Like the past few years, 2016 has been a momentous year with lots of accomplishments to strengthen our spirit. Before going into details, I want to highlight the macro-economic environment that surrounds us with few of my observations and enlighten you on the steps that we are going to take to strengthen our position.

Bangladesh is showing a healthy growth in GDP despite slowing remittance stream and private investment. Rate of inflation has decreased to 5.9 percent from 6.4 percent this year which is the lowest rate of inflation in last twelve years. Industry has shown a downward trend in interest rates and a rise in the flow of credit to the private sector. Political environment remained stable and highly suitable for businesses to grow. Bangladesh Bank is maintaining an accommodative monetary policy stance and has been very supportive to growth. We expect that in 2017, businesses will take the advantage of falling interest rates.

Year-end Highlights-2016:
To exploit the huge opportunities in SME sector, we deployed different strategies aimed to grow and achieve a diversified portfolio and as on December 2016, our SME portfolio stood at BDT 4,209 million, showing a growth of 98%. 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.

We continued our effort to increase service-providing capacity and established diversified platforms for high frequency lending in retail sector as well. Our credit card department has shown significant growth and offers the highest number of merchant relationships for discounts and other privileges. On top of that, we are successfully exploiting our competitive edges in auto loan and unsecured personal loan products and achieved the highest growth in the industry. Our prime vision for 2017 is to ensure that branches play a bigger role in promoting retail and SME lending and driving medium term business goals.

Our Corporate Financial Services has shown a modest growth of 13% in 2016. Moreover, our strategy of increasing non-funded income from fee-based services has also been proved to be a success. Our primary focus in coming years for this division will be to widen our umbrella of corporate relationships and prove ourselves as the true growth partner to our clients as we claim to be.

Since the inception of LankaBangla Finance, our goal has always partner to our customers. We have diversified our portfolio through financing retail, SME and corporate businesses with well-structured product mix and continued our effort to expand our footprints all over the country. To accommodate our customer-centric focus, we kept upgrading our IT backbone over the years and we expect to have the top notch IT backbone in the industry in the upcoming years.

Reducing dependency on bank borrowing is a major prerequisite for a NBFI to have sustainable future. Our Public deposit has grown by 32% in 2016.

To reach our prospective clients through electronic and digital media, we have widened our delivery channels. Moreover, conventional delivery and advertisement mechanisms were used selectively, especially to promote our SME products.

Financial Highlights:
As on 31st December 2016, our asset portfolio has reached at 46,749 million which indicates a growth of 30%. Overall disbursement was 45,539 million showing a growth of 27%. Other major highlights are shown below.

• Revenue

  Consolidated revenue for 2016 has been BDT 7,310.93 million which shows a growth rate of 17.23% from the previous year, of which 77.44% was from interest earning products, 6.61% from investment income, 7.74% from commission & brokerage income and rest 8.20% from other income sources

• Profitability

  Consolidated Pre-tax profit was recorded at BDT 946.66 million for the year 2016, which was BDT 532.84 million in the previous year, resulting in a growth of 77.66%. Consolidated Post-tax profit also shows an impressive growth of 89.02% from the previous year

• Portfolio

  Lease, Loans & Advances Portfolio of LBFL shows a growth of 30% from 36,019 million in 2015 to 46,749 million in 2016. Retail portfolio grew 51% and now stands at BDT 16,997 million, whereas, corporate portfolio has grown from 22,633 to 25,543 million. SME financial services division shows a huge growth of 98% from 2,125 million in 2015 to 4,209 million in 2016.

• Credit Quality and NPL

  We have been successful in reducing our stand alone NPL ratio from 3.72% in 2015 to 3.52% in 2016. Overall NPL ratio of the Group was well placed at 3.22%. This shows that we have displayed growth without sacrificing our credit quality.

• Liquidity and Capital Adequacy Ratio

  Capital Adequacy Ratio (CAR) for 2016 stood at 13.22% on separate basis and 12.45% 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 26.5 and BDT 42.4 and finally settled at BDT 34.8 at the end of 2016, which is up by 20% than 2015 year end.

• ROA

  For the year 2016, our Consolidated Return on Assets (ROA) was 1.39% compared to 2015 figure of 0.94%. The increase in the ratio despite a modest asset growth shows the management efficiency of LankaBangla.

• ROE

  Consolidated Return on Equity (ROE) for the year 2016 was 12.29% which was 6.37% in 2015. The outcome has been the result of increased profitability.

• EPS

  Consolidated Earnings per Share (EPS) for 2016 stood at BDT 2.87 compared to BDT 1.53 in 2015. This indicates increased profitability and stable asset base despite fierce competition amongst the players within the market.

Activities of Subsidiaries:
In the Capital Market front, we maintained our leadership in both stock brokerage and merchant banking. LankaBangla Securities Limited is the current market leader in both the stock exchanges of the country. And as the market is getting stronger day by day, we are getting ready to cease the upcoming opportunities. On a similar note, LankaBangla Investment Ltd, a leading merchant bank of the country, has successfully completed several mandates. Another Subsidiary LankaBangla Asset Management Company Limited made a kick start in fund management activities. In 2016 we restructured the company looking forward to manage Private Equity, Venture Capital and Impact Funds in foreseeable future.

"Our vision is to be the leading financial services organisation in the Country, delivering exceptional client experiences and superior value. This sets the primary goals and standard of excellence we intend to achieve. As an integrated financial services provider organisation that serves the full spectrum of the financial needs of individuals, small and medium enterprises (SMEs) and large corporations across the Country, it is in our interest that Bangladesh’s growth is strong and inclusive."

CSR and Green Banking Initiatives:
We value social and political progress just as much as we value our profitability. We have adopted our green office initiative for the best utilization of natural resources. Financing Greenfield brick projects are a part of our green banking strategies. Our CSR initiative, LankaBangla Foundation has broadened its landscape to support the underprivileged all over the country.

Our Motto "Growing Together" includes the growth of our employees as well. We seek to foster a well-trained, dynamic and diverse workforce who can understand, relate and interpret the expectations of our clients and meet those aspirations efficiently. We believe in nurturing our employees through knowledge sharing and training programs and spent BDT __ million and __ training hours to enhance their professional capabilities. We are continuing our effort to uphold professional ethics among our employees while ensuring the transparency in the operational policies, guidelines and procedures.

We allocate capital and human resources to market segments where we believe we will be most effective in creating value for our clients and generating profitable revenue. This is reflected in our strategy to shift the focus of our core business. The ultimate test of our strategy is whether it will enable the group to deliver a superior ROE and sustainable growth in earnings over the medium to long term.

Economic Outlook and Competitive Challenges for 2017:
Judging the current economic and political scenario, it can be predicted that the business environment for us will remain stable but we will face increased competition in the coming years particularly in our growing business areas of emerging & commercial business unit, SME unit and retail unit. However, we are confident that LankaBangla will be able maintain its position and our investments in technology and human resources would continue to grow in the coming days to deliver the needs of new and existing customers throughout our footprint.

In 2017, our target will be to strengthen our SME and Retail positions and increase our cost to income ratio with a view to improve profitability. Besides, our branch network will be further widened with the opening of 10 branches at the country’s major business hubs. Also, we are making heavy investments to strengthen our IT backbone and hopefully, we will be able to cash-in the results soon.

We recognise that employee engagement is a lead indicator of client experience. We are committed to best practice people management and to a workplace where high performance is expected and rewarded. Diversity in our leadership teams and demographic representation among our employees is an advantage as we serve equally diverse client bases.

Appreciations:
I would like to thank each and every customer across the country for the privilege to serve each and every one of you. You have always been our inspiration and we are committed to provide top notch services to our customers in the coming days. I also want to thank the board of directors and all the shareholders for their continued support and trust. My sincere gratitude goes to all of my fellow colleagues for their team effort, sincerity, diligence and professionalism. Special thanks to all of our lenders, depositors, regulators and other stakeholders. I believe all of our stakeholders would be growing together hand in hand with a sense of ownership in the LankaBangla family.

Thank you.
Mohammed Nasir Uddin Chowdhury
Managing Director & CEO