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Investment Banking Services : Cap-Invest (Non-Discretionary Portfolio) 2020 marked the 35th year of IDLC. Our clients, shareholders, employees, partners, regulators, and the community at large, have each been an integral part that made us whole and who we are today; one of the most recognized and the largest financial institution of the country. Hand-in-hand we have trekked over mountains and have attained new heights. Despite many challenges along the way we, as a family, grew together. Thus, at this milestone we reflect on the lives we have touched, gave us a reason to exist and provided us the opportunity to give back to the community. This year we are sharing with you the stories which we consider as our achievements and inspiration for our journey ahead... 35 Years of legacy Subsidiaries operating 03 in capital market 41 Touch-points 24 Cities across the country 1,450+ Employees AAA Credit Rating CONTENTS Highlights 4 About Our Integrated Report 6 Stakeholders Identification 9 Materiality Determination Process 10 Navigating Through This Report 11 OPERATING ENVIRONMENT AND THE COMPANY RISK MANAGEMENT Our Philosophies 13 Overview & Macroeconomic Highlights 71 Key Milestones 14 Macroeconomic Factors & Their Impacts 72 Products & Services 16 Market Forces & Competitive Landscape 75 IDLC Integrated Business Model & Activity Models 18 Entity Analysis 78 National Footprint 21 Statement of Risk Management 80 Value Chain Activities & Impacts 22 How We Create Value 24 MANAGEMENT DISCUSSION & Our Capitals ANALYSIS Financial Capital 26 Human Capital 28 Strategy & Resource Allocation 91 Manufactured Capital 30 Performance Analysis with the Management Committee 101 Intellectual Capital 32 Key Operating & Financial Highlights 106 Social & Relationship Capital 34 Horizontal Analysis 108 Natural Capital 36 Vertical Analysis 110 Stakeholders Engagement 38 Highlights as Required by Bangladesh Bank 112 Event Highlights 42 Value Added Statement 113 Awards & Accolades 46 Market Value Added (MVA) Statement 114 Economic Value Added (EVA) Statement 115 Capital Adequacy Ratio 116 STEWARDSHIP Contribution to the National Economy 117 Human Resource Accounting 119 Business Segment Review – Core Financing Message from the Chairman 49 SME 122 CEO's Statement 53 Consumer 124 Shareholding Composition 56 Corporate 126 Board Composition 57 Structured Finance 128 Organisational Chart 63 Green Banking 129 Management Committee 64 Wealth Management 131 Senior Executives 68 Business Segment Review – Subsidiaries IDLC Securities Limited 133 IDLC Investments Limited 135 IDLC Asset Management Limited 137 REPORTS & FINANCIAL STATEMENTS GOVERNANCE SUBSIDIARY COMPANIES Letter from Board of Directors 140 IDLC Securities Limited Management Committee 299 Statement of Corporate Governance 141 Directors' Report to the Shareholders 301 Statutory Reporting Independent Auditors' Report 306 Key Pointers for the Stakeholders 182 Statement of Financial Position 308 Statement of Profit and Loss and Other Disclosures Under Pillar-III Market Discipline 184 309 Comprehensive Income Report on Security Custodial Service of IDLC Finance 191 Statement of Changes in Equity 310 Limited Statement of Cash Flows 311 Notice of the 36th Annual General Meeting 192 Notes to the Financial Statements 312 Report of the Audit Committee 193 IDLC Investments Limited Assessment Report on the Going Concern of IDLC Management Committee 331 195 Finance Limited Directors' Report to the Shareholders 333 Statement of Directors' Responsibilities for Internal Independent Auditors' Report 337 Control, Financial Reporting and Corporate 197 Governance Statement of Financial Position 339 Statement of Profit and Loss and Other Directors’ Report to the Shareholders 198 340 Comprehensive Income Annexure I: Shareholding pattern as required by the 205 Statement of Cash Flows 341 Corporate Governance Code issued by BSEC Statement of Changes in Equity 342 Annexure II: Meeting attended by the Directors 206 Notes to the Financial Statements 343 Annexure III: Certification on the Compliance with the 207 IDLC Asset Management Limited Corporate Governance Guidelines Management Committee 359 Status of Compliance with the Corporate Governance 208 Guidelines Directors' Report to the Shareholders 361 Annexure IV: Statement of Compliance with the the Good Independent Auditors' Report 364 219 Governance Guidelines Issued by the Bangladesh Bank Statement of Financial Position 366 Statement of Profit and Loss and Other Comprehensive Income 367 Statement of Cash Flows 368 REPORTS & FINANCIAL STATEMENTS Statement of Changes in Equity 369 IDLC GROUP AND IDLC FINANCE LIMITED Notes to the Financial Statements 370 Report of the CEO and Managing Director and the Chief 222 Financial Officer DISCLOSURES, CHECKLISTS & Independent Auditor's Report 223 MISCELLANEOUS Consolidated Financial Statements - IDLC Group Consolidated Balance Sheet 227 Annual Report Review Checklist 380 Consolidated Profit and Loss Account 229 Corporate Governance Checklist 384 Consolidated Statement of Changes in Equity 230 Integrated Reporting Checklist 386 Consolidated Cash Flow Statement 232 IDLC’s Branch Network 394 IDLC at a Glance 398 Financial Statements - IDLC Finance Limited Proxy Form & Attendance Slip 399 Balance Sheet 233 Profit and Loss Account 235 Statement of Changes in Equity 236 Cash Flow Statement 238 Liquidity Statement 239 Notes to the Consolidated and Separate Financial 240 Statements THE COMPANY STEWARDSHIP OPERATING ENVIRONMENT & RISK MANAGEMENT MANAGEMENT DISCUSSION & ANALYSIS HIGHLIGHTS CUSTOMERS PILOTED LAUNCHED Deposit Pension Scheme IDLC Venture Capital Fund-I E-Loan of SME Investors online onboarding platform SHAREHOLDERS 2.08% 35% Return on Asset Proposed Cash Dividend REGULATORS BDT 2,346 million Contribution through payment of Tax, VAT and Excise Duty PROFIT AFTER TAX IN BDT MN TOTAL LOAN PORTFOLIO in BDT mn COST TO INCOME RATIO 5 year CAGR: 11.73% 5 year CAGR: 11.01% 92,346 93,074 83,934 2,541 43.33% 71,499 2,277 2,171 62,217 39.49% 1,780 1,700 37.94% 38.23% 37.19% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 4 annual report 2020 GOVERNANCE REPORTS & FINANCIAL STATEMENTS - IDLC REPORTS & FINANCIAL STATEMENTS - SUBSIDIARIES DISCLOSURES, CHECKLISTS & MISC. EMPLOYEES 155 7,554 Number of Training Number of Attendees COMMUNITY BDT 31 million 32,000+ fund contributed to various individuals benefitted through entities to support the community our various CSR activities through the pandemic RETURN ON ASSET RETURN ON EQUITY NPL% 2.60% 2.98% 3.07% 2.33% 21.29% 21.15% 2.77% 2.12% 2.08% 16.55% 17.37% 2.20% 1.79% 1.50% 12.29% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 IDLC Finance Limited 5 THE COMPANY STEWARDSHIP OPERATING ENVIRONMENT & RISK MANAGEMENT MANAGEMENT DISCUSSION & ANALYSIS ABOUT OUR INTEGRATED REPORT We are pleased to present to our shareholders with the 2020 Annual Report in the form of an ‘Integrated Report’ for IDLC Finance Limited and its subsidiaries (collectively referred to as IDLC Group). The aim of our integrated reporting approach is to enable our stakeholders, including investors, to make a more informed assessment of the value of IDLC and its prospects as this report is organised around our story of value creation. The story presents key aspects of our value creation process accurate measurement of operational, financial and sustainable which are in the different forms of capital that provide the performance against our strategy and the matters we consider inputs, business domains and the value creating activities that to be most material to the sustainability of our Group, in a results in outputs, outcomes and impacts. It also covers risk concise manner, so that it ensures comparability with the and the aspect of conformance. In totality, this report ensures industry and beyond. REGULATIONS WE FOLLOW REPORTING FRAMEWORKS AND GUIDELINES • Companies Act 1994 • International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) • Financial Institutions Act 1993 • Global Reporting Initiative (GRI)-GR4 Framework • Securities and Exchange Rules 1987 • International Integrated Reporting Framework by • Corporate Governance Code International Reporting Council • Relevant rules and regulations of Bangladesh Bank • SAFA Integrated Reporting Checklist (The Central Bank) • ICAB Corporate Governance Checklist • And other applicable laws and regulations of the land. Scope and Boundaries of this Report guidance from by IFC Toolkits for Disclosure and Transparency, published by International Finance Corporation to improve The report covers the period from 1 January 2020 to 31 December coherence, and transparency across the report. 2020, which encompasses the activities that have been carried out within the geographical boundaries of Bangladesh, as IDLC In clarifying the Company’s operations and financial performance, does not have operation or subsidiary in other countries. we have extracted the financial information from the Audited Financial Statements for the financial year ended 2020 with We have referred to the guidelines of Integrated Report, issued relevant comparative information. The financial statements by the Institute of Chartered Accountants of Bangladesh (ICAB) consistently comply with the mandated requirements of the in the form of ‘Integrated Reporting Checklist’, which is in laws of the land and of the industry that includes Companies Act congruence with the integrated reporting framework prototype 1994, Securities and Exchange Rules 1987, International Financial issued by the International Integrated
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