Dear Stakeholders,

It’s an honor for me to welcome you all to the 22nd Annual General Meeting of Mercantile Bank Limited. On behalf of the Board of Directors, it is my privilege to present the Annual Report of Mercantile Bank Limited for the year 2020.

2020 was a year that confronted the world with health, social and economic challenges that we could hardly have imagined. At the same time, our banking industry faced the unprecedented challenge of implementing the single digit interest rate from April 1, 2020 as declared by Bangladesh Bank.

However, we mastered these twin challenges better than expected. We are in line with our strategic plan. We achieved the most of our objectives over the past year. We recorded an operating profit of 3,947.74 million and net profit of 2,161.32 million BDT. In other words, we have been able to more than offset the significant strains of the pandemic and ongoing burdens relating to single digit interest rate implementation.

2020 for MBL: A resilient performance in the face of crisis

MBL was focused on maximizing revenue generation, to identify new business and cementing strong relation with existing clientele. We experienced steady growth in our lending volumes which resulted in loans and advances growing buoyantly by 5.11% year-on-year. In contrast, the deposit base fell slightly, decreasing by 3.86% year-on-year. In the backdrop of declining market interest rates, we were conservative in the mobilization of deposits that were deemed relatively more costly than other sources of funding available, and hence, we were able to access less costly sources of funding through borrowings on the strength of our brand with financial stability and integrity. Our core business of lending remained the main source of revenue for the Bank, contributing 81.08% to gross revenue while the non-fund based income being the other main source of revenue came primarily from fee and commission, trading in shares and the receipt of dividends.

We have experienced 4.56% growth in total assets which stood at BDT 330,785.56 million as at the reporting date, mainly driven by the growth in loans and advances. We were cautious about the increasing credit risk and took steps to strengthen our recovery process to mitigate the impact on asset quality. As a result, the non-performing ratio moved downward to 4.72%.

We were very much vigilant to comply with Bangladesh Bank’s instruction. As a result, our Advance Deposit (AD) ratio was 84.30% as on December 31, 2020. We have been gradually scaling our total capital base to facilitate the business growth. Presently Capital to Risk Weighted Assets Ratio (CRAR) is 13.61% where Tire-1 capital ratio is 8.67% (Including Buffer) and Tire-2 Capital ratio is 4.94%.

We continue to reward our shareholders with healthy dividend payout. In the last year we have been paid an industry remarkable dividend 11% cash and 5% stock dividend. I am glad to announce that the Board has proposed a 10% cash and 5% stock dividend for this year. This will be gradually improving through our continuous effort.

Progress on track despite the pandemic

The expansion strategy we undertook during the last two decades has been fruitful towards achieving our sustainability goals. We have extended credit facilities to our clientele based on the sustainability precepts of Award- 2016” by National Productivity Organization (NPO) under the Ministry of Industries of the Government of the People’s Republic of Bangladesh.

Outlook: on track for sustainable profitability

Challenges will continue to emerge during 2021, not least because the fight against the pandemic continues. Nevertheless, we expect economic activity to return in many markets that are important for our business, especially with the roll out of vaccination programmes. We had a strong start to 2021 and we continue to expect our revenues to increase year-on-year as industry volumes and volatility normalize. This is expected to result in marginally higher bank’s revenues year-on-year before growth resumes in 2022 in line with our projections. At the same time, we expect loan loss provisions to decrease slightly in 2021 and to decline further in 2022.


And we continue to see opportunities for the coming years. We are well positioned for an economic environment which is on the verge of graduation to a middle income country. Even when the economy is facing major upheavals due to the current pandemic situation banking sectors are being called on to support and help shape its recovery. We are ideally positioned to do so and to benefit from the process of recovery.


Our aim is to achieve sustainably and to remain firmly committed to our plans. To do so, we must continue along this path, the path towards a bank that is sustainably profitable and that is even better positioned for our clients, the economy and society.

Appreciating the Tireless Efforts

On behalf of the Board, I would like to thank the Government of the People’s Republic of Bangladesh, Honorable Governor and other officials of Bangladesh Bank, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange, respected Shareholders, valued Customers, Patrons and well-wishers for keeping their faith on us. I sincerely extend my thanks to MABS & J Partners, Chartered Accountants for carrying out the external audit professionally and advising us on various compliance issues. I would also like to express my gratitude to our Managing Director & CEO and the Senior Management team for their ongoing commitment to deliver our strategy every day. I also thank my fellow board members for their contributions to guiding the bank and wise counsel. This Bank exists because of its 4,765 dedicated employees including support staff who work every day to add value to our 1.14 million plus clients. I am grateful for their ongoing commitment to embracing change, ensuring MBL leads to the competition while living a strongly ethical culture.

We have entered 2021 with a more positive outlook as the year has marked the country’s 50 years as an independent nation as well as the birth centennial of the father of the nation. Against all odds I am excited by the opportunities we have to contribute to the strong growth track of our country and to help improve the lives of all citizens.


Best regards,

Morshed Alam, MP



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