annual report 2020 Table of contents ABOUT US Letter of Transmittal 06 Disclaimer 07 Vision 08 Mission 09 Values 09 Statement Regarding Forward Looking Approach 10 NRB Bank At a Glance 11 Company Milestones 12 CORPORATE GOVERNANCE From the office of the Chairman 16 Managing Director & CEO’s Roundup 20 Board of Directors’ Profile 26 Sponsors & Shareholders 36 Board Committees 41 Senior Management Team 44 Directors’ Report 46 Report of the Audit Committee of the Board 54 CEO/CFO’s Declaration to the Board 56 Certificate on Compliance on the Corporate Governance Code 57 Corporate Governance Report 58 Chief Risk Officer’s Report on Risk Management 88 Disclosures on Risk Based Capital (Basel-III) 97 Credit Rating Report 117 STAKEHOLDERS’ INFORMATION Financial Highlights 120 Five-Year Progression Of NRB Bank 121 Statement of Value Added and its Distribution 123 Economic Impact Report 124 contents FINANCIAL STATEMENTS Independent Auditors’ Report to the Shareholders 128 Balance Sheet 130 Profit and Loss Account 132 Cash Flow Statement 133 Statement of Changes in Equity 134 Liquidity Statement 135 Notes to the Financial Statements 136 OTHER INFORMATION Sustainable Finance 192 Brand and Communications 197 Product and Services 198 Information Technology @ NRB Bank 201 Correspondent Banking 203 Key Activities 2020 204 Branch Network 209 ATM Network 211 04 annual report 2020 NRB Bank Limited 05 Letter of Transmittal To All Shareholders of NRB Bank Limited Bangladesh Bank Bangladesh Securities & Exchange Commission Registrar of Joint Stock Companies & Firms Dear Sir/Madam, Annual Report of NRB Bank Limited for the year ended 31st December 2020 We are pleased to enclose a copy of the Annual Report along with the Audited Financial Statements and Balance Sheet as at 31st December 2020, Profit and Loss Account, Cash Flow Statement, Statement of Changes in Equity, Liquidity Statement for the year ended 31st December 2020 together with notes thereon of NRB Bank Limited for your kind information and record. Thank you. Sincerely Md. Hasanul Haque Company Secretary annual report 2020 06 Disclaimer This Annual Report 2020 contains audited financial statements of the Bank along with other financial disclosures. Some parts particularly the financial statements of the Bank are audited which are presented in page from 127 to 189. Review of business and financial analysis presented in the Directors Report sections are based on audited financials as well as management information mostly unaudited unless otherwise specified. The Bank while recognizing financial transactions and presenting financial statements followed by relevant International Financial Reporting Standards (IFRS) except in some cases where the Bangladesh Bank instructed banks to follow their prescribed guidelines. However, if there grew any confusion, the Bank followed instructions of Bangladesh Bank being the prime regulator for banking companies. Business ‘outlook’ and management estimates and assumptions in recognizing certain competition of the banking sector becomes financial transactions presented in different parts of this Annual Report can be no risky to face the challenge to meet required assurance that actual outcomes will turn up to the tune of these projections. Some of the ROI. Corporate tax burden hinders to meet factors that may cause projected outcomes differ from the actual ones can be put forth, the expected EPS of Shareholders. which are not comprehensive as well: Rising capital requirement: Basel III might Changes in macroeconomic outlook: The World Bank has forecast that Bangladesh’s Gross cause internationally active banks to Domestic Product (GDP) will increase by 3.6% in 2020-2021 fiscal year, due to better than maintain more capital and follow more expected remittance inflows. It also forecast that the country’s GDP growth will be at 5.1% and stringent rules. The Bank while doing trade 6.2% in 2021-22 and 2022-23 FYs respectively. The prospects of economic rebound is firming finance with those banks might have to up after being heavily jolted by COVID 19 pandemic. Even though the growth may be uneven follow more stringent rules. In addition to and economic activity may be well below per, as many businesses need to make up for lost that, Bangladesh Bank (BB) has decided revenue and millions of workers. to level up paid-up capital for all banks, pulling it to Tk 500 crore by 2021 General business and political uncertainties: Negative impact of political deadlock, associated risks in business environment, price spiral, declining demand for bank finance, environmental Climate change and natural calamities: erosion, etc may erode the bank’s earning substantially. In the absence of political agreement Bangladesh as one of the vulnerable and stability, success in business is hard to achieve. countries to climate change effects and natural disaster lies on an alarming Changes in Government and regulatory policy: Amendment of Bank Company Act 1991 and impact of such changes on banking business, underperformance of tax revenue by NBR, geographical location and risks increased borrowing by government from banks, central bank directives for charging lower on considerable loss in agricultural sector banks’ fees earnings, discontinuation of guidelines related to provisioning and rescheduling and accounting for a significant portion of GDP. others. Fraud or financial crime: Increasing frauds and financial crimes in the banking Deterioration in borrowers’ credit quality: Risk of deterioration of credit quality of borrowers is inherent in banking business. This could be driven by political unrest, economic slowdown and industry is denting industry confidence. supply side disruption. Abrupt changes in the import pricing may affect the commodity sectors. The incidence is a direct outcome of Banks are under obligation to maintaining provision against potential credit loss. weak corporate governance, control loopholes and IT inefficiencies. NRB Bank Power crisis and immature infrastructure: Stumbling block of adequate infrastructure, storage is all vigilant to prevent such untoward of sufficient supply of power to production facilities, political turmoil, soaring of cost of surviving incident by virtue of strong and effective businesses may push to cause slower growth of manufacturing and industrial activities. control system, high ethical practices, good corporate governance and risk Challenges in managing business: Excess liquidity has burdened the Banking Industry in management mechanism. However, the Bangladesh due to lower demand of credit for private sector. Govt. borrowing sometimes Bank cannot rule out any such surprise distorts the business plan of the banking sector in Bangladesh to maintain the liquidity as the industry closely intertwined with management. There is little doubt that the banking sector in Bangladesh is going to face a sophisticated financial relationships. difficult period in 2021 due to the continuing impact of the coronavirus outbreak. Unhealthy NRB Bank Limited 07 Vision To be the leading dedicated financial institution for NRBs to invest in Bangladesh and for Bangladeshi individuals and corporates to access international markets. annual report 2020 08 Mission NRB Bank aims to be the preferred provider of targeted financial services as a conduit for investment to and from Bangladesh for our Bangladeshi communities both domestically and internationally, to accelerate the industrialisation of Bangladesh. We will strengthen these relationships by providing the right solutions that combine professionalism, expertise and financial strenght. Values We are trusted financial advisors; valuing our local roots and remaining dedicated to our global presence by being different than any other banks. D DYNAMIC We strive to change and perform to progress I INNOVATIVE We foster ideas through finding better ways to improve G GLOBAL We empower to create competitive edge to set international standard I INTEGRITY We govern by the principles of ethics and transparency T TECHNOCENTRIC We step ahead of technological advancement NRB Bank Limited 09 Statement Regarding Forward Looking Approach The Annual Report contains some forward looking statements regarding the business environment and its likely effect in the financial conditions of the bank. We wish to caution you that these statements are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenues, earnings, cash flows. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, which are: Changes in the general economic condition resulting from natural calamities and political disturbances; Changes in monetary & fiscal policy budget; The effect of changes to our credit rating; Amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; The risk that the Bank’s risk management models may not take into account all relevant factors; Changing customer demand or preferences for business, including the effects of economic conditions on the business; Changes in government policy issues; Increase in Tax, VAT on banking services;