MBL Annual Report 2012

All Shareholders
Bangladesh Securities and Exchange Commission

Registrar of Joint Stock Companies & Firms
Dhaka Stock Exchange Limited
Chittagong Stock Exchange Limited
Subject: Annual Report for the year ended on December 31, 2012
Dear Sir (s),
We are delighted to enclose a copy of the Annual Report 2012 together with the Audited Financial Statements including
Balance Sheet as at December 31, 2012 and Income Statement, Cash Flow Statement for the year ended on
December 31, 2012 along with notes thereon of Mercantile Bank Limited for kind information and record.
Yours sincerely,
S. Q. Bazlur Rashid
Senior Executive Vice President and
Company Secretary
Letter of Transmittal
OUR MENTOR
Md. Abdul Jalil, M.P
(January 21, 1941-March 6, 2013)
Founder Chairman
had a lot to say; lot to work
we will miss him
5 Notice of the 14th Annual General Meeting
6 Vision, Mission and Strategic Objectives
7 Core Values & New Technology
8 Corporate Philosophy
8 Corporate Priorities
9 Way Forward
9 Business Ethics
10 Code of Conduct
11 Corporate Profile
11 Credit Rating
12 MBL Milestones
13 Sponsors of the Bank
16 Board of Directors
17 Directors Profiles
24 Corporate Structure
25 Management Team
29 Head Office & Branch Network
37 Our Coverage
38 Performance Indicators
40 Graphical Presentation
43 Market Performance
44 Financial Calendar
45 Economic Impact Report
48 Segment Reporting
49 Message from the Chairman
53 Managing Director & CEOs Review
58 Sustainability Report
58 Employee Benefit
59 Directors Report
85 Disclosure on Basel II
99 CROs Report on Risk Management
103 Certificate Regarding Compliance of BSEC Notification
104 Directors Responsibility for Internal Control & Financial Reporting
105 Report on Corporate Governance
113 Compliance Report on BSEC Notification
121 Status of Compliance of Bangladesh Banks Guidelines
123 Report of Audit Committee
124 Media Highlights
125 Report on Corporate Social Responsibility
133 Report on Human Capital
136 MBL Album
141 CFOs Statement
143 Auditors Report
146 Signing of Financial Statements 2012
147 Financial Statements-MBL
221 Financial Statements-OBU
227 Financial Statements- MBSL
237 Financial Statements-Mercantile Exchange House (UK) Limited
245 Products
Table
of
Contents
Notice of the 14th Annual General Meeting
Notice is hereby given to all members of Mercantile Bank Limited (the "Company") that the 14th Annual General
Meeting of the members i.e. shareholders of the Company will be held on April 27, 2013, Saturday at 11.00 A.M. in the
Winter Garden at Ruposhi Bangla Hotel, Dhaka to transact the following business and adopt necessary resolutions:
Agenda:
01. To receive, consider and adopt the Profit and Loss Account of the Company for the year ended on December 31,
2012 and the Balance Sheet as at that date together with Reports of the Auditors and Directors thereon;
02. To declare Dividend out of the profits for the year ended on December 31, 2012;
03. To elect/re-elect Directors;
04. To appoint Auditors of the Company for the term until conclusion of the next Annual General Meeting and to fix
their remunerations;
05. To transact any other business with the permission of the Chair.
By order of the Board
S. Q. Bazlur Rashid
Dated: 07 April, 2013 Senior Executive Vice President and
Dhaka, Bangladesh Company Secretary
Notes:
(a) The Record Date was scheduled on the March 28, 2013 (Thursday).
(b) The Shareholders' name appearing in the Register of Members of the Company or in the Depository on the Record
Date will be eligible to attend the AGM and receive the dividend.
(c) Any member of the Company eligible to attend and vote at the General Meeting may appoint a proxy to attend and
vote on his/ her behalf.
(d) The Board of Directors have recommended 7% (Seven Percent) cash dividend and 8% (Eight Percent) stock
dividend for the year ended on December 31, 2012 to be considered in the AGM.
(e) The proxy form duly filled in and signed by the Member and stamped, must be submitted at the Registered Office
of the Company at least 72 hours before the meeting.
(f) Members are requested to notify the changes of address, if any, well in time. For BO Account Holders, the same
to be rectified through their respective Depository Participants.
www.mblbd.com
Vision, Mission and Strategic Objectives
Vision
would make finest corporate citizen
Mission
will become most caring, focused for equitable growth based on
diversified deployment of resources and nevertheless would
remain healthy and gainfully profitable bank
Strategic objectives
to increase shareholders value
to achieve economic value addition
to be market leader in product innovation
to be one of the top three financial institutions in Bangladesh in
terms of efficiency
to be one of the top five financial institutions in Bangladesh in
terms of market share in all significant market segments we
serve
Core Values
For the customers
providing with caring services by being innovative in the development of
new banking products and services
For the shareholders
increase shareholders value
For the employees
respecting worth and dignity of individual employees devoting their
energies for the progress of the bank
For the community
strengthening the corporate values and taking environment and social
risks and reward into account
New Technology
adopting the state-of-the art technology in banking operations
customer
service
shareholders
value
worth and
dignity of
employees
community
reward
www.mblbd.com
Corporate Philosophy
Our customers, employees and shareholders are equally important to us. We want to
achieve strong corporate growth through FINANCIAL INCLUSION. We provide solutions
at a minimum cost based on a high level of satisfaction of all segments of our customers,
thus also contributing to the prosperity of our employees and shareholders.
With a firm commitment to provide solutions, we are constantly developing innovative and
technologically advanced 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.
Corporate Priorities
Ensure customers satisfaction by meeting their demands with excellent customer services
Enlarge customers freedom by designing need based banking products and services
Manage credit risk by diversified loan portfolio with emphasis on SME and Agriculture financing
Mitigate different risks through efficient risk management techniques
Strengthen internal control and compliance system to establish a very systematic and effective compliant culture
Combination of skilled human resources and state-of-art technology in providing banking services
Focus on green banking by ensuring eco friendly financing
Corporate clients credit rating to remain compliant in terms of regulatory capital requirement
To be transparent, accountable and trustworthy in all aspects of our banking activities
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MBL believes that business ethics practices provides 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 Banks instructions while setting interest rates of
deposits and loans. It also keeps our interest spread (difference between interest rate charged on loans and
interest rate paid on deposits) at or below 5% as advised by Bangladesh Bank.
The bank offers quality services to its customers with the principles of warm friendship and mutual support. The
bank applies only those charges/ fees that are disclosed by the schedule of charges of the bank.
The bank keeps and safeguards the information of its customers in confidential and not discloses such
confidential information to others unless with the consent of the customers or as required by the law.
Business Ethics
Way Forward
We look forward to consolidate our position focusing on the followings:
More emphasis on SME financing
Achievement of agriculture credit target
All out efforts to improve deposits mix by procuring low cost and no cost deposits
Innovation of need based deposits and loans products and services
Incorporate technology based advanced products and solutions
To hire and retain qualified human resources according to need of the Bank
To continue and increase CSR activities
To remain compliant in the sprit of law and industry practice
www.mblbd.com
9 annual report
Salient principles 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
not accept any outside employment, honorary or stipendiary, or undertake part-time work in any office of profit
without prior written permission of the competent authority
not engage directly or indirectly in any commercial business, industry or other business pursuits or as agent of
others
not absent from duty, nor leave the station without first obtaining the permission of the competent authority in
writing
not make any personal representation to any director of the Board or any outside authority, to intervene on
his/her behalf in any matter
not accept or permit any member of his/her family to accept any gift or subscriptions from a constituent of the
Bank, any person likely to have dealings with the Bank, a subordinate employee or a candidate for employment
in the Bank
not participate in gambling and betting or any such activities
not make or permit any member of his/her family to make, any investment likely to embarrass or influence
him/her in discharging official duties
not invest money in the business of the Banks clients
not do any activity which may undermine the prestige or image of the Bank or making/ joining any organization
which is not permitted
not take part directly in any political activity and in any election to parliament or any local authority in
Bangladesh or elsewhere
Code of Conduct
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Corporate Profile
Background
Mercantile Bank Limited (MBL) incorporated as a public
limited company on May 20, 1999. Subsequently, it
commenced business on June 02, 1999 with a vision for
being finest corporate citizen. MBL enlisted in Dhaka
Stock Exchange (DSE) and Chittagong Stock Exchange
(CSE) on February 16, 2004 and February 26, 2004
respectively. MBL is the output of some visionary
entrepreneurs dream of contributing directly to the
economy by catering various banking needs to all
segments of people living home and abroad.
Principal Activities
MBL has been able to establish itself as a leading third
generation private commercial bank by dint of its prudent
policy guidelines coupled with proper execution, wider
range of banking products and excellent customer
services. The core activities of the Bank are to provide all
kinds of commercial banking services including deposits
mobilization, providing loans, discounting bills, foreign
exchange business, off-shore banking, treasury
function, card business and mobile banking. MBL cater
card services to its customers by VISA dual prepaid
card, VISA Dual Hajj Card, Credit Card and Debit card,
and International/Dual cards with various up-to-date
facilities. MBL is continuously expanding its ATM
network and inking contact with other banks with a view
to making its card service more attractive and
convenient to all. Except these, MBL is also providing
other services through its subsidiary companies.
Subsidiaries
MBL has 2 (Two) subsidiaries namely Mercantile Bank
Securities Limited (MBSL) and Mercantile Exchange
House (UK) Limited. MBSL formed on 27 June 2010 to
deal with stock dealing and broking. MBSL started its
commercial operation on September 14, 2011 through
obtaining stock dealer and broker license from
concerned authorities.
Mercantile Exchange House (UK) Limited, another
subsidiary company of MBL incorporated as private
limited company on December 01, 2010. It commenced
its business operation at Birmingham in UK on
December 06, 2011. Currently, it is operating with two
branches, one in Birmingham and another in London
with a view to providing faster, easier and safer
remittance services to the Bangladeshi expatriates
working in UK.
Network
MBL has broad network coverage across the country. It
has 86 (Eighty Six) branches including 5 (Five)
SME/Krishi branches as on December 31, 2012. The
Bank has 2 (Two) Off-shore Banking Units operating at
Gulshan and Chittagong EPZ areas. MBL has 115 ATM
booths as on December 2012 covering important
business centers. Mercantile Bank Securities Limited
(MBSL), a subsidiary company of MBL dealing with
stock dealing and broking has 7 (seven) branches
across the country. Mercantile Exchange House (UK)
Limited, another fully owned subsidiary company of MBL
is facilitating inflow of remittance with 2 (two) branches in
Birmingham and London, UK.
Capital Base
MBL is maintaining strong capital adequacy ratio as per
new risk based capital adequacy framework i.e. Basel II.
Capital adequacy ratio of the Bank remained far above
compared to minimum requirement as on December 31,
2012. The Bank has taken numerous initiatives including
issuance of bonus shares, right shares, retention of
profit, corporate clients rating etc in a bid to attain strong
capital adequacy ratio.
Shareholding Composition
Total 611,075,316 ordinary shares of the Bank were
outstanding as on December 31, 2012. Share holding
position as on same date is as under:
Credit Rating
MBL has strong and stable credit rating over the last
couple of years. Credit Rating Information and Services
Limited (CRISL) has reaffirmed the long term rating of
MBL to AA- and short term rating to ST-2 based on its
financial up to December 31, 2011 and other qualitative
and quantitative information up to the date of rating.
*Rating for 2012 is in process
Total 611,075,316 100.00
December Capital Adequacy Minimum
2012 Ratio (CAR) Requirement
Solo 10.83% 10.00%
Consolidated 10.87% 10.00%
Composition
Basis of
Information
Outlook Stable
Rating
Rating
Company
Long Term Short Term
Ownership
Number of Shares % of Total Shares
www.mblbd.com
11 annual report
MBL Milestones
May 20, 1999 Incorporation of the Bank
June 02, 1999 Commencement of Business
October 29, 2000 Opening of 10th Branch
July 03, 2002 Opening of 15th Branch
June 30, 2003 Publication of Prospectus for IPO
October 21-22, 2003 Subscription for Shares
December 24, 2003 Opening of 20th Branch
February 16, 2004 Listed in Dhaka Stock Exchange
February 26, 2004 Listed in Chittagong Stock Exchange
December 29, 2004 Opening of 25h Branch
November 24, 2008 Opening of 42nd Branch
June 06, 2009 Mercantile Bank Brokerage House Operation
October 22, 2009 Opening of 45th Branch
March 20, 2011 Commencement of Off-shore Banking Unit
September 14, 2011 Separate Operation of Mercantile Bank Securities Limited (MBSL)
December 06, 2011 Opening of Mercantile Exchange House (UK) Limited, Birmingham Branch
September 20, 2012 Opening of Mercantile Exchange House (UK) Limited, London Branch
12 annual report
whose dreams, aspirations and
efforts came into reality
(Deceased)
Md. Anwarul Haque
Dr. Toufique Rahman
Chowdhury
Golam Faruk Ahmed
(Deceased)
Engr. Mohd. Monsuruzzaman Md. Mizanur Rahman
Chowdhury
Alhaj S.M. Shakil Akhter
Alhaj Tara Meah Khan
(Deceased)
Subrota Narayan Roy
Sponsors of the Bank
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13 annual report
M. S. Ahsan Jamshed R Khan
(Deceased)
Alhaj Akram Hussain
(Humayun)
Bilkis Begum Md. Tabibul Huq
A. S. M. Feroz Alam M. Amanullah Md. Abdul Hannan Mohd. Selim
Sponsors of the Bank
14 annual report
Nargis Anwar Md. Nasiruddin Choudhury
Morshed Alam Morzina Khan Monzu Md. Shahabuddin Alam Jalaluddin Ahmed Yeamin
A. K. M. Shaheed Reza
Feroza Begum S. M. Shafiqul Islam
(Mamun)
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15 annual report
Chairman
Alhaj Akram Hussain (Humayun)
Vice-Chairman
A. S. M. Feroz Alam
Directors
Md. Anwarul Haque
R. A. Howlader
M. S. Ahsan
Md. Tabibul Huq
M. Amanullah
Md. Abdul Hannan
Mohd. Selim
Morshed Alam
Md. Shahabuddin Alam
Alhaj Mosharref Hossain
Saber Hossain Chowdhury, M.P
Managing Director & CEO
M. Ehsanul Haque
Board of Directors
Chairman
Alhaj Akram Hussain (Humayun) was born on July 1,
1952 in a respectable Muslim family of Dagonbhuiyan,
Feni. He is a commerce graduate and one of the known
Freedom Fighters of Bangladesh Liberation War. He is
the Founder President of Bangladesh Paper Importers
Association and also Founder President of Greater
Noakhali Paper Merchant Somity. Apart from the
aforementioned affiliations, he is also General Body
Member of FBCCI, Bangladesh, member of Trustee
Board of Feni University and Founder Member of All
Community Club, Dhaka.
Mr. Hussain is a well known philanthropist for his
outstanding contribution for the betterment of the
society. Among his various affiliations the notable ones
are Founder and present Chairman of Managing
Committee, Rajapur High School and College; Founder
and present Chairman of Managing Committee of
Shindurpur Khaja Ahmad Biddya Niketon. He is the
Founder of Al-haj Shamsul Haque Miyah Adarsha
Academy and Shakentapur Primary School. He is life
member of Feni Heart Foundation and Feni Diabetic
Somity. His business affiliations are Chairman of FARS
Group of Company, Chairman & Managing Director of
Fars Holdings & Associates Ltd.; Fars Hotels & Resorts
Ltd.; Akram Traders; Pubali Paper Stores; Indigo
Packing & Accessories.
Directors Profiles
Mr. A. S. M. Feroz Alam was born on December 01, 1960 in a respectable Muslim
family of Patuakhali. He is a renowned businessman of the country.
He has traveled about 65 countries for business purpose and can speak in seven
languages. He is the Managing Director of Bengal Trading Limited (Japan). He is
Sponsor Director of Premier Leasing & Finance Ltd. and Chairman of Premier
Leasing Securities Ltd. He is the Director of National Television Ltd. (RTV).
A. S. M. Feroz Alam
Vice Chairman
Mr. Md. Anwarul Haque was born on January 03, 1951 in a respected Muslim
family in Dhaka. He is a renowned businessman of the country. He obtained the
B.Sc. Engg (Civil) Degree and is engaged in business since last 36 years in
different sectors like Construction, Real Estate, Export & Import and Trading. His
business affiliation is versatile and diversified. He is the Managing Director of
Living Plus Ltd. He is the Director of Premier Leasing & Finance Ltd., Holiday
Travels Ltd, Premier Leasing Securities Ltd. and Mercantile Bank Securities Ltd.
He is also Director of Securities Broking & Management Ltd. He is a Shareholder
& Ex Chairman of Global Insurance Ltd. His association with the abovementioned
well-reputed 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.
Md. Anwarul Haque
Chairman, Executive Committee
R. A. Howlader
Chairman, Audit Committee
Mr. R. A. Howlader was born in Barisal. After completion of B. Com. (Hons) from
Dhaka University, he joined United Bank Limited in 1962 as Probationary Officer
Grade-II. After liberation, United Bank Limited was nationalized in 1972 in the
name of Janata Bank wherein Mr. Howlader held different important positions till
1983, the last being Deputy General Manager, In-charge of International Division.
Mr. Howlader was the Managing Director of National Bank Limited for about eight
and half years. Mr. Howlader was also the Chairman of Global Insurance Limited.
He was also the Chief Advisor of Global Insurance Limited for about six years. Mr.
Howlader is now the Chairman of Delta Spinners Limited. He is the founder
President of Al-haj Hazrat Ali Degree College which was established in 1987. His
innovative ideas, financial acumen, dynamic leadership made him a popular and
pleasant personality in the banking sector of the country.
Directors Profles
18 annual report
M. S. Ahsan
Director
M. Amanullah
Director
Mr. M. S. Ahsan was born on June 01, 1960 in a respectable Muslim family of
Begumgonj, Noakhali. Mr. Ahsan obtained the Master Degree from Dhaka
University. He has established himself as an icon in the business sector of the
country and the proud owner of the Ahsan Group. He is also the Chairman of AG
Property Development, AG Agro Industries, Regent Holding Development Ltd.,
Capital Holding and Development Corporation, AG Pet Ltd., Shawdesh Builders
Ltd., Home Apparels Ltd., Raima Fashion Ltd., AG Ceramics Ltd., RNS
Corporation and Friends Traders. He is the Director of National Credit Ratings
Ltd. Currently he is the Chairman of Mercantile Bank Securities Limited. Mr.
Ahsan is also actively associated with many other Educational and Social
Institutions as donor/ founder.
Mr. Md. Tabibul Huq was born on August 19, 1952. He obtained Bachelor of
Science in Electrical Engineering from BUET in 1975 (Session 1972-73). He
joined Bangladesh Army and passed out from BMA in February 1976. He was
awarded the Chief of Army Staffs cane for outstanding performance in BMA. He
served for 4 years in Bangladesh Army and was released as Captain. During
Army service, he obtained higher training in telecommunication equipment on
1977 in Germany. He served in East Malaysia as transmission engineer in Hydro
Electric power project in 1979-80. He obtained management training in Europe.
Started own business in 1981 and established Creative Engineers Ltd. of which,
he is the Managing Director & presently enjoying franchise of Schindler and
Escalators from Switzerland, MAAN, B&W Diesels Ltd. of Germany and U.K. At
present, he is employer of more than 400 people including management &
non-management staff. He is also Managing Director of Creative Paper Mills
Limited, producing 200TPD of white writing & printing and craft linear, which has
gone into production from January 2013.
Md. Tabibul Huq
Director
Mr. M. Amanullah was born in a respectable Muslim family of businessmen in Dhaka. He
graduated from a renowned University of Dhaka. He is one of the distinguished industrialists
and entrepreneurs in Bangladesh. He is the Chairman of Aman Group of Companies and also
holds the Chairman position of all the companies under' the umbrella of Aman Group of
Companies Limited. His business acumen has lead to the successful launch of various,
diversified businesses under the umbrella of Aman Group of Companies.
In the textile sector Mr. Aman set up a manufacturing unit in the name of Aman Spinning Mills
Ltd., which manufactures 100% export oriented carded yarn from raw cotton. Mr. Aman
introduced Arena HRI Ltd., which is an India-Bangladesh joint venture in the field of cosmetic
industry and is one of the leading manufacturer of Hair Care products in Bangladesh. Mr.
Aman also introduced Arena Industries Ltd., engaged in industrial contract-packaging,
Mousumi Enterprises Ltd. and Arena Consumer Products Ltd., for distribution and
manufacture of consumer products. Mr. Aman also introduced Arena Securities Ltd. in the
financial sector which is a member of Dhaka Stock Exchange and registered as a corporate
house for operation in the capital market of the country. He is one of the Directors of "Amader
Shomoy', one of top circulating daily print media in Bangladesh. He is one of the founders,
Director and Ex Chairman & present Advisor of Global Insurance Ltd., a publicly listed general
insurance company.
Mr. Aman is also recognized for his contribution to the community and to the nation in the field
of education. He is one of the members of the Board of Trustee of the Presidency University,
Dhaka. For the contribution to the society, as a philanthropist Mr. Amanullah established
"Aman Group Foundation" as his initiative towards social responsibilities. For this act, he was
honored several times by the Govt. and other organizations. He was awarded the Sarojini
Naidu Gold Medal Award in 2000, C.R. Das Gold Medal Award in 2002 and the Atish Dipankar
Scholar Congress Award in 2004 for his extraordinary contribution in various sectors of
Bangladesh.
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19 annual report
Mr. Morshed Alam is one of the most renowned & widely known business and
industrial entrepreneur of the country. He was declared CIP for the year 1996-97,
2000-01 & 2009-10 by the Ministry of Commerce, Government of the Peoples
Republic of Bangladesh, for his remarkable contribution in business arena. He
has also been awarded National Export Trophy for Exports for the year 1997-98,
2006-07 and also for 2009-10.
With perception and technical expertise he has become a leading entrepreneur of
the country. He is founder of the Bengal Group of Industries, which consists of
Bengal Plastic Industries Ltd., Bengal Poly Paper Sack Ltd., Bengal Overseas
Corporation Ltd., Bengal Chemical & Synthetic Products Ltd., Romania Food &
Beverage Ltd., Bengal Adhesive & Chemicals Products Ltd., Bengal Concept &
Holdings Ltd., Power Utility BD Ltd., Romania Agrovat Ltd., Bengal Windsor
Thermoplastic Ltd., Bengal Corrugated Carton Ind Ltd., Poly Cord Ltd., Bengal
Polymer Wears Ltd. and Bengal Multimedia Ltd. He is the Chairman of RTV and
Director of Desh General Insurance Company Ltd., Director of United Hospital
Ltd., Director of Peoples University of Bangladesh and also Chairman of
Executive Committee of National Life Insurance Company Ltd. Mr. Alam is a
philanthropist. He is the founder of Morshed Alam High School at Nateswar,
Noakhali, life donor of Kazi Nagar Madrasha and Bazra High School at Noakhali
and Motijheel Ideal High School, Dhaka.
Morshed Alam
Director
Mr. Mohd. Selim is a renowned businessman of the country. He was born in a
respectable Muslim family in Shariatpur District. He has specialized himself in
trading business. After graduation he devoted himself fully to business and he is
the proprietor of Sumon Cloth Store, a large cloth store in Ramna Bhaban,
Dhaka and also proprietor of Central Plaza at Eastern Plaza. He is the Chairman
of Synthia Securities Limited (Member of Dhaka Stock Exchange Limited). He is
the Sponsor of Global Insurance Limited. He has also made notable contribution
in socio-cultural activities. He is life member of Shariatpur Zilla-Kalyan Samity, life
member of Greater Faridpur Kalyan Samity, trustee member, Shariatpur Shikhha
Kalyan Trust, Vice Chairman of Bangladesh Shop Owners Association and
Donor Member of Purba Madaripur College.
Mohd. Selim
Director
Md. Abdul Hannan
Director
Mr. Md. Abdul Hannan was born on 27th July, 1962 in a respectable Muslim
family at Faridgonj, Chandpur. He is one of the leading businessmen of the
country, especially in export of readymade garments. He is Director of Dabstar
Associates Limited, Reu Fashion Limited, ZHAS Garments Limited, M.H. Trading
and Murad Apparels Limited. He is also Director of Eastern University of
Bangladesh and Pan Pacific Hospital. His contributions towards the society are
quite remarkable.
Directors Profles
20 annual report
Director
Mr.Md. Shahabuddin Alam is one of the renowned entrepreneurs of the country.
He comes from a respectable Muslim family of South Halishahar, Chittagong. He is
the Chairman of S.A. Group of Industries which consists of S.A. Oil Refinery Ltd.,
Shamannaz Super Oils Ltd., Kamal Vegetable Oils Ltd., Sharija Oil Refinery Ltd.,
South Eastern Oil Refinery Ltd., Laila Vanaspati Products Ltd., Shamannaz
Condensed Milk Ltd., Shamannaz Dairy & Food Products Ltd., S.A. Consumer
Products Ltd., S.A. Salt Industries Ltd., S.A. Beverage Ltd., S.A. Pulp & Paper
Products Ltd., Sharija Cement Ltd., South Eastern Paper Mills Ltd., S.A. Properties
Ltd., S.A. Power Generation Ltd., South Eastern Tank Terminal Ltd., S.A. Telecom
System Ltd., Laila Oil Refinery Ltd., Laila Food Products Ltd. and Sharija
Navigation Ltd.
His contributions towards the society are quite remarkable. He is the Vice
Chairman of Bangladesh Vegetable Oil Refiners & Vanaspati Manufacturers
Association, Member of Chittagong Club Ltd., Chittagong Boat Club, Chittagong
Senior Club, Chittagong Samity, Dhaka, Lions Club of Chittagong City and Lions
Blood Bank. He is also a widely traveled person and visited USA, UK, KSA,
Thailand, Singapore, Malaysia, Hong Kong, India, Holland etc.
Alhaj Mosharref Hossain was born on January 07, 1940 in a respectable Muslim
family at Chhagalnaya, Feni. He had his schooling in the local educational
institutions.
Alhaj Mosharref Hossain is one of the leading businessmen of the country,
especially in trading. He is the Proprietor of M. H. Traders, a renowned business
house engaged in paper trading. Apart from being a businessman of repute he is
also a prominent personality in Bangladesh. He is also a Director of Toka Ink (BD)
Ltd. and Managing Director of Bulbul Printers. He is the Founder and Director of
Hossainya Hefje Quaran Madrasa & Atimkhana, Chhagalnaya, Feni.
Director
Mr. Saber Hossain Chowdhury is the Group Managing Director of Karnaphuli. He enjoys
wide recognition and reputation as a dynamic individual having a flair for creativity with a
high level of integrity and social responsibility. He has been elected for four successive
times as Member of the Board of Directors of Mercantile Bank Limited, a third generation
Bank that has an impressive record. Under his able stewardship and taking of strategy
policy decisions in close consultations with the Group Founder Chairman, Karnaphuli is on
the path to becoming one of the very top business houses in the country by transitioning
from a first generation family based company to a second generation corporate institution.
Expansion and consolidation of Karnaphulis existing businesses and venturing to new
areas of opportunity such as launching of a global satellite Bangla Television Channel as
well as embarking on Bangladeshs single largest apartment development project ever
typifies his style and energy.
Director
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21 annual report
M. Ehsanul Haque, is a senior banker with thirty three years experience in the
banking and finance industry and financial advisory services. After completing
Masters in Economics from Jahangirnagar University, he started his career as a
Management Trainee in Grindlays Bank, subsequently ANZ Grindlays Bank (now
Standard Chartered Bank). Mr. Haque worked in other local private and
multinational banks and financial institutions in various capacities including last
ten years as Managing Director and CEO. Prior to joining Mercantile Bank
Limited, he was the Managing Director of Prime Bank, Infrastructure
Development Company Ltd. (IDCOL), BRAC Afghanistan Bank, BRAC Bank and
Trust Bank. He trained in Australia, worked in India, Vietnam and Afghanistan
and has been exposed to global best practices in banking and finance. This was
through his association with banks at home and abroad and in his dealing with
multilateral agencies.
His banking skills are in the areas of loan assessment of Corporate/ Commercial,
SME, Retail Banking, audit /internal control, product development, banking
operations etc. Other skills include new organization set-up, access to finance for
various sectors in developing countries, financial consultancy and advisory
services.
M. Ehsanul Haque
In the field of public service, Mr. Chowdhury has already excelled at a relatively young age.
Elected as a Member of Parliament from Dhaka-6 (Motijheel-Shobujbagh) in 1996, He was
the youngest member of the Awami League Cabinet 1996-2001 initially held the portfolio
of Deputy Minister, Ministry of Shipping and put in process initiatives and action plans
which began the transformation of Chittagong Port. He was thereafter re-assigned to Local
Government, Rural Development & Co-operatives- a frontline and important development
Ministry where he broke new ground and set higher standards.
A firm believer in and defender of basic liberties, rights and individual freedom, he was,
between October 2002 to January 2003, subject to terms of detention and imprisonment.
Amnesty Intl adopted and recognized him as a Prisoner of Conscience and launched a
series of Urgent Actions campaigning for his release. This was eventually secured
through directives from the High Court which ruled detentions and imprisonments to have
been without lawful authority. As a Member of Parliament, he successfully launched a
number of novel community initiatives in his constituency linked to healthcare, medical
insurance, environment, youth training, awareness building and self help programmers.
Mr. Chowdhury has been re-elected as a Member of Parliament in December 2008 for a
further term of five years and is an influential Member of Parliamentary Standing
Committee on Environment. He has also initiated a number of Private Member Bills. An
active parliamentarian, he is also Chairman of Bangladesh Parliaments Party All Group on
Climate Change and Environment.
Directors Profles
22 annual report
we mourn
sad demise of our beloved ones
Golam Faruk Ahmed
April 7, 1953 - January 26, 2013
January 21, 1941-March 6, 2013
Alhaj Tara Meah Khan
August 30, 1931-March 16, 2010
Jamshed R Khan
July 10, 1943-August 29, 2008
Dr. Matiur Rahman, M.P
January 11, 1946 - September 13, 2012
Shamsur Rahman
January 25, 1933-January 02, 2012
Corporate Structure
Audit Committee
R. A. Howlader, Chairman
Md. Tabibul Huq, Member
Md. Abdul Hannan, Member
Alhaj Mosharref Hossain, Member
Saber Hossain Chowdhury, M.P, Member
M. Ehsanul Haque
Chief Risk Officer
Md. Abdul Jalil Chowdhury
Chief Financial Officer
Monindra Kumar Nath
Company Secretary
S. Q. Bazlur Rashid
Auditors
Khan Wahab Shafique Rahman & Co.
Chartered Accountants
K. M. Hasan & Co., Chartered Accountants
Tax Advisor
K. M. Hasan & Co., Chartered Accountants
Board of Directors
Alhaj Akram Hussain (Humayun), Chairman
A. S. M. Feroz Alam, Vice Chairman
Md. Anwarul Haque
R. A. Howlader
M. S. Ahsan
Md. Tabibul Huq
M. Amanullah
Md. Abdul Hannan
Mohd. Selim
Morshed Alam
Executive Committee
Md. Anwarul Haque, Chairman
M. S. Ahsan, Member
M. Amanullah, Member
Mohd. Selim, Member
Morshed Alam, Member
Md. Shahabuddin Alam, Member
24 annual report
Additional Managing Director & CRO
Monindra Kumar Nath
Additional Managing Director & CFO
M. A. Yousuf Khan
Deputy Managing Director
Choudhury Moshtaq Ahmed
Md. Quamrul Islam Chowdhury
M. Ehsanul Haque
Management Team
www.mblbd.com
25 annual report
Management Committee (MANCOM)
From left to right
Md. Sayeed Hossain EVP & Head of ICCD Member
S. Q. Bazlur Rashid SEVP & Company Secretary Member
M. A. Yousuf Khan Deputy Managing Director Member
Monindra Kumar Nath Additional Managing Director & CFO Member
M. Ehsanul Haque Managing Director & CEO Chairman
Md. Abdul Jalil Chowdhury Additional Managing Director & CRO Member
Choudhury Moshtaq Ahmed Deputy Managing Director Member
A. K. M. Atiqur Rahman EVP & Head of Risk Management Division Member
28 annual report
Head Office & Branch Network
Head Office
61 Dilkusha Commercial Area
Dhaka-1000, Bangladesh
PABX : 9559333, 9553892
Fax : 88-02-9561213
Swift : MBLBBDDH
E-mail : mbl@bol-online.com
Website: www.mblbd.com
Zonal Office
Chittagong Zone
Mishkat Arcade
21/1 Agrabad C/A, Chittagong
Phone : 031-2529445, 716421, 723181, 721772
Fax : 88-031-2529445
Abdullah Md. Zaki Hasan, EVP
Training Institute
Swadesh Tower
41/6 Purana Paltan, Dhaka-1000
Phone: 7174016, 7172282,
Fax : 88-02-9571096
Rabiul Hussain, Principal
Divisions at Head Office
Board Audit Division
Md. Abdus Salam, SEVP
Board, Share & HR Division
S. Q. Bazlur Rashid, SEVP
Credit Risk Management Division
Mohammad Ismail, SEVP
Credit Administration, Monitoring,
Recovery & Compliance Division
Khandakar Fahim Uddin Ahmed, EVP
SME Financing Division
Md. Sadruzzaman, EVP
Internal Control & Compliance
Division
Md. Sayeed Hossain, EVP
Card, Consumer & Retail Banking
Division
Javed Islam, EVP
IT Division
Md. Rafiqul Hoque Bhuiyan, EVP
General Services Division
Dr. Md. Nurul Islam, EVP
International Division
Shamim Ahmed, EVP
Risk Management Division
A.K.M. Atiqur Rahman, EVP
Research & Planning Division
Md. Shafiet Wahed, SVP
Financial Administration Division
Md. Golam Kibria, FCA, SVP
General Banking Division
Shah Syed Abdul Bari, SVP
Corporate Banking Division
Mohammad Iqbal Rezwan, SVP
NRB Division
Md. Nurul Haque Gazi, VP
Public Relations & Branches
Division
K. M. Abdur Razzaque, VP
Mobile Banking Division
Farhad Malik, VP
Marketing Division
Purbani Roy, VP
Treasury Division
Jahangir Javed, FVP
Agriculture Credit Department
Liaquat Fazlur Rashid, FVP
DHAKA DIVISION
Main Branch
61 Dilkusha C/A, Dhaka-1000
Phone : 02-9571618, 9559333
Mobile : 01711-722925
Fax : 88-02-9554410, 9551497
HOB: Md. Quamrul Islam Chowdhury, DMD
Dhanmondi Branch
Sima Blossom, House- 390 (Old)
03 (New), Road- 27 (Old), 16 (New)
Dhanmondi R/A, Dhaka -1209
Phone : 02-8124234, 9130500, 9142691
Mobile : 01755-500192
Fax : 88-02-8126768
HOB: Syed Ahmadul Karim, SEVP
Kawran Bazar Branch
Dhaka Trade Centre
99 Kazi Nazrul Islam Avenue
Kawran Bazar C/A, Dhaka- 1215
Phone : 02-8189613, 8153414, 8141910
Mobile : 01711-535946
Fax : 88-02-8126882
HOB: Md. Mahmood Alam Chowdhury, EVP
Joypara Branch
Samabay Super Market
Joypara Bazar, Dohar, Dhaka
Phone : 02-7768193, 7768163
Mobile : 01711-535949
Fax : 88-02-7768193
HOB: Md Shahidul Alam, AVP
Banani Branch
Awal Centre, 34 Kemal Ataturk Avenue
Banani C/A, Dhaka-1213
Phone : 02-9821046, 9821639-40
Mobile : 01711-535942
Fax : 88-02-9821046
HOB: Ahmedul Haque, EVP
Board Bazar Branch
Board Bazar, Gazipur
Phone : 02-9291604
02-9293639
Mobile : 01713-067012
Fax : 88-02-9291660
HOB: Md. Delwar Hossain, FVP
www.mblbd.com
29 annual report
Nayabazar Branch
25/1 Zinda Bahar (1st Lane)
Nayabazar, Dhaka-1100
Phone : 02-7393827, 7393655
Mobile : 01711-535956
01713-193961
Fax : 88-02-7393655
HOB: Abu Syed Md. Mohiuddin, VP
Mohakhali Branch
Green Delta Aims Tower
51-52 Mohakhali C/ A, Dhaka-1212
Phone : 02-9863215, 9888346
9891520, 9860094
Mobile : 01730-318188
Fax : 88-02-9895797
HOB: Md. Zakir Hossain, EVP
Mirpur Branch
Razia Plaza, 184 Senpara Parbata
Begum Rokeya Sarani
Mirpur - 10, Dhaka- 1216
Phone : 02-9014582, 9008852, 9015661
Mobile : 01711-535955
Fax : 88-02-8034577
HOB: F . M. Nawaz Ali, SVP
Ashulia Branch
Bhuiyan Commercial Complex
Jamgara Chowrasta, Ashulia
Savar, Dhaka
Phone : 02-7788757, 7790708
Mobile : 01711-535948
Fax : 88-02-7790708
HOB: Md. Ata Rabbani Chowdhury, VP
Uttara Branch
House- 10/A, Road- 7/D, Sector- 9
Uttara Model Town, Uttara, Dhaka-1230
Phone : 02-8931729, 8955879
8958244, 8931725
Mobile : 01711-535950
Fax : 88-02-8955881
HOB: Md. Abdul Halim, VP
Elephant Road Branch
Osman Plaza
75 Elephant Road, Dhaka-1205
Phone : 02-9614541, 9677364
9614542, 8618732
Mobile : 01713-044832
Fax : 88-02-9669458
HOB: Md. Kamruzzaman, VP
Motijheel Branch
Malek Mansion
128 Motijheel C/A, Dhaka-1000
Phone : 02-9561178
7161923-4
Mobile : 01730-320284
Fax : 88-02-7161925
HOB: A B M Eradul Islam, SVP
Motijheel Branch
Malek Mansion
Phone : 02-9561178
7161923-4
Mobile : 01730-320284
Fax : 88-02-7161925
Motijheel Branch
Malek Mansion
Phone : 02-9561178
7161923-4
Mobile : 01730-320284
Fax : 88-02-7161925
Satmasjid Road Branch
House- 735 (Old), 82/A (New)
Road- 8/A (New), Satmasjid Road
Dhanmondi R/A, Dhaka-1209
Phone : 02-8114672, 9141148
Mobile : 01713-084074
Fax : 88-02-9139183
HOB: Kawser Uddin Ahmed, SVP
Phone : 02-8114672, 9141148
Mobile : 01713-084074
Fax : 88-02-9139183
Phone : 02-8114672, 9141148
Mobile : 01713-084074
Fax : 88-02-9139183
Konabari Branch
Matiur Rahman Plaza
Konabari Bazar, Konabari
Joydevpur, Gazipur
Phone : 02-9298484-5
Mobile : 01713-044846
Fax : 88-02-9298486
HOB: Md. Abul Bashar Khan, FVP
Konabari Branch
Matiur Rahman Plaza
Joydevpur, Gazipur
Phone : 02-9298484-5
Mobile : 01713-044846
Fax : 88-02-9298486
Konabari Branch
Matiur Rahman Plaza
Joydevpur, Gazipur
Phone : 02-9298484-5
Mobile : 01713-044846
Fax : 88-02-9298486
Motijheel Branch
Malek Mansion
Phone : 02-9561178
7161923-4
Mobile : 01730-320284
Fax : 88-02-7161925
Phone : 02-8114672, 9141148
Mobile : 01713-084074
Fax : 88-02-9139183
Konabari Branch
Matiur Rahman Plaza
Joydevpur, Gazipur
Phone : 02-9298484-5
Mobile : 01713-044846
Fax : 88-02-9298486
Gulshan Branch
Hosna Center
106 Gulshan Avenue, Dhaka-1212
Phone : 02-9897879, 8835276, 8835277
Mobile : 01730-047977
Fax : 88-02-8835614
HOB: Md. Nazrul Hossain, SEVP
Hemayetpur Branch
Hatem Ali Complex, Singair Road
Hemayetpur, Savar, Dhaka-1340
Phone : 02-7741532, 7741533
Mobile : 01713-083617, 01713-452995
Fax : 88-02-7741531
HOB: Md. Fakhruzzaman Chowdhury, FVP
Bijoynagar Branch
Akram Centre, 212, S.S. Nazrul Islam
Sarani, Paltan, Dhaka - 1000
Phone : 02-7117830, 7117834
Mobile : 01713-068127
Fax : 88-02-7117114
HOB: Shah Md. Sohel Khurshid, SVP
Moghbazar Branch
227 Outer Circular Road
Moghbazar, Ramna, Dhaka
Phone : 02-8333017, 8316279, 8333016
Mobile : 01711-643281, 01713-068194
Fax : 88-02-8333018
HOB: Ahsanul Haq Chowdhury, SVP
Bhojeshwar Bazar Branch
Kazi Plaza, Bhojeshwar Bazar
Naria, Shariatpur
Mobile : 01713-384497
01730-048067
HOB: M.M. Rafikul Islam , FAVP
Green Road Branch
151/6 Green Road, Dhaka
Phone : 02-8157366, 9136809, 9136822
Mobile : 01730-013453
Fax : 88-02-9114108
HOB: Md. Abdul Awal, VP
Engineers' Institution Branch
IEB Bhaban, 8/A Ramna
Dhaka-1000
Phone : 02- 7110651, 7110684
Mobile : 01713-199801
Fax : 88-02-7110610
HOB: Mohammad Faruque Ahmmed, AVP
Mazar Road Branch
Hazrat Shah Ali Girls High School
& College Market Complex
Mazar Road, Mirpur-1, Dhaka-1216
Phone : 02-8060752, 8035539, 9014395
Mobile : 01730-328681
Fax : 88-02-8035529
HOB: Md. Moshaddeque Hossain, VP
Pragati Sarani Branch
Green Orlando, 42/4 Pragati Sarani
Baridhara, Dhaka-1229
Phone : 02-8411503, 8411501
Mobile : 01730-318186
Fax : 88-02-8411504
HOB: Farook Iqbal, VP
Head Ofce & Branch Network
30 annual report
Narayanganj Branch
H R Plaza, 64 (Old), 90 (New)
Bangabandhu Road, Narayanganj
Phone : 02-7648241, 7648243
Mobile : 01713-202431
Fax : 88-02-7648244
HOB: A.K.M. Hassanuzzaman, FVP
Demra SME/Krishi Branch
Matuail New Market Bhaban
Konapara, Demra, Dhaka-1362
Phone : 02-7542904, 7542911
Mobile : 01730-340795, 01714-075533
Fax : 88-02-7542904
HOB: Md. Rezaul Karim, AVP
Mymensingh Branch
Ali Plaza, 64 Choto Bazar
Mymensingh
Phone : 091-63313, 63326
Mobile : 01730-340791
Fax : 88-091-63316
HOB: Md. Zillur Rahman, AVP
Aganagar Branch
Choto Masjid Road (Ispahani)
South Keraniganj, Dhaka
Phone : 02-7763658, 7763657
Mobile : 01730-340794
Fax : 88-02-7763659
HOB: Al Mansur, AVP
Dholaikhal Branch
72 Lal Mohon Saha Street
Dholaikhal, Dhaka-1100
Phone : 02-9560286, 9564529
Mobile : 01730-709985
Fax : 88-02-7117927
HOB: Md. Faizur Rahman Mazumder, VP
Ring Road Branch
Choice A J Golden Tower
2/1 Ring Road, Shyamoli, Dhaka-1207
Phone : 02-9103329
Mobile : 01730-373896
Fax : 88-02-9103330
HOB: Md. Kabir Hossain, AVP
Damudya Branch
Main Road, Damudya Bazar
Damudya, Shariatpur
Phone : 06023-56204
Mobile : 01755-533146
Fax : 88-06023-56201
HOB: Md. Arifur Rahman, PO
Imamganj Branch
Mohammad Hossain Complex
Moulvibazar, Dhaka
Phone : 02-7312970, 7312821, 7312861
Mobile : 01713-049090
Fax : 88-02-7312943
HOB: Syed Ezazur Rahman, FVP
Rampura Branch
Circle Alams Height, 375 West
Rampura, DIT Road, Dhaka- 1219
Phone : 02-8333697, 8333703
Mobile : 01755-533149
Fax : 88-02-8322797
HOB: Md. Moniar Rahman, VP
Kishoreganj Branch
M M Shopping Complex
573 Gouranga Bazar, Kishoreganj
Phone : 0941-51016, 51018
Mobile : 01755-637381
Fax : 88-0941-51017
HOB: Md. Abul Kashem Khandaker, AVP
Bhulta Branch
Haji A Aziz Super Market
Bhulta, Rupganj, Narayanganj
Phone : 01755-637389
Mobile : 01755-637388
01755-637389
HOB: Mohammad Jubair Islam, FAVP
Sakhipur Branch
Sipa Super Market
Sakhipur Bazar, Sakhipur, Tangail
Phone : 09232-56274, 56275
Mobile : 01713-203958
Fax : 88-09232-56273
HOB: Zia Uddin Ahmed, AVP
CHITTAGONG DIVISION
Agrabad Branch
Mishkat Arcade
21/1 Agrabad C/A, Chittagong
Phone : 031-716459, 716421
723181, 721772
Mobile : 01714-067805
Fax : 88-031-716459
HOB: Abdullah Md. Zaki Hasan, EVP
Khatunganj Branch
599 Ramjoy Mohajan Lane
Khatunganj, Chittagong
Phone : 031-626101, 626102, 622751
Mobile : 01711-723051
01819-201040
Fax : 88-031-635514
HOB: Jashim Uddin, FVP
Jubliee Road Branch
Kamal Chamber
61 Jubilee Road
Kotwali, Chittagong
Phone : 031-621018, 624819
Mobile : 01711-724874
Fax : 88-031-626072
HOB: Zahedul Islam, VP
International Airport Road Branch
A R A Plaza, 77-78 Airport Road
Amtali, Mahakhali C/A, Dhaka-1212
Phone : 02-9857368, 9857480
Mobile : 01755-532810
Fax : 88-02-9857435
HOB: Md. Abu Sakin, FVP
www.mblbd.com
31 annual report
Madam Bibir Hat Branch
Bhatiary, Sitakunda, Chittagong
Phone : 031-2780465
Mobile : 01713-196595
01730-076127
Fax : 88-031- 2780686
HOB: Anwar Hossain, VP
Jhilongja Branch
Hotel Sea Palace Ltd.
Kalatali Road, Cox's Bazar
Phone : 0341-62234
Mobile : 01713-103662, 01713-196596
Fax : 88-0341-63734
HOB: Anupam Kumar Paul, AVP
O R Nizam Road Branch
191 CDA Avenue
East Nasirabad, Chittagong
Phone : 031-657512, 2550876
Mobile : 01713-103663, 01841-013454
Fax : 88-031-2550877
HOB: Syed Mahbubul Haq, VP
Chowmuhani Branch
Samobay Bhaban, Karimpur Road
Chowmuhani Begumgonj, Noakhali
Phone : 0321-52960
Mobile : 01713-036991
Fax : 88-0321-52966
HOB: Mohammed Masudul Hasan, FVP
Feni Branch
105 S S Kaiser Road Feni Model
Thana, Feni
Phone : 0331-63558, 63559
Mobile : 01713-452994
Fax : 88-0331-63557
HOB: Abu Yusuf Md. Abdullah Haroon, FVP
Comilla Branch
1042/945 Jhawtala
Comilla
Phone : 081-65275
Mobile : 01713-384498
Fax : 88-081-65275
HOB: M. A. Malek Patwary, FVP
Sheikh Mujib Road Branch
304 Sheikh Mujib Road
Chittagong
Phone : 031-2514236, 2524126-7
Mobile : 01730-013454
Fax : 88-031-2514235
HOB: Mrinal Paul, VP
Dagonbhuiyan Branch
Mizan Tower, 273 Bashurhat Road
Dagonbhuiyan, Feni
Phone : 03323-79160, 79105
Mobile : 01730-328684
Fax : 88-03323-79106
HOB: Md. Sana Ullah, FAVP
Faridganj Branch
Saima Abdullah Plaza, Chandra Road
Faridganj Bazar, Chandpur
Phone : 08422-64378
Mobile : 01730-318187, 01819-244177
Fax : 88-08422-64377
HOB: A.T.M Monjurul Karim, FAVP
Chittagong EPZ Branch
S A Tower, 2 No. Mailer Matha
South Halishahar Bandar, Chittagong
Phone : 031-740682-3, 742217
Mobile : 01730-318185
Fax : 88-031-740684
HOB: Md. Mahibbul Karim, SVP
Patiya SME/Krishi Branch
Rahman Mansion, 1284/1 Club Road
Gobindokhal, Patiya, Chittagong
Phone : 03035-56579
Mobile : 01730-320813
Fax : 88-03035-56579
HOB: Md. Abu Taher, PO
Amishapara SME/Krishi Branch
Aziz Super Market
Amishapara Bazar
Shonaimuri, Noakhali
Mobile : 01730-320812
01730-340792
HOB: Kamrul Islam Zabed, FAVP
Rajnagar SME/Krishi Branch
Balua Chowmuhani, Dholia
Feni Sadar, Feni
Phone : 0331-73782, 73783
Mobile : 01711-303711, 01730-340793
Fax : 88-0331-73784
HOB: Md. Shahadat Hossain, FAVP
Rangamati Branch
Hotel Green Castle, 1 Patharghata
Reserve Bazar, Rangamati-4500
Phone : 0351-61267-68
Mobile : 01730-709986
Fax : 88-0351-61275
HOB: Debabrata Das, FVP
Banglabazar Branch
Banglabazar, Begumganj
Noakhali
Phone : 0321-53305, 56631
Mobile : 01730-709987
Fax : 88-0321-53164
HOB: Md. Mozammal Hussain, PO
Maijdee Court Branch
Honey Dew Point
10 Abdul Malek Ukil Sarak
Maijdee Court, Noakhali
Phone : 0321-71710, 71711
Mobile : 01730-709983, 01716-466599
Fax : 88-0321-71712
HOB: Md. Shahab Uddin Patwary, PO
Ashuganj Branch
Aziz Plaza, West Bazar
Char Chartala
Ashuganj, Brahammanbaria
Phone : 08528-74592
Mobile : 01755-533145
Fax : 88-08528-74593
HOB: Md. Shamsul Alam Siddique, PO
A K Khan Moor Branch
Anjuman Tower, Zakir Hossain Road
827 Feroz Shah Colony
Pahartali, Chittagong
Phone : 031-2773369, 2773367
Mobile : 01755-533140, 01730-444134
Fax : 88-031-2773368.
HOB: Md. Jamal Uddin, VP
32 annual report
RAJSHAHI DIVISION
Rajshahi Branch
ZODIAC Plaza
Shaheb Bazar (Zero Point), Rajshahi
Phone : 0721-772261, 771214
Mobile : 01711-419079
Fax : 88-0721-771215
HOB: Md. Abdul Mannan, AVP
Naogaon Branch
J.R. Super Market, Old Bus Stand
Chakdev MainRoad, Naogaon-6500
Phone : 0741-63331, 69181, 69182
Mobile : 01711-419057
Fax : 88-0741-63230
HOB: A S M Zakir Hossain, VP
Bogra Branch
Barogola, Bogra Sadar
Bogra
Phone : 051-69840
Mobile : 01713-044835
Fax : 88-051-69190
HOB: A.H.M. Kawsarul Islam, AVP
RANGPUR DIVISION
Rangpur Branch
Press Club Complex Biponi Bitan
Station Road, Rangpur-5400
Phone : 0521-51323, 51299
Mobile : 01713-201636, 01713-203586
Fax : 88-0521-51110
HOB: Md. Abdul Matin, AVP
Dinajpur Branch
Dinajpur Plaza
Goneshtola, Dinajpur
Phone : 0531-61217
Mobile : 01730-328682
Fax : 88-0531-61218
HOB: Md. Nazmul Kabir, AVP
Thakurgaon Branch
Afsar Uddin Chowdhury Plaza, College
Road, 111 Asram Para, Thakurgaon
Phone : 0561-61368
Mobile : 01755-533143
Fax : 88-0561-61367
HOB: Md. Hazrat Ali, FAVP
Nilphamari Branch
Bari Plaza, Boro Masjid Road
Nilphamari
Phone : 0551-62007, 612008
Mobile : 01755-533144
Fax : 88-0551-62008
HOB: Md. Mamunur Rashid, AVP
Debiganj Branch
1892, Debiganj Bazar
Debiganj, Panchagarh
Phone : 05654-56151
Mobile : 01755-533147
Fax : 88-05654-56152
HOB: Md. Monjur Hossain, FAVP
Gobindaganj Branch
Anowara Super Market
Gobindaganj, Gaibanda
Phone : 05423-75083, 75387
Mobile : 01755-637387
Fax : 88-05423-75168
HOB: Shah Md. Mizanur Rahman, FAVP
Sapahar Branch
Saha Complex, Main Road
Sapahar, Naogaon
Phone : 07432-74081
Mobile : 01713-068096
Fax : 88-07432-74080
HOB: Md. Ruhul Amin Siddiqui, FAVP
Chapai Nawabganj Branch
65-67 Jhilim Road, Baro Indara More
Sadar, Chapai Nawabganj
Phone : 0781-51719, 51720
Mobile : 01730-709982
Fax : 88-0781-51707
HOB: Syed Saiful Islam, AVP
Shishahat Branch
Khorpa, Porsha
Naogaon
Mobile : 01755-533141
HOB: Md. Abdur Razzak, PO
Nazipur Branch
Noor Market, Harirampur, Nazipur
Patnitola, Naogaon
Phone : 07428-63293
Mobile : 01713-203085
Fax : 88-07428-63294
HOB: Md. Abdul Kuddus Kazi, AVP
Niamatpur Branch
Girls Plaza, Balahore
Niamatpur, Naogaon
Phone : 07427-56257
Mobile : 01712-075407, 01755-637385
Fax : 07427-56256
HOB: Md. Atiqur Rahman, SEO
Patherhat Branch
S M Shopping Center, Pather Hat
Noapara, Raojan, Chittagong
Phone : 031- 2573351
Mobile : 01713-104508, 01755-637384
Fax : 88-031- 2573352
HOB: A.M. Monsurul Hoque, AVP
www.mblbd.com
33 annual report
KHULNA DIVISION
Khulna Branch
Rupsha Plaza, 73 KDA Avenue C/A
Sonadanga, Khulna
Phone : 041-813561-2
Mobile : 01713-400641
Fax : 88-041-813563
HOB: Mohammad Salah Uddin, AVP
Jessore Branch
A. Ali Complex
45 R. N. Road, Jessore
Phone : 0421-68091, 62933
Mobile : 01730-328683
Fax : 88-0421-65392
HOB: B.M. Saifuzzaman, FVP
Kushtia Branch
A. Hamid market, N. S. Road
Boro Bazar, Kushtia-7000
Phone : 071-72412, 72411
Mobile : 01730-709984, 01711-388747
Fax : 88-071-72413
HOB: Md. Ashraf-Bin-Azher, FAVP
Chuadanga Branch
Malik Tower, 107 Borobazar, Shaheed
Abul Kashem Sarak, Chuadanga
Phone : 0761-63641, 63871
Mobile : 01714-031241
Fax : 88-0761-63761
HOB: Md. Arafat Mostofa, FAVP
BARISAL DIVISION
Barisal Branch
141 Sadar Road, Barisal-8200
Phone : 0431-2176209
Mobile : 01713-384496
01713-199827
Fax : 88-0431-2176208
HOB: Md. Humayun Kabir, AVP
Patuakhali Branch
0063-01 Natun Bazar, Patuakhali
Sadar, Patuakhali-8600
Phone : 0441-62979
Mobile : 01730-340790
Fax : 88-0441-62971
HOB: Kazi Sohel, AVP
Bhola Branch
Karnaphuli Complex
3373 Sadar Road, Bhola
Phone : 0491-62720, 62721, 62722
Mobile : 01755-637382
Fax : 0491-62720
HOB: Masum Iqbal, PO
SYLHET DIVISION
Sylhet Branch
Raisot Tower, Laldighirpar, Sylhet
Phone : 0821-723650, 723651
Mobile : 01711-922810
Fax : 88-0821-723722
HOB: Imam Kabir Chowdhury, SVP
Moulvibazar Branch
152/2 Court Road, Moulvibazar
Phone : 0861-62871, 62872
Mobile : 01713-068126, 01713-386897
Fax : 88-0861-62873
HOB: Golam Moula, AVP
Beanibazar Branch
Zaman Plaza, Beanibazar, Sylhet
Phone : 08223-56180
Mobile : 01713-384495
Fax : 88-08223-56181
HOB: Md. Rezaul Haque Chowdhury, AVP
Nabiganj SME/ Krishi Branch
Sky Light Tower, Nabiganj
Habiganj
Phone : 08328-56307
Mobile : 01730-320814, 01720-036093
Fax : 88-08328-56306
HOB: Syed Maniruzzaman, SEO
Sunamganj Branch
Zaman Complex, Arpin Nagor
Sunamganj
Phone : 0871-61278
Mobile : 01755-533148, 01913-700566
Fax : 88-0871-61280
HOB: Md. Zainul Abedin, FVP
Subidbazar Branch
Prantik-16, 407 Sylhet, Sunamganj Road
Subidbazar, Sylhet
Phone : 0821-728371, 728372
Mobile : 01713-386896, 01755-637383
Fax : 88- 0821-728373
HOB: Debojyoti Majumder, AVP
34 annual report
MERCANTILE BANK SECURITIES LIMITED
Head office
Swadesh Tower, 41/6 Purana Paltan, Dhaka-1000
Phone : 02-7122513, 7122515, 7122356, 7119932
Fax : 88-02-7119078
BRANCHES
Dhaka Branch
Swadesh Tower
41/6 Purana Paltan, Dhaka-1000
Phone : 02-7122513, 7122515
7122356, 7119932
Fax : 88-02-7119078
Khulna Branch
Rupsha Plaza
73 KDA Avenue C/A
Shonadanga, Khulna-9100
Phone : 041-731396
Fax : 88-041-731397
Mirpur Branch
Razia Plaza, Rokeya Sarani
184, Senpara Parbata
Mirpur - 10, Dhaka- 1216
Phone : 02-9014660
Fax : 88-02-9014680
Sylhet Branch
Al-Hamra Shopping City
Zinda Bazar
Sylhet-3100
Phone : 0821-711565
Fax : 88-0821-711571
Uttara Branch
House-22, Sonargaon Janapath,
Sector-9, Uttara Model Town
Dhaka-1230
Phone : 02-8959047, 8950714
Fax : 88-02-8961798
Chittagong EPZ Branch
Mishkat Arcade
21/1 Agrabad C/A
Chittagong
Phone : 031-721865
Fax : 88-031-721866
Sat Masjid Road Branch
House-735 (Old), 82/A (New)
Road-8/A, Satmasjid Road
Phone : 02-9126872
Fax : 88-02-9128541
MERCANTILE EXCHANGE HOUSE (UK) LIMITED
MBL Subsidaries
Birmingham Branch
Unit-2, 491 Coventry Road
Small Heath, Birmingham, B10 0 J S, UK
Phone : +44121-771-0546
Mobile : +44-7949902426
Fax : +44121-771-4675
E-mail : mercantileexchangeuk@mblbd.com
Khandakar Mahbub Murshed, Manager & Operation Director
London Branch
108 Whitechapel Road, London E1 1JE, UK
Phone : +4420-3638-1919
Mobile : +44-7738704863
Fax : +4420-3638-1919
E-mail : mercantileexchangelondon@mblbd.com
Jude Mark Rozario, CEO & Manager
www.mblbd.com
35 annual report
Other Executives of the Bank
Executive Vice Presidents
Md.Rabiul Islam
Nanda Dulal Bhattacharjee
Senior Vice Presidents
Faisal Ahsan Chowdhury
Niranjan Chandra Gope
Md. Sayeduzzaman Chowdhury
Md. Abul Bashar
Arif Md. Shahedul Haque
Vice Presidents
Md. Rashad Kamal (on leave)
Abdus Salam Shaikh
Md. Faruque Ahmed
A. K. M. Minhajul Islam
Md. Jamal Hossain
Md. Shafiqul Islam
Md. Khurshid Anwar
Lutful Haidar Chowdhury
Kabir Ahmed
Abu Asghar Gholam Haruni
Mostaque Uddin Ahmed
Md. Azimuddin
First Vice Presidents
Shah Nawaz Siddique
Md. Enayet Ullah
Moynul Islam
Mahmood Hasan
Md. Rezwanul Karim
Tanusree Mitra
Saiful Alam
Golam Mohammed Zaidi
Md. Shahadat Hossain Khan
Mahmuda Akhter
Mir Fauzia Rahman
Md. Nurul Alam
Farid Ahmed
Zareen Ahmed
Md. Masum Ali
Alok Kumar Biswas
Md. Shahidul Islam
Mesbah Uddin Ahamed
M. Ashik Arefin Hossain
Md. Aliullah
Md. Farid Uddin Ahmed Bhuiyan
Basudeb Paul
M. Ferdous Chowdhury
Kazi Md. Safayet Kabir
Assistant Vice Presidents
Muhammad Lutful Haider
K. M. Anowarul Islam
Mahmuda Khatun Munny
Md. Abul Hossain
Md. Mahbubur Rahman
Md. Mostafizur Rahman
Ferdausi Sultana
Md. Mynul Hossain Kabir
Shanaz Begum
Harunur Rashid
Sharina Quddus
Asaduzzaman Pavel
Lopita Mannan
Sanjib Kumar Sarkar
Md. Shahjahan Amin
Tashfeen Saleh
Fatema Saida Yasmin
Md. Shaiful Alam Choudhury
Muhammad Fayazur Rahman Biswas
A.I.M. Mostafa
Mohammad Mahtab Uddin
Pratap Kumar Deshmukhya
Suraya Nasrin
Zihan Al Fuad
Shahnewaz
Shamim Ahmed
Abu Sayed Md. Asadul Islam
Md. Nasim Alam
Sardar Mohammad Zobayar
Ashish Kumar Lasker
Md. Gias Uddin
Md. Humayun Kabir Bhuiyan
Md. Mizanur Rahman
Jannatul Mawa
Tapash Chandra Paul, Ph.D
Md. Ekhlasul Moula
Sayeda Sultana
Abu Saleh Md. Ibrahim
Muhammad Saiful Karim
Md. Salahuddin Khan
Deen Mohammad Khan
Dipak Kumar Chakraborty
Md. Sazzadur Rahman
Md. Atiqur Rahman
Asish Kumar Paul
Md. Anisur Rahman
Md. Akram Hossain
Mohammad Rezaul Karim
Md. Shaheen Reza
Sayed Md. Moharram Hossain
Munshi Md. Asif Reza
Tarafder Sushil Kumar
Md. Zahed Hossain
Ashfa Khanam
Khandoker Akram Hossain
Kazi Golam Rasul
Md. Shah Jamal
Asif Ahmed
Md. Delwar Hossain
S M Ruhul Amin
Md. Sarware Alam
Md. Mahfuzur Rahman
36 annual report
Our Coverage
The green shaded districts represent our branch network coverage in the country.
www.mblbd.com
37 annual report
Performance Indicators
(BDT in Million)
Particulars 2008 2009 2010 2011 2012
Income Statement
Interest Income 5,604.36 6,741.69 7,669.42 10,719.69 14,207.72
Interest Expenses 4,045.97 4,755.90 5,176.00 8,022.13 10,556.79
Net Interest Income 1,558.39 1,985.79 2,493.42 2,697.56 3,650.93
Non-Interest Income 1,273.14 1,506.12 2,282.39 3,404.69 2,459.83
Non-Interest Expenses 1,250.02 1,580.21 1,928.69 2,600.57 2,759.98
Net Non-Interest Income 23.12 -74.09 353.70 804.12 -300.15
Profit before Provision and Tax 1,581.51 1,911.70 2,847.12 3,501.68 3,350.78
Provision for Loans and Assets 299.83 248.92 411.20 497.50 969.33
Profit after Provision before Tax 1,281.68 1,662.78 2,435.93 3,004.17 2,381.45
Porvision for tax including deferred tax 665.80 855.26 1,010.59 1,270.00 1,000.00
Profit after Tax 615.88 807.52 1,425.34 1,734.17 1,381.45
Balance Sheet
Authorized Capital 3000.00 8,000.00 8,000.00 8,000.00 8,000.00
Paid-up Capital 1,798.68 2,158.42 4,072.21 4,968.10 6,110.75
Shareholders' Equity 3,470.09 4,296.25 7,185.69 9,659.33 10,924.55
Deposits 49,538.35 58,033.47 75,629.14 102,262.02 132,093.64
Loans and Advances 43,419.36 48,295.55 66,377.70 79,999.80 93,610.87
Investments 6,264.71 9,664.72 10,937.20 24,645.38 41,314.19
Fixed Assets 683.00 1,032.83 1,647.58 2,711.32 2,898.60
Total Assets 55,928.72 66,166.52 87,140.11 116,553.01 154,040.18
Foreign Exchange Business
Import 56,528.80 60,592.50 89,524.10 95,008.70 113,434.10
Export 43,108.50 46,298.60 59,404.20 81,311.80 81,477.10
Remittance 4,722.90 5,061.30 5,108.10 7,150.00 15,792.80
BIS Capital Measure (SOLO)
Total Risk Weighted Assets under Basel II (Basel I for 2008 & 2009) 40,634.58 47,685.71 95,158.50 101,085.30 111,524.70
Core (Tier I) Capital 3,470.92 4,236.52 7,100.80 8,834.97 10,216.87
Supplementary (Tier II) Capital 660.29 758.91 1,583.52 1,794.40 1,861.99
Total Capital/Regulatory Capital 4,131.21 4,995.43 8,684.32 10,629.37 12,078.86
Core Capital to RWA 8.54% 8.89% 7.46% 8.74% 9.16%
Supplementary Capital to RWA 1.63% 1.59% 1.67% 1.78% 1.67%
Capital Adequacy Ratio under Basel II (Basel I for 2008 & 2009) 10.17% 10.48% 9.13% 10.52% 10.83%
Credit Quality
Non Performing Loans (NPL) 1,242.47 1,252.05 1,187.81 2,084.62 4,090.92
Provision for unclassified Loan 438.20 518.50 749.00 889.63 969.00
Provision for classified Loan 578.20 629.70 617.53 712.42 1,495.87
NPL to total Loans and Advances 2.96% 2.59% 1.78% 2.61% 4.37%
Common Share Information
Market Price per Share (BDT) 34.83 39.50 58.05 34.80 19.10
No. of Shares Outstanding (Million) 179.87 215.84 407.22 496.81 611.08
Earning per Share (BDT) 2.85 3.07 4.10 3.49 2.26
Dividend: 20.00% 22.00% 22.00% 23.00% 15%
Cash - - - - 7.00%
Stock 20.00% 22.00% 22.00% 23.00% 8.00%
Dividend Payout Ratio 70.10% 71.73% 54.09% 63.90% 66.37%
Market Capitalization 6,263.89 8,525.73 23,639.12 17,288.96 11,671.54
Book Value per Share 19.29 19.90 17.65 19.44 17.88
Market Value Book Value multiple 1.81 1.98 3.29 1.79 1.07
Price Earning Multiple (Times) 12.21 12.88 14.14 9.97 8.45
Operating Performance Ratio
Net Interest Margin (NIM) 3.72% 3.58% 3.59% 2.93% 2.99%
Net Non-interest Margin 0.05% -0.13% 0.51% 0.87% -0.25%
Earning base in Assets (average) 90.56% 90.81% 90.62% 90.46% 90.15%
Cost Income Ratio 44.15% 45.25% 40.38% 42.62% 45.17%
Credit Deposit Ratio 87.65% 83.22% 87.77% 81.68% 79.26%
Cost of Deposits 9.19% 8.81% 7.94% 9.63% 10.02%
Yield on Loans and Advances 13.24% 13.12% 12.80% 13.86% 14.72%
Spread 4.05% 4.31% 4.86% 4.23% 4.70%
Return on Average Assets 1.22% 1.32% 1.86% 1.70% 1.02%
Return on Average Equity 17.75% 18.80% 19.84% 17.95% 13.42%
Equity Multiple (Times) 16.12 15.40 12.13 12.07 14.10
Other Information
No. of Branches 42 53 65 75 86
No. of Employees 1,115 1,303 1,526 1,668 1,981
No. of Correspondence Relationship 586 590 589 638 627
Fiancial Highlights
www.mblbd.com
39 annual report
Graphical Presentation
2008 2009 2010 2011 2012
299.83
248.92
411.20
497.50
969.33
Provision for Loans and Assets
2008 2009 2010 2011 2012
615.88
807.52
1,425.34
1,734.17
1,381.45
Profit after Tax
2008 2009 2010 2011 2012
49,538.35
58,033.47
75,629.14
102,262.02
132,093.64
Deposits
2008 2009 2010 2011 2012
1,558.39
1,985.79
2,493.42
2,697.56
3,650.93
Net Interest Income
2008 2009 2010 2011 2012
3,470.09
4,296.25
7,185.69
9,659.33
10,924.55
Shareholders' Equity
2008 2009 2010 2011 2012
43,419.36
48,295.55
66,377.70
79,999.80
Loans and Advances
93,610.87
2008 2009 2010 2011 2012
56,528.80
60,592.50
89,524.10
95,008.70
113,434.10
Import
2008 2009 2010 2011 2012
1,581.51
1,911.70
Profit before Provision and Tax
3,501.68
3,350.78
2,847.12
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
40 annual report
2008 2009 2010 2011 2012
43,108.50
46,298.60
59,404.20
81,311.80
Export
81,477.10
2008 2009 2010 2011 2012
4,722.90
5,061.30
5,108.10
7,150.00
Remittance
15,792.80
2008 2009 2010 2011 2012
4,131.21
4,995.43
8,684.32
10,629.40
12,079.00
Capital Fund
2008 2009 2010 2011 2012
19.29
19.90
17.65
Book Value per Share
19.44
17.88
2008 2009 2010 2011 2012
3.72%
3.58% 3.59%
2.93%
2.99%
Net Interest Margin (NIM)
2008 2009 2010 2011 2012
10.17%
10.48%
9.13%
10.52%
10.83%
Capital Adequacy Ratio
2008 2009 2010 2011 2012
1,242.47
1,252.05
1,187.81
2,084.62
Non Performing Loans (NPL)
4,090.92
2008 2009 2010 2011 2012
34.83
39.50
58.05
34.80
19.10
Market Price per Share
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT in Million)
(BDT)
(BDT)
www.mblbd.com
41 annual report
Yields on Advances
2008 2009 2010 2011 2012
2.85
3.07
4.10
3.49
2.26
Earning per Share
2008 2009 2010 2011 2012
44.15%
45.25%
40.38%
42.62%
Cost Income Ratio
45.17%
2008 2009 2010 2011 2012
9.19%
8.81%
7.94%
9.63%
Cost of Deposits
2008 2009 2010 2011 2012
4.05%
4.31%
4.86%
4.23%
Spread
10.02%
(BDT in Million)
(BDT)
4.70%
2008 2009 2010 2011 2012
13.24% 13.12%
12.80%
13.86%
14.72%
2008 2009 2010 2011 2012
42
53
65
75
No. of Branches
86
2008 2009 2010 2011 2012
No. of Employees
2008 2009 2010 2011 2012
55,928.72
1,115
1,303
1,526
1,668
1,981
66,166.52
87,140.11
116,553.01
154,040.18
75
Total Assets
86
Graphical Presentation
42 annual report
Market Performance
Dhaka Stock Exchange (DSE)
January, 2012
February, 2012
March, 2012
April, 2012
May, 2012
June, 2012
July, 2012
August, 2012
September, 2012
October, 2012
November, 2012
December, 2012
Chittagong Stock Exchange (CSE)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
40
35
30
25
20
15
10
5
0
Dhaka Stock Exchange(DSE)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
40
35
30
25
20
15
10
5
0
Chittagong Stock Exchange(CSE)
www.mblbd.com
43 annual report
Financial Calendar
Quarterly Results
Particulars Submission Date
Audited consolidated results for
the 4th quarter ended 31 December 2011
Unaudited consolidated results for the
1st quarter ended 31 March 2012
2nd quarter and half-year ended 26.07.2012
30 June 2012
3rd quarter ended 30 September 2012
Dividends
Particulars Record Date Allotment Date
Distribution of 23% stock 06.03.2012 28.03.2012
dividend in respect of
financial year ended on
31 December 2011

Annual General Meetting (AGM)
Particulars Notice Date Held On
13th AGM 15.02.2012 28.03.2012
Taxation on Dividend Income
Stock dividend is tax exempted. In case of cash
dividend, following is the rate of tax deduction at source
on dividend income as per current fiscal act:
If the shareholder is a company, either resident or
non-resident, at the rate applicable to the company
i.e. 20%
If the shareholder is a resident person, other than
company, at the rate of 10%

If the shareholder is a non-resident (Other than
Bangladesh) person, other than company, at the
rate of 25%
Since stock dividend is out of the loop of withholding tax
deduction, its effective rate of return is much higher
than cash dividend.
Taxation on Capital Gain
Capital gain arising from transfer or sale of Government
Securities is tax exempted. Capital gain arising from
transfer or sale of Stocks and Shares of publicly listed
companies listed with stock exchanges is taxable at the
rate of 10%. For non-resident the tax exemption on
capital gain shall be allowed if the similar exemption is
allowed in the country of residence of the non-resident.
Other Information
Exchange controls and other limitations affecting equity
security holders
Non-residents can buy and sell MBLs share and
transfer the dividends after complying with Guidelines
for Foreign Exchange Transactions 1996 and SEC
Rules.

Stock Details
Particulars DSE CSE
Stock Symbol MERCANBANK MERCANBANK
Company Code 11128 22023
Listing Year 2003 2003
Market Category A A
Electronic Share Yes Yes
Market Lot (Nos.) 500 100
Face Value (Taka) 10 10
Total Number of Shares 611,075,316 611,075,316
(31-12-2012)
Accessibility of Annual Report 2012
Annual Report 2012 and other information about MBL
may be accessed on MBLs website www.mblbd.com.
MBL provides copies of Annual Reports to the
Bangladesh Securities and Exchange Commission,
Bangladesh Bank, Dhaka Stock Exchange and
Chittagong Stock Exchange for their reference.
Respectable stakeholders may read them at their public
reference room or library.
Shareholders Inquiries
Share Department
Mercantile Bank Limited
Head Office
61 Dilkusha Commercial Area
Dhaka-1000
Web: www.mblbd.com
15.02.2012
26.04.2012
04.11.2012
44 annual report
Capital Adequacy
Complying the new risk based capital adequacy
framework i.e. Basel II, MBL maintains a strong capital
base. Total eligible capital of the Bank stood at BDT
1,207.90 Crore as on December 2012 which is well
above than minimum requirement of BDT 1,115.25
Crore as on the same date. Capital Adequacy Ratio is
10.83% (Solo) as on December 2012 compared to
minimum requirement of 10% as per Basel II.
Economic Impact refers to the effect of a policy,
program, project, activity or event on the economy.
Economic impact is usually measured in terms of
changes in economic growth (output or value added) and
associated changes in jobs (employment) and income
(wages). We can understand how a bank adds value to
the society by analyzing economic impact.
MBL aims to create optimum value to its stakeholders.
Economic impact report highlights the value that the
Bank caters to its shareholder and to the country as a
whole. Among others, followings are the important
measures taken by the Bank with a view to offering
sustainable values to its stakeholders.
Economic
Impact Report
Economic Value-Added (EVA) attempts to capture the
true economic profit of a company. EVA is calculated by
deducting the cost of equity capital employed from the
post-tax profit plus provision for loans and advances.
Companies which earn higher returns than cost of
capital create value. Therefore, Shareholders/Equity
providers are always conscious about their return on
capital invested. As a commercial banking company,
MBL is deeply concerned for delivering higher value to
its Shareholders/Equity providers.
Value added statement shows how much value (wealth)
has been added and distributed by MBL in 2012 for its
employees, government and shareholders in the form of
salaries & allowances, income tax, profit after tax
respectively and also indicates depreciation value of
fixed assets.
December, 2012 December, 2011
I Total Eligible Capital I Minimum Capital Requirement
1
,
2
0
7
.
9
0
1
,
1
1
5
.
2
5
1
,
0
6
2
.
9
4
1
,
0
1
0
.
8
5
23%
35%
12%
26%
4%
(BDT in Million)
(BDT in Million)
(BDT in Core)
To Employees
To Government as Income Tax
Retained Earnings
To Statutory Reserve
Depreciation
Value Added Statement
for the year ended December 31, 2012
Economic Value Added Statement
Particulars 2012 2011
Income from Banking Services 16,667.55 14,124.38
Less: Cost of Services & Supplies (11,808.45) (9,200.08)
Value added by Banking Services 4,859.10 4,924.30
Provision for loans & off -balance sheet items (969.33) (497.50)
Total Value Added 3,889.77 4,426.80
Distribution of value addition 2012 2011
To Employees 1,363.76 1,292.01
To Government as Income Tax 1,000.00 1,270.00
Depreciation 144.56 130.61
To Statutory Reserve 476.29 600.83
Retained Earnings 905.16 1,133.34
Total 3,889.77 4,426.80
2012 2011
920.42
1,202.10
(BDT in Crore)
Dec-12 Dec-11
Tier-1 (Core Capital) 1,021.70 883.50
Tier-2 (Supplementary Capital) 186.20 179.44
Tier-3 (Additional Supplementary
Capital) - -
Total Eligible Capital 1,207.90 1,062.94
Total Risk Weighted Assets (RWA) 11,152.47 10,108.53
Capital Adequacy Ratio (Solo) 10.83% 10.52%
Core Capital to RWA 9.16% 8.74%
Supplementary Capital to RWA 1.67% 1.78%
Minimum Capital Requirement (MCR) 1,115.25 1,010.85
Economic Value Addition (BDT in Million)
Particulars
Economic Impact Report
46 annual report
Market Value Added Statement
for the year ended December 31, 2012
Market value added (MVA) shows the difference
between the total market value and total book value of
shares of a company. A high Market Value Added
indicates that the company has created substantial
wealth for the equity holders. The market value of the
Bank stood at BDT 11,671.54 million whereas the book
value of the share stood at BDT 10,924.55 million,
resulting a Market Value Added of BDT 746.99 million
as on December 31,2012.
Particulars No. of Shares Outstanding Per Share (BDT) BDT in Million
Market value 611,075,316 19.10 11,671.54
Book value 611,075,316 17.88 10,924.55
Market value added 746.99
Payment of Dividends
MBL has been maintaining a very healthy and stable
dividend policy. During the last few years the Bank paid
only stock dividend with a view to strengthening its
capital base and thereby maintaining strong capital
adequacy as per Basel II. This year, Board has
recommended 15% dividend (cash dividend @ 7% and
stock dividend @ 8%).
2
2
%
2
0
%
2
2
%
2
3
%
1
5
%
2008 2009 2010 2011 2012
Shareholders' Equity 10,924.55 9,659.33
Add: Cumulative provision for loans and
advances and off-balance sheet exposure 2,947.42 2,010.87
13,871.97 11,670.20
Average Shareholders' Equity 12,771.09 10,295.67
Earnings
Profit After Tax 1,381.45 1,734.17
Add: Provision for loans and advances and off-balance sheet
exposure during the year 969.33 497.50
Total Earnings (a) 2,350.78 2,231.67

Average cost of equity (based on first year's return on sanchaypartra by the
Government of Bangladesh) plus 2% risk premium 11.20% 10.00%
Total cost of average equity (b) 1,430.36 1,029.57
Econmic Value Addition (a-b) 920.42 1,202.10
(BDT in Million)
Market Value Book Value Market Value added
7
4
6
.
9
9
1
0
,
9
2
4
.
5
5
1
1
,
6
7
1
.
5
4
(BDT in Million)
www.mblbd.com
47 annual report
Segment Reporting
MBL Operation
Banking Operation
(BDT in Crore)
(BDT in Crore)
48 annual report
Message from the Chairman
Bismillahir Rahmanir Rahim
Assalamualaikum
Dear Shareholders, Respected members of the Board and the MBL Team,
Its my pleasure to welcome you all to the 14th Annual General Meeting (AGM) of Mercantile Bank Limited (MBL) and
to present before you the Annual Report 2012 and the Audited Financial Statements for the year ended on 31
December, 2012. On behalf of the Board of Directors, I would like to express my gratitude and thanks for your
continuous support and co-operation. Your support has helped us attain a base in the finance industries. Thanks to you,
our customers and all other stakeholders. We have been able to establish ourselves as a bank of repute.
Global Economy in 2012
The world economy has passed another challenging
year in 2012. More than four years after the turbulence,
the global economy continues to feel the effects of the
financial crisis. On-going market volatility continues to
fetter economic growth throughout the world. Global
growth dropped to almost 3% in 2012, which indicates
that about half a percentage point has been trimmed off
the long-term trend since the crisis emerged. This
slowing trend is likely to continue. Mature economies are
still healing the scars of the crisis. But unlike 2010 and
2011, emerging markets did not pick up the slack in
2012, and wont do so in 2013. The macroeconomic
environment has again been dominated by uncertainty
and volatility in global financial markets and continued to
weigh heavily on the economy of the world. Uncertainty
across the regions- from the post-election fiscal cliff
question in the U.S. to the Chinese leadership, the
transition and reforms in the Euro Area- will continue to
have global impacts in sluggish trade and tepid foreign
direct investment.
Bangladesh Economy in 2012
Against the backdrop of the global economic slowdown,
the Bangladesh economy has performed strongly over
the past few years. But as the global economic
slowdown continues to prevail, economic condition is
expected to be adverse. Through the lens of our
businesses, we continue to see in Bangladesh the
impacts of global uncertainty: sluggish investment
growth, lower discretionary spending and weaker equity
markets. These impacts combine to create a lower
revenue growth environment, which could continue for
some time more.
Banks Financial Performance
2012 was a year of relatively low economic growth and
challenging markets, which resulted in a difficult year for
the banking industry as a whole. Despite this
environment, we made satisfactory progress against our
mission to become the most caring bank, focused for
equitable growth. On the key actions we will continue to
deliver strong, stable and sustainable returns for
shareholders.
The Bank mobilized deposits of BDT 132,093.64 million
as on December 31, 2012 compared to BDT 102,262.02
million in 2011. Total loans and advances stood at BDT
93,610.87 million at the end of 2012, which was BDT
79,999.80 in 2011. Import business stood at BDT
113,434.10 million in 2012 compared to BDT 95,008.70
million in 2011. Export business stood at BDT 81,477.10
million in 2012 as against BDT 81,311.80 million of
2011. The Bank collected foreign remittance of BDT
million in 2011. In 2012, the Bank was able to make
operating profit of BDT 3,350.78 million as compared to
BDT 3,501.67 in 2011. Earnings per Share (EPS) stood
at BDT 2.26. Non Performing Loan (NPL) ratio stood at
4.37% in 2012.
MBL made adequate provision against classified loans,
to make the Bank stronger than before. Tier-1 Capital
stood at BDT 10,216.87 million at the end of 2012
compared to that of BDT 8,834.97 million in 2011. Tier-2
Capital reached to BDT 1,861.99 million at the end of
December 2012 as compared to that of BDT 1,794.40
million at the end of 2011. Return on Assets (ROA) was
1.02% as on December 31, 2012 and Return on Equity
(ROE) was 13.42% as on December 31, 2012. Capital
Adequacy Ratio of the Bank stood at 10.83% (Solo
basis) as on December 2012, against minimum
requirement of 10.00% as per Basel II Capital. Net
Interest Margin (NIM) stood at 2.99% at the end of 2012.
Corporate Governance Practice
Proper functioning of the Board, effectively challenging
yet supporting the management team is one of its most
important tasks alongside the Boards fiduciary
responsibilities. Backed by a strong and experienced
Board, befitting its aspiration to become a leading bank
of prominence, the Board of Directors remain committed
to ensure the highest standards of corporate
governance throughout the organization with the
objective of safeguarding the interest of all stakeholders
and enhancing the shareholders value. They always
guide the Bank towards the goal set by the
Shareholders, ensuring highest standards of integrity,
accountability, transparency, ethics and professionalism
of the management. For smooth functioning of the Bank,
two supporting committees of the Board; Executive
Committee and Audit Committee are working with the
Management since the inception of the Bank.
We firmly believe that a 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, likely 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 time to
time. The Board undertakes prompt actions to protect
the Bank and shareholders wealth based on internal
audit reports.
Caring for the Community
As the Bank continues to move ahead in our business
operations and growth, we have equally focused on our
role as a corporate citizen. MBL since its inception has
played a vital role in community development. The
principal means by which MBL can benefit society and
the communities where we operate is to build a
successful business entity. MBL plays a part in the lives
of a huge number of people of the country, as a supplier
of financial services, a major employer, and an important
consumer. We look after the financial needs of over 01
million retail and business customers. In addition we
employ more than 2,000 people and are a significant
buyer of goods and services to support our business.
We have a relationship with many homes and many
businesses of the country. Our brands are well
recognized. At a time when the banking sector is under
increased public scrutiny, we acknowledge our
responsibility to provide the proper flow of credit to the
economy by delivering banking solutions and excellent
customer service.
MBL operates its banking activities in economically,
environmentally and socially sustainable manner in line
with the Banks Vision and Mission Statement. To
enable us prosper and for sake of the betterment of all
communities we touch, we have set up Mercantile Bank
Foundation in 2000. The Bank is contributing 1% of its
operating profit each year or BDT 4.00 million (which
one is maximum) to Mercantile Bank Foundation and
indeed it is our immense pleasure to announce that the
actual amount contributed towards betterment of the
society often exceeds the promised figure manifold. The
foundation will cover all aspects of human well-being
from social and medical welfare and community
development to heritage preservation and environment
conservation.
Technology
At MBL, we aspire to become a leader in the application
of technology to financial services. We are on the verge
of implementation a new core banking platform.
Unwavering management focus is on for extracting
benefits of the upgrade, and a customer-focused culture.
MBL has always been moving with the latest technology
and time-to-time the Bank has adopted different
advantages of the technology which has enriched its IT
infrastructure. Technological development of the Bank
has tremendously increased its customer service as well
as trust of the stakeholders.
Customers Service
MBL believes that customer service excellence is central
to sustainable, long-term business success. We have to
be consistent in that view, because we have to
recognize that an authentic difference that puts our
people and customers first is good for them and good for
business. Our continuous strive for complete customer
satisfaction helped the Bank to attain the remarkable
growth rate in many lines of business. The Bank always
remained very competitive in offering services to the
customers and redesigned its products to meet
customers need. MBL each year has been increasing its
branch and ATM network to provide banking services to
mass people. Number of correspondent relationships is
augmented and agreements with foreign exchange
remittance companies are being signed to facilitate the
non-resident Bangladeshi to remit their hard-earned
money to the doorsteps of the beneficiary easily and
quickly. Our customer group ranges from individuals, big
corporate clients, NGOs, SME and Retail. Undivided
attention has been paid to our customers to provide
them prompt and need based service. We always listen
to our customers and offer products and services that
respond to their changing needs. Improved access to
financial services for all sections of the community is
important for our business, our customers and our
communities.
Human Resources Development
In MBL, we consider our employees as a resource, an
asset, that provides competitive advantage to the
organization, and on whom organizational success is
leveraged. To establish the perfect strategic HR, MBL
has developed the linking human resources to strategic
goals and objectives in order to improve business
performance and develop organizational culture that
foster innovation, flexibility and competitive advantage.
Employees of the Bank play a significant role in
providing better customer service. MBL always
emphasizes to satisfy both the customers and
employees offering better facilities than other
commercial banks, such as attractive compensation
package, training facilities at home and abroad and
other fringe benefits. Each year, MBL recruits new
employees, fresh and experienced to meet the
customers ever-increasing demand and support the
ever changing business scenario. The employees of the
Bank are given on job training and are sent to different
training programs/seminars, workshops home and
abroad. The Training Institute of the Bank continuously
arranges various courses, workshops, and seminars on
different aspects of banking.
Outlook & Challenges
The past year was characterized by an uncertain and
volatile global economy, fragile consumer and corporate
confidence, stagnant investment growth and political
uncertainty which was challenging for the Bank and
many of its customers. The scenario has not changed
much then and we are unlikely to see significant
improvements in the macro environment in the coming
year. Subdued underlying credit growth, intensified
competition, continued pressure on interest margins,
fees, exchange earnings and increased provision
requiremnet will pose a challenge to the financial
institutions during 2013 as well.
Against these backdrop, the Bank will continue to
operate in a disciplined and prudent manner with a focus
on driving productivity initiatives which will deliver
sustainable improvements in business performance.
The Banks priority is to maintain a robust and stable
financial and operating platform, which will enable us
support our customers and provide superior returns to
shareholders. We intend to continue to fight like the
strongest contender as we always are. We will refocus
our priorities on organic growth, our capacity to respond
to change, loyalty to our values, and maintaining our
solid expertise in risk management and operational
efficiency. The Bank will continue to exploit the potential
of retail, card, SME and remittance market. The Bank
will also continue to improve its customer services,
provide faster turnaround time via better process
efficiency and actively manage operating costs to
maintain profitability.
While 2013 will be a challenging year for the Bank, I am
nonetheless very optimistic about the Banks
performance and its ability to continue to deliver superior
long term services for our customers, our shareholders
and our people.
Appreciations
We are thankful to the Government of the Peoples
Republic of Bangladesh, Governor and other officials of
Bangladesh Bank, Bangladesh Securities and
Exchange Commission, Dhaka Stock Exchange,
Chittagong Stock Exchange, our respected
Shareholders, valued Customers, Patrons and
Well-wishers for keeping their faith and trust on us. On
behalf of the Board, I would like to thank our
shareholders, customers and business partners for their
continuing support. My appreciation goes to all staffs
and executives for their dedicated services and efforts to
achieve the goal of the Bank. The confidence that the
shareholders and clients have reposed on us has always
been the source of our strength. We are grateful to them
for their continuous support and co-operation.
I sincerely thank Khan Wahab Shafique Rahman & Co.
and K. M. Hasan & Co for carrying out the external audit
professionally and advising us on various compliance
issues relating to International Accounting Standards
and Bangladesh Accounting Standards. Finally, I wish to
thank my colleagues in the Board for their important
contribution to the Banks strategic thinking and most for
their strong leadership in view of the current
environment. Their relentless support and commitment
during the year is worthy of deep appreciation.
Allah Hafiz.
With warm regards,
50 annual report
direct investment.
some time more.
shareholders.
4.37% in 2012.
audit reports.
customer service.
conservation.
Technology
Customers Service
communities.
and our people.
Appreciations
Allah Hafiz.
With warm regards,
www.mblbd.com
51 annual report
direct investment.
some time more.
shareholders.
4.37% in 2012.
audit reports.
customer service.
conservation.
Technology
Customers Service
communities.
and our people.
Appreciations
Allah Hafiz.
With warm regards,
52 annual report
Managing Director and CEOs Review
Dear Shareholders,
At the outset, on behalf of the management I express my gratitude to all valued clients, patrons, well-wishers and
shareholders for continuous support and co-operation to your Bank. Like earlier, our endeavor towards enhancing
shareholders value by delivering better financial results continued in 2012.
On the occasion of the 14th Annual General Meeting of MBL, it is my pleasure to have an overview on world economy
and domestic economy. I would also take the privilege to report the Banks performance in 2012 while forecasting its
prospects and challenges in the years to come.
World Economy
World economic conditions improved modestly in the last half of 2012. During this time, global growth increased to
about 3.2%. Emerging market economies, the main source of acceleration marked 5.1% growth in 2012. Global growth
is projected to increase marginally to 3.5% during 2013, but not at rates recorded in 201011. Supportive policies have
underpinned much of the recent acceleration in activity in many advanced economies, but weakness will weigh on
external demand and on terms of trade of commodity exporters.
Policy actions have lowered crisis in the Euro area and the United States. Advance Economies are expected to grow
by 1.4%, whereas emerging economies are projected to grow by 5.5% in 2013. If crisis risks remain under control and
financial conditions continue to improve, global growth could be stronger than projected. However, downside risks
remain significant, including renewed setbacks in the
Euro area and risks of excessive near-term fiscal
consolidation in the US. Policy action must urgently
address these risks to sustain the world economic
recovery.
Bangladesh Economy:
With the exception of few occasional lapses,
Bangladesh has been credited with maintaining decent
macroeconomic balances for the past few years. That
situation came under stress at the close of 2011.
Macroeconomic stability appeared to be under pressure
due to: double digit inflation rate, unfavorable balance of
payment position, pressure on foreign exchange
reserve, depreciation of Taka, persistent instability in the
stock market and difficulties in mobilizing foreign
financing.
In 2012, Bangladesh economy managed to address all
those issues. Therefore, macro economic stability
appeared back on track. It achieved 6.32% GDP growth
in FY2011-12 which is consistent of last decades GDP
growth performance. Accommodative monetary policy of
Bangladesh Bank helped bringing inflation to single digit
in 2012. Point to point inflation reduced from 11.59% in
January 2012 to 7.69% in December 2012.
Both Export and Import marked moderate growth in
FY2011-12. Export and Import growth was 5.93% and
5.52% respectively in FY2011-12 over FY2010-11.
However, Import in the first half of FY2012-13 showed
negative growth of 8.11%, partly due to lower food grain
and consumer goods imports due to existing high food
stocks and excellent domestic harvests. Export on the
other hand maintained a positive growth of 7% during
the first half of FY2012-13. Foreign Remittance Inflow
marked substantial growth of 22% during the first half of
FY2012-13 as compared to 10.24% growth over the
corresponding period in FY2011-12.
Foreign exchange reserves increased persistently
during 2012 and stood record high at around USD 12.8
billion in end December 2012 which is equivalent to
about 4 months of import cost. Pro-active steps to
secure alternative sources of external financing for oil
imports, lower import demand especially food-grains,
positive export growth combined with strong remittance
growth contributed for this record foreign exchange
reserve. Domestic currency Taka remained largely
stable appreciating by 2.6% in July-December, 2012 due
to this foreign currency reserve.
Large volume of government borrowing from banking
channels occured due to decline in foreign aid inflows,
subsidy payments and low levels of non-bank borrowing.
This created pressure in macro economic stability in
FY2011-12. During FY2011-12 net credit to government
from the banking channel was BDT 184.7 billion.
Government borrowing from banking channel during the
first half of FY2012-13 has been restrained to BDT 58.9
billion, which is around 29% of the budgeted amount.
Broad money growth in November 2012 is 18.6% above
the 16.2% program target due to higher growth of
remittance.
MBLs Financial Performance in 2012
The year 2012 was challenging for the banking industry
and for our Bank as well. High cost of deposits, sluggish
trend in the country's capital market, cautious monetary
policy and lower import payments affected us adversely.
Bangladesh Banks new rules for loan classification and
provision in 2012 required more provisions against
classified loan. To comply with Bangladesh Banks
guideline a larger amount of provision was to be kept to
safeguard Banks health. MBLs operating profit reduced
to BDT 3,350.78 million in 2012 from 3,501.67 million in
2011. Due to the higher requirement of provisioning
against classified loan, net profit before tax reduced to
BDT 2,381.45 million in 2012 from BDT 3,004.17 million
in 2011.
Balance Sheet Position
Amidst sluggish investment and disciplined financial
system, balance sheet of the Bank marked reasonable
growth in 2012. Total Deposits and Loans and Advances
grew by 29.17% and 17.01% respectively in 2012 over
2011. At year end 2012, total deposits stood at BDT
132,093.64 million compared to BDT 102,262.02 million
in 2011. Loans and Advances on the other hand
increased to BDT 93,610.87 million at the end of 2012. In
December 2011, it was BDT 79,999.80 million. Total
Assets of the Bank marked 32.16 % growth and stood at
BDT 154,040.18 million at the end of 2012 as compared
to BDT 116,553.01 million in 2011. Total Shareholders
Equity increased to BDT 10,924.55 million in 2012
showing 13.10% growth over that of 2011.
Achievement in International Business
MBL made noteworthy contribution in facilitating the
import and export of the economy. Import business of
the Bank increased to BDT 113,430.10 million during
2012 as compared to BDT 95,008.70 million in 2011
indicating 19.39% growth. The Bank handled BDT
81,477.10 million of export business in 2012. In terms of
remittance business, the growth of 120.88% in 2012
over 2011 was spectacular. The bank procured BDT
15,792.80 million of inward remittance in 2012 as
compared to BDT 7,150.00 million in 2011.
Diversified Deposits & Loans Products
Customers need are foremost. We always emphasize
on launching new products and review existing products
in order to meet customers financial need. In 2012, we
have launched two new deposits products naming Super
Benefit Deposits Scheme (SBDS) and Education
Planning Deposits Scheme (EPDS). In addition, our
existing deposit products- Monthly Savings Scheme,
Family Maintenance Deposit Scheme, Double Benefit
Deposit Scheme, Quarterly Benefit Deposit Scheme,
Advanced Benefit Deposits scheme, 1.5 Times Benefit
Scheme and Special Savings Scheme are highly
popular. In case of loan products, ^c wbevm- Home
Loan, mvbvi Zix- Car Loan, AvKvv- Overseas
Employment Loan, PvKv- SME Loan, Abbv- Women
Entrepreneurs SME Loan, KywUi- Cottage Loan, and
bevb Agricultural Loan have attained enthusiasm
among the people at home and abroad.
Dynamic Card Services
MBL started its credit card operation in 2002 with
Q-Cash proprietary cards. In June 2006, VISA Brand
Card was launched. VISA dual prepaid card, VISA Dual
Hajj Card, Credit Card and Debit card have been
introduced in the Bank with various up-to-date facilities.
There are withdrawal through Pay Order, SMS alert
services, bill through e-mail, Issuance of supplementary
card, longer interest free period etc. Banks International/
Dual cards are highly acceptable all over the world. MBL
is continuously expanding its ATM network and inking
contact with the other banks with a view to facilitating
customer convenient and care. As on December 31,
2012 total number of ATM booth increased to 115. MBL
earned BDT 24.00 million operating profit from card
business during the year 2012.
Agriculture & SME financing
Agriculture and SME are the priority sectors of financing
in MBL. In order to facilitate the agricultural activities and
promote small and medium enterprises, MBL is
financing these two sectors with the assistance of
Bangladesh Bank and different Micro Financing
Institutions (MFIs). To facilitate Agriculture & SME
Credit, the Bank has already established seperate
Agriculture Credit Department and SME division. It has
also inaugurated 5 SME/ Krishi branches in remote
areas of the country. In future, the Bank will launch more
SME and rural branches to enhance this sector. At the
end of 2012, total Agricultural loan increased to BDT
1,421.18 million from BDT 679.81 Million as on
December 2011. On the other hand, SME financing of
the Bank stood at BDT 4,597.81 million in 2012 against
BDT 3,833.56 million in 2011 registering 19.94% growth
in 2012 over 2011.
Sustainable Growth
In an attempt to attain sustainable growth we prioritize
on superior customer services, wide range of products,
skilled work force, team work, diversified portfolio,
prudent fund management. We are careful in our
expense management and effective execution of
business strategies. To sum up, we want to maximize
our shareholders value while remaining continuously
compliant to different regulatory bodies thus contributing
directly to economic growth.
Sophisticated Technology
Technological sophistication is a precondition for
attaining comparative advantages in this modern and
highly competitive banking arena. We are putting due
emphasis on strengthening our IT division and at the
same time continuously providing more IT based
products to our customers. From the beginning, MBL
has adopted modern technologies to make services
easier and quicker for customers. We have introduced
on-line banking and SMS banking services for our
customers. We are providing 24 hours banking services
to our clients through SMS banking and ATM booths
across the country. For Core Banking Solution the Bank
has selected TEMENOS T24, a world class proven
technology platform, which will be implemented this
year. Our endeavor to continuously improve
technological support will bring greater efficiency to
operations and enable continuous value added services.
Mobile Banking
To fulfill our vision of Inclusive Banking MBL will forge
agressively ahead in achieving cash based services
across the corner of Bangladesh. This will be through a
network of agents using the cell phone service
infrastructure.
Human Capital Development
We believe that Human Resources are the most
valuable asset for the Bank. Success in banking
operations depends largely on the quality of human
resources. So, it is our continuous endeavor to establish
an open and enabling environment where our people
can work with self respect, dignity and scope of showing
creativity. We believe that our investments in Human
Resource development are key to sustainable growth
and profit. The Bank has a talented work force. We
nurture that talent even more effectively through
continuous and need based training. Bank plans to hire,
develop and retain its Human Resources based on the
right level of skills and talent to meet current and future
needs. In recruiting fresh graduates we follow
competitive process of recruitment, which eventually
ensures efficient and skilled human capital for the Bank.
Corporate Social Responsibility (CSR)
MBL is committed to the society. We believe that, true
success does not consist in profit maximization but in
looking forward to help the under privileged. With a view
to performing CSR activities, MBL has established a
Foundation a year after its incorporation. Each year one
percent of the operating profit or BDT 40 Lakh, which one
is higher, is contributed to this Foundation to undertake
various benevolent activities. For instance, Mercantile
Bank Abdul Jalil Education Scholarship, awards to
intellectual personalities of the society for their
outstanding contribution. The Foundation has
programmes for donation to health, education and
natural disaster, development of sports, talent
development, etc. During the year 2012, MBL donated
BDT 85.90 million for CSR activities.
Off-Shore Banking Unit
MBL launched off-shore banking unit in 2011.
Performance of Off-Shore Banking unit was satisfactory
in 2012. Two units of Off-shore banking unit achieved
BDT 9.67 million as operating profit during 2012 as
compared to BDT 0.46 million during 2011.
MBL Subsidiaries
Considering the market demand and our commitment to
serve the customers, MBL launched two subsidiaries
namely Mercantile Bank Securities Limited (MBSL) and
Mercantile Exchange House (UK) Limited. MBSL formed
on 27 June 2010, to deal with stock dealing and broking
and as a subsidiary it started its separate operation from
14 September 2011. MBSL has 7 branches across the
country. Targeting to provide superior remittance
services to the Bangladeshi expatriate working in UK,
MBL has launched Mercantile Exchange House (UK)
Limited, which commenced its business operation at
Birmingham on December 06, 2011. Second branch of
Mercantile Exchange House (UK) Limited was opened in
London, on September 20, 2012. We believe that such
endeavor will contribute towards attracting more
remittance business through the banking channel.
Commitment to Government
MBL made significant contribution to the governments
effort in collection of revenue. We are proud that being
one of the largest taxpayers in the country, we have
become an important source of revenue for the
Government of Bangladesh. As per law, Bank deducts
income taxes, VAT and excise duty from various
services at source. Besides, the Bank also pays income
tax on its earnings. In 2012, the Bank has made a
provision of BDT 1,000.00 million for the National
Exchequer.
Basel II Capital Accord
Risk based capital adequacy i.e. Basel II came into
effect fully in the banking industry of Bangladesh from
January 01, 2010 after parallel run with Basel I during
2009. MBL believes that Basel II is not merely a quarterly
reporting system but rather a new risk management
technique for the Bank. Therefore, MBL is committed to
implement Basel II properly. Complying with Basel II
requirement the Bank maintained adequate capital by
ensuring optimum mix of Tier 1 and Tier 2 capital. The
Bank has been generating most of its incremental capital
through issuance of bonus shares and retention of profit.
Furthermore, there is an instance of raising capital
amounting to BDT 1,430 million in 2010 by issuing Right
Shares. Banks Capital Adequacy Ratio (CAR)
consistently remains much higher than the statutory
requirement.
Separate Risk Management Division
For better risk management, MBL has formed a separate
Risk Management Division (RMD). RMD identify,
measures and manages risks efficiently. The division
undertakes Stress Tests as per Bangladesh Banks
guidelines. Core objectives of Stress Test are to
measure the survival capacity of the Bank under some
exceptional but plausible shocking events.
Green Banking
As a part of Green Banking, MBL is providing support to
the activities that are not harmful to the environment. We
have established a separate Green Banking unit and
various measures have been adopted to ensure Green
Banking. Among others, green financing, creating
awareness among employees for efficient use of water,
electricity and paper, giving preference to preservation
of ecosystem while financing commercial projects and
reuse of equipments are some initiatives for turning MBL
as a Green Bank.
Network Expansion
Bearing the slogan of evsjvi evsK we want to reach the
people with our banking services no matter whether they
are urban or rural. For that, we are continuously
expanding our network across the country. In 2012, we
have launched 11 new branches. As a result, at the end
of 2012, we have 86 branches including 5 SME/ Krishi
branches and two subsidiary i.e. Mercantile Bank
Securities Limited with 7 branches and Mercantile
Exchange House (UK) Limited with two branches. We
aspire to augment the number of branches of MBL as
well as Mercantile Exchange House (UK) Limited in the
year 2013. We hope to sign more agreements with
various overseas companies across the world. Apart
from these, we have planned to increase the number of
ATM booth across the country for meeting the demand
of 24 hours cash withdrawal facilities of our customers.
All these actions will strengthen our business network in
the local as well as global financial market.
Economic Outlook for 2013
The year 2013 will be a challenging year for the
economy partly because of political unrest and partly for
the adverse impact of global economic slowdown on
exports. Export growth may be affected due to a delayed
recovery in Europe and the USA. While global growth
prospects for 2013 are expected to be marginally better
than 2012, they remain highly uncertain in key trading
partner countries, particularly in Europe. The US
showing some signs of recovery but overall the growth
prospect for 2013 in advanced economies remains
bleak. Besides, threat from US to cancel Generalized
System of Preference (GSP) facilities in their market on
the ground of poor working atmosphere for the labor and
their right may decelerating export growth rate.
As a pre-election year, 2013 will be a year of increased
political unrest. Therefore, economic activities may be
hampered. Domestic and Foreign Direct Investment may
be stalled following the go-slow taken by the investors
amid political uncertainty. Besides, the unavailability of
gas and power may continue to adversely affect
investments growth and employment. Capital market,
another area of discomfort is yet to stabilize. Real
investors confidence has not been restored. Ongoing
downward trend in real estate business is also expected
to continue in 2013. Under these circumstances,
achievement of 7.2% GDP growth target set in
FY2012-13 would be a challenge for the economy.
Upcoming Challenges and Our Preparation
Banking industry is getting competitive day by day.
Modern and hi-tech banking business is replacing
traditional banking. All banks are handling almost
identical financial products. Approval of some new banks
will intensify the existing competition in the banking
industry in near future. Hence, quality services and
efficient management will make the difference for us and
help in achieving sustainable growth and a leading
position in the industry.
In order to be successful in the backdrop of this rapid
changing competitive sector, we have prepared
ourselves accordingly. Our strategy is to continue the
business that we do well. Better management of our
exposure in corporate/ commercial business and
diversification of portfolio are our focus. Others are
expansion in potential areas like Agriculture, Retail and
SME business; further expansion in small and
agricultural loans; venturing of new and innovative ideas;
continuous focus on IT development for efficient
customer services and expand to larger customer base;
relentless efforts in mobilization of remittances with an
ever increasing network of exchange houses both at
home and abroad; mobilization of no-cost and low-cost
deposits; effective management of operating costs;
maximization of fee based income; strengthening our
Primary Dealer operations to optimize our profitability.
We are relentlessly endeavouring to provide our
customers with quality and prompt services. We have
planning and progressing with sophisticated technology,
innovative products and quality human capital. Our
officers and executives are well equipped with
contemporary knowledge regarding banking and
economy. We work to devise the potential strategies to
ensure Risk Return Trade off.
Acknowledgement
On behalf of management of the Bank, I express my
appreciation and thanks to the Government of the
Peoples Republic of Bangladesh, Governor and other
officials of Bangladesh Bank, Bangladesh Securities and
Exchange Commission (BSEC), Dhaka Stock Exchange
(DSE), Chittagong Stock Exchange (CSE) and Registrar
of Joint Stock Companies and Firms for their continuous
support and assistance, guidelines and cooperation
provided to the Bank from time to time.
We have a dedicated team who are well equipped to
meet the challenges of modern and highly competitive
banking industry while remaining compliant to all
regulatory issues. I would like to thank the MBL team for
their passion and effort to attain the corporate vision,
mission and strategic objectives at the same time
ensuring that our core value remains consistent. My
sincere note of gratitude goes to our dynamic Board of
Directors for their valuable and judicious policy support
and timely decisions to steer the Bank for being the
finest corporate citizen.
M. Ehsanul Haque
www.mblbd.com
Dear Shareholders,
World Economy
recovery.
Bangladesh Economy:
financing.
remittance.
in 2011.
in 2012 over 2011.
Sustainable Growth
Mobile Banking
infrastructure.
MBL Subsidiaries
Exchequer.
requirement.
Green Banking
as a Green Bank.
Network Expansion
Acknowledgement
M. Ehsanul Haque
Managing Director & CEOs Review
54 annual report
Dear Shareholders,
World Economy
recovery.
Bangladesh Economy:
financing.
remittance.
in 2011.
in 2012 over 2011.
Sustainable Growth
Mobile Banking
infrastructure.
MBL Subsidiaries
Exchequer.
requirement.
Green Banking
as a Green Bank.
Network Expansion
Acknowledgement
M. Ehsanul Haque
www.mblbd.com
55 annual report
Dear Shareholders,
World Economy
recovery.
Bangladesh Economy:
financing.
remittance.
in 2011.
in 2012 over 2011.
Sustainable Growth
Mobile Banking
infrastructure.
MBL Subsidiaries
Exchequer.
requirement.
Green Banking
as a Green Bank.
Network Expansion
Acknowledgement
M. Ehsanul Haque
Managing Director & CEOs Review
56 annual report
Dear Shareholders,
World Economy
recovery.
Bangladesh Economy:
financing.
remittance.
in 2011.
in 2012 over 2011.
Sustainable Growth
Mobile Banking
infrastructure.
MBL Subsidiaries
Exchequer.
requirement.
Green Banking
as a Green Bank.
Network Expansion
Acknowledgement
M. Ehsanul Haque
www.mblbd.com
57 annual report
Dear Shareholders,
World Economy
recovery.
Bangladesh Economy:
financing.
remittance.
in 2011.
in 2012 over 2011.
Sustainable Growth
Mobile Banking
infrastructure.
MBL Subsidiaries
Exchequer.
requirement.
Green Banking
as a Green Bank.
Network Expansion
Acknowledgement
M. Ehsanul Haque
Sustainablity Report
Initiative for green banking is the key in SHAPING our FUTURE. We, together with our central bank namely,
Bangladesh Bank are effectively working to sustain and keep our planet green. Role of Bangladesh Bank has made our
job easy to enter into green banking initiatives like Online CIB, Bangladesh Automated Clearing House (BACH),
Electronic Fund Transfer Network (EFTN), Enterprise Data Warehouse System (EDWS) etc. These are not only
analogous to green banking but also has made us efficient.
Bangladesh Bank is also assisting us to empowering women and farmers giving them access to finance. We are
allowing substantial loan facilities to woman entrepreneurs and farmers at lower interest rate and getting refinance from
Bangladesh Bank. Furthermore, we are getting refinance against Bio-gas, ETP and Solar energy finance.
We have installed solar panels in our eleven branches particularly in rural areas. Installation of solar panels in number
of branches is also in progress. Apart from solar panel installation, our Bank has changed interior decoration concept
to get more sunlight in office premises during working hours. These have given us scope to reduce our energy
requirement. Being a responsible corporate citizen, we arranged number of trainings/ seminars for our employees and
distributed twenty thousand stickers on green banking.
Employees Benefit
MBL is an employer of choice. We want to see our employees make the most of their talents and always looking for
ways to do the things better. Hence, we respect our employees and strive to keep our work environment harmonious
to create leadership and team strength. We maintain safe and healthy working environment for our employees.
We arrange fire drill in our offices in collaboration with Bangladesh Fire Service & Civil Defense Department. We offer
competitive compensation package and all sorts of financial and non-financial benefits. Our employees have been
availing long term education leave to earn their overseas degrees.
We support equal employment opportunities. Our female employee ratio is much higher than industry average. They
avail 06 months maternity leave with full benefit. We acknowledge good results of the children of our employees and
give them financial rewards. We have a full time MBBS doctor stationed in head office to provide emergency health
care.
Directors Report
Dear Shareholders,
On behalf of the Board of Directors of MBL, I have the
pleasure to present the 14th Annual Report of the Bank
which consists of audited Balance Sheet, Profit and Loss
Account, Statement of Changes in Equity, Cash Flow
Statement and Assets & Liabilities Maturity Analysis as
on December 31, 2012. Post Balance Sheet Events: Mr.
Md. Abdul Jalil, M.P, Chairman of the Board of Directors
of the Bank, expired on March 06, 2013. Alhaj Akram
Hussain (Humayun), Director and the then
Vice-Chairman has since been elected as the Chairman
of the Board of the Bank. Mr. A. K. M. Shaheed Reza
was the Chairman of Executive Committee of the Board
of Directors of the Bank. Mr. Md. Anwarul Haque has
been elected as Chairman of the Executive Committee
by the Board of Directors in its 213th meeting held on
April 01, 2013. Consequent upon resignation of Mr.
A.K.M. Shahidul Haque as Managing Director in
September, 2012 Mr. Md. Abdul Jalil Chowdhury, the
then Deputy Managing Director was holding the current
charge of Managing Director till January 06, 2013. Mr. M.
Ehsanul Haque joined as Managing Director of the Bank
on January 07, 2013.
On this grand occasion, I am also placing a brief review
of various business operations of the Bank during 2012
along with the current trend of World as well as
Bangladesh Economy.
World Economy
Global financial conditions improved in the fourth quarter
of 2012 with global growth increasing to about 3.2% in
2012 as compared to 3% growth projection of World
Economic Outlook (WEO) September 2012. Advanced
economy marked 1.3% growth in 2012 as compared to
1.6% growth in 2011. Emerging market and developing
economies also attained moderate growth of 5.1% in
2012. On the contrary, the Euro zone economies
exhibited dismal picture with -0.4% growth in 2012.
Growth in the United States is predicted to achieve 2%
growth in 2013; a supportive financial market
environment and the turnaround in the housing market
have helped improve household balance sheets and
should underpin firmer consumption growth in 2013.
The near-term outlook for the Euro area has been
revised downward, even though progress in national
adjustment and a strengthened EU-wide policy
response to the euro area crisis reduced risks and
improved financial conditions for sovereigns in the
periphery. Euro area activity is now expected to contract
by 0.2% in 2013. Growth in emerging market and
developing economies is on track and likely to grow by
5.5% in 2013. Nevertheless, growth is not projected to
rebound to the high rates recorded in 201011.
Against this backdrop, the WEO projection imply that
global growth will strengthen gradually through 2013,
averaging 3.5% on an annual basis, a moderate
increase from 3.2% in 2012, but 0.1% point lower than
projected in the October 2012 WEO. A further
strengthening to 4.1 % is projected for 2014, assuming
recovery takes a firm hold in the Euro area economy.
Bangladesh Economy
The year 2012 will be remembered as a year in which
macroeconomic stability was restored from a potential
slide in monetary, fiscal and exchange rate
developments that threatened the economy early in the
year. In 2012 almost all the macroeconomic indicators
appeared to back on track. For instance, Inflation rate
fell down to single digit, balance of payment recorded its
surplus and foreign exchange rate remained largely
stable appreciating by 2.6% in July-December, 2012.
Defying all suspects and uncertainty, the economy
achieves 6.32% GDP growth in FY2011-12. Although
this growth rate was lower than that of previous fiscal but
in consideration of renewed crisis in USA and Euro
zone, above 6% GDP growth was quite satisfactory.
Inflation rate came down to single digit in 2012 due to
tightening monetary policy taken by Bangladesh Bank.
During December 2012, point to point inflation reduced
to 7.69% (base year 1995-96) compared to 10.63%
during the corresponding month of 2011. With improved
fiscal discipline, fiscal deficit was contained within 4% of
GDP in FY2011-12. Slower growth of private credit
helped squeeze import demand to achieve balance of
payment stability.
The overall balance of payments reversed from a
moderate deficit of USD 656 million in FY2010-11 to a
small surplus of USD 494 million in FY2011-12 due to
much slower than projected import growth, strong
growth in remittances and moderate growth in export
earnings. Foreign Exchange reserves stood at USD
12.75 billion in December 2012 which is equivalent to 4
months import bill of the economy.
Both the Export and Import marked positive growth in
FY2011-12 amidst the world economic slowdown. Total
Export earnings and Import cost was USD 24.29 billion
and USD 35.52 billion respectively in FY2011-12. The
economy also achieved USD 12.84 billion as remittance
inflow in FY2011-12.
GDP Growth
Bangladesh has been experiencing a relatively
moderate but sustained growth in GDP at around above
6% for the last one decade. In FY 2011-12, Bangladesh
Economy achieved 6.32% GDP growth against the
target of 7.5%. Though targeted GDP growth rate is not
achieved, the growth rate of GDP in Bangladesh is
satisfactory compared to the world growth rate. In 2012,
the world growth rate was 3.20%. Volume of total GDP
at current price In FY 2011-12 was BDT 9,147.84 billion
as compared to that of BDT 7,874.95 billion in previous
FY2010-11.
Sector wise contribution in GDP
Service sector leads the contribution in GDP followed by
industrial and agricultural sector. In terms of sector wise
contribution in GDP during FY2011-12, service sector
contributed 49.45%, while contribution of Industry and
Agriculture was 31.26% and 19.29% respectively.
Inflation
Inflation rate, both point to point and twelve month
average have been declining steadily over the year
2012. Point to point inflation reduced from a peak of
11.59% in January 2012 to 7.69% in December, 2012
(base year 1995-96). Twelve month average on the
other hand reduced from a peak of 10.96% in February
2012 to 8.74% in December, 2012 (base year 1995-96).
Both the food price and non food price inflation
contributed to the decreasing trend in countrys overall
inflation rate.
Broad Money
Broad money increased to BDT 5,507.51 billion and
recorded an increase of 18.49% at the end of November
2012 against the growth of 17.78% at the end of
November 2011. Among the components of M2,
currency outside banks was BDT 654.45 billion whereas
amount of Deposits (Demand and Time) was BDT
4,853.06 billion as on November 2012.
Exports
The economy earned USD 24.29 billion as export
earning in FY2011-12 as compared to USD 22.93 billion
in FY2010-11, registering 5.93% growth in FY2011-12
over the previous fiscal. Economic slowdown in major
export destination of Bangladesh coupled with world
economic downtrend led to this moderate export growth
in the immediate past FY2011-12. Ready Made
Garments still contributes more than 75% of total export
earnings.
Imports
Import payments during FY2011-12 reached to USD
35.52 billion as compared to USD 33.66 billion in
FY2010-11 indicating 5.52% growth over the preceding
fiscal. However, import growth marked negative growth
of 8.11% during first half of current FY2012-13.
Remittances
Bangladesh economy exhibited excellent performance
in terms of remittance inflow over the last few months.
Remittance inflow during FY2011-12 was USD 12.84
billion as compared to USD 11.65 billion in FY2010-11,
indicating 10.24% growth over the last fiscal. Remittance
inflow however, strengthened further in the ongoing
fiscal. During the first six month of this FY2012-13
foreign remittance inflow marked substantial growth of
22% over the corresponding period of FY2011-12.
Foreign Exchange Reserve
Foreign exchange reserves mounted to USD 12 billion
for the first time in the history of Bangladesh in October,
2012. As on December 2012, foreign exchange reserve
of Bangladesh Bank stood at around USD 12.75 billion
which is equivalent to import cost of 4 months of the
country.
Exchange Rate Movement
Domestic currency taka lost its value against USD
during early of the year 2012. However, it restored some
of its value at the later of the year 2012. Taka
appreciated by 2.04% against USD at the end of
December 2012 as compared to that of November 2012.
This appreciation of taka resulted mainly due to higher
remittance flow, moderate export growth, foreign aid,
and low import cost.
Balance of Payments (BOP)
Trade Balance recorded lower deficit of USD 3.49 billion
in the first five month of ongoing FY2012-13 as
compared to the deficit of USD 4.48 billion over the
corresponding period of FY2011-12. On the other hand,
large inflow of remittances in the period contributed to a
current account surplus of USD 0.043 billion during
July-November 2012. This together with strong financial
account surplus resulted overall surplus in the BOP
amounting to USD 1.75 billion during July-November
2012 against a deficit of USD 0.92 billion during
July-November 2011.
Bangladeshs economic outlook is subject to several
near-term risks. For instance, possible intensification of
economic crisis in the USA and in the Euro area may
hurt our export earnings; escalation of global food prices
may reverse the recent decline in food inflation; global oil
price shock may place the balance of payments under
pressure again and shrink fiscal space; banks are
susceptible to credit and market risk and the global
economic vulnerabilities; and increased political
instability and labor unrest may depress investments
further.
Surpassing all the above potential risks, probable
political instability in the year 2013 may be the main
impediment to the economic growth. Furthermore, the
prevailing Gas and Power crisis, instability in the local
capital market is unlikely to be addressed soon. Political
uncertainty alongwith the lack of congenial atmosphere
for investment may lead the domestic as well as foreign
investors to adopt the go-slow stance for taking
investment decision in Bangladesh. Therefore,
investment in productive sector may fall and fund may
channel to unproductive sector which may cause to
induce the inflationary pressure. All these issues really
cast doubt on achieving 7.2% GDP growth target set for
FY2012-13 in the economy.
Business Review
Deposits & Deposit Mix
Deposit is the major source of fund for Commercial
Banks. All the banks want to have sufficient deposits to
expand their business with a continuously increasing
trend. In 2012, the Bank mobilized total deposits of BDT
132,093.64 million compared to that of BDT 102,262.02
million at the end of 2011. The growth rate is 29.17%.
Attractive deposit products, competitive interest rates,
superior customer service delivery at the branch level,
expansion of branch network to rural areas where
foreign remittance flow is significant as well as campaign
for mobilization of no cost and low cost deposits
contributed to the remarkable growth in deposits. The
Bank evolved a number of attractive deposit schemes to
cater the requirement of people of all classes. This
improved not only the quantum of deposits but also
brought about qualitative changes in the deposits
structure.
Directors Report
60 annual report
Bangladesh Economy.
World Economy
Bangladesh Economy
payment stability.
GDP Growth
FY2010-11.
Inflation
inflation rate.
Broad Money
Exports
earnings.
Imports
Sectorwise Contribution in GDP (%)
2007-08 2008-09 2009-10 2010-11 2011-12
50.00
40.00
30.00
20.00
10.00
0.00
Service Sector Industrial Sector Agricultural Sector
7
.
2
0
Projected GDP Growth Rate (%)
Monthwise Inflation (%) 2012 (Base Year 1995-96)
1
1
.
5
9

1
0
.
4
3

1
0
.
1
0

9
.
9
3

9
.
1
5
8
.
5
6

8
.
0
3

7
.
9
3

7
.
3
9

7
.
2
2

7
.
4
1

7
.
6
9

J
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F
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A
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J
u
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o
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N
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D
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Point to Point Twelve Month Average
1
0
.
9
1

1
0
.
9
6

1
0
.
9
2

1
0
.
8
6

1
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.
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6

1
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.
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2

1
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.
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1
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.
0
8

9
.
6
9

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.
3
3

8
.
9
8

8
.
7
4

Point to Point Inflation Trend 2012 (Base Year 1995-96)
J
a
n
u
a
r
y

F
e
b
r
u
a
r
y

M
a
r
c
h

A
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l

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General Food
Non-Food
Remittances
country.
July-November 2011.
further.
Business Review
structure.
www.mblbd.com
61 annual report
Bangladesh Economy.
World Economy
Bangladesh Economy
payment stability.
GDP Growth
FY2010-11.
Inflation
inflation rate.
Broad Money
Exports
earnings.
Imports
Monthwise Export Earning Trend (Million USD) over 2010-2012
Monthwise Import Cost Trend (Million USD) over 2010-2012
Monthwise Remittance Inflow (Million USD) over 2010-2012
Remittances
country.
July-November 2011.
further.
Business Review
structure.
Directors Report
62 annual report
Bangladesh Economy.
World Economy
Bangladesh Economy
payment stability.
GDP Growth
FY2010-11.
Inflation
inflation rate.
Broad Money
Exports
earnings.
Imports
Sectors/Segments Volume Percentage (%)
Trade Finance 13,716.42 14.65%
Exports (RMG) 13,788.60 14.73%
Engineering (Iron and Steel/Electrical) 11,086.53 11.84%
SME 4,597.81 4.91%
Food, Beverage, Edible Oil, etc 6,513.71 6.96%
Agriculture 1,421.18 1.52%
Hospital and Medical Services 2,367.56 2.53%
Textle 2,817.36 3.01%
Housing 1,363.32 1.46%
Transportaton 1,325.82 1.42%
Pharmaceutcals 1,029.27 1.10%
Telecommunicaton 563.09 0.60%
Others 33,020.20 35.27%
Total 93,610.87 100.00%
Loans and Advances
Total loans and advances of the Bank stood at BDT
93,610.87 million as on December 31, 2012 against BDT
79,999.80 million at the end of 2011. The Bank recorded
a 17.01% growth in loans and advances. Major sectors
where the Bank extended credit includes trade &
commerce, garments industries, large & medium scale
industries, construction, agriculture and related sectors,
hospital & medical Services, telecommunication, plastic
and plastic materials, transport, pharmaceuticals etc.
Besides, the Bank continued its support to Small and
Medium Enterprises (SME) and expanded credit
facilities to them through its SME Division. Sectorwise
Loans & Advances Mix-
(BDT in million)
(BDT in million)
Type Amount Percentage (%)
Deposit Under Schemes 43,333.46 32.81%
Fixed Deposits 46,250.92 35.01%
Savings Deposits 6,869.66 5.20%
Current Deposits 4,491.20 3.40%
Short Notce Deposits 5,087.39 3.85%
Other Deposits 26,061.01 19.73%
Total 132,093.64 100.00%
Deposits Mix
Deposits Under Schemes
Savings Deposits
Short Notice Deposits
Fixed Deposits
Current Deposits
Other Deposits
32.81%
19.73%
3.85%
3.40%
5.20%
35.01%
Remittances
country.
July-November 2011.
further.
Business Review
structure.
www.mblbd.com
63 annual report
Trade Finance
Exports (RMG)
Engineering
(Iron and Steel/Electrical)
SME
Food, Beverage, Edible Oil etc
Agriculture
Hospital and Medical Services
Textile
Housing
Transportation
Pharmaceuticals
Telecommunication
Others
Sectorwise Loans & Advances Mix
35.27%
3.01%
1.46%
1.42%
0.60%
1.10%
14.73%
11.84%
4.91%
6.96%
1.52%
2.53%
14.65%
Import Trade
MBL has exhibited quality financing while facilitating
import trade in 2012. During the year, the Bank handled
a total of 25,357 Letters of Credit amounting to BDT
113,434.10 million compared to 23,296 Letters of Credit
amounting to BDT 95,008.70 million in the year 2011.
Current growth rate is 19.39% based on the previous
year. 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 total 25,712 export bills worth BDT
81,477.10 million in 2012 as against 22,501 export bills
and BDT 81,311.80 million in 2011. Growth rate of
export trade is 0.20%. The focal point of the Bank in
export financing was garments industry, the lone driving
force of the economy of Bangladesh and the biggest
source of foreign exchange and employment provider of
the country. Other notable items were jute & jute goods,
leather, handicrafts, tea, frozen food & fish products.
Foreign Remittance
During the year 2012, 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
alliance with leading exchange companies and banks in
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 with
some other local agencies. MBL participated in various
fairs/ campaigns at home and abroad to create
awareness and continued encourage and motivate both
remitters and beneficiaries to use formal banking
channel for money transfer from abroad. In 2012, the
bank handled total inward foreign remittance of BDT
15,792.80 million compared to BDT 7,150.00 million in
2011 registering a growth of 120.88%. We have
strengthened relationship with various global money
transfer companies including Western Union,
MoneyGram, Xpress Money, Placid Express, Instant
Cash Worldwide, Prabhu Money Transfer and
Trans-Fast Remittance.
Treasury Operation and Fund Management
Treasury exerts its all out efforts to mobilize the
investable/surplus fund effectively and efficiently to
maintain liquidity. Treasury operation of our Bank deals
with money market activities, asset liability
management, and foreign exchange dealings. The duty
of treasurer also includes maintaining Cash Reserve
Requirement (CRR) and Statutory Liquidity
Requirement (SLR) with the Bangladesh Bank. Treasury
Services of our Bank provides integrated working capital
management, money market operations and investment
activities. In 2009, MBL obtained Primary Dealership
(PD) license from Bangladesh Bank and since then,
MBL is continuously trying to develop the bond market
through trading of Treasury Bills and Bonds in the
secondary market.
Earning Base in Assets
Earning base in Total Assets of the Bank was 89.82% in
2012 as compared to 90.78% in 2011. The ratio
indicates efficient utilization of resources to earn
revenues.
(BDT in million)
Total Assets 154,040.18 116,553.01
Earning Assets 138,365.18 105,801.30
Non-earning Assets 15,675.00 10,751.71
% of Earning Assets in Total Assets 89.82% 90.78%
% of Non-earning Assets in Total Assets 10.18% 9.22%
Asset Portfolio
The Banks total assets as on December 31, 2012
amounted to BDT 154,040.18 million as compared to
BDT 116,553.01 million at the end of December 2011.
Among the total assets outstanding in 2012, loans and
advances constituted 60.77%, investments 26.82%,
cash 7.80%, balances with other banks 0.41% and other
assets 4.20% as against that of 68.64%, 21.15%,
5.96%, 0.55%, and 3.70% respectively in the end of
2011.
(BDT in million)
Particulars In 2012 In 2011
Loans and Advances 93,610.87 77,999.80
Investments 41,314.19 24,645.38
Cash 12,015.12 6,946.10
Balance with other Banks 625.02 643.86
Other Assets 6,474.98 4,317.88
(including Fixed Assets)
Total 154,040.18 116,553.01
Directors Report
64 annual report
Import Trade
MBL has exhibited quality financing while facilitating
import trade in 2012. During the year, the Bank handled
a total of 25,357 Letters of Credit amounting to BDT
113,434.10 million compared to 23,296 Letters of Credit
amounting to BDT 95,008.70 million in the year 2011.
Current growth rate is 19.39% based on the previous
year. 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 total 25,712 export bills worth BDT
81,477.10 million in 2012 as against 22,501 export bills
and BDT 81,311.80 million in 2011. Growth rate of
export trade is 0.20%. The focal point of the Bank in
export financing was garments industry, the lone driving
force of the economy of Bangladesh and the biggest
source of foreign exchange and employment provider of
the country. Other notable items were jute & jute goods,
leather, handicrafts, tea, frozen food & fish products.
Foreign Remittance
During the year 2012, 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
alliance with leading exchange companies and banks in
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 with
some other local agencies. MBL participated in various
fairs/ campaigns at home and abroad to create
awareness and continued encourage and motivate both
remitters and beneficiaries to use formal banking
channel for money transfer from abroad. In 2012, the
bank handled total inward foreign remittance of BDT
15,792.80 million compared to BDT 7,150.00 million in
2011 registering a growth of 120.88%. We have
strengthened relationship with various global money
transfer companies including Western Union,
MoneyGram, Xpress Money, Placid Express, Instant
Cash Worldwide, Prabhu Money Transfer and
Trans-Fast Remittance.
Treasury Operation and Fund Management
Treasury exerts its all out efforts to mobilize the
investable/surplus fund effectively and efficiently to
maintain liquidity. Treasury operation of our Bank deals
with money market activities, asset liability
management, and foreign exchange dealings. The duty
of treasurer also includes maintaining Cash Reserve
Requirement (CRR) and Statutory Liquidity
Requirement (SLR) with the Bangladesh Bank. Treasury
Services of our Bank provides integrated working capital
management, money market operations and investment
activities. In 2009, MBL obtained Primary Dealership
(PD) license from Bangladesh Bank and since then,
MBL is continuously trying to develop the bond market
through trading of Treasury Bills and Bonds in the
secondary market.
Earning Base in Assets
Earning base in Total Assets of the Bank was 89.82% in
2012 as compared to 90.78% in 2011. The ratio
indicates efficient utilization of resources to earn
revenues.
Capital
The Authorized Capital of the Bank stood at BDT
8,000.00 million of 800,000,000 Ordinary Shares of BDT
10 each as on December 31, 2012. Paid-up Capital of
the Bank was BDT 6,110.75 million of 611,075,316
Ordinary Shares, face value of BDT 10 each and listed
with both Dhaka and Chittagong Stock Exchanges.
Statutory Reserve
During the period under review the Bank transferred
BDT 476.29 million to Statutory Reserve as 20% of the
profit after provisions before tax as per section 24 of the
Bank Companies Act, 1991. The total amount of
Statutory Reserve stood at BDT 3,119.68 million at the
end of 2012.
Capital Adequacy
As per new risk based capital adequacy framework, MBL
has adopted Basel II in the Bank. On the basis of Basel
II principles, capital adequacy ratio (Solo basis) of the
bank stood at 10.83% as on December 2012 against
minimum requirement of 10.00%.
Assests Portfolio
Loans and Advances
Investments
Cash
Balance with Other Banks
Fixed & Other Assets
26.82%
7.80%
60.77%
4.20%
0.41%
(BDT in million)
Capital Adequacy (Solo)
Core Capital (Tier I) 10,216.87
Paid-up Capital 6,110.75
Statutory Reserve 3,119.68
Retained Earnings 940.75
Dividend Equalization Account 45.68
Supplementary Capital (Tier II) 1,861.99
General Provision 1,451.55
Exchange Equalization Account -
Revaluation Reserve for Assets 321.81
Revaluation Reserve for equity Investment 56.60
Revaluation Reserve for Securities 32.03
Total Capital (Tier I + Tier II) 12,078.86
Total Risk-Weighted Assets 111,524.70
Capital Adequacy Ratio 10.83%
Tier I Capital to Total Risk-Weighted Assets 9.16%
Tier II Capital to Total Risk-Weighted Assets 1.67%
Minimum Capital Requirement 11,152.47
Capital Surplus 926.39
(BDT in million)
Total Assets 154,040.18 116,553.01
Earning Assets 138,365.18 105,801.30
Non-earning Assets 15,675.00 10,751.71
% of Earning Assets in Total Assets 89.82% 90.78%
% of Non-earning Assets in Total Assets 10.18% 9.22%
Asset Portfolio
The Banks total assets as on December 31, 2012
amounted to BDT 154,040.18 million as compared to
BDT 116,553.01 million at the end of December 2011.
Among the total assets outstanding in 2012, loans and
advances constituted 60.77%, investments 26.82%,
cash 7.80%, balances with other banks 0.41% and other
assets 4.20% as against that of 68.64%, 21.15%,
5.96%, 0.55%, and 3.70% respectively in the end of
2011.
(BDT in million)
Particulars In 2012 In 2011
Loans and Advances 93,610.87 77,999.80
Investments 41,314.19 24,645.38
Cash 12,015.12 6,946.10
Balance with other Banks 625.02 643.86
Other Assets 6,474.98 4,317.88
(including Fixed Assets)
Total 154,040.18 116,553.01
www.mblbd.com
65 annual report
2005 37.50% - 5,625,000.00 NIL
2006 5.00% 33.33% 750,000.00 50,000
2007 15.00% 25.00% 2,250,000.00 37,500
2008 15.00% 20.00% 2,812,500.00 37,500
2009 10.00% 100.00% 2,250,000.00 225,000
2010 35.00% 65.00% 15,750,000.00 292,500
2011 - 25.00% NIL 185,625
Total 29,437,500.00 828,125
Year
Cash Dividend (BDT) Cash Stock Stock Dividend
% Dividend Received by MBL
Capital Gain:
MBL received 50,000 shares as stock dividend of IDLC
Finance Limited in the year 2006. In the year 2007 we
realized capital gain of BDT 59,650,000.00 after
completion of sale of 50,000 bonus share.
Total Receipt:
From the financial year 2005 to 2011 we have received
cash dividend of BDT 29,437,500.00 along with capital
gain from sale of 50,000 shares BDT 59,650,000.00.
Total receipt from IDLC investment stood at BDT
89,087,500.00.
Present Holding:
At present MBL is holding 9,281,250 ordinary shares of
IDLC FINANCE LIMITED, which is 7.50% of the total
paid up capital of the said Non-Banking financial
institution.
Purchase of Land
Gulshan:
Land measuring 1 bigha 2 chattaks located at Gulshan
Plot # 3, Block # CWN (C), Gulshan Avenue, Gulshan,
Dhaka-1212 has been purchased during the year 2005
for Banks own use. The land is under litigation and
possession of the land is yet to be taken. In this
connection, a provision has been made as per
Bangladesh Banks instruction.
Rajshahi Branch:
Ground Floor and 1st floor measuring 10502.72 sft floor
space (Ground floor and 1st floor measuring 5251.36 sft
each) has been purchased on 17.12.2007 of a 07 storied
Commercial Building named ZODIAC Plaza at ZODIAC
Plaza, 88 Saheb Bazar (Zero Point), Rampur, Boalia,
Rajshahi for our Rajshahi Branch premises.
Green Road Branch:
Ground Floor and 1st floor measuring 4,578 sft (2,423 sft
+ 2,155 sft) including 02 (two) units of Car Parking have
been purchased on 18.06.2008 of a 09 storied
Commercial Building named: Gazi Tower located at
151/6, Green Road, Dhaka on Plot No. CS-171 (p),
SA-248, JL-262, Mouza-Rajabazar, District-Dhaka for
our Green Road Branch premises.
Number of Shareholders
Since the issuance of IPO in 2003, the number of total
shareholders is increasing day by day. End of the year
2012, number of shareholders increased to 44,117 which
were 41,427 in previous year.
Year No. Of Shareholders
2003 3,118
2004 4,459
2005 5,199
2006 5,868
2007 6,692
2008 8,246
2009 12,416
2010 40,283
2011 41,427
2012 44,117
Contributon to Natonal Exchequer and Economy
Being a responsible corporate body, MBL regularly pays
corporate tax in time. We also deposit excise duty,
withheld tax and VAT to govt. exchequer in time through
deduction from employees salary as well as payments to
customers and vendors. In 2012, the Bank has made
provision of BDT 1,000.00 million for corporate tax
against that of BDT 1,270.00 million in 2011. The Bank
has also contributed to the economy by generating
employment of 1,981 full time officials till 2012 end. In the
intermediation process, the Bank mobilized resources of
BDT 132,093.64 million from the surplus economic unit
and deployed BDT 93,610.87 million in 2012. The Bank
has made significant contribution to the growth of
Readymade Garments sectors by handling huge amount
of export Letters of Credit.
Acquisiton of IDLC Shares
In the year 2005 MBL acquired 150,000 sponsor shares
of IDLC Finance Limited
Dividend Received From IDLC Finance Limited:
Directors Report
66 annual report
Satmasjid Road Branch:
A Plot of Land measuring 10 (ten) khatas alongwith 02
storied Building has been purchased on 29.07.2009
located at Plot No. 735 (Old), 82/A (New), Satmasjid
Road (old), Road No. 8/A (New), Dhanmondi Residential
Area, Dhaka-1209 for our Satmasjid Road Branch
premises.
Bijoynagar Branch:
First floor measuring 8,328.59 sft has been purchased
on 30.07.2009 of a 15 storied Commercial Building
named: Akram Centre located at 3/3 C & 3/3 D, Purana
Paltan (Old), 212 Shahid Sayed Nazrul Islam Sarani
(New), Dhaka-1000 for our Bijoynagar Branch premises.
Progat Sharani Branch:
Ground floor measuring 3,891.00 sft and entire 1st Floor
measuring 4,921.00 sft totaling 8,812.00 sft along with
03 (three) Car Parking space at Basement has been
purchased on 06.12.2009 of a 09 storied Commercial
Building named: Green Orlando for our Progati Sharani
Branch premises located at 42-4, Progati Sharani,
Baridhara, Dhaka.
Khulna Branch:
Ground floor, 1st Floor and 2nd floor measuring
7,463.42 sft (2,400 sft + 2,400 sft + 2,663.42 sft) has
been purchased on 31.08.2010 of a 07 storied
Commercial Building named: Rupsha Plaza for our
Khulna Branch premises located at 73 KDA Avenue
Commercial Area, Khulna. At present the ground floor
and 1st floor of Rupsha Plaza are being used for our
Khulna Branch premises and 2nd floor is used by Khulna
Branch of Mercantile Bank Securities Ltd.
Gulshan Branch:
First floor (Suite No. 103-109) measuring total 9,275 sft
including 08 (eight) units of Car Parking spaces at
basement-2 have been purchased on 09.09.2010 of a
06 storied Commercial Building named: Hosna Center
at Plot No. 02, Block CES (A), 106 Gulshan Avenue,
Gulshan, Dhaka-1212 for shifting of our Gulshan Branch
premises.
Ring Road Branch:
First floor measuring 5,500 sft along with 03 (three) units
of Car Parking spaces on the Basement has been
purchased on 06.01.2011 of a 15 storied Residential
cum Commercial Building named: CHOICE A J Golden
Tower located at 2/1, Ring Road, Shyamoli, Dhaka for
our Ring Road Branch premises.
Dhanmondi Branch:
First floor measuring 7,395 sft along with 03 units of car
parking at Basement of a 14 storied Commercial
Building named, Sima Blossom, Holding No. 390 (old),
Road No. 27 (old), Dhanmondi, Dhaka-1209 has been
purchased on 26.10.2011 for of our Dhanmondi Branch
premises.
Mymensingh Branch (Ongoing process):
First floor (level-2) measuring approximately 6,000 sft
along with a space for ATM Booth measuring 60 sft,
space for installation of Generator measuring 100 sft and
a car parking space of a 12 storied Commercial cum
Residential Building named Momen Tower located at
65 Choto Bazar, Mymensingh has been booked for
shifting of our Mymensingh Branch premises. An
Agreement for Sale has already been executed on
30.07.12 after obtaining required permission from
Bangladesh Bank. Sale deed has been targeted to be
executed after completion of construction of the floor
within March, 2013.
Branch Network
The Bank commenced its business on June 2, 1999. The
first branch was opened at Dilkusha Commercial Area in
Dhaka on the inauguration day of the Bank. At the end of
2012, the number of branches of the Bank stood at 86,
including 5 SME/Krishi branches, of which 59 branches
are located at major trade centers of the country while
remaining 27 branches are at the rural areas of the
country. Expansion of branches at rural areas has
provided the lower income group an access to modern
banking system and prompt receipt of remittances.
Board of Directors
In the 13th Annual General Meeting (AGM) held on
March 28, 2012- Mr. Saber Hossain Chowdhury, M.P
representing public shareholders of the Bank was
elected as a member of the Board of Directors of MBL.
Board and Commitee Meetngs
17 (seventeen) meetings of the Board of Directors, 40
(forty) meetings of the Executive Committee and 11
(eleven) meetings of the Audit Committee of the Board
were held during the year 2012.
Partculars
Year
2010 2011 2012
Board of Directors 20 20 17
Executve Commitee 48 40 40
Audit Commitee 10 13 11
www.mblbd.com
67 annual report
Corporate and Financial Reporting
Bank is a financial institution that acts as an intermediary
between depositors and borrowers. Thus, Banks
Corporate and Financial Reporting must be transparent
to all the stakeholders including depositors, borrowers
and regulators. Mercantile Bank is very much compliant
for Corporate and Financial Reporting as per Regulators
requirements. The Board of Directors of the Bank
confirms compliance with the financial reporting
framework for the followings:
The Financial Statements prepared by the
Management of the Bank represent fairly its state of
affairs, the results of its operations, cash flows and
changes in equity;
Proper books and accounts of the Bank have been
maintained;
Appropriate accounting policies have been
consistently applied in the preparation of Financial
Statements and accounting estimates are based on
reasonable and prudent judgment;
International Accounting Standards, as applicable in
Bangladesh, have been followed in preparation of
Financial Statements and any departure, therefore,
has been adequately disclosed;
The system of Internal Control is sound in design
and has been effectively implemented and
monitored;
There are no significant doubts upon the Bank to
continue as a going concern.
External Auditors
Khan Wahab Shafique Rahman & Co., Chartered
Accountants and K. M. Hasan & Co., Chartered
Accountants are presently engaged as Auditors of the
Bank. The Audit Firm K. M. Hasan & Co., Chartered
Accountants will be completing 2 (two) years as External
Auditors and the other Auditor, Khan Wahab Shafique
Rahman & Co., Chartered Accountants will be
completing first year successfully for the year ending
December 2012. As per the guidelines of Bangladesh
Bank and Bangladesh Securities and Exchange
Commission, both firms are eligible for re-appointment
for further term. The distinguished Shareholders will
decide the appointment/ re-appointment of 2 (two) Audit
Firms as External Auditors of the Bank in the AGM.
Research and Planning: Innovation and Market
Development
Excellence in banking operation depends largely on a
well equipped and efficient Research and Development
Division. 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 and this is where the
role of research and development come into play and
contribute 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. RPD conducted
number of surveys and studies on business related
issues to provide the management with relevant,
authentic, reliable and actionable information and
analytical findings so that the management can take
decisions more appropriately and provide services to
customers more efficiently. Some of the initiatives which
have assisted the management are mentioned below:
Product development studies and development of
new products;
Market monitoring, tracking of product
performances and product re-engineering;
Analyze the world and local economic situation and
convey the scenario to the management of the
Bank;
Commodity market watch from national and global
perspectives;
Successful adoption of Basel II Capital Accord in the
Bank;
National monetary review;
Publication of Insight, a quarterly newsletter of
RPD on macro economy, global finance and
banking related issues to translate market insight
into business need;
Study on performance of branches of MBL;
Success stories evaluation of peer banks;
Arranging Focus Group Discussions or Mini Group
Discussions for identifying new scopes and
opportunities for business of the Bank.
Correspondent Relationship
The Bank has established correspondent relationship
across the world with a number of foreign banks. The
number of correspondent banks stood at 627 as on
December 31, 2012 across 67 countries. Through its
correspondent relationship network, MBL continues to
follow needs and business opportunities of its clients.
The bank maintains 29 Nostro accounts in 6 major
international currencies with reputed international banks
in all the major financial centers around the world, for
settlement of trade finance and all other customer driven
Directors Report
68 annual report
transactions denominated in foreign currency. MBL also
enjoys sufficient credit lines from correspondent banks
for add confirmation to LC to facilitate international trade.
We are continuously emphasizing and trying to develop
and improve the relationship with correspondent banks.
Mercantile Exchange House (UK) Limited
With permission from Bangladesh Bank and registration
of Financial Services Authority, UK, MBL stretched its
business in UK through its fully owned subsidiary named
Mercantile Exchange House (UK) Limited to facilitate
fast and reliable medium to remit the hard-earned money
of expatriates to home. After commencement of
business in December 2011, at present we have two
branches in Birmingham and London. Within a very short
span of time, the company has been able to create
satisfactory customer base through efficient and
professional service to Bangladeshi expatriates living in
the UK. Opening of the fully owned subsidiary in UK has
added a new dimension to the banks remittance
operation widening its global reach for remittance
services.
Mercantile Bank Securities Limited (MBSL)
MBSL formed on 27 June 2010, to deal with stock
dealing and broking. As a subsidiary it started its
separate operation from 14 September, 2011. Till now,
MBSL has 7 branches and in order to make this service
available all over the country, it has been decided for
further expansion of branch network of MBSL.
Off-Shore Banking
Off-Shore banking acts as a unique solution for banks
across the globe to carry out international banking
business involving foreign currency denominated assets
and liabilities taking the advantages of low or
non-existent taxes/ levies and higher return on
investment. MBL is offering off-shore banking facilities to
cater the banking requirements of non-resident
customers through its Gulshan and Chittagong Export
Processing Zone (CEPZ) branches.
Information Technology
From inception, MBL has always been moving with the
latest technology and time-to-time the bank has adopted
different advantages of the technology to enrich its IT
infrastructure and to cope with the ever changing
customer needs. The role and importance of Information
Technology in the banking industry cannot be
over-emphasized. Technological innovation is adding
value continuously. Banking operations of the branches
have been computerized to minimize costs and risks and
to optimize benefits and increase overall efficiency for
improved services. The Bank has taken necessary steps
to establish its Core Banking Solution TEMENOS T24.
This will make Banks MIS system more robust, prompt
and user friendly. Banks have started moving into
"paperless banking" as part of Green Banking and MBL
cherishes the idea by accelerating the pace of
automation empowered by IT Division, which will not
only reduce transaction and hardware costs significantly,
but also a greater extent of scalability will be introduced
and the resources exploitation will be maximized to save
energy.
Financial Product and Services
The Bank has launched a sound number of attractive
financial products and services to accommodate the
requirement of people of all classes since inception.
Among them Monthly Savings Scheme (MSS), Super
Benefit Deposit Scheme (SBDS), Monthly Benefit
Deposit Scheme (MBDS), Double Benefit Deposit
Scheme (DBDS), Special Saving Scheme (SSS),
Education Benefit Deposit Scheme (EBDS), Quarterly
Benefit Deposit Scheme, 1.5 Time Benefit Deposit
Scheme, Advance Benefit Deposit Scheme, Consumer
Credit Scheme, Lease Finance Scheme, Overseas
Employment Loan Scheme, Personal Loan Scheme,
Car Loan Scheme, Home Loan Scheme, Agriculture
Loan and SME Loan have received wide acceptance
among the people. The Bank evolved a number of
attractive deposit schemes to accommodate the
requirement of small and medium savers.
Financial Review
Operating Profit
The operating profit of the Bank stood at BDT 3,350.78
million in 2012 as against BDT 3,501.67 million in 2011.
Net Interest Income of the Bank stood at BDT 3,650.93
million in 2012 as against BDT 2,697.56 million in 2011.
Total Interest Income 14,207.72
Less: Interest Expenses 10,556.79
Net Interest Income 3,650.93
Add: Non- Interest Income 2,459.83
Total Operating Income 6,110.76
Less: Non Interest Expenses 2,759.98
Operating profit 3,350.78
(BDT in million)
Operating Profit
www.mblbd.com
69 annual report
Interest Expenses
Interest expenses moved up from BDT 8,022.13 million
in 2011 to BDT 10,556.79 million in 2012.
Net Interest Income
Net interest income increased from BDT 2,697.56 million
in 2011 to BDT 3,650.93 million in 2012. Gross interest
income of the Bank amounted to BDT 14,207.72 million
and interest expenses amounted to BDT 10,556.79
million in 2012.
Net Interest Margin (NIM)
Banks net interest margin, which is derived from net
interest income divided by average earning assets, was
2.99% in 2012.
Non-Interest Income
Non-interest income stood at BDT 2,459.83 million in
2012 against BDT 3,404.69 million of 2011. Among the
constituents of Non-Interest Income, Exchange gains
contributed 22.52%, commission 33.18%, income on
investment 0.26%, and other non-interest income
44.04% in 2012 as against 20.41%, 21.84%, 20.10%
and 37.64% respectively in 2011.
Total Income
Total income increased to BDT 16,667.55 million in 2012
from BDT 14,124.38 million in 2011. Interest income
accounted for 85.24%, exchange gains 3.32%,
commission 4.90% and other income 6.54% to total
income in 2012 as against 75.89%, 4.92%, 5.27% and
13.92% respectively in 2011.
Interest Income
Interest income increased from BDT 10,719.69 million in
2011 to BDT 14,207.72 million in 2012. Interest on loans
and advances accounted for 88.06%, interest on
Treasury bill and Bond 11.70% and Other Interest
Income 0.24% in 2012.
Components Amount % of Total
Interest on Loans and Advances 12,511.25 88.06%
Interest on Treasury Bill & Bond 1,662.38 11.70%
Other Interest Income 34.09 0.24%
Total 14,207.72 100.00%
(BDT in million)
Exchange gains 554.04 22.52%
Commission 816.15 33.18%
Income on Investment 6.44 0.26%
Other non-interest income 1,083.20 44.04%
Total 2,459.83 100.00%
Interest on Deposits 10,524.51 99.69%
Interest on Refinance from BB 32.28 0.31%
Total 10,556.79 100.00%
(BDT in million)
(BDT in million)
Interest Income 14,207.72 85.24%
Exchange Gains 554.04 3.32%
Commission 816.15 4.90%
Other Income 1,089.64 6.54%
Total 16,667.55 100.00%
(BDT in million)
Total Income
85.24%
3.32%
6.54%
4.90%
Interest Income
Exchange Gains
Commission
Other Income
Interest Income
Interest on Loans and Advances
Interest on Treasury Bill & Bond
Other Interest Income
88.06%
11.70%
0.24%
Non Interest Income
Exchange gains
Commission
Income on Investment
Other non-interest income
44.04%
0.26%
33.18%
22.52%
Directors Report
70 annual report
Non-interest Expenses
Non-interest expenses moved up from BDT 2,600.57
million in 2011 to BDT 2,759.98 million in 2012. Salaries
and allowances 49.41%, rent, rates, taxes etc. 12.32%,
depreciation and repairs 6.82%, stationary, printing and
advertisements 5.76%, postage, stamp and
Net Profit before Tax
After transferring all provisions, net profit before tax
stood at BDT 2,381.45 million in 2012 as against BDT
3,004.17 million in 2011 showing a decrease of 20.73%.
Provision for Income Tax
Provision against current year tax is BDT 1,000.00
million in 2012 as against BDT 1,270.00 million in 2011,
showing a decrease of 21.26%.
Profit after Tax
Profit after tax earned by the Bank in 2012 is BDT
1,381.45 million as against that of BDT 1,734.18 million
in 2011.
Total Expenses
The total expenses of the Bank stood at BDT 13,316.77
million during 2012 as compared to BDT 10,622.70
million during 2011. Interest expenses accounted for
79.27%, salaries and allowances 10.24%, rent, rates,
taxes etc. 2.55%, depreciation and repairs 1.41%,
stationary, printing and advertisements 1.19%, postage,
stamp and telecommunication 0.39%, and other
expenses 4.93% of total expenses in 2012 as against
75.52%, 12.16%, 2.65%, 1.53%, 1.17%, 0.58% and
6.39% respectively in 2011.
(BDT in million)
Amount % of Total
Interest Expenses 10,556.79 79.27%
Salaries and Allowances 1,363.76 10.24%
Rent, Rate, Taxes etc 340.11 2.55%
Depreciation and Repairs 188.30 1.41%
Stationery, Printing & Advertising 158.85 1.19%
Postage, Stamp and
Telecommunication 51.89 0.39%
Other Expenses 657.07 4.93%
Total Expenses 13,316.77 100.00%
Total Expenses
79.27%
10.24%
2.55%
4.93%
0.39%
1.19%
1.41%
Interest Expenses
Salaries and Allowances
Rent, Rate, Taxes etc
Depreciation and Repairs
Stationery, Printing & Advertising
Postage, Stamp and
Telecommunication
Other Expenses
(BDT in million)
Amount % of Total
Salaries and Allowances 1,363.76 49.41%
Rent, Rate, Taxes etc 340.11 12.32%
Depreciation and Repairs 188.30 6.82%
Stationery, Printing & Advertising 158.85 5.76%
Postage, Stamp and
Telecommunication 51.89 1.88%
Other Expenses 657.07 23.81%
Total Non-interest Expenses 2,759.98 100.00%
Stationery, Printing & Advertising
Postage, Stamp and
Telecommunication
Other Expenses
Salaries and Allowances
Rent, Rate, Taxes etc
Depreciation and Repairs
Non Interest Expenses
49.41%
12.32%
1.18%
5.76%
23.81%
6.82%
telecommunication 1.88%, and other expenses 23.81%
of total expenses in 2012 as against 49.68%, 10.84%,
6.24%, 4.77%, 2.38% and 26.09% respectively in 2011.
www.mblbd.com
71 annual report
Dividend
The Board of Directors recommended 15% dividend (7%
Cash & 8% Stock) for the year 2012. The Bank paid out
23% stock dividend to the shareholders in 2011.
Earnings Per Share (EPS)
Since the inception and enlistment in Stock Exchange,
the Bank has been making positive EPS. Earnings per
share stood at BDT 2.26 as on December 31, 2012.
Operating Efficiency Ratio
Operating Efficiency Ratio stood at 79.90% in 2012 as
against 75.21% in 2011. This measures how much
operating expenses are incurred to generate operating
revenues.
Outlook 2013
In 2013, the Bank will continue to strengthen its position
by expanding the core business activities, particularly in
Trade Finance, Commercial Lending to SME and
Agriculture, Structured Finance, Import and Export
business. In regards to liability management, the Bank
will remain focused on growing its core customer
deposits and also improve its deposit mix to have
competitive funding cost. Our focus will be on IT
(BDT in million)
Total Expenses 13,316.77 10,622.70
Total Income 16,667.55 14,124.38
Operating Efficiency Ratio 79.90% 75.21%
developments and large customer base to generate
more business from existing and potential customers.
The Bank will continue to enhance its delivery standards,
promote fee-based activities and pursue greater cost
efficiency and staff productivity by promoting a proactive
business process. However, continued pressure on
interest margins and increased provision requirement
against classified loans will pose a challenge to the
financial sector. In pursuit of business growth, the Bank
will invariably stick to good corporate governance
practice, sound risk management policies, prudent credit
policies and practices in order to support sustainable
long-term growth and profitability of the Bank for the
benefit of all stakeholders. The Bank confidently looks
forward to continue sharing its success in delivering
superior shareholders value in 2013.
Acknowledgements
The Board of Directors take this opportunity of
expressing its heart-felt appreciation and gratitude to the
Government of the Peoples Republic of Bangladesh,
Ministry of Finance, Bangladesh Bank, Bangladesh
Securities & Exchange Commission, Dhaka Stock
Exchange Limited, Chittagong Stock Exchange Limited
and Registrar of Joint Stock Companies and Firms for
their cooperation, valuable guidance and advice
The Board of Directors also expresses deep
appreciation to the clients, sponsors, shareholders,
stakeholders, patrons and well-wishers, whose
continued support and patronage has facilitated our path
towards the glory achieved and also to the Management
and all Executives, Officers and Staffs for their dedicated
and efficient services.
MBL is well positioned for the future. We are confident
that the Bank has the ability to continue delivering
superior long term performance for our customers, our
shareholders, our people and the communities in which
we operate.
On behalf of the Board of Directors,
Chairman
(BDT in million)
Interest Income 14,207.72
Interest Expenses 10,556.79
Net Interest Income 3,650.93
Non- Interest Income 2,459.83
Non Interest Expenses 2,759.98
Net Non interest Income (300.15)
Profit Before Provision & Tax 3,350.78
Provisions
Provision for Un-classified Loans 77.00
Provision for Classified Loans 818.00
Provision for Off-Balance Sheet Items 74.33
Profit before Tax 2,381.45
Provision for Tax 1,000.00
Profit after Tax 1,381.45
Profit after tax
Directors Report
72 annual report
www.mblbd.com
73 annual report
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Directors Report
74 annual report
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(wgwjqb UvKv)
weeiY 2012 2011
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2010-2012 mvj gvwmK ivwb Avqi Zzjbvg~jK wP (wgwjqb BDGmwW)
2010-2012 mvj gvwmK Avg`vwb eqi Zzjbvg~jK wP (wgwjqb BDGmwW)
2010-2012 mvj gvwmK cevwm Avqi Zzjbvg~jK wP (wgwjqb BDGmwW)
Directors Report
76 annual report
e`wkK gy`vi wiRvf
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www.mblbd.com
77 annual report
e`wkK gy`vi wiRvf
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gy`v wewbgq nvi
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81 annual report
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(wgwjqb UvKv)
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AvjnvR AvKivg nvmb (gvqyb)
|<|
Disclosure on Basel II
The Basel Committee on Banking Supervision published
a framework for international convergence of capital
measurement and capital standards commonly termed
as Basel II which replaced the original 1988 Basel I
accord. In Bangladesh, Risk Based Capital Adequacy for
Banks (Revised regulatory capital framework in line with
Basel II) came into force fully from January 2010
following the BRPD circular # 20 on December 29, 2009
after parallel existence with Basel I during the year 2009.
MBL believes that Basel II is not merely a reporting
system rather a new risk management technique for the
Bank. Therefore, it has put extensive care and attention
to implement Basel II inside the Bank. With a view to
facilitating the way of implementation, the Bank has
formed a high powered committee under the heading of
Basel II implementation Unit. This committee forecast
the future; follow up the overall implementation status
and way out the probable solution to cope with the
international best practices and to make the Banks
capital more risk sensitive as well as more shock
resilient. The Bank has also formed a Supervisory
Review Process (SRP) team to participate the dialogue
with the Supervisory Review Evaluation Process (SREP)
team of Bangladesh Bank for measuring the adequate
capital requirement.
The Basel II principle stands on the following three
pillars:
O Pillar-I: Minimum Capital Requirement
Banks must hold minimum regulatory capital
against Credit, Market and Operational Risk
inherent with Banking Business.
O Pillar-II: Supervisory Review Process (SRP)
SRP basically deals with other risks faced by a bank
but not covered in pillar-1. The key principle of SRP
is that banks have a process for assessing overall
capital adequacy in relation to their risk profile and
a strategy for maintaining their capital at an
adequate level. The assessment of adequate
capital would be the outcome of the dialogue to be
held between the banks SRP and Bangladesh
Banks SREP team.
O Pillar-III: Market Discipline
The purpose of Market Discipline in the Revised
Capital Adequacy Framework is to complement the
minimum capital requirement and the supervisory
review process. The aim of introducing Market
Discipline in the revised capital framework is to
establish more transparent and more disciplined
financial market so that stakeholders can assess
the position of a bank regarding holding of assets
and to identify the risks relating to the assets and
capital adequacy to meet probable loss of assets.
Disclosure Framework
The following detailed qualitative and quantitative disclosures of the Bank is furnished to provide its stakeholders with
consistent and understandable disclosure framework to assess the Banks position regarding holding of assets and to
identify the risks relating to the assets and capital adequacy to meet probable loss of assets as on December 31, 2012
in line with Bangladesh Banks Risk Based Capital Adequacy (RBCA) guideline.
Basel II Principle
Pillar 1
Minimum
Capital
Requirement
Pillar 2
Supervisory
Review
Process
Pillar 3
Market
Discipline
www.mblbd.com
85 annual report
The Basel Committee on Banking Supervision published
a framework for international convergence of capital
measurement and capital standards commonly termed
as Basel II which replaced the original 1988 Basel I
accord. In Bangladesh, Risk Based Capital Adequacy for
Banks (Revised regulatory capital framework in line with
Basel II) came into force fully from January 2010
following the BRPD circular # 20 on December 29, 2009
after parallel existence with Basel I during the year 2009.
MBL believes that Basel II is not merely a reporting
system rather a new risk management technique for the
Bank. Therefore, it has put extensive care and attention
to implement Basel II inside the Bank. With a view to
facilitating the way of implementation, the Bank has
formed a high powered committee under the heading of
Basel II implementation Unit. This committee forecast
the future; follow up the overall implementation status
and way out the probable solution to cope with the
international best practices and to make the Banks
capital more risk sensitive as well as more shock
resilient. The Bank has also formed a Supervisory
Review Process (SRP) team to participate the dialogue
with the Supervisory Review Evaluation Process (SREP)
team of Bangladesh Bank for measuring the adequate
capital requirement.
The Basel II principle stands on the following three
pillars:
O Pillar-I: Minimum Capital Requirement
Banks must hold minimum regulatory capital
against Credit, Market and Operational Risk
inherent with Banking Business.
O Pillar-II: Supervisory Review Process (SRP)
SRP basically deals with other risks faced by a bank
but not covered in pillar-1. The key principle of SRP
is that banks have a process for assessing overall
capital adequacy in relation to their risk profile and
a strategy for maintaining their capital at an
adequate level. The assessment of adequate
capital would be the outcome of the dialogue to be
held between the banks SRP and Bangladesh
Banks SREP team.
O Pillar-III: Market Discipline
The purpose of Market Discipline in the Revised
Capital Adequacy Framework is to complement the
minimum capital requirement and the supervisory
review process. The aim of introducing Market
Discipline in the revised capital framework is to
establish more transparent and more disciplined
financial market so that stakeholders can assess
the position of a bank regarding holding of assets
and to identify the risks relating to the assets and
capital adequacy to meet probable loss of assets.
Disclosure Framework
The following detailed qualitative and quantitative disclosures of the Bank is furnished to provide its stakeholders with
consistent and understandable disclosure framework to assess the Banks position regarding holding of assets and to
identify the risks relating to the assets and capital adequacy to meet probable loss of assets as on December 31, 2012
in line with Bangladesh Banks Risk Based Capital Adequacy (RBCA) guideline.
a) Scope of application
(a) The name of the corporate
entity in the group to which
the guidelines applies.
(b) An outline of difference in
the basis of consolidation
for accounting and
regulatory purposes, with a
brief description of the
entities within the group (a)
that are fully consolidated ;
(b) that are given a
deduction treatment ; and
(c) that are neither
consolidated nor deducted
(e.g. where the investment
is risk-weighted).
(d) The aggregate amount of
capital deficiencies in all
subsidiaries not included in
the consolidation that are
deducted and the name(s)
of such subsidiaries.
(c) Any restriction, or other
major impediments, on
transfer of funds or
regulatory capital within the
group.
Mercantile Bank Limited (MBL)
MBL, the leading third generation private commercial bank incorporated as a
public limited company in Bangladesh on May 20, 1999 and commenced
business on June 02, 1999. It was listed in DSE and CSE on February 16,
2004 and February 26, 2004 respectively. MBL has 86 (Eighty Six) branches
including 5 (Five) SME/Krishi branches as on reporting date i.e. December 31,
2012. 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 Ltd and
Mercantile Exchange House (UK) Limited.
Mercantile Bank Securities Ltd
Mercantile Bank Securities Ltd (MBSL), a subsidiary company of MBL formed
on 27 June 2010 to deal with stock dealing and broking. MBSL has started its
commercial operation from September 14, 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 opening market operation for its customer. Margin loan facility is also
extended to its customers against their equity for investment in the listed
companies.
Mercantile Exchange House (UK) Limited
Mercantile Exchange House (UK) Limited, a fully owned subsidiary company
of MBL incorporated as private limited company with companies for England
and Wales under registration no. 07456837 dated December 01, 2010. The
company commenced its business operation at Birmingham in UK on
December 06, 2011. It launched its second branch in London, UK on
September 20, 2012. Mercantile Exchange House is committed to provide
faster, easier and safer remittance services to the Bangladeshi expatriate
living and working in UK.
Qualitative Disclosures
Not applicable
Not applicable
Quantitative Disclosures
86 annual report
59.46%
30.36%
0.50%
9.23%
0.44%
Consolidated Tier 1 Capital
Consolidated Total Capital
Tier 1 Capital
Paid-up Capital
Statutory Reserve
Minority Interest in Subsidiaries
Retained Earnings
Divided Equiliztion Account
Tier 2 Capital
(a) Summary information on
the terms and conditions of
the main features of all
capital instruments,
especially in the case of
capital instruments eligible
for inclusion in Tier 1 or in
Tier 2.
Conditions set by BB for maintaining Regulatory Capital i.e. Tier 1 capital, Tier 2
capital and Tier 3 capital are as under:
a) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1 Capital.
b) 50% of revaluation reserves for fixed assets and securities eligible for Tier 2 Capital.
c) 10% of revaluation reserves for equity instruments eligible for Tier 2 Capital.
d) Subordinated bond shall be limited to a maximum of 30% of the amount of Tier 1
Capital.
e) Limitation of Tier 3: A minimum of about 28.50% of Market risk needs to be
supported by Tier 1 Capital. Supporting of Market Risk from Tier 3 Capital shall be
limited up to maximum of 250% of a Banks Tier 1 Capital that is available after
meeting credit risk capital requirement.
In order to obtain the eligible regulatory capital for the purpose of calculating
Capital Adequacy Ratio (CAR), the following deductions are required from banks
Tier 1 capital:
a) Book Value of Intangible Assets that have been shown as assets.
b) Shortfall in provisions required against classified assets.
c) Shortfall in provisions required against investment in shares.
d) Remaining deficit on account of revaluation of investments in securities after netting
off any other surplus on the securities.
e) Reciprocal/Crossholding of banks capital/subordinated debt.
f) Unauthorized amount of share holding.
g) Investments in subsidiaries which are not consolidated.
(b) The amount of Consolidated Tier 1 capital, with separate disclosure of:
Particulars
b) Capital Structure
i. Paid Up Capital 611.08 611.08
ii. Statutory Reserve 311.97 311.97
v. Retained Earnings 94.08 94.84
vi. Minority Interest in Subsidiaries - 5.18
viii. Dividend Equalization Account 4.57 4.57
ix. Others (If any item approved by Bangladesh Bank) - -
Sub-Total (A) 1,021.70 1,027.64
(c) Total amount of Tier 2 and Tier 3 capital
i. Amount of Tier-2 capital 186.20 186.20
ii. Amount of Tier-3 capital - -
Sub-Total amount of Tier-2 and Tier-3 capital (B) 186.20 186.20
(d) Other deductions from capital - -
(e) Total Eligible Capital (A+B) 1,207.90 1,213.84
BDT in Crore
Solo Consolidated
15.34%
84.66%
www.mblbd.com
87 annual report
c) Capital Adequacy
(a A summary discussion of the Banks
approach to assessing the adequacy of
its capital to support current and future
activities.
MBL has adopted Standardized Approach for computation of
Capital Charge for Credit Risk and Market Risk while Basic
Indicator Approach for Operational Risk. Total Risk Weighted
Assets (RWA) of the Bank is determined by multiplying the capital
charge for market risk and operational risk by the reciprocal of the
minimum capital adequacy ratio i.e. 10% as on December 2012
and adding the resulting figures to the sum of risk weighted assets
for credit risk. Total RWA is then used as denominator while total
Eligible Regulatory Capital as on numerator to derive Capital
Adequacy Ratio (CAR) i.e.
Eligible Regulatory Capital
RWA
Banks CAR on the basis of Consolidated and Solo are 10.87%
and 10.83% respectively against minimum requirement of 10% as
on December 31, 2012. MBLs policy is to manage and maintain
its capital and RWA at an adequate level to raise its CAR higher
than minimum requirement in line with Basel II. Ultimate goal of
the capital management process of MBL is to ensure that the
Bank remains capital at a level to absorb all the material risks. The
Bank also ensures that the capital levels comply with all
regulatory requirements.
Particulars
BDT in Crore
Solo Consolidated
(b) Capital Requirement for Credit Risk 967.38 968.16
(c) Capital Requirement for Market Risk 56.35 56.35
(d) Capital Requirement for Operational Risk 91.52 92.35
(e) Total and Tier 1 capital ratio
Total CAR 10.83 % 10.87 %
Tier-1 CAR 9.16 % 9.20 %
Tier-2 CAR 1.67 % 1.67 %
CAR (Solo) as on December 31, 2012
Required Maintained
1
0
.
0
0
%
1
0
.
8
3
%
CAR= x 100
88 annual report
d) Credit Risk
(a) The general qualitative disclosure requirement with respect to credit risk, including:
i) Definition of past
due and impaired (for
accounting purposes);
As per guideline of Bangladesh Bank, All Loans and Advances are grouped into 4
(four) categories namely- Continuous Loan, Demand Loan, Fixed Term Loan and
Short-term Agricultural Credit & Micro Credit for the purpose of classification.
Any continuous Loan are classified as:
Sub-standard- if it is past due/overdue for 03 (three) months or beyond but less than
06 (six) months.
Doubtful- if it is past due/overdue for 06 (six) months or beyond but less than 09 (nine)
months
Bad/Loss- if it is past due/overdue for 09 (nine) months or beyond.
Any Demand Loan are classified as:
Sub-standard- if it remains past due/overdue for 03 (three) months or beyond but not
over 06 (six) months from the date of expiry or claim by the bank or from the date of
creation of forced loan.
Doubtful- if it remains past due/overdue for 06 (six) months or beyond but not over 09
(nine) months from the date of expiry or claim by the bank or from the date of creation
of forced loan.
Bad/Loss- if it remains past due/overdue for 09 (nine) months or beyond from the date
of expiry or claim by the bank or from the date of creation of forced loan.
Fixed Term Loan are 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 06 (six) months, the entire loan will be
classified as Sub-standard.
Doubtful-If the amount of past due installment is equal to or more than the
amount of installment(s) due within 09 (nine) months, the entire loan will be
classified as Doubtful.
Bad/Loss- If the amount of 'past due installment is equal to or more than the
amount of installment(s) due within 12 (twelve) months, the entire loan will be
classified as Bad/Loss.
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.
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89 annual report
ii) Description of
approaches followed
for specific and general
allowances and
statistical methods;
iii) Discussion of the
Banks credit risk
management policy
Agricultural Credit & Micro Credit:
Sub-standard- If the irregular status continues, after a period of 12 (twelve) months
the credits are classified as Sub-standard.
Doubtful- If the irregular status continues, after a period of 36 (thirty Six) months the
credits are classified as Doubtful.
Bad/Loss- If the irregular status continues, after a period of 60 (sixty) months the
credits are 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).
As per Bangladesh Banks guideline, MBL maintains General and Specific
provision in the following way:
Particulars
General provision on all unclassified loans of Small and Medium Enterprise
(SME)
General provision against all unclassified loans (other than loans under
Consumer Financing, Loans to Brokerage House, Merchant Banks, Stock
dealers etc., Special Mention Account as well as SME Financing.)
General provision on the unclassified amount for Consumer Financing (other
than Housing Finance and Loans for professionals to set up business)
General provision on the unclassified amount for Housing Finance and Loans
for professionals to set up business under consumer financing scheme
General provision on the unclassified amount for Loans to Brokerage House,
Merchant Banks, Stock dealers, etc.
General provision on the outstanding amount of loans kept in the Special
Mention Account.
General provision on the off-balance sheet exposures
Specific Provision for classified Continuous, Demand and Fixed Term Loans:
Substandard
Doubtful
Bad/Loss
Specific Provision for Short-term Agricultural and Micro-Credits
All credits except 'Bad/Loss'
Bad/Loss
The Bank bas adopted numerous strategies to manage its credit risk including:
Creating credit risk awareness culture
Approved credit policy by the Board of Directors
Separate credit risk management division
Formation of law and recovery ream
Independent internal audit and direct access to Board/Audit committee
Credit quality and portfolio diversification
Early warning system
Provision and suspension of interest
Rate (%)
0.25%
1%
5%
2%
2%
5%
1%
20%
50%
100%
5%
100%
90 annual report
(b) Total gross credit risk
exposures broken
down by major types of
credit exposure.
(c) Geographical distribution
of exposure, broken
down in significant areas
by major types of credit
exposure
Scientific lending and credit approval process
Counterparty credit rating
Strong NPL management system
Total gross credit risk exposures broken down by major types of credit
exposure as on December 31, 2012 is as under:
Particulars BDT in Crore
Loan General 216.60
Term Loan 1,840.38
Time Loan 995.34
Small and Medium Enterprise 455.31
Consumer Finance 103.56
Loan against Trust Receipt 1,110.21
Home Loan 1.12
Packing Credit 106.43
House Building Loan 278.56
Lease Finance 88.03
Hire Purchase 409.97
EDF Loan 154.94
Payment Against Documents 75.27
Cash Credit (Hypo) 774.89
Overdraft 1,694.96
Personal Loan 42.16
Consumer Credit Scheme 2.76
Other Credit Scheme 1.79
Staff Loan 65.86
Credit Card 29.95
Agricultural Credit 142.12
Bill Purchased and Discounted-Inland 642.95
Bill Purchased and Discounted-Foreign 127.94
Total 9,361.09
Geographical distribution of total exposure as on December 31, 2012 is as under:
Urban:
Dhaka 6,221.49
Chittagong 2,055.36
Rajshahi 466.76
Sylhet 69.16
Khulna 52.09
Rangpur 77.10
Barisal 75.56
Sub-Total (A) 9,017.54
www.mblbd.com
91 annual report
(d) Industry or counter-
party type distribution
of exposures, broken
down by major types of
credit exposure.
Rural:
Dhaka 203.94
Chittagong 100.79
Rajshahi 19.98
Sylhet 17.44
Rangpur 1.39
Sub-Total (B) 343.55
Grand Total (A+B) 9,361.09
Industry or counterparty type distribution of exposures, broken down by major
types of credit exposure.
Garments 1,378.86
Trading 1,371.64
Engineering 1,108.65
Contractor Finance 111.98
Leasing Company 176.98
Housing 136.33
Food, Food product, Beverage, Edible oil etc 651.37
Pharmaceuticals 102.93
Tele-communication 56.31
Transport 132.58
Leather & Leather Product 40.11
Jute Industries 101.86
Textile 281.74
Information Technology 55.81
Hospital & Medical Service 236.76
Paper, Paper Production & Publication 185.35
Plastic & Plastic Materials 182.41
Storage 79.88
Glass & Glass Product 0.0009
Agriculture 142.12
SME Loan 459.78
Credit Card 29.95
Consumer Loan 181.58
Loans to Brokerage House 407.39
Others 1,748.72
Total 9,361.09
92 annual report
(e) Residual contractual
maturity breakdown of
the whole portfolio,
broken down by major
types of credit
exposure.
i) Amount of impaired
loans and if available,
past due loans,
provided separately
ii) Specific and general
provisions; and
iii) Charges for specific
allowances and
charge-offs during the
periods
(g) Gross non-performing
assets (NPAs):
Residual contractual maturity breakdown of total exposure as on BDT in Crore
December 31, 2012 is as under:
Up to 1 (one) month 2,531.15
Over 1 (one) month but not more than 3 (three) months 1,327.75
Over 3 (one) months but not more than 1 (one) year 2,542.52
Over 1 (one) year but not more than 5 (five) years 2,182.81
Over 5 (five) years 776.86
Total 9,361.09
Impaired Loan under 4 (four) broad categories as on December 31, 2012 is as under
Continuous Loan 66.89
Demand Loan 137.18
Term Loan 204.95
Short Term Agro Credit and Micro Credit 0.07
Total 409.09
Specific and general provisions made following Bangladesh Banks guideline
as on December 31, 2012 is as under
General Provision (including SMA) 96.90
Specific Provision (SS, DF, Bad/Loss) 149.59
Provision for Off-balance Sheet Exposure 48.26
During the year 2012 following provisions were made on Un-classified, Classified and
Off-Balance sheet exposure as per Bangladesh Banks guideline
Provision against Un Classified Loans 7.70
Provision against Classified Loans 81.80
Other Provision (Off-Balance Sheet Items) 7.43
Gross non-performing assets as on December 31, 2012 is as under
Gross non-performing assets (NPAs): 409.09
Non-performing Assets (NPAs) to Outstanding Loans & Advances 4.37%
Movement of Non Performing Assets
Opening balance 208.46
Additions 298.02
Reductions 97.39
Closing Balance 409.09
Movement of specific provisions for NPAs
Opening balance 71.82
Recoveries of amount from pre-written off 3.46
Provisions made during the period 81.80
Write-off (7.49)
Write-back of excess provisions -
Closing Balance 149.59
(f) By major industry or counter party type:
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93 annual report
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.
(b) Value disclosed in the balance sheet of investment, as well as the fair value of
those investments; for quoted securities, a comparison to publicly quoted share
values where the share price is materially different from fair value.
Quoted shares
Un Quoted shares
(c) The cumulative realized gain (losses) arising from sales and liquidations in the
reporting periods.
Realized gain (losses) from equity investments
(d) Total unrealized gains (losses)
Total latent revaluation gains (losses)
Any amount of the above included in tier 2 Capital
(e) Market value of investment in equities as on December 31, 2012
Specific Risk- Capital Requirement is 10% of the said value
Market value of investment in equities as on December 31, 2012
General Risk- Capital Requirement is 10% of the said value
e) Equities: Disclosure for Banking Book Positions
(a) The general qualitative disclosure requirement with respect to equity risk, including:
Particulars Solo Consolidated
MBLs total equity share holding comprises of two purposes i.e. capital gain and
other strategic reason like equity participation and investment diversification. MBL
is the director of IDLC finances Ltd and sole purpose of such investment is not
capital gain, rather maintain relationship as well as diversify its investment portfolio.
Investment in equity securities are broadly fall under 2 categories:
i) Quoted Securities (traded in the secondary market; trading book assets) &
ii) 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.
59.82 59.82
68.12 91.12
- -
56.60 56.60
- -
5.66 5.66
116.42 116.42
11.64 11.64
116.42 116.42
11.64 11.64
BDT in Crore
94 annual report
(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.
(b) The increase (decline) in
earnings or economic value
( or relevant measure used
by management) for upward
and downward rate shocks
according to managements
method for measuring
IRRBB, broken down by
currency (as relevant)
f) : Interest rate risk in the banking book ( IRRBB)
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 measures the
Interest Rate Risk by calculation Duration Gap i.e. positive Duration Gap affects
banks profitability adversely with the increment of interest rate and negative
Duration Gap increase the banks profitability with the reduction of interest rate.
Increase of interest rate will affect the Bank in the following ways:
Particulars Minor Shock Moderate Shock Major Shock
Magnitude of Shock 1.00% 2.00% 3.00%
Duration Gap (Years) 0.42 0.42 0.42
Total Regulatory Capital (BDT in Cr) 1,207.90 1,207.90 1,207.90
Risk Weighted Assets (BDT in Cr) 11,152.47 11,152.47 11,152.47
CAR 10.83% 10.83% 10.83%
Revised Capital-After Shock (BDT in Cr) 1,148.87 1,089.84 1,030.81
Revised RWA 10,993.28 10,993.28 10,993.28
Revised CAR (%) 10.45% 9.91% 9.38%
g) : Market Risk
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.
(a) Views of BOD on trading/
investment activities Methods
used to measure Market risk
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95 annual report
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, MBLs
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.
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 bee put
on the following issues for mitigating market risk:
O Interest Rate Risk Management
Treasury Division reviews the risks of changes in income of the Bank as a result
of movements in market interest rates. In the normal course of business, the
Bank tries to minimize the mismatches between the duration of interest rate
sensitive assets and liabilities. Effective Interest Rate Risk Management is done
as under:
Market Analysis
Market analysis over interest rate movements are reviewed by the Treasury
Division of the Bank. The type and level of mismatch interest rate risk of the
Bank is managed and monitored from two perspectives, being an economic
value perspective and an earning perspective.
Gap Analysis
ALCO has established guidelines in line with central Banks policy for the
management of assets and liabilities, monitoring and minimizing interest rate
risks at an acceptable level. ALCO in its regular monthly meeting analyzes
Interest Rate Sensitivity by computing GAP i.e. the difference between Rate
Sensitive Assets and Rate Sensitive Liability and take decision of enhancing
or reducing the GAP according to prevailing market situation aiming to
mitigate interest rate risk.
Methods used to measure
Market risk
Market Risk Management
system
Policies and Processes for
mitigating market risk
96 annual report
O 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
Banks Treasury Division manages and controls day-to-day trading activities under the
supervision of ALCO that ensures continuous monitoring of the level of assumed risks.
Treasury Division monitors the foreign exchange price changes and Back Office of the
Treasury Division verifies the deals and passes the entries in the books of account.
Treasury Back Office 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 Banks guidelines. Such valuation are
made after specific time interval as prescribed by Bangladesh bank.
Nostro Accounts
Nostro accounts are maintained by the Bank with various currencies and countries. These
Accounts are operated by the International Division of the Bank. All Nostro accounts are
reconciled on monthly basis. The management reviews outstanding entry beyond 30 days
for settlement purpose.
O 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.
BDT in Crore Particulars
Interest Rate Risk 29.24 29.24
Equity Position Risk 23.28 23.28
Foreign Exchange Risk 3.82 3.82
Commodity Risk - -
Total Capital Requirement for Market Risk 56.35 56.35
Solo Consolidated
Capital
requirement
for:
www.mblbd.com
97 annual report
h) : Operational Risk
(a) Views of BOD on system to
reduce Operational Risk
Performance gap of
executives and staffs
Potential external events
Policies and processes for
mitigating operational risk
All the policies/guidelines including Internal Control and Compliances and Board
audit are duly approved by BOD. Audit Committee of the Board directly
oversees the activities of internal control and compliances aiming to check all
types of lapses and irregularities inherent with operational activities of the Bank
and thereby may create a notable downfall risk for the Bank.
Operational risk includes legal risk, but excludes strategic and reputation risk.
Operational Risk includes:
Transaction processing
Operation control
Technology and systems
Risks of physical and logical security
Unique risk arises due to outsourcing
BDT in Crore Particulars
Capital Requirement for Operation Risk 91.52 92.35
Solo Consolidated
Approach for calculating
capital charge for
operational risk
The BOD of the Bank is always keen to provide a competitive, attractive and
handsome remuneration package for its employees. Besides, the recruitment
policy of the Bank always emphasize on sorting out fresh graduate from the
reputed universities and nurture them until transformation to a Human Capital
of highest quality. Besides, the Banks name and fame as top tier Bank of the
country acts as moral boosting factor for the employees. An accommodating,
welcoming, co-operative and congenial work atmosphere motivates its
employees to act as a family towards achievement of goal. As such, there exists
no performance gap in the Bank.
No potential external events have been detected yet at the time of reporting of
the capital accord.
Operational Risks results from inadequate or failed internal process, people and
systems or from external events. Within the Bank, Operational Risk may arise
from negligence and dishonesty of the employees, lack of management
supervision, inadequate operational control, lack of physical security, poor
technology, lack of automation, non- compliance of regulatory requirements,
internal and external fraud etc. Operational Risk Management Framework has
been designed to provide a sound and well-controlled operational environment
and thereby mitigate the degree of operational risk.
Operational Risk is defined as the risk of loss resulting from inadequate or failed
internal processes, people and system or from external events. The Bank use
Basic Indicator Approach for calculating capital charge against operational risk
i.e. 15% of average positive annual gross income of the Bank over the last three
years.
98 annual report
Risk is the potential that a chosen action or activity
(including the choice of inaction) will lead to a loss (an
undesirable outcome). Being a financial intermediary
banking business is exposed to more risk. Therefore,
risks must be measured and managed properly in order
to ensure sustainable growth.
Risk management of an Organization ensures
identification and understanding of risks to which it is
exposed. Risk management also guarantees that the
organization creates and implements an effective plan to
prevent losses or reduce the impact if a loss occurs.
MBLs Risk Management Strategies
MBL adopted strong and integrated Risk Management
strategies for the long-term sustainability of its business.
The Board of Directors has the overall responsibility of
ensuring that organizational structure, policies,
standards, guidelines and procedures are in place for
risk management and that they are properly
implemented. Board approves our risk management
policies and also sets limits by assessing our risk
appetite, skills available for managing risk and our risk
bearing capacity.
CROs Report On
Risk Management
B. Managing Foreign Exchange Risk
Foreign exchange risk or exchange rate risk is a form of
financial risk that arises from the potential change in the
exchange rate of one currency in relation to another.
MBLs Foreign Exchange Risk Management Strategies
Policies and Manuals with a view to reducing the
foreign exchange risk
Treasury division of the Bank manages and controls
day-to-day trading activities under the supervision of
ALCO that ensures continuous monitoring of the
level of assumed risks
All the transactions are carried out on behalf of the
customers, i.e. MBLs foreign exchange trading
exposures are principally derived from customer
driven transactions, and major risk arises from
movement of price
All foreign exchange transactions are revalued at
Mark-to-Market method according to Bangladesh
Banks guidelines and position maintained by the
Bank at the end of day within the stipulated limit
prescribed by Bangladesh Bank
All Nostro accounts are reconciled on monthly basis
and verified by the external auditors and reports are
submitted to Bangladesh Bank
C. Equity Price Risk Management
Equity price risk is the risk that one's investments will
depreciate because of stock market dynamics causing
one to lose money. Equity price risk may arise from
general or specific risk or for both.
MBLs Equity Price Risk Management Strategies
Investment Policy emphasizing on portfolio
diversification
Mark-to-Market valuations procedures
Where margin loan is allowed, security of
investment, liquidity of securities, reliability of
earnings and risk factors are considered
professionally
LIQUIDITY RISK MANAGEMENT
Liquidity Risk is the potential for loss to an institution
arising from either its inability to meet its obligations or to
fund increases in assets as they fall due without
incurring unacceptable cost or losses. Liquidity risk is
considered a major risk for banks. It arises when the
cushion provided by the liquid assets are not sufficient
enough to meet its obligation.
MBLs Liquidity Risk Management Strategies
Acceptable assets and liabilities mix
Diversified sources and stability of liabilities
Scientific cash flow projections
Various ratios to maintain liquidity and to create limits
for liquidity management
Ratios are used in conjunction with more qualitative
information about borrowing capacity
OPERATIONAL RISK MANAGEMENT
Operational risk is the risk of loss resulting from
inadequate or failed internal processes, people and
systems or from external events. It is a very broad
concept which focuses on the risks arising from the
people, systems and processes through which a
company operates. It also includes other categories
such as fraud risks, legal risks, physical or
environmental risks.
MBLs Board of Directors and Senior Management have
established an organizational culture that places a high
priority on effective operational risk management and
adherence to sound operating controls. Senior
Management transforms the strategic direction given by
the Board through operational risk management policy.
INTERNAL CONTROL AND COMPLIANCE RISK
MANAGEMENT
Internal control is the process, affected by a bank's
board of directors, management and other personnel,
designed to provide reasonable assurance regarding the
achievement of objectives in the effectiveness and
efficiency of operations, the reliability of financial
reporting and compliance with applicable laws,
regulations, and internal policies. Internal controls are
the policies and procedures established and
implemented alone, or in concert with other policies or
procedures, to manage and control a particular risk or
business activity, or combination of risks or business
activities, to which the bank is exposed or in which it is
engaged.
MBLs Internal Control And Compliance Risk
Management Strategies
According to the Central Banks guideline, the Bank has
formed separate Internal Control and Compliance
Division (ICCD) for an effective internal control system.
Compliance Unit of ICCD ensures that Bank complies
with all regulatory requirements of the legislative bodies
in conducting its business.
MONEY LAUNDERING RISK MANAGEMENT
Money laundering risk is defined as the loss of reputation
and expenses incurred as penalty for being negligent in
prevention of money laundering. Bangladesh Bank
through BRPD Circular No. 17, dated October 07, 2003
advised the scheduled commercial banks operating in
the country to put in place effective risk management
system which includes, among others, Money
Laundering Risk Management, since money laundering
is a criminal act recognized all over the world having
severe consequences in the economy, security and the
society.
MBLs Ant-money Laundering Policy
Bangladesh Banks Anti-Money Laundering policy
contains the following major issues which have also
been incorporated in the MBLs Anti Money Laundering
policy:
Duly filled in KYC (Know Your Customer) form is
mandatory for account opening
Transaction Profile (TP) in which every customer
must specify what will be the frequency and amount
of transactions
Preservation of correct and full information for
identification of its clients during operation of
accounts
Monthly Cash Transaction Report to be sent to
Bangladesh Bank for the customers depositing or
withdrawing cash BDT 1 million and above in any day
Monitoring of unusual/suspicious transactions and
reporting the same to Bangladesh Bank
Previous records should be maintained for at least
five years after closing of clients account
Appoint CAMLCO, deputy CAMLCO at Head Office
and BAMLCO in every branch
KYC and TP to be changed on the basis of
customers transactions
Classification of customers on the basis of risk
Creating awareness among the employees by
arranging training on Anti Money Laundering
INFORMATION TECHNOLOGY RISK MANAGEMENT
IT risk is the business risk associated with the use,
ownership, operation, involvement, influence and
adoption of IT within an enterprise. Risks surrounding
Information Technology such as network failure, lack of
skills, hacking and viruses and poor system integration
have the potential to have a negative impact on an
organization.
MBLs Informaton Technology Risk Management
Strategies
Clear policies and procedures by defining roles and
responsibilities of all relevant officials
Dedicated IT Audit Team as per the Central Banks
guidelines to conduct audit at branch and divisional
levels
Segregated job descriptions and responsibilities to
minimize IT Risk
MBL protects and secures its data as prescribed by
the Banks policy
Need based trainings are being conducted time to
time to handle the IT Risk in an efficient manner
Additional Managing Director and CRO
Equity Price Risk
General Risk Specic Risk
CREDIT RISK MANAGEMENT
Credit Risk is the potential that a bank borrower or
counterparty fails to meet its obligation in accordance
with agreed terms. Credit Risk Management of MBL is
passed through the following procedures:
Articulate Lending Guideline
Credit Risk Grading Process
Proper Assessment of Credit Proposal
Precise Lending Process
Separate Credit Administration Division
Credit Recovery and Monitoring of Non-Performing
Loans
MARKET RISK MANAGEMENT
Market risk is defined as the risk of loses in on and
off-balance sheet positions arising from movements in
market price. Major market risks include: Interest Rate
Risk, Foreign Exchange Risk, Equity Risk, and
Commodity Risk. MBLs strategies to address these
risks are as under:
A. Managing Interest Rate Risk
Interest rate risk is the risk (variability in value) borne by
an interest-bearing asset, such as a loan or a bond, due
to variability of interest rates. Bank faces various types of
Risks including Basis Risks, Yield Curve Risk,
Re-pricing Risk, Option Risk and Model Risk.
MBLs Interest Rate Risk Management Strategies
Market Trend Analysis
Interest Rate Sensitivity Analysis
Gap Analysis
MBLs Risk management process is delineated below:
CROs Report on Risk Management
100 annual report
movement of price
diversification
professionally
MANAGEMENT
engaged.
society.
policy:
of transactions
accounts
organization.
Strategies
levels
minimize IT Risk
the Banks policy
Loans
risks are as under:
Gap Analysis
www.mblbd.com
101 annual report
movement of price
diversification
professionally
MANAGEMENT
engaged.
society.
policy:
of transactions
accounts
organization.
Strategies
levels
minimize IT Risk
the Banks policy
Loans
risks are as under:
Gap Analysis
CROs Report on Risk Management
102 annual report
Certificate on Compliances of Conditions of the Corporate Governance
Guidelines to the Shareholders of Mercantile Bank Limited
We have examined the compliances of the Corporate Governance Guidelines of the Bangladesh Securities and
Exchange Commission (BSEC) by Marcantile Bank Limited (the Bank) as stipulated in clause 7 (i) of the BSEC
notification on SEC/CMRRCD/2006-158/134/admin/44 dated 7 August 2012.
The compliance of conditions of the Corporate Governance Guidelines as stated in the aforesaid notification and
reporting of the status of compliance is the responsibility of the Banks Management. Our examination for the purpose
of issuing this certification was limited to the checking of procedures and implementations thereof, adopted by the Bank
for ensuring the compliance of conditions of Corporate Governance and correct reporting of compliance status on the
attached statement on the basis of evidence gathered and representation received.
To the best of our information and according to the explanations given to us, we certify that, except as reported on the
attached status of compliance statement, the Bank has complied with the conditions of corporate governance stipulated
in the above mentionned BSEC notification dated 7 August 2012.
M. Moniruzzaman, FCA
Partner
ACNABIN
ICAB Enrolment Number 787
For ACNABIN
Dated: February 10, 2013
ACNABIN
BDBL Bhaban (13th Floor)
12 Kawran Bazar Commercial Area
Dhaka-1215, Bangladesh
Telephone : (880-2) 8144347-52
Facsimile : (880-2) 8144353
E-mail : <acnabin@bangla.net>
Web : www.acnabin-bd.com
Branch Office :
House # 734, Road # 26
CDA R/A, Chittagong.
103 annual report
Statement of Directors Responsibility for
Internal Control & Financial Reporting
Responsibility to Financial Statements
The Directors are responsible for ensuring that the Bank keeps proper books of accounts of all the transactions and
prepares financial statements, which give a true and fair view of the state of affairs and profit/loss for the year.
The Board of Directors accepts responsibility for the integrity and objectivity of the financial statements. It ensures that
the estimates and judgments relating to the financial statements were made on a prudent and reasonable basis, so that
they reflect in a true and fair manner, the form and substance of transactions, and reasonably present the Companys
true state of affairs.
The Board of Directors confirms that the International Financial Reporting Standard (IFRS) and International
Accounting Standards, as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh, have been
adhered to, subject to any material departure being disclosed and explained in the notes to the accounts. The Board
also confirms that the Company keeps accounting records, which enables it to ensure that the financial statements
comply with the requirements of the Companies Act, 1994, Bangladesh Securities and Exchange Rules 1987, Financial
Institution Act 1993 and Listing Regulations of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited
and amendments thereto.
Responsibility to Internal Control Systems
To ensure this, the Bank has taken proper and sufficient care in installing a system of internal control, which is reviewed,
evaluated and updated on an ongoing basis. The Internal Control & Compliance Division of the Bank conducts periodic
audits to provide reasonable assurance that the established policies and procedures of the Company were consistently
followed.
Opinion of the External Auditors
The auditor of the Bank, M/s Khan Wahab Shafiqur Rahman & Co., Chartered Accountants and M/s K. M. Hasan & Co.,
Chartered Accountants, have carried out annual audits to review on the system of internal controls, as they consider
appropriate and necessary, for expressing their opinion on the financial statements. They have also examined the
financial statements made available by the management together with all the financial records, related data, minutes of
shareholders and Board Meetings, relevant policies and expressed their opinion.
Chairman
104 annual report
Appointment of Board Members
There is a prescribed and transparent practice for the
appointment of Directors to the Board. The members of
the Board are selected each year in the Annual General
Meeting (AGM) by the Shareholders of the Bank. The
members of the Board are appointed in compliance with
Central Banks Guidelines and other applicable rules of
the country.
Board Meetings
The Board of Directors holds meetings on a regular
basis to discuss and decide on major corporate,
strategic and operational issues, as well as to evaluate
major investment opportunities. As per Bangladesh
Banks Guidelines, the Directors are paid remuneration
for attending in the meetings.
Role and Responsibilities of the Board of Directors
Board of Directors remains concerned to protect the
interests of all Stakeholders, including the Depositors.
The Board has the responsibility to periodically review
and approve the overall strategies, business,
organization, and significant policies of the Bank. The
Key Responsibilities of the Board of Directors are as
follows-
Determine the policies, objectives, Key Performance
Indicators, capital plan etc
Ensure that the Bank complies with all relevant laws
and regulations, including Central Bank ones
Approve rescheduling of loans, interest rebates and
write off abiding by Central Banks regulations
Review the report presented by the Audit Committee
Approve the minutes of Executive Committee, which
is formed to consider regular business issues and
also approve the minutes and findings of Audit
Committee, which is formed to ensure compliance at
Head Office and Branch level in every aspect
Appoint External Auditors after having approval in
the AGM of the Shareholders
Appoint Consultants and other Advisors complying
the norms
Role and Responsibilities of the Chairman of the
Board and the Managing Director & CEO
In line with the best practices and to ensure appropriate
supervision of the Management, the roles and
responsibilities of the Chairman and the CEO are
separated with clear division of responsibilities, defined
and documented as approved by the Board.
Chairman
The Chairman leads the Board and is also responsible
for the effective performance of the Board. The
Chairman continuously works together with the rest of
the Board members in setting the policy framework and
strategies to align the business activities driven by the
senior management with the Banks objectives and
aspirations and monitors its implementation.
The Chairman ensures orderly conduct and proceedings
of the Board, where healthy debate on issues being
deliberated is encouraged. The Chairman takes the lead
to ensure the appropriateness and effectiveness of the
succession-planning program for the Board and senior
management levels. He also promotes a healthy working
relationship with the CEO and provides the necessary
support and advice as appropriate. He continues to
demonstrate the highest standards of corporate
governance practices and ensures that these practices
are regularly communicated to the stakeholders.
Managing Director & CEO is primarily accountable for
overseeing the day-to-day operations to ensure smooth
and effective operation of the Bank. Furthermore, he is
responsible for mapping the medium to longer term
plans for Board approval, and is accountable for
implementing the policies and decisions of the Board, as
well as coordinating the development and
implementation of business and corporate strategies.
The CEO ensures that the financial management
practice is performed at the highest level of integrity and
transparency for the benefit of the shareholders. The
CEO, by virtue of his position as a Board member, also
functions as the intermediary between the Board and the
management.
Role of the Company Secretary
The Company Secretary of the Bank provides
assistance to the Board of Directors and the
Management. He is responsible for advising the Board
audit members on issues relating to compliance with the
relevant laws, rules, procedures and regulations, as well
as best practices of governance. The Company
Secretary keeps the records of the Banks compliance/
non-compliance status of the conditions imposed by
(BSEC) which has been shown in the Compliance
Report on BSEC Notification.
BOARD COMMITTEES
As per Bangladesh Banks guidelines, all banks have to
form an Executive Committee and an Audit Committee
of the Board to take decisions on urgent matters of the
banks. Complying with Central Banks guidelines, Board
of Directors of the Bank has formed 2 Committees i)
Executive Committee and ii) Audit Committee. The
Board delegates some of its responsibilities to the Board
Committees, which operate within clearly defined terms
of references, primarily to assist the Board in the
execution of its duties and responsibilities. Without
Executive Committee and Audit Committee, Bank has
no other committee or sub committee of the Board.
Role of Executive Committee (EC)
Executive Committee (EC) considers, approves
business and operational proposals. EC decides upon
all routine and day-to-day operational functioning of the
Bank beyond delegated power of the Management. In
the year 2012, Forty meetings of Executive Committee
were held to consider the proposals placed by the
Management.
Role of Audit Committee
The Audit Committee of the Board plays significant role
to ensure implementation of policies, guidelines etc.
provided by Bangladesh Bank, other regulatory bodies
and the Board of Directors of the Bank. The committee
also reviews the policies, audit plan and its execution,
financial statements, audit reports, internal control and
compliance report etc. In the year 2012, eleven
meettings of Audit Committee were held.
MANAGEMENT COMMITTEES
MBL has formed a number of committees with a view to
support the management in carrying out banking
operation smoothly. Management Committee
(MANCOM), Asset Liability Committee (ALCO), Basel II
Implementation Unit, Risk Management Committee,
ICAAP Preparation Committee, Management Reporting
System (MRS) Committee, Investment Committee,
Credit Assessment Committee, Purchase Committee
have been supporting the Banks management in
discharging its duties efficiently and effectively.
MANAGEMENT COMMITTEE (MANCOM)
As per directives of Bangladesh Bank and for setting a
strong internal control framework, each bank must have
an effective Management Committee (MANCOM),
which is responsible for overall management of the
Bank. MANCOM is considered the highest decision and
policy making authority of the Bank.
Composition of MANCOM Position
Managing Director & CEO Chairman
Additional Managing Directors at Head Office
Deputy Managing Directors at Head Office Member
Head of Human Resources Division, Head Office
Head of Risk management Division, Head Office
Head of Internal Control & Compliance Division Member Secretary
MANCOM of the Bank is primarily responsible to
formulate policies and procedures to identify measure,
monitor and control all risks. It also monitors the
effectiveness of the internal control system.
RISK MANAGEMENT COMMITTEE
MBL has formed a separate Risk Management
Committee as per Bangladesh Banks circular letter no
DOS (EW) 1164/14 (Mercantile) 2009-457 dated June
10, 2009. The responsibilities of the Risk Management
Committee for risk oversight include, amongst others,
to develop and foster a risk aware culture within the
Bank, review and approve risk management
strategies, risk frameworks, policies, risk tolerance
and risk appetite limits
to ensure the infrastructure, resources and systems
are in place for risk management and approve model
risk management and validation framework
Composition of Risk Management Committee
Additional Managing Directors/Deputy
Managing Directors
Head of CRMD
Head of Corporate Banking Division
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of RMD Member Secretary
BASEL II IMPLEMENTATION UNIT
Bangladesh Bank has implemented Basel II Capital Standard in the banking sector solely from January, 2010. MBL has
formed a Committee, namely Basel II Implementation Unit. The Committee acts for successful adoption of Basel II,
recommends ways to maintain adequate Capital Adequacy Ratio (CAR) and keeps the higher management updated
regarding the implementation status of Basel II in the Bank.
Composition of Basel II Implementation unit Position
Additional Managing Director & CFO Chairman
Head of Board Audit Division
Head of Internal Control and Compliance Division
Head of Credit Risk Management Division
Head of Information Technology Division
Head of International Division Member
Head of Risk Management Division
Head of Financial Administration Division
Head of Treasury Division
Head of Research and Planning Division
One member from Research and Planning Division Member Secretary
ICAAP PREPARATION COMMITTEE
MBL has formed ICAAP Preparation Committee to prepare the Internal Capital Adequacy Assessment Process for the
Bank. The Committee assesses the overall capital adequacy of the Bank in relation to risk profile. The Committee
clearly bears primary responsibility for ensuring that MBL has adequate capital to support its risks. Composition of
ICCAP Preparation Committee of the Bank is as follows:
Composition of ICAAP Preparation Committee Position
Managing Director / Deputy Managing Director/CFO Chairman
Deputy Managing Director/SEVP
Head of CRMD
Head of Corporate Division
Head of CAD Member
Head of Treasury
Head of FAD
Executive (Next to HOD), FAD
Head of RPD
Committee for Management Reporting System (MRS)
MBL has formed a committee as per Central Banks requirement, namely, Committee for Management Reporting
Systems (MRS) to collect information from internal and external sources, identify the actual weaknesses/defects for
taking appropriate decision, locate the reason of weak performance of any of the branches etc.
PURCHASE COMMITTEE
A Purchase Committee is functioning with a group of
executives headed by a senior most Executive to
examine the procurement procedure of goods, services
or works whether it has been placed on the basis of
actual requirement and maintained necessary
formalities as per guidelines of the purchase policy.
INVESTMENT COMMITTEE
With a view to achieve diversification in asset portfolio
and generating a healthy revenue (as income from
buy/sale of shares through secondary market), MBL has
formed an Investment Committee, which is primarily
responsible to take investment decision in shares in
compliance with investment policy of the Bank.
ACCOUNTABILITY AND INTERNAL CONTROL
Accountability
Accountability is central to the concept of good corporate
governance. Accountability mainly ensures that
managements action is reviewed by the Board. MBLs
Board of Directors is accountable to the Shareholders
(owners of the Bank). The Management is accountable
to the Board for their activities.
MBLs Board of Directors Responsibilities in
preparing Financial Statements
MBL Board of Directors ensures that the financial
statements of the Bank reflect a true and fair view of the
state of affairs of the Bank as at the end of the
accounting period and of the profit and loss and cash
flow for the period then ended. In preparing the financial
statements, the Directors have applied suitable
accounting policies and applied them consistently and
made judgments and estimates that are reasonable and
prudent. The Directors have also ensured that all
applicable accounting standards have been followed
and financial statements are prepared on a going
concern basis as the Directors have a reasonable
expectation, having made enquiries that the Bank has
adequate resources to continue in operational existence
for the foreseeable future.
Accountability in Disclosure of Material Facts
The Board has a Responsibility and takes it upon itself to
present to the shareholders and the public at large, a
clear, balanced and meaningful evaluation of the Banks
financial position, performance and prospects. In order
to meet the Fiduciary Responsibility expected of the
Board, the Board with the assistance of the Audit
Committee oversees the financial reporting process and
the quality of the Banks financial statements to ensure
that the reports present a true and fair view of the Banks
performance.
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) customers account or business
details, (b) shareholders holding or transaction details,
(c) employees job records, pay perquisites, benefits, tax
issues etc. (d) suppliers price, sales strategy etc. (e)
Internal documents like strategy papers, Product
Program Guidelines (PPG) etc.
Internal Controls
MBLs Board of Directors has established a
management structure that clearly defines roles,
responsibilities and reporting lines for Internal Control
and Compliance. The Board has overall responsibility for
maintaining sound internal control systems that cover
financial controls, operational compliance controls and
risk management to ensure that shareholders
investments, customers interests and the Banks assets
are safeguarded. The systems of internal controls are
continuously reviewed to ensure that they are working
via the ongoing review through internal audit process.
The Audit Committee (AC) reviews audit
recommendations and managements responses to
these recommendations. Lending to the members of the
Board or Controlling Shareholders is strictly prohibited
by the Bank.
Internal Control on key Risks faced by the Bank and
Risk Management Policies
There exists risk in every transactions of a bank. So,
Risk Management is important in financial sector.
Bangladesh Bank has identified six Core Risks and
provided guidelines to identify and thereafter minimize
ASSET LIABILITY COMMITTEE (ALCO)
Asset Liability Committee (ALCO) is mainly accountable for managing
Liquidity risk related to the Balance Sheet and
Pricing of the asset and liability products in the light of economic and market scenario
Composition of ALCO Designation Position
Mr. M. Ehsanul Haque Managing Director & CEO Chairman
Mr. Md. Abdul Jalil Chowdhury Additional Managing Director & CRO
Mr. Monindra Kumar Nath Additional Managing Director & CFO
Mr. M. A. Yousuf Khan Deputy Managing Director
Mr. Md. Quamrul Islam Chowdhury Deputy Managing Director
Mr. Choudhury Moshtaq Ahmed Deputy Managing Director
Mr. Mohammad Ismail SEVP and Head of CRMD
Mr. Khandakar Fahim Uddin Ahmed EVP and Head of CAMRCD Member
Mr. Md. Sadruzzaman EVP and Head of SME Financing Division
Mr. Javed Islam EVP and Head of Consumer and Retail Banking Division
Mr. Md. Rafiqul Haque Bhuiyan EVP and Head of IT Division
Mr. Shamim Ahmed EVP and Head of International Division
Mr. Md. Shafiet Wahed SVP and Head of Research & Planning Division
Mr. Golam Kibria SVP and Head of Financial Administration Division
Mr. Mohammad Iqbal Rezwan SVP and Head of Corporate Banking Division
Mr. Jahangir Javed FVP and Head of Treasury Division Member Secretary
SUPERVISORY REVIEW PROCESS (SRP) TEAM
Under Pillar-2 of Basel-II (Supervisory Review Process), all banks are required to design their own Supervisory Review
Process to ensure maintenance of adequate capital to fully cover all risk exposures. As per Guidelines on Supervisory
Review Evaluation Process, the level of Capital Adequacy is determined after evaluation and dialogue between
Bangladesh Bank and the SRP Team of the Bank. The assessment of capital adequacy is the outcome of a dialogue
between the Banks own SRP Team and BBs Supervisory Review Evaluation Process (SREP) Team. Banks own
assessment and SREP Teams review are linked up during this dialogue.
Composition of SRP Team Position
Additional Managing Directors
Deputy Managing Directors
Head of Credit Administration, Monitoring, Recovery & Compliance Division Member
Executive Next to HOD, Financial Administration Division
Head of Risk Management Division Member Secretary
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, identify and
minimize risks as well.
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 concern and
compatibility.
Internal Audit Function
Board Audit Function
A separate Audit Division, namely, Board Audit Division
has been formed within the Bank. Board Audit Division
reviews the compliance status of Policy Guidelines of the
Board of Directors of the Bank and also of the regulators.
Board Audit Division visits the Branches and Other
Divisions of the Bank for verification and inspection
purpose.
Internal Control and Audit Function Compliance
For an effective control system, a separate and
independent Internal Control and Compliance Division
(ICCD) has been established in the Bank. ICCD provides
assurance to the Banks Management that systems are
operating effectively; internal controls are effective; laid
down procedures are followed; financial and other
information being produced is sound and reliable. The
Bank, by its Internal Audit Team conducts regular audit
functions on the business activities of the Bank based on
different manuals, instructions, guidelines and
procedures laid down by the Bank as well as by the
regulatory bodies from time to time.
Information Technology (IT) Audit
MBL service delivery is designed on IT platform and
hence a number of inherent risks such as data collapse,
data loss, data modification, unauthorized access to
data etc. may arise within the Bank. IT Audit Team has
been formed as per the Central Banks Guidelines to
identify the inherent risks and manage those risks in an
effective and efficient manner. IT Audit Team follows the
prescribed guidelines, solves the unsettled issues and
also suggests the higher Management for needful
action.
External Audit Function
External Auditors
Accountants and K. M. Hasan & Co. have been
appointed as the External Auditors of the Bank in the
13th 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 put explanatory notes to financial
statements. External Auditors were entitled to enquire
from the Banks employees such information and
explanation as they thought necessary for the
performance of their duties as External Auditors. Bank
employees provided accurate, timely information and
explanations as and when required by the External
Auditors.
Central Banks Inspection
Bangladesh Bank conducts comprehensive inspection
at Head Office and Branches of the Bank. Central Banks
Inspection Team exchanges their views with the Banks
Auditors regarding Financial Operation, Treasury
Operation, IT Operation, and various process of the
audit. Inspection report of the Central Bank is reviewed
by the Board of Directors and corrective actions are
taken for the lapses mentioned in the report.
COMPLIANCE AND REGULATORY MATTERS
Compliance with relevant Rules and Regulations
MBL runs its business activities in full compliance with
relevant rules and regulations. While conducting its
operation, the Bank follows strictly Bank Companies Act
1991, The Companies Act 1994, Central Banks
Guidelines, Bangladesh Securities and Exchange Rules
1987, Dhaka Stock Exchange and Chittagong Stock
Exchange Listing Rules, Bangladesh Accounting
Standards (BAS), Bangladesh Financial Reporting
Systems (BFRS), IAS/IFRS guidelines, SAFA & CAPA
guidelines, BIS and UCPDC and other ICC rules.
Environmental Promotion
MBL concentrates on environment preservation by
financing Projects in the field of renewable energy,
organic agriculture across the entire value chain
including health food shops and environment technology
such as recycling companies and nature conservation
projects. MBL always encourages projects which take
care of following points while financing them viz., (a)
sustainable development and use of renewable natural
resources (b) protection of human health, bio-diversity,
occupational health and safety, efficient production,
delivery and use of energy (c) pollution prevention and
waste minimization.
COMMUNICATION WITH STAKEHOLDERS
Communication with Shareholders
MBL takes critically its corporate responsibility to provide
shareholders with the information necessary to form an
informed opinion of the Banks performance. Press
releases, interim and final results announcements,
interim and annual reports, and other information of
interest to shareholders are uploaded to Companys
corporate website www.mblbd.com. Half Yearly and
Annual Reports of the Bank are also sent to
shareholders within the respective deadlines stipulated
by the regulatory bodies.
Communication with Employees
To enhance mutual understanding and promote
cooperation at all levels, the Board of Directors and the
senior management of the Bank always maintains
communication with the employees; discuss matters
such as safety and the work environment, as well as
broader issues relating to employee welfare.
Communication with the General Public
The Banks website www.mblbd.com serve as a easy
access for key information source for business,
financials and other relevant information about the
businesses of the Bank. In addition, from time to time,
the Bank publishes reports and information brochures
which set out specific aspects of the Banks operations
for the general public.
Corporate governance has been comprehensively defined
as, "a system of law and sound approaches by which
corporations are directed and controlled focusing on the
internal and external corporate structures with the intention of
monitoring the actions of management and directors. Good
Corporate Governance should be ensured in the banks, as
they deal with public money. Fairness, Transparency,
Accountability and Responsibility are the minimum standard
of acceptable corporate behavior today. At MBL, the Board is
committed to maintaining high standards of corporate
governance with a view to enhancing stakeholder value,
increasing investor confidence, establishing customer trust
and building a competitive organization to pursue the Banks
corporate vision to be a financial services leader in the
country.
MBLs governance structure is to make sure compliance with
applicable legal and regulatory requirements and with best
governance practice as set out in the concerned Bangladesh
Securities and Exchange Commissions Notification. The
Board continuously reviews its governance model to ensure
its relevance and ability to meet the challenges of the future.
Report on
Corporate Governance
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
Report on Corporate Governance
106 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
107 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
108 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
109 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
110 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
111 annual report
the country.
Board Meetings
follows-
the norms
Chairman
management.
BOARD COMMITTEES
Management.
Managing Directors
Head of CRMD
Head of ICCD
Head of ID Member
Head of IT
Head of AML
Head of Treasury
Head of FAD
Head of RPD
Head of CRMD
Head of CAD Member
Head of Treasury
Head of FAD
Head of RPD
PURCHASE COMMITTEE
Accountability
performance.
Information
Internal Controls
by the Bank.
AUDIT FUNCTION
compatibility.
purpose.
action.
External Auditors
Auditors.
waste minimization.
country.
112 annual report
Vacant position of
independent Director will
be filled up soon.
Such appointment is to
be approved in the
ensuing 14th AGM
113 annual report
Compliance Report on BSEC Notifcation
114 annual report
115 annual report
Chairman of the audit
committee is also an
independent director
116 annual report
117 annual report
118 annual report
Compliance of Section 1.5 (xx)
Board meeting held during 2012 and attendance by each Director:
Number of Meeting: 2012
Held Attended
01 Alhaj Akram Hussain (Humayun) 17 16
02 A. S. M. Feroz Alam 17 12
03 Md. Anwarul Haque 17 14
04 R. A. Hawlader* 06 04
05 M. S. Ahsan 17 15
06 Md. Tabibul Huq 17 12
07 M. Amanullah 17 16
08 Md. Abdul Hannan* 06 02
09 Mohd. Selim 17 17
10 Morshed Alam* 10 07
11 Md. Shahabuddin Alam 17 08
12 Alhaj Mosharref Hossain 17 13
13 Saber Hossain Chowdhury, M.P** 13 04
* Elected as Director as on 06.09.2012
** Elected as Director as on 28.03.2012
Directors who could not attend meeting were granted leave of absence by the Board
Serial No. Composition of the Board
119 annual report
The Pattern of Shareholding

Parent/Subsidiary/Associated companies and other related parties : Nil
Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit.

SL Name Shares Held % of Name of Shares Held % of
Holding Spouses Holding
01 Directors
Alhaj Akram Hussain(Humayun) 13,262,856 2.17% Ferdousi Begum 1,528,803 0.25%
A. S. M. Feroz Alam 26,862,800 4.40% Yoko Inamori Nil Nil
Md. Anwarul Haque 12,369,091 2.02% Nargis Anwar 358,654 0.06%
R. A. Howlader 19,003 0.0031% Bilkis Begum 2,990,625 0.49%
M. S. Ahsan 15,273,832 2.50% Farah Ahsan Nil Nil
Md. Tabibul Huq 12,225,234 2.00% Mahmuda Huq Nil Nil
M. Amanullah 32,500,000 5.32% Tazneen Aman 408,507 0.07%
Md. Abdul Hannan 13,970,593 2.29% Israt Jahan 1,086,680 0.18%
Mohd. Selim 16,291,047 2.67% Farida Begum 1,525,802 0.25%
Morshed Alam 17,040,678 2.79% Bilkis Nahar 207,803 0.03%
Md. Shahabuddin Alam 22,426,086 3.67% Yeasmin Alam 1,528,803 0.25%
Alhaj Mosharref Hossain 14,626,372 2.39% Feroza Begum 1,936,487 0.32%
Saber Hossain Chowdhury, M.P 2,338,439 0.38% Rehana Chowdhury Nil Nil

02 Chief Executive Officer M. Ehsanul Haque Nil
03 Company Secretary S. Q. Bazlur Rashid Nil
04 Chief Financial Officer Monindra Kumar Nath Nil
05 Head of Internal Audit Md. Sayeed Hossain Nil

Executives ( top five salaried employees of the company, other than the Directors, Chief Executive Officer,
Company Secretary, Chief Financial Officer and Head of Internal Audit) :
Sl DESIGNATION NAME SHARE HELD
01 Additional Managing Director Md. Abdul Jalil Chowdhury Nil
02 Additional Managing Director Monindra Kumar Nath Nil
03 Deputy Managing Director M. A. Yousuf Khan Nil
04 Deputy Managing Director Md. Quamrul Islam Chowdhury Nil
05 Deputy Managing Director Choudhury Moshtaq Ahmed Nil

Shareholders holding ten percent or more voting interest in the company: Nil
120 annual report
121 annual report
122 annual report
The Audit Committee of the Bank constituted with the following five
members of the Board of Directors:
Name Designation
R. A. Howlader Chairman
Md. Tabibul Huq Member
Md. Abdul Hannan Member
Alhaj Mosharref Hossain Member
Saber Hossain Chowdhury, M.P Member
For the year ended on December 31, 2012, the Audit Committee of the Board of Directors conducted 11 (eleven)
meetings in which among other things, the following issues were discussed/ evaluated/ reviewed and provided
guidelines and necessary instructions:
Reviewed the Banks Financial Statement- Balance Sheet, Profit & Loss Accounts, Cash Flow Statement,
Statement of Changes in Equity, Liquidity Statement and related Explanatory notes as on December 31, 2011.
Approval of Risk Based Audit Plan for the year 2012
Reviewed the performance of Mercantile Bank Securities Ltd.
Reviewed the Banks 1st Quarterly Un-Audited Financial Statement- Balance Sheet, Profit & Loss Accounts, Cash
Flow Statement & Statement of Changes in Equity and Liquidity Statement ended on March 31, 2012
Recommended for appointment of External Auditors in Annual General Meeting (AGM) of the Bank
Reviewed Compliance on observations, recommendations and decisions of the Audit Committee Meetings
Reviewed the Banks Half Yearly Un-Audited Financial Statement- Balance Sheet, Profit & Loss Accounts, Cash
Flow Statement, Statement of Changes in Equity and Liquidity Statement ended on June 30, 2012
Reviewed the Comprehensive Inspection Reports on different branches of the Bank conducted by the team of
ICCD from time to time and the status of compliance thereof
Reviewed the surprise Inspection Report on different branches conducted by Board Audit Division, Head Office
Reviewed the Health Report of the Bank for the year 2011
Reviewed Non Performing Loans and recovery there against
Reviewed the Banks 3rd Quarterly Un-Audited Financial Statement- Balance Sheet, Profit & Loss Accounts, Cash
Flow Statement, Statement of Changes in Equity and Liquidity Statement ended on September 30, 2012
Reviewed the work process of Credit Administration, Recovery, Monitoring and Compliance Division of Head
Office.
R. A. Howlader
Chairman, Audit Committee
Report of Audit Committee
123 annual report
Media Highlights
124 annual report
Report on
Corporate Social
Responsibility
CSR is a process with the aim to embrace responsibility for
the Banks actions and encourage a positive impact
through its activities on the environment, customers,
employees, communities, stakeholders and all other
members of the public sphere. CSR is used as a framework
for measuring an organizations performance against
economic, social and environmental parameters. MBL
believes, it is about building sustainable businesses, which
needs healthy economies, communities and friendly
environments.
As a financial institution, we are aware of the critical role we
play in the economy, community and environment. For us,
corporate responsibility means getting the fundamentals
right for our customers, being a good employer and
addressing our broader responsibility to the society and
environment. CSR is an integral part of MBL culture. Our
corporate social responsibility has always been paying
concentration on initiatives and issues that are significant to
our stakeholders and expresses our obligation to do the
right things as a matter of principle. Basically, we deem
CSR as MBLs most static business model which is socially
responsible and environmentally sustainable. The Banks
activities have been expanded to contribute through an
effective leading role in serving the society.
Report on Corporate Social Responsibility
126 annual report
Our CSR Framework
Making a Difference
MBL believes that, true success does not consist in profit
maximization only rather in doing something for the
betterment of deprived part of the society. With this
consideration, MBL has established a foundation in the
name and style, Mercantile Bank Foundation in 2000,
just after a year of its inception, to work for the distressed
and disabled people. Mercantile Bank Foundation has
always been playing an imperative role in the social life
of the country throughout its course of compassionate
operation. MBL CSR is overseen by the Mercantile Bank
Foundation. MBL contributes 1% of its Operating Profit
to the Mercantile Bank Foundation every year, which
was never less than BDT 4,000,000.00 in the initial days.
This year it has reached to BDT 85,900,000.00. The
funding policy has focused on five major areas:
Community outreach, Health & Medical research,
Education Arts & Culture and development of Sports.
Investment in CSR programs is always supported and
encouraged by the Board of Directors. Additionally, Bank
has a separate CSR Desk to support such activities.
Segment wise contribution under CSR activities of
Mercantile Bank Foundation in 2012 is furnished below:
Segments (BDT in Million)
Education 13.80
Health 26.80
Disaster Management 17.50
Sports 2.40
Art & Culture 1.80
Others 23.60
Total 85.90
Objectives of Mercantile Bank Foundation
Mercantile Bank Foundation has been formed with the
aim of achieving some underlying objectives including:
to take possible initiatives in increasing social
wellbeing and poverty alleviation
to support education by establishing new
educational institutions, providing stipends/
scholarships to the poor but brilliant students
to provide awards to Scholars in different
significant arenas for their outstanding
contribution, as they uphold nations pride brightly
even across the geographical boundaries
to assist research activities on Bengali Literature
through Bangla Academy
to assist the unemployed young to make them self
sufficient
to assist the rootless and distressed orphans and
mentally retarded children through taking
appropriate steps for their mental perfection and
self-support
to support in establishing hospitals, clinics, etc. for
improvement of the health sector, to donate one
time financial endowment to poor artists,
literature-patron, for ailing fatal disease-affected
poor patients, to support poor fathers for arranging
their daughters marriage and to support writers
and publishers through purchasing their books
Mercantile Bank Award-2012
MBL runs numerous philanthropy programs all over the
country and Mercantile Bank Foundation is forever
destined to do good and even better in the days to
come. From foundation, MBL each year on its founding
ceremony, awards some noted intellectual personalities
of the society for their outstanding performances in their
respective fields. In 2012 MBL also provided awards to
fourteen Scholars. The Award includes a gold medal (2
Vori), a crest and one time financial endowment worth
BDT 1.00 lakh. The Scholars who have been honored
with Mercantile Bank Award-2012 are as under:
Education Scholarship Program
As a corporate citizen, MBL is set to fulfill its social
obligations through a broad range of activities.
Mercantile Bank Foundation launched a Scholarship
program in the name and style, Mercantile Bank Abdul
Jalil Education Scholarship for the meritorious and poor
students across the country under the category of J.S.C,
S.S.C and H.S.C Education Scholarship program is an
explicit expression of MBLs motive towards building the
nation through extending hands of assistance to the
future generation of the country. Mercantile Bank
Foundation is proud to have another year of success of
its Education Scholarship Program in this year. In 2012,
MBL provided scholarships among the students who
have successfully passed J.S.C, S.S.C and H.S.C in
2011 to continue their further studies. Through this
program, we engage to build self-respect and
capabilities to make career, educational and
life-changing journey. The details information of the
education scholarship program is as under:
Category Monthly Scholarship No. of Tenure
(BDT) Beneficiary
J.S.C 750.00 220 1 Year
S.S.C 1,000.00 265 1 Year
H.S.C 1,500.00 265 1 Year
Division wise information of scholarship awardees
Number of students Total
J.S.C S.S.C H.S.C
Dhaka 33 56 52 141
Chittagong 31 30 42 103
Rajshahi 56 63 64 183
Khulna 22 45 31 98
Sylhet 4 7 11 22
Barisal 26 28 26 80
Rangpur 48 36 39 123
Total 220 265 265 750
In 2012, MBL awarded scholarship worth BDT 10 million among 750 students which was BDT 5 million and 384
students in 2011. We aspire to increase the number of beneficiary students in the coming days. For awarding
scholarship, we sought application eligible candidates all over the country through advertisement in leading national
dailies and selected 750 awardees by an committee. The scholarship was given to the selected students through a
formal award giving ceremony organized by MBL at 10 different areas across the country.
Education (16%)
Disaster Management (20%)
Sports (3%)
Health (31%)
Art & Culture (2%)
Others (27%)
Employee
Environment
Community
Customer People
Arenas Scholars rewarded
Education Professor Abdul Mannan
Healthcare Professor Harun-or-Rahsid
Culture Mr. Ali Jaker
Freedom fighter Lt. Col. (Rtd.) Abu Osman Chowdhury
Liberation War based Research Mr. Hasan Hafizur Rahman (Posthumous)
Economy and Economic Research Professor Mosharof Hosan
Bengali Language and Literature Mr. Belal Chowdhury
Commerce and Industry Mr. A Rouf Chowdhury
Journalism Mr. Touab Khan
Sports Mr. Shakib Al Hasan
Agriculture based Research & development Sree Horipod Kapali
Social Infrastructure Sir Fazla Hasan Abed
Banking Mr. Khandakar Ibrahim Khaled
Institution Bangabandhu Sheikh Mujibur Rahman Memorial Museum
Figure: Segment wise contribution under CSR activities
127 annual report
Our CSR Framework
Making a Difference
Education 13.80
Health 26.80
Sports 2.40
Art & Culture 1.80
Others 23.60
Total 85.90
sufficient
self-support
(BDT) Beneficiary
J.S.C 750.00 220 1 Year
S.S.C 1,000.00 265 1 Year
H.S.C 1,500.00 265 1 Year
J.S.C S.S.C H.S.C
Dhaka 33 56 52 141
Rajshahi 56 63 64 183
Khulna 22 45 31 98
Sylhet 4 7 11 22
Barisal 26 28 26 80
Rangpur 48 36 39 123
Total 220 265 265 750
Awardees of Mercantile Bank Awards 2012
128 annual report
Our CSR Framework
Making a Difference
Education 13.80
Health 26.80
Sports 2.40
Art & Culture 1.80
Others 23.60
Total 85.90
sufficient
self-support
(BDT) Beneficiary
J.S.C 750.00 220 1 Year
S.S.C 1,000.00 265 1 Year
H.S.C 1,500.00 265 1 Year
J.S.C S.S.C H.S.C
Dhaka 33 56 52 141
Rajshahi 56 63 64 183
Khulna 22 45 31 98
Sylhet 4 7 11 22
Barisal 26 28 26 80
Rangpur 48 36 39 123
Total 220 265 265 750
Division
129 annual report
Scholarship Distribution Ceremony of Rajshahi Region
Mercantile Bank Abdul Jalil Education Scholarship Distribution
Scholarship Distribution Ceremony of Chittagong Region
Scholarship Distribution Ceremony of Comilla Region
Scholarship Distribution Ceremony of Sylhet Region
Scholarship Distribution Ceremony of Noakhali Region
Scholarship Distribution Ceremony of Barisal Region
Scholarship Distribution Ceremony of Dhaka Region
Scholarship Distribution Ceremony of Dhaka Region
130 annual report
MBLs Responsibilities to the Society
There is no question, through our day-to-day business
operations; we are adding values to the society and the
economy. Ultimate goal of CSR activities of MBL is
Building a Sustainable Society.
Community outreach: a helping hand for disaster
response
MBL is fully dedicated to providing opportunities for
economically disadvantaged communities by fostering
economic development and supporting local
communities. The Bank strives to assist the victims of
natural disaster by providing financial help in
rehabilitation and rescue purposes.
Distribution of winter clothes among the poor
people: MBL has distributed winter clothes among
the distressed people of different cold affected
areas of the country. About 58,225 pieces of new
winter clothes including blankets, shawls worth
BDT 11.39 million has been distributed in different
cold affected areas of the country.
MBL continues financial support to BDR
mutiny-affected families: BDR mutiny in
February, 2009 caused an irreparable loss to the
nation. MBL has widened its arms to share the
sufferings of the revolt affected families. In
continuation of previous years, this year also MBL
donated BDT 0.96 million to two mutiny- affected
families and will continue this support for another
six years.
Donation to various tragedy victims: MBL has
donated BDT 0.50 million to BAB to aid the fire
effected workers of Tazreen Fashion. MBL also
donated 65 bundle tin sheets worth BDT 0.20
million to fire victims of Boubazar and BDT 0.44
million to Chittagong Baddarhat tragedy.
Health and Medical
From the beginning, each year the Bank provides
financial support to different medical and health
institutions. Apart from institutional support, the Bank
also provides financial assistance to individuals for their
treatments. In 2012, Bank contributed BDT 26.80 million
to different individuals and hospitals. Following are the
major contribution of MBL in same arena:
donation of BDT 1.50 million to Liver Foundation of
Bangladesh for purchasing medical equipments
donation of BDT 1.00 million to SEID Trust for
development of the underprivileged children
donation of BDT 1.20 million to Rawnok Diadetes
Shastha Sheba, Feni
donation of BDT 0.28 million to National Heart
Foundation
donation of BDT 10.98 million to Naogaon General
Hospital to establish dialysis unit
donation of BDT 1.00 million to Nilphamari Diabetic
Association to establish eye unit
donation of BDT 10.79 million to 199 individuals for
their treatments
Education: teaching the young and spreading
knowledge
MBL Foundation is continuing its supports to the
education sector as before. From 2011, every year
Mercantile Bank Abdul Jalil Education Scholarships are
provided to the meritorious poor students. In addition,
the Bank has provided financial assistant of BDT 3.80
million to 51 meritorious students for their higher studies.
The Bank encourages the employees to have
professional degrees and also gives opportunities to the
employees who wish to get higher studies in abroad. The
Bank provides cash money incentives to the employees
who passed the Banking Diploma.
The Arts: preserving cultural heritage and
sponsoring the performing arts
As a recognized benefactor of culture, MBL takes some
non-profit initiatives every year. In 2012, as earlier, MBL
contributed to organize and celebrate different cultural
and traditional festivals. In this regard, in 2012 MBL
contributed BDT 1.80 million for different cultural affairs.
MBL has celebrated the Bangla New year-1419.
Besides, the followings are the few beneficiaries of
MBLs contribution in the Arts & Culture sector during
2012:
Muktijoddha Sangshad
Dhaka Press Club
Rabindra Academy
Uttara Sector Association
Naogaon Student Association
Ashugonj Upzila
Dhaka Munir Institution
Traditional Games and Sports
MBL always encourages the development of games and
sports of the country. In different times, the Bank has
contributed to organize a variety of traditional games and
sports. In 2012, the Bank contributes a total amount of
BDT 2.40 million to different institutions/clubs to arrange
games and sports such as,
Bangladesh Carrom Federation
Wari Club, Dhaka
Feni District Sports Association
District Sports Association, Nilphamary
Special Olympic For Autistics
Deaf Sports Fedaration
Playing our part in the Economy
The Bank has contributed to the economy by generating
employment of 1,981 full time employees. It also plays a
vital role in creating job opportunities by financing the
productive sectors. The Bank recruits a number of fresh
graduates and experienced officers every year. In the
and deployed BDT 93,610.87 million in 2012 to deficit
group. Following table depicts the Banks performance in
terms of deposit mobilization, its deployments,
international business, inward foreign remittance and
employments as at December 31 of 2012 and 2011:
(BDT in million)
Contribution to Economy In 2012 In 2011
Mobilization of Deposit 132,093.64 102,262.02
Deployment of Loans and Advances 93,610.87 79,999.80
Export Business 81,477.10 81,311.80
Import Business 113,434.10 95,008.70
Inward Foreign Remittance 15,792.80 7,150.00
Employment (in numbers) 1,981 1,668
Contribution to the National Exchequer
The Bank plays its responsibility to the Government of
Bangladesh paying corporate tax regularly. As per tax
law, the bank deducts income tax at source, VAT, excise
duty from various payments and services for ultimate
credit to government exchequer the Bank has made
provision of BDT 1,000.00 million for corporate tax in
2012 against BDT 1,270.00 million in 2011.
Care to Environment: Encouraging new
thinking about Environmental Challenges
Our obligation to Corporate Social Responsibility
maintains a long-term point of view to make
economically sound, environmentally responsible and
socially supportive decisions. We believe that every
small 'GREEN' step taken today would go a long way in
building a green future and that each one of us can work
towards a better global environment. Going Green in our
Bank can not only bring awareness among our
customers and our employees but also build awareness
and consciousness to our society. The core business
model of MBL clearly expresses its sustainability
towards environment and unveils its eco-friendly motives
i.e. not to harm or damage Green Life Belt of mother
nature which eventually ensures a pollution free
breathing atmosphere for our future generations. MBL
has established a separate unit to turn our Bank as a
Green Bank. A lot of measures have been adopted
including green financing, creating awareness among
the employees for efficient use of water, electricity &
paper and giving preference to eco friendly financing.
Involving Employees in the CSR approach
As a Corporate Citizen, Mercantile Bank Limited is
striving to play its responsibility in this regard. The
involvement of employees in the CSR approach is one of
the most effective ways to CSR awareness. In the new
CSR strategy, we have developed activities to keep
employees up-to-date with our CSR goals and
principles. We believe that they will put their knowledge
to both at work place and in their personal life. MBLs
employees are also kept updated about day-to-day CSR
events, and are invited to exchange views on new issues
and the Banks actions in this area.
131 annual report
response
six years.
Health and Medical
Shastha Sheba, Feni
Foundation
their treatments
knowledge
2012:
Dhaka Press Club
Rabindra Academy
Ashugonj Upzila
Wari Club, Dhaka
Donation to SEID Trust for underprivileged children
Donation to Nilphamari Diabetic Association, Nilphamari
Distribution of tin among the Hazaribagh Tragedy victims Bangla New Year Celebration
Distribution of winter clothes Distribution of winter clothes
Financial assistance to the family affected by BDR carnage in 2009
Contribution to the Pashuram Diabetic Samity, Feni
(BDT in million)
Import Business 113,434.10 95,008.70
132 annual report
response
six years.
Health and Medical
Shastha Sheba, Feni
Foundation
their treatments
knowledge
2012:
Dhaka Press Club
Rabindra Academy
Ashugonj Upzila
Wari Club, Dhaka
(BDT in million)
Import Business 113,434.10 95,008.70
Were committed to being
the best employer
We recognize that with 1981
employees, we play a significant
role in the lives of a diverse range
of people. Our focus on
leadership, culture and capability
helps us to build a better
workplace and an organization
with which our customers want to
do business and where people
really want to work.
Report on Human Capital
133 annual report
Overview
In present competitive banking industry, delivering
timely and efficient customer service is very important.
Employees of the banks play significant role in providing
better customer service. A talented officer can win the
heart of a customer by providing efficient service
blended with personal care which eventually builds a
strong and ever-lasting business relationship with that
customer.
Our people are our most valuable asset, embodying our
commitment to maximizing wealth of the Bank. We rely
on them to communicate this value to our many
stakeholders. With the Bank stepping up to entrenching
its business strength, Bank Human Capital initiatives
continued to focus on building capacity and confidence
to keep up the momentum and employees resilience in
pursuit to become most caring and gainfully profitable
Bank. Finding the right employees, developing,
rewarding and retaining them are some of our highest
priorities. Our talent management strategy is a
multi-pronged one that includes essential employee
value proposition with a competitive reward package.
Our People
MBL has formulated an efficient recruitment policy to
recruit new employees, both fresh and experienced to
meet the customers ever-increasing demand and to
support the business expansions of the Bank. Our
human resources are competent enough to handle the
challenges of modern banking. Total Manpower of the
Bank over the last three years is shown in the following
table:
Manpower December 31 December 31 December 31
2012 2011 2010
Executives 198 189 159
Officers & Staff 1,783 1,479 1,446
Total 1,981 1,668 1,605
We believe that the investment we make in our people,
culture and reputation sets us apart from our peers. Our
people want to feel proud of our organization, and this is
an essential factor in lifting employee engagement,
unlocking creativity and innovation, and driving a better
outcome for our customers and shareholders. At a time
when the industry is frequently criticized, employee
engagement and confidence are critical to performance.
Our people are an important asset and a key driver of
our performance. Like before, we remain committed to
promoting diversity, inclusion, flexibility, health and
well-being in our workforce.
Recruiting The Best People
In order to set our business up for success over the long
term, MBL recognizes the importance of attracting and
retaining the 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.
Building Capability
MBL always puts high priorities to invest on human
resources. We constantly up-skill our people to enable a
culture that thrives on innovation, high customer
engagement and fast problem resolution. In 2012, we
have continued to invest heavily in the capability of our
people. This year we invested BDT 3.36 million in
training and development programs, and 3,017
employees across the Bank attended leadership and
development programs. Employees are given
on-the-desk training so that they can carry out their
deskwork confidently remaining compliant. As well,
classroom trainings are also arranged for the employees
to make them up-to-date with the changing
requirements. The Bank has established Mercantile
Bank Training Institute (MBTI), our flagship learning
centre, run by experienced and talented faculty
members. MBTI has brought all the employees of the
Bank to the training net. With a view to achieving
professional excellence in Banking, MBTI conducts
various courses, workshops covering all diverse courses
for banking, finance, managements, laws etc. for officers
and executives of the Bank. During 2012, the MBTI fulfill
its yearly target by training a large number of employees
through different training programs.
MBTIs achievement in 2012
Total Courses Total No. of Days
Conducted Sessions Trainees Utilized
82 1,290 3,017 258
MBTI was created to deliver value across the business
by building a workforce with leading capability to drive
sustainable, enhanced performance and strengthen our
reputation. MBTI provides employees with experiences
and tools to develop the skills they require to be
successful in their current role and to prepare our people
for career opportunities of tomorrow. MBTI enables our
employees to enhance their knowledge of specific
subjects relevant to our business, such as pricing,
project finance, corporate governance, managerial and
leadership development, and experiential development.
The learning modules are primarily focused on products
and our processes are knowledge-driven. The Training
Institute has fixed a target with three main dimensions-
to bring all the employees in Training Net, ensure
Tailor-made training for the employees and to create
subsequent line of defense in essential areas of the
Bank.
Rewarding Performance
Our total rewards strategy has evolved with our business
transformation and basic pay is benchmarked against
the market to ensure competitiveness. The Bank offers
adequate financial and nonfinancial benefits for the
employees of the Bank to ensure a better life style. Such
as- attractive compensation package, festival and
incentive bonus, fair promotion, annual increment,
career growth opportunities, training and workshop
(home and abroad), favorable work environment, health
care facilities, loan facilities at a privileged rate,
retirement benefits, e.g., provident fund; gratuity fund,
disability benefit and leave fare assistance.
On top of this, we have platforms which provide
recognition for outstanding performance, we offer career
development opportunities, and we are dedicated to our
employees well-being. To boost motivation, we
recognize and reward top performers, long service
employees, best managers, executives and officers.
Every year, we commemorate these achievements at
the MBL Day Celebration on the Foundation Day of the
Bank, Annual Business Conference and other events.
Fostering Health
We remain proactive in implementing strategies and
systems to help prevent injury or harm to employees
whilst at work. Health and safety measures are in place
to ensure that our people have an optimum work
environment. Time to time, the Bank conducts a variety
of safety and wellness activities. The Bank also
extended the maternity leave from 03 months to 06
months for its female employees.
Managing People
MBL has formulated its HR Policy incorporating benefits
to be provided and returns to be expected from the
employees. HR Policy acts as a key mechanism to make
the employees responsible professionally and morally.
Ethical codes of conduct, behavioral patterns of the
employees and what the employees should do and what
they shouldnt, are elaborately incorporated in the Policy.
MBL manages its employees putting into practice its HR
Policy.
Our core behaviors encourage our people to speak up
and have open, honest conversations. Our Codes of
Conduct, Compliance Standards, and Policies guide our
day-to-day decisions, actions and behaviors and govern
our business. Any known or suspected incidents of
illegal/ unacceptable/ undesirable conduct is viewed with
zero tolerance.
134 annual report
Report on Human Capital
Overview
In present competitive banking industry, delivering
timely and efficient customer service is very important.
Employees of the banks play significant role in providing
better customer service. A talented officer can win the
heart of a customer by providing efficient service
blended with personal care which eventually builds a
strong and ever-lasting business relationship with that
customer.
Our people are our most valuable asset, embodying our
commitment to maximizing wealth of the Bank. We rely
on them to communicate this value to our many
stakeholders. With the Bank stepping up to entrenching
its business strength, Bank Human Capital initiatives
continued to focus on building capacity and confidence
to keep up the momentum and employees resilience in
pursuit to become most caring and gainfully profitable
Bank. Finding the right employees, developing,
rewarding and retaining them are some of our highest
priorities. Our talent management strategy is a
multi-pronged one that includes essential employee
value proposition with a competitive reward package.
Our People
MBL has formulated an efficient recruitment policy to
recruit new employees, both fresh and experienced to
meet the customers ever-increasing demand and to
support the business expansions of the Bank. Our
human resources are competent enough to handle the
challenges of modern banking. Total Manpower of the
Bank over the last three years is shown in the following
table:
Manpower December 31 December 31 December 31
2012 2011 2010
Executives 198 189 159
Officers & Staff 1,783 1,479 1,446
Total 1,981 1,668 1,605
We believe that the investment we make in our people,
culture and reputation sets us apart from our peers. Our
people want to feel proud of our organization, and this is
an essential factor in lifting employee engagement,
unlocking creativity and innovation, and driving a better
outcome for our customers and shareholders. At a time
when the industry is frequently criticized, employee
engagement and confidence are critical to performance.
Our people are an important asset and a key driver of
our performance. Like before, we remain committed to
promoting diversity, inclusion, flexibility, health and
well-being in our workforce.
Recruiting The Best People
In order to set our business up for success over the long
term, MBL recognizes the importance of attracting and
retaining the 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.
Building Capability
MBL always puts high priorities to invest on human
resources. We constantly up-skill our people to enable a
culture that thrives on innovation, high customer
engagement and fast problem resolution. In 2012, we
have continued to invest heavily in the capability of our
people. This year we invested BDT 3.36 million in
training and development programs, and 3,017
employees across the Bank attended leadership and
development programs. Employees are given
on-the-desk training so that they can carry out their
deskwork confidently remaining compliant. As well,
classroom trainings are also arranged for the employees
to make them up-to-date with the changing
requirements. The Bank has established Mercantile
Bank Training Institute (MBTI), our flagship learning
centre, run by experienced and talented faculty
members. MBTI has brought all the employees of the
Bank to the training net. With a view to achieving
professional excellence in Banking, MBTI conducts
various courses, workshops covering all diverse courses
for banking, finance, managements, laws etc. for officers
and executives of the Bank. During 2012, the MBTI fulfill
its yearly target by training a large number of employees
through different training programs.
MBTIs achievement in 2012
Total Courses Total No. of Days
Conducted Sessions Trainees Utilized
82 1,290 3,017 258
MBTI was created to deliver value across the business
by building a workforce with leading capability to drive
sustainable, enhanced performance and strengthen our
reputation. MBTI provides employees with experiences
and tools to develop the skills they require to be
successful in their current role and to prepare our people
for career opportunities of tomorrow. MBTI enables our
employees to enhance their knowledge of specific
subjects relevant to our business, such as pricing,
project finance, corporate governance, managerial and
leadership development, and experiential development.
The learning modules are primarily focused on products
and our processes are knowledge-driven. The Training
Institute has fixed a target with three main dimensions-
to bring all the employees in Training Net, ensure
Tailor-made training for the employees and to create
subsequent line of defense in essential areas of the
Bank.
Rewarding Performance
Our total rewards strategy has evolved with our business
transformation and basic pay is benchmarked against
the market to ensure competitiveness. The Bank offers
adequate financial and nonfinancial benefits for the
employees of the Bank to ensure a better life style. Such
as- attractive compensation package, festival and
incentive bonus, fair promotion, annual increment,
career growth opportunities, training and workshop
(home and abroad), favorable work environment, health
care facilities, loan facilities at a privileged rate,
retirement benefits, e.g., provident fund; gratuity fund,
disability benefit and leave fare assistance.
On top of this, we have platforms which provide
recognition for outstanding performance, we offer career
development opportunities, and we are dedicated to our
employees well-being. To boost motivation, we
recognize and reward top performers, long service
employees, best managers, executives and officers.
Every year, we commemorate these achievements at
the MBL Day Celebration on the Foundation Day of the
Bank, Annual Business Conference and other events.
Fostering Health
We remain proactive in implementing strategies and
systems to help prevent injury or harm to employees
whilst at work. Health and safety measures are in place
to ensure that our people have an optimum work
environment. Time to time, the Bank conducts a variety
of safety and wellness activities. The Bank also
extended the maternity leave from 03 months to 06
months for its female employees.
Managing People
MBL has formulated its HR Policy incorporating benefits
to be provided and returns to be expected from the
employees. HR Policy acts as a key mechanism to make
the employees responsible professionally and morally.
Ethical codes of conduct, behavioral patterns of the
employees and what the employees should do and what
they shouldnt, are elaborately incorporated in the Policy.
MBL manages its employees putting into practice its HR
Policy.
Our core behaviors encourage our people to speak up
and have open, honest conversations. Our Codes of
Conduct, Compliance Standards, and Policies guide our
day-to-day decisions, actions and behaviors and govern
our business. Any known or suspected incidents of
illegal/ unacceptable/ undesirable conduct is viewed with
zero tolerance.
Team of Mercantile Bank Training Institute
135 annual report
MBL Album
Annual
Business
Conference
2012
Half Yearly
Business
Conference
2012
13th Annual
General
Meetting (AGM)
of the Bank
136 annual report
MBL
Gathering
2012
MBL
Gathering
2012
Performance
Review
September
2012
137 annual report
Shareholders Participation in 13th AGM Shareholders participation in 13th AGM
Celebration of 500th EC Meeting MBL Express booth inaugauration
Customers gethering at Feni Certificate of recognition awarded by ICAB
138 annual report
MBL Album
Branch Opening Ceremony of Kishoreganj Remittance Agrement
Branch Opening Ceremony of Nazipur Branch Opening Ceremony of Bhulta
Mercantile Exchange House (UK) Ltd. opens London Branch Service Month Campaign 2012
139 annual report
Picnic 2013 Pickup Van Donation to Wildlife Society, Srimangal
SME Loan Disbursement Winter Cloths Distribution
Training Session at MBTI Anti-Money Laundering Workshop
140 annual report
MBL Album
During the year 2012, MBL showed satisfactory performance in almost all segment of banking business including
deposits mobilization, providing loans and advances, maintaining strong capital base against total risk weighted assets,
corporate clients credit rating, controlling cost of fund, yield on advances and efficient liquidity management. Key
Performance Indicators of the Bank as on December 31, 2012 are as follows:
(BDT in Million)
Particulars 2011 2012 Growth
Deposits 102,262.02 132,093.64 29.17%
Loans and Advances 79,999.80 93,610.87 17.01%
Total Assets 116,553.01 154,040.18 32.16%
Paid-up Capital 4,968.10 6,110.75 23.00%
Shareholders' Equity 9,659.33 10,924.55 13.10%
Operating Profit* 3,501.67 3,350.78 -4.31%
Import 95,008.70 113,434.10 19.39%
Export 81,311.80 81,477.10 0.20%
Remittance 7,150.00 15,792.80 120.88%
*Extraordinary gain worth of BDT 66.54 Crore during 2011 from selling DSE and CSE membership to Mercantile Bank
Securities Limited (MBSL), a subsidiary of MBL contributed substantial growth in operating profit in 2011.
Fund Management and Liquidity
The Bank handled its fund management operation efficiently during the year 2012. Loan-Deposits ratio remained below
the allowable limit over the year. As on December 2012, the loan deposits ratio stood at 79.26%. During the reporting
period, the Bank has been able to ensure optimum level of cash flow and thereby effectively managing its liquidity risk.
Dividend
The Bank depicts very strong dividend pay out ratio over the years. As on December 31, 2012 the Banks dividend pay
out ratio stood at 66.37%. In a bid to maximize shareholders value, the Bank is maintaining a stable dividend policy
emphasizing on stock dividend to boost the core capital of the Bank.
CFOs Statement
Capital Fund
The bank is committed to maintain adequate capital base to remain compliant as per new risk based capital adequacy
framework i.e. Basel II. For this, the bank has framed a five year capital plan incorporating its future outlook of achieving
capital adequacy ratio far above than minimum requirement in the future. As on December 31, 2012 regulatory capital
and capital adequacy ratio of the Bank is as under:
Year Dividend (%) Earning Per Share (BDT) Dividend Pay out Ratio (%)
2008 20.00 2.85 70.10
2009 22.00 3.07 71.73
2010 22.00 4.10 54.09
2011 23.00 3.49 65.90
2012 15.00* 2.26 66.37
* Recomended by the board of Directors (7% cash, 8% stock)
141 annual report
(BDT in Cr)
Particulars Dec 31, 2011 Dec 31, 2012
Total Eligible Capital (Tier 1 +Tier 2) 1,062.94 1,207.90
Total Risk Weighted Assets (RWA) 10,108.53 11,152.47
Capital Adequacy Ratio (Eligible Capital / RWA) 10.52% 10.83%
Minimum Capital Requirement (10% of RWA) 1,010.85 1,115.25
Capital Surplus 52.08 92.66
Assets Quality
During the year 2012, there was some sort of pressure on our assets following Bangladesh Banks new guideline
regarding loan classification and provision. Total non performing loan of MBL stood at 4.37% in 2012. However, we
have consolidated our position by making adequate provision as per Bangladesh Banks BRPD circular No. 14 dated
September 23, 2012. We made BDT 96.93 Crore as provision during the year 2012.
Operating Efficiency
The Bank exhibited its prudence in limiting cost of deposits by emphasizing on procuring more low cost and no cost
deposit while keeping yield on advances at a reasonable level. As on December 31, 2012 cost of deposits and yield on
advance of the Bank stood at 10.02% and 14.72% respectively causing spread of the Bank to 4.70%. Net interest
Margin (NIM) stood at 2.99% as on December 31, 2012. On the other hand, cost income ratio of the Bank increased to
45.17% in December 2012 as compared to 42.62% in December 2011.
Contribution to Government Exchequer
MBL regularly pays corporate tax on time. It also deposits excise duty, withheld tax and VAT to Govt. exchequer on
time deducted from employees salary as well as payments to customers and vendors. In 2012, the Bank has made
provision of BDT 1,000.00 million for corporate tax.
(BDT in Crore)
Year Provision for tax (including deferred tax)
2011 127.00
2012 100.00
We always remain compliant, transparent and accountable in every segment of our appearance. We want to ensure
uncompromising commitment towards our stakeholders. We believe that our unconditional endeavor for SHAPEING
the FUTURE will make the upcoming years more rewarding for us.
Monindra Kumar Nath
Additional Managing Director & CFO
9
2
.
6
5
(BDT in Cr)
i. Interest Income 1,071.97 1,420.77
ii. Interest Expense 8,02.21 1,055.68
iii. Net Interest Income (i-ii) 269.76 365.09
iv. Non Interest Income 340.47 245.98
v. Operating Income (iii+iv) 610.23 611.07
vi. Non Interest Expense 260.66 276.00
Vii. Cost Income Ratio (vi/v) 42.62% 45.17%
CFOs Statement
142 annual report
Auditors Report
AUDITORS REPORT
TO THE SHAREHOLDERS
OF
MERCANTILE BANK LIMITED
We have audited the accompanying consolidated financial statements of Mercantile Bank Limited (the bank), and
its subsidiaries as well as financial statements of Mercantile Bank Limited (the Bank) as of December 31, 2012 which
comprise the balance sheet, profit and loss account, statement of cash flows, statement of changes in equity and
statement of liquidity for the year then ended, and a summary of significant accounting policies and other explanatory
notes.
Managements Responsibility for the Consolidated Financial Statements
Management of the Bank is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Bangladesh Financial Reporting Standards along with Rules & Regulation issued by the
Bangladesh Bank. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
The financial statements comprise of the Banks two subsidiaries namely, Mercantile Bank Securities Limited and
Mercantile Exchange House (UK) Limited. Total assets and total revenue of the Banks one subsidiary Mercantile
Exchange House (UK) Limited has been translated from GBP using the foreign exchange rates referred in Note
no.1.11.3. The financial statements of the Mercantile Exchange House (UK) limited have been audited by KWSR & Co
and Mercantile Bank Securities Limited audited by ACNABIN whose reports have been furnished to us and our opinion,
in so far as it relates to the amounts included in respect of the Banks subsidiaries, is based solely on the reports of the
component auditors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion:
In our opinion, the Financial Statements referred to above which have been prepared in accordance with Bangladesh
Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) in the form prescribed by
Bangladesh Bank vide Circular # 14 dated June 25, 2003 give a true and fair view of the state of the affairs of the Bank
as of December 31, 2012 and of the results of its operations and its cash flows for the year then ended and comply with
Banking Companies Act 1991, Companies Act 1994, the Bangladesh Securities and Exchange Rules 1987 and rules
and regulations issued by the Bangladesh Bank and other applicable laws and regulations.
Report on Other Legal and Regulatory Requirements
We also report that;
I. we have obtained all 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 and found them satisfactory ;
II. in our opinion, proper books of account as required by law were kept by the Bank so far as it appeared from our
examination of those books and proper returns adequate for the purposes of our audit have been received from
branches not visited by us;
III. the records and statements submitted by the branches have been properly maintained and consolidated in the
Financial Statements;
IV. the Balance Sheet , Profit and Loss Account dealt with by this report are in agreement with the books of account
and returns;
V. the Financial Statements have been drawn up in conformity with Bank Companies Act 1991 and in accordance
with the accounting rules and regulations issued by Bangladesh Bank and the Financial Statements conform to
the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with
the professional accounting bodies of Bangladesh.
VI. the financial position of the Bank as on December 31, 2012 and the profit for the year then ended have been
properly reflected in the financial statements, and the Financial Statements have been prepared in accordance
with Bangladesh Financial Reporting Standards;
VII. adequate provisions have been made for advances, investments and other assets which are, in our opinion,
doubtful of recovery;
VIII. the expenditures incurred during the year were for the purposes of the business of the Bank;
IX. Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR) with Bangladesh Bank have been
maintained as per rule;
X. as far as it was revealed from our test checks, the existing rules and regulation for loan sanctioning and
disbursements have been followed properly;
XI. it appeared from our test checks that the internal control system was satisfactory and adequate to prevent
probable frauds and forgeries;
XII. adequate capital of the Bank, as required by law, has been maintained during the year under audit;
XIII. we were not aware of any other matters, which are required to be brought to the notice of the shareholders of
the Bank;
XIV. 80% of the Risk Weighted Assets have been reviewed spending over 4750 man-hours.
Khan Wahab Shafique Rahman & Co. K. M. Hasan & Co.
Chartered Accountants Chartered Accountants
Place: Dhaka Place: Dhaka
Date:13 March 2013 Date: 13 March 2013
Auditors Report
144 annual report
AUDITORS REPORT
TO THE SHAREHOLDERS
OF
We have audited the accompanying consolidated financial statements of Mercantile Bank Limited (the bank), and
its subsidiaries as well as financial statements of Mercantile Bank Limited (the Bank) as of December 31, 2012 which
comprise the balance sheet, profit and loss account, statement of cash flows, statement of changes in equity and
statement of liquidity for the year then ended, and a summary of significant accounting policies and other explanatory
notes.
Managements Responsibility for the Consolidated Financial Statements
Management of the Bank is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Bangladesh Financial Reporting Standards along with Rules & Regulation issued by the
Bangladesh Bank. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
The financial statements comprise of the Banks two subsidiaries namely, Mercantile Bank Securities Limited and
Mercantile Exchange House (UK) Limited. Total assets and total revenue of the Banks one subsidiary Mercantile
Exchange House (UK) Limited has been translated from GBP using the foreign exchange rates referred in Note
no.1.11.3. The financial statements of the Mercantile Exchange House (UK) limited have been audited by KWSR & Co
and Mercantile Bank Securities Limited audited by ACNABIN whose reports have been furnished to us and our opinion,
in so far as it relates to the amounts included in respect of the Banks subsidiaries, is based solely on the reports of the
component auditors.
opinion.
Opinion:
In our opinion, the Financial Statements referred to above which have been prepared in accordance with Bangladesh
Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) in the form prescribed by
Bangladesh Bank vide Circular # 14 dated June 25, 2003 give a true and fair view of the state of the affairs of the Bank
as of December 31, 2012 and of the results of its operations and its cash flows for the year then ended and comply with
Banking Companies Act 1991, Companies Act 1994, the Bangladesh Securities and Exchange Rules 1987 and rules
and regulations issued by the Bangladesh Bank and other applicable laws and regulations.
We also report that;
I. we have obtained all 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 and found them satisfactory ;
II. in our opinion, proper books of account as required by law were kept by the Bank so far as it appeared from our
examination of those books and proper returns adequate for the purposes of our audit have been received from
branches not visited by us;
III. the records and statements submitted by the branches have been properly maintained and consolidated in the
Financial Statements;
IV. the Balance Sheet , Profit and Loss Account dealt with by this report are in agreement with the books of account
and returns;
V. the Financial Statements have been drawn up in conformity with Bank Companies Act 1991 and in accordance
with the accounting rules and regulations issued by Bangladesh Bank and the Financial Statements conform to
the prescribed standards set in the accounting regulations issued by Bangladesh Bank after consultation with
the professional accounting bodies of Bangladesh.
VI. the financial position of the Bank as on December 31, 2012 and the profit for the year then ended have been
properly reflected in the financial statements, and the Financial Statements have been prepared in accordance
with Bangladesh Financial Reporting Standards;
VII. adequate provisions have been made for advances, investments and other assets which are, in our opinion,
doubtful of recovery;
VIII. the expenditures incurred during the year were for the purposes of the business of the Bank;
IX. Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR) with Bangladesh Bank have been
maintained as per rule;
X. as far as it was revealed from our test checks, the existing rules and regulation for loan sanctioning and
disbursements have been followed properly;
XI. it appeared from our test checks that the internal control system was satisfactory and adequate to prevent
probable frauds and forgeries;
XII. adequate capital of the Bank, as required by law, has been maintained during the year under audit;
XIII. we were not aware of any other matters, which are required to be brought to the notice of the shareholders of
the Bank;
XIV. 80% of the Risk Weighted Assets have been reviewed spending over 4750 man-hours.
Date:13 March 2013 Date: 13 March 2013
www.mblbd.com
145 annual report
Signing Ceremony of the
Financial Statements 2012
146 annual report
Consolidated Financial Statements
As at December 31, 2012
www.mblbd.com
147 annual report
Consolidated Balance Sheet
Amount in Taka
Notes 2012 2011
PROPERTY AND ASSETS
Cash 3(a) 12,015,292,367 6,948,621,454
Cash in hand (Including Foreign Currencies) 1,470,735,823 815,067,987
Balance with Bangladesh Bank & Sonali Bank 10,544,556,544 6,133,553,467
(Including Foreign Currencies)
Balance with other Banks and Financial Institutions 4(a) 662,915,683 662,821,502
In Bangladesh 576,083,402 518,861,081
Outside Bangladesh 86,832,281 143,960,421
Money at Call and Short Notice 5(a) - -
Investments 6(a) 41,544,194,470 24,875,376,497
Government 40,034,748,601 23,348,847,110
Others 1,509,445,869 1,526,529,387
Loans and Advances 7(a) 93,384,291,546 79,728,024,718
Loans, Cash Credit, Overdraft etc. 85,675,340,959 73,532,937,989
Bills Purchased and Discounted 7,708,950,587 6,195,086,729
Fixed Assets Including Premises, Furniture and Fixtures 8(a) 2,945,814,406 2,753,125,268
Other Assets 9(a) 3,595,196,230 1,687,314,226
Non Banking Assets - -
Total Assets 154,147,704,702 116,655,283,665
LIABILITIES AND CAPITAL
Liabilities :
Borrowings from other Banks, Financial Institutions and Agents 10(a) 17,313,279,868 5,976,762,994
Deposits and Other Accounts 11(a) 118,045,024,783 94,054,156,826
Current Accounts and Other Accounts 11.1(a) 19,865,532,250 12,822,034,650
Bills Payable 11.2(a) 1,725,460,339 1,107,180,337
Savings Bank Deposits 11.3(a) 6,869,659,847 5,929,735,523
Fixed Deposits 11.4(a) 46,250,915,355 38,875,499,490
Deposits Under Schemes 11.5(a) 43,333,456,992 35,319,706,826
Other Liabilities 12(a) 7,805,396,278 6,893,475,581
Total Liabilities 143,163,700,929 106,924,395,401
Capital/Shareholders' Equity
Paid-up Capital 13.1 6,110,753,160 4,968,092,000
Statutory Reserve 14(a) 3,119,683,762 2,643,393,554
Other Reserve 15(a) 753,360,335 870,039,141
Surplus in Profit & Loss Account 16(a) 948,428,399 1,197,589,941
10,932,225,656 9,679,114,636
Non Controlling Interest 16(b) 51,778,117 51,773,629
Total Shareholders' Equity 10,984,003,773 9,730,888,265
Total Liabilities & Shareholders' Equity 154,147,704,702 116,655,283,665
These Financial Statements should be read in conjunction with the annexed notes (1 to 41)
M. Ehsanul Haque M. S. Ahsan A. S. M. Feroz Alam Alhaj Akram Hussain (Humayun)
Managing Director and CEO Director Vice Chairman Chairman
Auditors' Report to the Shareholders to see annexed report on even date
Date: 13 March, 2013 Date: 13 March, 2013
Auditors Report
148 annual report
Consolidated Off-Balance Sheet Items

Amount in Taka
Notes 2012 2011
OFF- BALANCE SHEET ITEMS
A CONTINGENT LIABILITIES 17
Acceptances and Endorsements 17.1 20,569,926,764 17,598,275,000
Letters of Guarantee 17.2 7,832,764,925 6,059,769,002
Irrevocable Letters of Credit 17.3 19,823,147,250 16,585,475,576
Bills for Collection 17.4 29,376,464 147,818,597
Other Contingent Liabilities 17.5 1,726,232,704 1,557,027,293
Total 49,981,448,107 41,948,365,468
B 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 ( A+B ) 49,981,448,107 41,948,365,468
www.mblbd.com
149 annual report
Consolidated Profit And Loss Account
For The Year Ended December 31, 2012
Amount in Taka
Notes 2012 2011
Interest Income 19(a) 12,520,547,845 9,760,577,255
Less: Interest Paid on Deposits, Borrowings, etc. 21(a) 10,556,793,170 8,022,591,397
Net Interest Income 1,963,754,675 1,737,985,858
Investment Income 20(a) 1,668,827,242 1,671,292,448
Commission, Exchange and Brokerage 22(a) 1,434,089,974 1,455,620,438
Other Operating Income 23(a) 1,142,611,470 1,304,435,120
4,245,528,686 4,431,348,006
Total Operating Income 6,209,283,361 6,169,333,864
Salaries and Allowances 24(a) 1,403,469,303 1,307,224,799
Chief Executive's Salary and Fees 25(a) 7,937,120 6,300,000
Directors' Fees 26(a) 3,970,750 3,051,400
Rent, Taxes, Insurances, Electricity, etc. 27(a) 351,162,725 285,322,125
Legal Expenses 28(a) 13,300,835 10,249,884
Postage, Stamps, Telecommunication, etc. 55,488,952 62,044,103
Stationery, Printings, Advertisements, etc. 29(a) 160,799,869 124,703,829
Auditors' Fees 936,227 941,024
Depreciation and Repair of Fixed Assets 30(a) 195,828,541 165,990,792
Other Expenses 31(a) 669,614,608 671,335,241
Total Operating Expenses 2,862,508,930 2,637,163,197
Profit before Provision 3,346,774,431 3,532,170,667
Provision against Classified Loans 12.5.1 818,000,000 315,200,000
Provision against Un Classified Loans 12.5.1 77,000,000 143,000,000
Other Provision 12.3 74,331,154 39,300,000
Total Provision 969,331,154 497,500,000
Total Profit before Taxes 2,377,443,277 3,034,670,667
Provision for Taxation 12.4(a) 1,007,602,868 1,258,943,330
- 20,000,000
Provision for Deferred Tax 1,007,602,868 1,278,943,330
Net Profit after Taxation 1,369,840,409 1,755,727,337
Retained Surplus brought forward from previous year 56,656,315 44,470,703
1,426,496,724 1,800,198,040
Appropriations
Statutory Reserve 476,290,208 600,834,470
Non Controlling Share of Profit 16(b) 1,778,117 1,773,629
Retained Surplus 16(a) 948,428,399 1,197,589,941
1,426,496,724 1,800,198,040
Earning Per Share* (EPS) 32 2.24 2.87

*Earnings Per Share (EPS) has been calculated using weighted average number of shares outstanding at the reporting date and
previous year figures have been restated accordingly as per BAS-33.

Auditors Report
150 annual report
Consolidated Statement Of Cash Flows
Amount in Taka
2012 2011
A. Cash Flows from Operating Activities 302,562,746 (35,504,648)
Interest Received 11,632,027,729 7,416,665,100
Interest Paid (9,263,205,731) (6,022,291,197)
Fees and Commission Received 880,053,915 744,829,207
Payment to the Employees (1,403,469,303) (1,307,224,799)
Payment to Suppliers (160,799,869) (124,703,829)
Income Tax Paid (1,382,043,995) (742,779,130)
Received from other operating activities 1,696,647,529 2,683,721,396
Exchange Gain 554,036,059 695,000,785
Other Operating Income 1,142,611,470 1,988,720,611
Payment for other operating activities (1,145,984,990) (1,071,771,264)
Rent, Taxes, Insurances and Electricity (351,162,725) (285,322,125)
Legal Expenses (13,300,835) (10,249,884)
Postage, Stamps and Telecommunication (55,488,952) (62,044,104)
Auditors' Fees (772,500) (941,024)
Repair and Maintenance (43,737,500) (31,714,455)
Chief Executive's Salary and Fees (7,937,120) (6,300,000)
Directors' Fees (3,970,750) (3,864,431)
Other Expenses (669,614,608) (671,335,241)
Operating profit before changes in Operating Assets and Liabilities 853,225,285 1,576,445,484
Increase / Decrease in Operating Assets and Liabilities (30,342,168,319) (26,940,673,152)
Trading Securities (Treasury Bills & Bonds) (16,685,901,491) (13,590,345,760)
Loans and Advances to other Banks - -
Loans and Advances to Customer (13,656,266,828) (13,350,327,392)
Other Assets (Item-wise) (534,040,657) 11,829,991
Suspense Account (Note 9.1) (275,947,781) 10,191,675
Demand Draft paid without Advice (134,083) 35,833
Advance Rent (65,636,172) (75,535,482)
Advance Deposits (322,027) (542,485)
Stock of Stationery 4,488,681 2,835,760
Stamps in Hand (1,203,888) 5,156
Premium on Bond (283,385) (3,210,232)
Clearing Adjustment Account (16,534,326) (16,348,043)
On Line Client Adjustment Account (701,828) 5,124,845
Adjusting Account Debit (Note 9.2) (217,489,548) 89,272,964
Others 39,723,700 -
35,407,698,766 26,969,971,194
Deposit from other Banks 11,336,516,874 5,112,719,303
Deposit from Customers 23,990,867,957 20,314,764,773
Other Liabilities on account of Customers
Other Liabilities 80,313,935 1,542,487,118
Net Cash Received from Operating Activities 5,384,715,075 1,617,573,517
B. Cash Flows from Investing Activities (317,949,981) 208,200,716
Brokerage House Customer Account
Dividend Received 2,220,141 16,261,493
Purchase/ Sale of Property, Plant and Equipment (337,253,640) (550,731,564)
Purchase/ Sale of Shares 17,083,518 75,326,274
Other Investment Income - 667,344,514
Net Cash from Investing Activities
C. Cash Flows from Financing Activities
Receipts from Issue of Loan Capital and Debt Securities - -
Paid for Repayment of Loan and Debt Securities - -
Received by Issue of Right Share - -
Dividend Paid - -
Net Cash from Financing Activities
D. Net Increase/(Decrease) of Cash & Cash Equivalent (A+B+C) 5,066,765,094 1,825,774,233
Effects of Exchange Rate changes on Cash and Cash Equivalent
E. Opening Cash and Cash Equivalent 7,611,442,956 5,785,668,723
F. Closing Cash and Cash Equivalent (D+E) note-16.A 12,678,208,050 7,611,442,956
www.mblbd.com
151 annual report
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152 annual report

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www.mblbd.com
153 annual report
FINANCIAL STATEMENTS (MAIN BANKING OPERATION)
FOR THE YEAR ENDED ON 31 DECEMBER 2012
Auditors Report
154 annual report
Balance Sheet
Amount in Taka
Notes 2012 2011
PROPERTY AND ASSETS
Cash 3 12,015,121,299 6,946,104,482
Cash in hand (Including Foreign Currencies) 3.1 1,470,564,755 812,551,015
Balance with Bangladesh Bank & Sonali Bank 3.2 10,544,556,544 6,133,553,467
(Including Foreign Currencies)

Balance with other Banks and Financial Institutions 4 625,015,429 643,855,116
In Bangladesh 4.1 551,208,596 499,894,695
Outside Bangladesh 4.2 73,806,833 143,960,421
Money at Call and Short Notice 5 - -
Investments 6 41,314,194,597 24,645,376,621
Government 6.4 40,034,748,601 23,348,847,110
Others 6.5 1,279,445,996 1,296,529,511

Loans and Advances 7 93,610,874,413 79,999,799,464
Loans, Cash Credit, Overdraft, etc. 7.A 85,901,923,826 73,804,712,735
Bills Purchased and Discounted 7.B 7,708,950,587 6,195,086,729

Fixed Assets Including Premises, Furniture and Fixtures 8 2,898,596,040 2,711,318,595
Other Assets 9 3,576,381,413 1,606,559,609
Non Banking Assets - -
Total Assets 154,040,183,191 116,553,013,887
LIABILITIES AND CAPITAL
Liabilities :
Borrowings from other Banks, Financial Institutions 10 17,313,279,868 5,976,762,994
and Agents
Deposits and Other Accounts 11 118,106,883,705 94,102,832,878
Current Accounts and Other Accounts 11.1 19,927,391,172 12,870,710,702
Bills Payable 11.2 1,725,460,339 1,107,180,337
Savings Bank Deposits 11.3 6,869,659,847 5,929,735,523
Fixed Deposits 11.4 46,250,915,355 38,875,499,490
Deposit Under Schemes 11.5 43,333,456,992 35,319,706,826

Other Liabilities 12 7,695,469,734 6,814,084,739
Capital/Shareholders' Equity
Paid-up Capital 13.1 6,110,753,160 4,968,092,000
Statutory Reserve 14 3,119,683,762 2,643,393,554
Other Reserve 15 753,360,335 870,039,141
Surplus in Profit & Loss Account 16 940,752,627 1,177,808,581
Total Shareholders' Equity 10,924,549,884 9,659,333,276
Total Liabilities & Shareholders' Equity 154,040,183,191 116,553,013,887

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155 annual report
Off-Balance Sheet Items
Amount in Taka
Notes 2012 2011
OFF- BALANCE SHEET ITEMS
A. CONTINGENT LIABILITIES 17
Acceptances and Endorsements 17.1 20,569,926,764 17,598,275,000
Letters of Guarantee 17.2 7,832,764,925 6,059,769,002
Irrevocable Letters of Credit 17.3 19,823,147,250 16,585,475,576
Bills for Collection 17.4 29,376,464 147,818,597
Other Contingent Liabilities 17.5 1,726,232,704 1,557,027,293
Total 49,981,448,107 41,948,365,468
B. 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 ( A+B ) 49,981,448,107 41,948,365,468
Auditors Report
156 annual report
Profit And Loss Account
Amount in Taka
Notes 2012 2011
Interest Income 19 12,545,337,913 9,732,681,382
Less: Interest Paid on Deposits, Borrowings, etc. 21 10,556,793,170 8,022,131,491
Net Interest Income 1,988,544,743 1,710,549,891
Investment Income 20 1,668,827,242 1,671,292,448
Commission, Exchange and Brokerage 22 1,370,181,097 1,439,016,961
Other Operating Income 23 1,083,205,597 1,281,385,842
4,122,213,936 4,391,695,251
Total Operating Income 6,110,758,679 6,102,245,142
Salaries and Allowances 24 1,363,756,665 1,292,014,793
Chief Executive's Salary and Fees 25 5,400,000 6,300,000
Directors' Fees 26 2,860,750 3,051,400
Rent, Taxes, Insurances, Electricity, etc. 27 340,111,307 281,873,775
Legal Expenses 28 13,300,835 10,249,884
Postage, Stamps, Telecommunication, etc. 51,894,958 61,816,538
Stationery, Printings, Advertisements, etc. 29 158,854,337 124,064,567
Auditors' Fees 575,000 707,059
Depreciation and Repair of Fixed Assets 30 188,302,003 162,320,527
Other Expenses 31 634,920,627 658,174,251
Total Operating Expenses 2,759,976,482 2,600,572,794
Provision against Classified Loans 12.5.1 818,000,000 315,200,000
Provision against Un Classified Loans 12.5.1 77,000,000 143,000,000
Other Provision 12.3 74,331,154 39,300,000
Total Provision 969,331,154 497,500,000
Provision for Taxation 12.4 1,000,000,000 1,250,000,000
Provision for Deferred Tax - 20,000,000
1,000,000,000 1,270,000,000
Retained Surplus brought forward from previous year 35,591,792 44,470,703
1,417,042,835 1,778,643,051
Appropriations
Statutory Reserve 476,290,208 600,834,470
General Reserve - -
Retained Surplus 940,752,627 1,177,808,581
1,417,042,835 1,778,643,051
Earning Per Share* (EPS) 32 2.26 2.84
*Earnings Per Share (EPS) have been calculated using weighted average number of shares outstanding at the reporting date and
previous period figures have been restated accordingly as per BAS-33.

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157 annual report
Statement Of Cash Flows
Amount in Taka
2012 2011
A. Cash Flows from Operating Activities 386,491,545 (47,904,378)
Interest Received 11,656,817,797 7,388,769,227
Interest Paid (9,263,205,731) (6,021,831,291)
Fees and Commission Received 816,145,038 744,016,176
Payment to the Employees (1,363,756,665) (1,292,014,793)
Payment to Suppliers (77,464,899) (124,064,567)
Income Tax Paid (1,382,043,995) (742,779,130)
Received from other operating activities 1,637,241,656 2,644,410,625
Exchange Gain 554,036,059 695,000,785
Other Operating Income 1,083,205,597 1,949,409,840
Payment for other operating activities (1,174,322,474) (1,053,930,303)
Rent, Taxes, Insurances and Electricity (340,111,307) (281,873,775)
Legal Expenses (13,300,835) (10,249,884)
Postage, Stamps and Telecommunication (51,894,958) (61,816,538)
Auditors' Fees (707,059) (750,000)
Repair and Maintenance (43,737,500) (31,714,455)
Chief Executive's Salary and Fees (5,400,000) (6,300,000)
Directors' Fees (2,465,000) (2,725,000)
Other Expenses (716,705,815) (658,500,651)
Operating profit before changes in Operating Assets and Liabilities 849,410,727 1,542,575,944
Increase / Decrease in Operating Assets and Liabilities (30,296,976,440) (27,405,603,241)
Trading Securities (Treasury Bills & Bonds) (16,685,901,491) (13,783,501,103)
Loans and Advances to other Banks - -
Loans and Advances to Customer (13,611,074,949) (13,622,102,138)
Other Assets (Item-wise) (1,799,405,200) 505,603,623
Suspense Account (Note 9.1) (275,947,781) 10,191,675
Demand Draft paid without Advice (134,083) 35,833
Advance Rent (65,636,172) (75,535,482)
Advance Deposits (322,027) (542,485)
Stamps in Hand (1,203,888) 5,156
Premium on Bond (283,385) (3,210,232)
Clearing Adjustment Account (16,534,326) 477,425,589
On Line Client Adjustment Account (701,828) 5,124,845
Adjusting Account Debit (Note 9.2) (217,489,548) 89,272,964
Mercantile Exchange House UK. Ltd. (19,050,871) -
Mercantile Bank OBU Unit (1,206,589,972) -
36,320,557,329 26,939,256,404
Deposit from other Banks 11,336,516,874 5,112,719,303
Deposit from Customers 24,004,050,828 20,363,440,825
Other Liabilities on account of Customers - -
Other Liabilities 979,989,627 1,463,096,276
Net Cash Received from Operating Activities 5,073,586,415 1,581,832,730

B. Cash Flows from Investing Activities (23,409,286) 222,458,146
Sale proceeds of Fixed Assets
Dividend Received 2,220,141 16,261,493
Purchase/ Sale of Property, Plant and Equipment (42,712,942) (550,731,564)
Purchase/ Sale of Shares 17,083,515 75,326,274
Other Investment activities 681,601,943
Net Cash from Investing Activities
C. Cash Flows from Financing Activities
Receipts from Issue of Loan Capital and Debt Securities - -
Paid for Repayment of Loan and Debt Securities - -
Received by Issue of Right Share - -
Dividend Paid - -
Net Cash from Financing Activities
D. Net Increase/(Decrease) of Cash & Cash Equivalent (A+B+C) 5,050,177,131 1,804,290,875
Effects of Exchange Rate changes on Cash and Cash Equivalent
E. Opening Cash and Cash Equivalent 7,589,959,598 5,785,668,723
F. Closing Cash and Cash Equivalent (D+E) note-16.A 12,640,136,728 7,589,959,598

Auditors Report
158 annual report

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www.mblbd.com
159 annual report
M
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a
Auditors Report
160 annual report
www.mblbd.com
161 annual report
1.1 Status and Nature of the company:
Mercantile Bank Limited (the Bank) was
incorporated in Bangladesh as a Public
Company, Limited by shares under the
Companies Act 1994 as on May 20, 1999 and
subsequently obtained Banking operation license
from Bangladesh Bank under the Bank
Companies Act 1991 and commenced
commercial operation on June 02, 1999. The
Bank went for public issue of shares in the year
2003 and its shares are listed with Dhaka Stock
Exchange (DSE) and Chittagong Stock
Exchange (CSE). Presently the Bank has 86
Branches, including 5 SME/Krishi Branches and
two subsidiary companies.
1.1.1 Principal Activities
The principal activities of the Bank are to provide
all kind of commercial banking activities
encompass a wide range of services including
accepting deposits, making loans, discounting
bills, conducting money transfer and foreign
exchange transactions and performing other
related services such as safe keeping,
collections, issuing guarantees, acceptances and
letters of credit to its customers through its
branches in Bangladesh.
1.1.2 Off-shore Banking Unit (OBU)
The Bank obtained the Off-shore Banking Unit
permission vide letter no.
BRPD(P-3)744(114)/2010-1743 dated 4 May
2010. The commencement of operation of this
unit from 20 March 2011. Presently the bank has
3 (three) units in operation in Bangladesh. The
Off-shore Unit is governed under the rules and
guidelines of Bangladesh Bank. Separate
Financial Statements of Off-shore Unit are shown
in Annexure-H. The principal activities of the
Bank are to provide all kinds of commercial
banking services to its customers through its
1.1.3 Mobile Banking Operation
The bank obtained the permission for conducting
the Mobile Banking Operation under reference
letter # DCMPS/PSD/37(D)/2011-753 dated 2
November 2011of Bangladesh Bank. The Bank
started test run November 2012.
The main activities of the Mobile Banking
Services are to customers through Mobile Phone
within the applicable rules & regulations and
guidelines of Bangladesh Bank.
1.1.4 Mercantile Bank Securities Limited (a
subsidiary company of Mercantile Bank
Limited)
In line with Bangladesh Bank directives,
Mercantile Bank Securities Ltd (MBSL), a
subsidiary company of Mercantile Bank Limited
has been formed on 27 June 2010 to deal with
stock dealing and broking. MBSL has started its
commercial operation from 14 September 2011
through obtaining stock dealer & broker license
from the Bangladesh Securities and Exchange
Commission (BSEC). The main operation of the
subsidiary is to buy and sell off securities for its
customers and margin loan is extended to the
customers against their margin for investment in
the listed companies. The required margin level
in monitored daily and margin loan is provided as
per established guideline. Financial Statements
of the Company are shown in Annexure-I
1.1.5 Mercantile Exchange House (UK) Limited
Mercantile Exchange House (UK) Limited was
incorporated as private limited company with
Companies for 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
companys ultimate holding company. Earlier on
17 June 2010, Mercantile Bank Limited got the
permission from Bangladesh Bank for opening a
fully owned subsidiary in UK. Mercantile
Exchange House (UK) limited obtained Money
Laundering registration on 21 February 2011
issued by HM Customs and Excise.
The company got the registration from Financial
Services Authority (FSA) on 7 October 2010 as
Small Payment Institution to carry out Money
Service business under Payment Services
Regulations 2009. The company started its
commercial operation on 6 December 2011 at its
Birmingham Office, & another branch in
London,UK on 20 September 2012. Financial
Statements of the company are shown in
Annexure- J
1.2 Significant Accounting Policies:
1.2.1 Basis of Preparation of Financial Statements
The Financial statements of the Bank and its
subsidiaries are prepared on a going concern
basis under historical cost convention, except for
certain investments which are stated at
fair/market value and freehold land which are
measured at revalued amount, in accordance
with first schedule of Bank Companies Act of
1991 as amended on June 25, 2003 section 38
(4), Bangladesh Bank Circulars, Bangladesh
Accounting Standards (BAS) and Bangladesh
Financial Reporting Standards (BFRS), the
Companies Act 1994, the Bangladesh Securities
and Exchange Rules 1987, DSE & CSE listing
regulations and other laws and rules applicable in
Bangladesh.
1.2.2 Basis of Consolidation
The consolidated financial statements include the
financial statements of Mercantile Bank Limited,
Mercantile Bank Securities Limited and
Mercantile Bank Exchange House (UK) limited
made up to the end of the financial year. The
consolidated financial statements have been
prepared in accordance with Bangladesh
Accounting Standard 27: Consolidated Financial
Statements and Accounting for Investments in
Subsidiaries. The consolidated financial
statements are prepared to a common financial
year ending 31 December 2012.
1.2.5 Reporting Period
These financial statements cover a calendar year
from January 01, 2012 to December 31, 2012.
1.2.6 Use of Estimates and Judgment
The preparation of Financial Statements requires
management to make judgments, estimates and
assumptions that affect the application of
accounting policies and the reported amount of
assets, liabilities, income and expenses. Actual
result may differ from these estimates. Estimates
and underlying assumptions are reviewed on an
ongoing basis. Revision to accounting estimates
are recognized in the period in which the
estimates are revised and in any future period
affected.
1.3 Revenue Recognition:
1.3.1 Interest Income
In terms of provisions of the BAS-18 Revenue,
the interest income is recognized on accrual
basis using effective interest rate. Interest on
loans and advances ceases to be taken into
income when such advances are classified. It is
then kept in interest suspense account.
1.3.2 Investment Income
Interest income on investments is recognized on
accrual basis using effective interest rate as per
BAS-18 Revenue. Capital gain on investments
in shares is recognized as income and credited to
investment income in the profit and loss
statement as per BAS-39 Financial Instruments:
Recognition and Measurements. Capital Gain is
recognized when it is realized.
1.3.3 Fees and Commission Income
Fees and Commission income arises on services
provided by the Bank are recognized on a cash
basis. Commission charged to customers on
letters of credit and letters of guarantee is
credited to income at the time of effecting the
transactions in accordance with BAS-18
Revenue.
1.3.4 Dividend Income on Shares
Dividend income on shares is recognized during
the period in which it is declared and right to
receive is established as per BAS-18 Revenue.
1.3.5 Interest Paid and Other Expenses
In terms of the provisions of BAS-1 Presentation
of Financial Statements interest and other
expenses are recognized on accrual basis.
1.4 Reconciliation of Inter-Bank and
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.
1.5 Assets and Basis of their Valuation:
1.5.1 Cash and 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 value, and are used by the Bank
management for its short term commitments.
1.5.2 Loans and 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.
Transactions eliminated on consolidation
All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
Profit and loss resulting from transactions
between group are also eliminated on
consolidation.
1.2.3 Statement of Cash Flows
The Statement of Cash Flows has been prepared
in accordance with the Bangladesh Accounting
Standards-7, Statement of Cash Flows under
direct method as recommended in the BRPD
Circular No. 14, dated June 25, 2003 issued by
the Banking Regulation & Policy Department of
Bangladesh Bank.
1.2.4 Liquidity Statement
The liquidity statement of assets and liabilities as
on the reporting date has been prepared on
residual maturity term as per the following basis:
a. Balance with other Banks and financial
institutions, money at call and short notice
etc. are on the basis of their maturity term;
b. Investments are on the basis of their
respective maturity;
c. Loans and advances/ investments are on the
basis of their repayment schedules;
d. Fixed assets are on the basis of their useful
lives;
e. Other assets are on the basis of their
realizations/ amortizations;
f. Borrowing from other banks, financial
institutions and agents, etc are as per their
maturities/ repayment terms;
g. Provisions and other liabilities are on the
basis of their payments/ adjustments
schedule;
h. Deposits and other accounts are on the basis
of their maturity term and past trend of
withdrawal by the depositors.
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 year-end review by the
management following instructions contained
in Bangladesh Bank BCD Circular no. 34
dated November 16, 1989, BCD Circular no.
20 dated December 27, 1994, BCD Circular
no. 12 dated September 04, 1995, BRPD
Circular no. 16 dated December 06, 1998,
BRPD Circular no. 9 dated May 14, 2001,
BRPD Circular no.02 of February 2005,
BRPD Circular no. 09 of August 2005, BRPD
Circular no. 17 dated December 06, 2005.
and BRPD Circular no. 14 dated September
23,2012.The classification rates are given
below:
Category of Assets Rate
Land and land development Nil
Building 2.5%
Furniture and Fixtures 10%
Office Equipment 20%
Vehicles 20%
Books & Periodicals 20%
1.6.1 Leasing
Lease assets are classified as finance lease
whenever the terms of the lease transfer
substantiality all the risks and rewards of
ownership to the lessee. All other leases are
classified as operating leases as per BAS -17.
The bank as leassor:
Amount due from leases under finance leases
are recorded as receivables at the amount of the
banks net investment in the leases. Finance
Leases income is allotted to accounting periods
so as to reflect a constant periodic rate to return
on the Banks net investment outstanding in
respect of the leases as per BAS-17.
The bank as lessee:
Assets held under finance leases are recognized
as assets of bank at there fair value at the date of
acquisition or if lower, at the present value of the
minimum lease payments. The corresponding
liability to the lessor is included in the Balance
Sheet as a Finance Lessee Obligation. Lease
payments are apportioned between finance
charges and reduction of the lease obligation so
as to achieve a constant rate of interest on the
remaining balance of the liability. Finance
charges are charged directly against income as
per BAS-17.
Assets held under finance leases are depreciated
over their expected useful lives on the same
basis as owned assets.
1.7 Basis for Valuation of Liabilities and
Provisions:
1.7.1 Provision for Taxation
Provision for current income tax has been made
as prescribed in the Finance Act, 2012 on the
accounting profit made by the Bank after
considering some of the add backs to income
and disallowances of expenditure as per income
tax laws in compliance with BAS-12 " Income
Taxes".
1.7.2 Deferred Taxation
Deferred tax liabilities are the amount of income
taxes payable in future periods in respect of
taxable temporary differences. Deferred tax
assets are the amount of income taxes
recoverable in future periods in respect of
deductible temporary differences. Deferred tax
assets and liabilities are recognized for the future
tax consequences of timing differences arising
between the carrying values of assets, liabilities,
income and expenditure and their respective tax
bases. Deferred tax assets and liabilities are
measured using tax rates and tax laws that have
been enacted or substantially enacted at the
balance sheet date.
1.7.3 Dividend Payments
Final dividend is recognized when the
shareholders approve it and right to receive of
dividend is established to the shareholder.
1.7.4 Statutory Reserve
Bank Companies Act 1991 requires the Bank to
transfer 20% of its current year's profit before tax
to reserve until such reserve equals to its paid up
capital. Accordingly Bank has transferred
requisite portion of current periods profit to the
statutory reserve account.
1.7.5 Provision for Contingent Assets and
Liabilities
A provision is recognized in the balance sheet
when the Bank has a legal or constructive
obligation as a result of a past event and it is
probable that an outflow of economic benefit will
be required to settle the obligations, in
accordance with the BAS 37 "Provisions,
Contingent Liabilities and Contingent Assets".
1.7.5.1 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
September 18, 2007, Banks are required to
maintain provision @1% against off balance
sheet exposures (L/C and Guarantee) effective
from December 2008.
1.7.5.2 Provision for Nostro Accounts
As per instruction contained in the circular letter
No. FEPD (FEMO)/ 01/ 2005-677 dated 13
September 2005 issued by Foreign Exchange
Policy Department of Bangladesh Bank, Bank
is not required to make provision regarding the
un-reconciled debit balance of nostro account
as on the reporting date in these financials.
1.7.5.3 Benefits to the Employees:
The retirement benefits accrued for the
employees of the Bank as on reporting date
have been accounted for in accordance with
the provisions of Bangladesh Accounting
Standard-19, "Employee Benefit". Bases of
enumerating the retirement benefit schemes
operated by the Bank are outlined below:
1.8.1 Provident Fund
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 Ordin ance 1984.
The recognition took effect from June 02, 1999.
The Fund is operated by a Board of Trustees
consisting of six members (03 members from
the management side and other 03 members
from the Board of Directors including Managing
Director) of the Bank. All confirmed employees
of the Bank are continuing their contribution
@10% of their basic salary as subscription to
the Fund. The Bank also similarly contributes
equal amount of the employees' contribution.
Interest earned from the investments is
credited to the members' account on yearly
basis.
1.8.2 Gratuity Fund
The Bank has started providing Gratuity fund,
which was approved by the National Board of
Revenue on October 05, 2006. The Fund is
operated by a Board of Trustees consisting of 7
(seven) members of whom 03 members are
taken from the Board of Directors including
Managing Director of the Bank.
1.8.3 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 for employees'
welfare fund.
1.8.4 Incentive Bonus
Mercantile Bank Limited started a scheme under
the name and style Incentive Bonus for
imperative motivation to all the employees work
under the Bank. The criterion of payment of
incentive bonus does not exceed 10% of
disclosed net profit of the bank as per section
30(j) of Income Tax Ordinance, 1984. This bonus
amount is distributed amongst the employees on
annual basis based on their individual job
performance.
1.9 Earnings Per Share
The company calculates Earning Per Share
(EPS) in accordance with BAS-33 Earning per
Share which has been shown on the face of the
Profit and Loss account and the computation of
EPS is elaborated in Note-32.
Basic Earnings per Share
Basic earnings per share have been calculated in
accordance with BAS 33 "Earnings per Share"
which has been shown on the face of the profit
and loss account. This has been calculated by
dividing the basic earnings by the weighted
average number of ordinary shares outstanding
during the year.
Memorandum Items
Memorandum items are maintained to have
control over all items of importance and for
such transactions where the Bank has only a
business responsibility and no legal
commitment. Stock of travelers cheque,
savings certificates, wage earners bonds and
other fall under the memorandum items.
1.10 Offsetting Financial Instruments
Financial assets and financial liabilities are
offset and the net amount reported in the
balance sheet when there is a legally
enforceable right to offset the recognized
amounts and there is an intention to settle on a
net basis, or realize the asset and settle the
liability simultaneously as per BFRS-7
Financial Instruments: Disclosures.
1.11 Foreign Currency Transactions:
1.11.1 Foreign Currency
Foreign Currency Transactions in foreign
currencies are converted into equivalent BDT
applying the ruling rate at the date of such
transactions as per BAS-21 The Effects of
Changes in Foreign Exchange Rates. Foreign
currencies balances held in US dollar are
converted into Taka at weighted average rate
of inter bank 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 Taka
equivalent.
1.11.2 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 guarantee
denominated in foreign currencies are
expressed in BDT terms at the rate of
exchange ruling on the balance sheet date.
1.11.3 Exchange Rate
Foreign currencies are translated into taka
currency at the following rates:
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
EURO 1= Tk. 104.343 and JYEN 1=
Tk.0.9208, as on 31 December 2012.
Other foreign currency related transactions
have been converted by using the rate of
exchange prevailing on the dates of such
transactions.
1.12 Risk Management
The risk of Mercantile Bank Limited is defined
as the possibility of losses, financial or
otherwise. The risk management of the Bank
covers core risk areas of banking viz. credit
risk, liquidity risk, market risk that includes
foreign exchange risk, interest rate risk, equity
risk, operational risk and reputation risk arising
from money laundering incidences. The prime
objective of the risk management is that the
Bank evaluates and takes well calculative
business risks and thereby safeguarding the
Banks capital, its financial resources and
profitability from various business risks through
its own measures and through implementing
Bangladesh Bank's guidelines and following
some of the best practices as under:
1.12.1 Credit Risk
It arises mainly from lending, trade finance,
leasing and treasury businesses. This can be
described as potential loss arising from the
failure of a counter party to perform as per
contractual agreement with the Bank. The
failure may result from unwillingness of the
counter party or decline in his / her financial
condition. Therefore, the Banks credit risk
management activities have been designed to
address all these issues.
some of the best practices as under: 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. Fees and commission income
arises on services provided by the Bank are
recognized on a cash receipt basis.
Commission charged to customers on letters of
credit and letters of guarantee is credited to
income at the time of effecting the transactions.
However, the final profit is determined and to
be paid to the depositors.
In terms of the provisions of BAS-1
"Presentation of Financial Statements" interest
and other expenses are recognized on accrual
basis. Interest income on investments is
recognized on accrual basis. Capital gain on
investments in shares is also included in
investment income. Capital gain is recognized
when it is realized. 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 are shown in
note-12.5.1.
A thorough assessment is done before
sanction of any credit facility at Credit Risk
Management Unit. The risk assessment
includes borrower risk analysis, financial
analysis, industry analysis, historical
performance of the customer, security of the
proposed credit facility, etc. The assessment
process starts at Corporate Division by the
Relationship Manager / Officer and ends at
Credit Risk Management Unit when it is
approved / declined by the competent
authority. Credit approval authority has been
delegated to the individual executives.
Proposals beyond their delegation are
approved / declined by the Executive
Committee and / or the Management of the
Bank.
In determining Single borrower / large loan
limit, the instructions of Bangladesh Bank are
strictly followed. Internal audit is conducted at
periodical intervals to ensure compliance of
Banks and Regulatory polices. Loans are
classified as per Bangladesh Banks
guidelines.
1.12.2 Liquidity Risk
The object 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 (Note- 11).
Management of liquidity and funding is carried
out by Treasury Department under approved
policy guidelines. Treasury front office is
supported by a very structured mid office and
Back office. Asset Liability Committee (ALCO)
monitors the Liquidity management on a
regular basis. A written contingency plan is in
place to manage crisis situation.
1.12.3 Market Risk
The exposure of market risk of the Bank is
restricted to foreign exchange risk, interest rate
risk and equity risk.
1.12.4 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 half 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.
1.12.5 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.
1.12.6 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
1.12.7 Operational Risk
Operational risk may arise from error and fraud
due to lack of internal control and compliance.
Management through Internal Control and
Compliance Division controls operational
procedure of the Bank. Internal Control and
Compliance Division undertakes periodical and
special audit of the branches and departments
at the Head Office for review of the operation
and compliance of statutory requirements. The
Audit Committee of the Board subsequently
reviews the reports of the Internal Control and
Compliance Division.
1.12.8 Guideline on Information &
Communication technology
To effectively manage the IT operational risk in
the wise level, the Bank is going to introduce a
Centralized MIS that will reduce the operational
risk. This information system will assist in
collecting, analyzing and tracking of
operational risk and forecast the trend. The
implementation of this information system will
be linked from the branches to the central
database. In the future the information will be
easily accessible by senior management and is
expected to be important source of information
of strategic decision-making process based on
a comprehensive database. It is to be declared
that the Bank is fully complaint according to the
guideline of Central Banks IT policy.
1.12.9 System Audit
Systems audit is a part of the overall audit
process, which is one of the facilitators for good
corporate governance. IT audit is basically "the
process of collecting and evaluating evidence
to determine whether a computer system
(information system) safeguards assets,
maintains data integrity, achieves
organizational goals effectively and consumes
resources efficiently. "To comply the ICT
Guideline of Bangladesh Bank and to ensure
the smooth operation of business. A seperate
audit department has been formed in May 2007
for IT Audit. The main aim of the department is
to identify the inherent risks and vulnerabilities
associated with the use of IT operated banking
system PC Bank 2000, other duties are to
implement controls to mitigate the risks and
provide recommendations for improvement in
controls for reducing risks. IT Audit provides an
objective means of reviewing the risks faced by
the Bank in relation to use of Information
Technology and assesses whether they are
being controlled/mitigated in an effective and
efficient manner; provides an assessment of
the Bank's IT control against 'Guideline on ICT
for Scheduled Banks by Bangladesh Bank. IT
Audit has carried out audit most of the branches
during the year 2012. Internal Control and
Compliance contains self -monitoring
mechanisms, and actions are taken to correct
deficiencies as they are identified. Even with
effective internal control, no matter how well
designed, has inherent limitations including the
possibility of the circumvention or overriding of
controls and therefore can provide only
reasonable assurance with respect to financial
statement preparation. Further, because of
changes in conditions, internal control
effectiveness may vary over time. MBL has
taken all-out efforts to mitigate all sorts of risk
as per guidelines issued by Bangladesh Bank.
As a part of robust risk management process,
the Bank has formulated a comprehensive
Credit Risk Management Policy to address
credit risk.
1.13 Events after Reporting Period
As per BAS-10 Events after 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).
1.14 Component of Financial Statements:
As per BAS-1 Presentation of Financial
Statements and as recommended in the BRPD
the Banking Regulation and Policy Department of
Bangladesh Bank the Financial Statement
includes;
a. Statement of Financial Position (Balance
Sheet) as at 31 December, 2012.
b. Statement of Comprehensive Income (Profit &
Loss account) for the year ended 31
December, 2012.
c. Statement of Changes in Equity for the year
ended 31 December,2012.
d. Statement of Cash Flows for the year ended
31 December, 2012.
e. Liquidity Statement as at 31 December, 2012
and
f. Significant Accounting Policies and
Explanatory Notes to the Financial
Statements.
1.15 Comparative:
Financial statements are presented as per BAS-1
Presentation of Financial Statements and
previous years figures have been restated due to
changes in some accounting policies as per
BAS-8 Accounting Policies, Changes in
Accounting Estimates and Errors.
2.0 General
a. Wherever considered necessary, previous
years figures have been rearranged for the
purpose of comparison;
b. Figures appearing in the Financial Statements
have been rounded off to the nearest Taka.
c. The expenses, irrespective of capital or
revenue nature, accrued / due but not paid
have been provided for in the books of the
bank.
2.1 Supplier Payment Policy
MBL always adheres to well set payment polices
for all suppliers and explains them in details about
the payment method and system and reviews
process before providing work order. Bills are paid
according to the payment terms and VAT and
other taxes & duties are deducted from bills as per
law. As of December 31, 2012 there is no legal
case filed by the Bank or filed against the Bank by
any supplier so far information gathered from the
Bank authority.
2.2 Rating
Credit Rating and Information Services Limited
(CRISL) on the basis of Financial Statements as
rated Mercantile Bank Limited on 29 May 2012.
The summary of their ratings is given below:
CRISL
CRISL rated the Mercantile Bank Limited to AA-
(Pronounced as Double A Minus) 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.
CRISL rated the Mercantile Bank Limited to ST-2
in the short term. This rate shows High Grade of
the Bank it indicates high certainty of timely
payment. Liquidity factors are strong and
supported by good fundamental protection factors.
Risk factors are very small. The long-term rating is
valid for only one year and short-term rating is for
six months.
2.3 Offsetting:
No assets or liabilities have been offset or reduced
by any other assets unless a legal right of set-off
exists and the offsetting represents the
expectation as to the realization or settlement of
the asset or liability.
2.4 Approval of the Financial Statements:
The Board of Directors of the bank in its 212th
meeting held on 13.03.2013 and approved the
financial statements for the year ended 31
December, 2012.
d) Depreciation on assets addition during the year is
charged from the month of addition. Whole month
depreciation charged for the month of addition.
e) On the month of disposal of fixed assets no
depreciation is charged. The cost and
accumulated depreciation of disposed assets are
eliminated from the fixed assets schedule and
gain or loss on such disposal is reflected in the
income statement.
f) Useful life and method of depreciation of fixed
assets are reviewed periodically. If useful lives of
assets do not differ significantly as it was
previously estimated, bank management does
not consider revaluing its assets by the
meantime.
II. Investments
All investment in securities is initially recognized
at cost, being fair value of the consideration
given, including acquisition charges associated
with the investment. Premiums are amortized
and discounts accredited, using the effective
yield method is taken to discount income as per
BAS-32 Financial Instruments: Presentations
and BAS-39 Financial Instruments: Recognition
and Measurements. The valuation methods of
investments include:
Held To Maturity (HTM)
HTM consists the Government approved securities in
the mode of Treasury Bond & Bills which are classified
accordingly as per Bangladesh Bank DOS Circular # 5
dated May 26, 2008. 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.
Held For Trading (HFT)
HFT securities are the trading book securities of the
Bank; classified as per Bangladesh Bank DOS Circular #
5 dated May 26, 2008. These securities are freely
tradable, if desired. Securities held in this category are
revalued weekly as per Mark to Market basis and the
gain or loss arising out of such valuation is reflected on
the Reserve for Revaluation Account.
Investment in listed securities
These securities are bought and held primarily for the
purpose of selling them in future or held for dividend
income. These are reported at cost. Unrealized gains or
losses are not recognized in the profit and loss account
Investment in unlisted securities
Investment in unlisted securities is reported at cost
under cost method. Adjustment is given for any shortage
of book value over cost for determining the carrying
amount of investment in unlisted securities.
All investments are stated as per following basis:
e) Loans and advances are written off to the extent
that (i) there is no realistic prospect of recovery
(ii) 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.
1.6 Valuation of Assets
I. Property, Plant and Equipment
a) All fixed assets are stated at cost less
accumulated depreciation as per BAS-16
Property, Plant and Equipment. The cost of
acquisition of an asset comprises its
purchase price and any directly attributable
cost of bringing the asset to its working
condition for its intended use inclusive of
inward freight, duties and non-refundable
taxes.
b) The bank recognize in the carrying amount of
an item of property, plant and equipment the
cost of replacing part of such an item when
that cost is incurred if it is probable that the
future economic benefit embodied with the
item will flow to the company and the cost of
the item can be measured reliably.
Expenditure incurred after the assets have
been put into operation, such as repairs and
maintenance is normally charged as revenue
expenditure in the period in which it is
incurred.
c) Depreciation is charged on Fixed Assets at
the following rates on reducing balance
method from the date of acquisition, other
than the Vehicles. Straight-line method is
applied on Vehicles.
Explanatory Notes to the Financial Statements
For the year ended 31 December 2012
The conversion policy of subsidiary company is given below;
SL # Particulars Price Mercantile Bank Exchange House (UK)
1. For Assets & Liabilities Closing Price 1 = BDT 126.8560
2. For Income & Expenses Average Price 1 = BDT 126.8932
For Unclassified Loans and Advances
Particulars Rate
i) Small and Medium Enterprise (SME) 0.25%
ii) All unclassified loans (other than loans under Consumer financing, Loan to Brokerage 1%
House, Merchant Banking, Stock dealers and Special Mention account)
iii) Unclassified loans against Housing and Professionals to set up business under Consumer
Financing 2%
iv) Unclassified loans to Brokerage House, Merchant Banking, Stock dealers 2%
v) Margin Loan Account 2%
vi) Unclassified loans against other Consumer Financing 5%
vii) Outstanding amount of loans kept in the Special Mention
Account after netting off the amount of Interest Suspense. 5%
For Classified Loans and Advances
Particulars Rate
i) Specific Provision on substandard loans and advances 20%
ii) Specific Provision on doubtful loans and advances 50%
iii) Specific Provision on bad/loss loans and advances 100%
Investment Class Initial Measurement after
Recognition initial recognition
Govt. T-Bill (HFT) Cost Market Value
Govt. T-Bond (HFT) Cost Market Value
Govt. T-Bond (HTM) Cost Amortized Value
Share (Quoted) Cost At cost or market price whichever is
lower at balance sheet date
Prize bond Cost Cost
162 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
163 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
164 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
165 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
166 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
167 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
168 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
169 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
170 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
171 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
172 annual report
BRPD(P-3)744(114)/2010-1743 dated 4 May
Limited)
Annexure- J
Bangladesh.
affected.
Revenue.
accounts.
consolidation.
Bangladesh Bank.
lives;
schedule;
below:
Building 2.5%
Vehicles 20%
1.6.1 Leasing
The bank as lessee:
per BAS-17.
Provisions:
Taxes".
balance sheet date.
Liabilities
from December 2008.
basis.
1.8.2 Gratuity Fund
1.8.3 Welfare Fund
welfare fund.
performance.
during the year.
Memorandum Items
equivalent.
1.11.2 Commitments
USD 1= Tk.79.7524, GBP 1= Tk. 126.856,
transactions.
1.12.1 Credit Risk
segregated.
note-12.5.1.
Bank.
guidelines.
1.12.3 Market Risk
Bangladesh Bank.
1.12.9 System Audit
credit risk.
identified:
and
includes;
December, 2012.
31 December, 2012.
and
Statements.
1.15 Comparative:
2.0 General
bank.
Bank authority.
2.2 Rating
CRISL
six months.
2.3 Offsetting:
December, 2012.
income statement.
meantime.
II. Investments
followed up.
taxes.
incurred.
Particulars Rate
Financing 2%
Particulars Rate
www.mblbd.com
173 annual report
3 CASH
3.1 Cash in hand
In local currency 1,401,546,880 790,596,192
In foreign currency 69,017,875 21,954,823
1,470,564,755 812,551,015
3.2 Balance with Bangladesh Bank and Sonali Bank Ltd.
(Including foreign currencies)
Bangladesh Bank
In local currency 7,102,708,414 5,441,023,302
In foreign currencies 3,245,063,170 574,169,407
10,347,771,584 6,015,192,709
Sonali Bank Ltd.
Sonali Bank Ltd., (As an agent of 196,784,960 118,360,758
Bangladesh Bank) - Local Currency 10,544,556,544 6,133,553,467
12,015,121,299 6,946,104,482
3.3 Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR)
Statutory Liquidity Requirement (SLR) have been maintained on the basis of 19% of total time and demand
liabilities and in accordance with the Section 33 of the Bank Companies Act, 1991 and Bangladesh Bank's
(Central Bank) subsequent BCD Circular #.13 dated May 24, 1992, BRPD Circular # 12 dated September 06,
1998; BRPD Circular # 12 dated September 20, 1999; BRPD Circular # 22 dated November 06, 2003 , BRPD
Circular #12 dated August 25, 2005, DOS Circular # 03 dated June 01, 2010 and MPD Circular # 04 dated
December 01, 2010. The Statutory Liquidity Requirement includes 6% Cash Reserve Requirement (CRR)
calculated on the bank's total demand and time liabilities and maintained on a fortnight average basis in the
Current Account maintained with the Bangladesh Bank and rest 13% is to be maintained in the form of Securities
which include Treasury Bills, Government Treasury Bonds, Bangladesh Bank Bills and other securities approved
by the Bangladesh Bank, such as, T&T Bonds and also Balance held with Sonali Bank Ltd., Cash in hand and
Vault, Balance of FC Clearing Account maintained with Bangladesh Bank. Both the reserves are maintained by
the Bank in excess of the statutory requirements, as shown below:
a) Cash Reserve Requirement (CRR): 6% of Average Demand and Time Liabilities:
Required Reserve 6,833,433,000 5,046,762,000
Actual Reserve held with Bangladesh Bank (Note-3.2) 7,102,708,414 5,441,023,302
Surplus 269,275,414 394,261,302
b ) Statutory Liquidity Requirement (SLR): 19% of Average
Demand and Time Liabilities:
Required Reserve (including CRR) 21,639,206,000 17,434,269,000
Actual Reserve held (Note-3.5) 52,049,869,900 30,294,951,592
Surplus 30,410,663,900 12,860,682,592
3.4 Maturity grouping of cash
Maturity-wise Groupings (Inside and Outside Bangladesh)
Payable on Demand 12,015,121,299 6,946,104,482
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 - -
12,015,121,299 6,946,104,482
Amount in Taka
2012 2011
174 annual report
3.5 Held for Statutory Liquidity Ratio
Cash in hand (note-3.1) 1,470,564,755 812,551,015
Balance with Bangladesh Bank and its agent bank(s) (note-3.2) 10,544,556,544 6,133,553,467
Government securities (note-6.2) 8,785,256,891 3,558,748,490
Government bonds (note-6. 2) 31,249,491,710 19,790,098,621
52,049,869,900 30,294,951,592
3(a) CONSOLIDATED CASH AND CASH EQUIVALENTS
Cash in hand (Including foreign currencies)
Mercantile Bank Ltd. 1,470,564,755 812,551,015
Mercantile Bank Securities Ltd. 171,068 -
Mercantile Exchange House (UK) Limited 2,516,972
1,470,735,823 815,067,987
Balance with Bangladesh Bank and Sonali Bank Ltd.
(Including foreign currencies)
Mercantile Bank Ltd. 10,544,556,544 6,133,553,467
Mercantile Bank Securities Ltd. - -
Mercantile Exchange House (UK) Limited - -
10,544,556,544 6,133,553,467
12,015,292,367 6,948,621,454
4. BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS
4.1 In Bangladesh
Current Accounts
Sonali Bank Ltd. 22,661,640 24,334,353
Agrani Bank Ltd. 28,877,462 37,564,237
51,539,102 61,898,590
Short-notice Deposits Accounts
National Bank Ltd. 17,642,374 7,717,004
Trust Bank Ltd. 20,573,362 12,602,600
Arab Bangladesh Bank Ltd. 4,982,615 3,389,770
National Credit and Commerce Bank Ltd. 407,143 388,341
Janata Bank Ltd. 158,160,740 95,661,798
Standard Bank Ltd. 1,000,000 -
Eastern Bank Ltd. 21,705 21,801
Mercantile Securities Bank Ltd. 295,937 -
Pubali Bank Ltd. 1,299,731 6,515,448
Rupali Bank Ltd. 4,511,771 4,693,947
The City Bank Ltd - 100,000,000
Al Arafa Islami BanK Ltd. 2,000,000 -
United Commercial Bank Ltd. 2,116,388 2,279,144
Bangladesh Commerce Bank 996,225 997,725
Southeast Bank Ltd. 154,204,298 3,541,821
368,212,289 237,809,399
Offshore Banking Unit 10,205,722 -
429,957,113 299,707,989
Amount in Taka
2012 2011
www.mblbd.com
175 annual report
Financial Institutions
BIFC - 50,000,000
Prime Financial investment ltd. 83,352 186,706
GSP FinanceCompany (BD) Ltd. 50,000,000 50,000,000
IIDFC Finance Ltd. 20,000,000 -
Reliance Finance and Investment Ltd. 50,000,000 -
Uttara Finance & Investment Company Ltd. 1,168,131 100,000,000
121,251,483 200,186,706
551,208,596 499,894,695
4.2 Outside Bangladesh (Nostro Accounts)
Standard Chartered Bank, New York 102,117 17,420
Mashreq Bank, New York 20,632,552 26,314
Citibank N.A., New York - 11,387
HSBC, New York 30,078 7,840
Wachovia Bank, New York 3,037,919 30,821,262
Commerzbank, Frankfurt 1,626,067 3,048,458
Standard Chartered Bank ,London 28,679,771 31,002
The Bank of Tokyo Mitsubishi Ltd., Tokyo 2,031,728 5,415,778
Citibank N.A., Mumbai - 10,311
Arab Bangladesh Bank Ltd., Mumbai 125,956 96,093
Commerzbank, Frankfurt 6,291,853 55,688
Standard Chartered Bank, Frankfurt 288,238 534,091
Unicredito Italiano, Milan 1,277,544 1,734,951
Hatton National Bank, Colombo 3,538 22,539
Bank of Bhutan, Phuentsholing 3,393 23,946
United Bank of India, Kolkata 3,223 35,477
Sonali Bank, Kolkata 4,865 4,993
Nepal BD Bank Ltd., Kathmandu 657,448 674,763
Standard Chartered Bank, Mumbai 24,468 5,883
HSBC, Mumbai 12,478 51,782
HSBC, Karachi, Pakistan 194 2,082
ICICI, Mumbai 364,056 87,411,267
Habib Bank AG Zurich 2,220,965 2,252,628
Mashreq Bank, Mumbai 227,929 28,411
BNL, Italy 16,867 257,769
Habib American Bank 1,969,387 4,381,627
ICICI, Hongkong 95 4,410,022
JP Morgan Chase Bank Canada 1,625,424 2,208,201
JP Morgan Chase Bank NY 1,109,400 300,785
Habib Metropolitan Bank 1,439,280 76,146
Standard Chartered Bank, Kolkata - 1,505
73,806,833 143,960,421
625,015,429 643,855,116
Amount in Taka
2012 2011
176 annual report
4.3 Maturity-wise Groupings (Inside and Outside Bangladesh)
Payable on Demand 429,957,113 299,707,989
Up to 1(one) Month - -
Over 1(one) Month but not more than 3 (three) Months 73,806,833 143,960,421
Over 3 (three) Months but not more than 1 (one) Year 121,251,483 200,186,706
625,015,429 643,855,116
4(a) CONSOLIDATED BALANCE WITH OTHER BANKS AND FINANCIAL INSTITUTIONS
In Bangladesh
Mercantile Bank Ltd. 551,208,596 499,894,695
Mercantile Bank Securities Ltd. 86,733,728 18,966,386
637,942,324 518,861,081
Less: Inter Company Transaction 61,858,922 -
576,083,402 518,861,081
Outside Bangladesh (Nostro Accounts)
Mercantile Exchange House (UK) Limited 13,025,448 -
86,832,281 143,960,421
662,915,683 662,821,502

5. MONEY AT CALL AND SHORT NOTICE
Financial Institutions - -
5(a) CONSOLIDATED MONEY AT CALL AND SHORT NOTICE
Mercantile Bank Ltd. - -
- -
6. INVESTMENTS
Government Securities (Note- 6.1) 40,034,748,601 23,348,847,110
Other Investments (Note- 6.5) 1,279,445,996 1,269,529,511
41,314,194,597 24,645,376,621
6.1 Investment classified as per Bangladesh Bank Circular:
Held for Trading (HFT) 14,675,891,272 10,586,837,035
Held to Maturity (HTM) 21,071,417,733 12,627,938,332
Other Securities 4,287,439,596 134,071,744
40,034,748,601 23,348,847,110
6.2 Investment classified as per nature:
a) Government Securities:
28 days Treasury Bills - -
91 days Treasury Bills 4,732,342,682 238,751,761
364 days Treasury Bills 2,420,681,054 2,459,082,627
5 years Treasury Bills - -
8,785,256,891 3,558,748,490
Amount in Taka
2012 2011
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177 annual report
b) Government Bonds:
3 Years T & T Bond - -
5 Years Treasury Bond 12,377,342,145 8,602,292,325
Prize Bonds 3,040,100 2,263,700
31,249,491,710 19,790,098,621
Total (a+b) 40,034,748,601 23,348,847,110
Other Investments (Note- 6.5) 1,279,445,996 1,296,529,511
41,314,194,597 24,645,376,621
Note:- Value of Securities for the Year 2012 are also adjusted with the values determined by Mark to Market method.
6.3 Maturity Grouping of Government Securities
Payable on Demand 3,040,100 2,263,700
Up to 1(one) Month 2,798,677,370 464,124,141
Over 1(one) Month but not more than 3 (three) Months 3,819,390,160 439,296,744
Over 3 (three) Months but not more than 1 (one) Year 4,539,661,992 3,220,560,349
Over 1 (one) Year but not more than 5 (five) Years 12,209,408,105 10,183,915,321
Over 5 (five) Years 16,664,570,874 9,038,686,856
40,034,748,601 23,348,847,110
6.4 Types of Government Securities
A. Held to Maturity (HTM) Securities
21,071,417,733 12,627,938,332
B. Held for Trading (HFT) Securities
364 days Treasury Bills 1,580,742,376 2,459,082,627
15 Years Treasury Bond 1,469,696,263 163,790,399
20 Years Treasury Bond 909,509,183 237,494,458
14,675,891,271 10,586,837,035
C. Other investment
Encumbered Treasury Bond (lien with Bangladesh Bank) 4,284,399,497 131,808,044
Prize Bonds 3,040,100 2,263,700
4,287,439,597 134,071,744
Total (A+B+C)) 40,034,748,601 23,348,847,110
Amount in Taka
2012 2011
178 annual report
6.5 Other Investments
A. Investment in shares
a) Unquoted
Central Depository Bangladesh Ltd. 5,138,890 5,138,890
SWIFT 1,575,829 1,575,829
Mercantile Exchange House UK Ltd, 127 124
Market Stablization Fund Asset Management Co. Ltd. 2,000,000 2,000,000
I T C L 10,000,000 10,000,000
618,714,846 618,714,843
b) Quoted
Al-Arafah Islami Bank Ltd 2,074,410 2,074,410
Atlas Bangladesh 858,517 858,517
Bank Asia Ltd. 10,029,928 10,029,928
Beximco Ltd 30,947,879 30,947,879
Beximco Pharmaceuticals Ltd 152,745 152,745
The City Bank Ltd 3,880,736 3,880,736
Eastern Bank Ltd. 5,164,616 5,164,616
EXIM Bank Ltd 5,077 5,077
Grameen Phone 8,042,301 -
GPH Ispat Ltd. 2,013,220 -
IDLC Finance Ltd. 136,887,000 136,887,000
Islami Bank Bangladesh Ltd. 10,582,107 10,582,107
Jamuna Oil Company Limited - 19,277,638
Khulna Power Company Limited 2,518,396 2,518,396
Lafarge Surma Cement 65,033 65,033
Lanka Bangla Finance Ltd. 23,501,702 22,634,202
MBL 1st Mutual Fund 200,000,000 200,000,000
Mobil Jamuna Ltd. 3,609,852 -
MI Cement ltd 4,437,399 4,437,399
Navana CNG 3,488,726 3,488,726
NCCBL Mutual Fund 1,565,000 -
Prime Finance & Investment Ltd. 8,517,764 8,517,764
Phoenix Finance& Investment Ltd 40,450 51,850
Pubali Bank Ltd. 1,330,400 1,330,400
RAK Ceramics Ltd. 12,980,620 12,980,620
Social Islami Bank Ltd. 3,868,613 3,868,613
Singer BD Ltd. 938,942 1,520,180
Southeast BanK ltd. 1,520,180 14,508,607
Square Pharmaceuticals Ltd. 24,292,378 86,999,885
Summit Power Company Ltd. 86,999,885 -
Titas Gas 384,934 -
United Commercial Bank Ltd. 11,031 -
Uttara Bank Ltd. 1,792,193 11,031
- 1,792,193
598,231,150 590,314,668
1,216,945,996 1,209,029,511
Amount in Taka
2012 2011
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179 annual report
B. Bonds
IDLC Finance Ltd. 12,500,000 37,500,000
N B L Subordinated Bond 50,000,000 50,000,000
62,500,000 87,500,000
1,279,445,996 1,296,529,511
Market price of quoted shares 1,164,208,804 1,410,508,728
Gain/Loss arises 565,977,654 820,194,060
6.6 (i) Disclosure regarding outstanding Repo
Amount (1st leg
Counterparty name Agreement date cash consideration)
Bangladesh Bank 30.12.2012 01.01.2013 3,750,235,000
Standard Chartered Bank 30.12.2012 01.01.2013 1,260,882,550
Standard Bank 27.12.2012 01.01.2015 912,696,552
(ii) Disclosure regarding outstanding Reverse Repo Counterparty name
(iii) Disclosure regarding overall transaction of Repo and Reverse Repo
Counterparty name Minimum Minimum Daily average
outstanding during the year
outstanding
Security sold under Repo
I) with Bangladesh Bank 3,750,235,000 14,757,400,000 9,899,533,795
ii) with other Banks & FIs 356,096,151 6,568,328,889 3,466,844,634
Security purchased under Reverse Repo
I) From Bangladesh Bank - - -
ii) From other Banks & FIs - - -
6(a) CONSOLIDATED INVESTMENTS
Investment - Government Securities
40,034,748,601 23,348,847,110
Other Investments
Mercantile Exchange House (UK) Limited -
2,109,445,996 2,126,529,511
Less: Inter Company Transaction 600,000,127 600,000,124
1,509,445,869 1,526,529,387
41,544,194,470 24,875,376,497
7. LOANS AND ADVANCES
Loans, Cash Credit and Overdraft etc. (Note A) 85,901,923,826 73,804,712,735
Bills Purchased and Discounted (Note B) 7,708,950,587 6,195,086,729
93,610,874,413 79,999,799,464
Amount in Taka
2012 2011
180 annual report
A. Loans, Cash Credit and Overdraft, etc.
Loan General 2,165,983,241 2,245,172,419
Term Loan 18,403,831,083 16,020,429,747
Time Loan 9,953,358,564 7,090,865,345
Small and Medium Enterprise(SME) Loan 4,553,055,917 3,833,560,990
Consumers Finance 1,035,609,944 1,116,805,688
Loan Against Trust Receipt (LTR) 11,102,073,057 10,415,283,805
Home Loan 11,220,356 12,228,424
Packing Credit 1,064,289,254 706,187,340
House Building Loan 2,785,580,197 2,707,174,919
Lease Finance 880,278,521 763,298,609
Hire Purchase 4,099,675,433 3,676,215,065
EDF Loan 1,549,354,805 1,501,573,458
Payment Against Documents (PAD) 752,690,638 998,961,520
Cash Credit (Hypo) 7,748,915,389 5,877,030,722
Overdraft 16,949,604,965 14,762,052,222
Personal Loan 421,618,255 436,637,552
Consumers Credit Schemes 27,606,487 34,713,417
Other Credit Schemes 17,902,436 17,935,878
Staff Loan 658,571,014 665,471,627
Credit Card 299,528,417 243,308,290
Agricultural Credit 1,421,175,853 679,805,698
85,901,923,826 73,804,712,735
B. Bills Purchased and Discounted
Payable in Bangladesh 6,429,502,795 4,874,592,417
Payable outside Bangladesh 1,279,447,792 1,320,494,312
7,708,950,587 6,195,086,729
7.1 Net loans, advances and leases/ investment
Gross performing loans, advances and leases/ investment (note-7) 93,610,874,413 79,999,799,464
Less:
Non-performing loans, advances and leases/ investment (note-7.13(x)) 4,090,921,667 2,084,618,000
Provision for loans, advances and leases/ investment (note-12.5.1) 2,464,869,678 1,610,161,055
6,555,791,345 3,694,779,055
87,055,083,068 76,305,020,409
7.2 Residual maturity grouping of loans, advances and leases/
Investments including bill purchased and discounted
Up to 1(one) Month 25,311,454,649 15,242,177,774
Over 1(one) Month but not more than 3 (three) Months 13,277,534,813 11,298,178,430
Over 5 (five) Year 7,768,506,811 7,888,320,350
93,610,874,413 79,999,799,464
Amount in Taka
2012 2011
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181 annual report
7.3 Loans and Advances (Broad Categories)
In Bangladesh 93,610,874,413 79,999,799,464
Loans and Advances 60,323,124,951 52,402,331,182
Leases / Investments 880,278,521 763,298,609
Cash Credits 7,748,915,389 5,877,030,721
Bill Purchased and Discounted 7,708,950,587 6,195,086,729
Overdraft 16,949,604,965 14,762,052,222
Outside Bangladesh - -
93,610,874,413 79,999,799,464
7.3.1 Residual maturity grouping of loans and advances
Up to 1(one) Month 12,735,270,011 10,734,878,113
Over 5 (five) Years 7,573,963,616 7,888,320,350
60,323,124,951 52,402,331,182
7.3.2 Residual maturity grouping of leases / investments
Lease rental receivable within 1 year 331,798,764 297,686,457
Above 1 year but within 5 years 682,529,875 586,144,095
Above 5 years 165,244,580 88,457,639
Total Lease rental receivable 1,179,573,219 972,288,191
Less: Unearned interest receivable 299,294,698 208,989,582
880,278,521 763,298,609
7.3.3 Residual maturity grouping of cash credit
Up to 1(one) Month 2,133,473,727 1,123,419,371
Over 1(one) Month but not more than 3 (three) Months 1,128,039,095 575,754,337
7,748,915,389 5,877,030,722
7.3.4 Residual maturity grouping of bill purchased and discounted
Up to 1(one) Month 3,408,832,338 3,104,918,108
7,708,950,587 6,195,086,729
7.3.5 Residual maturity grouping of overdraft
Up to 1(one) Month 7,033,148,809 2,518,355,784
16,949,604,965 14,762,052,222
Amount in Taka
2012 2011
182 annual report
7.4 Significant Concentration of Credit
Advances to Directors and Others - -
Advances to Managing Director and Chief Executive - -
Advances to Customers 38,135,703,399 28,722,227,837
Industry-wise 54,816,600,000 50,612,100,000
Staff Loan 658,571,014 665,471,627
93,610,874,413 79,999,799,464
7.5 Geographical Location-wise break-up
Urban
Dhaka 62,214,906,024 56,100,422,603
Chittagong 20,553,633,034 14,974,454,845
Rajshahi 4,667,639,598 3,856,263,346
Sylhet 691,625,515 690,094,133
Khulna 520,922,509 463,692,314
Rangpur 771,034,421 590,716,849
Barisal 755,642,403 398,276,676
90,175,403,504 77,073,920,766
Rural
Dhaka 2,039,445,391 1,800,357,342
Chittagong 1,007,929,326 805,262,079
Rajshahi 199,792,154 163,860,987
Rangpur 13,872,413
Sylhet 174,431,625 156,398,290
3,435,470,909 2,925,878,698
93,610,874,413 79,999,799,464
7.6 Sector wise break-up of Loans :
Garments 13,788,595,706 12,338,915,803
Trading 13,716,420,045 9,758,353,153
Engineering (Iron & Steel, Electrical Equipment etc.) 11,086,529,431 8,357,686,230
Contractor Finance 1,119,762,634 1,262,835,064
Leasing Company 1,769,800,000 2,022,700,000
Housing 1,363,324,423 1,329,111,219
Food, Food product, Beverage, Edible oil etc. 6,513,710,479 7,503,611,682
Pharmaceuticals 1,029,267,119 1,642,771,179
Tele- Communication 563,088,724 226,497,641
Transport 1,325,817,380 1,106,455,548
Leather & Leather Products 401,142,945 275,260,005
Jute Industries 1,018,570,951 -
Textile 2,817,358,725 2,255,942,470
Information Technology 558,131,917 792,364,979
Hospital & Medical Services 2,367,562,008 1,768,183,271
Paper, Paper Production & Publications 1,853,453,546 849,604,140
Plastic & Plastic Materials 1,824,074,073 1,434,622,495
Storage 798,783,883 710,920,612
Glass & Glass Product 8,596 3,818,596
Agriculture 1,421,175,854 679,805,698
SME Loan 4,597,814,795 3,833,560,990
Credit Card 299,528,417 243,308,290
Consumer Loan 1,815,807,316 2,188,273,583
Loans to Brokarage House 4,073,933,988 -
Others 17,487,211,458 19,415,196,816
Total 93,610,874,413 79,999,799,464
Amount in Taka
2012 2011
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183 annual report
7.7 Loan and Advances allowed to each customer exceeding 10% of Bank's total capital:
Total Loans and Advances 17,786,695,000 14,149,427,000
No. of Customers 26 23
Classified amount thereon nil nil
Measures taken for recovery nil nil
The amount represents the sum of total loan allowed to each customer exceeding BDT1207.88 crore which is
computed @ 10% of closing total Capital Fund.
7.8 Details of Large Loans and Advances
Number of clients with outstanding amount exceeding 10% of total capital of the Bank is 26. Total capital of the
Bank was Taka 1207.88 crore as at 31 December 2012.
Name of Capital Outstanding Total Branch
Funded Non-funded
DBL Group 292,784,000 719,118,000 1,011,902,000 Main
Azmat Group 584,270,000 568,818,000 1,153,088,000 Main
City Group - 362,439,000 362,439,000 Main
Natural Group 203,000,000 880,811,000 1,083,811,000 Main
Jamuna Group 1,402,283,000 2,122,159,000 3,524,442,000 Main
United Group 470,509,000 1,061,468,000 1,531,977,000 Main
Mark Group 103,362,000 624,691,000 728,053,000 Main
Bashundhara Group 400,891,000 413,890,000 814,781,000 Main
Pioneer Group 197,912,000 663,208,000 861,120,000 Main
Creative Group 1,224,611,000 525,866,000 1,750,477,000 Main
Interstoff Group 828,781,000 1,056,228,000 1,885,009,000 Dhanmondi
Abul Khair Group 1,551,485,000 1,926,052,000 3,477,537,000 Agrabad
TK Group 641,418,000 1,157,746,000 1,799,164,000 Agrabad
Sunmar Group 858,477,000 334,636,000 1,193,113,000 Agrabad
Habib Group 118,793,000 73,664,000 192,457,000 Agrabad
BSRM Group 79,891,000 1,561,782,000 1,641,673,000 Jubille Road
Ratanpur Group 1,569,187,000 161,803,000 1,730,990,000 Jubille Road
Starlight Group 611,412,000 2,524,129,000 3,135,541,000 Mohakhali
Bangla Trade Group 717,965,000 147,913,000 865,878,000 Mohakhali
Nitol Motors Group 727,594,000 51,417,000 779,011,000 Mohakhali
Rising Group 949,350,000 1,040,492,000 1,989,842,000 Banani
Loadster Fashion 874,464,000 126,983,000 1,001,447,000 Banani
KDS Group 1,084,044,000 723,471,000 1,807,515,000 Khatungonj
PHP Group - 659,974,000 659,974,000 Khatungonj
S Alam Super Edible 1,588,750,000 1,974,763,000 3,563,513,000 Khatungonj
Deshbandhu 705,462,000 783,278,000 1,488,740,000 Motijheel
17,786,695,000 22,246,799,000 40,033,494,000
Amount in Taka
2012 2011
184 annual report
7.9 Loans & Advances Classified as per Bangladesh Bank Circular
Unclassified 89,519,952,746 77,915,181,464
Sub-Standard 646,326,086 661,537,000
Doubtful 1,615,107,239 831,907,000
Bad/ Loss 1,829,488,342 591,174,000
93,610,874,413 79,999,799,464
Details of Loans and Advances as follows
(Figure in "000")
Status of loans and advances Year
2012 2011
Mix % Outstanding Mix % Outstanding
Amount (Taka) Amount (Taka)
Unclassified loans and advances :
Unclassified ( including staff loan) 95.24% 89,152,755 97.24% 77,790,659
Special Mention Account 0.39% 367,198 0.16% 124,522
Total unclassified loans and advances : 95.63% 89,519,953 97.39% 77,915,181
Classified loans and advances :
Substandard 0.69% 646,326 0.83% 661,537
Doubtful 1.73% 1,615,107 1.04% 831,907
Bad/loss 1.95% 1,829,488 0.74% 591,174
Total classified loans and advances : 4.37% 4,090,921 2.61% 2,084,618
Total loans and advances : 100% 93,610,874 100% 79,999,799
7.9.1 Base for Provision
SMA 355,649,117 120,600,000
Base for Provision
Sub-Standard 433,958,576 478,147,000
Doubtful 955,765,685 579,056,000
Bad/Loss 924,286,640 327,257,000
2,314,010,901 1,384,460,000
7.10 Nature wise Loans & Advances
Continuous 23,011,811,035 18,202,244,000
Demand Loan 37,905,997,020 32,409,461,000
Term Loans up to 5 ( five) years 32,004,166,275 15,364,097,837
Term Loans above 5 (five) years 30,415,333 13,358,525,000
Term Loans above 5 (five) years - Staff Loan 658,484,750 665,471,627
93,610,874,413 79,999,799,464
7.11 Provision for Loans and Advances
General Provision (including SMA) 969,000,000 889,631,000
Specific Provision (Classified Loans and Advances)
Sub-standard 87,000,000 95,629,000
Doubtful 476,000,000 289,528,000
Bad/ Loss 932,869,678 327,257,000
Total 2,464,869,678 1,602,045,000
Amount in Taka
2012 2011
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185 annual report
Required Provision for Loans and Advances 2,454,995,414 1,602,645,000
Total Provision Maintained (Note-12.5.1) 2,464,869,678 1,610,161,055
Excess/(Short) Provision 9,874,264 7,516,055
Provision for Loans and Advances:
(Figure in "000")
Status of Loans and advances Outstanding Base for Provision Provision Provision
Amount (Taka) Amount (Taka) % Amount (Taka)
Unclassified loans and advances :
Unclassified ( SMEF) 3,804,248 3,804,248 0.25% 9,511
Unclassified (other credit) 77,036,369 77,036,369 1% 773,112
Unclassified ( HF, LP & BH/MBS/SDS
against share) 4,833,592 4,833,592 2% 96,672
Unclassified (other than HF, LP & short
term agri. Loan) 1,404,458 1,404,458 5% 70,223
Agri Loan 29,654 29,654 5% 1,483
Unclassified (staff loan)) 658,485 658,485 0% -
Unclassified (Secured Bill Purchased) 1,385,949 - 0% -
Special Mention Account 367,198 355,649 5% 18,000
Total unclassified loans and advances : 88,134,004 88,122,455 969,001
Classified loans and advances :
Substandard 646,326 433,959 20% 87,000
Doubtful 1,615,107 955,766 50% 476,000
Bad/loss 1,829,488 924,287 100% 932,870
Total classified loans and advances : 4,090,921 2,314,012 1,495,870
Total loans and advances : 93,610,874 90,436,467 2,464,871
7.12 Provision for Off-balance Sheet Exposures
Particulars of Off-balance Sheet Exposures Base Rate 1% Provision
for Provision Amount Amount
Acceptances and endorsements less margin 20,569,926,764 205,699,268
Letter of guarantee less margin 7,832,764,925 78,327,649
Letter of credit less margin 19,823,147,250 198,231,473
Bills for collection 29,376,464 293,765
other contingent liabilities
Required provision on Off-balance Sheet Exposures 48,255,215,403 482,552,154 482,552,154
Total Provision maintained - - 482,552,154
Excess/(short) provision - - 4,307,618
7.13 Particulars of Loans and Advances
i) Loans considered good in respect of which the Bank 85,990,600,101 75,661,553,180
Company is fully secured
ii) Loans considered good for which the Bank holds no other Security 1,063,216,431 1,151,519,105
than the debtors personal security
iii) Loans considered good and secured by the personal security 421,616,255 436,637,552
of one or more parties in addition to the personal security of the debtors
iv) Loans adversely classified; provision not maintained there against - -
87,475,432,787 77,249,709,837
Amount in Taka
2012 2011
186 annual report
v) Loans due by directors or executives of the Banking Company or any of
them taken either severally or jointly with any other person (Staff Loan) 658,571,014 665,471,627
vi) Loans due by companies or firms in which the directors of the Bank
Company are interested as directors, partners or managing agents
or in case of private companies, as members - -
vii) Maximum total amount of advances, including temporary advances
made at any time during the year to directors or managers or officers
of the Banking Company or any of them either separately or jointly
with any other person (Staff Loan) 658,571,014 665,471,627
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 are interested as directors,
partners or managing agents or in the case of private companies,
as members - -
ix) Due from other Banking Companies - -
x) Total amount of Classified Advances on which interest is not
credited to income 4,090,921,667 2,084,618,000
a. Movement of classified Loans and Advances
Opening Balance January 01, 2012 2,084,618,000 1,187,809,000
Increase/ (Decrease) during the Period 2,006,303,667 896,809,000
4,090,921,667 2,084,618,000
b. Amount of provision kept against Loan Classified as 'Bad/Loss'
on the reporting date of Balance Sheet 932,869,678 328,000,000
c. Interest creditable to the Interest Suspense Account 717,154,767 349,832,197
xi) Amount of written off loans:
Opening Balance 1,557,027,293 1,106,457,238
Amount written off during the Period 225,720,203 463,804,633
Amount Recovered / Adjustment (56,514,792) (13,234,578)
Cumulative Balance 1,726,232,704 1,557,027,293
7.14 Listing of Assets Pledged as Security/ Collaterals
Nature of the Secured Assets:
Fixed Assets 77,667,728,000 67,765,344,000
Cash & Quasi-Cash 14,392,684,000 14,789,448,000
Others 7,702,107,000 7,631,573,000
99,762,519,000 90,186,365,000
7.15 Suits Filed by the bank (branch wise details)
Main Branch 1,443,645,065 1,001,895,125
Dhanmondi Branch 118,247,958 122,382,833
Motijheel Branch 17,742,100 17,742,100
Nayabazar 49,984,468 49,984,468
Kawran Bazar 170,801,482 185,663,023
Rajshahi Branch 28,850,330 29,319,457
Noagaon Branch 233,969,021 230,642,727
Agrabad Branch 333,159,344 372,238,870
Sylhet Branch 84,041,931 78,203,253
Amount in Taka
2012 2011
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187 annual report
Comilla Branch 23,625,914 23,625,914
Khatungonj Branch 18,312,133 1,877,834
Uttara 457,960 -
Jubliee Road 6,722,976 5,682,222
Green Road 627,800 627,800
Banani Branch 317,065,725 241,429,082
Uttara Branch 7,746,463 -
2,855,000,670 2,361,314,708
7(a) CONSOLIDATED LOANS AND ADVANCES
Loans and Advances
Mercantile Bank Securities Ltd. 3,847,351,121 3,652,293,862
89,749,274,947 77,457,006,597
Less: Inter Company Transction 4,073,933,988 3,924,068,608
85,675,340,959 73,532,937,989
Bills Purchased and Discounted
7,708,950,587 6,382,779,439
Less: Inter Company Transaction - 187,692,710
7,708,950,587 6,195,086,729
93,384,291,546 79,728,024,718
8. FIXED ASSETS INCLUDING PREMISES, FURNITURE AND FIXTURES -
At cost less accumulated depreciation (Annexure-A)
FREE HOLD PROPERTIES
Land & Land Development 1,310,444,376 1,310,444,376
Building 710,279,416 728,491,708
Furniture & Fixtures 432,946,865 343,531,054
Office Equipment 351,773,118 235,588,568
Vehicles 55,806,193 51,045,992
Books 129,909 149,121
2,861,379,877 2,669,250,819
LEASE HOLD PROPERTIES
Vehicles 9,463,295 9,463,295
Automated Teller Machine (ATM) 27,752,868 32,604,481
37,216,163 42,067,776
2,898,596,040 2,711,318,595
8(a). CONSOLIDATED FIXED ASSETS INCLUDING PREMISES, FURNITURE AND FIXTURES
Mercantile Exchange House (UK) Limited 11,951,357 5,280,423
Off-shore Banking Unit - 401,680
2,945,814,406 2,753,125,268
N. B. Fixed assets of the Bank specially Land & Land Development been revalued during the year 2011 by a professional
valuation firm M/s Jarip O Paridarshan. Gain arisen from such revaluation is duly accounted for in the year 2011.
Amount in Taka
2012 2011
188 annual report
9 OTHER ASSETS
Suspense Account (Note 9.1) 559,635,828 283,688,047
Demand Draft paid without Advice 160,000 25,917
Advance Rent 311,451,002 245,814,830
Advance Deposits 2,309,742 1,987,715
Stamps in Hand 2,626,639 1,422,751
Premium on Bonds 4,872,620 4,589,235
Clearing Adjustment Account 32,882,369 16,348,043
On Line Client Adjustment Account (4,423,017) (5,124,845)
Adjusting Account Debit (Note 9.2) 1,032,251,120 814,761,572
Mercantile Exchange House UK. Ltd. 30,086,299 11,035,428
Mercantile Bank OBU Unit 1,394,282,715 187,692,743
Mercantile Bank General Account 187,351,979 16,935,375
3,576,381,413 1,606,559,609
9.1 Suspense Account
Advance against TA/DA 670,816 609,990
Advance against Mobile Banking 6,270,922 -
Encashment of PSP/BSP 55,826,174 31,124,373
Others 496,867,916 251,953,684
559,635,828 283,688,047
9.2 Adjusting Account Debit
Accrued Interest 888,520,116 580,272,442
Other Accruals (Note - 9.2.1) 143,731,004 234,489,130
1,032,251,120 814,761,572
9.2.1 Other Accruals
Other Receivables 2,391,806 3,465,371
Fees Receivable 4,266,753 10,000
Prepaid Insurance Premium 3,016,492 2,128,940
Discount Receivable 109,508,754 199,619,398
Protested Bills 414,562 12,934,077
Prepaid Expenditure Others 24,132,637 16,331,344
143,731,004 234,489,130
9.3 Mercantile Bank General Account
Mercantile Bank General Account represents outstanding inter-branch and Head Office transactions (Net)
originated but yet to be responded by the Balance Sheet date. However, the un-respondent entries of
31.12.2012 (position on 10.03.2013) are given below:
Numbers of Un-respondent
Un-respondent entries entries (BDT)
Dr. Cr. Dr. Cr.
Up to 3 Months 1 0 50,000 -
Over 3 Months but within 6 Months 2 - 29,000 -
Over 6 Months but within 1 Year - - -
Over 1 Year but within 5 Years - - - -
3 0 79,000 -
Amount in Taka
2012 2011
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189 annual report
9(a) CONSOLIDATED OTHER ASSETS
Mercantile Banl Limited 3,576,381,413 1,607,564,306
3,595,196,230 1,687,314,226
10. BORROWINGS FROM OTHER BANKS, FINANCIAL INSTITUTIONS
AND AGENTS
Inside Bangladesh - Interest bearing
Call Deposits
State Bank of India 240,000,000 70,000,000
Dutch Bangla Bank Ltd. 500,000,000 300,000,000
Rupali Bank Ltd. 1,900,000,000 3,000,000,000
HSBC Bank Ltd. - 200,000,000
Bank Alfala Ltd. - 200,000,000
United Commercial Bank Ltd. 1,400,000,000 350,000,000
IFIC Bank Ltd. 350,000,000 1,000,000,000
Trust Bank Ltd. 1,000,000,000 -
One Bank Ltd. 100,000,000 -
Standard Bank Ltd' 680,000,000 -
City Bank Ltd. 500,000,000 -
A B Bank Ltd. 450,000,000 -
Uttara Bank Ltd' 200,000,000 -
Sonali Bank Ltd. 2,300,000,000 -
Janata Bank Ltd. 300,000,000 -
Pubali Bank Ltd. 400,000,000 -
Jamuna Bank Ltd. 120,000,000
Agrani Bank Ltd. 500,000,000 100,000,000
11,190,000,000 5,370,000,000
Other Borrowings
Bangladesh Bank Refiance 4,728,480,407 606,762,994
Off-shore Banking Unit 1,394,799,461 -
6,123,279,868 606,762,994
Outside Bangladesh - -
17,313,279,868 5,976,762,994
10.1 Security wise grouping
Secured Borrowings 6,123,279,868 606,762,994
Unsecured Borrowings 11,190,000,000 5,370,000,000
17,313,279,868 5,976,762,994
10.2 Nature of repayment
Repayable on Demand 11,190,000,000 5,370,000,000
Others 6,123,279,868 606,762,994
17,313,279,868 5,976,762,994
10.3 Maturity grouping of borrowings from other banks, financial institutions and agents
Up to 1(one) Month 11,190,000,000 5,370,000,000
Over 1(one) Month but not more than 3 (three) Months - -
Over 3 (three) Months but not more than 1 (one) Year 6,123,279,868 606,762,994.00
17,313,279,868 5,976,762,994
Amount in Taka
2012 2011
190 annual report
10(a) CONSOLIDATED BORROWINGS FROM OTHER BANKS, FINANCIAL INSTITUTIONS

Inside Bangladesh
Mercantile Bank Securities Ltd. 4,073,933,988 3,924,068,608
21,387,213,856 10,088,524,312
Outside Bangladesh
- -
21,387,213,856 10,088,524,312
Less: Inter Company Transaction 4,073,933,988 4,111,761,318
17,313,279,868 5,976,762,994
11. DEPOSITS AND OTHER ACCOUNTS
A. Deposits Received from Banks (Note- A-1)
B. Other than Bank
Payable on Demand (Note- B-1) 17,099,201,149 12,210,202,042
Time Deposits (Note - B-2 ) 101,007,682,556 81,892,630,836
118,106,883,705 94,102,832,878
Maturity Analysis (Deposits received from other than Banks)
Repayable on Demand 9,788,129,989 6,877,912,898
Repayable within 01 Month 21,289,725,150 19,328,527,510
Repayable over 01 (one) Month but within 03 (three) Months 17,569,318,154 11,758,498,752
Repayable over 03 (three) Months but within 01 (one) Year 22,972,112,228 18,957,896,524
Repayable over 01 (one) Year but within 05 (five) Years 28,897,547,862 23,589,547,925
Repayable over 05 (five) Years but within 10 (ten) Years 17,589,625,541 13,589,578,954
Unclaimed Deposits 10 (ten) Years and above 424,781 870,315
118,106,883,705 94,102,832,878
A-1 Deposits received from Banks
Maturity wise Grouping
Repayable within 01 Month - -
Repayable over 01 (one) Month but within 03 (three) Months - -
Repayable over 03 (three) Months but within 01 (one) Year - -
Repayable over 01 (one) Year but within 05 (five) Years - -
Repayable over 05 (five) Years but within 10 (ten) Years - -
Unclaimed Deposits 10 (ten) Years and above - -
- -
B-1 Payable on Demand
Current Deposits 4,491,201,775 3,440,809,343
Saving Deposits (9%) - (Note 11.3) 618,269,386 533,676,197
Foreign Currency Deposits (non interest bearing ) 2,941,154,875 380,940,831
Security Deposit Receipt 30,362,078 82,064,589
Bills Payable (Note-11.2) 1,725,460,339 1,107,180,337
Sundry Deposits (Note - 11.6) 3,027,845,491 2,522,412,349
Foreign Currency held against Back to Back L/C 4,264,907,205 4,143,118,396
17,099,201,149 12,210,202,042
Amount in Taka
2012 2011
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191 annual report
B- 2 Time Deposits
Saving Deposits (91%) - (Note 11.3) 6,251,390,461 5,396,059,326
Fixed Deposits (Note-11.4) 46,250,915,355 38,875,499,490
Short Term Deposits 5,087,389,285 2,221,586,121
Deposits Under Schemes (Note-11.5) 43,333,456,992 35,319,706,826
Foreign Currency Deposits (interest bearing ) - 17,876,000
Non Resident Taka Deposit 72,591,510 58,294,882
Deposit Under Q-cash 11,938,953 3,608,191
101,007,682,556 81,892,630,836
11.1 Current Accounts & Other Accounts
Current Deposits 4,491,201,775 3,440,809,343
Short Term Deposits 5,087,389,285 2,221,586,121
Non Resident Taka Deposits 72,591,510 58,294,882
Foreign Currency Deposits 2,941,154,875 398,816,831
Deposit Under Q-cash & M-Pay 11,938,953 3,608,191
Security Deposit Receipt 30,362,078 82,064,589
Sundry Deposit 3,027,845,491 2,522,412,349
Foreign Currency held against Back to Back L/C 4,264,907,205 4,143,118,396
19,927,391,172 12,870,710,702
11.2 Bills Payable
Demand Draft 22,404,609 52,944,452
Pay Order 1,701,821,570 1,052,665,071
Pay Slip 1,234,160 1,570,814
1,725,460,339 1,107,180,337
Maturity wise Grouping Bills Payable
1,725,460,339 1,107,180,337
11.3 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) 618,269,386 533,676,197
91% of total Savings Bank Deposits (Time Deposits) 6,251,390,461 5,396,059,326
6,869,659,847 5,929,735,523
11.4 Fixed Deposits
Customer Deposits (11.4.1) 46,250,915,355 38,875,499,490
46,250,915,355 38,875,499,490
11.4.1 Fixed Deposits - Maturity wise Grouping
Repayable over 01 (one) Month but within 03 (three) Months 15,402,723,529 3,514,678,952
Repayable Over 03 (three) Months but within 01 (one) Year 9,760,449,357 32,458,057,788
Repayable Over 01 (one) Year but within 05 (five) Years - -
Repayable Over 05 (five) Years but within 10 (ten) Years - -
Unclaimed Deposits for 10 (ten) Years and above - -
46,250,915,355 38,875,499,490
Amount in Taka
2012 2011
192 annual report
11.5 Deposits Under Schemes
Monthly Savings Scheme 24,172,121,590 20,960,470,934
Double Benefit Deposit Scheme 13,495,137,574 10,750,116,348
Family Maintenance Deposit Scheme 1,890,470,120 2,383,631,000
Super Benefit Scheme 2,927,829,444 -
Special Savings Scheme 495,735,332 580,889,947
Pension and Family Support Scheme 226,113,690 235,896,036
Quarterly Benefit Deposit Scheme 59,651,170 153,900,120
One & Half Time Benefit Scheme 65,341,675 249,300,492
Advance Benefit Deposit Scheme 566,015 5,501,949
Education Planing Deposit Scheme 490,382 -
43,333,456,992 35,319,706,826
11.6 Details of Sundry Deposit
Sundry Creditors 350,029,326 148,053,422
Withholding Tax - IT 201,164,869 45,129,488
Withholding Tax - Excise Duty 77,841,564 61,527,265
Withholding Tax - VAT 26,676,441 23,706,278
Margin on Letter of Guarantee 414,975,000 358,335,973
Margin on L/C 1,127,220,675 973,819,478
Margin on FDBP/IBP 26,266,982 46,750,260
Margin on Inward bill collection 13,328,500 7,234,000
Other Margin Account 16,158,156 11,383,324
Sale proceeds of PSP/BSP 101,885,000 101,100,000
Advance deposit against lease 14,958,892 9,366,892
FC held against back to back L/C - 140,718,511
Security deposit 7,813,236 6,226,699
FC TT/DD payable 6,847,850 6,856,305
Payable to provident fund 2,766 -
Payable to employee welfare fund 15,361 13,715
Export bill agency commission 102,804,093 99,774,094
Export bill reserve margin 110,878,202 74,347,326
Other sundry deposit 288,260,067 548,787,830
3,027,845,491 2,522,412,349
11 (a) CONSOLIDATED DEPOSITS AND OTHER ACCOUNTS
Current and other accounts 19,927,391,172 12,870,710,701
Bills Payable 1,725,460,339 1,107,180,337
Savings Bank Deposits 6,869,659,847 5,929,735,523
Fixed Deposits 46,250,915,355 38,875,499,490
Deposits Under Schemes 43,333,456,992 35,319,706,826
118,106,883,705 94,102,832,878
118,045,024,783 94,054,156,826
Amount in Taka
2012 2011
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193 annual report
11.1 (a).Current and other accounts
Deposits Received from Banks
- -
Other than Bank
19,927,391,172 12,870,710,702
19,865,532,250 12,822,034,650
11.2 (a). Bills Payable
Demand Draft 22,404,609 52,944,452
Pay Order 1,701,821,570 1,052,665,071
Pay Slip 1,234,160 1,570,814
1,725,460,339 1,107,180,337
Maturity Wise Grouping Bills Payable
1,725,460,339 1,107,180,337
11.3 (a). 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) 618,269,386 533,676,197
91% of total Savings Bank Deposits (Time Deposits) 6,251,390,461 5,396,059,326
6,869,659,847 5,929,735,523
11.4. (a) Fixed Deposits
Customer Deposits 46,250,915,355 38,875,499,490
Bank Deposits - -
46,250,915, 355 38,875,499,490
11.4.1(a). Fixed Deposits - Maturity wise Grouping
Repayable Over 01 (one) Month but within 03 (three) Months 15,402,723,529 3,514,678,952
Repayable Over 03 (three) Months but within 01 (one) Year 9,760,449,357 10,589,542,569
Repayable Over 01 (one) Year but within 05 (five) Years - 21,868,515,219
Repayable Over 05 (five) Years but within 10 (ten) Years - -
Unclaimed Deposits for 10 (ten) Years and above - -
46,250,915,355 38,875,499,490
Amount in Taka
2012 2011
194 annual report
11.5 (a)Deposits Under Schemes
Monthly Savings Scheme 24,172,121,590 20,960,470,934
Double Benefit Deposit Scheme 13,495,137,574 10,750,116,348
Family Maintenance Deposit Scheme 1,890,470,120 2,383,631,000
Super Benefit Scheme 2,927,829,444 580,889,947
Special Savings Scheme 495,735,332 -
Pension and Family Support Scheme 226,113,690 235,896,036
Quarterly Benefit Deposit Scheme 59,651,170 153,900,120
One & Half Time Benefit Scheme 65,341,675 249,300,492
Advance Benefit Deposit Scheme 566,015 5,501,949
Education Planing Deposit Scheme 490,382 -
43,333,456,992 35,319,706,826
12. OTHER LIABILITIES
Provision for Gratuity (Note-12.1) - -
Provision for Fixed Assets (Note-12.2) 85,000,000 85,000,000
Provision for Off Balance Sheet Items (Note-12.3) 482,552,154 408,221,000
Provision for Incentive Bonus 179,781,333 211,591,313
Provision for Current Tax (Note-12.4) 933,898,039 1,266,091,689
Provision for Deferred Tax (Note-12.4.2) - 49,850,345
Provision for Loans and Advances (Note-12.5.1) 2,464,869,678 1,610,161,055
Adjusting Account Credit (Note-12.6) 1,399,987,467 1,438,706,902
Interest Suspense Account (Note-12.7) 717,154,768 349,782,211
Provision for Audit fees 575,000 772,500
Foreign Currency held against EDF L/C 1,396,766,153 1,351,305,251
Unrealised Loss on Share 6,049,414 6,049,413
Provision for Foundation - -
Brokerage House Client Account - -
Reserve from revaluation on HFT securities - -
Clearing Adjustment A/C - -
Exchange Equalization Account - -
Lease Payable (Note-12.8) 28,835,728 36,553,060
7,695,469,734 6,814,084,739
12.1 Provision for Gratuity
Provision held at the beginning of year - -
Provision made during the year 10,000,000 130,000,000
10,000,000 130,000,000
Transferred to savings Account for Gratuity 10,000,000 130,000,000
- -
12.2 Provision for Fixed Assets
Provision held at the beginning of the year 85,000,000 85,000,000
Add: Provision made during the year - -
85,000,000 85,000,000
85,000,000 85,000,000

Provision was made for land as per instruction of Bangladesh Bank vide letter no. DBI-1(vigilance) / 5050 (15)/
2006-400 dated 20 March 2006.
Amount in Taka
2012 2011
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195 annual report
12.3 Provision for Off Balance Sheet Items
Add: Provision made during the year 74,331,154 39, 300, 000
482,552,154 408,221, 000
12.4 Provision for Tax including Deferred Tax
Provision held at the beginning of the year 6,019,065,755 4,749,065,755
Add: Provision made during the year 1,000,000,000 1,250,000,000
Add:Deferred Tax Provision - 20,000,000
Total Provision 7,019,065,755 6,019,065,755
Less: Tax paid during the year 1,382,043,995 742,779,130
5,637,021,760 5,276,286,625
Less: Advance Tax paid up to last year 4,703,123,721 3,960,344,591
Balance held at th e end of the year 933,898,039 1,315,942,034

Current Tax liabilities for the current and prior periods have been measured at the amount expected to be paid
to (recovered from) the taxation authorities, using the tax rates and tax law that have been enacted or substan-
tively enacted by the Balance Sheet date (BAS - 12; Para - 46).

12.4.1 Tax liabilities
Provision held at the beginning of the year 5,969,215,410 4,719,215,410
Add: Provision made during the year 1,000,000,000 1,250,000,000
6,969,215,410 5,969,215,410
Less: Advance tax paid 6,085,167,716 4,703,123,721
884,047,694 1,266,091,689
12.4.2Deferred Tax liabilities
Add: Provision made during the year - 20,000,000
49,850,345 49,850,345
12.4.(a)CONSOLIDATED TAX PROVISION
Off-shore Banking Unit - -
1,007,602,868 1,258,943,330
12.5 Provision made during the year
Less :
Provision against Un Classified Loans 77,000,000 143,000,000
Provision against Classified Loans 818,000,000 315,200,000
Other Provision (Off Balance Sheet Items) 74,331,154 39,300,000
969,331,154 497,500,000
Operating Revenue after Provision 2,381,451,043 3,004,172,348
Provision for current year Tax 1,000,000,000 1,250,000,000
Deferred Tax (Bangladesh Accounting Standard-12) - 20,000,000
Income Tax Provision made for the year 1,000,000,000 1,270,000,000
Amount in Taka
2012 2011
196 annual report
12.5.1Provision for Loans and Advances
Provision against Classified Loans (Specific Provision) 1,495,869,678 718,161,055
Provision against Unclassified Loans (General Provision) 969,000,000 892,000,000
2,464,869,678 1,610,161,055
Movement of Provision against Classified Loans and Advances (Specific Provision)
Fully Provided Debts written off (74,899,414) (214,569,953)
Recoveries of amounts previously written off 34,608,037 -
Specific Provision for the year - -
Recoveries and Provisions no longer required - -
Net Charge to Profit and Loss Account 818,000,000 315,200,000
Provision held at the end of the year 1,495,869,678 718,161,055
Provision against Unclassified Loans
Addition during the year 77,000,000 143,000,000
REF! 969,000,000 892,000,000
Provision at the end of the year 2,464,869,678 1,610,161,055
12.6 Adjusting Account Credit
Interest Provision 1,293,587,439 1,278,834,646
Other Provision 106,400,028 159,872,256
1,399,987,467 1,438,706,902
12.7 Interest Suspense Account
Opening Balance as at January 01, 2012 349,782,211 248,068,674
Add: Amount transferred during the year 464,651,175 258,396,075
814,433,386 506,464,749
Less: Amount recovered during the year 63,100,000 69,365,000
Less: Amount written off during the year 34,178,618 87,317,538
97,278,618 156,682,538
Balance at the end of the year 717,154,768 349,782,211

12.8 Obligation Under Finance Lease (Lease Payable)
Lease Rental Payable within 1 year 36,553,060 24,377,858
Above 1 year but within 5 years (7,717,332) 12,175,202
Total Lease Rental Payable 28,835,728 36,553,060
Less: Finance Charge Payable - -
28,835,728 36,553,060
12(a) CONSOLIDATED OTHER LIABILITIES
7,805,396,278 6,893,475,581
Amount in Taka
2012 2011
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197 annual report
13. CAPITAL
AUTHORISED CAPITAL
800,000,000 Ordinary shares of Taka 10 each 8,000,000,000 8,000,000,000
13.1Issued, Subscribed and Fully Paid-up Capital
Total 611,075,316 Ordinary shares (114,262,116 Ordinary shares during 2012) of Tk 10 each were issued, subscribed and
fully paid up at the end of December 31 , 2012.
Opening Balance as at January 01, 2012 4,968,092,000 4,072,206,600
Issued for Cash - -
Right Shares - -
Issued for other than Cash ( Bonus Shares) 1,142,661,160 895,885,400
6,110,753,160 4,968,092,000
13.2 History of paid-up capital
Accounting year Declaration No. of share Value in capital Cumulative
1999 Initial Shares 24,500,000 245,000,000 245,000,000
2000 Bonus Shares 3,185,000 31,850,000 276,850,000
2001 Bonus Shares 2,768,500 27,685,000 304,535,000
2002 Bonus Shares 1,523,000 15,230,000 319,765,000
2003 IPO 31,976,500 319,765,000 639,530,000
2003 Bonus Shares 15,988,250 159,882,500 799,412,500
2004 Bonus Shares 19,985,310 199,853,100 999,265,600
2005 Bonus Shares 19,985,310 199,853,100 1,199,118,700
2006 Bonus Shares 29,977,960 299,779,600 1,498,898,300
2007 Bonus Shares 29,977,960 299,779,600 1,798,677,900
2008 Bonus Shares 35,973,550 359,735,500 2,158,413,400
2009 Bonus Shares 47,485,090 474,850,900 2,633,264,300
2010 Right Shares 143,894,230 1,438,942,300 4,072,206,600
2010 Bonus Shares 89,588,540 895,885,400 4,968,092,000
2011 Bonus Shares 114,266,116 1,142,661,160 6,110,753,160
Total 611,075,316 6,110,753,160
13.3 Particulars of Fully Paid-up Share Capital
2012 2011 2012 2011
No. of Shares No. of Shares ( % ) ( % )
Sponsor 243,862,159 200,657,920 39.91% 40.39%
Financial Institutions 64,908,856 91,607,340 10.62% 18.44%
General Public 302,304,301 204,543,940 49.47% 41.17%
611,075,316 496,809,200 100% 100%
13.4 Classification of Shareholders by Holding as on December 31, 2012
No. of Share Holders No. of Shares ( % ) of Holdings
1 to 499 Shares 10,997 1,845,281 0.30%
500 to 5,000 Shares 26,676 46,377,177 7.59%
5,001 to 10,000 Shares 3,262 23,582,343 3.86%
10,001 to 20,000 Shares 1,710 23,866,008 3.91%
20,001 to 30,000 Shares 442 10,723,680 1.75%
30,001 to 40,000 Shares 237 8,016,798 1.31%
40,001 to 50,000 Shares 143 6,455,359 1.06%
50,001 to 100,000 Shares 277 19,771,469 3.24%
100,001 to 1,000,000 Shares 278 79,040,823 12.93%
1,000,001 to 999999999 Shares 95 391,396,378 64.05%
44,117 611,075,316 100.00%
Amount in Taka
2012 2011
198 annual report
Amount in Taka
2012 2011
13.5 Capital Adequacy Ratio
According to section 13 (2) of the Bank Companies Act, 1991 and BRPD circulars nos. 01, 14, 10, 05 and 35
dated January 08, 1996, November 16, 1996, November 25, 2002, May 14, 2007 and December 29, 2010
respectively, required capital based on RWA of the Bank at the end of the December 31, 2012 was Taka
11,152,470,000 against available core capital of Taka 10,216,869,799 and supplementary capital of Taka
1,861,992,197 which comes to total capital of Taka 12,078,861,996 resulting a surplus capital / equity of Taka
926,391,996 at that date.

Tier I (Core Capital)
Paid up Capital 6,110,753,160 4,968,092,000
Statutory Reserve 3,119,683,762 2,643,393,554
Retained Earnings 940,752,627 1,177,808,581
Dividend Equalization Fund 45,680,250 45,680,250
10,216,869,799 8,834,974,385
Tier II (Supplementary Capital)
General Provision 1,451,552,154 1,300,221,000
Exchange Equalization Account -
Revaluation Reserve for Fxied Assets 321,805,978 321,805,978
Revaluation Reserve for Equity Investment 56,600,000 82,000,000
Revaluation Reserve for Securities 32,034,065 90,373,468
1,861,992,197 1,794,400,446
A. Total Capital 12,078,861,996 10,629,374,831
B. Total Risk Weighted Assets 111,524,700,000 101,085,300,000
C. Required Capital based on Risk Weighted Assets (10% on B) 11,152,470,000 10,108,530,000
D. Surplus/ (Deficiency) (A - C) 926,391,996 520,844,831
Capital Adequacy Ratio (%) 10.83% 10.52%
Capital Requirement 2011 2012
Required Held Required Held
( % ) ( % )
Tier - I 5.00% 8.74% 5.0% 9.16%
Tier -II 5.00% 1.78% 5.0% 1.67%
Tier-III 0.00% 0.00 0% 0.00
Total 10.00% 10.52% 10% 10.83%
13.7 CAPITAL ADEQUACY RATIO (CAR)
There remains a surplus of Tk.926,391,996 of capital and reserve fund of the bank as per requirement of section 13A of Bank
Companies Act, 1991 and BRPD circular No 09 dated December 31, 2008 respectively details of which are placed below :
(a) Required Capital (10% of Risk weighted Assets) 11,152,470,000 10,095,270,000
(b) Actual Capital: 12,078,861,996 10,700,929,820
i) Core Capital (Total Shareholders' Equity) 10,216,869,799 8,906,529,374
ii) Supplementary 1,861,992,197 1,794,400,446
General provision 1,451,552,154 1,300,221,000
Exchange Equalization Account - -
Revaluation Reserve for Fxied Assets 321,805,978 321,805,978
Revaluation Reserve for equity Investment 56,600,000 82,000,000
Revaluation Reserve for securities 32,034,065 90,373,468
926,391,996 605,659,820
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199 annual report
Amount in Taka
2012 2011
13(a) CONSOLIDATED CAPITAL
Mercantile Exchange House (UK) Limited 127 -
6,710,753,287 5,568,092,000
6,110,753,160 4,968,092,000
14. STATUTORY RESERVE
Opening Balance, as at January 01, 2012 2,643,393,554 2,042,559,084
Transferred during the year from Profit & Loss A/C 476,290,208 600,834,470
Closing Balance 3,119,683,762 2,643,393,554

This has been made according to Sec. 24 of Bank Companies Act 1991 and shall be maintained until it equals to
Paid-up Capital.
14(a) CONSOLIDATED STATUTORY RESERVE
Off-Shore Banking Unit - -
3,119,683,762 2,643,393,554
15. OTHER RESERVE
A. Dividend Equalization Fund
Balance on January 01, 2012 45,680,250 45,680,250
Add: Addition During the year - -
45,680,250 45,680,250
B. Adjustment for Approved Securities HTM
The above amount represents the adjustment made of approved securities held for adjusting against Treasury
Bond held for Statutory Liquidity Reserve Requirements (SLR).
Balance on January 01, 2012 36,775,023 84,883,226
Add: Last Years Adjustment 10,598,685 (48,108,203)
Add: Adjustment During the year - -
47,373,708 36,775,023
C. Reserve from revaluation
HFT securities 16,694,422 143,971,913
Revaluation Reserve for Fixed Assets 643,611,955 643,611,955
660,306,377 787,583,868
Total other reserves (A+B+C) 753,360,335 870,039,141
15(a) CONSOLIDATED OTHER RESERVES
753,360,335 870,039,141
200 annual report
Amount in Taka
2012 2011
16. RETAINED EARNINGS / MOVEMENT OF PROFIT AND LOSS ACCOUNT
Balance on January 01, 2012 1,177,808,581 940,356,103
Balance on January 01, 2013(Off-shore Banking Unit) 444,371 -
Less: Bonus Share Issued 2011 1,142,661,160 895,885,400
Retained Earnings 35,591,792 44,470,703
Add: Profit before Income Tax 2,381,451,043 3,004,172,348
2,417,042,835 3,048,643,051
Less: Statutory Reserve 476,290,208 600,834,470
1,940,752,627 2,447,808,581
Less: Provision for Income Tax 1,000,000,000 1,250,000,000
940,752,627 1,197,808,581
Less: Provision for Deferred Tax - 20,000,000
Balance as on December 31, 2012 940,752,627 1,177,808,581

Previous year's Retained Earning Balance of off-shore Banking Unit has been transfer to opening balance of
solo's retained earning from consolidated suplus in profit & loss account for the purpose of fair presentation.
16(a) CONSOLIDATED SURPLUS IN PROFIT AND LOSS ACCOUNT
Mercantile Bank Ltd. 940,752,627 1,177,808,581
Mercantile Exchange House (UK) Limited (13,661,630) (1,946,560)
948,428,399 1,197,589,941

Retained loss balance of Mercantile Exchange (UK) Limited as on 31.12.2012 included Exchange loss amount
of Taka 46,095 for the conversion of previous year retained earning balance in GBP into BDT.

16(b) Non Controlling Interest
Non Controlling Share Capital 50,000,000 50,000,000
Share of Profit 1,778,117 1,773,629
51,778,117 51,773,629
16.A (1) CASH AND CASH EQUIVALENT
Cash 12,015,121,299 6,946,104,482
Balance with other Banks and Financial Institutions 625,015,429 643,855,116
12,640,136,728 7,589,959,598
16.A (2) CONSILIDATED CASH AND CASH EQUIVALENT
Cash 12,015,292,367 6,948,621,454
Balance with other Banks and Financial Institutions 662,915,683 662,821,502
12,678,208,050 7,611,442,956
17 CONTINGENT LIABILITIES
17.1 ACCEPTANCES AND ENDORSEMENTS
Back to Back Bills 10,931,605,764 11,265,235,500
Back to Back Bills (EDF) - -
Banker's Liabilities PAD (DEF) 9,638,321,000 6,333,039,500
20,569,926,764 17,598,275,000
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201 annual report
Amount in Taka
2012 2011
17.2 LETTER OF GUARANTEE
Money for which the Bank is contingently liable in respect of
guarantees are given favouring:
Directors - -
Government 4,286,845,720 3,687,922,510
Bank and other Financial Institutions 472,370,550 334,807,130
Others ( Note-17.2.1) 3,073,548,655 2,037,039,362
7,832,764,925 6,059,769,002
17.2.1LETTER OF GUARANTEES OTHERS
Local 2,189,760,655 1,977,078,360
Foreign 883,788,000 59,961,002
3,073,548,655 2,037,039,362
17.3 LETTER OF CREDIT
Inland 54,509,500 48,714,000
General 14,221,117,750 11,994,194,776
Back to Back L/C 5,547,520,000 4,542,566,800
19,823,147,250 16,585,475,576
17.4 BILLS FOR COLLECTION
Outward Bills for Collection 19,176,464 30,052,597
Outward Foreign Bills for Collection 10,200,000 117,766,000
29,376,464 147,818,597
17.5 OTHER CONTINGENT LIABILITIES
Banker's Liabilities (BLW) 1,726,232,704 1,557,027,293
1,726,232,704 1,557,027,293
18 INCOME STATEMENT
Income:
Interest, Discount and Similar Income 14,362,774,203 10,719,688,339
Dividend Income 2,220,141 16,261,493
Fees, Commission and Brokerage 816,145,038 744,016,176
Gain less losses arising from Dealing Securities 332,658,079 386,798,790
Gain less losses arising from Investment Securities 4,220,389 -
Gain less losses arising from dealing in Foreign Currencies 554,036,059 695,000,785
Income from Non-banking Assets 1,400,433 4,936,000
Other Operating Income 594,097,507 1,557,675,050
Profit less losses on interest rate changes - -
16,667,551,849 14,124,376,633
Expenses:
Interest, fees and commission 10,556,793,170 8,022,131,491
Losses on Loans and Advances - -
Administrative expenses 1,372,017,415 1,301,366,193
Other operating expenses 1,243,394,564 1,168,600,529
Depreciation on banking assets 144,564,503 130,606,072
13,316,769,652 10,622,704,285
Operating Profit before Provision 3,350,782,197 3,501,672,348
19 INTEREST INCOME
Interest from Banks & other Financial Institutions (Note-19.1) 18,992,281 65,928,453
Interest from F.C. Clearing Account 15,099,118 6,247,943
Interest from Loans and Advances (Note-19.2) 12,511,246,514 9,660,504,986
12,545,337,913 9,732,681,382
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Amount in Taka
2012 2011
19.1 Interest received from Banks & other Financial Institutions
Interest from Call Loan 1,818,195 3,979,069
Interest from Other Banks 17,173,641 61,948,910
Interest from Q-cash Settlement Deposits 445 474
18,992,281 65,928,453
19.2 Interest from Loans and Advances
Loan General 149,194,110 574,226,266
Term Loan 2,353,254,444 1,795,266,098
Time Loan 1,189,267,068 750,560,086
Loan Against Trust Receipt 1,841,542,918 1,389,588,952
Packing Credit 64,967,239 55,094,278
Lease Finance 127,971,001 90,627,151
Hire Purchase 584,577,579 500,112,749
Payment Against Documents 243,294,709 125,626,647
Cash Credit (Hypo) 1,052,398,960 803,223,267
Overdraft 2,361,534,860 1,562,977,368
Consumers Credit 166,314,998 139,333,834
House Building Loan 449,099,212 355,677,603
Staff Loan 32,539,970 31,748,954
EDF Loan 9,318,738 21,206,047
Bill Purchase and Discounted 1,037,549,024 874,629,045
S M E 783,522,614 530,311,547
Other Credit Schemes 2,236,817 1,077,078
Personal Loan 59,851,618 59,218,016
Other Interest. 2,810,635 -
12,511,246,514 9,660,504,986
19 (a).CONSOLIDATED INTEREST INCOME
13,101,276,387 9,903,639,012
Less: Inter Company Transction 580,728,542 143,061,757
12,520,547,845 9,760,577,255
20 INVESTMENT INCOME
Interest on Investments (Note-A) 1,662,386,712 987,006,957
Income on Investment in Shares (Note-B) 6,440,530 684,285,491
1,668,827,242 1,671,292,448
A Interest on Investments
Interest on Treasury Bills 1,646,518,508 50,800,726
Interest on Treasury Line - -
Interest on Treasury Bonds - 911,356,109
Interest on Bangladesh Bank Bill - -
Interest on T & T Bonds - -
Interest on Zero Coupon Bond 15,868,204 24,850,122
Interest on DBBL Bond - -
1,662,386,712 987,006,957
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203 annual report
Amount in Taka
2012 2011
B Income on Investment in Shares
Gain on sale of Shares 4,220,389 2,623,998
Gain on sale of DSC Shares - 641,900,000
Gain on sale of CSC Shares - 23,500,000
Dividend on Shares 2,220,141 16,261,493
6,440,530 684,285,491
20 (a) CONSOLIDATED INVESTMENT INCOME
1,668,827,242 1,671,292,448
21 INTEREST PAID ON DEPOSITS & BORROWINGS ETC.
Interest on Deposits 10,524,515,664 7,992,012,029
Interest on Refinance BB 32,277,506 29,917,594
Interest on Secondary Treasury Bill Purchased - -
Interest on Borrowings - -
Interest on Overseas Accounts - 201,868
10,556,793,170 8,022,131,491
21 (a) CONSOLIDATED INTEREST EXPENSES
11,137,521,712 8,165,653,154
Less: Inter Company Transction 580,728,542 143,061,757
10,556,793,170 8,022,591,397
22 COMMISSION, EXCHANGE & BROKERAGE
Commission 816,145,038 744,016,176
Exchange (Note-22.1) 554,036,059 695,000,785
1,370,181,097 1,439,016,961
Commission income arises on services provided by the Bank and recognized on a cash basis. Commission
charged to customers on letter of credit and letter of guarantee are credited to income at the time of effecting the
transactions.
22.1 Exchange
Gains arising from Dealing Securities - -
Less: losses - -
Gains arising from Investment Securities - -
Less: losses - -
Gains arising from Foreign Trade Business (including dealings) 911,596,792 827,400,732
Less: losses 357,560,733 132,399,947
554,036,059 695,000,785
22 (a) CONSOLIDATED COMMISSION, EXCHANGE & BROKERAGE
Mercantile Exchange House (UK) Limited 5,493,119 37,672.00
1,434,089,974 1,455,620,438
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Amount in Taka
2012 2011
23 OTHER OPERATING INCOME
Charges on L/C 61,654,960 57,099,946
Services & other Charges 41,317,775 68,258,646
Income from Rent of Locker 3,757,788 3,051,184
Telephone, Telex and E-mail Charges 4,930,239 6,016,258
On Line Client Fees 28,590,934 29,455,196
ATM Card 24,185,810 15,625,828
VISA Card 68,248,438 58,317,274
Co-Brand Services 1,637,076 1,924,365
BLW Recovered 67,000 3,044,813
Discount 155,049,578 205,906,301
Gain on Sale and revaluation of Securities 332,658,079 386,798,790
Gain on Sale on Assets 1,400,433 4,936,000
Miscellaneous Earnings (Note-23.1) 359,707,487 440,951,241
1,083,205,597 1,281,385,842
23.1 Miscellaneous Earnings
Postage Charge Recovery 30,380,090 23,788,540
SWIFT Charge Recovery 45,143,081 37,602,166
Incidental Charges 87,570,943 80,021,853
Brokerage House Income (pre-separation income) - 135,673,758
Foreign Correspondence Charges 65,966,819 47,275,233
Others 130,646,554 116,589,691
359,707,487 440,951,241
23 (a) CONSOLIDATED OTHER OPERATING INCOME
Mercantile Exchange House (UK) Limited 442,347 -
Off-shore Banking Unit - -
1,142,611,470 1,304,435,120
24 SALARIES & ALLOWANCES
Basic Salary 589,200,539 537,758,643
Bonus (Festival and Incentive) 252,921,600 284,931,850
Bank's Contribution to Employees Provident Fund 53,525,494 47,951,122
House Rent Allowances 179,663,703 159,935,169
Conveyance Allowance 32,241,963 30,087,324
Medical Allowance 121,311,566 109,141,544
Dearness Allowance 134,347,430 121,469,301
Overtime Allowance 385,250 386,800
Other Allowances 159,120 353,040
1,363,756,665 1,292,014,793
24(a). CONSOLIDATED SALARIES & ALLOWANCES
Mercantile Exchange House (UK) Limited 4,784,501 413,031
1,403,469,303 1,307,224,799
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205 annual report
Amount in Taka
2012 2011
25 CHIEF EXECUTIVE'S SALARY AND ALLOWANCES
Salary 3,500,000 3,600,000
Other Allowances 1,900,000 2,700,000
5,400,000 6,300,000
25 (a) CONSOLIDATED CHIEF EXECUTIVE SALARY AND FEES
Mercantile Exchange House (UK) Limited 2,537,120 -
7,937,120 6,300,000
26 DIRECTORS' FEES
Director Fees 2,465,000 2,725,000
VAT on Director Fees 395,750 326,400
2,860,750 3,051,400
26 (a) CONSOLIDATED DIRECTORS' FEES
Mercantile Bank Securities Ltd. 1,110,000 -
3,970,750 3,051,400
27 RENT, TAXES, INSURANCE, LIGHTING ETC.
Office Rent 190,300,085 165,945,548
Rates, Taxes & Excise Duty and VAT on Rent VAT on Rent 15,878,189 587,490
Insurance 75,338,601 77,590,056
Lighting, Gas & Water 58,594,432 37,750,681
- -
340,111,307 281,873,775
27 (a) CONSOLIDATED RENT, TAXES, INSURANCE, LIGHTING ETC.
351,162,725 285,322,125
28 LEGAL EXPENSES
Legal Fees & Charges 4,967,616 10,015,681
Stamps & Notary Public Expenses,Registration Fees 8,333,219 234,203
13,300,835 10,249,884
28(a) CONSOLIDATED LEGAL EXPENSES
13,300,835 10,249,884
29 STATIONERY, PRINTING AND ADVERTISEMENT
Printing & Stationery 58,729,612 36,887,015
Advertisement 81,389,438 70,171,594
Computer Expenses 18,735,287 17,005,958
158,854,337 124,064,567
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Amount in Taka
2012 2011
29 (a) CONSOLIDATED STATIONERY, PRINTING AND ADVERTISEMENT
Mercantile Bank Securities Ltd. 965,570 197,729
Mercantile Exchange House (UK) Limited 979,962 441,533
160,799,869 124,703,829
30 DEPRECIATION AND REPAIR OF FIXED ASSETS
Depreciation on Fixed Assets (Note-30.1) 144,564,503 130,606,072
Repairs & Maintenance 43,737,500 31,714,455
188,302,003 162,320,527
30.1 Depreciation on Fixed Assets (Annexure - A)
Free Hold Property 137,800,889 121,158,398
Lease Hold Property 6,763,614 9,447,674
144,564,503 130,606,072
30 (a) CONSOLIDATED DEPRECIATION AND REPAIR OF FIXED ASSETS
Mercantile Exchange House (UK) Limited 737,414 -
195,828,541 165,990,792
31 OTHER EXPENSES
Bank Charges 3,851,830 3,900,730
Other Charges 6,873,089 7,224,687
Donation 27,789,271 24,702,305
Car Expenses 90,266,383 80,603,647
Discount & Commission Paid 797,266 2,312
Training Expenses 12,377,755 9,483,022
Securities & Cleaning 150,520,247 118,700,020
Subscription 8,438,841 2,893,347
Entertainment Expenses 31,035,106 30,879,649
Travelling Expenses 29,175,814 20,589,247
Conveyance, Carriage & Freight 7,632,650 6,023,920
Business Development 56,288,515 52,593,347
Liveries & Uniforms 3,266,345 3,289,385
Medical Expenses 87,092 199,560
Newspapers and Magazines 1,272,171 1,088,195
Cook Servant 200,000 240,000
Loss on sale on Property - 243,866
Interest Expenses Lease 5,026,408 5,447,966
Q-cash/ATM Cards/VISA Cards 33,809,070 17,756,614
House Furnishing 7,308,779 6,107,712
Leave Encashment 94,227,386 83,835,767
Gratuity 10,000,000 130,000,000
Credit Rating Fees 313,500 345,000
Listing Fees and CDBL Fees - 45,489
Mobile Banking 14,095,376 -
Howla charges - 1,281,932
Laga charges - 6,781,887
Miscellaneous Expenses (Note-31.1) 40,267,733 43,914,645
634,920,627 658,174,251
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207 annual report
Amount in Taka
2012 2011
31.1 Miscellaneous Expenses
Laundry & Cleaning 2,040,304 1,673,202
Photocopy 691,930 554,356
Cash Carring Charge 5,837,793 4,731,404
Nursery 1,222,853 921,820
Sundry Expenses 30,474,853 36,033,863
40,267,733 43,914,645
31 (a) CONSOLIDATED OTHER EXPENSES
669,614,608 671,335,241
32 EARNING PER SHARE (EPS)
Net Profit after tax 1,381,451,043 1,734,172,348
Number of Ordinary Shares outstanding 611,075,316 611,075,316
Weighted Average no. of Share Outstanding 611,075,316 611,075,316
Earning Per Share (EPS) 2.26 2.84
CONSOLIDATED EARNING PER SHARE (EPS) 2.24 2.87
EPS has been calculated in accordance with BAS-33. Previous year's figures have been restated for the issue of
114,266,116 Bonus Share (for 2011) during the year.
33 NUMBER OF EMPLOYEES

The number of employees engaged for the entire period who received a total remuneration of BDT 36,000 or
above were 1930.

Break-up of No. of employee as per salary range wise:

Salary range in Taka No. of Employees
0 to 20,000 302
20,001 to 50,000 641
50,001 to 100,000 875
100,001 to 200,000 101
200,001 and above 11
1930
34 RELATED PARTY DISCLOSURE (BAS-24)
34.1 Name of Directors and their interest in the Bank and different entities-shown in annexure-B.
208 annual report
Nature of contract Name of Director and related by Remarks
Lease agreement with Mrs. Rena Jalil, Wife
of Mr. Md. Abdul Jalil.
The lease agreement was approved
by the Bangladesh Bank vide its letter
no.BRPD(P-3)745(44)/2009-3322
dated 14.09.2009
Mr. Md. Abdul Jalil, Ex-Chairman of the Bank,
Husband of Mrs. Rena Jalil.
Lease agreement with Mr. M. S. Ahsan
Director of the Bank
no.BRPD(P-3)745(44)/2006-3776
dated 22.11.2009
Mr.M. S. Ahsan, Director of the Bank
Lease agreement with Arena Industries
Ltd. where Mrs. Tazneen Aman, Director of
the said Company.
no.BRPD(P-3)745(44)/2006-3776
dated 22.11.2006
Mr. M. Aman Ullah. Director of the Bank, Husband of
Mrs. Tazneen Aman
Lease agreement with Mr. Md.
Shahabuddin Alam, Director of the Bank
no.BRPD(P-3)745(44)/2009-2706
dated 29.07.2009
Mr. Md. Shahabuddin Alam, Director of the Bank
Lease agreement with Mr. Md. Abdul
Hannan, Director of the Bank
no.BRPD(P-3)745(44)/2009-4159
dated 10.11.2009
Ms. Israt Jahan, Shareholder of the Bank, Wife of Mr.
Md. Abdul Hannan.
no.BRPD(P-3)745(44)/2010-313
dated 31.01.2010
Mr. M. S. Ahsan Director of the Bank
Lease agreement with Mrs. Begum Rounak
Afza, Mother of A. K. M Shaheed Reza
Sponsor of the Bank
no.BRPD(P-3)745(44)/2010-1202
dated 31.03.2010
A. K. M Shaheed Reza Sponsor of the Bank
Lease agreement with Mr. Md. Baharul
Ahsan, Brother of M. S. Ahsan Director of
the Bank
no.BRPD(P-3)745(44)/2010-1814
dated 06.05.2010
Mr. M. S. Ahsan Director of the Bank, Brother of Md.
Baharul Ahsan
Lease agreement with Mr. Mohd. Selim
no.BRPD(P-3)745(44)/2011--3260
dated 25.08.2011
Mr. Mohd. Selim Director of the Bank
Lease agreement with Mr. Alhaj Akram
Hussain (Humayun), Chairman of the Bank
no.BRPD(P-3)745(44)/2011--3455
dated 25.09.2011
Mr. Alhaj Akram Hussain (Humayun), Chairman of the
Bank
Hannan, Director of the Bank
no.BRPD(P-3)745(44)/2011--4574
dated 01.12.2011
Ms. Israt Jahan, Shareholder of the Bank, Wife of Mr.
Md. Abdul Hannan.
no.BRPD(P-3)745(44)/2010-3888
dated 20.10.2011
Mr. M. S. Ahsan Director of the Bank
Hannan Director of the Bank
no.BRPD(P-3)745(44)/2011-4574
dated 01.12.2011
Mr. Md. Abdul Hannan Director of the Bank
Lease agreement with Mr. Shawket Reza
brother of Mr. A. K. M Shaheed Reza
no.BRPD(P-3)745(44)/2012-2215
dated 28.05.2012
Mr. A. K. M Shaheed Reza Sponsor of the Bank
Lease agreement with Mr. M. Amanullah
no.BRPD(P-3)745(44)/2012-3497
dated 27.08.2012
Mr. M. Amanullah Director of the Bank
34.2 Significant contracts where Bank is a party and herein Directors have interest:
www.mblbd.com
209 annual report
34.3 Shares issued to Directors & Executives without consideration or exercisable at discount: Nil
34.4 Related Party Transaction:
Transaction with related Party Nature of transaction Amount in taka
Mercantile Bank Securities Ltd. Loan (SOD) 4,073,933,988

34.5 Lending Policies to related Parties :
Lending to related parties is effected as requirements of Section 27 (1) of Bank Companies Act 1991

34.6 Loan and Advances to Directors and their related concern : Nil

33.7 Business other than Banking business with any related concern of the Directors as per Section 18 (2) of
Bank Companies Act 1991 : Nil

34.8 Investments in the Securities of Directors and their related concern : Nil
35 RECONCILIATION OF INTER BANK/BOOKS OF ACCOUNTS
Books of Accounts with regards to inter-bank (in Bangladesh and outside Bangladesh) are reconciled and there
are no material differences, which may affect the financial statements significantly.

36 LAND UNDER LITIGATION
A Land is included under free hold properties - land (Note-8), located at Gulshan, Plot # 3, Block # CWN (C),
Gulshan Avenue, Gulshan, Dhaka-1212, Municipality Holding # 105, Gulshan Avenue, Gulshan. Area of land is
1 bigha 2 chattaks purchased in the year 2005 for 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 had been made as per Bangladesh Bank's instruction (Note-12.2).
37 AUDITORS WORK-HOUR :
The Joint External Auditors of the Bank M/S K M Hasan & Co., Chartered Accountants and M/S Khan Wahab
Shafique Rahman & Co. Chartered Accountants worked more than 4750 man-hours at the banks Head Office
and some Branches. During the period of audit, they cover 80% the audit of the Banks risk weighted assets as
on the reporting date.
38 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, 2012 and under the guidelines of Bangladesh Bank BRPD Circular
No.14 dated June 25, 2003.
39 "RESTATEMENTS"
Wherever considered necessary, previous year's figures have been rearranged for the purpose of comparison
with current period's presentation without any impact on the profit and value of assets and liabilities as reported
in the Financial Statements.
210 annual report
40 AUDIT COMMITTEE
The Audit committee constituted by the Board of Directors of the Bank on March 28,2012 consisting five following
members:
Name Designation Educational qualification
Mr. Md. Anwarul Haque Chairman B.Sc. Engg.
Engr. Md. Monsuruzzaman Member B.Sc. Engg.
Mr.Md. Tabibul Huq Member B.Sc. Engg.
Mr. Md. Nasiruddin Chowdhury Member B.Sc. Engg.
Mr. Saber Hossain Chowdhury, M.P Member B.A.(Hons) M.A.
Subsequently the Board of Directors in its 203rd meeting held on September 06, 2012 re-constituted the Audit
Committee with the following members of Board of Directors:

Name Designation Educational Qualification
Mr. R. A. Howlader Chairman B.Com. (Hons)
Dr. Toufique Rahman Chowdhury Member B.A.(Hons)M.A.PGDM,Ph.D
Mr.Md. Tabibul Huq Member B.Sc. Engg.
Mr. Md. Abdul Hannan Member Graduate
Mr. Saber Hossain Chowdhury, M.P Member B.A.(Hons) M.A.
During the year ended December 31, 2012, the Audit Committee of the Board of Directors conducted 11(Eleven)
meetings in which among other things the following issues were discussed/evaluated/reviewed and provided
guidelines and necessary instructions:
* Reviewed the Banks financial statement Balance sheet, Profit & Loss Accounts, Cash Flow Statement, Statement
of Changes in Equity, Liquidity Statement and related explanatory notes as on December31, 2012.
* Approval of Risk Based Audit Plan for the year 2012.
* Reviewed the performance of Mercantile Bank Securities Ltd.
* Reviewed the Banks 1st quarterly Un Audited financial statement Balance sheet, Profit & loss Accounts, Cash
Flow statement, statement of changes in equity and Liquidity statement ended on March 31,2012.
* Recommended for appointment of External Auditors in Annual General Meeting (AGM) of the Bank.
* Reviewed Compliance on observations, recommendations and decisions of the Audit Committee Meetings.
* Reviewed the Banks half yearly Un Audited financial statementBalance sheet, Profit & loss Accounts, Cash
* Flow statement, statement of changes in equity and Liquidity statement ended on June 30,2012.
* Reviewed the Comprehensive Inspection Reports on different branches of the Bank conducted by the team of
ICCD from time to time and the status of compliance thereof.
* Reviewed the surprise Inspection Report on different branches conducted by Board Audit Division, Head Office.
* Reviewed Health Report of the bank for the year 2012.
* Reviewed Non Performing Loans and Recovery there against.
* Reviewed the Banks 3rd quarterly Un Audited financial statement-Balance sheet, Profit & loss Accounts, Cash
Flow statement, statement of changes in equity and Liquidity statement ended on September 30, 2012.
* Reviewed the work process of Credit Administration, Recovery, Monitoring and Compliance Division of Head
Office.
41 EVENTS AFTER THE REPORTING PERIOD (BAS-10)
The Board of Directors of the Bank has recommended @ 15% dividend (Stock Dividend 8% and Cash Dividend
7%) for the year 2012.
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214 annual report
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www.mblbd.com
215 annual report
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216 annual report
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 tranferred to Reserve for Revaluation Accounts.
(Amount in BDT)
Market Adjustment on Approved Securities HTM
Balance as on Januray 1, 2012 36,775,022.69
Less : Adjustment due to Bond sale (repo) 381,751.00
Add. Adjustment of Amortization of HTM secutrities 10,980,436.33
Balance as on December 31, 2012 47,373,708.02
Reserve for Revaluation (for HFT securities)
Balance as on January 1, 2012 143,971,913.22
Add adjustment during the year in Mark to market Method on Treasury Bond 73,419,511.04
Add adjustment during the year in Mark to market Method on Treasury Bill 2,717,362.09
Less adjustment due to sale & Repo (outright sale) 203,414,364.72
Balance as on December 31, 2012 16,694,421.63
(Market adjustment on Treasury Bond is reported as per DOS circular no.220 Dated. 08 December ,2010.)
Annexure-D
Adjustment for Approved Securities HTM
As on Dec 31, 2012
www.mblbd.com
217 annual report
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218 annual report
Name of the BFRS BFRS no Status
Firsttime Adoption of Bangladesh Financial Reporting Standards 1 N/A
Share Based Payment 2 N/A
Business Combinations 3 N/A
Insurance Contract 4 Applied
Non-current Assets Head for Sale and Discontinued Operations 5 N/A
Exploration for and Evaluation of Mineral Resources 6 N/A
Financial Instruments: Disclosures 7 Applied
Operating Segments 8 Applied
Name of the BAS BAS no Status
Presentation of Financial Statements 1 Applied
Inventories 2 N/A
Cash Flow Statements 7 Applied
Accounting Policies, changes in Accounting Estimates and Errors 8 Applied
Events after Reporting Period 10 Applied
Construction Contracts 11 N/A
Income Taxes 12 Applied
Property, Plant and Equipment 16 Applied
Leases 17 Applied
Revenue 18 Applied
Employee Benefits 19 Applied
Accounting for Government Grants and 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 and Reporting by Retirement Benefit Plans 26 Applied
Consolidated and Separate Financial Statements 27 N/A
Investment in Associates 28 Applied
Interests in Joint Ventures 31 N/A
Financial Instruments: Presentations 32 Applied
Earnings per Shares 33 Applied
Interim Financial Reporting 34 Applied
Impairment of Assets 36 Applied
Provisions, Contingent Liabilities and Contingent Assets 37 Applied
Intangible Assets 38 Applied
Financial Instruments: Recognition and Measurements 39 Applied
Investment Property 40 Applied
Agriculture 41 N/A
Annexure-F
Compliance of Bangladesh Financial Reporting Standards (BFRS)
and Bangladesh Accounting Standards (BAS)
www.mblbd.com
219 annual report
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220 annual report
OFF-SHORE BANKING UNIT(OBU)
Financial Statements
For the year Ended on 31 December 2012
Annexure- H
221 annual report
Mercantile Bank Limited
Off Shore Banking Unit
Balance Sheet

Property and Assets :
Cash:
Cash in Hand - - - -
Balance with Bangladesh Bank - - - -
Balance with Other Banks and Financial Institutions:
In Bangladesh 127,967.58 10,205,722 - -
Outside Bangladesh - - - -
Money at call and Short Notice:
Investments - - - -
Loans and Advances 3 17,378,122.10 1,385,946,945 2,293,049.00 187,692,710
Fixed Assets at Carrying Amount 4 3,680.52 303,837 4,907.34 401,680
Other Assets 5 106,806.94 8,518,110 12,274.42 1,004,697
Total Assets 17,616,577.14 1,404,974,614 2,310,230.76 189,099,087
Liabilities and Capital
Liabilities
Borrowings from other Banks, Financial
institutions and Agents 6 17,489,122.10 1,394,799,461 2,293,049.00 187,692,710
Bangladesh Bank and other Banks in
Bangladesh - - - -
Deposits and other Accounts:
Current Deposits and other Accounts 824.75 65,776 - -
Fixed deposits - -
Other Liabilities 7 - - 11,752.86 962,006
Total Liabilities 17,489,946.85 1,394,865,237 2,304,801.86 188,654,716
Capital/ Shareholders' Equity:
Retained Earnings 126,630.29 10,109,377 5,428.90 444,371
Total liabilities and Shareholders' Equity 17,616,577.14 1,404,974,614 2,310,230.76 189,099,087
USD Taka USD Taka
2011
Note
2012 Particulars
222 annual report
2012
USD Taka
2011
USD Taka
Note
Off Shore Banking Unit
Profit and Loss Account
For the Year Ended 31 December 2012

Particulars
Property and Assets:
Interest Income 8 248,036.10 19,781,474 12,274.42 1,004,697
Less: Interest paid on Deposits, Borrowings etc 9 (124,150.36) (9,901,289) (5,618.69) (459,906)
Net Interest Income 123,885.74 9,880,185 6,655.73 544,791
Investment Income - - - -
Commission, Exchange and Brokerage - - - -
Other Operating Income - - - -
Total Operating Income 123,885.74 9,880,185 6,655.73 544,791
Salary and Allowances 1,457.52 116,241 - -
Rent, Taxes, Insurances, Electricity etc - - - -
Postage, Stamps, Telecommunication etc - - - -
Depreciation and repair of Fixed assets 10 1,226.83 97,843 1,226.83 100,420
Other Expenses - - - -
Total Operating Expenses 2,684.35 214,083 1,226.83 100,420
Profit before Provision 121,201.39 9,666,102 5,428.90 444,371
Provision against Classified Loans - - - -
Provision against Unclassified Loans - - - -
Other Provision - - - -
Total Profit Before Taxes 121,201.39 9,666,102 5,428.90 444,371
Provision for Taxation - - - -
Net Profit After Taxation 121,201.39 9,666,102 5,428.90 444,371
Retained Surplus Brought Forward from Previous Year 5,428.90 444,371 - -
Effect of Changes in Exchange Rate - (1,096) - -
Retained Earnings Transferred To Central Operation 126,630.29 10,109,377 5,428.90 444,371
223 annual report
Particulars
2012
USD Taka
2011
USD Taka
Statement of Cash Flows
For the Year Ended December 31, 2012

A Cash Flows from Operating Activities :
Interest Received 248,036.10 19,781,474 12,274.42 1,004,697
Interest Paid (124,150.36) (9,901,289) (5,618.69) (459,906)
Fees and Commission Received - - - -
Payment to Employees (1,457.52) (116,241) - -
Payment to Suppliers - - - -
Income Tax paid - - - -
Cash generated from operating activities before
changes in operating assets & liabilities 122,428.22 9,763,944 6,655.73 544,791
Increase /Decrease in operating Assets & Liabilities
Loans and Advances to Other Banks - - - -
Loans and Advances to Customer (15,085,073.10) (1,198,254,235) (2,293,049.00) (187,692,710)
Current Deposits and other Accounts 824.75 65,776 - -
Other Assets (94,532.52) (7,513,413) (12,274.42) (1,004,697)
Other Liabilities (11,752.86) (962,006) 11,752.86 962,006
Net Cash Received from Operating Activities : (15,068,105.51) (1,196,899,934) (2,286,914.83) (187,190,610)
B Cash Flows from Investing Activities
Purchase of Fixed Assets - - (6,134.17) (502,100)
Sale of Fixed Assets - - - -
Net Cash Used in Investing Activities - - (6,134.17) (502,100)
C Cash Flows from Financing Activities
Borrowing from Mercantile Bank Limited 15,196,073.10 1,207,106,751 2,293,049.00 187,692,710
Net Cash from Financing Activities 15,196,073.10 1,207,106,751 2,293,049.00 187,692,710
D Net Increase/(Decrease) of Cash & Cash Equivalents (A+B+C) 127,967.59 10,206,818 - -
Effect of Exchange Rate changes on Cash & Cash Equivalents - (1,096) - -
E Opening Cash & Cash Equivalents - - - -
F Closing Cash & Cash Equivalents (D+E) 127,967.59 10,205,722 - -
224 annual report
2012
USD Taka
2011
USD Taka
Off-shore Banking Unit
Notes to the Financial Statements
1. Background Information
Mercantile Bank Limited is operating Offshore Banking Unit (OBU) by obtaining permission from Bangladesh
Bank vide its letter no. BRPD (P-3)744(114)2010-1743 dated 4 May 2010, as a separate business unit under the
Rules and Guidelines of Bangladesh Bank. The Bank commenced operation of this unit from 20 march 2011 at
its Gulshan, Dhaka and CEPZ, Chittagong Branches.
2. Significant Accounting Policy
2.1 Basis of Accounting
The unit maintains its accounting records in USD form which accounts are prepared according to the Bank
Companies Act.1991, Bangladesh Financial Reporting Standards (BFRS) Bangladesh Accounting Standards
(BAS) and other applicable directives issued by Bangladesh Bank.
2.2 Common Expenses:
a. Establishment expenses have not been separately accounted for in the Financial Statements
b. Provision for taxation, loans & advances and Off-balance sheet items have not been separately accounted
for in the financial statements. These are accounted for in the central accounts of Mercantile Bank Limited.

3 Loans & Advances
Loans, Cash Credit and Overdraft etc. - - - -
Bill purchased and Discounted 17,378,122.10 1,385,946,945 2,293,049 187,692,710
17,378,122.10 1,385,946,945 2,293,049 187,692,710
4 Fixed Assets including Premises, Furniture and Fixtures
Cost :
Software 4,398.13 360,000 4,398.13 360,000
Computer, Printer & Peripherals 1,736.04 142,100 1,736.04 142,100
6,134.17 502,100 6,134.17 502,100
Less: Accumulated Depreciation 2,453.65 198,263 1,226.83 100,420
Net Book Value 3,680.52 303,837 4,907.34 401,680
5 Other Assets
Interest Receivable 106,806.94 8,518,10 12,274.42 1,004,697
106,806.94 8,518,110 12,274.42 1,004,697
6 Borrowing from other Banks, Financial Institutions and Agents
In Bangladesh - - - -
Mercantile Bank Limited 17,489,122.10 1,394,799,461 2,293,049 187,692,710
Bangladesh Bank - - - -
17,489,122.10 1,394,799,461 2,293,049 187,692,710
225 annual report
2012
USD Taka
2011
USD Taka

7 Other Liabilities
Accrued Interest - - 5,618.69 459,906
Payable to Head office - - 6,134.17 502,100
- - 11,752.86 962,006
8 Interest Income
Interest on Advances 248,036.10 19,781,474 12,274.42 1,004,697
Interest on Money at Call and Short Notice - - - -
Interest on fund placement with ID, HO - - - -
Interest on foreign Currency Balances - - - -
248,036.10 19,781,474 12,274.42 1,004,697
9 Interest paid on Deposit, Borrowings etc.
Interest on Deposit - - -
Interest on Borrowing 124,150.36 9,901,289 5,618.69 459,906
Discount - - - -
interest on REPO - - - -
124,150.36 9,901,289 5,618.69 459,906
10 Depreciation and repair on Fixed Assets
Furniture, Fixture, Fittings etc. - - - -
Equipment & Machineries 1,226.83 97,843 1,226.83 100,420
Office Equipment - - - -
1,226.83 97,843 1,226.83 100,420
226 annual report
Annexure- I
Mercantle Bank Securites Limited
Auditors Report and Audited Financial Statements
227 annual report
AUDITORS REPORT
TO THE SHAREHOLDERS OF MERCANTILE BANK SECURITIES LIMITED
We have audited the accompanying finacial statements of Mercantile Bank Securities Limited which comprise the
statement of financial position as of 31 December 2012, Statement of Comprehensive Income, Statement of changes
in Equity and Statement of Cash Flows for the year then ended and a summary of significant accounting policies and
other explanatory information.
Management Responsibilities for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
Bangladesh Finacial reporting Standards and for such internal control as management determines is necessary to
enable the preparation of financial statements that are free from material missstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
opinion.
Opinion
In our opinion, the financial statements referred to above give a true and fair view of the financial position of Mercantile
Bank Securities Limited as on 31 December 2012 and of the results of its operations and its cash flows for the year then
ended in accordance with Bangladesh Financial Reporting Standards and comply with the Companies Act 1994, the
Bangladesh Securities and Exchange Act 1993, the Securities and Exchange Rules 1987, conditions and regulations
issued by the Bangladesh Securities and Exchange Commission and other applicable laws and regulations.
We also report that:
(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) 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 companys management has followed relevant provisions of laws and rules in managing the affairs of the
company. Proper books of accounts, records and other statutory books have been properly maintained;
(d) the statement of financial position and the statement of comprehensive income are in agreement with the said
books of account maintained by the company and examined by us, and
(e) the expenditure incurred and payments made were for the purpose of the companys business.
Dhaka, ACNABIN
27 January 2013 Chartered Accountants
228 annual report
Statement of Financial Position
As at 31 December 2012
Chief Executive Officer
This is the Statement of Financial Position referred to in our separate report of even date.
Dhaka
27, January 2013
ACNABIN
Md. Tabibul Huq
Vice Chairman
M. S. Ahsan
Chairman
31.12.2012
Taka
31.12.2011
Taka
Notes
Assets
Non Current Assets
Property, Plant and Equipment 3 35,267,009 36,124,569
DSE Membership 650,000,000 650,000,000
CSE Membership 180,000,000 180,000,000
865,267,009 866,124,569
Current Assets
Cash and Bank Balances 4 86,904,795 67,833,834
Receivable from DSE 429,661 5,362,101
Receivable from Client 5 3,847,351,121 3,652,293,863
Advance Income Tax 6 10,357,784 64,893,198
Advance, Deposit & Prepayment 7 5,774,663 8,118,163
Total Current Assets 3,950,818,025 3,798,501,159
Total Assets 4,816,085,033 4,664,625,728
EQUITY AND LIABILITIES
Share Capital 650,000,000 650,000,000
Retained Earnings 23,115,519 23,057,178
Total Equity 673,115,519 673,057,178
Liabilities
Borrowing from MBL 8 4,073,933,988 3,924,068,608

Current Liabilities
Payable to Clients 9 41,557,768 57,873,113
Other Liabilities 10 10,931,561 683,500
Corporate Tax Payable 11 16,546,197 8,943,329
Total Current Liabilities 69,035,526 67,499,942
Total Equity and Liabilities 4,816,085,033 4,664,625,728

The annexed notes form an integral part of the Statement of Financial Position.
Particulars
229 annual report
Statement of Comprehensive Income
Chief Executive Officer
This is the Statement of Financial Position referred to in our separate report of even date.
Dhaka
27, January 2013
ACNABIN
Md. Tabibul Huq
Vice Chairman
M. S. Ahsan
Chairman
31.12.2012
Taka
31.12.2011
Taka
Notes
Particulars
Operating Income 12 673,159,647 204,170,665
Less: Operating Expenses 13 598,269,956 154,138,327
Gross Profit 74,889,691 50,032,338
Less: Administrative and General Expenses 14 57,783,726 23,429,181
Operating Profit 17,105,966 26,603,157
Add: Other Income 15 158,111 5,397,350
Profit Before Provision 17,264,076 32,000,507
Less: Other Provision 9,602,868 -
Profit Before Tax 7,661,208 32,000,507
Less: Provision for Tax 7,602,868 8,943,329
Net Profit after Tax 58,341 23,057,178

The annexed notes form an integral part of the Statement of Financial Position.
230 annual report
31.12.2012
Taka
31.12.2011
Taka
a. Cash Flows from Operating Activities
Interest on Margin Loan Received 553,938,474 169,943,818
Brokerage Commission Received 50,812,890 16,565,805
Account Opening Income Received 2,848,500 66,100
Service Charge Income Received 55,894,902 17,594,942
Other Income Received 220,125 5,397,351
Operating Expenses Paid (592,269,631) (150,925,375)
Administrative & General Expenses Paid (57,783,726) (23,429,181)
Cash generated from operating activities before changes in 13,661,534 35,213,460
operating assets and liabilities
Increase / (Decrease) in Operating Liabilities
Interest Payable on MBL Loan - 143,061,757
Payable to Clients (16,315,345) 57,873,113
Other Liabilities 10,248,061 683,500
(Increase) / Decrease in Operating Assets
Receivable from DSE 4,932,440 (5,362,101)
Receivable from Client (195,057,258) (3,652,293,863)
Advance Income Tax 54,535,414 (64,893,198)
Advance, Deposit & Prepayment 2,343,500 (8,118,163)
(139,313,188) (3,529,048,955)
Net cash used in operating activities (125,651,654) (3,493,835,495)
b. Cash Flows from Investing Activities
Purchase of Property, Plant & Equipment (5,142,765) (39,150,222)
Return of Property, Plant & Equipment - 12,548,570
DSE Membership - (650,000,000)
CSE Membership - (180,000,000)
Net cash used in investing activities (5,142,765) (856,601,652)
c. Cash Flows from Financing Activities
Proceeds from Long Term Borrowing 149,865,380 3,768,270,981
Proceeds from issue of Share Capital - -
Net cash flow from financing activities 149,865,380 3,768,270,981
Net surplus/(deficit) in cash & bank balance for the year (a+b+c) 19,070,961 (582,166,166)
Cash & Bank Balance at the beginning of the year 67,833,834 650,000,000
Cash & Bank Balance at the end of the year (*) 86,904,794 67,833,834
(*) Cash & Bank Balance:
Cash in hand 171,067 191,396
Cash at bank 86,733,727 67,642,438
86,904,794 67,833,834
Statement of Cash Flows
STATEMENT OF CHANGES IN EQUITY
Balance as at 01 January 2012 650,000,000 23,057,178 673,057,178
Net Profit for the year - 58,341 58,341
Balance as at 31 December 2012 650,000,000 23,115,519 673,115,519
Figures in Taka
Share Capital
Retained
Earnings
Total
Balance as at 01 January 2011 - - -
Share Capital Issued 650,000,000 - 650,000,000
Net Profit for the year - 23,057,178 23,057,178
Balance as at 31 December 2011 650,000,000 23,057,178 673,057,178
Particulars
231 annual report
1. Background Information
Mercantile Bank Securities Limited (MBSL) was established on 27 June 2010 to facilitate development of sound capital market and to provide
higher, better and diversified services to a wide range of 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. MBSL is also a full
service Depository Participant (DP) of Central Depository Bangladesh Ltd. (CDBL). The brokerage service is designed to provide customers
with necessary support and profitability in the stock market. The main objective of the Mercantile Bank Securities Limited is to act as a
full-fledged high standard brokerage service with margin loan facility services. The company obtained DSE Membership on 04 September 2011
and CSE Membership on 25 September 2011 and started operation since 14 September 2011.
2. Significant Accounting Policies
2.1 Basis of Accounting
The financial statements of the Mercantile Bank Securities Limited have been prepared applying accrual basis of accounting under the historical
cost convention in accordance with Bangladesh Financial Reporting Standards.
2.2 Property, Plant & Equipment and Depreciation
Property, Plant and Equipment are stated in the financial statements at cost less accumulated depreciation. Depreciation is charged on assets
at the following rates & methods for the full year irrespective of their date of purchase:
Name of Assets Rate of Depreciation Method
Vehicles 20.00% Straight Line
Office Equipment & Machineries 20.00% Reducing Balance
Furniture & Fixtures 10.00% Reducing Balance
Books & Periodicals 20.00% Reducing Balance

2.3 Revenue Recognition
Revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow to the
company. Revenue during the period are recognised as follows:
- Brokerage commission is recognised as income when selling or buying order is executed;
- Interest income on STD account is recognised when the respective banks credited the interest to the company's account;
- Interest income from margin loan is calculated quarterly.
2.4 General
Figures appearing in these accounts have been rounded off to the nearest Taka.
232 annual report
2012
Taka
2011
Taka
3. Property, Plant and Equipment
A. Cost
Opening balance 46,734,696 12,548,570
Add: Addition during the year 5,142,764 39,150,222
51,877,460 51,698,792
Less: Adjustment - 12,548,570
51,877,460 39,150,222
B. Accumulated depreciation
Opening balance 10,610,127 -
Add: Charged during the year 6,000,325 3,025,653
16,610,452 3,025,653
C. Written Down Value (A-B) 35,267,009 36,124,569
A schedule of Property, Plant and Equipment is given in Annexure-A.
4. Cash and Bank Balance
Cash in Hand 171,067 191,396
Cash at Bank (Note: 4.1) 86,733,727 67,642,438
86,904,795 67,833,834
4.1 Cash at Bank
Name of Bank Account No.
Mercantile Bank Ltd.* 0101-11100080508 15,197,813 17,172,602
One Bank Ltd.(mbl bkh) 001-0025413008 - 962,418
MBSL A/C (One Bank Ltd.) 001-0026458005 24,874,805 18,003,968
Mercantile Bank Ltd. (MBSL Cons. Cust)** 0101-11100085071 46,420,692 31,237,032
Mercantile Bank Ltd.(Income Exp A/C) 0101-13100002230 240,417 266,418
86,733,727 67,642,438
* This account had been opened and maintained for MBL Brokerage House. But subsequently new account has
been opened in the name of MBSL and the balance was transfer to this account. But necessary effect has not been
made in the books of accounts till 31 December 2012. As a result there was a difference of TK.15,197,813 between
the balances as per books of accounts and that of the Bank statement. Reconciliation of the said difference is in
progress.
** As on 31 December 2012 there is a difference of Tk.1,696,961 between the balances as per books of accounts
and that of the Bank statement. Reconciliation of the said difference is in progress.
5. Receivable from clients
General Client 321,542 14,362,029
Margin Client 3,847,029,579 3,637,931,834
3,847,351,121 3,652,293,863
6. Advance Income Tax
Opening Balance 64,893,198 62,138,281
Less: Adjustment with MBL 62,138,281 -
Adjusted Opening Balance 2,754,917 62,138,281
Add: Tax deducted at source during the year 7,602,868 2,754,917
10,357,764 64,893,198
7. Advance, Deposit & Prepayment
Advanced Rent 5,481,100 7,954,600
Prepaid Expenses (Furniture Allowance) 289,563 159,563
Security Deposit 4,000 4,000
5,774,663 8,118,163
233 annual report
2012
Taka
2011
Taka
8. Borrowing from MBL
MBL Loan 4,073,933,988 3,781,006,851
Interest Payable on MBL Loan - 143,061,757
4,073,933,988 3,924,068,608
This amount represent the Secured Overdraft (SOD) provided by Mercantile Bank Limited, Main Branch, Dhaka.
This is a quarterly revolving loan facilities and yearly rate of interest is 14.5%.
9. Payable to Clients
General Client 18,156,167 18,483,332
Margin Client 23,401,601 39,389,781
41,557,768 57,873,113
10. Other Liabilities
Sundry Deposit 1,500 17,700
CDBL Charges (A/C opening + M Chg) 339,600 550,800
Security Deposit 163,293 -
Provision for Audit Fees 115,000 115,000
Other Provisions 9,707,368 -
Provision for CDBL Charges 604,800 -
10,931,561 683,500
11. Corporate Tax Payable
Opening Balance 8,943,329 -
Add: Provision made during the period ( TDS ) 7,602,868 8,943,329
16,546,197 8,943,329
12. Operating Income
Brokerage Commission 58,415,758 16,565,805
Account Opening Fee 2,848,500 66,100
Monthly Cdbl Charges 62,013 -
Interest on Margin Loan 555,938,474 169,943,818
Service Charge on Margin Loan 55,894,902 17,594,942
673,159,647 204,170,665
13. Operating Expenses
Howla Charge DSE 768,950 223,334
Laga Charge DSE 3,041,147 795,496
CDBL Charges 6,269,612 6,447,974
Audit Fees 209,000 115,000
Directors Fee 1,110,000 400,000
Bank Charges 37,991 49,025
Interest on MBL Loan A/c 580,690,551 143,061,757
Time loan charges & Interest (One Bank) - 8,019
Depreciation 6,000,325 3,025,652
Other Operating Expenses 142,381 12,070
598,269,956 154,138,327
234 annual report
2012
Taka
2011
Taka
14. Administrative and General Expenses
Salaries & Allowances (Note : 14.1) 34,928,137 14,396,975
Rent, Taxes, Insurances, Electricity etc. 7,350,648 2,860,974
Postage, Stamps, Telecommunication etc. 3,359,310 947,097
Printing & Stationery 965,570 197,729
Repairs and Maintenances 788,799 546,793
Security & Cleaner 5,761,386 2,048,099
Legal Fees 15,500 37,770
Miscellenious 1,014,384 229,488
Refreshment 2,296,491 1,643,502
Utility Expenses 128,796 58,912
Fuel Costs 794,501 169,987
Travel Expenses 380,204 291,855
57,783,726 23,429,181
14.1 Salaries & Allowances
Basic Salary 13,223,085 6,687,169
Bonus 1,720,250 1,467,000
Car Allowances 525,000 280,000
House Rent 5,829,457 1,706,118
Conveyance Allowances 1,689,061 464,406
Medical Allowances 4,215,675 1,219,313
House maintenance Allowances 1,839,114 654,856
Utilities Allowance 1,839,114 654,856
PF Contribution 1,262,170 442,324
Furniture Allowance 80,000 12,333
Leave Fare Assistance 2,705,211 808,600
34,928,137 14,396,975
15. Other Income
Bank Interest 90,094 9,115
Miscellaneous Earnings 64,017 5,379,236
Cheque Dishonor Fees 4,000 9,000
158,111 5,397,350
235 annual report
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236 annual report
237 annual report
MERCANTILE EXCHANGE HOUSE (UK) LTD
Company Information
for the Year Ended 31 December 2012
238 annual report
Company Information
DIRECTORS : M A Jalil
A.K.M. S Haque
K M Murshed
T R Chowdhury
SECRETARY : J M R0ZARIO
REGISTERED OFFICE : 491 Coventry Road
Small Heath
West Midlands
Birmingham
B10 OJS
REGISTERED NUMBER : (England and Wales)
AUDITORS : KWSR & Co Chartered Accountants
136 Merton High Street
London
SW 19 IBA
239 annual report
Report of the Directors
The directors present their report with the financial statements of the company for the year ended 31 December 2012.
PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of money transfer
DIRECTORS
The directors shown below have held office during the whole of the period from 1 January 2012 to the date of this report.
M A Jalil
A.K.M.S Haque
K M Murshed
Other changes in directors holding office are as follows:
T R Chowdhury appointed 22 June 2012
STATEMENT OF DIRECTORS RESPONSIBILITIES
The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law). 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 of 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 judgments and accounting estimates that are reasonable and prudent;
- 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 companys
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to
ensure that the financial statements company 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.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, their is no relevant audit information (as defined by Section 418 of the Companies Act 2006)
of which the companys auditors are unaware and each director has taken all the steps that he ought to have taken as a
director in order to make himself aware of any relevant audit information and to establish that the companys auditors are
aware of that information.
AUDITORS
The auditors, KWSR & Co Chartered Accountants, will be proposed for re-appointment at the forthcoming Annual General
Meeting.
This report has been prepared in accordance with the special provisions of Part 15 of the Companies Act 2006 relating to small
companies.
ON BEHALF OF THE BOARD:
Director
Date: 17 January 2013
240 annual report
We have audited the financial statement of Mercantile Exchange House (UK) Ltd for the year ended 31 December 2012 on
pages six to eleven. The financial reporting framework that has been applied in their preparation is applicable law and the
Financial Reporting Standard for Smaller Entities (effective April 2008)(United Kingdom Generally Accepted Accounting
Practice applicable to Smaller Entities).
This report is made solely to the companys members, as a body, in accordance with Chapter 3 of part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the companys members those matters we are
required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the companys members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors Responsibilities set out on Page two, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to
audit and express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the companys circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial
information in the Report of the Directors to identify material inconsistencies with the audited financial statements. If we
become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the companys affairs as at 31 December 2012 and of its loss for the year then
ended;
- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to
Smaller Entities; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the Directors for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if in
our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit; or
- the directors were not entitled to prepare the financial statements in accordance with the small companies regime and
take advantage of the small companies exemption in preparing the Report of the Directors.
Mr. Mujibur Rahman (Senior Statutory Auditor)
for and on behalf of KWSR & CO Chartered Accountants
136 Merton High Street
London, SW 19 IBA
Date: 17 January 2013
Report of the Independent Auditors to the Members of
Mercantile Exchange House (UK) Ltd
241 annual report
Year Ended
31.12.11
Period
01.12.10 to 31.12.11
Notes
TURNOVER 43,302 304
Administrative expenses 138,775 16,012
(95,473) (15,708)
Others Operating Income 3,487 -
OPERATING LOSS and
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION 2 (91,986) (15,708)
Tax on loss on ordinary activities 3 - -
LOSS FOR THE FINANCIAL YEAR (91,986) (15,708)
The notes from part of these financial statements
Year Ended
31.12.11
Period
01.12.10 to 31.12.11
Notes Particulars
Balance Sheet
As at 31 December 2012
FIXED ASSETS
Tangible assets 4 94,212 42,611
CURRENT ASSETS
Debtors 5 17,758 9,563
Cash at bank and in hand 102,679 120,311
120,437 29,874
CREDITORS
Amounts falling due within one year 6 82,342 4,430
NET CURRENT ASSETS 38,095 25,444
TOTAL ASSETS LESS
CURRENT LIABILITIES 132,307 68,055
CREDITORS
Amounts falling due after more than one year 7 240,000 83,762
NET LIABILITIES (107,693) (15,707)
CAPITAL AND RESERVES
Called up share capital 8 1 1
Profit and loss account 9 (107,694) (15,708)
SHAREHOLDERS' FUNDS (107,693) (15,707)
The notes from part of these financial statements
The financial statements have been prepared in accordance with the special provisions of part 15 of the Companies Act 2006 relating
to small companies and with the Financial Reporting Standard for Smaller Entities (effective April 2008)
The financial statements were approved by the Board of Directors on 16 January 2013 and were signed on its behalf by:
Director
242 annual report
MERCANTILE EXCHANGE HOUSE(UK) LTD

1. ACCOUNTING POLICIES
Accounting convention

The financial statements have been prepared under the historical cost convention and in accordance with the
Financial Reporting Standard for Smaller Entities (effective April 2008).
Turnover
Turnover represents net invoiced sales of services, excluding values added tax.
Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Deferred tax
Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance
sheet date.
2. OPERATING LOSS
The operating loss is stated after charging:

Depreciation- owned assets 4,496 -
Auditors' remuneration 1,200 960
Directors' remuneration and other benefits etc 20,000 3,333

3. TAXATION
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2012 nor for the
period ended 31 December 2011.
Period
1/12/10 to 31/12/11
Year Ended
31/12/12
243 annual report

4. Tangible Fixed Assets
COST
At 1 January 2012 2,894 39,717 42,611
Additions 4,098 51,999 56,097
At 31 December 2012 6,992 91,716 98,708
DEPRECIATION
Charge for year - 4,496 4,496

At 31 December 2012 - 4,496 4,496

NET BOOK VALUE
At 31 December 2012 6,992 87,220 94,212
At 31 December 2011 2,894 39,717 42,611
5 DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Other debtors 17,758 9,563
6 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors 53,048 11
Taxation and social security 7,149 795
Other creditors 22,145 3,624
82,342 4,430
31/12/12 31/12/11
Land and
Buldings
Plant &
Machinery
etc.
Totals

7 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Other creditors 240,000 83,762
8 CALLED UP SHARE CAPITAL
9 RESERVES
At 1 January 2012 (15,708)
Deficit for the year (91,986)
At 31 December 2012 (107,694)
31/12/12
31/12/11
Profit and
Loss
Account
244 annual report
Commission Received 43,302 304
Other Income
Rents Received 2,833 -
Rates Received 654 -
3,487 -
- 46,789 304
Expenditure
Rates and water 3,878 327
Light and heat 1,138 151
Repairs to property 1,317 -
Depreciation of tangible fixed assets
Fixtures and fittings 4,496 -
Directors' salaries 20,000 3,333
Wages 37,716 1,402
Telephone 1,850 337
Advertising 7,725 3,563
Travelling 910 544
Licences and Insurance 1,073 -
Rent 23,084 4,461
IT and Software Cost 3,150 -
Household and Cleaning - 83
Sundry Expenses 4,362 181
Accountancy 3,720 600
Auditors' remuneration 1,200 960
115,619 15,942
(68,830) (15,638)
Finance costs
Bank charges 2,942 50
Bank Commission 20,214 20
23,156 70
NET LOSS (91,986) (15,708)
Year Ended
31/12/12

Period
1/12/10 to 31/12/11

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Products
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All Shareholders

Bangladesh Securities and Exchange Commission

Liquidity risk related to the Balance Sheet and

Liquidity risk related to the Balance Sheet and

Liquidity risk related to the Balance Sheet and

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243 annual report

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