Letter of Transmittal

To
Mominul Hoq
Course Instructor
FBS, BUP
Subject: Submission of Term Paper on Finance.
Dear Sir,
It is a great pleasure for me to get the opportunity to prepare a Term paper under your
supervision. I am a 3rd Semester student in Bangladesh University of Professionals. I was
prescribed by you to write a term paper on Application of Long Term Financing in Bangladesh
from the context of a company and I have chosen IDLC as my company. Here is the paper I
have prepared with your kind co-operation. While preparing the paper I enthusiastically and
honestly have devoted my best effort. I hope that you would be kind enough to consider the
mistakes I have done while preparing the paper. Surely, it has enriched my knowledge. I am
submitting this paper for your kind perusal. I will be honored to provide any additional
information, if necessary.
Sincerely yours
Zerin Anjum Khan Lora
B1506065
BBA 2015, SEC A
FBS,
Bangladesh University of Professionals

Declaration by the Student

I hereby declare that the work in this thesis titled Application of Long Term Financing in
Bangladesh from the context of IDLC is authored by me. Its totally genuine and original which
have been duly acknowledged at the end of the report. The term paper has not been accepted for
any sequel or copying. I further certify that the term paper has not been published or submitted
for publication anywhere else nor it will be sent for publication in the future.
I cede the copyright of the term paper in favor of Mominul Hoq Sir, our course instructor.
I hereby warrant and declare that:
1

This research paper is an original and genuine research work.

It does not infringe on the right of others and does not contain any libelous or unlawful
statements.

It has neither been submitted for publication nor published elsewhere in any print form.

I assign all the copyright of this article to the term paper and have not assigned any kind
of rights for its publication to any other publisher(s).

Thank you ,
.

Acknowledgement
My first acknowledgement goes to the Almighty Allah for bestowing me with the patience. He is
the one who gave me courage to finish the task within its deadline.
Heartiest thanks go to my faculty Mominul Hoq Sir. His knowledgeable lectures and guidance
helped me a lot to build confidence and provided a guideline in completing this project. The
blessing, help and guidance given by her time to time shall carry me a long way in the journey of
life on which I am about to embark.
I would like to thank my faculty again for giving me this wonderful opportunity to get to know
about Application of Long Term Financing in Bangladesh. It gave me an overall idea and helped
me to solve the task assigned to me. I have put my best effort and hope that I have accomplished
the job to present an all-round and complete assignment.
Lastly, I thank Almighty, my parents, my brother, and friends for their constant encouragement
without which this report would not be possible.

EXECUTIVE SUMMARY

A Firm initially started with Lease Financing as our core product, IDLC has
grown to become the largest multi-product Non-Bank Financial Institution of
Bangladesh, with almost equal focus in Corporate, Retail and SME
sectors. Moreover , IDLC has a significant presence in the Capital Markets.
The merchant banking arm, IDLC Investments Limited, a wholly-owned
subsidiary of IDLC is a premier brand for investment banking in the country.
The stock brokerage arm, IDLC Securities Limited, another wholly-owned
subsidiary of IDLC is also amongst the top five brokers in the country.
IDLC aspires to be one of the major contributors to the economy of
Bangladesh through its contribution to the national exchequer, as well as
through creation of employment (both direct and indirect). As a pioneer in
the non-bank financial institution (NBFI) sector of Bangladesh, IDLC
represents a shining example of institutional excellence. Besides being a
catalyst in fostering the countrys economic and developmental progress, the
Company has helped entrepreneurs realise their dreams and achieve their
goals and enabled consumers to live a better quality of life. The Companys
sustainable and consistent success in shareholder value creation is hence a
result of concerted efforts to emerge as a role model in the sector that it
stewards and it does so through a time-tested business strategy and a
corporate culture that nurtures governance and environmental and social
responsibility. The Company is also anchored by a passionate and
professional team that is focused on achieving long-term corporate plans
while at the same time are assured of sound prospects for career
advancement.

Contents
Topic..............................................................................................................6
1. Company profile.........................................................................................7
1.1 Product....................................................................................................7
1.2 HISTORY...............................................................................................12
1.3 UNIQUENESS........................................................................................14
1.4 DEPTH...................................................................................................15
2. LONG TERM FINANCING...........................................................................16
3. LONG TERM FINANCING IN BDANGLADESH MARKET................................18
4. LONG TERM FINANCING IN IDLC...............................................................19
5. SHAREHOLDING COMPOSITION OF IDLC FINANCE LIMITED......................21
6. DEPOSITE RATES OF IDLC.........................................................................22
7. CREDIT RATING........................................................................................24
8. FINANCIAL HIGHLIGHTS OF IDLC..............................................................25
9. IDLCS PERFORMANCE.............................................................................27
10. References.............................................................................................30

TOPIC

Application of Long Term

Financing in Bangladesh from the
context of a company

IDLC

1.

Company profile
1.1 Product

Corporate Division
Corporate Finance
We have extensive knowledge, expertise and experience to offer a range of
financial solutions in response to the needs of a broad spectrum of clientele,
comprising of local and multinational corporate houses in Bangladesh.

Lease Financing
Asset backed financing against industrial machinery, commercial
equipments, office equipments, generators, vehicles, vessels, engines, etc.

Working Capital Financing

IDLC offering working capital financing to assist companies in carrying out
day-to-day business operations

Term Loan Financing

For meeting various regular capital/fixed expenditures like balancing of
production line, modernization of manufacturing process, expansion of
capacity and space, etc.

Project Financing
For setting up of a new unit as addition to the existing product line and
capacity, a new concern of an existing group, a new Joint Venture project of
an existing company, etc.

Specialized Products
For matching the repayments with cash flows, allowing some more time for
repayment, releasing working capital limits
7

Structured Finance
Structured Finance refers to the process of designing and managing complex
financial transactions to meet the unique financial needs of large corporate
clients that cant be matched by conventional financial products.

Fund-Raising
Asset backed financing against industrial machinery, commercial
equipments, office equipments, generators, vehicles, vessels, engines, etc.

Advisory Services
For meeting various regular capital/fixed expenditures like balancing of
production line, modernization of manufacturing process, expansion of
capacity and space, etc.

Securitization of Assets
IDLC offering working capital financing to assist companies in carrying out
day-to-day business operations

Consumer Division
Deposit Schemes
You can now earn more with our various attractive Deposit Schemes.

Home Loan
As one of the leading Home Loan providers in the country, we offer you the
most convenient Home Loan facility to suit your needs. With so many
attractive benefits, the home you always wanted is no longer a dream.

Car Loan
In todays age, owing car is no longer considered a luxury; rather it has
become a vital part of our everyday life. A car is now a useful investment
that improves your quality of life.

Personal Loan
We understand your all out efforts to improve the quality of life, but
necessities no longer wait for your savings to accumulate.

RegistraLoan
"RegistraLoan", the first loan of its kind in Bangladesh, is a secured loan
facility for property buyers and possession-holders for securing ownership of
apartment, commercial space and land.

SME Division
Small Enterprise Finance
IDLC offers financing facilities to small-scale enterprises for carrying out their
trading, manufacturing or service business. Moreover, financing facilities for
developing commercial real estate can also be availed by such enterprises.

Medium Enterprise Finance

SME-Mid segment offers mid and longer term financial solutions to a wide
range of clienteles who are in their journey to emerge as promising corporate
houses in near future.

Supplier Finance
Supplier Finance is a revolving financing facility offered against receivables
created due to supply of goods or delivery of services on credit.

Women Entrepreneur Loan

Women Entrepreneur Loan is a loan facility offered to small and medium
business enterprises operated by women entrepreneurs.

JICA-SME Loan
SME Loan by JICA is a loan facility under the two-step fund, provided by Japan
International Cooperation Agency (JICA) offered to small and medium
business enterprises of Bangladesh.

Commercial Vehicle Loan

10

"Commercial Vehicle Loan" is a lease facility for the purpose of vehicle

purchase for commercial use.

Capital Market
Portfolio Management
IDLC offers Portfolio Management services to both individual and institutional
investors through our subsidiary, IDLC Investments Limited. Investors can
avail our services through our discretionary investment accounts Easy
Invest, MAXCAP, Profit-Loss Sharing Scheme, Capital Protected Scheme,
Portfolio Advisory Service and Cap Invest.

Investment Banking
With a rich experience in Investment Banking, we assist our clients to our
best throughout the IPO process, along with sustained market support.

Brokerage Services

Trade Execution in Dhaka and Chittagong Stock Exchange

Limited
Appointment of dedicated and skilled sales representative
Opportunities for trading through different financial instruments.

11

1.2 HISTORY
23rd May 1985, the IDLC of Bangladesh Limited was consolidated as a joint
venture public organization with the multinational cooperation of five foreign
and three local money related establishments. Presently, IDLC is one of the
main twenty organizations in the nation with various product offerings. The
organization has approved capital of BDT 1,000,000,000/ - (10,000,000
shares of Taka. 100 each) and paid up capital of BDT 200,000,000/ (2,000,000 conventional shares of BDT 100 each).
The organization plotted its vital center for administration expansion in 1994
by launching its deposit schemes. In 1997, IDLC presented Real Estate
Financing and Short term Financing. Amid the time of 1998 and 2006, the
organization widened its exercises into the ranges of corporate financing,
underwriting, issue management, syndication and other speculation
managing an account related administrations and advanced as a genuinely
multi item money related establishment.

From stepping stones to milestones:

23 May 1985-Incorporation of the company
23 Feb 1986-Commencement of the leasing business
1 Oct 1990-Establishment of a Branch in Chittagong
20 Mar 1993-Listed on the Dhaka Stock Exchange Limited
7 Feb 1995-Licensed as a Non-banking intuition under the Financial institutions Act,
1993
25 Nov 1996-Listed on the Chittagong stock exchange limited
27 May 1997-Commencement of home finance short term finance operation
22 Jan 1998-Licensed as merchant banker by the Bangladesh securities and
exchange commission

12

15 Jan 1999-Commencement of corporate finance and merchant banking operation

29 Jan 2004-Opening of the first retail focused branch at Dhanmondi
29 Jun 2004-Opening of the Gulshan branch
22 Nov 2004-Launched investment management services, Cap invest
2 Jan 5006-Opening of the first SME-focused branch at Bogra
6 Apr 2006-Opening of the Uttara branch
1 Jul 2006-Relocation of the companys Registered and Corporate head Office at
own premises at 57, Gulshan Avenue.
18 Sep 2006-Commencement of the operations of IDLC securities Limited, a whollyowned 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 nandankanon
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 incesments limited, a whollyowned subsidiary of IDLC
18 Jan 2012-Opening of the jessore branch
11 Mar 2012-Rebranding initiative undertaken for IDLC

13

8 Jun 2014-Opening of the Khulna branch

28 Oct 2014-Opening of the Bhulta branch
10 Nov 2014-Opening of the Natore branch

1.3 UNIQUENESS
IDLC was initially established in Bangladesh in 1985 through the
collaboration of International Finance Corporation (IFC) of the World Bank,
German Investment and Development Company (DEG), Kookmin Bank and
Korean Development Leasing Corporation of South Korea, the Aga Khan Fund
for Economic Development, the City Bank Limited, IPDC of Bangladesh
Limited, and Sadharan Bima Corporation. As the company evolved, initial
foreign shareholding of 49% was gradually withdrawn and the last foreign
shareholding was bought out by local sponsors in 2009.

Although we initially started with Lease Financing as our core product, IDLC
has grown to become the largest multi-product Non-Bank Financial Institution
of Bangladesh, with almost equal focus in Corporate, Retail and SME sectors.
Moreover , IDLC has a significant presence in the Capital Markets. Our
merchant banking arm, IDLC Investments Limited, a wholly-owned subsidiary
of IDLC is a premier brand for investment banking in the country. Our stock
brokerage arm, IDLC Securities Limited, another wholly-owned subsidiary of
IDLC is also amongst the top five brokers in the country .

Over the years, IDLC has attained a significant presence in the corporate
sector of Bangladesh. IDLC is highly respected by our clients, peers,
employees and regulators for our strong corporate governance, statutory
compliance, high ethical standards, a progressive and enabling working
environment, and strong commitment to environmental and social
development.

14

IDLC continues to play a pioneering role in introducing and popularizing a

variety of financial instruments suiting ever-changing requirements of its
fast-growing clients. We are continuously expanding our presence to ensure
the best quality of service to our clients at all times.

1.4 DEPTH
IDLC Securities Limited
IDLC Securities Limited, a fully-owned subsidiary of IDLC, offers full-fledged
international standard brokerage services for both our retail and institutional
clients. It has seats on both Dhaka Stock Exchange Limited and Chittagong
Stock Exchange Limited. It is also a Depository Participant (DP) of Central
Depository Bangladesh Limited (CDBL).

IDLC Investments Limited

As per requirement of the Securities & Exchange Commission (SEC), IDLC
formed a separate subsidiary on May 19, 2010 in the name of IDLC
Investments Limited, in order to transfer its existing merchant banking
activities to the newly formed entity. IDLC applied to SEC to transfer the
existing merchant banking license of IDLC Finance Limited to IDLC
Investments Limited. Accordingly, IDLC Investments Limited has started its
operations from August 16, 2011 to offer merchant banking services to both
our individual and institutional clients.

IDLC Asset Management Limited (AML)

IDLC Asset Management Limited (AML) was incorporated in Bangladesh on
19 November 2015 vide registration no. C-127068/2015 as a private
company limited by shares under the Companies Act, 1994. The registered
15

office of the Company is situated at D.R. Tower (4th Floor), 65/2/2, Bir Protik
Gazi Dostogir Road, Paltan, Dhaka. It is a subsidiary Company of IDLC
Finance Ltd that holds 99.99% ownership of the Company.

The principal objective of the company is to carry out the business of asset
management, primarily, through launching and managing mutual funds to
cater to the diverse needs of investors. Besides, institutional fund
management, IDLC AML also aims at creating avenues for alternative
investments through private equity and venture capital.

2.

LONG TERM FINANCING

Long term financing is a form of financing that is provided for a period of

more than a year. Long term financing services are provided to those
business entities that face a shortage of capital. There are various long term
sources of finance.
It is different from short term financing which is normally used to
provide money that has to be paid back within a year. The period may be
shorter than one year as well.
Long-term debt consists of loans and financial obligations lasting over one
year. Long-term debt for a company would include any financing
or leasing obligations that are to come due in a greater than 12-month
period. Long-term debt also applies to governments: nations can also have
long-term debt.
Examples of long-term financing include a 30 year mortgageor a 10-year
Treasury note.
Equity is another form of long-term financing, such as when a company
issues stock to raise capital for a new project.

16

Purpose of Long Term Finance:

To finance fixed assets.
To finance the permanent part of working capital.
Expansion of companies.
Increasing facilities.
Construction projects on a big scale.
Provide capital for funding the operations. This helps in adjusting the cash
flow.

EXPERTS SAY
Focus on small and medium companies"Retail investors should never stop investing in equities. Over a period of 510 years, equities have outshone almost all other asset classes. This is true
not only for the Indian market but globally as well."
- C.J. George, Managing Director, Geojit BNP Paribas Financial Services

Bet on a secular growth trajectoryThe focus should be on picking fundamentally strong companies at right valuations. It is
always better to invest in a staggered and systematic manner."
- Gaurav Dua, Head of Research, Sharekhan

The markets offer ample scope for gains"Expect FII flows to remain buoyant because of the strength in the domestic economy
and corporate earnings. Currently, we prefer low-value, mid-cap stocks."
- Dipen Shah, Senior Vice-President, PCG Research, Kotak Securities

Big brands and large-caps are the way to go"2010 is a difficult year to predict since we are trading at 16-18 times PE multiples and
there is a lot of uncertainty on account of factors like monetary policy, monsoons, global
economy and inflation."
- Amar Ambani, Vice-President (Research), India Infoline

17

Time to catch the tide"In the boom years of 2006 and 2007, 124 countries grew at over 4 per cent. In the next
four years, only a few countries will grow rapidly and India will get a disproportionate
share of attention and FII inflows."
- Sandip Sabharwal is CEO, Portfolio Management Services, Prabhudas Lilladher

Adopt a theme-based strategy"An ideal portfolio should be built around the India growth story. This consists of
multiple themes, including consumption, asset creation, financial inclusion and
technology innovation."
- Pallav Sinha, MD and CEO, Fullerton Securities

3.
LONG TERM FINANCING IN
BDANGLADESH MARKET

Long Term Financing Facility (LTFF) under the Financial Sector Support Project (FSSP)
The Government of Bangladesh (GOB) has signed a Financing Agreement (FA) on
June 30, 2015 with the International Development Association (IDA) regarding
implementation of the
Financial Sector Support Project (FSSP). The objective of the project is to improve
financial market infrastructure of the country, regulatory and oversight capacity of
Bangladesh Bank and access to long term financing mainly for manufacturing firs in
Bangladesh. Bangladesh Bank has also signed a Project Agreement (PA) with the
IDA on the same date to carry out the tasks for implementation of the project.
Supporting Long Term Finance is the major component of the project. Under the
arrangement, Bangladesh Bank will provide long term financing in foreign currency
18

mainly for small and medium scale manufacturing enterprises in the country as
detailed in the attached Operations Manual. The financing would be provided to
eligible Participating Financial Institutions (PFIs) for on lending/refinancing to the
eligible firm.

4.

LONG TERM FINANCING IN IDLC

Term Loan Financing

Term Loan

For meeting various regular capital/fixed expenditures like

balancing of production line, modernization of manufacturing
process, expansion of capacity and space, etc.
19

Usually for a tenure of 1 to 5 years

Repayment through monthly or quarterly installments
Installments may be equal or structured (step-up, step-down,
bullet, etc.)

Bridge Financing

For meeting the funding requirements of the borrower for any

interim period
Usually for shorter term
Generally through bullet payments

Loan to Corporate Houses to Procure

Commercial Space

Financing to corporate clients for procuring office/commercial

space
Loan term may be up to 7 years or so
Repayment can be made every quarter or month through equal
or structured installments

Long Term Finance for Real Estate

Developers

Financing to developers for meeting the capital

expenditures/construction costs of any specific real estate
project, both residential and commercial
A debt-equity ratio is maintained
Disbursements are usually made in phases with progress of
construction work
Tenure of loan can be up to 7 years depending on nature of the
project
Repayment can be made every quarter or month through equal
or structured installments
20

21

5.
SHAREHOLDING COMPOSITION OF
IDLC FINANCE LIMITED

22

Sl.No.

Name Of Shareholders

No.Of Shares

AS A % OF TOTAL

01.

Sponsors/Directors
The City Bank Limited

60,854,056

24.21

Transcom Group

33,515,443

13.33

- Eskayef Bangladesh Limited

20,109,375

8.00

- Transcraft Limited

10,088,022

4.01

3,318,046

1.32

Sadharan Bima Corporation

19,151,663

7.62

Mercantile Bank Limited

18,852,538

7.50

Reliance Insurance Co. Limited

17,595,702

7.00

149,969,402

59.66

17,523,641

6.97

LR Global

5,684,354

2.26

BNYM

3,371,785

1.34

Marina Apparels Limited

2,513,671

1.00

27,089,551

10.78

56,183,002

22.35

45,214,783

17.99

Sub-Total

45,214,783

17.99

Total Holdings

251,367,187

100.00

- Bangladesh Lamps Limited

Sub-Total
02.

General
Institutions
ICB

Other Institutions
Sub-Total

Individuals
General Public (Individuals)

23

6.

DEPOSITE RATES OF IDLC

Flexible Term Deposit Package

IDLC Regular Term Deposits

Individual
(Any Amount)

Term

Institutional
(Any Amount)

3-15 months

7.25%

7.00%

2 Years

7.50%

7.00%

3, 4 & 5 Years

7.50%

7.00%

IDLC 500 Days Term Deposit

Term

Individual
(Any Amount)

Institutional
(Any Amount)

500 Days

7.25%

7.00%

IDLC Double Money Deposit

Term
7 Years 6 Months

24

IDLC Monthly Earner Deposit (Individual)

Term

Int. Amt. per month/lac(Any Amount)

IDLC Triple Money Deposit

1 Year

BDT 605
Term

2 Years

BDT 625
11 years

3-5 Years

BDT 625

Regular Earner Package

IDLC Quarterly Earner Deposit (Individual)
Term

Int. Amt. per quarter/lac (Any Amount)

1 Year

BDT 1,815

2 Years

BDT 1,875

3-5 Years

BDT 1,875

7.

CREDIT RATING

Emerging Credit Rating Limited (ECRL) has affirmed AAA (Pronounced as

Triple A) long term credit rating and ECRL-1 short term credit rating to the
IDLC Finance Ltd (From here on referred to as IDLCFL) based on audited
financials of FY2009-2013 and other available information up to the date of
rating. The outlook on the rating is Stable. The ratings are consistent with
ECRL's methodology for this type of financial institutions. ECRL considered
financial performance, capital base, asset composition, asset quality, earning
trends, profitability, management experience and prospect of the industry
while assigning the rating.

Date of

Valid Till

Rating

Long Term

Short Term

Outlo
25

Declaration

Action

Rating

Rating

ok

April 15, 2016

April 14,
2017

Surveillanc
AAA
e

ECRL-1

Stable

April 15, 2015

April 14,
2016

Surveillanc
AAA
e

ECRL-1

Stable

May 09, 2014

May 08,
2015

Surveillanc
AAA
e

ECRL-1

Stable

May 09, 2013

May 08,
2014

Surveillanc
AAA
e

ECRL-1

Stable

May 09, 2012

May 08,
2013

Initial

ECRL-1

Stable

8.

AAA

FINANCIAL HIGHLIGHTS OF IDLC

FINANCIAL PERFORMANCE
Financial Performance 2011

2012

2013

2014

2015

Growth

Total assets

31,165

37,784

50,429

58,927

73,434.45

24.62%

Long term liabilities

25,299

32,492

43,951

51,371

64,154.04

26
24.88%

Term deposit balance

16,828

22,008

29,064

35,240

46,038.68

30.64%

BDT in million

OPERATIONAL PERFORMANCE

2011

2012

2013

2014

2015

Growth

Operatio
nal
Performa
nce

Operational income

2,160

2,403

2,761

3,658

4,587.90

25.43%

Operational expenses

913

1,058

1,243

1,464

1,647.79

12.58%

Financial expenses

2,364

3,103

4,138

4,543

4,833.19

6.39%

Profit before tax

1,217

1,252

1,325

2,187

2,628.50

20.21%

Net profit after tax

500

713

669

1,246

1,459.22

17.16%

BDT in million

FINANCIAL RATIOS

27

Financial Ratios

2011 2012 2013 2014 2015 Growth

Debt equity ratio (Times)

6.83

7.05

8.40

8.03

8.43

0.40

Financial expenses coverage ratio (Times)

1.51

1.40

1.32

1.48

1.54

0.06

Return on total assets (%)

1.72

2.07

1.52

2.28

2.20

(0.07)

Return on shareholders equity (%)

13.04 16.44 13.31 20.95 20.39 (0.56)

Earnings per share* (Taka)

1.99

2.84

2.66

4.95

5.81

0.85

Dividend per share (Taka)

2.50

3.00

3.00

3.50

2.50

(1.00)

Price earnings ratio (Times)

27.41 15.95 15.12 12.06 10.96 (1.10)

Dividend yield (%)

1.81

Dividend payout ratio (%)

49.47 52.08 72.09 56.51 43.07 (13.44)

Average effective tax rate

58.88 43.07 49.48 43.04 44.48 1.45

3.26

4.77

4.69

3.93

(0.75)

EQUITY STATISTICS
Equity Statistics

2011

2012

2013

2014

2015

Grow
th

Number of shares (No.)

99,000,
000

123,750,
000

160,875,
000

201,093,
750

251,367,
187

25.00
%

Year end market price

per share (BDT)

138.50

91.90

62.90

74.70

63.60

14.86
%

Net asset value per

share (BDT)*

15.84

18.67

21.33

25.97

30.97

19.27
%

Market capitalization
(Taka in million)

13,711.
50

11,372.6
3

10,119.0
4

15,021.7
0

15,986.9
5

6.43
%

28

Market value addition

(Taka in million)

98.29

44.49

29.57

42.24

32.63

22.76
%

Shareholders' equity
(Taka in million)

3,980.4
7

4,693.29

5,362.76

6,527.83

7,785.96

19.27
%

9.

IDLCS PERFORMANCE

The year 2015 proved to be a pivotal year in our efforts to optimize our
business model for driving future growth. Despite several challenges on the
political and economic fronts that led to sluggish industrial growth and weak
consumption, IDLC reported a respectable performance during the year
under report, a testimony of its robust business model. The company
reported Net Interest Income of Taka 3,418 million, and Net Income after Tax
of Taka 1,459 million in 2015, which contributed to the shareholders equity
20.39% for the year. This demonstrates effective deployment of capital and
resources as IDLC Finance Limited continues to outperform its peers in this
area. Amid efforts to enhance our future growth prospects, we remained
vigilant in strengthening the balance sheet and maintaining a solid credit
profile. Total assets increased by over 24.6% to Taka 73,434 million at
December 31, 2015. Asset quality remains a top priority, with our
performance measures of nonperforming asset and reserves exceeding the
averages of our peer group.
The Companys SME division continued to grow at a steady pace on the back
of robust customer relationships and swift loan processing and turnaround
times. The division disbursed Taka 15,656 million in 2015 and registered a
portfolio growth of 24.92% to Taka 22,368 million. Refinancing receipts
29

amounted to Taka 3,020 million in 2015, making IDLC one of the largest
participants of the refinancing programs of the Bangladesh Bank and other
low-cost fund providers. Our focus on driving entrepreneurship among
women resulted in disbursements (under women entrepreneur loans)
growing 40% to Taka 2,004 million during the year under report. IDLC has
launched two new SME Products: IDLC Purnota and IDLC Udbhabon; and
three new refinancing schemes - IDLC Pinion, IDLC Startup Financing, and
IDLC Dairy Financing in partnership with SME Foundation and Bangladesh
Bank that further enhanced the SME profile. In 2015, the Structured Finance
Department (SFD), which is a segment of Corporate Division, attained a
satisfactory fee income of Taka 60.03 million. While many other players in
the industry were struggling to survive, SFD arranged subordinated bonds for
commercial banks, arranged Taka 5.00 billion in the form of coupon bearing
subordinated bonds for one of the largest banks in the country and also
arranged Taka 3.55 billion as commercial paper for 4 (four) eminent
corporate houses of the country. The Corporate Division (overall), has
attained a 10.72% growth in cumulative divisional portfolio to Taka 10,623
million by the end of the year. Despite the market vulnerabilities, both IDLC
Investments Limited (IDLCIL) and IDLC Securities Limited (IDLCSL), IDLCs
wholly-owned subsidiaries operating in the capital markets, demonstrated a
resilient performance during the year under report. IDLCIL attained an
impressive net profit after tax of Taka 119.32 million while IDLCSL achieved a
strong growth in net profit of 147.02% to Taka 96.08 million in 2015.

Particulars

IDLC Group
2015

2014

Net interest income

Other operating income
Total operating income
Total operating expenses
Profit before provisions
Provision for loans/ investments*

3,417.99
1,169.91
4,587.90
1,647.79
2,940.11
311.61

2,888.77
768.95
3,657.72
1,463.65
2,194.07
7.55

Profit before taxes

Provision for taxes
Net profit after taxation

2,628.50
1,169.28
1,459.22

2,186.53
941.02
1,245.51

Growth
(%)
18.32%
52.14%
25.43%
12.58%
34.00%
4027.28
%
20.21%
24.26%
17.16%

*As instructed by Bangladesh Bank (BB), the Company started to follow BBs
provisioning policy for financial institution from September, 2014 instead of
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its internal stringent provisioning policy, which resulted in a substantial fall in

provision for loan losses by an amount of Taka 241.15 million in the year
2014. Nullifying the impact of this one-off decrease in 2014, year-onyear
growth in provision for loans and investments is in effect around 25%,
commensurate with the growth in asset portfolio in the period under
consideration. This is a useful synopsis of the Company performance during
the past year from the Managements point of view and narrates how The
IDLC Group operates sustainably through the Companys engagement with
its key stakeholders. The review also provides a glimpse of the future
performance of the Company as well. The IDLC Groups net interest income
and operating income witnessed an escalation of 18.32% and 25.43%,
respectively, in 2015. Correspondingly, operating expenses witnessed a
restrained growth of 12.58% despite recruiting 682 new employees (majority
of which were recruited to strengthen the sales organization and, in turn,
brought reduction in business acquisition cost) and conducting several
training sessions towards capacity building; the benefits of this exercise are
expected to accrue in the future. Profit before provision increased by 34% as
against a 25.43% increase in operating income, mainly on the back of lower
increase in operating expenses.

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10. References
http://www.cbpp.org/blog/expert-group-proposes-long-term-care-financing-reforms
http://www.dsebd.org/displayCompany.php?name=IDLC
http://idlc.com/about.php
http://idlc.com/producta_services.php
http://www.investopedia.com/terms/l/longtermdebt.asp
http://www.businesstoday.in/moneytoday/cover-story/experts-picks-for-longtermwealth/story/8624.html
http://www.cbpp.org/blog/expert-group-proposes-long-term-care-financing-reforms
https://www.unglobalcompact.org/system/attachments/21669/original/2012_Sustain
ability_Report_IDLC.pdf?1367300036
http://blogs.worldbank.org/voices/long-term-finance-infrastructure-essential-endingpoverty

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