Year in review


Obtained a portfolio growth of 14.92%

Restricted NPL below 3%

Retained cost to income ratio below 40%

Achieved a 27.91% growth in net profit

The 2017 financial year has been one with a challenging operating environment, constrained margins and rising expenses. Nonetheless, we have managed to end the year with a strong set of results. Considering our substantial investment in infrastructure and human capital so as to enhance efficiency and cater for ongoing growth, we are pleased with the progress of the group.


Summarized Income Statement


2017 (in BDT million)

2016 ( in BDT million)

Year-on-Year Growth

Net interest income




Fee Income




Operating expense








Income Tax




Net Profit after tax





Owing to a well-developed channel of diversified revenue streams, we have registered a strong post-tax profit of BDT 2,277.12mn, marking a 27.9% growth over the previous year. This growth reflects the capacity of the company to generate superior returns to the capital that the shareholders have contributed. The key drivers behind this feat were growth in the lending book, efficient management of funds, and maintenance of operational efficiency and restriction of non-performing loans, which are discussed in turn, in the following sections. Subsequently, the profitability ratios have followed suit. This year, our Return on Assets rose to 2.60% from 2.33% while our Return on Equity saw marginal depletion to 21.15% from 21.29% in the previous year.

Net Interest Income


Total Income rose by 15% in 2017 to BDT 11,178mn and Operating Income (adj. for interest expense) rose 21.6% to BDT 6,280mn. While all broad revenue streams posted growth over the previous year, the largest contributor has been Investment Income, with a 127% growth of BDT 1,082mn in 2017. As a result, it accounted for 9.7% of the total income of the group, up from 4.9% in 2016.


On the other hand, Interest Income rose modestly by 6.4% to BDT 8,893mn, on the back of a portfolio growth of 14.9%, which is reflective of the competitive forces in motion (pg. 49). Interest Expense grew by 5.9% to BDT 4,898mn – resulting in a Net Interest Income of BDT 3,995mn in 2017, a 7% growth from BDT 3,735mn in 2016.


Fee Income grew by 26.2% and contributed towards 10.8% of the total income. It mainly resulted from a 91.5% increase in Brokerage Fees and a 34.4% rise in Mgt. & Advisory Fees. Growth in Processing Fees and Service Charges were nominal despite increased disbursement, essentially due to significant fall in fee rates from the funded businesses (customer loans), which was an industry phenomenon throughout the year. This trend is expected to hold going forward as well, prompting the company to further strengthen its Structured Finance, Advisory Services and Investment Banking businesses as a sustainable source of Fee Income going forward.

Operating Expense


While Operating Income grew by 21.6%, Operating Expenses increased by 19.2% to BDT 2,336mn in 2017, from BDT 1,959mn in 2016. Our Operating Expense comprises of costs associated with compensation, premises rent & maintenance, technology and other expenses. We have successfully maintained Cost to Income Ratio below 40%.

Cost to income ratio


Provision have been maintained for classified loans as per the provisioning policy by the Central Bank. Increase in provision in 2017 exceeded that of 2016 by BDT 77mn. The majority of the increase came from General Provisioning, which is reflective of the 14.9% growth in Loan Portfolio. As the income generation capacity of the group increased gradually throughout the last 5 years, so did the contribution of the company to the government exchequer in the form of income tax. In fact, in the year 2016/17 assessment year, IDLC has been awarded the Gold Certificate for being the highest tax payer among NBFIs. The tax expense of the group has increased to BDT 1,435mn in 2017 from BDT 1,269mn in the previous. The effective tax rate in 2017 was 38.65%.


Summarized Balance Sheet

  2017 (in BDT Million) 2016 (in BDT Million)
Cash and cash equivalent 14,728 11,353
Investment 7,923 4,348
Lending portfolio 71,499 62,217
Others 1,538 1,393
Deposit 62,092 49,324
Borrowing 11,400 12,564
Other liabilities 9,597 8,485
Equity 12,597 8,938

Lending Portfolio

Our core lending portfolio grew by 14.92% reaching BDT 71,499mn in 2017 from BDT 62,217mn in 2016. 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, 56% and 30% respectively.



Lending Portfolio


The total liabilities of the group has grown by 24% (avg. cumulative) between 2009 and 2013, and by 17% (avg. cumulative) between 2013 and 2017. This is in coherence with the cumulative average growth in Total Assets in the said periods; 23% & 17% respectively. Our funding base increased by 18.7% in 2017 and moved to BDT 73,493mn from BDT 61,889mn. This growth was largely driven by Term Deposits, which amounted to BDT 59,854mn (26% growth) in 2017, adjusted for intercompany deposits. The funding basket including inter-company deposits, and excluding security deposits amounted to BDT 71,769mn in 2017, registering a 20.4% growth. In 2016, it was BDT 59,598mn. The majority of our funding basket is comprised of Term Deposits – 84.4% of the funding basket (incl. inter-company deposits & excl. security deposits) at the close of 2017. It was 79.8% in 2016. These include deposits from Banks, Other Institutions and Individuals.

Debt to Equity Ratio


The debt to equity ratio has been on a downward trend in the past 2 years. At the end of 2017, it has come down to 6.6 times. This is mainly due to the Rights Share Issuance in 2017, which increased our paid up share capital to BDT 3,770.5mn.

Earnings per share


Our earnings per share (restated) has increased to BDT 6.13 in 2017 from BDT 5.49 in 2016, posting a growth of 11.6%.

Shareholders’ Funds


A 41% growth took the shareholders’ fund to BDT 12,597mn compared to BDT 8,938mn in the preceding year. This growth was mainly driven by the 1:2 rights share issuance at a premium of BDT 10 per share (face value being BDT 10 per share).

Paid-up capital and Reserves increased by 50% and 56% respectively. Their corresponding compositions at the year-end were 30% and 35% of the Shareholders’ Funds respectively. Hence, in spite of having risen by 23%, Retained Earnings now hold 35% of the Shareholders’ Funds, down from 40% in the previous year.

Cash Flow from Operating Activities


In 2017, cash flow from operating activities before adjusting the changes in operating assets and liabilities increased by 24.5%, amounting to 5,766mn. It was BDT 4,630mn in the prior year. The growth primarily came from increased inflows of receipts from interest as well as gain from marketable securities. Driven by a significant growth in Term Deposits, there was a net cash inflow from operating activities of BDT 7,449mn in 2017, as compared to a net cash outflow of BDT 1,197mn in 2016.


Cash Flow from Investing Activities


The cash flow from investing activities increased to BDT 3,734mn in 2017 from BDT 1,228mn in 2016, as a result of increase in investments. The large growth in net proceeds of investment in securities is backed by our legacy of prudent fund management with a discerning eye for the right investments.


Cash Flow from Financing Activities


The group obtained BDT 2,787mn from term loan, while it repaid BDT 4,516mn of its previously obtained loans. BDT 2,514mn of cash inflow was generated from the rights issue, while BDT 1,126mn was paid out as Cash Dividends – marking a 1.8 fold increase from BDT 625mn in the preceding year.


Overall Scenario


The cash and cash equivalent balance of the group rose to BDT 14,728mn in 2017 compared to BDT 11,353mn in 2016 - the major driver being the net cash flows from operating activities of

BDT 7,449mn. This puts us in a comfortable position ahead of the anticipated pressure on liquidity in 2018 as this position will net off majority of the Term Deposits from banks that will mature in the coming months