Despite facing some headwinds, we are pleased to report that MBL managed to weather the storm due to its overall sound business performance. As a result, MBL’s net profit for 2022 amounted to BDT 2,202.58 million, a testament to our organization’s resiliency and commitment to delivering value to our stakeholders.

 

Dear Stakeholders,
AS-SALAMU-ALAIKUM

On behalf of the MBL Board of Directors, I extend a warm welcome to the 24th Annual General Meeting. It is my distinct honor to present the Annual Report and audited financial statements for the year 2022, providing an in-depth look at MBL’s performance over the past year.

Despite facing some headwinds, we are pleased to report that MBL managed to weather the storm due to its overall sound business performance. As a result, MBL’s net profit for 2022 amounted to BDT 2,202.58 million, a testament to our organization’s resiliency and commitment to delivering value to our stakeholders.
 

Economic Resilience in 2022

Bangladesh exhibited a commendable economic bounce-back from the COVID-19 pandemic, despite the global economy’s substantial upheaval due to the Russia-Ukraine conflict. This turbulence resulted in a surge in worldwide commodity prices, presenting new challenges for growth that also impacted Bangladesh. In December 2022, headline inflation rose to 8.71%, fueled by increased food and non-food prices, while decreased remittances led to an unprecedented Taka devaluation and a decline in foreign exchange reserves to US$ 33.74 million by year-end. Nevertheless, Bangladesh’s economy demonstrated resilience and vitality, achieving a robust 7.2% growth in 2022, with per capita income reaching $2,824 from $2,591 in 2021, highlighting the nation’s ability to overcome external hurdles. The banking industry also overcame various challenges in 2022, such as reducing non-performing loans (NPLs), improving governance and regulation, enhancing cyber security and embracing digital transformation.
 

Resilient Financial Performance of MBL

Our bank has also demonstrated its resilience and agility, delivering solid results in terms of profitability, asset quality, capital adequacy and customer satisfaction in the face of the challenging context.

MBL’s total income increased by 9.89% to BDT 29,555.47 million, with both net interest income and non-interest income showing growth. Our net interest income grew by 0.86% to BDT 4,718.03 million, supported by a 5.29% increase in loans and advances to customers, while our non-interest income rose by 22.28% to BDT 10,639.61 million. We kept our operating expenses under control at BDT 8,218.75 million, resulting in a cost-to-income ratio of 53.52%. Our bank’s net profit after tax stood at BDT 2,202.58 million, translating into an earnings per share of BDT 2.03. Our return on average equity were 8.87%  in 2022, while our return on average assets were 0.59% in 2022.

MBL’s balance sheet also remained strong and resilient throughout the year, with total assets growing by 6.37% to BDT 382,328.46 million, compared to BDT 359,411.36 million in 2021. This was mainly due to the growth in loans and advances to customers, which reached BDT 280,890.53 million in 2022, while our deposits from customers also increased by 4.50% to BDT 294,060.00 million, reflecting our strong customer base and trust. Our capital adequacy ratio remained well above the regulatory requirement of 12.50%, at 14.35% in 2022. We have proposed a 10?sh and 2% stock dividend for the year under review. These results demonstrate our bank’s ability to adapt to the changing environment and deliver value to our shareholders, customers, and employees.
 

Digital Transformation and Cyber Security Initiatives in 2022

In 2022, MBL achieved significant progress in digital transformation and cyber security. It established a department for digital innovation and expanded its mobile banking app. The bank also acquired ISO 27001:2013, PCI DSS, and SWIFT CSP certifications, implemented next-gen firewalls, and reduced people risk to less than 10%. Additionally, it established online portals, connected to mobile operators, integrated fund transfer services, and adopted a green banking approach. The bank also provided digital banking training, e-KYC fingerprint devices, and webcams to all branches and sub-branches.
 

Fostering Financial Inclusion

At MBL, fostering financial inclusion is a core element of our social responsibility and business strategy. We believe that financial inclusion not only empowers marginalized communities but also drives sustainable growth and innovation for our bank. In 2022, we were committed to our comprehensive approach, which encompasses product diversification, channel expansion, customer education, and partnership development. With a network of 152 branches, 30 Sub-Branches, 187 Agent Outlets, 213 ATMs & CDMs, digital banking app ‘MBL Rainbow’ as well as our MBL MyCash platform with around 1 million registered customers, we aim to reach out to all segments of the population. We also collaborate with various stakeholders to create an enabling environment for financial inclusion.
 

Upholding Best Corporate Governance Practices for Sustainable Value Creation

At MBL, we believe that good corporate governance is fundamental to our sustainable growth and success. We have complied with the mandatory guidelines issued by the Bangladesh Securities and Exchange Commission and followed the global best practices recommended by the OECD. In 2022, we strengthened our board of directors, established three board committees, implemented a sound remuneration policy, enhanced our risk management framework, and improved our disclosure and transparency practices. These practices have enabled us to achieve good financial performance, customer satisfaction, employee engagement, social impact, and regulatory compliance. We are committed to continuously improving our corporate governance standards in line with international best practices and stakeholder expectations.
 

Sound Risk Management

MBL’s adherence to the guidelines and standards set by regulatory bodies has enabled us to effectively manage credit, market, operational, liquidity, cyber, and environmental risks. We have adopted best practices for identifying, assessing, measuring, mitigating, and reporting risks. Our annual risk conference in October 2022 provided a platform for reviewing our performance and challenges in managing risks. Additionally, regular training programs, workshops, and audits have enhanced risk awareness and culture among our staff and management. We have strengthened our systems and processes to monitor, control, and report potential risks or issues, enabling us to operate in a manner that balances risk and returns.    
 

Outstanding Compliance Status

In 2022, MBL maintained high compliance standards, adhering to regulatory guidelines, international best practices, and legal requirements. We invested in enhancing our compliance culture and capacity through training programs, workshops, and audits. Our robust systems and processes monitor, report, and mitigate potential compliance risks. We operate transparently, ethically, and responsibly, protecting our stakeholders' interests and contributing to our country's development.
 

Strong Credit Profile

MBL has received impressive credit ratings from global and local rating agencies, highlighting our resilience and performance in a challenging operating environment in Bangladesh. Moody's Investors Service has rated our foreign and local currency deposits at B2 and Ba3, respectively, while Emerging Credit Rating Limited has rated our long-term and short-term credit at AA and ST-2, respectively, for three consecutive years. Our unwavering commitment to prudent growth strategies, risk management practices, and governance standards has strengthened our credit profile and reputation in the market.
 

CSR Initiatives for Sustainable Success

In 2022, MBL continued its commitment to corporate social responsibility (CSR) initiatives aimed at promoting education, health, community outreach, disaster management, arts and culture, and sports. Our education-focused initiatives provided opportunities for higher education and employment to underprivileged youths. In the health sector, we supported medical institutions and individuals in need of treatment, and continued donation to the Abdul Jalil Hemodialysis Unit at Naogaon Sadar Hospital. We also provided humanitarian assistance during natural disasters and engaged in community outreach to support vulnerable communities. Additionally, we supported the preservation of cultural heritage and sponsored the performing arts, and encouraged the development of games and sports in the country.
 

Efficient Human Capital

Mercantile Bank Limited has a strong and skilled human capital base, with 2,624 permanent, 239 contractual, 2,411 outsourced employees delivering excellent customer service. Initiatives such as competitive compensation, incentives and rewards, regular training and development, a conducive work environment, engagement, and recognition, as well as effective succession planning have contributed to our employees' satisfaction and loyalty.
 

Awards and Accolades

Mercantile Bank Limited received multiple awards and accolades in 2022, including recognition as the "Best Bank in the Private Sector" by the South Asian Partnership Summit and receiving two J.P. Morgan Chase Bank N.A. Awards for Fund Transfer Operations. The bank also won the Silver Award in the General Banking category of the 9th ICSB National Award for Corporate Governance Excellence and was awarded three ICAB National Awards for Best Presented Annual Reports. These achievements demonstrate the bank's ongoing commitment to excellence, good governance, and customer satisfaction.
 

Outlook and Strategic Priorities in 2023

Despite the challenges posed by the global economic environment, we remain optimistic about the future of our bank and our country. Our strategy for the coming year will focus on customer centricity, operational efficiency, risk management and digital transformation. We aim to achieve sustainable growth and profitability by offering innovative products and services, streamlining our processes and policies, adopting best practices for risk management, and investing in digital channels. We are confident that we can achieve a healthy growth rate, stable net interest margin, satisfactory return on equity, comfortable capital adequacy ratio, and low non-performing loan ratio in 2023.
 

Expressing Gratitude to the Stakeholders

We extend our sincere appreciation to our regulators, specially Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC), as well as our business partners, for their valuable cooperation and collaboration. We also express our gratitude to our shareholders for their confidence in our vision and strategy, and to our management team and staff members for their dedication, professionalism, and hard work. Finally, we thank our fellow directors for their oversight that ensured good governance practices throughout the organization. We look forward to seizing new opportunities and creating greater value for all our stakeholders in the years to come.

Thank you.

 

Best regards,

Morshed Alam, MP
Chairman