ANNUAL REPORT 2019 ENDLESS POSSIBILITIES Together, we have come across the ocean of times. Together, we sail unwavering and determined. Together, we are stronger. We shall take our journey towards Endless Possibilities. 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, 2019 We enclose herewith 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, 2019 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. With best regards, Yours sincerely, Md. Shahjahan Miah SVP & Company Secretary DHAKA BANK LIMITED www.dhakabankltd.com ANNUAL REPORT 2019 01 TABLE OF CONTENTS ABOUT US 2019 Performance Highlights - The Bank 08 Bank’s Profile 09 Bank’s Rating & Achievement 11 Milestones 12 2019 Results Summary 14 Values & Objectives Vision, Mission & Core Values 15 Strategic Objectives & Ethical Principles 16 Ethics and Compliance 17 Customer Charter 18 Our Strength and Our Confidence 18 Our Story 19 Corporate Governance & Strategic Review Board of Directors and Committees of the Board 20 Sponsor Shareholders 24 Chronicle of a Rare Visionary 25 Directors’ Profile 26 Chairman’s Statement 32 Strategic Review of the Managing Director & CEO 37 Report of the Audit Committee of the Board 42 Report of the Shari’ah Supervisory Committee 45 Dhaka Bank Management Committee 46 SHAREHOLDERS’ Distribution of Shareholdings 48 INFORMATION Dividends & Stock Details 48 Financial Calendar 2019 49 Information Sensitive to Share Price 49 Market Price Information 49 5-Year Financial Highlights 50 Value Added Statements Economic Impact Report 52 Economic Value Added Statement 52 Market Value Added Statement 52 Contribution to National Exchequer 52 Value Added Statement 53 5-Year Essential Performance Graphs--Bank 54 Glimpses of the 24th AGM 58 DHAKA BANK LIMITED 02 ANNUAL REPORT 2019 www.dhakabankltd.com DIRECTORS’ REPORT Global Economic Situation 60 Bangladesh Economy 61 Rooms for Business 62 Business and Operational Highlights 67 Meeting & Business Review 68 AGM & Dividend 68 Way Forward 2020 69 Goals Set for 2020 69 cwiPvjKM‡Yi cÖwZ‡e`b 2019 70 COMPLIANCE REPORT ON Compliance Report on BSEC's Notification 72 BSEC'S NOTIFICATION Certifcate on Compliance of Conditions of Corporate Governance 88 CEO’s & CFO’s Declaration to the Board of Directors 89 SUSTAINABILITY OF SME Business of Dhaka Bank Limited 92 BANKING PESTEL Analysis 95 Market Forces and Competitive Landscape 98 SUSTAINABILITY Environment Related Initiatives 100 REPORTING Environmental & Social Obligations 101 Social Responsibility Initiatives 102 MANAGEMENT DISCUSSION & Corporate Banking 106 ANALYSIS Syndications and Structured Finance 107 Business Operations 109 Asset-Liability Management 112 Human Resources 114 Human Resources Accounting 115 Human Capital 115 Information Technology 116 Internal Control & Compliance 118 Islamic Banking Operations 119 Retail Business 120 Off-Shore Banking 121 International Business 122 Dhaka Bank Training 122 Communications & Branding 123 RMG Financing 123 Cash Management 124 DHAKA BANK LIMITED www.dhakabankltd.com ANNUAL REPORT 2019 03 RISK MANAGEMENT & Risk Management of Dhaka Bank Limited 126 CONTROL ENVIRONMENT Risk Management Framework 126 Risk Mitigation Methodology 126 Disclosure of Risk Reporting 132 Basel III: Dhaka Bank Perspective 132 AUDITOR'S REPORT & AUDITED Independent Auditor’s Report 134 FINANCIAL STATEMENTS Consolidated Financial Statements 139 Dhaka Bank Financial Statements 145 Financial Statements of Islamic Banking 229 Financial Statements of Off-Shore Banking Unit 240 Financial Statements of Dhaka Bank Securities Limited 254 Financial Statements of Dhaka Bank Investment Limited 273 Disclosures on Risk Based Capital 279 Branch Network 294 Abbreviations 297 25th AGM Notice of the 25th AGM 299 Attendance Slip 301 Proxy Form 301 DHAKA BANK LIMITED 04 ANNUAL REPORT 2019 www.dhakabankltd.com IN YOUR IMMORTAL SPIRIT FOREVER MAY WE RISE This year, it is the auspicious occasion of the birth centenary of one of the greatest leaders of humankind, ‘The Greatest Bengalee of All Time’, the Father of the Nation, Bangabandhu Sheikh Mujibur Rahman. Bangabandhu Sheikh Mujibur Rahman is an unparalleled leader who had fought and devoted his life for the freedom of Bangladesh, earned it and immediately set course of the nation to gain economic and financial independence. He started the journey towards building Bangladesh as a Land of Gold, and since then we are moving forward to reach the goal. The worthy daughter of Bangbandhu, Honorable Prime Minister Sheikh Hasina is the leader who is taking the nation to reach the destination with a great pace. On the Mujib Year, Dhaka Bank pays tribute to the Father of the Nation Bangabandhu Sheikh Mujibur Rahman and pledges promise to fight alongside to help build the Land of Golden Bengal that Bangabandhu had dreamt. This year, we promise to take the banking further and beyond to serve the people and the economy of Bangladesh. May the spirit of Bangabandhu lives and leads us forever. DHAKA BANK LIMITED www.dhakabankltd.com ANNUAL REPORT 2019 05 ENDLESS POSSIBILITIES Within every story, there lies a perspective and a purpose. The stronger the two essential elements are, the beautiful the story turns out. The story of Dhaka Bank Limited is the story of walking ahead with a perspective and a purpose. 25 years ago, a group of renowned individuals with strong bonds of friendship decided to put their united efforts for the population of the Nation. Since then, the story of Dhaka Bank Limited continued with pride. Dhaka Bank Limited started its journey with the initial Paid-up-Capital of Tk.10.00 crore sponsored by some prominent entrepreneurs namely - Mr. Abdul Hai Sarker, Mr. A.T.M. Hayatuzzaman Khan, Mr. Mainul Islam, Mrs. Afroza Abbas, Mr. Altaf Hossain Sarker, Mr. Khandaker Md. Shahjahan, Mr. Aminul Islam, Mr. Md. Amirullah, Mr. Reshadur Rahman, Mr. Abdullah Al Ahsan, Mr. Khondoker Monir Uddin, Mr. M.N.H. Bulu, Mrs. Rakhi Das Gupta, Mr. Tahidul Hossain Chowdhury, Mr. Jashim Uddin, Mrs. Kamala Khatun, Mr. Abdul Wahed, Mr. Mohammed Hanif, Mr. Khondoker Jamil Uddin and Mr. Mohammad Ali Sarker moving forward with a perspective, Dhaka Bank Limited has been putting positive influence on the national economy through multidimensional interventions. Bangladesh is getting prepared to celebrate 50 years of Independence at a time, when the upsurge of the indomitable nation is disrupted by the global epidemic corona virus. Amid the chaos and confusion, Dhaka Bank is going to celebrate the milestone Silver Jubilee of banking services on its 25th Anniversary with pride of being a part of the quest for development of our Nation and with promise to end the harsh times and help the nation go back to the right track of development through strengthening the economy. This year Mujib Borsho has been declared by the government marking the 100th anniversary of the birth of the Father of the Nation, Bangabandhu Sheikh Mujibur Rahman and in its 25th anniversary Dhaka Bank is really feeling proud to be a part with this historical celebration through participating yearlong various programmes. DHAKA BANK LIMITED 06 ANNUAL REPORT 2019 www.dhakabankltd.com ENDLESS POSSIBILITIES From the very year of its landmark journey, Dhaka Bank has Over the last 24 years, Dhaka Bank has ascended the height of truly cherished and brought into focus the heritage and history excellence. Now, as we are going to enter a new economic of Dhaka and Bangladesh from Mughal outpost to modern facet after the corona virus pandemic is over, we are ready to metropolis and the people living here. The Bank is widely take the challenges with the help of what we have achieved in recognized today for its exceptional service, simplicity, these past 24 years. proximity and cutting-edge way of delivery. In addition to our In the 1st Balance Sheet as at 31st December 1995 of Dhaka priority of operating profitably and successfully, we are acutely Bank Limited: Total Deposit was Tk.62.54 crore, Total Loans & aware of our responsibilities to our employees, society and Advances was Tk.15.89 crore, Total Reserves was Tk.0.11 environment. crore, Balance Sheet size was Tk. 90.09 crore, Operating Profit Dhaka Bank Limited started its journey as a Scheduled Bank was Tk.0.11 crore. And, in the 25th Balance Sheet as at 31st with effect from July 5, 1995 with the motto ‘Excellence in December 2019: Total Deposit stood Tk.20,453.00 crore, Banking’. The perspective was to improve living standard and Total Loans & Advances stood Tk.19,563.49 crore, Total the purpose was to become the best in serving and Reserves raised Tk.867.84 crore, Balance Sheet size raised appreciating life. The Bank is now an admired provider of Tk.28,500.94 crore, Operating Profit stood Tk.609.86 crore. financial services and an established brand. As a leading As a Nation we have Indomitable spirit to challenge any private commercial bank in Bangladesh, our eminence is obstacles. We live the legacy of our Freedom Fighting with the backed by quality products and services, superior technology vision to rise as a developed nation.