MBL Insight 11f

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    DEWAN MUJIBUR RAHMAN, Chairman, Editorial Board and Managing Director & CEO A.K.M. SHAHIDUL HAQUE, Additional Managing Director MD. ABDUL JALIL CHOWDHURY, Deputy Managing Director MONINDRA KUMAR NATH, Deputy Managing Director MD. ABDUL ALIM, Assistant Vice President

    The World Economy has recovered from recession faster than expectation. It expanded at an annualized rate ofover 5 percent during the first quarter of 2010. In the recovery process, the emerging Asian Economies maderemarkable strides. The world economic growth is expected to reach 4.6 percent in 2010 and 4.3 percent in2011. Conversely, the growth of developing Asian Economies is projected at 9.2 percent in 2010.

    Bangladesh Economy has entered into new Fiscal Year 2010-11. It performed satisfactorily amid the worst

    world economic crisis during the immediate past FY 2009-10. Export earnings during FY 2009-10 experienced4.11 percent growth whereas Import payment recorded 5.02 percent growth during the same time period.Remittance inflow in FY 2009-10 hit USD 10.95 billion showing 13.07% growth over the last fiscal. ForeignExchange reserve also crossed the USD 10 bollion landmark in FY 2009-10 and stood at USD 10.75 billion. GDPgrowth is expected to be achieved at the targeted level of 6% during the immediate past FY 2009-10.

    Meanwhile, national budget amounting BDT 1,32,170 crore with Annual Development Program (ADP) size ofBDT 38,500 crore has been announced for the new fiscal 2010-11. In the new budget, GDP growth rate hasbeen set up at 6.7%, while inflation target has been set at 6.5%. Global turnaround from the financial crisis,continued growth in agriculture sector and capacity to sustain domestic demand has received importance inthe Budget for FY 2010-11. It is projected that the 6.7% estimated GDP growth will be achieved by augmentingrevenue collection, accelerating private sector investment through an increase in supply of credit for theprivate sector including PPP and making the external sector competitive through a stable exchange rate,accelerated export growth with diversified export basket and immediate solution of Power and Gas crisis.

    Bangladesh Bank has unveiled its Monetary Policy for first six months of the ongoing FY2010-11 aiming toattain faster growth and poverty reduction while keeping inflation rate at a tolerable level. This monetarypolicy intends to tight monitoring and discouragement of private sector credit growth in unproductive sector.However, through this monetary policy Bangladesh Bank has expressed its optimism to obtain 6.7% GDPgrowth in the new FY2010-11.

    MBL has stamped its 11 th Founding Anniversary on June 02, 2010 expecting to keep up outstandingperformance in the coming days. From a single branch beginning, now it has become a top-tier bankingorganization providing state-of-art technology based customer service. In the first half of 2010, MBL achievedcontinuous growth in almost all business areas, focusing on capital adequacy, growth of quality assets, soundearnings and strong liquidity management.

    In the 11 th quarterly issue of MBL Insight, we have endeavored to cover topics related to World andBangladesh economy, current issue focuses on the Banking sector and events of our Bank. We have alsoincorporated a Special Article on Budget for Fiscal Year 2010-11.

    Our efforts for publishing this issue will be elated if you appraise it. Let us know how you do offer weights toour efforts and how we can do better in the next issues.

    insightISSUE-11 JULY, 2010

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    The world economy expanded at an annualized rate of over 5% during the first quarter of 2010. This was better than expected in the April2010 WEO, mostly due to robust growth in Asia. Global indicators of real economic activities were strong through April and stabilized at ahigh level in May. Industrial production and trade posted a double-digit growth, consumer confidence continued to improve, andemployment growth resumed in advanced economies. Overall, macroeconomic developments confirmed expectations of a modest butsteady recovery in most advanced economies and strong growth in many emerging and developing economies.

    Overview of the World EconomicOutlook ProjectionsGlobal growth is projected at 4.6% in 2010 and 4.3% in 2011.Relative to the April 2010 WEO, this represents an upwardrevision of 0.4% point in 2010, reflecting stronger activities duringthe first half of the year mostly due to robust growth in Asia.

    Three more US banks shut US Regulators shut down three more banks in Illinois, Mississippiand Nebraska that has struggled under the weight of souredloans and drawn scrutiny from federal authorities since early lastyear, boosting the number of US bank failures this year stands at81. The banks are TierOne, First National Bank and ArcolaHomestead Savings Bank.

    Russia's Economy Remains VulnerableHighly dependent on oil prices, Russia was extremely vulnerableduring the recent global economic downturn. In fact, the RussianFederation went through its worst recession in 15 years, shrinkingalmost 8% in 2009. Yet, the recent surge in energy price, variousstimulus programs and low interest rates made Russia grew 2.9%in the first quarter of 2010.

    Indian Growth Higher than Expected India's economy grew 7.4% in the year ended March, 2010 and8.6% year on year growth in the fourth quarter, was boosted bybright performances in the industrial and service sectors.

    Malaysia Unveils New Development PlanMalaysian government recently unveiled a 69 billion USD planintended to spur growth and attract foreign investment. Theexport-dependent country forecast average annual economicgrowth of 6% over the five years, and targeted to reduce its fiscaldeficit from 5.3% of GDP in 2010 to 2.8% in 2015.

    Trade Gap of U.S. Widened in MayThe trade deficit in the US unexpectedly widened 4.8% in May toUSD 42.3 billion, the highest level since November 2008, as a gainin imports outpaced growth in exports. Exports from the US tothe rest of the world increased 2.4% to USD 152.3 billion,reflecting gains in industrial materials, business equipment andsemiconductors. Imports rose 2.9% in May to USD 194.5 billion,led by an increase in demand for cars, pharmaceuticals, toys andgarments from abroad.

    World Unemployment Despite economists' expectations that the unemployment ratewould climb more amid the recovery from world economic crisis,it is showing some improvements in the various countries of theworld. Unemployment scenario of some developed countries is asfollows:

    World InflationInflation pressures are expected to remain subdued in advancedeconomies. In contrast, in emerging and developing economies,inflation is expected to edge up to 6.25% in 2010 before subsidingto 5% in 2011.

    Country Current Inflation Rate (%)United States 1.1UK 3.2Germany 0.8France 1.5China 2.9Russia 5.8 Japan -0.9India 13.91Source: Tradingeconomics.com

    World Output Projection (%)Growth Projections

    Country 2010 2011World Output 4.6 4.3USA 3.3 2.9UK 1.2 2.1Germany 1.4 1.6 Japan 2.4 1.8China 10.5 9.6India 9.4 8.4Source: International Monetary Fund

    Country Unemployment Rate (%)United States 9.5UK 7.9Germany 7.7France 9.9China 9.6 Japan 5.2India 10.7Source: The Economist, July 2010

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    Bangladesh Economy has entered into new Fiscal Year 2010-11 leaving behind the FY 2009-10 with high optimism to attain 6% growthamid the worst world economic crisis. Meanwhile, national budget of BDT 132,170 crore has been unveiled for the new fiscal targeting6.7% growth and inflation level within 6.5%. The achievement of these targets much depends on the fully implementation of ADP, highergrowth in both exports and imports as well as growth in foreign investment, immediate solution of power and gas crisis and a favorableworld economic scenario.

    InflationInflation is exhibiting upward trend during May 2010. ThePoint-to-Point inflation increased to 8.65% in May 2010 comparedto 8.54% in April 2010. The twelve-month average rate of inflationalso increased to 6.78% in May 2010 from 6.51% of April 2010.

    Export EarningsExport earnings in the first six months of calendar year 2010(January-June) stood higher at USD 8,914.82 million compared toUSD 7,796.45 million over the corresponding period of 2009indicating 14.34% export growth in the said time period.

    Foreign Exchange ReserveThe gross foreign exchange reserves stood higher at USD 10.75billion as of end June, 2010, against USD 10.15 billion by end May,2010. This was 43.89% higher than the USD 7.47 billion reserves asof end June 2009.

    RemittancesRemittances in June 2010 stood at USD 877.95 million indicating amarginal decline of USD 7.17 million as against USD 885.12 millionof May 2010. However, total remittances receipts during July-Juneof FY10 increased by 13.07% to USD 10,955.27 million against USD9,689.26 million over the corresponding period of FY09.

    Import Import payments experienced 16.87% growth during first sixmonths (Jan-June) of calendar year 2010 over the correspondingtime period of 2009. During Jan-July, 2010 total import paymentwas USD 12,500 million as against USD 10,696.20 million in Jan-June of 2009.

    Broad Money (M2)Broad money (M2) consists of Currency outside banks andDeposits. The comparative scenario of M2 over the last two yearson May is as following:

    Balance of Payments (BOP)Trade balance experienced deficit of USD 4,885 million during July-May of FY10. However, Current Account balance exhibited asurplus of USD 3,006 million during July-May of FY 2010. Theoverall BOP showed a surplus of US$2,661 million during July-May of FY2010 compared to the surplus of US$1,393 millionover the corresponding time period of FY 2009.

    (BDT in million)

    Particulars May 09 May 10Currency outside banks 3,54,698.00 4,45,789.00Deposits 2,51,0463.00 3,076,470.00

    a) Demand deposits 272,561.00 381,698.00b) Time deposits 2,237,902.00 2,694,772.00

    Broad Money M2 (Total) 2,865,161.00 3,522,259.00

    Twelve Month AveragePoint to Point

    Inflation Rate (Jan-May'10)

    Jan 10 Feb 10 Mar 10 Apr '10 May '10

    8.99 9.06 8.78 8.54 8.65

    5.67 5.956.26

    6.516.78

    Jan Feb Mar Apr May Jun2008 2009 2010

    Half Yearly Export Earnings (million USD) over the last three calendar years

    1 , 2

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    Jan Feb Mar Apr May Jun2008 2009 2010

    Half yearly Import payments (million USD) over the last three calendar years

    2 , 0

    2 7

    . 8 0

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    6 0

    . 6 0

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    Jan Feb Mar Apr May Jun2008 2009 2010

    Half yearly remittance inflow (million USD) over the last three calendar years

    877.95753.58

    919.1

    730.26

    895.30

    885.12

    840.99

    922.16

    781.71808.72

    885.67

    956.49

    689.26

    784.47

    827.96

    710.74

    859.00952.39

    Jan Feb Mar Apr May Jun2008 2009 2010

    Foreign exchange reserve (billion USD) over the first six months of lastthree calendar years

    5 . 3

    9

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    First Monetary Policy of the FY 2010-11BB has announced a slightly tighten Monetary Policy(MP) for thefirst six months of the current FY 2010-11 to cut loan flow intothe unproductive sector with continuing its dual objectives ofmaintaining price stability and supporting the economic growth.The policy has set the private sector growth rate at 16% for June2011, which was 21.1% June this year. However, the creditgrowth target for the public sector for the next June has been setat 25.3%, which was 9.4% in June this year. In a bid to containinflation, reserve money growth target has been set at 13% forthe next June, while it was 17.1% this June.

    5 Years Strategic PlanBB has formulated its first five-years Strategic Plan afterdiscussions with different banks, financial institutions,development partners and other stakeholders. In the StrategicPlan 2010-2014, BB has set its core focus on agriculture, small and

    Particulars June, 2010

    Authorised Capital 8,000.00

    Paid-up Capital 4,072.21Deposits 59,677.90

    Loan & Advances 54,659.74

    Investment 9,602.62

    Total Assets 73,507.49

    Export 25,485.00

    Import 37,726.20

    Remittance 2,154.80

    Operating Profit 1,302.38

    Manpower (in number) 1,431

    Number of Branches 54

    medium enterprises (SMEs) and financial inclusion. The Planalso envisages suitable amendment to Money LaunderingPrevention Act 2009, and Anti-Terrorism Act 2009. BB strategiesare aimed at addressing its development issues and the changesit needs. It has also framed an action plan for implementing thestrategies.

    Revised Guidelines on Basel II Capital Accord The risk based regulatory capital adequacy framework in linewith Basel II has fully come into force from January 01, 2010replacing the previous approach for calculating capitaladequacy of banks. In order to enable the banks to have allexisting instructions on the subject at one place, BB has revisedits guidelines on RBCA incorporating all instructions issued till July 31, 2010. Moreover, the overall situation regardingadoption of the RBCA has since been reviewed and consideringthe same, several new instructions and reporting formats have

    (BDT in million)

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    been included in the revised guidelines. Report on capitaladequacy of banks in line with the revised guidelines should besubmitted to the Department of Off-site Supervision onquarterly basis within the following month of the relevantquarter.

    Guideline on Stress Testing BB recently provides a guideline of Stress Testing recognizingthe importance to understand and appreciate the risks in thebanking industry. The recent financial turmoil in the USfinancial system has augmented the importance of establishingmore developed risk management regime in the financial sector.Financial institutions around the world are increasinglyemploying stress testing to determine the impact on the financialinstitution under a set of exceptional, but plausible assumptionsthrough a series of battery of tests. BB has designed a stresstesting framework for banks and FIs to proactively manage risksin line with international best practices. All banks and FIs areexpected to carry out stress testing on half yearly basis i.e. on

    June 30 and December 31 each year with their first stress testingexercise to be based on June 30, 2010.

    Guidelines on Supervisory Review Evaluation Process (SREP)BB recently issues a guideline of Supervisory Review EvaluationProcess. As per the guideline, the assessment of capital adequacyof the banks would be the outcome of a dialogue between thebanks and Bangladesh Bank. The dialogue is targeted atcomparing BBs expectations and banks initiatives to managerisks. BB has already formed a SREP Team, headed by the

    Executive Director of Banking Regulation and PolicyDepartment. Banks are advised to form an exclusive SRP Teamto sit with the SREP Team of BB.

    STD Accounts will be known as SND AccountsBB has renamed Short Term Deposit (STD) account by SpecialNotice Deposit (SND) Account. Recently, BB has issued BRPDCircular No. 20, dated May 16, 2010 aiming to bring uniformityto handle this account by different banks. The Customers have toprovide a notice of at least 7 (Seven) days to withdraw moneyfrom the SND account. Banks must issue cheque book against

    SND account. Interest of SND account has to be calculated ondaily basis and the earned interest in this account is to becredited on half yearly basis or SND account closing date.Interest Rate on SND account can be varied on the basis ofamount but not on the basis of customer and tenure (as there isno specific tenure for this account). SND interest rate will neverbe higher than the rate of Savings Account. Minimum BalanceFee/Incidental Charge/ Ledger Fee/Service Charge is not

    applicable for SND account. But Account Maintenance Fee canbe charged against this account which should not be more thanBDT 500 (Five Hundred) on half yearly basis and AccountClosing Fee should not be more than BDT 300 (Three Hundred).

    Second Stimulus Package for Export Sector Development Comes into Effect The second stimulus package for development of the exportsector of the country came into effect from June 07, 2010 and theBB issued FE Circular No. 12, dated June 07, 2010 in line with thefinance ministrys advice in this regard and asked theCommercial Banks to take necessary measures to implementsteps adopted in the package for the development of theexport-oriented sector, particularly textile. On November 25 lastyear, the government announced a series of additional fiscal andpolicy stimulus packages worth over BDT 10 billion for theexport sector to offset adverse impacts of global recession fromthe domestic economy. Under the package, the exporters willreceive 5% cash incentives for new export destinations for 3

    years while all export destinations, except the USA, EU andCanada, will be considered new ones. The exporters will get 5%cash incentives in the first year, 4% in the second year and 2% inthe third and final year.

    Increased Banks Reserve RatioBB has raised the Cash Reserve Ratio (CRR) to 5.5% from 5% forbanks in a bid to contain inflation and issued a circular todifferent Commercial Banks in this regard. The reserverequirement is a Central Bank regulation that sets the minimumreserves each bank must hold against customer deposits. Thenew decision comes after a gap of more than four years. Earlieron October, 2005, the ratio increased by 0.5% to 5%. The reserveratio is sometimes used as a tool in the monetary policy,influencing the country's economy, inflation, borrowing andinterest rates.

    Capital Market Exposure Limit for BanksBB has for the first time set capital market exposure limit for theCommercial Banks. Under the new provisions, banks will beallowed to invest not more than 10% of their total liabilities inthe capital market. Recently, BB issued DOS Circular No. 04,

    dated June 15, 2010 in this connection and advised all scheduledbanks to follow the capital market financing limit. Besides, thebanks will not be allowed to conduct merchant banking orbrokerage house business from October 1, 2010 withoutformation of subsidiary companies for the purpose. As per thenew provisions BB will deal with only the banks, not subsidiarycompanies and the SEC will look into the functions of thesubsidiary companies.

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    National Budget amounting to BDT 132,170 crore has been unveiled for FY 2010 aiming to spurring higher economic growth, aided byincreased spending on energy and power and also encouraging private investments. The GDP growth target has been set at 6.7%, inflationtarget has been fixed at 6.5% along with the total allocation of BDT 38,500 crore for Annual Development Program (ADP) in this fiscal year.The total budget deficit is 5% of GDP. The key figures of proposed budget for FY2010-11 are as follows:

    Budget At A Glance: FY 2010-11(BDT in crore)

    Description Proposed Proposed Revised2010-11 2009-10 2009-10

    i) Total Revenue 92,847 79,461 79,484

    ii) Foreign Grants 4,809 5,130 3,742

    iii) Total (i+ii) 97,656 84,591 83,226

    Expenditure

    iv) ADP 38,500 30,500 28,500

    v) Non ADP 93,670 83,319 82,023

    vi) Total Expenditure (iv + v) 1,32,170 1,13,819 1,10,523

    Overall Deficit, Including Grants (iii-vi) -34,514 -29,228 -27,297

    (In % of GDP) -4.4 -4.2 -3.9

    Overall Deficit, Excluding Grants (i-vi) -39,323 -34,358 -31,039

    In % of GDP -5 -5 -4.5

    Deficit Financing

    Domestic 23,680 20,555 17,325

    a) Net Borrowing from Banking Institution 15,680 16,755 8,661

    b) Net Borrowing from Non-Banking Institution 8,000 3,800 8,664

    Net Foreign Financing 10,834 8,673 9,972

    Total Financing 34,514 29,228 27,297

    Non-Development & Development Budget: 2010-11BDT 1321.70 Billion

    Resources coming from

    12.7%2.6%

    54.9% 3.6% 8.2%17.9%

    Non-Development & Development Budget: 2010-11

    BDT 1321.70 Billion

    Use of Resources

    6.9%

    0.9%6.7%1.0%13.9%3.9%

    8.2%

    1.2%

    11.1%5.2%

    6.2%

    8.6%

    14.2%7.3%

    4.6%

    Foreign GrantsForeign Loans

    Domestic FinancingNon-Tax RevenueTax Revenue (Non-NBR)Tax Revenue (NBR)

    Public Administration

    Agriculture

    Energy & Power Transport & Communication

    Education & ITLocal Govt. & Rural DevRecreation, Culture &Religious AffairsPublic Order & Security

    Defence

    Health

    Industrial & Economic ServicesHousing

    Miscellaneous Expenditure

    Interest

    Social Security & Welfare

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    ADP Budget, All Time HighTotal targeted allocation for Annual Development Program(ADP) in FY 2010-11 is BDT 38,500 crore-an all times high in thehistory of Bangladesh. This allocation in FY 2011 is 26.3% higherthan ADP of FY 2009-10 and 35.10% higher than Revised ADP ofFY 2009-10.

    Macro Economic Aspect The GDP growth target has been set at 6.7% for FY 2010-11 in thisbudget, which is 0.5% higher from the previous projection and ifachieved it will be highest in the recent past. Export and importgrowth targets are set at 15% and 16% respectively. The target forremittance is set on 14 billion USD. Inflation target is fixed at 6.5%in the budget. Gross investment target in FY 2010-11 is set on

    26.4% of GDP, which will much depend on Public PrivetPartnership (PPP) realization. Total budget deficit is 5% of GDP.Targeted Broad Money is set at 16.2% of GDP.

    Education on top of allThe government has given top priority to the education sector,raising its allocation by 13.5% in the budget to BDT 17,959 crorefrom BDT 14,006 crore in the FY 2010-11.

    Limited Scope for Whitening Black MoneyIn the budget of FY 2010-11, the government proposed to allowmoney whitening only in infrastructure fund with payment of10% flat tax by investment to the Bangladesh InfrastructureFinance Fund (BIFF). In the last few years, black money could bewhitened by paying tax only without any mandatory investmentin any sector.

    Tax PolicyLevel of tax-free income and all tax slabs remain unchanged inthe budget for the last three consecutive years with a taxexemption limit of BDT 1,65,000. Corporate tax structure will alsoremain unchanged at 42.5%. A concessionary tax will be imposed

    in the following manner: a) at 10% on income of a companyearned from trading of shares of listed companies in any stockexchange; b) at 5% on income of sponsor shareholders ordirectors of a company listed with any stock exchange; c) at 3%on the premium value of shares of companies being sold at apremium value. VAT at the rate of 4.5% will be imposed onprivate universities and english medium schools.

    Government Borrowing The overall budget deficit (excluding grants) has been estimated atBDT 39,323 crore (5.0% of the GDP) for FY2010-11. In this fiscalyear, governments domestic borrowing will be increased by36.7% to BDT 23,680 crore. The govt. will increase its borrowingfrom banks by 81%. Total foreign finances (loan and grants)estimated at BDT 20,777 crore, upped by 14% in the budget of FY2010-11.

    Allocation for AgricultureTotal allocation for agriculture and allied sectors is BDT 20,769crore (6.1% higher than the Revised budget for FY 2009-10).However, subsidy for fertilizers and agricultural inputs has beenreduced by 19.2% in the budget for FY 2010-11 (BDT 4,000 crore)as compared to that of last years revised budget (BDT 4,950

    crore).

    Public Private Partnership (PPP)The PPP initiative conceived as a key mechanism to stimulateinvestment if Bangladesh is to achieve 8% GDP growth by FY2014-15. It can play an important catalyzing role in infrastructureprojects, a broader partnership between the government andprivate sector in policy formulation and implementation. Totalallocation of BDT 3,000 crore has been kept in the FY 2010-11budget for PPP, which is 2.2% of the total budget.

    Stimulus PackageThe budget also proposes BDT 2,000 crore as a stimulus package.The stimulus package of BDT 5,000 crore introduced earlier for thelocal exporters to tide over global financial meltdown willcontinue as the government. allocated a further BDT 2,000 crorefor the export sectors in this fiscal year.

    Social Safety Net The national budget for 2010-11 seeks to retain thrust on the socialsafety net although allocation has reduced by 0.4%. In theproposed budget the government has allocated BDT 19,497 crore,which is about 14.8% of development and non-developmentexpenditure and 2.5% of GDP for the social safety netprogrammes.

    Concluding ObservationThe FY 2010-11 budget is pragmatic, yet justifiably somewhatambitious. With 20% growth in the overall outlay and 35% indevelopment spending, raises a question regarding thegovernments implementation capability. Success of theimplementation of the budgetary proposals and targets will hingeon efficiency of delivery, efficiency of development administrationand good governance.

    The highly discussed issues of the budget are the followings:

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    Md. Abdul Jalil, M.P, Honble Chairman along with the scholars whohave been honored with Mercantile Bank Awards-2010 atBangabandhu International Conference Center.

    8

    Corporate News MBL Celebrates its 11th Founding AnniversaryMBL started its operation on 2nd June, 1999 with a vision tobecome the finest corporate citizen. On 2nd June, 2010 it hascompleted 11 years of its successful operation. MBL marks the daydistributing cakes among the customers, employees and wellwishers expecting that the Bank will continue its outstandingperformance in the coming days, providing state-of-arttechnology-based customer service. On the occasion, all theBranches and Head Office of the Bank were decorated withcolorful festoons and banners.

    On the day morning, Md. Abdul Jalil, M.P, Honble Chairman

    inaugurates the 11th

    Founding Anniversary cutting anddistributing cakes among the customers, employees andwell-wishers at the Head Office of the Bank. On the day evening,a colorful customer gathering was arranged at BangabandhuInternational Conference Centre, Dhaka followed by a livelycultural program and refreshing Dinner. In that vibrant ceremony,12 distinguished personalities of the country were awarded fortheir outstanding contribution in the respective fields fromMercantile Bank Foundation. The Award includes a Gold Medal(2 Vori), a Crest and a Pay Order of BDT 1 lakh.

    M. Amanullah, Vice Chairman; Md. Anwarul Haque, ViceChairman; Md. Shahabuddin Alam, Chairman of the Executive

    Committee; Morshed Alam, Chairman of the Audit Committee;all Honorable Directors and Sponsor Directors and SeniorExecutives & Officials of the Bank were present in the ceremony.

    Md. Abdul Jalil, M.P, Honble Chairman along with other HonbleDirectors, Sponsor Directors and Senior Executives inaugurates the11th Founding Anniversary program of the Bank cutting cakes at HeadOffice.

    Recognition MBL Awards 12 Scholars of the CountryMBL always fosters the motive in mind to build an ever-lastingwarm relationship with the customers, employees, financeproviders, regulatory bodies and the community people at large.Keeping this motive in mind, the Bank always cares all of itsstakeholders and the community people since its inception.Mercantile Bank Foundation has been established to act as ahelping hand to the community people and Banks commitmenttowards CSR. In 2010, as before, the Foundation of the Bankprovides awards to 11(eleven) Scholars for their outstandingcontribution in eleven arenas. Besides, like 2009, also in 2010 theBank provides a special award, namely, Mercantile Bank SpecialAward for remarkable contribution in Banking.

    Mercantile Bank Awards-2010Arenas Scholars

    Bengali Language Syed Shamsul Haque

    Education Dr. Rafiqul IslamCulture Sohrab HossainLiberation War Dr. M. A. Hasanbased ResearchEconomy and Dr. Mohammed FarashuddinEconomicResearchHealthcare National Professor Dr. Nurul IslamScience and Dr. Abul HussamTechnologyCommerce Major Gen. (Retd.) Amjad Khan Chowdhuryand Industry Journalism Abdul Gaffar ChoudhuryAgricultural Shykh SerajResearch andDevelopmentSports Rani Hamid

    Mercantile Bank Special Award-2010Banking Muhammad Taheruddin

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    Donation to Kidney FoundationMercantile Bank Limited has donated BDT 5 million to KidneyFoundation to establish a hospital, which will provide moderndiagnostic facilities to the kidney-affected patients at a nominalcost. The President of Kidney Foundation Prof. Dr. Harun UrRashid received the cheque on behalf of the Organization fromMd. Abdul Jalil, M.P, Honble Chairman of the Bank in a Cheque

    handover ceremony held at the Dhanmondi Office of KidneyFoundation.

    Honble Vice Chairman of the Bank M. Amanullah, HonbleDirectors- Golam Faruk Ahmed, M.S. Ahsan, A. K. M. ShaheedReza, Alhaj Mosharref Hossain, Honble Sponsor- M.A. KhanBelal, Managing Director and CEO Dewan Mujibur Rahman,Additional Managing Director A.K.M. Shahidul Haque, KidneyFoundations Vice Chairman Prof. M. A. Ohab, Managing DirectorTiny Rashid and Senior Executives from the both organizationswere also present on the Cheque handover ceremony.

    Donation to Hicare School, RajshahiMBL has donated an amount of BDT 5 lac to Hicare School,Rajshahi for education and development of the deaf children aspart of its Corporate Social Responsibility. The Honble Chairmanof the Bank Md. Abdul Jalil, M.P handed over the donationcheque to the Headmistress and Member Secretary of Hicare

    Credit Rating of the BankYear Long Term Rating Short Term Rating

    2009 AA- ST-22008 A ST-2

    Credit Rating Information and Services Limited (CRISL) hasupgraded the rating of Mercantile Bank Limited with AA-(pronounced as double A minus) in Long Term and reaffirmsST-2 rating in Short Term based on financials up to December31, 2009 and other qualitative and quantitative information.

    MBLs Long Term Rating has been upgraded to AA- whichtestifies its good fundamentals such as good profitability, increasein NIM, increase in non-funded business, diversified investmentportfolio, increase in loans and advances, augmentation of Assetbase etc. This level of rating indicates a banking entity with highquality, offer higher safety and have high credit quality.

    The Short Term rating ST-2 indicates high certainty of timelyrepayment. Liquidity factors are strong and supported by goodfundamental protection factors. Risk factors are very small.

    MBL thanks its all valued stakeholders for making it happen.

    Md. Abdul Jalil M.P, Chairman of the Bank handing over a cheque of BDT 5 million to Prime Minister Shikh Hasina to help the Nimtoli fire tragedy victims.

    Honble Chairman Md. Abdul Jalil M.P, handing over the Cheque tothe President of Kidney Foundation Prof. Dr. Harun Ur Rahid.

    Honble Chairman Md. Abdul Jalil M.P, handing over the Cheque tothe Headmistress of Hicare School, Rajshahi.

    Rating

    CSR Donation to Help the Nimtoli TragedyVictimsMBL has donated an amount worth BDT 5 million to the PrimeMinisters Relief Fund for the victims of recent devastating fire ofNimtoli. Recently, the Chairman of the Bank Md. Abdul Jalil, M.Phanded over the donation cheque to the Honble Prime MinisterSheikh Hasina at Her office. Honble Directors of the Bank- M. S.Ahsan and A.S.M. Feroz Alam were also present on the occasion.

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    School, Shahnaj Begum. On the occasion, the Honble Chairmainsaid, the Bank is always committed to work for the welfare of thepeople of the country. Donation to Hicare School, Rajshahi is thereflection of its commitment. In the program Head of RajshahiBranch of MBL Abu Syed Md. Mohiuddin, President of HicareSchool Prof. Dr. S.A.A. Bari, Vice President and Senior JournalistMostafizur Rahman Khan and other notable persons of thesociety were present.

    10

    Opening

    54th Branch at PatuakhaliThe 54th Branch with an ATM Booth of MBL was officiallyinaugurated on July 10, 2010 by the Chief Guest of the openingceremony, the Honble Chairman of the Bank Md. Abdul Jalil,M.P, at Natun Bazar, Patuakhali. In his inaugural speech, Md.Abdul Jalil M.P said that Patuakhali is one of the growingbusiness areas of the country and the newly opened Branch willharness the trade and commerce of the district. Honble ViceChairman Md. Anwarul Haque, Honble Chairman of the AuditCommittee Morshed Alam and Honble Directors A.S.M. FerozAlam, Mohd. Selim, A. K. M. Shaheed Reza and ManagingDirector and CEO of the Bank Dewan Mujibur Rahman andDeputy Managing Director Monindra Kumar Nath were presentin the inaugural ceremony.

    Signing

    Mercantile Bank to Sponsor its First Mutual Fund MBL is going to float its first Mutual Fund (MF) worth BDT 1.0billion in the capital market by the name and style MBL 1stMutual Fund. Recently, a signing ceremony of the Trust DeedAgreement took place between MBL and Bangladesh GeneralInsurance Company Limited (BGIC). Managing Director & CEO

    Brokerage House at Mirpur, DhakaMBL has opened its 3rd Branch of Brokerage House at Razia Plaza,184 Senpara porbata, Rokeya Sarani, Mirpur-10, Dhaka as part of itscapital market operations. The Honble Chairman of the Bank Md.Abdul Jalil, M.P inaugurated the Branch of the Brokerage House asthe Chief Guest of the opening ceremony. Honble Directors of theBank Dr. Taufique Rahman Chowdhury, M. S. Ahsan, HonbleSponsor M. A. Khan Belal, Managing Director and CEO of the BankDewan Mujibur Rahman, Deputy Managing Director and CFOMonindra Kumar Nath were present in the program.

    Md. Abdul Jalil, M.P Honble Chairman of the Bank along with other Directors, Sponsors and Senior Executives of the Bank unlocking the 3rd Branch of the Brokerage House of the Bank at Mirpur, Dhaka.

    Brokerage House and ATM Booth at KhulnaHonble Chairman of MBL Md. Abdul Jalil M.P has inauguratedthe 4th Branch of Brokerage House and an ATM Booth of the Bankat Rupsha Plaza, 73 KDA Avenue, Khulna. Honble Directors of theBank A. K. M. Shaheed Reza, Golam Faruk Ahmed, ManagingDirector and CEO of the Bank Dewan Mujibur Rahman, DeputyManaging Director and CFO Monindra Kumar Nath were presentin the program.

    Honble Chairman of the Bank Md. Abdul Jalil, M.P along with other Directors and Senior Executives of the Bank inaugurating the 4th Branch of Brokerage House of the Bank at Khulna.

    Honble Chairman Md. Abdul Jalil, M.P, inaugurating the 54th Branchof the Bank at Patuakhali. Honble Directors, Sponsor Directors, Senior Executives of the Bank were also present on the opening ceremony.

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    of the Bank Dewan Mujibur Rahman and AK Azizul HaqueChoudhuri, Managing Director of BGIC has signed the deedagreement on behalf of their respective organizations. Under thisagreement, BGIC will act as the Trustee of the forthcoming issueof MBL 1st Mutul Fund. Additional Managing Director A.K.MShahidul Haque, Deputy Managing Directors Md. Abdul JalilChowdhury and Monindra Kumar Nath along with other seniorOfficials of MBL were present on the occasion.

    Financing

    Loan through MIDAS Financing for Poor PeopleMBL has planned to provide BDT 250 million loan through itsPragoti Sarani Branch to the under-privileged poor people for theoverall micro-economic growth of the country. The Bank willdisburse the loan through MIDAS Financing Limited. In thisconnection, a cheque handover ceremony was arranged at the

    Visit

    Marketing Campaign in Qatar & Omanby Managing Director and CEODewan Mujibur Rahman, Managing Director & CEO of MBLrecently visit to Qatar & Oman for the purpose of marketing ofremittance business. During the time he visited different potential

    Exchange Companies for entering into remittance arrangementwith MBL. As a result a good number of renowned exchangecompanies namely Al-Fardan Exchange Company, LLC, ArabianExchange Company LLC, City Exchange Company LLC, ModernExchange Company, Oman United Exchange Company & GulfOverseas Exchange Company have expressed their willingness totie up remittance arrangement with the Bank. In this connectionan expatriates gathering was organized by Al-Zaman Exchange,Qatar where Shahdat Hossain, Honble Ambassador ofBangladesh in Qatar was the chief guest, Managing Director &CEO of MBL had presided over the meeting. A good number ofBangladeshi expatriates and distinguished citizens were presentat the meeting. It is expected that the trip will be cemented ourexisting business relationship and will create new opportunity forincreasing the volume of remittance of the bank.

    Managing Director and CEO of MBL, Dewan Mujibur Rahman and Managing Director of BGIC, AK Azizul Haque Choudhuri signing theTrust Deed Agreement on behalf of their respective organizations.

    Managing Director and CEO Dewan Mujibur Rahman handing over the cheque to Shafiqul Azam, Managing Director of MIDAS Financingat the Banks Head Office.

    Shadat Hossain, Honble Ambassador of Bangladesh in Qatar andDewan Muzibur rahman, Managing Director & CEO are seen in anexpatriates gathering held in Qatar.

    Head Office of the Bank. Managing Director and CEO DewanMujibur Rahman handed over a cheque to Shafiqul Azam,Managing Director of MIDAS Financing. Additional ManagingDirector AKM Shahidul Haque, Deputy Managing Directors MdAbdul Jalil Chowdhury and Monindra Kumar Nath and VicePresident and Head of Pragati Sarani Branch Farook Iqbal,MIDAS Financing Assistant Manager Shafiqur Rahman Khanwere also present on the occasion.

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    Training & Seminer

    Basic Training Course for theTrainee Assistant Officers-2010Mercantile Bank Training Institute (MBTI) hasrecently arranged a 18 days long Basic TrainingCourse for the Trainee Assistant Officers of theBank. The Training program was inaugurated bythe Chief Guest of the inaugural ceremony andHonble Chairman of the Bank Md. Abdul Jalil,M.P. The Managing Director and CEO of the BankDewan Mujibur Rahman, Additional ManagingDirector A.K.M. Shahidul Haque and Principal ofthe MBTI Rabiul Hussain were also present in theprogram.

    Published by Research & Planning Division61, Dilkusha Commercial Area, Dhaka-1000, Bangladesh

    Tel: +880-2-9559333, 01711-535960, Fax: +880-2-9561213SWIFT: MBLBBDDH, E-mail: [email protected]

    DISCLAIMER: This documents has been prepared and issued by Mercantile Bank Limited (MBL) on the basis of publicly available information, internally developed data and othsources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts stated here are accurate as on the date of this document, neither MBL nor any of itsdirectors, management, or employees shall, in any way, be responsible for the contents and no representation or warranty, expressed or implied, is made as to their accuracy,completeness and correctness. MBL endeavors to update the information provided in this document on a reasonable basis. However, MBL has no obligation to inform the recipientwhen such changes occur. This document is for general information of the stakeholders of MBL. It does not solicit any action based on the materials contained and should not bconstrued as an offer or solicitation to buy or sell, or subscribe to any security. This document or any information contained herein shall not form the basis of or be relied upon iconnection with any contract or commitment whatsoever. All investors are strongly advised to take advice regarding any investment decision.

    12

    Md. Abdul Jalil, M.P, Honble Chairman of the Bank inaugurating the Basic TrainingCourse program for the Trainee Assistant Officers of the Bank.

    NAME BRANCH / DIVISION

    PART-I COMPLETED

    Md. Nizam Uddin Rajnagar SME/Krishi BranchKafil Uddin Muhammad Zahid Mahmud IT DivisionSamar Kanti Ghosh Human Resources DivisionMd. Shafiqul Islam SME Financing DivisionMd. Main Uddin Sheikh Mujib Road BranchRaihan Bhuiyan Main BranchATM Sadequssalam Chowdhury Ashulia BranchMd. Zulhash Uddin International DivisionTahmina Islam Elephant Road BranchMd. Yunus Miah Faridganj BranchMd. Mamun Hossain Satmasjid Road BranchMd. Abdul Aziz Main BranchRuhidash Paul Jessore BranchFujael Ahmed Khan Gulshan BranchTushar Kanti Mallick Banani BranchMd. Tariqul Islam Karwan Bazar BranchMuhammad Abdul Kader Bijoynagar BranchMd. Rajanul Islam Board Bazar BranchFerdous Rayhan Miaji Jubilee Road BranchMasrur Hasan Madam Bibir Hat BranchMohammad Talat Rahman Madam Bibir Hat BranchMd. Afzul Hossain Madam Bibir Hat Branch

    PART-II COMPLETED

    Mohammad Nazrul Islam SME Financing DivisionYasser Arafat Corporate Banking Division

    Success

    MBL Feels Proud for itsWinning TeamA number of employees have made the Bank to feelproud by being successful (passing part-I andPart-II) in the 70th (Winter) Banking DiplomaExamination held in November 2009 conducted bythe Institute of Bankers, Bangladesh. Besides, agood number of employees have partially passedpart-I and part-II. In below, a list of the successfulcandidates has been furnished: