We began our journey in 1992 with a passion for service excellence, product innovation and a commitment to offer world class banking experience. In the 28 years down the road, we have crossed many a hurdle, faced numerous challenges, and traversed many a mile to emerge as a market leader in providing cutting-edge financial solutions and service propositions to our customers. Since inception, we pursued responsible and ethical banking. We initiated best international corporate governance practices and corporate culture to promote sustainable performance, client-centricity, innovation and partnership. But underneath of all our indicatives/efforts was the motto of serving our customers better by making banking simple and easy for them. Our tagline ‘Simple Math’ is an expression of our philosophy. From designing a product or a service proposition to incorporating latest technological intervention including banking app, artificial intelligence, augmented reality, real-time internet banking, introduction of tap and pay cards, among other numerous propositions—everywhere our keen interest in making banking experience rewarding and simple for our customers is palpable. CONTENTS Letter of Transmittal 04 GOVERNANCE REPORTS EBL at a Glance 05 Directors’ Responsibility Statement 61 Awards and Recognitions 06 Report of the Audit Committee 63 Report of the Risk Management Committee (RMC) of the 65 ORGANIZATIONAL OVERVIEW Board Vision, Mission and Core Values 09 Corporate Governance Report 67 Strategic Priority 10 Risk Management Report 87 Corporate Directory 11 Disclosures on Risk Based Capital (BASEL-III) 98 Organogram 14 Management of Non-performing Loan (NPL) 109 Board of Directors 16 Recovery of Classified and Write-off Loans 110 Management Committees 24 Going Concern and Viability 111 Products and Services 29 Timeline 32 SUSTAINABILITY REPORT Overview 114 STEWARDSHIP Sustainability Governance 114 Chairman’s Message 36 Key Highlights of 2019 115 Managing Director & CEO's Review 40 Sustainability at EBL 116 Directors' Report 2019 43 • Economic Sustainability 117 • Environmental Sustainability 118 STAKEHOLDERS' INFORMATION • Social Sustainability 119 Engagement with Stakeholders 49 Our Move towards SDGs 120 Financial Highlights 50 Way Forward 121 Five-Year Financial Progression 50 Financial Goals and Performance (Bank) 52 Market Value Added (MVA) Statement 52 Credit Rating of EBL 52 Value Added Statement 53 Stock Performance 54 Graphical Presentation 55 Financial Calendar 58 Glimpses from the 27th AGM 59 BACK TO CONTENTS CORPORATE SOCIAL RESPONSIBILITY FINANCIAL REPORTS Corporate Citizenship Strategy 122 Statement on the Integrity of Financial Statements 152 Mujib Borsho Celebration 122 Auditor’s Report to the Shareholders 153 Education: Key to Social and Economic Development 122 Consolidated & Separate Financial Statements 158 Promoting Human Welfare 123 Financial Statements of Offshore Banking Unit (OBU) 243 Contribution to National Exchequer 123 Financial Statements of the Subsidiaries 250 Women Empowerment 123 Environment-friendly Bank 124 SUPPLEMENTARY INFORMATION Disaster Management 124 Branch Network 290 Healthcare 124 Correspondent Banking Network 293 Way Forward 124 Abbreviations 296 Media Coverage 297 MANAGEMENT DISCUSSION AND ANALYSIS Notice of the 28th AGM 298 Comparative Analysis of Financial Performance 126 Proxy Form 299 Business Review • Corporate Banking 127 • Retail & SME Banking 131 • Treasury 135 Review of EBL Subsidiaries 137 Operational Excellence 142 Service Excellence 145 EBL: Home of Happiness 147 Information Technology: The Business Differentiator 150 BACK TO CONTENTS Letter of Transmittal All Shareholders of Eastern Bank Limited Bangladesh Bank Bangladesh Securities and Exchange Commission (BSEC) Registrar of Joint Stock Companies & Firms Dhaka Stock Exchange Limited (DSE) Chittagong Stock Exchange Limited (CSE) Dear Sir, Annual report of Eastern Bank Limited for the year ended 31 December 2019. We are pleased to present before you the Bank’s (EBL) Annual Report 2019 along with the audited Financial Statements (Consolidated and Separate) for the year ended 31 December 2019 and as on that date. Financial Statements of ‘The Bank’ comprise those of EBL - Domestic Banking Operations and Offshore Banking Unit (presented separately) whereas consolidated Financial Statements comprise Financial Statements of ‘The Bank’ and those of its subsidiaries [EBL Securities Ltd., EBL Investments Ltd., EBL Finance (HK) Ltd. and EBL Asset Management Ltd.] presented separately. Analyses in this report, unless explicitly mentioned otherwise, are based on the financials of ‘The Bank’ not the consolidated financials. Yours Sincerely, Md. Abdullah Al Mamun, FCS Company Secretary (Acting) 4 BACK TO CONTENTS Annual Report 2019 EBL at a Glance Eastern Bank Limited Domestic Oshore Representative Banking Operations Banking Operations O ces Credit rating Moody’s: B1, CRISL: AA+, ST-1 Deposit Growth Loan Growth Total Assets Growth +20% +11% +19% BDT 240,164 million on 31.12.2019 BDT 232,051 million on 31.12.2019 BDT 335,163 million on 31.12.2019 Operating Profit Growth PAT Growth Regulatory Capital Growth +15% +30% +24% BDT 8,210 million in 2019 BDT 4,008 million in 2019 BDT 30,569 million in 2019 Profitability Capital market Share valuation 2019 2018 2019 2018 2019 2018 EPS (BDT) Capital market exposure (solo) Net asset value per share (BDT) 4.94 22.63% 31.49 4.17 22.10% 31.12 Return on avg. assets Market Capitalization P/E ratio (times) 1.30% BDT 26,952 million 6.72 1.15% BDT 26,568 million 8.62 Return on avg. equity Market price per share Dividend coverage ratio* 16.52% BDT 33.20 1.97 13.83% BDT 36.00 1.39 Credit quality Liquidity Stability 2019 2018 2019 2018 2019 2018 Gross NPL ratio Maximum Cumulative Outflow (MCO) CRAR (solo) 3.35% 15.27% 14.74% 2.35% 15.31% 12.16% Net NPL ratio Liquidity Coverage Ratio (LCR) NSFR 1.11% 338.22% 114.45% 1.01% 127.67% 104.07% NPL coverage ratio AD ratio Leverage ratio (solo) 120.42% 77.20% 5.28% 150.39% 83.08% 5.26% *Board recommended 25% cash dividend for the year 2019 on 05 April 2020. Subsequently Bangladesh Bank has set a cap on dividend (Total: 30%; cash 15%) vide DOS Circular No. 03 dated 11 May 2020. However, final dividend decision will be taken by the shareholders at the 28th AGM in compliance with respective rules and regulations. BACK TO CONTENTS 5 Awards and Recognitions EBL is a trend setter in many areas of the financial sector. Its PCI DSS Certificate success comes from an innovative and deliberate attitude that reflects our dedication to the growth and success of our customers PCI DSS certificate was awarded to EBL in 2016 and reaffirmed and communities. consecutively in 2017 & 2018 by NCC Group of UK, global leader in cyber security. EBL has been known for its consistent and sustainable growth over the past 28 years. We believe in working with the customer at a In 2019, EBL was assessed by Network Intelligence (I) Pvt. Ltd. and time and place where it is most convenient to them. As we work they have found the Bank compliant with PCI DSS on card security. to deliver performance with purpose, we are proud that numerous All these are a testimony to our emphasis on card security. organizations have recognized our progresses and achievements. Euromoney Award The following awards speak volumes to the dedication and commitment of our people under judicious guidance of honorable In 2016, the jury of Euromoney Awards for Excellence conferred Board of Directors of EBL. the Best Bank in Bangladesh for its professionalism, prudence, ICMAB Best Corporate Award and growth. In 2017 and 2018, EBL was adjudged the Best Bank in Bangladesh making the tally to three consecutive years. EBL won the prestigious ICMAB Best Corporate Award 2018 A Leader in Retail Banking securing the first position in the Private Commercial Bank Category. It signifies the Bank’s resilient performance over the years. EBL In retail banking EBL has emerged as an undisputed leader. won the award for three consecutive years from 2016. Eastern Bank Limited has won the prestigious Best Retail Bank in Best Employer Brand Award Bangladesh award by Singapore-based The Asian Banker for six consecutive years from 2013-18. EBL received the Bangladesh Best Employer Brand Award 2019 The London-based International Finance magazine in 2018 at the 14th Employer Branding Awards ceremony. The award was awarded EBL for the Best Credit Card Offering in Bangladesh. given by the globally renowned Employer Branding Institute. International Finance Award Best Transaction Bank in Bangladesh EBL was awarded the prestigious Asian Banker Business EBL was awarded the Most Innovative Retail Bank – Bangladesh Achievement Awards 2018 held in Beijing. EBL is the only bank from 2019 from International Finance magazine. Bangladesh to win Best Transaction Bank in Bangladesh Awards in Asiamoney Award two categories of Best Cash Management and Best Trade Finance. EBL was awarded the Asiamoney Best Corporate and Investment IFC Award Bank in Bangladesh for four consecutive years from 2016-2019. In 2017 IFC of World Bank group recognized EBL as the Best Issuing ICSB National Award for Corporate Governance Excellence Bank Partner and Best Trade Operations Issuing Bank Partner in South Asia. Our system of corporate governance provides the basis for the responsible management, transparency of processes and FinanceAsia Award compliance to regulatory bodies with a focus on sustainable value EBL received Best Investment Bank in Bangladesh in 2019 award by creation. Our continuous effort to adopt and adapt to international FinanceAsia. The FinanceAsia magazine also awarded EBL the Best best practices in corporate governance has been recognized by Bank in Bangladesh accolade in 2017. Institute of Chartered Secretaries of Bangladesh (ICSB). Since inception of the award in 2013, EBL is the most awarded financial Superbrands Award institution in the category. EBL has been recognized as a 'Superbrand' of the country for the ISO Certification year 2018-2020 by the Superbrands Bangladesh. Our relentless effort to upgrade and update on every account of standardization is reflected in our ISO 9001: 2015 certification of operations and human resources division of the Bank.