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Chairman's Message
Bismillahir Rahmanir Rahim
Assalamualaikum
Dear Shareholders,
I feel privileged and honored to welcome you all to the 17th Annual General Meeting of Mercantile Bank Limited and present before you the Annual Report for the year 2015 containing the Directors’ Report accompanied by Auditors’ Report and Audited Financial Statements. You are very much aware that overall banking industry faced multipronged challenges during the year mainly due to subdued credit demand, growing pressure to slash the interest rate, increased tendency among the corporate business houses to avail low cost foreign currency fund. The banking and financial sector as a whole crossed the choppy water and despite all the headwinds the banking industry has experienced consistent growth in operating profit. Appreciating the ground reality we in our bank have endeavored to ensure consolidated growth and prioritized streamlining of the non performing loans in the portfolio. In the same breath we attached importance to bringing down the cost of fund through proper liquidity management. Sustainable accelerated growth is the policy priority of the board of our bank and accordingly we intend to navigate our bank in the right direction as to make it one of the most stable, sound and resilient banking institutions of the country.

You will be happy to learn that we have very much successfully expanded our network by opening a good number of branches in quick succession in the year 2015 and now number of branches came up to 109 and further expansion is also afoot. Our business performance as reflected by the size of our operating profit did not create ground for us to be complacent but our achievement indicates our journey towards consolidated growth as we succeeded to control the dud assets by handling professionally. The externalities as prevailed in the preceding year were not congenial enough so we could not reach the expected destination in our business performance.
GLOBAL & REGIONAL OUTLOOK
In the past few years the global economy witnessed slump growth in investment, dwindling level of consumer confidence and world economy was also rattled by unfavorable socio political state of condition. The Eurozone economy was jolted by the crisis in Greece. Global growth momentum trended down to 3.1% but is expected to rebound slowly but steadily in the year 2016. While growth in South Asia is slated to be around 7.3% in the current year from 7% of the immediate past year.
BANGLADESH ECONOMY
Despite the depression in the world economy, instability in our political landscape, the economy of Bangladesh has proved to be resilient by keeping up the desired level of GDP growth and all other economic indicators during the year had taken positive up tick. Inflation declined to 6.19% in FY15 from 6.99% in FY14, thanks to declining food inflation. Export growth was 3.3% in FY2015 that was 12.1% in FY2014. Contribution of garments sector was about 80% of total exports basket and registered consistent growth by 4.1% during the year. We can take optimistic note for the year 2016 as both import and export growth are expected to be in the territory of 8.50% and 5% increase in remittance. During the year 2016 economic growth is projected to be 6.8% backed by strong consumption and upward trend of export growth.
FINANCIAL PERFORMANCE
Even though the profit growth of the bank has slided in comparison to the preceding year but on all other fronts we have had success stories like that of enhancement of deposit base from BDT 140.48 billion in 2014 to BDT 154.87 billion at the end of 2015. Total loans and advances stood at BDT 126.34 billion at the end of 2015, which was BDT 117.06 billion in 2014. Earning per Share (EPS) stood at BDT 1.88. Non Performing Loans (NPL) ratio was 4.95% in 2015. Total Shareholders’ Equity increased to BDT 15.51 billion in 2015 experiencing 14.71% growth over that of 2014. Return on Assets (ROA) was 0.79% and Return on Equity (ROE) was 9.60% as on December 31, 2015. Net Interest Margin (NIM) stood at 3.27% at the yearend December 2015.
BUSINESS MODEL
We believe in welfare oriented financial services which is premised on the motto that if our customers grow financially that will have a direct spill over positive effect on our growth trajectory. We continue to upscale the quality of our services focusing on value addition in the business of our counterparty clienteles thereby ensuring our effective contribution to the cause of country’s GDP growth.
INFORMATION TECHNOLOGY
In 2015, the bank successfully implemented of our migration to core banking software TEMENOS T24. This software will make paradigm shift in our IT platform ensuring real time integrated banking services. We aspire to be even more tech-savvy in our operations responding to the emerging needs.
CORPORATE GOVERNANCE PRACTICE
We maintain and foster effective good Corporate Governance practices in our constant endeavor to promote and up keep the public trust and confidence on our agenda of priority. The term corporate governance is no longer a buzz word, the underlying meaning of which warrants us to stay compliant in our banking affairs with the bottom line objective to maximize the shareholders value and with the firm commitment to be a socially responsible corporate citizen. Our built-in advantage that the board of directors of the bank are composed of personalities from the business and industrial circle having credible track record and reputation in their respective fields. Besides, our independent directors are highly educated and professional; they contribute meaningfully to the cause of this institution. So it is conceivable that the members of our board of directors are well poised to provide strategic support and guidance to steer the overall affairs of the bank adroitly.
CORPORATE SOCIAL RESPONSIBILITY
The bank continues to play its active role in CSR activities specifically focusing on Healthcare, Education, Environment, Disaster Management, Art & Culture and other social welfare oriented arena, the details of which are given herein for your cognizance. For the sake of carrying out corporate social responsibilities in the right earnest we established “Mercantile Bank Foundation” back in the year 2000. Besides to contribute meaningfully to the cause of spreading out the education across the country we had launched “Mercantile Bank Abdul Jalil Scholarship” program in the year 2001 and significant numbers of meritorious students had derived financial benefit out of our this endeavor. You will be happy to learn that on account of CSR activities we had given benefits to the different segments of under privileged ones to extend of BDT 93.30 million in the year 2015. It is noteworthy that from the foundation, every year commemorating the founding anniversary of the bank we use to award prominent personalities in recognition of their concrete contribution in the respective fields.
OUTLOOK & CHALLENGES
We are very much optimistic that macro economic fundamentals will take further positive and stable trend but at the same time there exist challenges to face in our journey ahead because the roads sometimes are bumpy and not smooth all along.

We believe that private sector credit will pick up along with the rebounding of infrastructural and mega projects will necessarily be instrumental to infuse dynamism as well as will add new dimension in the overall economic activities spurring the economic growth.
ACKNOWLEDGEMENTS
I am grateful to the Government of the People’s Republic of Bangladesh, officials of Bangladesh Bank, officials of Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange for their very effective guidance and supervision. My Colleagues on the Board have helped me a lot and contributed in every possible way to promote the interest of the Bank.

The Senior Management and officials have lived up to the challenge as a team and their collective effort has augured well in making our journey ahead smoother by overcoming the headwinds.

Our customers as well as our valued stakeholders will always remain in our hearts and minds as we endeavor to create more value for them and we firmly committed to keep their trust and confidence on the high of our agenda as reposed on us.

With warm regards,
M. S. Ahsan
Chairman
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