The very fundamental and organic component of human evolution is the sense of “Togetherness”. This trait is seen across almost every living creatures in the world, regardless of species. As the consequences of our co-existence we, as Earthlings, have reached a point of excellence in various segments such as urban practices, civic establishments, peace missions, and wealth management. Today as social animals, we happen to manage our wealth using various tools including modern Banking. This year, we tried to develop a cover visual for our Annual Report, which signifies a bundled core essence of Togetherness, Bonding and Human Co-existence broadly. LETTER OF TRANSMITTAL All Shareholders of Dhaka Bank Limited Bangladesh Bank Bangladesh Securities & Exchange Commission (BSEC) Registrar of Joint Stock Companies & Firms Dhaka Stock Exchange Limited (DSE) & Chittagong Stock Exchange Limited (CSE) Dear Sir(s), Annual Report of Dhaka Bank Limited for the year ended December 31, 2018 We are pleased to enclose a copy of Annual Report along with the audited financial statements including consolidated and separate balance sheet, profit and loss account, cash flow statement, statement of changes in equity, liquidity statement for the year ended December 31, 2018 along with notes thereto of Dhaka Bank Limited (the Bank) and its subsidiaries - Dhaka Bank Securities Limited and Dhaka Bank Investment Limited for your kind information and record. We have also enclosed separate financial statements of Islamic Banking Branches and Off-Shore Banking Unit (OBU) of the Bank. Financial statements of the Bank comprise those of Conventional and Islamic Banking Branches and Off-Shore Banking Unit while consolidated financial statements comprise financial statements of the Bank and its subsidiaries. General review of this report, unless explained otherwise, is based on the financials of the Bank rather than consolidated financial statements. Best regards, Yours truly, Arham Masudul Huq Company Secretary www.dhakabankltd.com Annual Report 2018 1 CONTENTS Shareholders’ Information Distribution of Shareholdings 43 Dividends & Stock Details 43 2 Financial Calendar 2018 43 Information Sensitive to Share Price 44 Market Price Information 44 Redressal of Investors’ Complaints 45 5-Year Financial Highlights 46 Economic Impact Report 48 Economic Value Added Statement 48 Market Value Added Statement 49 Contribution to National Exchequer 49 Value Added Statement 50 5-Year Essential Performance Graphs--Bank 51 Glimpses of the 23rd AGM 56 About Us 2018 Performance Highlights -- The Bank 04 Bank’s Profile 06 1 The Banker Award-2018 09 Milestones 10 2018 Results Summary 11 Vision, Mission & Corporate Values 12 Strategic Objectives & Ethical Principles 14 Customer Charter 15 Our Strength & Our Confidence 16 Our Story 17 Board of Directors and Committees of the Board 18 Sponsor Shareholders 22 Chronicle of a Rare Visionary 23 Directors’ Report Directors’ Profile 24 Global Economic Situation 58 Chairman’s Statement 30 Bangladesh Economy 59 Strategic Review of the Managing Director & CEO 34 3 Rooms for Business 60 Report of the Audit Committee of the Board 38 Business and Operational Highlights 63 Report of the Shari’ah Supervisory Committee 40 Meeting & Business Review 64 Dhaka Bank Management Committee 41 AGM & Dividend 64 Way Forward 2019 65 Goals Set for 2019 65 cwiPvjKM‡Yi cÖwZ‡e`b 2018 66 Compliance Report on BSEC's Notification Compliance Report on BSEC's Notification 67 Certifcate on Compliance of Conditions of Corporate Governance 84 4 CEO’s & CFO’s Declaration to the Board of Directors 85 2 Annual Report 2018 www.dhakabankltd.com Sustainability SME Banking 88 PESTEL Analysis 91 5 Poter’s Five Forces Analysis 94 Green Banking 95 Corporate Social Responsibility [CSR] 97 Management Discussion & Analysis Corporate Banking 100 Syndications and Structured Finance Unit 101 6 Business Operations 103 Asset-Liability Management [ALM] 106 Human Resources [HR] 107 Information Technology [IT] 110 Internal Control & Compliance 112 Islamic Banking Operations 112 Retail Business 115 Off-Shore Banking 116 International Division 117 Dhaka Bank Training Institute [DBTI] 117 Communications & Branding 119 RMG Financing 120 Risk Management Risk Management of Dhaka Bank Limited 121 7 BASEL III 133 Dhaka Bank Securities Limited 8 Report of the Board of Directors 137 Auditor's Report & Audited Financial Statements Independent Auditor’s Report 142 Consolidated Financial Statements 147 9 Dhaka Bank Financial Statements 153 Financial Statements of Islamic Banking 235 Financial Statements of Off-Shore Banking Unit 245 Financial Statements of Dhaka Bank Securities Limited 259 Financial Statements of Dhaka Bank Investment Limited 278 Disclosures on Risk Based Capital 284 Branch Network 299 Abbreviations 302 Notice of the 24th AGM 303 10 www.dhakabankltd.com Annual Report 2018 3 2018 PERFORMANCE HIGHLIGHTS -- THE BANK Core Business Growth Amount in Taka Assets 273,976 M 19% Operating Profit 6,564 M 26% Deposits 197,189 M 16% Loans & Advances 180,626 M 17% Paid-up Capital 8,125 M 12% Shareholders’ Equity 16,616 M 7% NPL Ratio -4.99% decreased to Earnings Per Share stood at Tk.1.67 Export 21% 125,167 M Import 158,344 M 18% Classified Loans -2% 9,009 M Inward Remittance 12,146 M 17% 4 Annual Report 2018 www.dhakabankltd.com 2018 PERFORMANCE HIGHLIGHTS -- THE BANK Continued Financial Inclusion Growth (direct & indirect) Contribution to National Exchequer 26% Tk. 4,735 M Total Customers’ Accounts 5% 535,367 SME Customers Account 8,714 19% SME Financing 15% Tk. 30,831 M SME Woman Entrepreneur Finance 63% Tk. 719 M No. of Women Entrepreneurs 41% 138 Customer Service Centre 01 (newly opend) 100% Total Delivery Channels 1% 184 www.dhakabankltd.com Annual Report 2018 5 BANK’S PROFILE About the Bank Capital Adequacy and Economic Capital Dhaka Bank Limited is the brainchild of a host of committed entrepre- The Bank has stepped in the regime of Basel-III compliance since neurs and farsighted dreamers of Banking excellence. Established in January 2015 as an enhanced regulation for capital and liquidity July 5, 1995, the Bank is now an admired provider of financial services strength. The Bank is engaging with Basel III to position itself competi- and has positioned itself as a strong brand in the mind of Customers. tively in the new post-crisis global financial risk and Regulatory ‘Excellence in Banking’ is our motto and to become the best performing landscape. To keep up capital adequacy as per Basel-III requirement, the Bank issued Non Convertible Subordinated Bond to strengthen the bank in the country is our mission. As a leading private commercial bank capital base in line with the newly introduced Capital Adequacy Guide- in Bangladesh, our eminence is backed by quality products and services, lines under BASEL-III Accord. As a result, DBL’s Regulatory capital as on superior technology and highly motivated personnel to realize your December 31, 2018 stood at Tk. 29,094 million, whereas, the Capital to dream. We are recognized for our good governance practices, compli- Risk Weighted Assets Ratio (CRAR) was 13.84% under Basel-III, as per ance with Regulatory guidelines, flexibility to growing needs and adapt- Central Bank’s minimum capital requirement of 11.87%. ability to the changing world. The concept of economic capital has come up to act as a safety cushion for the Bank, particularly in the wake of the global credit crisis. Year Our strategy & achievement 2018 still saw the effect of unanticipated losses of banks from credit Customer centricity is our main strategic focus. The ultimate goal is to risks and extent of market volatility. Under such a market it becomes maximize investors’ wealth by running business efficiently and ethically. imperative to manage the Banking business in a risk-sensitive economic capital framework. So we are carefully considering the potential To protect investors’ interest, the Bank constantly pursues strategies for unexpected losses and thus, bringing up the concept of economic capital sustainable growth and wider financial integration. Key businesses are that is associated with each individual activity to minimize the risks of the diversified into Corporate Banking, SME, Agriculture, Consumer Banking Balance Sheet and safeguard the interest of the stakeholders. and Islamic Banking. Business is run on a viable platform backed by other functions such as Business Operations, IT, R&D, Marketing, HR, Our concern for people & environment Procurement & Logistics, Risk Management, Compliance, Internal Audit, We are committed to making a better society by working and donating in Financial Administration and so forth. Moreover, the Bank group has two different sectors such as, education, health, disaster management, subsidiaries namely Dhaka Bank Securities Limited to look after capital sports and some other sectors having national priority. Significant CSR market and brokerage service and Dhaka Bank Investment Limited to involvement alongside our financial integration over long 24 year journey conduct merchant Banking operations (this company is yet to start is a true reflection of our concern for people. On the other side, we have operations). The Bank gathers strength from its growing Customer base, incorporated sustainability principles into day-to-day activities of the skilled workforce, superior technological platform & process and a Bank. Green Banking Cell has been formed with the task of developing company-wide culture that binds us together. Tailored products and policies,