Dear Stakeholders,

I am pleased to welcome you all to the 25th Annual General Meeting of the Bank. It has been a year to remember and I would like to thank all the stakeholders for their unwavering support and confidence on the Bank through the thick and thin. On behalf of the board of directors, it is honor to present the Annual Report of Mercantile Bank PLC. for the year 2023. 2023 has once again proved that how this world can be unpredictable defying everyone’s belief and predictions. The operating environment continued to be generally characterized by continued broad macroeconomic concerns, including the outlook for economic growth and inflation, and elevated geopolitical tensions. For the fourth year in a row, we look back on another year spent in a very challenging environment. In addition to the war in Ukraine, which is being waged with undiminished ferocity, a new war broke out between Israel and Palestine, which threatens to destabilize the entire Middle East and is also causing new economic disruptions. The resulting complex economic situation is one that confronts the world with difficult choices. One needs to hedge against the heightening risks that future may pose.



In 2023, Bangladesh’s economy demonstrated resilience, with a GDP growth of 6.11 percent, despite challenges. The growth was supported by industrial and service sector advancements, while agriculture also contributed positively. Notably, the Consumer Price Index (CPI) inflation rate escalated, particularly due to adjustments in fuel and energy prices, reaching 9.48 percent by December. In response, the Central Bank of Bangladesh (BB) enacted policy measures, including a 175 basis point increase in policy rates and the introduction of a market-based reference rate (SMART). These measures, along with continued foreign currency sales, served as quantitative tightening, moderating money supply and private sector credit growth, and aiming to stabilize inflation expectations.


While the external environment remains uncertain, I believe our strategy remains the right one, underpinned by a strengthened connection between our strategic goals, clear financial targets, purpose and culture. I am pleased with the Bank’s strategic achievements in 2023. Our purpose of helping Bangladesh prosper means addressing social issues that impact our customers and creating long-term, sustainable growth for the country. Building an inclusive and sustainable future is at the heart of this. If the bank can create a strong base, then, with our kind of portfolio we will be able to contribute exponentially to the economy of Bangladesh. Currently, Mercantile Bank PLC. has a deposit Portfolio of BDT 306,947.95million and Loans & Advances portfolio of BDT 284,830.98 million. Our Regulatory authorities have identified Non-Performing Loans (NPL) as one of the main reasons for the current not so healthy scenario of the banks. For the Last few years, consolidation and recovery has been our main focus. While we acknowledge that we have way to go before achieving our target, we are certainly in the right direction.



I have said before that our objective is to grow income in a strong, safe and sustainable manner, while maintaining both cost and capital discipline, and I am delighted to say that was the case last year. We are happy that our NPL (Non-performing Loans) ratio has improved. Currently, it is 6.08%, which has improved quite a lot from last year. We managed profit after provision & tax of BDT 2,028.61 million while maintaining a strong capital and liquidity position. The strength of our financial performance affirms that the strategy that we set out earlier is working. Both the Board and the Management Team are absolutely focused on delivering sustained, long-term value for our shareholders. I believe our solid performance in 2023 gives us a good base from which to do this. We have further sharpened the actions we will take to accelerate performance and future growth. We also believe, generating strong and sustainable earnings in the long-term is imperative. We have made good progress on our strategy, whilst continuing to deliver a robust financial performance in 2023. The Board recognizes the importance of returns for our shareholders. I am pleased to announce that the Board has recommended a Cash dividend of 10 percent for 2023, in line with our progressive and sustainable dividend policy.



Our capital base is extremely robust: the Capital to risk weighted asset (CRAR) ratio was 14.79 % at the end of the year, compared to 14.35% at the end of 2022. This was significantly higher than a number of banks in the industry. We owe this on the one hand to our continued capital discipline, which is reflected in the renewed reduction of risk-weighted assets; on the other, we are operating so efficiently that we are able to preserve our capital base.



Our commitment to strong corporate governance continues to be a core focus for the Board. Over the past year, my fellow directors and I have focused on the continuing uncertain macroeconomic environment that has presented challenging conditions for the financial industry. MBPLC continued to demonstrate resilience and stable operational performance. The Board has been working closely with the leadership group, holding Board meetings and discussions to provide prudent oversight and guidance on the Bank’s business strategies, risk tolerance, and management practices – all these to support delivering the best of our Bank to clients and shareholders.



The Board remains committed to firmly embedding aculture of excellence across the organization, building high standards in a culture of ambition, actionand accountability that puts our clients at the heart of all we do. We are at our best when we harness the full talent and potential of the diverse markets in which we operate. Both the Board and the Management Team are dedicated to maintaining our status as an employer of choice. That means offering our employees a variety of ways to build their skill sets, attracting the best talent through our doors with a diverse set of career paths and progressive employee policies.



As the world continues to change around us, we also recognize the ongoing importance of technology and continuous improvement in maintaining our competitive edge, and in building an innovation-led culture that allows us to try new things within an effective and comprehensive risk management framework. We are intent on capturing the benefits of new, game-changing technologies like artificial intelligence, whilst protecting the information and financial security of our clients.



On behalf of the Board, I express sincere gratitude to our shareholders, customers, and business partners for their unwavering trust and patronage. We also acknowledge the valuable contributions of our Auditors, Legal Advisors, Consultants, and Correspondents, who have played pivotal roles with timeliness and prudence. Heartfelt appreciation goes to our dedicated management, executives, and officers, who tirelessly advance the interests of our esteemed institution. I extend thanks to the Government of the People’s Republic of Bangladesh, officials of Bangladesh Bank, Bangladesh Securities and Exchange Commission, Financial Reporting Council, Dhaka Stock Exchange, Chittagong Stock Exchange, and the National Board of Revenue. Lastly, my colleagues on the Board have consistently provided invaluable support and agility in steering the institution toward success.



In the year ahead, our focus is again on strengthening the firm by providing worldclass solutions for our clients as well as investing in our culture and our people. I am confident that, if we continue to serve our clients well, we will build on last year’s progress and position the Bank to deliver strong returns for shareholders. The environment and our strategy are ushering in a new chapter for the Bank. When I think about the strength of our market position, the depth and breadth of our client engagement, and the caliber of our people, I couldn’t be more excited about the future of Mercantile Bank PLC.


Best regards,

Morshed Alam, MP

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