Idlc Ar 2013

Rising Above. Going Beyond!
The year 2013 was one of sheer resolve and resilience at IDLC
Finance Limited.
Even as the global and national economic situation continued
to be enveloped in a pall of gloom, we reported respectable
financials driven by a 34% increase in our loans and advances
book, 33% increase in our revenues and 37% increase in our
operating profit with the same parameters recording growth of
26%, 25% and 13%, respectively, for the IDLC Group.
Interestingly, the big story at IDLC is not the year that passed
by, but the years to come.
Not the fact that we continued to sustain our leading and
pioneering position in the NBFI space in Bangladesh, but
having created strong foundations, we are likely to remain so
into the foreseeable future.
Hence, our overarching message to our stakeholders is that
we are rising above and going beyond, creating a trajectory of
sustainable growth.
Welcome to the Annual Report 2013 of IDLC Finance

Limited. These are the pillars of the document
II
Our Founding Philosophies page 6

Who We are and What We Do page 8
Our Products & Services Basket page 10
Words on Numbers page 11
Our Organisational Chart (Organogram) page 12
Our Shareholding Composition Page 13
Letter to Our Stakeholders from the Chairmans Desk page 16

Thematic Positioning page 20
Our Performance over the Past Five Years page 24
An Analysis of Our Portfolio page 26
CEO & Managing Directors Review page 27
From Stepping Stones to Milestones page 31
III
IV
Business Segment Review page 34

Our Business Model Review page 48
Strengths and Strategic Key Performance Indicators page 50
Brief Profile of the Board of Directors page 54

Management Committee (ManCom) page 58
Senior Executives page 60
Committees of the Board & Management page 62
VI
Statement of Risk Management page 68

Our Treasury page 78
Statement on Corporate Governance page 82
Event Highlights page 96
Corporate Social Responsibility at IDLC page 98
Our Human Capital page 107
Human Resources Accounting (HRA) page 111
Letter of Transmittal page 114

Notice of the 29th Annual General Meeting page 115
Report of the Audit Committee page 116
Assessment Report on the Going Concern Status of IDLC page 118
Business Environment and its Likely Impact on the Financial
Performance of IDLC page 120
Key Operating and Financial Highlights IDLC Finance Limited page 120
Key Operating and Financial Highlights IDLC Group page 121
Value Added Statement page 122
Market Value Added Statement page 123
Economic Value Added Statement page 124
Contribution to National Economy page 125
Highlights as Required by the Bangladesh Bank page 126
Statement of Directors Responsibility for Internal Control, Financial
Reporting & Corporate Governance page 127
Thematic Anchoring and Company Philosophy
Operating and Financial Review
Risk, Treasury and Governance
Birds Eye View of Our Company
At the Helm of Our Affairs
Fostering a Culture of Integrity Reports and Statements
VII
VIII
Directors Report to the Shareholders of IDLC page 130

Certification on Compliance of Corporate Governance Guidelines page 136
Status of Compliance with the Corporate Governance Guidelines (CGG) page 137
Auditors' Report to the shareholders of IDLC Finance Limited page 149
Upholding Transparency Statutory Reporting
IX
Shareholders Corner
Disclosures under Pillar III- Market Discipline page 231
Information for the Stakeholders page 240
Glossary page 242
IDLC's Presence page 244
Proxy Form & Attendance Slip page 247
Reports and Financial Statements

Report of the CEO & Managing Director and the Chief Financial Officer page 148
Consolidated Financial Statements IDLC Group
Consolidated Balance Sheet page 151
Consolidated Profit and Loss Account page 153
Consolidated Cash Flow Statement page 155
Consolidated Statement of Changes in Equity page 157
Financial Statements IDLC Finance Limited
Balance Sheet page 159
Profit and Loss Account page 161
Cash Flow Statement page 163
Statement of Changes in Equity page 165
Liquidity Statement page 167
Notes to the consolidated and separate financial statements page 168
Financial Statements Subsidiary Companies
IDLC Securities Limited
Directors Report to the Shareholders page 216
Auditors Report page 220
Statement of Financial Position page 221
Statement of Comprehensive Income page 222
IDLC Investments Limited
Directors Report to the Shareholders page 223
Auditors Report page 228
Statement of Financial Position page 229
Statement of Comprehensive Income page 230
Clear Vision
An eagles eyes are extremely powerful, enabling it to spot potential prey from a very long
distance, sometimes as much as 50 miles! At IDLC, we also possess a crystal clear vision of
emerging as the most-preferred nancial brand in the country.
Thematic Anchoring and

Company Philosophy
Our Founding Philosophies page 6
Who We are and What We Do page 8
Our Products & Services Basket page 10
Words on Numbers page 11
Our Organisational Chart (Organogram) page 12
Our Shareholding Composition Page 13
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Thematic Anchoring and Company Philosophy | Birds Eye View of Our Company | Operating and Financial Review | At the Helm of Our Affairs | Risk, Treasury and Governance
The Wind Beneath Our Wings.

Our Founding Philosophies.
Our Vision
We will be the best financial brand in the country.
Our Mission
We will focus on quality growth, superior customer experience and sustainable business practices.
Our Strategic
Objectives
Grow and develop our talent pool

Fully leverage the core banking platform
Optimise distribution points
Grow and diversify funding sources
Grow sales and service capabilities in the Consumer division
Aggressively grow SME portfolio
Focus on top-tier clients in the Corporate segment
Consolidate capital market operations and enhance capabilities
Embrace internationally accepted Corporate Governance and sustainable business practices
Our Core Values
Integrity
Customer Focus
Trust and Respect
Equal Opportunity
Eco-friendly
Passion
Simplicity
Fostering a Culture of Integrity Reports and Statements | Upholding Transparency Statutory Reporting | Reports and Financial Statements | Shareholders Corner
Our Code of Conduct and Ethics

In accordance with the approved and agreed Code of Conduct, IDLC employees shall:
Act with integrity, competence, dignity and in an ethical manner when dealing with customers, prospects, colleagues, agencies and
the public
Act and encourage others to behave in a professional and ethical manner that will reflect positively on IDLC employees, their
profession and on IDLC at large
Strive to maintain and improve the competence of all in the business
Use reasonable care and exercise independent professional judgment
Not restrain others from performing their professional obligations
Maintain knowledge of and comply with all applicable laws, rules and regulations
Disclose all conflicts of interest
Deliver professional services in accordance with IDLC policies and relevant technical and professional standards
Respect the confidentiality and privacy of customers, people and others with whom they do business
Not engage in any unprofessional conduct involving dishonesty, fraud, deceit or misrepresentation or commit any act that reflects
adversely on honesty, trustworthiness or professional competence
IDLC employees have an obligation to know and understand not only the guidance contained in the Code of Conduct but also the spirit
on which it is based.
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IDLC Finance Limited is Bangladeshs largest

and fastest growing Non-Banking Finance
Institution (NBFI)
Our legacy
IDLC Finance Limited, incorporated as Bangladeshs pioneering leasing company, was established in Dhaka in 1985 and was constituted
through the collaboration of International Finance Corporation (IFC), German Investment and Development Company (DEG), Kookmin
Bank, Korea Development Financing Corporation, The Aga Khan Fund for Economic Development, The City Bank Limited, IPDC of
Bangladesh Limited and Sadharan Bima Corporation.
Who we are today

IDLC has emerged as a pioneering multi-product NBFI in Bangladesh with 26 branches and over 642 team members.
What we offer
IDLC offers a wide range of products and solutions comprising loans, deposit and capital market products and services to corporate,
consumer and SME clients.
Our
subsidiaries
IDLC also operates two wholly-owned subsidiaries in the capital markets through IDLC Investments Limited (providing merchant banking
services) and IDLC Securities Limited (providing brokerage services).
Our listing
IDLC is listed on the Dhaka and Chittagong stock exchanges. The Companys market capitalisation stood at Taka 10,119 million as on
31 December 2013.
Our promoters/ directors holding

The promoters/ directors of IDLC hold 63.82% of the Companys common equity.
Dividend declared, 2013

IDLC has declared a stock dividend @ 25% (one Bonus share for every four shares held) and cash dividend @ 5%
(Taka 0.50 per share) for 2013.
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Our Products & Services Basket catering to

wide-ranging customer needs and requirements
Small and Medium Enterprise (SME)
Small Enterprise Finance
Small Enterprise Loan/ Lease
Seasonal Loan
Women Entrepreneur Loan
SME Shachal Loan
SME Surakkha
SME Deposit
Medium Enterprise Finance
Medium Enterprise Lease/ Loan
Commercial Vehicle Finance
Machinery Lease
Healthcare Finance
Revolving Short Term Loan
SME Deposit
Supplier & Distributor Finance
Factoring of Accounts Receivable
Bill/Invoice Discounting
Work Order Financing
Distributor Financing
Home Loan
Flexible Term Deposit Package
Car Loan
Regular Earner Package
Personal Loan
Loan Against Deposit
Corporate Division
10
Corporate inance
Lease Financing
Term Loan Financing
Working Capital Arrangement
Structured inance solutions
Loan/ Lease Syndication
Private Placement of Equity
Preference Shares
Project/ Infrastructure Finance
Bond
Foreign Currency Loan
Refi
of Special Funds
Mergers & Acquisitions
Joint Venture Matchmaking
Balance Sheet Restructuring
Feasibility Study
Securitization of Assets
Structured Solutions
Treasury
Consumer inance
Project Financing Appraisal

Specialized Products
Common Equity Investments

Term Placement
Call Placement
Zero Coupon Bonds
Debenture
Capital markets
Brokerage Service
CDBL Service
Margin Loan Operations (Cap Invest)
Discretionary Portfolio Management (MAXCAP)
Corporate Advisory
Issue Management
Underwriting
Research
Words on Numbers
50,429
million taka
29,064
million taka
Total Assets
Term Deposits
31%
40,941
Compounded annual growth rate

of term deposits over 2009-2013
Loans and advances
29%
3.71%
Compounded annual growth rate of our loans

and advances (excluding margin loan) over
2009-2013
Net interest margin
1.63%
29,976
NPL
Customer and client relationships
642
26
Team strength
Branches
million taka
* As on 31 December 2013
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12
Our Organisational Chart (Organogram)
Audit Commitee
Execuive Commitee
CEO & Managing Director
Credit Evaluaion Commitee
Human Resource
Corporate
SME
DMD & CFO
Internal Control & Compliance
1 Branch
Supplier & Distributor

Finance
Finance
Credit Risk Management
Structured Finance
9 Branches
Statutory Reporing &

Corporate Aairs
Special Asset Management
Consumer
2 Booths
Treasury
Informaion Technology
Corporate Social
Responsibility
Markeing Communicaion
6 Branches
IDLC Securiies Limited
9 Branches
8 Branches
Administraion
Operaions
Credit Administraion
Service Delivery
Board of Directors
Our Shareholding Composition

As on December 31, 2013
Sl.No.
Name of Shareholders
Sponsors/ Directors:
The City Bank Limited
45,634,598
28.37
Transcom Group
21,449,885
13.33
12,870,000
8.00
Transcraft Limited
6,456,335
4.01
Bangladesh Lamps Limited
2,123,550
1.32
Sadharan Bima Corporation
12,257,065
7.62
Mercantile Bank Limited
12,065,625
7.50
Reliance Insurance Co. Limited
11,261,250
7.00
102,668,423
63.82
Eskayef Bangladesh Limited
Sub-Total
2
No.of
Shares
General
Institutions:
Bangladesh Fund
5,145,910
3.20
Pubali Bank Limited
2,566,100
1.60
Marina Apparels Limited
1,608,750
1.00
14,069,269
8.75
23,390,029
14.54
34,816,548
21.64
34,816,548
21.64
160,875,000
100
Other Institutions
Sub-Total
Individuals:
General Public
Sub-Total
Total Holdings
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Sky Sovereigns
Eagles are large, powerfully-built and much-feared birds of prey. Just as they are referred to
as sky sovereigns, at IDLC, we are also sky sovereigns, being the largest and most-respected
leaders of the NBFI industry in Bangladesh today.
II
Birds Eye View of

Our Company
Letter to Our Stakeholders from the Chairmans Desk page 16
Thematic Positioning page 20
Our Performance over the Past Five Years page 24
An Analysis of Our Portfolio page 26
CEO & Managing Directors Review page 27
From Stepping Stones to Milestones page 31
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Letter to our
stakeholders from
the Chairmans desk
AT IDLC, WE HAVE CREATED THE CULTURE OF
OUR ENTERPRISE AROUND OUR CUSTOMERS
RATHER THAN OUR PRODUCTS. THIS SINGLEMOST IMPORTANT DIFFERENTIATOR HAS ENABLED
US TO ALIGN OUR THOUGHT PROCESSES, OUR
STRATEGIES AND OUR INITIATIVES AROUND
WHAT MATTERS MOST TO OUR CUSTOMERS AND
CLIENTS.
WE ARE ALSO A COMPANy THAT PROMOTES
CONNECTEDNESS NOT jUST CONNECTING OUR
CLIENTS AND CUSTOMERS WITH THE BROADEST
ARRAy OF DEPOSIT AND LOAN PRODUCTS AND
SERVICES BUT ALSO CONNECTING EACH OTHER,
LEVERAGING THE POWER OF RELATIONSHIPS.
AS WE TAkE THE ESSENCE OF THESE INITIATIVES
FORWARD, WE HAVE EMERGED AS A MUCH
STRONGER COMPANy TODAy THAN WHAT WE EVER
WERE ON THE TIMELINES OF OUR HISTORy.
Anwarul Huq
Chairman
Dear fellow stakeholders,

The year 2013 can be encapsulated on our efforts that focused
on three broad objectives
First, having created strong foundations in terms of

penetration, technology, processes and people, consolidating
our activities and operations for our next phase of growth.
Second, rebalancing and realigning our portfolio towards our

overarching corporate philosophy of financing happiness,
and in doing so, further strengthening our presence in
those segments which are relatively unrepresented by the
traditional banking network and creating strong bonds on
the basis of opportunities and mutual respect.
Third, reinforcing the quality of our Balance Sheet and

capital position to create the right conditions for long-term
shareholder value growth.
Rising above, going beyond

As we take the essence of these initiatives forward, we have
emerged as a much stronger Company today than what we ever
were on the timelines of our history. Our well-defined vision,
strategies and operating principles continue to guide us as we
pursue our goals. Our success in doing so is already reflected
in the fact that our clients have deep faith and trust in us and
16
choose us to deposit a growing channel of their funds; our

customers choose to bring us more of their business and make
us their primary financial institution; our employees choose us
to build their careers and aspire for achieving their aspirations
and ambitions and shareholders realise the long-term value our
enterprise can deliver, translating into steady growth in tangible
book value per share, attractive total shareholder returns and
consistent performance through economic cycles.
Relevantly so, even in the face of several significant challenges
that we encountered in 2013, we made good progress in
advancing our Company towards our long-term vision. Particularly,
as we transformed the Company from the year ago period, we
recorded a respectable 32% growth in term deposits and 26%
growth in advances, kept our NPL (non-performing loans) tightly
under control to 1.63% of the overall advances (2.09% NPL
in 2012) and, most importantly, built on our market-leading
capabilities to serve our clients and customers core financial
services needs, hence reporting a healthy 15% growth in our
operating income to Taka 2,763 million, up 28% from the year
ago period. Moreover, we tightened our cost structures in our bid
to create a culture of more and more from less and less with
the result that our operating profit increased 13% to Taka 1,518
million, a significant achievement in a challenging economic
scenario. As a prudent and conservative financial measure, we
0.46%
40,941
26%
32,595
22,008
32%
Loans and Advances
29,064
Term Deposit
more than in the same period last year. Though this picture might
look rosy at fi glance, the drop in imports shows that the country
is not importing manufacturing equipment and capital goods, which
might affect the economy in the long run.
also made provisions to the extent of Taka 1,044 million in our

consolidated Balance Sheet.
It gives me the confidence therefore to tell you that our Company
today has reduced risk and is less complex. As a stronger and
more agile corporate, we are building deeper relationships with
our clients and customers and are doing what we can to help
restore confidence and strength to our economy.
Source: Bangladesh Bank
Overview of the Bangladesh economy

The global economy continued to be pummelled by several
factors including the Euro Zone crisis, steady global food prices,
global oil price escalation, depressed consumer spending, banks
succumbing to credit and market risks and an overall depressed
sentiment. The Bangladesh economy was not only impacted
by these global economic vulnerabilities but increased political
instability, labour unrest and declining trade and commerce
compounded matters further for our 160-million-strong country.
Moreover, inadequate infrastructure, tightening access to credit
on account of liquidity challenges, inefficient bureaucracy, political
uncertainty and high inflation continued to remain the core factors
impacting national growth. Also, shortage of electricity supply to
power-intensive industries and poorly functioning roads and ports
have widened the cracks in the growth path of the country.
As a result of these challenges, the Bangladesh economy, which
was aiming to achieve a growth of 7.2% in 2013-14 will only
touch a 5.7% growth during the fiscal, indicates the World Banks
half yearly report. This projected growth comes on the back of a
healthy 6.3% GDP growth recorded in 2012-13. The turmoil in
the recently-concluded national elections created an unfavourable
investment climate and both domestic and foreign capital stayed
away from investing in the country.
Consequently, on the expenditure side, investments as a share

of GDP remained nearly the same at around 25% while private
investment declined from 19.5% of GDP to 19.1% between 201011 and 2011-12. Though the investment target for 2012-13 was
pegged at 29.6% of GDP, the present state of the global economy
and internal supply constraints will make this a tough projection.
As per the Bangladesh Economic Update, October 2012,
notwithstanding increasing subsidies, the fiscal performance was
favourable. The 2012-13 Budget deficit target at 5% of GDP
is modest though higher than the estimated 4.5% of 2011-12,
although it is likely to fall short of expectations mainly because of
a shortfall in the implementation of the ambitious Taka 550 billion
Annual Development Program. Financing the deficit poses a major
challenge with a projected USD 2.2 billion net external financing
needed, more than the USD 1.4 billion of the revised 2011-12
Budget. The rest of the deficit is projected to be financed from
domestic sources, with a 69% reliance on bank borrowing.
Operating principles that move us forward
With a view to execute our vision, we have focused our strategies
and directed our efforts to sustain our position as a forwardfacing company.
Customer centricity
Source: Finance Ministry
Remittances from expatriates also dropped a sharp 8.4% in the

fi six months of the fi
2013-14 after rising a stellar 12.6%
in 2012-13. Considering that remittances are the second most
important mainstay of the country after garment exports, the
medium to long-term trend is indeed worrisome. Moreover, due to
rising exports and a drop in import costs, Bangladesh registered
a massive surplus in foreign transactions in the fi half of the
2013-14 fi
at around USD 1.38 billion, almost three times
As a customer-led Company, we are intently listening to our

clients and responding to their needs and preferences. They
value clarity, choice and healthy advice and choose us as their
preferred financial partner. This is precisely the reason why repeat
business comprises a solid 52% of our turnover (2013), enabling
us to create a strong sense of goodwill for our franchise. We
have also developed employee incentive, reward and recognition
programmes that align with our customer experience goals and
represent our ability to build a strong pipeline of business driven
on the foundations of profitable relationships. The result of these
initiatives is the fact that we see immediate improvements in
customer satisfaction, problem resolution and willingness to
broaden and deepen relationships.
In serving businesses from 6,872 SME relationships (which
is of the largest such pools in the NBFI space in the country
today) to 856 large corporate clients to 7,203 retail clients our
belief is value creation by pursuing broad, deep and long-lasting
relationships.
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mitigate revenue and geographical concentration risks, prudently

balancing our assets and liabilities and controlling our expenses
with a tight fist.
We believe that the execution of these measures has led to less
volatile earnings per share growth and steady capital generation.
We also believe that this will result in attractive growth in book
value per share, support a higher multiple for the stock and enable
us to stay consistent with our dividend payout policies.
Pursue operational excellence and manage risks prudently

An important element in our strategy is achieving operational
excellence and incremental productivity gains throughout the
organisation. We believe that this is exactly where we can
start our journey of building stronger relationships with our
customers by getting it right the first time, hence building loyalty
and with our employees by creating a dynamic team and linking
performance with pay.
We streamline and focus our resources on driving operational
excellence for our customers by leveraging the power of
technology. We are using Flexcube as our core banking software
and through this, we are automating processes, shrinking
application-to-disbursement timeframes, liberating wasteful
expenditure and conserving resources. Through Flexcube, we are
also integrating our head office with all our branches, thereby
enabling quicker decision-making, which represents the most
significant driver in building long-lasting relationships.
Operational excellence in risk management is especially
important, as we continue to build on our work to institute new,
rigorous risk management controls and procedures throughout
the organisation. In the face of a challenging economic scenario,
these efforts are contributing to improving our credit quality
results.
Building a stronger Balance Sheet
Building and maintaining a fortress Balance Sheet through various
economic cycles requires the need for strong liquidity and credit
reserve positions, robust asset quality, strong capital management
practices and prudent balancing between assets and liabilities.
Despite the fact that we recorded a healthy 26% growth in
our advances to Taka 40,941 million at the close of 2013, we
significantly reduced risk-weighted assets, with the result that
our NPL levels stood at among the lowest levels in our industry in
the country. We also mobilised Taka 11,458 million as deposits,
registering a healthy growth of 16.5% over the past year. This
clearly reflects the faith individuals repose in us and entrust their
long-term security in favour of our various deposit products that
enjoy the highest rating across categories.
Our net interest income of Taka 2,078 million (2,134 million for
IDLC Finance Limited) in 2013 grew by 19% ( 31% for IDLC
Finance Limited) over the last year and net interest margins of
3.71% continues to remain one of the highest in the NBFI
industry in the country today.
Focusing on our shareholder return model
Our shareholder return model is geared towards enhancing
long-term value in the hands of our investors and directs us to
take decisions and actions that are aligned with this core guiding
principle. Our shareholder return model encapsulates the creation
and sustenance of a strong Balance Sheet, achieving consistently
sustainable revenue growth, diversifying our business exposure to
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It gives me pleasure to mention that even in a challenging

environment, we declared a stock dividend of 25% (one bonus
share for every four shares held) and cash dividend @ 5% or
Taka 0.50 for every share of face value of Taka 10, in line with
our philosophy of rewarding our shareholders with their faith and
belief in our business model. As we pursue our long-term growth
strategies, we invite you to remain invested in our Company.
Consolidation
The recessionary environment took a toll in terms of lowering the
spending power of millions, which in turn halted capital asset
expansion and lowered industrial production. The capital markets
also continued to remain volatile with retail investors largely
remaining in the wait-and-watch mode. Besides, depressed
primary markets and low valuations also halted the IPO (Initial
Public Offer) plans of several corporates with the result that
only 10 IPOs were floated during the course of 2013, mopping
up a cumulative Taka 3,966 million as against 12 IPOs in 2012
absorbing Taka 14,197 million. In fact over the past three years,
the country has witnessed the flotation of only 33 IPOs raising a
total of Taka 25,465 million from 31 IPOs raising Taka 21,022
million during the preceding three years. The average daily
turnover on the Dhaka Stock Exchange continued to remain
suppressed at Taka 4,003 million in 2013, continuing from Taka
4,209 million in 2012.
We operate two wholly-owned subsidiaries in the capital markets
and investment banking businesses under IDLC Securities Limited
(IDLCSL) and IDLC Investments Limited (IDLCIL). We are making
a provision of Taka 81.20 million in the IDLCIL Balance Sheet for
2013 as a prudent accounting measure towards cleaning our
operations and consolidating our Balance Sheet (consolidated),
hence creating the foundations for sustainable long-term growth.
Building the Company on strong foundations
At IDLC, we view the governance and oversight of our distinctive
business model and prudent strategy as key to the ongoing
creation and delivery of value to our stakeholders, particularly
in an economic environment that remains both uncertain and
challenging.
At our Company, the Boards primary role is to provide leadership,
ensure that it is appropriately managed and deliver long-term
shareholder value. It also sets the Groups strategic objectives and
provides direction as a whole. A number of key decisions are
reserved for and may only be made by the Board, which enables
it and the executive management to operate within a clear
governance framework. Some of the matters specifically reserved
for the Board include:
Setting and monitoring strategy.

Oversight of regulatory compliance and internal controls.
Ensuring adequate financial resources.
Acquisitions and disposals over certain thresholds.
Board appointments and removals.
Communication with shareholders.
To accomplish this, the Board has met nine times in 2013 and
prior to each meeting, it receives reports not only on the results
of each of the three divisions and the two subsidiaries and key
performance indicators but also detailed updates on the progress
and implementation of the agreed strategies for each division and
subsidiary. The Board has the opportunity to discuss the reports
and challenge each of the divisional business heads who
attend all or part of the Board meetings on the progress and
implementation of their divisional strategy. In addition, we also
organise various forums dedicated to discussing and reviewing
the Groups long-term strategy with the executive management.
At IDLC, we have also established and embraced both in letter
and spirit our Code of Conduct, signed by each and every
member as an acceptance to adhere to the principles of the Code
during all business dealings. The Code also sets out guidance on
best practices in the form of principles and provisions on how we
should adopt and follow good governance practices. It has been
the Boards view that the Companys governance regime has been
fully-compliant with the best practices set out in the Code during
the year under review.
Corporate responsibility
Almost six years after the global financial crisis erupted and
engulfed most of the world, 2013 saw the economic tide slowly
begin to turn. Housing markets started to stabilise, economies
around the globe found their footing and unemployment rates
trickled downwards. At IDLC, we remain optimistic that better
days are ahead; however we also believe that there are still far too
many people looking for jobs even as the government faces fiscal
and administrative constraints and vital social service providers
are stretched thin, struggling to make ends meet.
As the financial crisis and the ongoing challenges have
demonstrated, the world is more complex and our economies
more inter-connected than at any time in history. Global
competition is more formidable than ever. Populations are growing
rapidly and rising urbanisation is creating the need for new jobs
and putting pressure on local infrastructure, education, housing,
energy, clean water and other critical resources.
At the core of our values, IDLC believes that using our strength
and reach, our expertise and relationships and our access to
capital to support our clients and communities, invest in them
and help them navigate through the challenging times rightly
encapsulates our fundamental corporate responsibility. When
we are successful, we create the foundations for widely shared
growth and long-term prosperity.
On the corporate responsibility front, there was a lot for us to be
proud of during 2013. At a time when job creation is top priority
for communities around our country, we catalysed our lending to
small businesses, thereby helping accelerate both direct and
indirect employment; invested over Taka 5.16 million (Taka 2.47
million in 2012) in our overall community development projects
both directly and in partnerships with other organisations of
repute and worked to improve the lives of under-served and the
marginalised under several umbrella programmes. Our people
donated significant amounts of time and money to help local
charities and we continued to uphold our duty to support our
communities through hiring, housing and education.
We also advanced our environmental stewardship and innovation
across our lines of business in close partnership with clients and
through careful management of our direct operations, including
energy use, greenhouse gas emissions and careful use of
precious resources including paper and water, among others. We
also actively engaged in several environment programmes during

the year under report, including plantation drives, enhancing
the green cover and engaging with our customers on improving
their operating environment. Significantly, we also refrained from
lending capital to those projects/ industries which we believe
might potentially and irreparably damage the environment.
Taken together, these efforts reflect our responsibility to invest
in our communities and we are committed to doing more in the
years ahead. We know that to progress, we need to operate with
integrity and continually strive to gain the confidence of all our
stakeholders, the pursuit of which motivates us every day.
Focused on the future
Our 2013 results demonstrate that while we have made good
progress in strengthening the Balance Sheet and focusing our
capital to support the core capabilities of our customers, the state
of the national economy as well as probable regulatory changes
continue to cast their shadow over the medium term.
However, I continue to remain optimistic on the long-term
prospects of our nation considering a vast population, relative
under-penetration and a strong entrepreneurial drive. We will
continue to leverage our core competencies comprising a widely
dispersed branch network (26 branches at the close of 2013);
a solidly growing deposit base (term deposits grew at a 31%
CAGR over the past five years); a relatively well-balanced and
de-risked portfolio comprising Corporate, SME and Consumer; a
robust disbursement growth (customer advances grew at a 20%
CAGR over the past five years); declined NPLs (NPL of 2.32%
in 2011, 2.09% in 2012 and 1.63% in 2013); a cherished and
widely-recalled brand equity founded on the premise of financing
happiness; a strong, motivated and productive staff-force (642
employees with revenue per employee growing from Taka 9.04
million in 2012 to Taka 10.74 million in 2013) and our position as
a responsible NBFI through remaining Bangladeshs only United
Nations Environment Programme Finance Initiative (UNEP-FI)
certified corporate that drives us to preserve the environment and
refrain from extending credit to particular sectors.
We enjoy leading positions in almost every business in which
we compete and operate. We serve thousands of consumers,
businesses and investors, each of which provides an opportunity
for us to expand our relationship with them.
The year 2014 will bring its own mix of successes and challenges,
but our direction is crystal clear. We will continue to focus intently
on what we can control providing our customers and clients
with the best services and most comprehensive financial solutions
in the market, managing our costs, and doing our part to keep the
economy moving forward.
As we proceed, I deeply acknowledge the efforts of my fellow
colleagues on the Board, our employees and their continued
commitment. I also thank our customers and clients for their
confidence in our ability to deliver results and our shareholders for
continuing to share our journey.
As always, I welcome your thoughts and feedback as we move
forward together.
With warm regards,
Anwarul Huq
Chairman, IDLC Finance Limited
19
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Thematic Positioning
Unleashing insights.
Reinforcing foresight.
At IDLC Finance Limited, we have extended our wings to accelerate momentum, anchoring our business around five distinct drivers that
include:
1.
Focus on enhancing our reach and penetration towards ensuring inclusive coverage through enhancing our branch network
2.
Focus on leveraging the power of technology through the introduction of Flexcube to shrink processing time, cut unnecessary
delays and reduce overall turnaround times
3.
Focus on our most valuable assets, our people to ensure that they represent the progressive face of IDLC and stand for the
principles of honesty, commitment and customer-centricity in all that we do
4.
Focus on portfolio rebalancing towards optimising our cost of deposits on the one hand and enhancing our share of advances on
the other
5.
Focus on branding and visibility to take our message to our audiences and create a favourable recall
32%
Term deposits growth, 2013
26%
Advances growth, 2013
20
Expanding prospects.
Enhancing capabilities.
In a business that is founded on the basic premise of trust, we have consistently managed this intangible through an ability to
understand deep consumer insights, align products and processes to these requirements, deliver value to consumers and position our
brand relevantly and prominently.
At IDLC, we positioned our brand around the distinctive proposition of financing happiness.
This immediately translates into our consistent focus on empowering our customers with products and solutions that take their business
ahead and in doing so, strengthen the spirit of entrepreneurship and contribute to the success of our countrys economic growth. Our
proposition also means robust governance for shareholders, career progression for employees and responsible citizenship for the
community, resulting in happiness for all.
Our ability to consistently create the bonds of trust has resulted in a growing customer base on the one hand and relatively low NPLs
(non-performing assets) on the other.
5,985
Customer accretion, 2013
1.63%
NPL position, 2013
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Consolidating competence.
Sustaining growth.
At IDLC, excellence is not just about scaling new heights. It is also about having a broader perspective and exploring newer avenues.
Over the years, we have remained synonymous with growth and opportunity and today, we are consolidating our competence,
expanding our horizons and exploring new dimensions towards sustaining growth.
We have a clear strategic blueprint that will help us navigate the organisation skillfully and prudently through various economic cycles,
helping create sustainable long-term value. We intend to grow our branch network and sales teams to enable deeper penetration
and meet the large unmet financial needs of our customers. We intend to deepen the bonds of mutual respect among our clients and
customers to explore opportunities to widen our product and services basket and hence create newer and more diversified revenue
streams.
We expect to reinforce our deposit base by providing clients with a safe and secure channel to grow their savings while at the same
time innovative on our products and processes to cater to the different needs of our customers for instance, women entrepreneur
loans and Abhasan loans are two specialised products that have helped meet specific customer needs.
19%
Revenue per employee
growth, 2013
5%
Employee base growth,
2013
22
Rising above. Going beyond.

IDLC is the countrys largest
and most respected NBFI
with a loans and advances
book of Taka 40,941 million
(as on 31 December 2013).
IDLC disbursed Taka 4,421

million worth of home loans
in 2013, enabling almost
6,013 families to own their
lifes most important asset
a home.
IDLC disbursed an average

of Taka 61 million every day
during 2013.
An IDLC branch is located

every 11 km in Dhaka
and about 100 km in
Bangladesh, strengthening
customer and client access
and reach.
Even in a tough economic

environment, revenue per
branch rose 25.32% in
2013.
IDLC is the only Company

in its sector in Bangladesh
to be certified by the
prestigious United Nations
Environment Programme
Finance Initiative (UNEP-FI)
IDLC disbursed Taka 10,392

million worth of SME loans
in 2013, playing its role
in taking the Bangladeshi
economy ahead.
IDLCs NPL in the Consumer

(retail) division is one of the
lowest in the finance industry
in Bangladesh at 0.54%.
IDLCs repeat relationships

contributed to 52% of its
turnover of Taka 6,900
million in 2013.
IDLC is one of the few NBFI

players to offer NRB as well
as women entrepreneur
loans.
IDLCs application-todisbursement cycle

(turnaround time) is about
two days, one of the fastest
in the countrys financial
sector.
IDLC invested 3,448

person-hours in CSR
activities in 2013, up from
2,672 person-hours in the
previous year.
23
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Scaling New Heights Our Performance over

the Past Five Years
IDLC Finance Limited
* Net profi
after tax for the years 2009, 2010 and 2011 include Taka 97.10 million, Taka 354.95 million and Taka 179.66 million,
respectively, as net profi from merchant banking activities. Merchant banking business of the Company has been separated on August
16, 2011 through forming a separate subsidiary "IDLC Investments Limited".
24
IDLC Group
18%
8%
33.33
29.17
24.74
14.88
22.94
54%
Taka in Crore
2.59
30.60
3.40
3.13
25
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Our Wing Span Sturdy Yet Flexible

An analysis of our portfolio
Portfolio
identiication
Loans and
Loans and
advances
advances
(Taka million), (Taka million),
2012
2013
Percentage Percentage of Percentage of

growth in
total book in total book in
loans and
2013
2012
advances
over 2012
Net NPLs
(percent),
2013
Team strength
(full-time and
contractual),
December 31,
2013
SME
10,178
14,334
40.83
38.22
36.36
1.58
290
Consumer
9,851
12,950
31.45
34.54
35.19
0.54
255
Corporate
7,963
10,213
28.24
27.24
28.45
3.31
13
Towards creating a balanced portfolio

Loans and Advances as a percentage of total customer assets portfolio
27.24%
38.22%
%
%
2009
26
34.54%
2013
At IDLC, we are passionate

about partnering our
clients and adding value
to their businesses and
society in general. We are
committed to continually
investing in the professional
growth and development
of our talent pool. Our
organisation is driven by a
focus on superior financial
performance, sustainable
business practices
and strong Corporate
Governance."
SELIM R. F. HUSSAIN
CEO & Managing Director
Q&A with Mr. Selim R.F. Hussain, CEO & Managing Director,
IDLC Finance Limited
How would you rate the performance of IDLC
Q Finance Limited during the year under report?
he IDLC Group results for 2013 reflect the story of a

Company on a high growth path, the full potential of which
is currently masked by environmental factors that should
eventually abate.
At IDLC Finance, in terms of year-on-year (y-o-y) comparisons,
core customer deposits grew by Taka 7,156 million or 33%
while core customer loans and advances (to SME, Consumer and
Corporate client segments) grew by Taka 9,401 million or 34%.
Net interest income, the key earnings indicator for any FI, grew
y-o-y to Taka 495 million or 30% and fee-based income grew
y-o-y to Taka 96 million or 33%. While the non-performing loan
ratios (NPL) for the entire industry deteriorated, IDLC Finances
NPL actually improved from 2.09% at the end of 2012 to 1.63%
at the end of 2013.
IDLC Investments and IDLC Securities continued to be impacted
by poor trading volumes and general depression in the country's
capital markets.
27
ANNUAL
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were the key developments of 2013 that make

Q What
you proud?
n 2013, despite a most difficult and challenging environment,

IDLC Finance reported a very strong performance. Loans and
deposits both grew well, several new products were launched,
a number of large syndication deals were concluded, new funding
sources were found and the Company's brand was significantly
enhanced through the receipt of several independent and reputed
awards.
Some of the other transactions/ events of 2013 that particularly
stand out include:
Receipt of the DHL-Daily Star Best Financial Institution
Award 2012
Receipt of the SAFA (South Asian Federation of Accountants)
Award 2011 as Winner in the Financial Services Sector and
Overall Winner in all sectors of SAARC countries
Successful financial closure of Taka 1,500 million of zero
coupon bonds for IDLC Finance
Agreement with FMO for five-year loan of USD 20 million
(Taka 1,550 million)
Emerging as a market leader in monthly home loan
disbursements for most of the year
Continued success at our SME business vertical on the back
of small businesses reporting consistent growth
Successful closure of several deals at our structured finance
vertical:
Best Holdings Limited (Le Meridien): Taka 5,596.60

million
BSRM Steel Mills Limited: Taka 5,908 million and USD

40 million
Tradexcel Auto Bricks Limited: Taka 390.51 million

WWR Bio Fertilizer Bangladesh Limited: Investment of
by our Consumer segment, also grew by Taka 7,156 million

or 33%. All this (external) Balance Sheet growth was achieved
during a period during which the non-performing loan (NPL) ratio
improved considerably, despite the last quarter of 2013 being
severely hit by political disturbances and unrest.
would you rate the performance of the two
Q How
subsidiaries? Please share the key highlights for each
along with the initiatives expected to be undertaken
in 2014?
ur capital market businesses under IDLC Investments

Limited (IDLC-IL) and IDLC Securities Limited (IDLC-SL)
have suffered since the market collapse in end-2010,
similar to all other players in the market. Revenues have shrunk as
trading volumes have declined dramatically while provisions have
been made in line with BSEC regulations for those parts of the
margin loan portfolio which have suffered impairment. Importantly,
we have also de-recognised all income generated from such
impaired assets, in line with the most conservative international
accounting practices. We will continue to adopt such conservative
accounting practices and plan to fully provide for any and all
impaired assets in our portfolio by the end of 2014.
At the same time, the margin loan product itself has been
significantly transformed from its original 2010 composition
and a new, better controlled product is now in place. All these
efforts together will ensure that IDLCs capital market businesses
can restart operations with a clean slate from 2015 onwards or
perhaps a few months earlier if the market picks up in 2014.
are the key trends that are shaping the NBFI
Q What
space in Bangladesh today? What are your key points
of optimism?
in several macro indicators created potential
Successful automation of the HR function
USD 450,000 by the Waste to Resource Fund (W2RF)

How would you rate the performance of each of our
business divisions SME, Consumer and Corporate?
Please share the key highlights of each of the
divisions along with the initiatives expected to be
undertaken in 2014.
e reported a good performance across each of our three

business divisions at IDLC Finance, which obviously could
have been even better if not for the difficult last quarter of
2013. All three client segments grew their Balance Sheet well in
2013: The SME asset portfolio grew y-o-y to Taka 4,086 million or
40%; the Consumer asset portfolio grew by Taka 3,066 million or
32% y-o-y and the Corporate asset portfolio grew by Taka 2,249
million or 29% y-o-y. Our client deposit portfolio, mainly mobilised
28
he year 2013 was challenging for all businesses as

Bangladesh was approaching its national elections. Though
improvements
opportunities for businesses, these were largely overshadowed
by the anticipation of political conflicts and subsequent adversity
on businesses. As a result, despite stronger reserves and falling
interest rates, several sectors curtailed expansion programmes
anticipating political disruptions and putting multiple drags on
both private credit demand and external trade. The financial
sector was already shaky following the discovery of several large
loan scams and rising non-performing loans amidst ongoing
regulatory changes in the sector. The RMG (readymade garment
sector), the largest source of export earnings for the country, faced
several challenges following multiple incidents centering around
worker safety and access to markets abroad. Further, as political
turbulences peaked in the fourth quarter of 2013, a breakdown in
the supply chain caused sufferings to all businesses.
As the financial sector of Bangladesh evolves, there is a pressing

need for FIs (or NBFIs as they are sometimes called) to also grow
and develop. FIs will have to become more agile and nimble. The
landscape for FIs has changed significantly, in terms of statutory
and Corporate Governance requirements and also in terms of
overall competition, over the past five years. The sector is facing
strong competition from banks who have also moved into the
leasing business. FIs will have to become more innovative and
focused on their business acquisition and will need to carve out
niches of their own. They will have to learn to build their own
deposit mobilisation capabilities and fund themselves instead of
depending solely on corporate or treasury borrowings.
At IDLC we are confident and optimistic about the future.
Our enterprise is a highly corporatised and well-structured
organisation equipped with a fully professional management
team and an experienced Board who mentor and guide us with
broad policies but, importantly, do not intervene in day to day
affairs. This working relationship between the Board and the
management team is unique in the country's financial sector and
one that is based on meritocracy, respect and appreciation of
the most cherished traditions of Corporate Governance. We have
very clearly laid out and well-communicated goals and plans and
are very much on track to achieve our medium and long term
objectives.
What are the key risks facing our business and how
are we actively mitigating these?
ne of the major risks we face today is political instability,

the kind we experienced much through 2013, particularly
in the last quarter of the year. More than ever before, the
Bangladeshi economy needs peace and stability, law and order,
good governance and discipline and an enabling environment that
will attract and facilitate investments and drive entrepreneurship.
In Bangladesh, political unrest often translates into street violence
and a breakdown of the law and order machinery, disrupting
individual businesses and the economy at large. Since this is
beyond our control, there is very little we can do to influence such
macro-economic issues and any measures we undertake
to minimise risks in such circumstances can only be temporarily
successful. If such political unrest persists, every institution in the
country is bound to suffer. It is heartening to note that the first two
months of 2014 suggest that the year will be much better than
2013.
In terms of normal business risks, IDLC is focused on enhancing
its command and control capabilities by continually investing in
cutting-edge technology, workforce training, data analysis and
process re-engineering. We have fully-implemented processes
to identify, analyse and report all seven core risks that the
Bangladesh Bank has recommended. We are fully compliant with
all risk assessments and statutory requirements.
What is your immediate priority for 2014? What are

the various ways in which we expect to reinforce our
business?
ver the past four years, we have significantly invested in

IDLC Finance in terms of people, technology, processes
and branding. Our priority for 2014 is to leverage these
investments and continue to grow our Balance Sheet in a secure
and sustainable way. This will translate into improved financial
performance.
2014 will also launch our plans to expand our branch network
across the country with the opening of five new branches.
We believe that with improved political stability in the country and
appropriate investments in infrastructure, investor confidence
will be restored and the stock market will also witness dramatic
improvements. The priority for IDLC Investments Ltd and IDLC
Securities Ltd in 2014 will therefore be to recover from the
challenges of the previous three years and step up into higher
revenue streams.
enumerate the key CSR activities embraced
Q Please
during the year under report.
t IDLC, we embrace a uniquely distinct concept for

environmental and social initiatives that are focused on
bringing forth measurable results at the grassroots for
societies and communities whose basic needs remain unmet.
Hence, we believe that aligning our corporate social responsibility
(CSR) initiatives with strategies and efforts that create the
maximum impact captures our deep sense of compassion
towards humanity at large. Our cornerstone for such initiatives
is integrating the 3Ps: People, Planet and Profit, thus creating
a sustainable business. We also became members of the UN
Global Compact (UNGC), UN Environment Program Finance
Initiative (UNEP FI) and the CSR Centre in 2010 to conduct our
sustainability initiatives in the right manner.
In 2013, IDLCs prime focus was on community empowerment
through skills development and sustainable livelihood generation
for the underprivileged, with a particular focus on women
empowerment. Our most notable project in this regard was
conducted under a public-private partnership approach, targeting
skills development and subsequent employment in the readymade garments sector. The project targeted social and economic
empowerment of the underprivileged from North Bengal, one
of the most impoverished and underdeveloped regions of
Bangladesh.
29
ANNUAL
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In addition, IDLC also undertook a Model Village Project with

VSO Bangladesh, focusing on capacity development of the youth
community through various initiatives including:
Training on basic accounting practices and setting up an IT
centre
Primary healthcare awareness for the community
Environmental management through tree plantation,
increased use of organic fertiliser
To minimise the negative impacts of climate change and
environmental degradation, IDLC conducted a campaign across
different schools, with active participation from school children.
The focus was to reflect on issues such as environmental pollution
and mitigation measures, responsible resource consumption and
the principles of reduce, reuse and recycle and consequently
adopt feasible solutions. In 2013, eight schools were covered
under this programme and IDLC will continue this campaign into
2014 as well.
Our regular activities included tree plantation, blanket distribution
among the poor in North Bengal, Jessore and Chittagong during
the winters, working with partner organisations for providing better
education and healthcare facilities for underprivileged children,
blood donation, employee vaccination and financial assistance for
supporting the victims of the Rana Plaza tragedy.
In 2014, in addition to the core CSR activities, IDLC will also
work on green banking activities to bring in place a more
robust financing and operational framework with respect to
environmental and social issues. Moreover, IDLC will also
implement an environmental and social management system
(ESMS) to streamline its policies and procedures in line with
internationally-acceptable standards.
is your big picture vision for the next
Q What
three years?
ver the last three years, IDLC has consistently grown both
client deposits and loans at a significantly faster pace
than the average of the countrys banking and FI industry.
This growth strategy will continue as we further leverage new
technology and processes while refining our product focus. We
plan to grow our branch network to cover much more of the
country every year and intend to diversify into new products,
sectors and geographies.
We have almost trebled our financing in the SME, Consumer and
Corporate client segments in the last four years and will continue
this growth rate - expecting to reach an asset base of Taka
100,000 million or USD 1.25 million by 2017.
30
is your broad message to the shareholders?

Q What
How do you expect to create long-term value?
hile Group results have suffered from the capital market

debacle of end-2010, the return on equity of IDLC
Finance has been consistent over the past few years.
Shareholders will see the benefit of the investments we have
made in IDLC Finance as the Balance Sheet continues to grow in
a safe and strong manner. We are also confident that the drag
experienced on Group results because of the capital market
businesses will also be more than mitigated by end of 2014 and
going forward, Group (consolidated) financial performance will
also improve over the foreseeable future.
At IDLC, we are passionate about partnering our clients and
adding value to their businesses and society in general. We are
committed to continually invest in the professional growth and
development of our talent pool. Our Company is driven by a
focus on superior financial performance, sustainable business
practices and strong Corporate Governance and one whose
brand leads the financial sector of Bangladesh. As we move
forward, we are confident about the future and will continue to
enrich value in the hands of all those who invest in us, work with
us and depend upon us.
From Stepping Stones to Milestones

23 May 1985
Incorporation of the Company
22 Feb 1986
Commencement of the leasing business
1 Oct 1990
Establishment of a branch in Chittagong, the main port city of Bangladesh
20 Mar 1993
Listed on the Dhaka Stock Exchange Limited
7 Feb 1995
Licensed as a Non-Banking Financial Institution under the Financial Institutions Act, 1993
25 Nov 1996
Listed on the Chittagong Stock Exchange Limited
27 May 1997
Commencement of home finance and short term finance operations
22 jan 1998
Licensed as a merchant banker by the Securities and Exchange Commission
15 jan 1999
Commencement of corporate finance and merchant banking operations
29 jan 2004
Opening of the first focused retail branch at Dhanmondi
29 jun 2004
Opening of the Gulshan Branch
22 Nov 2004
Launched investment management services, Cap Invest
2 jan 2006
Opening of the first SME-focused branch at Bogra
6 Apr 2006
Opening of the Uttara branch
1 jul 2006
Relocation of the Company's Registered and Corporate Head Office at own premises at 57, Gulshan Avenue
18 Sep 2006
Commencement of operations of IDLC Securities Limited, a wholly-owned subsidiary of IDLC
14 Mar 2007
Launching of discretionary portfolio management services under Managed Cap Invest
5 Aug 2007
Company name changed to IDLC Finance Limited from Industrial Development Leasing Company of
Bangladesh Limited
6 jan 2009
Opening of the Sylhet branch
26 Aug 2009
Opening of the Gazipur SME booth
3 Feb 2010
Commencement of operations at Narayanganj
24 Feb 2010
Inauguration of the Savar branch
8 Aug 2010
Inauguration of a second branch in Chittagong at Nandankanon
27 Oct 2010
IDLC entered Comilla
23 Dec 2010
IDLC inaugurated its Narsingdi branch
27 Dec 2010
Opening of the Keraniganj branch
15 jun 2011
IDLC started operations at Mirpur
9 Aug 2011
Opening of the Tongi branch
16 Aug 2011
Commencement of operations of IDLC Investments Limited, a wholly-owned subsidiary of IDLC
18 jan 2012
Opening of the Jessore branch
11 Mar 2012
Rebranding initiative undertaken for IDLC
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Strategic Flight
In a fascinating instance, most eagles grab their prey without landing and take ight
swiftly back upwards. At IDLC, we also possess a strategic ight path that guides us to
grow our loan book to a projected Taka 100,000 mn by 2017 (Taka 40,941mn in 2013).
III
Operating and
Financial Review
Strengths and Strategic Key Performance Indicators page 50
Business Segment Review page 34

Our Business Model Review page 48
ANNUAL
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At IDLC, We Possess a Profitable Portfolio

Built Through Focused Investments in HighGrowth Sectors
IDLC enjoys a rich and diversified presence in the NBFI space through its three focused verticals comprising SME, Consumer and
Corporate and two subsidiaries comprising IDLC SL and IDLC IL. Its portfolio comprises an extensive range of financial products and
solutions catering to wide-ranging customer needs and requirements.
Business Segment Review I
Small & Medium Enterprises (SME)

Segment status within Company: Largest
Portfolio: Financing products to a large bouquet of Small and Medium Enterprises (SME)
Disbursements over the past fi years (2009-13): Taka 26,845 million
Loan book as on 31 December 2013: Taka 14,334 million
Growth in loan book over 2012: 40.83%
Percentage of the overall loan book as on 31 December 2013: 38.22%
Turnover (gross), 2013: Taka 2,347.71 million
Contribution to Company turnover (gross) in 2013: 35.03%
Contribution to Company PBT in 2013: 30.48%
Total number of relationships: 6,638 clients, 7,041 accounts
Asset growth: CAGR 49.40% in the last 5 years; fastest in the industry
Overview
IDLC SME (Small and Medium Enterprises) business vertical was established in the year 2006. The traditional banking network has
usually avoided financing SMEs in Bangladesh due to a variety of reasons including their perceived delinquency risks, their dispersed
location and their typical unorganized way of doing business. However, through prudent business policies and practices, IDLC has proved
that the SME market segment is indeed a financially viable one. Over the last eight years, IDLC SME business has moved from strength
to strength by enhancing its ability to serve a large section of the economy. Our focus on setting up a world class operational platform,
customer centric business model and ever evolving, forward looking strategies has made our SME business a role model in the country.
Our exceptionally strong asset quality and phenomenal growth in SME business is a reflection of our commitment for this sector which
holds enormous potential.
We initially commenced financing SMEs through term loans, working capital loans and lease financing and over time, have introduced a
variety of products to cater to specific needs of our clients. We have been continuously investing on our distribution network, technology,
capacity development and new processes to build a robust, yet lean business model.
key competence drivers
Quick turnaround time (TAT): For small loans, our turnaround time can be as low as five working days, enabling us to build
stronger and loyal customer relationships.
34
Prudent customer selection: We have a unique credit risk management model which enables us to make quick, informed and
prudent credit decisions. This reflects in the quality of our asset portfolio.
Robust internal processes and MIS: Leveraging the power of the state-of-the-art core banking system Flexcube, our on-ground
team is ideally positioned to take advantage of business intelligence and insights. This effectively helps us generate more value
internally and externally.
Customer-centric: We believe in taking banking to the doorsteps of our customers. Our processes are designed to provide
superior customer experience.
key inancials
Particulars
2009
2010
2011
2012
2013
Growth over
2012 (%)
Disbursement (Taka million)
1,758
2,712
4,485
7,498
10,392
38.59
Outstanding (Taka million)
2,877
4,182
6,870
10,178
14,334
40.83
No. of active customers
1,338
2,004
3,462
5,222
6,638
27.12
key business trends and opportunities

Stable GDP Growth: A stable GDP growth has led to sustainable demand for consumer goods and services, resulting in the
emergence and growth of various new enterprises and unleashing the spirit of entrepreneurship in the country
Sector-speciic Stimuli: Sector-specific stimuli driven by the government and other multi-lateral agencies
key risks impacting our business and their mitigation
Political unrest: While SMEs are now perceived as being the leading growth vehicle in the economy, (encompassing a multiplier
effect on employment, GDP growth as well as having a significant and positive impact on poverty reduction), an extended political
crisis could hamper much of the economic progress achieved in this segment. As a financier in the segment, we work with a
diverse set of customers thereby mitigating risks to some extent.
Credit Risk: We embrace a proactive approach towards delinquency and credit risk management with the result that our NPLs
(non performing loans) in this segment are the lowest in the country.
Blueprint for the future
In continuation to the preceding growth pattern, we will continue to expand our geographical footprint, introduce new products and bring
in new dimensions in serving our customers.
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As we grow bigger and better, we will effect changes to the organizational structure, creating a leaner and more flexible division. Overall,
we plan to reach Taka 50 billion worth of portfolio by the end of 2017.
Some of our other initiatives include the following:
We intend to continue to expand our geographical coverage. We will implement a new and improved model for loan appraisals,
thereby driving automation and infusing scalability into our operations.
We plan to integrate a world class customer relationship management solution into our core banking system to serve our
customers even better. Collaborating closely with various multilateral agencies, we will work towards developing women
entrepreneurs in the business and increase access to appropriate, market-based, business services for SMEs.
At IDLC SME, we strive to make life easier for our clients every day. From reengineering
our existing processes to introducing new products, all our actions are undertaken with a
view to make the borrowing experience quick, simple and hassle free.
We respect SME entrepreneurs for their contribution to the growth of the country; it
is through gaining their trust that we have been able to ride on a exciting journey of
supporting many small entrepreneurs. We take a lot of pride in being able to nurture and
graduate many small enterprises into medium and large enterprises.
Our attitude and efforts have so far repaid us with growth, profi bility and most
importantly, high degree of customer satisfaction, enabling us to generate a pulse in the
market of being one of the best fi
brand in the SME fi
space.
Mr. Zahid Ibne Hai
General Manager and Head of
SME Division
In spite of the best efforts put forth by many fi

institutions, a large stratum of
the SME space in Bangladesh is still greatly underserved. However, we believe that the
prospect of the SMEs in Bangladesh is big and bright as 95% of business entities in
Bangladesh fall under this category. By operating effi
y and diligently, with focus and
innovation, we can carve-up many niches in profi ble segments through which we can
help many growth-hungry SMEs of Bangladesh unleash their potentials.
Business Segment Review II
Consumer
Segment status within Company (funds disbursed, 2013): Second largest
Portfolio: Providing home loans, car loans, personal loans and loans against deposits
Turnover (gross), 2013: Taka 1,838.85 million
Daily average number of transactions in 2013: 84
Workforce strength (as on 31 December 2013): 255 members
Overview
IDLCs Consumer division was established in 1997 as part of the Companys diversification towards the establishment of an alternative
cost-effective source of funds for providing financial services to customers.
At present, the Consumer division is the second largest business segment of IDLC in terms of asset portfolio and the largest with regards
to funds under management (advances and deposits). The significance of the division can be gauged from the fact that it works as a
brand ambassador of the Company for the retail segment by reaching at the doorstep of the targeted market with its wide range of
lending (home loans, car loans and personal loans) and deposit products (flexible term deposit packages and regular earner packages).
36
The Consumer division contributes 77% to the entire funding basket of IDLC and holds 91% deposits (in volume terms) in the entire
deposit bucket of IDLC at the close of 2013.
Skilled and experienced resources: Our large pool of professional and experienced members enable business growth through
embracing quick on-ground decisions and building and sustaining customer loyalty.
Strong relationship management/ customer-centricity: Strong customer orientation enables us to take quick decisions that are
in the best interest of our customers. This explains why we enjoyed an average of 25 million disbursements every day in 2013 as
compared with 16 million daily disbursements in 2012.
Wide product range: We possess a wide basket of products that can be customised and our flexibility to design these products
suit a diverse range of customer needs and requirements.
Large branch network: Our network of 14 consumer based branches is spread strategically across Bangladesh, enhancing
customer and client accessibility and enabling us to remain close to their requirements, thereby building strong comfort levels.
Quick turnaround time (TAT): We enjoy a faster turnaround time from application-to-disbursement which has considerably
improved over the years.
Transparent pricing: Our well-documented processes and practices including our robust creditworthiness checks enable us to
create transparent pricing propositions to our customers.
Large deposit base: Our deposit base of over 5,500 customers repose their faith and trust in our products with average ticket
size of between Taka 1-1.5 million.
Diversiied deposit products: We offer a wide variety of customer-centric deposit products including regular term deposits, 500day term deposits, double money deposits and triple money deposits, among others.
Strong reputation and brand value proposition: Our strong brand equity and recall centered around the financing happiness
proposition enhances the faith and trust of our clients and customers.
key inancials
Growth over
2012 (%)
Particulars
2009
2010
2011
2012
2013
Home loan assets (Taka million)
4,818
5,645
7,025
8,366
11,308
35.16
Car loan assets (Taka million)
348
343
388
414
787
90.09
Personal loan assets (Taka million)
101
213
213
190
166
(12.63)
LAD (loan against deposit) portfolio (Taka million)
206
576
802
881
689
(21.79)
Deposit balance (Taka million)
9,780
12,373
16,828
22,008
29,064
32.06
No. of Customers loans
1,512
2,556
3,525
5,169
6,013
16.32
No. of Customers deposits
3,724
4,218
5,456
6,343
6,681
5.32
37
ANNUAL
REPORT
2 0 1 3

As we face an unstable political situation and tight liquidity, we are effectively embracing transformation to drive more customer
value with leaner operations and fewer resources at our disposal. We are doing so through focusing on the 3 Ps purpose,
processes and people.
Vulnerable real estate markets and a challenging car loan business has compelled us to remain focused and vigilant on
opportunities as and when they arise.
We are focused on improving employee profitability and productivity through robust performance management policies.
We are also enhancing our focus on garnering a larger share of household deposits and increase business relationships with
corporate houses.
Political unrest and violent law and order situation: We realise that this is an external condition and beyond our control;
however we are tightening our ship towards creating greater efficiency across our operations.
Market trend of deposit interest rates: We witnessed downward movement in deposit interest rates due to enhanced liquidity
in the system. Our brand image as a trustworthy financial partner will continue to enable us to mobilise funds and we will actively
benchmark deposit interest rates in line with the broader market.
Growing competition in home loan products: We expect to counter rising competition in the home loan segment through
leveraging our first movers advantage in the business, our widespread network, our quick processing and disbursement
timeframes and our strong approach to relationship-building.
Retention of deposits in uncertain economic conditions: We will continue to remain as the preferred financial partner, ensuring
the security of our client deposits. At the same time, we will maintain adequate liquidity at all times.
Uncertain change in policy/ process and guidelines by external stakeholders: We will continue to monitor the external
situation vigilantly and take decisions which are in the best interest of our operations.
38

Customer centricity: We plan to provide larger emphasis on:
Branding
Establishments of new branches/ touch points to increase our geographical footprint
Customer relationship management and customer feedback collection on a regular basis through different mediums
Back to basics: We expect to initiate the following actions in 2014:
Developing key performance indicators and a score card for each business team member; all permanent members of the
business team will be brought under monthly/ quarterly ratings
Retaining leadership in core products
Ensuring the implementation of all training programmes for each staff member as per the yearly training calendar
Regular circulation of the required MIS and better coordination among internal stakeholders for taking immediate action (as
and when necessary) to ensure continuous improvement
Focus on speciic areas: We expect to train our attention to key specific areas:
Assigning and monitoring cost accountability (business channel, department and employee-wise)
Centralisation of credit administrative department of the consumer division
Simplification of processes to ensure faster and proactive customer service
Renovation of flagship branches as per the guidelines of the IDLC model branch set-up
Reshaping the branch sales management structure to improve the overall performance level
Focus on optimising operating costs: We expect to embrace proactive measures to monitor our operating costs in detail and
take necessary action towards optimising these costs.
Effective sales governance: We will empower our sales governance team and equip them to ensure greater control on CRE
recruitment, CRE leave policy, TA-DA policy, training and providing other logistical support to CREs and FTs centrally in association
with HR and other concerned departments.
IDLCs Consumer division offers signifi

fl
in products and convenience through
possessing the largest branch network among the NBFI sector in the country. With strong
representation of the division in all major branches and two dedicated consumer sales
centers in Dhaka, the total loan portfolio and deposit bucket of the division stood at Taka
39,037 million as on December 31, 2013, registering a respectable 28% growth over
2012. Our team of 262 members (both permanent and contractual) played a key role
behind this success.
Mr. Irteza A. khan

Business Head,
Consumer Division
The year 2013 represented an extraordinary and record breaking period. we were able
to report a much higher growth compared to the rest of the industry, clearly refl
the effi
of our robust business policies and practices. We strengthened our core
capabilities and reinforced our delivery platforms to surge ahead in the home and car loan
businesses even as we ramped up our retail deposit base quite successfully despite an
adverse market scenario, especially in real estate and reconditioned car market sectors.
Going forward, we intend to build on our capabilities and our three-year business plan
includes increasing touch points and visibility, doubling the existing loan portfolio and
emerging as the market leader in home and car loan fi
segments.
39
ANNUAL
REPORT
2 0 1 3
Business Segment Review III
Corporate
Segment status within Company (portfolio, 2013): Third largest
Portfolio: Lease fi
term loans and loans for capital equipment procurement, among others

Turnover (gross), 2013: Taka 1,528.63 million (interest income plus fee income)
Total number of relationships: 248 clients
Workforce strength: 13 members
Overview
IDLC started its wholesale lending business mainly with long-tenor products and subsequently launched short-term products. In 2000, it
shifted focus from the tenor of products to various business segments. At the end of 2003, the Corporate division was formally created to
cater to the financial needs of large organisations in the country. Since then, the division started its journey as a full-fledged business
unit.
Earlier, the Corporate division handled only one product - leasing. Term loans and working capital products such as factoring, intercorporate deposits (ICD) and other short-term loans were an insignificant part of the portfolio. However, this portfolio was soon
rebalanced to reflect the effects of transformation post 2003.
The Corporate division has created its own market niche despite having a limited offering. Over the years, it has strongly demonstrated
the capability to survive, adapt and excel in the countrys ever-changing and dynamic industry environment. Some of the key strengths
of this division include:
High standards of Corporate Governance: The division upholds the highest standards of Corporate Governance and regulatory
compliance. Though IDLC has undergone changes in the management and sponsorship, it has sustained the tradition of these
standards, which has created strong brand equity to its customers.
Strong resource base: The Corporate division enjoys a strong and motivated talent pool sourced from the best business schools
and reputed banks on lateral entry. Moreover, continuous training and development helps sharpen skills and aids in business
growth.
Flexible inancing approach: Innovative products paired with a flexible financing approach have helped the division create its
own niche in the industry. Being in the NBFI sector, the Corporate division does not have a wide spectrum of credit products.
However this is more than compensated through the divisions approach to create innovative products (within the realms of
regulations) that meet client requirements.
Quick turnaround time (TAT): The division embraces quick financing decisions; it usually takes three to five working days to get
back to customers with its analysis of the financing requirements, enabling them to plan quickly in advance. This is one of the
major USPs for IDLC's business proposition.
Diversiied portfolio: The division possesses a well-diversified portfolio across the sectors of food and beverages, apparels and
accessories, building and construction, pharmaceuticals and healthcare, telecom, textiles, financial services and iron and steel.
This balanced portfolio helps mitigate concentration risks.
Strong clientele: Some of the divisions top clients are prominent business houses of the country who possess solid credit ratings.
This clientele helps create a low risk portfolio.
40
Low NPLs: The divisions gross NPLs stood at 3.31% in 2013, which is lower than the industry average.
Synergies: On account of the Structured Finance Departments (SFD) robust loan syndication business, the Corporate division
receives additional business out of the transactions of the SFD.
key inancials
Particulars
2009
2010
2011
2012
2013
Total revenue earned (Taka million)

Portfolio/ asset size (Taka million)
717
5,327
703
4,654
764
6,332
1,114
7,963
1,529
10,213
Growth over
2012 (%)
37.25
28.24
Disbursement
1,932
1,633
4,032
4,806
6,504
35.33
7.01
6.35
6.30
5.12
3.31
(1.81)
11
13
13
NPL (%)
Employee strength

Being an emerging economy, Bangladesh continues to build on its economic trajectory and hence, industrial and corporate
financing have become one of the key drivers of the economic growth.
Rapid industrialisation has led to the increasing requirement for capital equipment and working capital. This trend enables financial
institutions to participate in organic and inorganic projects and together with IDLCs strong structured financing team, the division
participates in projects of several mid and large-sized business houses throughout the country. Moreover, the Corporate divisions
strategic alliances with renowned financial institutions have also aided in its business growth.
Market liquidity directly affects fund flows from savers to borrowers. During a cash crunch, borrowers find it difficult to fund their
capital requirements. Such situations raise borrowing costs and only liquid FIs can benefit from such scenarios. The Corporate
division has leveraged its strengths and has prudently taken advantage of these market developments.
Corporate division also taps funds from the Bangladesh Banks refinancing windows, which not only enables pass on of lower
credit costs to borrowers but also helps build portfolio and asset book.
The division has been approved of offshore financing/ foreign currency facilities with credit lines from multilateral agency, enabling
to provide customers with a greater choice for tapping low-cost funds.
With each passing year, the division has widened its geographic coverage, especially in projects located in remote areas of the
country.
key risks impacting business and their mitigation
Credit risks: To address this risk, the Corporate division possesses a strong team of relationship personnel who have built strong bonds
with clients. It is also committed to continuously improve the loan underwriting process through regular training on effective credit analysis.
In addition, IDLC has a strong credit risk management department as a second layer to fi
poor quality credit.
Business risks: Being an NBFI, IDLC suffers from an inherent weakness of higher funding costs when compared with banks.
Nevertheless, the business units are focusing on improving service levels, finding new niche areas and are constantly adopting
innovative and attractive credit solutions to remain competitive.
41
ANNUAL
REPORT
2 0 1 3
Market risks: Though for an NBFI it is tougher to match interest rates during volatility, the division has been successful in
matching interest rates during cyclicality with the help of its strong credit pool. Moreover, the division has little or no foreign
exchange exposure.
Operational risks: The divisions structure helps mitigate operational risks. Its robust reporting hierarchy helps proper supervision
and enables the staff to understand and perform their tasks timely and accurately. Moreover, the software inputs are mainly
handled by IT professionals and trained personnel.
The year 2014 should be a better one for the Corporate division on account of the following planned initiatives:
Providing financial solutions which can be customised by the divisions dedicated experts. In the coming years, the division
expects to cater to client needs for bilateral, multi-bank loans or specialised financing products.
Providing quick response with support from experienced product specialists and dedicated deal teams. The division will stay upto-date with changing priorities, challenges, opportunities and needs to meet a wide variety of their funding requirements.
Focusing on growing the quality of its portfolio and maintaining NPL below 2%. The Corporate divisions past record demonstrates
continuous quality asset growth and it has targeted a portfolio of Taka 20 billion by 2017.
Structured inance
(part of the Corporate division)
Overview
IDLCs structured finance department (SFD) was established in 2000. The department commenced operations through loan syndication
on the back of increasing demand for large industrial and infrastructure project financing. Over the years, the department continued to
arrange syndication deals in the form of term loans and working capital facilities.
Presently, the SFD is involved in deals that require various modes of financing. Being one of the leading structured finance solution
providers, the department arranges financing through a wide range of products that include term-loans (both local and foreign
currency), working capital facilities, infrastructure financing and subordinated bonds for Tier-II regulatory capital requirements of
commercial banks, among others. The department also provides financial advisory services to the business houses.
Over the years, the SFD has emerged as a strong player and earned a solid reputation in the financial markets for its creditable
performance. Several strengths have played a key role behind this success:
Initial backing of IDLC management coupled with a strong Corporate Governance framework has enabled IDLC to establish a
strong brand image in the market. The reputation of IDLC contributes immensely for booking loan syndication deals from large
corporate houses of Bangladesh.
Experienced team members possessing thorough knowledge of the industry. Besides, continuous development of our human
resource has enabled the creation of several innovative customer-centric financial solutions.
Strong management support provides comfort to the team towards the procurement of a larger pipeline of business deals and
enhances the success of transactions.
The sustenance of strong relationships with syndication partners and other stakeholders enables successful booking and
execution of syndication deals. IDLCs strategic relationship is not limited to local financial institutions but also extends to multilateral agencies, which aids in acquiring diverse and often low-cost source of funds.
Innovative and low-cost solution for the complex transaction of the high-end corporate clients.
Focused efforts on diversifying the portfolio through booking deals is ensured across multiple sectors like real estate, steel, power
and hospitality, among others.
Strong network with corporate houses and in-house industry research helps in the selection of the right clientele, which ensures
growth and profitability as well as the maintenance of a quality portfolio.
42
key inancials
Particulars
Employee strength
Number of deals
Total funds raised
(Taka million)
Total fee income
(Taka million)
2009
2
1
2010
2
1
2011
3
1
1,323
9,550
11.88
3.19
2.64
2012
4
2
2013
6
4
Taka 2,280 million

Taka 11,895
million and USD 30 million
and
USD 40 million
30.62
47.39

Socio-economic environment: The socio-economic environment of Bangladesh is one of the most important factors that drives
business in the country. As one of the members of the LDC (least developed countries) group, the countrys GDP growth remains
consistent despite an unstable political situation, corruption and Corporate Governance issues, among others. However being an
emerging economy, Bangladesh is continuing on its growth path and hence, industrial and large project financing has become one of
the key drivers of this transition. Bottlenecks created due to socio-economic challenges have resulted in a negative impact on various
projects undertaken by the public sector, thereby indirectly affecting the private sector as well. For example, a delay in government
approvals may delay overall project implementation. It is imperative that socio-economic conditions contribute positively to the overall
infrastructure development of the country.
Large infrastructure projects: With growing urbanisation in recent decades, the demand for large infrastructure projects transport,
communication, water and energy, among others is increasing rapidly. Large-scale financing is required for such projects and they
provide opportunities to the SFD, enabling us to participate in the economic growth and business development. The public-private
partnership (PPP) projects also play a vital role in the demand for syndicated financing of large infrastructure projects.
Market liquidity: Liquidity in the financial markets plays a significant role in investment opportunities for financial institutions. High
liquidity supports financing of projects and results in increasing investments in large projects. Liquidity in the financial market is an
important factor for the SFD to procure deals that result in successful fund arrangements.
Different inancing modes: Economic development has created an appetite for large-scale projects. Currently, the large size and scale
of projects require various forms of financing collaborations for the successful arrangement of funds. The incorporation of Islamic
Financing (HPSM), IPFF (Bangladesh Bank/ World Bank) and foreign currency financing in loan syndication has helped the SFD to
structure diversified modes of financing. In addition, a vibrant capital market is essential for structuring different products such as
coupon bearing bonds, zero coupon bonds and convertible bonds, among others.
Increasing demand in advisory services: With a growing economy, institutions require corporate advisory services. Providing advisory
services has been an added source of business development for the SFD team. Various services include preparation of feasibility
studies, business plans, mergers and acquisitions and valuation, among others. This service not only expands the opportunity of
business but also opens up a different income-earning possibility.
Changes in government policies: Major changes in government policies create an adverse effect on businesses. Due to a change
in the political situation, different projects face difficulties during implementation and operation. In addition, changes in tax and duty
structures impact businesses which indirectly affect the business of SFD. As part of the mitigation measure, the SFD continuously
monitors the trends in government policies and works together with large corporate houses to better assess the situation and find
appropriate mitigation measures.
43
ANNUAL
REPORT
2 0 1 3
Lack of availability of required infrastructure: Unavailability of proper infrastructure hampers business growth. As a mitigation
measure, the SFD actively engages in due diligence to ensure availability of the required infrastructure well before undertaking the fund
arrangement process for such projects.
Selection of equipment supplier: Most projects face implementation challenges on account of inappropriate selection of equipment
suppliers. To mitigate the risk, the SFD engages an independent engineer/ consultant for projects. Hence, the department ensures
constant project monitoring and provides a third eye view to lenders through the independent engineer/ consultant.
Interest rate luctuations: Fluctuation in interest rates creates a significant project risk, more so, as rising interest rates compel
companies to resist taking large syndicated loans. In order to mitigate the risk, upper and lower bands for interest rates are structured
to give adequate cushion to both client and lenders against fluctuations, thus creating a mutually-beneficial situation.
Natural calamities: Bangladesh is prone to cyclones, floods and hurricanes, which adversely impacts implementation of projects.
As part of the mitigation measure, the SFD team ensures that projects are insured to cover most of the risks associated with natural
calamities and other such incidents as fire.
In 2013, the SFD demonstrated impressive growth in loan syndication despite an adverse market scenario. In 2014, the department
plans to expand its product portfolio to include all possible structured products. The SFD also plans to introduce new products like
issuance of various bonds, asset securitisation and corporate advisory services for mergers and acquisitions. The team is already
working on the arrangement of Tier-II bonds for two major banks in order to support their regulatory capital requirements under the
Basel-II framework. The SFD also plans in providing banks with support through its advisory services on compliance-related issues to
the Basel-III accord.
The team is also planning to introduce an Islamic bond (Sukuk) to support clients who prefer the Islamic banking framework.
Apart from its regular business, the SFD intends to arrange at least two seminars and training programmes for industry personnel in
2014. The goal of the seminars is to bring all stakeholders on a single platform and discuss different issues of syndication. The SFD
team believes that this type of seminar and discussion will facilitate improvements in the process of syndication and also increase
bonding among stakeholders. The goal of the training programme is to enhance professional capabilities of syndication professionals in
the industry.
The vision of the department is to be the most-preferred partner in loan syndication in Bangladesh.
At the Corporate division, we are focused on strengthening our relationships because

this lever not only helps create favourable recall and publicity but also opens up new
prospects of business with existing clients. We also expect to remain close to their
needs and requirements to be able to provide swift solutions that empower their
businesses. At our structured fi
division, we also successfully closed several
deals for reputed companies across Bangladesh and we intend to continue to structure
attractive solutions that will take their business ahead.
Mr. M. jamal Uddin

Head of Corporate Division
44
Capital market operations

Our capital market businesses under IDLC Securities Limited (IDLC-SL) and IDLC Investments Limited (IDLC-IL) have suffered since
the market collapsed in end-2010, similar to all other players in the market. Revenues have shrunk as trading volumes have declined
dramatically while provisions have been made in line with BSEC regulations for those parts of the margin loan portfolio which have
suffered impairment. Importantly, we have also de-recognised all income generated from such impaired assets, in line with the most
conservative international accounting practices. As a result, IDLC Investments Limited suffered a net loss of Taka 213 million during the
year under review.
Subsidiary review IDLC Securities Limited
Brokerage services
Segment status within IDLC Group: Wholly-owned subsidiary
Broker, Dealer (Dhaka and Chittagong Stock Exchange) and CDBL participant
Customer base: number of active customers 10,756
Market status/position in DSE: 5th largest in Bangladesh
Overview
IDLCs brokerage business operates under its fully-owned subsidiary, IDLC Securities Limited. The Company commenced operations in
the year 2006 and is engaged in providing investors access to capital markets through state-of-the-art infrastructure in terms of online
trading platform and terminals. IDLC Securities operates 59 terminals spread across ten offices in Bangladesh.
Cutting-edge technology: The Company provides its customers cutting edge technology in terms of robust trading platforms,
redundancies and high uptime.
Customer services: The Company provides wide ranging capital market access through phone trades (placing trades via the
telephone), i-trade (trading through the Internet), m-trade (via mobile phones through a particular application) and SMS trade
(placing a trade via a pre-formatted SMS sent from the customers registered mobile number). These provide our customers the
freedom and convenience to trade as per their requirements.
Strong brand equity: The Company enjoys brand equity through a strong lineage (association with IDLC). This ensures high levels
of customer trust and loyalty; the result was that it achieved 20% growth in customer base last year.
IDLC Securities intends to invest in shoring up its back-office infrastructure towards strengthening its administrative speed and
reinforcing customer service. It also expects to continue to invest in customer education programs, enabling them to make informed
decisions.
The year 2013 was a challenging one for the Company on account of depressed primary
markets leading to sluggish secondary markets as well. However, on account of our strong
customer focused orientation, we continued to gather momentum with our customer
education and awareness programs while at the same time providing them with the
advantage of anytime, anywhere trade, leveraging various formats telephone, Internet and
mobile phone. The result of our achievements can be encapsulated in the fact that we were
able to grow our customer base by 20% to 10,756 in 2013, a remarkable achievement. Over
the next one-two years, we intend to fortify our human resources, strengthening productivity,
deploying new technology for trading and our operating culture all with the intent of solidifying
our customer services.
Mr. Md. Saifuddin
Managing Director,
A detailed performance and activity report of brokerage services has been given on page no. 216 of this annual report.
45
ANNUAL
REPORT
2 0 1 3
Subsidiary review IDLC Investments Limited
Merchant banking
Segment status within IDLC Group: Wholly-owned subsidiary
Portfolio: Investment banking (IPO, RPO, rights issue, corporate advisory, underwriting, pre-IPO placement and merger and
acquisitions), research and discretionary portfolio management and margin loan, among others
Issues (IPO, RPO, rights) managed over the past fi years (2009-13): 7
Market status: A leading merchant banker in Bangladesh
Overview
IDLCs investment banking operations commenced in the year 1999 with the primary activity being participating in underwriting shares.
The Company managed its first Initial Public Offer (IPO) as the issue manager of Bank Asia Limited in the year 2003, mobilising a
cumulative Taka 200 million. Another landmark was achieved in the capital market history of Bangladesh when IDLC Investments
managed the first-ever IPO under the book-building method in the year 2010 for RAK Ceramics (Bangladesh) Limited, raising a
cumulative Taka 1,656 million with a share subscription of over 10 times.
Showpiece portfolio: As of 31 December 2013, the Company managed seven IPOs as issue manager and has helped raise Taka
5,200 million; some of companies for which we have managed IPOs/ bonds include Bank Asia Limited, Berger Paints Bangladesh
Limited, Marico Bangladesh Limited, RAK Ceramics (Bangladesh) Limited, GBB Power Limited, Paramount Textile Limited and
Matin Spinning Mills Limited.
Diversiied services: We have managed multiple private placements and capital raising activities. Until 31 December 2013, we
provided underwriting services to 48 issuers and have also managed the repeat public offering of subordinated convertible bond of
BRAC Bank Limited and the rights offer of The City Bank Limited. We have also completed private placement (equity) of Taka 1,205
million for Energypac Power Generation Limited and for Tosrifa Industries Limited amounting to Taka 60 million. We have also
provided corporate advisory services to Runner Automobiles Limited to help raise capital through foreign direct investment (FDI) to
the tune of Taka 1,050 million.
Healthy mobilisation: By managing IPO, RPO, rights, placement and capital raising activities, we have helped raise Taka 14,336
million for our clientele.
Innovative approach: In September 2013, we conducted a road show for the IPO of Energypac Power Generation Limited under
the book-building method (a process in which a company attempts to determine the price to offer its security based on demand
from institutional investors), which is an innovative funds mobilisation approach in Bangladesh.
Our bouquet of services
IDLC Investments is also engaged in several other services, including:
Research
Our buy-side research team is focused on facilitating investment decisions of our proprietary and discretionary portfolio investments.
Our qualified team covers a universe of 50 scrips and provides investment recommendations on stocks enabling fund managers to
generate attractive returns. During 2013, our recommended scrips posted a +47.83% return, as against the blue chip index, DS30, that
returned +0.41%.
Discretionary portfolio management (DPM)
With a pool of experienced fund managers, we manage funds on behalf of investors, formulating appropriate investment strategies,
constructing and rebalancing portfolios, monitoring market perspectives on an ongoing basis, actively managing risks and optimally
diversifying portfolios. Our experienced DPM team has been outperforming the DSE market index for the past five years. Under the
banner of MAXCAP, Profit and Loss Sharing Scheme, Capital Protected Scheme and Portfolio Advisory Services, the division is focused
on protecting customers and generating market-leading returns suited to individual risk-return profiles.
Margin loan: Cap Invest
IDLC Investments is widely considered as one of the top portfolio managers in the Bangladesh capital markets through the margin
lending product, Cap Invest. Over the last three years, we have significantly reduced our margin loans to reduce customer risk profiles in
volatile markets and also align with the regulatory framework of capital adequacy, single obligor limit and capital market exposure limits
of the parent Company.
46
Risk management
In 2013, risk management was our biggest focus area. We brought in a number of changes to manage client as well as lender-centric
risks.
Introducing mark-to-market (MTM);
Rebalancing portfolios with defensive and growth scrips;
Lowering margin loan exposure.
Currently, we are working as the issue manager for several proposed IPOs including a corporate advisory agreement with Ananta
Apparels Limited, a 100% export-oriented RMG (readymade garments) manufacturer.
Something interesting!
In 2013, out of the total of 10 IPOs approved by the BSEC, only IDLC Investments-managed issues received
a premium over their face value . Additionally, IDLC-managed IPOs were placed at the top two slots in
terms of funds raised, totaling Taka 2,101 million; eight other companies got approvals for raising Taka
1,865 million during the year under review.
The year 2013 was a landmark one at IDLC Investments Limited. During the year, the
Bangladesh Securities & Exchange Commission (BSEC) approved a total of 10 IPOs and
two companies were able to offer shares at a premium, a good achievement in challenging
economic and primary market conditions. We acted as the issue manager for both the
companies, which included Paramount Textiles Limited engaged in manufacturing woven
fabric for export-oriented industries and Matin Spinning Mills Limited, manufacturers of
combed and carded yarn from raw cotton. We raised Taka 840 million and Taka 1,261
million, respectively, for the two companies through the IPO route.
Mr. Md. Moniruzzaman

Managing Director,
Besides, we also initiated a unique programme under the Negative Equity Recovery
Campaign, under which we offered fi
incentives including waivers and reductions to
encourage customers to continue to invest in equity and equity-oriented products despite
sluggish market conditions. Several customers responded positively to this campaign.
Over 2014, we will be actively engaged in consolidating our activities through
strengthening our risk fi
restructuring operations at our branches and reinvigorating
our teams for enhancing productivity and performance. We will strengthen our operational
platforms with a view to capitalise on the mid and long-term prospects of the economic
performance of our country.
A detailed performance and activity report of merchant banking has been given on page no. 223 of this annual report.
47
ANNUAL
REPORT
2 0 1 3
Our Business Model Review

IDLC Finance Limited is Bangladeshs premier financial services
Group in the NBFI (non-banking financial institutions) space,
providing a wide range of deposit solutions on the one hand and
offering a diverse set of loans and advances to a vast number of
SMEs (small and medium enterprises) corporate and consumers
on the other.
We typically operate in segments of the financial market where
we can strategically differentiate ourselves and leverage our core
competencies to counter competitive pressures from peers in
the NBFI space as well as from traditional financial institutions
including banks.
Though each of our businesses is distinct with specialised and
focused teams, they collaborate on a number of key attributes,
which not only help us drive synergies but also enable us to
offer differentiated yet integrated propositions to our clients.
This underpins our long track record of financial performance
through economic cycles while our deposits have grown at a
compounded annual growth rate (CAGR) of 31% over 2009-13,
our loan book has reported a CAGR of 20% over the same period.
The key features of our business model are highlighted below:
Simple
Our business activities are organised and straightforward.
We offer deposit and loan solutions that cater to a wide
range of needs and requirements; we provide capital market
and merchant banking services; we also trade securities and
provide advice and investment management solutions to our
customers.
We offer simple products with straightforward, transparent
and unambiguous pricing.
Our Balance Sheet is transparent and we do not invest in
complex securities products or derivatives. As a prudent
measure, we provided for provisioning of Taka 1,044 million
in 2013 with a provisioning coverage ratio on our gross
loans of 3% (consolidated level).
The Groups simple products, business

activities and Balance Sheet ensure
we maintain the conidence of clients,
lenders and depositors, shareholders and
other stakeholders. Our local knowledge
and experience allow us to provide a
differentiated and valuable service to
our clients and is a core part of our risk
management approach.
Prudent
We possess a prudent, diversified and relatively low-cost
funding base and we borrow longer than we lend, helping us
create strong asset-liability positions.
We have a strong well-capitalised position with cash
and cash equivalents of Taka 7,855.92 million as on 31
December 2013.
We apply prudent, judicious, consistent and well-documented
framework to our lending and our loan portfolio is
predominantly secured and diverse.
Relationships
We offer high service levels and build long-term relationships
with clients, customers and intermediaries.
Our local presence and knowledge allows us to understand
and meet diverse client needs, creating mutually-beneficial
relationships grounded on trust and transparency.
Our financial strength and prudent, consistent model ensure
we can continue serving our clients at all stages of the
economic cycle.
Expert
Our employees are specialists in their fields with strong
knowledge of their products and markets with an exceptional
ability to establish strong bonds with our customers.
Our experienced local teams cover every corner of the
Bangladesh market and have delegated decision-making
authority (enabling capture of opportunities with speed and
surety) with strong central oversight.
Our remuneration structures aim to balance long and
short-term performance to keep our teams motivated and
energised and ensure a culture of high productivity.
48
Our businesses in brief:

NBFI operations
Provides specialist lending to small and medium-sized
businesses and individuals across a diverse range of asset
classes and also offers deposit taking services.
We provide a wide bouquet of loan solutions directly to
SMEs across even the remotest corners of Bangladesh and
specialise in catering to their niche requirements.
Our loan book is predominantly secured and is diverse
across asset classes and sectors.
Through high service levels and flexible solutions we build

long-term relationships with clients and generate high
levels of repeat business (almost 64% of our deposit book
comprise of repeat customers).
Investments IDLC Investments Limited

Offers a broad range of capital market solutions including
IPOs/ rights issues and follow-on public offers.
Securities IDLC Securities Limited
Enjoys the status of lead underwriters for some of the largest

IPOs in Bangladesh (including those for Bank Asia Limited,
Berger Paints Bangladesh Limited, Marico Bangladesh
Limited, RAK Ceramics (Bangladesh) Limited, GBB Power
Limited, Paramount Textile Limited and Matin Spinning Mills
Limited).
Provides retail trading services of securities to a wide base

of 10,597 customers.
Has been involved with seven IPOs over our tenure, being
responsible for mopping-up a cumulative Taka 5,200 million.
Our strong collection teams continually focus on maturity

cycles across our portfolio and facilitate in ensuring timely
cash inflows, helping take effective control of our NPLs (nonperforming loans).
Possesses robust infrastructure that ensures high uptime.

We have a strong research desk that covers 159 companies
across a broad range of sectors.
We also provide an integrated offering for private clients
combining financial planning advice and professional
investment management.
49

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Rising Above. Going Beyond!

Welcome to the Annual Report 2013 of IDLC Finance

Our Founding Philosophies page 6

Letter to Our Stakeholders from the Chairmans Desk page 16

Business Segment Review page 34

Brief Profile of the Board of Directors page 54

Statement of Risk Management page 68

Letter of Transmittal page 114

Thematic Anchoring and Company Philosophy

Operating and Financial Review

Risk, Treasury and Governance

Birds Eye View of Our Company

At the Helm of Our Affairs

Fostering a Culture of Integrity Reports and Statements

Directors Report to the Shareholders of IDLC page 130

Auditors' Report to the shareholders of IDLC Finance Limited page 149

Upholding Transparency Statutory Reporting

Reports and Financial Statements

Thematic Anchoring and

The Wind Beneath Our Wings.

Grow and develop our talent pool

Our Core Values

Our Code of Conduct and Ethics

IDLC Finance Limited is Bangladeshs largest

Who we are today

Our promoters/ directors holding

Dividend declared, 2013

Our Products & Services Basket catering to

Small and Medium Enterprise (SME)

Small Enterprise Finance

Small Enterprise Loan/ Lease

Women Entrepreneur Loan

SME Shachal Loan

Medium Enterprise Finance

Medium Enterprise Lease/ Loan

Commercial Vehicle Finance

Revolving Short Term Loan

Supplier & Distributor Finance

Factoring of Accounts Receivable

Work Order Financing

Term Loan Financing

Working Capital Arrangement

Structured inance solutions

Loan/ Lease Syndication

Private Placement of Equity

Project/ Infrastructure Finance

Foreign Currency Loan

Mergers & Acquisitions

Joint Venture Matchmaking

Balance Sheet Restructuring

Project Financing Appraisal

Common Equity Investments

IDLC Securities Limited

IDLC Investments Limited

Margin Loan Operations (Cap Invest)

Discretionary Portfolio Management (MAXCAP)

Compounded annual growth rate

Loans and advances

Compounded annual growth rate of our loans

Net interest margin

Customer and client relationships

Our Organisational Chart (Organogram)

CEO & Managing Director

Credit Evaluaion Commitee