Year in review


Obtained a portfolio growth of 17.39%

Restricted NPL at 2.20%

Retained cost to income ratio below 40%

Obtained term deposit growth of 17.38%


The 2018 financial year has been one with a challenging operating environment, constrained margins, rising expenses and harsh capital market conditions. Nonetheless, we have managed to maintain our position in the market at the end of the year.


Summarized Income Statement


2018 (in BDT million)

2017 ( in BDT million)

Year-on-Year Growth

Net interest income




Fee Income




Operating expense








Income Tax




Net Profit after tax






On a standalone basis, IDLC Finance Limited maintained its prior level of Net Profit after Tax with a small growth rate of 1%. However, on a consolidated basis, the company posted a 5% decline in NPAT over the previous year, reporting an amount of BDT 2,171mn. This has been mainly caused by lower profits from subsidiaries. Earnings per share stands at BDT 5.76 as against BDT 6.13 at the end of 2017. ROE and ROA have been 16.55% and 2.12% against 21.15% and 2.60% respectively in the equivalent prior period.

Net Interest Income


Interest Income saw a significant growth of 25.53% reaching BDT 11.16bn, on the back of a portfolio growth of 17.39%. However, Net Interest Income grew by a meagre 5.71% to BDT 4.22bn, consequent to a 41.69% growth in Interest Expense taking it to BDT 6.94bn.


Moreover, Investment Income fell to BDT 559.29mn, reflecting a de-growth of 48.33% subsequent to the slump in equity market return following a 14% (approx.) decline in DSE Index in 2018 coupled with extraordinary market conditions in 2017. However, our proprietary investments in fundamentally strong shares are expected to generate value in the coming periods.


Fee Income stood at BDT 974.95mn at the end of the year, registering de-growth of 15.21%. It mainly resulted from a 28.59% decline in Brokerage fees over the year. There has also been a fall in Processing Fees and Service Charges despite increased disbursement, essentially due to a decline in fee rates across the industry, following directives issued by the regulators. Nonetheless, growth in disbursement volumes is expected to restrict further deterioration in fee income. Going forward, we will be concentrating on Structured Finance, Advisory Services and Investment Banking businesses for a sustainable source of Fee Income.

Operating Expenses



Our Operating Expense comprises of costs associated with compensation, premises rent & maintenance, technology and other expenses. In 2018, operating expenses were restricted to BDT 2.30bn following a decline of 1.53% from the previous year allowing us to retain the Cost to Income ratio below 40%.


Cost to Income Ratio




Provisions for Loans/Investments




Increase in General Provision during the year



Increase in Specific Provisions during the year



Increase in Provision for diminution in value of investments







Provisions have been maintained for classified loans as per the provisioning policy by the Central Bank. Increase in provision in 2018 exceeded that of 2017 by BDT 164mn. The majority of the increase came from Provision for Diminution in Value of Investments arising from some unrealized capital market losses. The increase from General Provisioning is reflective of the 17.39% growth in Loan Portfolio. On the other hand, successful collection efforts and regularization of payments from few large clients with temporary liquidity issues, restricted Specific Provision.


Provision for Income Tax



Our contribution to the government exchequer in the form of income tax took a dip, primarily as a consequence of tax rate revision from 40% to 37.5% in 2018, effective from 2017. Also, lower income generation in 2018 compared to the previous years, contributed to it; while some other adjustments of prior excess provisions have also come into effect.

Balance Sheet Summary







 Cash and cash equivalent






 Lending portfolio














 Other liabilities







Lending Portfolio


Our core lending portfolio grew by 17.39% reaching BDT 83.93bn in 2018 from BDT 71.50bn in 2017. The growth in lending portfolio was majorly driven by Term Finance and Real Estate Finance. In fact, two major portions of the portfolio are made up of these categories, 59% and 30% respectively. 65% of our Term Finance portfolio is comprised of SME loans, while the other 35% is held by the Corporate division.

Our funding base increased by 16.48% in 2018 and moved to BDT 83.60bn from BDT 71.77bn in the previous year, which is well matched with the 16.62% growth in the company’s standalone lending portfolio. The growth was largely driven by Term Deposits – 85.33% of the funding basket - which amounted to BDT 70.26bn (17.38% growth) in 2018, adjusted for intercompany deposits.


Our long-term strategy involves enhancing our customer deposit portfolio as a sustainable source of funds. There are 3 sources for our Term Deposits: Corporate, Individuals and Banks. In 2018, deposit growth rates from Institutions (excl. Banks) and Individuals have been 28% and 24% respectively, while our deposits with other Banks remained at the same level.


However, comparing the deposits from Banks with our placements in Banks, we had a net deposit from Banks amounting to BDT 776mn. This is only 0.93% of our funding base and 0.71% of our total balance sheet. Having such low level of dependency on bank deposits provides us insulations against any shocks in the money market scenario.


Debt to Equity Ratio & CAR


In 2017, our paid up share capital rose to BDT 3.77bn following issuance of Rights Share, which brought down the Debt to Equity ratio to 6.6 times and improved the Capital Adequacy Ratio taking it to 15.3% from 13.3% in the previous year. In 2018, our loan book has seen a growth of 17.39%, primarily funded through increased deposits. This resulted in a slightly higher debt to equity ratio, causing our Return on Equity to go through temporary sufferings. However, our Capital Adequacy Ratio rose to 15.5% despite the growth in loan assets, on the back of marked improvement in asset quality, which is manifested in the improved NPL ratio.





A) Net cash flows from/(used in) operating activities



B) Net cash used in investing activities



C) Net cash flow from financing activities



D) Net increase/(decrease) in cash and cash equivalents (A+ B + C)



E) Cash and cash equivalents at beginning of the year



F) Cash and cash equivalents at end of the year (D+E)




Cash Flow from Operating Activities

In 2018, cash flow from operating activities before adjusting the changes in operating assets and liabilities increased by 1.52%, amounting to 5.85bn. It was BDT 5.77bn in the prior year. The growth primarily came from increased inflows of receipts from interest. Driven by a significant growth in our loan book followed by a decline in the growth rate of Term Deposits, net cash inflow from operating activities moved to BDT 4.17bn in 2018 from a net cash inflow of BDT 7.45bn in 2017.


Cash Flow from Investing Activities

The cash flow from investing activities increased to BDT 0.58bn in 2018 from BDT (3.73)bn in 2017, as a result of decrease in investments in marketable securities keeping to tackle market volatility.


Cash Flow from Financing Activities

The group obtained BDT 1.66bn from term loan, while it repaid BDT 3.77bn of its previously obtained loans. Cash outflow from financing activities in the previous year was significantly lower, following an inflow of BDT 2.51bn from issuance of rights share in 2017.


Overall Scenario

The cash and cash equivalent balance of the group rose to BDT 16.24bn in 2018 compared to BDT 14.73bn in 2017 - the major driver being the net cash flows from operating activities of BDT 4.17bn.