The year 2017 saw Bangladesh achieve its highest ever GDP growth in recent years, with revised GDP growth hitting 7.28%. This was the highest growth achieved in South Asia for 2017, and one of the highest GDP growth rates among major economies in the world. The political environment also remained stable. The government has set a GDP growth target of 7.40% for the 2018 fiscal year with higher gear in investments in power and transport infrastructure and higher private sector credit growth rates. Given current trends, Bangladesh is clearly entering to yet another higher growth trajectory.

For us 2017 is the culmination of the first stage of a journey undertaken along the path defined by our last Strategic Plan. We believe that the Government’s ambitious infrastructure development programme supported by a fast-track implementation will help our nation to achieve higher growth in the near future. In this backdrop we as a financier will enjoy higher credit growth to support private sector activities linked with these developments. Armed with sense of collective achievement we look forward to the next phase of our journey towards growth and prosperity which will consolidate and build on the good work done so far.

Year-end Highlights-2017:
As on December 2017, our SME portfolio stood at BDT 15,949 million, showing a growth of 131% during the year. In order to exploit the huge opportunities in SME sector, we deployed different strategies aimed to grow and achieve a diversified portfolio. These strategies are aligned with our strategy of branch growth, and we are planning to ensure our presence in the major SME business hubs all over the country.

In 2017, we focused heavily on personal financial services and SME financial services. Our credit card department has shown significant growth and client base is growing sharply. Our Home Loan portfolio has grown 92% from last year; BDT 12,250 million in 2017 from BDT 6,393 million in 2016. The Personal Loan division also achieved commendable success with the achievement of portfolio growth of 70% from last year. Our prime vision for 2018 is to ensure that branches play a bigger role in promoting retail and SME lending and driving medium term business goals.

Our term deposit has grown by 29% in 2017. This is in line of reducing dependency on bank borrowing which is a major prerequisite for a NBFI to have sustainable future.

Financial Highlights:
As on 31st December 2017, our asset portfolio has reached at 61,914 million which indicates a growth of 32%. Overall disbursement was 56,726 million showing a growth of 25%. Other major highlights are shown below.

• Revenue

  Consolidated revenue for 2017 has been BDT 9,981 million which shows a growth rate of 37% from the previous year, of which 71% was from interest earning products, 9% from investment income, 11% from commission & brokerage income and rest 9% from other income sources.

• Profitability

  Consolidated Pre-tax profit was recorded at BDT 2,263.81 million for the year 2017, which was BDT 946.66 million in the previous year, resulting in a growth of 139%. Consolidated Post-tax profit also shows an impressive growth of 142% from the previous year.

• Portfolio

  Lease, Loans & Advances Portfolio of LBFL shows a growth of 32% from 46,749 million in 2016 to 61,914 million in 2017. Retail portfolio grew 70% and now stands at BDT 27,050 million, whereas corporate portfolio has gone down from 23,918 to 18,915 million. SME financial services division shows a huge growth of 131% from 6,905 million in 2016 to 15,949 million in 2017.

• Credit Quality and NPL

  We have been successful in reducing our stand alone NPL ratio from 3.52% in 2016 to 3.07% in 2017. Overall NPL ratio of the Group was well placed at 2.85%. This shows that we have displayed growth without sacrificing our credit quality.

• Liquidity and Capital Adequacy Ratio

  Capital Adequacy Ratio (CAR) for 2017 stood at 11.81% on separate basis and 11.95% on consolidated basis against the Bangladesh Bank’s stipulation of 10%. This shows the strength of Capital and the level of compliance of LankaBangla with the regulatory requirements with regards to a sustainable growth.

• Share Performance

  Market price of our share had shown fluctuation throughout the year in between BDT 35.9 and BDT 69.3 and finally settled at BDT 47.8 at the end of 2017, which is up by 37% than 2016year end.

• ROA

  For the year 2017, our Consolidated Return on Assets (ROA) was 2.58% compared to 1.39% of 2016. Efficient Asset Management of the group plays a significant role in increasing the ROA in 2017.

• ROE

  Consolidated Return on Equity (ROE) for the year 2017 was 25.66% which was 12.29% in 2016. The outcome has been the result of increased profitability.

• EPS

  Consolidated Earnings per Share (EPS) for 2017 stood at BDT 5.97 compared to BDT 2.50 in 2016. This indicates increased profitability and stable asset base despite fierce competition amongst the players within the market.

Activities of Subsidiaries:
With the launching of fund management service through LankaBangla Asset Management Company Limited, now LankaBangla is the pioneer financial institution in Bangladesh to operate full scale in capital market of Bangladesh. LankaBangla Securities Limited (LBSL) maintained its leadership in both of the exchanges (DSE & CSE) in terms of turnover for the last 12 years and 13 years respectively. Daily turnover in both the bourses increased significantly in 2017 and LBSL was able to register 7.64% market share in DSE and 10.88% in CSE which is so far the highest market share retention in LBSL’s history. In 2017, brokerage revenue from LBSL touched a billion mark, highest in last five years. LankaBangla Securities Limited has won the “Dream Company to Work for-Best Workplace Practices” award at the Global CSR Excellence and Leadership Awards-2018. This is a testament that we could set an exemplary leadership in the industry.

LankaBangla Investments Limited (LBIL) worked on quite a few deals in merger & acquisition and corporate advisory maintaining its leading position in primary market operations. Gradually this merchant banking wing of LankaBangla Finance Limited is shifting from fund based earning sources to non-funded earning sources. LBIL has arranged BDT 2,770 million for its clients through Preference Share Issuance, Equity Arrangement and Commercial Paper Issuance. Advisory Service from LBIL has been strengthened and LBIL has worked as Transaction Advisor in divestment of a Foreign entity and provided valuation advisory services in several mandates.

2017 was the first full year for LankaBangla Asset Management Company Limited (LBAMCL) in Fund Management. As the wealth management wing of LankaBangla, LBAMCL kept signature mark of LankaBangla brand in capital market operations and generated impressive return in its first fund namely LankaBangla 1st Balanced Unit Fund (LB1stBUF) and declared 15% dividend for the year 2017. Looking forward in 2018, two new mutual funds namely LankaBangla Al-Arafah Shariah Unit Fund and LankaBangla Popular Life Growth Fund are expected to be launched. In Alternative Fund Management side, we are hopeful to launch our First Private Equity Fund in 2018.

We are building capacity along with these developments to facilitate the market with right kind of technology and skill set that would be required in foreseeable future.

Economic Outlook and Competitive Challenges for 2018
The monetary policy for H2 FY 2018 has set the private sector credit growth target at 16.8%, tighter than 18.13% growth achieved in December 2017. Bangladesh Bank mulls to tighten credit supply and curb excessive lending due to prospective inflationary pressure on economy. The ADR of all banks has been re-fixed at 83.50% for conventional banks and at 89% for Shariah-based Islamic banks from the existing 85% and 90% respectively. The revised limit will come into effect from December 2018. This directive put pressure on banks to attract more deposits. In the backdrop of decreasing liquidity in the banking system due to higher lending and lower deposit growth, this measure will pop up interest rates in 2018. NIM would be under pressure throughout the year as we see it. Political risk is also heightening ahead of national election in late 2018. We would remain cautious in lending and will rebalance our portfolio to higher yield segments as measure to keep our desired margin.

While we are investing more on technology to ensure seamless operations and customer service, innovation would remain a top priority in 2018. With few other new branches, we will reach to customer doorsteps with higher concentration in personal financial services and SME financial services.

Our Footprint
In expanding our footprint our desire is to project our presence selectively in strategically important places for SME & Personal Financial Services. We envisage that all our branches will be advanced in state-of-the-art technology and client service. We are conscious of the immense potential in the new growth areas of the Bangladesh economy, and will invest in preparing our human resources to cater to these specific market segments. Our branch network already comprises 25 locations country-wide. As we grow in geographical presence and strength, we are committed to be most preferred financial service provider of the country.

Appreciations:
Our achievements have always been made possible through a team effort where everyone – from the members of the Board to the newest recruits manning our counters – have contributed wholeheartedly towards achieving our goals and I sincerely thank the Board of Directors, members of Management Committee and all members of our staff for their contribution.

Finally, none of this would have been possible without our investors, loyal customers and all other stakeholders who have reposed their confidence, unwaveringly in LankaBangla. We look forward to continue our journey towards mutual growth and prosperity.

Thank you!
Khwaja Shahriar
Managing Director & CEO