Theme We believe in- Digitalization of banking services Accuracy and transparency of fi nancial transactions Desirable security & confi dentiality Sharp response to customers' demand Ensuring sustainable growth NBL & its OffShore Unit at a Glance in 2017 Operating income Operating profi t Total assets +3.11% -4.53% +14.75% 32,153m 10,266m 350,692m 2016: 31,184m 2016: 10,753m 2016: 305,617m Earnings per share Market value per share Return on assets -15.74% +27.45% -24.74% 1.98 Taka 13.00 Taka 1.43% 2016: 2.35 2016: 10.20 2016: 1.90% Employees Branches & SME centers Price earning ratio -0.32% +4.71% +81.49% 4,602 nos 200 nos 6.57 times 2016: 4,617 nos 2016: 191 nos 2016: 3.62 times Import Export Remittance +27.15% -14.53% -15.79% 88,477m 42,878m 38,262m 2016: 69,583m 2016: 50,168m 2016: 45,438m Property & Assets (Taka in million) Liabilities & Capital (Taka in million) 5,328.57 30,074.92 16,666.29 5,212.27 2,882.03 3,601.30 Cash & Bank Balance 23,704.53 Borrowings Deposits Call Money 2,750.00 Other Liabilities Investment 60,338.45 29,588.01 Subordinated Bond Loans & Advance Paid up Capital Fixed Assets 272,771.32 Reserve & Surplus Other Assets 248,467.15 Income (Taka in million) Expenditure (Taka in million) 1,543.83 592.73 508.10 Interest Interest Investment 5,271.61 Administrative 7,469.85 Commission , Exchange & 16,107.01 Brokerage Other 22,546.17 Other 2 Annual Report 2017 †mev I mvd‡j¨i 35 eQi PARTICULARS PAGE NO. Vision 4 Mission & Commitments 5 Forward Looking Statements 6 Core Values 7 Core Indicators 8 Segmental Information 9 Value Added Statement 10 Economic & Market Value Added Statement 11 Our Corporate Strategies 12 Delivering Growth 13 Five Years’ Financial Summary 14 Board of Directors 16 Executive Committee, Audit Committee & Risk Management Committee19 Notice of the 35th Annual General Meeting 25 Standard Disclosure Index 26 Corporate Governance Disclosure Checklist 29 Chairman’s Message 32 From the Desk of the Managing Director & CEO 36 Directors’ Report 38 Risk Management 67 Green Banking 93 Our People 97 Corporate Social Responsibilities (CSR) 100 Corporate Governance 104 Compliance Report under Condition No. 7.00 of BSEC 109 Report of the Audit Committee of the Board 119 Statement of Directors’ Responsibilities 120 Auditors’ Report and Financial Statements 121 Off shore Banking Unit 181 NBL Money Transfer Pte. Ltd. Singapore 191 NBL Money Transfer Sdn Bhd. Malaysia 209 NBL Money Transfer (Maldives) Private Limited 225 NBL Money Transfer S.A., Greece 237 NBL Money Transfer INC., USA 241 NBL Securities Ltd. 247 NBL Capital and Equity Management Ltd. 261 Corporate Information 272 Regional Offi ce & Branch Network 273 Table of Contents Pictorial Views 279 Vision Ensuring highest standard of clientele services through best application of latest information technology, making due contribution to the national economy and establishing ourselves fi rmly at home and abroad as a front ranking bank of the country is our cherished vision. 4 Annual Report 2017 †mev I mvd‡j¨i 35 eQi Mission Eff orts for expansion of our activities at home and abroad by adding new dimensions to our banking services are being continued unabated. Alongside, we are also putting highest priority in ensuring transparency, accountability, and improved clientele service as well as to our commitment to serve the society, through which we want to get closer and closer to the people of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the national economic standard through continuous up gradation and diversifi cation of our clientele services in line with national and international requirements is the desired goal we want to reach. Commitments Carrying In Serving In Serving Ourselves at Work the Bank Customers Discipline Loyalty Customer-fi rst Integrity Total commitment & Quality-focus Sincerity dedication Credibility & secrecy Caring Excellence through Creativity teamwork Annual Report 2017 5 WE HAVE ESTABLISHED POSITIVE TRENDS IN MARGIN, COST AND IMPAIRMENTS AND ARE WELL POSITIONED Forward looking statements This annual report includes certain forward looking statements with respect to the business, strategy and plans of National Bank and its current goals and expectations relating to its future fi nancial condition and performance. Statements that are not historical facts, including statements about National Bank or its directors and/or management’s beliefs and expectations, are forward looking statements. Words such as ‘believes’, ‘anticipates’, ‘estimates’, ‘expects’, ‘intends’, ‘aims’, ‘potential’, ’will’, ‘would’, ‘could’, ‘considered’, ‘likely’, ‘estimate’ and variations of these words and similar future or conditional expressions are intended to identify forward looking statements but are not the exclusive means of identifying such statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. Examples of such forward looking statements include, but are not limited to, projections or expectations of the Bank’s future fi nancial position including profi t attributable to shareholders, provisions, economic profi t, dividends, capital structure, expenditures or any other fi nancial items or ratios; statements of plans, objectives or goals of NBL or its management including in respect of the integration and the achievement of certain synergy targets; statements about the future business and economic environments in Bangladesh and elsewhere including future trends in interest rates, foreign exchange rates, credit and equity market levels and demographic developments and any impact on the Bank; statements about strategic goals, competition, regulation, disposals and consolidation or technological developments in the fi nancial services industry; and statements of assumptions underlying such statements. Except as required by any applicable law or regulation, the forward looking statements contained in this annual report are made as of the date hereof, and National Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this annual report to refl ect any change in NBL’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The future strength of the Bank remains where it has always been - with its people. This Annual Report makes clear, that the Bank was founded on principles of openness, transparency and sound governance. That these values continue to earn trust and confi dence is evidenced by the steadfast support of all stakeholders. 6 Annual Report 2017 †mev I mvd‡j¨i 35 eQi ENSURING ACCOUNTABILITY AND LOYALTY THROUGH QUALITY SERVICE IN EVERY ASPECT IS OUR PRIME STRATEGY Core Values Integrity NBL protects and safeguards all customer information. NBL treats everyone in an equitable and consistent manner. NBL creates an environment, which earns and customer trust. Open Communication NBL builds customer relationships based on integrity and respect. NBL offers a full line of products and excellent service. NBL is committed to the prosperity of the customers and shareholders. Performance Driven NBL’s Core Values consist of 6 In NBL, customers and employees are judged key elements. These values in terms of their performance. bind our people together with an emphasis that our people are essential to everything being in the Bank. Continuous Self Improvement Continuous learning, self-challenge and strive make ways for self improvement of workforce at NBL. Quality NBL offers hassle free better service timely. NBL builds-up quality assets in the portfolio. Teamwork Interaction, open communication, and maintaining a positive attitude reflectNBL’s commitment to a supportive environment based on teamwork. Annual Report 2017 7 CORE INDICATORS Profit before tax & provision (Taka in million) Total Shareholders equity (Taka in million) 10,753.13 10,265.87 40,370.82 36,202.87 8,260.14 33,557.96 6,722.39 26,963.95 23,929.64 3,539.91 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Deposits & Loans and Advances (Taka in million) Import & Export (Taka in million) Deposits Loans and Advances Import Export 113,492.00 272,771.32 99,994.10 248,467.15 241,329.88 85,598.27 222,112.91 209,929.07 88,477.30 203,296.18 69,582.90 193,642.97 186,179.45 172,964.72 75,912.41 76,459.20 151,098.98 67,888.84 42,877.60 50,167.64 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Price earning ratio Net assets value per share 8.68 19.54 7.35 6.57 18.33 4.82 3.62 17.27 16.86 17.03 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Cost to income ratio Debt equity ratio 39.23% 36.83% 8.83 8.51 7.69 36.02% 7.39 7.44 35.54% 34.11% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 8 Annual Report 2017 †mev I mvd‡j¨i 35 eQi SEGMENTAL INFORMATION Interest income (Taka in million) Interest expenses (Taka in million) 5,098.90 2,970.80 Corporate Corporate 877.80 Retail & SME 511.40 Retail & SME Treasury Operation Treasury Operation 21,668.40 12,624.81 Other operating income (Taka in million) Operating Expenses (Taka in million) 1,599.10 435.70 Corporate Corporate 1,209.70 Retail & SME 1,227.40 Retail & SME Treasury Operation Treasury Operation Others Others 1,279.50 283.00 419.20 3,833.60 Industrywise Loans & Advances (Taka in million) Divisionwise Deposits (Taka in million) 69,554.95 3494.22 Agriculture 17,566.82 3,463.13 Term loan to small cottage industries 8,362.74 Dhaka 71,897.49 Term loan to large & Chittagong medium industries 5,712.81 Khulna Working capital to 13,748.69 industry Sylhet 1,287.01 Export credit 18,874.71 Rangpur 1,500.35 Trade finance Barisal Consumer credit Rajshahi 49,420.31 39,506.51 Credit card 47,516.13 8,343.17 Others 160,989.42 Productwise Exposure ( Taka in Million) Divisionwise Loans & Advances (Taka in million) 2,024.39 12,051.16 3,609.22 Dhaka 1,271.93 Chittagong 5,779.19 Khulna Sylhet 72,421.09 Rangpur Barisal Rajshahi 151,310.16 Annual Report 2017 9 Value added statement Value added is the wealth created by National Bank Ltd.