. The risk assessment by internal
subsidiary board or direct control focuses more on compliance
contact, with the regulators of all
5.1 Internal Control and Audit
with regulatory requirements, social,
subsidiaries.
Function Compliance
ethical and environmental risks that
To ensure good governance in the affect the Banking industry. It ensures
The details information of parent
Bank management it is essential to reliable financial and managerial
companies Board is given in separate
have specific internal control. A strong information that promote better
part of this Annual Integrated Report.
internal control system can ensure strategic decision for the Bank.
5.0 Directors’ responsibility to the achievement of Banks’ goals and
establish appropriate system objectives with long term profitability. 5.2 Key features of Internal
of internal control It also helps to comply with rules Control System of MBL
and regulation as well as policies
In line with the Bank Company Act, and to minimize the financial and The entire system of internal
1991 (amended up to 2013) the reputational losses. To carries out the control helps MBL to establish
newly included Section 15 (kha) & analysis and independent appraisal of an environment which does not
(ga) MBL gives the responsibility the adequacy and effectiveness of the encourage corruptibility as well as
to the Board of directors for Bank’s risk management framework fraudulent activities. Following are
establishing policies for the Bank and internal control environment, the key features of internal control
company, for risk management, MBL has been designed and formed system:
internal controls and compliance
for ensuring their implementation.
The Directors acknowledge their Internal Control Process
overall responsibility for the Bank’s
systems of internal control for
establishing efficiency, effectiveness,
reliability, timeliness, completeness
and compliance with applicable laws
and regulations. Along with Board of Monitoring
Inf
n
tio

orm

Directors internal control is affected

ica

ati

by the senior management, audit

un

on
mm

committee and all level of personnel.

&C
Co

Control Activities
om
n&

mu

The board is vigilant on the

o
ati

nic

internal control system of the

rm

ati
o

Bank in order to attain and

on
Inf

maintain satisfactory qualitative

Risk Assessment
standard of its loan and
investment portfolio.

The board establishes such an

internal control system so that
the internal audit process can be Control Environment
conducted independently from
the management.
 CORPORATE GOVERNANCE

5.2.1 Control Environment
The Board of Directors along with
Senior Management Team of MBL
establishes the tone at the top
regarding the importance of internal
control including expected standards
of conduct. Management reinforces
expectations at the various levels
of MBL. The control environment
comprises the integrity and ethical
values of MBL; the parameters
enabling the board of directors to
carry out its governance oversight
responsibilities; the organizational
structure and assignment of authority
and responsibility; the process for
attracting, developing, and retaining
competent employees; and the rigor
around performance measures,
incentives, and rewards to drive
accountability for performance. The
resulting control environment has
a pervasive impact on the overall
system of internal control.
5.2.2 Risk assessment
An effective internal control system
requires that the material risks are
being recognized and continually
assessed. This assessment should
cover all risks facing the Bank.
Risks facing by a Bank are credit
risk, country risk and transfer risk,
market risk, interest rate risk, liquidity
risk, operational risk, legal risk
and reputational risk etc. Internal
controls may need to be revised to
appropriately address any new or
previously uncontrolled risk.
5.2.3 Control Activities
Control activities of MBL have been
established with a view to mitigating
risks. Control activities are performed
at all levels of MBL, at various stages
within business processes and over
the technology environment. They
may be preventive or detective in
nature and may encompass a range
of manual and automated activities
such as authorizations and approvals,
verifications, reconciliations, and
business performance reviews.
Segregation of duties is typically built
into the selection and development of
control activities. Where segregation
of duties is not practical, management
selects and develops alternative
control activities.
5.2.4 Monitoring activities and
correcting deficiencies
Monitoring of key risks is a part of the
Bank as well as periodic evaluations
by the business lines and internal
audit. Bank’s internal control system
is monitored and deficiencies are
corrected in an ongoing basis.
5.2.5 Information and
communication
MBL has adopted following three (3)
principles in respect of information
and communication to carry out
its internal control responsibilities
to support the achievement of its
objectives:
1. MBL obtains or generates and
uses relevant, quality information
to support the functioning of
internal control in a timely manner.
2. MBL internally communicates
information, including objectives
and responsibilities for internal
control, necessary to support the
functioning of internal control.
3. MBL communicates with external
parties regarding matters
affecting the functioning of
internal control.

The manner in which Internal Control System is monitored by the Board, Audit Committee or
Senior Management:
Fundamental functions of Internal Audit:
independent assurance that MBL’s risk
management, governance and internal
control processes are operating effectively.

Internal
Audit Board Audit
Function

Audit External
Audit
Information Technology
(IT) Audit
Function Function

Central
Bank’s
inspection
212 Mercantile Bank Limited
Annual Report 2019
5.3 Audit Function
In the case of financial audits, a set
of financial statements are said to be
true and fair when they are free of
material misstatements - a concept
influenced by both quantitative
(numerical) and qualitative factors.
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 concerns.
5.3.1 Internal Audit Function
Principal of internal audit function:
The internal audit function should
provide independent assurance to
the board and should support board
and senior management in promoting
an effective governance process and
the long-term soundness of the Bank.
5.3.2 Fundamental Audit
Function
An effective and efficient internal
audit function constitutes the third
line of defense in the system of internal
control. It provides an independent
assurance to the board of directors
and senior management on the
quality and effectiveness of a Bank’s
internal control, risk management
and governance systems and
processes, thereby helping the board
and senior management protect their
organization and its reputation. The
internal audit function has a clear
mandate, be accountable to the board
and be independent of the audited
activities. It has sufficient standing,
skills, resources and authority within
the Bank to enable the auditors to
carry out their assignments effectively
and objectively.
The board and senior management
contribute to the effectiveness of the
internal audit function by:
Providing the function with
full and unconditional access
to any records, file data and
physical properties of the Bank,
including access to management
information systems and records
and the minutes of all consultative
and decision-making bodies;
Requiring the function to
independently assess the
effectiveness and efficiency
of the internal control, risk
management and governance
systems and processes;
Requiring internal auditors
to adhere to national and
international professional
standards, such as those
established by the Institute of
Internal Auditors;
Requiring that audit staff
collectively have or can access
knowledge, skills and resources
commensurate with the business
activities and risks of the Bank;
Requiring timely and effective
correction of audit issues by
senior management; and
Requiring the function to perform
a periodic assessment of the
Bank’s overall risk governance
framework, including but not
limited to an assessment of:
The effectiveness of the
risk management and
compliance functions;
The quality of risk reporting
to the board and senior
management; and
The effectiveness of the
Bank’s system of internal
controls.
The board and senior management
promote the independence of the
internal audit function by ensuring
that:
Internal audit reports are provided
to the board or its audit committee
without management filtering and
that the internal auditors have
direct access to the board or the
board’s audit committee;
The head of the internal audit
function’s primary reporting
line is to the board (or its audit
committee), which is also
responsible for the selection,
oversight of the performance
and if necessary, dismissal of the
head of this function;
If the chief audit executive is
removed from his or her position,
this should be disclosed publicly.
The Bank should also discuss the
reasons for such removal with its
supervisor.
5.3.3 Board Audit
In order to review the business
performance of the Bank, MBL has
formed a separate Audit Cell, namely,
Board Audit Cell. The Cell reviews
the compliance status of Policy
Guidelines of the Board of Directors
of the Bank and also of the regulators.
Board Audit Cell visits the Branches
and Other Divisions of the Bank for
verification and inspection purpose.
5.3.4 Information Technology
(IT) Audit
MBL is fully dependent on Information
Technology and 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
follows the prescribed guidelines,
solves the unsettled issues and also
suggests to the higher Management
for needful action. IT Audit Team
has been formed as per the Central
Bank’s Guidelines to identify the
intrinsic risks and manage those risks
in an effective and efficient manner.
5.4 External Audit Function
Appointment of External Auditors
Ahmed Zaker & Co, Chartered
Accountants have been appointed as
the External Auditors of the Bank in
the 20th 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. External
Auditors were entitled to require from
the Bank’s 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.
5.5 Bangladesh Bank’s
Inspection
Bangladesh Bank conducts
comprehensive inspection at Head
Office and Branches of the Bank.
Central Bank’s Inspection Team
exchanges their views with the
Bank’s 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.
5.6 Review of the adequacy of
the system of internal controls
by Director
MBL’s Board of Directors has
established a management
structure that clearly defines roles,
responsibilities and reporting lines
for Internal Control and Compliance.
The Board of Directors is committed
to managing risk and to controlling its
business and financial activities in a
manner which enables it to maximize
profitable business opportunities,
avoid or reduce risks which can cause
loss or reputational damage, ensure
compliance with applicable laws and
regulations, and enhance resilience to
external events.
The effectiveness of the Bank’s internal
control system is reviewed regularly
by the Board, its Committees, Bank’s
management and Bank’s internal
audit. Bank’s internal audit monitors
compliance with policies and
standards and the effectiveness of
internal control structures across the
Bank through its program of business
audits. 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. MBL’s
Board of Directors, in discharging its
responsibilities for effective internal
control system within the Bank has
formulated internal control policies
and procedures.
6.0 Disclosure of the
identification of risks both
internally and externally
The sophistication of the Bank’s risk
management and internal control
infrastructure keep pace with
changes to the Bank’s risk profile,
to the external risk landscape and in
industry practice. Risk identification
encompasses all material risks to the
Bank, on- and off-balance sheet and
on a group wise, portfolio-wise and
business-line level. In order to perform
effective risk assessments, the board
and senior management, including
the CRO, regularly and on an ad hoc
basis, evaluate the risks faced by the
Bank and its overall risk profile. The
risk assessment process includes
ongoing analysis of existing risks as
well as the identification of new or
emerging risks. Risks captured from all
organizational units. Risk identification
and measurement include both
quantitative and qualitative elements.
Risk measurements also include
qualitative, Bank-wide views of risk
relative to the Bank’s external operating
environment.
The core risk areas of Bank are:
1. Credit Risk
2. Asset and Liability/Balance
Sheet Risk
3. Foreign Exchange Risk
4. Internal Control and Compliance
risk
5. Money laundering Risk
6. Information and Communication
Technology Security Risk
Banking companies in Bangladesh,
while conducting day-today
operations, may face some other
risks both internally and externally:
Credit risk also includes
concentration risk, country risk,
transfer risk, and settlement risk
Market risk (including interest
rate risk in the Banking book,
foreign exchange risk and equity
market risk)
Liquidity Risk
Operational Risk
Strategic Risk
Reputation Risk
6.1 Risk Communication
A strong risk culture promote risk
awareness and encourage open
communication and challenge
about risk-taking across the Bank
as well as vertically to and from
the board and senior management.
Senior management actively
communicate and consult with the
control functions on management’s
major plans and activities to control
functions so that they can effectively
discharge their responsibilities.
Information on overall and specific
risks are communicated to the board
and senior management in timely,
accurately and understandable way
to take decisions by them to minimize
such risks effectively.
CORPORATE GOVERNANCE
Risk reporting to the management,
board and regulator are made
carefully so that Bank-wide,
individual portfolio and all other
risks in a concise and meaningfully
identified and reported properly.
Reporting accurately communicate
risk exposures and results of stress
tests or scenario analyses and
provoke a robust discussion of, for
example, the Bank’s current and
prospective exposures (particularly
under stressed scenarios), risk/return
relationships and risk appetite and
limits.
Our Risk reporting systems is
dynamic, comprehensive and
accurate, and draws on a range of
underlying assumptions in line with
Basel III guideline and Bangladesh
Bank guidance. We communicated
Market Discipline statement under
Pillar III of Basel III in our websites
along with Annual Integrated Report.
All other material risk that effect Bank
is also disclosed in separate Risk
Management report of this Annual
Integrated Report.
6.2 Disclosure of the
strategies adopted to manage
and mitigate risk
MBL has an effective independent
risk management function, under the
direction of a Chief Risk Officer (CRO),
with sufficient stature, independence,
resources and access to the Board and
Board risk management committee.
Key activities of the risk management
function include:
Setting targets for capital ratios
and capital composition
Managing the balance sheet
Managing the funding structure
Determining general principles
for measuring, managing and
reporting of Bank’s risk
Developing risk policies for
business units
Determining the overall
investment strategy
Identifying, monitoring and
managing the Bank’s current
and potential operational risk
exposures
Handling “critical risks” (risks
that require follow-up and
further reporting)
Following up on reviews by
Internal Audit and informing the
214 Mercantile Bank Limited
Annual Report 2019
Board through Audit Committee
of unusual circumstances
Preparing management
information on issues such as
IT security, physical security,
business continuity and
compliance
Risk managers are work closely with
individual business units; the risk
management function is sufficiently
independent of the business units and
not be involved in revenue generation.
This independence is an essential
component of an effective risk
management function, as is having
access to all business lines that have
the potential to generate material risk
to the Bank as well as to relevant risk-
bearing subsidiaries and affiliates.
The risk management function has
a sufficient number of employees
who possess the requisite experience
and qualifications, including market
and product knowledge as well
as command of risk disciplines.
Staff has the ability and willingness
to effectively challenge business
operations regarding all aspects of
risk arising from the Bank’s activities.
6.3 Role of the Chief Risk
Officer (CRO)
Bank has the CRO with high
designated position, Additional
Managing Director. The CRO is
primarily responsible for overseeing
the development and implementation
of the Bank’s risk management
function. This includes the ongoing
strengthening of staff skills and
enhancements to risk management
systems, policies, processes,
quantitative models and reports as
necessary to ensure that the Bank’s
risk management capabilities are
sufficiently robust and effective to
fully support its strategic objectives
and all of its risk-taking activities. The
CRO is responsible for supporting the
board in its engagement with and
oversight of the development of the
Bank’s risk appetite and RAS and for
translating the risk appetite into a risk
limits structure. The CRO, together
with management, actively engaged
in monitoring performance relative to
risk taking and risk limit adherence.
6.4 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.
6.5 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. MBL has formed a
number of designated committees
entrusted with specific objectives
under the leadership of Managing
Director & CEO of the Bank. As per
Bangladesh Bank Guidelines, Senior
Management Team (SMT) is the main
body of management and decision
making in the Bank. Besides, there are
Asset Liability Committee (ALCO),
Basel III 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
Bank’s management in discharging
its duties efficiently and effectively.
7.00 Ethics and Compliance
Bank’s senior management is
responsible for establishing a
compliance policy that contains
the basic principles to be approved
by the board and explains the main
processes by which compliance risks
are to be identified and managed
through all levels of the organization.
The board and management
are accountable for the Bank’s
compliance, the compliance function
has an important role in supporting
corporate values, policies and
processes that help ensure that the
Bank acts responsibly and fulfils all
applicable obligations.
7.01 Disclosure of statement of
Ethics and compliance
Mercantile Bank is always committed
to establishing the highest level of
business compliance and ethical
standard. The Bank has an “Employee
Code of Ethics and Business
Conduct”- a framework of ethical
behavior for all the employees of the
organization. The leaders/managers
are required to exemplify the highest
standards of conduct and ethical
behavior. The leaders/managers are
expected to:
Lead according to Mercantile
Bank standards of ethical
conduct, in both words and
actions
Create and maintain an
environment where employees
feel comfortable asking
questions or reporting concerns
Be diligent in enforcing the
Bank’s ethical standards and
taking appropriate action if
violation occur
Contact the Human Resources
Division when in need of
assistance
7.02 Integrity
The ‘Employee Code of Ethics
and Business Conduct’ starts with
the phrase “Uncompromising
integrity”. Employees of Mercantile
Bank are judged not only in terms
of competencies, but also with
their integrity. The reputation and
continued success of Mercantile
Bank largely depend on a shared
commitment to the core value of
integrity. Respecting this value is
the responsibility of each and every
member of the organization.
7.03 Avoiding conflict of
interest
Conflicts of interest may arise as a
result of the various activities and
roles of the Bank (eg where the
Bank extends loans to a firm while
its proprietary trading function buys
and sells securities issued by that
firm), or between the interests of
the Bank or its customers and those
of the Bank’s board members or
senior managers (e.g. where the Bank
enters into a business relationship
with an entity in which one of the

Bank’s board members has a financial
interest). Conflicts of interest may
also arise when a Bank is part of a
broader group. For example, where
the Bank is part of a group, reporting
lines and information flows between
the Banks, its parent company and/
or other subsidiaries can lead to the
emergence of conflicts of interest
(e.g. sharing of potential proprietary,
confidential or otherwise sensitive
information from different entities
or pressure to conduct business
on a non-arm’s length basis). MBL
board oversees the implementation
and operation of policies to identify
potential conflicts of interest. To avoid
conflict of interest and also to make
accountable the Bank has already
taken the following measures:
Loan to the directors is restricted
subject to full filing certain terms
and conditions of regulatory
guidelines.
If there is any related party
transaction, the management
discloses the matter in the Annual
Report and it is also approved by
the general shareholders in AGM.
Executive committee of the
Board can approve loan to
anyone up to a limited portion.
Audit committee regularly
reviews the financial and
other related statements and
gives recommendation to the
management regarding any
changes in policy and also
presents to the Board for further
evaluation.
Board of directors’ approval is
needed for loan re-scheduling.
7.04 Compliance with the laws
and regulations
Mercantile Bank maintains its
reputation as a law-abiding
organization and a good corporate
citizen. It complies with all the
prevailing laws and regulations of
the country. Employees are trained
and guided to conduct business in
compliant manner. The policy and
procedures regarding Mercantile
Bank’s business process are prepared
in adherence to the applicable laws
and regulations.
7.05 Compliance with Bangladesh
Secretarial Standards (BSS)
issued by Institute of Chartered
Secretaries of Bangladesh (ICSB)
Mercantile Bank has conducted
its board meetings in line with
the provisions of the Bangladesh
Secretarial Standards (BSS)-1:
Secretarial Standard on Meetings
of the Board of Directors, general
meeting in line with the provisions
of BSS-2: Secretarial Standard on
General Meetings, record the minutes
of the meetings in line with the
provisions of BSS-3: Minutes and
declared the dividend in line with
the provisions of BSS-4: Secretarial
Standard on Dividend adopted by
the Institute of Chartered Secretaries
of Bangladesh (ICSB).
7.06 Compliance with
Bangladesh Bank guidelines
for Corporate Governance
To ensure good governance i.e.
corporate governance in Bank
management, Bangladesh Bank (BB)
issued four Circulars covering broad
areas as follows:
1. BRPD Circular No.11 dated 27
October 2013: Formation and
responsibilities of Board of
Directors (BoD).
2. BRPD Circular Letter No. 18 dated
27 October 2013: Appointment
and responsibilities of Chief
Executive Officer (CEO).
3. BRPD Circular Letter No. 19 dated
27 October 2013: Contractual
appointment of Advisor and
Consultant.
4. BRPD Circular Letter No. 2 dated
7 February 2018: Compliance of
Bank Company Act (Amendment
2018).
7.07 Related Party Transaction
The Bank in its ordinary course
of business undertook financial
transactions with some entities or
persons that fall within the definition
of ‘Related Party’ as contained in
IAS 24 (Related Party Disclosures)
and relevant provisions of Bank
Company Act 1991 (amended up to
2018) and Bangladesh Bank BRPD
Circular No. 14 dated 25 June 2003.
The Board approves all related party
transactions and ensures that these
transactions with the Company are
undertaken on an arm’s length basis.
The Audit Committee reviewed all
material related party transactions
and kept the Board informed of such
transactions.
CORPORATE GOVERNANCE
7.08 Communication of the
statement of ethics and
business practices to all
directors and employees:
MBL has a ‘Code of Conduct’ – a
framework of ethical behavior for all
the employees of the organization.
The Board of Directors also follows a
code of conduct which was adopted
to provide guidance to directors
to perform their duty in an honest,
responsible and businesslike manner
and within the scope of their authority,
as said for in the laws of country as
well as memorandum and articles of
association of the Bank. The code of
conduct for board of directors states
that:
The members of the Board of
Directors discharge their duties
professionally, with due diligence
and to the best of their abilities.
The members act honestly in
good faith and in the best interest
of the stakeholders.
The members do not make
improper use of information
and offensive advantage of the
position as director.
Confidential information
acquired by the members in the
course of exercise of directorial
duties remain the property of the
company.
Members make every effort to
attend all board and committee
meeting during their tenure to
maximize effectiveness of the
Board/ committee meetings,
contribution of individual
directors are monitored and
appraised on an annual basis.
All others code of conduct
set by the Bangladesh Bank,
Bangladesh Securities and
Exchange Commission and other
regulatory bodies are followed
strictly.
The Board of directors of the Bank
established high level of ethics and
compliance within the organization
and they are committed to and
maintained it in Board level and
management level.
216 Mercantile Bank Limited
Annual Report 2019
Good
Relationship
Procurement
and Payment
Accountability
The Board provides shareholders with
quarterly and annual financial results.
In presenting these statements, the
Board aims to provide shareholders
with a balanced and understandable
assessment of the Bank’s performance
and position with a commentary at
the date of announcement of the
competitive conditions within the
industry in which it operates. The
Management provides all directors
periodically with accounts and
detailed reports on the Bank’s
financial performance and related
matters prior to each Board meeting.
The directors may at any time
seek further information from and
discuss with the Management on the
Bank’s operations and performance.
Compliance Department with
direct reporting line to the Risk
Management Committee is set up to
ensure compliance with legislative
and regulatory requirements. The
Board believes in conducting itself
in ways that will deliver maximum
sustainable value to all shareholders.
Financial
Reporting
Accountability
Confidentiality
The Board’s commitment to
establish high level of ethics
and compliance within the
organization
The Board of Director has always
been committed to establishing a
high level of ethics and compliance
among all employees of the
organization. They have always
encouraged management to ensure
that everyone maintains a high ethical
standard within the Bank. The Board
guides management on principles
that should be adopted and followed
by everyone in the Bank.
MBL’s Board of Directors
Responsibilities in preparing
Financial Statements
MBL Board of Directors ensures that
no information that is false, misleading
and incomplete or would lead to
mistrust by the public, customers or
other stakeholders are not published.
The Board also ensures that any
monetary transaction done with the
customers and other stakeholders are
Disclosure of
Material Facts
recorded and done under the Bank’s
established rules and in a transparent
manner. MBL’s Board of Directors
ensures that qualified personnel
having professional and academic
knowledge in the area of cost
and financial accounting prepares
Financial Statements in accordance
with Generally Accepted Accounting
Principles (GAAP), Bangladesh
Accounting Standards (BAS),
Bangladesh Financial Reporting
Standards (BFRS), Bangladesh
Bank’s Circulars, Schedule of Bank
Companies Act of (amended up
to 2013), the Companies Act-
1994, the Securities and Exchange
Rules-1987 and other applicable
laws and regulations. In preparing
Financial Statements, the Board of
Directors ensures suitable accounting
policies, accounting judgments and
estimations. It also ensures the highest
standards in preparation, reporting
and disclosure of accounting and
financial information to the regulators
and to the Stakeholders of the Bank.

Accountability in Disclosure of
Material Facts
All material facts are disclosed to the
Stakeholders for taking their timely
economic decisions. Material but non-
public information is not divulged that
may adversely affect the business of
the Bank or create regulatory breach
or legal complication. Material public
information is disclosed through the
Audited Annual Report, Un-audited
Half-yearly and Quarterly Report,
Quarterly Bulletin (MBL Bulletin) etc.
and other forms of print and electronic
media. All related party transactions
are reviewed regularly by the internal
auditors and a report on the reviews
conducted is submitted to the Audit
Committee for their monitoring.
Accountability in Maintaining
Confidentiality of Information
Information of the customers,
prospective customers, suppliers,
shareholders and employees is kept
confidential. 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) customer’s account or
business details, (b) shareholder’
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.
Fulfillment of pertinent Rules
and Regulations
MBL runs its business activities in
full compliance with relevant rules,
regulations and guidelines. While
conducting its operation, MBL
follows strictly Bank Companies
Act, (amended up to 2013), The
Companies Act, 1994, Central Bank’s
Guidelines, Securities and Exchange
Rules-1987, Dhaka and Chittagong
Stock Exchange Listing Regulations,
Bangladesh Accounting Standards
(BAS), Bangladesh Financial
Reporting Systems (BFRS), IAS/IFRS
guidelines, SAFA & CAPA guidelines,
BIS and UCPDC and other ICC rules.
Effective Anti- Money
laundering and anti-terrorism
program
Money Laundering, fraud & corruption
have become very important issues in
recent years. To battle and mitigate
the problems of money laundering
and terrorism, Management of MBL
has formed Anti Money Laundering
Department which seeks to prevent
any misuse of the financial system
for the purpose of offences that
might jeopardize the asset and
reputation of Bank. The Bank has
also nominated Chief Anti Money
Laundering Compliance Officer
(CAMLCO) who attends the CAMLCO
Conference every year organized
by Bangladesh Bank and Branch
Anti Money Laundering Compliance
Officers (BAMLCO) at Branches, who
independently would make the Bank
compliant on AML matters. AML
Department arranges and conducts
AML workshops in order to train all
the employees of the Bank to meet
up our regulatory requirement and
CORPORATE GOVERNANCE
most of the employees obtained
AML and CFT (Combating Financing
Terrorism) related training.
Effective Anti-Fraud Programs
The Internal Control & Compliance
Division (ICCD) of MBL always
engage in examination of whether
any fraud forgery or irregularities
is going on in the Bank. The ICCD
also conducts special audit or
investigations as instructed by the
Board or Audit Committee of the
Bank. The ICCD submits reports
upon the observations they detect
throughout their audit to the Audit
Committee at a regular interval.
Effective Whistle blowing
MBL has an effective Whistle
blowing Policy whereby employees
are entitled to raise concerns in
confidence about the malpractices
in the bank.
Whistle blowing about bad practices
can help ensure that problems are
identified before it is too late. This
helps prevent disasters ranging from
customer mistreatment to huge
financial loss. MBL is committed
to the highest standards of good
governance, openness, transparency,
honesty, integrity and accountability.
This whistle blowing policy document
explains procedure for reporting any
misconduct to the designated officials
so that appropriate remedial action
can be taken. This policy is designed
to enable Directors, all employees,
including temporary staff, to raise any
serious concerns internally with high
level of confidentiality and immunity.
218 Mercantile Bank Limited
Annual Report 2019
MBL Approaches Towards Whistle Blowing
Recognizing employees
are vigilant
Quick response
Protect the confidentiality
of a whistleblower
Establishment of hot line for
reporting irregularities
MBL is committed to recognize the
right of its customer and stakeholders
to complain when feeling dissatisfied
with the service of the Bank. MBL
undertakes to resolve any complaints
about irregularities and to prevent
similar complaints from occurring.
Any issue brought to the attention is
treated in a confidential manner, and
discussed only with the people who
need to be involved. In this connection,
MBL strictly follows the ‘Guidelines for
Customer Services and Complaint
Management’ (June 2014) issued by
Financial Integrity & Customer Services
Department (Customer Services
Division), Bangladesh Bank.
Getting the right culture Training and support
Better information to Promoting a policy and
make decisions and making sure it is easily
control risk accessible
08.00 Remuneration Disclosure should be as
Committee follows:
Disclosure of the charter
08.01 Appropriate practice/ (roles and responsibilities) of
disclosure: Remuneration committee
As per Bangladesh Bank BRPD Circular
On existence of a remuneration
no. 11 dated October 27, 2013, every
committee, disclosure should be Bank have to form three committee
in addition to the Board of Directors
made on the following areas:
i.e. 1(one) executive committee,
1(one) audit committee and 1(one)
The roles of the members of the
risk management committee. The
committee mentioned circular also restricted to
form any other permanent, temporary
The composition of the or sub- committee except the above
mentioned three committee. Hence,
remuneration committee
the Board of Directors of MBL reviews
employees’ remuneration along with
Disclosure of number of meetings
fringe benefit based on inflation,
and work performed market trend, employee satisfaction

etc. Usually they make to proposition
to the Board which is then reviewed
and validated by special policy
committee of the Board. After
incorporating their recommendations
the compensation / remuneration
decisions are approved by the
Board. The main work includes
presenting recommendations to
the Board regarding remuneration,
compensation packages of
Management, incentive schemes and
retirement benefits. They also assist
the Board of Directors to ensure
that all employees are remunerated
fairly and get performance based
compensation by ensuring effective
remuneration policy; procedures and
practices aligned with the Banks’
strategy and applied consistency
for all employee levels. Salaries
and allowances of MBL are very
competitive in the banking industry.
The roles and responsibilities of the
committee are the followings:
Reviewing the effectiveness of
remuneration policy to ensure
that whether the Board’s set
objectives and expectations are
being met
Ensuring that an effective
remuneration policy, procedure
and practice are in place, aligned
with the Bank’s strategy, and
is applied consistently for all
employee levels
Ensuring that the structure and
mix of fixed and variable pay and
other elements are in alignment
with the overall business
objectives
Guiding and giving suggestion to
HR team during preparation and
review of any policy or process
related to compensation and
benefits
Ensuring that all benefits,
including retirement benefits and
other financial arrangements, are
justified, appropriately valued
and promoting the performance
based reward and recognition
etc.
Identifying MBL’s needs for
employees at different levels
and determine their selection,
transfer or replacement and
promotion criteria; and
Developing, recommending
and reviewing annually the
company’s human resources and
training policies
In addition to remuneration committee,
the Bank has following trustees for
ensuring post employment benefits-
1. Trustees for Mercantile Bank
Limited Employees’ Gratuity
Fund
2. Trustees for Mercantile Bank
Limited Employees’ Provident
Fund
3. Trustees for Mercantile Bank
Limited Employees’ Welfare
Fund
4. Trustees for Mercantile Bank
Limited Outsourced Employees
Welfare Fund
Disclosure the composition of
the Remuneration Committee:
Since the Bank is restricted by
Bangladesh Bank to have more than
three sub-committee of the Board,
the Board time to time reviews and
enhances the remuneration packages
of the employees. Mercantile
Bank Limited has a Remuneration
Committee which comprises
Managing Director & CEO, Chief
Financial Officer (CFO) and Head of
Human Resources Division.
Disclosures of key policies
with regard to remuneration
of directors, senior
management and employees
All employees including the Senior
Management employees are paid
competitive remuneration package. The
structure and level of remuneration are
reviewed time to time based on Bank’s
performance and affordability. The
remuneration also stresses on ensuring
internal and external pay equity.
Disclosure of number of
meetings
Meeting regarding overseeing the
remuneration related policy by the
Managing Director & CEO, Chief
Financial Officer (CFO) and Head of
Human Resources Division was held
on need basis at a regular interval
throughout the year. So, if any
remuneration related issue needs
committee’s attention, it is placed
CORPORATE GOVERNANCE
as agenda for necessary review.
However, if required, the meeting
is held on need basis to review and
discuss any remuneration related
issue exclusively.
8.02 Activities of the
Remuneration Committee
The major activities of the
Remuneration Committee are given
below:
1. Formulating Human Resources
(HR) Policies i.e. “HR Manual” of
the Bank.
2. Recruitment, promotion and
remuneration process of top
executives (Up to two-level below
the rank of Managing Director &
CEO) as per Bangladesh Bank
Circular (BRPD Circular No.11
dated 27 October 2013).
3.
Other than the above
as mentioned in (2), all
appointments, promotions and
fixing remuneration are made by
the Managing Director & CEO as
authorized by the Board.
4. Conducting periodic Salary
Survey to determine MBL’s
competitive position with peer
Banks in the industry. Based
on the Survey Result, Board
approves required adjustments
to existing benefit packages for
the employees of the Bank.
8.03 Disclosure of
Remuneration of Directors,
Chairman, Chief Executive and
Senior Executives
The Directors of the Board are
paid only honorarium for attending
Board or Committee meetings. For
attending the Board Meeting, Audit
Committee Meeting, Executive
Committee Meeting and Risk
Management Committee Meeting,
the Directors receive an honorarium
of Tk. 8,000.00 each. But in
management level no remuneration
was given for any meeting. During
2019, the expenditures incurred
related to directors were Tk. 47.27
lac for Directors’ fee and in the year
2018 were Tk. 39.74 lac. On the other
hand, the Managing Director is paid
salary and allowances as fixed by the
Bangladesh Bank. Total remuneration
to Managing Director and CEO for
220 Mercantile Bank Limited
Annual Report 2019
the year 2019 is Tk. 131.91 lac and
in the year 2018 was Tk. 176.58 lac.
The total cost related to employee
compensation has been shown in
Financial Statement in the report.
09. Human Capital
Human capital may act as a
fundamental pillar to acquire success
in different magnitude. Developing
human capital requires creating and
cultivating environments in which
human beings can rapidly learn and
apply new ideas, competencies, skills,
behaviors and attitudes.
09.01 Human Resource
Development and
Management
MBL considers its employees as
the most precious capital of the
organization that play the crucial role
in materializing the mission, vision,
goals and objectives of the Bank.
To ensure long term sustainability,
MBL has a special focus on skill
and merit based recruitment and
selection process, highly competitive
remuneration package, adequate
training and development programs,
career growth with succession
planning, high performance culture
and pleasant working atmosphere.
09.02 Succession planning
Succession planning is a process
whereby an organization ensures
that employees are recruited and
developed to fill each key role within
the company. Through succession
planning process, MBL recruits
superior employees, develop their
knowledge, skills, and abilities, and
prepare them for advancement or
promotion into ever more challenging
roles. Most importantly, our future
leader development program is
designed to develop highly qualified
managers and future leaders for
the Bank. This program provides
exposures of various operational
settings and helps them acquire
required knowledge and skills to
become the successful leaders. With
the proven experiences, these juniors
will move to the senior management
positions in future. They will also have
a clear career progression and receive
an extensive development programs
to fine tune their skills and knowledge.
9.03 Merit based recruitment
In order to set our business up
for success over the long term,
MBL recognizes the importance of
attracting and retaining the best
talent. 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. As a part of
MBL’s investments in Human Capital,
it has formulated Human Resources
Policy including a strategic imperative
for recruiting the best people from
the society.
9.04 Performance Appraisal
System
The performance appraisal is the
process of assessing employee
performance by way of comparing
present performance with already
established standards which have
been already communicated to
employees, subsequently providing
feedback to employees about their
performance level for the purpose
of improving their performance as
needed by the organization. The
performance appraisal system of MBL
is an annual process which includes:
Assessment of the financial or
non-financial targets;
Assessment of the competencies
of the individual in achieving the
content of the job;
Assessment of overall performance.
9.05 Promotion, reward and
motivation
As efficiency is our strength, the Board
of Directors of our Bank approved and
enacted various motivational benefits
and policies besides regular pay scale
in order to ensure maximum efficiency
of employees for maximizing job
satisfaction. We declare promotion
every year for our eligible Executives
which motivates, inspires and helps
to develop themselves for greater
achievement of the individual and
organizational goals.
9.06 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 challenge
of modern Banking. 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. 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.
9.07 Grievance management
and counseling:
Since employee’s behavior affects
work discipline, HR Division always
encourages employees to report if
they have any work related grievance.
In Mercantile Bank Limited there
is formal procedure to address the
employee grievance and counseling.
Time to time competent authority
also counsels employees as part
of its job as people’s advocate.
Whenever any grievance is received
from any employee of the Bank, the
management of the Bank takes the
matter promptly for:

Frame up
enquiry teams, investigation
if necessary & Enquiry
Beside that an employee on whom
any disciplinary action is imposed may
prefer an appeal to the competent
authority of the Bank and the appeal
need to be made for review of the
decision within the specific time
period. Thus, we have a participative
and collaborative grievance handling
procedure which is very much
democratic in nature.
09.08 Organizational Chart: MBL
Organogram mirrors the internal
structure of the company. It has been
designed to emphasize on the roles,
work responsibilities and reporting
relationships, lines of communication
within the organization for ensuring
good governance.
10.00 Communication
with Shareholders and
Stakeholders
Maintaining a website by MBL:
MBL has an official website
linked with the website of the
stock exchange. The Bank has
been maintaining the website
functional from the date of
listing. MBL has made available
the detailed disclosures on
its website as required under
the listing regulations of the
concerned stock exchange(s).
Communication with
Shareholders: While maintaining
investors’ relation, proper
communication and equitable
treatment of every shareholder
are given the highest priority
by MBL. MBL always share
information to the concern
party and publish integrated
operational and financial output
and takes initiative to enrich
the ability of future assessment
of Bank of shareholders. The
Share Department of the Bank
Proper Open
Hearing
plays an instrumental role to
make effective communication
with its shareholders and other
stakeholders. Shareholders and
other stakeholders of the Bank
may contact to this Department
during office hour for any sort
of information and queries.
Common services include but
not limited to allow or rejection of
transfer or transmission of shares,
issue of duplicate certificates,
allotment of shares issued
from time to time, opening and
operation of Bank accounts for
payment of dividend, redemption
of paper shares and the listing of
securities on stock exchanges
etc. Press releases, interim and
final results announcements,
interim and annual reports, and
other information of interest to
shareholders are uploaded to
Company’s 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.
For Shareholders’ Inquiries
Share Department
Mercantile Bank Limited
Head Office
61 Dilkusha Commercial Area
Dhaka-1000
Web: www.mblbd.com
Information Access: Prior to
each Board meeting, the Bank
Management provides the Board
with information relevant to
matters on the agenda for the
Board meeting. The Management
also provides adequate
information in their regular
reports pertaining to operational
issues, financial performance
CORPORATE GOVERNANCE
Decision
according
to HR
and any affairs that require the
attention of the Board. Such
reports enable the directors to
be aware of key issues pertaining
to financial statements, internal
controls, compliance and risk
management of the Company. A
risk management dashboard that
summarizes the main risks and
key risk indicators is presented
during the board meeting to
facilitate the oversight function
by the Board. In respect of
budgets, material variances
between the projection and
actual results are explained in the
salient reports circulated to the
Board members. Monthly and
quarterly reports are provided to
directors. The Board has separate
and independent access to the
Senior Management and the
Company Secretary at all times.
Procedures are also in place for
Directors and Board Committees,
where necessary, to seek
independent professional advice
at the Company’s expense.
Policy on ensuring participation
of shareholders at AGM: The
Bank strongly encourages
and supports shareholder
participation at its AGM. The
Bank sends out the Notice of
the Meeting on a timely basis
to provide ample time for
shareholders to receive and
review the Notice and reply with
their attendance. MBL publishes
notice of AGM in daily newspapers
with necessary details to
ensure effective and efficient
participation of shareholders in
AGM within reasonable time-
frame. The AGM normally takes
place in a well known place
and at convenient time. Annual
Reports are circulated as per
222 Mercantile Bank Limited
Annual Report 2019

the provision of Companies transmission of shares, non- Investors Friendly Essentials:

Act 1994, so that shareholders
would get sufficient time to go
through the report and freely
provide their valuable comments
and suggestions in the AGM. A
registered shareholder who is
unable to attend may choose 1
proxy to attend and vote on his
behalf. As the authentication of Communication with
shareholder identity information Stakeholders
and the integrity of the
information transmitted still
remain a concern, the Bank has
decided, for the time being, not
to implement voting in absentia
by mail, email or fax.
The Company advocates fair
and equitable treatment to all
shareholders. All price-sensitive
information is timely disclosed
publicly. Shareholders are given
the opportunity to participate
effectively in and vote at general
meetings of shareholders and
they are informed of the rules,
including voting rights and
procedure that governs such
general meetings of shareholders.
Shareholders are entitled to
attend and vote at the AGM by
person or proxy.
Redressal of Shareholders
Complaints: Any complaint,
received at AGM or throughout
the year, related to transfer and
receipt of Annual Reports, and MBL has better capital
dividend timely and other share
adequacy, good asset quality,
related matter is resolved lawfully
steady financial performance,
in time. Chief Compliance Officer
of MBL plays the role of handling comfortable liquidity, strong
any such issue related to our market position and experienced
shareholders, investors etc. Management, so investment in it
is reliable. Since inception, MBL is
declaring good dividends for the
investors. MBL is also a Corporate
Communication with Employees:
Shareholder of IDLC Finance Ltd.
MBL Board of Directors and the
senior management of the Bank
11.00 Environmental and
always maintain communication
Social Obligations
with the employees to enhance
mutual understanding and
MBL’s policies and practices
promote cooperation at all levels.
They discuss matters such as relating to environmental and
social obligation:
safety and the work environment,
as well as broader issues relating
to staff welfare. MBL assumes the responsibilities
to act in the best long-term
Communication with the
interests of its beneficiaries. In this
General Public: MBL’s website
fiduciary role, MBL believes that
www.mblbd.com serve as an
environmental, social, and corporate
easy access for key information
source for business, financials governance (ESG) issues can affect
and other relevant information the performance of its own business
about the businesses of the Bank.
portfolio.
MBL always provides quarterly
and half-annually financial
In this connection, MBL also
statements and Annual Report
recognizes that applying following
to provide balanced and clear
assessment of its performance principles may better align with
for the general public. broader objectives of society;

1 MBL incorporates ESG issues into its business portfolio and decision-making processes.

2 MBL incorporates ESG issues into its corporate governance practices.

3 MBL seeks appropriate disclosure on ESG issues.

4 MBL promotes acceptance and implementation of the Principles within the industry.

5 MBL works together to enhance its effectiveness in implementing the Principles.

6 MBL reports on its activities and progress towards implementing the Principles.
 CORPORATE GOVERNANCE

12.00 The Pattern of Shareholding

(a) Parent or Subsidiary or Associated Companies and other related parties (name-wise details) : Nil
(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit & Compliance and their
spouses and minor children (name-wise details);
Name of the Directors, As at December 31, 2019 As at December 31, 2018
SL
their spouse & minor children Shares Hold % Shares Hold %
i. Directors
1 Morshed Alam, MP 23,339,638 2.49% 20,295,338 2.49%
Spouse: Bilkis Nahar 318,689 0.03% 277,121 0.03%
Minor Children : Nil Nil Nil Nil
2 Al-haj Akram Hossain (Humayun) 20,340,200 2.17% 17,687,131 2.17%
Spouse: Ferdousi Begum 2,344,602 0.25% 2,038,785 0.25%
Minor Children : Nil Nil Nil Nil
3 Mohd. Selim 27,158,704 2.90% 23,616,265 2.90%
Spouse: Farida Begum 2,380,623 0.25% 2,179,290 0.27%
Minor Children : Nil Nil Nil Nil
4 Md. Shahidul Ahsan 23,559,786 2.51% 20,486,771 2.51%
Spouse: Farah Ahsan Nil Nil Nil Nil
Minor Children : Nil Nil Nil Nil
5 Dr. Md. Rahmat Ullah Nil Nil Nil Nil
Spouse: Asma Jahan Nil Nil Nil Nil
Minor Children : Nil Nil Nil Nil
6 Md. Anwarul Haque 21,124,890 2.25% 18,369,470 2.25%
Spouse: Nargis Anwar 1,944,699 0.21% 1,691,043 0.21%
Minor Children : Nil Nil Nil Nil
7 A.S.M. Feroz Alam 29,340,189 3.13% 25,513,208 3.13%
Spouse: Yoko Inamori Nil Nil Nil Nil
Minor Children : Nil Nil Nil Nil
8 M. Amanullah 23,086,824 2.46% 20,075,499 2.46%
Spouse: Tazneen Aman 377,000 0.04% 500,000 0.06%
Minor Children : Nil Nil Nil Nil
9 Md. Abdul Hannan 21,425,595 2.29% 18,630,954 2.29%
Spouse: Israt Jahan 2,909,734 0.31% 2,325,074 0.29%
Minor Children : Nil Nil Nil Nil
10 A.K.M. Shaheed Reza 47,509,237 5.07% 43,051,512 5.28%
Spouse: Zobeda Begum 241,075 0.03% 209,631 0.03%
Minor Children : Nil Nil Nil Nil
11 Md. Nasiruddin Choudhury 18,794,389 2.01% 16,342,948 2.01%
Spouse: Khaleda Shahzadi 469,474 0.05% 350,000 0.04%
Minor Children : Nil Nil Nil Nil
12 Al-haj Mosharref Hossain 22,431,316 2.39% 19,505,493 2.39%
Spouse: Feroza Begum 2,969,834 0.32% 2,582,465 0.32%
Minor Children : Nil Nil Nil Nil
13 M.A. Khan Belal 18,815,751 2.01% 16,361,523 2.01%
Spouse: Morzina Khan Monzu 411,513 0.04% 357,838 0.04%
Minor Children : Nil Nil Nil Nil
14 Dr. Md. Hamid Ullah Bhuiyan Nil Nil Nil Nil
Spouse: Hasina Eusuf Nil Nil Nil Nil
Minor Children : Nil Nil Nil Nil

As at December 31, 2019 As at December 31, 2018

SL Designation
Shares Hold % Shares Hold %
ii. Md. Quamrul Islam Chowdhury, MD & CEO Nil Nil Nil Nil
Spouse / Minor Children of MD & CEO Nil Nil Nil Nil
iii. Abu Asghar G. Haruni, SVP & Company Secretary Nil Nil Nil Nil
Spouse / Minor Children of CS Nil Nil Nil Nil
iv. Tapash Chandra Paul, PhD, CFO Nil Nil Nil Nil
Spouse / Minor Children of CFO Nil Nil Nil Nil
v. Dr. Md. Nurul Islam, DMD & HIAC Nil Nil Nil Nil
Spouse / Minor Children of DMD & HIAC Nil Nil Nil Nil

(c) Executives [top 5 (five) salaried employees of the company, other than the Directors, Chief Executive Officer, Company
Secretary, Chief Financial Officer and Head of Internal Audit and Compliance]
As at December 31, 2019 As at December 31, 2018
SL Designation
Shares Hold % Shares Hold %
1 Md. Mati-Ul-Hasan, AMD & CRO Nil Nil Nil Nil
2 G.W.M Mortaza, Deputy Managing Director Nil Nil Nil Nil
3 Md. Zakir Hossain, Deputy Managing Director Nil Nil Nil Nil
4 Adil Raihan, Deputy Managing Director Nil Nil Nil Nil
5 Shamim Ahmed, Deputy Managing Director Nil Nil Nil Nil

(d) Shareholders holding ten percent (10%) or more voting interest in the company (name-wise details): Nil
224 Mercantile Bank Limited
Annual Report 2019

CERTIFICATE
OF COMPLIANCE
 CORPORATE GOVERNANCE

COMPLIANCE REPORT
ON BSEC NOTIFICATION ON
CORPORATE GOVERNANCE
Annexure-C
[As per condition No. 1(5)(xxvii)]

Status of compliance with the conditions imposed by the Commission’s Notification No.
SEC/CMRRCD/2006-158/207/Admin/80, dated 3 June 2018 issued under section 2CC of
the Securities and Exchange Ordinance, 1969:
(Report under Condition No. 9)

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
1. Board of Directors:
1(1) Size of the Board of Directors : There were 14 (fourteen)
members in the Board of the
The total number of members of a company’s Board of
Bank as on December 31, 2019
Directors shall not be less than 5 (five) and more than 20
(twenty).
1(2) Independent Directors √
All companies shall have effective representation of
independent directors on their Boards, 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)(a) At least one-fifth (1/5) of the total number of directors in √ There are 2 (two) Independent
the company’s Board shall be independent directors; any Directors in the Board of the
fraction shall be considered to the next integer or whole Bank
number for calculating number of independent director(s);
Relevant Provision of the
Banking Companies Act, 1991
(amended upto 2018):
Quote
Sec.-15:9: Notwithstanding
anything contained in any
other law for the time being
in force or in memorandum
of association or article of
association of any banking
company, after expiration
of 1 (One) year on the
commencement of this Act, no
banking company shall have
directors not exceeding 20
(twenty) in total including 3
(three) independent directors.
Provided that, if the number of
directors of a bank company
is less than 20 (twenty),
the number of independent
directors shall be minimum 2
(two).
Unquote
1(2)(b) “Independent director” means a Director
1(2)(b)(i) who either does not hold any share in the company or holds √ Independent Directors have
less than one percent (1%) shares of the total paid-up shares submitted declarations about
of the company; their compliances
226 Mercantile Bank Limited
Annual Report 2019

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
1(2)(b)(ii) who is not a sponsor of the company or is not connected √ Do
with the company’s any sponsor or director or nominated
director or shareholder of the company or any of its
associates, sister concerns, subsidiaries and parents or
holding entities who holds one percent (1%) or more shares
of the total paid-up shares of the company on the basis of
family relationship and his or her family members also shall
not hold above mentioned shares in the company:
Provided that spouse, son, daughter, father, mother, brother,
sister, son-in-law and daughter-in-law shall be considered as
family members;
1(2)(b)(iii) who has not been an executive of the company in √ Do
immediately preceding 2 (two) financial years;
1(2)(b)(iv) who does not have any other relationship, whether √ Do
pecuniary or otherwise, with the company or its subsidiary
or associated companies;
1(2)(b)(v) who is not a member or TREC (Trading Right Entitlement √ Do
Certificate) holder, director or officer of any stock exchange;
1(2)(b)(vi) who is not a shareholder, director excepting independent √ Do
director or officer of any member or TREC holder of stock
exchange or an intermediary of the capital market;
1(2)(b)(vii) who is not a partner or an executive or was not a partner √ Do
or an executive during the preceding 3 (three) years of the
concerned company’s statutory audit firm or audit firm
engaged in internal audit services or audit firm conducting
special audit or professional certifying compliance of this
Code;
1(2)(b) who is not independent director in more than 5 (five) listed √ Do
(viii) companies;
1(2)(b)(ix) who has not been convicted by a court of competent √ Do
jurisdiction as a defaulter in payment of any loan or any
advance to a bank or a Non-Bank Financial Institution
(NBFI); and
1(2)(b)(x) who has not been convicted for a criminal offence involving √ Do
moral turpitude;
1(2)(c) The independent director(s) shall be appointed by the √ The appointments of Mr. Dr. Md.
Board and approved by the shareholders in the Annual Rahmat Ullah as Independent
General Meeting (AGM); Directors was duly approved in
AGM.
The appointments of Dr. Md.
Hamid Ullah Bhuiyan will be
placed for approval in the
upcoming 21st AGM.
1(2)(d) The post of independent director(s) cannot remain vacant √ No such situation arisen in the
for more than 90 (ninety) days; and reporting year
1(2)(e) The tenure of office of an independent director shall be for √ Independent directors of the
a period of 3 (three) years, which may be extended for 1 Bank in their regular term of
(one) tenure only: office
Provided that a former independent director may be
considered for reappointment for another tenure after
a time gap of one tenure, i.e., three years from his or her
completion of consecutive two tenures [i.e. six years]:
Provided further that the independent director shall not be
subject to retirement by rotation as per the Condition no. 18
of Companies Act, 1994.
Explanation: For the purpose of counting tenure or term
of independent director, any partial term of tenure shall be
deemed to be a full tenure.
1(3) Qualification of Independent Director :
1(3)(a) Independent director shall be a knowledgeable individual √ The qualification and
with integrity who is able to ensure compliance with background of Independent
financial laws, regulatory requirements and corporate laws Directors justify their
and can make meaningful contribution to the business; capabilities to ensure
mentioned compliances
1(3)(b) Independent director shall have following qualifications:
1(3)(b)(i) Business Leader who is or was a promoter or director of None
an unlisted company having minimum paid-up capital of
Tk.100.00 million or any listed company or a member of any
national or international chamber of commerce or business
association; or
 CORPORATE GOVERNANCE

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
1(3)(b)(ii) Corporate Leader who is or was a top level executive not None
lower than Chief Executive Officer or Managing Director
or Deputy Managing Director or Chief Financial Officer
or Head of Finance or Accounts or Company Secretary
or Head of Internal Audit and Compliance or Head of
Legal Service or a candidate with equivalent position of
an unlisted company having minimum paid-up capital of
Tk.100.00 million or of a listed company; or
Explanation: Top level executive includes Managing Director
(MD) or Chief Executive Officer (CEO), Additional or Deputy
Managing Director (AMD or DMD), Chief Operating Officer
(COO), Chief Financial Officer (CFO), Company Secretary
(CS), Head of Internal Audit and Compliance (HIAC), Head
of Administration and Human Resources or equivalent
positions and same level or ranked or salaried officials of the
company.
1(3)(b)(iii) Former official of government or statutory or autonomous None
or regulatory body in the position not below 5th Grade
of the national pay scale, who has at least educational
background of bachelor degree in economics or commerce
or business or Law; or
1(3)(b)(iv) University Teacher who has educational background in √ Dr. Md. Rahmat Ullah is the
Economics or Commerce or Business Studies or Law; or Dean of the Faculty of Law and
a Professor in the Department
of Law, University of Dhaka.
Dr. Md. Hamid Ullah Bhuiyan is
a Professor in the Department
of Accounting & Information
System, University of Dhaka.
1(3)(b)(v) Professional who is or was an advocate practicing at least None
in the High Court Division of Bangladesh Supreme Court
or a Chartered Accountant or Cost and Management
Accountant or Chartered Financial Analyst or Chartered
Certified Accountant or Certified Public Accountant or
Chartered Management Accountant or Chartered Secretary
or equivalent qualification;
1(3)(c) The independent director shall have at least 10 (ten) years √ Both the Independent Directors
of experiences in any field mentioned in clause (b); have more than 10 years of
working experiences each in
their respective fields.
1(3)(d) In special cases, the above qualifications or experiences may None
be relaxed subject to prior approval of the Commission.
1(4) Duality of Chairperson of the Board of Directors and
Managing Director or Chief Executive Officer.
1(4)(a) The positions of the Chairperson of the Board and the √ The Chairman of the Board
Managing Director (MD) and/or Chief Executive Officer and MD & CEO of the Bank are
(CEO) of the company shall be filled by different individuals; different individuals
1(4)(b) The Managing Director (MD) and/or Chief Executive Officer √ MD & CEO of the Bank is not
(CEO) of a listed company shall not hold the same position holding any such position in
in another listed company; another company
1(4)(c) The Chairperson of the Board shall be elected from among √ All 14 (fourteen) members
the non-executive directors of the company; of the Board including the
Chairperson are non-executive
directors
1(4)(d) The Board shall clearly define respective roles and √ The Board have clearly
responsibilities of the Chairperson and the Managing defined respective roles &
Director and/or Chief Executive Officer; responsibilities of the Chairman
and MD & CEO of the Bank.
1(4)(e) In the absence of the Chairperson of the Board, the None No such situation arisen in the
remaining members may elect one of themselves from reporting year
non-executive directors as Chairperson for that particular
Board’s meeting; the reason of absence of the regular
Chairperson shall be duly recorded in the minutes.
1(5) The Directors’ Report to Shareholders
The Board of the company shall include the following
additional statements or disclosures in the Directors’ Report
prepared under section 184 of the Companies Act, 1994
(Act No. XVIII of 1994):
1(5)(i) An industry outlook and possible future developments in √ Included in the Directors’ Report
the industry part of this Annual Report
1(5)(ii) The segment-wise or product-wise performance; √ Do
228 Mercantile Bank Limited
Annual Report 2019

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
1(5)(iii) Risks and concerns including internal and external risk √ Do
factors, threat to sustainability and negative impact on
environment, if any;
1(5)(iv) A discussion on Cost of Goods sold, Gross Profit Margin and √ Being a bank, Interest Income,
Net Profit Margin, where applicable; Interest Expenses and Profit
Margins were discussed
1(5)(v) A discussion on continuity of any extraordinary activities None No such situation arisen in the
and their implications (gain or loss); reporting year
1(5)(vi) A detailed discussion on related party transactions along √ Included in the Directors’
with a statement showing amount, nature of related party, Report part of this Annual
nature of transactions and basis of transactions of all related Report
party transactions;
1(5)(vii) A statement of utilization of proceeds raised through public None No such situation arisen in the
issues, rights issues and/or any other instruments; reporting year
1(5)(viii) An explanation if the financial results deteriorate after the None No such situation arisen in the
company goes for Initial Public Offering (IPO), Repeat reporting year
Public Offering (RPO), Rights Share Offer, Direct Listing,
etc.;
1(5)(ix) An explanation on any significant variance that occurs None No such situation arisen in the
between Quarterly Financial performances and Annual reporting year
Financial Statements;
1(5)(x) A statement of remuneration paid to the directors including √ Included in the Directors’ Report
independent directors; part of this Annual Report
1(5)(xi) A statement that the financial statements prepared by √ Do
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) A statement that proper books of account of the issuer √ Do
company have been maintained;
1(5)(xiii) A statement that appropriate accounting policies have √ Do
been consistently applied in preparation of the financial
statements and that the accounting estimates are based on
reasonable and prudent judgment;
1(5)(xiv) A statement that International Accounting Standards (IAS) √ Do
or International Financial Reporting Standards (IFRS), 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) A statement that the system of internal control is sound √ Do
in design and has been effectively implemented and
monitored;
1(5)(xvi) A statement that minority shareholders have been √ Do
protected from abusive actions by, or in the interest of,
controlling shareholders acting either directly or indirectly
and have effective means of redress;
1(5)(xvii) A statement that there is no significant doubt upon the √ Do
issuer company’s ability to continue as a going concern, if
the issuer company is not considered to be a going concern,
the fact along with reasons there of shall be disclosed;
1(5)(xviii) An explanation that significant deviations from the last None No such situation arisen in the
year’s operating results of the issuer company shall be reporting year
highlighted and the reasons thereof shall be explained;
1(5)(xix) A statement where key operating and financial data of at √ Included in the Directors’
least preceding 5 (five) years shall be summarized Report part of this Annual
Report
1(5)(xx) An explanation on the reasons if the issuer company has not None MBL has declared 11% cash &
declared dividend (cash or stock) for the year; 5% stock dividend for the year
ended 2019
1(5)(xxi) Board’s statement to the effect that no bonus share or stock None No such situation arisen in the
dividend has been or shall be declared as interim dividend; reporting year
1(5)(xxii) The total number of Board meetings held during the year √ Included in this Annual Report
and attendance by each director;
1(5)(xxiii) A report on the pattern of shareholding disclosing the √ Do
aggregate number of shares (along with name-wise details
where stated below) held by:-
1(5)(xxiii) Parent or Subsidiary or Associated Companies and other √ Do
(a) related parties (name-wise details);
1(5)(xxiii) Directors, Chief Executive Officer, Company Secretary, Chief √ Do
(b) Financial Officer, Head of Internal Audit and Compliance
and their spouses and minor children (name-wise details);
 CORPORATE GOVERNANCE

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
1(5)(xxiii) Executives; and √ Do
(c)
Explanation: For the purpose of this clause, the expression
“executive” means top 5 (five) salaried employees of the
company, other than the Directors, Chief Executive Officer,
Company Secretary, Chief Financial Officer and Head of
Internal Audit and Compliance.
1(5)(xxiii) Shareholders holding ten percent (10%) or more voting √ Do
(d) interest in the company (name-wise details);
1(5)(xxiv) In case of the appointment or reappointment of a
director, a disclosure on the following information to the
shareholders:
1(5)(xxiv) a brief resume of the director; √ Included in this Annual Report
(a)
1(5)(xxiv) nature of his or her expertise in specific functional areas; √ Do
(b) and
1(5)(xxiv) names of companies in which the person also holds the √ Do
(c) directorship and the membership of committees of the
Board;
1(5)(xxv) A Management’s Discussion and Analysis signed by CEO or
MD presenting detailed analysis of the company’s position
and operations along with a brief discussion of changes in
the financial statements, among others, focusing on:
1(5)(xxv) accounting policies and estimation for preparation of √ Included in this Annual Report
(a) financial statements;
1(5)(xxv) changes in accounting policies and estimation, if any, clearly √ Do
(b) describing the effect on financial performance or results
and financial position as well as cash flows in absolute figure
for such changes;
1(5)(xxv) comparative analysis (including effects of inflation) of √ Do
(c) financial performance or results and financial position as
well as cash flows for current financial year with immediate
preceding five years explaining reasons thereof;
1(5)(xxv) compare such financial performance or results and financial √ Do
(d) position as well as cash flows with the peer industry
scenario;
1(5)(xxv) briefly explain the financial and economic scenario of the √ Do
(e) country and the globe;
1(5)(xxv) risks and concerns issues related to the financial statements, √ Do
(f) explaining such risk and concerns mitigation plan of the
company; and
1(5)(xxv) future plan or projection or forecast for company’s √ Do
(g) operation, performance and financial position, with
justification thereof, i.e., actual position shall be explained to
the shareholders in the next AGM;
1(5)(xxvi) Declaration or certification by the CEO and the CFO to √ Do
the Board as required under condition No. 3(3) shall be
disclosed as per Annexure-A; and
1(5)(xxvii) The report as well as certificate regarding compliance of √ Do
conditions of this Code as required under condition No. 9
shall be disclosed as per Annexure-B and Annexure-C.
1(6) Meetings of the Board of Directors Total 20 meetings of Board held
√ in the Year 2019 & all minutes,
The company shall conduct its Board meetings and record
required books & records are
the minutes of the meetings as well as keep required books
well maintained & preserved
and records in line with the provisions of the relevant
Bangladesh Secretarial Standards (BSS) as adopted by the
Institute of Chartered Secretaries of Bangladesh (ICSB)
in so far as those standards are not inconsistent with any
condition of this Code.
1(7) Code of Conduct for the Chairperson, other Board
members and Chief Executive Officer
1(7)(a) The Board shall lay down a code of conduct, based on the Bangladesh Bank, the primary
recommendation of the Nomination and Remuneration regulator of Banks, has
Committee (NRC) at condition No. 6, for the Chairperson informed us that they will
of the Board, other board members and Chief Executive instruct Banks in this issue after
Officer of the company; reconciling the matters with
BSEC.
1(7)(b) The code of conduct as determined by the NRC shall be Do
posted on the website of the company including, among
others, prudent conduct and behavior; confidentiality;
conflict of interest; compliance with laws, rules and
regulations; prohibition of insider trading; relationship with
environment, employees, customers and suppliers; and
independency.
230 Mercantile Bank Limited
Annual Report 2019

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
2 Governance of Board of Directors of Subsidiary Company
2(a) Provisions relating to the composition of the Board of √
the holding company shall be made applicable to the
composition of the Board of the subsidiary company;
2(b) At least 1 (one) independent director on the Board of the √
holding company shall be a director on the Board of the
subsidiary company;
2(c) The minutes of the Board meeting of the subsidiary √
company shall be placed for review at the following Board
meeting of the holding company;
2(d) The minutes of the respective Board meeting of the holding √
company shall state that they have reviewed the affairs of
the subsidiary company also;
2(e) The Audit Committee of the holding company shall also √
review the financial statements, in particular the investments
made by the subsidiary company.
3 Managing Director (MD) or Chief Executive Officer (CEO),
Chief Financial Officer (CFO), Head of Internal Audit and
Compliance (HIAC) and Company Secretary (CS)
3(1) Appointment
3(1)(a) The Board shall appoint a Managing Director (MD) or Chief √ The positions of MD & CEO, CS,
Executive Officer (CEO), a Company Secretary (CS), a Chief CFO, HIAC are appointed by the
Financial Officer (CFO) and a Head of Internal Audit and Board
Compliance (HIAC);
3(1)(b) The positions of the Managing Director (MD) or Chief √ The positions of MD & CEO, CS,
Executive Officer (CEO), Company Secretary (CS), Chief CFO, HIAC are filled by different
Financial Officer (CFO) and Head of Internal Audit and individuals
Compliance (HIAC) shall be filled by different individuals;
3(1)(c) The MD or CEO, CS, CFO and HIAC of a listed company √ MD & CEO, CS, CFO, HIAC of
shall not hold any executive position in any other company the Bank are not holding any
at the same time; such position in any other
company at the same time
3(1)(d) The Board shall clearly define respective roles, √ Roles, responsibilities & duties of
responsibilities and duties of the CFO, the HIAC and the CS; CFO, the HIAC and the CS are
clearly defined by the Board.
3(1)(e) The MD or CEO, CS, CFO and HIAC shall not be removed √ No such situation arisen in the
from their position without approval of the Board as well reporting year
as immediate dissemination to the Commission and stock
exchange(s).
3(2) Requirement to attend Board of Directors’ Meetings √ The MD & CEO, CS, CFO and
HIAC participate in Board
The MD or CEO, CS, CFO and HIAC of the company shall
meetings
attend the meetings of the Board. Provided that the CS,
CFO and/or the HIAC shall not attend such part of a
meeting of the Board which involves consideration of an
agenda item relating to their personal matters.
3(3) Duties of Managing Director (MD) or Chief Executive Officer
(CEO) and Chief Financial Officer (CFO)
3(3)(a) The MD or CEO and CFO shall certify to the Board that they √ Included in this Annual Report
have reviewed financial statements for the year and that to
the best of their knowledge and belief:
3(3)(a)(i) these statements do not contain any materially untrue √ Do
statement or omit any material fact or contain statements
that might be misleading; and
3(3)(a)(ii) these statements together present a true and fair view of √ Do
the company’s affairs and are in compliance with existing
accounting standards and applicable laws;
3(3)(b) The MD or CEO and CFO shall also certify that there are, to √ Do
the best of knowledge and belief, no transactions entered
into by the company during the year which are fraudulent,
illegal or in violation of the code of conduct for the
company’s Board or its members;
3(3)(c) The certification of the MD or CEO and CFO shall be √ Do
disclosed in the Annual Report.
4 Board of Directors’ Committee :
For ensuring good governance in the company, the Board
shall have at least following sub-committees
4(i) Audit Committee; and √ Audit Committee of the Board of
the Directors has been formed as
per guidelines of BSEC
 CORPORATE GOVERNANCE

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
4(ii) Nomination and Remuneration Committee. Bangladesh Bank, the primary
regulator of Banks, has informed
us that they will instruct Banks
in this issue after reconciling the
matters with BSEC.
5 Audit Committee
5(1) Responsibility to the Board of Directors
5(1)(a) The company shall have an Audit Committee as a √ Audit Committee is established
subcommittee of the Board; as per BSEC guidelines
5(1)(b) The Audit Committee shall assist the Board in ensuring √ The Audit Committee
that the financial statements reflect true and fair view of discharges their responsibility
the state of affairs of the company and in ensuring a good as per given guidelines
monitoring system within the business;
5(1)(c) The Audit Committee shall be responsible to the Board; the √ The duties of the Audit
duties of the Audit Committee shall be clearly set forth in committee are clearly defined
writing. in the Guideline for Audit
committee as per BSEC’s
guidelines
5(2) Constitution of the Audit Committee
5(2)(a) The Audit Committee shall be composed of at least 3 √ Audit Committee comprises of
(three) members; 05 members
5(2)(b) The Board shall appoint members of the Audit Committee √ All the Directors of the Bank
who shall be non-executive directors of the company except MD & CEO are non-
excepting Chairperson of the Board and shall include at executive directors.
least 1 (one) independent director;
Dr. Md. Rahmat Ullah, an
Independent Director, is
the Chairman of the Audit
Committee
5(2)(c) All members of the audit committee should be “financially √ The profiles of the members
literate” and at least 1 (one) member shall have accounting demonstrate their capabilities
or related financial management background and 10 (ten) as such
years of such experience;
Explanation: The term “financially literate” means the
ability to read and understand the financial statements like
statement of financial position, statement of comprehensive
income, statement of changes in equity and cash flows
statement and a person will be considered to have
accounting or related financial management expertise if he
or she possesses professional qualification or Accounting or
Finance graduate with at least 10 (ten) years of corporate
management or professional experiences.
5(2)(d) When the term of service of any Committee member √ No such situation arisen in the
expires or there is any circumstance causing any Committee reporting year
member to be unable to hold office before 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 shall appoint the new Committee
member to fill up the vacancy immediately or not later than
1 (one) month from the date of vacancy in the Committee to
ensure continuity of the performance of work of the Audit
Committee;
5(2)(e) The company secretary shall act as the secretary of the √ The CS in practice act as
Committee; the secretary of the Audit
Committee
5(2)(f) The quorum of the Audit Committee meeting shall not √ The quorum of all the meetings
constitute without at least 1 (one) independent director. of the Audit Committee was
duly filled up
5(3) Chairperson of the Audit Committee
5.3.a The Board shall select 1 (one) member of the Audit √ Dr. Md. Rahmat Ullah, an
Committee to be Chairperson of the Audit Committee, who Independent Director, is the
shall be an independent director; Chairman of Audit Committee
5.3.b In the absence of the Chairperson of the Audit Committee, √ No such situation arisen in the
the remaining members may elect one of themselves as reporting year
Chairperson for that particular meeting, in that case there
shall be no problem of constituting a quorum as required
under condition No. 5(4)(b) and the reason of absence
of the regular Chairperson shall be duly recorded in the
minutes.
232 Mercantile Bank Limited
Annual Report 2019

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
5.3.c Chairperson of the Audit Committee shall remain present in √ The Chairperson of the Audit
the Annual General Meeting (AGM): Committee was present in the
AGM held in 2019
Provided that in absence of Chairperson of the Audit
Committee, any other member from the Audit Committee
shall be selected to be present in the annual general
meeting (AGM) and reason for absence of the Chairperson
of the Audit Committee shall be recorded in the minutes of
the AGM.
5.4 Meeting of the Audit Committee
5.4.a The Audit Committee shall conduct at least its four √ Total 13 meetings of Audit
meetings in a financial year: Committee held in the Year
2019
Provided that any emergency meeting in addition to regular
meeting may be convened at the request of any one of the
members of the Committee;
5.4.b The quorum of the meeting of the Audit Committee shall √ The quorum of all the meetings
be constituted in presence of either two members or two- of the Audit Committee was
third of the members of the Audit Committee, whichever is duly filled up
higher, where presence of an independent director is a must.
5.5 Role of Audit Committee
The Audit Committee shall:
5.5.a Oversee the financial reporting process; √ The Audit Committee performs
as per BSEC’s guidelines
5.5.b Monitor choice of accounting policies and principles; √ Do
5.5.c Monitor Internal Audit and Compliance process to ensure √ Do
that it is adequately resourced, including approval of the
Internal Audit and Compliance Plan and review of the
Internal Audit and Compliance Report;
5.5.d Oversee hiring and performance of external auditors; √ Do
5.5.e Hold meeting with the external or statutory auditors for √ Do
review of the annual financial statements before submission
to the Board for approval or adoption;
5.5.f Review along with the management, the annual financial √ Do
statements before submission to the Board for approval;
5.5.g Review along with the management, the quarterly and half √ Do
yearly financial statements before submission to the Board
for approval;
5.5.h Review the adequacy of internal audit function; √ Do
5.5.i Review the Management’s Discussion and Analysis before √ Do
disclosing in the Annual Report;
5.5.j Review statement of all related party transactions submitted √ Do
by the management;
5.5.k Review Management Letters or Letter of Internal Control √ Do
weakness issued by statutory auditors;
5.5.l Oversee the determination of audit fees based on scope √ Do
and magnitude, level of expertise deployed and time
required for effective audit and evaluate the performance of
external auditors; and
5.5.m Oversee whether the proceeds raised through Initial Public √ No such situation arisen in the
Offering (IPO) or Repeat Public Offering (RPO) or Rights reporting year
Share Offer have been utilized as per the purposes stated
in relevant offer document or prospectus approved by the
Commission:
Provided that the management shall disclose to the Audit
Committee about the uses or applications of the proceeds
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:
Provided further that on an annual basis, the company
shall prepare a statement of the proceeds utilized for the
purposes other than those stated in the offer document or
prospectus for publication in the Annual Report along with
the comments of the Audit Committee.
5.6 Reporting of the Audit Committee
5.6.a Reporting to the Board of Directors
5.6.a.i The Audit Committee shall report on its activities to the √ The Audit Committee performs
Board. as per BSEC’s guidelines
5.6.a.ii The Audit Committee shall immediately report to the Board
on the following findings, if any:
5.6.a.ii.a report on conflicts of interests None No such situation arisen in the
reporting year
 CORPORATE GOVERNANCE

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
5.6.a.ii.b suspected or presumed fraud or irregularity or material None Do
defect identified in the internal audit and compliance
process or in the financial statements;
5.6.a.ii.c suspected infringement of laws, regulatory compliances None Do
including securities related laws, rules and regulations; and
5.6.a.ii.d any other matter which the Audit Committee deems None Do
necessary shall be disclosed to the Board immediately;
5.6.b Reporting to the Authorities
If the Audit Committee has reported to the Board about None No such situation arisen in the
anything which has material impact on the financial reporting year
condition and results of operation and has discussed with
the Board 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 for three times
or completion of a period of 6 (six) months from the date of
first reporting to the Board, whichever is earlier.
5.7 Reporting to the Shareholders and General Investors
Report on activities carried out by the Audit Committee, √ Activities of the Audit
including any report made to the Board under condition Committee are reported on the
No. 5(6)(a)(ii) above during the year, shall be signed by the Annual Report
Chairperson of the Audit Committee and disclosed in the
annual report of the issuer company.
6 Nomination and Remuneration Committee (NRC).
6.1 Responsibility to the Board of Directors
6.1.a The company shall have a Nomination and Remuneration Bangladesh Bank, the primary
Committee (NRC) as a sub-committee of the Board regulator of Banks, has informed
us that they will instruct Banks
in this issue after reconciling the
matters with BSEC.
6.1.b The NRC shall assist the Board in formulation of the Do
nomination criteria or policy for determining qualifications,
positive attributes, experiences and independence of
directors and top level executive as well as a policy for
formal process of considering remuneration of directors, top
level executive;
6.1.c The Terms of Reference (ToR) of the NRC shall be clearly Do
set forth in writing covering the areas stated at the
condition No. 6(5)(b).
6.2 Constitution of the NRC
6.2.a The Committee shall comprise of at least three members Bangladesh Bank, the primary
including an independent director; regulator of Banks, has informed
us that they will instruct Banks
in this issue after reconciling the
matters with BSEC.
6.2.b All members of the Committee shall be non-executive Do
directors;
6.2.c Members of the Committee shall be nominated and Do
appointed by the Board;
6.2.d The Board shall have authority to remove and appoint any Do
member of the Committee;
6.2.e In case of death, resignation, disqualification, or removal Do
of any member of the Committee or in any other cases of
vacancies, the board shall fill the vacancy within 180 (one
hundred eighty) days of occurring such vacancy in the
Committee;
6.2.f The Chairperson of the Committee may appoint or co- Do
opt any external expert and/or member(s) of staff to the
Committee as advisor who shall be non-voting member, if
the Chairperson feels that advice or suggestion from such
external expert and/or member(s) of staff shall be required
or valuable for the Committee;
6.2.g The company secretary shall act as the secretary of the Do
Committee;
6.2.h The quorum of the NRC meeting shall not constitute Do
without attendance of at least an independent director;
6.2.i No member of the NRC shall receive, either directly or Do
indirectly, any remuneration for any advisory or consultancy
role or otherwise, other than Director’s fees or honorarium
from the company.
6.3 Chairperson of the NRC
234 Mercantile Bank Limited
Annual Report 2019

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
6.3.a The Board shall select 1 (one) member of the NRC to be Bangladesh Bank, the primary
Chairperson of the Committee, who shall be an independent regulator of Banks, has informed
director; us that they will instruct Banks
in this issue after reconciling the
matters with BSEC.
6.3.b In the absence of the Chairperson of the NRC, the remaining Do
members may elect one of themselves as Chairperson for
that particular meeting, the reason of absence of the regular
Chairperson shall be duly recorded in the minutes;
6.3.c The Chairperson of the NRC shall attend the annual general Do
meeting (AGM) to answer the queries of the shareholders:

Provided that in absence of Chairperson of the NRC,

any other member from the NRC shall be selected to be
present in the annual general meeting (AGM) for answering
the shareholder’s queries and reason for absence of the
Chairperson of the NRC shall be recorded in the minutes of
the AGM.
6.4 Meeting of the NRC
6.4.a The NRC shall conduct at least one meeting in a financial Bangladesh Bank, the primary
year; regulator of Banks, has informed
us that they will instruct Banks
in this issue after reconciling the
matters with BSEC.
6.4.b The Chairperson of the NRC may convene any emergency Do
meeting upon request by any member of the NRC;
6.4.c The quorum of the meeting of the NRC shall be constituted Do
in presence of either two members or two third of the
members of the Committee, whichever is higher, where
presence of an independent director is must as required
under condition No. 6(2)(h);
6.4.d The proceedings of each meeting of the NRC shall duly Do
be recorded in the minutes and such minutes shall be
confirmed in the next meeting of the NRC.
6.5 Role of the NRC
6.5.a NRC shall be independent and responsible or accountable Bangladesh Bank, the primary
to the Board and to the shareholders; regulator of Banks, has
informed us that they will
instruct Banks in this issue after
reconciling the matters with
BSEC.
6.5.b NRC shall oversee, among others, the following matters and Do
make report with recommendation to the Board:
6.5.b.i formulating the criteria for determining qualifications, Do
positive attributes and independence of a director and
recommend a policy to the Board, relating to the
remuneration of the directors, top level executive,
considering the following:
6.5.b.i.a the level and composition of remuneration is reasonable and Do
sufficient to attract, retain and motivate suitable directors to
run the company successfully;
6.5.b.i.b the relationship of remuneration to performance is clear and Do
meets appropriate performance benchmarks; and
6.5.b.i.c remuneration to directors, top level executive involves a Do
balance between fixed and incentive pay reflecting short
and long-term performance objectives appropriate to the
working of the company and its goals;
6.5.b.ii devising a policy on Board’s diversity taking into Do
consideration age, gender, experience, ethnicity, educational
background and nationality;
6.5.b.iii identifying persons who are qualified to become directors Do
and who may be appointed in top level executive position
in accordance with the criteria laid down, and recommend
their appointment and removal to the Board;
6.5.b.iv formulating the criteria for evaluation of performance of Do
independent directors and the Board;
6.5.b.v identifying the company’s needs for employees at different Do
levels and determine their selection, transfer or replacement
and promotion criteria; and
6.5.b.vi developing, recommending and reviewing annually the Do
company’s human resources and training policies;
 CORPORATE GOVERNANCE

Compliance Status (√ has been

Condition put in the appropriate column)
Title Remarks
No. Complied Not complied
6.5.c The company shall disclose the nomination and Do
remuneration policy and the evaluation criteria and activities
of NRC during the year at a glance in its annual report.
7 External or Statutory Auditors
7.1 The issuer company shall not engage its external or
statutory auditors to perform the following services of the
company, namely:-
7.1.i Appraisal or valuation services or fairness opinions; √ External or statutory auditors
provided declaration that they
are not engaged in any of
the tasks, issues, and matters
prohibited by this Guideline.
7.1.ii Financial information systems design and implementation; √ Do
7.1.iii Book-keeping or other services related to the accounting √ Do
records or financial statements;
7.1.iv Broker-dealer services; √ Do
7.1.v Actuarial services; √ Do
7.1.vi Internal audit services or special audit services; √ Do
7.1.vii Any service that the Audit Committee determines; √ Do
7.1.viii Audit or certification services on compliance of corporate √ Do
governance as required under condition No. 9(1); and
7.1.ix Any other service that creates conflict of interest. √ Do
7.2 No partner or employees of the external audit firms shall √ Do
possess any share of the company they audit at least during
the tenure of their audit assignment of that company; his
or her family members also shall not hold any shares in the
said company:
Provided that spouse, son, daughter, father, mother, brother,
sister, son-in-law and daughter-in-law shall be considered as
family members.
7.3 Representative of external or statutory auditors shall remain √ Representative of external or
present in the Shareholders’ Meeting (Annual General statutory auditors were present
Meeting or Extraordinary General Meeting) to answer the in the 20th AGM held in 2019
queries of the shareholders.
8 Maintaining a website by the Company
8.1 The company shall have an official website linked with the √ The address of official website
website of the stock exchange of the Bank is www.mblbd.
com & it’s already linked with
websites of DSE & CSE
8.2 The company shall keep the website functional from the √ The website is functional since
date of listing. inception of the Bank
8.3 The company shall make available the detailed disclosures √ Detailed disclosures required
on its website as required under the listing regulations of as per listing regulations are
the concerned stock exchange(s). available on the “Investors’
Relation” part of the website
9 Reporting and Compliance of Corporate Governance
9.1 The company shall obtain a certificate from a practicing √ Included in this Annual Report
Professional Accountant or Secretary (Chartered
Accountant or Cost and Management Accountant or
Chartered Secretary) other than its statutory auditors
or audit firm on yearly basis regarding compliance
of conditions of Corporate Governance Code of the
Commission and shall such certificate shall be disclosed in
the Annual Report.
Explanation: “Chartered Accountant” means Chartered
Accountant as defined in the Bangladesh Chartered
Accountants Order, 1973 (President’s Order No. 2 of
1973); “Cost and Management Accountant” means Cost
and Management Accountant as defined in the Cost and
Management Accountants Ordinance, 1977 (Ordinance
No. LIII of 1977); “Chartered Secretary” means Chartered
Secretary as defined in the Chartered Secretaries Act, 2010
9.2 The professional who will provide the certificate on √ Approval for Appointment
compliance of this Corporate Governance Code shall of Corporate Governance
be appointed by the shareholders in the annual general compliance Auditor will be
meeting. placed in the 21st AGM
9.3 The directors of the company shall state, in accordance with √ Included in this Annual Report
the Annexure-C attached, in the directors’ report whether
the company has complied with these conditions or not.
236 Mercantile Bank Limited
Annual Report 2019

COMPLIANCE OF
MEETING & REMUNERATION
Board Meeting held during the year 2019 and attendance of each directors
Total no. of Applicable for mentioned member
No Director's Name Designation meeting held
Meeting held Present Absent Remuneration
during the year
1 Mr. Morshed Alam, MP Chairman 19 16 3 120,000
2 Al-haj Akram Hossain (Humayun) Vice Chairman 20 20 - 152,000
3 Mr. Mohd. Selim Vice Chairman 19 17 2 128,000
Chairman,
4 Mr. Md. Shahidul Ahsan Executive 20 18 2 136,000
Committee
Independent
Director,
5 Dr. Md. Rahmat Ullah 20 17 3 128,000
Chairman, Audit
Committee
Chairman, Risk
6 Mr. Md. Anwarul Haque Management 20 16 4 120,000
Committee 20
7 Mr. A.S.M. Feroz Alam Director 20 15 5 112,000
8 Mr. M. Amanullah Director 20 17 3 136,000
9 Mr. Md. Abdul Hannan Director 19 19 - 144,000
10 Mr. A.K.M. Shaheed Reza Director 20 20 - 152,000
11 Mr. Md. Nasiruddin Choudhury * Director 12 11 1 80,000
12 Al-haj Mosharref Hossain Director 20 15 5 120,000
13 Mr. M.A. Khan Belal * Director 12 12 - 88,000
Independent
14 Dr. Md. Hamid Ullah Bhuiyan ** 5 5 - 32,000
Director
Independent
15 Dr. Mahmood Osman Imam *** 5 4 1 32,000
Director
Directors who could not attend meeting were granted leave of absence by the present members of the committee

Note
* Approval for appointment of Mr. Md. Nasiruddin Choudhury & Mr. M.A. Khan Belal as Director of MBL were accorded by BB on
26.06.2019
** Approval for appointment of Dr. Md. Hamid Ullah Bhuiyan as Director of MBL was accorded by BB on 23.10.2019
*** Continued as Director of the Bank Upto 08.05.2019

Executive Committee (EC) Meeting held during the year 2019

and attendance of each directors
Total no. of Applicable for mentioned member
No Director's Name Designation meeting held
Meeting held Present Absent Remuneration
during the year
1 Mr. Md. Shahidul Ahsan Chairman 43 41 2 328,000
2 Mr. Md. Anwarul Haque Director 43 32 11 256,000
3 Mr. A.S.M. Feroz Alam ** Director 20 17 3 136,000
4 Mr. M. Amanullah Director 43 37 6 296,000
5 Mr. Md. Abdul Hannan ** Director 20 15 5 120,000
43
6 Mr. A.K.M. Shaheed Reza ** Director 20 18 2 144,000
7 Al-haj Mosharref Hossain Director 43 36 7 288,000
8 Al-haj Akram Hossain (Humayun) * Director 23 23 - 184,000
9 Mr. Morshed Alam, M.P * Director 22 12 10 96,000
10 Mr. Mohd. Selim * Director 22 19 3 152,000
 CORPORATE GOVERNANCE

Directors who could not attend meeting were granted leave of absence by the present members of the committee

Note
* Continued as member of Executive Committee up to 04.07.2019
** Appointment as member of Executive Committee on 04.07.2019

Audit Committee (AC) Meeting held during the year 2019

and attendance of each directors
Total no. of Applicable for mentioned member
No Director's Name Designation meeting held
Meeting held Present Absent Remuneration
during the year
Independent
Director,
1 Dr. Md. Rahmat Ullah 13 13 - 80,000
Chairman, Audit
Committee
Al-haj Akram Hossain
2 Vice Chairman 8 8 - 40,000
(Humayun) ***
3 Mr. Md. Nasiruddin Choudhury*** Director 8 8 - 40,000
13
4 Mr. M.A. Khan Belal *** Director 8 8 - 40,000
Independent
5 Dr. Md. Hamid Ullah Bhuiyan**** 2 2 - 8,000
Director
Independent
6 Dr. Mahmood Osman Imam * 5 5 - 40,000
Director
7 Mr. Md. Abdul Hannan ** Director 5 5 - 40,000
8 Mr. A.S.M. Feroz Alam ** Director 5 3 2 24,000

Directors who could not attend meeting were granted leave of absence by the present members of the committee

Note
* Continued as member of Audit Committee up to 08.05.2019
** Continued as member of Audit Committee up to 04.07.2019
*** Appointment as member of Audit Committee on 04.07.2019
**** Appointment as member of Audit Committee on 23.10.2019

Risk Management Committee (RMC) Meeting held during

the year 2019 and attendance of each directors
Total no. of Applicable for mentioned member
No Director's Name Designation meeting held
Meeting held Present Absent Remuneration
during the year
1 Mr. Md. Anwarul Haque *** Chairman 3 3 - 24,000
Al-haj Akram Hossain
2 Director 3 3 - 24,000
(Humayun) ***
3 Mr. Mohd. Selim *** Director 3 3 - 24,000
4 Mr. Md. Nasiruddin Choudhury *** Director 3 3 - 24,000
5 Mr. M.A. Khan Belal *** Director 7 3 3 - 24,000
Independent
6 Dr. Md. Rahmat Ullah * 4 3 1 24,000
Director
7 Mr. Md. Abdul Hannan * Director 4 3 1 24,000
8 Mr. A.S.M. Feroz Alam * Director 4 3 1 24,000
Independent
9 Dr. Mahmood Osman Imam ** 3 3 - 24,000
Director
Directors who could not attend meeting were granted leave of absence by the present members of the committee

Note
* Continued as member of Risk Management Committee up to 04.07.2019
** Continued as member of Risk Management Committee up to 08.05.2019
*** Appointment as member of Risk Management Committeeup on 04.07.2019
238 Mercantile Bank Limited
Annual Report 2019

REPORT OF
THE AUDIT COMMITTEE
Audit Committee is an operating Audit Committee Composition compliance with the Bangladesh Bank
committee of a company’s Board of and Qualifications direction. The Committee is comprised
Directors, assisting the board to fulfill its of 5 (five) members including 2
oversight responsibilities in areas such The Audit Committee of the Board of
Directors of MBL was reconstituted Independent Directors and they are
as an entity’s financial reporting, internal
in the 345th and 351st meeting of not members of Executive Committee.
control systems, risk management
the Board held on July 04, 2019 and The composition of audit Committee is
systems and the internal and external
audit functions. For ensuring good November 27, 2019 respectively in as follows:
governance in the Bank, Mercantile
Bank Limited has an Audit Committee Educational Meeting
Name Status Position
as a sub-committee of the Board. The Qualification Attendance
Audit Committee of Mercantile Bank Independent
Dr. Md. Rahmat Ullah Chairman LLM, PhD 13/13
Limited has been formed and its roles Director
and responsibilities were defined in Al-haj Akram Hossain
Director Member Graduate 8/8
line with the notification on Corporate (Humayun)
Governance issued by BSEC on 03 Mr. Md. Nasiruddin B. Sc. Engg.
Director Member 8/8
June 2018 and Bangladesh Bank BRPD Choudhury (Civil), BUET
Circular No. 11 dated 27 October 2013. M.Sc.
Mr. M. A. Khan Belal Director Member 8/8
The Audit Committee assists the (Chemistry)
Dr. Md. Hamid Ullah Independent
Board in ensuring that the financial Member M. Com., PhD 2/2
Bhuiyan Director
statements reflect true and fair view of
the state of affairs of the company and
in ensuring a good monitoring system The Company Secretary of the Bank is the Secretary of the Board Audit
within the business. Committee. The quorum of the Audit Committee meeting do not constitute
without at least one independent director.

Roles and Responsibilities of
the Audit Committee
In compliance with Bangladesh Bank
BRPD Circular and BSEC’s Corporate
Governance Guidelines, the Audit
Committee is mainly responsible for
the following:
Oversee the financial reporting
process;
Monitor choice of accounting
policies and principles;
Monitor Internal Audit and
Compliance process to ensure
that it is adequately resourced,
including approval of the Internal
Audit and Compliance Plan and
review of the Internal Audit and
Compliance Report;
Oversee hiring and performance
of external auditors;
Hold meeting with the external or
statutory auditors for review of
the annual financial statements
before submission to the Board
for approval or adoption;
Review along with the
management, the quarterly and
half yearly financial statements
before submission to the Board
for approval;
Review the adequacy of internal
audit function;
Review the Management’s
Discussion and Analysis before
disclosing in the Annual Report;
Review statement of all related
party transactions submitted by
the management;
Review Management Letters
or Letter of Internal Control
weakness issued by statutory
auditors; and
Oversee whether the proceeds
raised through Initial Public
Offering (IPO) or Repeat Public
Offering (RPO) or Rights Share
Offer have been utilized as per
the purposes stated in relevant
offer document or prospectus
approved by the Commission.
Reporting of the Audit
Committee
1. Reporting to the Board of Directors
All activities of Audit Committee were
reported to the Board and the Board
closely reviewed and ratified them. The
Audit Committee reports to the Board
on the following findings, if any –
Report on conflicts of interests;
Suspected or presumed fraud
or irregularity or material defect
identified in the internal audit
and compliance process or in the
financial statements;
Suspected infringement of laws,
regulatory compliances including
securities related laws, rules and
regulations; and
Any other matter which the Audit
Committee deems necessary, to
discuss to the Board immediately;
2. Reporting to the Authorities
There had not been any occurrence
in the Bank that required reporting to
the relevant authorities by the Bank’s
Audit Committee.

Meetings of the Audit
Committee and Major focused
Areas
Bangladesh Bank suggested Banks
to hold at least 4 (four) meetings in
a year. The Audit Committee of MBL
held 13 (thirteen) meetings in 2019 and
had detailed discussions and review
sessions with the Head of Audit, Head of
Internal Control & Compliance, External
Auditors regarding their findings and
remedial suggestions on various issues
that need improvement. The Audit
Committee instructed management to
follow those remedial suggestions and
monitored accordingly. Meeting dates
are as follows:
In the meetings, among other things,
the following issues were evaluated/
reviewed/discussed and provided
guidelines and necessary instructions:
Evaluation/Review/Discussion
of policy formulation &
implementations:
Time Bound Action Plan under
Self Assessment of Anti-Fraud
Internal Controls.
Reviewed Health Report of the
Bank for the year 2018.
Internal Control and Compliance
Guidelines of the Bank.
Position of Non-Performing
Loans and Advances.
Evaluation/Review/Discussion
of financial related matters,
compliances and disclosures:
Reviewed the yearly, quarterly
and half yearly audited/
unaudited financial statements
along with Balance Sheet, Profit
& Loss Accounts, Cash Flow
Statements, Changes in Equity,
Liquidity Statements and notes
of the Bank and discussed with
CORPORATE GOVERNANCE
Sl No. Meeting Date of Meeting
1 181st Audit Committee Meeting January 28, 2019
2 182nd Audit Committee Meeting February 27, 2019
3 183rd Audit Committee Meeting March 25, 2019
4 184th Audit Committee Meeting April 29, 2019
5 185th Audit Committee Meeting May 07, 2019
6 186th Audit Committee Meeting July 24, 2019
7 187th Audit Committee Meeting September 09, 2019
8 188th Audit Committee Meeting September 29, 2019
9 189th Audit Committee Meeting October 15, 2019
10 190th Audit Committee Meeting October 21, 2019
11 191st Audit Committee Meeting November 03, 2019
12 192nd Audit Committee Meeting November 24, 2019
13 193rd Audit Committee Meeting December 08, 2019
Management and the external Reviewed implementation status
auditors prior to submission to of report submitted earlier of
the Board of Directors for their the Branches/Divisions through
approval. respective Cluster Head on
continuous basis.
Reviewed with the external
auditors about the result Reviewed Compliance on
of their audit findings and observations, recommendations
management letter together with and decisions of the Audit
Management’s response to their Committee Meetings.
findings.
Reviewed the investigation
Evaluated the performance of reports tabled during the
year and ensured appropriate
external auditors and make the
remedial actions/measures were
necessary recommendations for
taken.
appointment/re-appointment of
External Auditors of the Bank Discussed the observations
and to fix their remuneration. relating to inspection reports of
Bangladesh Bank and compliance
Evaluation of internal audit thereof.
reports and compliances
there against Branches and Suggested preventive measures
Divisions at Head Office level: for internal control lapses those
were arisen during the period of
Reviewed the internal audit inspection.
reports of Branches/Divisions
with a focus on all major areas of
housekeeping particularly day to
day operational activities, inter
branch adjustment accounts,
arrears in the balancing of the Dr. Md. Rahmat Ullah
books, un-reconciled entries in Chairman
inter-bank accounts and frauds. Audit Committee
240 Mercantile Bank Limited
Annual Report 2019

CHIEF FINANCIAL OFFICER (CFO)’S

REVIEW
Establishing a stable profit structure and robust financial base, taking appropriate
risks, and providing optimal solutions in order to contribute to the sustainable
growth and development of our customers and society as a whole

Overview
Tapash Chandra Paul, PhD Despite operating in a challenging
Chief Financial Officer environment, MBL reached the
new heights and achieved several
milestones, both financial and
nonfinancial, during 2019. Financially,
the bank made a remarkable operating
profit, strengthened its capital and
liquidity position and maintained
consistency in paying dividends to
shareholders. Non-financial milestones
include starting new ventures of
asset management & mobile financial
services and exploring new business
avenues like sub-branches, agent
banking booths & Islamic banking
operation.

Performance Review of 2019

Net Interest Income

Net interest income increased by

21% to BDT 4,965.65 million in 2019
compared to BDT 4,104.08 million in
2018. The increase was primarily driven
by a BDT 12,659.84 million, or 6%,
growth in average loan volumes. These
also account for net interest margin to
be improved by 16 basis points to 3.12%
in 2019 compared to the prior year.

Non-Interest Income

Investment income increased by 8%

to BDT 3,828.90 million, commissions
and fees income increased by 24% to
BDT 2,950.70 million in 2019 and other
income decreased by 25% to BDT
1,430.75 million in 2019 compared to
2018. Overall, the remarkable growth
in non-interest income reflects MBL’s
commitment to increase fee-based
income as part of its strategic focus.

Non-Interest Expense

Noninterest expenses increased by

BDT 325.32 million, or 6%, to BDT
5,820.26 million in 2019 compared
to BDT 5,494.94 million in 2018. The

increase was driven by additional
expenses related with the expansion
of branches, other business segments
and growth in human resources.
Excluding these effects, non-interest
expenses decreased compared to the
prior year following disciplined cost
management with reductions across all
major cost categories except IT related
expenses, which remained essentially
stable during 2019, reflecting MBL’s
commitment to continue spending on
technology and controls in line with its
strategy.
Operating Profit
MBL has been experiencing steady
profit growth over the years. Operating
Profit reached remarkably at BDT
7,355.75 million in 2019, which is a
15.92% increase compared to the
previous year. This operating profit
growth is mainly driven by an increase
in net interest income.
Net Profit after Tax
We experienced a decrease in Net
Profit after Tax by 27.50% mainly due
to a 81% increase in provision against
Loans & advances compared to 2018.
The increased provision reflects
the weakened macroeconomic
environment that resulted in
low recovery. The overall level of
provisioning reflects the bank’s strong
financial base and a low-risk profile of
the loan portfolio.
Conservative Balance Sheet
Management: An Essential
Element of Our Strategy
We remain committed to managing
our balance sheet conservatively as
part of our strategy, and we delivered
on this commitment in 2019. A strong
capital ratio is a core to this objective.
At the end of 2019, our Common
Equity Tier 1 ratio stood at 8.50% which
improved from 8.09% a year ago.
The Capital to Risk-Weighted Assets
(CRAR) 13.92% was also comfortably
above the regulatory requirement. We
were able to offset the negative impact
of business expansion upon capital
by taking initiatives for increasing the
borrower ratings to minimize risk-
weighted assets. These efforts also
contributed to a fully-loaded leverage
ratio of 5.55% at year-end, versus a
target of 3%.
The Advance-Deposit Ratio (ADR) for
the Bank was 84.10% at year-end 2019,
CORPORATE GOVERNANCE
reflecting a strong and stable funding by a lower net interest margin due to
base supporting our growing loan falling/single digit interest rates.
portfolio. Our funding base benefited
from structural improvements in our We made a good start to achieve
balance sheet, and the net stable our business targets and are satisfied
funding ratio at the year-end stood at with our progress so far. However, the
110.03% compared to 103.49% in 2018. current COVID-19 pandemic and its
We maintained a liquidity coverage potential impact on the local and global
ratio of 149.43% as at year-end economy may affect our financial and
2019, comfortably above regulatory business targets. To cope with this, we
requirements and improved greatly have a solid foundation with a strong
from 108.85% at the year-end 2018. capital and liquidity base and high
credit quality in our loan book. We are
The Bank’s total loans and advances prepared to deal with any exceptional
increased by 5.65% to BDT 236,890.45 situation and determined to continue
million which was supported by 7.71% executing our business plan in a
growth in its total deposits to BDT disciplined way.
247,624.47 million reflecting the bank’s
Finally, to be successful in the banking
strengthening deposit base and brand
industry in the long term, not only
recognition. The size of our credit
cost discipline, revenue growth and
portfolios is relatively stable and the
capital strength but also a constructive
overall quality is good, especially as
relationship based on trust with various
it is supported by continuing positive
regulatory authorities are needed.
local economic developments. At the
Regardless of the progress we made in
end of 2019, Our NPL ratio stood at
this context in the past year, it is vital
4.86%; below the industry average rate.
to continue remediating shortcomings
To further reduce the non-performing
and to further improve our processes
loans (NPLs), we continuously monitor
and controls. For this reason, we will
our clients' position and reconsider our
continue to develop and optimize the
strategy accordingly.
relevant functions in the bank in future.
Returns to Shareholders and
Other Value Creation Activities
MBL has always been committed
to delivering consistent value to the
shareholders. This year, the Board has
proposed a 16% dividend (11% cash & 5%
stock) for approval at the forthcoming Tapash Chandra Paul, PhD
annual general meeting, compared Chief Financial Officer
to 15% stock dividend in 2018. The
Bank continued to create value for its
shareholders with a Return on Equity
(ROE) of 10.99%, an Earnings per Share
(EPS) of BDT 2.32 in 2019, and a Net
Asset Value Per Share (NAVPS) of
BDT 22.31. During the year 2019, MBL
also contributed BDT 5,209.27 million
to the national exchequer in the form
of income tax payment on bank’s
earnings, tax deducted at source, VAT
deducted at source and excise duty.
Outlook 2020
We had entered 2020 with positive
growth momentum. We will focus
on moderate but quality growth of
our loan book and strengthen the
recovery process to keep the loan-
loss provisioning at a low level. Among
other strategies, we will also eye on
increasing commission and fee-based
income, similar to 2019, which may
offset the potential impact partially
242 Mercantile Bank Limited
Annual Report 2019

CEO & CFO’S DECLARATION

TO THE BOARD
Date: May 17, 2020

The Board of Directors

Mercantile Bank Limited
61, Dilkusha C/A
Dhaka-1000.

Subject: Declaration on Financial Statements for the year ended on 31 December, 2019.

Dear Sirs,

Pursuant to the condition No. 1(5) (xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/
Admin/80 Dated 03 June, 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby
declare that:

(1) The Financial Statements of Mercantile Bank Limited for the year ended on 31 December, 2019 have been prepared
in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards
(IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed;

(2) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis,
in order for the financial statements to reveal a true and fair view;

(3) The form and substance of transactions and the Bank’s state of affairs have been reasonably and fairly presented
in its financial statements;

(4) To ensure above, the Bank has taken proper and adequate care in installing a system of internal control and
maintenance of accounting records;

(5) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies
and procedures of the Bank were consistently followed; and

(6) The management’s use of the going concern basis of accounting in preparing the financial statements is
appropriate and there exists no material uncertainty related to events or conditions that may cast significant
doubt on the Bank’s ability to continue as a going concern.

In this regard, we also certify that:

(i) We have reviewed the financial statements for the year ended on 31 December, 2019 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 collectively present true and fair view of the Bank’s 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 in violation of the code of conduct for the Bank’s Board of Directors or its members.

Sincerely yours,

Tapash Chandra Paul, PhD  Md. Quamrul Islam Chowdhury

Chief Financial Officer (CFO)  Managing Director & Chief Executive Officer
 FINANCIAL STATEMENTS

FINANCIAL
STATEMENTS
244 Mercantile Bank Limited
Annual Report 2019

INDEPENDENT AUDITOR’S REPORT (REVISED)

TO THE SHAREHOLDERS OF MERCANTILE BANK LIMITED
Report on the Audit of the Consolidated and Separate Financial Statements

Opinion
We have audited the consolidated
financial statements of Mercantile
Bank Limited and its subsidiaries
(the “Group”) as well as the separate
financial statements of Mercantile
Bank Limited (the “Bank”), which
comprise the consolidated and
separate balance sheet as at 31
December 2019 and the consolidated
and separate profit and loss account,
consolidated and separate statements
of changes in equity and consolidated
and separate cash flow statement for
the year then ended, and notes to the
consolidated and separate financial
statements, including a summary of
significant accounting policies.
In our opinion, the accompanying
consolidated financial statements
of the Group and also the separate
financial statements of the Bank
give a true and fair view of the
consolidated balance sheet of the
Group and the separate balance sheet
of the Bank as at 31 December 2019,
and of its consolidated and separate
profit and loss account, consolidated
and separate statement of changes
in equity and its consolidated and our other ethical responsibilities in
separate cash flow statement for the accordance with the IESBA Code
year then ended in accordance with
and the Institute of Chartered
International Financial Reporting
Accountants of Bangladesh (ICAB)
Standards (IFRSs) as explained in
Bye-Laws. We believe that the
note-2.0 and in accordance with the
Bank Company Act 1991 (as amended audit evidence we have obtained is
up to date), the rules and regulations
sufficient and appropriate to provide
issued by Bangladesh Bank , the
Companies Act 1994 and Regulations a basis for our opinion.
issued by the Bangladesh Securities &
Exchange Commission (BSEC). Key Audit Matters
Basis for Opinion Key audit matters are those matters
that, in our professional judgment,
We conducted our audit in
were of most significance in our audit
accordance with International
Standards on Auditing (ISAs). Our of the financial statements for the year
responsibilities under those standards 2019. These matters were addressed
are further described in the Auditor’s in the context of our audit of the
Responsibilities for the Audit of the
financial statements as a whole, and
Consolidated and Separate Financial
Statements section of our report. in forming our opinion thereon, and
We are independent of the Group we do not provide a separate opinion
and the Bank in accordance with the on these matters. For each matter
International Ethics Standards Board
described below our description of
for Accountants’ Code of Ethics for
Professional Accountants (IESBA how our audit addressed the matter
Code), Bangladesh Securities and is provided in that context.
Exchange Commission (BSEC) and
Bangladesh Bank, and we have fulfilled

Loans & Advances

Key Audit Matters Our Response to the Risk
Classification We tested the design and operating effectiveness of key
controls focusing on the following:
The classification of Loans & Advances are determined
by specific Bangladesh Bank’s circulars which have wide Tested the investment appraisal, loans disbursement
ranging effect on the financial position and performance of procedures, monitoring and recovery process;
the Bank, namely through provisioning requirements.
Identification of loss events, including early warning
Furthermore the calculation of RWA (Risk Weighted and default warning indicators;
Assets) is, to some extent, dependent on the classification
Reviewed quarterly Bank’s Classification of Investment
of Loans & Advances which ultimately impact the CRAR
(CL);
(Capital to Risk Weighted Assets) – a significant indicator
of Bank’s health under the BASEL – III regime. Furthermore we have assessed the Loans & Advances
application receipt, assessment, documentation and
Furthermore the recognition and measurement of these
authorization process against Bank’s policy and Bangladesh
Loans & Advances are dictated by Bangladesh Bank’s
Bank’s requirements.
circulars namely BRPD Circular No. 7 dated 6.12.05 BRPD
14 dated 23.09.12, BRPD 19 dated 27.12.12, BRPD 05 dated As part of our process we have also reviewed the loan files,
29.05.13, BRPD 16 dated 18.11.14, BRPD 08 dated 02.08.15, bank statements, assessed the adequacy of collateral.
BRPD 03 dated 21.04.2019, BRPD 05 dated 16.05.2019 , BRPD Finally assessed the appropriateness and presentation
17 dated 08.08.2019, BRPD 14 dated 25.06.2019, BRPD 06 of disclosures against relevant accounting standards and
dated 19.06.2019, BRPD 07 dated 22.05.2019 respectively Bangladesh Bank guidelines.
which limits the fair implementation of respective IFRSs.
The Bank’s disclosures about classification of Loans and
Advances are included in note 2.2.3(a-h) and 7.6
 FINANCIAL STATEMENTS

Key Audit Matters Our Response to the Risk

Measurement of Provision
The process for estimating the provision for Loans &
Advances portfolio associated with credit risk is significant
and complex.
For the individual analysis, these provisions consider the
estimates of future business performances and the market
value of collateral provided for credit transactions.
We tested the design and operating effectiveness of key
controls focusing on the following:
Tested the control designed by management to ensure
compliance of Bangladesh Bank Circulars relating to
provision requirement and provision calculations.
Tested the controls regarding the proper reporting of
provision in (CL) and others.

For the collective analysis, these provisions are manually Tested the controls relating to proper authorization
processed that deals with voluminous databases, and compliance of Bangladesh Bank Circulars for
assumptions and calculations for the provision estimates write-off of investment.
of complex design and implementation.
Our substantive procedures in relation to the provision for
At year end, the Bank reported total Loans & Advances Investments portfolio comprised the following:
of Taka 236,890.45 million (2018: Taka 224,230.61 million)
and provision against Loans & Advances of Taka 12,134.28 Reviewed the adequacy of the Bank general and
million (2018: Taka 10,391.53million). specific provisions;

Provision measurement is primarily dependent upon key Assessed the methodologies on which the provision
assumptions relating to probability of default, ability to amounts based, recalculated the provisions and tested
repossess collateral and recovery rates. Amount of provision the completeness and accuracy of the underlying
provide in financial statement is determined according information;
to the Bangladesh Bank circulars. Bangladesh Bank has
issued specific circulars and guidelines for measurement Finally assessed the appropriateness and presentation
and calculation of provisions. of disclosures against relevant accounting standards and
Bangladesh Bank guidelines.
The Bank’s disclosures about provisioning of Loans &
Advances are included in note 2.2.3, 13,13.3 ,13.5, 13.5.1 (a & b).

IFRS 16 Leases
Key Audit Matters Our Response to the Risk
IFRS 16 replaces the existing standard IAS 17 and specifies Our audit procedures included understanding
how an IFRS reporter will recognize, measure, present management’s IFRS 16 transition impact analysis approach.
and disclose leases. The standard provides a single lessee Specifically:
accounting model, requiring lessees to recognize assets
Obtained an understanding and evaluated the group’s
and liabilities for all leases unless the lease term is 12
implementation process, including the review of the
months or less or the underlying asset has a low value.
updated accounting policy and policy elections in
The implementation of IFRS 16 is considered a key audit
accordance with IFRS 16.
matter due to the judgments needed in establishing the
underlying key assumptions. We assessed the design and implementation of the
key controls relating to the determination of the IFRS
The Bank’s disclosures relating to IFRS 16 are included in 16 transition impact disclosure;
the notes 2.2.9,9,13,21,33 of the financial statements.
We assessed the discount rates used to calculate
the lease obligation with support from our valuation
specialists;
We assessed the accuracy of the lease data by testing
the lease data captured by management for a sample of
leases through the inspection of lease documentation;
and
We tested the completeness of the lease data by
reconciling the Group’s existing lease commitments to
the lease data underpinning the IFRS 16 model.

The disclosure included within the Accounting Policies of

the Group of the transition impact of IFRS 16 is appropriate.
We conclude the discount rates used by the Group to
determine the IFRS 16 lease liability and the lease data
underpinning the impact analysis reasonable.
246 Mercantile Bank Limited
Annual Report 2019

IT systems and controls

Key Audit Matters
Our audit procedures have a focus on IT systems and
controls due to the pervasive nature and complexity of the
IT environment, the large volume of transactions processed
in numerous locations daily and the reliance on automated
and IT dependent manual controls.
The Bank’s disclosures relating to its IT systems and controls reviewed and authorized. We tested the Bank’s periodic
are included in note 2.13.8 of the financial statements.
Our Response to the Risk
We tested the design and operating effectiveness of the
Bank’s IT access controls over the information systems
that are critical to financial reporting. We tested IT general
controls (logical access, changes management and
aspects of IT operational controls). This included testing
that requests for access to systems were appropriately
review of access rights. We inspected requests of changes
to systems for appropriate approval and authorization. We
considered the control environment relating to various
interfaces, configuration and other application layer
controls identified as key to our audit.

Where deficiencies were identified, we tested compensating

controls or performed alternate procedures. In addition, we
understood where relevant changes were made to the IT
landscape during the audit period and tested those changes
that had a significant impact on financial reporting.

Legal & Regulatory Matters

Key Audit Matters
We focused on this area because the Bank operates in
a legal and regulatory environment that is exposed to
significant litigation and similar risks arising from disputes
and regulatory proceedings. Such matters are subject to
many uncertainties and the outcome may be difficult to
predict.Significant Legal & Regulatory matters pertaining
to the Bank were:
Our Response to the Risk
We obtained an understanding, evaluated the design and
tested the operational effectiveness of the Bank’s key
controls over the legal provision and contingencies process.
We enquired to those charged with governance to obtain
their view on the status of all significant litigation and
regulatory matters.

Compliance of rules & regulations, including submission We enquired of the Bank’s internal legal counsel for all
of returns to various regulators; significant litigation and regulatory matters and inspected
Maintenance of regulatory capital, reserves & internal notes and reports.
provisions; and
Litigation (cases) filed on behalf of or against the Bank
including any provisioning requirements.

These uncertainties inherently affect the amount and timing

of potential outflows with respect to the provisions which
have been established and other contingent liabilities.

The Bank’s disclosures relating to its Legal & Regulatory

Matters are included in note 2.16 of the financial statements.

Deferred Tax
Key Audit Matters Our Response to the Risk
The Bank reports net deferred tax assets totaling Taka We obtained an understanding, evaluated the design and
124.96 million as at 31 December 2019 (Taka 83.42 million tested the operational effectiveness of the Bank’s key
as at 31 December 2018) controls over the recognition and measurement of DTAs
and the assumptions used in estimating the Bank’s future
Significant judgment is required in relation to deferred tax taxable income.
assets as their recoverability is dependent on forecasts of
future profitability over a number of years. We also assessed the completeness and accuracy of the
data used for the estimations of future taxable income.
The Bank’s disclosures relating to Deferred Tax are included
in note 2.6.2.2,13,13.4.2&13.4.2(a) to the financial statements. We involved tax specialists to assess key assumptions,
controls, recognition and measurement of DTAs.

Finally assessed the appropriateness and presentation of

disclosures against “IAS12” Income Tax.

Key Audit Matters
No General Reserve maintained in 2019.
Materiality
The scope of our audit was influenced
by our application of materiality. We
set certain quantitative thresholds
for materiality. These together with
qualitative considerations, helped us to
determine the scope of our audit and
the nature, timing and extent of our audit
procedures on the individual financial
statement line items and disclosures and
in evaluating the effect of misstatements,
both individually and in aggregate on the
financial statements as a whole.
Going Concern
We are required to report if we have
anything material to add or draw
attention to in relation to the note 2.1.7
to the financial statements on the use of
the going concern basis of accounting
with no material uncertainties that may
cast significant doubt over the Group
and Bank’s use of that basis for a period
of at least twelve months from the date
of approval of the financial statements.
We have nothing to report in these
respects.
Other Information
Management is responsible for the other
information. The other information
comprises of all the information in
the Annual Report other than the
consolidated and separate financial
statements and our auditor’s report
thereon. The Annual Report is expected
to be made available to us after the date
of this auditor’s report.
Our opinion on the consolidated and
separate financial statements does not
cover the other information and we
do not express any form of assurance
conclusion thereon.
In connection with our audit of the
consolidated and separate financial
statements, our responsibility is to
read the other information identified
General Reserve
The Bank has maintained Capital to Risk Weighted Asset
Ratio (CRAR) as 13.92% with 2.5% capital conservation
buffer which is shown in note 14.5
above when it becomes available and,
in doing so, consider whether the other
information is materially inconsistent
with the financial statements or our
knowledge obtained in the audit or
otherwise appears to be materially
misstated.
When we read the annual report, if
we conclude that there is a material
misstatement therein, we are required
to communicate the matter to those
charged with Governance.
Responsibilities of
Management and Those
Charged with Governance
for the Consolidated and
Separate Financial Statements
and Internal Controls
Management is responsible for the
preparation and fair presentation of the
consolidated financial statements of
the Group and also separate financial
statements of the Bank that gives a
true & fair view in accordance with
IFRSs as explained in note 2.1.1, and for
such internal control as management
determines is necessary to enable
the preparation of consolidated and
separate financial statements
are free from material misstatement,
whether due to fraud or error. Bank
Company Act 1991 (as amended up
to date), the rules and regulations
issued by Bangladesh Bank,
Companies Act 1994 and Regulations
issued by the Bangladesh Securities &
Exchange Commission (BSEC) 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.
In preparing the consolidated
separate financial statements,
management is responsible
FINANCIAL STATEMENTS
Our response to the risk
assessing the Group’s and the Bank’s
ability to continue as a going concern,
disclosing, as applicable, matters
related to going concern and using
the going concern basis of accounting
unless management either intends to
liquidate the Group and the Bank or
to cease operations, or has no realistic
alternative but to do so.
Those charged with Governance are
responsible for overseeing the Group’s
and the Bank’s financial reporting
process.
Auditor’s Responsibilities for
the Audit of the Consolidated
and Separate Financial
Statements
Our objectives are to obtain reasonable
assurance about whether financial
statements as a whole are free from
material misstatement, whether due
to fraud or error, and to issue an
auditor’s report that includes our
opinion. Reasonable assurance is a
high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs will always detect
a material misstatement when it exists.
that Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
the of users taken on the basis of these
financial statements.
As part of an audit in accordance with
ISAs, we exercise professional judgment
and maintain professional skepticism
throughout the audit. We also:
Identify and assess the risks of
material misstatement of the
financial statements, whether
due to fraud or error, design
and perform audit procedures
and responsive to those risks, and
obtain audit evidence that is
for sufficient and appropriate to
248 Mercantile Bank Limited
Annual Report 2019
provide a basis for our opinion.
The risk of not detecting a
material misstatement resulting
from fraud is higher than for
one resulting from error, as
fraud may involve collusion,
forgery, intentional omissions,
misrepresentations, or the
override of internal control.
Obtain an understanding of
internal control relevant to the
audit in order to design audit
procedures that are appropriate
in the circumstances.
Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures
made by management.
Conclude on the appropriateness
of management’s use of
the going concern basis of
accounting and, based on the
audit evidence obtained, whether
a material uncertainty exists
related to events or conditions
that may cast significant doubt
on the Group’s and the Bank’s
ability to continue as a going
concern. If we conclude that a
material uncertainty exists, we
are required to draw attention in
our auditor’s report to the related
disclosures in the consolidated
and separate financial
statements or, if such disclosures
are inadequate, to modify our
opinion. Our conclusions are
based on the audit evidence
obtained up to the date of our
auditor’s report. However, future
events or conditions may cause
the Group and the Bank to cease
to continue as a going concern.
Evaluate the overall presentation,
structure and content of the
consolidated and separate
financial statements, including
the disclosures, and whether
the consolidated and separate
financial statements represent
the underlying transactions and
events in a manner that achieves
fair presentation.
Obtain sufficient appropriate Act 1991 (as amended up to date),
audit evidence regarding the the rules and regulations issued by
financial information of the Bangladesh Bank, the Companies Act
entities or business activities 1994 and Regulations issued by the
within the Group to express an Bangladesh Securities & Exchange
opinion on the consolidated Commission (BSEC), we also report that:
financial statements. We are
responsible for the direction, (i) We have obtained all the
supervision and performance of information and explanations
the group audit. We remain solely which to the best of our knowledge
responsible for our audit opinion. and belief were necessary for the
purpose of our audit and made due
We communicate with those verification thereof;
charged with Governance
regarding, among other matters, (ii) To the extent noted during
the planned scope and timing of the course of our audit work
the audit and significant audit performed on the basis stated
findings, including any significant under the Auditor’s Responsibility
deficiencies in internal control section in forming the above
that we identify during our audit. opinion on the financial statements
and considering the reports of the
We also provide those charged Management to Bangladesh Bank
with Governance with a statement on anti-fraud internal controls and
that we have complied with instances of fraud and forgeries as
relevant ethical requirements stated under the Management’s
regarding independence, and Responsibility for the financial
to communicate with them all statements and internal control:
relationships and other matters
that may reasonably be thought (a)
Internal audit, internal
to bear on our independence, control and risk management
and where applicable, related arrangements of the Group
safeguards. and the Bank as disclosed in
notes 2.13.6 and 2.13 to the
From the matters communicated financial statements appeared
with those charged with to be materially adequate
Governance, we determine with immaterial control
those matters that were of deficiencies as identified in the
most significance in the audit of Management Report;
the consolidated and separate
(b) Nothing has come to our
financial statements of the current
attention regarding material
period and are therefore the
instances of forgery or
key audit matters. We describe
irregularity or administrative
these matters in our auditor’s
error and exception or anything
report unless law or regulation
detrimental committed by
precludes public disclosure
employees of the Bank and
about the matter or when, in
its related entities other than
extremely rare circumstances,
matters disclosed in note 2.13.7
we determine that a matter
should not be communicated in to the financial statements;
our report because the adverse
(iii)
Financial statements of all
consequences of doing so
subsidiary companies of the Bank
would reasonably be expected
namely, Mercantile Bank Securities
to outweigh the public interest
Ltd. have been audited by K.M.
benefits of such communication.
Hasan & Co. Chartered Accountants
Report on other Legal and and Mercantile Exchange House
Regulatory Requirements (UK) Limited have been audited
by Jahan & Co. Chartered
In accordance with the Bank Company Management Accountants and

have been properly reflected in the
consolidated financial statements;
(iv) In our opinion, proper books of
accounts as required by law have
been kept by the Group and the
Bank so far as it appeared from our
examination of those books;
(v) 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 together with the annexed
notes dealt with by the report are
in agreement with the books of
account and returns;
(vi) The expenditures incurred and
payments made were for the
purpose of the Bank’s business for
the year;
(vii)
The consolidated financial
statements of the Group and the
Dhaka,
May 17, 2020
separate financial statements
of the Bank have been drawn
up in conformity with prevailing
rules, regulations and accounting
standards as explained in note
2.1.1as well as with related
guidelines, circulars issued by
Bangladesh Bank and decision
taken in tripartite meeting amongst
the inspection team of Bangladesh
Bank, external auditor’s and the
management of Mercantile Bank
Limited held on March 04, 2020;
(viii)Provisions as explained in note
13.5.1, 13.2.1 and 13.3 have been
made for the loans & advances,
other assets and off-balance sheet
items which are in our opinion,
doubtful of recovery;
(ix)
The records and statements
submitted by the branches have
been properly maintained and
consolidated in the financial
statements;
FINANCIAL STATEMENTS
(x) The information and explanations
required by us have been received
and found satisfactory;
(xi) We have reviewed over 80% of the
risk weighted assets of the Bank
and spent around 2,408 person
hours for the audit of the books
and accounts of the Bank; and
(xii)
The Financial Statements were
approved by the Board of Directors
of Mercantile Bank Limited on
March 22, 2020 accordingly signed
on that day. But the Bank revised
the Financial Statements due
to compliance for 2 (ka) (1) of
Bangladesh Bank DOS Circular No-
03, dated May 11, 2020 regarding
‘Dividend Policy for banks for the
year 2019’.
AKM Mohitul Haq, FCA
Senior Partner
Ahmed Zaker & Co.
Chartered Accountants
250 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited and its Subsidiaries

Consolidated Balance Sheet
As at 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
PROPERTY AND ASSETS
Cash 3(a) 16,788,776,795 15,603,173,163
Cash in hand (Including foreign currency) 2,542,948,612 2,320,565,012
Balance with Bangladesh Bank & its agent bank(s) (including foreign
14,245,828,183 13,282,608,151
currency)
Balance with other banks and financial institutions 4(a) 1,289,207,319 2,892,469,252
In Bangladesh 1,048,738,016 1,088,808,133
Outside Bangladesh 240,469,302 1,803,661,119
Money at call on short notice 5(a) 365,000,000 145,000,000
Investments 6(a) 50,806,920,206 39,986,518,021
Government 44,377,626,068 33,226,982,753
Others 6,429,294,138 6,759,535,268
Loans and Advances 7(a) 240,468,606,394 227,543,893,756
Loans, Cash Credit, Overdraft etc. 228,274,889,981 211,202,502,868
Bills purchased and discounted 12,193,716,412 16,341,390,888
Fixed assets including premises, furniture and fixtures 8(a) 3,161,428,865 3,310,541,200
Other assets 9(a) 4,820,161,703 3,262,669,210
Non-banking assets 10(a) 23,905,709 -
Total Assets 317,724,006,990 292,744,264,601
LIABILITIES AND CAPITAL
Liabilities
Borrowings from other banks, financial institutions and agents 11(a) 20,623,045,320 20,184,862,378
Non-convertible Subordinated Bond 11.6a 4,200,000,000 4,800,000,000
Deposits and other Accounts 247,606,440,443 229,878,335,355
Current Accounts and other Accounts 12.1(a) 48,632,260,233 48,129,568,880
Bills Payable 12.2(a) 3,045,627,717 2,939,303,079
Savings Bank Deposits 12.3(a) 23,894,395,453 21,453,096,403
Fixed Deposits 12.4(a) 116,338,773,679 105,589,346,641
Deposits Under Schemes 12.5(a) 55,695,383,360 51,767,020,352
Other Liabilities 13(a) 24,354,823,662 19,214,368,510
Total Liabilities 296,784,309,424 274,077,566,243
Capital/Shareholders' Equity 20,889,627,692 18,617,218,120
Paid up Capital 14.1 9,371,583,020 8,149,202,630
Statutory Reserve 15(a) 7,879,083,376 7,182,984,005
General Reserve 15.1 1,400,000,000 1,400,000,000
Other Reserve 16(a) 746,752,530 712,557,299
Surplus in Profit & Loss Account 17(a) 1,492,208,765 1,172,474,186
Non Controlling Interest 17(b) 50,069,875 49,480,238
Total Shareholders' Equity 20,939,697,566 18,666,698,358
Total Liabilities & Shareholders' Equity 317,724,006,990 292,744,264,601
 FINANCIAL STATEMENTS

Consolidated Balance Sheet (Continued)

As at 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
OFF-BALANCE SHEET ITEMS
Contingent liabilities

Acceptances and Endorsements 18.1 49,314,711,103 50,255,420,715

Letters of Guarantee 18.2 14,781,461,873 12,775,435,565
Irrevocable Letters of Credit 18.3 31,099,559,466 35,271,484,698
Bills for Collection 18.4 6,798,004,286 6,267,132,644
Other Contingent Liabilities 18.5 - -
Total 101,993,736,728 104,569,473,622

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 - -

Total Off-Balance Sheet Items including contingent liabilities 101,993,736,728 104,569,473,622

Net Asset Value Per Share (NAVPS) 36(a) 22.34 22.91

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.

Ahmed Zaker & Co.

Chartered Accountants
Dated: Dhaka
May 17, 2020
252 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited and its Subsidiaries

Consolidated Profit & Loss Account
For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
Interest income 20(a) 23,155,095,356 20,451,512,557
Interest Paid on deposits, borrowings etc. 21(a) 18,120,004,540 16,277,034,618
Net interest income 5,035,090,817 4,174,477,939
Investment income 22(a) 3,855,632,752 3,592,906,102
Commission, exchange and brokerage 23(a) 3,037,426,557 2,469,707,084
Other operating income 24(a) 1,460,306,486 1,826,078,712
8,353,365,795 7,888,691,898
Total operating income 13,388,456,611 12,063,169,838
Salaries and allowances 25(a) 2,455,289,533 2,481,573,236
Rent, taxes, insurances, electricity etc. 26(a) 391,187,402 813,336,693
Legal expenses 27(a) 33,217,400 25,258,305
Postage, stamps, telecommunication etc. 28(a) 68,538,394 72,895,725
Stationery, Printings, Advertisements etc. 29(a) 267,038,211 297,894,256
Chief Executive's salary and fees 30(a) 13,191,210 17,658,710
Directors' fees 31(a) 5,502,200 5,124,400
Auditors' fees 32(a) 1,257,146 2,047,827
Depreciation and repair of bank's assets 33(a) 900,436,039 448,095,115
Other expenses 34(a) 1,789,485,101 1,554,185,524
Total operating expenses 5,925,142,636 5,718,069,791
Profit/(Loss) before provision 7,463,313,975 6,345,100,047
Provision for loans and advances including off Balance Sheet items 13.5(a) 3,607,813,043 2,039,335,646
Other provision 13.3.1(a) 305,642,102 21,492,981
Total provision 3,913,455,145 2,060,828,627
Total Profit/(Loss) before Taxes 3,549,858,830 4,284,271,420
Provision for Current Tax 13.4.1(a) 1,368,333,012 1,413,816,901
Provision for Deferred Tax 13.4.2(a) (41,035,528) (52,513,317)
1,327,297,484 1,361,303,584
Net Profit after Taxation 2,222,561,346 2,922,967,837
Appropriations
Statutory Reserve 15 696,099,371 870,187,564
General Reserve 15.1 - 900,000,000
696,099,371 1,770,187,564
Retained surplus 1,526,461,975 1,152,780,272
Net profit after Tax attributable to:
Equity holders of Mercantile Bank Ltd. 1,525,872,338 1,153,857,015
Non Controlling Interest 17(b).1 589,637 (1,076,743)
1,526,461,975 1,152,780,272
Consolidated Earnings Per Share (EPS) 35(a) 2.37 3.12

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Consolidated Profit and Loss Account referred to in our separate report of even date.

Ahmed Zaker & Co.

Dated: Dhaka Chartered Accountants
May 17, 2020
 FINANCIAL STATEMENTS

Mercantile Bank Limited and its Subsidiaries

Consolidated Cash Flow Statement
For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
A) Cash flows from operating activities
7,286,861,244 4,768,079,547
Interest received 22,903,261,977 19,029,283,867
Interest paid (12,984,431,606) (12,654,707,949)
Dividends receipts 189,595,363 169,896,441
Fees and commission received 1,385,282,720 2,469,707,084
Recoveries on loans previously written off 5,160,882 136,069,760
Payment to the employees (2,455,289,533) (1,881,573,236)
Payment to suppliers (267,038,211) (297,894,256)
Income taxes paid (1,489,680,348) (2,202,702,164)
Received from other operating activities 6,776,144,245 6,437,527,293
Exchange gain 1,652,143,837 1,197,273,275
Other operating income 5,124,000,408 5,240,254,019
Payment for other operating activities (2,465,608,452) (2,579,029,596)
Rent, taxes, insurances and electricity (368,885,420) (793,168,973)
Legal expenses (33,217,400) (25,258,305)
Postage, stamps and telecommunication (67,916,889) (72,128,602)
Auditors' fees (1,257,146) (667,827)
Repair and maintenance (95,952,393) (87,384,031)
Chief Executive's salary and fees (13,191,210) (17,658,710)
Directors' fees (5,502,200) (5,124,400)
Other expenses (1,879,685,795) (1,577,638,748)
Operating profit before changes in operating assets & liabilities 11,597,397,037 8,626,577,244
(Increase)/ decrease in operating assets and liabilities (24,075,355,953) (28,467,956,037)
Trading securities (11,150,643,315) (3,864,476,026)
Loans and advances to other banks - -
Loans and advances to customer (12,924,712,638) (24,603,480,012)
Other assets (1,557,492,493) (919,480,460)
Income generating:
Investment in shares of subsidiary companies
Investment in Shares of subsidiary company (In Bangladesh) Mercantile
(15,229,314) (336,138,391)
Bank Securities Limited
Investment in Shares of subsidiary company (In Bangladesh) MBL
(56,000,000) -
Asset Management Limited
Investment in Shares of subsidiary company (outside Bangladesh)
34,198,778 (1,257,804)
Mercantile Exchange House (UK) Limited
In Bangladesh (Mercantile Bank OBU Unit) - -
Non-Income generating:
Stationery, stamps,printing materials in stock etc 1,661,681 (6,336,725)
Advance rent and advertisement 275,802,460 31,747,178
Interest accued on investment but not collected,commission and brokerage
86,821,658 (303,602,623)
receivable on shares and debenture and other income receivable
Security deposit (743,960) 215,065
Preliminery, formation and organization expenses, renovation/development
(63,250,307) (69,817,105)
expenses and prepaid expenses
Branch adjustment (224,638,769) (468,229,246)
Suspense Account (360,559,720) 233,939,191
Right Of Use (ROU) Assets as per IFRS-16 (1,234,650,000) -
Clearing adjustment account (905,000) -
(2,050,737,800) 22,421,585,234
Deposit from other banks 438,182,942 4,000,031,826
Deposit from customers 17,728,105,088 20,803,876,512
Other liabilities (1,636,431,813) (2,382,323,105)
Net cash flows from operating activities 2,080,098,820 1,660,725,982
254 Mercantile Bank Limited
Annual Report 2019

Consolidated Cash Flow Statement (Continued)

For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
B) Cash flows from investing activities
Brokerage House customer account - -
(Purchase)/ sale of property, plant and equipment (242,872,493) (587,791,548)
(Purchase)/sale of shares 10,908,423 (12,627,239)
(Purchase)/sale of bond 406,000,000 673,250,000
Other investment (1,130,328,888) (1,007,111,480)
Net cash flows from investing activities (956,292,958) (934,280,268)

C) Cash flows from financing activities

Receipts from issue of loan capital and debt Securities - -
Payments for redemption of loan capital and debt securities (600,000,000) 2,400,000,000
Paid for Interest on Subordinated bond (372,891,780) (256,500,000)
Received by issue of right share - -
Dividend paid - (1,319,394,713)
Net cash flows from financing activities (972,891,780) 824,105,287

Net increase/(decrease) in cash & cash equivalent (A+B+C) 150,914,082 1,550,551,001

Effects of Exchange rate changes on cash and cash equivalents 20,959,898 5,166,999
Cash and cash equivalent at beginning of the year 18,274,880,733 16,719,162,732
Cash and cash equivalent at the end of the year 18,446,754,714 18,274,880,733

Net Operating Cash Flow Per Share (NOCFPS) 37(a) 2.22 2.04

Cash and cash equivalents at the end of the year

Cash in hand (Including foreign currencies) 3(a) 2,542,948,612 2,320,565,012
Balance with Bangladesh Bank & its agent bank(s) (including foreign
3(a) 14,245,828,183 13,282,608,151
currencies)
Balance with other banks and financial institutions 4(a) 1,289,207,319 2,523,011,570
Prize Bonds 6.2 (b) 3,770,600 3,696,000
Money at call on short notice 5(a) 365,000,000 145,000,000
18,446,754,714 18,274,880,733

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Consolidated Cash Flow Statement referred to in our separate report of even date.

Ahmed Zaker & Co.

Chartered Accountants
Dated: Dhaka
May 17, 2020
Mercantile Bank Limited and its Subsidiaries
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Amount in BDT
Other Reserve Surplus

Adjustment Revaluation Non

Statutory Dividend Net Balance
Paid-up Capital General reserve for Surplus Total Controlling Grand Total
Particulars Reserve Equalization of Other Profit/(loss)
Approved for Fixed Interest
Fund Reserve
Securities Assets/Other

A B C D E F G=(D+E+F) H I=(A+B+C+G+H) J K=(I+J)

Balance as at 1 January 2019 8,149,202,630 7,182,984,005 1,400,000,000 45,680,250 23,265,094 643,611,955 712,557,299 1,172,474,186 18,617,218,121 49,480,238 18,666,698,358
Changes in accounting policy - - - - - - - - - - -
Statutory reserve - 696,099,371 - - - - - (696,099,371) - - -
General reserve - - - - - - - - - -
Market adjustment of approved
- - - - 10,289,522 - 10,289,523 - 10,289,523 - 10,289,523
securities (HTM)
Surplus/deficit on account of revaluation/
- - - - 23,905,709 23,905,709 - 23,905,709 - 23,905,709
Reserve of properties/others
Surplus/deficit on account of
- - - - - - - - - - -
revaluation of investments
Currency transaction difference - - - - - - - 15,652,994 15,652,994 - 15,652,994
Net gains and losses not recognised in
- - - - - - - - - -
Income Statement
Net profit for the year after taxation - - - - - - - 2,222,561,346 2,222,561,346 589,637 2,223,150,982
Transfer - - - - - - - - - -
Issuance of bonus shares 1,222,380,390 - - - - - - (1,222,380,390) - - -
Bonus share premium - - - - - - - - -
Cash dividend - - - - - - - - - - -
Dividend equalization fund - - - - - - - - - - -
Non controlling share capital/profit - - - - - - - - - - -
Issue of right share - - - - - - - - - -
Balance as at 31 Decmber 2019 9,371,583,020 7,879,083,376 1,400,000,000 45,680,250 33,554,616 667,517,664 746,752,530 1,492,208,765 20,889,627,692 50,069,875 20,939,697,566

Balance as at 31 Decmber 2018 8,149,202,630 7,182,984,005 1,400,000,000 45,680,250 23,265,094 643,611,955 712,557,299 1,172,474,186 18,617,218,120 49,480,238 18,666,698,358

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Consolidated Statement of Changes in Equity referred to in our separate report of even date.

Ahmed Zaker & Co.

FINANCIAL STATEMENTS

Dated: Dhaka
Chartered Accountants
May 17, 2020
Mercantile Bank Limited and its Subsidiaries
Consolidated Liquidity Statement
256

Asset and Liability Maturity Analysis

As at 31 December 2019
Amount in BDT

Up to 1 1-3 3-12 1-5 More than

Particulars Total
Month Months Months Years 5 years
Assets:
Annual Report 2019
Mercantile Bank Limited

Cash in hand 2,536,093,750 703,541,183 6,854,862 - 13,542,287,000 16,788,776,795

Balance with other banks and financial institutions 74,332,287 394,866,307 820,008,725 - - 1,289,207,319
Money at call on short notice 365,000,000 - - - - 365,000,000
Investments 3,094,167,366 493,695,502 13,252,396,370 7,311,932,828 26,654,728,140 50,806,920,206
Loans and advances 38,976,004,972 30,559,327,406 76,366,327,381 44,113,454,889 50,453,491,746 240,468,606,394
Fixed assets including premises, furniture and fixtures - - 444,552,959 2,716,875,906 - 3,161,428,865
Other assets 1,156,073,808 824,192,764 1,324,664,600 280,547,696 1,234,682,834 4,820,161,703
Non-banking assets - - - 23,905,709 - 23,905,709
Total Assets 46,201,672,183 32,975,623,162 92,214,804,896 54,446,717,029 91,885,189,720 317,724,006,990
Liabilities:
Borrowing from Bangladesh Bank, other banks, financial institutions - - 20,623,045,320 - - 20,623,045,320
and agents
Deposits 39,210,258,780 32,500,450,258 48,125,650,900 43,780,250,145 80,944,202,643 244,560,812,726
Other accounts 3,045,627,717 - - - - 3,045,627,717
Non-convertible Subordinated Bond - - - - 4,200,000,000 4,200,000,000
Provision and other liabilities - 180,905,286 16,450,850,000 7,723,068,375 - 24,354,823,662
Total Liabilities 42,255,886,497 32,681,355,544 85,199,546,220 51,503,318,520 85,144,202,643 296,784,309,424
Net Liquidity Gap 3,945,785,686 294,267,618 7,015,258,676 2,943,398,508 6,740,987,077 20,939,697,566
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Balance Sheet
As at 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
PROPERTY AND ASSETS
Cash 3 16,781,921,933 15,601,365,120
Cash in hand (Including foreign currencies) 3.1 2,536,093,750 2,318,756,969
Balance with Bangladesh Bank & its agent bank(s) 3.2 14,245,828,183 13,282,608,151
(including foreign currencies)

Balance with other banks and financial institutions 4 1,165,342,631 2,481,834,305

In Bangladesh 4.1 924,873,328 678,173,186
Outside Bangladesh 4.2 240,469,302 1,803,661,119

Money at call on short notice 5 365,000,000 145,000,000

Investments 6 49,755,982,451 38,977,947,399
Government 6.4 44,377,626,068 33,226,982,753
Others 6.5 5,378,356,383 5,750,964,646

Loans and Advances 7 236,890,448,333 224,230,612,873

Loans, Cash Credit, Overdraft etc. 7.A 224,696,731,920 207,889,221,985
Bills purchased and discounted 7.B 12,193,716,412 16,341,390,888

Fixed assets including premises, furniture and fixtures 8 3,142,445,869 3,288,457,574

Other assets 9 8,238,422,004 6,660,431,339
Non- banking assets 10 23,905,709 -

Total Assets 316,363,468,930 291,385,648,610

LIABILITIES AND CAPITAL

Liabilities
Borrowings from other banks, financial institutions and agents 11 20,623,045,320 20,080,790,157

Non-convertible Subordinated Bond 11.6 4,200,000,000 4,800,000,000

Deposits and other Accounts 12 247,624,472,715 229,907,325,556

Current Accounts and other Accounts 12.1 48,650,292,506 48,158,559,081
Bills Payable 12.2 3,045,627,717 2,939,303,079
Savings Bank Deposits 12.3 23,894,395,453 21,453,096,403
Fixed Deposits 12.4 116,338,773,679 105,589,346,641
Deposit Under Schemes 12.5 55,695,383,360 51,767,020,352

Other Liabilities 13 23,007,656,618 17,913,978,270

Total Liabilities 295,455,174,652 272,702,093,982
Capital/Shareholders' Equity
Paid up capital 14.1 9,371,583,020 8,149,202,630
Statutory reserve 15 7,879,083,376 7,182,984,005
General reserve 15.1 1,400,000,000 1,400,000,000
Other reserve 16 746,752,530 712,557,299
Surplus in Profit & Loss Account 17 1,510,875,350 1,238,810,693
Total shareholders' Equity 20,908,294,277 18,683,554,627
Total Liabilities & Shareholders' Equity 316,363,468,930 291,385,648,610
258 Mercantile Bank Limited
Annual Report 2019

Balance Sheet (Continued)

As at 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
OFF-BALANCE SHEET ITEMS

Contingent liabilities
Acceptances and Endorsements 18.1 49,314,711,103 50,255,420,715
Letters of Guarantee 18.2 14,781,461,873 12,775,435,565
Irrevocable Letters of Credit 18.3 31,099,559,466 35,271,484,698
Bills for Collection 18.4 6,798,004,286 6,267,132,644
Other Contingent Liabilities 18.5 - -
Total 101,993,736,728 104,569,473,622

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 - -

Total Off-Balance Sheet items including contingent liabilities 101,993,736,728 104,569,473,622

Net Asset Value Per Share (NAVPS) 36 22.31 22.93

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Balance Sheet referred to in our separate report of even date.

Ahmed Zaker & Co.

Chartered Accountants
Dated: Dhaka
May 17, 2020
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Profit and Loss Account
For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
Interest income 20 23,081,814,816 20,381,113,173
Interest paid on deposits, borrowings etc. 21 18,116,167,297 16,277,034,618
Net interest income 4,965,647,519 4,104,078,555
Investment income 22 3,828,901,293 3,558,859,901
Commission, exchange and brokerage 23 2,950,703,441 2,384,417,062
Other operating income 24 1,430,754,400 1,793,157,860
8,210,359,134 7,736,434,823
Total operating income 13,176,006,653 11,840,513,378
Salaries and allowances 25 2,416,251,526 2,439,759,322
Rent, taxes, insurances, electricity etc. 26 365,373,181 796,225,237
Legal expenses 27 31,821,336 24,382,779
Postage, stamps, telecommunication etc. 28 66,492,547 70,745,731
Stationery, Printings, Advertisements etc. 29 265,782,748 296,864,216
Chief Executive's Salary and fees 30 13,191,210 17,658,710
Directors' fees 31 4,727,200 3,974,400
Auditors' fees 32 747,500 1,477,500
Depreciation and repair of bank's assets 33 895,185,906 442,859,729
Other expenses 34 1,760,682,601 1,400,992,287
Total operating expenses 5,820,255,754 5,494,939,911
Profit/(Loss) before provision 7,355,750,899 6,345,573,467
Provision for loans and advances including off Balance Sheet items 13.5 3,587,813,043 1,982,135,646
Other provision 13.2.1(V) 287,441,000 12,500,000
Total provision 3,875,254,043 1,994,635,646
Total profit/(Loss) before taxes 3,480,496,856 4,350,937,821
Provision for Current Tax 13.4.1 1,346,540,534 1,403,709,864
Provision for Deferred Tax 13.4.2 (41,540,535) (53,709,159)
1,305,000,000 1,350,000,705
Net profit after taxation 2,175,496,856 3,000,937,116
Appropriations
Statutory reserve 15 696,099,371 870,187,564
General reserve 15.1 - 900,000,000
696,099,371 1,770,187,564
Retained surplus 1,479,397,485 1,230,749,552

Earnings per share (EPS) 35 2.32 3.20

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Profit and Loss Account referred to in our separate report of even date.

Ahmed Zaker & Co.

Chartered Accountants
Dated: Dhaka
May 17, 2020
260 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Cash Flow Statement
For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
A) Cash flows from operating activities
7,139,178,183 3,442,769,030
Interest received 22,829,981,437 18,958,884,483
Interest paid (12,980,594,363) (12,654,707,949)
Dividends receipts 189,595,363 169,896,441
Fees and commission received 1,266,749,486 1,171,951,997
Recoveries on loans previously written off 5,160,882 136,069,760
Payment to the employees (2,416,251,526) (1,839,759,322)
Payment to suppliers (265,782,748) (296,864,216)
Income taxes paid (1,489,680,348) (2,202,702,164)
Received from other operating activities 6,735,513,694 6,372,407,983
Exchange gain 1,667,796,831 1,199,121,018
Other operating income 5,067,716,863 5,173,286,965
Payment for other operating activities (2,407,012,674) (2,403,979,056)
Rent, taxes, insurances and electricity (343,071,199) (776,057,517)
Legal expenses (31,821,336) (24,382,779)
Postage, stamps and telecommunication (65,871,041) (69,978,608)
Auditors' fees (747,500) (97,500)
Repair and maintenance (95,952,393) (87,384,031)
Chief Executive's Salary and fees (13,191,210) (17,658,710)
Directors' fees (4,727,200) (3,974,400)
Other expenses (1,851,630,794) (1,424,445,511)
Operating profit before changes in operating assets and liabilities 11,467,679,203 7,411,197,957
(Increase)/ decrease in operating assets and liabilities (23,810,478,775) (28,434,367,867)
Trading securities (11,150,643,315) (3,864,476,026)
Loans and advances to other banks - -
Loans and advances to customers (12,659,835,460) (24,569,891,841)
Other assets (1,577,990,665) (580,698,866)
Income generating:
Investment in shares of subsidiary companies
Investment in Shares of subsidiary company (In Bangladesh) Mercantile
- -
Bank Securities Ltd.
Investment in Shares of subsidiary company (In Bangladesh) MBL
(56,000,000) -
Asset Management Ltd.
Investment in Shares of subsidiary company (outside Bangladesh)
(1,528,708) 1,385,398
Mercantile Exchange House (UK) Ltd.
In Bangladesh (Mercantile Bank OBU Unit) - -
Non-Income generating:
Stationery, stamps,printing materials in stock etc 1,661,681 (6,336,725)
Advance rent and advertisement 275,802,460 31,747,178
Interest accued on investment but not collected,commission and brokerage
86,821,658 (303,602,623)
receivable on shares and debenture and other income receivable
Security deposit (743,960) 215,065
Preliminery, formation and organization expenses, renovation/development
(63,250,307) (69,817,105)
expenses and prepaid expenses
Branch adjustment (224,638,769) (468,229,246)
Suspense Account (360,559,720) 233,939,191
Right Of Use (ROU) Assets as per IFRS-16 (1,234,650,000) -
Clearing adjustment account (905,000) -
15,933,307,633 23,335,702,939
Deposit from other banks 542,255,163 3,895,959,605
Deposit from customers 17,717,147,159 20,784,371,505
Other liabilities (2,326,094,689) (1,344,628,171)
Net cash flows from operating activities 2,012,517,395 1,731,834,163
 FINANCIAL STATEMENTS

Cash Flow Statement (Continued)

For the year ended 31 December 2019

Amount in BDT
Notes
Dec 19 Dec 18
B) Cash flows from investing activities
(Purchase)/sale of property, plant and equipment (247,372,317) (586,432,100)
(Purchase)/sale of shares 10,908,423 (12,627,239)
(Purchase)/sale of bond 406,000,000 673,250,000
Other investment activities (1,130,328,888) (1,005,263,736)
Net cash flows from investing activities (960,792,782) (931,073,075)

C) Cash flows from financing activities

Receipts from Issue of loan capital and debt securities - -
Payments for redemption of loan capital and debt securities (600,000,000) 2,400,000,000
Paid for Interest on Subordinated bond (372,891,780) (256,500,000)
Received by issue of right share - -
Dividend paid - (1,319,394,713)
Net cash flows from financing activities (972,891,780) 824,105,287

Net increase/(decrease) in cash & cash equivalent (A+B+C) 78,832,834 1,624,866,375

Effects of Exchange rate changes on cash and cash equivalents 5,306,905 3,319,256
Cash and cash equivalent at the beginning of the year 18,231,895,425 16,603,709,794
Cash and cash equivalent at the end of the year 18,316,035,164 18,231,895,425

Net Operating Cash Flow Per Share (NOCFPS) 37 2.15 2.13

Cash and cash equivalents at end of the year

Cash in hand (Including foreign currencies) 3.1 2,536,093,750 2,318,756,969
Balance with Bangladesh Bank & its agent bank(s) (including foreign
3.2 14,245,828,183 13,282,608,151
currencies)
Balance with other banks and financial institutions 4 1,165,342,631 2,481,834,305
Prize Bonds 6.2 (b) 3,770,600 3,696,000
Money at call on short notice 5 365,000,000 145,000,000
18,316,035,164 18,231,895,425

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Cash Flow Statement referred to in our separate report of even date.

Ahmed Zaker & Co.

Chartered Accountants
Dated: Dhaka
May 17, 2020
Mercantile Bank Limited
262

Statement of Changes in Equity

For the year ended 31 December 2019
Amount in BDT

Other reserve
Paid-up Statutory General Dividend Adjustment Revaluation Surplus profit/
Net balance of Total
Particulars capital reserve reserve Equalization for Approved surplus for Fixed (loss)
other reserve
Fund Securities assets/Other
A B C D E F G=D+E+F H I=A+B+C+G+H
Annual Report 2019

Balance as at 1 January 2019 8,149,202,630 7,182,984,005 1,400,000,000 45,680,250 23,265,094 643,611,955 712,557,299 1,238,810,693 18,683,554,627
Changes in accounting policy - - - - - - - -
Mercantile Bank Limited

Transfer from income of OBU - - - -

Statutory reserve - 696,099,371 - - - - - (696,099,371) -
General reserve - - - - - - - - -
Market adjustment of approved securities - - - - - - - - -
(HTM)
Surplus/deficit on account of revaluation/ - - - - - 23,905,709 23,905,709 - 23,905,709
Reserve of properties
Surplus/deficit on account of revaluation of - - - - 10,289,522 - 10,289,522 - 10,289,522
investments
Currency transaction difference - - - - - - - -
Net gains and losses not recognised in the - - - - - - - - -
income statement
Net profit for the year after taxation - - - - - - - 2,175,496,856 2,175,496,856
Transfer - - - - - - - 15,047,562 15,047,562
Issuance of bonus share 1,222,380,390 - - - - - - (1,222,380,390) -
Bonus share premium - - - - - - - - -
Cash dividend - - - - - - - - -
Dividend equalization fund - - - - - - - - -
Issue of right share - - - - - - - - -
Balance as at 31 December 2019 9,371,583,020 7,879,083,376 1,400,000,000 45,680,250 33,554,616 667,517,664 746,752,530 1,510,875,350 20,908,294,277

Balance as at 31 December 2018 8,149,202,630 7,182,984,005 1,400,000,000 45,680,250 23,265,094 643,611,955 712,557,299 1,238,810,693 18,683,554,627

The annexed notes form an integral part of these financial statements.

Managing Director and CEO Director Director Chairman

This is the Statement of Changes in Equity referred to in our separate report of even date.

Ahmed Zaker & Co.

Dated: Dhaka
Chartered Accountants
May 17, 2020
Mercantile Bank Limited
Liquidity Statement
Asset and Liability Maturity Analysis
As at 31 December 2019
Amount in BDT

Up to 1 1-3 3-12 1-5 More than

Particulars Total
Month Months Months Years 5 years
Assets:
Cash in hand 2,536,093,750 703,541,183 - - 13,542,287,000 16,781,921,933
Balance with other banks and financial institutions 74,332,287 394,866,307 696,144,037 - - 1,165,342,631

Money at call on short notice 365,000,000 - - - - 365,000,000

Investments 3,094,167,366 493,695,502 12,201,458,615 7,311,932,828 26,654,728,140 49,755,982,451
Loans and advances 38,976,004,972 30,559,327,406 72,788,169,320 44,113,454,889 50,453,491,746 236,890,448,333
Fixed assets including premises, furniture and fixtures - - 444,552,959 2,697,892,911 - 3,142,445,869
Other assets 1,656,073,808 1,324,192,764 1,324,664,600 280,547,696 3,652,943,135 8,238,422,004
Non-banking assets - - - 23,905,709 - 23,905,709
Total Assets 46,701,672,183 33,475,623,162 87,454,989,530 54,427,734,033 94,303,450,021 316,363,468,930
Liabilities:
Borrowing from Bangladesh Bank, other banks, financial institutions - - 20,623,045,320 - - 20,623,045,320
and agents
Deposits 39,210,258,780 32,500,450,258 48,125,650,900 43,780,250,145 80,962,234,915 244,578,844,998
Other accounts 3,045,627,717 - - - - 3,045,627,717
Non-convertible Subordinated Bond - - - - 4,200,000,000 4,200,000,000
Provision and other liabilities - 30,905,286 16,450,850,000 6,525,901,331 - 23,007,656,618
Total Liabilities 42,255,886,497 32,531,355,544 85,199,546,220 50,306,151,476 85,162,234,915 295,455,174,652
Net Liquidity Gap 4,445,785,686 944,267,618 2,255,443,310 4,121,582,557 9,141,215,106 20,908,294,277
FINANCIAL STATEMENTS
264 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
As at and for the year ended 31 December 2019

1.0 Legal Status & Nature of the Bank

Mercantile Bank Limited (“the Bank”) is one of the third generation Private Commercial Banks (PCBs) 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 Company Act, 1991 as amended in 2013. The
bank commenced its commercial operation on 2 June, 1999. Afterward, 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). At present, the
Bank has 148 Branches, 181 own ATMs (Automated Teller Machines), 20 CDMs (Cash Deposit Machines), 2 off-shore Banking
Units (OBU) operating at Gulshan and Chittagong EPZ areas, The Bank has 2 subsidiary companies namely Mercantile Bank
Securities Ltd. (MBSL) & Mercantile Exchange House (UK) Limited as on 31 December, 2019. Apart, the establishment of 2
(Two) subsidiaries- namely MBL Asset Management Limited and MBL MyCash Limited are in the process of finalization. It
is noteworthy that MBL Asset Management Limited obtained ‘Certificate of Incorporation’ dated 29 November, 2018 and
MBL MyCash Limited obtained ‘Certificate of Incorporation’ dated 03 July, 2019.
The registered office of the bank is situated at 61, Dilkusha C/A, Dhaka-1000, Bangladesh.
1.1 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 admirable customer services. The core
activities of the Bank are to provide all kinds of commercial banking services including Deposits Mobilization, Corporate
Banking, SME and Consumer Businesses, Discounting bills, Foreign Exchange Business, Off Shore Banking, Treasury
function, Card business, Mobile Banking (MyCash), Internet Banking and Locker Services. MBL caters card services to its
customers by VISA dual prepaid card, Credit Card, Debit card, VISA Medical Card, VISA International Student Card, VISA
Dual Hajj Card and International/Dual cards with various up-to-date facilities. Mercantile Bank has started centralized ‘MBL
Contact Center’ to provide banking services to customers’ doorstep on 24/7 basis.
1.2 Off-shore Banking Unit (OBU)
The Off-shore Banking Unit commenced its commercial operation on 20 March 2011 after obtaining permission from
Bangladesh Bank vide letter no. BRPD (P-3)744(114)/2010-1743, dated 4 May, 2010 In the mean time as per BRPD
circular # 2, dated 25 February 2019 we have already applied to Bangladesh Bank for conducting Off-shore banking
in Bangladesh on March 24, 2019. At present, the bank has 2 (two) units in operation in Bangladesh. The Off-shore
Banking Unit is governed by 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 Division
The Bank obtained the permission for conducting Mobile Banking Operation under reference letter # DCMPS/
PSD/37(D)/2011-753, dated 2 November, 2011 of Bangladesh Bank. The main activities of the mobile banking services
are to deliver a wide range of financial products and services through mobile phone in the brand of MYCash within
the applicable rules & regulations and guidelines of Bangladesh Bank. MYCash is a customer centric mobile financial
service with a combination of convenient and secured services to ‘Make Life Easy’.
It could be noted that the process of transforming Bank’s Mobile Banking Division to a separate subsidiary company for
rendering better Mobile Financial Services (MFS) to a wide range of customers in the name of ‘MBL MyCash Limited’.
1.4 Subsidiaries of the Bank
The Bank has 2 (two) subsidiaries as follows:

Country of Controlling interest of

Name of the Subsidiaries Principal activities
incorporation Mercantile Bank Ltd.
Mercantile Bank Securities Limited Trading securities Bangladesh 98.61%
Mercantile Exchange House (UK) Limited Financial services UK 100%

Detail as presented in note no. 1.4.1 to 1.4.2

1.4.1 Mercantile Bank Securities Limited
Mercantile Bank Securities Limited (MBSL) was founded in 2010 and started its commercial operation on 14 September,
2011. MBSL has been licensed from Bangladesh Securities and Exchange Commission (BSEC) with a view to carrying
out Stock Broker & Dealer business in the capital market and other diversified services to a wide range of customers.
MBSL has high quality products and services at a competitive rate. Having seats in both Dhaka Stock Exchange
Limited (TREC no. 224) and Chittagong Stock Exchange Limited (TREC no. 140), MBSL has become a trusted name to
most of the Institutional investors & retail investors in Bangladesh.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
MBSL offers full-fledged international standard brokerage service with margin loan facility. It is also a full service
Depository Participant (DP) of Central Depository Bangladesh Ltd. (CDBL). MBSL is dedicated to provide high level of
professional and personalized services to its clients at a reasonable cost. MBSL’s services are comprehensive in nature,
including brokerage, margin loan, CDBL facilities, and research and custodian needs of customers. The Head Office of
MBSL is situated at Shawdesh Tower (3rd & 4th floor), 41/6 Purana Palton, Dhaka-1000. The 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 1 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
September 2010, Mercantile Bank Limited got the permission from Bangladesh Bank for opening a fully owned
subsidiary in UK. Mercantile Exchange House (UK) Limited obtained Anti-Money Laundering registration on 21 February
2011 which was issued by HM Customs and Excise of the Government of UK.
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. The Head Office of Mercantile Exchange House (UK) Limited is situated at 108
Whitechapel Road, London E1 1JD, UK. The Financial Statements of the company are shown in Annexure-I.
2.0 Basis of Preparation of Financial Statements & Other Significant Accounting Policies
2.1 Basis of Accounting
2.1.1 Statement of Compliance
The financial statements of the Bank and its subsidiaries have been prepared for the year ended on 31 December,
2019 on a going concern basis in accordance with the First Schedule (Sec-38) of the Bank Companies Act, 1991
(as amended up to 2013), BRPD Circular #14 dated 25 June 2003, other Bangladesh Bank circulars, International
Accounting Standards (IAS) & International Financial Reporting Standards (IFRS) adopted by the Institute of Chartered
Accountants of Bangladesh (ICAB) and all other applicable regulatory frameworks.
The Bank has complied with the requirements of following laws and regulations from various Government bodies:

I. The Banking Companies Act, 1991(amendment up to 2013).

II. The Companies Act, 1994,
III. Circulars, Regulations and Guidelines issued by Bangladesh Bank time to time.
IV. Securities and Exchange Ordinance 1969, Bangladesh Securities and Exchange Rules 1987, Bangladesh
Securities and Exchange Commission Act 1993, Bangladesh Securities and Exchange Commission IPO Rules
2006, Gazette Notification (No. BSEC/CMRRCD/2006-158/208/Admin/81 Dated: 20 June 2018) on Financial
Reporting and Disclosure, Any other directives, Orders and Circulars issued by Bangladesh Securities and
Exchange Commission (BSEC).
V. Dhaka Stock Exchange (DSE) Listing Regulations, 2015, Chittagong Stock Exchange (CSE) (Listing)
Regulations, 2015 and Central depository Bangladesh Limited (CDBL) rules & regulations.
VI. The Income Tax Ordinance, 1984 and Finance Act 2019
VII. Statutory Regulatory Orders (SROs), General Orders, Notifications issued by NBR time to time
VIII. The VAT and Supplementary Duty Act,2012 and amendment thereon
IX. Bangladesh Labor Act, 2006 (Amendment up to 2013) and Bangladesh labor rules 2015
X. The Financial Reporting Act, 2015.

In cases where the requirements of Bangladesh Bank differ with those of IAS/IFRS, the guidelines of the Bangladesh
Bank have been applied in preparing these financial statements. The requirements of accounting standards as per IAS/
IFRS that have been departed to comply with Bangladesh Bank requirements are disclosed in detail in Note - 2.18 as
per the provision of Para 20 of IAS – 1 (Presentation of Financial Statements).
2.1.2 Presentation of financial statements
The presentation of the financial statements has been made as per the requirements of BRPD Circular No 14, dated
25 June, 2003 issued by Bangladesh Bank.
266 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
2.1.3 Basis of measurement
The financial statements have been prepared on a historical cost convention, except for the following material items;

Application of Accounting
Items Basis of Measurement Referred Note No:
Standards
Financial Instruments Fair Value IFRS 13, IFRS7, IAS 32, IFRS-9 2.2.2
Freehold Land Stated at Revalued Amount IAS 16, IFRS 13 16.00 (C)

No adjustment has been made for inflationary factors affecting the financial statements. The accounting policies referred
in IAS 8 unless it contradicts with local laws and regulations have been consistently followed by the bank, as appropriate
2.1.4 Basis of Consolidation
The Consolidated Financial Statements include the financial statements of Mercantile Bank Limited, its subsidiaries,
Mercantile Bank Securities Limited and Mercantile Bank Exchange House (UK) Limited, prepared at the end of the
year as on 31 December, 2019. The Consolidated Financial Statements have been prepared in accordance with IAS 27
“Separate Financial Statements” and IFRS-10 “Consolidated Financial Statements”.
Subsidiaries
Subsidiaries are all entities over which the bank has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. A parent of a subsidiary should present
consolidated financial statements according to IAS 27 “Separate financial statements” and IFRS 10 “Consolidated
Financial Statements”. The financial statements of subsidiary are included in the consolidated financial statements
from the date that control effectively commences until the date that the control effectively ceases. The conversion
policy of subsidiary companies is given below:

Mercantile Exchange House (UK)

Particulars Price
Limited
For Assets & Liabilities Closing Price £1 = 111.0534 BDT
For Income & Expenses Average Price £1= 110.3904 BDT

Preparation of Consolidated Financial Statements

Consolidated Financial Statements have been prepared by using uniform accounting policies for like transactions and
other events in similar circumstances.
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.
2.1.5 Use of Estimates & Judgments
The preparation of financial statements in conformity with International Financial Reporting Standards (IFRS)
requires management to make judgments, estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses. It also requires disclosures of contingent assets and liabilities at the date of the
financial statements. Provisions and accrued expenses are recognized in the financial statement in line with the IAS 37
“Provisions, Contingent Liabilities and Contingent Assets” when-
• the Bank has a legal or constructive obligation as a result of past event.
• It is probable that an outflow of economic benefit will be required to settle the obligation.
• a reliable estimate can be made of the amount of the obligation.
The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the result of which form the basis of making the judgments about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
Significant areas are where management requiring the use of estimate and judgment
• Useful life of depreciable assets.
• Provision for leases, loans, advances and investments for future impairment.
• Provision for Gratuity.
However, the estimates and underlying assumptions are reviewed on an ongoing basis and the revision is recognized
in the year in which the estimates are revised.
Changes in accounting estimates
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Changes are reflected in the assumptions when they occur in accordance with IAS 8, Accounting Policies, and Changes
in Accounting Estimates & Errors. During the year, the bank has not adopted any change of accounting estimates and
consistency applies same accounting estimates of the previous year.
2.1.6 Foreign Currency Transactions and Translations
i) Functional & Presentation Currency
Functional currency is the currency of the primary economic environment in which the Bank and its subsidiaries
operate. The Bank and its subsidiaries consider the following factors in determining its functional currency:
(a) The currency:
(i) that mainly influences interest income, operating income and sales prices for goods and services of the
country whose competitive forces and regulations mainly determine the interest income, operating income
and sales prices for goods and services;
(ii) in which funds from financing activities are generated; and
(iii) in which receipts from operating activities are usually retained.
The following additional factors are considered in determining the functional currency of a foreign operation,
(b) Whether the activities of the foreign operation are carried out an extension of the reporting entity, rather than
being carried out with a significant degree of autonomy.
(c) Whether transactions with the reporting entity are a high or a low proportion of the foreign operation’s activities.

(d) Whether cash flows from the activities of the foreign operation directly affect the cash flows of the reporting
entity and readily available for remittance to it.
(e) Whether cash flows from the activities of the foreign operation are sufficient to service existing and normally
expected debt obligations without funds being made available by the reporting entity.
In consideration with above factors, the Bank has determined Bangladesh Taka (BDT) as functional currency. Moreover,
functional currency for Off-shore banking unit is US Dollar and Mercantile Exchange House (UK) Limited is Pound
Sterling.
The financial statements of Bank and its subsidiaries are presented in Bangladesh Taka (BDT) except as indicated
above; financial information has been rounded off to the nearest Taka.
ii) Foreign Currency translation
Transactions in foreign currencies are converted into equivalent BDT applying the ruling rates on the dates of transaction
as per IAS-21,” The Effects of Changes in Foreign Exchange Rates”. 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 as on 31 December, 2019:

Currency BDT
USD 1= 84.9000
GBP 1= 111.0534
EURO 1= 94.8885
JYEN 1= 0.7759

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 rates of exchange prevailing 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.
268 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
v) Foreign operation
The results and financial position of the Bank’s operation whose functional currency is not Bangladeshi Taka are
translated into Bangladeshi Taka as follows:
a) Assets and liabilities are translated at the exchange rate prevailing at the balance sheet date;
b) Income and expenses in the income statement are translated at an average rate approximating the exchange
rates at the year end;
c) Resulting exchange differences are recognized as a separate component of equity;
d) As per IAS 21, “Foreign Currency Transactions”, foreign currency denominated non-monetary items of OBUs
are translated at historical rate, as the OBUs are considered as an integral part of the Bank’s operation not a
foreign operation due to specific regulations governing the OBU and unique nature.

2.1.7 Going concern

Going concern is one of the fundamental assumptions in accounting on the basis of which all the financial statements are
prepared. The financial statements of the Bank have been prepared assuming that a business entity will continue to operate
in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly
restrain its operational activities. Therefore, it is assumed that the entity will realize its assets and settle its obligations in
the normal course of the business. It is the responsibility of the management of the bank to determine whether the going
concern assumption is appropriate in the preparation of financial statements.
2.1.8 Materiality and aggregation
Each material item as considered by management significant has been presented separately in financial statements. No
amount has been set off unless the bank has a legal right to set off the amounts and intends to settle on net basis. Income
and expenditures are presented on a net basis only when permitted by the relevant accounting standards.
2.1.9 Consistency
In accordance with the IFRS framework for the presentation of financial statements together with IAS 1 and IAS 8,
the bank applies the accounting disclosure principles consistently from one period to the next. In case of selecting
and applying new accounting policies, changes in accounting policies applied and correction of errors, the amounts
involved are accounted for and disclosed retrospectively in accordance with the requirement of IAS 8.
2.1.10 Comparative figures
Comparative information has been disclosed in respect of the year ended 31 December, 2019 for all numerical data in
the financial statements and also the narrative and descriptive information when it is relevant for better understanding
of the current year’s financial statements. Previous years have been rearranged whenever considered necessary to
ensure comparability with the current year.
2.1.11 Statement of Cash Flows
The statement of cash flows has been prepared in accordance with the guideline of BRPD Circular # 14, dated 25 June
2003 issued by the Banking Regulation and Policy Department of Bangladesh Bank which is a combination of direct
and indirect methods. In addition to BRPD Circular 14, dated 25 June 2003 as stated, MBL also follows IAS-7 for areas
not covered in the above circular.
2.1.12 Branch accounting
The bank has 148 branches as on 31 December, 2019. Accounts of the branches are maintained at the Branch level, and
consolidated through the “Temenos T24” Core Business Solution (CBS) automatically in head office from which these
accounts are drawn up.
2.1.13 Liquidity Statement
The liquidity statement of assets and liabilities has been prepared in accordance with the residual maturity grouping
as on 31 December, 2019 under the presented format of BRPD Circular # 14 dated 25 June 2003. MBL has prepared its
liquidity statement on following basis:
Items On the basis of
a. Balance with other Banks and financial institutions, maturity term
money at call and short notice, etc.
b. Investments respective maturity
c. Loans and advances repayment schedules
d. Fixed assets useful lives
e. Other assets realizations/ amortizations
f. Borrowing from other banks, financial institutions and maturities/ repayment terms
agents etc.
g. Deposits and other accounts Maturity term and past trend of withdrawal by the depositors.
h. Other long term liability Maturity term
i. Provisions and other liabilities payments/ adjustments schedule
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
2.1.14 Reporting Period
These financial statements cover one calendar year from 1 January, 2019 to 31 December, 2019.
2.1.15 Events after the reporting period (IAS 10)
Events after the reporting period refer those events, which could be favorable or unfavorable, that occur between the
end of the reporting period and the date that the financial statements are authorized for issue. There was no material
post reporting period events which could materially affect the values stated in these financial statements.
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 Investments
All investment securities are 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 IAS 32 “Financial Instruments: Presentations” and IAS 39 “Financial
Instruments: Recognition and Measurements”. Details of investment in shares/securities are given in. The valuation
methods of investments include: Please see Annexure-C.
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 and DOS Circular # 5, dated 28 January 2009. These securities bear fixed
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 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, 2019 and have been shown in the equity. Please see Annexure- D.
REPO and reverse REPO
The Bank has been recording transactions of REPO and reverse REPO following DOS circular no. 6 dated 15 July 2010 of
BB. In case of REPO of both coupon and non-coupon bearing (Treasury Bill) securities, the Bank adjusts the revaluation
reserve account for HFT securities and stops the weekly revaluation (if the revaluation date falls within the REPO period) of
the same security. For interest bearing security, the Bank does not accrue interest during REPO period.
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 valued and reported at market price as per Bangladesh Bank’s guidelines. Booking of provision for Investment
in securities (gain /loss net off basis) are made as per DOS Circular No. 4 dated 24 November 2011.
Investment in Unlisted Securities
Investment in unlisted securities is reported at cost under cost method or NAV if audited financial statements are
available. The required Adjustments are given for any shortage of book value over cost in determining the carrying
amount of investment in unlisted securities.
All investments are stated as per following basis:

Initial Measurement after initial

Investment Class Recording of changes
Recognition recognition
Govt. T-bills/bonds- Held Cost Amortized cost at each year Increase or decrease in value to equity
to Maturity (HTM) end and profit & Loss account respectively.
Govt. T-bills/bonds- Held Cost Fair Value (Weekly revalued at Loss to profit & loss account, Gain to
for Trading (HFT) Fair Market value through MTM Revaluation Reserve through Profit &
valuation process) Loss Account.
Shares (Quoted) Cost Lower of Cost or Market Loss (gain net off) to Profit & Loss
Value (overall portfolio) account but no unrealized gain booking.
Share (Unquoted) Cost Lower of Cost or Net Asset Loss to profit & Loss account but no
value (NAV) unrealized gain booking.
Prize Bond Cost Cost N/A
270 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Investments in Subsidiaries
The Bank recognizes investment in subsidiaries under cost method in the group financial statements in accordance with IAS
27, “Consolidated and Separate Financial Statements”, IFRS 3 “Business Combination”, IAS 36 “Impairment of Assets”, IFRS
10, “Consolidated Financial Statements” and IFRS 12, “Disclosure of Interests in Other Entities” . Accordingly, investments in
subsidiaries are stated in the Bank’s balance sheet at cost, less impairment losses (if any).
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 IFRS 7 “Financial Instruments: Disclosures”.
2.2.3 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.
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. 7 dated 6 December 2005, BRPD Circular no. 14
dated 23 September 2012, BRPD Circular no. 19 dated 27 December 2012, BRPD Circular no. 5 dated 29 May
2013, BRPD Circular no. 16 dated 18 November 2014. BRPD Circular no. 8 dated 2 August 2015. Provisions and
interest suspense are separately shown under other liabilities as per First Schedule of Bank Company Act 1991
(amended up to 2013).The rates of provision for loans and advances are given below:

Rate of Provision for Unclassified Loans and Advances

Particulars Rate for Provision

Small and Medium Enterprise (SME) 0.25%
All unclassified loans (other than loans under Consumer financing, Loan to Brokerage House, 1%
Merchant Banking, Stock dealers’ etc. and Special Mention account)
Unclassified loans against Housing and Professionals to set up business under Consumer Financing 2%
Unclassified loans to Brokerage House, Merchant Banking, Stock dealers’ etc. 2%
Margin Loan Account 2%
Unclassified loans against other Consumer Financing 5%
Outstanding amount of loans kept in the ‘Special Mention Account’ after netting off the 0.25% -5%
amount of Interest Suspense.

Rate of provision for Classified Loans and Advances

Particulars Rate for Provision

Specific Provision on Sub-standard loans and advances (SS) 20%
Specific Provision on Doubtful loans and advances (DF) 50%
Specific Provision on Bad/Loss loans and advances (BL) 100%

Rate for provision for short term Agricultural and Micro-credits

Particulars Rate for Provision

Substandard and Doubtful (SS & DF) 5%
Bad/Loss (BL) 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.
f) Amounts receivable on Credit Cards are included in advances to customers at the amounts expected to be
recovered.
g) General Provision against all unclassified Credit Card Loans under Consumer Financing: BRPD Circular No-12
dated 20 August, 2017.
h) Provision for Short-term Agricultural and Micro-Credits: BRPD Circular No-15 dated 27 September, 2017.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
2.2.4 Fixed Assets including premises, furniture and fixtures (Property, Plant & Equipment)
a. Recognition and Measurement
All fixed assets are stated at cost less accumulated depreciation as per IAS 16 “Property Plant and Equipment” except
Land. Land is initially measured at cost and then recognized at revalued amount.
The cost of an item of property, plant and equipment is recognizes as an asset if- it is probable that future economic
benefits associated with the item will flow to the entity; and the cost of the item can be measured reliably.
The cost of the items of property, plant and equipment comprises:
i) its purchase price, including import duties and non refundable purchase tax, after deducting trade discount and
rebates.
ii) Any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of
operating in the manner intended by management.
iii) The initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located,
the obligation for which an entity incurs either when the item is acquired or as consequence of having used the item
during a particular year of purpose other than to produce during that year.
Subsequent costs
Subsequent costs of enhancement of existing assets are recognized as a separate asset, only when it is probable that
future economic benefits associated with the item will flow to the bank and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the profit and loss account during the financial period in
which they are incurred.
b. Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
assessed and if a component has a useful life that is different from the remainder of that asset, that component is
depreciated separately.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component
of an item of property, plant and equipment. Land is not depreciated.
The rates at which property, plant and equipment are depreciated for current and comparative period are as follows:

Category of Assets Estimated useful lives (Years) Rate

Land and Land Development Nil Nil
Building 40 2.5%
Furniture and Fixtures 10 10%
Office Equipment 5 20%
Vehicles 5 20%
Books 5 20%

For addition to property, plant and equipment; depreciation is charged from the month of capitalization and no
depreciation is charged in the month of disposal.
c. Disposal of Fixed Assets
The cost and accumulated depreciation of disposed assets are eliminated from the fixed assets schedule and gains
or losses on disposal of an item of property, plant and equipment are to be determined by comparing the proceeds
from disposal with the carrying amount of the property, plant and equipment disposed off. Profit or (loss) if any is
accounted for in “Other Operating Income” head.
d. Revaluation
The fair value of land and building usually refers its market value. This value is determined by appraisal, normally
undertaken by professionally qualified experts. The fair value of items of plant and equipment is usually their market
value, determined by appraisal. The frequency of revaluation depends upon the movements in the fair value of the
items of property, plant and equipment being revalued.
Increases in the carrying amount as a result of revaluation are credited to shareholders equity under the heading of
revaluation surplus. Decreases in the carrying amount as a result of revaluation are recognized as an expense. However,
a revaluation decrease is charged directly against any related revaluation surplus to the extent that the decrease does
not exceed the amount held in the revaluation surplus in respect of same assets.
272 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
e. Capital work in progress (CWIP)
Costs incurred but if the related asset is yet not ready or available to use are recognized as capital work in progress and
disclosed as a part of fixed assets. Once the underlying asset is ready and available to use then it has been transferred
to fixed assets stated at cost. These are expenses of a capital nature directly incurred in the construction of building,
system development, awaiting capitalization. However, no depreciation is calculated on CWIP.
f. Borrowing costs
As per IAS 23, 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.
2.2.5 Intangible Assets
a. Recognition and Measurement
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 IAS 38 “Intangible Assets”.
b. Subsequent expenditure
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.
Software
Software represents the value of computer application software licensed for use of the Bank, other than software
applied to the operation software system of computers. Intangible assets are carried at its cost less accumulated
amortization and any impairment losses.
Initial cost comprises of license fees paid at the time of purchase and other directly attributable expenditure that are
incurred in customizing the software for its intended use.
Software is amortized using the straight line method over the estimated useful life of 5 (five) years commencing from
date of the application. Software is available for use over the best estimate of its useful economic life.
2.2.6 Assets Revaluation Reserve
The Bank has revalued assets in 2011 by an independent valuation firm as per IAS 16 “Property, Plant & Equipment” by
the approval of Board of Directors of the Bank. The revaluation amount is eligible up to 50% for the supplementary
capital (Tier-II) after 20% transitional arrangements for capital deduction as per RBCA guidelines and BRPD circular #
10, dated 24 November 2002.
It is to be noted that as per Bangladesh Bank Guidelines on Risk Based Capital Adequacy (Revised regulatory Capital
Framework for banks in line with Basel III), December, 2014, the regulatory capital adjustment has started in a phased
manner from January, 2015 in the following manner:

Phase-in of deductions from 2015 2016 2017 2018 2019

Supplementary Capital (Tier-II)
Revaluation Reserve for Fixed Assets 20% 40% 60% 80% 100%

2.2.7 Impairment of Assets

As per IAS 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.
2.2.8 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. Provisions
for other assets (if any) are guided by the BRPD Circular No. 14 dated 25 June, 2001.
2.2.9 Lease
‘IFRS 16 :Leases’ defines a lease as “A Contract, or part of a contract, that conveys the right to use an asset for a period
of time in exchange for consideration.” The Bank follows IFRS 16 which has been effective from 01 January, 2019 for the
recognition, measurement, presentation and disclosure of leases.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
As per ‘IFRS 16: Leases’, summary of lease related information is provided as follows:
Figures in BDT
Particulars Opening Depreciation/ Accumulated depreciation/ Lease Closing Balance
Balance interest expense Payment/ Advance Adjustment
Right of Use (ROU) 1,646,200,000 411,550,000 411,550,000 1,234,650,000
Assets
Lease Liabilities 1,370,397,540 50,335,822 413,509,465 1,007,223,897
Advance Rent 275,802,460 48,376,357 227,426,103

2.2.10 Receivables
The Bank recognizes receivables when there is a contractual right to receive cash or in form of another financial
asset from another entity.
2.2.11 Non- Banking Assets
Non-banking assets were acquired due to failure of borrowers to repay the loan in time taken against mortgaged
property. The Bank was awarded absolute ownership on few mortgaged properties (mostly land) through the verdict
of the honourable court under section 33(7) of the Artharin Adalat Act 2003. The value of the properties has been
recognised in the financial statements on the basis of third party valuation and reported as non income generating
assets. Party wise details (including possession date) of the properties are separately presented in note 10 and
Annexure –D1 during the year ended as on 31 December, 2019.
2.2.12 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 Borrowings from Other Banks, Financial Institutions & Agents
Borrowings include call deposits, Bangladesh Bank refinance, other banks borrowings, off-shore banking unit. The
amounts are recognized at the repayable amount. Interest expenses on these amounts are charge to the profit or loss
account.
2.4 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 on Risk Based Capital Adequacy”
through Bangladesh Bank approval letter # BRPD (BIC) 661/14B (P)/ 2014, dated 15 April 2014. The Bank has further
issued 7 (Seven) years term 2nd subordinated bond during the year 2018 for BDT 3,000,000,000 to raise subordinated
debt as part of the Tier-II Regulatory Capital following “Guideline on Risk Based Capital Adequacy (Revised Regulatory
Capital Framework for banks in line with BASEL III)” vide BRPD Circular No- 18 dated December 21, 2014 through
Bangladesh Bank approval letter # BRPD (BFIS) 661/14B(P)/2018-3835 dated June 07,2018 and Bangladesh Securities
and Exchange Commission approval letter # BSEC/CI/CPLC/DS-210/2018/347 dated May 21,2018.
2.5 Deposits & Other Accounts
Deposits and other accounts include non-interest bearing current deposits redeemable at call, interest bearing short
term deposits, savings deposits and fixed deposits which are initially measured at the consideration received. These
items are subsequently measured and accounted for the gross value of the outstanding balance in accordance with
the contractual agreements with the counterparties.
2.6 Basis for Valuation of Liabilities & Provisions
2.6.1 Benefits to 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 IAS 19 “Employee Benefit”. Bases of enumerating the retirement benefit schemes
operated by the Bank are outlined below:
Provident Fund (Defined Contribution Plan)
Provident fund benefits are given to the permanent employees’ of the Bank in accordance with Bank’s 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 2 June 1999. The Fund is operated by a Board of Trustees consisting of six members (3
members from the management side and other 3 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 period basis.
274 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Gratuity Fund (Defined Benefit Plan)
The Bank has started providing Gratuity fund, which was approved by the National Board of Revenue on 5 October
2006. The Fund is operated by a Board of Trustees consisting of 7 (seven) members of whom 3 members are from
the Board of Directors including Managing Director of the Bank.
Employees of the bank are entitled to gratuity benefit at the following amount:

Duration of continuous and Entitlement

confirmed service in MBL
Up to 10 years
From 11 year and above
01 (One) month ‘basic’ pay for each completed year of service.
For the first 10 years, 01 (one) month’s basic for each completed year.
From 11th year to 25th year, 02 (two) months ‘basic’ pay for each completed year
of service.
Total entitlement maximum of 40(forty) months ‘basic’ pay.

The actuarial valuation has not yet been made to assess the adequacy of the liabilities provided for the scheme.
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.
2.6.2 Taxation
Income tax on profit for the year comprises current and deferred tax and is based on the applicable tax law in
Bangladesh. It is recognized in the income statement as tax expense.
2.6.2.1 Current Tax
Provision for current income tax has been made @ 37.5% as prescribed in the Finance Act 2019 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.
2.6.2.2 Deferred Tax
The Bank accounted for deferred tax as per IAS 12 “Income Taxes”. Deferred tax is accounted for using the comprehensive
tax balance sheet method. It is generated by temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax base.
Deferred tax assets, including those related to the tax effects of income tax losses and credits available to be carried
forward, are recognized only to the extent that it is probable that future taxable profits will be available against which
the deductible temporary differences or unused tax losses and credits can be utilized.
Deferred tax liabilities are recognized for all taxable temporary differences. They are also recognized for taxable
temporary differences arising on investments and it is probable that temporary differences will not reverse in the
foreseeable future. Deferred tax assets associated with these interests are recognized only to the extent that it is
probable that the temporary difference will reverse in the foreseeable future and there will be sufficient taxable profits
against which to utilize the benefits of the temporary difference.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year(s) when the asset and
liability giving rise to them are realized or settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the reporting date. The measurement reflects the tax consequences that would follow from the manner in
which the bank, at the reporting date, recovers or settles the carrying amount of its assets and liabilities.
2.6.3 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, BRPD Circular # 14, dated 23 September 2012, and BRPD
Circular No-07 21 June 2018 Banks are required to maintain provision @1% against off-balance sheet exposures (L/C and
Guarantee) effective from December 2008. However, in reference to the BRPD circular No.07, dated 21 June 2018, it was
instructed that banks will not to maintain any provision relating to the Bills for collection. Further, it was also instructed that
Banks will not have to maintain any provision against counter guarantee of government/Multilateral Development Bank
(MDB)/International Bank provided that the counter guarantee issuing Multilateral Development Bank (MDB)/International
Bank has to have Bangladesh Bank rating grade-1 equivalent outlined in the Guidelines on Risk based Capital adequacy
(Revised Regulatory Capital framework for banks in line with Basel III).
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
2.6.4 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 required to make provision regarding the un-
reconciled debit balance of Nostro account as on the reporting date in these financials.
2.7 Share Capital
Ordinary shares are classified as capital/ shareholders’ equity which has no contractual obligation to transfer cash or
other financial assets.
2.7.1 Authorized capital
Authorized capital is the maximum amount of share capital that the Bank is authorized by its Memorandum and
Articles of Association. Details of which are shown in Note 14.
2.7.2 Paid up capital
Paid up capital represents total amount of shareholder capital that has been paid in full by the ordinary shareholders.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at
shareholders’ meetings. In the event of a winding-up of the Bank, ordinary shareholders rank
after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation. Details of which
are shown in Note 14.3
2.8 Statutory Reserve
As per the provision of section 24 of the Bank Company Act 1991 (as amended up to 2013), the Bank requires to
transfer 20% of its current year profit before tax to reserve until such reserve equals to its paid up capital. Accordingly,
Bank has transferred requisite portion of current year profit to the statutory reserve account.
2.9 Non-Controlling Interest
Non-Controlling Interests are measured at their proportionate share of the acquires identifiable net assets at the date
of acquisition as per Para 19 of IFRS 3 “Business Combinations”. The company presents the non-controlling interests
in the consolidated balance sheet within equity, separately from the equity of the owners of parent as per Para 22 of
IFRS 10 “Consolidated Financial Statements”. Changes in Group’s interest in a subsidiary that do not result in a loss
of control are accounted for as equity transaction as per Para 23 of IFRS 10 “Consolidated Financial Statements”. The
company attributes the profit and loss to the owners of the parent and to the non-controlling interests even if the
results in the non-controlling interest having a deficit balance as per provision of Para B94 of IFRS 10 “Consolidated
Financial Statements”. When the proportion of the equity held by the non-controlling interests changes, the company
adjusted the carrying amounts of the controlling and non-controlling interests to reflect the changes in their relative
interests in the subsidiary and recognized directly in equity for any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received, and attribute it to the owners
of the parent by as per provision of Para B96 of IFRS 10 “Consolidated Financial Statements”.
Further details about non-controlling interest are given in Note -17 of Financial Statements.
2.10 Revenue Recognition
2.10.1 Interest Income
In accordance with the provisions of IAS 18 “Revenue”, the interest income is recognized on an accrual basis. As per
Para 34 of IAS 18 “Revenue”; “Revenue is recognized when it is probable that the economic benefits associated with
the transaction will flow to the entity and the amount of revenue and the cost incurred or to be incurred in respect of
the transaction can be measured reliably”. Hence, 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.
2.10.2 Interest Paid & Other Expenses
In terms of the provisions of IAS 1 “Presentation of Financial Statements” interest and other expenses are recognized
on accrual basis.
2.10.3 Investment Income
Interest income on investments is recognized on accrual basis using effective interest rate as per IAS 18 “Revenue”.
Capital gains on investments in shares are recognized as income and credited to investment income in the profit and
loss statement as per IAS 39 “Financial Instruments: Recognition and Measurements”. Capital Gains are recognized
when these are realized.
2.10.4 Fees & Commission Income
Fees and Commission income arising on services provided by the Bank are recognized when those are realized.
Commission charged to customers on letters of credit and letters of guarantee is credited to income as per terms and
conditions of Letter of Credit or Letter of Guarantee in the books of accounts.
276 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
2.10.5 Dividend Income on Shares
Dividend income on shares is recognized during the year in which it is declared and right to receive is established as
per IAS 18 “Revenue”.
2.10.5A Rebate to good borrower
As per BRPD Circular No 6 dated 19 March, 2015 and BRPD Circular No 3 dated 16 February, 2016 Banks are required to
provide 10% interest rebate to the good borrower subject to some qualifying criteria. The bank has a policy to provide
the rebate to the customer accordingly.
2.10.6 Dividend Payments
The Board of Directors recommended 11% Cash and 5% Stock dividend for shareholders only for the year ended 31
December 2019 subject to approval in the next Annual General Meeting. As per BSEC Notification dated 23.05.2019,
we have confirmed that the bonus shares has declared out of accumulated profit. In addition, we have also complied
‘Dividend Policy for banks for the year 2019’ as per Bangladesh Bank DOS Circular No. 03, dated 11 May, 2020.
Final Dividend of the Bank and its subsidiaries is recognized only when the shareholders’ right to receive payment is
established and when it is approved by the shareholders in the AGM.
2.10A Revenue Recognition as per IFRS 15: Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized.
It replaces existing recognition guidance, IAS 18 “Revenue”.
Based on preliminary assessment the Mercantile Bank has determined that IFRS 15 has no material impact on its financial
statements. The impact of IFRS 15 will vary depending on a bank’s existing accounting policies and the nature and mix
of its products. Areas most affected could include, but are not limited to, credit cards and loyalty schemes, commissions,
advisory contracts and bundled products. There might not be significant changes in how banks account for revenue, but all
banks will need to review their contracts to ascertain how the new standard applies to their particular circumstances. Hence,
Mercantile Bank herein should also consider how they will comply with the new disclosures required by IFRS 15.
This standard IRFS 15 contains principles that a bank will apply to determine the amount and timing of revenue. The
underlying principle is for a bank to recognize revenue as it renders services to customers at an amount that the entity
expects to be entitled to in exchange for those services. The bank will apply a five-step approach:

Step 1: Identify the contract(s) with the customer.

Step 2: Identify the separate performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to separate performance obligations.
Step 5: Recognize revenue when (or as) each performance obligation is satisfied.
Application of this guidance will depend on the facts and circumstances present in a contract with a customer and
will require the exercise of judgment.

IFRS 15 includes extensive disclosure requirements intended to enable financial statement users to understand the
amount, timing and judgments related to revenue recognition, and corresponding cash flows arising from contracts with
customers. These requirements are more detailed than currently required under IAS 18. Some of the more significant
disclosure requirements include qualitative and quantitative information about:
• Contracts with customers;

• Reconciliation of contract balances;

• The significant judgments, and changes in judgments, made in applying the guidance to those contracts; and

• Assets recognized from the costs to obtain or fulfill contracts with customers.
IFRS 15 also requires the bank to disclose the amount of its remaining performance obligations and the expected
timing of the satisfaction of those performance obligations for contracts with durations of greater than one year, and
both quantitative and qualitative explanations of when amounts will be recognized as revenue. The new disclosure
requirements might require banks to collect additional information, even if the impact of IFRS 15 on Revenue recognition
is not significant.
2.11 MBL Foundation
Mercantile Bank Limited performs its Corporate Social Responsibilities and other voluntary and charitable activities as
per the guidelines of Bangladesh Bank and other regulatory frameworks for the welfare of society through Mercantile
Bank Limited Foundation since 2000.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
2.12 Operating Segments
Segmental information is presented in respect of Mercantile Bank Limited and its subsidiary. Business segments report
consists of products and services whose risks and returns are different from those of other business segments. These
segments comprise main operations of Commercial Banking including Off-shore Banking Units, Mercantile Bank
Securities Limited and Mercantile Exchange House (UK) Ltd. Geographical segments report consists of products and
services within a particular economic environment where risks and returns are different from those of other economic
environments. Inter-segment transactions are generally based on inter-branch fund transfer measures as determined
by the management. Income, expenses, assets and liabilities are specifically identified with individual segments.
2.13 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
Bank’s capital, its financial resources and profitability from various business risks through its own measures and through
implementing Risk Management Guidelines issued by Bangladesh Bank through DOS Circular No. 4 dated 08 October, 2018
and following some of the best practices as under:
Core Risk Management
BRPD Circulars No.17 dated 7 October 2003 and BRPD Circular No. 4 dated 5 March 2007 require banks to put in place
an effective risk management system. The risk management system of the bank covers the following risk area:
2.13.1 Credit Risk
Credit risk arises mainly from lending, trade finance, and 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 Bank’s
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 Bank’s and Regulatory policies. Loans are classified
as per Bangladesh Bank’s guidelines.
2.13.2 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 which is formulated in line with “Managing Core Risks in
Banking: Asset-Liability Management” policy issued by Bangladesh Bank. 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.
2.13.3 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 and commodity prices.
278 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
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 Bank’s account was
conducted during the year.
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-to-Market 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.
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.
2.13.4 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 (ICCD) 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-to-day operation of the Bank by way of using various 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.
2.13.5 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.
2.13.6 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 Bank’s 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.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Audit Committee
The Audit Committee of the Board was duly formed by the Board of Directors of the Bank in accordance with the
BRPD Circular no. 11 dated 27 October 2013 of the Bangladesh Bank.The management of Mercantile Bank has also
revisited the new corporate governance code No. BSEC/CMRRCD/2006-158/207Admin/80 dated 03 June 2018, which
repeals the earlier BSEC notification no. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012, on Corporate
Governance.
In reference to the Corporate Governance Code as mentioned above, the current Committee is constituted with the
following 05 (Five) members of the Board and the Bank hereby has been also compliant with the BRPD Circular no.
11 dated 27 October 2013.
Sl Name Status with Bank Status with Educational/ Professional
No. Committee qualification
1. Dr. Md. Rahmat Ullah Independent Director Chairman LLM, PhD
2. Al-Haj Akram Hossain Director Member Graduate
(Humayun)
3. Mr. Md. Nasiruddin Director Member B.Sc. (Civil Engineering) (BUET)
Choudhury
4. Mr. M. A. Khan Belal Director Member M.Sc. (DU) (Chemistry)
5. Dr. Md. Hamid Ullah Bhuiyan Independent Director Member M.Com.(DU), PhD

Role of Audit Committee

In reference to the above corporate governance code, the Audit Committee is responsible to the following;

(a) Oversee the financial reporting process;

(b) monitor choice of accounting policies and principles;
(c) monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of
the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report;
(d) oversee hiring and performance of external auditors;
(e) hold meeting with the external or statutory auditors for review of the annual financial statements before
submission to the Board for approval or adoption;
(f) review along with the management, the annual financial statements before submission to the Board for approval;
(g) review along with the management, the quarterly and half yearly financial statements before submission to the
Board for approval;
(h) review the adequacy of internal audit function;
(i) review the Management’s Discussion and Analysis before disclosing in the Annual Report;
(j) review statement of all related party transactions submitted by the management;
(k) review Management Letters or Letter of Internal Control weakness issued by statutory auditors;
(l) oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time
required for effective audit and evaluate the performance of external auditors.

During the year ended as on 31 December, 2019, the Audit Committee of the Board of Directors conducted 13 (Thirteen)
meetings in which among other things the following issues were discussed/ evaluated/ reviewed and provided
guidelines and necessary instructions:
• Reviewed of time bound action plan under self assessment of anti-fraud internal controls.
• Reviewed Health Report of the Bank for the year 2018.
• Reviewed internal Control and Compliance Guidelines of the Bank.
• Evaluated the Position of Non-Performing Loans and Advances.
• Reviewed the yearly, quarterly and half yearly audited/unaudited financial statements along with Balance Sheet,
Profit & Loss Accounts, Cash Flow Statements, Changes in Equity, Liquidity Statements, notes to the financial
statements of the bank and discussed with Management and the external auditors prior to submission to the
Board of Directors for their approval.
• Reviewed with the external auditors about the result of their audit findings and management letter together with
Management’s response to their findings.
• Evaluated the performance of external auditors and make the necessary recommendations for appointment/re-
appointment of External Auditors of the Bank and to fix their remuneration.
280 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
• Reviewed the internal audit reports of Branches/Divisions with a focus on all major areas of housekeeping
particularly day to day operational activities, inter branch adjustment accounts, arrears in the balancing of the
books, un-reconciled entries in inter-bank accounts and frauds.
• Reviewed implementation status of report submitted earlier of the Branches/Divisions through respective Cluster
Head on continuous basis.
• Reviewed Compliance on observations, recommendations and decisions of the Audit Committee Meetings.
• Reviewed the investigative reports tabled during the year and ensured appropriate remedial actions/measures
were taken.
• Discussed the observations relating to inspection reports of Bangladesh Bank and compliance thereof.
• The Committee suggested preventive measures for internal control lapses those were arisen during the year of
inspection.
Risk Management Committee
As per Bank Company Act 1991 (Amendment 2013) and subsequent Bangladesh Bank BRPD Circular no. 11, dated
October 27, 2013, MBL has reformed the Board of Risk Management Committee of the Board in its 345th meeting held
on July 4, 2019, which is as follows:
Sl No. Name Status with Bank Status with Committee
1. Mr. Md. Anwarul Haque Director Chairman
2. Mr. Al-Haj Akram Hossain (Humayun) Director Member
3. Mr. Mohd. Selim Director Member
4. Mr. Md. Nasiruddin Choudhury Director Member
5. Mr. M.A. Khan Belal Director Member

Roles and Responsibilities of Board Risk Management Committee (BRMC)

Board Risk Management Committee of Mercantile Bank Limited always follows the latest circulars and guidelines of
Bangladesh Bank. The roles and responsibilities of BRMC of Mercantile Bank are enumerated below:
• Formulating and reviewing (at least annually) risk management policies and strategies for sound risk management;
• Monitoring implementation of risk management policies & process to ensure effective prevention and control
measures;
• Ensuring construction of adequate organizational structure for managing risks within the Bank;
• Supervising the activities of Executive Risk Management Committee (ERMC) of Mercantile Bank Limited;
• Ensuring compliance of BB instructions regarding implementation of core risk management;
• Ensuring formulation and review of risk appetite, limits and recommending these to Board of Directors for their
review and approval;
• Approving adequate record keeping & reporting system and ensuring its proper use;
• Holding at least 4 meetings in a year (preferably one meeting in every quarter) and more if necessary;
• Analyzing all existing and probable risk issues in the meeting, taking appropriate decisions for risk mitigation,
incorporating the same in the minutes of meeting and ensuring follow up of the decisions for proper implementation;
• Submitting proposal, suggestions & summary of BRMC meetings to board of directors at least on quarterly basis;
• Complying with instructions issued from time to time by the regulatory body;
• Ensuring appropriate knowledge, experience, and expertise of lower-level managers and staff involved in risk
management;
• Ensuring sufficient & efficient staff resources for Risk Management Division;
• Establishing standards of ethics and integrity for staff and enforcing these standards;
• Assessing overall effectiveness of risk management functions on yearly basis.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Board Risk Management Committee Meetings details of MBL during January-December, 2019
There were 07 (Seven) BRMC meetings held during the year which are as follows:

1. Following issues were discussed in 25th BRMC Meeting held on January 21, 2019:

• Information regarding Risk Management Report September, 2018.

• Information regarding Stress Testing as on September, 2018.
• Quarterly report of restructured syndicated Term Loan liability of Jamuna Builders Limited (Lead arranger &
Agent: Janata Bank Limited) for the quarter ended on December 2018.
• Information regarding Liquidity related issues for the month of September, 2018.
• Information regarding Liquidity related issues for the month of October, 2018.
• Information regarding Liquidity related issues for the month of November, 2018.
• Information regarding Aging Status of Overdue Loans & Advances of Offshore Banking Unit.
• Information regarding Exposure of Top 20 Borrowers.
• Information regarding Sector wise classification of Loans and advances as on 30.09.2018.
2. Following issues were discussed in 26th BRMC Meeting held on February 27, 2019:
• Information regarding Stress Testing as on December, 2018.
• Information regarding Risk Management Report as on January, 2019.
• Approval for Risk Appetite Statement of the Bank for the year 2019.
• Information Regarding Comprehensive Risk Management Report as on December-2018.
3. Following issues were discussed in 27th BRMC Meeting held on April 17, 2019:
• Approval for Revised Internal Capital Adequacy Assessment Process (ICAAP) documents 2017 under
Supervisory Review Process (SRP) i.e. pillar 2 of Basel III.
• Quarterly report of restructured syndicated Term Loan liability of Jamuna Builders Limited (Lead arranger &
Agent: Janata Bank Limited) for the quarter ended on March 2019.
• Approval for Bank’s “Business Continuity and Disaster Recovery Planning (BCP) V2.0”.
4. Following issues were discussed in 28th BRMC Meeting held on May 22, 2019:
• Information regarding Stress Testing as on March 2019.
• Approval of Internal Capital Adequacy Assessment Process (ICAAP) documents prepared 2018 under
Supervisory Review Process (SRP) i.e. pillar 2 of Basel III.
• Approval for reformation of Supervisory Review Process (SRP) Team of the Bank.
• Approval for Bank’s “Business Continuity and Disaster Recovery Planning (BCP) V2.0”.
5. Following issues were discussed in 29th BRMC Meeting held on July 17, 2019:
• Implementation of Supervisory Review Process (SRP) in the Bank.
• Information regarding Risk Management Report as on April-2019 & May-2019.
• Approval for Risk Management Guidelines-2019.
• Quarterly report of restructured syndicated Term Loan liability of Jamuna Builders Limited (Lead arranger &
Agent: Janata Bank Limited) for the quarter ended on June 2019.
6. Following issues were discussed in 30th BRMC Meeting held on October 6, 2019:
• Information regarding Comprehensive Risk Management Report as on June 30, 2019.
• Information regarding Stress Testing as on June 2019.
• Comprehensive Risk Management Rating as of 31/12/2018.
• Approval for Bank’s “Internet Banking Security Policy V 1.0.”
• Quarterly report of restructured syndicated Term Loan liability of Jamuna Builders Limited (Lead arranger &
Agent: Janata Bank Limited) for the quarter ended on September 2019.
7. Following issues were discussed in 31st BRMC Meeting held on December 4, 2019:
• Information regarding Stress Testing as on September 2019.
• Approval for Risk Register of the Bank.
• Approval for Credit Policy (Revised-2019).
282 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Internal Audit
The Bank’s 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 Bank’s 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.
2.13.7 Fraud and Forgeries
Fraud Detection and Management Process: Internal Audit (IA) team conducts surprise audit on all branches and
departments/ divisions of the Head Office at least once 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.
2.13.8 Information Technology Risk
The ICT development helps the bank to develop and maintain a competitive advantage for ensuring the Bank’s
profitability and survivability in the marketplace. This competitive advantage often brings bank numerous benefits
including fast business transactions, increasing automation of business processes, improved customer service
and provision of effective decision support in a timely manner. Among all other pivotal factors, ‘Information and
Communication Technology’ (ICT) has been regarded as the core to bring such momentous transformation into
successful reality. Consequently, the importance information security for the banks has gained much importance,
and it is the critical essence for us to ensure that the ICT risks are being properly identified measured and adequate
mitigation strategies are in place.
The ICT policy of the bank is in line with Bangladesh Bank latest ICT guideline and under revision process to comply
with the recent technology and risk management trends. The Business Continuity Plan & Disaster Recovery Plan is
tested and also under review to cope with recent change in technology. Moreover, MBL has been developing ICT Risk
management policy which covered all areas of IT Risks according to Bangladesh Bank Risk Grading guidelines.
MBL has the following footprints on reducing ICT risks including fraud prevention, which will eventually ensure our
sustainable banking operation in the foreseeable future:
• ICT Risk Management Policy, Process up-gradation as per the latest Bangladesh Bank ICT guideline. It can reduce
regularly and compliance-related risks.
• Vulnerability Assessment and Penetration Testing (VA/PT) solution has been done once in a year.
• Optimization of SWIFT System has been successfully completed
• Internet Banking Solution with two-factor authenticator (2FA) mechanisms and OTP.
• Anti-money Laundering (AML) solution implemented
• Two-factor authentication (2FA), SMS, E-mail alerts for Credit Card Transactions.
• Duel control mechanism: Bank has introduced maker-checker roles in FCUBS & Card Management software which
results internal user cannot process any CBS and Credit Card related tasks by one person.
• Human resource management Information system (HRMIS) Solution has been implemented. So to maintain and
control HR related issues faster and accurately (Employee screening, recruitment, promotions, benefits, retirement,
etc.) which also reduce the employee risks.
• Optimization of CORE Banking software and Database
• Improvement in ICT Awareness Risk: ITD has continuously conducting ICT awareness related training for employees
which are aligned with Learning and Development Center.
• Mercantile Bank Limited has implemented the SIEM. The event management of a SIEM solution stores and
interprets logs in a central location and allows analysis in near real-time, which means IT security personnel can
take defensive actions much more rapidly. The information management component provides trend analysis,
as well as automated and centralized reporting for compliance by collecting data into a central repository. So
monitoring and security will be strengthened.
• Conventional firewalls cannot protect behavior based attacks, Zero Day Malware, for APT (Advanced Persistent
Threat) or for Ransom ware Attacks. The bank has implemented Next Generation Firewall with sandboxing, which
will be able to protect such types of attacks.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
• Mercantile Bank Limited has implemented VM ware v Sphere with Operations Management which will help the
bank to achieve unique business needs by providing better insights and better IT. It will help the bank to improve
performance and avoid disruption, with intelligent operations from apps to storage providing simplified availability
and comprehensive visibility in one place.
• Mercantile Bank Limited has implemented IBM Flash System V9000 is designed to accelerate all types of
applications and infrastructures. However, it is most often deployed to support high-performance database
applications, such as IBM DB2® and those from Oracle or SAP, and to replace existing Tier 1 storage constrained
by slow disk drives.
2.14 Earnings per Share
The company calculates Earnings per Share (EPS) in accordance with IAS 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-35.
Basic Earnings per Share
Basic earnings per share have been calculated in accordance with IAS 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
Diluted earnings per share are calculated as dilution has been occurred during the period.
2.15 Directors’ responsibility on financial statements
The Board of Directors’ responsibility is the preparation & presentation of financial statements.
2.16 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 are fallen under the memorandum items.
2.17 Compliance report on International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs)
The Institute of Chartered Accountants of Bangladesh (ICAB) is the sole authority for adoption of International Accounting
Standards (IASs) and International Financial Reporting Standards (IFRSs). While preparing the financial statements,
Mercantile Bank Limited applied most of IASs and IFRSs as adopted by the ICAB. Details are given below:
Name of the IAS IAS No Status
Presentation of Financial Statements 1 Applied*
Inventories 2 N/A
Statement of Cash Flows 7 Applied*
Accounting Policies, Changes in Accounting Estimates & Errors 8 Applied
Events after the Reporting Period 10 Applied
Construction Contracts 11 N/A
Income Taxes 12 Applied
Property, Plant & Equipment 16 Applied
Revenue 18 Applied
Employee Benefits 19 Applied
Accounting for Government Grants & Disclosure of Government Assistance 20 N/A
The Effects of Changes in Foreign Exchange Rates 21 Applied
Borrowing Costs 23 Applied
Related Party Disclosures 24 Applied
Accounting & Reporting by Retirement Benefit Plans 26 Applied
Consolidated & Separate Financial Statements 27 Applied
Investments in Associates 28 N/A
Interests in Joint Ventures 31 N/A
Financial Instruments: Presentation 32 Applied*
Earnings per Share 33 Applied
Interim Financial Reporting 34 Applied
Impairment of Assets 36 Applied
Provisions, Contingent Liabilities & Contingent Assets 37 Applied
Intangible Assets 38 Applied
Investment Property 40 Applied
Agriculture 41 N/A
284 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Name of the IFRS IFRS No Status
First- time Adoption of International Financial reporting standards 1 N/A
Share- based Payment 2 N/A
Business Combinations 3 N/A
Insurance Contracts 4 N/A
Non- current Assets Held for Sale & Discontinued Operations 5 N/A
Exploration for & Evaluation of Mineral Resources 6 N/A
Financial Instruments: Disclosures 7 Applied*
Operating Segments 8 Applied
Financial Instruments 9 Applied*
Consolidated Financial Statements 10 Applied
Joint Arrangement 11 N/A
Disclosure of Interest in Other Entities 12 Applied*
Fair Value Measurement 13 Applied
Revenue from contracts with customers 15 Applied
Leases 16 Applied
Insurance Contracts 17 Applied*

*In order to comply with certain specific rules and recognitions of the local Central Bank (Bangladesh Bank) which
are different to IAS/IFRS, local laws and regulation will be prevailed.
2.18 Departures from IAS/IFRS
The consolidated financial statements of the Bank as at and for the year ended 31 December 2019 have been prepared
under the historical cost convention except investments and in accordance with the “first schedule” (section 38) of the Bank
Companies Act 1991 as amended by Bangladesh Bank (the Central Bank of Bangladesh ) through BRPD Circular No. 14
dated 25 June 2003, other Bangladesh Bank Circulars, International Financial Reporting Standards (IFRSs), the Companies
Act 1994, the Securities and exchange Rules 1987, Dhaka and Chittagong Stock Exchange’s listing regulations. In case, any
requirement of provisions and circulars issued by Bangladesh Bank differ with those of other regulatory authorities, the
provisions and circulars issued by Bangladesh Bank shall prevail.
As such the Bank has departed from those contradictory requirements of IFRSs in order to comply with the rules and
regulations of Bangladesh Bank which are disclosed below:
I) Presentation of Financial Statements
IFRS:
As per ‘IAS 1-Presentation of Financial Statements’ shall comprise statement of financial position, comprehensive
income statement, changes in equity, cash flow statement, adequate notes comprising summary of accounting policies
and other explanatory information. As per para 60 of ‘IAS 1-Presentation of Financial Statements’, the entity shall also
present current and non-current assets and liabilities as separate classifications in its statement of financial position.

Bangladesh Bank:
The presentation of the financial statements in prescribed format (i.e. balance sheet, profit and loss account, cash flow
statement, statement of changes in equity, liquidity statement) and certain disclosures therein are guided by the First
Schedule (section 38) of the Bank Company Act 1991 (amendment up to 2013) and BRPD circular no. 14 dated 25 June
2003 and subsequent guidelines of BB. In the prescribed format there is no option to present assets and liabilities
under current and non-current classifications.
II) Investments in equity instruments (shares, mutual funds, etc.)
IFRS:
Financial Instruments, classification and measurement of investment in shares and securities will depend on how these
are managed (the entity’s business model) and their contractual cash flow characteristics. Based on these factors it
would generally fall either under “at fair value through profit and loss account” or under “at fair value through other
comprehensive income” where any change in the fair value (as measured in accordance with IFRS 13) at the year-end
is taken to profit and loss account or other comprehensive income respectively.
Bangladesh Bank:
As per Banking Regulation & Policy Department of Bangladesh Bank (BRPD) circular no. 14 dated 25 June 2003,
investments in quoted and unquoted shares are revalued on the bases of year end market price and net assets
value (NAV) of last audited balance sheet respectively. As per another instruction issued by Department of Off-site
Supervision of Bangladesh Bank (DOS) circular letter no. 3 dated 12 March 2015, investment in mutual fund (closed-
end) is revalued ‘at lower of cost and (higher of market value and 85% of NAV)’. As such, provision is made for any
loss arising from diminution in value of investments (portfolio basis); otherwise investments are recognized at costs.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
III) Revaluation gain/(loss) on government securities
IFRS:
As per requirement of IFRS 9 where securities will fall under the category of fair value through profit or loss account,
any change in the fair value of assets is recognised through the profit and loss account. Where securities are measured
‘at fair value through other comprehensive income’ then gains or losses shall be recognised in other comprehensive
income (OCI), except for impairment gains or losses and foreign exchange gains and losses. The loss allowance arise
from impairment shall be recognised in OCI and shall not reduce the carrying amount of financial assets in the Financial
Position. Securities designated as amortisedcost are measured at effective interest rate method and interest income is
recognised through the profit and loss account
Bangladesh Bank:
According to DOS circular no. 5 dated 26 May 2008 and subsequent clarification issue through DOS circular no. 5 dated 28
January 2009, amortisation loss is charged to profit and loss account, mark-to-market loss on revaluation of government
securities (T - bills/T - bonds) categorised as held for trading (HFT) is charged to profit and loss account, but any unrealised
gain on such revaluation is recognised to revaluation reserve account. T - bills/T - bonds designated as held to maturity
(HTM) aremeasured at amortised cost but interest income/gain is recognised through equity.
IV) Provision on loans and advances
IFRS:
As per IFRS 9 an entity shall recognise an impairment allowance on loans and advances based on expected credit
losses. At each reporting date, an entity shall measure the impairment allowance for loans and advances at an amount
equal to the lifetime expected credit losses if the credit risk on these loans and advances has increased significantly
since initial recognition whether assessed on an individual or collective basis considering all reasonable information,
including that which isforward-looking. Forthose loans and advances for which the credit risk has not increased
significantly since initial recognition, at each reporting date,an entity shall measure the impairment allowance at an
amount equal to 12 months expected credit losses
Bangladesh Bank:
As per BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012, BRPD circular
no. 16 dated 18 November 2014 and BRPD circular no. 8 dated 2 August 2015, a general provision @ 0.25% to 5% under
different categories of unclassified loans (standard/SMA loans) should be maintained regardless of objective evidence
of impairment. And specific provision for sub-standard/doubtful/bad-loss loans should be made at 20%, 50% and
100% respectively on loans net off eligible securities (if any). Also, a general provision @ 0.5% - 1% should be provided
for certain off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by
IFRS 9.
V) Other comprehensive income
IFRS:
As per ‘IAS 1- Presentation of Financial Statements’ Other Comprehensive Income (OCI) is a component of financial
statements or the elements of OCI are to be included in a single Other Comprehensive Income statement.
Bangladesh Bank:
Bangladesh Bank has issued templates for financial statements which would strictly be followed by all banks. The
templates of financial statements issued by Bangladesh Bank neither include Other Comprehensive Income nor are
the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI)
Statement. As such the Bank does not prepare the other comprehensive income statement. However, elements of OCI,
if any, are shown in the statements of changes in equity.
VI) Financial instruments - presentation and disclosure
IFRS: Financial instruments - disclosure and IFRS 9: Financial Instruments. As such some disclosures and presentation
requirements of IFRS 7 and IFRS 9 cannot be fully made in these financial statements.
Bangladesh Bank: As per BB guidelines, in certain cases financial instruments are categorized, recognized, measured
and presented differently from those prescribed in
Repo & Reserve Repo transaction
IFRS: When an entity sells a financial asset and simultaneously enters into an agreement to repurchase asset (or a
similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is treated as a loan and the
underlying asset continues to be recognized in the entry’s financial statements. The difference between selling price
and repurchase price is treated as interest expense. Same rule applies to the opposite side of the transaction (reverse
repo).
286 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Bangladesh Bank: As per DOS Circular letter No. 6 dated 15 July 2010 and subsequent clarification in Dos circular no. 2
dated 23 January 2013, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase
the asset (or similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for
as a normal sales transactions and the financial assets are derecognized in the seller’s book and recognized in the
buyer’s book.
However, as per DMD circular letter No. 7 dated 29 July 2012, non primary dealer banks are eligible to participate in
the Assured Liquidity Support (ALS) programme, whereby such banks may enter collateralized repo arrangements
with Bangladesh Bank. Here the selling bank accounts for the arrangement as a loan, thereby continuing to recognize
the asset.
VII) Financial guarantees
IFRS:
As per IFRS 9, financial guarantees are contracts that require an entity to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms
of the instrument. Financial guarantee liabilities are recognised initially at their fair value and is amortised over the life
of the instrument. Any such liability is subsequently carried at the higher of this amortised amount and the present
value of any expected payment when a payment under the guarantee has becomeprobable. Financial guarantees are
prescribed to be included within other liabilities
Bangladesh Bank:
As per BRPD circular no. 14 dated 25 June 2003, financial guarantees such as LC & LG should be treated as offbalance
sheet items. No liability is recognised for such guarantee except the cash margin. However, a general provision @ 0.5%
-1% is provided against such guarantee.
VIII) Cash and cash equivalents
IFRS:
Cash and cash equivalent items should be reported as cash item as per ‘IAS 7- Statement of Cash Flows’.
Bangladesh Bank:
Some cash and cash equivalent items such as money at call and on short notice, treasury bills, Bangladesh Bank bills
and prize bond are not shown as cash and cash equivalents. Money at call and on short notice presented on the face
of the balance sheet, and treasury bills, prize bonds are shown in investments.
IX) Non banking assets
IFRS:
No indication of Non-banking asset is found in any IFRS.
Bangladesh Bank:
As per BRPD circular no. 14 dated 25 June 2003, there must exist a face item named Non-banking asset.
X) Cash flow statement
IFRS:
As per ‘IAS 7- Statement of Cash Flows’ The Cash flow statement can be prepared using either the direct method or
the indirect method. The presentation is selected to present these cash flows in a manner that is most appropriate for
the business or industry. The method selected is applied consistently.
Bangladesh Bank:
As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods.
XI) Balance with Bangladesh Bank (Cash Reserve Requirement)
IFRS:
Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations
as per ‘IAS 7- Statement of Cash Flows’.
Bangladesh Bank:
Balance with Bangladesh Bank is treated as cash and cash equivalents.
XII) Presentation of intangible asset
IFRS:
An intangible asset must be identified and recognized. And the disclosure must be given as per ‘IAS 38-Intangible
Assets’.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Bangladesh Bank:
There is no regulation for intangible assets in BRPD circular no.14 dated 25 June 2003.
XIII) Off balance sheet items
IFRS:
There is no concept of off-balance sheet items in any IFRS; hence there is no requirement for disclosure of off-balance
sheet items on the face of the balance sheet.
Bangladesh Bank:
As per BRPD circular no.14 dated 25 June 2003, off balance sheet items (e.g. Letter of credit, Letter of guarantee etc.)
must be disclosed separately on the face of the balance sheet.
XIV) Loans and advances net of provision
IFRS:
Loans and advances should be presented net of provisions.
Bangladesh Bank:
As per BRPD circular no.14 dated 25 June 2003, provision on loans and advances are presented separately as liability
and cannot be netted off against loans and advances.
[Also refer to Note-2.17 Compliance of International Accounting Standards (IASs) and International Financial Reporting
Standards (IFRSs)]
2.19 Approval of financial statements
The Board of Directors’ approved the financial statements for year ended 31 December, 2019 on May 17, 2020.
2.20 Component of Financial Statements
As per IAS 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 (Statement of Financial Position);
b) Profit & Loss account (Statement of Profit or Loss & Other Comprehensive Income);
c) Statement of Changes in Equity;
d) Statement of Cash Flows;
e) Liquidity Statement;
f) Significant Accounting Policies and Explanatory and
g) Notes to the Financial Statements.
2.21 Implementation of BASEL-III
Basel III refers to the latest capital and liquidity standards prescribed by the Bank for International Settlements (BIS).
Bangladesh has entered into the Basel III regime from January 1, 2015. Bangladesh Bank (BB) has amended its capital
standard based on Basel II and circulated new regulatory capital and liquidity guidelines in line with Basel III of BIS.
The Basel III reform measures aim to improve the banking sector’s ability to absorb shocks arising from financial
and economic stress thus reducing the risk of spillover from the financial sector to the real economy, improve risk
management and strengthen banks’ transparency and disclosures. The new capital and liquidity standards have great
implications for banks.
With a view to facilitating the way of implementation of BASEL-III, the bank has formed “Basel Implementation Unit”.
A supervisory committee includes top management of the bank overseeing the unit. The bank has also formed a
Supervisory Review Process (SRP team) to participate the dialogue with the Supervisory Review Evaluation Process
(SREP) team of Bangladesh Bank for measuring the adequate capital requirement.
288 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
2.22 Rating
Emerging Credit Rating Limited (ECRL), on the basis of Financial Statements has rated Mercantile Bank Limited. ECRL
rated the Mercantile Bank Limited to “AA” (Pronounced as Double A) in the 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. ECRL 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. Both long-term and short-term
rating is valid for one year i.e. from 22 May, 2019 to 21 May, 2020.
Summary of Credit Rating:

Term Rating Indication

Indicates a very strong ability to repay principal and pay interest on a timely basis, with
Long-term AA
limited increment risk compared to issues rated in the highest category.
While the degree of safety regarding timely repayment of principal and payment of
Short-term ST-2
interest is strong, the relative degree of safety is not as high as issues rated ST-1.

In addition to above rating, Mercantile Bank Ltd has been assigned B2 rating by Moody’s.
2.23 General
Figures appearing in the Financial Statements have been rounded off to the nearest Taka.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Notes
Dec 19 Dec 18
3 Cash
Cash in hand (including foreign currencies) 3.1 2,536,093,750 2,318,756,969
Balance with Bangladesh Bank & its agent bank(s) 3.2
(including foreign currency) 14,245,828,183 13,282,608,151

16,781,921,933 15,601,365,120
3.1 Cash in hand (including foreign currencies)
In local currency 2,510,350,185 2,267,425,876
In foreign currency 25,743,565 51,331,093
2,536,093,750 2,318,756,969
3.2 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)
Bangladesh Bank
In local currency 13,482,516,019 12,193,356,696
In foreign currencies 3.2.a 299,426,605 770,180,482
13,781,942,624 12,963,537,178
Agent banks(s)
Sonali Bank Limited. - Local Currency 463,885,559 319,070,973
14,245,828,183 13,282,608,151
3.2.a Balance with Bangladesh Bank in Foreign Currencies

Exchange Rate
Currencies Balance as on Dec-19
(Average of BDT)
USD 3,427,750.34 84.9 291,016,004 764,291,329

GBP 11,825.18 111.0534 1,313,226 1,249,870

EURO 74,793.42 94.8885 7,097,035 4,638,951
JPY 437.00 0.7759 339 332
299,426,605 770,180,482

3.3 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 of the Bank in accordance with the Section 33 of the Bank Company Act, 1991 and clause (1) of Article 36 of
Bangladesh Bank Order,1972 (as amended up to 2013). As per MPD Circular # 1 dated 23 June 2014, the required Statutory
Liquidity Ratio (SLR) is to be maintained at 13% in the form of securities which include Treasury Bills, Government Treasury
Bonds, Bangladesh Bank Bills and Other Securities approved by Bangladesh Bank such as:T&T Bonds, balance held with
Sonali Bank Limited., cash in hand including vault and balance of FC clearing account maintained with Bangladesh Bank.
Now, Bangladesh Bank Monetary Policy Department has refixed Cash Reserve Requirement vide MPD Circular # 1 dated
03 April 2018. at 5.5% on bi- weekly average basis with a provision of minimum 5% on daily basis ( effective from 15 April,
2018) .Both reserves are maintained by the Bank with surplus, which are as shown below;
Amount in BDT
Dec 19 Dec 18
a) Cash Reserve Ratio (CRR): 5.5% of average demand and time liabilities:
Required Reserve 13,542,287,000 11,420,547,000
Actual reserve held with Bangladesh Bank 13,860,424,810 12,412,043,970
Surplus on CRR 318,137,810 991,496,970
b) Statutory Liquidity Ratio (SLR): 13% of average demand and time liabilities:
Required reserve 32,009,044,000 26,994,020,000
Actual reserve held with Bangladesh Bank 47,563,935,150 36,724,500,000
Surplus on SLR 15,554,891,150 9,730,480,000
290 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18

3.4 Held for Statutory Liquidity Ratio

Cash in hand 2,536,093,750 2,318,756,969
Surplus of CRR 318,137,810 991,496,970
Balance with Sonali Bank as an agent of BB 463,885,566 319,070,973
Held for Trading(HFT) 9,514,096,393 127,402,612
Held for Maturity (HFM) 34,727,951,031 32,964,076,096
Other Securities 3,770,600 3,696,379
47,563,935,150 36,724,500,000
3.5 Maturity grouping of cash
Maturity-wise groupings (inside and outside Bangladesh)
Payable on demand 16,781,921,933 15,601,365,120
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 - -
16,781,921,933 15,601,365,120
3(a) Consolidated Cash
Cash in hand (Including foreign currencies)
Mercantile Bank Limited 2,536,093,750 2,318,756,969
Mercantile Bank Securities Limited 175,666 152,037
Mercantile Exchange House (UK) Limited 6,679,196 1,656,005
2,542,948,612 2,320,565,012
Balance with Bangladesh Bank and its agent bank. (Including foreign currencies)
Mercantile Bank Limited 14,245,828,183 13,282,608,151
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
14,245,828,183 13,282,608,151
16,788,776,795 15,603,173,163
4. Balance with other banks and financial institutions
4.1 In Bangladesh
Current accounts
Sonali Bank Limited 1,200,085 1,200,085
Agrani Bank Limited 788,745 2,714,534
Janata Bank Limited 58,884,279 14,894,005
Rupali Bank Limited - 11,771
Pubali Bank Limited 7,618,150 -
United Commercial Bank Limited 341,938 356,633
Standard Bank Limited 2,000,000 2,000,000
Bangladesh Commerce Bank Limited 996,225 996,225
NRB Commercial Bank Limited - 8,192,568
Modhumoti Bank Limited - 3,571,255
NRB Bank Limited - 5,093,148
Al Arafah Islami Bank Limited 2,500,000 2,500,000
South Bangla Agriculture Bank Limited - 6,255,729
AB Bank Limited - 26,005
National Bank Limited 2,865 30,950
Sub-Total Current Deposit 74,332,287 47,842,906
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Short-Notice Deposits accounts
Standard Chartered (VISA settlement) 3,388,464 16,020,127
Trust Bank Limited (Q-CASH settlement ) 21,777,979 7,816,635
National Bank Limited 1,264,078 1,234,459
Arab Bangladesh Bank Limited 1,821 5,702
Agrani Bank Limited 59,095,066 67,367,793
South East Bank Limited 5,340,250 9,950,823
Islami Bank Limited 6,815 96,098
90,874,472 102,491,636
Off-shore Banking Unit 229,659,548 187,830,149
Sub-Total Short-Notice Deposit 394,866,307 338,164,691
Financial institutions
PFI Securities Limited 1,503 5,755
IIDFC Finance Limited 20,000,000 20,000,000
International Leasing and Finance Limited - 130,000,000
Bay Leasing and Investment Limited 120,000,000 100,000,000
Meridian Finance & Investment Limited 90,000,000 90,000,000
Uttara Finance Limited 300,000,000 -
Mercantile Bank Securities Limited 5,518 2,740
Sub-Total Financial Institutions 530,007,021 340,008,495
Total 924,873,328 678,173,186
4.2 Outside Bangladesh (Nostro accounts)
Currency / Rate
Standard Chartered Bank, New York USD / 84.90 2,292,252 39,335,809
Mashreq Bank, New York USD / 84.90 1,956,456 228,911,863
Wells Fargo Bank, New York USD / 84.90 34,397,346 944,802,707
Commerzbank, Frankfurt USD / 84.90 12,420,166 26,766,062
Standard Chartered Bank ,London GBP /111.0534 63,194,168 26,836,381
The Bank of Tokyo Mitsubishi Limited., Tokyo Japanees Yen/0.7759 630,661 1,828,538
Arab Bangladesh Bank Limited., Mumbai ACU/USD- 84.90 3,517,430 2,566,618
Commerzbank, Frankfurt EURO /94.8885 2,588,202 12,444,910
Standard Chartered Bank, Frankfurt EURO /94.8885 31,771,432 84,148,447
Hatton National Bank, Colombo ACU/USD- 84.90 2,643,925 560,689
Bank of Bhutan, Phuentsholing ACU/USD- 84.90 7,188,098 232,147
United Bank of India, Kolkata ACU/USD- 84.90 2,534,262 11,694,266
Sonali Bank, Kolkata ACU/USD- 84.90 1,070,775 7,395,465
Nepal BD Bank Limited., Kathmandu ACU/USD- 84.90 189,358 321,452
Standard Chartered Bank, Mumbai ACU/USD- 84.90 25,661,715 7,432,561
Meezan Bank Ltd. Karachi, (Former HSBC,Karachi) ACU/USD- 84.90 18,336,922 351,113
ICICI, Mumbai ACU/USD- 84.90 3,977,098 7,287,220
Habib Bank AG Zurich Swiss Franc / 87.0814 806,495 498,125
Mashreq Bank, Mumbai ACU/USD- 84.90 3,227,974 1,314,731
Habib American Bank USD / 84.90 8,769,297 15,472,899
JP Morgan Chase Bank NY USD / 84.90 3,315,013 306,941,556
Habib Metropolitan Bank ACU/USD- 84.90 3,217,351 781,664
AXIS Bank Limited ACU/USD- 84.90 2,833,252 66,599,333
Mashreq Bank Dubai Dirham/AED-23.1156 3,929,652 9,136,560
Sub-Total Outside Bangladesh (Nostro accounts) 240,469,302 1,803,661,119
Grand Total (Note 4.1 & Note 4.2) 1,165,342,631 2,481,834,305
292 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
4.3 Remaining maturity grouping of balance with other banks and financial Institutions (inside and outside Bangladesh)
Payable on demand 394,866,307 338,164,691
Up to 1 (one) month - -
Over 1 (one) month but not more than 3 (three) months 240,469,302 1,803,661,119
Over 3 (three) months but not more than 1 (one) year 530,007,021 340,008,495
Over 1 (one) year but not more than 5 (five) years - -
Over 5 (five) years - -
1,165,342,631 2,481,834,305
4(a) Consolidated Balance with Other Banks and Financial Institutions
In Bangladesh
Mercantile Bank Limited 924,873,328 678,173,186
Mercantile Bank Securities Limited 253,919,539 550,146,475
Mercantile Exchange House (UK) Limited - -
1,178,792,868 1,228,319,661
Inter Company Transaction (130,054,851) (139,511,528)
1,048,738,016 1,088,808,133
Outside Bangladesh (Nostro Accounts)
Mercantile Bank Limited 240,469,302 1,803,661,119
Mercantile Exchange House (UK) Limited - -
240,469,302 1,803,661,119
1,289,207,319 2,892,469,252
5. Money at call on short notice
Bank:
- -
Financial Institution:
FAS Finance & Investment Limited 145,000,000 145,000,000
Reliance Finance Limited 110,000,000 -
International Leasing & Financial Services Limited 110,000,000 -
365,000,000 145,000,000
5(a) Consolidated money at call on short notice
Mercantile Bank Limited 365,000,000 145,000,000
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
365,000,000 145,000,000
6. Investments
Government Securities (Note- 6.1) 44,377,626,068 33,226,982,753
Other investments (Note- 6.5) 5,378,356,383 5,750,964,646
49,755,982,451 38,977,947,399
6.1 Government Securities: Classified as per Bangladesh Bank circular
Held for trading (HFT) 9,514,096,393 127,402,612
Held to maturity (HTM) 34,727,951,031 32,964,076,096
Other securities 135,578,644 135,504,044
44,377,626,068 33,226,982,753
6.2 Government Securities: Classified as per nature
a) Government securities:
14 days Treasury Bill 1,997,638,365 -
91 days BB Bills 4,040,565,381 -
182 days BB Bills 2,421,623,186
364 days BB Bills 944,094,701 -
9,403,921,632 -
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18

b) Government bonds:
2 Years Treasury Bond 1,827,722,869 -
5 Years Treasury Bond 1,620,144,698 1,627,028,988
10 Years Treasury Bond 6,846,423,191 6,850,161,040
15 Years Treasury Bond 8,934,672,966 8,948,811,212
20 Years Treasury Bond 15,740,970,112 15,797,285,513
Prize Bonds 3,770,600 3,696,000
34,973,704,436 33,226,982,753
Total (a+b) 44,377,626,068 33,226,982,753
6.3 Government Securities: Maturity grouping wise
Payable on demand 3,770,600 3,696,000
Up to 1 (one) month 3,090,396,766 -
Over 1 (one) month but not more than 3 (three) months 493,695,502 -
Over 3 (three) months but not more than 1 (one) year 6,823,102,232 -
Over 1 (one) year but not more than 5 (five) years 7,311,932,828 1,627,028,988
Over 5 (five) years 26,654,728,140 31,596,257,765
44,377,626,068 33,226,982,753
6.4 Government securities: Aging as per Bangladesh Bank Circular
A. Held for Trading (HFT) securities
14 days Treasury Bills 1,997,638,365 -
91 days Treasury Bills 4,040,565,381 -
182 days Treasury Bills 2,421,623,186 -
364 days Treasury Bills 944,094,701 -
10 Years Treasury Bond 3,887,704 6,433,350
15 Years Treasury Bond 17,045,385 19,325,288
20 Years Treasury Bond 89,241,672 101,643,974
9,514,096,393 127,402,612
B. Held to Maturity (HTM) securities
2 Years Treasury Bond 1,827,722,869 -
5 Years Treasury Bond 1,620,144,698 1,627,028,987
10 Years Treasury Bond 6,842,535,486 6,843,727,690
15 Years Treasury Bond 8,917,627,582 8,929,485,924
20 Years Treasury Bond 15,519,920,396 15,563,833,495
34,727,951,031 32,964,076,096
C. Other Securities
*Encumbered Treasury Bond (20 years)-lien with Bangladesh Bank 131,808,044 131,808,044
Prize Bonds 3,770,600 3,696,000
135,578,644 135,504,044
Total (A+B+C)) 44,377,626,068 33,226,982,753

*Encumbered Treasury Bond (20 years) : Tk. 131,808,044, ISIN No.BD092920120202, which are lien with Bangladesh
Bank for TT discounting purpose till 30th June 2020.
294 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
6.5 Others Investments
A. Investment in shares:
a) Quoted:
IDLC Finance Limited 233,135,524 233,135,524
MBL 1st Mutual Fund 200,000,000 200,000,000
Bangladesh Export Import Company Limited (BEXIMCO) 30,947,879 30,947,879
Lanka Bangla Finance Limited 25,177,922 25,177,922
RAK Ceramics (Bangladesh) Limited 12,980,620 12,980,620
ITCL (IT consultants Limited) 10,000,000 10,000,000
Prime Finance & Investment Limited 8,517,764 8,517,764
Square Pharmaceuticals Limited - 10,232,169
National Bank Limited 5,729,116 5,729,116
Titas Gas Transmission & Dist. Co. Limited 4,706,629 4,706,629
Navana CNG Limited 3,488,726 3,488,726
Uttara Bank Limited 1,792,193 1,792,193
Silva Pharmaceuticals Limited - 91,940
Kattali TextileLimited - 100,640
Advent Pharmaceuticals Limited 2,840 34,550
Eastland Insurance Company Limited - 1,852,762
Aman Cotton Fibrous Limited - 313,840
Bank Asia Limited - 175,700
SK Trims & Industry Limited - 50,410
VFS Thread Dying Limited - 38,386
ML Dyeing Limited - 35,233
Indo-Bangla Pharmaceuticals Limited - 2,673
Intraco Refueling Station Limited - 2,534
Ring Shine Textile 1,135,989 -
Genexil 3,403
Esquire Knit Limited 470,025 -
New Line Clothing Limited 40,011 -
Runner Automobile Limited 282,927 -
SilCophl Limited 39,798 -
Copper Tech 47,420 -
538,498,787 549,407,210
b) Unquoted:
Bangladesh Fixed Income Special Purpose Vehicle (BFISPV) 1,000,000,000 1,000,000,000
Central Counter 37,500,000 -
SWIFT 5,218,706 5,218,706
Central Depository Bangladesh Limited (CDBL) 5,138,890 5,138,890
Ashugonj Power Station Company Limited 10,000,000 -
Market Stabilization Fund Asset Management Company 2,000,000 2,000,000
Limited
Esquire Knit Composite - 1,880,100
Runner Automobiles Limited - 1,080,150
SS Steel Limited - 134,920
Genex Infosys - 104,670
1,059,857,596 1,015,557,436
Total-A: (a+b) 1,598,356,383 1,564,964,646
Market price of quoted shares (Annexure-C) 1,138,530,549 1,695,997,622
Gain/(Loss) arises (Annexure-C) 600,031,762 1,146,590,412
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
B. Investment in Subordinated Bond
FSIBL Mudaraba Subordinated Bond - 36,000,000
Southeast Bank Subordinated Bond 100,000,000 150,000,000
Eastern Bank Subordinated Bond 150,000,000 200,000,000
Exim Bank Subordinated Bond 150,000,000 200,000,000
Prime Bank Subordinated Bond 150,000,000 200,000,000
Bank Asia Subordinated Bond 300,000,000 400,000,000
Jamuna Bank Subordinated Bond 300,000,000 400,000,000
United Commercial Bank Subordinated Bond 300,000,000 400,000,000
Al-Arafa Islami Bank Subordinated Bond 150,000,000 200,000,000
Trust Bank Subordinated Bond 80,000,000 100,000,000
SIBL 2nd Mudaraba Subordinated Bond 200,000,000 250,000,000
The City Bank 2nd Mudaraba Subordinated Bond 400,000,000 400,000,000
First Security Islami 2nd Mudaraba 200,000,000 200,000,000
United Commercial Bank 3rd Subordinated Bond 200,000,000 200,000,000
Standard Bank Ltd Subordinated Bond 350,000,000 350,000,000
Prime Bank Ltd 3rd Subordinated Bond 500,000,000 500,000,000
FSIBL Mudaraba 3rd Subordinated Bond 250,000,000 -
Total (B) 3,780,000,000 4,186,000,000
Grand Total (A+B) 5,378,356,383 5,750,964,646
6.6 REPO & Reverse REPO Transctions during the year ended on 31 December 2019
As per Bangladesh Bank DOS Circular No.-06 Dated: 15 July 2010 regarding of REPO and reverse REPO.
(a) (i) Disclosures regarding outstanding REPO as on 31 December 2019
Sl Amount (1st leg cash
Counterparty name Agreement date Reversal date
No. consideration)
1 Premier Bank Limited 30-Dec-19 02-Jan-20 997,238,000
2 IFIC Bank Limited 30-Dec-19 01-Jan-20 984,323,000
3 AB Bank Limited 30-Dec-19 01-Jan-20 997,238,000
4 BASIC Bank Limited 30-Dec-19 01-Jan-20 498,619,000
Total 3,477,418,000

(a) (ii) Disclosures regarding outstanding Reverse REPO as on 31 December 2019:

Amount (1st leg cash
Counterparty name Agreement date Reversal date
consideration)
NIL

(b) Disclosure regarding overall transaction of REPO and Reverse REPO

Minimum outstanding Maximum outstanding Daily Average Outstanding
Counterparty name
during the year during the year during the year
Security sold under Repo
I) with Bangladesh Bank 340,000,000 9,656,000,000 4,874,488,818
ii) with other Banks & FIs 497,346,000 7,031,700,400 604,343,288
Security repurchased under Reverse Repo
I) From Bangladesh Bank - - -
ii) From other Banks & FIs - - -

6(a) Consolidated Investment

Investment - Government Securities
Mercantile Bank Limited 44,377,626,068 33,226,982,753
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
44,377,626,068 33,226,982,753
296 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Other Investments
Mercantile Bank Limited 5,378,356,383 5,750,964,646
Mercantile Bank Securities Limited 1,050,937,755 1,008,570,622
Mercantile Exchange House (UK) Limited - -
6,429,294,138 6,759,535,268
Inter company transaction - -
6,429,294,138 6,759,535,268
50,806,920,206 39,986,518,021
7. Loans and Advances
7.A Loans, Cash Credit and Overdraft etc.(Note-7.2) 224,696,731,920 207,889,221,985
7.B Bills Purchased and Discounted (Note-7.B(i)) 12,193,716,412 16,341,390,888
236,890,448,333 224,230,612,873
7.1 Maturity grouping of loans and advances
Repayable on demand 38,976,004,972 37,486,861,304
Not more than 3 (three) months 30,559,327,406 42,612,236,735
More than 3 (three) months but not more than 1 (one) year 72,788,169,320 73,397,738,710
More than 1 (one) year but not more than 5 (five) years 44,113,454,889 49,071,510,916
More than 5 (five) years 50,453,491,746 21,662,265,207
236,890,448,333 224,230,612,873
7.2 Loans, Cash Credit and Overdraft, etc.
I) Within Bangladesh:
Term Loan 79,386,741,840 56,911,784,714
Time Loan 19,459,547,160 25,104,639,937
Packing Credit 2,608,412,524 2,607,688,777
Loan Against Trust Receipt (LTR) 8,140,788,954 8,602,058,645
Lease Finance 1,188,621,827 932,522,336
EDF Loan 11,213,342,176 12,899,236,441
Loan General 181,630,066 280,890,882
House Building Loan 5,684,581,449 5,527,989,330
Hire Purchase 12,234,662,626 10,100,649,790
Payment Against Documents (PAD) 429,902,195 834,084,389
Cash Credit (Hypo) 11,577,681,783 12,713,253,954
Overdraft 32,119,976,278 33,885,550,358
Home Loan Scheme Refinance 1,351,450 2,581,556
Personal Loan 324,822,247 302,741,622
Consumers Credit Schemes 5,195,905 6,571,199
Consumers Finance 2,370,844,621 2,156,708,217
Staff Loan 1,087,210,602 1,131,733,202
Credit Card 482,484,704 415,031,664
Small and Medium Enterprise(SME) Loan 32,207,287,592 30,249,224,463
Agricultural Credit 3,988,294,147 3,220,343,517
Other Credit Schemes 3,351,775 3,936,994
224,696,731,920 207,889,221,985
II) Outside Bangladesh: - -
Total A (I+II) 224,696,731,920 207,889,221,985
7.3 Loans and Advances: Significant Concentration
Advances to allied concerns of directors - -
Advances to Managing Director & Chief Executive and other Senior executives - -
Advances to customers' group 64,048,695,099 70,963,625,378
Industry-wise 171,754,542,632 152,135,254,293
Staff loan 1,087,210,602 1,131,733,202
236,890,448,333 224,230,612,873
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
BDT in lac
Dec 19 Dec 18
7.4 Loans and Advances: Sector wise
Education (School/College, University, Research institute) 3,269 2,478
Health 2,463 16,410
Agriculture 39,883 50,310
Commodities (Sugar/Edible Oil/Wheat/Rice/Dal/Peas/Maize etc), Food & Beverage 196,464 119,312
Trade Finance 366,486 361,153
Transport 12,165 23,621
Shipping 1,467 75,426
Textile (Excluding IDBP) 112,504 69,936
Textile (IDBP) 18,047 12,815
Readymade Garments (RMG) [excluding IDBP] 429,353 400,647
Readymade Garments (RMG) [IDBP] 2,764 3,410
Tele communication 9,416 9,440
IT & Computer/Trade 3,685 3,327
Power & Fuel 76,337 21,030
Real Estate 77,087 73,707
Cement 10,856 10,897
Chemicals 44,636 11,419
Leather & Leather products 44,184 43,205
Plastic & Plastic products 10,550 18,667
Electrical & Electronic goods 45,378 48,301
Paper & Packaging 51,421 51,351
Jute & Jute products 31,846 29,535
Glass & Glass products 0.09 75
Ceramics (Table ware, Sanitary ware, Tiles etc.) 11,143 9,346
Iron & Steel 202,794 129,435
Engineering & Construction 73,130 108,113
Contractor Finance 40,470 26,694
Capital Market Intermediaries 6,236 8,436
Backward Linkage 38,959 40,877
Consumer & Retail Products 81,100 79,121
Non Bank Financial Institution (NBFI) 90,493 85,599
Service (Hotel, Restaurant, Travelling, Tickets, etc.) 16,583 64,406
Others 217,734 233,808
2,368,904 2,242,306

Amount in BDT
Dec 19 Dec 18
7.5 Loans and Advances: Geographical location-wise
Urban:
Dhaka 169,410,506,413 157,098,954,447
Chattogram 34,716,599,219 34,560,035,601
Rajshahi 12,523,315,370 11,620,523,481
Sylhet 1,014,552,982 854,063,237
Khulna 2,049,260,040 2,003,077,985
Rangpur 3,462,592,463 3,269,103,064
Barisal 2,352,279,925 2,258,236,014
Mymensingh 383,558,445 343,759,368
Sub-total Urban 225,912,664,857 212,007,753,198
298 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Rural:
Dhaka 4,114,347,486 4,682,028,169
Chattogram 5,265,637,081 5,482,431,350
Rajshahi 1,181,778,633 1,649,234,224
Sylhet 136,359,797 150,394,490
Rangpur 163,823,930 126,654,994
Barisal 115,836,549 132,116,449
Sub-total Rural 10,977,783,475 12,222,859,675
Total 236,890,448,333 224,230,612,873
7.6 Loans & advances classified as per Bangladesh Bank circular
Unclassified 225,387,834,686 213,428,180,702
Sub-standard 1,294,751,252 368,693,346
Doubtful 409,975,654 1,186,143,955
Bad Loss 9,797,886,742 9,247,594,870
236,890,448,333 224,230,612,873

Details of Loans and advances as follows: (Figure in thousand)

Dec-19 Dec-18
Status of Loans and advances
Mix % Outstanding Mix % Outstanding
Unclassified Loans and advances :
Unclassified (including staff loan) 94.21% 223,163,495 94.10% 210,991,271
Special Mention Account 0.94% 2,224,340 1.09% 2,436,910
Total Unclassified loans and advances : 95.14% 225,387,835 95.18% 213,428,181
Classified Loans and advances :
Sub-standard 0.55% 1,294,751 0.16% 368,693
Doubtful 0.17% 409,976 0.53% 1,186,144
Bad/loss 4.14% 9,797,887 4.12% 9,247,595
Total classified Loans and advances : 4.86% 11,502,614 4.82% 10,802,432
Total Loans and advances : 100% 236,890,448 100% 224,230,613

Amount in BDT
Dec 19 Dec 18
7.7 Base for provision
SMA 2,224,339,691 2,436,909,596
Base for provision
Sub-standard 611,867,247 109,625,000
Doubtful 147,126,922 885,260,824
Bad Loss 4,324,940,152 4,375,610,842
5,083,934,321 5,370,496,666
7.8 Required provision for Loans and advances
General provision (including SMA) 7,458,402,000 7,534,356,403
OBU 155,900,000 121,578,854
Sub-Total 7,614,302,000 7,655,935,257
Specific provision (classified loans and advances)
Sub-standard 121,706,259 21,776,419
Doubtful 73,334,588 442,558,476
Bad/ Loss 4,324,940,152 4,375,610,842
Sub-Total 4,519,981,000 4,839,945,737
Grand Total 12,134,283,000 12,495,880,994
***Less: The remaining deferral amount BDT 210.44 crore will be - 2,104,350,000
adjusted for the period of 2019 and 2020
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Provision Required for 2019 12,134,283,000 10,391,530,994
Provision maintained (Note-13.5.1) 12,134,283,000 10,391,530,994
Excess/(short) provision - -

Provision for loans and advances: (Figure in thousand)

Outstanding Base for Provision %

Status of loans and advances Provision
Amount (BDT) Provision Amount (BDT)
Unclassified loans and advances :
Unclassified ( SMEF) 29,193,081 29,193,081 0.25% 117,787
Unclassified (other credit) 178,159,306 178,159,306 1% 6,777,623
Unclassified (OBU) 12,028,670 12,028,670 1% 155,900
Unclassified ( HF, LP & BH/MBS/SDS against share) 2,764,390 2,764,390 1%-2% 33,909
Unclassified (other than HF, LP & short term agri. Loan) 964,882 964,882 2%-5% 34,876
Agri Loan/Short term Agri & Micro Credit 53,165 53,165 1% 532
Unclassified ( staff loan) 1,081,299 - - -
Special Mention Account 2,224,340 2,224,340 0.25% -5% 493,676
Total unclassified Loans and advances : 226,469,134 225,387,834 7,614,302
Classified Loans and advances :
Sub - standard:
a) Short Term Agri. Credit 5,019 4,448 5% 222
b) Others 1,289,732 607,419 20%-100% 121,484
Total Sub - standard 1,294,751 611,867 121,706
Doubtful:
a) Short Term Agri. Credit 598 509 5% 25
b) Others 409,378 146,618 50% 73,309
Total Doubtful 409,976 147,127 73,334
Bad/ loss 9,797,887 4,324,940 100% 4,324,940
Total Classified loans and advances : 11,502,614 5,083,934 4,519,981
Total Loans and advances : 237,971,747 230,471,768 12,134,283

7.9 Provision for off-balance sheet exposures

Base for Rate 1% Provision

Particulars of off-balance sheet exposures Amount
Provision Amount (BDT) Amount (BDT)
Acceptances and endorsements less margin 49,314,711,103 49,314,711,103 493,147,111
Letter of guarantee less margin 14,781,461,873 14,781,461,873 147,814,619
Letter of credit less margin 31,099,559,466 27,769,135,773 277,691,358
Bills for collection 6,798,004,286 6,798,004,286 67,980,043
Other contingent liabilities - - -
Required provision on off-balance exp 101,993,736,728 98,663,313,035 986,633,130 986,633,130
Total Provision maintained (Note-13.3) 986,633,130
Excess/(short) provision -
300 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
7.10 Particulars of loans and advances
i) Loans considered good in respect of which the banking company is 224,300,624,083 211,975,559,462
fully secured;
ii) Loans considered good against which the banking company holds no - 320,888,039
security other than the debtor's personal guarantee;
iii) Loans considered good secured by the personal undertakings of one 27,483,024,469 11,201,691
or more parties in addition to the personal guarantee of the debtor;
iv) Loans adversely classified; provision not maintained thereagainst; - -
251,783,648,552 212,307,649,192

v) Loans due by directors or officers of the banking company or any of

1,087,210,602 1,131,733,202
these either separately or jointly with any other persons; (Staff Loan)

vi) Loans due from companies or firms in which the directors of the
banking company have interests as directors, partners or managing - -
agents or in case of private companies as members;

vii) Maximum total amount of advance including temporary advance made

at any time during the year to directors or managers or officers of the
1,087,210,602 1,131,733,202
banking companies or any of them either separately or jointly with any
other person; (Staff Loan)

viii) 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 have interests as directors, partners
or managing agents or in the case of private companies as members;

ix) Due from banking companies; - -

x) Amount of classified loan on which interest has not been charged,

11,502,613,647 10,802,432,171
should be mentioned as follows:
a. Decrease/increase in provision, amount of loan written off and amount
realised against loan previously written off;
Movement of classified loans and advances
Opening balance 01 January 2019 10,802,432,171 7,564,720,752
Increase/(decrease) during the year 700,181,476 3,237,711,419
11,502,613,647 10,802,432,171

b. Amount of provision kept against loan classified as 'bad/loss' on the

4,324,940,152 4,375,610,842
date of preparing the balance sheet;

c. Interest creditable to the Interest Suspense a/c; 4,992,975,024 3,858,594,068

xi) Cumulative amount of the written off loan and the amount written off during the Current year:
Opening Balance 3,202,368,251 2,938,740,014
Amount written off during the year 2,248,416,793 449,126,809
Amount Recovered / Adjustment (5,089,484) (185,498,572)
Cumulative Balance 5,445,695,560 3,202,368,251
7.11 Suits filed by the Bank Branch:
As of the responding date, the Bank filed lawsuit against recovery of its defaulted loans and advances as under:
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Name of the Branch:
Main Branch 4,010,042,052 3,012,388,902
Dhanmondi Branch 1,646,396,627 893,415,240
Motijheel Branch 173,381,671 173,381,671
Nayabazar Branch 425,241,044 423,106,758
Kawran Bazar 386,551,182 353,771,464
Rajshahi Branch 48,594,536 48,594,536
Noagaon Branch 1,061,343,819 231,697,981
Agrabad Branch 5,344,972,904 5,119,084,632
Sylhet Branch 95,648,639 90,942,785
Cumilla Branch 38,438,670 38,438,670
Khatungonj Branch 1,541,013,000 791,313,214
Sapahar Branch 5,186,081 5,186,081
Jubliee Road Branch 564,754 564,754
Banani Branch 1,234,039,577 1,234,039,213
Uttara Branch 7,746,464 7,746,464
O R Nizam Road Branch 8,544,354 8,544,354
Madam Bibi Hat Branch 1,813,790,602 1,830,177,979
Mogh Bazar Branch 81,250,652 60,851,749
Faridgonj Branch 10,329,263 10,329,263
Khulna Branch 3,233,742 3,233,742
Rangpur Branch 55,565,735 50,901,905
Sk.Mujib Road Branch 318,852,000 12,672,533
Elephant Road Branch 34,080,792 19,343,223
Darus Salam Road Branch 18,593,327 18,594,127
Bijoynagar Branch 42,644,374 42,644,374
Joypara Branch 16,190,512 16,190,512
Aganar Branch 537,510 537,510
Patiya Branch 2,100,000 1,500,000
Satmasjid Road Branch 296,378,633 296,378,633
Dinajpur Branch 24,827,000 5,622,971
Ashulia Branch 1,861,958 1,861,958
International Airport Road Branch 52,803,168 52,803,168
Chowmuhani Branch 73,165,000 61,064,877
A.K. Khan Moor Branch 1,424,368 1,424,368
Kushtia Branch 8,678,298 7,132,502
Moulvibazar Branch 15,608,717 15,849,676
Sunamgonj Branch 18,895,995 7,539,356
Beanibazar Branch 30,002,628 30,002,628
Gulshan Branch 6,230,949 6,230,949
Dholaikhal Branch 54,366,504 54,366,504
Nilphamari Branch 9,433,656 9,433,656
Nabigonj Branch 675,070 552,790
Hemayetpur Branch 1,746,190 1,746,190
Bogura Branch 205,990,621 205,990,621
Chattogam EPZ Branch 30,187,299 30,187,299
Madanpur Branch 1,163,618 1,163,618
Chapainawabgonj Branch 23,936,000 22,383,000
Patuakhali Branch 509,000 -
Amishapara Branch 3,539,320 -
Engineer Institution Branch 2,058,416 -
Narayanganj Branch 395,248,085 -
Chandpur Branch 17,993,000 -
Patherhat Branch 10,782,000 -
19,712,379,378 15,310,928,402
302 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
7.12 Listing of assets pledged as security/ collaterals
Nature of the secured assets:
Fixed assets 171,627,765,336 189,957,891,000
Cash & quasi-cash 32,582,549,118 30,967,382,000
Others 39,511,694,959 12,157,885,000
243,722,009,413 233,083,158,000
7.13 Nature wise loans & advances
Continuous 65,735,299,895 68,570,568,340
Demand Loan 62,997,068,293 76,158,614,500
Term Loans up to 5 ( five) years 57,704,588,741 78,369,696,831
Term Loans above 5 (five) years 49,997,361,910 -
Term Loans above 5 (five) years - Staff Loan 456,129,493 1,131,733,202
236,890,448,333 224,230,612,873
7.14 Loan and advances allowed to each customer exceeding 10% of Bank's total capital
As per BRPD Circular 02, dated 16 January 2014 issued by Bangladesh Bank, disclosure on large loan i.e. loan sanctioned
to any individual or enterprise or any organization of a group amounting to 10% or more of the Bank’s total capital and
classified amount therein and measures taken for recovery of such loan have been furnished as under:
Total Capital 32,899,828,701 29,486,306,159
Total Loans and Advances (Funded) 72,047,844,152 63,211,345,000
No. of customers 34 37
Classified amount thereon Nil Nil
Measures taken for recovery of classified loans N/A N/A
7.15 Details of large loans and advances
Single Borrower Exposure Limit has been calculated on the basis of total eligible capital as on 31 December 2019
according to BRPD Circular 02, dated 16 January 2014. Number of clients with outstanding amount exceeding 10% of
total capital of the Bank is 34. Total capital of the Bank was BDT 3,289.98 crore as at 31 December 2019.
Outstanding (BDT)
SL # Name of Clients Total (BDT) Branch
Funded Non-Funded
1 Abul Khair Group 2,108,600,000 5,111,100,000 7,219,700,000 Agrabad
2 ACI Group 3,119,400,000 863,600,000 3,983,000,000 Banani
3 Azmat Group 970,000,000 1,597,716,000 2,567,716,000 Main
4 Bashundhara Group 2,896,800,000 11,900,000 2,908,700,000 Main
5 BSRM Group 598,000,000 2,874,200,000 3,472,200,000 Jubilee Road
6 City Group - 1,850,400,000 1,850,400,000 Main
7 Comprehensive and Metro, 1,714,200,000 556,300,000 2,270,500,000 Dhanmondi /
Montaha / Venetto Ceramics Green Road
8 Creative Group 2,408,444,000 382,588,000 2,791,032,000 Main
9 Deshbandhu Group 5,180,100,000 109,966,000 5,290,066,000 Motijheel
10 Energypac Group 2,067,600,000 1,461,800,000 3,529,400,000 International Airport
Road
11 IFAD Group 2,022,500,000 76,500,000 2,099,000,000 Satmasjid Road
12 International Leasing & 4,079,497,285 - 4,079,497,285 Banani/Elephant Road
Financial Services
13 Interstoff Group 2,041,024,000 1,168,354,000 3,209,378,000 Dhanmondi/Main
14 Jamuna Group 2,036,400,000 4,965,200,000 7,001,600,000 Main
15 Jamuna Industrial Agro Group 3,029,500,000 386,700,000 3,416,200,000 Rajshahi
16 KDS Group 717,900,000 2,014,500,000 2,732,400,000 Khatungonj
17 Labib Group 4,241,634,000 7,567,508,000 11,809,142,000 Mohakhali
18 Meghna Group 95,700,000 3,158,300,000 3,254,000,000 Main
19 MNR Group 1,449,928,000 857,370,000 2,307,298,000 Gulshan
20 Natural Group 941,900,000 2,539,800,000 3,481,700,000 Main
21 Nitol Niloy Group 3,140,359,000 148,875,000 3,289,234,000 Mohakhali
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Outstanding (BDT)
SL # Name of Clients Total (BDT) Branch
Funded Non-Funded
22 Orion Group 1,873,700,000 7,865,000,000 9,738,700,000 Main
23 Power Grid Company of Engineers Institution /
- 9,697,200,000 9,697,200,000
Bangladesh Ltd Rampura
24 Pran RFL Group 1,448,500,000 1,526,800,000 2,975,300,000 Motijheel
25 Rahimafrooz Group Motijheel/Moghbazar/
3,306,146,000 300,600,000 3,606,746,000
Mohakhali/gulshan
26 Rahman Group Kawran Bazar/Main/
3,362,600,000 28,200,000 3,390,800,000
Dhanmondi
27 Rising Group 1,210,200,000 2,614,300,000 3,824,500,000 Banani
28 Robintex Group 1,672,435,702 507,628,000 2,180,063,702 Gulshan
29 S. Alam Group 2,766,900,000 1,937,900,000 4,704,800,000 Khatungonj
30 Sajeeb Group 2,425,700,000 134,300,000 2,560,000,000 Green Road
31 Silver Composite Textile Mill 1,933,270,000 1,541,818,000 3,475,088,000 Gulshan
32 SQ Group 3,323,911,166 2,228,182,000 5,552,093,166 Gulshan
33 TRZ Group 2,146,395,000 750,734,000 2,897,129,000 Mohakhali
34 Utah Group 1,718,600,000 902,500,000 2,621,100,000 Main
Total 72,047,844,152 67,737,839,000 139,785,683,152

Amount in BDT
Dec 19 Dec 18
7.16 Net loans, advances and leases/ investment
Gross performing loans, advances and leases/ investment (Note-7) 236,890,448,333 224,230,612,873
Non-performing loans, advances and leases/ investment (Note-7.10(X) (11,502,613,647) (10,802,432,171)
Provision for loans, advances and leases/ investment (Note-13.5.1) (12,134,283,000) (10,391,530,994)
(23,636,896,647) (21,193,963,164)
213,253,551,686 203,036,649,708
7.17 Loans and advances: Broad categories
Loans and advances (7.17.1) 153,789,756,813 160,357,895,338
Cash credits (7.17.2) 31,790,527,058 12,713,253,954
Overdraft (7.17.3) 37,400,434,916 33,885,550,358
Bill Purchased and discounted (7.17.4) 12,686,285,854 16,341,390,888
Leases/investments (7.17.5) 1,223,443,691 932,522,336
In Bangladesh 236,890,448,333 224,230,612,873
Outside Bangladesh - -
Total Loans and advances 236,890,448,333 224,230,612,873
7.17.1 Loans and advances: Residual maturity grouping
Repayable on demand 20,843,888,480 27,314,916,186
Not more than 3 (three) months 14,607,063,033 20,207,301,573
More than 3 (three) months but not more than 1 (one) year 27,761,114,364 43,593,451,395
More than 1 (one) year but not more than 5 (five) years 40,126,697,576 47,596,211,423
More than 5 (five) years 50,450,993,360 21,646,014,761
153,789,756,813 160,357,895,338
7.17.2 Cash credit : Residual maturity grouping
Repayable on demand 7,953,255,038 2,842,644,551
Not more than 3 (three) months 3,904,821,257 1,371,100,556
More than 3 (three) months but not more than 1 (one) year 19,275,075,123 8,415,942,905
More than 1 (one) year but not more than 5 (five) years 657,375,640 83,565,942
More than 5 (five) years - -
31,790,527,058 12,713,253,954
304 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
7.17.3 Overdraft: Residual maturity grouping
Repayable on demand 6,521,331,040 4,351,482,443
Not more than 3 (three) months 3,416,645,624 8,154,503,260
More than 3 (three) months but not more than 1 (one) year 25,252,772,519 20,829,862,979
More than 1 (one) year but not more than 5 (five) years 2,209,685,733 549,549,763
More than 5 (five) years - 151,913
37,400,434,916 33,885,550,358
7.17.4 Bills discounted and purchased: Remaining maturity grouping
Payable within 1 (one) month 3,642,393,086 2,974,784,975
Over 1 (one) month but less than 3 (three) months 8,614,109,541 12,864,999,641
Over 3 (three) months but less than 6 (six) months 429,783,227 501,606,272
6 months or more - -
12,686,285,854 16,341,390,888
7.17.5 Leases / investments: Residual maturity grouping
Lease rental receivable within 1 year 101,249,707 80,330,476
Above 1 year but within 5 years 1,119,695,940 842,183,788
Above 5 years 2,498,044 10,008,072
Total lease rental receivable 1,223,443,691 932,522,336
Unearned interest receivable - -
1,223,443,691 932,522,336
7.18 Loan and advances related with large loan restructuring
The bank has participated syndication loan of Jamuna Builders Limited with lead arranger of Janata Bank Limited.
In addition, these loans have been restructured as large loan restructuring complied with BRPD circular # 4 dated
January 29, 2015. Details are given below :
(BDT in Lac)
Outstanding as on Total Provision
Nature of facility Amount Validity CL Status
31.12.2019 kept
Syndication Term Loan 4,271.28 30-Jun-27 4,662.98 93.26 SMA
(Restructured)

Amount in BDT
Dec 19 Dec 18
7.B Bills Purchased and Discounted:
7.B.(i). Bill discounted and purchased exclude Government Treasury bills:
Payable in Bangladesh 4,501,404,976 4,509,736,466
Payable outside Bangladesh 7,692,311,436 11,831,654,422
12,193,716,412 16,341,390,888
7.B.(ii). Remaining maturity grouping of Bills discounted and purchased
Payable within 1 (one) month 5,533,222,283 2,974,784,975
Over 1 (one) month but less than 3 (three) months 5,793,677,902 12,864,999,641
Over 3 (three) months but less than 6 (six) months 866,816,227 501,606,272
6 months or more - -
12,193,716,412 16,341,390,888

7(a) Consolidated Loans and advances

Loans and advances
Mercantile Bank Limited 224,696,731,920 207,889,221,985
Mercantile Bank Securities Limited 4,201,766,829 4,193,092,029
Mercantile Exchange House (UK) Limited - -
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
228,898,498,749 212,082,314,014
Inter company transactions (623,608,768) (879,811,146)
228,274,889,981 211,202,502,868
Bills Purchased and discounted
Mercantile Bank Limited 12,193,716,412 16,341,390,888
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
12,193,716,412 16,341,390,888
Inter company transaction - -
12,193,716,412 16,341,390,888
Total 240,468,606,394 227,543,893,756

8. Fixed assets including premises, Furniture and Fixtures-at cost less Accumulated Depreciation (Annexure-A)
Freehold properties
Land & land development 1,341,807,978 1,341,807,978
Building 932,907,814 960,731,950
Furniture & fixtures 444,516,621 459,071,957
Office equipment 356,284,920 457,492,753
Vehicles 66,892,198 69,278,112
Books 36,337 74,823
Total 3,142,445,869 3,288,457,574
8(a). Consolidated Fixed assets including premises, furniture and fixtures
Mercantile Bank Limited 3,142,445,869 3,288,457,574
Mercantile Bank Securities Limited 11,847,926 14,946,851
Mercantile Exchange House (UK) Limited 7,135,070 7,136,775
3,161,428,865 3,310,541,200

9 Other Assets: (Annexure-E)

Other assets should be classified under the following categories:
Income generating:
Investment in Shares of subsidiary company (In Bangladesh) Mercantile 3,550,000,000 3,550,000,000
Bank Securities Ltd.
*Investment in Shares of subsidiary company (In Bangladesh) MBL 56,000,000 -
Asset Management Ltd.
Investment in Shares of subsidiary company (outside Bangladesh) 38,170,536 36,641,828
Mercantile Exchange House (UK) Ltd.
306 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Mercantile Bank OBU Unit 4,198,770,211 2,690,392,065

No-Income generating:
Stationery, stamps,printing materials in stock etc. 25,707,977 27,369,658
**Advance rent and advertisement - 275,802,460
Interest accued on investment but not collected,commission and
brokerage receivable on shares and debenture and other income 1,351,055,794 1,437,877,452
receivable (Note 9.1);
Security deposit 8,772,599 8,028,639
Preliminary, formation and organization expenses, renovation/ 228,118,794 164,868,487
development expenses and prepaid expenses (Note-9.2)
Branch adjustment 692,868,015 468,229,246
Suspense Account (Note 9.3) 1,052,078,289 691,518,569
Right Of Use (ROU) Assets as per IFRS-16 1,234,650,000 -
Silver - -
Clearing adjustment account 1,000,000 95,000
12,437,192,215 9,350,823,404
Inter company transaction(OBU) (4,198,770,211) (2,690,392,065)
8,238,422,004 6,660,431,339

*MBL has invested for establishing MBL Asset Management Limited (one of subsidiary company) in the year 2019
with a view to rendering services like management of mutual fund, asset management, portfolio management, capital
market operation; issue manager and other non banking financial services.
**Advance rent upto 2019 Tk 22.74 crore has been considered with Right of Use (ROU) Assets as per IFRS 16
9.1 Interest accued on investment but not collected, commission and brokerage receivable on shares and debenture
and other income receivable:
Accrued interest (Note-9.1.1) 1,337,862,107 1,422,228,690
Other accruals (Note - 9.1.2) 13,193,687 15,648,761
1,351,055,794 1,437,877,452
9.1.1 Accrued interest
Interest Receivable on Investment 1,086,028,728 1,059,292,091
Interest Receivable on Loan & Advances 27,207,753 1,527,041
Interest Receivable on OBU 224,625,626 361,409,558
1,337,862,107 1,422,228,690

9.1.2 Other accruals

Fees receivable 10,850,220 10,024,792
Dividend receivable on share 1,034,762 3,210,385
Discount receivable 1,173,974 1,173,974
Protested bills - 47,562
Other receivables 134,731 1,192,049
13,193,687 15,648,761
9.2 Preliminary, formation and organization expenses, renovation/development expenses and prepaid expenses:
MBL Center (Development Expenses on Head Office Building) 172,572,797 95,606,196
Prepaid insurance premium 11,285,962 8,794,126
Others Prepaid expenditure 44,260,034 60,468,165
228,118,794 164,868,487
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
9.3 Suspense Account
Advance against TA/DA 476,331 958,444
Encashment of PSP/BSP/WEDB 267,030,628 342,887,102
Others 784,571,330 347,673,023
1,052,078,289 691,518,569
9.4 Un-reconciled Branch Adjustments- Mercantile Bank General Account
This Note represents outstanding inter-branch and Head Office transactions (Net) originated but yet to be responded.
However, the un-reconciled entries of 31 December 2019 (upto-date position 08.03.2020) are narrated below:
(Figures in Thousand)
No of entries Amount No of entries Amount
Particulars
Debit Credit
Up to 3 months - - - -
Over 3 months but within 6 months 21 88,435 - -
Over 6 months but within 1 year 4 624,427 - -
Over 1 year but within 5 years - - - -
25 712,862 - -

Amount in BDT
Dec 19 Dec 18
9(a) Consolidated other assets
Mercantile Bank Limited. 8,238,422,004 6,660,431,339
Mercantile Bank Securities Limited. 161,712,456 146,483,142
Mercantile Exchange House (UK) Limited 7,785,399 5,754,835
8,407,919,859 6,812,669,316
Inter company transaction (3,587,758,156) (3,550,000,107)
4,820,161,703 3,262,669,210

10. Non-banking assets

The Bank was awarded absolute ownership on few mortgaged properties through the verdict of honorable court under
section 33(7) of the Artharin Adalat Act 2003. These were recorded as non banking assets. Following are the details:
308 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements

Dec-19
Entitlement
SL Name of Parties Asset detsils (Market Value
Date
in BDT)
1 Global Business a) 44 decimal land at Mouza- Gosai Gobindapur, P.S:
Associates Baliakandi, Dist: Rajbari;
30-Apr-15 500,000
b) 6.66 decimal land at Mouza- Gosai Gobindapur, P.S:
Baliakandi, Dist: Rajbari.
2 SS Trading a) RM of 17.50 decimal land along with Semipacca
Corporation building under Mouza Joar Shahara, PS. Dhaka
Shamimul Islam Siraj. Cantonment, Dist. Dhaka owned by Md. Ali Azam
Khan, Solaiman Khan, Khorshed Alam Khan, mrs.
Kohonoor Akhter, Rasheda Begum, Sheuli Akhter and
Fatema Begum.
b) RM of 170.50 decimal land at Dist. Madaripur, PS. –
Shibchar, Mouza Shamail owned by Shamimul Islam
05-Aug-13 4,262,500
Siraj and shariar Farid.
c) RM of 375.00 decimal land at Dist. Madaripur, PS
Shibchar, Mouza- Choto Chowdhurir Bill and Shamail
owned by Sheba Fish Feeds Limited represented by
Anwarul Haq, Md. Ashraful Islam Taluqder, Shahariar
Farid and Shamimul Islam Siraj.

Mutation only 170.50 decimal completed

3 Dohar Seed Company, RM (3rd party) of land 16.25 Decimal at Bhatara,
Prop.: Md. Advocate Gulshan, Dhaka. 25-Nov-08 3,939,394
Abdus Sobhan
4 Sarker Traders a) 21.86 decimal land at , Naogaon.
b) 5.24 decimal land with 1 storied building at 22-Jun-10 2,985,815
Naogaon.
5 Taj Enterprise RM of decimal 43.73 decimal land (10.75 decimal land
at Mouza-Mohanonda Khali, PS-Poba, Dist-Rajshahi
07-Jul-15 1,976,000
and 33.00 decimal land at Mouza-Sundolpur, PS-Poba,
Dist.-Rajshahi)
6 M/S Sayed Traders RM of 261.75 decimal land (256.5 decimal land at
Mouza-Bagdhani, PS-Poba, Dist.-Rajshahi and 5.25
24-May-15 10,242,000
decimal land at Mouza-Nowhata, PS-Poba, Dist.-
Rajshahi)
Total 23,905,709

Amount in BDT
Dec 19 Dec 18

10(a). Non- banking assets

Mercantile Bank Limited 23,905,709 -
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
23,905,709 -
11 Borrowings from other banks, financial institutions and agents
In Bangladesh (Note 11.1) 20,623,045,320 20,080,790,157
Outside Bangladesh - -
20,623,045,320 20,080,790,157
11.1 In Bangladesh - Interest bearing
A. Money at Call (11.1a): - -
- -
B. Other Borrowings:
Bangladesh Bank Refinance (11.1b) 12,307,554,422 11,366,900,639
Bangladesh Bank Pre-finance against RMG 108,823,813 125,620,688
Borrowing from Bangladesh Bank - -
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Other Bank Borrowings - -
Off-shore Banking Unit 12,405,437,296 11,278,660,896
24,821,815,531 22,771,182,222
Inter company transaction (4,198,770,211) (2,690,392,065)
Other Borrowings 20,623,045,320 20,080,790,157

Total- In Bangladesh 20,623,045,320 20,080,790,157

11.1a Money at Call - -
- -
11.1b Bangladesh Bank Refinance
Refinance for Women Ent. SME 226,004,083 281,692,095
Refinance for Home Loan 10,849,600 13,693,843
Refinance for SME 163,827 656,015
Refinance against SMEDP-2 8,727,000 -
Refinance for ETP 36,049,839 48,577,807
Refinance against EDF from BB 10,413,649,774 10,247,911,349
Refinance Against Brick Kil 75,785,720 16,928,576
Refinance Against Jute Sector - 15,000,000
Refinance Against Fin. Incl SC(FIS) 18,735,953 12,528,453
Refinance for Agro Processing Ind 648,312,500 729,912,500
FC Account Against BB Refinance 869,276,125 -
12,307,554,422 11,366,900,639
11.2 Outside Bangladesh - -
Total Borrowings from other banks, financial institutions and agents 20,623,045,320 20,080,790,157
(N-11.1+11.2)
11.3 Borrowings from other banks, financial institutions and agents: Security wise grouping
Secured borrowings 12,416,378,235 11,492,521,326
Unsecured borrowings 8,206,667,085 8,588,268,831
20,623,045,320 20,080,790,157
11.4 Borrowings from other banks, financial institutions and agents: Nature of repayment
Repayable on demand 8,206,667,085 8,588,268,831
Others 12,416,378,235 11,492,521,326
20,623,045,320 20,080,790,157
11.5 Borrowings from other banks, financial institutions and agents: Maturity grouping
Repayable on demand 8,206,667,085 8,588,268,831
Repayable within 1 month - -
Over 1 months but within 6 months - -
Over 6 months but within 1 year - -
Over 1 year but within 5 years 12,416,378,235 11,492,521,326
Over 5 year but within 10 years - -
Over 10 (ten) years - -
20,623,045,320 20,080,790,157
11(a) Consolidated borrowings from other banks, financial institutions
Inside Bangladesh 20,623,045,320 20,080,790,157
Mercantile Bank Limited 623,608,768 947,653,919
Mercantile Bank Securities Limited - 36,229,448
Mercantile Exchange House (UK) Limited 21,246,654,088 21,064,673,524
310 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Consolidated borrowings from other banks, financial institutions
Outside Bangladesh
Mercantile Bank Limited - -
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
- -
21,246,654,088 21,064,673,524
Inter company transaction (623,608,768) (879,811,146)
Total- Consolidated borrowings from other banks, financial institutions 20,623,045,320 20,184,862,378
11.6 Non-convertible Subordinated Bond
Coupon Rate
BRAC Bank Limited 12.00% 400,000,000 600,000,000
ONE Bank Limited 12.00% 200,000,000 300,000,000
NRBC Bank Limited 12.00% 180,000,000 270,000,000
Dhaka Bank Limited 12.00% 120,000,000 180,000,000
NRB Bank Limited 12.00% 80,000,000 120,000,000
Pubali Bank Limited 12.00% 40,000,000 60,000,000
IDLC Finance Limited 12.00% 120,000,000 180,000,000
United Finance Limited 12.00% 40,000,000 60,000,000
National Life Insurance Company Limited 12.00% 20,000,000 30,000,000
Janata Bank Limited 10.50% 1,000,000,000 1,000,000,000
Agrani Bank Limited 10.50% 1,000,000,000 1,000,000,000
Sonali Bank Limited 10.50% 1,000,000,000 1,000,000,000
4,200,000,000 4,800,000,000

11.6a Consolidated Non-convertible Subordinated Bond

Mercantile Bank Limited 4,200,000,000 4,800,000,000
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
4,200,000,000 4,800,000,000
12. Deposits and other accounts:
A. Deposits received from Banks : 8,202,663,648 14,442,454,640
Payable on demand (Note- A-1) 4,752,272 7,428,594
Time Deposits (Note - A-2 ) 8,197,911,376 14,435,026,046
B. Other than Bank: 239,421,809,067 215,464,870,916
Payable on demand (Note- B-1) 28,148,678,450 27,526,093,324
Time Deposits (Note - B-2 ) 211,273,130,617 187,938,777,592

Total Payable on Demand Deposits (Note- A-1 & B-1) 28,153,430,722 27,533,521,918
Total Time Deposits (Note -A-2 & B-2 ) 219,471,041,993 202,373,803,638
247,624,472,715 229,907,325,556

A. Deposits received from Banks:

Term deposit 8,115,000,000 14,300,000,000
Current deposit 4,752,272 7,428,594
Special Notice deposits 82,911,376 135,026,046
Saving deposits - -
8,202,663,648 14,442,454,640
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
A-1 Payable on demand
Current deposits 4,752,272 7,428,594
Saving deposits (9%) - (A) - -
4,752,272 7,428,594
A-2 Time deposits
Saving deposits (91%) - (A) - -
Term deposit 8,115,000,000 14,300,000,000
Special Notice deposits 82,911,376 135,026,046
8,197,911,376 14,435,026,046
Maturity Analysis (Deposits received from Banks):
Repayable on demand 4,752,272 7,428,594
Repayable within 1 month 82,911,376 135,026,046
Over 1 months but within 6 months 8,115,000,000 14,300,000,000
Over 6 months but within 1 year - -
Over 1 year but within 5 years - -
Over 5 year but within 10 years - -
Unclaimed deposits 10 (ten) years and above - -
8,202,663,648 14,442,454,640
B. Other than Bank:
B-1 Payable on demand:
Current deposits 8,895,243,133 8,836,207,945
Saving deposits (9%) - (Note 12.3) 2,150,495,591 1,930,778,676
Foreign currency deposits (non interest bearing ) 1,699,341,115 1,702,348,625
Bills payable (Note-12.2) 3,045,627,717 2,939,303,079
Sundry deposits (Note - 12.1.1) 6,475,287,274 6,601,259,358
Foreign currency held against Back to Back L/C 5,882,683,620 5,516,195,641
28,148,678,450 27,526,093,324
B- 2 Time deposits:
Saving deposits (91%) - (Note-12.3) 21,743,899,862 19,522,317,727
Fixed deposits (Note-12.4) 108,223,773,679 91,289,346,641
Special Notice deposits 25,336,298,292 24,945,475,351
Deposits under schemes (Note-12.5) 55,695,383,360 51,767,020,352
Non-resident taka deposit 161,183,297 288,172,515
Deposit under Q-cash 112,592,126 126,445,007
211,273,130,617 187,938,777,592
Maturity Analysis (Deposits received from other than Banks):
Repayable on demand 37,605,456,250 29,504,750,654
Repayable within 1 month 40,625,120,780 35,450,655,258
Over 1 months but within 6 months 30,034,875,996 24,035,958,674
Over 6 months but within 1 year 35,852,654,125 45,120,258,785
Over 1 year but within 5 years 55,034,875,996 45,458,658,452
Over 5 year but within 10 years 40,268,825,920 35,894,589,092
Unclaimed deposits 10 (ten) years and above - -
239,421,809,067 215,464,870,916
312 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
12.1 Current accounts & other accounts
Current deposits 8,899,995,405 8,843,636,539
Special Notice deposits 25,419,209,668 25,080,501,396
Foreign currency deposits 1,699,341,115 1,702,348,625
Deposit under Q-cash & My cash 112,592,126 126,445,007
Non-resident taka deposits 161,183,297 288,172,515
Sundry deposit (Notes 12.1.1) 6,475,287,274 6,601,259,358
Foreign currency held against Back to Back L/C 5,882,683,620 5,516,195,641
48,650,292,506 48,158,559,081
12.1.1 Details of sundry deposit
Sundry Creditors 343,742,870 256,830,456
Withholding Tax - IT 352,969,268 406,737,216
Withholding Tax - Excise Duty 167,163,511 157,326,272
Withholding Tax - VAT 47,030,214 43,595,311
Margin on Letter of Guarantee 728,853,046 646,893,704
Margin on L/C 2,503,604,596 2,359,342,197
Margin on FDBP/IDBP 181,776 242,403
Margin on Inward bill collection 1,065,819 13,752,357
Other Margin Account 11,212,577 6,002,975
Sale proceeds of PSP/BSP 3,300,000 249,125,000
Advance deposit against lease rent 17,678,300 18,046,300
Security deposit 27,249,454 26,154,015
Export bill agency commission 11,498,241 11,648,566
Export bill reserve margin 203,551,402 133,965,121
Other sundry deposit 2,056,186,202 2,271,597,465
6,475,287,274 6,601,259,358
12.2 Bills payable
Demand Draft 3,043,740 3,043,740
Security deposit receipt 2,776,950 2,776,950
Pay Order 3,029,732,920 2,923,543,848
Pay Slip 10,074,107 9,938,541
3,045,627,717 2,939,303,079
Maturity wise Grouping Bills Payable
Repayable on demand - -
Repayable within 1 month 3,042,850,767 2,936,526,129
Over 1 months but within 6 months 2,776,950 2,776,950
Over 6 months but within 1 year - -
Over 1 year but within 5 years - -
Over 5 year but within 10 years - -
3,045,627,717 2,939,303,079
12.3 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) 2,150,495,591 1,930,778,676
91% of total Savings Bank deposits (Time deposits) 21,743,899,862 19,522,317,727
23,894,395,453 21,453,096,403
12.4 Fixed deposits
Customer deposits (Note 12 B-2) 108,223,773,679 91,289,346,641
Deposits received from Banks-Term deposit (Note-12 A-2) 8,115,000,000 14,300,000,000
116,338,773,679 105,589,346,641
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
12.4.1 Fixed Deposits - maturity wise Grouping
Repayable on demand - -
Repayable within 1 month - -
Over 1 months but within 6 months 951,369,286 2,951,015,334
Over 6 months but within 1 year 27,602,713,734 36,718,132,179
Over 1 year but within 5 years 87,757,909,550 65,862,165,669
Over 5 year but within 10 years 26,781,109 58,033,459
Unclaimed deposits 10 (ten) years and above - -
116,338,773,679 105,589,346,641
12.5 Deposits under schemes
Monthly Savings Scheme 35,581,536,766 34,996,674,064
Double Benefit Deposit Scheme 14,368,715,599 11,940,493,284
Family Maintenance Deposit Scheme 1,339,200,000 885,090,445
Special Savings Scheme 364,754,062 341,786,585
Pension and Family Support Scheme 254,350,982 240,309,054
Quarterly Benefit Deposit Scheme 26,050,000 8,302,773
One & Half Time Benefit Scheme 52,573,132 98,201,249
Super Benefit Scheme 3,699,265,000 3,249,135,000
Education Planning Deposit Scheme 8,937,819 7,027,898
55,695,383,360 51,767,020,352
12(a) Consolidated deposits and other accounts
12.1(a) Current and other accounts
Deposits Received from Banks
Mercantile Bank Limited 8,202,663,648 14,442,454,640
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
8,202,663,648 14,442,454,640
Other than Bank
Mercantile Bank Limited 40,447,628,858 33,716,104,441
Mercantile Bank Securities Limited 112,022,579 110,521,326
Mercantile Exchange House (UK) Limited - -
40,559,651,437 33,826,625,768
Inter Company Transaction (130,054,851) (139,511,528)
40,429,596,585 33,687,114,240
48,632,260,233 48,129,568,880
12.2(a) Bills Payable
Mercantile Bank Limited 3,045,627,717 2,939,303,079
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
3,045,627,717 2,939,303,079
Maturity wise Grouping Bills Payable
Repayable on demand - -
Repayable within 1 month 3,042,850,767 2,936,526,129
Over 1 months but within 6 months 2,776,950 2,776,950
Over 6 months but within 1 year - -
Over 1 year but within 5 years - -
Over 5 year but within 10 years - -
Unclaimed deposits 10 (ten) years and above - -
3,045,627,717 2,939,303,079
314 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
12.3(a) Savings Bank Deposits
Mercantile Bank Limited 23,894,395,453 21,453,096,403
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
23,894,395,453 21,453,096,403
12.4(a) Fixed Deposits
Mercantile Bank Limited 116,338,773,679 105,589,346,641
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
116,338,773,679 105,589,346,641
12.4.1(a) Fixed Deposits - Maturity wise Grouping
Repayable on demand - -
Repayable within 1 month 27,602,713,734 36,718,132,179
Over 1 months but within 6 months 87,757,909,550 65,862,165,669
Over 6 months but within 1 year 978,150,395 3,009,048,793
Over 1 year but within 5 years - -
Over 5 year but within 10 years - -
Unclaimed deposits 10 (ten) years and above - -
116,338,773,679 105,589,346,641
12.5(a) Deposits Under Schemes
Mercantile Bank Limited 55,695,383,360 51,767,020,352
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
55,695,383,360 51,767,020,352
13. Other liabilities
Provision for Gratuity Fund (Note-13.1) - -
Provision for MBL Foundation 13.1A - 20,000,000
Provision for Fixed Assets (Note-13.2) 85,000,000 85,000,000
Other Provision (Note-13.2.1) 299,941,000 12,547,562
Provision for Off Balance Sheet Items (Note-13.3) 986,633,130 998,566,888
Provision for Incentive Bonus 30,305,286 325,669,595
Provision for Current Tax less advance Tax (Note-13.4.1) (1,327,265,563) (1,184,125,749)
Provision for Deferred Tax (Note-13.4.2) (124,964,099) (83,423,564)
Provision for Loans and Advances (Note-13.5.1) 12,134,283,000 10,391,530,994
Leasehold Liabilities IFRS-16 1,007,223,897 -
Adjusting Account Credit (Note-13.6) 4,922,924,942 3,488,180,976
Interest Suspense Account (Note-13.7) 4,992,975,024 3,858,594,068
Provision for Audit fees 600,000 1,437,500
23,007,656,618 17,913,978,269
13.1 Provision for Gratuity Fund
Beginning of the year - -
Add. During the year 150,000,000 100,000,000
150,000,000 100,000,000
Transferred to Savings Account (Gratuity Fund) 150,000,000 100,000,000
- -
13.1A Provision for MBL Foundation:
Beginning of the year 20,000,000 20,000,000
Add. During the year 30,000,000 20,000,000
Less. Adjustment during the year 20,000,000 20,000,000
30,000,000 20,000,000
Transferred to Savings Account ( MBL Foundation) 30,000,000 -
- 20,000,000
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
13.2 Provision for Fixed Assets
Provision held at the beginning of the year 85,000,000 85,000,000
Provision made during the year - -
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 Bank's 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 Bank's 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.
13.2.1 Other Provision
I. Provision for Protested Bill :
Provision held at the beginning of the year agt.Protested Bill 47,562 324,062
Less. Transfer to Retain Earning (47,562) (276,500)
- 47,562
II. Provision for Other Asset
Provision held at the beginning of the year - -
Provision made during the year against Other Asset 285,441,000 -
285,441,000 -
III. Provision for Climate risk fund
Provision held at the beginning of the year 2,500,000 -
Provision made during the year 1,000,000 2,500,000
3,500,000 2,500,000
IV. Provision for Good Borrower rebate
Provision held at the beginning of the year 10,000,000 -
Provision made during the year 1,000,000 10,000,000
11,000,000 10,000,000
Total (I+II+III+IV+IV) 299,941,000 12,547,562
V. Other Provision made during the year
Other Asset 285,441,000 -
Climate risk fund 1,000,000 2,500,000
Good Borrower rebate 1,000,000 10,000,000
287,441,000 12,500,000
13.3 Provision for Off Balance Sheet Items
Provision held at the beginning of the year 998,566,888 1,079,900,000
Provision made during the year (11,933,758) (81,333,112)
986,633,130 998,566,888
13.3 (a) Consolidated current years provision for off-balance sheet
Mercantile Bank Limited (11,933,758) (81,333,112)
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
(11,933,758) (81,333,112)
13.3.1 (a) Consolidated current years other provision
Mercantile Bank Limited 287,441,000 12,500,000
Mercantile Bank Securities Limited 18,201,102 8,992,981
Mercantile Exchange House (UK) Limited - -
305,642,102 21,492,981
13.4 Provision for Income Tax
Current tax liabilities for the current and prior year 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 (IAS 12 "Income Taxes" ; Para 46).
316 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Advance tax
Opening Advance Tax 15,796,615,773 13,593,913,609
Adjustment during the year (646,517,115) -
Tax paid during the year Under 64, ITO Ordinance 1984 1,489,680,348 2,202,702,164
16,639,779,006 15,796,615,773
Provision for Tax
Opening Provision of Tax 14,637,233,601 13,233,523,737
Adjustment during the year (646,517,115) -
Provision made during the year-Profit and Loss Account 1,346,540,534 1,403,709,864
15,337,257,020 14,637,233,601
Tax liabilities/(Assets) (1,302,521,986) (1,159,382,172)
13.4.1 Current Tax liabilities/(Assets)
Opening Tax Liabilities 14,612,490,024 13,208,780,160
Adjustment during the year (646,517,115) -
Provision made during the year- Profit and Loss Account only 1,346,540,534 1,403,709,864
15,312,513,443 14,612,490,024
Total Advance tax paid (16,639,779,006) (15,796,615,773)
(1,327,265,563) (1,184,125,749)
13.4.2 Deferred Tax liabilities/(Assets)
Opening Deferred Tax (83,423,564) (29,714,405)
Provision made during the year- Profit and Loss Account only (41,540,535) (53,709,159)
(124,964,099) (83,423,564)
13.4.2.1 As per BRPD Circular # 11 Dated: 12 December 2011 regarding accounting for Deferred Tax policy are as follows:
Deferred Tax
Carrying (Deductible)/ Taxable
Particulars Tax Base (Asset)/Liability
Amount Temporary Differences
@37.5%
Fixed Assets 1,950,637,891 2,283,875,487 (333,237,596) (124,964,099)
Deferred Tax (Assets)/Liabilities as on 31.12.2019 (124,964,099)
Deferred Tax (Assets)/Liabilities as on 31.12.2018 (83,423,564)
Deferred Tax (Income)/Expenses (41,540,535)

13.4.1(a) Consolidated tax provision

Mercantile Bank Limited 1,346,540,534 1,403,709,864
Mercantile Bank Securities Limited 21,744,127 10,107,037
Mercantile Exchange House (UK) Limited 48,351 -
1,368,333,012 1,413,816,901

13.4.2(a) Consolidated deferred tax provision

Mercantile Bank Limited (41,540,535) (53,709,159)
Mercantile Bank Securities Limited 505,007 1,195,842
Mercantile Exchange House (UK) Limited - -
(41,035,528) (52,513,317)
13.5 Provision made for loans & advances including off-balance sheet
Provision against Un Classified Loans 3,492,235,969 1,043,437,903
Provision against Classified Loans 107,510,832 1,020,030,855
Other Provision (Off-Balance Sheet Items) (Note-13.3) (11,933,758) (81,333,112)
3,587,813,043 1,982,135,646
13.5(a) Provision made for loans & advances including off-balance sheet items
Mercantile Bank Limited 3,587,813,043 1,982,135,646
Mercantile Bank Securities Limited 20,000,000 57,200,000
Mercantile Exchange House (UK) Limited - -
3,607,813,043 2,039,335,646
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements

Amount in BDT
Dec 19 Dec 18
13.5.1 Provision for loans and advances
a. Provision against Classified Loans (Specific Provision) 4,519,981,000 4,763,914,091
b. Provision against Unclassified Loans (General Provision) 7,614,302,000 5,627,616,903
12,134,283,000 10,391,530,994
a Movement of Provision against Classified Loans and Advances (Specific Provision)
Provision held at the beginning of the year 4,763,914,091 3,967,459,063
Fully Provided Debts written off (356,604,804) (429,145,587)
Recoveries of amounts previously written off 5,160,882 136,069,760
Specific Provision for the year
Recoveries and Provisions no longer required - 69,500,000
Net Charge to Profit and Loss Account 107,510,832 1,020,030,855
Provision held at the end of the year 4,519,981,000 4,763,914,091

b. Provision against Unclassified Loans

Provision held at the beginning of the year 5,627,616,903 4,584,179,000
Fully Provided Debts written off (1,505,550,872) -
Adjustment during the year - -
***Addition during the year 3,492,235,969 1,043,437,903
7,614,302,000 5,627,616,903

***As per Bangladesh Bank approval vide letter no. DBI-1/110/2020-1144 dated on 15.03.2020 the Bank is required to
keep provision Tk.63.15 crore for 2019 and Tk.100.00 crore for 2020, which was already been maintained.

Provision at the end of the year (a+b) 12,134,283,000 10,391,530,994

13.5.1(a) Consolidated Provision for Loans and Advances
Mercantile Bank Limited 12,134,283,000 10,391,530,994
Mercantile Bank Securities Limited 20,000,000 57,200,000
Mercantile Exchange House (UK) Limited - -
12,154,283,000 10,448,730,994

13.6 Adjusting Account Credit

Interest Payable 4,630,352,384 3,260,826,669
Other payable 292,572,558 227,354,306
4,922,924,942 3,488,180,976
13.7 Interest Suspense Account
Opening balance 3,858,594,068 2,579,918,226
Amount transferred during the year 3,830,339,118 2,163,004,050
7,688,933,186 4,742,922,276

Amount recovered and waive during the year 447,542,369 864,346,986

Amount written off during the year 2,248,415,793 19,981,222
(2,695,958,162) (884,328,208)
Balance at the end of the year 4,992,975,024 3,858,594,068
13(a) Consolidated Other Liabilities
Mercantile Bank Limited 23,007,656,618 17,913,978,269
Mercantile Bank Securities Limited 1,339,697,925 1,292,638,844
Mercantile Exchange House (UK) Limited 7,469,119 7,751,397
24,354,823,662 19,214,368,510
318 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements

Amount in BDT
Dec 19 Dec 18
14. Capital
Authorized capital
1200,000,000 Ordinary shares of BDT 10 each 12,000,000,000 12,000,000,000

14.1 Issued, Subscribed and Fully Paid-up Capital

Total 937,158,302 Ordinary shares of BDT 10 each were issued, subscribed and fully paid up as at 31 December 2019.
Opening balance 8,149,202,630 7,761,145,370
Issued for cash - -
Right shares - -
Issued for other than cash ( Bonus shares) 1,222,380,390 388,057,260
Closing balance 9,371,583,020 8,149,202,630

Issued for cash 245,000,000 245,000,000

IPO 319,765,000 319,765,000
Right shares 1,438,942,300 1,438,942,300
Bonus shares 7,367,875,720 6,145,495,330
9,371,583,020 8,149,202,630
14.2 History of Paid-up capital
Accounting
Declaration No. of shares Value in capital (BDT) Cumulative (BDT)
year
1999 Initial 24,500,000 245,000,000 245,000,000
2000 Bonus 3,185,000 31,850,000 276,850,000
2001 Bonus 2,768,500 27,685,000 304,535,000
2002 Bonus 1,523,000 15,230,000 319,765,000
2003 IPO 31,976,500 319,765,000 639,530,000
2003 Bonus 15,988,250 159,882,500 799,412,500
2004 Bonus 19,985,310 199,853,100 999,265,600
2005 Bonus 19,985,310 199,853,100 1,199,118,700
2006 Bonus 29,977,960 299,779,600 1,498,898,300
2007 Bonus 29,977,960 299,779,600 1,798,677,900
2008 Bonus 35,973,550 359,735,500 2,158,413,400
2009 Bonus 47,485,090 474,850,900 2,633,264,300
2010 Right Share 143,894,230 1,438,942,300 4,072,206,600
2010 Bonus 89,588,540 895,885,400 4,968,092,000
2011 Bonus 114,266,116 1,142,661,160 6,110,753,160
2012 Bonus 48,886,025 488,860,250 6,599,613,410
2013 Bonus 79,195,360 791,953,600 7,391,567,010
2014 - - 7,391,567,010
2015 - - 7,391,567,010
2016 Bonus 36,957,836 369,578,360 7,761,145,370
2017 Bonus 38,805,726 388,057,260 8,149,202,630
2018 Bonus 122,238,039 1,222,380,390 9,371,583,020
Total 937,158,302 9,371,583,020 -
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
14.3 Particulars of Fully Paid-up Share Capital
Dec-19 Dec-18 Dec-19 Dec-18
No. of Shares (%)
Sponsor 372,811,021 317,212,923 39.78% 38.93%
Financial Institutions 159,226,488 139,815,430 16.99% 17.16%
General Public 346,659,377 307,169,716 36.99% 37.69%
Foreign 58,461,416 50,722,194 6.24% 6.22%
937,158,302 814,920,263 100.00% 100.00%

14.4 Classification of Shareholders by Holding as on 31 December 2019

No. of Shareholder No. of Shareholder ( % ) of Holdings
1 to 499 Shares 6,038 1,076,755 0.11%
500 to 5,000 Shares 11,808 23,551,572 2.51%
5,001 to 10,000 Shares 2,531 18,109,270 1.93%
10,001 to 20,000 Shares 1,719 24,037,715 2.56%
20,001 to 30,000 Shares 707 17,468,427 1.86%
30,001 to 40,000 Shares 325 11,298,321 1.21%
40,001 to 50,000 Shares 222 10,114,091 1.08%
50,001 to 100,000 Shares 469 33,554,374 3.58%
100,001 to 1,000,000 Shares 504 139,564,900 14.89%
1,000,001 to 99999999 Shares 112 658,382,877 70.25%
24,435 937,158,302 100.00%

14.5 Capital to Risk Weighted Asset Ratio (CRAR)-under BASEL-III

Tier – I Capital (Going Concern Capital)
a) Common Equity Tier I (CET-I)
Paid up Capital 9,371,583,020 8,149,202,630
Statutory Reserve 7,879,083,376 7,182,984,005
Retained Earnings 1,510,875,350 1,238,810,693
General Reserve 1,400,000,000 1,400,000,000
Dividend Equalization Fund 45,680,250 45,680,250
20,207,221,996 18,016,677,578
Regulatory Adjustment from CET-I (108,328,425) (65,698,097)
20,098,893,571 17,950,979,481
b) Additional Tier-I (AT-I) - -
Tier-I Capital (a+b) 20,098,893,571 17,950,979,481
Tier-II Capital (Gone Concern Capital)
General Provision 8,600,935,130 6,626,183,791
Exchange Equalization Account - -
Revaluation Reserve for Fixed Assets 321,805,978 321,805,978
Revaluation Reserve for Equity Investment - -
Non-convertible Subordinated Bond 4,200,000,000 4,800,000,000
Revaluation Reserve for Securities 223,908,457 223,908,457
13,346,649,565 11,971,898,225
Regulatory Adjustments from Tier-II Capital (545,714,435) (436,571,548)
Tire-II Capital 12,800,935,130 11,535,326,678
A. Total Capital 32,899,828,701 29,486,306,159
B. Total Risk Weighted Assets (RWA) 236,412,615,295 221,963,286,136
C. Minimum Capital Requirement (MCR) {12.50% for 2019 & 11.875% 29,551,576,912 26,358,140,229
for 2018 of RWA}
D. Surplus/ (Deficiency) (A-C) 3,348,251,789 3,128,165,931
Capital to Risk Weighted Asset Ratio (CRAR) 13.92% 13.28%
320 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec 19 Dec 18
Dec-19 Dec-18
Capital Requirement % Required % Held % Required % Held
Tier -I Capital (Going-Concern Capital) 6.00% 6.00%
Capital Conservation Buffer 2.50% 2.08%
Tier -II Capital (Gone-Concern Capital) 5.42% 5.20%
12.50% 13.92% 11.875% 13.28%

14.6 Capital to Risk Weighted Asset Ratio (CRAR)-under BASEL-III

There remains a surplus of BDT 3,348,251,789 on capital and reserve fund of the Bank as per requirement of section 13A of
Bank Companies Act, 1991 and BRPD circular # 9, dated 31 December 2019 respectively details of which are placed below :
(a) Minimum Capital Requirement (MCR) {12.50% for 2019 & 11.875%
29,551,576,912 26,358,140,229
for 2018 of RWA}
(b) Actual Capital: 32,899,828,701 29,486,306,159
i) Tier I Capital (Going-Concern Capital) 20,098,893,571 17,950,979,481
ii) Tier-II Capital (Gone -Concern Capital) 13,346,649,565 11,971,898,225
General provision 8,600,935,130 6,626,183,791
Exchange Equalization Account - -
Revaluation Reserve for Fixed Assets 321,805,978 321,805,978
Revaluation Reserve for equity Investment - -
Non-convertible Subordinated Bond 4,200,000,000 4,800,000,000
Revaluation Reserve for securities 223,908,457 223,908,457
Regulatory Adjustments from Tier-II Capital (545,714,435) (436,571,548)
Surplus/ (Deficiency) (b-a) 3,348,251,789 3,128,165,931
15. Statutory Reserve
Opening balance 7,182,984,005 6,312,796,441
Addition during the year 696,099,371 870,187,564
Closing balance 7,879,083,376 7,182,984,005
This has been made according to Sec. 24 of Bank Companies Act, 1991 and shall be maintained until it equals to Paid-up
Capital.
15(a) Consolidated Statutory Reserve
Mercantile Bank Limited. 7,879,083,376 7,182,984,005
Mercantile Bank Securities Limited. - -
Mercantile Exchange House (UK) Limited - -
7,879,083,376 7,182,984,005
15.1 General reserve
Opening balance 1,400,000,000 500,000,000
Transferred during the year - 900,000,000
Closing balance 1,400,000,000 1,400,000,000
16. Other reserves
A. Dividend Equalization Fund
Opening balance 45,680,250 45,680,250
Addition during the year - -
Closing balance 45,680,250 45,680,250

B. Adjustment for Approved Securities HTM

Opening balance 938,767 860,213
Last years adjustment 7,748,885 78,554
Adjustment during the year - -
Closing balance 8,687,652 938,767
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec-19 Dec-18
C. Reserve from revaluation
HFT securities 24,866,964 22,326,327
**Revaluation Reserve for Fixed Assets 643,611,955 643,611,955
668,478,919 665,938,282

**Fixed assets of the Bank specially land & land development was revalued by a professional valuation firm M/s Jarip
O Paridarshan. The Gain was arisen from such revaluation was duly accounted for in the year 2011 as per IAS 16.

D. Reserve against non-banking assets

Opening balance - -
*Addition during the year 23,905,709 -
Adjustment during the year - -
Closing balance 23,905,709 -

*The Bank was awarded absolute ownership on few mortgaged properties through the verdict of honorable court under
section 33(7) of the Artharin Adalat Act 2003. These were recorded as non banking assets. (Shown as Annexure- D1)

Total Other reserves (A+B+C+D) 746,752,530 712,557,299

16(a) Consolidated other reserves
Mercantile Bank Limited 746,752,530 712,557,299
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
746,752,530 712,557,299
17. Retained earnings (Surplus in Profit & Loss Account ):
Opening balance 1,238,810,693 1,714,742,113
Less. Cash dividend - 1,319,394,713
Less. Stock dividend 1,222,380,390 388,057,259
Transfer to Suspense 5,000,000 -
Transfer from Provision for Incentive Bonus 20,000,000 -
Transfer from Other Provision 47,562 771,000
Retained earnings (opening balance adjusted) 31,477,865 8,061,141
Profit before income tax 3,480,496,856 4,350,937,821
3,511,974,721 4,358,998,962
General reserve - 900,000,000
Statutory reserve 696,099,371 870,187,564
2,815,875,350 2,588,811,398
Provision for income tax 1,346,540,534 1,403,709,864
1,469,334,816 1,185,101,534
Provision for deferred tax (41,540,535) (53,709,159)
Closing balance 1,510,875,350 1,238,810,693
17.(A) Retained surplus
Opening Retained Earning 31,477,865 8,061,141
Add. Addition during the year 1,479,397,485 1,230,749,552
Closing balance 1,510,875,350 1,238,810,693
17.1 Consolidated retained earnings last year
Mercantile Bank Limited 31,477,865 8,061,141
Mercantile Bank Securities Limited (37,422,933) 40,102,552
Mercantile Exchange House (UK) Limited (29,433,336) (28,989,541)
(35,378,404) 19,174,152
17(a).1 Consolidated retained earnings Current year
Mercantile Bank Limited 1,479,397,485 1,230,749,552
Mercantile Bank Securities Limited 42,453,833 (77,525,484)
Mercantile Exchange House (UK) Limited 5,805,726 (443,796)
1,527,657,044 1,152,780,272
322 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec-19 Dec-18
17(a) Consolidated Surplus in Profit and Loss Account
Mercantile Bank Limited 1,510,875,350 1,238,810,693
Mercantile Bank Securities Limited 5,030,900 (37,422,933)
Mercantile Exchange House (UK) Limited (23,627,610) (29,433,336)
1,492,278,640 1,171,954,424
Share of profit (17(b).1) (69,875) 519,762
1,492,208,765 1,172,474,186
17(a).1A Controlling Interest
Opening balance (36,903,168) 39,545,573
Addition during the year 41,864,196 (76,448,741)
Closing balance 4,961,029 (36,903,168)
17(b) Non Controlling Interest
Non controlling share capital 50,000,000 50,000,000
Share of profit (17(b).1) 69,875 (519,762)
50,069,875 49,480,238

17(b).1 Non Controlling Interest

Opening balance (519,762) 556,981
Addition during the year 589,637 (1,076,743)
Closing balance 69,875 (519,762)
18.A(1) Cash and cash equivalent
Cash 16,781,921,933 15,601,365,120
Balance with other Banks and Financial Institutions 1,165,342,631 2,481,834,305
Prize Bonds 3,770,600 3,696,000
Money at call on short notice 365,000,000 145,000,000
18,316,035,164 18,231,895,425
18.A(2) Consolidated cash and cash equivalent
Cash 16,788,776,795 15,603,173,163
Balance with other Banks and Financial Institutions 1,289,207,319 2,523,011,570
Prize Bonds 3,770,600 3,696,000
Money at call on short notice 365,000,000 145,000,000
18,446,754,714 18,274,880,733
18 Contingent liabilities
18.1 Acceptance and endorsements
Back to Back Bills 12,458,431,185 13,361,576,057
Banker's Liabilities PAD (EDF) 36,856,279,917 36,893,844,657
49,314,711,103 50,255,420,715
18.2 Letter of guarantees
Money for which the Bank is contingently liable in respect of guarantees are given favoring:
Directors - -
Government 70,278,361 2,895,431,270
Bank and other Financial Institutions 250,000,000 552,693,360
Others ( Note-18.2.1) 14,461,183,512 9,327,310,935
14,781,461,873 12,775,435,565
18.2.1 Letter of guarantees others
Local 12,115,979,650 7,427,078,565
Foreign 2,345,203,862 1,900,232,370
14,461,183,512 9,327,310,935
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Dec-19 Dec-18
18.3 Letter of credit
Inland 1,454,969,771 1,036,064,887
General 19,353,478,963 25,772,369,323
Back to Back L/C 10,291,110,732 8,463,050,488
31,099,559,466 35,271,484,698
18.4 Bills for collection
Outward Bills for Collection 3,460,417,595 3,381,487,761
Outward Foreign Bills for Collection 3,337,586,692 2,885,644,883
Outward Foreign Bills Lodge - -
6,798,004,286 6,267,132,644

18.5 Other Contingent Liabilities - -

- -

Total Contingent liabilities 101,993,736,728 104,569,473,622

Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18

19 Income Statement
Income:
Interest, discount and similar income 26,716,805,688 23,759,839,432
Dividend income 190,630,125 176,317,210
Fees, commission and brokerage 1,277,599,706 1,181,976,788
Gain less losses arising from dealing securities 115,903,958 583,317,689
Gain less losses arising from investment securities 3,280,296 3,816,432
Gain less losses arising from dealing in foreign currencies 1,673,103,735 1,202,440,274
Income from non-banking assets - -
Other operating income 1,314,850,442 1,209,840,171
Sub. Total 31,292,173,950 28,117,547,996
Expenses:
Interest, fees and commission 18,116,167,297 16,277,034,618
Losses on Ioans and advances - -
Administrative expenses 2,434,169,936 2,461,392,432
Other operating expenses 2,586,854,506 2,678,075,981
Depreciation on banking assets 799,231,312 355,471,498
Sub. Total 23,936,423,051 21,771,974,529
Operating profit before provision 7,355,750,899 6,345,573,467
20 Interest income
Interest from Banks & other Financial Institutions (Note-20.1) 241,864,725 168,112,077
Interest from F.C. Clearing Account 162,311,982 112,700,205
Interest from Loans and Advances (Note-20.2) 22,677,638,108 20,100,300,891
23,081,814,816 20,381,113,173
20.1 Interest received from Banks & other Financial Institutions
Interest from money at call and short notice 166,841,044 94,738,111
Interest from other Banks 75,023,681 73,373,966
Interest from Reverse REPO - -
241,864,725 168,112,077
324 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
20.2 Interest from loans and advances
Loan General 6,820,427 9,742,931
Term Loan 5,043,738,074 4,090,911,731
Time Loan 2,758,348,361 2,448,509,394
Loan Against Trust Receipt 1,108,854,794 838,121,003
Packing Credit 211,761,777 198,596,026
Lease Finance 123,725,355 99,412,747
Hire Purchase 1,300,266,620 922,753,419
Payment Against Documents 80,596,873 103,598,153
Cash Credit (Hypo) 1,553,922,104 992,364,825
Overdraft 3,799,927,068 3,358,043,022
Consumers Credit 285,309,522 240,926,528
House Building Loan 675,021,395 523,543,282
Staff Loan 64,254,272 76,814,076
EDF Loan 388,566,211 271,208,735
Bill Purchase and Discounted 1,282,359,876 2,075,980,552
SME 3,603,896,410 3,472,553,957
Agricultural Credit 346,809,813 338,609,450
Personal Loan 43,064,656 38,049,359
Other Credit Schemes 394,500 561,701
22,677,638,108 20,100,300,891
20(a) Consolidated interest income
Mercantile Bank Limited 23,081,814,816 20,381,113,173
Mercantile Bank Securities Limited 73,280,541 71,950,911
Mercantile Exchange House (UK) Limited - -
23,155,095,356 20,453,064,084
Inter Company Transaction - (1,551,527)
23,155,095,356 20,451,512,557
21 Interest paid on deposits & borrowings etc.
Interest on Deposits 16,877,776,041 14,032,301,096
*Interest paid on lease 50,335,822 -
Interest on Refinance BB 71,803,796 31,480,374
Interest on Secondary Treasury Bill Purchased 27,219,266 305,557,865
Interest on Subordinated Bonds 505,220,550 361,500,000
Interest on Borrowings 583,811,821 1,546,195,283
18,116,167,297 16,277,034,618
*Interest paid on lease has been calculated for the year 2019 as per IFRS-16
21(a) Consolidated Interest paid on deposits & borrowings etc.
Mercantile Bank Limited 18,116,167,297 16,277,034,618
Mercantile Bank Securities Limited 3,837,243 1,551,527
Mercantile Exchange House (UK) Limited - -
18,120,004,540 16,278,586,145
Inter Company Transaction - (1,551,527)
18,120,004,540 16,277,034,618
22 Investment income
Interest on Investments (Note-A) 3,634,990,872 3,378,726,259
Income on Investment in Shares (Note-B) 193,910,421 180,133,642
3,828,901,293 3,558,859,901
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
A Interest on Investments
Interest on Treasury Bills 320,285,604 950,613
Interest on Treasury Bonds 2,885,316,171 2,890,352,431
Interest on Bangladesh Bank Bill - 429,392
Interest on Subordinated Bond 408,492,050 474,407,071
Interest on SWAP 20,897,047 12,586,752
3,634,990,872 3,378,726,259
B Income on Investment in Shares
Gain on sale of shares 3,280,296 3,816,432
Dividend on shares 190,630,125 176,317,210
193,910,421 180,133,642
22(a) Consolidated Investment Income
Mercantile Bank Limited 3,828,901,293 3,558,859,901
Mercantile Bank Securities Limited 26,731,459 34,046,201
Mercantile Exchange House (UK) Limited - -
3,855,632,752 3,592,906,102
23 Commission, exchange & brokerage
Commission 1,277,599,706 1,181,976,788
Exchange (Note-23.1) 1,673,103,735 1,202,440,274
2,950,703,441 2,384,417,062
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.
23.1 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 1,673,103,735 1,202,440,274
Losses on foreign trading - -
1,673,103,735 1,202,440,274
23(a) Consolidated Commission, Exchange & Brokerage
Mercantile Bank Limited 2,950,703,441 2,384,417,062
Mercantile Bank Securities Limited 56,055,705 64,625,436
Mercantile Exchange House (UK) Limited 30,667,411 20,664,585
3,037,426,557 2,469,707,084
24 Other Operating Income
Charges on L/C 449,481,129 390,434,436
Services & Other Charges 201,529,699 198,005,799
Income from rent of locker/property 7,973,666 7,151,629
On Line client fees 100,612,945 97,653,198
ATM card 53,615,240 56,068,600
VISA card 120,226,371 107,364,424
Co-brand services 5,772,606 4,126,096
Gain on sale and revaluation of securities 115,903,958 583,317,689
Gain on sale on assets 5,481,582 4,241,896
Miscellaneous earnings (Note-24.1) 370,157,204 344,794,092
1,430,754,400 1,793,157,860
326 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
24.1 Miscellaneous earnings
Postage cost recovery 10,607,511 8,362,022
SWIFT cost recovery 103,445,417 107,130,692
Foreign correspondence cost recovery 133,073,057 135,976,237
Others 123,031,219 93,325,141
370,157,204 344,794,092
24(a) Consolidated Other Operating Income
Mercantile Bank Limited 1,430,754,400 1,793,157,860
Mercantile Bank Securities Limited 26,069,048 29,674,486
Mercantile Exchange House (UK) Limited 3,483,038 3,246,366
1,460,306,486 1,826,078,712
25 Salaries and Allowances
Basic salary 1,282,558,659 1,002,033,109
Bonus (Festival and incentive) 262,042,055 467,508,401
Bank's contribution to employees provident fund 119,452,937 91,319,594
House rent allowances 459,755,755 360,418,617
Conveyance allowance 59,194,023 60,505,471
Medical allowance 125,307,142 82,864,553
Dearness allowance 105,045,685 372,443,277
Overtime allowance 566,500 577,250
Other allowances 2,328,770 2,089,050
2,416,251,526 2,439,759,322
25(a) Consolidated Salaries and Allowances
Mercantile Bank Limited 2,416,251,526 2,439,759,322
Mercantile Bank Securities Limited 28,013,318 31,953,243
Mercantile Exchange House (UK) Limited 11,024,689 9,860,671
2,455,289,533 2,481,573,236
26 Rent, Taxes, Insurance, Lightings etc
*Office rent - 441,331,697
Rates, taxes & excise duty and VAT on rent 73,344,365 65,286,243
Insurance 189,441,859 187,406,070
Lighting, gas & water 102,586,957 102,201,228
365,373,181 796,225,237
*Right Of Use (ROU) Assets as per under IFRS-16 has been calculated for the year 2019 considering monthly rental
expenses.
26(a) Consolidated Rent, Taxes, Insurance, Lightings etc
Mercantile Bank Limited 365,373,181 796,225,237
Mercantile Bank Securities Limited 18,442,239 9,638,291
Mercantile Exchange House (UK) Limited 7,371,981 7,473,165
391,187,402 813,336,693
27 Legal Expenses
Legal fees & charges 21,220,542 13,006,876
Stamps, notary public expenses, registration fees & other fees etc. 10,600,795 11,375,903
31,821,336 24,382,779
27(a) Consolidated Legal Expenses
Mercantile Bank Limited 31,821,336 24,382,779
Mercantile Bank Securities Limited 667,266 44,896
Mercantile Exchange House (UK) Limited 728,797 830,630
33,217,400 25,258,305
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
28 Postage, stamps, telecommunication etc.
Postal Charges 742,892 775,478
Courier Charges 5,813,824 6,253,150
Stamp & Cartridge Paper Cost 358,131 345,301
Telephone Bill 14,024,123 13,811,940
Mobile Phone Bill 317,273 261,543
FAX Charges 459 750
Telex Charge 505,013 248,480
Internet Charges 1,790,979 1,563,511
BACH Charge 1,585,166 1,830,669
SWIFT 11,056,593 14,798,034
Reuters 1,101,096 2,003,255
Online Connection Fees 29,196,998 28,853,621
66,492,547 70,745,731
28(a) Consolidated Postage, stamps, telecommunication etc.
Mercantile Bank Limited 66,492,547 70,745,731
Mercantile Bank Securities Limited 1,930,269 1,996,549
Mercantile Exchange House (UK) Limited 115,579 153,445
68,538,394 72,895,725
29 Stationary, Printing and Advertisements
Printing & stationery 94,497,158 92,057,428
Advertisement 75,781,129 72,947,348
Computer expenses 95,504,461 131,859,440
265,782,748 296,864,216
29(a) Consolidated Stationary, Printing and Advertisements
Mercantile Bank Limited 265,782,748 296,864,216
Mercantile Bank Securities Limited 511,764 615,124
Mercantile Exchange House (UK) Limited 743,700 414,917
267,038,211 297,894,256
30 Chief Executive's salary and fees
Basic Salary 7,364,573 10,780,645
Allowances 2,991,072 3,000,000
Bonus (Festival and Incentive) 2,100,000 2,800,000
Bank's contribution to Provident fund 735,565 1,078,065
13,191,210 17,658,710
30(a) Consolidated Chief Executive's salary and fees
Mercantile Bank Limited 13,191,210 17,658,710
Mercantile Bank Securities Limited - -
Mercantile Exchange House (UK) Limited - -
13,191,210 17,658,710
31 Directors' Fees
Director fees 4,208,000 3,456,000
VAT on director fees 519,200 518,400
4,727,200 3,974,400
Fees of the Directors is Taka 8,000 per meeting as per BRPD Circular Letter No. 11 Dated 04 October 2015.No other
financial benefits are extended to Board of Directors [as per section 18(1) of the Banking Company Act (Amendment)
2013] excluding above fees.
328 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements
Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
31(a) Consolidated Directors' Fees
Mercantile Bank Limited 4,727,200 3,974,400
Mercantile Bank Securities Limited 775,000 1,150,000
Mercantile Exchange House (UK) Limited - -
5,502,200 5,124,400
32 Auditors' fees
External Audit fee/CGC fees 747,500 1,477,500
747,500 1,477,500
32(a) Consolidated Auditors' Fees
Mercantile Bank Limited 747,500 1,477,500
Mercantile Bank Securities Limited 115,000 115,000
Mercantile Exchange House (UK) Limited 394,646 455,327
1,257,146 2,047,827
33 Depreciation and Repair of Fixed Assets
Depreciation on fixed assets (Note-33.1) 387,681,312 355,471,498
*Depreciation of ROU (Right Of Use) assets as per IFRS-16 411,550,000 -
Repairs & Maintenance (Note-33.2) 95,954,593 87,388,231
895,185,906 442,859,729
*Depreciation of ROU (Right Of Use) assets has been calculated for the year 2019 as per IFRS-16 (Annexure -A)
33.1 Depreciation on fixed assets (Annexure -A)
Free hold property 387,681,312 355,471,498
387,681,312 355,471,498
33.2 Repair of Fixed Assets
Repairs & Maintenance 95,954,593 87,388,231
95,954,593 87,388,231
33 (a) Consolidated Depreciation and Repair of Fixed Assets
Mercantile Bank Limited 895,185,906 442,859,729
Mercantile Bank Securities Limited 4,677,097 4,621,719
Mercantile Exchange House (UK) Limited 573,037 613,667
900,436,039 448,095,115
34 Other Expenses
Bank charges 7,023,223 7,610,445
Donation 156,772,608 140,633,638
Car expenses 168,620,186 149,190,070
Training expenses 8,354,874 11,143,387
Supporting Staff Salary 373,701,900 342,007,506
Subscription 12,472,631 5,429,870
Entertainment expenses 55,203,708 53,869,527
Travelling expenses 37,688,032 33,603,109
Conveyance, carriage & freight 11,339,760 11,589,947
Business development 44,556,580 47,302,308
Liveries & uniforms 3,251,732 4,297,748
Medical expenses 1,228,482 530,296
Newspapers and magazines 1,855,995 1,902,851
House Attendance Allowance 798,215 600,000
Professional service fees 7,211,051 25,195,397
Q-cash/ATM cards/VISA cards 41,803,639 35,383,650
House furnishing 8,174,954 8,525,279
Leave Encashment & Leave Fare Assistance (LFA) 467,503,818 189,238,074
Gratuity 150,000,000 100,000,000
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements

Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
Loss on sale of assets 268,154 498,115
Loss on sale of securities 11,463,778 237,000
Loss on market adjustment (Securities) 83,043,339 145,086,346
Mobile banking 22,827,813 20,434,482
Credit Rating Fees 1,344,313 3,203,750
Discount & commission paid - 81
Miscellaneous expenses (Note-34.1) 84,173,819 63,479,407
1,760,682,601 1,400,992,287
34.1 Miscellaneous expenses
Laundry & cleaning 5,065,781 4,471,896
Photograph & Photocopy 785,978 812,766
Cash carrying charge 13,859,398 14,496,245
Nursery & Plantation 1,700,397 1,653,312
Cash incentive 2,439,122 2,123,936
Sundry expenses 60,323,143 39,921,251
84,173,819 63,479,407
34 (a) Consolidated Other Expenses
Mercantile Bank Limited 1,760,682,601 1,400,992,287
Mercantile Bank Securities Limited 21,459,331 148,640,310
Mercantile Exchange House (UK) Limited 7,343,169 4,552,927
1,789,485,101 1,554,185,524
35 Earnings per Share (EPS)
Net profit after tax (Earnings Attributable to ordinary shareholders) 2,175,496,856 3,000,937,116
Number of Ordinary Shares outstanding in the year 937,158,302 937,158,302
Average no. of share outstanding 937,158,302 937,158,302
Earnings per Share (EPS) 2.32 3.20
35 (a) Consolidated Earnings Per Share (EPS)
Consolidated net profit after tax 2,222,561,346 2,922,967,837
Less: Non Controlling Interest 589,637 (1,076,743)
Profit attributable to ordinary equity holders of the parent entity 2,221,971,709 2,924,044,580
Number of share outstanding 937,158,302 937,158,302
Consolidated Earnings per Share (EPS) 2.37 3.12
*Disclouser as per Bangladesh Securities and Exchange Commission notification reference
no. BSEC/CMRRCD/2006-158/208/Admin/81, dated on 20 June 2018.
36 Calculation of Net Asset Value Per Share (NAVPS)
Total shareholders' Equity 20,908,294,277 18,683,554,627
Number of Share outstanding 937,158,302 814,920,263
Net Asset Value (NAV) per share 22.31 22.93
36 (a) Calculation of Consolidated Net Asset Value Per Share (NAVPS)
Total shareholders' Equity 20,939,697,566 18,666,698,358
Number of Share outstanding 937,158,302 814,920,263
Net Asset Value (NAV) per share 22.34 22.91
37 Calculation of Net Operating Cash Flow Per Share (NOCFPS)
Net cash flows from operating activities 2,012,517,395 1,731,834,163
Number of Share outstanding 937,158,302 814,920,263
Net Operating Cash Flow Per Share (NOCFPS) 2.15 2.13
330 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements

Amount in BDT
Jan-19 to Dec-19 Jan-18 to Dec-18
37 (a) Calculation of Consolidated Net Operating Cash Flow Per Share (NOCFPS)
Net cash flows from operating activities 2,080,098,820 1,660,725,982
Number of Share outstanding 937,158,302 814,920,263
Net Operating Cash Flow Per Share (NOCFPS) 2.22 2.04
37.1 Reconciliation of Net Profit after tax with Cash flows from Operating Activities (Solo)
Net profit after taxation 2,175,496,856 3,000,937,116
Adjustment to reconcile net income to net cash provided by operating activities
Interest Income (251,833,379) (1,422,228,690)
Interest Expense 5,135,572,934 3,622,326,669
Dividends receipts 189,595,363 169,896,441
Fees and commission income (10,850,220) (10,024,792)
Payment to the employees - 600,000,000
Income taxes paid (184,680,348) (852,701,459)
Other Operating Income (192,084,852) (45,980,292)
Other Operating Expenses 731,208,806 354,337,317
Provision for Loans & Advances/Investments/Other Assets 3,875,254,043 1,994,635,646
Operating Profit before changes in Operating Assets and Liabilities 9,292,182,346 4,410,260,841

Increase/(Decrease) in operating assets & liabilities

Net Investment in trading securities (11,150,643,315) (3,864,476,026)
Loan & Advance to Customers (12,659,835,460) (24,569,891,841)
Other Assets (1,577,990,665) (580,698,866)
Deposits from other Bank 542,255,163 3,895,959,605
Deposits from customers 17,717,147,159 20,784,371,505
Other Liabilities (2,326,094,689) (1,344,628,171)
(9,455,161,807) (5,679,363,794)

Net Cash Flows from Operating activities 2,012,517,395 1,731,834,163

38 Number of Employees
The number of employees engaged for the entire year who received a total remuneration of BDT 36,000 or above were 2418.
Break-up of No. of employees as per salary range wise

Range of Salary No of employees

Tk. 0.00 to Tk. 20,000 11
Tk 20,001 to Tk. 50,000 497
Tk. 50,001 to Tk. 1,00,000 1112
Tk. 100,001 to Tk. 2,00,000 728
Tk. 2,00,001 and above 70
Total 2418

Mercantile Bank Limited
Notes to the Financial Statements
39 Related Party Disclosure
39.1 Name of Directors and their interest in the Bank and different entities-shown in Annexure - B.
39.2 Significant contracts where Bank is a party and herein Directors have interest:
Nature of contract
Lease agreement with Mr. M.S. Ahsan,
Director of the Bank to take rent 3rd, 4th,
5th, 13th, 14th & 15th floor(20400sft) of
Swadesh Tower for Head Office use only.
Lease agreement with Arena Industries
Ltd. represented by Mr. Tahsin Aman,
Director of the said company, for 02 suits
no. 9/A & 9/B on 9th floor of Eunoos
Trade Centre for Head Office use only.
Lease agreement with Mr. Md.
Shahabuddin Alam, Sponsor and Ex-
Director of the Bank to take rent of our
CEPZ Branch.
Lease agreement with “M.A. Hannan
Education & Human Resource
Development Trust” to take rent of our
Faridgonj Branch, Chandpur.
Lease agreement with Mr. M.S. Ahsan,
Director of the Bank for 2nd, 8th, 9th &
10th floor (13600sft) of Swadesh Tower
for Head Office use only.
Lease agreement with (1) Mr. A.K.M.
Shaheed Reza, (2) Mr. Shawket Reza, (3)
Ms. Tahamina Afroz to take rent of our
Rajnagar Branch, Feni.
Lease agreement with Mr. Md. Baharul
Ahsan to take rent of our Bangla Bazar
Branch, Noakhali.
Name of Director & related by
Mr. M.S. Ahsan, Director of
the Bank & Chairman of the
Executive committee of the Bank.
Mr. M. Amanullah, Director of the The lease agreement was approved by
Bank, father of Mr. Tahsin Aman, the Bangladesh Bank vide its letter no.
Director of Arena Industries Ltd. BRPD(P-3)745(44)/2019-3668 dated
14.05.2019.
Mr. Md. Shahabuddin Alam,
Sponsor and Ex-Director.
Mr. Md. Abdul Hannan, Director
of the Bank & Chairman of “M.A.
Hannan Education & Human
Resource Development Trust”.
Mr. M.S. Ahsan, Director of
the Bank & Chairman of the
Executive committee of the
Bank.
Mr. A.K.M. Shaheed Reza,
Director of the Bank, Mr.
Shawket Reza (brother of Mr.
A.K.M Shaheed Reza) and Ms.
Tahamina Afroz (sister of Mr.
A.K.M Shaheed Reza).
Mr. M.S. Ahsan, Director of
the Bank & Chairman of the
Executive committee of the
Bank & Brother of Mr. Md.
Baharul Ahsan.
FINANCIAL STATEMENTS
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 by
the Bangladesh Bank vide its letter no
BRPD(P-3)745(44)/2009-2706 dated
29.07.2009.
Initially the agreement was executed
by Mr. Md. Abdul Hannan (former
landowner) after getting approval
from Bangladesh Bank vide its letter
no. BRPD(P-3)745(44)/2009-4159
dated 10.11.2009. But, later on Mr. Md.
Abdul Hannan transferred ownership
of the property in favor of “M.A.
Hannan Education & Human Resource
Development Trust” with approval of
Bangladesh Bank vide its letter no.
BRPD(p-3)/745(44)/2017-2543 dt.
24.04.2017
The lease agreement was approved
by the Bangladesh Bank vide its letter
no. BRPD(P-3)745(44)/2010-313 dated
31.01.2010.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)2010-1202, dated
31.03.2010.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2010-1814 dated
06.05.2010.
332 Mercantile Bank Limited
Annual Report 2019
Mercantile Bank Limited
Notes to the Financial Statements
Nature of contract
Lease agreement with Mr. Mohd. Selim,
Director & Vice Chairman of the Board of
Director of the Bank to take rent of our
Damudya Branch, Shariatpur.
Lease agreement with Mr. Alhaj Akram
Hossain (Humayun), Director & Vice
Chairman of the Bank for ATM Booth at
Bijoynagar Branch, Dhaka.
Lease agreement with Mr. M.S. Ahsan,
Director & Chairman of the Executive
committee of the Board of Directors of
the Bank for ATM Booth at Swadesh
Tower, Dhaka
Lease agreement with Mr. Md. Abdul
Hannan, Director of the Bank for ATM
Booth at Faridgonj branch, Chandpur.
Lease agreement with Mr. Shawket Reza
for ATM Booth at Gorat, Ashulia, Savar,
Dhaka.
Lease agreement with Mr. Md. Abdul
Hannan, Director of the Bank for
ATM Booth at Murad Apparels, South
Gouripur, Ashulia, Savar, Dhaka.
Lease agreement with Mr. M. Amanullah,
Director of the Bank for ATM Booth at
Zirabo Ashulia, Savar, Dhaka.
Lease agreement with Mr. Md.
Shahabuddin Alam, Sponsor and Ex-
Director of the Bank for Central Godown
for Chittagong City.
Lease agreement with “M.A. Hannan
Education & Human Resource
Development Trust” to take rent of our
Chandpur Branch.
Lease agreement with Mr. A.S.M. Feroz
Alam, Director of the Bank to take rent
of our Kalaiya Branch, Patuakhali.
Lease agreement with Mr. M. Amanullah,
Director of the Bank to take rent of our
Donia Branch.
Lease agreement with Mr. Morshed Alam
M.P., Director & Chairman of the Board of
Directors of the Bank to take rent of our
Chowmuhoni Branch, Noakhali.
Name of Director & related by
Mr. Mohd. Selim, Director &
Vice Chairman of the Board of
Director of the Bank.
Mr. Alhaj Akram Hossain
(Humayun), Director & Vice
Chairman of the of the Bank.
Mr. M.S. Ahsan, Director &
Chairman of the Executive
Committee of the Board of
Directors of the Bank
Mr. Md. Abdul Hannan, Director
of the Bank.
Mr. A.K.M. Shaheed Reza,
Director of the Bank & brother
of Mr. Shawket Reza.
Mr. Md. Abdul Hannan, Director
of the Bank.
Mr. M. Amanullah, Director of
the Bank.
Mr. Md. Shahabuddin Alam,
Sponsor and Ex-Director of the
Bank.
Mr. Md. Abdul Hannan, Director
& Chairman of “M.A. Hannan
Education & Human Resource
Development Trust”.
Mr. A.S.M. Feroz Alam, Director
of the Bank.
Mr. M. Amanullah, Director of
the Bank.
Mr. Morshed Alam M.P., Director
& Chairman of the Board of
Directors of the Bank.
Annexure - B(Cont.)
Remarks
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2011-3456 dated
25.09.2011.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2011-3455 dated
25.09.2011.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2011-3888 dated
20.10.2011.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2011-4574 dated
01.12.2011.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2012-2215 dated
28.05.2012.
The lease agreement was executed
with approval of the Board in 265th
meeting dated 21.09.2015 as per
Bangladesh Bank guideline vide BRPD
circular letter no # 02 dated 13.01.2015.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2012-3497 dated
27.08.2012.
The lease agreement was approved
by the Bangladesh Bank vide its letter
no. BRPD(P-3)745(44)/2013-1121 dated
24.10.2013.
Initially the agreement was executed
by Mr. Md. Abdul Hannan (former
landowner) after getting approval from
the Bangladesh Bank vide its letter
no. BRPD(P-3)745(44)/2014-5723
dated 03.09.2014. But, later on Mr. Md.
Abdul Hannan transferred ownership
of the property in favor of “M.A.
Hannan Education & Human Resource
Development Trust” with approval of
Bangladesh Bank vide its letter no.
BRPD/(p-3)/745(44)/2017-3157 dt.
25.05.2017.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD (P-3)745(44)/2014-7845 dated
10.12.2014.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)745(44)/2014-3575 dated
11.06.2014.
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)/745(44)/2015-17268 dated
22.11.2015.
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Notes to the Financial Statements
Annexure - B(Cont.)

Nature of contract Name of Director & related by Remarks

Lease agreement with Mr. Md. Abdul
Hannan, Director of the Bank to take rent
of our Arambagh Branch, Dhaka.
Lease agreement with Mr. Md. Abdul
Hannan, Director of the Bank for ATM
Booth at Arambagh Branch, Motijheel,
Dhaka.
Lease agreement with (1) Mr. A.K.M
Shaheed Reza, (2) Mr. Shawket Reza, (3)
Mrs. Zobeda Begum & (4) Mrs. Nahid
Reza to take rent of our Cumilla Noakhali
Regional Office, Feni.
39.3 Shares issued to Directors & Executives without consideration or exercisable at discount: Nil
39.4 Related Party Transaction:
Mr. Md. Abdul Hannan, Director
of the Bank.
Mr. Md. Abdul Hannan, Director
of the Bank.
Mr. A.K.M Shaheed Reza
(Director of the Bank), Mr.
Shawket Reza (brother of Mr.
A.K.M Shaheed Reza), Mrs.
Zobeda Begum (wife of Mr.
A.K.M Shaheed Reza), & Mrs.
Nahid Reza (wife of Mr. Shawket
Reza)
The lease agreement was approved by
the Bangladesh Bank vide its letter no.
BRPD(P-3)/745(44)/2019-1979 dated
07.03.2019.
The lease agreement was executed
with approval of the Board in 345th
meeting dated 04.07.2019 as per
Bangladesh Bank guidline vide BRPD
circular letter no.02,dated 13.01.2015.
The lease agreement was approved
by Bangladesh Bank vide its letter no.
BRPD(P-3)/745(44)/2018-1685 dated
05.03.2018.

Transaction with related Party Nature of transaction Amount as on 31.12.2019

Mercantile Bank Securities Limited Loan (SOD) 623,608,768

39.5 Compensation of Key management personnel: Refer to note 30

39.6 Lending Policies to related Parties :
Lending to related parties is effected as requirements of Section 27 (1) of Bank Companies Act 1991
39.7 Loan and Advances to Directors and their related concern : Nil
39.8 Business other than Banking business with any related concern of the Directors as per Section 18 (2) of Bank
Companies Act 1991 : Nil
39.9 Investments in the Securities of Directors and their related concern : Nil
40 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.
41 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 Bank’s 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 Bank’s instruction (Note-13.2).
42 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, 2019 and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated
June 25, 2003.
43 RESTATEMENTS
Wherever considered necessary, Previous year’s figures have been rearranged for the purpose of comparison with
current year’s presentation without any impact on the profit and value of assets and liabilities as reported in the
Financial Statements.
334 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Notes to the Financial Statements

44 Events after the reporting Period

As per IAS 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 May 17, 2020 approved the financial statements of
the company for the year ended 31 December 2019 and authorized the same for the issue. The Board of Directors also
recommended 11% Cash and 5% Stock dividend for shareholders only for the year ended 31 December 2019 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 Director Director Chairman

Dated: Dhaka
May 17, 2020
Fixed Assets schedule as at 31 December 2019
Annexure-A (Solo)
A. Freehold Property:
Cost Accumulated Depreciation
Written down
Additions/ Rate value at 31
Particulars Sales Balance as at Balance as Adjustment Balance as at
Balance as on Revaluation % Charge for December
during the 31 December on 1 January on during 31 December
1 January 2019 during the the year 2019
year 2019 2019 the year 2019
year
Land 1,341,807,978 - - 1,341,807,978 Nill - - - - 1,341,807,978

Building 1,118,516,344 - - 1,118,516,344 2.5% 157,784,394 27,824,136 - 185,608,530 932,907,814

Furniture & Fixtures 966,790,433 59,680,846 4,731,858 1,021,739,420 10% 507,718,477 73,255,782 3,751,460 577,222,799 444,516,621
Office Equipment & Computer
1,232,290,292 118,692,873 12,554,727 1,338,428,438 20% 858,409,125 207,934,702 11,955,504 284,040,116
Equipment 1,054,388,322
Vehicles 178,938,948 21,365,982 18,328,840 181,976,090 20% 109,660,836 22,480,163 17,057,108 115,083,891 66,892,199
Books 833,527 - - 833,527 20% 758,704 38,486 - 797,190 36,337
Sub-total 4,839,177,522 199,739,701 35,615,425 5,003,301,798 1,634,331,535 331,533,268 32,764,071 1,933,100,732 3,070,201,066

B. Intangible asset:
Cost Accumulated Amortization
Written down
Additions/ Rate value at 31
Particulars Adjusrment Balance as at Balance as Adjustment Balance as at
Balance as on Revaluation % Charge for December
during the 31 December on 1 January on during 31 December
1 January 2019 during the the year 2019
year 2019 2019 the year 2019
year
Software 451,023,922 44,781,262 - 495,805,184 20% 367,412,336 56,148,044 - 423,560,380 72,244,804

Sub-total 451,023,922 44,781,262 - 495,805,184 367,412,336 56,148,044 - 423,560,380 72,244,804

Balance as at 31 Dec'19: Total
5,290,201,444 244,520,963 35,615,425 5,499,106,982 2,001,743,871 387,681,312 32,764,071 2,356,661,112 3,142,445,869
(A+B)
Balance as at 31 Dec' 18 4,720,385,935 587,478,304 17,662,795 5,290,201,444 1,662,888,963 355,471,498 16,616,590 2,001,743,871 3,288,457,574

Right Of Use (ROU) Assets as per IFRS-16

Cost Accumulated Amortization
Written down
Additions/ Rate Balance value at 31
Particulars Adjustment Balance as at Balance as Adjustment
Balance as on 1 Revaluation % Charge for as at 31 December
during the 31 December on 1 January on during
January 2019 during the the year December 2019
year 2019 2019 the year
year 2019
Right Of Use (ROU) Assets
1,646,200,000 - - 1,646,200,000 25% - 411,550,000 - 411,550,000 1,234,650,000
as per IFRS-16
Total 1,646,200,000 - - 1,646,200,000 - 411,550,000 - 411,550,000 1,234,650,000
FINANCIAL STATEMENTS
Name of the Directors and their Interest in the Bank and other different entities
336

Annexure-B
No. of Shares held in Bank Position (as Nature and Value
Name of Firms/Companies in which interested proprietor, partner,
Sl. of interest in the
Name and address Designation as proprietor, partner, director, managing director, managing
No 31.12.2019 31.12.2018 firm/ companies in
agent, guarantor, employee etc. agent, guarantor,
employee etc.) which interested

1 2 3 4 5 6 7
01. MR. MORSHED ALAM, MP Chairman 23,339,638 20,295,338 1. Bengal Windsor Thermoplastics Limited Chairman 11.17%
Annual Report 2019

House no. 12/A, Road no. 63, 2. Bengal Media Corporation Limited Chairman 18.00%
Gulshan-2, 3. Bengal Plastics Limited Chairman 37.50%
Mercantile Bank Limited

Dhaka-1213. 4. Bengal Poly and Paper Sack Limited Chairman 8.19%

5. Bengal Adhesive & Chemical Products Limited Chairman 27.27%
6. Bengal Flexipak Limited Chairman 30.00%
7. Bengal Polymer Wares Limited Chairman 26.00%
8. Bengal Plastic Pipes Limited Chairman 20.00%
9. Romania Food and Beverage Limited Chairman 18.00%
10. Power Utility Bangladesh Limited Chairman 37.00%
11. Hamilton Metal Corporation Limited Chairman 42.00%
12. Bengal Feed & Fisheries Limited Chairman 39.97%
13. Designer Fashion Limited Chairman 20.53%
14. Bengal Retails Limited Chairman 15.00%
15. Bengal Renewable Energy Limited Chairman 15.00%
16. Linnex Technologies Limited Chairman 25.00%
17. Euphoria Apparels Limited Chairman 20.00%
18. Bengal Cement Limited Chairman 12.00%
19. Bengal Structure Development Limited Chairman 50.00%
20. Mercantile Bank Securities Limited Sponsor Director 0.056%
02. AL-HAJ AKRAM HOSSAIN Sponsor 20,340,200 17,687,131 1. Akram Traders Proprietor 100.00%
(HUMAYUN) Director 2. FARS Holding & Associates Limited Managing Director 25.00%
2/C, Purana Paltan, 3. FARS Hotels & Resorts Limited Managing Director 25.00%
Dhaka. 4. Mercantile Bank Securities Limited Sponsor Director 0.056%
03. MR. MOHD. SELIM Sponsor 27,158,704 23,616,265 1. Synthia Securities Limited Chairman 35.00%
3 & 3A, Paribagh Director 2. Sumon Cloth Store Proprietor 100.00%
Shanta Properties, Diganta 3. Global Insurance Limited Shareholder 0.27%
Flat No. 12/A, Ramna, Dhaka. 4. Mercantile Bank Securities Limited Sponsor 0.056%
Name of the Directors and their Interest in the Bank and other different entities
Annexure-B (Cont.)
No. of Shares held in Bank Position (as Nature and Value
Name of Firms/Companies in which interested proprietor, partner,
Sl. of interest in the
Name and address Designation as proprietor, partner, director, managing director, managing
No 31.12.2019 31.12.2018 firm/ companies in
agent, guarantor, employee etc. agent, guarantor,
employee etc.) which interested

1 2 3 4 5 6 7
04. MR. MD. SHAHIDUL AHSAN Sponsor 23,559,786 20,486,771 1. AG Agro Industries Limited Chairman 70.00%
76, Mohakhali C/A Director 2. AG Property Developments Limited Chairman 60.00%
Bir Uttam A K Khandaker Road, 3. Regent Holding Developments Limited Chairman 70.00%
Dhaka -1213 4. AG High Tech Limited Chairman 45.00%
5. AG Limited Chairman 50.00%
6. AG Ceramics Limited Chairman 70.00%
7. AG Green Property Development Limited Chairman 70.00%
8. AG Ship Breaking Industries Proprietor 100.00%
9. M/s. Friends Traders Proprietor 100.00%
10. R.N.S. Corporation Proprietor 100.00%
11. Mercantile Bank Securities Limited Sponsor 0.056%
12. National Credit Ratings Limited Sponsor Director ---
13. Swadesh Life Insurance Company Limited Sponsor Director ---
14. AG Agro Food Limited Sponsor ---
15. Meghna Bank Limited Sponsor Shareholder ---
16. AG Poly & Fiber Industries Limited Chairman 0.23%
17. AG Broilers Limited Chairman 50.00%
18. Dhaka Bangla Media & Communication Limited Managing Director 70.00%
19. The Daily Observer Limited Director ---
20. AG Plastic & Accessories industries Limited Chairman 25.00%
21. AG GP Limited Chairman 6.25%
22. Priyo.com Chairman 60.00%
23. iPay Systems Limited Chairman 80.00%
24. Delta Jute Mills Limited Managing Director 50.00%
05. DR. MD. RAHMAT ULLAH Independent --- --- --- --- ---
E/3 Shahid Munir Choudhury Director
Vaban
Isha Khan Road
Dhaka University
Dhaka-1000.
FINANCIAL STATEMENTS
Name of the Directors and their Interest in the Bank and other different entities
338

Annexure-B (Cont.)
No. of Shares held in Bank Position (as Nature and Value
Name of Firms/Companies in which interested proprietor, partner,
Sl. of interest in the
Name and address Designation as proprietor, partner, director, managing director, managing
No 31.12.2019 31.12.2018 firm/ companies in
agent, guarantor, employee etc. agent, guarantor,
employee etc.) which interested

1 2 3 4 5 6 7
06. MR. MD. ANWARUL HAQUE Sponsor 21,124,890 18,369,470 1. Living Plus Limited Managing Director 32.00%
Annual Report 2019

Apartment-4-A, House-45, Director 2. Holiday Travels Limited Director 35.00%

Road-15/A, 3. Premier Leasing Securities Limited Director 0.40%
Mercantile Bank Limited

Dhanmondi R/A, 4. Securities Broking & Management Limited Director ---

Dhaka 5. Mercantile Bank Securities Limited Sponsor Director 0.056%
6. Global Insurance Limited Shareholder 0.01%
7. Premier Leasing & Finance Limited Sponsor Shareholder 0.02%
MR. A. S. M. FEROZ ALAM Sponsor 29,340,189 25,513,208 1. Premier Leasing & Finance Limited Sponsor Shareholder 6.09%
Flat no. 08, House no. 211 Director 2. Premier Leasing Securities Limited Chairman ---
Road no. 7, Bashundhara R/A 3. Bengal Trading Limited (Tokyo) Chairman 100.00%
Dhaka 4. Mercantile Bank Securities Limited Sponsor Director 0.056%
5. Saheda Gafur Ibrahim General Hospital Founder Chairman ---
08. MR. M. AMANULLAH Sponsor 23,086,824 20,075,499 1. Aman Spinning Mills Limited Chairman 20.00%
House No.06, Road No. 80, Director 2. Mousumi Enterprises Limited Chairman & MD 50.00%
Gulshan-2, 3. Arena Securities Limited Chairman 10.00%
Dhaka. 4. Arena Industries Limited Chairman & MD 25.00%
5. Arena Consumer Products Limited Chairman 25.00%
6. Daily Amader Shomoy Sponsor Director 10.00%
7. Mercantile Bank Securities Limited Sponsor Director 0.056%
09. MR. MD. ABDUL HANNAN Sponsor 21,425,595 18,630,954 1. Dabster & Associates Limited Chairman 90.00%
190 Arambag, Inner Circular Director 2. Reu Fashion Limited Chairman 50.00%
Road, 3. M.H. Trading Proprietor 100.00%
Dhaka. 4. Murad Apparels Limited Chairman 70.00%
5. Unnayan Engineers & Associates Proprietor 100.00%
6. Unnayan Housing Limited Managing Director 50.00%
7. Global Insurance Limited Shareholder 0.01%
8. Pan Pacific Hospital Limited Director 5.00%
9. Eastern University Director ---
Name of the Directors and their Interest in the Bank and other different entities
Annexure-B (Cont.)
No. of Shares held in Bank Position (as Nature and Value
Name of Firms/Companies in which interested proprietor, partner,
Sl. of interest in the
Name and address Designation as proprietor, partner, director, managing director, managing
No 31.12.2019 31.12.2018 firm/ companies in
agent, guarantor, employee etc. agent, guarantor,
employee etc.) which interested

1 2 3 4 5 6 7
10. MR. A.K.M. SHAHEED REZA Sponsor 47,509,237 43,051,512 1. Allure Apparels Limited Chairman 40.00%
“Surjamukhi” Director 2. Fashion Plus Limited Chairman 30.00%
House no. 02, Road no. 11 3. Reza Fabrics Limited Chairman 25.00%
Sector-14, Uttara Model Town, 4. Global Insurance Limited Shareholder 0.08%
Dhaka 5. Fashion Exports Proprietor 100.00%
6. Reza Fashions Limited Chairman 25.00%
7. National Credit Ratings Limited Vice Chairman 7.00%
8. Padma Bleaching & Dying Limited Chairman 25.00%
9. Padma Weaving Limited Chairman 25.00%
10. Padma Yarn Mills Limited Chairman 25.00%
11. The Daily Observer Director 7.00%
12. Bangla Radio FM 95.2 Owner 100.00%
13. Mercantile Bank Securities Limited Sponsor 0.056%
14. Reza Dresses Limited Chairman 20.00%
15. Reza Communications Limited Chairman 20.00%
11. MR. MD. NASIRUDDIN Sponsor 18,794,389 16,342,948 1. Technocon Limited Managing Director 80.00%
CHOUDHURY Director 2. Techno-Con Partner 50.00%
‘Kalpaneer’ (Apartment no. 3A), 3. Holiday Travels Limited Chairman 35.00%
House no. 35, Road no. 10/A, 4. Delta Hospital Limited Shareholder 2.15%
Dhanmondi R/A, 5. Premier Leasing & Finance Limited Sponsor shareholder 2.05%
Dhaka-1209. 6. Premier Leasing Securities Broking Limited Chairman 0.106%
7. Mercantile Bank Securities Limited Chairman 0.056%
12. ALHAJ MOSHARREF Director 22,431,316 19,505,493 1. M/s. M.H. Traders Proprietor 100.00%
HOSSAIN 2. Toka Ink (BD) Limited Director 5.00%
1/1 Folder Street, Wari, 3. Eastern Paper House Partner 50.00%
Dhaka. 4. Hossain Traders Proprietor 100.00%
5. Mercantile Bank Securities Limited Sponsor 0.056%
FINANCIAL STATEMENTS
Name of the Directors and their Interest in the Bank and other different entities
Annexure-B (Cont.)
340

No. of Shares held in Bank Position (as Nature and Value

Name of Firms/Companies in which interested proprietor, partner,
Sl. of interest in the
Name and address Designation as proprietor, partner, director, managing director, managing
No 31.12.2019 31.12.2018 firm/ companies in
agent, guarantor, employee etc. agent, guarantor,
employee etc.) which interested

1 2 3 4 5 6 7
13. MR. M. A. KHAN BELAL Director 18,815,751 16,361,523 1. Shamrat Prince Spinning Mills Limited Chairman 50%
Annual Report 2019

26/B, Topkhana Road, 4/B 2. Shamrat Cold Storage Limited Managing Director 50%
Eastern Housing Apartment, 3. Shamrat Ice & Fish Processing Plant Proprietor 100%
Mercantile Bank Limited

Shahbag, 4. Shamrat Commercial Company Limited Managing Director 50%

Dhaka-1000. 5. Shandhya Hotel (Residential) Proprietor 100%
6. Shamrat Shipping Lines Proprietor 100%
7. Shamrat Commercial Enterprise Proprietor 100%
8. Morzina Money Changer Proprietor 100%
9. B.M.S Travels Proprietor 100%
10. Shamrat Electronics Managing Partner 50%
11. Prince Trade International Proprietor 100%
12. Shamrat Agro Limited Chairman 35%
13. Shamrat Feed Limited Chairman 35%
14. B.S.P. Corporation Proprietor 100%
15. Zamzam LP Gas Limited Managing Director 40%
16. Mercantile Bank Securities Limited Director 0.056%
14. DR. MD. HAMID ULLAH Independent --- --- 1. ICB Asset Management Company Limited --- ---
BHUIYAN Director 2. BDBL Investment Services Limited --- ---
Professor
Department of Accounting &
Information System
Faculty of Business Studies,
University of Dhaka
Dhaka-1000.
 FINANCIAL STATEMENTS

Investment in Shares/Securities
As at 31 December 2019
Annexure-C

A. Quoted Company Amount in BDT

Type Closing Total market
Face No of Avg. Unrealize
SL Name of the Company of Total cost price value as on
Value Shares cost Gain/(Loss)
Shares 31.12.19 31.12.19
1 Advent Pharmaceuticals Ltd. Quoted 10 345 8.23 2,840 22.40 7,728 4,888
2 Bangladesh Export Import
Quoted 10 360,334 85.89 30,947,879 13.80 4,972,609 (25,975,270)
Company Ltd.
3 Esquire Knit Composite Ltd. Quoted 10 10,445 45.00 470,025 28.30 295,594 (174,432)
4 Genex Infosys Ltd. Quoted 10 392 8.68 3,403 67.40 26,421 23,017
5 IDLC Finance Ltd. Quoted 10 20,737,791 11.24 233,135,524 45.40 941,495,711 708,360,187
6 IT Consultants Ltd. Quoted 10 1,407,692 7.10 10,000,000 33.90 47,720,759 37,720,759
7 LankaBangla Finance Ltd. Quoted 10 540,581 46.58 25,177,922 18.00 9,730,458 (15,447,464)
8 Navana CNG Ltd. Quoted 10 31,464 110.88 3,488,726 34.40 1,082,362 (2,406,364)
9 National Bank Ltd. Quoted 10 311,919 18.37 5,729,116 8.10 2,526,544 (3,202,572)
10 New Line Clothings Ltd. Quoted 10 4,282 9.34 40,011 14.80 63,374 23,362
11 Prime Finance &
Quoted 10 65,956 129.14 8,517,764 7.50 494,670 (8,023,094)
Investment Ltd.
12 RAK Ceramics
Quoted 10 127,717 101.64 12,980,620 28.70 3,665,478 (9,315,143)
(Bangladesh) Ltd.
13 Runner Automobiles Ltd. Quoted 10 3,961 71.43 282,927 59.50 235,680 (47,248)
14 Silco Pharmaceuticals Ltd. Quoted 10 4,377 9.09 39,798 30.30 132,623 92,825
15 Titas Gas Transmission &
Quoted 10 58,500 80.46 4,706,629 30.90 1,807,650 (2,898,979)
Dist. Co. Ltd.
16 Uttara Bank Ltd. Quoted 10 35,482 50.51 1,792,193 27.20 965,110 (827,083)
17 Coppertech Industry Ltd. Quoted 10 4,979 9.52 47,420 23.50 117,007 69,587
18 Ring Shine Textiles Ltd. Quoted 10 115,609 9.83 1,135,989 10.30 1,190,773 54,784
Total of Shares (a) 338,498,787 1,016,530,549 678,031,762
19 MBL 1st Mutual Fund Quoted 10 20,000,000 10.00 200,000,000 6.10 122,000,000 (78,000,000)
Total of Mutual Fund (b) 200,000,000 122,000,000 (78,000,000)
Sub Total (a+b) 538,498,787 1,138,530,549 600,031,762

B. Un-Quoted Company
Type of Face No of
SL Name of the Company Avg. cost Total cost
Shares Value Shares
1 SWIFT Un-Quoted 5,218,706
2 Central Depository Bangladesh Limited (CDBL) Un-Quoted 10 1,142,362 4.50 5,138,890
3 Central Counterpaty BD Limited Un-Quoted 10 3,750,000 10.00 37,500,000
4 Market Stabilization Fund Asset Management Un-Quoted
10 200,000 10.00 2,000,000
Company Limited
5 *Ashugonj Power Station Co.Ltd (Bond) Un-Quoted 5,000 2,000 5,000.00 10,000,000
6 Bangladesh Fixed Income Special Purpose Vehicle Un-Quoted 100 10,000,000 1,000,000,000
Sub Total (B) 1,059,857,596
Grand Total (A+B) 1,598,356,383

*Invested in IPO but trade yet to be started

342 Mercantile Bank Limited
Annual Report 2019

Adjustment for Approved Securities HTM:

As at 31 December 2019
Annexure-D
As per Bangladesh Bank’s DOS Circular Letter # 5 dated May 26, 2008 all Government Securities holding by scheduled banks
with effect from July 1, 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 untill sale or maturity rather the same is to be transferred
to Reserve for Revaluation Accounts.

(Amount in BDT)
Market Adjustment on Approved Securities HTM

Balance as on Januray 1, 2019 938,767

Less : Adjustment due to Bond Maturity -

Add. Adjustment of Amortization of HTM secutrities 7,748,885

Balance as on 31 December 2019 8,687,652

Reserve for Revaluation (for HFT securities)

Balance as on January 1, 2019 22,326,327

Add adjustment during the year in Mark to market Method on Treasury Bond 14,815,026
Add adjustment during the year in Mark to market Method on Treasury Bill 158,458,365
Less adjustment due to Maturity,sale & Repo Treasury Bond 1,357,6931
Less adjustment due to Maturity,MTM, sale & Repo Treasury Bill 157,155,823
Balance as on 31 December, 2019 24,866,964

(Market adjustment on Treasury Bond is reported as per DOS circular no.220 Dated. 8 December ,2010.)
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Certificate obtained by Mercantile Bank Ltd. under section 33(7) of Artha Rin Adalat Ain, 2003.

Non-banking assets
As at 31 December 2019
Annexure-D1
Amount in BDT
Name of Entitlement Market
SL. Branch Asset Detailes Legal Status
Borrower Date Value
1 Banani Global Business a) 44 decimal land at Mouza- Gosai 30-Apr-15 500,000 Physical
Branch Associates Gobindapur, P.S: Baliakandi, Dist: Rajbari; possession of the
A.T.M. Shamim- b) 6.66 decimal land at Mouza- Gosai property in under
Ul Alam Gobindapur, P.S: Baliakandi, Dist: Rajbari. Bank's control
(Proprietor)
2 Banani SS Trading a) RM of 17.50 decimal land along with 05-Aug-13 4,262,500 Physical
Branch Corporation Semipacca building under Mouza Joar possession of the
Shamimul Islam Shahara, PS. Dhaka Cantonment, Dist. property in under
Siraj. Dhaka owned by Md. Ali Azam Khan, Bank's control
Solaiman Khan, Khorshed Alam Khan, mrs.
Kohonoor Akhter, Rasheda Begum, Sheuli
Akhter and Fatema Begum.
b) RM of 170.50 decimal land at Dist.
Madaripur, PS. – Shibchar, Mouza Shamail
owned by Shamimul Islam Siraj and shariar
Farid.
c) RM of 375.00 decimal land at Dist.
Madaripur, PS Shibchar, Mouza- Choto
Chowdhurir Bill and Shamail owned by
Sheba Fish Feeds Limited represented by
Anwarul Haq, Md. Ashraful Islam Taluqder,
Shahariar Farid and Shamimul Islam Siraj.
3 Kawran Dohar Seed RM (3rd party) of land 16.25 Decimal at 25-Nov-08 3,939,394 Physical
Bazar Company,Prop.: Bhatara, Gulshan, Dhaka. possession of the
Branch Md. Advocate property in under
Abdus Sobhan Bank's control
4 Naogaon Sarker Traders a) 21.86 decimal land at , Naogaon. 22-Jun-10 2,985,815 Physical
Branch Sushant Sarker b) 5.24 decimal land with 1 storied building possession of the
at Naogaon. property in under
Bank's control
5 Rajshahi Taj Enterprise RM of decimal 43.73 decimal land (10.75 07-Jul-15 1,976,000 Physical
Branch decimal land at Mouza-Mohanonda Khali, possession of the
PS-Poba, Dist-Rajshahi and 33.00 decimal property in under
land at Mouza-Sundolpur, PS-Poba, Dist.- Bank's control
Rajshahi
6 Rajshahi M/S Sayed RM of 261.75 decimal land (256.5 decimal 24-May-15 10,242,000 Physical
Branch Traders land at Mouza-Bagdhani, PS-Poba, Dist.- possession of the
Rajshahi and 5.25 decimal land at Mouza- property in under
Nowhata, PS-Poba, Dist.-Rajshahi) Bank's control
Total 23,905,709
Maturity Analysis of Other Assets
As at 31 December 2019
344

Annexure-E

Amount in BDT
Up to 1 1-3 3-12 1-5 More than
Particulars Total
Month Months Months Years 5 years
1 2 3 4 5 6 7
Other assets should be classified under the following categories:
Annual Report 2019

Income generating other asset:

Mercantile Bank Limited

Investment in shares of subsidiary companies(In Bangladesh) - - - - 3,550,000,000 3,550,000,000

Mercantile Bank Securities Limited
Investment in shares of subsidiary companies(outside Bangladesh) - - - - 38,170,536 38,170,536
Mercantile Exchange House (UK) Limited
Mercantile Bank OBU Unit 4,198,770,211 - - - - 4,198,770,211
MBL Asset Management Limited 56,000,000 56,000,000
No-Income generating other asset: -
Stationery, stamps,printing materials in stock etc 5,205,793 8,391,118 12,111,066 - - 25,707,977
Advance rent and advertisement - -
Interest accued on investment but not collected,commission and 958,000,000 393,055,794 - - 1,351,055,794
brokerage receivable on shares and debenture and other income
receivable
Security deposit - - - - 8,772,599 8,772,599
Preliminary, formation and organization expenses, renovation/ 59,302,374 73,210,224 95,606,196 - 228,118,794
development expenses and prepaid expenses
Branch adjustment 692,868,015 - - - - 692,868,015
Suspense Account - 862,443,479 4,693,310 184,941,500 - 1,052,078,289
Right Of Use (ROU) Assets as per IFRS-16 1,234,650,000 1,234,650,000
Silver - - - - - -
Clearing adjustment account - 1,000,000 - - - 1,000,000
Intra company transaction (OBU) (4,198,770,211) - - - - (4,198,770,211)
Total amount in taka 1,656,073,808 1,324,192,764 1,324,664,600 280,547,696 3,652,943,135 8,238,422,004
 FINANCIAL STATEMENTS

Highlights of Mercantile Bank Limited

Annexure-F
(BDT in crore unless otherwise specified)
SL
Particulars 31.12.2019 31.12.2018 31.12.2017 31.12.2016 31.12.2015
#
1 Paid-up Capital 937.16 814.92 776.11 739.16 739.16
2 Total Capital Fund 3,289.98 2,948.63 2,458.14 2,236.72 1,797.20
3 Capital Surplus / deficit 334.83 312.82 139.74 412.36 282.77
4 Total Assets 31,636.35 29,138.56 26,016.99 20,412.75 18,280.02
5 Total Deposits 24,762.45 22,990.73 22,051.66 15,608.58 14,781.63
6 Total Loans and Advances 23,689.04 22,423.06 19,966.07 15,091.25 12,633.88
Total Contingent Liabilities and
7 10,199.37 10,456.95 11,475.71 8,169.78 6,403.67
Commitments
8 Credit Deposit Ratio (in %) 84.10% 86.30% 84.25% 85.15% 78.54%
Classified Loans against Total Loans
9 4.86% 4.82% 3.79% 5.13% 4.95%
and Advances (in %)
10 Profit after Tax and Provision 217.55 300.09 301.77 222.74 139.33
11 Amount of Classified Loans 1,150.26 1,080.24 756.47 774.59 625.08
12 Provision kept against classified Loans 452.00 476.39 396.75 311.71 255.10
13 Provision Surplus (0.00) (0.00) - 0.40 0.01
14 Cost of Fund (in %) 6.35% 6.06% 5.38% 5.72% 7.32%
15 Interest Earning Assets 29,119.53 26,735.89 22,969.87 16,978.44 13,880.95
16 Non-interest Earning Assets 2,516.82 2,402.68 3,047.12 3,434.31 4,399.07
17 Return on Equity (ROE) (in %) 10.99% 16.55% 17.55% 13.78% 9.60%
18 Return on Assets (ROA) (in %) 0.72% 1.09% 1.30% 1.15% 0.79%
19 Income from Investment 382.89 355.89 345.11 293.19 287.79
20 Earning Per Share (Tk.) 2.32 3.68 3.89 3.70 1.88
21 Return on investment (ROI) 8.63% 9.65% 9.01% 8.91% 8.51%
22 Net assets value per share (NAVPS) 22.31 22.93 22.66 22.74 20.99
23 Cost of deposit (%) 6.92% 6.47% 5.85% 6.25% 7.52%
24 Price Earning Ratio 5.69 Times 4.89 Times 6.79 Times 5 Times 7 Times
346 Mercantile Bank Limited
Annual Report 2019

Annexure-G
Mercantile Bank Limited
Offshore Banking Unit
Balance Sheet
As on 31 December, 2019

Dec-19 Dec-18
Particulars Notes
USD Taka USD Taka
Property and Assets:
Cash:
Cash in Hand - - - -
Balance with Bangladesh Bank - - - -
Balance With other Banks and
Financial Institutions
In Bangladesh 4 7,144,745.31 606,588,877 5,708,383.59 478,933,383
Outside Bangladesh 12,147.75 1,031,344
Money at Call on Short Notice: - - - -
Investments - - - -
Loans and Advances:
Loans, Cash Credit, Overdraft etc. 5 2,213,496.64 187,925,865 4,024,052.94 337,618,042
Time Loans 5,451,841.10 462,861,309 2,774,470.58 232,778,082
Term Loans 58,631,858.73 4,977,844,806 11,860,737.44 995,115,871
Bills Purchased & Discounted 75,383,256.89 6,400,038,510 126,249,980.83 10,592,373,392
Fixed Assets including Premises, 6 685.97 58,239 1,091.97 91,616
furniture and Fixtures
Other Assets 7 2,649,160.75 224,913,748 4,307,825.79 361,426,584
Non-Banking Assets - - - -
Total Assets: 151,487,193.14 12,861,262,698 154,926,543.14 12,998,336,970
Liabilities and Capital :
Liabilities:
Borrowings from Banks, Financial 8 146,118,224.92 12,405,437,296 134,429,808.06 11,278,660,896
institutions and Agents
Deposit and Other Accounts:
Current Deposits and Other Accounts 9 24.75 2,101 24.75 2,077
Fixed Deposits
Term Deposit 10 - - 16,000,000.00 1,342,400,000
Other Liabilities 11 929,257.62 78,893,972 1,027,065.11 86,170,763
Total Liabilities 147,047,507.29 12,484,333,369 151,456,897.92 12,707,233,736
Capital/Shareholders' Equity: - - - -
Retained Earnings carried forward from - - - -
previous year
Surplus in Profit & Loss Account 4,439,685.85 376,929,329 3,469,645.22 291,103,234
Total Liabilities and Shareholders' 151,487,193.14 12,861,262,698 154,926,543.14 12,998,336,970
Equity:

USD 1.00 = BDT 84.9000

OFF-BALANCE SHEET ITEMS
Other Commitments:
Corporate Import Commitment under 12
17,873,856.81 1,517,490,443 11,141,347.73 934,759,075
Contract
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Offshore Banking Unit
Profit and Loss Account
For the year ended 31 December, 2019

Dec-19 Dec-18
Particulars Notes
USD Taka USD Taka
Interest Income 13 8,122,549.42 689,604,446 18,228,613.89 1,529,380,705
Less: Interest paid on Deposits, 14 4,204,794.26 356,987,033 14,630,490.56 1,227,498,158
Borrowings etc.
Net Interest Income 3,917,755.16 332,617,413 3,598,123.33 301,882,547

Investment Income
Commision, Exchange and Brokerage 657,117.96 55,789,315 - -
Other Operating Income 15 24,995.00 2,122,076 6,727.00 564,395
Miscellaneous Earnings 14,855.38 1,261,222 1,895.88 159,064
Adjustment for Exchange Rate - -
Fluctuation
Total Operating Income 4,614,723.50 391,790,026.00 3,606,746.21 302,606,006

Salary and Allowances 16 170,816.42 14,416,899 136,682.93 11,401,314.00

Rent, Taxes, Insurances, Electricity etc. - - - -
Postage, Stamps, Telecommunication 12.72 1,080 12.06 1,010
etc.
Depreciation and repair of Fixed Assets 17 406.00 34,469 406.00 34,063
Other Expenses-Fees For Nostro 3,802.51 322,833 - -
Aaccount
Adjustment for Exchange Rate 18 - 85,416 66,385
Fluctuation
Total Operating Expenditures 175,037.65 14,860,697 137,100.99 11,502,772
Profit before Provision 4,439,685.85 376,929,329 3,469,645.22 291,103,234
Provision against Classified Loans - - - -
Provision against Unclassified Loans - - - -
Other Provision - - - -
Total Provision - - - -
Total Profit before Taxes 4,439,685.85 376,929,329 3,469,645.22 291,103,234
Provision for Taxation - - - -
Net Profit after Taxation 4,439,685.85 376,929,329 3,469,645.22 291,103,234

** Provisions would be calculated with central operation

*** Taxes would be calculated with central operation
348 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Offshore Banking Unit
Notes to the Financial Statements
For the year ended on 31 December, 2019

1 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 May 04,
2010. The Bank commenced operation of these units from July 04, 2010 at its Gulshan, Dhaka and Chattogram EPZ,
Chattogram Branches.
2 Significant Accounting Policy
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.
3 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
c. These are accounted for consolidation in the central accounts of Mercantile Bank Limited

Dec-19 Dec-18
USD Taka USD Taka
4 Balance with other Banks and Financial Institutions
In Bangladesh 7,144,745.31 606,588,877 5,708,383.59 478,933,383
Outside Bangladesh (With JP Morgan 12147.75 1,031,344
Chase Bank, NY)
7,156,893.06 607,620,221 5,708,383.59 478,933,383
5 Loans & Advances
Loans, Cash credit etc.
Overdrafts 2,213,496.64 187,925,865 4,024,052.94 337,618,042
Time Loans 5,451,841.10 462,861,309 2,774,470.58 232,778,082
Term Loans 58,631,858.73 4,977,844,806 11,860,737.44 995,115,871
Bill purchased and Discounted (Local/ 10,209,849.55 866,816,227 14,408,371.29 1,208,862,351
Export)
Bill purchased and Discounted (Foreign) 65,173,407.34 5,533,222,283 111,841,609.54 9,383,511,041
141,680,453.36 12,028,670,490 144,909,241.79 12,157,885,387
6 Fixed Assets including Premises, Furniture and Fixtures
Software - - - -
Computer, Printer & Peripherals 313.45 26,612 653.45 54,824
Furniture & Fixture 372.52 31,627 438.52 36,792
685.97 58,239 1,091.97 91,616
7 Other Assets
Interest Receivable 2,645,767.09 224,625,626 4,307,622.86 361,409,558
Prepaid Expense (House Furnishing 245.86 20,874 157.93 13,250
Allowance)
Prepaid Expense (Mobile Set Purchase) 147.80 12,548 45.00 3,776
Fees Receivable (Rebate of Nostro 3,000.00 254,700 - -
Account)
2,649,160.75 224,913,748 4,307,825.79 361,426,584
8 Borrowing from other Banks, Financial Institutions and Agents
In Bangladesh
Mercantile Bank Limited (Own Borrowing) 49,455,479.52 4,198,770,211 32,066,651.55 2,690,392,065
Other Banks & Finanacial Institutions 8,000,000.00 679,200,000 - -
Outside Bangladesh(Foreign Bank) 88,662,745.40 7,527,467,085 102,363,156.51 8,588,268,831
146,118,224.92 12,405,437,296 134,429,808.06 11,278,660,896
 FINANCIAL STATEMENTS

Mercantile Bank Limited

Offshore Banking Unit
Notes to the Financial Statements
Dec-19 Dec-18
USD Taka USD Taka
8.1 Borrowing from Local Banks in Bangladesh through Treasury Division
BRAC Bank Ltd. 5,000,000.00 424,500,000 - -
Jamuna Bank Ltd. 3,000,000.00 254,700,000 - -
8,000,000.00 679,200,000.00 - -
8.2 Ageing of Borrowing from Local Banks in Bangladesh as on 31.12.2019
Ageing 0-1 Month >01-03 Month >03-06 Month Total
USD 8,000,000 8,000,000
BDT(84.9000) 679,200,000 - - 679,200,000

9 Deposit and Other Accounts:

Current Deposit - - - -
Fixed Deposit - - - -
Foreign Currency Deposit FCAD (Gen) 24.75 2,101 24.75 2,077
24.75 2,101 24.75 2,077
10 Term Deposits and Other Accounts:
Term Deposits procured from various
local Banks in BD: - - - -
Rupali Bank Ltd. - - 16,000,000 1,342,400,000
- - 16,000,000 1,342,400,000
10.1 Term Deposits and Other Accounts:
Maturity Gouping
0-1 Month - - 16,000,000.00 1,342,400,000
1-3 Month - - - -
More then 3 Month - - - -
- - - 1,342,400,000
11 Other Liabilities
Accrued Interest - - - -
Payable to Head Office - - - -
Intt. Payable on Borrowing/Adjusting 929,257.62 78,893,972 1,027,065.11 86,170,763
A/C Cr.
929,257.62 78,893,972 1,027,065.11 86,170,763
12 Off-Balance Sheet Items
Corporate Import Commitment favoring
BHF Bank, Germany on behalf of GPH
Ispat Ltd. under Export Credit Agency 17,873,856.81 1,517,490,443 11,141,347.73 934,759,075
(ECA) through Syndication under lead
arrangement of UCBL.
17,873,856.81 1,517,490,443 11,141,347.73 934,759,075

Dec-19 Dec-18
USD Taka USD Taka
13 Interest Income
Interest on Advances 8,122,549.42 689,604,446 18,228,613.89 1,529,380,705.00
Interest on Money at Call and Short Notice - - - -
Interest on fund placement with Head Office - - - -
Interest on foreign Currency Balances - - - -
8,122,549.42 689,604,446 18,228,613.89 1,529,380,705.00
350 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Limited

Offshore Banking Unit
Notes to the Financial Statements
Dec-19 Dec-18
USD Taka USD Taka
14 Interest paid on Deposit, Borrowings etc.
Interest on Deposit - - - -
Interest paid on Borrowings from own Banks 692,151.98 58,763,703 2,653,044.22 222,590,410
Interest paid on Borrowings from Other 3,512,642.28 298,223,330 11977446.34 1,004,907,748
Banks
Interest on REPO - - - -
4,204,794.26 356,987,033 14,630,490.56 1,227,498,158
15 Other Operating Income
Investment Income - - - -
Commission, Exchange Gain & Brokerage 657,117.96 55,789,315 - -
Other Operating Income/Foreign 24,995.00 2,122,076 6,727.00 564,395
Correspondence Charge
Miscellaneous Earnings 14,855.38 1,261,222 1,895.88 159,064
696,968.34 59,172,613 8,622.88 723,459
16 Salary and Allowances, Rent, Taxes, Insurances, Electricity etc.
Basic Salary 72,148.54 6,096,282 53,735.86 4,485,024
House Rent 28,780.41 2,431,800 22,647.97 1,891,500
Medical Allowance 8,713.34 736,450 4,960.72 391,800
Conveyance Allowance 3,099.48 261,700 3,879.30 346,500
House Maintenance Allowance 2,778.89 233,775 10,636.77 888,300
Utility Allowances 2,778.87 233,775 10,636.81 888,300
PF Contribution 7,235.01 611,328 5,373.60 448,502
Car Allowance 4,305.65 349,903 4,893.51 408,000
Leave Fare Assistance 26,876.61 2,270,500 9,888.80 816,600
Bonus 12,959.55 1,095,000 9,355.69 783,000
Telephone Bill 881.68 74,521 527.16 43,996
Periodicals, Newspaper & Magazines 50.46 4,248 47.63 3,997
House Furnishing Allowances 207.93 17,617 99.11 5,795
170,816.42 14,416,899 136,682.93 11,401,314
17 Free Hold Properties-Depreciation and repair of Fixed Assets
Software - - - -
Computer,printer & Peripherals 340.00 28,866 340.00 28,526
Furniture & Fixture 66.00 5,603 66.00 5,537
406.00 34,469 406.00 34,063.00
18 Different expenditure such as salary & allowances, telephone bill, news paper bill, bonus, postal charge etc are paid at BDT
which are booked at Our OBU books of accounts by converting in to USD using prevelling exchange rate at the date when
such expenditure incurred. As a result, difference arises due to exchange rate fluctuation. Details are enumarated below:
USD BDT at Actual USD BDT at Actual
A Salary and Allowances 170,816.42 14,416,899 136,682.93 11,401,314
B Salary and Allowances at BDT using 14,502,315 11,467,699
conversion rate as on B/S Date.
(A-B) Difference (Effect for Exchange Rate (85,416) (66,385)
Fluctuation)
*Provision will be calculated with the central accounts
*Taxes are computed with the central operation
*Depreciation has been charged @ 20% on Office Equipments & Machineries and @10% p.a. on Fixtures and furniture.
 FINANCIAL STATEMENTS OF SUBSIDIARIES

FINANCIAL STATEMENTS OF
SUBSIDIARIES OF
MERCANTILE BANK LIMITED
352 Mercantile Bank Limited
Annual Report 2019
INDEPENDENT AUDITOR’S REPORT TO
THE SHAREHOLDERS OF Mercantile Bank Securities Limited
Report on the audit of the Financial Statements
Opinion
We have audited the financial
statements of Mercantile Bank
Securities Limited, which comprise
the statement of financial position
as at 31 December 2019, and the
statement of profit or loss and other
comprehensive income, statement of
changes in equity and statement of
cash flows for the year then ended,
and notes to the financial statements,
including a summary of significant
accounting policies.
In our opinion, the accompanying
financial statements give a true and
fair view, in all material respects, of the
financial position of the company as at
31 December 2019, and of its financial
performance and its cash flows for
the year then ended in accordance
with International Financial Reporting
Standards (IFRSs).
We conducted our audit in
accordance with International
Standards on Auditing (ISAs). Our
responsibilities under those standards
are further described in the Auditor’s
Responsibilities for the Audit of the
Financial Statements section of our
report. We are independent of the
Company in accordance with the
International Ethics Standards Board
of Accountants’ Code of Ethics for
Professional Accountants (IESBA
Code) together with the ethical
requirements that are relevant to our
audit of the Financial Statements
in Bangladesh, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements
ant the IESBA Code. We believe that
the audit evidence we have obtained
is sufficient and appropriate to
provide a basis for our opinion.
Other Information
Management is responsible for
the other information. The other
information comprises all of the
information in the Annual Report
other than the financial statements
and our auditor’s report thereon. The
annual report is expected to be made
available to us after the date of this
auditor’s report.
Our opinion on the financial
statements does not cover the other
information and we do not express
any form of assurance conclusion
thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially in consistent
with the financial statements of our
knowledge obtained in the audit or
otherwise appears to be materially
misstated.
Responsibilities of
Management of Those
Charged with Governance for
the Financial Statements
Management of Mercantile Bank
Securities Limited is responsible for
the preparation and fair presentation
of the Financial Statements in
accordance with International
Financial Reporting Standards
(IFRSs), the Companies Act 1994,
the Securities and Exchange Rules
1987 and other applicable Laws and
Regulation and for such internal
control as management determines is
necessary to enable the preparation
of financial statements that are free
from material misstatement, whether
due to fraud or error. material misstatement resulting
In preparing the financial statements,
management is responsible for
assessing the Company’s ability
to continue as a going concern,
disclosing, as applicable, matters
related to going concern and using
the going concern basis of accounting
unless management either intends
to liquidate the company or to
cease operations, or has no realistic
alternative but to do so.
Annexure-H
Those charged with governance
are responsible for overseeing
the Company’s financial reporting
process.
Auditor’s Responsibilities
for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether
the financial statements as a whole
are free from material misstatement,
whether due to fraud or error, and to
issue an auditor’s report that includes
our opinion. Reasonable assurance is
a high level of assurance, but is not
a guarantee that an audit conducted
in accordance with International
Standards on Auditing (ISAs) will
always detect a material misstatement
when it exists. Misstatements can
arise from fraud or error and are
considered.
As part of an audit in accordance
with ISAs, we exercise professional
judgement and maintain professional
skepticism throughout the audit. We
also:
Identify and assess the risks of
material misstatement of the
financial statements, whether
due to fraud or error, designed
and performed audit procedures
responsive to those risks, and
obtain audit evidence that is
sufficient and appropriate to
provide a basis for our opinion.
The risk of not detecting a
from fraud is higher than for
one resulting from error, as
fraud may involve collusion,
forgery, intentional omissions,
misrepresentations, or the
override of internal control.
Obtained an understanding of
internal control relevant to the
audit in order to design audit
procedure that as appropriate in
the circumstances, but not for the
purpose of expressing an opinion

on the effectiveness of the
company’s internal control. events in a manner that achieves
Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures
made by management. entities or business activities
Conclude on the appropriateness
of management’s use of the going
concern basis of accounting and,
based on the audit evidence
obtained, whether a material
uncertainty exists related to
events or conditions that may
cast significant doubt on the
company’s ability to continue as
a going concern. If we conclude
that a material uncertainty exists,
we are required to draw attention
in our auditor’s report to the
related disclosures in the financial
statements or, if such disclosures
are inadequate, to the date of
our auditor’s report. However,
future events or conditions may
cause the company to cease to
continue as a going concern.
Evaluate the overall presentation,
structure and content of the
financial statements, including
the disclosures, and whether the
financial statements represent
Place: Dhaka, Bangladesh K. M. HASAN & CO.
Dated: 12 March 2020
FINANCIAL STATEMENTS OF SUBSIDIARIES
the underlying transactions and
fair presentation.
Obtain sufficient appropriate
audit evidence regarding the
financial information of the
within the company to express
an opinion on the financial
statements. We are responsible
for the direction, supervision and
performance of the audit. We
remain solely responsible for our
audit opinion.
We communicate with those charged
with governance regarding, among
other matters, the planned scope and
timing of the audit and significant
and findings, including any significant
deficiencies in internal control. That
we identify during our audit.
We also provide those charged with
governance with a statement that
we have complied with relevant
ethical requirements regarding
independence, and to communicate
with them all relationships and other
matters that may reasonably be
thought to bear on our independence,
and where applicable, related
safeguards.
Report on Other Legal and
Regulatory Requirements
In accordance with the Companies
Act 1994 and the Securities and
Exchange Rules 1987, We also report
the following:
(a) we have obtained all the
information and explanations
which to the best of our
knowledge and belief were
necessary for the purposes
of our audit and made due
verification thereof;
(b) in our opinion, proper books
of account as required by law
have been kept by the company
so far as it appeared from our
examination of those books;
(c) the statement of financial
position and statement
of profit or loss and other
comprehensive income dealt
with by the report are in
agreement with the books of
account; and
(d) the expenditure incurred was for
the purposes of the company’s
business.
Chartered Accountants
354 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Statement of Financial Position
As at 31 December 2019

2019 2018
Notes
Taka Taka
ASSETS
Current Assets
Cash and Bank Balances 3 254,095,206 550,298,512
Accounts Receivable from Exchange, Depository and CCP 4 - -
Accounts Receivable from Securities Trading 5 10,901,344 11,337,987
Receivable from Margin Clients 6 4,201,766,829 4,193,092,029
Receivable from Other Clients 7 - -
Receivable from Securities Dealer (if subsidiary) 8 - -
Receivable Arises from Short Sale 9 - -
Proprietary Positions in Securities & Specified Investments 10 383,437,800 341,070,667
Total Current Assets 4,850,201,179 5,095,799,195
Non-Current Assets
Other Assets Arising from 11 9,000 9,000
Advance /Investments in Associated Undertaking (Long Term) 12 1,276,000 1,228,500
Property, Plant and Equipment 13 11,847,926 14,946,851
Value of Investment in Exchange (against Membership Value) 14 667,499,955 667,499,955
Other Long Term Assets 15 - -
Advance Income Tax 16 149,526,112 133,907,655
Total Non-Current Assets 830,158,993 817,591,961
Total Assets 5,680,360,172 5,913,391,156
EQUITY AND LIABILITIES
Liability
Current Liabilities
Payable to Clients 17 112,022,579 110,521,326
Short Term Borrowing from Bank 18 623,608,768 843,581,698
Amounts Payable to Clearing House/Exchanges/Depository etc 19 3,140,763 4,516,907
Other Liabilities and Provisions 20 1,336,557,162 1,288,121,936
Total Current Liabilities 2,075,329,272 2,246,741,868
Non-Current Liabilities
Long Term Loan Liabilities (Other than Current Portion Amount) 21 - 104,072,221
Total Non-current Liabilities - 104,072,221
Shareholders' Equity
Share Capital 22 3,600,000,000 3,600,000,000
Retained Earnings 23 5,030,900 (37,422,933)
Total Equity 3,605,030,900 3,562,577,067
Total Equity and Liabilities 5,680,360,172 5,913,391,156

The financial statements should be read in conjunction with the annexed notes and were approved by the Board of Directors
on 12 March 2020 and were signed on its behalf by :
For and on behalf of Board of Directors of Mercantile Bank Securities Limited

Chief Executive Officer Director Director

Signed in terms of our separate report of even date annexed

Place: Dhaka, Bangladesh K. M. HASAN & CO.

Dated: 12 March 2020 Chartered Accountants
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Statement of Profit or Loss and Other Comprehensive Income
For the year ended on 31 December 2019

2019 2018
Notes
Taka Taka
Operating Income 24 156,510,064 171,429,218
Less: Operating Expenses 25 16,021,002 144,226,732
Gross Profit/(Loss) 140,489,062 27,202,486
Less: Administrative and General Expenses 26 64,407,524 56,099,927
Operating Profit/(Loss) 76,081,538 (28,897,441)
Add: Other Income 27 25,626,689 28,867,817
Profit/(Loss) Before Provision and Income Tax 101,708,227 (29,624)
Less: Provision for Margin Loan 20.2 20,000,000 57,200,000
Provision for Unrealised Loss 20.5 18,201,102 8,992,981
Profit/(Loss) Before Income Tax 63,507,125 (66,222,605)
Less: Provision for Income Tax
Current Tax 20.3 21,744,127 10,107,037
Deferred Tax 20.1 (690,835) 1,195,842
Net Profit/(Loss) After Income Tax 42,453,833 (77,525,484)
Add: Other Comprehensive Income - -
Total Comprehensive Income/(Loss) 42,453,833 (77,525,484)

The financial statements should be read in conjunction with the annexed notes and were approved by the Board of Directors
on 12 March 2020 and were signed on its behalf by :

For and on behalf of Board of Directors of Mercantile Bank Securities Limited

Chief Executive Officer Director Director

Signed in terms of our separate report of even date annexed

Place: Dhaka, Bangladesh K. M. HASAN & CO.

Dated: 12 March 2020 Chartered Accountants
356 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Statement of Changes in Equity
For the year ended on 31 December 2019

Amount in Taka

Particulars Share Capital Retained Earnings Total

Balance as at 01 January 2019 3,600,000,000 (37,422,933) 3,562,577,067

Net Profit/(Loss) for the year - 42,453,833 42,453,833
Balance as at 31 December 2019 3,600,000,000 5,030,900 3,605,030,901

For the year ended on 31 December 2018

Amount in Taka

Particulars Share Capital Retained Earnings Total

Balance as at 01 January 2018 3,600,000,000 40,102,551 3,640,102,551

Net Profit/(Loss) for the year - (77,525,484) (77,525,484)
Balance as at 31 December 2018 3,600,000,000 (37,422,933) 3,562,577,067

For and on behalf of Board of Directors of Mercantile Bank Securities Limited

Chief Executive Officer Director Director

Signed in terms of our separate report of even date annexed

Place: Dhaka, Bangladesh K. M. HASAN & CO.

Dated: 12 March 2020 Chartered Accountants
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Statement of Cash Flows
For the year ended on 31 December 2019

2019 2018
Taka Taka
A. Cash flows from Operating activities:
Net Profit Before Income Tax 63,507,125 (66,222,605)
Add: Depreciation 3,961,858 3,829,992
Loss on Sale of Strategic Investment in Shares (DSE) - 124,620,728
Operating Profit before Changes in Operating Assets and Liabilities 67,468,983 62,228,115

Increase/Decrease in Operating Assets and Liabilities

(Increase) / Decrease in Operating Assets (8,285,658) 104,140,562
Increase / (Decrease) in Operating Liabilities 27,507,042 68,369,963
Income Tax paid (15,618,456) (17,965,409)
Net cash flows from Operating activities 71,071,911 216,773,231

B. Cash flows from Investing activities:

Acquisition of Property, Plant and Equipment (2,026,703) (1,428,383)
Disposal of Property, Plant and Equipment 1,163,769 -
Investment in Dealer Account (42,367,133) (23,616,410)
Cash proceed from sale of Strategic Investment in Shares (DSE) - 37,879,317
Net cash used in Investing activities (43,230,067) 12,834,524

C. Cash flows from Financing activities:

Proceeds/(Payments) from Short Term Business Liabilities (219,972,930) (139,970,227)
Proceeds/(Payments) Long Term Loan Liabilities (104,072,221) 104,072,221
Net cash used in financing activities (324,045,150) (35,898,006)

Net surplus in cash and bank balance for the year (A+B+C) (296,203,306) 193,709,748
Cash & Bank Balance at the beginning of the year 550,298,512 356,588,764
Cash & Bank Balance as at 31 December 2019 254,095,206 550,298,512

Cash & Bank Balance :

Cash in Hand 175,666 152,037
Cash at Bank 130,054,851 139,511,528
Investment in FDR 109,679,912 339,333,518
Cash at Trading Accounts (Stock Dealer A/C) 14,184,776 71,301,428
254,095,206 550,298,512

For and on behalf of Board of Directors of Mercantile Bank Securities Limited

Chief Executive Officer Director Director

Place: Dhaka, Bangladesh

Dated: 12 March 2020
358 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting
policies and other explanatory notes
For the year ended on 31 December 2019

1. The Company and its Activities

1.1 Legal status and nature of the company
Mercantile Bank Securities Limited was incorporated vide Reg. # C-85413/10 dated as 27 June 2010 as a private limited
company under the Companies Act 1994. The registered office of the company is at Shwadesh Tower (3rd Floor), 41/6 Purana
Paltan, Dhaka-1000, Bangladesh. Its 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.
Mercantile 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 company obtained DSE Membership on 04 September 2011 and CSE Membership on 25 September 2011
and started it’s operation on 14 September 2011.
2. Significant Accounting Policies:
2.1 Basis of Presentation of Financial Statements
The financial statements have been prepared on a going concern basis applying accrual basis of accounting except
for statement of cash flows in accordance with and in compliance with International Financial Reporting Standards
(IFRS), the Companies Act 1994, Securities and Exchange Rules 1987, Securities and Exchange Act 1993, conditions
and regulations issued by the Bangladesh Securities and Exchange Commission (BSEC), Schedule-B reference no.
BSEC/CMRRCD/2017-357/221/Admin/89 Date: 29, May 2019 and other applicable laws and regulations. Statement
of Cash Flows is prepared in accordance with International Accounting Standard (IAS) 7: “Statement of Cash
Flows” and the cash flows from operating activities are presented under the indirect method as prescribed by the
Securities and Exchange Rules, 1987.
2.2 Basis of Measurement
The financial statements have been prepared based on historical cost convention basis. The accounting policies, unless
otherwise stated, have been consistently applied by the Company and are consistent with those of the previous year.
2.3 Use of Estimates and Judgements
The preparation of financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses. It also requires disclosures of contingent assets and
liabilities at the date of the financial statements. Provisions and accrued expenses are recognized in the financial
statements in line with the International Accounting Standard (IAS) 37 “Provisions, Contingent Liabilities and
Contingent Assets” when - The Company has a legal or constructive obligation as a result of past event.
i) it is probable that an outflow of economic benefit will be required to settle the obligation.
ii) a reliable estimate can be made for the amount of the obligation.
The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the result of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
However, the estimates and underlying assumptions are reviewed on an ongoing basis and the revision is recognized
in the period in which the estimates are revised.
2.4 Components of Financial Statements
The financial statements referred to here comprises:
a) Statement of Financial Position
b) Statement of Profit or Loss and Other Comprehensive Income
c) Statement of changes in Equity
d) Statement of Cash Flows and
e) Notes, comprising a summary of significant accounting policies and other explanatory notes
2.5 Statement of Cash Flows
Statement of Cash Flows is prepared in accordance with International Accounting Standard (IAS) 7: “Statement of
Cash Flows” and the cash flows from operating activities are presented under the indirect method as prescribed by
the Securities and Exchange Rules, 1987.
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2.6 Going Concern

The Company has adequate resources to continue in operation for foreseeable future. For this reasons the
directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities
and adequate resources of the Company provide sufficient funds to meet the present requirements of its
existing businesses and operations.
2.7 Recognition and measurement of financial assets
A financial asset or financial liability is classified as held for trading if it is acquired or incurred principally for the
purpose of selling or repurchasing it in the near term.
2.8 Revenue Recognition
Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow
to the enterprise and in accordance with the International Financial Reporting Standard (IFRS) 15 “Revenue from
Contracts with Customers”:
a. Brokerage Commission
Brokerage commission is recognized as income when selling or buying order is signed and trade is executed.
b. Interest Income from Margin Loan
Interest income from margin loan is recognized on accrual basis. Such income is calculated on daily margin loan
balance of the respective clients. Income is recognized on Quarterly basis.
c. Dividend income and gain/ (loss) on sale of marketable securities
Dividend income is recognized when cash dividend receive is established whereas profit or loss arising from the sale
of securities is accounted for only when shares are sold in the market and profit is realized or loss is incurred.
2.9 Cash and Bank Balances
Cash and Bank Balances include cash in hand and cash at bank which are held and are available for use by the
Company without any restriction. There is insignificant risk of change in the value of the above items.
2.9.1 Investment in Fixed Deposit Receipt (FDR)
Investment in Fixed Deposit Receipt (FDR) Tk. 23,019,572 kept in Peoples Leasing and Financial Service Limited
which remained uncollectable due to liquidity crisis of the company and honourable high court has appointed
liquidator for liquidation of Peoples Leasing and Financial Service Limited. The honourable high court has also
ordered the liquidator to submit report to court.
2.10 Property, Plant & Equipment
Fixed assets are recorded at cost and have limited useful lives (except land). All expenses incurred for the
purpose of acquiring, installing and bringing the fixed assets into its present location for intended use have to be
capitalized and included in the cost of the fixed assets.
2.11 Depreciation
Depreciation is calculated on the cost of fixed assets in order to write off such amounts over the estimated useful
lives of such assets. The rates of depreciation used on a straight-line method are as follows:
Name Of Assets Rate of Depreciation
Vehicles 20%
Computer Equipment & Machineries 20%
Furniture & Fixtures 10%
2.12 Investment in Shares
Investment in quoted shares (or shares held for sale) and unquoted shares are initially recognized at cost plus
transaction costs that are directly attributable to the acquisition of the shares. After initial recognition, investment in
quoted shares has been revalued at cost at reporting date. Net of unrealized gain and loss has not been recognized
in the Statement of Profit or Loss and Other Comprehensive Income.
2.13 Advance, deposits and prepayments
Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions,
adjustments or charges to other account heads such as property, plant and equipment, inventory, etc.
2.14 Advance Income Tax
The amount of advance income tax is mainly deduction at sources by DSE & CSE on daily transactions of broker &
dealer operation. Tax deduction on interest income and dividend income are also included here.
2.15 Provision against unrealized loss in shares purchased as dealer and Margin Loan
As per Bangladesh Securities and Exchange Commission Order No. BSEC/SRI/Policy/3/2020/68 dated on 12 January
2020, the company kept 20% Provision against Unrealized Loss in Securities of 2019.
360 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2.16 Provision for current Tax

Provision for current tax is made in accordance with the provision of Income Tax Ordinance, 1984 and subsequent
amendments made thereto from time to time.
2.17 Provision for expenses
Provision for expenses is recognized when the Company has a present obligation as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and
reliable estimate of the amount can be made.
2.18 Provision against Margin Loan
As per circular no. BSEC/SRI/Policy/3/2020/68 dated on 12 January 2020, Mercantile Bank Securities Limited has
created Tk. 20,000,000 provision against negative equity on margin loan amount at the end of the year due to
fluctuating situation in the capital market.
2.19 Related Party Disclosures
As per IAS 24 “Related Party Disclosures”, a related party is a person or entity that is related to the entity (i.e.
Mercantile Bank Securities Limited) that is preparing its financial statements. Related party transaction is a transfer
of resources, services, or obligations between a reporting entity and a related party, regardless of whether a
price is charged as per IAS 24.
Related parties include the company’s directors, key management personnel, associates, companies under common
directorship etc. as per IAS 24 “Related Party Disclosures”. All transactions involving related parties arising in
the normal course of business are conducted at arm’s length at normal commercial rates on the same terms and
conditions as third party transactions using valuation modes, as admissible.
2.20 Events after the balance sheet date
Events after the balance sheet date that provide additional information about the company’s position at the balance
sheet date are reflected in the financial statements. Events after the balance sheet date that are not adjusting event
are disclosed in the notes when material.
2.21 Management's responsibility on financial statements
The management of the company is responsible for the preparation and presentation of these financial statements.
2.22 Reporting period
These financial statements cover period from 1 January 2019 to 31 December 2019.
2.23 Authorisation for issue
These financial statements are authorised for issue by the Board of Directors of the company on 12 March 2020
2.24 GENERAL
i) These notes form an integral part of the annexed financial statements and accordingly are to be read in
conjunction therewith.
ii) Previous year’s figures have been re-arranged/re-grouped where necessary to conform to the current year’s
financial presentation.
iii) Figures in these notes and annexed financial statements have been rounded off to the nearest taka.

2019 2018
Taka Taka
3 Cash and Bank Balances

Cash in Hand 175,666 152,037

Bank Balances at Mercantile Bank Limited, Main Branch (Note 3.1) 130,054,851 139,511,528
Bank Balances at One Bank Limited, Principle Branch (Note 3.2) 14,184,776 71,301,428
Investment in FDR (Note 3.3) 109,679,912 339,333,518
254,095,206 550,298,512

3.1 Bank Balances at Mercantile Bank Limited, Main Branch Account No.
Company's operational account (MBSL Income 0002230 1,032,517 5,631,230
Expenditure A/C)
Account for clients (MBSL Consolidated Customers A/C) 0002437 128,976,952 133,879,798
IPO account (Public Issue Application A/C) 0002558 41,382 500
Strategic Investment account (Mercantile Bank Securities 9818578 4,000 -
Ltd.)
130,054,851 139,511,528
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Account No.
Taka Taka

3.2 Bank Balances at One Bank Limited, Principle Branch

Trading Accounts for Stock Dealer (Mercantile Bank 0000663 4,987,449 30,124,164
Securities Ltd.)
Settlement account (Mercantile Bank Securities Ltd.) 0000616 9,197,327 41,177,264
14,184,776 71,301,428

3.3 Investment in FDR FDR No.

Meridian Finance & Investment Ltd. 00089902 50,000,000 56,665,419

People's Leasing & Financial Services Ltd. 5167 - 3,734,315
People's Leasing & Financial Services Ltd. 6298 23,019,572 22,438,964
Mercantile Bank Limited 0326717 - 52,864,445
Mercantile Bank Limited 0362708 - 41,452,150
Mercantile Bank Limited 0362709 32,926,025 31,089,113
Mercantile Bank Limited 0362710 - 31,089,113
Mercantile Bank Limited 0363167 - 50,000,000
Mercantile Bank Limited 0363168 - 50,000,000
Mercantile Bank Limited 0363832 1,330,000 -
Mercantile Bank Limited 0364069 2,404,315 -
109,679,912 339,333,518
A schedule of Investment in FDR is given in "Annexure-C".
4 Accounts Receivable from Exchange, Depository and CCP

Mandatory - -
Excess over mandatory - -
Cash Deposits with Exchanges (as Margin/Security)(mandatory/Excess) - -
Mandatory - -
Excess over mandatory - -
Cash deposit with Clearing House (As margin)(mandatory/Excess) - -
Mandatory - -
Excess over mandatory - -
Cash Deposit with depository (as per rule) (mandatory/Excess) - -

- -

5 Accounts Receivable from securities Trading

Receivable from DSE (Note-5.1) 8,016,686 5,255,122

Receivable from CSE (Note-5.2) - -
Receivable from Stock-Broker/Stock- Dealer - -
Receivable from Merchant Banker - -
Receivable from Selling Agents - -
Receivable from others (Accrued Interest of FDR) - Annexure C 2,884,658 6,082,865
10,901,344 11,337,987

5.1 Receivable from DSE

Receivable against A, B, G & N category 6,325,141 5,255,122

Receivable against Z category 1,691,545 -
Receivable against DVP category - -
8,016,686 5,255,122
362 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
5.2 Receivable from CSE

Receivable against A, B, G & N category - -

Receivable against Z category - -
Receivable against DVP category - -
- -
6 Receivable from Margin Clients

Receivable from Clients having no margin or full erosion of clients' 3,628,681,005 -

equity (e.g. no equity against debit balance)
Receivable from Clients fall under force sale condition (e.g. equity is 125,432,273 -
between 100% and 125%of DB
Receivable from Clients fall under margin call (e.g. equity is > 125% of 9,291,221 -
DB but < 150% of DB)
Receivable from regular margin clients (e.g. equity is>150% of debt 438,362,329 -
balance)Clients
4,201,766,829 4,193,092,029
7 Receivable from Other Clients
Receivable after Securities Trading - -
Receivable Arise from Fee, Commission & Charge - -
- -

8 Receivable from Securities Dealer (if subsidiary) - -

9 Receivable Arises from Short Sale - -

10 Proprietary Positions in Securities & Specified Investments:

Investment in Dealer A/C at Cost (Note- 10.1) 383,437,800 337,436,002

Own Subscription in IPOs but not yet allotted (Note-10.2) - 3,634,665
383,437,800 341,070,667
Investment in Dealer A/C at Cost Value 383,437,800 337,436,002
Less: Investment in Dealer A/C at Market Value 247,467,389 292,465,620
Unrealized (Gain)/Loss 135,970,411 44,970,381
10.1 Investment in Dealer A/C at Cost Value
Value of "A" Category Instruments 379,386,458 337,436,002
Value of "B/G/N" Category Instruments 4,051,342 -
Value of "Z" Category Instruments - -
383,437,800 337,436,002
10.2 Own Subscription in IPOs but not yet allotted

Esquire Knit Composite Limited (EKCL) - 1,880,100

Runner Automobiles Ltd. - 1,080,825
ADN Telecom Limited - 569,070
Genex Infosys Limited - 104,670
- 3,634,665
11 Other Assets Arising from

Receivable against Advisory Fees, Commission, etc - -

Prepaid Expenses LFA 9,000 9,000
Security Deposit - -
9,000 9,000
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
12 Advance /Investments in Associated Undertaking (Long Term)
Advance to Subsidiaries - -
Advance to Associated Companies - -
Advance to Director's & Staffs - -
Other Advances 1,276,000 1,228,500
1,276,000 1,228,500
13 Property, Plant and Equipment
Fixed Assets (net off depreciation & amortization):
Land & Land Development - -
Building & Other Securities - -
Other Tangible Assets:
Vehicle 35,000 55,000
Furniture & Fixture 9,237,209 10,042,122
Computer Equipment & Machineries 2,416,675 4,599,637
11,688,885 14,696,759
Intangible Assets :
Software 159,042 250,092
Goodwill, Patents & other Intangible Assets - -
159,042 250,092
11,847,926 14,946,851
A schedule of Property, Plant and Equipment is given in Annexure-A.

14 Value of Investment in Exchange (Against Membership Value)

Dhaka Stock Exchange Ltd. (Note 14.1) 487,499,955 487,499,955
Chittagong Stock Exchange Ltd. (Note 14.2) 180,000,000 180,000,000
667,499,955 667,499,955
14.1 Dhaka Stock Exchange Ltd.
Opening Balance 487,499,955 650,000,000
Add: Investment made during the year - -
487,499,955 650,000,000
Less: Sales during the year - 162,500,045
Closing Balance 487,499,955 487,499,955

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 DSE transferred and credited 2,886,042 shares directly
to Company’s BO Account and rest 4,329,064 shares were credited to the “Demutualization Blocked Account”
maintained by the DSE. Later DSE have transferred 25% shares to Chinese Consortium-Strategic Partner of DSE
by taking over 25% shares of TREC holders. As such Mercantile Bank Securities Limited sold 1,803,777 shares at Tk.
21 per share amount in Tk. 37,879,317, but the cost value of Tk. 90 per share amount in Tk. 162,500,045, however
realized loss amount in Tk.124,620,728.
364 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
14.1.1 Loss on Sale of Strategic Investment in Shares (DSE)

No. of Value per 2019 2018

Particulars Share Share Taka Taka

Total cost value of share 1,803,777 90.09 - 162,500,045

Less: Sale value of Share 1,803,777 21 - 37,879,317
- 124,620,728
Less: Adjusted during the year - 124,620,728
- -

14.2 Chittagong Stock Exchange Ltd.

Opening Balance 180,000,000 180,000,000
Add: Investment made during the year - -
180,000,000 180,000,000
Less: Sale/ Recovery during the year - -
Closing Balance 180,000,000 180,000,000
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 CSE transferred and credited 1,714,932 shares directly to
Company’s BO Account and rest 2,572,398 shares were credited to the “Demutualization Blocked Account” maintained
by the CSE.
15 Other Long Term Assets
Long Term Investments - -
Long Term Prepayments & Deposit - -
Deferred Tax Assets - -
Others - -
- -
16 Advance Income Tax
Opening Balance 133,907,655 115,942,246
Add: Advance Income Tax Paid During The Year - 2,416,507
133,907,655 118,358,753
Add: Tax Deducted at Source During The Year 8,669,301 9,412,344
142,576,956 127,771,097
Add: Tax Deducted at Source Against Bank Interest & Others 6,949,155 6,136,559
149,526,112 133,907,655
Advance Income Tax Tk. 15,618,456 which includes TDS deducted from DSE & CSE TK. 8,669,301, TDS deducted from
bank interest & dividend income in dealer account TK. 4,604,051 and TDS deducted from FDR Tk. 2,345,104.
17 Payable to Clients
General Client 73,462,531 78,503,809
Margin Client 38,560,048 32,017,517
112,022,579 110,521,326
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
18 Short Term Borrowing from Bank
Mercantile Bank Limited 623,608,768 843,581,698
The terms and conditions of the loan taken from Mercantile Bank Ltd. are as follows:
Nature of facility : SOD General (Renewal)
Purpose : To provide liquidity of MBSL & to meet day to day operational expenses in the business.
Facility Amount : Tk. 70 Core
Rate of Interest : Nil
Tenor of the facility : One year
Security : Usual charge documents of the bank and undated chequed covering the credit limit

19 Amounts payable to clearing house/Exchanges/Depository etc

Payable to Exchanges - 2,186,563
Payable to clearing house - -
Payable to depository 3,140,763 2,330,344
Payable to brokers - -
3,140,763 4,516,907
20 Other Liabilities and Provisions :
Accruals & Accounts Payable - -
Deffered Tax and Other Deffered Liabilities (Note 20.1) 505,007 1,195,842
Provision for Margin Loan (Note 20.2) 182,900,000 162,900,000
Provision for Gratuity, PF & Others 16,840,721 14,478,813
VAT & TAX Payable (Note 20.3) 127,241,429 105,497,302
Interest Suspense Against Margin Loan (Note 20.4) 976,280,208 988,249,066
Provision for Unrealized Loss (Note 20.5) 27,194,082 8,992,981
Liabilities for Expenses (Incentive Bonus) 5,461,129 6,643,750
Sundry Deposit 13,130 39,797
Fractional Dividend of Clients 29,166 875
Payble for Audit Fees 86,250 115,000
VAT Payable - 2,470
Others 6,040 6,040
1,336,557,162 1,288,121,936
20.1 Deffered Tax Liability
Deferred tax liability has been recognized in accordance with the provisions of IAS 12: Income Taxes, is arrived at as
follows:
Opening balance 1,195,842 -
Addition/(deduction) during the year charged in P&L (690,835) 1,195,842
Closing balance 505,007 1,195,842
20.2 Provision for Margin Loan
Opening Balance 162,900,000 105,700,000
Add: Provision made during the year 20,000,000 57,200,000
182,900,000 162,900,000
Less : Adjusted during the year - -
Closing Balance 182,900,000 162,900,000
As on 31 December 2019 our negative equity stood as Tk. 2,745,575,112 against outstanding loan Tk. 3,628,681,005 and the
market value of share is 883,105,894. If the market value of share goes up then negative equity will be reduced.
The Bangladesh Securities and Exchange Commission vide its Instruction no. BSEC/SRI/Policy/3/2020/68 dated on
12 January 2020 allowed the stock broker to provide the loss on margin loan in 5 quarters in equal amount (20%)
beginning from December 2019 to December 2020. However, MBSL has maintained a lump sum amount of Tk.
20,000,000 as provision for margin loan till December 2019. In addition, the company has balance of Tk. 976,280,208
being interest on margin loan to interest suspense account as mentioned under Note - 20.4.
366 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
20.3 Provision for Income Tax
Opening Balance 105,497,302 95,390,265
Add: Advance Income Tax Paid - -
105,497,302 95,390,265
Add: Provision made during the year 21,744,127 10,107,037
Closing Balance 127,241,429 105,497,302
TDS final settlement 15,618,456 15,548,902
Provision for Income Tax is Tk. 21,744,127 under regular tax.
20.4 Interest Suspense A/C
Opening Balance 988,249,066 980,084,814
Add: Transfer made during the year - 8,164,252
988,249,066 988,249,066
Less : Adjusted during the year 11,968,858 -
Closing Balance 976,280,208 988,249,066
20.5 Provision for Unrealized Loss
Opening balance 8,992,981 -
Add: Provision made during the year 18,201,102 8,992,981
27,194,082 8,992,981
Less: Adjusted during the year - -
Closing Balance 27,194,082 8,992,981
Mercantile Bank Securities Limited has created provision for compensating loss which is incurred due to decrease in
market price of shares which is less than cost price.
As Per Bangladesh Securities and Exchange Commission Instruction no. BSEC/SRI/Policy/3/2020/68 dated on 12
January 2020, the company may keep 20% Provision amount in tk. 27,194,082.19 for Unrealized Loss in company’s
Own Portfolio Account. The total unrealized loss of Tk. 135,970,410.93 as on 31 December 2019 arrived at as under:
Marginable (134,801,553) (45,963,357)
Non Marginable (1,168,858) 998,728
Total Unrealized Loss (135,970,411) (44,964,629)
21 Long Term Loan Liabilities (Other than Current Portion Amount)
ICB Pronodona Fund
Investment Corporation Of Bangladesh (ICB) - 104,072,221
- 104,072,221
The terms and conditions of the loan taken from Investment Corporation of Bangladesh (ICB) are as follows:
Nature of facility : Fixed
Purpose : To provide liquidity of MBSL & to meet affected small investors in the capital market .
Facility Amount : Tk. 124,122,143
Rate of Interest : 5%
Tenor of the facility : 03 May 2018 to 31 December 2019
Security : Usual charge documents of the bank and post dated Six (6) chequed covering the credit limit.

22 Share Capital
Authorized Capital
500,000,000 Ordinary Shares @ Tk. 10 each 5,000,000,000 5,000,000,000
Issued, Subscribed and Fully Paid-up Capital
Total 360,000,000 Ordinary Shares of Tk. 10 each 3,600,000,000 3,600,000,000
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Sl # Name of the Shareholders No. of Shares
Taka Taka
1 Mercantile Bank Limited 355,000,000 3,550,000,000 3,550,000,000
2 Subrota Narayan Roy 200,000 2,000,000 2,000,000
3 Ms. Bilkis Begum 200,000 2,000,000 2,000,000
4 A. S. M. Feroz Alam 200,000 2,000,000 2,000,000
5 Mohd. Selim 200,000 2,000,000 2,000,000
6 M. A. Khan Belal 200,000 2,000,000 2,000,000
7 Md. Abdul Jalil 200,000 2,000,000 2,000,000
8 Md. Anwarul Haque 200,000 2,000,000 2,000,000
9 Dr. Toufique Rahman Chowdhury 200,000 2,000,000 2,000,000
10 Golam Faruk Ahmed 200,000 2,000,000 2,000,000
11 Engr. Mohd. Monsuruzzaman 200,000 2,000,000 2,000,000
12 Md. Mizanur Rahman Chowdhury 200,000 2,000,000 2,000,000
13 M.S. Ahsan 200,000 2,000,000 2,000,000
14 Alhaj. Akram Hussain 200,000 2,000,000 2,000,000
15 Md. Tabibul Huq 200,000 2,000,000 2,000,000
16 M. Amanullah 200,000 2,000,000 2,000,000
17 S. M. Shafiqul Islam 200,000 2,000,000 2,000,000
18 A.K.M. Shaheed Reza 200,000 2,000,000 2,000,000
19 Md. Nasiruddin Choudhury 200,000 2,000,000 2,000,000
20 A. F. M. Bahauddin 200,000 2,000,000 2,000,000
21 Morshed Alam, MP 200,000 2,000,000 2,000,000
22 Md. Shahabuddin Alam 200,000 2,000,000 2,000,000
23 Syed Muhammed Abbdul Mannan 200,000 2,000,000 2,000,000
24 Israt Jahan 200,000 2,000,000 2,000,000
25 Sakina Khatun 200,000 2,000,000 2,000,000
26 Anwar Hossain 200,000 2,000,000 2,000,000
360,000,000 3,600,000,000 3,600,000,000

2019 2018
Taka Taka
23 Retained Earnings
Opening Balance (37,422,933) 40,102,551
Net profit/(loss) during the year 42,453,833 (77,525,484)
5,030,900 (37,422,933)
Adjustment during the year - -
Closing Balance 5,030,900 (37,422,933)
24 Operating Income
Brokerage Commission DSE & CSE 55,991,410 64,511,966
Account Opening Fees 63,600 693,150
BO Account Maintenance Fees 293,100 1,000
Interest on Margin Loan 73,280,541 71,950,911
Account Closing Fees 30,659 67,519
IPO Commission 64,295 113,470
Cheque Dishonor Fees 55,000 45,000
Dividend Income DSE & CSE 7,421,728 7,215,106
Dividend Income from Dealer A/C 13,105,695 11,455,785
Capital Gain from Dealer A/C 6,204,036 15,375,310
156,510,064 171,429,218
368 Mercantile Bank Limited
Annual Report 2019

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
25 Operating Expenses
Howla Charge DSE & CSE 400 640
Laga Charge DSE & CSE 4,321,029 4,696,078
CDBL Charges 2,223,518 2,494,943
Audit Fees 115,000 115,000
Directors Fees 775,000 1,150,000
Bank Charges 16,892 235,116
Interest on ICB Pronodona Fund 3,837,243 1,551,527
DSE, CSE Fees & Others 676,258 485,462
Loss on Sale of Strategic Investment in Shares (DSE) - 124,620,728
Loss on Sale of Shares (Negative equity clients) 93,805 37,299
Trade License - 38,061
Loss on Margin Interest Reverse - 4,971,887
Depreciation 3,961,857 3,829,992
16,021,002 144,226,732
26 Administrative and General Expenses
Salaries & Allowances (Note- 26.1) 35,890,947 32,497,500
Rent, Taxes, VAT, Insurances, Electricity etc. 18,442,239 9,638,291
Postage, Stamps, Telecommunication etc. 1,930,269 1,996,549
Printing & Stationery 511,764 615,124
Repairs and Maintenances 715,240 791,727
Legal & Consultancy Fees 667,266 44,896
Loss on Sale of Fixed Assets 979,169 -
Miscellaneous 123,831 260,039
Refreshment 1,271,285 1,432,638
Utility Expenses 258,988 202,563
Fuel Costs 362,750 349,430
Excise Duty 273,500 27,500
Travel Expenses 352,978 379,806
Incentive Bonus - 5,000,000
Investor Awareness Program 2,400,000 2,525,000
PSSL Uniform 111,766 101,116
Capital Market Expo Expense - 48,735
Business Development Expense 115,532 189,013
64,407,524 56,099,927
26.1 Salaries & Allowances
Basic Salary 15,034,164 12,824,475
Off Day, Closing & Other Allowance 328,980 429,640
Consolidated Salary - 616,903
Arrear Salary - 65,352
Bonus 2,830,850 2,449,650
House Rent 4,916,500 4,122,844
Conveyance Allowances 1,222,500 1,437,810
Medical Allowances 1,611,833 2,028,885
House Maintenance Allowances 447,267 1,141,551
Utilities Allowance 447,267 1,141,551
PF Contribution 1,502,937 1,124,222
Leave Fare Assistance 4,273,200 2,003,082
Security & Cleaner 3,275,449 3,111,535
35,890,947 32,497,500
 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Notes, comprising a summary of significant accounting policies and other explanatory notes

2019 2018
Taka Taka
27 Other Income
Bank Interest 25,520,189 28,867,817
Miscellaneous Earnings 106,500 -
25,626,689 28,867,817
28 Related Party Disclosures
The following amounts are related to Mercantile Bank Limited (MBL) which is the parent company of Mercantile
Bank Securities Limited (MBSL) and subside in capital market in Investment Corporation of Bangladesh (ICB):

Received from related Party

Bank Overdraft MBL Parent Company - -

ICB Pronodona Fund ICB Subside in Capital Market - 104,072,221
- 104,072,221
29 Events After the Reporting Period
i) The Board of Directors in its meeting held on Dated 12 March 2020 approved the financial statements of the
company for the year ended 31 December 2019 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 Director Director

Signed in terms of our separate report of even date annexed

Place: Dhaka, Bangladesh

Dated: 12 March 2020
Mercantile Bank Securities Limited
Schedule of Property, Plant and Equipment
370

As at 31 December 2019 Annexure- A

Amount in Taka
Cost Depreciation
Written
Adjustment/ Rate Adjustment/ Down
Particulars Balance Addition Balance Balance Charged Balance
Disposal % Disposal Value as on
as on during the as on as on During the as on
during the during the 31.12.2019
Annual Report 2019

01.01.2019 year 31.12.2019 01.01.2019 year 31.12.2019

year year
Mercantile Bank Limited

Vehicle 100,000 - - 100,000 20% 45,000 20,000 - 65,000 35,000

Furniture & Fixture 19,639,538 1,845,346 4,459,455 17,025,429 10% 9,597,417 1,506,841 3,316,038 7,788,220 9,237,209
Computer Equipment & Machineries 19,387,618 181,357 2,714,747 16,854,228 20% 14,787,981 2,343,967 2,694,395 14,437,552 2,416,675
Software 455,250 - - 455,250 20% 205,158 91,050 - 296,208 159,042
As at 31 December 2019 39,582,406 2,026,703 7,174,202 34,434,907 24,635,555 3,961,858 6,010,433 22,586,981 11,847,926

As at 31 December 2018 38,154,023 1,428,383 - 39,582,406 20,805,563 3,829,992 - 24,635,555 14,946,851

 FINANCIAL STATEMENTS OF SUBSIDIARIES

Mercantile Bank Securities Limited

Statement of Investment in Shares
For the year ended on 31 December 2019 Annexure- B

Amount in Taka

Quoted
Total Market
Name of the Number of Average Rate per Unrealized
Sl # Category Total Cost Value as on
Companies Shares Costs share as on Gain/(Loss)
31.12.2019
31.12.2019
Marginable
1 ACFL A 7,846 40.00 313,840 21.10 165,551 (148,289)
2 ADVENT A 58,800 32.49 1,910,469 22.40 1,317,120 (593,349)
3 AMANFEED A 48,089 50.39 2,423,291 28.20 1,356,110 (1,067,181)
4 ARGONDENIM A 220,500 33.65 7,420,049 16.60 3,660,300 (3,759,749)
5 BARKAPOWER A 300,000 33.64 10,092,126 22.70 6,810,000 (3,282,126)
6 BBSCABLES A 39,600 75.03 2,971,114 58.80 2,328,480 (642,634)
7 BXPHARMA A 60,000 106.31 6,378,743 69.40 4,164,000 (2,214,743)
8 CITYBANK A 144,400 31.78 4,588,664 21.10 3,046,840 (1,541,824)
9 DBH A 5,500 125.49 690,187 114.30 628,650 (61,537)
10 DESCO A 10,000 44.40 444,013 37.00 370,000 (74,013)
11 DHAKABANK A 341,250 17.04 5,816,051 12.00 4,095,000 (1,721,051)
12 DUTCHBANGL A 23,000 69.48 1,598,028 71.30 1,639,900 41,872
13 FBFIF A 114,072 6.07 692,070 3.70 422,066 (270,004)
14 GENEXIL A 392 8.70 3,409 67.40 26,421 23,011
15 GP A 55,000 401.42 22,078,150 285.80 15,719,000 (6,359,150)
16 IBNSINA A 1,189 255.74 304,072 222.40 264,434 (39,639)
17 IDLC A 2,325,000 81.52 189,534,858 45.40 105,555,000 (83,979,858)
18 IFADAUTOS A 22,000 108.83 2,394,294 46.20 1,016,400 (1,377,894)
19 INTRACO A 100,000 18.32 1,831,598 13.60 1,360,000 (471,598)
20 JAMUNAOIL A 29,550 196.11 5,795,106 141.90 4,193,145 (1,601,961)
21 LHBL A 150,000 53.74 8,061,230 33.60 5,040,000 (3,021,230)
22 LINDEBD A 7,900 1,236.06 9,764,842 1,299.00 10,262,100 497,258
23 MARICO A 500 1,801.35 900,675 1,673.30 836,650 (64,025)
24 MJLBD A 52,500 99.22 5,209,088 63.30 3,323,250 (1,885,838)
25 MPETROLEUM A 39,000 223.88 8,731,188 163.80 6,388,200 (2,342,988)
26 NAHEEACP A 110,000 44.04 4,844,833 36.60 4,026,000 (818,833)
27 NEWLINE A 4,282 9.35 40,023 14.80 63,374 23,351
28 OIMEX A 131,597 32.78 4,313,990 21.80 2,868,815 (1,445,175)
29 POWERGRID A 10,000 60.25 602,452 44.60 446,000 (156,452)
30 RENATA A 7,700 853.90 6,575,024 1,096.50 8,443,050 1,868,026
31 RUNNERAUTO A 7,566 71.43 540,450 59.50 450,177 (90,273)
32 RUPALIINS A 30,000 22.44 673,164 20.70 621,000 (52,164)
33 SHASHADNIM A 115,500 58.02 6,700,930 24.70 2,852,850 (3,848,080)
34 SILCOPHL A 4,377 9.09 39,793 30.30 132,623 92,830
35 SPCL A 83,837 132.25 11,087,385 70.00 5,868,590 (5,218,795)
36 SQURPHARMA A 48,150 258.21 12,432,870 190.00 9,148,500 (3,284,370)
37 STANDBANKL A 403,000 8.62 3,473,486 8.90 3,586,700 113,214
38 SUMITPOWER A 100,000 41.39 4,138,575 36.30 3,630,000 (508,575)
372 Mercantile Bank Limited
Annual Report 2019

Annexure- B (Cont.)

Amount in Taka

Quoted
Total Market
Name of the Number of Average Rate per Unrealized
Sl # Category Total Cost Value as on
Companies Shares Costs share as on Gain/(Loss)
31.12.2019
31.12.2019
39 TITASGAS A 50,000 78.55 3,927,433 30.90 1,545,000 (2,382,433)
40 UNIQUEHRL A 100,000 59.96 5,996,038 43.90 4,390,000 (1,606,038)
41 UTTARABANK A 102,000 29.81 3,040,279 27.20 2,774,400 (265,879)
42 AAMRANET A 24,380 60.75 1,481,117 37.60 916,688 (564,429)
43 ACIFORMULA A 17,000 179.00 3,043,079 91.70 1,558,900 (1,484,179)
44 GLAXOSMITH A 466 1,712.15 797,863 1,756.30 818,436 20,573
45 MERCANBANK A 422,625 10.54 4,453,224 13.20 5,578,650 1,125,426
46 RINGSHINE A 130,689 9.47 1,237,293 10.30 1,346,097 108,804
Total Value of "A" Category Instruments 379,386,458 245,054,465 (134,331,993)

Non Marginable
1 CENTRALPHL B 140,000 14.43 2,020,174 9.00 1,260,000 (760,174)
2 SEAPEARL B 3,916 9.53 37,300 41.30 161,731 124,431
3 ESQUIRENIT N 30,890 44.59 1,377,378 28.30 874,187 (503,191)
4 ADNTEL N 18,969 30.00 569,070 0.00 - (569,070)
5 COPPERTECH N 4,979 9.52 47,420 23.50 117,007 69,587
Total Value of "B/G/N" Category 4,051,342 2,412,924 (1,638,417)
Instruments
383,437,800 247,467,389 (135,970,411)
Mercantile Bank Securities Limited
Schedule of Investment in FDR
For the year ended on 31 December 2019 Annexure- C

Amount in Taka

Beginning Balance Addition during the Year Encash during the Year
SL. Purchased A/C Interest Income Bank Charge Closing
FDR No. Accrued Rate of Day Length
NO. from No. Principal Principal Principal Interest Balance
Interest Interest Considered Months Excise
Cash Accrued Total TDS
duty
Meridian
1 89902 89902 56,665,419 2,766,514 - 11.25% 162 6M 5,804,098 2,496,575 5,534,159 580,410 - - 11,889,107 50,000,000
Finance
People's
2 01663 6298 22,438,964 629,213 - 11.50% - 3M 645,120 - 15,907 64,512 - - - 23,019,572
leasing
People's
3 01664 5167 3,734,315 - - 11.50% - 3M - - - - 3,734,315 - -
leasing
Mercantile
4 76388 0326717 52,864,445 225,941 - 6.00% - 3M 3,904,449 - 3,678,508 390,445 37,000 52,864,445 3,477,004 -
Bank Ltd.
Mercantile
5 31584 0362708 41,452,150 511,054 - 6.00% - 3M 2,721,352 - 2,210,298 272,135 24,000 41,452,150 2,425,216 -
Bank Ltd.
Mercantile
6 31746 0362709 31,089,113 383,290 - 6.00% 65 3M 2,041,014 351,812 2,009,536 204,101 - - - 32,926,025
Bank Ltd.
Mercantile
7 31673 0362710 31,089,113 383,290 - 6.00% - 3M 1,553,702 - 1,170,412 177,750 24,000 31,089,113 1,351,952 -
Bank Ltd.
Mercantile
8 40108 0363167 50,000,000 591,781 - 6.00% - 3M 3,282,522 - 2,690,741 358,848 37,000 50,000,000 2,886,674 -
Bank Ltd.
Mercantile
9 40062 0363168 50,000,000 591,781 - 6.00% - 3M 2,498,788 - 1,907,007 296,903 37,000 50,000,000 2,164,885 -
Bank Ltd.
Mercantile
10 36015 0363832 - - 1,330,000 8.00% 119 6M - 34,689 34,689 - - - - 1,330,000
Bank Ltd.
Mercantile
11 07104 0364069 - - 2,404,315 8.00% 3 6M - 1,581 1,581 - - - - 2,404,315
Bank Ltd.
Total 339,333,518 6,082,865 3,734,315 22,451,044 2,884,658 19,252,836 2,345,104 159,000 229,140,023 24,194,838 109,679,912
FINANCIAL STATEMENTS OF SUBSIDIARIES
374 Mercantile Bank Limited
Annual Report 2019

MERCANTILE EXCHANGE HOUSE (UK) LIMITED Annexure-I

Company Information
For the year ended 31 December 2019

Directors : Morshed Alam, MP

A. S. M. Feroz Alam
Md. Quamrul Islam Chowdhury
Khoyruzzaman Khan

Registered Number : 07456837

Registered Office : 108 WHITECHAPEL ROAD,

LONDON
E1 1JD

Accountants : Jahan & Co

Chartered Management Accountants
22 Osborn Street, London
E1 6TD

Secretary : Khoyruzzaman Khan

Bankers : Barclays Bank

 FINANCIAL STATEMENTS OF SUBSIDIARIES

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Directors’ Report
For the year ended 31 December 2019

The directors present their annual report and the financial statements for the year ended 31 December 2019.

Principal activities
Principal activity of the company during the financial year was of financial intermediation.

Directors
The directors who served the company throughout the year were as follows:
Morshed Alam, MP
A. S. M. Feroz Alam
Md. Quamrul Islam Chowdhury
Khoyruzzaman Khan

Statement of Directors’ responsibilities

The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable
law and regulations and in accordance with United Kingdom Generally Accepted Accounting Practice.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected
to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial
Reporting Standard 102). Under company law the directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to :
Select suitable accounting policies and then apply them consistently
Make judgements and accounting estimates that are reasonable and prudent
State whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements and
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to
ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the company’s website. Legislation in the United Kingdom, governing the preparation and dissemination of financial
statements, may differ from legislation in other jurisdictions.
Each director who held office at the date of approval of this report confirms that: so far as the director is aware, there is
no relevant audit information needed by the company’s auditor in connection with preparing their report of which the
company’s auditor is unaware; and the director has taken all the steps that they ought to have taken as a director in order
to be aware of any relevant audit information and to establish that the company’s auditor is aware of that information .
This report was approved by the board and signed on its behalf.

Morshed Alam, MP A. S. M. Feroz Alam Md. Quamrul Islam Chowdhury Khoyruzzaman Khan
Director Director Director Director

Date approved: 16 January 2020

376 Mercantile Bank Limited
Annual Report 2019

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Accountants’ Report
For the year ended 31 December 2019

Chartered Management Accountants’ report to the board of directors on the preparation of the unaudited statutory
accounts MERCANTILE EXCHANGE HOUSE (UK) LIMITED for the year ended 31 December 2019.

In order to assist you to fulfil 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 2019 which comprise of the Profit
and Loss Account, the Balance Sheet and the related notes from the company’s accounting records and from information
and explanations you have given us.

As a practising member firm of the Chartered Institute of Management Accountants, we are subject to its ethical and other
professional requirements which are detailed at http://www.cimaglobal.com.

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 as detailed at http://www.cimaglobal.com.
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 profit
MERCANTILE EXCHANGE HOUSE (UK) LIMITED. You consider that MERCANTILE EXCHANGE HOUSE (UK) LIMITED is
exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the accounts of MERCANTILE EXCHANGE HOUSE (UK)
LIMITED. For this reason, we have not 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
16 January 2020
 FINANCIAL STATEMENTS OF SUBSIDIARIES

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Income Statement
For the year ended 31 December 2019

2019 2018
Notes
£ £
Turnover 320,223 199,769
Gross  profit 320,223 199,769
Selling and Distribution Costs (5,537) (2,200)
Administrative Expenses (250,786) (211,753)
Operating  Profit 2 63,900 (14,184)
Profit/Loss  on  ordinary  activities  before  taxation 63,900 (14,184)
Tax on profit on ordinary activities 5 (438) -
Profit/Loss  for  the  financial  year 63,462 (14,184)

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Statement of Financial Position
As at 31 December 2019

2019 2018
Notes
£ £
Fixed  assets
Tangible fixed assets 6 64,249 66,976
64,249 66,976
Current  assets
Debtors: amounts falling due within one year 7 57,605 41,507
Debtors: amounts falling due after one year 8 12,500 12,500
Cash at bank and in hand 60,144 15,541
130,249 69,548
Creditors:  amount  falling  due  within  one  year 9 (67,257) (72,744)
Net  current  assets 62,992 (3,196)

Total  assets  less  current  liabilities 127,241 63,780

Creditors:  amount  falling  due  after  more  than  one  year 10 - (340,000)
Net  assets 127,241 (276,220)

Capital  and  reserves

Called up share capital 11 340,000 1
Profit and loss account 12 (212,759) (276,221)
Shareholders  funds 127,241 (276,220)
For the year ended 31 December 2019 the company was entitled to exemption from audit under section 477 of the companies
act 2006 relating to small companies.
Directors’ Responsibilities:
1. The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476
2. The directors acknowledge their responsibilities for complying with the requirements of the companies act 2006 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 of Part 15 of the Companies Act 2006.

Signed on behalf of the board of directors

Morshed Alam, MP A. S. M. Feroz Alam Md. Quamrul Islam Chowdhury Khoyruzzaman Khan
Director Director Director Director

Date approved: 16 January 2020

378 Mercantile Bank Limited
Annual Report 2019

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Notes to the Financial Statements
For the year ended 31 December 2019

General Information

MERCANTILE EXCHANGE HOUSE (UK) LIMITED is a private company, limited by shares, registered in England and Wales,
registration number 07456837, registration address 108 WHITECHAPEL ROAD, LONDON, E1 1JD.
The presentation currency is £ sterling
1. Accounting Policies
Significant accounting policies
Statement of compliance
These financial statements have been prepared in compliance with FRS 102 - The Financial Reporting Standard
applicable in the UK and Republic of Ireland and the Companies Act 2006.
Basis of preparation
The financial statements have been prepared on the going concern basis and under the historical cost convention as
modified by the revaluation of land and buildings and certain financial instruments measured at fair value in accordance
with the accounting policies.

The financial statements are prepared in sterling which is the functional currency of the company.

Turnover

Turnover comprises the invoiced value of goods and services supplied by the company, net of Value Added Tax and
trade discounts.
Tangible fixed assets
Tangible fixed assets, other than freehold land, are stated at cost or valuation less depreciation and any provision for
impairment. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their
estimated residual value, over their expected useful lives on the following basis:
Fixtures and Fittings 5% Reducing Balance
Assets on finance lease and hire purchase
Assets held under finance lease or hire purchase contracts i.e. those contracts where substantially all the risks and
rewards of ownership have passed to the company, are included in the appropriate category of tangible fixed assets
and depreciated over the shorter of the lease term and their estimated expected useful lives.

Future obligations under such contracts are included in creditors net of the finance charge allocated to future periods.

2019 2018

£ £
2. Operating Profit

The operating profit is stated after charging:

Depreciation of tangible fixed assets 3,095 3,309

3. Directors’ Emoluments
One of the directors withdrew salary during the period. - -
4. Staff Costs
Wages and salaries 95,691 84,151
Pension costs, defined contribution plan 4,179 2,071
Other staff costs 4,018 1,528
103,888 87,750

Average number of employees during the year Number Number

Administration 2 2
Sales 4 4
6 6
 FINANCIAL STATEMENTS OF SUBSIDIARIES

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Notes to the Financial Statements
For the year ended 31 December 2019

2019 2018
£ £
5. Tax on profit on ordinary activities
UK Corporation Tax 438 -
438 -
6. Tangible fixed assets
Fixtures and Fittings Land and Buildings Total
Cost
£ £ £
At 01 January 2019 78,432 4,098 82,530
Additions 368 - 368
Disposals - - -
At 31 December 2019 78,800 4,098 82,898
Depreciation
At 01 January 2019 15,554 - 15,554
Charge for year 3,095 - 3,095
On disposals - - -
At 31 December 2019 18,649 - 18,649
Net book values
Closing balance as at 31 December 2019 60,151 4,098 64,249
Opening balance as at 01 January 2019 62,878 4,098 66,976
The net book value of Land and Buildings includes £4,098(2019 £4,098) in respect of assets leased under finance
leases or hire purchase contracts.
7. Debtors: amounts falling due within one year
Trade Debtors 53,094 -
Prepayments & Accrued Income 218 12,500
Other Debtors 4,293 29,007
57,605 41,507
8. Debtors: amounts falling due after one year
Other Debtors 12,500 12,500
12,500 12,500
9. Creditors: amount falling due within one year
Trade Creditors - 8,838
Amounts Owed to Group Undertakings 52,000 62,000
Corporation Tax 438 -
Accrued Expenses 12,499 -
Other Creditors 2,320 1,906
67,257 72,744
10. Creditors: amount falling due after more than one year
Amounts Owed to Group Undertakings - 340,000
- 340,000
11. Share Capital
Allotted - -
340,000 Class A shares of £1.00 each 340,000 1
340,000 1
12. Profit and loss account
Balance at 01 January 2019 (276,221)
Profit for the year 63,462
Balance at 31 December 2019 (212,759)
380 Mercantile Bank Limited
Annual Report 2019

MERCANTILE EXCHANGE HOUSE (UK) LIMITED

Detailed Income Statement
For the year ended 31 December 2019

2019 2018
£ £
Turnover
Remittance Commissions 173,451 107,933
ATM Commissions 2,680 3,427
Bank Interest - 4
Exchange Gains 106,253 56,984
Bureau De Change Gains 8,967 6,329
Rental Income 28,872 25,092
320,223 199,769
Gross Profit 320,223 199,769
Selling  and  Distribution  Costs
Advertising 5,537 2,200
(5,537) (2,200)
Administrative  Expenses
Wages & Salaries 95,691 84,151
Pension Contributions 4,179 2,071
Staff Training 2,202 43
Staff Welfare 1,816 1,485
Accountancy Fees 3,575 4,000
Legal and Professional Fees (Allowable) 5,790 5,657
Property Insurance - 1,233
Cleaning of Premises 1,325 -
Water, Gas & Electricity 6,615 4,846
Rent & Rates 58,782 57,816
Security Costs 346 403
General Travel Expenses 576 78
Bank Charges 56,968 35,334
Depreciation Charge: Fixtures & Fittings 3,095 3,309
Fees & Subscriptions 1,520 2,466
General Insurance 1,384 1,756
Computer Expenses 260 590
Repairs & Renewals 2,096 2,082
Stationery & Postage 1,200 1,445
Telephone, Fax & Internet 1,047 1,348
Compliance 812 1,640
Meeting Expenses 1,507 -
(250,786) (211,753)
Operating Profit 63,900 (14,184)
Tax  on  profit  on  ordinary  activities
UK Corporation Tax 438 -
(438) -
Profit/Loss  for  the  financial  year 63,462 (14,184)
 SUPPLEMENTARY

MBL
ALBUM

20th Annual General Meeting Half Yearly Business Conference 2019

International Women's Day Celebration-2019 Mercantile Bank Abdul Jalil Education Sholarship Awarding
Program

Donation to Assistance for Blind Children (ABC) MBL Sports- 2019

382 Mercantile Bank Limited
Annual Report 2019

MBL observes the National Mourning Day-2019 SME Fair- 2019

Inauguration Ceremony of 139th Arambag Branch Inauguration Ceremony of 140th Aftabnagar Branch

Inauguration Ceremony of 141st Bhedarganj Branch Inauguration Ceremony of 143rd Chandina Branch

Inauguration Ceremony of 144th Hajiganj Branch Inauguration Ceremony of 145th Rahimanagar Branch
 SUPPLEMENTARY

Inauguration Ceremony of 146th Senbag Branch Inauguration of 147th Goalabazar Branch

Inauguration Ceremony of 148th Satkhira Branch MOU Signing Ceremony between MBL & a2i

MOU signing Ceremony between MBL & Nagad Workshop on Comprehensive Risk Management

Workshop on Residual Risk Assessment Workshop on Guidelines for Internal Credit Risk Rating
System (ICRRS)
384 Mercantile Bank Limited
Annual Report 2019

MEDIA
HIGHLIGHTS
 SUPPLEMENTARY

ABBREVIATIONS

AC Audit Committee International Finanacial Reporting

IFRS
Standard
ALCO Asset Liability Committee IT Information Technology
ATM Automated Teller Machine LC Letter of Credit
BB Bangladesh Bank MBL Mercantile Bank Ltd
Banking Regulation and Policy
BRPD MBSL Mercantile Bank Securities Ltd
Department

CDM Cash Deporsit Machine NAV Net Assets Value

CRR Cash Reserve Ratio NPL Non performing Loan

CRAR Capital to Risk Weighted Assets Ratio NIM Net Interest Margin

CSR Corporate Social Responsibility NRB Non Resident Business

EC Executive Committee OBU Offshore Banking Unit

EPS Earning Per Share PCBs Private Commercial Banks

EVA Economic Value Added ROA Return on Assets

GDP Gross Domestic Product ROE Return on Equity

Institute of Chartered Accountants of SAM Special Assets Management

ICAB
Bangladesh
Internal Capital Adequacy Assessment SME Small and Medium Enterprise
ICAAP
Process
SLR Statutory Liquidity Ratio
ICCD Internal Control & Compliance Division

IAS International Accounting Standard

Note
 PROXY FORM

I/we, …………………………………………………………………………..........………………………………………………..................................................……………

of …………………………………………………………………………………………………………………….......................................................................................……………………

being a member of Mercantile Bank Limited do hereby appoint ………..………..........................…………………………………………………………

of ………………………………………………………………………………………………………………………….......................................................................................………………

as Proxy / Attorney in my absence to attend and vote for me and on my behalf at the 21st Annual General Meeting

of the Company to be held on June 24, 2020 at 11.00 am virtually by using digital platform through the link

http://mbl.bdvirtualagm.com and at any adjournment thereof.

As witness my hand this ……………………………………………………day of ………………………...……… 2020.

Revenue
Signature of Member Signature of Proxy
Stamp of Tk.
20

Folio No. ……………………………………………

BO No.

Note:
a. The “Proxy Form”, duly filled, signed and stamped at BDT 20 must be sent through email to share@mblbd.com not later than 48 hours before
commencement of the AGM.
b. Signature of the shareholders should agree with the specimen signature registered with the Company and Depository Register.

ATTENDANCE SLIP

I hereby record my attendance at the 21st Annual General Meeting of the Company being held on June 24, 2020 at
11.00 a.m. virtually by using digital platform through the link http://mbl.bdvirtualagm.com

Name of the member / Proxy , ……………………………………………………………………………………………………………..

Folio No. ……………………………………………

BO No.

Signature

Note: Please complete the attendance slip and sent through email to share@mblbd.com