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MANAGING DIRECTOR & CEO'S REVIEW
Bismillahir Rahmanir Rahim
Assalamualaikum
Dear Shareholders, Colleagues, Ladies & Gentlemen,
Our renewed vision is premised on two pronged objectives: to remain a highly resilient and reliable financial institution by maintaining competitive edge prioritizing our compliance on all the fronts of banking operations, while at the same time delivering hassle free customized top notch financial services to our expanding base of clienteles. We believe the financial prosperity of our clients will infuse the impetus to accelerate the implementation of our forward looking strategy propelling this institution towards the next trajectory of sustainable growth.
GLOBAL ECONOMY
In 2015, global economic activities remained almost subdued. Growth in emerging market and developing economies declined for the fifth consecutive year, while a modest recovery continued in advanced economies and USA has shown sign of recovery. The Global growth, currently estimated at 3.1 percent in 2015, is projected to be 3.4 percent in 2016 and 3.6 percent in 2017. The main contributor of this world growth performance is Asia and the Pacific region. Growth rate of China is unlikely to see significant uptick in 2016 compared to 2015. Growth in China is expected to be slow which will hover around 6.3 percent in 2016 and 6.0 percent in 2017, primarily reflecting weaker investment growth as the economy continues to rebalance. Chinese economy is glut with surpluses with no corresponding pick up in the investment spree. It is very much perceptible that the economy of china occupies 15% of global GDP, so any upward and downward movement of this economy will have systemic/contagious effect on the rest of the countries. The country is, however, taking steps to rebalance its economy, and, if they succeed, we may see a rebound in Chinese growth earlier than expected.
BANGLADESH ECONOMY
In the year 2015, the economy of Bangladesh witnessed stable macroeconomic dynamics with a GDP growth rate of around 6.5%. Most major economic indicators have been within the level of forecasting: exports experienced a growth of 3.3%, imports increased by 1.3%, and the growth momentum of remittance was around 7.5%. Home-bound remittance is expected to face emerging challenges, however, with oil-based economies around the world in turmoil as oil dipped below $30 per barrel in 2015.

The causes of concern for us were the sluggish growth in investment and sign of an overall stagnation in the business landscape of Bangladesh during the immediate past year. The banking industry has suffered as a result of this stagnation, encountering increasing pressure to reduce interest rate to counteract the plunge in credit demand while simultaneously struggling under liquidity burden. Coupled with all the noted impediments, an increase in the ratio of NPLs in the portfolios of several banks has had an adverse impact on their revenue streams. The banking industry as a whole is fraught with challenges to overcome.
MBL'S PERFORMANCE HIGHLIGHTS
During the year 2015 our deposit base surged to BDT 154.87 billion, grown by 10.25% in comparison to 2014. Here, it is notable that our endeavor to rein in the cost of deposits by mobilizing no cost/free float deposits yielded good result, as the cost of deposit came down to 7.52% in 2015 from 8.26% in 2014. Over the same period, our loan and advance portfolio experienced growth by 7.92% to BDT 126.34 billion. Compared to 2014, our export performance increased by 20% to BDT 94.03 billion and imports registered growth by 12.04% to BDT 119.98 billion, while our bank’s home bound remittance experienced consistent growth, figured at BDT 19 billion during the year.

We have achieved this growth despite the difficult market condition described earlier. In the year 2015 the banking industry as a whole faced with myriad of challenges including subdued credit demand, and growing cost sensitivity and a strong preference to avail of foreign currency loans among corporate borrowers. Even though these external factors did not favor the desired level of profitability for our organization, we maintained internal policies of strict regulatory compliance, while at the same time making adjustments in our interest rates/loan pricing to remain competitive in the today’s financial market.

We have taken strategic approach to coping with difficult externalities in 2015 through consolidating our balance sheet by streamlining of nonperforming assets, as well as expanding our business portfolio and thereby striking balance between liquidity and profitability. Our concerted efforts with respect to NPL management yielded good result, as we succeeded in keeping it in the range of 4.95%. During the year we also focused on liability management and prioritized reductions in cost of deposit to generate satisfactory net interest margins (NIM) in the process of intermediation.

As a result of the sincere efforts of all the members of MBL family, and under the prudent policy guidance of our board, we succeeded in 2015 in attaining consistent profit growth by keeping down the growth of NPLs, ensuring efficiency in the process of intermediation of the available funds, and reining in the cost of deposits.
BUSINESS STRATEGY
In all our business planning and strategic decision-making, the interest of our clientele reigns supreme, and the spirit of customer services pervades all of our operational activities. In addition we accorded priority to maximize profit by bringing loss making branches within territory of profitable ones by leveraging of our expanding network to reap geographic and demographic dividends. Our strategic objective is to make this institution first ranking one in term of the performance parameters among its peers on all the fronts of our banking operations.
INFORMATION TECHNOLOGY
A strong Information Technology infrastructure is a precondition for achieving a bank’s goals in the modern competitive banking industry. In 2015, we successfully migrated to TEMENOS T24 a world-class, proven core banking software. We are now well-networked across the country via the 109 strong branches and two subsidiaries i.e. Mercantile Bank Securities Limited with 7 branches and Mercantile Exchange House (UK) Limited at London, United Kingdom. At the end of 2015 we have 136 ATMs and 20 Cash Deposit Machines. We are also investing in industry-leading online and Mobile Financial Services.
HUMAN RESOURCES
A bank is only as good as its people, and we believe that the surest way of improving our organization’s performance is to train and upgrade the skills of our employees to maximize both productivity and morale. We are committed to a culture that nurtures and promotes leadership, team spirit, and open communication at every level of our organization’s hierarchy. We continue to invest in people to enhance and upgrade their professional knowledge and strategic thinking by organizing training sessions at home, and where necessary, by sending our officers and executives abroad.
GREEN BANKING
As a third generation Bank in Bangladesh, MBL is always committed to ensure proactive and prudent management of the environmental impact of our banking operations. MBL has established a separate Green Banking unit aiming at making our bank a ‘Green Bank’ -- eco-friendly corporate citizen with sustainable business practices -- not in rhetoric but in reality.
CORPORATE SOCIAL RESPONSIBILITY
At MBL, we believe that true success does not consist merely in profit maximization, but in maximizing the net benefit to the communities in which we operate, including those in our communities who are underprivileged. As such, corporate social responsibility is an integral part of MBL culture. With this mind, MBL established a Foundation named Mercantile Bank Foundation in 2000 as a separate entity to carry out various philanthropic and charitable activities on behalf of the Bank. During the year 2015, MBL donated BDT 93.30 million for the CSR activities, notable ones are as under:

• "Mercantile Bank Abdul Jalil Education Scholarship", which provides financial assistance to poor and meritorious student across the Bangladesh.

• On its founding anniversary 2nd June each year MBL awards prominent personalities of the society for their outstanding contribution in the fields of Education, Healthcare, Culture, Liberation War based Research, Bengali Language and Literature, Economy and Economic Research, Commerce and Industry, Journalism, Sports, Agriculture based Research and Development, and Science and Technology.

• Financial assistance in health sectors, assisting the victims of natural disasters, development of sports, and distribution of warm clothings in winter season.
UPCOMING CHALLENGES
With 56 banks in operation in Bangladesh, there is no doubt that the banking industry is becoming fiercely competitive. At the same time, the regulatory environment of our industry has become increasingly stringent and complex. We are committed to embarking on a new strategy to step into the next trajectory of growth and we are hopeful that the year 2016 will open new avenues of opportunities, but we are also aware that there will be challenges to overcome. However, with the cumulative experience and energy of my colleagues in the MBL family, and under the prudent and dynamic guidance of our board, I am confident that we will overcome any difficulty and cross any barrier on our way to new height of excellence.
ACKNOWLEDGEMENT
At the end, I express my heartfelt gratitude to the Government of the People’s Republic of Bangladesh, the 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 valuable guidance and co-operation provided to us from time to time.

Our Bank is well poised to face the future challenges with confidence and we shall continue our relentless efforts to make superior value addition in all banking services. We value high on our agenda the trust and confidence that our depositors, shareholders and other stakeholders have placed in us and we assure you of our endless efforts to maximize the value of your precious investment.
Kazi Masihur Rahman
Managing Director & CEO
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