annual-report-2020-642658.pdf - IDLC - Login

35 Years of legacy

41 Touch-points

24 Cities across the country

1,450+ AAA

Employees

Credit Rating

03 Subsidiaries operating in capital market

2020 marked the 35th year of IDLC. Our clients, shareholders, employees, partners, regulators, and the community at large, have each been an integral part that made us whole and who we are today; one of the most recognized and the largest financial institution of the country. Hand-in-hand we have trekked over mountains and have attained new heights. Despite many challenges along the way we, as a family, grew together. Thus, at this milestone we reflect on the lives we have touched, gave us a reason to exist and provided us the opportunity to give back to the community. This year we are sharing with you the stories which we consider as our achievements and inspiration for our journey ahead...

CONTENTSHighlights 4

About Our Integrated Report 6

Stakeholders Identification 9

Materiality Determination Process 10

Navigating Through This Report 11

THE COMPANY OPERATING ENVIRONMENT AND RISK MANAGEMENT

MANAGEMENT DISCUSSION & ANALYSIS

STEWARDSHIP

Our Philosophies 13

Key Milestones 14

Products & Services 16

IDLC Integrated Business Model & Activity Models 18

National Footprint 21

Value Chain Activities & Impacts 22

How We Create Value 24

Our Capitals

Financial Capital 26

Human Capital 28

Manufactured Capital 30

Intellectual Capital 32

Social & Relationship Capital 34

Natural Capital 36

Stakeholders Engagement 38

Event Highlights 42

Awards & Accolades 46

Overview & Macroeconomic Highlights 71

Macroeconomic Factors & Their Impacts 72

Market Forces & Competitive Landscape 75

Entity Analysis 78

Statement of Risk Management 80

Message from the Chairman 49

CEO's Statement 53

Shareholding Composition 56

Board Composition 57

Organisational Chart 63

Management Committee 64

Senior Executives 68

Strategy & Resource Allocation 91

Performance Analysis with the Management Committee 101

Key Operating & Financial Highlights 106

Horizontal Analysis 108

Vertical Analysis 110

Highlights as Required by Bangladesh Bank 112

Value Added Statement 113

Market Value Added (MVA) Statement 114

Economic Value Added (EVA) Statement 115

Capital Adequacy Ratio 116

Contribution to the National Economy 117

Human Resource Accounting 119

Business Segment Review – Core Financing

SME 122

Consumer 124

Corporate 126

Structured Finance 128

Green Banking 129

Wealth Management 131

Business Segment Review – Subsidiaries

IDLC Securities Limited 133

IDLC Investments Limited 135

IDLC Asset Management Limited 137

Report of the CEO and Managing Director and the Chief Financial Officer

222

Independent Auditor's Report 223

Consolidated Financial Statements - IDLC Group

Consolidated Balance Sheet 227

Consolidated Profit and Loss Account 229

Consolidated Statement of Changes in Equity 230

Consolidated Cash Flow Statement 232

Financial Statements - IDLC Finance Limited

Balance Sheet 233

Profit and Loss Account 235

Statement of Changes in Equity 236

Cash Flow Statement 238

Liquidity Statement 239

Notes to the Consolidated and Separate Financial Statements

240

IDLC Securities Limited


Directors' Report to the Shareholders 301

Independent Auditors' Report 306

Statement of Financial Position 308

Statement of Profit and Loss and Other Comprehensive Income

309


Statement of Cash Flows 311

Notes to the Financial Statements 312

IDLC Investments Limited





Statement of Profit and Loss and Other Comprehensive Income

340




IDLC Asset Management Limited





Statement of Profit and Loss and Other Comprehensive Income 367




GOVERNANCE REPORTS & FINANCIAL STATEMENTS SUBSIDIARY COMPANIES

DISCLOSURES, CHECKLISTS & MISCELLANEOUS

REPORTS & FINANCIAL STATEMENTSIDLC GROUP AND IDLC FINANCE LIMITED

Letter from Board of Directors 140

Statement of Corporate Governance 141

Statutory Reporting

Key Pointers for the Stakeholders 182

Disclosures Under Pillar-III Market Discipline 184

Report on Security Custodial Service of IDLC Finance Limited

191

Notice of the 36th Annual General Meeting 192

Report of the Audit Committee 193

Assessment Report on the Going Concern of IDLC Finance Limited

195

Statement of Directors' Responsibilities for Internal Control, Financial Reporting and Corporate Governance

197

Directors’ Report to the Shareholders 198

Annexure I: Shareholding pattern as required by the Corporate Governance Code issued by BSEC

205

Annexure II: Meeting attended by the Directors 206

Annexure III: Certification on the Compliance with the Corporate Governance Guidelines

207

Status of Compliance with the Corporate Governance Guidelines

208

Annexure IV: Statement of Compliance with the the Good Governance Guidelines Issued by the Bangladesh Bank

219

Annual Report Review Checklist 380

Corporate Governance Checklist 384

Integrated Reporting Checklist 386

IDLC’s Branch Network 394

IDLC at a Glance 398

Proxy Form & Attendance Slip 399

4 annual report 2020

THE COMPANY STEWARDSHIP OPERATING ENVIRONMENT & RISK MANAGEMENT MANAGEMENT DISCUSSION & ANALYSIS

HIGHLIGHTS

PILOTED

Deposit Pension Scheme

E-Loan of SME

LAUNCHED IDLC Venture Capital Fund-I

Investors online onboarding platform

CUSTOMERS

2.08%Return on Asset

35%Proposed Cash Dividend

SHAREHOLDERS

BDT 2,346 million

Contribution through payment of Tax, VAT and Excise Duty

REGULATORS

COST TO INCOME RATIO

2016 2017 2018 2019 2020

37.94%37.19%

39.49%

43.33%

38.23%

PROFIT AFTER TAX IN BDT MN

2016 2017 2018 2019 2020

5 year CAGR: 11.73%

1,780

2,277 2,171

1,700

2,541

2016 2017 2018 2019 2020

62,217 71,499

83,934 92,346 93,074

TOTAL LOAN PORTFOLIO in BDT mn5 year CAGR: 11.01%

5IDLC Finance Limited

GOVERNANCE REPORTS & FINANCIAL STATEMENTS - IDLC REPORTS & FINANCIAL STATEMENTS - SUBSIDIARIES DISCLOSURES, CHECKLISTS & MISC.

BDT 31 million

fund contributed to various entities to support the community through the pandemic

32,000+

individuals benefitted through our various CSR activities

COMMUNITY

155Number of Training

7,554Number of Attendees

EMPLOYEES

NPL%

2016 2017 2018 2019 2020

2.98%2.77%

2.20%

3.07%

1.79%

RETURN ON ASSET

2016 2017 2018 2019 2020

2.33%2.60%

2.12%

1.50%

2.08%

RETURN ON EQUITY

2016 2017 2018 2019 2020

21.29% 21.15%

16.55%

12.29%

17.37%



ABOUT OUR INTEGRATED REPORT

The story presents key aspects of our value creation process which are in the different forms of capital that provide the inputs, business domains and the value creating activities that results in outputs, outcomes and impacts. It also covers risk and the aspect of conformance. In totality, this report ensures

accurate measurement of operational, financial and sustainable performance against our strategy and the matters we consider to be most material to the sustainability of our Group, in a concise manner, so that it ensures comparability with the industry and beyond.

Scope and Boundaries of this Report

The report covers the period from 1 January 2020 to 31 December 2020, which encompasses the activities that have been carried out within the geographical boundaries of Bangladesh, as IDLC does not have operation or subsidiary in other countries.

We have referred to the guidelines of Integrated Report, issued by the Institute of Chartered Accountants of Bangladesh (ICAB) in the form of ‘Integrated Reporting Checklist’, which is in congruence with the integrated reporting framework prototype issued by the International Integrated Reporting Council (IIRC). We have also taken into account recommendations and

guidance from by IFC Toolkits for Disclosure and Transparency, published by International Finance Corporation to improve coherence, and transparency across the report.

In clarifying the Company’s operations and financial performance, we have extracted the financial information from the Audited Financial Statements for the financial year ended 2020 with relevant comparative information. The financial statements consistently comply with the mandated requirements of the laws of the land and of the industry that includes Companies Act 1994, Securities and Exchange Rules 1987, International Financial Reporting Standards, Financial Institutions Act 1993, circulars from Central Bank.

The aim of our integrated reporting approach is to enable our stakeholders, including investors, to make a more informed assessment of the value of IDLC and its prospects as this report is organised around our story of value creation.

REGULATIONS WE FOLLOW

• Companies Act 1994

• Financial Institutions Act 1993

• Securities and Exchange Rules 1987

• Corporate Governance Code

• Relevant rules and regulations of Bangladesh Bank (The Central Bank)

• And other applicable laws and regulations of the land.

REPORTING FRAMEWORKS AND GUIDELINES

• International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS)

• Global Reporting Initiative (GRI)-GR4 Framework

• International Integrated Reporting Framework by International Reporting Council

• SAFA Integrated Reporting Checklist

• ICAB Corporate Governance Checklist

We are pleased to present to our shareholders with the 2020 Annual Report

in the form of an ‘Integrated Report’ for IDLC Finance Limited and its subsidiaries

(collectively referred to as IDLC Group).



Structure of Our Value-Created Integrated Report

Our Mission, Vision & Core Principles

Materiality Determination

Value Chain & Business Model

Operating Context

Risk Management

Strategy Stakeholder Identification &

Engagement

Corporate Governance

Page Ref: 10 Page Ref: 18, 22 Page Ref: 71 Page Ref: 80 Page Ref: 91 Page Ref: 9, 38 Page Ref: 141

Key Pillars of Our integrated Report

We have extracted the disclosure of non-financial information from internally-maintained records reported for the statement of financial position, unless otherwise stated that it has been extracted from a reliable source.

The Sustainability requirements, as elaborated separately in our Sustainability Report, adhere to the guidelines issued by the Global Reporting Initiative (GRI)-G4 Framework. We consider that this Integrated Report in congruence with Sustainability Report, complies with the requirements of the GRI G4 Core Reporting Guidelines.

To report our corporate governance practices, we have drawn reference from the revised Corporate Governance Guidelines (CGG) issued by Bangladesh Securities and Exchange Commission (BSEC). Furthermore, there have not been any significant changes to the scope, boundary and reporting basis since the last reporting date as of December 31, 2019.

ComparabilityAll the information presented in this report is on the same basis as the 2019 report in terms of the entities covered, the measurement methods applied and time frames used. The information provided covers all material matters relating to business strategy, risk and areas of critical importance to our stakeholders. The structure of the report has been further developed as part of our continuous focus on improving communication to our stakeholders.

Determining Materiality of the Report ContentThe materiality assessment of the report content appears on pg. 10.

External Assurance

The company has obtained external assurance on the following reports in the reporting period under consideration:

Sl. Description of Report External Assurance1 Financial Statements Audit

ReportHoda Vasi Chowdhury & Co., Chartered Accountants

2 Corporate Governance Certification

Itrat Husain & Associates, Chartered Secretaries

3 Provident Fund Financial Audit M M Rahman & Co., Chartered Accountants, Member of Russell Bedford International

4 Gratuity fund valuation Air Consulting, an actuarial firm

5 Eligibility Compliance of IDLC Finance Limited for participating in the Investment Promotion and Financing Facilities (IPFF) project 2019

Hoda Vasi Chowdhury & Co., Chartered Accountants

6 Gratuity Fund Financial Audit M M Rahman & Co., Chartered Accountants, Member of Russell Bedford International

7 Entity Credit Rating Emerging Credit Rating Limited



I, on behalf of the Board, acknowledge our responsibility to ensure the integrity of this Integrated Report, which addresses all material issues and presents fairly the integrated performance of IDLC Group.

Aziz Al MahmoodChairmanIDLC Finance Limited

The Board and the management ensures that reasonable care has been taken in preparation and presentation of this Integrated Annual Report to preserve the disclosure contained in this Integrated Report presented herewith which comprises the discussion, analysis and disclosures pertaining to stewardship, which should be read in conjunction with the audited financial statements. The role of stewardship brings upon it an obligation to be transparent and accountable, which is thoroughly recognised in this report.

Furthermore, we agree that the Integrated Annual Report has been prepared in accordance with the Integrated Reporting Council’s International Integrated Reporting Framework, and it addresses the material matter pertaining to the long term sustainability of the group and presents fairly the integrated performance of IDLC Group and the impacts thereof.

Responsibility over the Integrity of the Integrated Report

Availability of the Annual Report

The soft copy of the Annual Report is sent to all the shareholders, prior to holding the Annual General Meeting, giving due period of notice. Separately, for the benefit of all stakeholders, our report has been made available in the website http://www.idlc.com.



STAKEHOLDERS IDENTIFICATIONIdentifying and understanding stakeholders is important because it allows us to recruit them as part of our effort to succeed. It encourages us to think about others rather than being confined to a bubble. As we address each of the stakeholders’ expectations, we gain their wholehearted support. This lends us credibility as an organization as well as raises the chances of our success as our success becomes their success.

At IDLC, we identify and analyze stakeholders under three sustainability dimensions – economic, social and environmental.

Shareholders Customers Service Provider and Suppliers Regulators

Employees Local Communities

Environmentally Interested Groups/Organisations

ECONOMIC

SOCIAL

ENVIRONMENT



MATERIALITY DETERMINATION AND REPORTING AT IDLC

At IDLC, the materiality determination process marks its beginning with Integrated Thinking. We actively reflect on the interdependencies between our various operating and functional units and the capitals we use and/or affect. As a

result, we are well prepared to rightly identify and disclose information on matters that substantially affect our value creation process over the short, medium and long term, while keeping our competencies intact.

Materiality determination for disclosures to various stakeholders

Target audienceThis report is primarily targeted towards our current and prospective investors (to assist in their assessment of our business and its value creating potential), and for representatives of the government and regulatory authorities in Bangladesh (to assist in their efforts to ensure compliance of accounting standards and other relevant regulatory guidelines). Moreover, this report will act as a good source of information for all our stakeholders to evaluate how we create shared value through our financial services.

The material factors present in this report have been highlighted in Navigating Through the Material Aspects (pg. 11).

Stakeholder Disclosure impacts:

Shareholders- Return on investment- Shareholder rights

Costumers- Financing/savings/investments needs- Quality of service

Employees- Compensation and benefits- Career growth opportunities- Well-being

Service Providers & Suppliers

- Ability to pay dues

Government/Regulators

- Compliance with regulatory guidelines- Ability of the company to meet taxation payments

Environment - Carbon footprint

Community- Ability to enhance Corporate Social Responsibility- Prospects of job creation

Monitor & Review

Identify DisclosePrioritize & Act

Integrated Thinking at the heart of Materiality Determination for Integrated Decision-Making and Integrated Reporting

Material matters and practices that allow materiality identification through integrated thinking

KPIs set by the Management Committee

Resource Allocation Strategies set by the Management Committees (pg. 91)

Regular meetings held by the Board and by 12 Key Committees ( List and functions of committees on page 158)

Issues raised by and discussed with colleagues

Issues raised by other stakeholders through engagement activities (pg. 38), email, social media, phone, in-person visits, AGM, etc.

Internal

Relevant Heads

Management Committee

Board of Directors

External

External stakeholders (Engagement activities in pg. 38)

Guidelines followed for reporting (pg. 240)



NAVIGATING THROUGH THIS REPORTThe key objective of this report is to provide a comprehensive picture of our organisation and illustrate our strategies to create value in the long run. It is centered around six capitals and our activities, held in place through the common thread of our focus on engaging with our stakeholders at a human level. Navigating through this report will require the reader to ask seven key questions:

What role do we have in the bigger picture and how do we structure our activities to optimize value creation?

Value Creation ProcessBusiness ModelCorporate Governance StructureOrganisational Chart

Bird's eye view of our role in the big picture.Key components of our Business Model that make it possible to transform our resources.The governance structure that enables our Business Model.The organisational structure designed to complement our Business Model.

Core questions to ask Where to look for What you will find Page

24

18, 22

144

63

What are the various challenges within the operating environment and competitive landscape affecting our business?

Operating Environment and Risk Management

Macroeconomic aspects that shape the industry.Market forces and the competitive landscape that shape our business.Our key competencies and scope of improvement.

72

7578, 79

How do we transform our resources - the various capitals - to create value for our stakeholders?

Financial CapitalHuman CapitalIntellectual CapitalManufactured CapitalSocial and Relationship CapitalNatural Capital

Our financial resources.Our people.Our knowledge-based intangibles.Our tangible inputs.Our key relationships and engagement with stakeholders.Our environmental resources.

2628

32303436

How do we formulate our strategies and allocate resources?

Performance Analysis with the Management CommitteeStrategy and Resource Allocation

Our historical performance and resource allocation strategiesGoals and breakdown of objectives.Risks and opportunities identified through analysis of operating environment and stakeholder engagement.Business model adaptability and change requirements.Responses to issues raised through stakeholder engagement.Resource allocation strategies to meet our objectives.Strategy formulation and our sources of competitive advantage.Interdependencies, complexities and trade-offs between our capitals.How we measure the efficacy of our objectives.Our strategies to avoid unintended consequences of potentially narrow focus on KPIs.Our scope and boundaries for long term value creation.

91, 106

9293

9496

969697

9898

100

What are the performance, challenges and mitigation strategies of our business parts?

Business Segment Review Performance reviews.Competence drivers.Influential trends affecting business segments and subsidiaries.Outlook.

122-138

What are our broad risks and how do we manage them?

Statement of Risk Management Risk identification and measuring techniques.Risk impacts and likelihoods, through heat maps.Risk mitigating tools and techniques.Breakdown of risk exposures in separate categories.Stress testing.

80-89

Who governs our organization and how do they approach the evolving market dynamics?

Chairman’s StatementBusiness Segment ReviewsCommittees of the Board and Mgt.Statement of Corporate Governance

Broad overview of where we stand and where we are headed.The key drivers of our success and incisive analysis of our business verticals.The experiences and competence of our dignitaries.In-depth review of our governance and control framework.

49

122-13857, 158

141



SALMA SULTANA

My husband always thought of the well-being of our sons and had bought a land with eyes full of dreams. But he passed away, leaving the dreams shattered. I was lost and I didn't know how to provide an ideal childhood for my three sons, neither did I know how to develop the land that my husband had so lovingly bought.

Then one day I came across an IDLC Home Loan billboard at Shibbari and mustered the courage to apply for the loan. I never thought that a widow like me would get a home loan, but IDLC made it possible. Despite legal complicacies involved with the land, IDLC dealt with everything and provided the loan to me.

Today, I can provide well for my children with the rent I receive from the houses I built with the home loan, and now I can start my everyday life with a smile.

Thank you IDLC !



SALMA SULTANA

My husband always thought of the well-being of our sons and had bought a land with eyes full of dreams. But he passed away, leaving the dreams shattered. I was lost and I didn't know how to provide an ideal childhood for my three sons, neither did I know how to develop the land that my husband had so lovingly bought.

Then one day I came across an IDLC Home Loan billboard at Shibbari and mustered the courage to apply for the loan. I never thought that a widow like me would get a home loan, but IDLC made it possible. Despite legal complicacies involved with the land, IDLC dealt with everything and provided the loan to me.

Today, I can provide well for my children with the rent I receive from the houses I built with the home loan, and now I can start my everyday life with a smile.

Thank you IDLC !

OUR PHILOSOPHIES

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 professional conduct involving dishonesty, fraud, deceit or misrepresentation or commit any act that reflects adversely on honesty, trustworthiness or professional competence.

• Achieve sustainable business growth

• Fully leverage the core banking platform

• Maintain strong funding mix

• Attract, retain and develop talented employees

• Continuously improve operational efficiency

• Advance our social causes

• Embrace internationally accepted Corporate

Governance and sustainable business practices

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.

• Integrity

• Customer Focus

• Trust and Respect

• Equal Opportunity

• Eco-friendly

• Passion

• Simplicity

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.

OUR STRATEGIC OBJECTIVES

OUR CORE VALUES



Opening of first Branch in Chittagong

1990

Launched First Open Ended Mutual Fund IDLC Balanced Fund

Inaugarated Khushir Kheya

2017

2019Launch of VSE Finance & Affordable Housing

Received BSEC approval for Venture Capital FundLaunch of IDLC AML Shariah Fund

2020Launch of Venture Capital Fund-I

Launch of Online On-boarding Platform by IDLC AML

Inauguration of 25th Branch at Elephant Road

First ever LEED certified environment friendly branch in financial industry of

Bangladesh at Chittagong

Licensed as an NBFI

1995Incorporation of the Company

1985

Commencement of IDLC Investments Limited

2011

Commencement of home finance and short-term finance operations

1997

Company Name changed to IDLC Finance Limited

2007

Commencement of corporate finance and merchant banking operations

1999

2006Commencement of IDLC Securities Limited

Opening of the first SME focused branch at BoguraRelocation of Head Office to Gulshan Premise

1986Commencement of the leasing business

2016Launching of Easy Invest

2018Launch of IDLC Growth Fund

Launch of IDLC SIPObtained Alternative Investments License

Launch of Interest First Deposit Launch of IDLC Priority Program

1993Listed on the Dhaka Stock Exchange Limited

1996Listed on the Chittagong Stock Exchange Limited

1998Licensed as a merchant

banker by BSEC

2004Opening of first retail focused

branch at Dhanmondi

2012Change of Logo and Rebranding

2015Incorporation of IDLC AssetManagement Limited

2010Inauguration of 10th Branch

at Narshingdi

KEY MILESTONES



Opening of first Branch in Chittagong

1990

Launched First Open Ended Mutual Fund IDLC Balanced Fund

Inaugarated Khushir Kheya

2017

2019Launch of VSE Finance & Affordable Housing

Received BSEC approval for Venture Capital FundLaunch of IDLC AML Shariah Fund

2020Launch of Venture Capital Fund-I

Launch of Online On-boarding Platform by IDLC AML

Inauguration of 25th Branch at Elephant Road

First ever LEED certified environment friendly branch in financial industry of

Bangladesh at Chittagong

Licensed as an NBFI

1995Incorporation of the Company

1985

Commencement of IDLC Investments Limited

2011

Commencement of home finance and short-term finance operations

1997

Company Name changed to IDLC Finance Limited

2007

Commencement of corporate finance and merchant banking operations

1999

2006Commencement of IDLC Securities Limited

Opening of the first SME focused branch at BoguraRelocation of Head Office to Gulshan Premise

1986Commencement of the leasing business

2016Launching of Easy Invest

2018Launch of IDLC Growth Fund

Launch of IDLC SIPObtained Alternative Investments License

Launch of Interest First Deposit Launch of IDLC Priority Program

1993Listed on the Dhaka Stock Exchange Limited

1996Listed on the Chittagong Stock Exchange Limited

1998Licensed as a merchant

banker by BSEC

2004Opening of first retail focused

branch at Dhanmondi

2012Change of Logo and Rebranding

2015Incorporation of IDLC AssetManagement Limited

2010Inauguration of 10th Branch

at Narshingdi

KEY MILESTONES



PRODUCTS AND SERVICES

Small Enterprise Financing• SME Term Loan/Lease• Purnota – Women

Entrepreneur Loan

• Working Capital Loan• Seasonal Loan• Abashan Loan• SME Shombhabona• Commercial Vehicle Loan• IDLC Udbhabon

Supply Chain Finance• Factoring of Accounts

Receivables• Work Order Financing• Distributor Financing

Home Loan• Apartment/Home Purchase• Building Construction• Commercial Space• Home Equity• Affordable Housing

Finance Solution

• ASHA• ULLAS• Semi Paka Loan

Car Loan• Brand New• Reconditioned

Personal Loan• Secured• Unsecured

SME

Consumer

Deposits

Corporate Finance• Lease Financing• Term Loan Financing• Commercial Vehicle

Finance• Commercial Space

Financing• Project Financing• Short Term Loans (to

meet working capital requirements)

• Specialized Products (for meeting seasonal demand)

• Preferred Stock

• Bridge Loan

Structured Finance Solutions• Debt Syndication (Local &

Foreign Currency)• Working Capital

Syndication• Agency & Trusteeship• Fund Raising through

Zero Coupon & Coupon Bearing Bonds

• Commercial Paper• Arrangement of Private

Equity & Preference Shares• Corporate Advisory for

Mergers• Balance Sheet

Restructuring• Preparation of feasibility

Study

Green Banking Solutions• Certified Green Industry/

Building Establishment• Renewable Energy• Energy & Resource

Efficiency• Liquid & Solid Waste

Management• Recycling &

Manufacturing of Recyclable Goods

• Environment-friendly Brick Production

• Occupational Health and Safety

Corporate

• Loan Against Deposits

• Flexible Term Deposit Package

• Regular Earner Package

• Deposit Pension Scheme

IDLC

FINA

NCE

LIM

ITED



Mutual Funds• IDLC Balanced Fund

• IDLC Growth Fund

• IDLC AML Shariah Fund

Alternate Investment Funds• IDLC Venture Capital Fund 1

Others• Corporate Advisory• Institutional Portfolio Management

• Cash Account• Margin Account • Easy IPO• Premium Brokerage for High Networth

Individuals (HNIs), Institutions and Foreign Investors

• Trade execution through the Dhaka and Chittagong stock exchanges

• Internet based trading facilities• Online based IPO Application• Custodial and CDBL services• Bloomberg terminal for foreign clients• Research and Advisory Services

Investment Banking Services :

• Initial Public Offering (IPO)

• Rights Issue Management

• Repeat Public Offering (RPO)

• Mergers & Acquisitions

• Corporate advisory

• Underwriting

• Arranging pre-IPO placement/ capital raising of forthcoming IPOs

• Substantial share acquisition and take over

• Valuation services for repatriation of sale proceeds of non-resident owned equity in unlisted companies

• Acting as trustee of bond issuances through private placement of debt securities

Cap-Invest (Non-Discretionary Portfolio)

• Margin Account

• Non-Margin Account

Discretionary portfolio management (DPM):

• MAXCAP

• Easy Invest

• Profit-Loss Sharing Scheme

• Capital Protected Scheme

• Portfolio Advisory Services


CAPI

TAL

MAR

KET





IDLC INTEGRATED BUSINESS MODELIntegrated Business Model for Consolidated Operations

Cost StructureInterest Expense

Infrastructure andTechnology

Human ResourcesOther Administrative

Expenses

ShareholdersBanks/FIsDepositorsInvestorsRegulatorsVendorsOther Organisations

FundsHuman ResourcesIntellectual CapitalNatural & Other ResourcesStakeholder RelationshipsPolicy Incentives

Value Proposition

Resources Partnerships

SMEFinance

Consumer Finance

Investment Products

Brokerage Services

Corporate Finance

Savings Products

Alternative Investment

Corporate Advisory

Key Ac�vi�es

Channels (Branches, Direct Selling, Telephone & Online Pla�orms)

Innovate & Sell Financial Products

Grow & MaintainRelationships

Create Brand Awareness

Attract & Manage Investments

While Commi�ng to Social & Environmental Responsibili�es

Supporting Activities

Risk Management

Continuous Process

Improvement

Ensure Employees’ engagement & wellbeing

Maintaining Financials

Customer SegmentIndividuals

Small & Medium EnterprisesInstitutional Investors

CompaniesForeign InvestorsFund Managers

Brokerage Houses

Commission Income

FeeIncome

InterestIncome

InvestmentIncome

Revenue Stream



ACTIVITY MODELS

IDLC Finance Limited


Interest IncomeFee IncomeInvestment

Income

Revenue GeneratedInterest Expense

Fixed Income Investment

Loan processing fees

Equity Investment

Fee from SFD Activities

Interest Earnings

Employeecompensation

RetainedEarnings

Dividends to equity holdersCAPEX Tax to GovernmentOther Operating

Expenditures

BrokerageServices

Proprietary Investment

Cash Account

Premium Account

Easy IPO

Margin Account

Investment in Marketable

Securities

• Commission Income• Fees Income

• Commission Income• Fees Income• Interest Income

• Dividend income• Capital Gain

Revenue Generated

Retained Earnings

Dividend to Shareholders

Business Expenses

Wealth Management Products Loan Products





Investment Banking

Margin Loan

DiscretionaryPortfolio Management


Retained Earnings


Business Expenses

Revenue Generated



Income From:• Issue Management Service• Underwriting Service• Corporate advisory Service• Trustee Service

• Investment in Marketable Securities

Fund Management

• Interest Income• Portfolio Management Income• Transaction Income

Institutions Retail Investors InstitutionsInvestment

in Marketable Securities

Investment in Marketable

Securities

Non-Margin Portfolio

Margin PortfolioFund

InflowTrading

Fund FlowMutual Fund

and Other Investments

Revenues in the form ofManagement and Other Fee Income

Efficient Fund Management

Retained Earnings


Business Expenses

Revenue Generated

Retail Investors

Institutions

ACTIVITY MODELS




NATIONAL FOOTPRINTLocation of the Corporate Head Office and branches of the IDLC Group

IDLC’s Presence

Dhaka District Map

Bhulta

Narshingdi

Bogura

Rangpur

Mymensingh

Gazipur

Narayanganj

Chattogram

Jashore

Khulna

Barishal

Faridpur Cumilla

Noakhali

Natore

Rajshahi

Kushtia

Sylhet

Habiganj

Tongi

Uttara

Gulshan

Mohakhali

Corporate Head o�ce, Gulshan

Mirpur

DhanmondiElephant Road

Dilkusha

KeranigonjImamganj

Savar

Dhaka


Our Value Chain Activities and Impacts

Our vision, mission and values act as our compass for sustainable business. We draw resource from di�erent inputs, and through our business processes transform these into meaningful business outcomes.

As a multi-segment �nancial institution, our most prominent capital input is �nancial capital with depositors making up 76.61% of our funding.

Our overall business model (pg. 18) entails us to expand physically and virtually. We also aim to be up to date with the latest technological support for more e�ciency. All these means hefty investment in branches and technological infrastructure - our manufactured capital.

Our business model also requires us to invest in and develop our human capital for business growth through professional networks - a key aspect of our social and relationship capital - as well as our intellectual capital, to continuously innovate our o�erings and improve our process e�ciencies to add to our ability to be responsive and timely.

Our various activities, eventually generate outcomes, creating value for our stakeholders and add back to our inputs, be it in the form of pro�ts, employee compensation, reduction in carbon footprint, process e�ciency or other material outputs.

In the entire cycle, we guarantee our business activities are aligned with our core values and guided by our governance framework. We also ensure that our strategies and risk mitigation e�orts are in line and responsive to pressures from the external environment and market forces.

Our Business Models (pg. 18) further explains how each element of the overall business contributes to the bigger picture.

FINANCINGACTIVITIES

pg. 122-132

BROKERAGE ACTIVITIES

pg. 133-134

ASSET MANAGEMENT

ACTIVITIESpg. 137-138

INVESTMENT BANKING (IB)


OURACTIVITIES

OUTPUTS

Loan and Deposit products

Corporate Advisory and IB services

Mutual funds, Alternate Investment and corporate

advisory services

Brokerage Service

FINANCIAL CAPITAL

Equity capitalLiability basketPolicy incentives

MANUFACTURED CAPITAL

Branches (pg. 21, 394)IT infrastructureO�ce equipment andsupplies

NATURAL CAPITALUtilitiesPolicy incentives andinitiatives

INTELLECTUAL CAPITAL

Product and serviceformulationsPurchased softwareIn house softwareProcessesKnowledge

SOCIAL & RELATIONSHIPCAPITAL

Brand equity

Partnerships

Branding initiatives

Customer serviceassurance

Community serviceprojects

FINANCIAL CAPITAL

11.01% 5 year portfolio CAGRBDT 2,541 mn NPAT

17.37% ROE1.79% NPL38.23% Cost to Income Ratio


Improved economies of scaleIncreased reachSmoother operations


Dividends paid

32,000+ bene�ciariesreached through CSR

2.89 mn+ interactionsthrough social media

NATURAL CAPITAL

Reduction in carbon footprintGreen banking portfolioincreased to BDT 1,583.72 mn


Increased e�ciency throughprocess enhancementsNew products and services

INPUTS OUTCOMES

VISION, MISSION, VALUES (pg. 13)

OUR BUSINESS MODEL

External Environment

Performance (pg. 101)

Statement of Risk Management(pg. 80)

Corporate Governance(pg. 141)

Strategy & ResourceAllocation (pg. 91)

Outlook

Our value creation process

Covid 19 and its impact on our economy Change in liquidity scenario halfway through 2020 Single digit interest rate cap for banks

HUMAN CAPITALExperienced andcompetent humanresourcesTechnical and managerialskills

HUMAN CAPITAL

Increased employeeproductivityIncreased bene�ts for the employeesImproved work life balanceCareer advancements

VALUE CHAIN ACTIVITIES & IMPACTS


Our Value Chain Activities and Impacts

Our vision, mission and values act as our compass for sustainable business. We draw resource from di�erent inputs, and through our business processes transform these into meaningful business outcomes.

As a multi-segment �nancial institution, our most prominent capital input is �nancial capital with depositors making up 76.61% of our funding.

Our overall business model (pg. 18) entails us to expand physically and virtually. We also aim to be up to date with the latest technological support for more e�ciency. All these means hefty investment in branches and technological infrastructure - our manufactured capital.

Our business model also requires us to invest in and develop our human capital for business growth through professional networks - a key aspect of our social and relationship capital - as well as our intellectual capital, to continuously innovate our o�erings and improve our process e�ciencies to add to our ability to be responsive and timely.

Our various activities, eventually generate outcomes, creating value for our stakeholders and add back to our inputs, be it in the form of pro�ts, employee compensation, reduction in carbon footprint, process e�ciency or other material outputs.

In the entire cycle, we guarantee our business activities are aligned with our core values and guided by our governance framework. We also ensure that our strategies and risk mitigation e�orts are in line and responsive to pressures from the external environment and market forces.

Our Business Models (pg. 18) further explains how each element of the overall business contributes to the bigger picture.

FINANCINGACTIVITIES

pg. 122-132

BROKERAGE ACTIVITIES

pg. 133-134

ASSET MANAGEMENT


INVESTMENT BANKING (IB)


OURACTIVITIES

OUTPUTS

Loan and Deposit products

Corporate Advisory and IB services

Mutual funds, Alternate Investment and corporate

advisory services

Brokerage Service

FINANCIAL CAPITAL

Equity capitalLiability basketPolicy incentives


Branches (pg. 21, 394)IT infrastructureO�ce equipment andsupplies

NATURAL CAPITALUtilitiesPolicy incentives andinitiatives


Product and serviceformulationsPurchased softwareIn house softwareProcessesKnowledge


Brand equity

Partnerships

Branding initiatives

Customer serviceassurance

Community serviceprojects

FINANCIAL CAPITAL

11.01% 5 year portfolio CAGRBDT 2,541 mn NPAT

17.37% ROE1.79% NPL38.23% Cost to Income Ratio


Improved economies of scaleIncreased reachSmoother operations


Dividends paid

32,000+ bene�ciariesreached through CSR

2.89 mn+ interactionsthrough social media

NATURAL CAPITAL

Reduction in carbon footprintGreen banking portfolioincreased to BDT 1,583.72 mn


Increased e�ciency throughprocess enhancementsNew products and services

INPUTS OUTCOMES

VISION, MISSION, VALUES (pg. 13)

OUR BUSINESS MODEL


Performance (pg. 101)

Statement of Risk Management(pg. 80)

Corporate Governance(pg. 141)

Strategy & ResourceAllocation (pg. 91)

Outlook

Our value creation process

Covid 19 and its impact on our economy Change in liquidity scenario halfway through 2020 Single digit interest rate cap for banks

HUMAN CAPITALExperienced andcompetent humanresourcesTechnical and managerialskills

HUMAN CAPITAL

Increased employeeproductivityIncreased bene�ts for the employeesImproved work life balanceCareer advancements



COM

MUN

ITY

C

USTO

MERS

SHAREHOLDERS

REGULATORS SUPPLIES

EMPLOYER

ENVIRONMENT

Lend

mon

ey to

clien

ts, re

ceive

fund

s from

indiv

iduals

and i

nstit

ution

s, mak

einve

stmen

ts, m

anag

e cred

it risk

,

and p

rovid

e syn

dicati

on an

d age

ncy s

ervice

s

Lend money to clients, receive funds from individuals

and institutions, make investments, manage credit

risk, and provide syndication and agency services

Provide merchant banking services, manage portfolios

Provide brokerage services, Produce sell-side research,

Offer margin loans

ACTIVITIESKEYCore

Fina

ncing

Asset Management Investment Banking

Brokerage

HOW WE CREATE VALUE The connection between our bottom line and our stakeholders

IMPACT ON OUR STAKEHOLDERS (pg. 38)

CUSTOMERS

We create value for our customers through wide range of product offerings. Our deposit products help customers save and accumulate wealth. Our capital market products allow the customers to make prudent investments to serve their individual goals. And most importantly, lending enables the customers to fulfill their financial needs, be it personal or for business expansion.

When people consume products and businesses expand using our funds, they enable other businesses along the value chains to sustain themselves and create more employment. This leads to economic growth and an increase in standard of living. Additionally, through our CSR efforts, we attempt our best to have a long lasting impact on our society, especially in the sectors that provide basic necessities that are often lost to those who are most in need. Thus, we are creating value for the community both directly and indirectly.

While lending, we assess the environmental impact of our decisions and avoid lending money to those businesses that have a detrimental effect on our environment. At the same time, we encourage our customers to invest in green projects.

In the process of creating value for others, we create employment and provide our employees with a healthy working environment, learning opportunities and competitive benefits.

EMPLOYEES

COMMUNITY

ENVIRONMENT



COM

MUN

ITY

C

USTO

MERS

SHAREHOLDERS

REGULATORS SUPPLIES

EMPLOYER

ENVIRONMENT

Lend

mon

ey to

clien

ts, re

ceive

fund

s from

indiv

iduals

and i

nstit

ution

s, mak

einve

stmen

ts, m

anag

e cred

it risk

,

and p

rovid

e syn

dicati

on an

d age

ncy s

ervice

s

Lend money to clients, receive funds from individuals

and institutions, make investments, manage credit

risk, and provide syndication and agency services

Provide merchant banking services, manage portfolios

Provide brokerage services, Produce sell-side research,

Offer margin loans

ACTIVITIESKEYCore

Fina

ncing

Asset Management Investment Banking

Brokerage

IMPACT ON OUR BOTTOM LINE (pg. 229)

Each of our key activities impact our bottom line.

Core financing activities generate different types of incomes- interest income, investment income, other fee income. We also have to incur interest expenditure, operational expenditure, and pay taxes to the government.

Asset management and investment banking activities produce fund management fee, other fee income. The brokerage business brings in interest income, commission and brokerage fee, and other fee income.

In order to conduct business, we have to spend on Operational Expenditure and pay Taxes to the government.

SERVICE PROVIDERS &

SUPPLIERS

REGULATORS

SHAREHOLDERS

At the same time, we also create value for our suppliers and service providers by maintaining healthy relationships and making timely payments while ensuring compliance to our procurement policy.

Throughout our activities, we maintain full compliance by aligning company policies according to the guidance of the regulators.

We manage our assets and liabilities to ensure IDLC delivers consistent annual returns to the shareholders as well as maximize their wealth over the course of time.

Based on our business and activity models, our relevant inputs are our 6 capitals (Page 22 Value Chain). Each of the individual capitals

are discussed in details from the following page.



FINANCIAL CAPITALMonetary resources utilized and value generated

Our Financial capital consists of the monetary resources which are constantly enhanced through our business activities.

OPERATING CONTEXT & RISKS (pg. 71, 80)

ACTIVITIES (pg. 18, 22, 24)

OUTPUTS

35%Cash dividend for 2020

11.01%5-year portfolio CAGR

2.08%ROA

17.37%ROE

1.79%NPL

SDG relevance with capital outcomes

INPUTS• Equity

• Deposits & Borrowings

• Refinance schemes by government

OUTCOMES

QR Resource Optimization Quality Asset Growth

S Strength of Funding Strategy

Shareholders Regulators

SuppliersMaterialMatters for

Stakeholders

CustomersLocal

Communi�es

NGO andEnvironmentally Interested groups

Colleagues

RQ

SQ

R

R

R

R

RQ

S

RQ S

Despite the challenges posed by COVID 19, our loan portfolio grew by 0.79%.

TOTAL LOAN PORTFOLIO in BDT mn

2016 2017 2018 2019 2020

5 year CAGR: 11.01%

62,217 71,499

83,934 92,346 93,074



Challenges Responses

IDLC’s profitability in 2020 was driven by a sizeable increase in investment income and reduction in provisions.

More focus on loan book growth

Efforts to maintain quality portfolio

Diversification in the liability basket

Cautionary approach in the capital market

WAY FORWARD

PBT & NPAT in BDT mn

2016 2017 2018 2019 2020

3,049 3,712

3,127 2,761

3,804

1,780 2,277 2,171

1,700

2,541

PBT NPAT

BDT 841mnGrowth in NPAT from 2019

38.23%Cost to Income Ratio

Per Head Administrative Expense Reduction Drives

Interest Rate Adjustments with Market Trends

Capital Trade-off

Financial Human

Short-term Short-term

Long-term Long-term

Social & Relationship

Short-term

Long-term

Manufactured

Short-term

Long-term

• Maintaining portfolio quality • Increased focus towards collection efforts and continued prudent lending

• Lower lending opportunity • Increased investment in government securities

• Sustaining excess liquidity position • Proactively managed treasury funds and re-focused resources towards deposit-booking

• Managing operating expenses while maintaining operational risks and ensuring sufficient investments in other capitals

• Invested in technology, process improvements and training to improve productivity



HUMAN CAPITAL Colleagues, expertise, experience and well-being

Our human capital consists of our employees as well as their health and well-being, their expertise, their experience, their innovative capacity and their motivation



OUTPUTS

Improved Productivity (pg. 33)

Attrition rate fell to 10.75%

Reduced training cost, covering more trainees

Enhanced employee skillset


INPUTS• 155 trainings

• Introduced IDLC E-Learning APP

• Compensation & benefits (pg. 119)

• Stress management initiatives

• Implemented Health and Safety measures

OUTCOMES



Stakeholders

CustomersLocalCommunities

NGO andEnvironmentally

Interested groups

Colleagues

H

H

CP

HC P

PH Headcount Allocation & Optimization Performance Management

C Culture & Well-Being

At IDLC, we try to contain attrition at a manageable level. We believe that, managing attrition not only reduces the cost of hiring but also enables us to maintain a consistent level of service quality.

ATTRITION RATE

2016

19.78% 19.33%15.81%

12.31% 10.75%

2017 2018 2019 2020



Build Managerial capabilities to lead more

effectively with coaching & feedback tools

Improving the evaluation process to strengthen the talent recruitment process

Use technology to automate HR Processes

Focus more on individual career plans to develop

the right resources for the right roles

WAY FORWARD

Core Management

Senior Level Management

Mid-Level Management

Junior Level Management

EMPLOYEE SPREAD6%

14%

78%

2%

Training

Increments in compensation & benefits

New Hires

Capital Trade-off

Financial

Intellectual

Human


Short-term


Long-term

Long-term

Long-term

Long-term

Short-term


• COVID-19 pandemic and health and safety of the employees • Introduced work from home initiatives to ensure health and safety of the employees

• Employee morale and mental health during the pandemic. • Introduced employee health portal and rigorously tracked employee health to maintain a safe environment.

• Enhance employee talents through need base training, coaching and e-learning

• Organized mental health awareness and counselling session for all employees to enhance mental health of employees and boost employee morale.

• Reducing attrition rate & ensuring retention of talent through a culture where people are driven towards achieving personal as well as business goals and objectives

• Supporting the career development plans of all the employees and focus on providing the right training to the right personnel



MANUFACTURED CAPITALPhysical & IT Infrastructure

IDLC’s manufactured capital consists of all the physical objects ranging branch networks and IT infrastructure to supplies that we use in providing services to the clients



OUTPUTS

Increased scalability Wide reach through extensive branch network

Fluent operations


INPUTS• Physical and other touch points

• IT infrastructures

• Office equipment and supplies

IDLC continuously tries adopt to technology, innovate simpler processes and create infrastructure that are aligned with business objectives.

IA Accessibility IT Infrastructure S Scalability



Stakeholders

CustomersLocal

Communi�es


Colleagues

A

S

IA

IA

SI A I

EXPENDITURE IN IT INFRASTRUCTURE in BDT mn

2016 2017 2018 2019 2020

Hardware Software

19

43

13 10 8

12 5 7

4

23

OUTCOMES



Enhance our accessibility by increasing both geographical and

virtual presence

Extend infrastructure to meet upcoming business needs

Improve process efficiencies to improve utilization of manufactured

capitals

WAY FORWARD

The accessibility network is designed keeping the opportunities, need for proximity to the clients and cost effectiveness in mind. Currently, we are operating from 41 physical touch points across the nation.

IDLC also maintains strong virtual presence in social media. Furthermore, it has dedicated hotlines to deal with customer requests and grievances round the clock.

Rental Expense in BDT mn

2016 2017 2018 2019 2020

163 166

170

184 186

Capital Trade-off

Financial

Intellectual

Manufactured


Short-term


Long-term

Long-term

Long-term

Long-term

Short-term

Investment in servers

Branch Expansion

Security measures against possible Intellectual property damage


• Ensuring infrastructure adequacy to align with growth ambitions

• Made strategic investments in network expansion

• Finding the right balance in costs & benefits • Conducted regular cost benefit analysis by competent personnel

• Evolving technological needs and timing of investments • Consulted local and international consultants to be updated with best practices

• Ensure timely delivery of services • Maintained/updated systems according to technology and process audits for quick adoption and improvisation



INTELLECTUAL CAPITALKnowledge based Assets

Over the years, IDLC have amassed great intellectual capital in terms of branding, product innovations, in house proprietary software, and improved process and policies.



OUTPUTS


INPUTS• Product and service formulations

• Branding initiatives

• In house software development

• Process Innovation

• Knowledge

RS Software Research & Development O Organizational Knowledge Sharing



Stakeholders

CustomersLocal

Communi�es


Colleagues

SR

O

R

R

S

SR

O

SR O

IDLC BRAND

The strong and reliable brand image of IDLC among the stakeholders solidifies our position as the leading Non-Banking Financial Institute of the country. The competitive advantage achieved through the positive view of “IDLC Brand” adds significant value towards our performance.

New product launched Enhanced Brand Image Improved efficiency in sales, process and credit analysis

Process re-engineering

62.4 millionPeople reached through digital channels

89.3 millionImpressions on social media

OUTCOMES



Process Re-Engineering

Explore partnership based product offering to

enrich product basket

Enhance rule based credit-risk grading model for faster loan processing

Focus on the digital space to keep up with technological change

Seek continuous process enhancement

to further increase productivity

WAY FORWARD

11.1% Productivity improvement in disbursement processing

13.5%Percentage of files processed through CRG (SME only)

IDLC constantly monitors and find scopes od improvement in existing processes. In 2020, multiple initiatives were taken to improve efficiency in two major aspects of our value chain: disbursement and credit processing.

Product innovation and launch

Automation and Optimization

Capital Trade-off

Financial

Intellectual

Human


Manufactured

Natural

Short-term

Short-term

Short-term

Short-term

Short-term

Short-term

Long-term

Long-term

Long-term

Long-term

Long-term

Long-term


• Facilitating Work From Home (WFH) arrangements • Design and implementation of convenient and secure WFH solution

• Evolving needs of customers and rapid changes in technology

• Quick adoption and improvisation

• Ongoing risk of system failure, connectivity failure & data breach

• Continuous assessment of existing controls and adoption of appropriate measures

• Attaining Process Improvements for Continuous Development Of Employee Productivity & Customer Service

• Continued process re-engineering drives to improve efficiency



SOCIAL AND RELATIONSHIP CAPITALRelationship with our stakeholders

IDLC built and nurtured robust relationships with its stakeholder as well as the inter-relationships between them that enable greater value creation for all.



OUTPUTS

32,000+ beneficiaries reached through CSR Enhanced brand awareness: 2.89 mn+ interactions through branding campaigns


INPUTS• Partnerships

• Branding initiatives

• Customer service assurance

• Community service projects



Stakeholders

CustomersLocal

Communi�es


Colleagues

CS

E

S

C

SE

Cu

S CuS

SCu

S

CU IT Corporate Social ResponsibilityS Stakeholder Identification &Management

C Customer Service & Assurance E Ensuring Branding Excellence

IDLC is continuously working towards providing the best customer service and experience possible.

The various customer service enhancement initiatives taken last year are:

• Added convenience in our website by enabling self-service facilities without having to visit IDLC premises.

• Customer on-boarding platform introduced by IDLC Asset Management Limited

Looking ahead, we are working on implementing Customer Relationship Management (CRM) solution across the company to improve our profiling, analytical and cross-selling capabilities.

Customer Service Assurance

OUTCOMES



Environment

IDLC’s CSR Approach

IDLC’s CSR is based on its belief in working for the society and environment and achieving better sustainability by all of its stakeholders at large.

CSR Initiatives

IDLC’s CSR is based on its belief in working for the society and environment and achieving better sustainability by all of its stakeholders at large. This year the focus was on healthcare and contributing to the nation's response to the pandemic. In addition to the BDT 25 mn donated to the Prime Minister’s Relief and Welfare Fund, we ensured

We continued our commitment towards education that allows for the welfare of the society, through the scholarship funds and stipends that we are committed to. Details of our efforts to help the environment are in page 36. The details of the CSR initiatives are documented in our separate Sustainability Report.

IDLC's CSR Approach

Education

Healthcare

This year the focus was on healthcare and contributing to the nation's response to the pandemic.

Enhance customer relationship management

Increase branding effort to be to reach more segments

Continue our efforts in CSR

WAY FORWARD

Investment towards customer service & branding

Increasing community service efforts

Capital Trade-off

Financial


Manufactured

Natural

Short-term


Long-term

Long-term

Long-term

Long-term

Short-term

30,000Beneficiaries received food as

donation during pandemic

300Patients got free eye checkup

50Patients got free cataract

surgery

50Fistula Patients had free

surgery & post-surgical service from IDLC’s funding


• Uncertain situation during Covid-19 lockdown • Reallocated our marketing budget to digital media due increased consumption of online media during lockdown

• Cancellation of physical events and activations • Customer service enhancement initiatives

• Addressing stakeholders’ queries and potential complaints • Earnings disclosure sessions with analysts and increased engagement through social media

• Finding the right partnerships that can bolster value creation for the company in the process of serving the larger community

• Partnerships with multilateral organizations to innovate financing solutions for under-served segments



NATURAL CAPITAL Ecosystem and natural resources

IDLC’s natural capital comprises of the ecosystem and natural resources that are directly or indirectly affected by our business initiatives



OUTPUTS

INPUTS• Utilities

• Policy Incentives from regulators

• Green Initiatives

ES Sustainable Business Practices Environmental Friendly Initiatives

G Green Banking



Stakeholders

CustomersLocal

Communi�es


Colleagues

GS

G

E

SG G

GES

ENVIRONMENTAL FRIENDLY INITIATIVES

Through various external and internal initiatives, IDLC tries to bring positive impact to the environment surrounding its business activities. We are one of the Executing Entity (EE) of a Green Climate Fund (GCF) approved project that is worth USD 340.5 million.

Only member of United Nation Environment Program for Financial Institution (UNEP FI) in Bangladesh.

The Initiatives of the Founding signatories of UNEPFI are:

Principles for

Responsible Banking (PRB)

Collective Commitment

to Climate Action (CCCA)

Pledge of Tobacco Free

Portfolios

Green Initiatives Increased Green Banking Portfolio Controlled Carbon Footprint


OUTCOMES



Continued focus on organisation wide resource optimization

Increased focus on organisation-wide carbon management

Increase focus on sustainability

WAY FORWARD

IDLC strictly follows our Green Office Guide, which helps us to use natural resources as prudently as possible and maintain a sustainable business environment. Although no natural resources are directly utilized behind our business operations, they are used to aid our day to day operations.

PER EMPLOYEE RESOURCE CONSUMPTION2019 2020

710

21,517

3,837 916 450

18,646

2,716 902

WaterConsumption

ElectricityConsumption

FuelConsumotion

PaperConsumptiom

Green Banking Efforts

Green Office Practices

Capital Trade-off

Financial

Social & Rel.

Manufactured

Natural

Short-term

Long-term Long-term

Short-term

Short-term

Long-term

Short-term

Long-term


• Implementing an effective resource optimization system to reduce energy and resource consumption during business operations

• Implemented an organization-wide Carbon Management & Resource Optimization Model

• Creating awareness among clients regarding the benefits of green projects

• Leveraged our relationships with regulators and multilateral organizations to increase green financing

• Ensuring Green Office practices are maintained and internal stakeholders are aware of its benefits

• Conducted training and seminars to increase awareness of our colleagues and stakeholders



STAKEHOLDERS ENGAGEMENTAt IDLC, we are continuously trying our best to address the stakeholders’ expectations, create value and minimize any detrimental effect. We designed our sustainable business objectives in alignment with stakeholders’ expectations. By assessing these objectives, we have formulated strategies that complement our business model with the value creation process that targets stakeholders’ expectations and produces the most desirable outcomes. We believe that we will not succeed until we can engage and earn the full support from each of our stakeholders.

The highlights of engagement are presented in this section.

Stakeholders under Economic Dimension

SHAREHOLDERS

CUSTOMERS

OUTCOMES

OUTCOMES

ENGAGEMENT

ENGAGEMENT

7,171Number of Shareholders

6.74Earnings per Share

35%Proposed Cash Dividend per Share

53,700+Number of Customers

increased to

0.79%Increase in Loan Portfolio

1.46%Increase of Deposit Portfolio by

Website Print Media Broadcast Media Email Postal Services AGM

Geographical Coverage

Product Innovation

Faster Service

DedicatedRMs

PostalService

Customer Relationship

Teams

Sustainable BusinessObjectives

• Maximizing shareholder's wealth

• Ensuring healthy annual returns


• Offer quality products and services according to needs of customers

• Protect customer interest especially depositors through careful management of operations

Addressing Stakeholder Expectation

• Pre-emptive planning to face future challenges and utilize opportunities.

• Maintain sound governance practices and effective risk management policies.

• Strict maintenance of internal control and

compliance


• Increase geographical reach through expanding branch networks nationwide.

• Shaping existing services to meet diversified needs of customers.

• Innovate new products and operational process to improve efficiency.

Creating Value

• Return on Investment

• Further details on how we create value for our shareholders are provided in pg. 24

Creating Value

• Piloted Venture Capital Fund-I and Deposit Pension Scheme



Stakeholders under Economic Dimension

SERVICE PROVIDERS &

SUPPLIERS

OUTCOMES

ENGAGEMENT

Robust relationship with the vendors and service providers

One-to-one meetings Emails Verbal communication


• Maintaining robust relationship with service providers.

• Compliance with proper procurement regulations.


• Continuous upgradation and enforcement of internal procurement policies to ensure strong control and fair treatment of suppliers.

Creating Value

• Procuring services and goods in a cost-effective way.

• Timely payment to suppliers.

REGULATORS

OUTCOMES

ENGAGEMENT

Maintenance of full compliance

Statutory Reporting

Meetings as and when required

Letters EmailsVerbal

communicationAGM


• Ensure compliance with all regulatory guidelines and directives


• Enforcing processes, practices and controls to comply with all applicable rules and regulations.

• Maintain healthy relation with regulators.

• Efforts to achieve global best practices

Creating Value

• Maintain compliance with all regulatory guidelines and directives

• Refer to statement of Corporate governance section for more details (pg. 141)



Stakeholders under Social Dimension

EMPLOYEES

COMMUNITY

OUTCOMES

OUTCOMES

ENGAGEMENT

ENGAGEMENT

1,465Number of Employees

10.75%Decrease in attrition

12.3%Increase in employee

productivity

2.89 mn+Interactions on social media

32,000+Beneficiaries

BDT 24 mnDonated to PM’s Welfare Fund

Training Programs

Employee Days

Mental Health Awareness

Sessions

LadiesForum

Celebration Nights

AGM

Social Media Page CSR Initiatives Marketing Events Seminars and Workshops


• Creating healthy, ethical, and supportive work environment.

• Keeping employee motivation high.

• Developing human capital to ensure sustained talent in the organization.


• Value creation for society.

• Excel in business without harming the society.


• Ensuring proper health and safety standards in the office during the COVID 19 pandemic

• Investing in wide range of training programs for personal and professional growth of employees.


• Financial inclusion to marginalized population.

• Adding value to society by being a good and transparent corporate citizen.

• Implementing programs for education, healthcare, skill development and poverty alleviation for the marginalized and underprivileged

communities.

Creating Value

• Investments in training

• Option for telecommuting

• Safe space and environment for working

Creating Value

• CSR Initiatives

• Educational Support

• Facilities curative and preventive healthcare

• Disaster aid



Stakeholders under Environmental Dimension

ENVIRONMENT

OUTCOMES

ENGAGEMENT

1,584 mnGreen Banking Portfolio

29%Reduction in fuel consumption

13%Reduction in electricity

consumption

Green Banking Practices CSR InitiativesTraining programs, seminars, and

workshops


• Conducting business without damaging the environment


• Implementing Green banking practices and ensuring compliance through Green reporting to Bangladesh bank.

• Strict energy saving practices to reduce wastage.

Creating Value

• Green Banking initiatives (pg. 36, 129)

• Inhouse Environmental management system

• Refer to natural Capital section for more details (pg. 36)



EVENT HIGHLIGHTS

Shareholders of IDLC Finance Limited approved 35% cash dividend for the year 2019 at the 35th Annual General Meeting (AGM) held virtually.

Agreement Signing Ceremony with Form.3 Architects for establishing IDLC's future Corporate Office.

IDLC was awarded 1st position in all 3 categories among SAARC countries by South Asian Federation of Accountants (SAFA) - Integrated Reporting, Financial Service, Corporate Governance

IDLC was awarded 1st position in 3 categories by Institute of Chartered Accountants of Bangladesh (ICAB)- Financial Service Sector, Corporate Governance and Overall Winner

IDLC attained “Gold” award at the ICMAB Best Corporate Award 2019 under NBFI category, presented by Institute of Cost and Management Accountants of Bangladesh (ICMAB)

IDLC Finance Limited wins Best Bank for SME's in Bangladesh 2020 award organized by Asiamoney

IDLC received “Silver” award at the 7th ICSB National Award 2019 presented by Institute of Chartered Secretaries of Bangladesh (ICSB)

IDLC Finance Limited wins Best Investment Bank, Bangladesh 2020 award organized by Euromoney, for the third time in a row.



Launching Ceremony of IDLC Venture Capital Fund IIDLC received Tax Card as recognition of being the “Second Highest Tax Payer in the NBFI Category “ for the assessment year 2019-2020

IDLC brings some of the largest IPOs in the country- Robi and Mir Akhtar IDLC launches digital loan product with ShopUp

Celebrating highest ever monthly disbursement of SME IDLC and Policy Research Institute (PRI) presents joint research on “Access to Finance to SME & Job Creation”

IDLC donates BDT 24 million to Prime Minister's Relief & Welfare fund in response to COVID-19

Inauguration of IDLC sponsored Boat Ambulance



'Share Warmth This Winter' - a winter donation drive arranged by IDLC IDLC organised free “Eye camp” for the underprivileged at Kushtia

Chairman of IDLC providing “Integrity Award” to employee

Various team celebrations on milestones achieved

MoU Signing between IDLC and MAMM’s Institute of Fistula and Women’s Health

Provided food support for over 32,000 low-income and unemployed individuals in 29 regions of the country

IDLC celebrates Pitha Uthshab



IDLC arranged a day-long picnic for its employees and their families

CEO's session on Managerial Skills, Growth Mindset and Communication Excellence Training Program



Asia MoneyBest Bank for SME Award

EUROMONEY AwardsBest Investment Bank in Bangladesh

20th ICAB National Award for Best Presented Annual Reports 2019Financial Services Sector- First

ICSB Best Presented Annual Report- Financial Sector for Corporate Governance Excellence- Second

20th ICAB National Award for Best Presented Annual Reports 2019Corporate Governance Disclosure- First

20th ICAB National Award for Best Presented Annual Reports 2019Integrated Reporting- Second

South Asian Federation ofAccountants (SAFA) Financialservices sector- First

South Asian Federation ofAccountants (SAFA) SAARC CorporateGovernance- First

South Asian Federation ofAccountants (SAFA) Integrated Reporting- First

ICAB National Award for Best Presented Annual Reports 2019- Overall Winner

Tax Card for Non-Banking Financial Institutions- Second

ICMABBest Corporate Award- First

AWARDS & ACCOLADES



MUNNI BEGUM

My husband's job tenure was near its end and we couldn't understand what to do next.

One day the empty space in our homestead came to my attention and today, houses in that space have become our livelihood.

When I look back to those uncertain days, I would never imagine that a simple homemaker in a small town of Mymensingh would ever own these houses.

It was IDLC Home loan that made it possible for us.

Today, whenever I see small income people trying to improve their lives, I always talk about IDLC home loans.

Thank you IDLC !


Aziz Al Mahmood Chairman



MESSAGE FROM THE CHAIRMAN

Our unified perseverance and resilience have proved that we are strong and we shall tackle all adversities head on.

Dear Stakeholders,

As we all know, year 2020 brought about one of the most unprecedented scenarios in modern times. Rapidly spreading virus, lockdowns, panic, economic disruption crippled the world, leading to a global GDP growth rate of a negative 3.5%, as reported by International Monetary Fund (IMF). Naturally our nation was affected. Our strong economic growth momentum was curbed to 5.2% (projected by Bangladesh Bank) against the previous target of 8.1%. However, it must be mentioned that we are one of the very few economies that have quickly bounced back due to the prudent and timely decisions undertaken by the Government.

In such extreme business and social environment, as an organization our responsibility was immense. We undertook measures prioritizing the health and safety of our stakeholders. We have highlighted here our prime initiatives for- customers, employees and the community.

Better connectivity with our customers

Our first response to the pandemic was to assure our customers that we would be there for them in such difficult times. Even before regulatory intervention allowed for our customers to enjoy delayed repayment, we had planned and communicated for providing such benefit. This support helped boost our customer morale and allowed them to rebuild their businesses, thus strengthening their trust in us. The rapidly improved collection ratio from around 30% (during the general holidays) to over 75% after the resumption of office, validates this.

CustomersContinued assurance

Digital service

EmployeesWFH arrangement

Prioritizing health and undertaking safety measures

Roster plan for physical office

CommunityBDT 31mn+ fund contributed to various organizations

5,000+Customers served via non-physical channel (Online Service Platform+ Email)

Launchof online onboarding portal by IDLC AML



Moreover, our customers were able to fully reap benefit from the self-service portal that we introduced the year before. The platform helped customers to tap into regular services without the hassle of physically visiting our branches. From less than 5%, the service provided through alternate/digital medium is now over 40% (of total services) and our aim is to increase this ratio further.

Bearing the same principle in mind, our asset management company launched the unique “Online on-boarding portal”. This innovative platform allows investors to complete the whole process of investment in mutual funds of IDLC Asset Management Limited without any physical contact.

These initiatives allowed us to cater to more customers at a quicker rate; thus improving efficiency, connectivity and relationship.

Safety first for our employees

The employees are the fundamental resource of the company and we believe in ensuring their well-being. Thus, in solidarity with the safety measures prescribed by World Health Organization (WHO) and the Government, we went for Work from Home facilities from the end of March, and took every prescribed measure to ensure continued safety. We voluntarily compensated those employees who had to physically attend office, in line with the policy prescribed for banks by the Central Bank. Even after Government Holidays ended, we implemented elaborate Roster Plans to ensure least exposure of our employees and allowed for contingency continuity plans for the organization to stay in effect.

Be one with the community

As a responsible corporate citizen, we continue to focus our efforts on driving sustainability and uplifting the communities we operate in. 2020 was the year when our community felt the need for institutional support the most. We contributed BDT 31 million to various organizations, including the Prime Minister’s Relief Fund. We facilitated food being delivered to over 32,000 individuals and supported many other programs to help the marginalised communities, including free health care services.

Our performance

Although health and safety were our priorities, but we never deviated from our mission, neither did we fail to attain our strategic objectives. We assessed, planned and promptly undertook strategic maneuvers that allowed us to present before you a year of stellar financial performance-

• Net Profit After Tax grew by 49% to BDT 2,540 million

• Total Asset grew by 8% to 126,874 million

• Return on Asset (ROA) increased by 58 bps to 2.08%

• Return on Equity (ROE) increased by 507 bps to 17.37%

• Our Asset Management company IDLC Asset Management Limited attained profit in its 5th year of operation by a commendable BDT 14.42 million

• Non-performing Loan restricted to 1.79%

• Strong collection ratio of over 85% percent despite government measures allowing leeway on repayment

• Being the issue manager of the largest IPO in the country– of Robi Axiata Limited (IPO size: BDT 524 million)

I would like to highlight here that we attained these numbers in spite of the following:

• Undertaking cautious approach to portfolio growth through exceedingly stringent credit appraisals

• No salary cuts or layoffs

• Going through with on-boarding the committed employment opportunities

• Taking contingency provision

In remembrance, in gratitude

Undoubtedly the pandemic has been harsh and heartbreaking; many of us have lost loved ones. We have lost three colleagues and many of us have lost family members, including I. Despite such difficult times we have been there to stand by one another.

Such feat has been possible due to the combined effort of the management and the Board, the passion and drive of every employee and the continued support of the customers.

507 BPS RETURN ON EQUITY

58 BPS RETURN ON ASSET

49% NET PROFIT AFTER TAX

I want to take this opportunity to express my sincere gratitude to our Board of Directors, Management, resilient employees, our esteemed customers, partners, regulators and our shareholders.



35 years

It is on the back of such excellent support that we crossed a milestone of 35 years in our journey. The institution which started out primarily to offer leasing facility, has expanded its reach into every financial solution. Our strength lies in our commitment towards innovation. Our brand characteristics of Trust, Solidity and Resilience has been garnered from our commitment towards initiating and embracing change that has allowed us to stand the tests of time. We are immensely proud of having established an institution on the foundation of integrity, ethics and unyielding governance practices that has empowered its stakeholders.

Going forward

Looking back at 2020, I can now say that it was a year of learning. It was a year that tested our resilience in a manner that has never been tested before. It was our commitment towards our values that allowed us to remain buoyant despite the extremely challenging market environment. We remained focused on our core strategy to optimize stakeholder benefit that bore results through- financial growth, national and international recognitions and the immense support from our customers.

As we move ahead with 2021, we continue to tackle the economic detriments of the pandemic. However, with the increased accessibility of the vaccine against the COVID 19 virus, especially in our country, we are hopeful. Economic activity has resumed showing the zeal to reach the pre-pandemic state. The Government has declared new stimulus packages for helping disrupted industries and slowly global trade and economic activity is picking up. Undoubtedly 2021 would be a challenging year in terms of sustainability. However, our Management team, with the guidance of the Board, has

plans to tackle all adversities head on. Our focus for the year ahead would be on-

• Technological innovation and process improvements;

• Quality loan book growth;

• Diversification in the liability basket and emphasis on retail depositors;

• Leveraging on the capital market especially the fund market by providing new asset management solutions but remaining cautious; and

• Contribution to the community.

We will continue to strengthen our policies and maintain strong risk management in these evolving times while committing to the highest level of governance. As a Company, we will remain committed to create long-term sustainable value for all our stakeholders.

I am happy that we have battled through the most unique of detriments and can stand tall and sturdy, and am hopeful that we would be stronger and better.

Wishing you all good health and life.

Warm regards

Aziz Al Mahmood Chairman IDLC Finance Limited


Arif Khan, CFA, FCMA Group CEO & Managing Director


CEO'S STATEMENT

“2020 has shown us the value of staying level-headed no matter how big the adversity; and that, as long as there is effort, there is hope”

Dear shareholders & fellow stakeholders,

Looking back at the previous year, we have all witnessed what can only be described as global institutional chaos of the highest order, to say the least. It has been a year of sorrow with so many lives lost. A year of hardship for the businesses that closed, for the families that were stripped off of their regular monthly incomes. But most importantly, it has also been a year of hope. A year of learning. And even, a year of opportunities.

As a country, the tragedy from the loss of lives and the economic repercussions have been immense. Yet, while heart-breaking, the death toll has been less compared to that of other countries. Medicines that were later clinically proven to be effective had been available and prescribed by our doctors from early May and our healthcare system still has excess capacity to support the ongoing cases of the second wave. Currently, public hospitals in the capital alone, are running with over 10% excess capacity in terms of ICU beds, as per data compiled by the Directorate General of Health Services (DGHS).

On the other hand, the government has introduced over BDT 1.24tn in stimulus packages to tackle the economic hardships. Now, we are looking forward to have vaccines by the end of January 2021, while the economy has already started to recover, with Bangladesh being one of the few countries expected to experience economic growth by multilateral organizations.

Meanwhile, IDLC’s main strategy was to direct business resources towards collections rather than portfolio growth and ramp up on our already liquid position by increasing deposit booking. Later, we were able to utilize our excess funds to leverage on a declining interest rate scenario through investing in fixed income securities. On the capital market end, we invested when the broad index was still comparatively low, but in a rebound stage.

The cumulative effect resulted in a bottom line of BDT 2.54bn, with an ROA of 2.08% and ROE of 17.37%, up from BDT 1.70bn, 1.50% and 12.29%, respectively, in the previous year. As such, we were able to declare a cash dividend of 35%.

Reviewing the key themes of 2020Essentially, the year 2020 can be characterized based on the following key areas:

1) Well-being of colleagues and customers

2) Liquidity management

3) Collections & portfolio quality

4) Lending opportunity

5) Capital market uncertainty

Well-being of colleagues and customers

Among the many lives taken by the pandemic, we lost one of our own as well. This was during the early weeks of the government-mandated holidays when access to health services was comparatively more difficult. Meanwhile, another colleague passed away to Covid-related symptoms around the same time. We deeply mourn the demise of colleagues and family members who passed away despite all efforts from our end.



My only solace as CEO is in hoping that the pro-active measures we took saved other lives at least. In the initial days of the pandemic, we introduced our work-from-home policy across the company even before the government announced “general holidays” and implemented safety guidelines for the miniscule number of employees that needed to attend office physically.

Since our deposit operations remained fully functional, we enhanced our tab-based operations capacity for remote work and introduced systems and processes to enable fewer interactions for account opening and restrict virus transmission to protect our colleagues as well as customers.

On the financial end, while numerous organizations initiated layoffs and salary cuts, we adopted a zero retrenchment, zero pay-cut approach; and rather onboarded recruits who had already been given commitment in the pre-Covid period. Moreover, we also made sure we recognized the efforts of our incentive-based colleagues by promoting the top-performers.

Liquidity management

While the financial sector as a whole, especially NBFIs, were going through a highly uncertain liquidity environment in the middle of the year due to the pandemic, IDLC was comparatively in a comfortable position. Our loan to fund ratio remained below 90%, the regulatory limit being 95%. In fact, at the close of 2020, it stood at 80.9%.

However, as economic activities during the post-lockdown period revived collections & improved deposit mobilization, the liquidity scenario flipped in the second half of the year. Recovery in export and strong remittance inflow further improved the liquidity condition in the market.

In fact, there was USD 12.9 billion (BDT ~1.1 trillion) of remittance inflow between July to December 2020 as per Bangladesh Bank provisional publications, marking a 37.6% growth from the same period previous year. This led the central bank to purchase USD 5.49bn from the market during this period, releasing BDT ~467bn into the system. 21 stimulus packages worth BDT 1.24 trillion in response to COVID-19 also added to the excess liquidity.

Collections & portfolio quality

Collections have already returned back to normal levels hovering about 90% range in any given month. At its worst, it went down to ~35% during the government mandated holidays, which was less than 20% for numerous other well-governed organizations as per our market intelligence findings.

As a result of collection normalization of major accounts, recovery from previous writeoffs, loan restructuring under central bank’s guidance, and halting of downward classification by the regulator - for disbursements before 2020, NPLs have dropped to 1.79% at the close of the year, from 3.07% a year prior.

Nonetheless, since to an extent, this has been achieved through the restructuring of pandemic stricken businesses and individuals, we have kept our loan loss provisions conservatively despite regulator’s relaxation of related policy. For reference, the industry NPL rate was 8.88% at the end of September 2020, as per latest available publications.

Lending opportunity

While lending opportunity was comparatively less till the second quarter, we used our funds to take position in government bonds instead, in order to benefit from the declining interest rate scenario. By the end of the year, we were able to book BDT 1.12tn in capital gains from the sale of these fixed income securities alone. This accounted for a sizable 16.75% of the total operating income of the group.

Thankfully, as the economy began to revive from the fourth quarter, lending picked up again. We ended the year with a loan book of 93.07bn – a marginal growth of 0.79% over 2019 – owing to a 7.30% growth in Q4 alone.

Managing capital market uncertainty

DSEX generated a 21.3% return in 2020 after two bearish years (2018: -13.8%, 2019: -17.3%). It was the second-highest return in the world (after USA NASDAQ 43.4%) in this pandemic year. However, between January and mid-March 2020, market had actually fallen by 19.1%.

As mentioned previously, we took a cautious approach while the market was in a downward trend, investing again when it had rebounded, but still at an over-sold state. This helped us reduce provision on investments by BDT 64.95mn.

Our brokerage wing experienced a similar journey. Although the average daily turnover of the market was only BDT 3.86bn in the first half of the year, especially due to the 66 day government mandated holidays, it became BDT 8.23bn in the second half. The average turnover stood at BDT 6.49bn in 2020 which is around 35% higher than that of 2019 (BDT 4.80bn). We were able to utilize this opportunity, gaining a brokerage income of BDT 357.93mn, an increase of BDT 100.24mn over the previous year.

On the investment banking vertical, IDLC Investments Limited carried out the largest IPO in the country till date – of Robi Axiata Limited (IPO size: BDT 5.24bn) – as issue manager. This was besides the IPO of Mir Akhter Hossain Limited, one of the largest construction engineering companies in the country and the first of its sector to get listed (IPO size: BDT 1.25bn).

IDLC Asset Management Limited also showed progress, owing to the improved capital market conditions; recording a net profit of BDT 14mn, up from a loss of BDT (27)mn in 2019.

Looking aheadGoing forward, we intend to:

1) Re-iterate growth focus in lending business while maintaining quality

2) Diversify the liability basket in terms of tenor and composition

3) Continue to enhance productivity through tech & process improvements

4) Take a measured approach in capital market investments while re-assessing target segments of each subsidiary

5) Continue to take community initiatives for the underprivileged



Re-iterate growth focus in lending business

Private sector credit growth stood at 8.37% in December, 2020 – higher than what was expected at the start of the government mandated holidays. Our current liquid position will allow us to propel forward to grow our loan book as the economy has started to recover. We will be focusing most of our resources on lower ticket segments among SME and Consumer clienteles as usual. However, we will continue to lend to corporates with good credit standing, albeit the rate pressures in this segment.

We have already recovered some legacy bad loans in spite of the pandemic, which was a significant contributor towards improving our NPL ratio to 1.79%. However, given the special classification policy for the pandemic year will be lifted, the ratio is expected to return to its normal level going forward. In 2020, all Banks and NBFIs had to freeze downward classification of loans disbursed before 31st December 2019.

That being said, although IDLC’s NPL ratio usually hovers around 3%, historically, its actual loan loss ratio has been comfortably less than 0.50%. Our credit analytics and collection efforts will remain to keep it that way.

Diversify the liability basket

On the funding side, it will continue to be a deposit-centric basket, with over 80% of the funds expected to come from term deposits. However, given the short tenors of our average term deposits, we aim to secure some long term funds to reduce our asset liability mismatch, while efforts to preserve deposit renewal rates above 70% will continue.

Meanwhile, we intend to reinvigorate the emphasis on retail deposits through the introduction of digital deposit products and promotional efforts.

Tech & process improvements

Focus on technology and process improvements has been one of the key success factors for IDLC over the years. Regularly enhancing our operational model, introducing new products and gradually automating processes has been crucial in adapting to market changes and improving business scalability.

Thanks to these efforts, we have enhanced our monthly disbursement capacity by ~10%, utilizing the same resources, as compared to the previous year.

We have also been able to introduce work-from-home practices, pilot full online onboarding of Mutual Fund customers by IDLC Asset Management Limited, automate dividend payment of shareholders and introduce an online learning app for mobile access to training content.

Moving ahead, we are working on introducing fully digital deposit products and a new asset management offering. We also expect to complete the Customer Relationship Management software implementation, which had been delayed due to the pandemic.

Capital market investments & operations

Currently, investments in marketable securities stands at 14% of equity, against a regulatory cap of 25% - for IDLC Finance standalone proprietary desk. On average, this was at 8% until August. However, as mentioned previously, shares had been

oversold amidst the pandemic and we began trading once a rebound was confirmed; and took positions in comparatively strong shares that we considered to be under-valued. Nonetheless, we intend to stay comfortably below the regulatory limit, unless significant market opportunities arise going forward.

In terms of operations, efforts will continue to serve the bulk of low-ticket retail investors through various categories of asset management products, while offering customized investment and advisory solutions to institutions, high net worth individuals and foreign clients.

Initiatives for the under-privileged

Indeed, 2020 has been a year of hope. And we understand the importance of extending this to the greater community by giving back.

Over the year, we worked to provide food support for over 32,000 low-income and unemployed individuals in 29 regions of the country, contributed towards the Prime Minister’s relief fund and carried out a collection & distribution drive for winter clothes, engaging our colleagues and volunteers, among other efforts.

Going forward, we intend to collaborate with multilateral organizations to work on our causes at a bigger scale for better impact with more long-term value addition, especially in the field of healthcare and education.

We also intend to design more initiatives that can engage the comparatively privileged members of the society as well as local communities to come together in standing beside those in need.

Overall outlookThe government has targeted to implement more infrastructure projects. On the other hand, foreign exchange reserves stood at USD 41.0bn in December 2020. As per the latest reports, it equaled 9.4 months of import in November 2020. Meanwhile, regulators are taking initiatives to improve investor friendliness as well; such as, easing capital repatriation for foreign investors, allowing investments to be transferred to locations beyond the country of origin, and so on.

Bangladesh is one of the few countries expected to witness positive GDP growth in FY 2021, by analysts and multilateral organizations. What we see amidst numerous hurdles, is a nation that has a lot to offer, not just to its own citizens, but to the rest of the world.

No doubt, 2020 has been a difficult year for all of us, professionally and personally. However, if anything, it has taught us to show more compassion and camaraderie towards each other. It has taught us to be more resilient. And it has shown us the value of staying level-headed no matter how big the adversity. This is the thought process that is shared by all of us here at IDLC. And this is why I am confident we will be able to take on the challenges in the years ahead as well.

All the best wishes,

Arif Khan, CFA, FCMA Group CEO & Managing Director IDLC Finance Limited



SHAREHOLDING COMPOSITION

Sl. No. Name of Shareholders Number of Shares Held % of Total Shares

1 SPONSORS/DIRECTORSThe City Bank Limited (CBL) and its subsidiaries 87,510,575 23.21

The City Bank Limited (CBL) 33,935,329 9.00

City Bank Capital Resources Limited (CBCRL) 37,328,028 9.90

City Brokerage Limited 16,247,218 4.31

Transcom Group 50,273,164 13.33Eskayef Pharmaceuticals Limited 30,164,062 8.00

Transcraft Limited 15,132,033 4.01

Bangladesh Lamps Limited 4,977,069 1.32

Sadharan Bima Corporation (SBC) 28,727,494 7.62Reliance Insurance Company Limited 26,393,553 7.00Mercantile Bank Limited 20,737,791 5.50Sub-Total 213,642,577 56.66

2 GENERALInstitutionsInvestment Corporation of Bangladesh (ICB) 26,257,444 6.96

Bangladesh Fund 4,958,554 1.32

Marina Apparels Limited 3,770,506 1.00

Other Institutions 50,244,788 13.33

Sub-Total 85,231,292 22.60IndividualsGeneral Public (Individuals) 36,337,253 9.64

Sub-Total 36,337,253 9.64

3 FOREIGNInstitutions & Individuals 41,839,658 11.10

Sub-Total 41,839,658 11.10

Total Holdings 377,050,780 100.00

As on December 31, 2020

56.66%

22.60%

9.64%

11.10%

2020

56.66%

20.31%

10.78%

12.25%

Sponsor/Directors

Institutions

Individuals

Foreign

2019



BOARD COMPOSITION

Aziz Al Mahmood, after completing his graduation from London, joined the Partex Star Group. Despite his relatively young age, he achieved remarkable success and garnered respect owing to his in-born leadership quality, pragmatic outlook, exemplary academic background and family grooming. The Group’s Board of Directors along with the corporate members found his presence a unique equation. He demonstrated an appreciable skill in helping the Group achieve greater corporate efficacy and ascend newer and greater heights.

The Family legacy and his own inherent qualities gave him a great sense of value and direction. An industrial entrepreneur, Mr. Mahmood has set up and successfully executed several industrial undertakings in Bangladesh.

Mr. Mahmood is presently the Managing Director of Danish Condensed Milk (BD) Ltd, Danish Foods Ltd., Danish Distribution Network Ltd., Rubel Steel Mills Ltd., Danish Dairy Farm Ltd., Shubornobhumi Housing Ltd., VOICETEL Ltd., Partex Tissue Ltd. and Danish Multipurpose Farm Ltd. He is actively engaged with a number of social and philanthropic organizations of national stature, without forgetting his roots.

Atiqur Rahman joined Transcom Group, one of the largest business conglomerates in the country, as Group Finance Director in 1991. He is also in the Board of Directors of Transcom Beverages Limited (Franchisee of PEPSICO, USA), Transcom Foods Limited (Franchisee of PIZZA HUT & KFC, USA), Transcom Electronics Limited (Samsung & Whirlpool), Bangladesh Lamps Limited (PHILIPS & Transtec lighting products), Transcom Distribution Co. Limited (Pharma, Diagnostics, Heinz, Garnier, Loreal, Fritolays), Eskayef Pharmaceuticals Limited (Formerly SmithKline & French, USA), Mediastar Limited (Publishers of leading Bangla daily PROTHOM ALO), Trinco Limited (Sponsor Shareholder of Reliance Insurance Ltd. & The Daily Star), Transfin Trading Limited (Sponsor Shareholder of Reliance Insurance Limited & The Daily Star), Transcom Consumer Products Limited (First ever PepsiCo Snack Franchisee) and Ayna Broadcasting Corporation Limited (FM Radio).

Mr. Rahman is the Chairman of Heritage Agro Farms Limited and Director of Monipur Tea Co. Limited, Marina Tea Co. Limited and M. Rahman Tea Co. Limited.

He is a Director of IDLC Finance Limited nominated by Reliance Insurance Limited since October 2015. He is also the Chairman of Executive Committee of IDLC Finance Limited.

AZIZ AL MAHMOODChairman of the Board Nominated by The City Bank Limited

ATIQUR RAHMANDirector of the Board & Chairman of the Executive Committee Nominated by Reliance Insurance Limited



Nurullah Chaudhury is a seasoned banker with his banking career spanning over two decades. He is currently heading the Corporate Banking Division of The City Bank Limited as a Deputy Managing Director. He joined the City Bank limited as Unit Head of Corporate Banking in 2008, and was subsequently promoted to Cluster Head of RMG and textiles. Prior to joining City Bank, , he worked at Shamil Bank of Bahrain and at Bank Al Falah in various divisions, including Corporate Banking. Mr. Nurullah completed his Bachelor in Finance from USA.

NURULLAH CHAUDHURYDirector of the Board & Member of the Executive Committee Nominated by The City Bank Limited

Mohammad Mahbubur Rahman is a Fellow member of the Institute of Chartered Accountants of Bangladesh (ICAB). He is presently responsible as Deputy Managing Director and Chief Financial Officer (CFO) with The City Bank Limited. He is also Director of City Bank Capital Resources Ltd. and City Brokerage Ltd.

Before joining The City Bank Limited, Mr. Rahman served for the World Bank as Financial Management Specialist in the South Asia Region. He also served for Leads Corporation Limited as CFO and for Grameenphone Limited for a period of 5 years in various capacities, including Additional General Manager and Head of Revenue Accounting Department and Financial Control.

MOHAMMAD MAHBUBUR RAHMAN FCADirector of the Board & Member of the Audit Committee Nominated by The City Bank Limited



Mahia Juned started her career in 1994 with Citibank, N.A., Bangladesh as an Operations Officer. She left Citibank, N.A. in 2001 as Resident Vice President. After a break Ms.Juned joined The City Bank in December 2007 as the Head of Project Management. Eventually she was promoted to Head of Operations in 2011 and to Chief Operating Officer in January 2019. She is a BBA from Assumption University, Bangkok, Thailand.

Ms. Juned is also a nominated director in the board of City Hong Kong Ltd., a subsidiary of City Bank Ltd, in Hong Kong.

Ms. Juned is the first female Deputy Managing Director in the Bank’s 36 years of history and became the first female member in the Bank’s Management Committee back in 2013. She is also the official Female Ambassador of the bank.

MAHIA JUNEDDirector of the Board & Member of the Audit Committee

Nominated by The City Bank Limited

Md. Kamrul Hassan is a Fellow member of the Institute of Chartered Accountants of Bangladesh. He has 32 years of experience in the key position of Finance and Accounts in home and abroad.

Mr. Hassan started his career with Transcom Group in 1987. Thereafter he left Transcom and worked for a multinational company in Libya for 3 years. Further in 1994, he was employed by Transcom Group, one of the largest business conglomerates in the country. Currently he is holding the position of Chief Financial Officer of Transcom Group of Companies.

Mr. Hassan is a Director of IDLC Finance Limited nominated by Transcom Group since April 2013. He is also a Director (Board Member) of National Asset Management Ltd. and Global Appliances Limited (A Joint Venture Company of Transcom & Whirlpool, USA ).

Mr. Hassan received training on “Total Management System” organized by NICC, held in Tokyo, Japan as a nominee of Bangladesh Employers Federation.

MD. KAMRUL HASSAN, FCADirector of the Board & Member of the Audit Committee

Nominated by Transcom Group of Companies



Mr. Syed Shahriyar Ahsan, Director of the Company, is the Managing Director of Sadharan Bima Corporation (SBC). He was nominated as a Director of the Company from Sadharan Bima Corporation since October, 2016.

Mr. Ahsan completed his Masters and MBA Degree from Dhaka. He has been serving in the Insurance Industry for the last 35 years having practical experience in underwriting i.e. Aviation, Marine Hull & specialized mega projects of complexity, Re-insurance, Accounts, Stock market operation, Marketing and Claims of various exposure and complexity.

Syed Shahriyar Ahsan has contributed in the development of Bangladesh Insurance Industry being members of different committees of Insurance Development & Regulatory Authority (IDRA) & Bangladesh Insurance Academy (BIA).

Mr. Ahsan has taken part in various training courses and seminars on Insurance and Re-insurance both at home and abroad. During his long association with the industry, he has developed strong bondage with the overseas re-insurers and brokers. Furthermore, he was successful in establishing a wide network of contacts with the entrepreneurs of both large and medium scale in different sectors of industries of the country. He is also serving as a director of Investment Corporation of Bangladesh (ICB), National Tea Company Ltd. (NTC), Central Depository Bangladesh Limited (CDBL) and Aroma Tea (BD) Limited while being a Council Member of Asian Re-insurance Corporation, Thailand.

Mati Ul Hasan is a successful banker with a career spanning over thirty six years.

He started his career in IFIC Bank Ltd. in the year 1984 as a Probationary Officer having 10 years job experience in oversees operation in Pakistan and 2 years in Nepal in Nepal Bangladesh Bank as Deputy Managing Director. He later joined Mercantile Bank Limited in the year 2014 and now holding position of Additional Managing Director & CRO.

Mr. Hasan is a B.S.S. (Hons) in Economics from Dhaka University and Masters of Bank Management. He is a Diplomaed Associate of Institute of Bankers, Bangladesh (DAIBB).

He attended number of training programs held abroad.

SYED SHAHRIYAR AHSANDirector of the Board, Member of the Executive Committee and the Audit Committee Nominated by Sadharan Bima Corporation

MATI UL HASANDirector of the Board & Member of the Executive Committee Nominated by Mercantile Bank Limited



Niaz Habib is a seasoned professional banker combining over 42 years of rewarding multi-dimensional banking experience in both local and foreign banks. He has retired as Managing Director from Dhaka Bank Limited. Prior to that, he also worked as Acting Managing Director of Dhaka Bank Securities Ltd. Mr. Habib is the former Advisor of Meghna Group of Industries.

Prior to Dhaka Bank, he worked as Managing Director for Premier Bank Limited, Deputy Managing Director of AB Bank Limited and United Commercial Bank Limited. Mr. Habib also worked for Eastern Bank Limited and American Express Bank. He started his career in 1978 at Bangladesh Shilpa Bank Limited as Financial Analyst/Investment Officer.

Mr. Habib has written policy guidelines for credit review for Bangladesh Bank which are followed by all Banks as a credit operation guidelines. He has also written policy guidelines on Credit Risk Grading for Banks and Non-Banking Financial Institutions which is a mandatory requirement from Bangladesh Bank authorities. Mr. Habib has also provided extensive training to the local and foreign Banks’ employees on the above guidelines.

Mr. Habib has travelled various places in abroad. He is also the former Secretary General of Association of Bankers Bangladesh and a member of Khulna Club and Baridhara Cosmopolitan Club.

Mr. Habib completed his Masters of Business Administration from Institute of Business Administration (IBA) of University of Dhaka. He also completed his M.A. in Economics with Honours from the University of Rajshahi. He is the proud father of a daughter and a son.

Matiul Islam Nowshad is a seasoned management professional with over three decades of experience spanning three industrial segments- tea, textile and telecommunication, of which 19 years were spent in leadership roles at Board and executive council level within multinational, multi-cultural environment.

His contributions have been recognized by CHRO Asia at 2014 and 2018 World HRD Congress held in Mumbai, India as the “50 Most Talented Global HR Leaders in Asia” and ‘100 Top Global HR Minds’ respectively. In 2011 he was also awarded with “Best HR Leader” of the year award at World HRD Congress. Nowshad served Robi Axiata Limited as Chief Human Resources Officer and Chief Corporate and People Officer from February 14, 2010 to February 28, 2018. During his 8 year tenure Robi Axiata Ltd. has been recognized as “Best People Management Company” for consecutive six times in a row. His personal contribution was duly recognized with a milestone award at Axiata Annual Group Awards Program.

In November 2019 Nowshad moved to consulting career and Co-Founded a Management Consulting firm ZUNOKS Consulting.

Prior to this Nowshad had served in different organizations eg; a short stint with BRAC as Senior Director, Operations and Strategic Initiatives, Axiata Group Berhad, as Special Projects Director, overseeing HR Transformation projects within the group besides supporting few operating companies in South Asia Region and Axiata Digital Business. Prior to moving to Axiata Group on secondment Nowshad was the Chief Corporate and People Officer at Robi Axiata Ltd, from 2010 to 2017. He served Coats Bangladesh Ltd. from December 1992 to February 2010 in different managerial capacities including as Human Resources Director from 1999 to 2010. He was also a Board member of Coats plc subsidiaries; Coats Bangladesh Limited and Coats Crafts Bangladesh Ltd. for over a decade. Prior to joining Coats Bangladesh he served in Deundi Tea Company (UK) Limited (then a subsidiary of REA Holdings plc, UK) in various management roles. Nowshad started his career with Surmah Valley Tea Plc. (then a subsidiary of Sime Darby Group).

Nowshad has a Master's Degree in Business from Victoria University and is a Chartered Manager and Chartered fellow of the Chartered Management Institute, UK and Chartered Institute of Personnel and Development, UK. He has attended several general management, functional and leadership development programs in renowned business schools.

NIAZ HABIBIndependent Director Chairman of the Audit Committee & Chairman of IDLC Asset Management Ltd.

MATIUL ISLAM NOWSHAD CMGR, FCMIIndependent Director & Chairman of IDLC Securities Limited & Chairman of IDLC Investments Limited



Arif Khan brings more than 30 years of management experience to IDLC having served in various prestigious local, multinational and government organizations in the financial services sector.

Mr. Khan most recently served as a Commissioner of Bangladesh Securities and Exchange Commission (BSEC) in a 5 year stint and has been widely acclaimed for his role in the development of the capital market of Bangladesh. Prior to this, he served IDLC Finance Limited for 15 years before leaving as the Deputy Managing Director. In this role he played a key role in the growth of the company as well as development of several business wings.

He began his career in 1991 as a Probationary Officer in AB Bank Limited.

Mr. Khan is a Fellow Member (FCMA) of the Institute of Cost and Management Accountants of Bangladesh (ICMAB), where he occupied the role of the president in 2016. He also holds the Chartered Financial Analyst (CFA) Charter and is a member of the CFA Institute, USA. He was the Founding President of Bangladesh CFA Society and Bangladesh Merchant Bankers’ Association (BMBA).

Mr. Khan holds a Master of Business Administration (MBA) degree from the Institute of Business Administration (IBA) of Dhaka University. He also obtained a Master of Commerce degree in Finance and Banking from Dhaka University.

ARIF KHAN, CFA FCMACEO & Managing Director Ex-Officio Member of the Board



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MANAGEMENT COMMITTEE

Arif Khan brings more than 2 decades of management experience to IDLC having served in various prestigious local, multinational and government organizations in the financial service sector. Mr. Khan is a Fellow Member (FCMA) of the Institute of Cost and Management Accountants of Bangladesh (ICMAB). He also holds the Chartered Financial Analyst (CFA) Charter. He completed his MBA from the Institute of Business Administration (IBA) of Dhaka University and also obtained a Master of Commerce degree in Finance and Banking from the same university.

ARIF KHAN, CFA FCMACEO & Managing Director

Mr. Javed has over 20 years of experience in the Banks and Financial Institutions including Southeast Bank, Standard Chartered Bank and HSBC. During his long career, he has worked

in most of the functional areas of the Banking industry. Mr. Javed is an MBA from the Institute of Business Administration, University of Dhaka, and Master of Pharmacy from the

same University.

SYED JAVED NOORDeputy Managing Director

Head of Business and Strategic Planning

Over a 27 years of experience in the financial sector, Mr. Uddin is specialized in Corporate, SME, and Consumer lending and also structured Finance with special focus on term

financing and syndicated fund-raising for large local and multinational corporate houses of Bangladesh. He has started his career in IDLC as a Management Trainee in 1994. Over the years, he has made tremendous contribution for the growth of the organization. He

has completed his BBA and MBA from International University, Missouri, USA.

M. JAMAL UDDINDeputy Managing Director

Head of Business

Mr. Asif Saad Bin Shams is a seasoned banker with over 25 years of experience in leading Banking and Non-Banking Financial Institutions. He holds expertise in the fields of General Banking, Corporate Banking, Credit & Operation Risk and Special Asset Management. He completed his Executive MBA from the University of Dhaka along with M. Com and B. Com from the said institution. He is also a Diplomat Associate in Institute of Bankers Bangladesh.

ASIF SAAD BIN SHAMSDeputy Managing Director Credit Risk Officer (CRO)



Mr. Mir Tariquzzaman joined IDLC in April 1995 as Management Trainee. He has been in his current role since July 2007 and has been responsible for establishing and managing a dynamic IT Infrastructure of IDLC Group. He is a Master of Business Administration (MBA) from the Institute of Business Administration (IBA) under the University of Dhaka.

MIR TARIQUZZAMANGeneral Manager Chief Technology Officer

Mr. Indrajit Mallick possesses more than 20 years of experience in the financial sector. His field of expertise is spread over Factoring, Corporate Financing, Branch Operations and Credit Risk Management. At present, he holds the position of Head of Operations of IDLCFL. Mr. Mallick completed his MBA in Finance from IBA and MSS in Economics from University of Dhaka.

INDRAJIT MALLICKGeneral Manager Head of Operations

Mr. Mesbah Uddin Ahmed, Head of Corporate Division, is a seasoned banker having over 25 years of experience in the corporate sector. He is a highly experienced leader

with a successful track record in Corporate Banking, Credit Risk Management and Sales/marketing activities for private enterprises especially in Banks and FIs. He completed his MBA from London Institute of Technology and Research (LITR) and M.Com in Finance &

Banking from University of Dhaka.

MESBAH UDDIN AHMEDGeneral Manager

Head of Corporate Division

Mr. Masud Karim Majumder is a Fellow Chartered Accountant (FCA) with over a decade of corporate experience. His areas of expertise spans over Financial Planning and Control,

Budgeting, Corporate and Financial Reporting, Strategic Planning and Taxation. Prior to that, he was working in KPMG Bangladesh as an Audit Supervisor. Mr. Majumder

completed his Bachelor of Commerce (Honors) and Masters in Finance from the University of Dhaka.

MASUD KARIM MAJUMDER, FCAGeneral Manager

Group Chief Financial Officer



Mr. Saifuddowla Shamim is a passionate SME Banking professional with over a decade of experience in business development, risk management, process reengineering, product innovation and change management. He completed his Bachelor of Business Administration (BBA) in Finance and Master of Business Administration (MBA) in Banking and Insurance from the University of Dhaka. Mr. Shamim has also completed Bachelor of Laws (LLB) in 2018.

MOHAMMAD SAIFUDDOWLADeputy General Manager Head of SME

Mr. M. Ataur Rahman Chowdhury is a seasoned banker with over 21 years of industry experience. He holds expertise in the fields of Consumer, SME & Corporate business, Credit Administration, Foreign Trade & Foreign Exchange Operations. He completed his MBA from the University of Dhaka along with MSS and BSS(Hons) in Economics from the same University.

ATAUR RAHMAN CHOWDHURYDeputy General Manager Head of Consumer Division

Mr Jane Alam Romel is a career marketer with more than 15 years of experience in FMCG, Airlines, Household Durables and Financial Services. His areas of expertise evolves around

setting brand strategy, controlling media mix, integrating digital platforms, corporate social responsibility (CSR), PR and reputation management. He is a business graduate

with a major in Finance from North South University.

JANE ALAM ROMELDeputy General Manager

Group Chief Marketing Officer

Mr. Mahbub-ul-Kader has over 20 years of professional experience in the corporate & financial sector. His areas of expertise spans over Audit, Compliance, Risk Management, Credit Control and AML/CFT regime. He completed his Chartered Accountancy Course

from KPMG Bangladesh, MBA under the Royal Roads University, British Columbia, Canada, M. Com. under the National University of Bangladesh. He is also a Certified Anti-Money

Laundering Specialist (CAMS).

MAHBUB-UL-KADER, CAMSDeputy General Manager

Group Head of Internal Control & Compliance



Mr. Saifuddin has over 19 years of experience working in the financial sector including brokerage industry. Prior to joining IDLC Securities Ltd as Managing Director, he worked as the Head of Credit & Collection of Personal Finance Division of IDLC Finance Limited. He is a Chartered Financial Analyst (CFA) with the CFA Institute, U.S.A. He has completed his MBA from the Institute of Business Administration, University of Dhaka and holds an MBS degree from University of Rajshahi.

MD SAIFUDDIN, CFAManaging Director IDLC Securities Limited

Mr. Rajib has over 17 years of industry experience of Treasury Management, Portfolio Management, Public Equity Research and working under various capacities. From 2010, he was head of the Research Department and started managing proprietary investments of IDLC Group and took up his current role as Managing Director of IDLC Asset Management since 2016. He completed his BBA in Finance & Banking from University of Dhaka in 2000 and MBA from the Institute of Business Administration (IBA), University of Dhaka in 2004.

RAJIB KUMAR DEYManaging Director IDLC Asset Management Limited

Mr. Md. Moniruzzaman is a Chartered Financial Analyst (CFA) with the CFA Institute, U.S.A. with over 22 year of experience in investment banking industry. He has been serving as

Managing Director of IDLC Investments Limited since 2009. He is a business graduate of International Islamic University of Malaysia and holds an MBA from North South University.

Currently he is serving as Vice President of Bangladesh Merchant Bankers Association and a Director of CFA Society Bangladesh. He is also a member of the Trustee Board of Chittagong

Stock Exchange Investors’ Protection Fund.

MD. MONIRUZZAMAN, CFAManaging Director


Ms. Shamima Akter Lovely has over 19 years of working experience in renowned Financial Institutions, Multinationals, Large Local Corporates and Development sectors

in the fields of planning, leading and implementing all areas of Human Resources Management. She has completed PGDHRM from Institute of Personnel Management,

Dhaka. Master of Social Sciences (M. S. S.) & Bachelor of Social Sciences (B. S. S.) Department of Sociology from University of Dhaka Department of Sociology.

SHAMIMA AKTER LOVELYDeputy General Manager

Head of HR, Current Charge



SENIOR EXECUTIVES (In alphabetical order of first name)

01 02 03 04

05 06 07 08

09 10 11 12

13 14 15 16



Sl. Name

1Abul Fazal Mohamed Rubayat, ACSCompany Secretary

2Adnan RashidHead of Credit - SME

3Firuj HossainHead of Credit Administration

4Isa Mahmud ShovoHead of Agency and Trustee Business

5Kazi Farhan ZahirHead of Structured Finance

6Khandoker Maruf MominCluster Head, SME

7Laila NasrinHead of Technology Operations & Projects

8M. Maksudul HoqueHead of Administration

9Mahjebeen Binte RahmanHead of Consumer Assets

10Md. Abdullah-Al-MamunCluster Head, SME

11Md. Abu MushaHead of Legal

12Md. Ariful IslamHead of CEO's Transformation Team

13Md. Ariful IslamHead of Customer Experience Department

14Md. Masud RanaHead of Credit- Corporate

15Md. Masud SajjadHead of Write off Collection

16Md. Nurul AlamHead of Software Solutions

17Mohammad Abdul HannanHead of Local Corporate

18Mohammad Arifur Rahman AksadHead of Wealth Management

19Mohammad Ashiqur RahmanHead of Credit - Consumer Assets

20Mohammad Habib Ullah ChowdhuryHead of Consumer SAM

21Muhammad Sazzad HossainHead of Operational Risk Management

22Nafius Noor KhanHead of Outstation - Consumer Assets

23Nurul Karim PatweryHead of Treasury

24Rahat AzimHead of Technology Infrastructure

25Shafayet HossainHead of Special Asset Management

26Tabassum Abedin ShenjutiAGM, Administration

27Tashmeem Muntazir ChowdhuryAGM, Large Corporate

17 18 19

20 21 22

23 24 25

26 27



SHYAMOL KUMAR

Every man aspires to own a home for his family.

With that in mind, I bought a plot of land near Krishi University many years ago.

When I decided to start construction, the costs made me realize that for a library gate keeper of a university like me, that dream seems a little too far away.

Luckily, I have found the bridge that made it possible for me to reach my dreams.

IDLC Home loan has allowed me to build my own home. Today, my dreams have come true and I am a proud homeowner.

Thank you IDLC !



OVERVIEW AND MACRO ECONOMIC HIGHLIGHTSThe impact of various macroeconomic aspects on the financial sector this year is unlike anything we’ve seen before. While the whole world went into a standstill due to the COVID-19 pandemic bearing huge economic downturn, we were able to tackle the challenges through our various risk mitigation techniques (Pg. 83) and bring positive outlook and growth this year (Pg. 27, 101, 229).

A breakdown of the various macroeconomic aspects along with our key strengths, areas of improvement and strategies to tackle these issues have been provided in this section.

Unprecedented fallout in global economic output due to the COVID-19 Pandemic

• GDP Growth rate of Bangladesh was comparatively lower than the pre-covid projection but is expected to improve in the upcoming year.

• Private Sector Credit Growth came down to 8.37% growth (y-o-y) in Dec’20, which is still considerably higher than neighboring countries.

• Lower than expected sale of NSCs shifted government borrowing mode towards banks.

Expansionary monetary policy helped maintain liquidity in the financial market

• Liquidity scenario improved primarily owing to steps taken by the Central bank

• The introduction of enhanced repo alongside reducing CRR and repo further helped to maintain status quo in the interbank market.

• BB will continue to play an active role in the upcoming year as well to maintain a stable economy.

• The current account deficit further narrowed due to the various initiatives taken to strengthen remittance inflows.

The downward movement in capital market price further continued till the middle of 2020 due to the uncertainty that came with the COVID-19 pandemic. However, it rebounded to a great extent by the end of the year

• Capital market marked a 21.31% growth in DSEX and 35.10% growth in average daily market turnover.

• Government planned to ease capital repatriation for foreign investors, especially through introduction of share transfers through e-signature for foreigners.

• Foreign fund managers were enticed to enter the market as remitting investments, made from one country, could now be transferred to different countries.

Operating Context Highlights in 2020

MacroeconomicPressures

&Market Forces

Company Speci�cAspects:

Strengths andImprovement Areas


Internal Environment

Risks andOpportunities

Strategies

Mission:Quality Growth and Superior

Customer Experience throughSustainable Business Practices



MACROECONOMIC FACTORS & THEIR IMPACTS

Operating EnvironmentThe continuing political stability in Bangladesh helped to maintain a positive GDP growth, in spite of the COVID-19 pandemic. The current government’s continued focus on investing in countrywide mega projects, especially transport links in the capital led to a further increase in the investment to GDP ratio from 31.6% in the previous year to 31.8%, in spite of temporary disruptions. Appropriate steps were also taken to tackle both the health and economic situation of the country during the pandemic. Bangladesh won the UN Public service award 2020 for its excellence in delivering public services. Consequently, we are still on track for graduation from UN LDC in 2024.

Operating EnvironmentBangladesh had a goal of achieving 8.2% GDP growth rate in FY20. However, due to the pandemic many countries around the world failed to reach their target and even fell to negative growth rate. In contrast, Bangladesh showed extreme resilience attaining a GDP growth rate of 5.2%, considerably higher than the neighboring countries. Export and import both were impended in the middle of the year, but on the bright side, RMG orders are expected to recover within a few months. A growth of 10.9% in remittance flow helped to narrow the current account deficit. Inflation remained fairly stable at 5.65% in spite of the breakout of the pandemic.

On the fiscal front, budget deficit widened to -5.8% of GDP. A lion’s portion of the deficit was funded through borrowing from the banking system and foreign borrowing. Most importantly the government went on an expansionary monetary policy to counter the effects of the pandemic.

Long-Term Strategy Continue to maintain a neutral position in regards to any matters of political affiliation.

Long-Term Strategy Remain flexible in allocating resources between different business verticals and catering to market opportunities in a timely manner

POLITICAL

ECONOMIC

Impact: High

Impact: High

Risks Associated

Risks Associated

Low

Low

High

High

Credit Market Strategic

Credit Market Liquidity Technology

Impact on the Industry

• Bangladesh maintained its position in the World Bank’s ranking of ease of doing business.

• Increased Credit Growth in the Public sector.


• Cost of fund was reduced with surplus liquidity on the market

• Various stimulus packages had to be disbursed into the economy through the financial industry

• Private sector’s credit growth was lower than earlier projections due to the pandemic

IDLC’s Perspective

Both financing and capital market operations benefitted from the stability in political climate, albeit the uncertainty resulting from the pandemic.


Although the initial shock from the pandemic affected numerous borrower’s ability to repay and impacted the capital market, as the economy started to bounce back in the third quarter, collections gradually picked up and IDLC’s capital market investments regained momentum as well. The most significant contribution, however, came from the trading of fixed income securities.

Evident in: CEO’s Statement Pg: 53 Performance Analysis with Mgt.Committee Pg: 101

Business Segment Reviews Pg: 122

Evident in: Performance Analysis with Mgt.Committee Pg: 101 Business Segment Reviews Pg: 122



Operating EnvironmentThe gross national income per capita (GNI) of Bangladesh increased 8.11% to $2,064 in FY 2019 from $1,909 in the previous year. Over the years, Bangladesh has made considerable progress in improving life expectancy, reducing infant mortality & maternal mortality, and alleviating poverty. Boston Consulting Group forecasted Bangladesh’s Middle and Affluent Class (MAC) population to reach around 34 million people by 2025, under conservative circumstances. Even discounting for the pandemic, this will be a key driver behind the growth in local consumption demand in the upcoming years.

Operating EnvironmentDigitalization in banking grew significantly, with many banks introducing new products and channels for remote access. Similarly, internet banking and card transactions grew by 21% and 118% respectively. With mobile financial service already on the rise, the pandemic propelled its growth even further. The average monthly transaction through MFS service in Bangladesh stood at BDT 46,783 Crore in 2020, up by 29% from the previous year. The usage of technology from mobile banking to teleconferencing has helped to maintain financial services perform smoothly even during the lockdown in 2020. Norms are expected to change in the coming years as technology penetrates more spheres of the sector.

Long-Term Strategy Increase reach based on the demographic development of the population in different regions. Innovating new products targeting the MAC population will remain an ongoing effort.

Long-Term Strategy Categorically move towards automation of tasks, digitalization of products and eco-system financing to offer richer value propositions to the clientele.

SOCIAL

TECHNOLOGICAL

Impact: High

Impact: High

Risks Associated

Risks Associated

Low

Low

High

High

Credit Operational Environment Social Technology

Strategic Reputation Environment Social


• Overall demand for consumption is expected to rise over time due to the growing middle and affluent class population.

• Need for financial products like home loans, small business loans and retail loans is expected to increase.

• The expansion of e-commerce is imminent along with online based finance based technologies due to the increase in MAC population.


• More focus on building mobile and web platforms to improve customer experience given by institutes

• Implementation of various technologies has helped the overall sector to operate more efficiently.

• The financial service market is expected to experience accelerated digital transformation in the coming years.


IDLC’s market penetration plans are aligned with the rise of the middle class across the country. While the pandemic has sent back a significant number of people back under the poverty line, Bangladesh is expected to rebound. Accordingly, IDLC’s loan book and other portfolio is expected to grow sustainably in spite of the hurdle.


IDLC has taken numerous technological initiatives in light of the pandemic, including work from home for the colleagues, online deposits for customers and so on. Currently, there are ongoing efforts towards ensuring fully contactless digital deposits and capital market products.

Evident in: CEO’s Statement (pg: 53) Strategic & Resource Allocation (pg: 91)

Evident in: CEO’s Statement (pg: 53) Strategic & Resource Allocation (Pg: 91)Performance Analysis with Mgt.Committee (Pg: 101) Business Segment Reviews (Pg: 122 )



Operating EnvironmentBangladesh is very much suspectable to environmental degradation resulting from climate change. One-third of its population faces risk of displacement because of rising sea levels. According to the global climate risk index, Bangladesh is the seventh most vulnerable country to be impacted by climate change. The capital Dhaka faces massive environmental pollution from the various development projects, which needs immediate attention. On top of that the air quality index in the major cities of the country is also not favorable.

Operating EnvironmentThe COVID-19 pandemic induced a number of regulatory measures in the financial sector. Implementation of a mandatory lockdown during the first few months of the pandemic was one of them.

The Repo rate was reduced to 5.25% from 6% along with a reduction of the CRR for the banks. A moratorium was also introduced on loan payments to decrease the default rate during the lockdown. The Advance Deposit Rate was also increased to 87% from 85%. The single digit interest rate on lending and borrowing for banks also came into effect, impacting the financial industry heavily.

Long-Term Strategy Raise awareness among clients for undertaking more environmentally friendly projects and securing more international funds under green initiatives to lower the cost of borrowing.

Long-Term Strategy Continue to maintain compliant practices, assist regulators through proper reporting and policy inputs whenever possible.

ENVIRONMENT

LEGAL

Impact: Moderate

Impact: High

Risks Associated

Risks Associated

Low

Low

High

High

Strategic Environment Social

Market Liquidity Strategic Legal


• Government is rewarding industries that are operating in an environmentally friendly way to encourage sustainability.

• Regulators are extending special funds to encourage green financing.

• The overall impact of environment is considerably lower in the financial sector than other factors.


• Liquidity controls ensured sufficient liquidity in the market and lower cost of fund.

• It has become difficult to provide loans to slightly risky borrowers due to mandatory single digit lending rate.


IDLC has secured the position as one of the Executing Entities (EE) of the Green Climate Fund (GCF) approved USD 340.5 million worth project. This was in addition to the long-standing efforts towards green financing and promoting green initiatives.


While the single digit lending cap on banks was expected to provide additional lending opportunities to IDLC, the extent of it was significantly reduced on account of the general market rates moving downwards due to the excess liquidity scenario.

Evident in: CEO’s Statement (pg: 53)

Strategy & Resource Allocation (pg: 91)

Performance Analysis with Mgt.Committee (pg: 101)

Evident in: Strategy & Resource Allocation (pg: 91) Natural Capital (pg: 36) Business Segment Reviews (pg: 122)



MARKET FORCES & COMPETITIVE LANDSCAPE

Factors affecting buyer power at IDLC

• High rate sensitivity from well governed corporates and conglomerates allow them to exercise a higher buying power.

• Moderate to high rate sensitivity from some SMEs and mortgage clients also allows higher buying power.

• Consecutive downtrend of the capital market and high interest rates in fixed income instruments allows institutional investors to exercise moderately high buying power.

• Central Bank’s intervention in locking lending rates for banks empowered buyers to some extent.

Responses and Strategy going forward

Although lending and deposit rates, as well as fee rates on capital market offerings are likely to stay competitive, our customer base is strong enough, with an adequate acquisition rate, to prevent any particular client segment from driving prices down. Thus we will:

• Continue to focus on expanding our customer base to further improve our defense mechanisms to sustain amidst competitive pressures.

• Develop value added product offerings/ features to sustain the business cycle changes and evolving markets

BUYER POWER


Financial Capital (pg: 26)

Business Segment Reviews (pg: 122)

Moderate

Supplier power

Buyer power

CompetitiveRivalry

Threat ofsubstitutes

Threat of newEntrants



Factors affecting supplier power at IDLC

• Suppliers of funds such as banks remain the major suppliers for NBFIs.

• Control over interest rates is a key factor in determining the supplier power. Central Bank exercises significant control over cost of funds, through its refinancing schemes for various industries/ projects.

• Liquidity injection in the market allowed lower cost of funds for 2020.

• Vendors for several administrative and miscellaneous activities exert very low bargaining power, since they represent a very small part of NBFI’s cost structure.

Responses and Strategy going forwardFocus on acquiring a diversified pool of deposit basket and expand the retail deposit base to reduce dependency on any one specific segment.


• Direct substitute of loan products is not actually present in the market. While equity can loosely be considered as a substitute, but decisions to fund a business by loan or equity strictly depends on the business circumstances.

• Direct financing, eliminating the role of a financial intermediary is a more threatening substitute. This is primarily seen in the likes of commercial vehicle loans where the vehicle suppliers themselves receive payment in EMI.

• Loan products provided through fintech, although, very limited now, may in future provide substitute options for clients to choose from.

• On the other side, deposits and equity investment products, at times, do compete with each other. Some analysts argue that clients often put more money in fixed income instruments when rates are higher and vice versa. However, for the most part, the markets are sufficiently segregated, considering our customers.

Responses and Strategy going forwardMove towards digitalization to gain early adapters advantage in the fintech scene.

Having subsidiaries with capital market operations, we offer a host of wealth management and financing solutions to our clients. In that regard, our risks are somewhat hedged.

SUPPLIER POWER

THREAT OF SUBSTITUTE


Financial Capital (pg: 26)



Strategy And Resource Allocation (pg: 91)


Moderate

Moderate




• The industry is heavily fragmented with more than 90 banks and NBFIs in the market, increasing the competition.

• Switching costs are quite low, making competition even tougher.

• Niches in the market do exist, allowing room for differentiation. For example, IDLC operates strongly in the SME sector unlike most other institution. However, in recent years, banks are moving into these sectors.

• All in all, the rivalry in the market is High.

Responses and Strategy going forwardOur long-standing commitment towards delivering excellent service quality has helped differentiate ourselves so far. We have also been investing in process developments and technology to engineer superior efficiency in the lower ticket retail segments. As such, we also intend to increase our efforts to create more brand awareness among these segments, especially outside the metropolitan cities.

COMPETITIVE RIVALRY




High


• A very high amount of capital is necessary in order to start a financial institution. This works as a strong deterrent to entrance.

• A large part of this threat depends on the government and its decision to grant new licenses.

Responses and Strategy going forwardEnhance our competitive advantage further to outperform any new entrant in our business verticals by continuously improving efficiency and customer service.

THREAT OF NEW ENTRANTS




Low



ENTITY ANALYSISA holistic picture of IDLC can be understood through this entity analysis, where we attempt to link our key competencies across the value chain (pg: 22) and look for room for improvement in the overall business model (pg: 18). Moreover, this analysis allows us to leverage our key strengths, which helps us mitigate the various uncertainties and risks while exploiting the opportunities.

Key Competencies

Over Three Decades of Impeccable Track Record

• Responsible, proactive and customer-focused financial service provider

• Investment in Branding is to continue Elaboration: Social & Relationship Capital (pg: 34)

Strong Brand Image among Local Brands

• Reliable and transparent operations over the years

• Continue engagement in community services to bolster brand equity through CSR activities

IDLCBrand

Superior Service Quality and Need Based Product Portfolio

• Service of smaller ticket arenas through new loan and deposit products

• Continue to innovate in products and services to ensure continued granular penetration

• Training, counselling and business facilitation services are also provided to expand the horizon

Elaboration: Our Product Offerings (pg. 16) Social & Relationship Capital (pg: 34) CEO’s Statement (pg: 53)

Swift processes (one of the lowest loan TAT in the industry)

• Automation including tab based financing, credit risk grading based loan sanctioning and customization of core banking software.

• Continue focus on leaner organizational hierarchy and improved efficacy

Elaboration: Intellectual Capital (pg: 32) CEO’s Statement (pg: 53)

Ethics and Transparency

• Comprehensive code of ethics and values are in the company policy.

• Continue training programs on new recruits on code of ethics and values

Elaboration: Human Capital (pg: 28)

CustomerCentricity

State of the art core banking software

• Continue to upgrade and improve core banking system with time. Elaboration: Manufactured Capital (pg: 30)

Uninterrupted service delivery infrastructure

• Introduce automation through investment in technology. Elaboration: Manufactured Capital (pg: 30)

Strategically placed branches

• Expansion through small sized, low cost, strategically placed “IDLC Business Centers” for higher customer convenience.

Elaboration: Branch Network (pg: 394), CEO’s Statement (pg: 53)

Infrastructure



Key Competencies

Solid capital base

• Continue to maximize shareholder’s return through optimized allocation of capital and building on the capital base Elaboration: Financial Capital (pg: 26)

Strict adherence to regulations

• We strive to make it our top priority to abide by the law of the land in both letter and spirit. Elaboration: Statement of Corporate Governance (pg: 141)

Efficient asset liability management• Continue proper fund management practices to optimize asset liability gap. Elaboration: Financial Capital (pg: 26)

Collaborative and proactive approach towards reform and regulatory initiatives• We will continue to collaborate with regulators, peers and other industry participants and adopt best practices. Elaboration: Statement of Corporate Governance (pg: 141)

Adept and empowered human capital

• Continue to invest in human resource practices as well as offer competitive packages to retain talents. Elaboration: Human Capital (pg: 28)

Extensive training and development• Continue to provide inhouse training and development programs for skill and professional growth. Elaboration: Human Capital (pg: 28)

No compromise with integrity• Emphasize on IDLC’s moral codes, values and ethics. Elaboration: Human Capital (pg: 28)

An organisational culture of triumph • Continue to foster an innovative culture and maintain the industry best practices. Elaboration: Human Capital (pg: 28)

Healthy ROA and ROE• Continue to log sound financial performance and maintain shareholder returns. Elaboration: Performance Review and Analysis with the Management Committee (pg: 101)

Reputed institutional shareholding; experienced Board of Directors and

visionary management with direct ownership Elaboration: Statement of Corporate Governance (pg: 141)

StrongFinancial Foothold

Corporate Governance and

Compliance

QualityHuman

Resources

DEPENDENCY ON INTEREST INCOME

This is a limitation of being an NBFI. We are addressing this limitation through:

• Improved efficiency in the short-run

• Enhancing product offering in the long-run

• Introducing fee based income streams through asset management,

advisory and other services

Financial Capital (pg: 26) | CEO’s Statement (pg: 53)

DEPENDENCY ON TERM LENDING

This is a limitation of being an NBFI due to the absence of transactional

accounts. We are addressing this limitation through:

• Innovating new products

• Finding new niche markets to enter into

• Continue micro-level penetration through our retail and SME divisions

Strategy & Resource Allocation (pg: 91)

IMPACT OF DOWNWARD TREND OF THE CAPITAL MARKET OPERATIONS

This is a consequence of being a capital market player. We are addressing this limitation through:

• Analysis of market sentiment and quick decision to adopt

• Rebalancing investment composition

• Continue focus on foreign clients and high net-worth (HNW) individuals

Financial Capital (pg: 26) | CEO’s Statement (pg: 53)

PORTFOLIO CONCENTRATION IN DHAKA AND ADJACENT AREAS

Since most of the distant branches have been established in the last 4-5 years we

have low concentration in distant areas. We are addressing this limitation through:

• Development of the Affordable Housing Loan portfolio

• Introduction of IDLC Business Centers, which will be small sized distribution

points spread across the map to facilitate services in those regions

Branch Network (pg: 394) | CEO’s Statement (pg: 53)

Scope for Improvement



STATEMENT OF RISK MANAGEMENTIDLC adheres to a strong risk management strategy that stems from robust corporate governance in order to solidify the enterprise risk management framework. This allows the company to smoothly adapt to changes in the business environment.

The governance of risk management starts with the board and is interwoven around a strong management structure, information system, risk-rating system and robust policies. IDLC considers guidelines for Managing Core Risks of Financial Institutions issued by the Bangladesh Bank vide FID Circular No. 10 dated September 18, 2005 and Integrated Risk Management Guidelines for Financial Institutions issued by the Bangladesh Bank in 2016 alongside ensuring benchmark industry practices of identifying, assessing and measuring risk.

Strong inter-department communication link on risk factors and a culture of collaboration in decision-making among the revenue generating units, independent control and support functions, committees and the senior management help the company in proper management of organizational risks.

Effective management coupled with the adoption of BASEL-II recommendations benefits IDLC by enhancing capitalization and optimizing costs to risk and funding.

Risk types Risks at IDLC are broadly classified into 9 categories:

Credit Risk Market Risk

Liquidity Risk Operational Risk

Strategic Risk Technology Risk

Legal Risk Reputation Risk

Environmental and Social Risk

Risk Management Framework

Risk Identification Risk Assessment Risk Treatment Risk Monitoring Risk Reporting

Integrated Risk Management Approach

Risk Management and Control Principles Major Risks Associated with

Business Units

Credit Risk Management

Treasury

Operations

ICC

Corporate Affairs

Finance

IT

Strategic Planning

Other functional areas

by controlling risk exposures and circumventing potential risk concentration

w

whereby business management, as opposed to risk control, own all risks assumed throughout the firm and are responsible for continuous and active management.

monitor the effectiveness of the business’s risk management capabilities.

to senior management, the Board of Directors, shareholders, regulators, rating agencies and other stakeholders

through sound risk culture characterized by a holistic and integrated view of risk and ensuring compliance with our standards and principles.

Protecting IDLC’s financial strength

Complete management accountability

Independent control functions

Comprehensive and transparent risk disclosure

Protecting our Reputation



Risk # Broad Risk Specific Risk

5aStrategic

Strategy Positioning Risk

5b Implementation Risk

6a

Technology

System Failure Risk

6b Information Security Risk

6c Business Continuity Risk

7aLegal

Compliance risk

7b AML/CFT risk

8 Env. & Soc.Environmental Risk

Social Risk

9 Reputation Reputation Risk

Impact analysis

IDLC faces 9 broad risks which can be further classified into 21 subdivisions.

At IDLC, we endeavor to reduce the impact of major risks that can directly affect our profitability such as Credit Risk (1), Market Risk (2) and Liquidity Risk (3). On top of that, isolated incidents such as major natural disasters are also dealt with promptly and is discussed in our Business Continuity Risk (6c).

On that note, we, at IDLC, make risk management a continuous process.

In the following section, the risks associated and IDLC’s responses are described in detail.

Risk # Broad Risk Specific Risk

1a

Credit

Default Risk

1b Recovery Risk

1c Concentration Risk

2aMarket

Interest Rate Risk

2b Equity Price Risk

3aLiquidity

Funding Liquidity Risk

3b Market Liquidity Risk

4a

Operational

People risk

4b Process risk

4c System risk

4d External risk

Risk Heat Map

4b2b

2a

7b5b 4a4d

9 3b5a4c3a

1b6b

1a

6a 6c

1c7a8

Risks Faced by IDLC

Risks Likelihood

Moderate

ModerateRisks Impact

Low

Low High

High



Top 10 Group Exposure

Group Name Outstanding Amount [in BDT]

% of total portfolio (IDLCFL)

Group - 1 2,524,104,166.67 2.75%

Group - 2 1,622,400,097.76 1.77%

Group - 3 949,139,453.29 1.03%

Group - 4 921,774,533.12 1.00%

Group - 5 865,680,958.92 0.94%

Group - 6 703,714,930.55 0.77%

Group - 7 612,484,042.15 0.67%

Group - 8 594,671,966.30 0.65%

Group - 9 551,656,684.38 0.60%

Group - 10 491,904,175.59 0.54%

Total Top 10 Groups 9,837,531,008.73 10.71%

Strategic Risk

ROA 2.08%

ROE 17.37%

Reputation Risk

Number of negative news in media 0

Dishonored checks 0

Fines 0 Tk

IT Risk

Service Downtime 0

Incident Count of Information Leak 0

Environmental and Social RiskNumber of occurrences in which environmental compliances not maintained

0

Legal RiskIncidents of deviation from regulations/compliance

0

Liquidity risk

ALM RatioRecommended by Bangladesh

Bank

Recommended by Board/ALCO

Maintained (YES/NO)

CRR Min. 1.5% Min. 1.5% YES

SLR Min. 5.0% Min. 5.0% YES

Loan to Fund Ratio < 95% < 95% YES

Medium Term Funding Ratio (MTF)

> 30% > 30% YES

Gap (%)

1 Month Max. (15%) Max. (15%) YES

2 Months Max. (15%) Max. (15%) YES

3 Months Max. (15%) Max. (15%) YES

Performance Metrics

PORTFOLIO & NPL % OVER LAST 5 YEARS

2016 2017 2018 2019 2020

Portfolio (BDT Mn) NPL

61,136 70,666

82,410 91,448 91,853

2.98%2.77%

2.20%

3.07%

1.79%

TOP 10 INDUSTRIAL SECTORS IN BDT MN

27,675

18,520

6,446

4,879

2,782

2,311

1,798

1,491

1,371

1,315

Housing

Trade and Commerce

Garments and Knitwear

Food Production and Processing Industry

Iron, Steel and Engineering

Textile

Transport and Aviation

Telecommunication and Information Technology

Pharmaceuticals and Chemicals

Cement and Allied Industry

TOP SECTORAL CONTRIBUTION IN INDUSTRIAL PORTFOLIO

65.65% Top 5 Sectors

9.02% Next 5 Sectors

25.33% Other Sectors



RISK AND OUR RESPONSES

CREDIT RISK

Specific Risk Risk Impacts Mitigation Techniques Monitoring Mechanism

Default RiskBorrower's failure to repay debt. The risk arises from fund diversion, cash crunch, wrong product and over financing, borrower’s willful non-payment etc.

Strategy Link

1- Checking debt servicing capacity- Checking financial strength- Tracking payment behavior- Purpose Assessment and Need

based Credit Structuring- Market review- Seasonal Impact Consideration- Risk Grading- Risk transfer- Loan Restructuring- Negotiation

- Regular visit and market feedback- Review of financials in regular

interval- Review of industry report - Early Alert Reporting Process- Periodic Review of marginal clients- Portfolio Analysis: PAR & NPL

monitoring

Risk Severity

Recovery RiskFailure to recover sufficient amount after a client becomes defaulter. The risk arises from double financing against same asset, decline in collateral value, complication regarding repossession of collateral and owner's poor net worth.

Strategy Link

14

- Checking Procurement documents - PNW of owners- Ensuring strong Group support- Ensuring against proprietorship

concerns- Collateral visit by IDLC employee - Checking possession status- Accepting valuations no longer than

3 years old- Third party PG of Owner of the

Mortgaged Property- Signboard on mortgaged property- Involving Recovery Agency where

suited- Negotiation- Loan Rescheduling- Collection from Write-off account- Litigation

- Collection of updated documents at the time of repeat financing

- Updated PNW statements collection- Fresh valuation when the old one

was done more than 3 years ago- Collateral visit and documentation

rechecking at the time of refinancing- Analysis of NPL%, PAR & Provision

coverage

Risk Severity

Concentration RiskConcentration risk results from concentration in a particular client/ group/ region or sector if any such heavily concentrated client or group becomes defaulter or if such a heavily concentrated sector or region is affected negatively due to geopolitical reason or regulatory guidelines.

Strategy Link

1- Maintaining exposure cap to a single

group as per Credit Policy- Product and Sectoral Portfolio Cap in

policy

- Monthly Sanction, Disbursement and Portfolio Review

- Monthly Business Review - Periodic Review of Large Borrowers- Periodic Review of Top Sectorial

exposure- Quarterly Stress testing

Risk Severity

Business Model Relevance Capital Relevance External Trend Way Forward

Key Activities, Customer Segments Financial, Intellectual Industry NPL trend Improving quality of assessment and increasing process efficiency through automation will be key to sustainable financing. Accordingly, IDLC CRM has plan to initiate comprehensive risk management tool where facility generation, risk assessment, mitigating and monitoring – all processes will be brought under a single umbrella.

Strategic Intents1. Achieve sustainable growth2. Maintain strong funding mix3. Attract, retain and develop

talented employees

4. Continuously improve operational efficiency

5. Advance our social causes



MARKET RISK


Interest Rate Risk

Impact of changes in interest rate on the company's net interest income. The risk arises from mismatch of re-pricing dates of cash flows

Strategy Link

12

- Policy settings with respect to risk appetite

- Explicit and prudent interest rate risk limit

- Operating within the interest rate risk limit

- Gap analysis- Changes in net interest income- Simulation method- Sensitivity ratio- Monitoring deviation from approved

limitRisk Severity

Equity Price Risk

Adverse changes in the value of investment due to price volatility. The risk arises from macroeconomic instability, market volatility, political unrest and under performance of investee company, among other factors

Strategy Link

12

- Investment in Fundamentally sound and well governed companies considering broader economic cycle

- Prudence in terms of market volatility

- Portfolio re-allocation according to observed feedbacks

- Exposure management in different market scenario

- Observing Macroeconomic cycle- Staying updated about company

performance- Continuous monitoring of political

development- Portfolio beta in comparison to the

marketRisk Severity


Key Activities, Cost structure Financial, Intellectual Interest rate movement (pg: 199)Movement of DSE Index(pg: 199)

Going forward, interest rate risk measurement techniques will be improved further. Additionally, weighted average rate on portfolio in comparison to the market will be followed more rigorously

LIQUIDITY RISK


Funding Liquidity Risk

Inability to carry out necessary funding transactions due to asset liability mismatch. Arises from tenor mismatch of assets and liabilities

Strategy Link12

- Maintaining CRR & SLR- Limits on negative gap % in various

time buckets- Composition & concentration of

assets and liabilities- Funding mix (ratio of stable fund to

total fund)- Reviewing liquidity and funding

profile- Using contingency funding plan

as an integral part of liquidity management

- Conducting periodical stress Test- Tracking balance sheet movement

and key ALM ratios- Tracking major changes in key

economic indicators - Loan to fund ratio- Medium term funding ratio- Ratio of stable fund to total fund

Risk Severity

Market Liquidity Risk

Limited access to funds due to changes in external factors. The risk can arise from, concentrated funding mix, dependency on wholesale borrowing, investment in highly illiquid assets, etc.

Strategy Link

12

- Diversification of funding basket- Maintaining easily accessible secured

credit lines- Maintaining reserve in excess of CRR &

SLR requirement - Adherence to policy with sufficient

cushion to deal with liquidity disruptions

- Activating contingency funding plan for handling liquidity crisis

- Tracking balance sheet movement and key ALM ratios

- Tracking major changes in key economic indicators and acting accordingly

Risk Severity


Key Activities, Cost structure Financial, Intellectual Aggregate deposit trend Internal ALM ratios will be expanded upon. Efforts will also be made towards increasing the proportion of long term fund in funding basket.

Strategic Intents Risk Severity1. Achieve sustainable growth2. Maintain strong funding mix3. Attract, retain and develop

talented employees



Low Risk

Medium Risk

High Risk




talented employees



Low Risk

Medium Risk

High Risk

OPERATIONAL RISK


People Risk

The risk of loss intentionally or unintentionally caused by employees. The risk arises from employee error, employee defection, internal fraud, etc.

Strategy Link

13

- Setting of an appropriate 'tone at the top'

- Effective employee engagement- Ensuring appropriate segregation of

duties- Use of physical and logical access

controls- Whistleblower reporting- Insurance- Legal recovery measures

- Top management reviews- Reconciliations of key accounts and

balances- Verification procedures (using

independent third parties, where applicable)

- Internal audits- External audits

Risk Severity

Process Risk

Related to the execution and maintenance of transactions and the various aspects of running a business. The risk arises from incomplete/inadequate legal documentation, collateral management failures, data entry failures, etc.

Strategy Link

14

- Vetting of relevant documentation by appropriately qualified legal personnel

- Centralized operations for better oversight over collateral management processes

- Employing independent third party valuation specialists

- Data validation routines- Insurance- Legal recovery measures- Remediation activities- Data backup and recovery processes

- Pending document reporting & action planning

- Credit collection review meetings

Risk Severity

System Risk

The risk of loss caused by piracy, theft, failure, breakdown or disruption in technology, data or information. The risk arises from hardware and software failures, telecommunication problems and utility outages

Strategy Link

14

- Service Level Agreements with vendors

- Network redundancy arrangements- Alternative power sources- Use of Disaster Recovery site- Multiple telecommunication

channels

- Network & system monitoring- IT Dashboard- IT service desk- IT risk monitoring

Risk Severity

External Risk

The risk of loss on account of damage to physical property or assets from natural or unnatural causes. Sources of the risk are natural disasters, political unrest, regulatory change and external fraud

Strategy Link

1

Risk Severity

- Business continuity plan (BCP) - Disaster recovery plan (DRP)- Immediate response to regulatory

changes - Use of physical and logical access

controls, where appropriate- Whistleblower reporting- Insurance - Legal recovery measures

- Context analysis (environmental scanning) as part of strategic planning process

- BCP testing- DRP testing - Verification procedures


Key Activities Human, Intellectual, Manufactured No noteworthy/publicly available trend

Operational risks of individual departments and teams will be assessed, quantified and mitigated.




talented employees



Low Risk

Medium Risk

High Risk

STRATEGIC RISK


Strategic Positioning Risk

Risk of losing business volumes and margins due to improper positioning. The risk may arise from changing demographics, economic factors, organizational structure, competition and changes in regulation

Strategy Link

12345

- Regular market survey and cost of fund projection

- Participatory interaction with regulators on policy discussion

- Integrated planning across the company

- Discussion and engagement with all relevant parties at the planning stage of all essential projects

- Setting KPIs at the branch, divisional and organizational levels

- Timely withdrawal of resources from under-performing projects

- Monthly financial analysis and discussion on variances from budget

- Benchmarking KPIs within the company and across the industry

- Monthly preparation of forecasts and reviewing reasons for variances

- Evaluation of studies prepared for competitor intelligence

Risk Severity

Strategy Implementation Risk

Risk of losing business volumes and margins due to improper implementation of the strategies considered. The risk can arise from work processes, procedures and lack of proper/adequate human resources and IT infrastructure

Strategy Link

12345

- Ensure person-role fit through robust recruitment process

- Work process improvement and innovation

- Setting KPIs- Benchmarking with best practices

from both local and international approaches.

- Structured and systematic methods of gaining colleagues' views and feedback through Branch Managers' Meeting with CEO and through Change Management initiatives

- Analysis and monitoring of standard unit times for benchmark setting and improving process efficiencies

- Regular financial analysis to monitor returns of each business vertical

Risk Severity


Key Resources, Key Activities, Value Proposition, Channels, Customer Segments

Financial, Intellectual Private sector credit growth (pg: 199)

Further improve decision accuracy and speed through improving research, increasing the number of reports, increasing automation to enhance coverage of business intricacies, timeliness and early detection of deviations from budgets. Furthermore, enhance report standardization, quality and visualizations in order to capture and communicate more concise and actionable analyses to management.




talented employees



Low Risk

Medium Risk

High Risk

TECHNOLOGY RISK


System Failure Risk

Unavailability of business critical systems. The sources are: Infrastructure, Platform, Software, Malicious Intrusion, and Cyber Attack.

Strategy Link

14

- Disaster Recovery Site, High Availability, Redundancy, Hardware Review and Upgrade, Periodic Backup, Near Data Center (NDC), Real-time data replication to DRS

- Multi-layer Perimeter Security (Firewall), Intrusion Detection & Prevention System, Antivirus, System & Network Security Controls, Encryption, Multi-factor Authentication, Vulnerability Assessment & Penetration Testing, Awareness & Training for users and IT Personnel

- System Alerts- Performance- Global Intelligence- Exception Report

Risk Severity

Information Security Risk

Leak/disclosure of business critical Information. The sources are: People, Process, Vendor, Malicious Intrusion, and Cyber Attack.

Strategy Link

14

- Logical Access Control, Control on Privileged Account Usage, Periodic Review of System Access, Awareness & Training for users and IT Personnel, Deterrent Initiatives such limiting External Email and Web Access

- Compliance of Policy & Standard Operating Procedure (SOP), Periodic Review of Policy & Procedure

- Termination of Contract with non-performing Vendors, Multiple Vendors for Single Service

- Firewall, Intrusion Detection & Prevention System, Antivirus, System & Network Security Controls, Encryption

- System Log Monitoring- Network Traffic Monitoring- Audit Trail- Global Intelligence- Exception Report

Risk Severity

Business Continuity Risk

Interruption/unavailability of business critical systems which can occur from Natural disasters, Hazards (e.g. Fire), Vendor, Technology Obsolesces, Malicious Intrusion, Cyber Attack.

Strategy Link

14

- Near Data Center (NDC), Disaster Recovery Site

- Annual Maintenance Contract (AMC), Service Level Agreement (SLA), Due Diligence, Periodic review of Contracts, Maintain Relationship

- Research & Development, Technology Adoption, Skill Development

- Firewall, Intrusion Detection & Prevention System, Antivirus, System & Network Security Controls, Encryption

- Service & Performance monitoring- Business Operation Monitoring- Market Intelligence- Awareness of Technology Trend &

Change- System Log Monitoring- Network Traffic Monitoring- Audit Trail -Network Traffic

Monitoring- Global Intelligence- Exception Report - BCP Drill

Risk Severity


Key Activities, Cost structure Financial, Intellectual, Manufactured No new significant publicly available trend

We plan to sustain strong risk culture through Enhancing technology risk framework, enforcing stringent rules, continuous assessment and monitoring of progress. We also look forward to strengthening system security through enhanced security operation center, leveraging global threat intelligence and introduce layered internal and perimeter security.




talented employees



Low Risk

Medium Risk

High Risk

LEGAL RISK


Compliance Risk

Risk of legal sanction and material financial loss suffered. The risk arises from violations or non-compliance, lack of or inadequate compliance with contractual obligations and other legal documentation and pending litigations

Strategy Link

1- Aligning in-house policies and

procedures with national laws and regulations

- Integrating laws and regulations into our regular decision making processes

- Regular scanning of regulator websites to stay up-to-date with latest changes and timely communication of relevant updates

- Legal vetting of documentation- Employee training- Seeking, and acting in accordance

with, the appropriate legal advice- Insurance- Legal recovery measures- Remediation activities

- Top level management reviews- Incorporation of compliance

requirements in branch and departmental Key Control Standards

- Litigation register- Internal audits- External audits

Risk Severity

ML/FT Risk

Money laundering and terrorist financing (ML/TF) risk is the risk that IDLC may -

a) be used to launder money and/or finance terrorism and

b) Not be meeting its obligations under existing legislation, rules and regulations for the prevention of money laundering and for the combatting against terrorism financing

Strategy Link

15

- Designated AML/CFT organisation structure consisting of Central Compliance Unit, a Chief Anti Money Laundering Compliance Officer, and Branch Anti-Money Laundering Compliance Officers

- Appropriate AML/CFT policies and procedures

- Know Your Customer (KYC) and Know Your Employee (KYE) procedures

- Customer risk grading- Transaction monitoring- Employee training- Enhanced due diligence for select

accounts - Suspicious Transaction and/or Activity Reporting

- Cash transaction review- Suspicious transaction reporting- IT based screening mechanism for

UN Sanctions checklist and locally proscribed organization

- Continuous monitoring of media reports

- Internal AuditsRisk Severity


Key Activities Human, Intellectual No noteworthy/publicly available trend

Utilizing video telephony technology to implement online training programs to enhance reach. Administering online knowledge quizzes to surmount mobility barriers. Increased focus on effective operation of operational risk management key control standards.




talented employees



Low Risk

Medium Risk

High Risk

ENVIRONMENTAL & SOCIAL RISK


The probability that operational activities of a particular client/ industry would negatively affect the environment and the community of the operational zone as well as neighboring area. We might face loss if client has to stop operation due to regulatory intervention.

Strategy Link

15

- Not financing in 9 specific excluded sectors which have negative social and environmental impact.

- Not financing where operations of client are involved in processes which have negative impact on environment and community.

- Checking regulatory clearance documentation

- Using ESMS, a semi-automated toolkit, to determine general and 22 sector based environmental and social risks prior to financing.

- Mandatory ESIA (Environmental & Social Impact Assessment) by external experts for large projects like power plants.

- Not accepting mortgage of contaminated land as collateral.

- Quarterly review of Environmental and social risk status of portfolio

- Post-disbursement visit of Green establishment.

- Conducting Environmental and Social Due Diligence (ESDD)

- Quarterly update of ESMS related activities to EC

Risk Severity


Key Activities, Value Proposition Intellectual, Natural Green banking finance trend Periodical monitoring and implementation of Environmental & Social Action Plans (ESAP) of respective clients. Furthermore, we will keep extending our Advisory Supports for esteemed clients regarding Green Finances and Sustainable Finances, upholding the vision to contribute in achieving Sustainable Development Goals (SDGs) of Bangladesh by 2030.

REPUTATION RISK


The risk of potential or actual damage to the company's image which may impair profitability and/or sustainability of its business. Arises from actions and word-of-mouth of internal and external stakeholders, various media platforms operational hindrances and technological disruptions

Strategy Link

135

- Negotiations with Media Agencies to control misrepresentations of information

- Managing social media accounts to remove hateful comments and deter cyber bullying

- Regular monitoring of laws and regulations and ensuring those are complied with

- Monitoring the non-financial reputational risk indicators and identifying matters of potential risk

- Active evaluation to analyze impact on reputation

- Regular tests and system up-gradation to ensure the efficacy of the IT system

Risk Severity


Key Activities, Customer segments, Channels

Social & Relationship No noteworthy/publicly available trend

We plan to increase efforts towards connecting with our stakeholders, to better manage their queries and complaints, and at a much quicker pace. This would further portray our commitment to better serve all our stakeholders.



SHAHID ULLAH

It was 1997 when I started working at a hotel in Japan. From dishwashing to plating the food, I did everything and graduated to be the Head Chef in the same hotel.

I could have stayed in Japan if I wanted to but I longed to come back to Bangladesh and start my own business.

Hurdles are imminent in life and more so in business. I have faced losses in my business many times and tried to rebound stronger every time.

IDLC has supported me in my journey and today I own a restaurant, a bakery and a food factory where I employ more than 400 people.

Thank you IDLC !



Having discussed the numerous pressures from the operating environment (pg: 71), it is imperative we present to our stakeholders, specific pressures that influence our business model and our adaptability to these fundamental forces. We will also elaborate on any changes we see as required within our business model in combatting the challenges faced or in order to benefit from the opportunities arising from changing market dynamics and our strategies thereof.

While this section contains a detailed breakdown of our resource allocation strategies and their impact on the capitals and on our business model, our financial performance analysis is provided under Performance Analysis with the Management Committee (pg: 101), which is summarized in context of the operating environment, with explanation of our strategic responses in CEO’s Statement (pg: 53). Meanwhile, a more broad level view is provided under Message from Chairman (pg: 49).

Strategic progression of IDLC

At IDLC, the long-standing culture has been for the Board of Directors to provide direction and act as the guardian for ensuring corporate governance, carrying out the role of an enabler to allow the management team drive the company’s vision.

In retrospect, charting IDLC’s progression under 3 CEOs since 2003 shows how successive management teams took timely maneuvers to drive growth sustainably.

Key takeaways from the above are:

Strategy significance Outcomes in Way forward

Deposit mobilization, as opposed to borrowing from banks, paved way for business growth with better control over fund management and planning.

Performance Analysis with the Management Committee:

Term deposits (pg: 104)

Non-bank deposits (pg: 104)

Net deposit in Banks (pg: 104)

• Focus on expanding the retail depositor base

• Provide digital deposit products

Consumer and SME financing, as opposed to only catering to Corporates, helped move into less crowded spaces and attain early movers’ advantage.

Business Segment Reviews:

SME (pg: 122), Consumer (pg: 124), Corporate (pg: 126)

Strategy & Resource Allocation:

Portfolio composition (pg: 92)

Move into more granular segments:

• Affordable Housing Finance • Very Small Enterprise (VSE) Finance

Capital market operations, enabled business diversification beyond the lending business and allowed significant profit-booking during various market cycles.

Business Segment Reviews:

SL (pg: 133), IL (pg: 135), AML (pg: 137)

Directors’ Reports:

SL (pg: 301), IL (pg: 333), AML (pg: 361)

• Move towards providing differentiated fee-based offerings addressing investment needs of institutional as well as retail investors:

• Focus on building upon intellectual capital and provide more advisory services

STRATEGY & RESOURCE ALLOCATION

Deposit mobilization, Business Diversification

2003-09

Focus

2010-152016-

Present

SME, Mortgage Lending,Investment Banking,

Structured Finance, Core Banking System Integration

SME, Mortgage Lending, Capital market and Fee Income

Process Re-engineering & Automation

Preparations for Expansion

SME, MortgageBrokerage Services,Investment Banking

Capital Market OperationsNon-Funded Fee Business

Affordable Housing Finance, VSE Finance Asset Management,

Venture Capital



Current allocation of assets & bottom-line composition Following is a high-level view of IDLC group, broken down into its parts

ParticularsTotal Asset Composition Profit Composition2019 2020 2019 2020

IDLC Finance (Standalone) 92.90% 92.55% 89.50% 86.32%IDLC Investments (IL) 3.00% 3.03% 6.20% 6.58%IDLC Securities (SL) 3.90% 4.13% 5.80% 6.54%IDLC Asset Management (AML) 0.20% 0.29% -1.60% 0.57%IDLC Group 100% 100% 100% 100%

Further information on portfolio & profit trends:

• Core Highlights (pg: 4)

• Performance Analysis with the Management Committee (pg: 101)

• Business Segment Reviews: IDLC IL (pg: 135), IDLC SL (pg: 133), IDLC AML (pg: 137)

Portfolio composition within IDLC Finance (Standalone)

ParticularsPortfolio Amounts (BDT mn) Composition

2019 2020 2019 2020SME 31,318 33,648 34.25% 36.63%

Consumer 30,712 29,089 33.58% 31.67%

Corporate 29,419 29,115 32.17% 31.70%

Total Loan Book (Standalone) 91,448 91,853 100% 100%

Note: Portfolios restated with the new segmentation at the end of 2019 (Medium Enterprise Finance now part of Corporate Division)

Further information on portfolio trends:

• Highlights (pg: 4)

• Business Segment Reviews: SME (pg: 122), Consumer (pg: 124), Corporate (pg: 126)

Goals & objectivesOur strategies, in line with our vision and mission, pave the way for achieving our short, medium and long-term goals.

VISION MISSION

STRATEGICPRIORITIES

We will focus on quality growth, superior customer experience and sustainable business practices

Achieve Sustainable Business Growth

Maintain Strong Funding Mix

Attract, Retain and Develop Talented Employees

Continuously Improve Operational Efficiency

Advance OurSocial Cause

We will be the best financial brand in the country

1

2

3

4

5



As such, the interests of all our stakeholders are deeply rooted in our long, medium and short term goals.

Long Term Goals Medium Term Goals Short Term Goals

• Emerge as the best financial brand in the country

• Establish digitally enabled retail business operations

• Enhance financial inclusion significantly by introducing products and designing channels for unbanked populations

• Become the number no. 1 employer of choice among the local financial institutions

• Become/remain one of the top 5 most efficiently-run companies within the financial sector

• Continue to be one of the most socially responsible companies in the country

• Continue catering to existing segments while moving towards lower-ticket, high volume businesses

• Achieve significant growth in retail base, catering to mass people for lending, deposit and other wealth management products

• Implement more elaborate analytics solutions for improved credit appraisal, faster customer acquisition and forecasting needs

• Implement tech-based solutions for customer onboarding, client service & internal processes

• Optimize client reach through existing distribution channels and while adopting digitized distribution networks

• Attain greater brand recognition at the retail level

• Introduce enhanced hiring tools to improve person-job fit, reduce recruitment times and lower hiring costs

• Formalize detailed career roadmaps and tailored career development plans for key roles & top performers

• Implement more sophisticated reporting tools that enable greater monitoring & benchmarking of the various business verticals

• Lower carbon footprint further

• Further optimize CSR efforts to maximize impact

• Achieve portfolio growth in the aftermath of the pandemic, maintaining loan quality

• Improve credit & collection processes to restrict NPLs within desired levels and further review policies and processes to ensure portfolio quality in the backdrop of business growth objectives

• Implement Credit Risk Grading (CRG) based financing at a larger scale

• Launch digital deposit offering

• Set up groundwork for digital lending

• Implement web portal for enhanced customer service

• Double down on customer segmentation and identifying customer needs, concerns, effective touch points and the like through market research

• Review promotional strategy and carry out campaigns to enhance brand recognition across different tiers of potential customers

• Continue to invest in talent development

• Further improve on our objective based performance management process across the organisation

• Review organizational structure, identify all roles, determine banding of roles and further align employee rewards & compensations accordingly

• Introduce more employee engagement initiatives and surveys

• Establish a detailed data strategy and initiate, among other things, a drive towards improved analytics for management reporting

• Establish more detailed community welfare roadmaps for our causes

• Develop more measures to monitor environmental footprint

Risks and opportunities

This is a rundown of a few key challenges, those that affect our business model very specifically and influence our strategies. More comprehensive and in-depth risk assessments are provided in supplementary relevant topics within this report:

CEO’s Statement (pg: 53): Reviewing the key themes of 2020, Looking Ahead

Statement of Risk Management (pg: 80): Risks and our responses

Business Segment Reviews (pg: 122-138): Tackling Covid-19



Key Challenges Risk Category Opportunities and Key Strategies Relevant Strategic Theme

Business Model Adaptability

Achieving quality portfolio growth amidst the pandemic

Credit Risk (pg: 83)

Continuously fine tune internal credit rating and risk grading rules to ensure applicability of existing models in different markets and different macroeconomic situations, especially in consideration of the pandemic

• Achieve sustainable growth

• Short-term: High

• Medium-term: High

Tightening margins

Interest Rate Risk (pg: 84)

• Find niche and underserved markets

• Gain scalability in existing markets to be able to undertake quality business growth without proportionate rise in operating expenses

• Explore alternative & cheaper sources of funds and fee-based income sources

• Maintain balance sheet strength by holding fixed income securities such as government bonds to increase bargaining power, especially during low liquidity scenarios


• Maintain a robust funding mix

• Short-term: Moderate


Maturity Mismatch Funding Liquidity Risk (pg: 84)

• Focus on maintaining and improving renewal rates – currently, above 70% of deposits are renewed at maturity

• Maintain robust funding mix

• Short-term: High


Dependency of capital gains and brokerage incomes on stock market cycles

Equity Price Risk (pg: 84)

• Balance capital market exposures in the overall portfolio while taking advantage of market inefficiencies

• Gradually enhance scope for non-funded business revenues from capital market subsidiaries




• Medium-term: Moderate

Attaining targets with controlled growth in operating expenses

Operational Risk (pg: 85)

Technology Risk (pg: 87)

• Follow through on process optimization initiatives

• Review and implement improved sizing and HR strategy for optimizing productivity




Improving effectiveness of recruitment and talent management

People Risk (pg: 85)

• Attract the right talent through proper evaluation

• Offer competitive packages• Provide career development scopes

• Attract, retain and develop talented employees



Attaining mass brand recognition at retail level

Reputation Risk (pg: 89)

• Undertake promotional activities with a uniform branding strategy to increase brand awareness




Business model adaptability and change requirements

What makes our business model highly adaptable

Our business model is highly flexible and hence, adaptable to most of the discussed strategic needs. For instance, our liability team is capable of meeting the lion’s share of our fund requirements through deposit acquisition. Our governance makes us strong enough to handle blows such as liquidity shocks as big as the one caused by the pandemic. Our key partnerships allow us to seek soft loans from the central bank as well as multilateral organisations, which allow us to reduce our cost of funds compared to other NBFIs in the country. Our focus on environmentally sustainable lending policies and corporate citizenship, in part, paves the way for availing such opportunities.

Highlighted challenges facing our company and strategies to counter them, based on key findings from operating environment analysis and stakeholder engagement:



As a whole, it is the way we utilize the different elements within our business model and our culture of valuing innovation at every level that allow us to be highly responsive to client needs and adapt to market trends as well as changes to the competitive landscape.

Change requirements

As we grow our business across several verticals and as the operating environment around us changes, adapting our business model will be an inevitable requirement. We have already been changing parts of our business model in the previous few years through centralized operations and restructuring our Consumer and SME divisions by means of developing processes to free up Relationship Managers, Credit Analysts and Collection Officers, while bringing changes to the scope and roles of different departments within each division.

While we are aware of the more disruptive challenges to our business model such as risks presented by the advent of fintech, the regulatory environment in Bangladesh is taking the approach of allowing small and gradual changes in relevant policies to avoid any major shocks to the economy. Nonetheless, we have also looked into the opportunities it brings with it, and have already led change in various ways since the last couple of years. Operations centralization, adoption of activity tracking to better monitor and optimize the lead generation capacity of our colleagues in business wings, introduction of systems to increase organisational memory, equipping our sales force with tabs and numerous such initiatives are a few examples. Going forward, besides launching a digital savings offering, we plan to work on further improving operational efficiency, improve our credit risk grading model, adopt software to better manage customer relationships, integrate business intelligence tools for faster deep dive analysis capabilities and so on.

In the medium to long term, our revenue model can be expected to demonstrate scale-based growth, in line with the opportunities presented by the country’s growing economy. In preparation of this, our cost structure will see greater expenditures in technology and infrastructure in the short term as we move to automate more and more processes. Our customer base has been becoming more diverse, which is expected to continue as we focus on more retail client onboarding.

• Rich intellectual capital to develop differentiated value

propositions to fulfill unmet needs

• Different distribution model for each line of business

with scope for channel synergies

• Wide customer base, enabling organizational learning

for pattern recognition, with scope for cross-selling

• Cost structure constantly in check through process

improvements

• Multiple revenue streams from different business

verticals

• Greater investments in technology as we automate

numerous processes and implement digital products

under the eKYC guidelines

• Non-funded incomes expected to see greater

diversification as fee-based revenue generating

activities gain more traction

• Customer base expected to increase from metros

beyond the capital city, and with lower ticket sizes

• Customer relations platform armed with greater

resources to cope with growing number of customers

The following factors contribute to our business model adaptability

Following are the changes we look forward to bringing



Responses to issues raised through stakeholders engagement

We incorporate feedbacks from our stakeholders in various aspects of our operations and employ resources to address their concerns.

Stakeholders Concerns Our Response Capitals Invested Elaboration

Customers

• Account opening and services during lockdown

• Investment opportunities

• Time taken to earn interest on deposits

• Enabled online account opening and services options for relevant products

• Piloted Deposit Pension Scheme (DPS), launched Venture Capital Fund I

Financial, Intellectual, Social & Relationship

Business segment reviews (pg: 122-138), Intellectual Capital (pg: 32)

Shareholders• Timely performance

review and transparency

Conduct quarterly earnings disclosures every quarter

Human,

Intellectual

Social and Relationship

Capital (pg: 34)

Regulators

• Anti-money laundering and anti-terrorist financing

Operations Risk Management

(ORM) department and Internal Control & Compliance (ICC) departments ensure risk identification & mitigation

Statement of Risk

Management: Legal Risk

Management (pg: 88)

Colleagues

• Safety

• Fair incentive structure and performance rewards

• Introduction of work-from-home and remote work capabilities

• Thorough incentive structure and comprehensive performance appraisal system

• Healthy premises, company doctor, regular fire drills, etc.

Financial, Human

Human Capital (pg: 28)

Community

• Environment protection

• Social involvement

• Investment on green premises

• Increased focus on Green Financing

• Growing CSR activities

Financial, Social &

Relationship

Business Segment Review (pg: 122-138)

Social Relationship

Capital (pg: 34) Natural Capital (pg: 36)

Resource allocation approach

Our efforts always remain to undertake decisions with the view of long-term value creation for our investors. This means, occasionally, certain Trade-offs are needed to be made between capitals in order to accommodate our long-term orientation. Mostly, these are in the form of financial investments made towards ensuring the development and sustainability of other capitals in a way that the resulting long-term returns will outweigh the short term costs. In other words, we allocate our resources to build on our various capitals with the view of enabling a sustainable growth engine. This resource allocation strategy is manifested in our approach of utilizing key capitals, the role of innovation and other considerations in strategy formulation, explained in the following sections.

Capitals that form our competitive advantage

Emphasis on development of our intellectual and human capitals

Our investments towards developing these capitals are the reason why our SME business has been regarded as having the best-in-class processes by IFC. Other business verticals are also able to continue their tireless pursuits of continuous improvement.

Numerous forms of training conducted on technical and leadership skills (pg: 119) stand to prove our commitment towards developing our human and intellectual capitals in efforts to remain a knowledge centric institution that seeks to create value through quality growth and sustainable business practices. We incorporate various other measures in developing these capitals which are expanded upon under Intellectual Capital (pg: 32) and Human Capital (pg: 28).



Area of Innovation Scope for Innovation Primary Responsible Team

People

Increase efficiency in the hiring process Human Resources Team

Regularly improve on incentive structures to drive morale and performance

Human Resource with help from senior line management in business divisions

Further automate people management processes through use of HR Management software for employee on-boarding, objective setting, performance appraisal, compensation management, etc.

Human Resources and Technology teams

Product

Digitalize products Products, transformation and marketing teams in coordination with sales, operations and credit risk management, technology and customer experience teams

Conduct more market researchIntroduce more products to cater to underserved segmentsInnovate features in existing productsEnhance non-financial servicesFurther improve customer on-boarding experience

Process

Improve customer service platforms with greater features and further reduce customer service times

Business solutions team comprising of members from different departments including transformation, business and operations

Increase efficiency through process improvements

Increase process and information security further Technology Team

Environmental and social considerations in our strategy formulation

Our focus on environmental and social responsibilities is deeply ingrained within our policies, strengthened by government regulations and international frameworks that help us communicate our rationale and ways to implement sustainable practices with many of our clients. It is also evident in our efforts towards Green Financing initiatives (pg: 36).

Key interdependencies, complexities and Trade-offs between capitals

Our capitals are deeply intertwined and dependent on each other. While one capital is used up, it transforms into the creation or development of another. The role of innovation in harnessing the potential of our capitals already illustrates this. The flow of one capital therefore, not only affects its own outcomes, but also that of others (pg: 27, 29, 31, 33, 35, 37). While the relevant Trade-offs for each capital are briefly mentioned in their respective sections, following is an elaboration of some of the key interdependencies and Trade-offs.

Intellectual, Manufactured and Financial Capitals

The software and infrastructural investments we make towards achieving process efficiency, in turn, helps us maintain our low cost-to-income ratio (pg. 27, 101) and quicker service in the form of turnaround times, which enables us to operate competitively in the market. Hence, our various initiatives, while incur expenses, also strengthen our financial capital, through economies of scale enabled by our business growth. This not only ensures solvency in the short term, but also enhances our long-term value creation prospects through enriching our capabilities as a knowledge-based organisation that keenly develops its infrastructural prowess to serve a greater and wider pool of stakeholders. In conclusion, while monetary investments in our manufactured, intellectual, human, social & relationship and natural capitals are key to the development of these capitals in themselves, these investments also translate through the transformation back to financial capital in the form of monetary returns.

Human, Social & Relationship Capital and Manufactured Capitals

Our manufactured capital is intricately linked with our people strategy and the way we engage with our clients and other stakeholders. The services and operations of many of our branches are designed to best serve the clients within their closest vicinities, so that we can specialize in customizing our offerings to their specific needs. In addition, plans of mini branches are in place to further improve our physical reach.

Our broad training framework is purposed to provide better service to our clients to improve our social & relationship capital, which comprises of our key partnerships as well as relationships within and between our various stakeholders. In fact, we help expand these relationships to get a multiplier effect on the benefits. For instance, at Purnota, a pioneering service package for women entrepreneurs, we

The role of innovation in harnessing the potential of our capitals

IDLC nurtures its spirit of innovation through its three integral pillars - People, Product and Processes. The following table articulates the scope of further innovation of each of these pillars and the respective teams engaged in that regard:



organize events to introduce numerous such entrepreneurs to each other in order to give them an opportunity to harness the potential benefits to be derived from a community. In turn, as a financial institution, we too realize the benefits from these engagement programs through serving the financial needs of our clients – existing and prospective – when they thrive as a result of knowledge sharing and idea generation. Our engagement programs go on to extend from our customer engagement initiatives, to our marketing drives, to our CSR programs that are targeted to impact beyond our clients (pg: 35).

Natural and Other Capitals

Starting from our manufactured capital, which includes all synthetic physical resources, we seek to ensure proper utilization to help reduce our carbon footprint for doing our part in protection of the natural capitals. In order to do this, we also focus on developing our intellectual capital, so that we can improve process efficiencies and enhance resource utilization. In effect, we would also invest in training our human capital to expand on our organisational knowledge and add to the process efficiencies. Besides, investments in eco-friendly premises also become part of our drive towards protecting the environment (pg: 129).

In essence, our activities either use or affect the different capitals. And while the development of one capital may come at the expense of another, its utilization can also leave a positive impact on the development of other relevant resources.

Trade-offs we seek to avoid

Certain situations require us to make difficult choices between our capitals. For instance, investing in technology for process innovation automatically reduces need of manual work in the department concerned. However, we ensure the protection of our human capital through our thorough placement strategies, complemented by our efforts in creating a dynamic talent pool that is adaptable to meet a variety of work requirements in different job roles.

Another area where Trade-offs are made is apparent in our policies against the financing of socially and environmentally harmful projects (Trade-off being made with our financial capital). We do this with the long-term view of social and environmental protection in mind. However, we must acknowledge and give due credit to the role of regulatory policies that are in place to incentivize such efforts, helping to ensure that companies upholding those policies do not lose out on their competitive edge in the process.

Our performance indicators are elaborated in the respective capitals sections, business segment reviews, statement of risk management and all relevant topic areas.

Measuring the efficacy of our objectives and tackling possible ripple effects of essential KPIs

KPIs Potential spill-over effects Our solution

Portfolio growthPotential of becoming over-aggressive in terms of achieving business growth and in the process, acquire risky clients.

The key is to constantly monitor and review the credit approval processes. We have also made arrangements to further improve the utilization of our internal data repository through greater use of tools and policies regarding credit risk scoring, risk-based pricing, single party exposure limit, sector exposure limit and portfolio diversification.

NPL managementPossibility of losing business while being too conservative.

Based on our decades of experience, we are able to identify the niches that offer the most attractive risk-adjusted business opportunities. In turn, combined with our processes and policies, this allows us to maintain NPL levels that are significantly lower than the industry average.

Maintain/reduce cost to income ratio

Excessive cost-management drives could reduce branding initiatives, customer, employees & community engagement programs and so on.

As a way forward, we plan to automate more processes to improve efficiency & infrastructure utilization and review more processes to churn out the task redundancies besides training colleagues to increase HR capacity and productivity.



Our sustainable resource allocation practices and relevance to SDGs

Our focus remains to manage our resources in a sustainable manner. In addition, our activities are also designed in such a way that they have sustainable impact on the society, as summarized in the following tables:

Initiatives

Affordable home loan

Very Small Enterprise (VSE) FinancingCapacity development

Sustainable business growth

Green financing

Green office practices

Special products for women

Improving gender parity in workplaceCommunity initiatives

Partnering with development agencies

Relevance to Capitals

Capitals Inputs Outcomes

Financial Monetary investment Monetary gains/savings

Human Management Hours Employee benefits & living standards

Manufacturing Physical infrastructure & materials Sustainability & longevity of infrastructure

Intellectual Knowledge investment Knowledge enhancement

Social & Relationship Partnerships Community well-being & connectedness

Natural Natural resources Protection/optimization of resources



SL SDGs Financial Human Manufacturing Intellectual Social & Relation. Natural Remarks

1 No Poverty I O I OCSR activities and compensation policies

3Good health & well being

I O I OCSR activities and employee health initiatives

4 Quality education I I O CSR activities

5 Gender equality O IGender equality practices at workplace

6Clean water & sanitation

I I O O CSR & Green Banking activities

7Affordable & clean energy

I I / O I OGreen office practices & Green Banking activities

8Decent work & economic growth

I / O O I / O ODirect & indirect employment creation, Internal job and role evaluations

9Industry, innovation & infrastructure

I / O I / O I / O OGreen banking, project financing and product development

10 Reduced inequalities I / O O I OVery Small Enterprise (VSE) Financing and Affordable Housing Finance

12Resposible consumption & production

I / O I / O I O OGreen office practices and responsible financing practices

13 Climate action I I I OGreen office practices & Green Banking activities

14 Life below water I I O Green Banking activities

15 Life on land I I O Green Banking activities

17Partnerships for the goals

I / O IPartnership with UNEPFI, WB, IFC, Global SME Forum, SME Foundation

Key: Capital Input: ‘I’ Capital Outcome: ‘O’

Our scope of long term value creation

Besides the macro-economic trends being favorable for the retail markets that we seek to serve going forward, we believe to have developed the right set of strategies, policies, processes and investment endeavors to penetrate into these spaces successfully and sustain in the long run. Recognitions from multilateral organisations such as Investment Finance Corporation (IFC) as the best-in-class for SMEs serve as testament to our capability to bet on the right clients, with the appropriate loan structures. With a growing opportunity to offer greater value to these underserved segments through dedicated products pertaining to their various financing needs, combined with our expertise, we are well-positioned to eventually rise as one of the leading organisations in the country for such ventures.

The same structured approach in integrating our core competencies with opportunities derived from the operating environment are expected to help us ensure quality growth in affordable home loans and other business initiatives as well.

Our emphasis on corporate governance has been another key reason behind the trust of our stakeholders. Among other things, this has enabled us to successfully execute our funding strategies even at times when most Banks and NBFIs have been facing difficulties.

Besides, our ear-on-the-ground approach has enabled us to continually innovate our products to meet newer customer requirements. Additionally, one of our key strengths lies in our ability to have consistently hired the right talent for the right job, especially in key management positions. Combined with a Board of Directors that is well-informed about the industry and empowering about the matters that require swift decision-making, we are able to optimize our resource allocation strategy quickly in response to market variables.

Overall, our efforts at enhancing our capability to anticipate key trends through various stakeholder engagement programs, combined with constant reviewing of our operating environment and the competitive landscape help us utilize and transform our capitals for value creation. Our ability to meet and exceed customer expectations with the right set of execution strategies, ensure quicker loan disbursement (for those eligible). And our willingness and capacity to help them navigate through their business challenges has ensured that we remain one of Bangladesh’s most respected and trusted Financial Institutions.

Note: A more detailed take on our plans for value creation can be found in CEO's Statement (pg: 54)



PERFORMANCE ANALYSIS WITH THE MANAGEMENT COMMITTEE

Through the inputs being driven by our strategic objectives we come to the outcome of our activities. We discuss in this section and hereforth, the outcome and the drivers resulting in the performance of the year 2020.

Performance Summary in Light of Operating Context

Being the year of a global pandemic, 2020 has posed severe challenges in terms of an extremely unstable operating environment, constrained margins & challenging capital market conditions during the first half of the year amidst lockdown. However, well-timed strategic maneuvers by IDLC’s management teams has enabled us to maintain our position in the market and deliver solid financial results.

IDLC posted a Net Profit of BDT 2,541mn (2019: BDT 1,700mn), delivering a Return on Asset of 2.08% (2019: 1.50%) and Return on Equity of 17.37% (2019: 12.29%).

The sections that follow contain in-depth financial analyses dissecting our performance.

OPERATING INCOME AS % OF AVG. ASSATES

2016 2017 2018 2019 2020

6.76% 7.18%

5.69%4.96%

5.46%

COST TO INCOME RATIO

2016 2017 2018 2019 2020

37.94%37.19%

39.49%

43.33%

38.23%

DuPont Analysis

DuPont Description 2016 2017 2018 2019 2020

Net Interest Income % of Avg Assets 4.89% 4.57% 4.12% 4.12% 3.68%

Non Interest Income % of Avg Assets 1.87% 2.61% 1.56% 0.84% 1.78%

Operating Income % of Avg Assets 6.76% 7.18% 5.69% 4.96% 5.46%

Operating Expenses % of Avg Assets -2.57% -2.67% -2.25% -2.15% -2.09%

Cost/Income % of Operating Income 37.94% 37.19% 39.49% 43.33% 38.23%

PBT&P % of Avg Assets 4.20% 4.51% 3.44% 2.81% 3.37%

Provisions % of Avg Assets -0.20% -0.27% -0.39% -0.37% -0.26%

PBT % of Avg Assets 3.99% 4.24% 3.05% 2.44% 3.11%

Tax Rate % of PBT -41.61% -38.65% -30.58% -38.43% -33.21%

Minorities % of Avg Assets 0.00% 0.00% 0.00% 0.00% 0.00%

RoA Return on Avg. Assets 2.33% 2.60% 2.12% 1.50% 2.08%

Assets/Equity Avg. Assets/Avg. Equity 9.1 8.1 7.8 8.2 8.3

RoE Return on Avg. Equity 21.29% 21.15% 16.55% 12.29% 17.37%



Despite slow business climate, IDLC managed to sustain its loan book size while emphasizing on prudent lending and value creation. Although Net Interest Income declined by 3.82% (Standalone: -1.81%), Operating Income rose by 18.68% owing to timely investment and subsequent realization of capital gain from trading of government securities. This followed by several efficiency measures has enabled us to contain the Cost to

Income ratio below 40.00%. Cost of Risk as % of Average Asset came down to -0.26%, consequent to significant improvement in capital market condition and maintenance of loan portfolio at the same level requiring lower incremental general provision to be reserved. The subsequent impact on profitability helped the Return on Asset and Return on Equity move up to 2.08% (2019: 1.50%) and 17.37% (2019: 12.29%) respectively.

IDLC’s Total Income (Interest Income + Non-Interest Income) fell to BDT 12.94bn (Standalone: BDT 12.23bn), reflecting de-growth of 7.81% (Standalone: -8.88%). Net Interest Income declined by 3.82% (Standalone: -1.81%). This is because while interest expense increased on account of maintaining higher liquidity, increased holding of government securities shifted a portion of plausible interest income to investment income. Nonetheless, Net Interest Income from loan portfolio remained resilient during the year due to maintenance of spread.

Fee & Other Income (Non-Interest Income) fell by 1.56% to reach BDT 837.75mn, consequent to a 46.55% decline (fell by BDT 128.34mn) in loan disbursement fees following increased focus on prudent lending during the year considering the Covid-19 stricken

operating environment. However, the impact was restricted by the 38.90% growth (increased by BDT 100.24mn) in brokerage income, essentially due to improved capital market condition.

Fall in income from capital market led by realization of some capital loss during the first half of the year, affected our subsidiaries and the proprietary investment desk of IDLC Finance (standalone). Nonetheless, it was outweighed by the income from government securities, resulting a 1,290.47% growth in overall Investment Income.

Subsequently, our Operating Income rose to BDT 6.67bn accounting for a growth of 18.68% compared to the previous year, following which EPS grew to BDT 6.74 from BDT 4.51 in the preceding year.

Summarized Income Statement Amounts in BDT mn

2020 2019 Growth Net interest income 4,493 4,671 -3.82% Fee & other income 838 851 -1.56% Investment income 1,337 96 1290.47% Operating expense 2,549 2,434 4.73% Provision 315 423 -25.59% Tax 1,263 1,061 19.03% Profit after tax 2,541 1,700 49.45%

Profitability

COST OF RISK AS % OF AVG. ASSETS

2016 2017 2018 2019 2020

-0.20%-0.27%

-0.39% -0.37%

-0.26%

RETURN ON EQUITY

2016 2017 2018 2019 2020

21.29% 21.15%

16.55%

12.29%

17.37%

PBT & NPAT in BDT mn

2016 2017 2018 2019 2020

3,049 3,712

3,127 2,761

3,804

1,780 2,277 2,171

1,700

2,541

PBT NPAT

EARNINGS PER SHARE in BDT

2016 2017 2018 2019 2020

5.49 6.13 5.76

4.51

6.74



Advertisement & Promotions

Although there was a flight to safety by institutional depositors and high-net-worth individuals (HNIs), which was the major driver behind the deposit book maintenance at the same level, we are still trying to increase brand recall in the average household. In 2020, we recorded an expenditure of BDT 66.42mn in promotional activities to improve our brand recognition and customer recall in an effort to boost individual lower-ticket retail deposit growth and at the same time, target lower ticket and higher volume business such as Affordable Housing and SME Financing.

Nonetheless, since this was a comparatively difficult period, promotional expense was reduced by 32% on a year-on-year basis.

Depreciations & Other Operating Expense

Consequent to re-classification of office rent under IFRS 16: “Leases” since 2019, a major portion of our depreciation expense is charged against right-of-use asset. Overall depreciation expense came down to BDT 286mn from BDT 303mn in the preceding year owing to few disposals during the year. Apart from this, certain business activity based expenditures came down following slowed operations during the pandemic situation. Alongside, companywide expenditures behind entertainment, office service, travel and conveyance have been moderate, while focus remained more towards CSR activities, particularly to stand in solidarity with those whose livelihoods have been affected by Covid-19

Provisions for Loans/InvestmentsAmounts in BDT mn

Details 2020 2019Increase in General Provision during the year

20 70

Increase in Specific Provisions during the year

359 358

Increase in Provision for diminution in value of investments

(65) (5)

Provisions have been maintained for classified loans as per the provisioning policy set forth by the Central Bank. Incremental provision of BDT 315mn was charged during the year, which was BDT 108mn lower than that of 2019. The majority incremental provision came from increase in specific provisions, which was maintained conservatively, considering the uncertainties arising from the pandemic. Conversely, BDT 65mn was released from provision against capital market exposure subsequent to improved capital market conditions.

Provision for Income Tax

Expenses and ProvisionsOur Operating Expense comprises of costs associated with compensation, premises rent & maintenance, technology and other expenses. In 2020, Operating Expenses stood at BDT 2.55bn. While Operating Expenses grew by 4.73%, Operating Income grew by 18.68%, enabling the cost to income ratio to move down to 38.23% at the end of 2020 from 43.33% in the previous year.

Over the years, as the management team has continuously developed processes to improve efficiency, most process-based expenses remained steady, leading to compensation expenses taking up a comparatively larger share of the total Operating Expenses. In 2020, 64.21% of the total Operating Expenditure was comprised of compensation; while in 2019, it contributed 59.34%. Given HR related expenses takes the lion share of our Operating Expenses, a detailed breakdown of our Human Resource accounting has been provided in Human Capital. Nevertheless, some of the material changes in Operating Expenditure over the last year are discussed below.

Compensation

At the end of 2019 & beginning of 2020, we had a major recruitment drive, hiring 227 persons in line with 2020’s business growth projections. It should be noted that these recruitments took place in pre-Covid times in Bangladesh. However, as the pandemic hit and government declared nation-wide mandatory holidays, we promptly availed the facilities of work from home technology. During this time instead of pushing our work force for disbursement we re-focused our resources towards collections and higher deposit-booking, instead of going for retrenchment. This in turn, ensured that IDLC remained liquid throughout the pandemic, as elaborated in our cash flow analysis. On the other hand, our compensation expense stood at BDT 1,637mn having increased by BDT 192mn, with the key driver being recruitment.

INCOME BREAKDOWN in BDT mn

2016 2017 2018 2019 2020

Net Interest Income Operating IncomeFee & Other Income Investment Income

3,735 3,995 4,223

4,671 4,4935,164

6,280 5,824 5,618 6,668

953

1,203 1,042

851 838 476

1,082

559 96

1,337

OPEX BREAKDOWN in BDT mn

2016 2017 2018 2019 2020

Compensa�on Rent & U�li�esDeprecia�on Others

1,052 1,305 1,306 1,444 1,637

216 220 224 58

51 200

193 171 329 320

491 617 599

602 541 1,959

2,336 2,300 2,434 2,549

in BDT mn

2016 2017 2018 2019 2020

1,269 1,435

956 1,061

1,263



Our contribution to the government exchequer in the form of income tax increased by 19.03% from 2019 and stood at BDT 1,263mn as per the regulations of Income Tax Ordinance, 1984.

Summarized Balance SheetAmount in BDT mn

Details 2020 2019 Assets:

Cash and cash equivalent 21,996 15,100

Investment 8,659 6,935

Lending portfolio 93,074 92,346

Others 3,146 3,004

Liabilities:

Deposit 78,764 77,906

Borrowing 20,791 14,228

Other liabilities 12,080 11,234

Equity 15,238 14,018

Lending Portfolio, Quality & Cost of Risk

In 2020, we maintained our loan book size with a slight growth of 0.79% (Standalone: 0.44%). Considering the tough operating environment, we diverted our focus more towards collection rather than targeting portfolio growth to counter the increased level of credit risk and limit erosion in portfolio quality. In addition, settlement of few legacy contracts further helped improve the non-performing loan ratio and bring it down to 1.79% from 3.07% in the previous year. Subsequently our provision coverage ratio (without considering the value of the collaterals held against the loans) moved to 95% in 2020 from 54% in the previous year and cost of risk came down to 0.26% for the year 2020 compared to 0.37% in the preceding year.

Fund Size & MixOur funding base increased by 8.06% (Standalone 8.43%) in 2020 and moved to BDT 99.6bn (Standalone 101.41bn) from BDT 92.13bn (Standalone 93.53bn) in the previous year. Term Deposits (adjusted for intercompany deposits), which comprises 76.61% of the funding basket, grew by 1.14% in 2020 to reach BDT 76.27bn.

Our overall deposit increased by 1.46% in 2020, with deposit growth rates from Institutions (excl. Banks) and Individuals being 6.45% and 10.03% respectively, helping us further develop our base towards retail deposits. At the same time, our Deposit from Banks fell by 27.34%, while our Placements in Banks increased by 45.42%, enabling us to become a net lender in the inter-bank market.

Debt to Equity Ratio & CAR

TOTAL LOAN PORTFOLIO in BDT mn

2016 2017 2018 2019 2020

62,217 71,499

83,934 92,346 93,074

5 year CAGR: 11.01%

NPL%

2016 2017 2018 2019 2020

2.98%2.77%

2.20%

3.07%

1.79%

TERM DEPOSIT SOURCES in BDT mn

2019

33,584 28,975

14,450

2020

35,749 31,882

10,500

Corporate Individual Banks

TERM DEPOSIT FROM BANKS VS. PLACEMENT INBANKS in BDT mn

Deposit from Banks Placement in Banks

2019 2020

14,450

10,500 12,796

18,607

DEBT TO EQUITY RATIO (times)

2016 2017 2018 2019 2020

7.88

6.60

7.00 7.37 7.33



Cash flow Statement Analysis

Particulars 2020 2019

A) Net cash flows from/(used in) operating activities 3,414 (1,838)

B) Net cash flows from/(used in) investing activities (1,766) 286

C) Net cash flows from/(used in) financing activities 5,247 417

D) Net increase/(decrease) in cash and cash equivalents (A+ B + C) 6,896 (1,136)

E) Cash and cash equivalents at beginning of the year 15,100 16,236

F) Cash and cash equivalents at end of the year (D+E) 21,996 15,100

In 2017, our paid up share capital rose to BDT 3.77bn following

issuance of Rights Share, which brought down the Debt to Equity

ratio to 6.6 times and improved the Capital Adequacy Ratio, taking

it to 15.3% from 13.3% in 2016. In 2020, our debt to equity ratio

remained almost at the same level as the preceding year, primarily

due to the meagre growth in loan book size during the year. Our

Capital Adequacy Ratio remains robust at 14.59%, which is well

over the regulatory limit of 10%.

Cash Flow from Operating Activities

Net cash inflow from operating activities in 2020 was BDT 3.4bn which was BDT (1.8bn) in the preceding year. The pandemic situation slowed down business activity, resulting in lower disbursement compared to the previous year. Moratoriums provided to some clients due to the pandemic reduced cash inflows to an extent. However, constant collection efforts, deposit growth due to flight to safety, interest income from investment in government securities and capital gain from trading of the same led to a superior cash position.

Cash Flow from Investing Activities

The cash flow from investing activities moved to BDT (1.77bn) from BDT 0.28bn due to increased net investment in government securities to further strengthen the Balance Sheet by enhancing the company’s excess liquidity position.

Cash Flow from Financing Activities

The group obtained BDT 6.98bn from term loan and BDT 5.84bn from short term loan, while it repaid BDT 6.25bn of its previously obtained loans and also paid a dividend of BDT 1.31bn, taking the net cash flow from financing activities to BDT 5.25bn at the end of 2020 from BDT 0.42bn in the previous year.

Overall Scenario

The cash and cash equivalent balance of the group rose to BDT 22.00bn in 2020 compared to BDT 15.10bn in 2019. Consequently, the cash balance of the group remains robust, at 19.70% of the total liability and 40.55% of current liability, which will enable us to grow our loan book when the opportunity presents itself, as the economy recovers from the impact of Covid-19.

CAPITAL ADEQUACY RATIO

2016 2017 2018 2019 2020

CAR (Consolidated) CAR (Solo)

14.50%16.42% 17.34% 17.50% 17.45%

13.25%15.30% 15.47% 14.82% 14.59%

Amounts in BDT mn



KEY OPERATING & FINANCIAL HIGHLIGHTS

IDLC Group

Financial Performance 2016 2017 2018 2019 2020 5 years CAGR (%)

Total assets 79,311 95,687 109,166 117,385 126,874 11.56%

Long term liabilities 68,931 81,548 93,858 100,883 109,275 11.24%

Term deposit balance 47,475 59,854 70,258 75,415 76,273 10.62%

Loans & advances 62,217 71,499 83,934 92,346 93,074 11.01%

Operational Performance 2016 2017 2018 2019 2020 5 years CAGR (%)

Operational income 5,164 6,280 5,824 5,618 6,668 7.76%

Operational expenses 1,959 2,336 2,300 2,434 2,549 9.12%

Financial expenses 4,625 4,898 6,940 8,512 7,607 9.50%

Opearting Profit 3,205 3,945 3,524 3,184 4,118 6.97%

Profit before tax 3,049 3,712 3,127 2,761 3,804 7.67%

Net profit after tax 1,780 2,277 2,171 1,700 2,541 11.73%

Financial Ratios 2016 2017 2018 2019 2020 Growth

Debt equity ratio (Times) 7.88 6.60 7.00 7.37 7.33 (0.05)

Average effective tax rate (%) 41.61 38.65 30.58 38.43 33.21 (5.23)Financial expenses coverage ratio (Times) 1.66 1.76 1.45 1.32 1.50 0.18

Return on total assets (%) 2.33 2.60 2.12 1.50 2.08 0.58

Return on shareholders’ equity (%) 21.29 21.15 16.55 12.29 17.37 5.07

Earnings per share 5.49 6.13 5.76 4.51 6.74 2.23

Price earnings ratio (Times) 8.05 13.91 12.11 10.07 9.41 (0.66)Net interest income as a percentage (%) of working funds 6.36 5.98 5.43 5.30 4.85 (0.45)Operating Profit as percentage (%) of working fund 5.46 5.90 4.53 3.61 4.44 0.83

Equity Statistics 2016 2017 2018 2019 2020 5 years CAGR (%)

Number of shares outsatnding (No.) 251,367,187 377,050,780 377,050,780 377,050,780 377,050,780 8.45%

Year end market price per share (BDT) 57.00 85.30 69.70 45.40 63.40 -0.06%

Net asset value per share (BDT) 23.70 33.41 36.17 37.18 40.41 14.37%

Market capitalization (BDT in Million) 14,328 32,162 26,280 17,118 23,905 8.38%

Market value addition per share (BDT)

21.44 51.89 33.53 8.22 22.99 -6.77%

Shareholders’ equity (BDT in Million) 8,938 12,597 13,637 14,018 15,238 14.37%

in BDT million



KEY OPERATING & FINANCIAL HIGHLIGHTS

IDLC Finance Limited in BDT million

Financial Performance 2016 2017 2018 2019 2020 5 years CAGR (%)

Lease and Term loans disbursed 29,807 35,511 39,400 41,414 29,944 6.22%

Housing finance disbursement 5,646 7,893 7,649 8,134 3,793 -8.62%

Short term finance portfolio 845 778 906 735 891 -3.76%

Lease Finance 4,950 4,629 4,277 3,496 3,037 -12.78%

Real estate finance assets 18,108 21,462 25,131 28,163 26,834 9.30%

Total assets 76,505 92,611 105,182 114,655 123,419 11.45%

Long term liabilities 67,446 80,540 92,554 101,069 109,158 11.41%

Term deposit balance 47,564 60,538 71,338 77,008 78,131 11.09%Net current assets

Operational Performance 2016 2017 2018 2019 2020 5 years CAGR (%)

Operational income 4,433 4,801 4,705 4,815 5,625 7.27%

Operational expenses 1,679 1,934 1,913 2,012 2,157 9.13%

Financial expenses 4,625 4,902 7,016 8,640 7,640 9.62%

Profit before tax 2,581 2,639 2,426 2,390 3,252 7.40%

Net profit after tax 1,496 1,582 1,591 1,522 2,205 12.13%

Financial Ratios 2016 2017 2018 2019 2020 Growth

Debt equity ratio (Times) 9.06 7.76 8.54 9.21 9.19 (0.02)

Average effective tax rate (%) 42.02 40.05 34.43 36.32 32.20 (4.12)

Financial expenses coverage ratio (Times) 1.56 1.54 1.35 1.28 1.43 0.15

Current ratio (Times) 1.17:1 1.18:1 1.12:1 1.06:1 1.18:1 0.12

Return on total assets (%) 2.02 1.87 1.61 1.38 1.85 0.47

Non performing loan ratio (%) 2.98 2.77 2.20 3.07 1.79 (1.28)

Return on shareholders’ equity (%) 20.87 17.41 14.73 13.68 18.89 5.21

Earnings per share 4.62 4.26 4.22 4.04 5.85 1.81

Dividend per share 3.00 3.00 3.50 3.50 3.50 -

Dividend yield (%) 5.26 3.52 5.02 7.71 5.52 (2.19)

Dividend payout ratio (%) 75.59 71.50 82.96 86.70 59.86 (26.84)

Shareholders’ equity (BDT Million) 7,605 10,569 11,029 11,231 12,116 885.06

Net interest income as a percentage (%) of working funds 6.14 5.77 5.13 4.94 4.60 (0.34)

Operating Profit as percentage (%) of working fund 4.79 4.35 3.65 3.23 3.78 0.56



HORIZONTAL ANALYSISConsolidated Balance Sheet as at December 31 (For last five years)

2020 2019 2018 2017 2016PROPERTY AND ASSETSCashIn hand (including foreign currencies) 114% 117% 115% 102% 100%Balance with Bangladesh Bank and its agent (including foreign currencies) 156% 223% 263% 112% 100%

156% 223% 263% 112% 100%Balance with other banks and financial institutionsInside Bangladesh 197% 125% 132% 131% 100%Outside Bangladesh

197% 125% 132% 131% 100%Money at call and short notice

InvestmentsGovernment 221% 100% 0% 0% 0%Others 129% 128% 168% 182% 100%

199% 159% 168% 182% 100%

Loans and advancesLoans, cash credit, overdraft etc. 150% 148% 135% 115% 100%Bills purchased and discounted

150% 148% 135% 115% 100%Fixed assets including land, building, furniture and fixtures 157% 171% 84% 101% 100%Other assets 287% 255% 155% 119% 100%Non-banking assets - - - - - Total Assets 160% 148% 138% 121% 100%

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks, financial institutions and agents

165% 113% 99% 91% 100%

Deposits and other accountsCurrent accounts and other accounts etc. - - - - - Bills payable - - - - - Savings bank deposits - - - - - Term deposits 161% 159% 148% 126% 100%Bearer certificate of deposits - - - - - Other deposits 135% 135% 133% 121% 100%

160% 158% 147% 126% 100%Other liabilities 142% 132% 122% 113% 100%Total Liabilities 159% 147% 136% 118% 100%Capital/Shareholders' equityPaid-up capital 150% 150% 150% 150% 100%Share premium 33616% 33616% 33616% 33616% 100%Statutory reserves 166% 141% 136% 118% 100%General reserves 100% 100% 100% 100% 100%Dividend equalisation reserves 100% 100% 100% 100% 100%Retained earnings 173% 151% 143% 123% 100%Total Equity attributable to equity holders of the company 170% 157% 153% 141% 100%Non-controlling interest 137% 134% 132% 126% 100%Total Liabilities and Shareholders' equity 160% 148% 138% 121% 100%

*2016 has been considered to be the base year.



HORIZONTAL ANALYSISConsolidated Profit and Loss Account (For last five years)

2020 2019 2018 2017 2016Interest income 145% 158% 134% 106% 100%

Interest on deposits and borrowings etc. 164% 184% 150% 106% 100%

Net interest income 120% 125% 113% 107% 100%

Investment income 281% 20% 118% 227% 100%

Commission, exchange and brokerage 114% 93% 135% 171% 100%

Other operating income 65% 86% 87% 88% 100%

Total operating income 129% 109% 113% 122% 100%

Salaries and allowances 156% 137% 124% 124% 100%

Rent, taxes, insurance, electricity etc. 24% 27% 104% 102% 100%

Legal expenses 128% 121% 54% 138% 100%

Postage, stamp, telecommunication etc. 138% 128% 115% 111% 100%

Stationery, printing, advertisements etc. 109% 158% 162% 136% 100%

Managing Director's salary and benefits 142% 141% 135% 118% 100%

Directors' fees 99% 106% 115% 122% 100%

Auditors' fees 125% 124% 287% 138% 100%

Charges on loan losses - - - - -

Depreciation and repair of Company's assets 160% 164% 85% 97% 100%

Other expenses 107% 112% 114% 123% 100%

Total operating expenses 130% 124% 117% 119% 100%

Profit before provision 129% 99% 110% 123% 100%

Provision for loans and investments

General provision 41% 144% 187% 127% 100%

Specific provision 215% 214% 50% 102% 100%

Provision for diminution in value of investments 107% 9% -367% 0% 100%

Other provisions - - - - -

Total provision 202% 271% 255% 149% 100%

Total profit before taxation 125% 91% 103% 122% 100%

Provision for taxation

Current tax expense 104% 85% 77% 114% 100%

Deferred tax income 5500% 1682% 2500% 1267% 100%

100% 84% 75% 113% 100%

Net profit after taxation 143% 95% 122% 128% 100%

Earnings Per Share (EPS) 123% 82% 105% 112% 100%

*2016 has been considered to be the base year.



VERTICAL ANALYSISConsolidated Balance Sheet as at December 31 (For last five years)

2020 2019 2018 2017 2016PROPERTY AND ASSETSCashIn hand (including foreign currencies) 0.00% 0.00% 0.00% 0.00% 0.00%Balance with Bangladesh Bank and its agent (including foreign currencies) 1.20% 1.85% 2.35% 1.15% 1.23%

1.20% 1.85% 2.35% 1.15% 1.23%Balance with other banks and financial institutionsInside Bangladesh 16.14% 11.01% 12.52% 14.25% 13.08%

Outside Bangladesh - - - - -

16.14% 11.01% 12.52% 14.25% 13.08%Money at call and short notice

InvestmentsGovernment 2.40% 1.18% 0.00% 0.00% 0.00%

Others 4.42% 4.73% 6.69% 8.28% 5.48%

6.82% 5.91% 6.69% 8.28% 5.48%

Loans and advancesLoans, cash credit, overdraft etc. 73.36% 78.67% 76.89% 74.72% 78.45%

Bills purchased and discounted - - - - -

73.36% 78.67% 76.89% 74.72% 78.45%Fixed assets including land, building, furniture and fixtures 0.81% 0.95% 0.51% 0.69% 0.82%Other assets 1.67% 1.61% 1.05% 0.91% 0.93%

Non-banking assets - - - - -

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks, financial institutions and agents

16.39% 12.12% 11.45% 11.91% 15.84%

Deposits and other accountsCurrent accounts and other accounts etc. - - - - -

Bills payable - - - - -

Savings bank deposits - - - - -

Term deposits 60.12% 64.25% 64.36% 62.55% 59.86%

Bearer certificate of deposits - - - - -

Other deposits 1.96% 2.12% 2.25% 2.34% 2.33%

62.08% 66.37% 66.61% 64.89% 62.19%Other liabilities 9.52% 9.57% 9.45% 10.03% 10.70%Total Liabilities 87.99% 88.06% 87.51% 86.83% 88.73%Capital/Shareholders' equityPaid-up capital 2.97% 3.21% 3.45% 3.94% 3.17%

Share premium 0.99% 1.07% 1.15% 1.32% 0.00%

Statutory reserves 2.33% 2.14% 2.21% 2.19% 2.25%

General reserves 0.79% 0.85% 0.92% 1.05% 1.26%

Dividend equalisation reserves 0.04% 0.04% 0.04% 0.05% 0.06%

Retained earnings 4.89% 4.63% 4.71% 4.62% 4.53%Total Equity attributable to equity holders of the company 12.01% 11.94% 12.49% 13.17% 11.27%Non-controlling interest 0.00% 0.00% 0.00% 0.00% 0.00%Total Liabilities and Shareholders' equity 100.00% 100.00% 100.00% 100.00% 100.00%



VERTICAL ANALYSISConsolidated Profit and Loss Account (For last five years)

2020 2019 2018 2017 2016Interest income 84.76% 93.30% 87.45% 79.55% 85.40%

Interest on deposits and borrowings etc. 53.29% 60.24% 54.37% 43.82% 47.25%

Net interest income 31.47% 33.06% 33.08% 35.74% 38.15%

Investment income 9.37% 0.68% 4.38% 9.68% 4.86%

Commission, exchange and brokerage 3.54% 2.90% 4.68% 6.76% 4.51%

Other operating income 2.33% 3.12% 3.49% 4.01% 5.23%

Total operating income 46.71% 39.76% 45.63% 56.18% 52.75%

Salaries and allowances 11.38% 10.13% 10.14% 11.59% 10.66%

Rent, taxes, insurance, electricity etc. 0.36% 0.41% 1.76% 1.97% 2.21%

Legal expenses 0.17% 0.16% 0.08% 0.23% 0.19%

Postage, stamp, telecommunication etc. 0.33% 0.31% 0.31% 0.34% 0.35%

Stationery, printing, advertisements etc. 0.78% 1.15% 1.30% 1.25% 1.05%

Managing Director's salary and benefits 0.09% 0.09% 0.09% 0.09% 0.09%

Directors' fees 0.01% 0.01% 0.02% 0.02% 0.02%

Auditors' fees 0.01% 0.01% 0.02% 0.01% 0.01%

Charges on loan losses 0.00% 0.00% 0.00% 0.00% 0.00%

Depreciation and repair of Company's assets 2.24% 2.33% 1.34% 1.73% 2.04%

Other expenses 2.49% 2.63% 2.97% 3.67% 3.40%

Total operating expenses 17.86% 17.23% 18.02% 20.90% 20.01%

Profit before provision 28.85% 22.53% 27.61% 35.29% 32.74%

Provision for loans and investments

General provision 0.14% 0.50% 0.71% 0.55% 0.50%

Specific provision 2.52% 2.53% 0.66% 1.53% 1.71%

Provision for diminution in value of investments -0.46% -0.04% 1.74% 0.00% -0.62%

Other provisions 0.00% 0.00% 0.00% 0.00% 0.00%

Total provision 2.20% 2.99% 3.11% 2.08% 1.59%

Total profit before taxation 26.65% 19.54% 24.50% 33.21% 31.15%

Provision for taxation

Current tax expense 9.26% 7.64% 7.70% 12.95% 12.97%

Deferred tax income -0.41% -0.13% -0.21% -0.12% -0.01%

8.85% 7.51% 7.49% 12.83% 12.96%

Net profit after taxation 17.80% 12.03% 17.01% 20.37% 18.19%

Earnings Per Share (EPS) 0.05% 0.03% 0.05% 0.05% 0.06%



HIGHLIGHTS AS REQUIRED BY BANGLADESH BANKIDLC Finance Limited as on December 31, 2020

Sl no. Particulars 2020 2019

1 Paid-up capital in BDT Million 3,771 3,771

2 Total capital (eligible) in BDT Million 12,822 11,935

3 Surplus/(shortage) capital in BDT Million 4,033 3,880

4 Total assets in BDT Million 123,419 114,655

5 Total deposits in BDT Million 80,622 79,499

6 Total loans, advances and leases in BDT Million 91,853 91,448

7 Total contingent liabilities and commitments in BDT Million 2,879 2,039

8 Loans to deposit ratio (total loans/total deposits) Times 1.14 1.15

9 % of classified loans against total loans % 1.79 3.07

10 Profit after tax and provision in BDT Million 2,205 1,522

11 Classified loans, advances and leases during the year in BDT Million 1,643 2,804

12 Provisions kept against classified loans, advances and leases in BDT Million 360 343

13 Provision surplus/(deficit) against classified loans, advances and leases in BDT Million 276 -

14 Cost of fund % 8.05 9.30

15 Interest earning assets in BDT Million 116,921 108,491

16 Non-interest earning assets in BDT Million 6,498 6,164

17 Return on investment (ROI) % 2.31 1.70

18 Return on assets (ROA) % 1.85 1.38

19 Income from investment in BDT Million 1,035 33

20 Operating profit per share in BDT 9.20 7.44

21 Earnings per share in BDT 5.85 4.04

22 Price earning ratio Times 10.84 11.25



for the year ended December 31, 2020

VALUE ADDED STATEMENT

Value added is the wealth created by IDLC through extending lease financing, short-term finance (factoring of accounts receivable and work order financing), housing finance, merchant banking and corporate finance.

The Value Added Statement shows the total worth created and how it was distributed to meet certain obligation and the portion retained for the continued operation and expansion of the Company.

Dec. 31, 2020%

Dec. 31, 2019%

in BDT million in BDT millionValue added

Operating revenue 12,941 13,022 Cost of borrowing (7,640) (8,640)

5,300 4,382 Other income 325 433

5,625 4,815 Provisions (217) (413)Operating expenses excluding staff costs and depreciation. (554) (566)Value added 4,855 100% 3,837 100%

Distribution of value addition

To Employeesas remuneration 1,366 28% 1,191 31%

To Governmentas taxes 1,047 22% 868 23%

To Shareholdersas stock dividend (cash and stock) 1,320 27% 1,320 34%

Retained in the business 1,122 23% 457 12%as capital and revenue reserve 885 18% 203 5%as depreciation 237 5% 255 7%

4,855 100% 3,837 100%

Number of employees 1,294 1,304 Value added per employee 3.75 2.94

31.05%To Employees

22.63%To Government

34.40%To Shareholders

11.92%Retained in the business

2019

28.14%To Employees

21.57%To Government

27.18%To Shareholders

23.11%Retained in the business

2020



MARKET VALUE ADDED (MVA) STATEMENTMarket value added statement reflects the Company's performance evaluated by the market through the share price of the company. This statement shows the difference between the market value of a company and the capital contributed by investors. In other words, it is the sum of all capital claims held against the company plus the market value of debt and equity.

The higher MVA is the better indication. A high MVA indicates the company has created substantial wealth for the shareholders. A negative MVA means that the value of management's actions and investments are less than the value of the capital contributed to the company by the capital market (or that wealth and value have been destroyed).

The following statement shows how the MVA has been calculated for the year ended December 31, 2020 and 2019.

in BDT Million

2020 2019Market value of shares outstanding 23,905 17,118

Book value of shares outstanding 15,238 14,018

Market value added 8,667 3,101

in BDT mn

2020 2019

23,90517,118

8,667 3,101

14,018

15,238

Book value of shares outstanding Market value addedMarket value of shares outstanding



ECONOMIC VALUE ADDED (EVA) STATEMENTEconomic Value-Added is the surplus generated by an entity after meeting an equitable charge towards providers of capital. It is the post-tax return on capital employed (adjusted for the tax shield on debt) less the cost of capital employed. Companies which earn higher returns than cost of capital create value, and companies which earn lower returns than cost of capital are deemed harmful for shareholder value.

The aim of EVA is to provide management with a measure of their success in increasing shareholder's wealth: a better measure than profit of how much the company had made for shareholders.

EVA has been calculated by the following formula:

EVA = Net Operating Profit – Taxes – Cost of Capital

in BDT Million2020 2019

Net operating profit 3,468 2,804

Provision for taxes (1,047) (868)

Net operating profit after tax (NOPAT) 2,421 1,935

Charges for capital

Capital employed 13,290 12,585

Cost of equity (%)* 9.06% 11.43%

Capital charge 1,204 1,438

Economic Value added 1,217 497

Capital employed as on December 31

Shareholders' equity 12,116 11,231

Accumulated provision for doubtful accounts and future losses 1,572 1,661

Average shareholders' equity** 13,290 12,585

* Cost of equity reflects shareholders' expected return. Ultimately, this is the opportunity cost for shareholders for investing their funds in the company. Interest on 20 years Government Treasury Bond plus a standard risk premium has been assumed to be the cost of equity.

** Average shareholders equity has been derived from average of current year and previous years.



As per Bangladesh Bank Prudential Guidelines on Capital Adequacy and Market Discipline for Financial Institutions, Financial Institutions (FIs) are required to maintain a minimum capital adequacy ratio of 10%. At the end of 2020, capital adequacy ratio of the group stood at 17.45%.

in BDT million

2020 IDLC Group IDLC Finance

Tier I: Core Capital 15,238 12,116

Paid-up capital 3,771 3,771

Share premium 1,261 1,261

Statutory reserves 2,951 2,951

General reserves 1,000 1,000

Dividend equalization reserves 47 47

Retained earnings 6,210 3,088

Non-controlling interest 0.003 -

Tier II: Supplementary Capital 718 705

General Provision 718 705

Total eligible capital 15,956 12,822

Total risk weighted assets 91,420 87,888

Capital Adequacy Ratio (%) 17.45 14.59

CAPITAL ADEQUACY RATIO

2016 2017 2018 2019 2020

Group Solo

14.50%

16.42%17.34% 17.50% 17.45%

13.25%

15.30% 15.47%14.82% 14.59%



CONTRIBUTION TO THE NATIONAL ECONOMYIDLC is considered to be one of the major contributors in the economy of Bangladesh both in monetary and non-monetary terms. IDLC was established in 1985 as the first leasing company in the country and with its pioneering role has established and popularized lease finance as an alternative and secured source of long term finance. IDLC is the largest employer, financial service provider and taxpayer among the non-banking financial institutions in the country. Some of our specific contributions to the national economy are highlighted below:

Taxes to Government

In 2020, IDLC deposited BDT 1,119 million to the Government exchequer as corporate income tax and BDT 50 million as VAT against fee income; totaling to BDT 1,169 million paid as Tax and VAT against the income earned by IDLC. Also, BDT 1,176 million was collected and deposited to the Government exchequer as withholding tax (BDT 1,035 million), withholding VAT (BDT 54 million) and excise duty (BDT 87 million).

Notably, Tax and VAT paid against IDLC’s income grew by 8.78% resulting primarily from increase in advance income tax paid against increased taxable income. A sharp decline of 20.23% in VAT has been offset by the growth in corporate tax by 10.59%. The decline in VAT is a natural resultant of reduced fee income from reduced disbursements, owing to the economic slump caused by the pandemic. Tax, VAT and Excise Duty deduction/collection at source has been increased by 1.89% and the composition of Contribution has remained fairly consistent. The trend is consistent to the nature of the business.

Employment generation

Despite the pandemic, we on-boarded 161 employees, whose employment was committed prior to lockdown, bringing a net headcount to 1,465. During 2020, the group paid BDT 1,624.33 million as salaries and allowances to its employees and spent BDT 4.51 million for trainings. Moreover, at a time when job creation is a top priority for government, we continued to catalyze our lending to small and medium enterprises (SME), thereby helping accelerate both direct and indirect job creation.

92% Total Tax

4% Total VAT

4% Total Excise Duty

COMPOSITION OF CONTRIBUTION TO NATIONAL EXCHEQUER IN 2020

91% Total Tax

6% Total VAT

3% Total Excise Duty

COMPOSITION OF CONTRIBUTION TO NATIONAL EXCHEQUER IN 2019

TAXES PAID TO THE GOVERNMENT in BDT mn

2016 2017 2018 2019 2020

Tax and VAT paid against IDLC's incomeTax, VAT and excise duty collected at sourc

1,282 1,008 1,072 1,075 1,169

675 986 934 1,154 1,176

1,957 1,994 2,006 2,229 2,346



Focus on SME Financing

SMEs are the key drivers of any economy, while narrowing income inequality and supporting poverty alleviation. According to Policy Research Institute (PRI), SMEs now occupy an important position in the national economy, accounting for about 45% of manufacturing value addition, 80% of industrial sector employment, 90% of total industrial units and employment of about 25% of the labour force. Their total contribution to export earnings hovers in the range of 75% to 80%. The industrial sector makes up 31 per cent of the country's gross domestic product, most of which is coming from the SMEs.

IDLC SME division has been growing by around 21% on an average for the past 10 years. Today it comprises more than 36% of the total customer lending of IDLC Finance Limited. IDLC SME Division is also committed to the development of women entrepreneurs across the country by extending Women Entrepreneur Loans and non-financial services for women through IDLC Purnota. Besides, IDLC SME Division has increased its focus to serve the micro enterprises and has invested heavily on technological development to cater to the micro enterprises.

The growth story of IDLC SME Division is well represented by the increasing trend of active SME clientele, as depicted in the graph, which highlights 3.61% rise in number of clients to 15,749 in 2020, which was 15,201 in 2019.

Environment friendly technologies

Sustainable economic growth and a healthy environment are interlinked. Keeping this in mind, IDLC is also offering 55 products under green financing umbrella covering the sectors/purposes like Certified Green Industry/Building Establishment, Renewable Energy, Energy & Resource Efficiency, Liquid & Solid Waste Management, Recycling & Manufacturing of Recyclable Goods, Environment-friendly Brick Production, Occupational Health and Safety, etc. In the year 2020, Green Banking portfolio achieved 13% growth from 2019 and stands at BDT 1,584 million. Amidst the pandemic this year, IDLC claimed refinances against 72% of its Green Finances from Bangladesh Bank under Refinance Scheme for Green Products/Initiatives/Projects.

Details of Green Banking initiative are enunciated in the segment on ‘Green banking’, in page no. 129.

Supporting community through various CSR activities

At IDLC, commitment to social welfare and community has been part of its corporate culture, and IDLC is much reputed for its contributions towards environmental and community development. We support economic growth by investing in programs that enable economic development with a social purpose. With the aid of our one-of-a-kind ‘Khushir Kheya’ platform, we have extended our reach towards social and economic development by leaps and bounds, as we engage members of the community in various social development initiatives that further enhances our effort towards ensuring a sustainable economy.

2020 was the year where providing community support was key. We mobilized over BDT 31 million to fight against the pandemic via various platforms, including the Prime Minister’s Relief Fund. We also engaged in providing healthcare services to the marginalized society. Details of our activities in this area has been discussed on pg no. 34 in section 'Social & Relationship Capital'.

NUMBER OF ACTIVE CLIENTS (SME)

2016 2017 2018 2019 2020

10,416 12,183

13,640 15,201 15,749



HUMAN RESOURCE ACCOUNTING

At IDLC, it is one of the utmost priorities that colleagues are taken care of. We try to provide our colleagues a congenial work environment, opportunity to hone their skills, and apt compensation and rewards. Hence, they remain constantly inspired and motivated, and try to deliver their best performance- one of the key reason for our success and 35 years of existence.

Optimizing Headcount Allocation

Recruitment

The most important responsibility of our human resource department is to ensure that we have the right people at the right time in the right position. In order to achieve that, we have a very comprehensive and optimized recruitment process in place. We believe in equal opportunities for everyone who is interested and try to make the recruitment process as meritocratic as objectively possible.

Attrition Management

While attrition is inevitable to any organization in any industry, we, at IDLC, try to keep attrition levels as low as economically possible. Low attrition helps reduce cost of recruitment and enables consistency in service delivery. Moreover, morale remains high among existing employees. We have successfully reduced our attrition level over the years as presented in the graph below. Besides competitive salary and benefits, Supportive work environment, good work life balance, and proper recognition of talents have helped us achieve the declining attrition levels year by year.

Performance Management

Performance & Rewards

We have an online performance appraisal system that allows us to evaluate employee performance semi-annually and annually. Our performance appraisal process allows us assist employees in their learning and career development goals. The system also includes working on areas where there are room for improvement through constructive dialog. And lastly, the process ensures that employees with positive contributions are recognized and rewarded.

Talent Development

We emphasize building proper teams more than picking the best talents from the market. Thus, the HR department always tries to play a pivotal role in driving strength from diversity and inclusion of IDLC core values and leadership behaviors within our talents. Our talents are provided both- traditional and e-training to enhance their knowledge and skillset. Through a culture of continual growth, we try to help them grow and thrive throughout their careers.

IDLC GROUP

Training Type 2016 2017 2018 2019 2020

Foreign 15 21 13 11 0

Public/Local 59 74 80 56 24

Customized 11 20 22 14 11

In-House 27 49 60 39 107

Online 0 0 0 0 2

E-Learning 0 0 0 0 3

Total 112 164 175 120 147

Annual sales force training hours

Year 2016 2017 2018 2019 2020

Number of sales force training hours

1,956 1,714 4,600 7,572 9,165

Our commitment towards growth of the employees can be clearly seen from the above tables. Over the years, we have invested substantial time and money in such training programs. The sales force training hours have been increased by 20% in 2020 to ensure better service quality to customers.

Succession Planning

Like in any other organization, leadership continuity is very important in IDLC. Through our succession planning, we prefer to promote to leadership roles from within the organization to foster greater career opportunities for our people. During the year, we had several internal moves and promotions into key leadership positions, reflecting that the depth in our talent pool, consequent to which our succession pipelines for key management positions got bolstered.

Core Management

Senior Level Management

Mid-Level Management

Junior Level Management

EMPLOYEE SPREAD6%

14%

78%

2%

ATTRITION RATE

2016

19.78% 19.33%15.81%

12.31% 10.75%

2017 2018 2019 2020



Employee Engagement

At IDLC, we always keep engagement with colleagues constant in different capacities to maintain continuous motivation which was especially important in the times of the pandemic. In normal times, employees are motivated to go beyond their regular activities and engage in different team building activities. On the fun side of things, family days and department day-outs are organized from time to time to build more rapport and reinvigorate our employees. This year, because of social distancing measures, such activities were shifted to a virtual platform.

Health & Fringe Benefits

Healthy mind and body allows our employees to contribute to the fullest to the organization. Keeping that in mind, IDLC tries to improve its employee’s health through various health benefits and fostering a healthy working environment. Additionally, IDLC arranges yoga classes for its employees to keep their body and mind in good shape, which was especially important during the pandemic. Moreover, hospitalization schemes and other fringe benefits are also provided to ensure a better lifestyle for employees and their families.

Ethics & Culture

Corporate culture sets the direction for our teams. We follow the highest ethical values and make it a key business priority to do so. We expect our employees to fully uphold statutory compliances. As a result, it is compulsory for all our employees to read and sign the Code of Conduct every year as a sign of recurrence to the values enshrined in it. Additionally, IDLC encourages employees to act with honesty and spread the message of social responsibility to the community. Furthermore, IDLC puts effort in creating an organizational environment through the implementation of policies and programs that help individuals and teams to grow and sustain. In order to achieve these, a safe, supportive environment for employees are ensured. For proper engagement and motivation, our focus is to help employees maintain work-life balance. It is only possible because we exercise objective based performance appraisal system that enables employees to maintain standard operating time for different job roles and improve efficiency.

Human Resource Accounting Process

Human Resource Accounting involves capitalizing the company’s management and employees as human capital that provides future benefits. In the HRA approach, costs related to human resources are treated as assets on the balance sheet as opposed to the in traditional accounting approach which treats them as expenses on the income statement. HRA implies that in addition to the measures themselves, the process of measurement has relevance in decision-making involving organizations. Therefore, HRA is the process of identifying and measuring data about human resources and communicating this information to the interested parties. It is an attempted process to identify and report investments made in human resource that the current practices do not account for.

Financial Reporting Standards and Practice at IDLC

The IFRS do not currently have standards requiring HRA, but they are moving closer to providing more flexible approaches to accounting measurements and reporting. For example, the international standards IAS 38 Intangible Assets and IFRS 3 on Business Combinations permits the recognition of the intangible asset goodwill, which indicates a willingness to allow for valuation of assets that are not traditional tangible assets, such as human resources.

In IDLC, we are following conventional accounting practices and, as there are no HR specific accounting standards, we do not capitalize any HR cost as asset. However, we are trying to benefit from HR accounting concepts and are using HR accounting information (such as per employee cost to the company, expected service life of employees, per capita productivity and its growth over periods and many more) in making important management decisions.

Objectives and benefits

The aim of HR accounting is to illustrate the potential of the employees in monetary terms, which aids in investment decisions and HR and expected benefits that can be derived from such investment. It provides cost/value information for making management decision about acquiring, allocating, developing and maintaining human resources in order to attain cost effectiveness. It allows management personnel to monitor and effectively use human resources. Lastly, it also provides insightful information to the investors interested in making long term investments in service sector companies.

Employee Culture & Well-Being

Fringe benefits

Housing Loan

Personal Loan

Motor Cycle Loan

Transport Facilities

Group Life Insurance

Hospitalization Insurance

Education Support Scheme

Welfare Fund Spot Award Integrity Award Outstation Allowance

Leave Fair Assistance



Analysis of Key Metrics

The number of colleagues at IDLC has decreased from 1,478 in 2019 to 1,465 at the end of 2020. This is a result of natural attrition and minimal recruitment. Per capita figures have improved for most metrics other than disbursement, which was affected largely due to the pandemic. Our efforts in maintaining the strength of our lending business and mobilizing deposits are well reflected in the loan and deposit numbers. Operating Expense per employee increased by a small amount mainly because of increase in compensations. Training Cost per employee nearly halved, primarily on account of the e-learning platform. As a whole, all of the profitability figures increased significantly as the economy rebounded in the last quarter and the capital market also enjoyed a bullish run.

The key metrics of the group in regards to headcount are provided below:

Particulars 2019 2020

Number of Colleagues (Consolidated) 1,476 1,465

Number of Colleagues (Standalone) 1,306 1,294

Disbursement (BDT mn) 39.64 28.13

Loan Portfolio (BDT mn) 70.71 71.93

Deposit Portfolio (BDT mn) 57.75 58.94

Gross Turnover (BDT mn) 9.57 9.74

Operating Income (BDT mn) 3.81 4.55

Operating Expense (BDT mn) 1.65 1.74

Training Cost (BDT Thousand) 7.22 3.07

Operating Profit (BDT mn) 2.16 2.81

Profit Before Tax (BDT mn) 1.87 2.60

Profit After Tax (BDT mn) 1.15 1.73



BUSINESS SEGMENT REVIEW – LENDING BUSINESS OPERATIONSSMEIDLC’s SME Division started its journey in 2006 by establishing a dedicated SME branch in the Northern district of Bogura. Determined to play a significant role in developing the SME segment of Bangladesh, IDLC-SME has evolved into one of the core business segments of the organization. SME Division caters to the needs of its clients through a wide range of customer-centric, opportune, and innovative products. Throughout the years, SME Division has made significant investments in human resources and infrastructure - the two most critical building blocks, which resulted in the creation of a robust structure that has been facilitating our growth.

Core Competencies

• Faster loan processing

• Skilled sales force & credit team

• Strong distribution network

Number of clients

15,749 Average Ticket Size

BDT 2.42 mn Number of Employees

442

Portfolio Trend in BDT mn

Disbursement in BDT mn

Sector Breakdown

Key Business Actions in 2020

Record breaking highest monthly disbursements for two consecutive months amid the pandemic (BDT 2,472 million in Oct’2020 and BDT 2,849 million in Nov’2020).

Partnership with a leading e-commerce platform, to launch the “eLoan Pilot Project” to finance e-commerce and f-commerce entrepreneurs

The entire BDT 3,000 mn stimulus disbursement target set by Bangladesh Bank was disbursed within stipulated time, fulfilling every requirement.

IDLC Finance Limited has also received the highly coveted ‘Asiamoney Best Bank for SMEs’ Award in 2020, for the second consecutive year.

Strategic Focus

‘‘Increasing footprint and ensuring more financial inclusion’’

2016 2017 2018 2019 2020

19,921 24,147

27,891 31,318

33,648

2016 2017 2018 2019 2020

14,916

18,099 19,449

21,486

15,291

SME Portfolio Composition

26.58% Service

48.81% Trading

24.61% Manufacturing

HIGHLIGHTS



Indicators 2016 2017 2018 2019 2020

Headcount

Portfolio/business colleague(BDT)

Disbursement/business colleague(BDT)

Files Disbursed/business colleague

Average Ticket Size

Lending Rate

PERFORMANCE INDICATORS

Factors Affecting The Performance

Internal External

• Slowdown in economic activities in the first half of 2020 due to government mandated general holiday.

• In 2020, the financial sector witnessed an overall drop-in interest rate in line with government's interest rate capping policy, introduced for banks. This resulted in a decrease of Portfolio Weighted Average Lending Rate.

• The Online Credit Appraisal System (OCAS) and Mobile App for our tab based operations were upgraded to leverage technological improvements and increase efficiency.

• The employees of SME Division worked diligently to ensure unrestricted flow of funds to our clients even during the pandemic.

Looking Forward

Steps Taken

• Online Service Portal was developed to provide our clients all necessary services from the safety of their homes.

• Online training was organized for SME entrepreneurs and employees of SME Division.

• Increased focus in order to regularize collection volume

Future Initiatives

• Focus on creating alternate channels for SME lending by leveraging technology to minimize the need for physical interactions

• Collaborating with leading e-commerce and f-commerce platforms

Term Industry Trends Business FocusShort term(<1yr)

• Low interest rate due to regulatory directive.• Challenge in maintaining portfolio quality

due to payment deferment mandated by the central bank.

• Increased focus in e-commerce and f-commerce.

• Efficient asset liability management.• Regular monitoring of portfolio and strengthen

geographical footprint.• Collaboration with leading e-commerce sites for

financing e-commerce and f-commerce merchants to capitalise on low cost of funds.

Medium to Long term(>1yr)

• Increased focus on the SME Sector by Banks, NBFIs and MFS.

• Technological enhancement will empower more FIs to automate their processes.

• Consumption of financial product and services will increase with the increase in financial literacy.

• Focus on vertical and horizontal expansion to reach lower segments, as well as remote areas.

• Use of data analytics to understand the need of customer base through implementation of CRM software.

Tackling Covid-19



CONSUMERAfter being launched in 1997, Consumer Division of IDLC has been contributing to the overall growth of the company by providing customer-centric solutions through providing core loan services: Home Loan, Car Loan & Personal Loan. Currently Consumer Division is offering affordable housing finance solutions especially for the middle-income and lower middle income group and at the same time, exploring to extend its customer base further through enhancing efficiency, offering more customized solutions and increasing geographical coverage.

Core Competencies

• Rapid Turn Around Time for loan processing

• Customer centric approach and transparency

• Experienced sales force and extensive branch network

Number of clients



158


Disbursement in BDT mn

Sector Breakdown


Enhanced multiple processes and equipped the team managers with upgraded tools to improve productivity of the sales force.

Enhanced focus on regularizing the early stage irregular accounts brought about a significant breakthrough in collections and NPL management.

Focused on Affordable Home Loans, a specially designed product for middle and lower middle-income households.

Initiated referral channel with the idea of capturing leads generated informally & ensuring a structured delivery of service to these prospective clients

Strategic Focus

‘‘Leveraging Technology’’

Consumer Portfolio Composition

94.01% Home Loan

0.40% Personal Loan

1.59% Loan against Deposit

4.00% Car Loan

2016 2017 2018 2019 2020

21,415 24,152

27,823 30,712 29,089

2016 2017 2018 2019 2020

7,641

9,228 9,46610,357

6,590

HIGHLIGHTS



Indicators 2016 2017 2018 2019 2020

Headcount


Disbursement/business colleague(BDT)

Files Disbursed/Business colleague

Average Ticket Size

Lending Rate



Internal External

• Temporary impact of COVID imposed restrictions on personal income of the customers and target segment

• Downward pressure on the interest rate due to the regulator imposed cap for banks. Although no capping policy was implemented for NBFIs, the competitive pressure from banks led to the downward pressure on our rates

• Improved process efficiency driven by Online Credit Appraisal System and Tab based operation

• Strategic diversification of ticket size in an effort to capture less tapped market

Tackling Covid-19

Looking Forward

Steps Taken

• Increased focus on portfolio quality

• Work from home facility from the beginning of pandemic to ensure the safety of all employees

• Increased focus on cash flow management

• Leveraging technology for providing required services to the clients.

Future Initiatives

• Continue prioritization of the health and safety of employees

• Extensive credit assessment while focusing the middle-income and lower-middle income group through affordable housing financing

Term Industry Trends Business Focus

Short term(<1yr)

• Focus on efficiency driven models• Lower interest rates

• Leverage the ever evolving technology into the business model in order to achieve economies of scale.

• Continue to offer competitive interest rate



• Demand for customized products and services• Consumption of financial product and services will

increase with the increase in financial literacy.

• Explore and innovate customized services and need based products

• Explore and expand in less crowded customer segment and geographical locations.



CORPORATEThe corporate division of IDLC, the first business wing of IDLC, has demonstrated sturdy resilience throughout the last 35 years and more so during the pandemic induced situation through quality asset portfolio and proficient teamwork. For better part of the year the overall economic activity in the country remained low if not at a standstill. However, right after the lifting of lockdown and return of partial normalcy, most of the clients, comprising of large local corporates as well as foreign corporate houses, showed strong sign of recovery. The corporate team demonstrated remarkable flexibility by re-focusing and increasing effort for fund collection. Supported by Treasury’s excellent fund management, corporate department achieved commendable disbursement figures at the end of the year maintaining its portfolio even in year such as this. The team reinforced portfolio’s risk-resilience by taking higher exposure with clients who have strong credit worthiness.

Core Competencies

• Asset portfolio consisting of clients with strong credit worthiness.

• Experienced team of relationship managers and efficient business support process.

Number of clients

536 Average Ticket Size


38


Disbursement Trend in BDT mn

Sector Breakdown


The portfolio quality significantly improved due to settling of some perennial problematic contracts. As a result, NPL decreased by 2.92% and operating income increased by 13%.

Increased exposure with high credit worthy clients, which resulted in increase of average ticket size by 52%.

Following lower lending opportunities, we refocused on deposit mobilization, accumulating BDT 2,268 mn.

In spite of significantly reduced economic activity, we managed to disbursed BDT 14,514 mn and managed to sustain with only 1% de-growth in our portfolio

Strategic Focus

‘‘Sustainable Growth”

Consumer Portfolio Composition

30.68% Service

6.36% Trading

62.96% Manufacturing

2016 2017 2018 2019 2020

19,539 21,136

26,696 29,419 29,115

2016 2017 2018 2019 2020

14,891 17,412

19,951 19,928

14,514

HIGHLIGHTS



Tackling Covid-19

Indicators 2016 2017 2018 2019 2020

Disbursement (BDT)

Average Ticket Size (BDT)

Lending Rate %

Fee Income

NPL %



• Moratorium on loan payments, from January to December of 2020, extended by the central bank, has helped clients recuperate after the lockdown.

• Refinance schemes under various stimulus packages launched by the central bank aided clients to recover further.

• Consumer awareness regarding the risk-profile and strength of financial institutions has increased.

• Risk-resilient asset portfolio stemming from well-planned sectorial diversification in financing

• Diversified financing channels resulting in a sterling liquidity position

• Management of asset quality through cash flow based in-depth credit appraisal.

Looking Forward

Steps Taken

• Implemented innovative IT solutions, which facilitated all employees to work from home

• Virtual factory visit to ensure proper credit assessment even during the lockdown.

• Knowledge sharing online sessions were arranged between industry experts and RMs to share their business insight and awareness regarding industry trends

Future Initiatives

• Close monitoring of clients who have been highly affected by pandemic.

• There is a possibility of a delayed effect of the pandemic on clients’ revenues and subsequent cash flows. To maintain a healthy asset portfolio, special assessment of such businesses and their future cash flows is necessary.


Short term(<1yr)

• The end of the loan moratorium might result in an escalation in the number of defaulted loans.

• The drive to provide short-term emergency funding through loan facilities might increase banking risks like credit misallocation or credit loss.

• Maintain a diversified and risk-resilient portfolio and focus on industries & clients who showed better resilience during pandemic.

• Continue with the practice of financing clients with good corporate governance to maintain a healthy asset portfolio.

• Ensure collection measures to curb the escalation of defaulted loans after the end of the loan moratorium and continue with collection efforts from classified legacy contracts


• The clients, focused mainly on catering to domestic demand, are expected to recover faster.

• The rapid evolution of customers’ needs brought about by an increasing number of competitors and better technological innovations.

• Credit quality might wane in sectors or regions, which were hit hardest by the pandemic, making assessment of changing market condition harder.

• Focusing more towards various refinancing scheme to facilitate low-cost long-term financing through GCF, IPFF and other sources.

• Keep cultivating a thriving alliance with financing networks, such as development organizations to offer our clients more innovative and tailored financial solutions.

• Become more responsive to the rapid evolution of customer needs by undertaking process re-engineering and IT infrastructure development initiatives.

Internal External



STRUCTURED FINANCEOverview

Bangladesh, was anticipated to have a GDP growth rate above 8% this year and become one of the strongest economies of the world by the mid-21st century. But the global pandemic halted the speed of development worldwide and the economy of Bangladesh was no exception. Bangladesh is still expected to gain back its GDP growth rate in a few years. To facilitate this expected growth, there is a need to finance mega infrastructure projects in transportation, communication, water, energy, economic zones etc. In order to process this need of financing, IDLC’s Structured Finance Department has a dedicated and professional team capable of providing innovative, comprehensive & cost effective solutions to the company’s clients.

Challenges

This year the whole world has experienced an unforeseen and unique challenge of the economic shutdown because of the global pandemic. The pause in the economy has brought down the speed in which Bangladesh’s economy was supposed to go forward. Limited growth of the private sector, volatility surrounding the interest rate and the single-party exposure of few banks in recent times are the key challenges to structured finance opportunities in the current operating context. These unforeseen challenges hindered the continuation of existing deals, however, the expertise and experience of the team has been assisting with going forward with the target to a very good extent.

Key Highlights of 2020

A total of 10 deals were made in 2020 including City Economic Zone Ltd, Karnafuly Dry Dock, North West Power Generation Company Ltd and few more. Through these deals, the Structured Finance department has raised a total of BDT 14,203 mn for its clients, which contributed immensely towards IDLC’s fee income.

Total Fund Raised

BDT 14,203 mnTotal Number of Deals

10Nature of Projects

Economic Zones, Dry Dock Projects, Tower Companies, Perpetual Bond etc.

WAY FORWARD

The department is currently working on many notable deals such as raising funds for financing of multiple economic zones and Tier-I Bonds for various top banking institutions. Going forward, the structured finance department aims to focus on Tier-I bonds and going on joint strategy with other investment banks in Bangladesh to acquire more deals. The department also aims to expand its corporate advisory services by hiring new skilled manpower and focusing on providing consultancy services. Corporate advisory will also expand through pursuing more government deals, Public Private Partnerships (PPP) etc. and thus create new liaisons in the public sector.

Services Provided

• Debt Syndication (Local & Foreign Currency)

• Working Capital Syndication

• Agency & Trusteeship

• Fund Raising through Zero Coupon & Coupon Bearing Bonds

• Commercial Paper

• Arrangement of Private Equity & Preference Shares

• Corporate Advisory for Mergers & Acquisitions and Joint Venture Making

• Balance Sheet Restructuring

• Preparation of feasibility study and so on.

The Structured Finance department (SFD) has evolved as a specialized business unit of IDLC under its Corporate Division. The various diversified products offered are:



GREEN BANKINGOverview

Green Banking is the financial service integrating environmental, social and governance (ESG) criteria into the business or investment decisions for the sustainable advantage of both clients and society at large. Sustainability in this context means the quality of not being harmful to the environment or depleting natural resources, and thereby supporting long-term ecological, social balance and governance. Green Banking Unit (GBU) of IDLC is dedicated towards Green and Sustainable Banking, and enthusiastically working with Corporate and SME businesses to cater necessary finances and refinances defined for Green and Sustainable Products/ Projects/ Initiatives.

Green practice at IDLC

IDLC upholds a vision to encourage and catalyze transformation towards sustainable business practices. To do so, it has established its Agrabad branch in the World Trade Centre at Chittagong which achieved LEED (Leadership in Energy and Environmental Design) Gold Certification from USGBC (United States Green Building Council). This branch is the first-of-its-kind to achieve such an endorsement under the aforementioned category amongst the financial institutions of Bangladesh. IDLC also transformed all other branches with green features and practices it’s Green Office Guideline across the organization, aimed at improving in-house environmental management by saving electricity, minimizing usage of water and paper, and keeping the office clean and hygienic.

Key Highlights of 2020

• Green Financing portfolio has increased around 13% in 2020 over previous year and stands at BDT 1,583.72 million.

• Amidst the pandemic situation this year, IDLC claimed refinances against 72% of its Green Finances from Bangladesh Bank under Green Refinance Scheme.

Green Financing Portfolio

BDT 1,584 mnPortfolio Growth

13%

47.57%Green Building22.28% Liquid & SolidWaste Management12.44%Energy Efficient Machineries12.14% Miscellaneous (safety at factory)

3.83%Renewable Energy

1.75%Ecofriendly Brick Production

CUMULATIVE PORTFOLIO IN DIFFERENT SEGMENTS GREEN BANKING TREND

Green Financed (in BDT mn) Refinance Received (in BDT mn)

2014 2015 2016 2017 2018 2019 2020

3838

518

760 720 648

1,4081,584

- -

643

395

799

2080

214306

221233

1,041

Green Portfolio (in BDT mn)

Services Provided

IDLC offers Green Finances for 55 Green products/initiatives/projects under 9 categories, as defined by Bangladesh Bank, and avails refinances accordingly from Bangladesh Bank to cater the specialized needs of different industries and sectors. The products are mentioned in (pg: 16). IDLC also offers finances for 32 export oriented industries (as mentioned in Export Policy 2018-21), to procure and install up-graded machineries & technologies under the refinance scheme of Technology Development Fund (TDF) introduced by Bangladesh Bank.

Sustainable finances to sectors/ areas as defined in Sustainable Finance Policy (SFP) of Bangladesh Bank, i.e. Sustainable Agriculture, Sustainable CMSME, socially responsible initiatives; including Working Capital and Demand Loan for relevant Green projects and sectors.



Environmental & Social Management System (ESMS)

IDLC has been the pioneer in adopting the “Environmental & Social Management System (ESMS)”, which is a global standard to minimize Environmental & Social Risks. A robust ESMS system is practiced which has been developed with the assistance of FMO (The Netherlands Development Finance Company). In the preparation of the ESMS system, IDLC has taken the following guidelines into consideration: Environmental & Social Risk Management (ESRM) Guideline by Bangladesh Bank, the Environment Conservation Rules 1997, IFC Performance Standards, and ADB Safeguard for Financing. Additionally, IDLC has adopted the 10 UNGC (United Nations Global Compact) principles within the organizational frameworks. GBU organizes periodical in-house training & awareness programs for the employees on green and sustainable financing, and provides necessary technical assistances as well.

Challenges

Environmental and social risks are increasing with the industrialization, and hence, the technologies and non-compliant practices in different industries must be modernized through responsible manners. Lack of awareness is a major challenge, however, high cost of compliance, uneven competition, strict terms and conditions of banks & FIs, and weak regulatory enforcement are other key issues, which requires attention to promote green and sustainable banking. To mitigate such challenges and integrate sustainability into overall credit management of Banks/FIs, the central bank of Bangladesh (Bangladesh Bank) issued notable circulars: Target for Sustainable Finance and Green Finance in 2021, Sustainable Finance Policy in 2020, Sustainability Rating in 2020, Guidelines on Environmental and Social Risk Management (ESRM) in 2017, and Green Banking Policy in 2013. Bangladesh Bank is also offering concessional refinance facilities for green products/ initiatives/ projects i.e. Green Refinance Scheme, Technology Development/ Up-gradation Fund, Green Transformation Fund, and many others.

WAY FORWARD

IDLC will keep analyzing its portfolio for positive impacts while reducing the negative impacts on and managing risks towards sustainability. Environment, Society, and Governance (ESG) will remain priority in every financial decision, so that IDLC’s business strategies remains aligned with the Perspective Plan of Bangladesh: 2010-21, National Sustainable Development Strategy 2010-21, Seventh Five Year Plan, Sustainable Development Goals (SDGs), and Paris Climate Agreement. Furthermore, IDLC will be taking initiatives for capacity development of relevant stakeholders, and to create an enabling environment for the private sector to invest in green and sustainable projects.



WEALTH MANAGEMENTWealth Management Division of IDLC has been one of nucleuses to the overall growth of the company by providing extensive solutions to deposit customers, mostly in the form of Term Deposit: Flexible Term Deposit, Monthly & Quarterly Earner Deposit, Days Term Deposit, and Interest First Deposit. This division has been providing diversified fund sourcing capabilities for the company through collecting customer deposits from multifarious income groups consisting of both individual & corporate segments. We look forward to extending our customer base further through increasing efficiency, offering more elegance & customized solutions, broadening geographical coverage, enabling & enhancing digital platform.

Core Competencies

• Convenient process for deposit account opening

• Flexible products

• Customer centric approach and transparency

• Experienced sales force


Improved several processes and equipped team managers with required tools to improve productivity of the sales force significantly.

Hosted Referral and Retention campaign for the employees of IDLC which helped us to maintain the excess liquidity position to a great extent.

Introduced online based deposit account opening request for the deposit clients which ensured convenience to clients in pandemic situation.

Strategic Focus

‘‘Digital Enablement’’

2016 2017 2018 2019 2020

2.96

3.83 3.9 3.71 3.59

2016 2017 2018 2019 2020

5,739 5,2716,391

7,6138,305

2016 2017 2018 2019 2020

35,24342,477

53,33862,558

67,631

Number of clients



81

Non-Bank Deposit Trend in BDT mn

Client Base

Average Ticket Size in BDT mn

HIGHLIGHTS



Tackling Covid-19

Indicators 2016 2017 2018 2019 2020

Headcount


Client/ business colleague

Average Ticket Size



• Slowdown in economic activities in first half of 2020 due to government mandated general holiday.

• Interest rates of our products were revised to ensure better alignment with the market.

• Opt for technological shift in quick manner maintaining utmost health and safety measure.

• Extensive knowledge sharing and functional training arrangements via online platform for IDLC Group employees to motivate for deposit mobilization.

Looking Forward

Steps Taken

• Increased focus on well-being of clients and employees.

• Work from home facility from the beginning of pandemic to ensure the safety of all employees.

• Increased focus on liquidity management and giving comfort to clients.

• Providing online based solutions to clients.

Future Initiatives

• Continue prioritization of the health and safety of employees.

• Real time deposit account opening via App based solution.

• Extensive drive for improving digital eco-system and offer more convenience to clients.


Short term(<1yr)

• Demand for digital deposit product has increased

• Lower interest rates

• Rising wealth of mid and high income people

• Digitalization of deposit products as per Bangladesh Bank E-KYC guideline.

• Offer competitive returns on deposits

• Explore alternative channels to on-board customers



• Consumption of financial product and services will increase with the increase in financial literacy.

• Incorporate the improving technology into the business model and leverage it to further enhance business acquisition and provision of services.

• Interactive digital platform will be activated for both employee & client.

Internal External



BUSINESS SEGMENT REVIEW- SUBSIDIARY BUSINESS OPERATIONSIDLC SECURITIES LIMITEDIDLC SL, one of the top brokerages of Bangladesh, commenced operations in September 2006. The company provides brokerage services to more than 16 thousand retail, local & foreign institutional investors through reliable trading platforms of both the Dhaka and Chittagong stock exchanges. It also serves more than 4,500 customers of its enlisted merchant banks as a panel broker. It possesses a proven track record of delivering quality customer services while maintaining high standard of compliance and corporate ethics.

The company also offers premium brokerage services to High Net Worth (HNWs), Institutional and foreign investors. Premium brokerage services is a prime bundle of research and advisory support in addition to execution of brokerage.

Number of Clients

16,308 Number of Employees

124

NPAT in BDT mn

Market Share

Total Turnover in BDT bn

Key Strengths

• Skilled traders with professionalism and market insights

• Dedicated relationship managers for all investors

• Competent sell side research team

• Wide branch network

• Culture of confidentiality


While the average daily turnover of market increased by 35%, that of IDLCSL increased by 53% to BDT 519.7 million.

Net brokerage commission income increased by 42.8% to BDT 309.9 million

Market share increased to 4.0% from 3.5%.

Investment income increased by 118.7% to BDT 140.2 million due to substantial return from investment in Treasury bonds

Strategic Focus

‘‘Capturing Market Share”

2016 2017 2018 2019 2020

103

380 366

99

166

2016 2017 2018 2019 2020

3.48%4.02%

4.72%

3.54%4.00%

2016 2017 2018 2019 2020

83

174

126

81

108

HIGHLIGHTS



Indicators 2016 2017 2018 2019 2020

Total Equity 1,128.65 3,108.12 3,473.65 3,572.24 3,738.30

Total Asset 2,145.14 4,135.97 4,934.67 4,541.25 5,214.78

NPAT 103.38 379.47 365.53 98.58 166.06

Number of Customers 15,352 17,171 16,510 15,834 16,308

Average Daily Turnover 344.19 702.72 520.39 339.79 519.74

Total Turnover 82,949.95 174,273.61 125,934.40 80,529.32 108,112.27

Market Share 3.48% 4.02% 4.72% 3.54% 4.00%

Net Brokerage Fee Income 249.82 480.48 333.37 216.99 309.93

ROA 5.58% 14.79% 8.06% 2.08% 3.40%

ROE 9.60% 21.44% 11.11% 2.80% 4.54%

PERFORMANCE REVIEW


Internal External

• The decline in the deposit rate, which persuaded investors to look for alternative investment opportunities

• Low valuation and high dividend yield offered by some good stocks

• The investor-friendly approach taken by the new regulatory commission, further helping investors regain faith in the market structure

• The growth of income from investment by 118.7% can be attributed to the strategic decision to increase investment in treasury bonds.

• Increase in market share by 50 bps. Market share increased from 3.5% in 2019 to 4.0% in 2020.

Looking Forward


• Increase in liquidity due to low deposit rate

• Several reform activities by regulatory to improve stability and liquidity in the capital market

• Increase in total market cap by listing large corporates such as Robi and Walton

• Increase in average daily turnover

• Enhance capacity and productivity of trader’s pool through routine and systematic training

• Continue high focus in foreign and institution brokerage service


• Technological advancement and increasing popularity of trading apps

• Diversification in investment vehicle through the development of the bond market, especially Sukuk.

• Adopt advanced technologies in business for growth in client base and smooth operations

• Focus more on knowledge based brokerage service

Amount in BDT mn

Tackling Covid-19

Steps Taken

• Arranged work-from-home and rotation-based work services for employees

• Automated operational possesses for distant access.

• Improved health standards and hygiene practice through policy development and implementation

Future Initiatives

• Adopt online trading platform to facilitate uninterrupted trading activities and brokerage services from distance

• Continue virtual interaction with the clients

• Increase virtual engagement among the employees.



IDLC INVESTMENTS LIMITEDIDLC Finance commenced its merchant banking operations in 1999. Aligning with regulatory requirements, the merchant banking operation was segregated from the parent company and established as IDLC Investments Limited (IDLC IL) in 2011 as a fully-owned subsidiary of IDLC Finance. IDLC Investments provides a high standard of professional and personalized services to its local and NRB customers. IDLC Investments is currently positioned as one of the top-ranked merchant banking enterprises in the country, renowned for its quality investment banking and portfolio management services.

IDLC Investments Limited has received ‘Euromoney Awards for Excellence’ in 2018, 2019 & 2020 as the ‘Best Investment Bank in Bangladesh’ in recognition of outstanding performance compared to the peers in the market.

Number of Clients

3,929 Number of Employees

27

NPAT in BDT mn

Asset under management in BDT mn

ROA & ROE

Key Strengths

• Strong group brand

• Culture of confidentially and secured custodianship of clients’ assets

• Performance management model that drives business and its quality


Listing of the IPO of Robi Axiata Limited, biggest in the history of Bangladesh with a size of BDT 5,237 million, a multinational company in our bourses after a decade.

Trade debut of BDT 1,250 million IPO of Mir Akhter Hossain Limited, the first organization from the engineering and construction sector to go public

Trusteeship of the first perpetual bond to be issued by a bank in the country.

Strategic Focus

‘‘Diversification”

2016 2017 2018 2019 2020

170

277

180

106

167

2019 2020

1,713 1,372

730 761

1,445 2,148

Other Asset Margin Loan Investment

2016 2017 2018 2019 2020

ROA ROE

7.11% 7.20%

3.78% 2.75%4.36%

10.99%

14.29%

6.43%3.60%

5.43%

HIGHLIGHTS



Indicators 2016 2017 2018 2019 2020

Asset Size 2,705.36 5,039.47 4,496.97 3,888.98 4,281.09

NPAT 170.08 276.52 180.04 105.98 167.17

Number of IPOs, RPOs & Right Issues - - - 1 2

Number of Customers 4,210 5,621 5,816 4,718 3,929

ROA 7.11% 7.20% 3.78% 2.75% 4.36%

ROE 10.99% 14.29% 6.43% 3.60% 5.43%

Margin Loan Portfolio 1,300.51 1,977.95 1,398.62 730.24 760.94

PERFORMANCE REVIEW


• Challenging capital market scenario in 2020

• The decline in the deposit rate, which persuaded investors to look for alternative investment opportunities.

• Increased optimism among investors during post lockdown period.

• More focus on fixed income securities rather than equity investment

• Cautious monitoring of margin loan

• Prudent reduction of proprietary investment.

• Strategic investment in Treasury bonds.

Looking Forward


• Increase in total market cap by listing large corporates

• Improved stability and liquidity in the capital market by reforming activities and regulation

• Low deposit rates

• Expand business by capitalizing anticipated market stability

• Generate alpha following fundamental investment

• Emphasis on sales drive and attract new investors


• Diversification in investment vehicle through the development of the bond market

• Technological advancement and increasing popularity and stability of the market

• Continue to focus on new avenues of business predominantly in corporate advisory service based on client needs and market opportunities

• Technological development for effective client service and smooth operations

• Leverage brand equity to enhance engagement with regulators, investors and other stakeholders

Amount in BDT mn

Internal External

Tackling Covid-19

Steps Taken

• Conducted interactions with clients through phone calls and online messaging platforms

• Arranged work from home and rotation based work services to ensure uninterrupted service

• Improved health standards and hygiene practice through policy development and implementation

Future Initiatives

• Prepare virtual platform to interact with the clients

• Increase virtual engagement among the employees

• Technological development for effective client service and smooth operations



IDLC ASSET MANAGEMENT LIMITEDIDLC Asset Management Limited, a fully owned subsidiary of IDLC Finance Limited, was incorporated in Bangladesh on 19 November 2015. The Company was awarded with asset management license on 7 June 2016 with an initial paid-up capital of BDT 100 mn. We expect to operate in the nascent but growing asset management industry of Bangladesh. The Company’s principal objective is to conduct the business of asset management, primarily through launching and managing mutual funds, to cater the diverse investor needs. Alongside, we also manage a venture capital fund and provide related corporate advisory services.

Initiation

November, 2015Number of employees

18 Asset Size (BDT mn)

386 NPAT in BDT mn

Asset under Managementin BDT mn

Return on Equity

Key Strengths

• Management know-how

• Experienced and tested fund management professionals

• Strong brand image of IDLC as a knowledge leader in capital market operations

• Strong distribution channel


Launch of “IDLC Venture Capital Fund 1”, the first venture capital fund by a financial institution in Bangladesh.

Launch of “Online Onboarding Platform”, first time in the industry, which will enable investors to invest in the mutual funds of IDLC Asset Management Limited completely through online.

The three mutual funds of IDLC AML outperformed the market, generating excess returns

Strategic Focus

‘‘Expansion of Client Base”

2016 2017 2018 2019 2020

10

39 35

-27

14

2017 2018 2019 2020

978 1,100 1,139 1,212

2016 2017 2018 2019 2020

9.91%

30.07%

20.84%

-13.71%

5.45%

HIGHLIGHTS



Indicators 2016 2017 2018 2019 2020

Asset Size (BDT mn) 119.0 186.5 225.2 271.7 386.0

NPAT (BDT mn) 10.4 39.1 34.8 (26.8) 14.4

Asset Under management(Mutual Funds) (BDT mn) - 977.6 1,099.9 1,139.3 1,211.8

Fee income-Institutional Portfolio Mgt. & Mutual Funds (BDT mn) 17.3 68.5 81.1 37.3 70.8

ROA 9.5% 25.6% 16.9% -10.8% 4.4%

ROE 9.9% 30.1% 20.8% -13.7% 5.4%

Advisory Fee (BDT mn) - - - 4.2 1.5

PERFORMANCE REVIEW

Looking Forward


• Post-COVID recovery of the stock market poses many opportunities.

• The company will continue to explore the opportunities of the market.

• Enhance the value of the assets while also protecting the assets from value erosion.


• Strong potential for growth of the private equity and venture capital market in the future.

• Increasing awareness of the client base regarding long term investment opportunities

• Focus on educating mass people about the benefits of long-term investment through effective communication.

• Aim to strengthen its presence in PE-VC industry.


• The year 2020 put up additional operational challenges as physical movement was restricted due to the pandemic

• Interest rates of our products were revised to ensure better alignment with the market

• Expansion of Asset under management for increased fee income.

• Onboarding of new customers, despite the volatility in the equity market by creating awareness about the benefits of long term investment.

• Expansion of business activities by engaging in corporate advisory services.

Internal External

Tackling Covid-19

Steps Taken

• Arranged work from home for the employees

• Launched online onboarding for clients

• Continuous communication with the clients

Future Initiatives

• Ensuring the readiness of the company to completely operate virtually in case of any pandemic situation where physical movement might be restricted.



MD. RABIUL

Whenever I see a person with a disability on the streets, I cannot but stare and think that I could have been that person.

But I couldn't accept that life and maybe that is why I am where I am today.

I started working in a bakery at a very early age and worked there for 23 years.

Later, I opened my own bakery with 4 to 5 staff and a capital of Taka 50,000.

Today, my business is growing and by the Grace of Almighty, I now employ 60 workers. I am happy and grateful to have IDLC beside me all this time.

Thank you IDLC !



LETTER FROM THE BOARD OF DIRECTORS PRESENTED BY THE COMPANY SECRETARYDear Respected Shareholders,

It is our immense pleasure to present you the Annual Statement of Corporate Governance 2020 of IDLC Finance Limited, for the year ended December 31, 2020.

The aim of this statement is to provide insights into IDLC’s corporate governance activities throughout the year and explain how the company is directed and governed in order to uplift the corporate governance culture. It is to elucidate how the corporate governance at IDLC is coordinated in order to guide the optimum direction, activities and the profound changes in the company’s operating environment that took place throughout the year. Regardless of the changes, the commitment of operating ethically and responsibly remains the same.

The management and organization structure is arduously focused towards enhancing our governance culture. The Board of Directors are committed towards setting standards for upgrading the structure, corporate culture and value. Such standards are highly compliant to supervision and implementation at management and operational levels on a day-to-day basis. We are highly confident that your Board exhibits the expertise, talent and information base for carrying out the responsibilities while ensuring the demands of corporate culture.

The corporate governance practices set forth by IDLC Finance Limited are highly adjusted to the needs of modern financial and corporate environments. Your company not only adheres to the Corporate Governance Code (CGC) issued by Bangladesh Securities and Exchange Commission and Bangladesh Bank, but also follows the global best practices applicable to it as well.

Amidst the Global Pandemic decimating the economy and looming uncertainty about the depth and duration of the crisis, your company took necessary steps to assess and rapidly cope up with the situation. With public gatherings being discouraged and banned in most parts of the country, the board decided to hold the meetings online. Webinars and virtual workshops were held and virtual office was established. Throughout the year, we continued to deliver our commitment to our shareholders, with strong financial results, and to deliver our commitments to create value for our clients, our people, our partners and our communities.

IDLC has been obedient to the statures set out the Corporate Governance Code (CGC) issued by both the Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank throughout the year. Such allegiance is also certified by the independent auditors and Chartered Secretaries in Practice. The report along with the compliance status are enclosed with our annual report 2020 on page no. 208. IDLC has always been respectful to all the rules and regulations issued by Bangladesh Bank, National Board of Revenue (NBR) and all other regulators.

Emphasizing on the commitment to remain compliant with all the regulations, IDLC will continue to uphold the high standards in governance and stakeholders engagement as well as ensure the effective contribution in the sustainable development of our country.

Yours faithfully

On behalf of the board

Abul Fazal Mohamed Rubayat ACS ACMA Group Company Secretary



STATEMENT OF CORPORATE GOVERNANCEIDLC’s well established governance framework represents our commitment to integrity while ensuring flexibility that allows fast decision making and effective management and is not limited to adherence of the statutory and regulatory requirements.

Corporate governance represents a strategy for companies to ensure a framework of control for its administrative and management practices. This is achieved through procedures that are aligned with recognized standards that respond to the interests of shareholders and other stakeholders. Our board believes proper governance ensures fairness, transparency and accountability and safeguards the interests of all stakeholders, especially the minority shareholders. Empirical research also suggests that corporations that adhere to good governance practices are not only more sustainable but also tend to generate higher profitability.

IDLC believes in facilitating effective, entrepreneurial and prudent management which contains checks and balances to support appropriate consideration of risk management throughout the organization.

IDLC’s six core areas emphasize its effective corporate governance strategy as demonstrated in the diagram. The company’s corporate governance model is rigorously aligned with its well-articulated vision, mission, goals and objectives. The Company’s Board of Directors are responsible for proper governance, which includes setting out the Company’s strategic aims, providing the necessary leadership to implement such aims, supervising the management of the business and reporting to shareholders on their stewardship. The Board is collectively accountable to the Company’s shareholders for good governance to facilitate efficient and effective management towards delivering long-term shareholders' value within appropriately established risk parameters. The sustenance of effective corporate governance remains a key priority of IDLC’s Board. To exercise clarity about the Directors’ responsibilities towards shareholders, corporate governance must be dynamic and remain focused on the Company’s business objectives and create a culture of openness, transparency and accountability. Keeping this in mind, clear structures and ownership supported by well understood policies and procedures to guide the activities of the Company’s management have been instituted and institutionalized.

ORGANIZATION’S PURPOSE

ORGANIZATIONAL SUCCESS

CORPORATE GOVERNANCE DRIVER

COMPLIANCE

STRUCTURE POLICIES PROCEDURES

GOVERNANCE

PEOPLE CULTURE

IDLC is committed to continually review all its corporate governance policies and guidelines to ensure transparency in its practices and the delivery of the highest ethical standards and quality information to its stakeholders on an ongoing basis. This ensures long-term performance and sustainability, protects and enhances the interests of the shareholders and other stakeholders.

IDLC ensures that its corporate governance practices must comply with all the aspects of the revised Corporate Governance

Code (CGC) notification No. BSEC/CMRRCD/2006-158/207/Admin/80, dated June 3, 2018, and notification No. BSEC/CMRRCD/2006-158/208/Admin/81, dated June 20, 2018, on financial reporting and disclosure issued by Bangladesh Securities and Exchange Commission (BSEC) and all aspects of Bangladesh Bank’s DFIM Circular No. 7, dated September 25, 2007 and subsequent circulars thereon DFIM Circular No. 09, dated October 08, 2007, DFIM Circular No. 18, dated October 26, 2011 and DFIM Circular No. 06, dated June 17, 2012.

In addition to establishing the highest standards of corporate governance, IDLC also embraces best governance practices across all its activities. The independent role of the Board of Directors, separate and independent role of the Chairman and Chief Executive Officer, distinct roles of the Company Secretary, Chief Financial Officer and Chief Compliance Officer and different Board Committees enable IDLC to achieve excellence in corporate governance.

As a listed Company, IDLC must comply with the BSEC’s revised CGC, which requires the Company to provide a statement in the Annual Report disclosing the extent to which it has complied with the BSEC Corporate Governance Code. The status of compliance shall be certified by a practicing Professional Accountant/Secretary. The tables summarizing IDLC’s compliances are provided in Annexure-III and Annexure-IV of the Directors’ Report. A certificate on compliance with the Corporate Governance Code (CGC) certified by practicing professional chartered secretaries in practice is enclosed on page no. 207 of this Annual Report.

IDLC’s Corporate Governance Culture is anchored on• Competent Leadership• Strong risk management culture• Effective internal controls• Accountability towards Shareholders

• Corporate Governance Code by BSEC

• Good Governance Guideline Issued by Bangladesh Bank

• GRI Standards

• Corporate Governance Checklist of Institute of Chartered Accountants of BangladeshM

anda

tory

Co

mpl

ianc

e

Volu

ntar

y Co

mpl

ianc

e



VALUE CREATION THROUGH CORPORATE GOVERNANCE FRAMEWORK COMPONENTS

Value creation objectives upheld References of Corporate Governance framework Sections Initiatives/Responses and Outcomes

Ensuring long-term growth and sustainable standing

IDLC's Vision, Mission and Strategy 2• ROA-2.08%- One of the highest in the

industry• Downtrend of per employee resource

consumption (Natural Capital page: 37)• Controlled NPL (1.79%) in comparison to the

industry

Board of directors 1

Audit Committee 3

Internal Control and Risk Management 4

Environmental and Social Obligation 10

Ensuring engaged and informed shareholders

Communication and relationship with Shareholders 8 Improved interaction with shareholders and analysts (pg: 179-181)Relationship with Investors 9

FinancialCapital

Governance PillarsInput

VALUE CREATION THROUGH CORPORATE GOVERNANCE FRAMEWORK

Key

Risk

Miti

gato

rs

HumanCapital

ManufacturedCapital

IntellectualCapital

Social &RelationshipCapital

NaturalCapital

Philosophies

Code of Conduct

Anti-Money Laundering measure

Whistleblowing Policy

Business Continuity Plan

ICT Management & Security Policy

Integrity Policy

All regulations

Relatively controlled NPL

E�ciency drives reducing TAT of small scale loan processing and overall disbursement

Optimized Spreadand Well managedliquidity risk

Outcomes

Ensuring long- term growth and sustainability

Catering to evolvingcustomer needs

Developing an engaged, agile and innovative talent pool

Six Core areas of Corporate Governance Strategy

Ensuring engaged andinformed shareholders

ManagementBoard,

SupervisoryBoard and

Committees

Values andEthics

Policies &Regulatory

Frameworks

Monitoringand internal

control

Risk andperformancemanagement

Transparencyand

accountability

Credit Risk Market Risk Liquidity Risk Strategic RiskOperational Risk

Technology Risk Legal Risk Environmental and Social Risk Reputation Risk

Top Return on Asset (ROA)performanceof the industry

Value creationobjectives:

Objectives Stra

tegy

MissionVisio

n



FinancialCapital

Governance PillarsInput

VALUE CREATION THROUGH CORPORATE GOVERNANCE FRAMEWORK

Key

Risk

Miti

gato

rs

HumanCapital

ManufacturedCapital

IntellectualCapital

Social &RelationshipCapital

NaturalCapital

Philosophies

Code of Conduct

Anti-Money Laundering measure

Whistleblowing Policy

Business Continuity Plan

ICT Management & Security Policy

Integrity Policy

All regulations

Relatively controlled NPL

E�ciency drives reducing TAT of small scale loan processing and overall disbursement

Optimized Spreadand Well managedliquidity risk

Outcomes

Ensuring long- term growth and sustainability

Catering to evolvingcustomer needs


Six Core areas of Corporate Governance Strategy

Ensuring engaged andinformed shareholders

ManagementBoard,

SupervisoryBoard and

Committees

Values andEthics

Policies &Regulatory

Frameworks

Monitoringand internal

control

Risk andperformancemanagement

Transparencyand

accountability

Credit Risk Market Risk Liquidity Risk Strategic RiskOperational Risk

Technology Risk Legal Risk Environmental and Social Risk Reputation Risk

Top Return on Asset (ROA)performanceof the industry

Value creationobjectives:

Objectives Stra

tegy

MissionVisio

n

Value creation objectives upheld References of Corporate Governance framework Sections Initiatives/Responses and Outcomes


Human Capital 7 Improved learning/training through e-platform

Remuneration policy of Directors and Executives 6

Reduced attrition rate by 156 basis points in 2020Increased training programs by 6% in 2020, covering over 7,554 participants (218% increase) See details in Human Capital (pg: 176)

Catering to evolving customer needs

Ethics and Compliance 5 Catered to customers digitally, using our Online Service Platform (See Chairman’s statement page: 49)Pioneered and launched Online Customer on boarding Platform by IDLCAML(See Director’s Report of IDLCAML page: 361)

Complaint Management Process 10



CORPORATE GOVERNANCE STRUCTURE

1) Credit Evaluation Committee2) Asset Liability ManagementCommittee3)HR and Compensation Committee4) Internal Control Committee5) Corporate Governance Committee6) BASEL Implementation Committee7) Integrity Committee8) Central Compliance Unit9) Risk Management Forum10) ICT Steering Committee11) ICT Security and Risk Management Committee12) IDLC Ladies Forum


Regulators

BangladeshBank Shareholders External

Auditors

AuditCommittee

WealthManagement

HumanResource

CEO’sTransformation

Team

StrategicPlanning

Credit RiskManagement

Internal Controland Compliance

CorporateAffairs

InformationTechnology CIB & CIF Sustainable

Finance UnitOperational Risk

Management

MarketingCommunication

& CSR

Administration

Special AssetManagement

Treasury

Finance

Operations

Legal

ConsumerDivision

IDLC IL

IDLC SL

IDLC AMLCustomer Experience

Department

Business Functions/ Primary Activities

Supporting Functions/ Secondary Activities

Recommendation

Recommendation

Approval

Oversight

Ove

rsig

ht

External Auditor’sAppointment

Proposal

Appointment

1) Bangladesh Bank2) Registrar of Joint StockCompanies and Firms3) Bangladesh Securities and Exchange Commission4) Dhaka Stock Exchange5) Chittagong Stock Exchange6) National Board of Revenue

Other CommitteesDelegation of

Authority:

Responsible to:

External AuditorChain:

Board ofDirectors

CEO &Managing Director

ExecutiveCommittee

SME DivisionSME FinanceSupplier FinanceSME StrategyProduct and Channeldevelopment

Corporate DivisionLarge CorporateLocal CorporateGreen BankingStructured Finance



1.0 Composition of Board and Committees

The Board of IDLC considers that its constitution should comprise Directors with an appropriate mix of skill, experience and personal attributes that allow the Directors individually and the Board collectively to discharge their responsibilities and duties under the law efficiently and effectively, understand the business of the Company and assess the performance of the management.

The composition of the Board embraces diversity. The Directors possess a wide range of local and international experience, expertise and specialized skills to assist in decision-making and leading the Company for the benefit of its shareholders.

Name of the Director Status Executive Committee Audit Committee Subsidiary’s BoardAziz Al Mahmood Chairman, NED - - -Atiqur Rahman NED Chairman - -Niaz Habib IND, NED - Chairman Chairman, IDLC AMLNurullah Chaudhury NED Member - -Mohammad Mahbubur Rahman FCA NED - Member -Mahia Juned NED - Member -Md. Kamrul Hassan FCA NED - Member -Syed Shahriyar Ahsan NED Member Member -Mati Ul Hasan NED Member - -Matiul Islam Nowshad IND, NED - - Chairman, IDLC SL and ILArif Khan CFA FCMA EXO Member Director, IDLC AMLAbul Fazal Mohamed Rubayat ACS ACMA SEC SEC SEC SEC, IDLC SL, IL and AML

NED = Non-Executive Director; EXO = Ex-officio; IND = Independent Director, SEC = Secretary

1.1 IDLC’s policy on appointment of Directors

The Directors of IDLC are :

• Nominated Non-Executive Directors - nominated from the senior management of the Sponsor/Directorship holing institutes.

• Non-executive Independent Directors- recommendation received from various sources for highly capable and seasoned professionals, who fulfilled all the required criteria for appointment set by Corporate Governance Code set by BSEC.

New Director Recommendation

Nominated DirectorNominated by Sponsor/Director Shareholder

Independent DirectorRecommended from various sources

Appointment by the board

Newly appointed DirectorCasual Vacancies are �lled by the Board

Existing Director-subject to rotationRetires at the AGM but are eligible for re appointment

Approval of appointment of Independent Director

Appointment of existing directors by rotation

Apporval by Shareholders at the AGM



1.1.1 Retirement and re-election of Directors

As per Company ACT and IDLC’s Articles of Association, one-third of the Directors, are required to retire from the Board every year in Annual General Meeting (AGM), comprising those who have been in office the longest since their last election. A retiring Director shall be eligible for re-election.

However, as per the governance code of BSEC, independent directors are appointed for a tenure of 3 (three) years with renewal option for another term of 3 (three) years.

Independent directors are appointed by the board and be approved by the shareholders in the AGM.

The following non-executive directors will retire from the board in the upcoming 36th AGM:

Mr. Atiqur Rahman Director Nominated by Reliance Insurance LimitedMr. Mohammad Mahbubur Rahman

Director Nominated by The City Bank Limited

Mr. Syed Shahriyar Ahsan Director Nominated by Sadharan Bima CorporationMr. Mati Ul Hasan Director Nominated by Mercantile Bank Limited

1.2 Ensuring compliance with all regulations from regulatory bodies in terms of composition of the Board by ensuring adequate number of Non-Executive Directors and their independence:

IDLC maintains strict compliance with the Corporate Governance Code of Bangladesh Securities and Exchange Commission (BSEC). The minimum requirement of non-executive directors is maintained as well. The minimum requirement of independent directors set by the revised Corporate Governance Code of BSEC is also met. Directors possess a wide range of skills and experience over an array of professions, businesses and services.

Regularly review the size and composition of the Board and the mix of expertise, skills, experience and perspectives that may be desirable to permit the Board to execute its functions;

Identify any competencies not adequately represented and agree to the process necessary to be assured that a candidate nominated by the shareholders with those competencies is selected;

The Directors are appointed by the shareholders in the Annual General Meeting (AGM). Casual vacancies, if any, are filled by the Board in accordance with the stipulations of the Companies Act, 1994, and the Articles of IDLC;

The CEO & Managing Director is appointed by the Board subject to the consent of the shareholders in the Annual General Meeting (AGM) and approval of Bangladesh Bank;

Any change in the members of the Board requires intimation to the Bangladesh Bank, all scheduled banks and Financial Institutions (FIs), Bangladesh Securities and Exchange Commission (BSEC) and the stock exchanges.

In Relation to the selection and appointment of new Director, the existing Board of Directors possesses the following duties and responsibilities:

Oversee issues where there is a potential conflict of interest (financial reporting, controls, nominations, and

remuneration)

1.2.1 Role of Independent Directors:Independent Directors bring invaluable independent judgment to the Board. In addition to performing the roles of Directors, the Independent Directors perform other roles as well.

Roles of Independent Directors

Consider, review, evaluate and provide oversight over related-party transactions to ensure transactions are fair and in the

best interests of IDLC

Ensures that the organization maintains an effective and

independent compliance function

1.3 Adequate number of Independent Directors in the Board and their independence:

As per the revised Corporate Governance Code (CGC) of Bangladesh Securities and Exchange Commission (BSEC), at least one-fifth of the total directors of the Board shall be Independent Directors.

Thus, in compliance with the guideline, two (2) Directors out of the total ten (10) Directors are independent, having no share or interest in IDLC. Independence of the respective Independent Directors is confirmed during selection and appointment of the Directors and they remain committed to continue with such independence throughout their tenure.

1.3.1 Independence of non-executive directors from day to day operations

All the Non-Executive Directors are nominated by their respective institutions except for the Independent Directors. All the Directors bring forth independent judgment and considerable knowledge to perform their roles effectively. The Board of Directors ensures that the Company’s activities are always conducted with adherence to stringent and the highest possible ethical standards and in the best interests of all stakeholders.

None of the directors of the Board, are involved in the day-to-day operations of the Company; rather, they provide their valuable insights and guidance to the management in the meeting of the Board and its committees.



Professional background

Our Board comprises of experts from various fields that provide a well-rounded view to the company that helps in effective strategic management and implementation. The following table and diagrams depict the areas of expertise and the composition of the tenure of service of our board members.

Length of service

All members of our Board are extensively accomplished in their respective fields, and proffer their adept and seasoned knowledge on the back of over 20 years of experience. Majority of our directors falls within the experience bracket of 26 to 40 years; assuring the stakeholders in their decision-making process and governing capabilities.

Diversity of the Board

Members of the Board of Directors Accounting/ Finance Insurance Banking HR

Management

Entrepreneurship/Business

Management

Risk Management, Sustainble

DevelopmentMr. Aziz Al Mahmood ✔ ✔ ✔

Mr. Atiqur Rahman ✔ ✔ ✔ ✔ ✔

Mr. Nurullah Chaudhury ✔ ✔

Ms. Mahia Juned ✔ ✔ ✔

Mr. Mohammad Mahbubur Rahman FCA ✔ ✔ ✔

Mr. Md. Kamrul Hassan, FCA ✔ ✔ ✔

Mr. Syed Shahriyar Ahsan ✔ ✔ ✔

Mr. Mati Ul Hasan ✔ ✔

Mr. Niaz Habib ✔ ✔ ✔

Mr. Matiul Islam Nowshad CMgr, FCMI ✔ ✔

Respective qualifications of the Directors in details are appended in Directors’ profile on pg: 57 of this annual report.

Board Composition

8 NominatedNon-executive Director

2Independent Non-Executive Director

Gender

1

9

Female

Male

Length of service

10.00%

10.00%

40.00%

40.00%

20-25 years

26-30 years

31-40 years

Over 40 years

Professional Background



Role and responsibilities of the Board

The Board is committed to the Company to achieve superior financial performance and long-term prosperity, while meeting stakeholders expectations of sound corporate governance practices. The Board determines the corporate governance arrangements for the Company. As with all its business activities, the Board is proactive with regards to corporate governance and puts in place those arrangements that it considers in the best interest of the Company and its shareholders and consistent with its responsibilities to other stakeholders.

A high performing board works effectively with the CEO & Managing Director to fulfill its roles to induce the best performance for the organization and to deliver the optimum value to its stakeholders. This is illustrated in the model below.

Board Competencies• Knowledge• Skill• Abilities• Contacts

Board Structures• Policies• Process• Procedures• Committees

Board of Directors

Work With and Through CEO

ORGANIZATIONAL PERFORMANCE

Board Behaviors• Personalities• Values• Norms• Board-Management

Relations

Strategy

Effective Governance

CEO Selection, Monitoring &

Evaluation

Decision Making

Monitoring

Stakeholder Communication

RiskManagement

Networking

Compliance

Policy Framework

The functions of the board may be segregated into four categories as specified below

Strategic Governance Process for board functioningStructural

• Board composition and diversity

• Board competencies & skills

• Policies and goal setting

• Director recruitment and orientation

• Board evaluation

• Formulation & implementation of strategy

• Leadership pool development

• CEO selection & compensation

• Succession planning

• Company’s performance

• Risk and crisis management

• Compliance

• Governance

• Board meetings & preparation

• Group dynamics & training

• Managing the quality of conversation

• Interaction with management



The Board duly complies with the guidelines issued by the Bangladesh Bank regarding the responsibility and accountability of the Board, its Chairman and Chief Executive/Managing Director, vide DFIM Circular No. 7, dated September 25, 2007.

The board, executive and other functionaries have distinctly demarcated roles in achieving corporate goals, improved performance and enhanced shareholders value. It firmly believes that the success of the Company hinges on the credible corporate governance practices embraced by it. Taking this into consideration, the Board of Directors set out its strategic focus and supervises the business and the related affairs of the Company. The Board also formulates the strategic objectives and policy framework for the Company. In discharging the above responsibilities, the Board caries out, inter alia, the following functions as per the charter of the Board and Bangladesh Bank’s DFIM Circular No. 7, dated September 25, 2007:

• Review of the size and composition of the Board

• Appointment of members to board

• Review the Board’s performance

• Benchmarking value creation for customers, clients and partners

• Ensure creation of sustainable and trusted organization

• Reinforcement of the corporate culture and core values and ensuring that the Company remains an employer of choice

• Review and approval of the CEO and Management performance

• Oversight of succession planning for the CEO, Management team and such other Executives as the Board may deem fit

• Oversight of the management of social, economic and environmental concerns consistent with the injury-free vision

• Reinforcement of reputation, brand and community relations

• Approval of business strategy

• Approval and monitoring of major financial and strategic commitments

• Determination of capital structure and dividend policy

• Approval and monitoring of financial reporting

• Oversight of risk management, internal controls and compliance systems

• Recommendations regarding external auditors, their terms of appointment and determination of remuneration

• Approval of annual budget

• Regular review of financial performance

• Ensuring adequacy of technology and information systems for effective operations and sustainable competitiveness

DirectorsCustom

ersEm

ployeesCom

munity

Shareholders

Responsibilities Reserved to the Board



1.4 The Chairman of the Board and the CEO & Managing Director of the Company are different individuals

The Chairman of the Board is not the Chief Executive Officer of the Company, they are different individuals, each with their unique roles and responsibilities. Their roles are separate and independent, however, there’s a very positive and constructive work relationship between them.

1.5 Role and responsibilities of the Chairman as defined by the Board

The Board is run by the Chairman. The primary link between the Board and the management is served by the chairman. By working with the CEO & Managing Director and Company Secretary, he sets the agenda for board meetings and ensures that the board works effectively.

The primary role of the Chairman is to ensure that the board is effective in its task of setting and implementing the company’s direction and strategy. He is responsible for leadership of the board. Appointment of the Chairman is done by the Board. Other roles include:

Providing leadership to the board

Taking responsibility for the Board’s composition and development

Ensuring proper information for the Board; Planning and conducting Board meetings effectively

Set the agenda, style and tone of Boarddiscussions to promote constructive debate and effective decision making

Roles Of the

Chairman

ResponsibilitiesOf the

ChairmanEnsuring the Board’s focus on key tasks

Engaging the Board in assessing and improving its performance

Overseeing the induction and development of Directors

Supporting the CEO & Managing Director

Ensure that all Board Committees are properly structured, composed and operated

Ensure effective communication withshareholders, governments and other relevant

constituencies and ensure that the views of thesegroups are understood by the Board;

Ensure effective operations of the Board and its committees in conformance

with the highest standards of corporate governance

Support the CEO & Managing Director in strategy formulation and,

more broadly, providesupport and give advice

Ensure an effective relationship among Directors, acting as the principal conduit for communication and

issues relating to business strategy, planned acquisitions and corporate governance

Encourage active engagement by all members of the Board

1.6 Annual appraisal of the Board’s performance and disclosure

Appraising a board’s performance can clarify the individual and collective roles and responsibilities of its directors, and better knowledge of what is expected of them can help boards become more effective. Done properly, board appraisals may also improve the working relationship between a company’s board and its managementAny discussion of performance appraisals must necessarily cover two broad areas—the what and the how. In the case of a board, what should be appraised is its ability first to define its responsibilities and establish annual objectives in the context of those general responsibilities, and then its record in achieving those objectives. An appraisal must also look at the resources and capabilities the board needs and has available to perform its job. The how part of board appraisal is, of course, the process the board uses to evaluate its own performance.

Before a board can even begin to evaluate its performance in these broad areas of responsibility, it must articulate the specific actions that each of them implies. In other words, board must set objectives for themselves within those broad categories against which they can eventually measure their performance. The board creates a set of objectives annually—generally speaking, at the beginning of the fiscal year—that reflects the directors’ collective judgment about which aspects of the board’s overall responsibilities need particular attention in the coming year.

A board is a team of knowledge workers, and to do its job, the board needs the same resources and capabilities that any other successful team of knowledge workers need such as knowledge, information, power, motivation, and time.

Self-evaluation is not an easy issue for any group to deal with. It is particularly difficult in the case of boards because it requires board members to make judgments and decisions about themselves and about issues that affect all stakeholders.

The following criteria are considered for the evaluation:

Membership accountability and

governance

Board operations

Legal responsibilities

Financial overview

Planning

Board-management

relations



Evaluation of

The Performance of the board chairman

The Performance of the chief executive officer

The Corporate Governance practices of the organization

The Performance of any board committees

The board as a whole

Individual Board Members

The effectiveness of the evaluation very much depends on how the board structures the evaluation process. It should consist of three phases: The first-setting annual board objectives at the beginning of the fiscal year. The process picks up again at the end of the year, when, in the second phase, the board secretary collects and disseminates information about the board’s activities. With that information in hand, in the third phase, board members can judge how close they came to meeting their objectives while also examining the adequacy of the resources available to them over the year.

Performance Review

Clarity of Objectives, Target and Structures

Key Performance Indicators

Effective Chairman-CEO relationship

BalancedTeam

Culture andBehavior

IndividualPerformance

Measurement

Boardperformance

Measures

CollectivePerformance

Measurement

StructuredEngagement

Communicationand Reporting

Scope & Roleof Board

Agenda andCalendar

Performance Review

In a way, boards are like fire departments: they aren’t needed every day, but they have to perform effectively when called upon. One chair observed that in good times corporate governance is largely irrelevant, but in bad times it is crucial. Formal, periodic board appraisals can help ensure that when the board is needed, all the right processes, procedures, members, and relationships are in place and ready to go.



1.7 Roles and Responsibilities of the MD & CEO as defined by Board:

The CEO & Managing Director is appointed by the Board subject to the approval of Bangladesh Bank and the consent of the shareholders in the Annual General Meeting.

Ensures compliance with related regulatory guidelines and circulars

Fulfills duties as delegated by the board

Plans, executes and achieves targets set by the board

Talent Management

Creation and enharant of company brand

1.7.1 Annual evaluation of the CEO & Managing Director by the Board

The Board of Directors evaluates the CEO & Managing Director's performance based on the goals set for him considering the company's vision and mission at the beginning of each year. The annual financial budget and other job objectives are discussed, reviewed and finalized by the Board at the start of the financial year. The Board considers both financial and non-financial goals during the appraisal.

The board agrees goals and key expectations for the CEO

The board undertakes a detailed review using: 1. Financial goals2. Non-financial goals

On going advice, particularly from the Chairman

The board formally discusses the findings

Formal AppraisalPerformance assessment process formally reviewed at board meeting

PERFORMANCE

The board negotiates performance goals with the CEO

Set expectationsExpectations for the CEO performance are agreed by CEO and BoardEndorsed by the board

Establish expectations Guide Assess

1.7.2 Evaluation based on financial performance

At the end of each quarter, the CEO & Managing Director is evaluated based on the financial targets. The evaluation is done based on both:

• Achievement of targets against budget; • Achievement of targets against the achievement of those

targets in the previous year.

1.7.3 Evaluation based on Non-Financial goals

The CEO & Managing Director is also evaluated based on nonfinancial goals in an ongoing basis. The non-financial criteria include, but are not constricted to things such as:

• The confidence of the shareholders in the CEO, as reflected in the stock price of the company;

• The relationship of the company with the regulators;

In addition, at the end of each year, an annual assessment and evaluation of the achievements of pre-agreed targets is done. During this evaluation, the deviations from target, and the reasons for the deviations are discussed and assessed.

1.8 Training and Development of Directors

The Board recognizes the importance of ensuring that Directors are continuously being developed to acquire or enhance the requisite knowledge and skills to discharge their duties effectively.

All new Directors appointed to the Board attend a formal induction programme to familiarize themselves with the Group’s strategy and aspiration, understanding of the line of businesses and corporate



functions, key financial highlights, audit, compliance and risk management.

The programme is conducted by the CEO & Managing Directors/ Heads of the business units as well as Senior Management. The Company Secretary also provides the new Directors with an information kit regarding disclosure obligations of a Director, Board Charter, Code of Ethics, the Constitution of the Company, Board Committees’ Terms of Reference, and Schedule of Matters Reserved for the Board, amongst others.

The Board, together with the Board members of the subsidiaries of IDLC would also attend offsite Strategy Meeting to have an in-depth understanding and continuous engagement with Management pertaining to the Group’s strategic direction.

In addition, the Directors are constantly updated on information relating to the Group’s development and industry development through discussion at Board meetings with the Senior Management team.

The Board ensures that a structured Director Learning and Education Programme is in place for its members. This programme shall ensure members have access to an appropriate continuing education programme and are kept up to date with current business, industry, regulatory and legislative developments and trends that will affect the Company’s business operations.

1.9 Financial and accounting knowledge and expertise of Directors

Our Board of Directors consists of members who possess a wide variety of knowledge and experience in finance, economy, management, business administration, marketing and law. This ensures that together, they formulate the right policy for the development of the business while having the specialized skills and the ability to foresee developments across a larger perspective and with enough independence to audit the management in a balanced manner.

Among them, two Directors are Fellow members of the Institute of Chartered Accountants of Bangladesh (ICAB), naming Mr. Mohammad Mahbubur Rahman and Mr. Md. Kamrul Hassan. They provide guidance in matters applicable to accounting and audit-related issues to ensure compliance and reliable financial reporting.

1.10 Holding of Board meetings

Usually IDLC hold Board meeting at least once a month, to help the Board discharge its responsibilities and functions as mentioned above. The meeting is scheduled well in advance and the notice of each Board meeting is given in writing to each Director by the Company Secretary. During pandemic time IDLC continues to hold its meeting through online most secured digital platform abiding all regulatory compliances.

1.10.1 Process of holding Board meetings

The Company Secretary prepares the detailed agenda for the meeting. The Board papers comprising the agenda, explanatory notes and proposed resolutions are circulated to the Directors well in advance for their review. The members of the Board have complete access to all the information of the Company, enabling them to work efficiently. The members of the Board are also free to recommend inclusion of any matter in the agenda for discussions, subject to the permission of the Chairman of the meeting. The Company Secretary, the Chief Financial Officer and Head of Internal Control and Compliances always attend the Board meetings and the senior management is invited to attend the Board meetings to provide additional inputs of the items being discussed by the Board and make necessary presentations. Board meetings minutes as well as keep required books and records in line with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of any regulatory authorities.

The details of attendance along with the amount of remuneration of Directors in the meeting of the Board and its committees are enclosed in Annexure-II of the Directors’ Report. The amount of remuneration paid to the Directors is also disclosed in Note No. 30 of the audited financial statements.

1.10.2 Number of Board meetings held in 2020

The number of meetings of the Board and its committees held during the accounting year and the attendance of the Directors at those meetings and their respective remuneration are disclosed in Annexure-II of the Directors’ Report on page no. 206 of this annual report.

The number of Directors required to constitute a quorum is six (6), out of the ten (10) Directors. During 2020, a total of ten (10) Board meetings were held.

RegistersAttendance

DeterminesQuorum

Pays fees to Board Members

RegistersDecisions

Assists the Chairman during the meeting

Discuss/ Decide Presents Issue Run/Direct the Meeting

CS CS CS

Board Members CEO & MD/CS Chairman

CS CS



1.10.2.1 Key Activities of the Board in 2020

The following table shows a breakdown of the matters considered by the Board in 2020, in addition to business agenda.

Quarter-wise Overview of Main Recurring Board Activities of 2020January – March • Authorization of Financial Statements and Annual Report 2019

• Adoption of Directors’ Report of 2019• Dividend declaration for 2019• Appointment of Statutory and Corporate Governance Auditors and determination of Audit Fees• Approval of Performance Bonus for 2019• Review of Base Rate for the Fourth Quarter 2019• Postponed Annual General Meeting

April – June • Endorsement of First Quarter Financial Statement 2020 (January – March)• Review of Base Rate for the First Quarter 2020• Holding of Annual General Meeting

July – September • Endorsement of Second Quarter Financial Statement 2020 (April – June)• Review of Base Rate for the Second Quarter 2020

October – December • Endorsement of Third Quarter Financial Statement 2020 (July – September)• Approval of Budget for the year 2021• Modification of Credit Policy• Review of Base Rate for the Third Quarter 2020

The Board spent it’s time for the 2020 Board meetings* in the following manner:

Key Distinctive Activities of 2020:

• IDLC’s Donation to PM’s Relief Fund and contribution food to COVID-19 affected people

• Financing facilities from stimulus packages and reschedule of contracts as prescribed by BB

• COVID-19 Special Incentive for the employees who worked during General Holidays

• Declaration of IDLC FL Integrity Award;

• IDLC's 35 Years Brand Equity (Thematic) Campaign

• Affirmation of compliance with the code of conduct for the members of the board for 2020;

• Deposit Awareness Campaign through TVC and Digital Media

• Donation to Capital Market Journalists’ Forum* In determining the estimated time spent, we took into account the time discussing the relevant agenda items and the volume of supporting board papers.

1.10.3 Directors’ remuneration

Directors are not entitled to any remuneration other than attending the meeting of the Board and its committees.

Bangladesh Bank vide its DFIM Circular No. 13 dated November 30, 2015, re-fixed the maximum limit of remuneration to the Directors for attending meetings of the Board and its committees at Taka 8,000 per meeting per Director.

1.11 Directors’ report on preparation and presentation of financial statements and corporate governance

The Companies Act, 1994, requires the Directors to prepare financial

statements for each accounting year. The Board of Directors accepts the responsibility for the preparation of the financial statements, maintaining adequate records for safeguarding the assets of the Company, preventing and detecting fraud and/ or other irregularities, selecting suitable accounting policies and applying those policies consistently and making reasonable and prudent judgments and estimates where necessary.

The Board of Directors are also responsible for the implementation of the best and the most suitable corporate governance practices. A separate statement of the Directors’ responsibility for financial reporting and corporate governance is given on page no. 197 of this Annual Report.

Policyformulation

Governanceand risk

Performancemonitoring

Reporting anddisclosure

31.02%

37.11%

20.32%

11.55%

32.89%

38.21%

18.27%

10.63%

Meeting Time Clock 2019 BM % Meeting Time Clock 2020 BM %



1.12 Roles and background of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC)

1.12.1 Importance of Company Secretary Role :

The company secretary is responsible for the efficient administration of corporate affairs. He ensures the compliance with statutory and regulatory requirements and that the decisions of the board of directors are implemented. He acts as a mediator. He provides advice on Governance matters as well.

In today's world, the role of Company Secretary is multifarious and covers a multitude of tasks & responsibilities. That being said, the role lies at the heart of the governance systems of companies & is receiving ever great focus.

1.12.2 Background of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC)

Years of Professional Experience: 18 years

Prior Working Experience: CEAT, Zuellig Pharma, Heidelberg Cement, and Sanofi.

Educational Qualification: MBA from the University of Dhaka. Legislative Law Bachelor from National University, Certified Income Tax Practitioner from National Board of Revenue.

Associate Member (ACS) of the Institute of Chartered Secretaries of Bangladesh (ICSB), also holds membership of different foreign professional institutes.

Skills and Expertise: Accounts maintenance, Group reporting, consolidation process, Tax and VAT planning, Treasury function, Statutory and other regulatory compliance, Audit, Internal control, Risk Management, Stakeholder management, and Conversant with any IT environment


Prior Working Experience: KPMG Bangladesh, Rahman Rahman Huq, Heidelberg Cement Bangladesh,

Educational Qualification: Chartered Accountancy Course from KPMG Bangladesh, MBA under the Royal Roads University, British Columbia, Canada, M. Com. under the National University of Bangladesh. He is also a Certified Anti-Money Laundering Specialist (CAMS).

Skills and Expertise: Audit, Compliance, Risk Management, Credit Control and AML/CFT regime

ABUL FAZAL MOHAMED RUBAYAT ACS ACMAGroup Company Secretary

MAHBUB-UL-KADER CAMSGroup Head of Internal Audit and Compliance


Prior Working Experience: KPMG, Rahman Rahman Huq

Educational Qualificaion: His Bachelor and Masters of Commerce degree major in finance are from the University of Dhaka. He is a fellow member of

Institute of Chartered Accountants of Bangladesh (ICAB)

Skills and Expertise: Financial Planning and Control, Budgeting, Corporate and Financial Reporting, Strategic Planning and Taxation

MASUD KARIM MAJUMDER FCAGroup Chief Financial Officer



1.13 Committees of the Board

In Compliance with Bangladesh Bank guidelines, IDLC, being a Financial Institution (FI) can only form two subcommittees of the Board:

• Audit Committee (AC) and • Executive Committee (EC).

No other subcommittee of the Board is permitted by Bangladesh Bank.

For ensuring good governance in the company, BSEC has advised that the Board shall have at least two sub-committees

• Audit Committee, and• Nomination and Remuneration Committee

However, to comply with this clause of CGC of BSEC, we have

addressed the issue with Bangladesh Bank through Bangladesh Leasing and Finance Companies Association (BLFCA) and Bangladesh Association of Publicly Listed Companies (BAPLC). Moreover, we also directly seek advise and holistic decision from BB and BSEC. Till the date of reporting, we have not received any direction in this regard.

The Board has established two permanent Committees to assist, advice and make recommendations to the Board on matters falling within their respective responsibilities as per BSEC and Bangladesh Bank guidelines.

Each Committee is governed by a formal charter approved by the Board, setting out its objectives, responsibilities, structures and operations. The membership of the Board committees, as at the date of authorization of this Annual Report, is set out on the page no. 157 of this annual report.

1.12.3 Roles and Responsibilities of Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC)

Group Company SecretaryAbul Fazal Mohamed Rubayat ACS ACMA

Ensures compliance & manages the corporate governance framework

Oversees, conducts induction trainings for newly elected directors

Statutory reporting to Bangladesh Bank and other regulatory bodies

Conscience of the company

Liaison with outsideStakeholders for company affairs

Manages and administers board meetings

Ensures compliance with legal requirements

Mediator betweenboard and management

Liaison with external regulators and advisers

Roles and Responsibilities

Group Chief Financial Officer

Mr. Mohammad Masud Karim Majumder FCA

Ensures overall accuracy of budgetary & financial control system

Responsible for overall financial management


Alerts of any irregularity concerning financial system

Regulates, supervises and implements accounting & audit requirements

Ensures proper tax management and compliance system

Liaison with external auditor & oversee the audit procedure

Prepares and circulates statutory annual report to stakeholders

Assists in corporate tax planning & ensures effective tax management

Statutory reporting toBangladesh Bank

Group Head of Internal Audit and Compliance

Mr. Mahbub-ul-Kader CAMS


Coordinate analysis of risk in different area of operations

Ensure proper internalcontrol system

Prepare annual audit plans based on the result of the risk analysis

Check compliance to internal and external regulation

Prepare audit programs and approaches that meet the objectives of audit

Prepare draft audit report and conduct exit meetings

Prepare final audit reports and circulate the reports

Conduct special investigation on the megaton of fraud

Works on special projects as assigned by CEO or Audit Committee



Audit Committee Executive Committee

Board Committees

Section no.

Name of Committee of the Board

Members of the Committee Core Functions of the CommitteeNumber of meetings

held in 2020

1.13.1 Executive Committee Atiqur Rahman- ChairmanNurullah Chaudhury - MemberSyed Shahriyar Ahsan- MemberMati Ul Hasan- MemberArif Khan CFA FCMA- Member

• Reviewing all the operational functions • Analyzing and reviewing major standard terms and conditions

beyond the management authority as per approved Credit Policy • Considering all proposals and increase in their acquisition cost by

10% • Presenting a summary of approved proposals which are within

their approval limit• Exercising the delegated authority from time to time• Might delegate its authority to management as it deems fit from

time to time• Considering other matters submitted by Managing Director

7

1.13.2 Audit Committee(See Section 3 below for details)

Niaz Habib- ChairmanMohammad Mahbubur Rahman FCA- MemberMd. Kamrul Hassan FCA- MemberSyed Shahriyar Ahsan- MemberMahia Juned - Member

• Appraising the audit procedures and reviewing the management letter

• Assessing the managements’ compliance with the recommendation made by external auditors

• Making recommendation about the appointment of external auditors

• Reviewing rules and regulations set by different regulatory bodies , internal policies and guidelines

• Reviewing and reporting any rectification or irregularities identified by internal and external auditors and Bangladesh Bank inspection team

• Carrying out supervisory activities assigned by the board • Evaluating its own efficiency regularly

5

1.14 Management Committee and its subcommittees

To ensure that the company’s vision, mission are adhered to, we have our Management Committee, depicted below, who are entrusted to set objectives and lead from the front. On the back of the Board’s exemplary guidance, the Management and its various sub-committees determines IDLC’s strategic objectives such as areas of business focus; policies, monitoring and process improvements.



Meetings Held

Weekly

Risks Managed

• Credit Risk

• Market Risk

• Liquidity Risk

• Operational Risk

• Strategic Risk

• Technology Risk

• Legal Risk

• Environment and Social Risk

• Reputation Risk


Functions

Notable activities of 2020

· Driving value maximization strategies;

· Steering towards innovative product creations such as online deposit, E-loan, etc.;

· Guiding plans on improving efficiency;

· Review of the Business Continuity Plan

Achievement Highlights

· One of the highest Return on Asset (ROA) amongst all banks and financial Institutions-

2.08% (consolidated)

· Introduction of IDLC Online

Learning App for mobile

access of training content

· Introduction of mobile portal

for internal process requests

for colleagues on the move

· Introduction of software-

generated document printing

through Online Credit

Appraisal System (OCAS)

· Enhancement of deposit payment

module to address operational

risks and increase efficiency

through eliminating redundancies

· Automation of dividend payment

· Piloted Customer On-boarding

Platform by IDLC AML

Meetings Held

Twice in a Week

Risks Managed

• Credit Risk

• Legal Risk

• Liquidity Risk

MembersArif Khan CFA FCMA CEO & Managing DirectorM. Jamal Uddin Deputy Managing DirectorAsif Saad Bin Shams Deputy Managing Director & Chief Risk OfficerSyed Javed Noor Deputy Managing DirectorMesbah Uddin Ahmed Head of Corporate DivisionM. Ataur Rahman Chowdhury Head of Consumer DivisionIndrajit Mallick Head of Operations

Mohammad Saifuddowla Shamim

Head of SME DivisionNurul Karim Patwery Head of Treasury

Credit Evaluation Committee


· Containing NPL ratio to 1.79% which is a sound performance in comparison to the double digit industry average.


· Approved business proposals having a group exposure limit as given below:

· Cumulative exposure above BDT 20 million [for Business loan & Home Loan]

· Cumulative exposure above BDT 10 million [for Car Loan]

· Total Evaluated number of Credit Proposals: 300

· Note: Number of Credit Proposal approved under further Approval Delegation of CEC is 8500.

Functions

· Evaluates credit proposals from the risk point of view.

· Reviews all policies related to underwriting to ensure proper risk management.

· Reviews any policy and process related to valuation, vetting, insurance which have implication on overall credit risk management

· Reviews sector-specific portfolio from time to time to mitigate concentration risk.

MembersArif Khan CFA FCMACEO & Managing DirectorM. Jamal UddinDeputy Managing Director Asif Saad Bin ShamsDeputy Managing Director & Chief Risk OfficerSyed Javed NoorDeputy Managing Director Mesbah Uddin AhmedHead of Corporate DivisionMir TariquzzamanChief Technology Officer (CTO) Md. Masud K. Majumder, FCAGroup Chief Financial OfficerAtaur Rahman ChowdhuryHead of Consumer DivisionMd. SaifuddinManaging Director, IDLC Securities LimitedMd. Moniruzzaman, CFAManaging Director, IDLC Investments LimitedRajib Kumar DeyManaging Director, IDLC Asset Management LimitedJane Alam RomelGroup Chief Marketing OfficerMahbub-ul-Kader, CAMS Group Head of Internal Control and ComplianceIndrajit MallickHead of OperationsMohammad Saifuddowla ShamimHead of SME DivisionShamima Akter LovelyHead of Human Resources (CC)

· Oversee IDLC in accordance with its Constitution and applicable laws and regulations;

· Overseas ongoing operations;

· Segregation of the responsibilities and accountability of the committee from those of the Executive Officer to ensure good governance;

· Monitoring achievement against strategic plans and allocated budget

· Making key decisions for the Company’s management and operations under the official delegation of authority from the Board.



Meetings Held

12

Risks Managed

• Interest Rate Risk

• Liquidity Risk

Members

Arif Khan, CFA, FCMA CEO & Managing Director

M. Jamal Uddin Deputy Managing Director

Asif Saad Bin Shams Deputy Managing Director & Chief Risk Officer

Syed Javed Noor Deputy Managing Director

Md. Masud K. Majumder, FCAGroup Chief Financial Officer

Md. Mesbah Uddin AhmedHead of Corporate Division

M. Ataur Rahman ChowdhuryHead of Consumer Division

Mohammad Saifuddowla ShamimHead of SME Division

Nurul Karim PatweryHead of Treasury

Asset Liability Management Committee (ALCO)

Functions

· To install a systematic management process for tracking the Balance Sheet risks in a timely manner.

· To proactively review and manage potential liquidity risk and Interest rate risk which may arise from market movements, regulatory changes and/or changes in economic/political environment.

· To review and set deposit-pricing and asset-pricing strategy of IDLC. Determine deposits and assets growth in the right bucket for better Asset Liability Management (ALM) of IDLC.

· To ensure compliance with the regulations of Bangladesh Bank in respect of statutory obligations involved within the parameters of Balance Sheet Risks.

Notable Activities of 2020

· Maintaining adequate liquidity buffer depending on market outlook;

· Keeping liquidity risk and interest rate risk metrics within the regulatory limits;

· Re-pricing asset and liabilities in a timely fashion to maintain targeted spread;

· Reduce reliance on bank deposit;

· Manage interbank placement exposure;

· Ensuring compliance with all regulatory ALM ratios

Achievement Highlights· Increased the investment in

government securities to improve asset liability profile-

· Solo- BDT 3,017.59 million in 2020 from BDT 956.58 million in 2019

· Group- BDT 3,044.78 million in 2020 from BDT 1,380.72 million in 2019

· Maintained sufficient liquidity buffer through out the year

· Monthly Loan to fund ratio remained below 90% against the regulatory threshold of maximum 95%

· Maintained loan deposit spread within the targeted range;

· Reduced the ratio of bank deposit to total deposit basket to 13.44% at the end of 2020 from 18.76% a year ago

In the name of

HR & Compensation Committee

Meetings Held

8Risks Managed



Members

Arif Khan CFA FCMACEO & Managing Director



Syed Javed Noor Deputy Managing Director

Mesbah Uddin AhmedHead of Corporate Division

Mir Tariquzzaman Chief Technology Officer (CTO)

Md. Masud K. Majumder, FCA Group Chief Financial Officer

Shamima Akter LovelyHead of Human Resources (CC) Abul Fazal Mohamed Rubayat ACS ACMA Secretary to the Committee

Nomination & Remuneration Committee

Functions· Partner with the Human

Resource function in driving the people agenda in alignment with the Organizational Strategy related to total reward system.

· Ensure consistency of application of policies and procedures across the Group.

· Ensure equal opportunity and transparency in terms of suitable recruitment, performance evaluation and other benefits-related issues


· Revised Provident Fund rule to increase the benefits of employees

· Amendment of IDLC Housing Loan Policy by introducing “IDLC Group Construction Loan”

· Amendment of motorbike policy for employees

· Covid-19 Special Incentive provided to employees in line with BRPD Circular

· Implemented Interim ESAU Policy for direct sales employees during Covid-19 pandemic

· Approving Spot Awards & assistance from Welfare Fund to the employees


· Piloting Employee flexi-hours

· Improved HR self-service module

· Implemented E-learning module for continued HR development



Meetings Held

4

Risks Managed


• Liquidity Risk


• Reputation Risk

Meetings Held

4

Risks Managed

• Credit Risk

• Strategic Risk

Members

Arif Khan CFA FCMA CEO & Managing Director



Mahbub-ul-Kader, CAMS Group Head of Internal Control and Compliance

Abul Fazal Mohamed Rubayat ACS ACMA Group Head Corporate Affairs and Group Company Secretary

Members


Asif Saad Bin Shams Chief Risk Officer and Head of Credit



Nastaran TasnimSenior Manager, Finance

Corporate Governance Committee

BASEL Implementation Committee

Functions

Functions

· Ensures that the Corporate Governance practice within the Company is as required by the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank.

· Recommends and advises course of action in the areas where there is a scope of improvement

· Apply the action plan of BASEL-II and review thereof;

· Communicate issues related to the implementation of BASEL-II to the management;

· Assist in carrying out the quantitative impact study (QIS), if necessary;

· Engage in capacity building and training according to the training need assessment (TNiA) for the concerned officials; and

· Establish a planning and supervisory review as

required by Pillar-II of BASEL-II framework.

The reviews of the BASEL Implementation Committee include

· Review of action taken in previous BIU meetings

· Economic and market status and outlook

· Credit, market and operational risks related to capital adequacy

· Review of BASEL implementation status

· Action taken



Ensuring compliance Code of Conduct and IDLC’s governance framework with the BSEC Corporate Governance Code dated June 3, 2018 and Bangladesh Bank’s guidelines

• Ensuring credit rating for eligible clients to constrain Risk Weighted Asset of portfolio;

• Ensuring alignment of business strategies and planning with BASEL guidelines to ensure sound Capital Adequacy Ratio (CAR) as indicated by the improving trend of the CAR over the years.

• Implemented new Stress Testing Reporting framework as prescribed by central bank



· Achieved “Highly Satisfactory” certification from corporate governance auditor regarding the governance of the company.

· Obtained accolade from SAFA, ICAB and ICSB for being one of the best governed companies.

Maintaining CAR well above regulatory requirement

• Group-

17.45%• Solo

14.59%



Meetings Held

1Risks Managed

• Credit Risk

• Liquidity Risk


• Strategic Risk

• Market Risk


Members





Shamima Akter Lovely Head of Human Resources (CC)

Integrity Committee

Functions· Create awareness on code

of integrity and good governance across the company;

· Identify the scopes where efficiency of employee can be developed and arrange appropriate training in this regards;

· Amend existing policies and procedures as per requirements;

· Evaluate and reward the respective employees for integrity and good work;

· Improve e-governance system;

· Develop complaint management system;

· Implement code of conduct.

Highlights of 2020· As part of regulatory requirement followed by DFIM Circular No.

3, IDLC has awarded employees under “Integrity Award Policy” in two category for the year 2020.

· Number of Awardees - 2

Members

M. Jamal UddinDeputy Managing Director



Meetings Held

6

Risks Managed

• Credit Risk

• Market Risk

• Liquidity Risk


• Strategic Risk

• Technology Risk

• Legal Risk


• Reputation Risk

Highlights of 2020

· Ensured continued compliance with national AML/CFT laws and regulations;

· Review of AML/CFT policies and ensuring compliance across the organization;

· Reviewed and approved suspicious transaction and activity reporting;

· Review of organization-wide AML activity report

· Ensured continued process for AML/CFT Training and awareness building

· Ensuring every new employee is accustomed with basic risk mitigation factors at a behavioral level along with complying with the company’s code of conduct.

· Number of AML trainings conducted in 2020:

9· Number of employees

covered:

755

Central Compliance Unit (CCU)

Functions

· Keeping updated with changes in regulations regarding the combatting of money laundering and terrorist financing, and accordingly adopting changes to IDLC’s AML and ATA compliance policy

· Supervising money laundering and terrorist financing control procedures of the company so as to ensure legal and regulatory requirements

· Issuing necessary instructions across the company in line with company policy and Bangladesh Bank directives

· Ensuring that proper KYC along with effective risk assessment and control

procedures are in place

· Providing advisory services to on various issues linked with alleged money laundering activities or transactions

· Maintaining ongoing awareness on evolving money laundering risks and their compliance procedures through formal and informal training, workshop and seminars

· Development of adequate testing procedures to detect and prevent lapses in compliance

· Monitoring business activities of branches through AML and ATA self-assessment procedure and provide corrective measures .



Meetings Held

12

Risks Managed

• Credit Risk

• Liquidity Risk


• Strategic Risk

• Market Risk


Risk Management Forum

Functions· Design overall risk

management strategy· Communicate views of

the Board and senior management regarding the risk management culture and risk appetite across the company

· Prepare risk management policies and procedures

· Monitor the prescribed/ threshold limits of risk appetite Develop and observe the use of models to measure and monitor risks

· Develop and oversee implementation of stress testing

· Oversee the capital management functions in

accordance with the risk-based capital adequacy measurement accord, i.e. BASEL-II/ III

· Highlight risks in portfolios and deficiencies of the Company on a timely manner

· Review market conditions, identify external threats and provide commensurate recommendations for precautionary measures

· Develop overall information system/ MIS to support the risk management functions of the company

Notable activities of 2020· Reviewed Risk

Management Paper

· Recommended measures, as deemed necessary, for management of relevant risks;

· Assessed Top 10 risks of the company and reviewed Plans for future risk managements;

· Undertaking risk analysis and action plan to reduce the same


· Establishing Risk reporting across the subsidiaries:

· Key Control Standard-Yearly

· Key Control Self Assessment- Quarterly

· Key Risk Indicators- Monthly

· Enhancing control through every formalizing internal procedures and services.

Members


Mir TariquzzamanChief Technology Officer (CTO)



Jane Alam Romel Group Chief Marketing Officer

Indrajit Mallick Head of Operations

Shafayet Hossain Head of Special Asset Management

Nurul Karim Patwary Head of Treasury

Shamima Akter Lovely Group Head of Human Resources (CC)

Abul Fazal Mohamed Rubayat ACS ACMA Group Head Corporate Affairs and Group Company Secretary

Meetings Held

7

Risks Managed

• Strategic Risk

• Technology Risk


MembersArif Khan CFA FCMA CEO & Managing DirectorM. Jamal Uddin Deputy Managing Director Asif Saad Bin Shams Deputy Managing Director & Chief Risk OfficerSyed Javed Noor Deputy Managing Director Mesbah Uddin Ahmed Head of Corporate DivisionMir Tariquzzaman Chief Technology Officer (CTO) Md. Masud K. Majumder, FCA Group Chief Financial OfficerAtaur Rahman Chowdhury Head of Consumer DivisionJane Alam Romel Group Chief Marketing OfficerMahbub-ul-Kader, CAMS Group Head of Internal Control and ComplianceIndrajit Mallick Head of OperationsMohammad Saifuddowla Shamim Head of SME DivisionOther stakeholders as decided by the committee

ICT Steering Committee

Functions· Monitor management methods

to determine and achieve strategic goals

· Provide guidance related to risk, funding, or sourcing

· Ensure project priorities and assessing feasibility for ICT proposals

· Ensure that all critical technology projects have a component for “project risk management”

· Consult and advise on the selection of technology to be implemented

· Ensure that vulnerability assessment of new technology is performed

· Provide direction and guidance regarding architecture design, need for legislative and regulatory compliance

· Ensure compliance to regulatory and statutory requirements

Notable activities of 2020· Approved the project for the

year

· Prioritize the IT projects and resource assignment for the approved projects

· Take the status update of the ongoing IT projects

· Provide necessary guidance to ensure compliance

· Provided necessary directions to manage during pandemic situation

Achievement HighlightsNumber of projects evaluated by ICT

Steering committee in 2020: 40Number of projects approved for the

year: 35Number of projects implemented in

2020: 30Number of projects Ongoing from

2020: 5



Meetings Held

2

Risks Managed

• Credit Risk

• Liquidity Risk


• Strategic Risk

• Market Risk


ICT Security and Risk Management Committee

Functions

· Ensure development and implementation of ICT security objectives, ICT security related policies and procedures

· Provide ongoing management support to the Information security processes

· Ensure continued compliance with the

business objectives, regulatory and legal requirements related to ICT security

· Support to formulate ICT risk management framework/process and to establish acceptable ICT risk thresholds/ICT risk apatite and assurance requirements


· Provided necessary guidance to enhance IT security and mitigate technology risks during pandemic situation

· Take status update of the action items of last IT audit

· Provided necessary guidance to ensure compliance


Ensured compliance of Security Guideline on Technology usage at every user level

Members

Asif Saad Bin ShamsDeputy Managing Director & Chief Risk OfficerMir TariquzzamanChief Technology Officer (CTO) Indrajit Mallick Head of OperationsMd. Masud K. Majumder, FCA Group Chief Financial OfficerMahbub-ul-Kader, CAMSGroup Head of Internal Control and ComplianceOther stakeholders as decided by the committee

Meetings Held

1Members

Shamima Akter Lovely Chairperson11 women employees representing different divisions and branches of the GroupExecutive Committee MembersSanjana AhmedSecretaryAll the women employees of Group IDLC

IDLC Ladies Forum (IDLC LF)

Functions

· Ensuring all women employees the opportunity for networking and provide a common platform to share and raise various issues and problems like discrimination, harassment, negative attitude towards women and any other issue that may affect women employees within the Company.

· Enabling IDLC’s management to better understand and address issues and develop strategies accordingly.


· Ensuring proper management of issues raised.

· Counselling to women colleagues on different matters.



2. IDLC’s Vision, Mission and Strategies

2.1 Board-approved vision and mission statements of the company

The Board of Directors, at its 193rd meeting held on May 13, 2012, redefined the Company’s vision, mission, strategic objectives and value statements. Adhering to our value statements, we are driving towards our vision.

2.2 Business objectives and areas of business focus

Our business objectives have been explained in detail in the section ‘Strategy and Resource Allocation’ in page no. 91.

2.3 Strategies to achieve the Company’s business objectives

Aligned with our focus on enhancing shareholder communication and reporting our progress and prospects on an ongoing basis, we describe our strategy, resource allocation approach and our future plans to achieve our business objectives on page no. 93 of this annual report.

Vision

To be the best financial brand in the country

Our Mission

To focus on quality growth, superior customer experience and sustainable business

Integrity Trust and Respect Passion Customer Focus Equal Opportunity Eco-Friendly Simplicity

Our Core Values

Our vision, mission, strategic objectives and value statements are depicted on pages 13, 91, 92, 131 of this annual report.



Contribution to Value Creation

Risks Managed

CR LQR MR

OR SR TR

ESR LR RR

Key Functionality

Ensuring appropriate Internal Control and Compliance

Establishing Accountability and Transparency

Number of Meetings during 2020

Meetings required to hold

Meetings held

Mitigating Risks

Ensuring Long-term growth and sustainable standing

Upholding core values ofIntegrityTrustRespect

4

6

RR ReputationRisk

ESRLRTRSRCR LQRMR ORCreditRisk

MarketRisk

LiquidityRisk

Operational Risk

Strategic Risk

TechnologyRisk

Legal Risk

Environment & Social Risk

Audit Committee Composition

1 Nominated Non-executive director

4 Independent Non-executive director

Audit Committee Member expertise

40%

40%

20%

Finance

Risk Management & sustainable development

HR export

Audit Committee

3. Audit Committee

The role of the Committee is further expounded on and clarified in the Terms of Reference (ToR) of the Audit Committee, which was revised in light of directives contained in DFIM Circular No. 13, dated 26 October, 2011 issued by the Bangladesh Bank.

Terms ofReference

InternalControl

FinancialStatements

InternalAudit

ExternalAudit Miscellaneous

Compliance withExisting regulations

3.1.2 Terms of reference of Audit Committee – empowering to investigate employees and retain external counsel

3.1 Appointment of members and composition of the Audit Committee

IDLC’s Audit Committee is a sub-committee of the Board formed in compliance with the requirements of DFIM Circular No. 13, dated 26 October 2011 of the Bangladesh Bank and relevant BSEC revised Corporate Governance Code (CGC) notification No. SEC/CMRRCD/2006-158/207/Admin/80, dated June 3, 2018, and international best practices on corporate governance.

3.1.1. Qualification of the Chairman

The Chairman of the Audit Committee, Mr. Niaz Habib, is one of the Independent and Non-Executive Directors possessing vast experience. His qualifications are addressed in detail in the brief profile on page no. 61 of this annual report. All the members of the Committee are ‘financially literate’ as defined by the corporate governance code.

In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No. 5(4)(b) [where presence of an independent director is a must] and the reason of absence of the regular Chairperson shall be duly recorded in the minutes.

Chairperson of the Audit Committee shall remain present in the Annual General Meeting (AGM):

Provided that in absence of Chairperson of the Audit Committee, any other member from the Audit Committee shall be selected to be present in the annual general meeting (AGM) and reason for absence of the Chairperson of the Audit Committee shall be recorded in the minutes of the AGM.



According to the Terms of Reference (ToR) of the Audit Committee, its principal duties and responsibilities in respect of the following aspects:

Financial Statements

Miscellaneous

Internal Control

Internal Audit

External Audit

1. Reviewing whether financial statements were prepared in compliance with all directives and guidelines prescribed by the Bangladesh Bank and other applicable standards

2. Engaging in discussions with external auditors and the management prior to the finalization of the financial statements

3. Attending and answering questions related to accounts and audit at the AGM

1. Reviewing whether financial statements were prepared in compliance with all directives and guidelines prescribed by the Bangladesh Bank and other applicable standards

2. Engaging in discussions with external auditors and the management prior to the finalization of the financial statements

3. Attending and answering questions related to accounts and audit at the AGM

1. Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board;

2. Review the Management’s Discussion and Analysis before disclosing in the Annual Report;

3. Appraising the audit procedures and reviewing the management letter submitted by external auditors;

4. Assessing whether the management has appropriately considered the observations and recommendations made by the external auditors;

5. Oversee the determination of audit for effective audit and evaluate the performance of external auditors; and

6. Placing recommendations to the Board of Directors regarding the appointment of external auditors

Placing quarterly reports before the Board of Directors on rectification/correction status of errors, fraud, forgery and other irregularities identified by internal auditors, external auditors and the Bangladesh Bank inspection teams

Undertaking development functions through implementing an improved infrastructure and reporting system and

Performing all other supervisory activities as assigned by the Board as well as evaluating its own efficiency on a regular basis

1. Evaluating whether the management:

a. Has an appropriate internal control and compliance culture with regards to risk management, including approval of the Internal Audit and Compliance Plan

b. Has clearly defined the duties and responsibilities of officials

c. Has full control over the operations of the Company

2. Reviewing the appropriateness of management information system (MIS) including information technology system and its use

3. Reviewing whether the management is complying with the recommendations made by internal and external auditors

4. Reviewing existing risk management procedures to ensure that processes are effectively run within the Company

5. Reviewing all fraud, forgery and internal control weaknesses discovered by internal, external or regulatory auditors.

Reviewing whether the rules and regulations set by regulatory authorities (Bangladesh Bank and other regulatory bodies) as well as internal policies and guidelines approved by the Board of Directors are being complied with.

Compliance with existing regulations

Composition of the Audit Committee

3.1.3 Composition consisting of an Independent Director and Non-Executive Directors

In compliance Corporate Governance Code of BSEC, the Committee consists of five (5) non-executive members of the Board including an Independent Director who is the Chairman of the Committee. The quorum of the meeting shall not be filled until and unless the Independent Director attends the meeting. The Company Secretary acts as the secretary of the Audit Committee.

3.1.4 Relevant Expertise of the Committee:

All five of the Committee incumbents possess working experience in the fields of finance, accounting and audit. Two of these members of the Committee, Mr. Kamrul Hassan FCA and Mr.

Mohammad Mahbubur Rahman FCA, are Fellow members of the Institute of Chartered Accounts of Bangladesh (ICAB), and have specialized expertise required for the role. The qualifications of the members of the Committee are addressed in detail in their brief profile on page no. 57, 59 of this annual report.

3.1.5 Accessibility of Head of Internal Audit to the meeting of the Audit Committee

The Head of Internal Control and Compliance, Mr. Mahbub-ul-Kader has direct access to the Audit Committee, which in turn is directly accountable to the Board.

3.1.6 Holding of the Audit Committee meeting during 2020

As per its Terms of Reference and the BSEC Corporate Governance Code dated 03 June 2018, the Audit Committee is required to



hold at least four (4) meetings in a year. During the year ended 31 December 2020, the Committee held Five (5) meetings. The details of the meetings held and members’ attendance in the meetings are disclosed in Annexure II of the Directors’ Report.

3.1.6.1 Quorum of the Audit Committee meetings

The number of Directors required to constitute a quorum is two (2) or two third of the members of the Audit Committee, whichever is higher, where presence of an independent director is a must according to the BSEC Corporate Governance Code dated 03 June 2018. Of them, one shall be an Independent Director. The Company Secretary shall act as the secretary of the Committee.

3.1.7 The Audit Committee and Internal Control and Compliance

IDLC’s Internal Control and Compliance (ICC) department is tasked with reviewing the Company’s system of internal controls including the conduct of regular audits of all operational units. ICC is operationally independent in that its members are not involved in the Company’s operational activities and that the Head of ICC (HoICC), in addition to his direct reporting line to the CEO & Managing Director, also has access to the Audit Committee.

The Audit Committee is responsible for approving the annual audit plan of ICC and reviewing the plan’s subsequent implementation.

The internal audit reports or summaries thereof prepared by the ICC are reviewed on a regular basis by the Committee.

3.1.8 Reporting of the Audit Committee

The Audit Committee reports directly to the Board of Directors and under certain circumstances, can also report to the BSEC.

Reporting to the Board of Directors the Audit Committee shall immediately report to the Board of Directors in the following cases:

· On conflict of interest;

· Suspected and presumed fraud or irregularity or material defect in the internal control system;

· Suspected infringement of laws, including securities-related laws, rules and regulations and

· Any other matter which should be disclosed to the Board of Directors immediately

No such issues arose at IDLC during the year ended 31 December 2020.

3.1.9 Immediate reporting to the Bangladesh Securities and Exchange Commission

If the Audit Committee has reported to the Board of Directors about anything that has a material impact on the financial conditions and results of operations of, and where the Audit Committee finds

that such rectification has been unreasonably ignored, the Audit Committee shall report such findings to the BSEC,

No such circumstances arose during the year ended 31 December 2020.

3.2 Objectives of the Audit Committee

The Audit Committee shall assist the Board of Directors to ensure that the financial statements reflect a true and fair view of the state of affairs of the Company. The committee will also ensure good monitoring systems within the business.

The principal functions of the Audit Committee are to exercise oversight over IDLC’s risk management, financial reporting and regulatory compliance functions.

3.2.1 Internal controls are well conceived, properly administered and satisfactorily monitored

Based on the review of activities of ICC department in 2020, the Audit Committee is of the view that the internal control and compliance procedures are well conceived, properly administered and satisfactorily monitored which have been stated by the report of the Audit committee on page no. 193 of this annual report.

3.2.2 Ensuring compliance with Laws, Regulations and timely settlements of statutory dues

Being compliant ensuring sustainable business is the ultimate focus of IDLC. IDLC puts its best effort to remain compliant with all applicable laws and regulations including the regulatory reporting in due course.

3.2.3 Audit committee’s involvement in the review of the external audit functions

On the basis of the proposal of the Audit Committee, the board recommended Hoda Vasi Chowdhury & Co. Chartered Accountants, a Chartered Accountant firm in Bangladesh, to the shareholders in the 35th AGM to appoint them as statutory external auditors of the company for 2020. Accordingly the shareholders have approved their appointment.

Before their appointment as statutory auditors, declaration of their independence from IDLC was obtained, in compliance with DFIM Circular no. 04, dated April 30, 2015 of Bangladesh Bank.

In compliance with the BSEC corporate governance code, the statutory auditors did not perform any activities other than the statutory audit.

During their tenure, ICC department has coordinated and reviewed their functions and reported to the Audit Committee. Before presenting the financials before the board, the committee at its 77th meeting held on February 15, 2021 reviewed their activities and hold a discussion with them in this regard. And the committee and the auditors, both have expressed their satisfaction.



Activities undertaken in 2020

The key activities performed by Audit Committee has been detailed in page no. 193 in the Statement of Audit Committee.

3.2.4 Selection of appropriate accounting policies

While reviewing the financial statements for 2020 by the Audit Committee, they have reviewed that the financial statements were prepared following appropriate accounting policies that are in line with applicable accounting standards adopted by Institute of Chartered Accountants of Bangladesh (ICAB), which was also vetted by the statutory auditors and reflected in their report on page no. 223 of this annual report.

3.2.5 Review of interim financial statements before presenting to the board for authentication

In compliance with Bangladesh Bank DFIM circular No. 13, dated

October 26, 2011 as well as the Terms of Reference (ToR) of the

Audit Committee, the committee reviews the interim financials

before presenting before the board.

3.2.6 Review of reliability of management information used for such computation

Based on the effectiveness of the internal control process along

with its proper application and effective measures taken to prevent

possible fraud and forgery, the Audit Committee expressed

its satisfaction to the board on the reliability of management

information used for preparation these financial statements.

Statutory auditors have also expressed their satisfaction in this

regard and which was stated in their report on page no. 223 of

this annual report.

Key Functions of Audit Committee

Ensured effective coordination of

external audit function

Ensured independence of external auditors

Reviewed external auditors findings to

ensure actions being taken

Reviewed external auditor for

appointment/ re-appointment

No non-audit work was assigned to external auditor

4.0 Internal Control and Risk Management

4.1 Acknowledgment of Directors’ responsibility in respect of internal control of IDLC

IIDLC’s Board of Directors acknowledges its overall responsibility for maintaining the adequacy and effectiveness of the Group’s system of internal controls. The Board is of the view that the internal control framework is designed to manage the Group’s risks within an acceptable risk profile, rather than completely eliminate the risk of failure to achieve the policies, goals and objectives of the Group. The Board therefore believes that it can provide only reasonable, rather than absolute, assurance regarding effectiveness against material mis-statements of management and financial information or against financial losses and fraud.

4.2 Internal control

IDLC has adopted the definition of internal control provided by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its Internal Control — Integrated Framework. Accordingly, the Company defines internal control as a process, affected by its Board of Directors, management and other personnel, which is designed to provide reasonable assurance regarding the achievements of objectives relating to the effectiveness and efficiency of operations, reliability of both external and internal financial and non-financial reporting and compliance with applicable laws and regulations. The control system applies across the IDLC Group to all divisions and departments of its operations.



4.2.1 Key features of the internal control systemThe Company’s internal control system consists of five interrelated components:

3. ControlActivities

4. Information&Communication

5. Monitoring

Orientation awareness and actions of those in the governance and managementroles with regards to the Company’s internal control and its importance in theentity.

Activities ensured by IDLC:Active participation by those charged with governance though regular meetingsRegular communication and con�rmation of its Code of ConductZero tolerance for illegal or unethical behavior.Maintaining a well-de�ned organizational structureHuman resource policies that demonstrate the Company’s commitment

Facilitates the functioning of the other components by providing informationthat is necessary for the attainment of Company objectives and by establishinga continuous process for collecting, sharing and disseminating necessaryinformation from both within and outside the Company

Activities ensured by IDLC:Established information systems that deal with internally generated data as well asexternal events, activities and conditions relevant to business decision-makingEncourages sharing of information and opinions across the management hierarchyand among di�erent businesses, functions and departments

Company identi�es and assesses risks in the achievement of its objectives

Activities ensured by IDLC:Assessment from branch and department level reviews of portfolios, functions andoperations to ManCom and ALCO meetings at the very top level of the management

The policies and procedures that help ensure that the management directivesare carried out.

Activities ensured by IDLC:Authorization, reviews, reconciliations and veri�cations of various objectives that areapplied throughout the Company at all levels and in all functions

Ensures that controls are operating as intended and that they are appropriatelymodi�ed in response to changing conditions

Activities ensured by IDLC:Ongoing monitoring which occurs in the course of, and as a part of, day-to-dayoperations as well as separate management reviews, evaluations and periodic internalaudits of various departments and business functions.

1. ControlEnvironment

2. Risk Assessment

Orientation, awareness and actions of those in the governance and management roles with regards to the Company’s internal control and its importance in the entity.

Activities ensured by IDLC:• Active participation by those charged with governance through regular meetings• Regular communication and confirmation of its Code of Conduct. • Zero tolerance for illegal or unethical behaviour.• Maintaining a well-defined organisational structure• Human resource policies that demonstrate the Company’s commitment

Company identifies and assesses risks in the achievement of its objectives

Activities ensured by IDLC:

• Assessment from branch and department level reviews of portfolios, functions and operations to ManCom and ALCO meetings at the very top level of the management

The policies and procedures that help ensure that the management directives are carried out.


• Authorization, reviews, reconciliations and verifications of various objectives that are applied throughout the Company at all levels and in all functions

Facilitates the functioning of the other components by providing information that is necessary for the attainment of Company objectives and by establishing a continuous process for collecting, sharing and disseminating necessary information from both within and outside the Company


• Established information systems that deal with internally generated data as well as external events, activities and conditions relevant to business decision-making

• Encourages sharing of information and opinions across the management hierarchy and among different businesses, functions and departments

Ensures that controls are operating as intended and that they are appropriately modified in response to changing conditions


• Ongoing monitoring which occurs in the course of, and as a part of, day-to-day operations as well as separate management reviews, evaluations and periodic internal audits of various departments and business functions.

CreditRisk

Operational

Risk

LiquidityRisk

Market

Risk

Reputational

Risk

Envir

onm

enta

lan

dSo

cial R

isk

Lega

lRi

sk

TechnologyRisk

StrategicRisk

4.3 Directors’ reviewing the adequacy of internal control

Subject to the caveats of reasonable assurance mentioned earlier, the Board confirms that it has reviewed and assessed the Group’s system of internal controls with regards to its adequacy and effectiveness in providing reasonable assurance regarding the achievement of objectives relating to the effectiveness and efficiency of operations, reliability of both external and internal financial and non-financial reporting and compliance with the applicable laws and regulations.

4.4 Identification of key risks IDLC is exposed to – both internally and externally

The following are our keys risks-



IDLC always concentrates on delivering high value to its stakeholders through appropriate Trade-offs between risk and return. In addition to the industry best practices for assessing, identifying and measuring risks, IDLC also considers guidelines for managing core risks of financial instructions issued by Bangladesh Bank, vide FID Circular No. 10 dated September 18, 2005 for management of risks and, more recently, DFIM Circular No. 03 dated 24 January 2016.

A detailed discussion of risks and the strategies adopted to manage and mitigate these are given in the Statement of Risk Management on page no. 80 of the report. The adequacy of the system of internal controls is reviewed by the Board of Directors as well.

4.5 Disclosure of the strategies adopted to manage and mitigate the risks

· Credit Evaluation Committee (CEC): To evaluate all projects / proposals of financing activities of the Company from the risk point of view.

· Risk Management Forum (RMF): To introduce proactive risk management procedures in line with international best practices framework.

· Risk Analysis Unit (RAU): To act as the secretariat of the Risk Management Forum with responsibility for identifying and analyzing the various types of risks appropriately and in a timely manner.

· Central Compliance Unit (CCU): Responsible for supervising the anti-money laundering (AML) and anti-terrorism activities (ATA) at IDLC.

In order to address and mitigate the risks prudently, at IDLC, the committees are operational, about which details are given on page no. 158 of this annual report

The Global Pandemic and Crisis Management:

While global economies have been devastated by the pandemic, we learnt a lot about strength, resilience and flexibility. The COVID-19 pandemic has brought new and unique challenges everywhere. Since the onset of the pandemic, the board has faced a string of tough decisions. Focusing on the critical functions of the company certainly has been the top priority of the board. Some important implications for Corporate Governance practices and standards were adopted by the company’s board including the following:

• Enhanced Communication with Company Management: The board considered increased and sustained open discussion with company management on both the business risks and the workplace health and safety issues posed by COVID-19.

• Confirmed feasibility of the company’s disaster plan: The board discussed the implementation issues with management and evaluated whether any modifications to the disaster plan were necessary to deal with new issues as they arise. The disaster plan addressed matters such as employee availability, functionality of IT systems, cyber security, communication protocols and legal/regulatory compliances.

• Assessed key areas of additional risks and probabilities of occurrence: The feasibility of implementing necessary steps under different scenarios given the possibility of fewer resources being available, increased health and safety regulations, supply chain issues, availability of financing sources and customer situations were considered by the board.

• Reassessed long term corporate strategy: Given the changed circumstances due to the Global Pandemic this year, the board accelerated and reassessed long term corporate strategy of the company.

Established Frequent Communication through

digital platform for effective and ongoing

information flow and reporting

Revised and adapted delegation processes and reporting lines for expedited communication and

decision-making

Adopted succession plans and emergency contingency plans

Established a COVID-19 response plan

Revised the roles of committees to include communication and

oversight of the crisis

Adopted virtual Board and commit-tee meetings, increased interactions and exchange of documentation via

virtual means

Immediate Corporate Governance Actions Taken:



5 Ethics and Compliance The Board’s commitment to establishing the highest levels of ethics and compliance. Code of Conduct majorly addresses all issues relating to conduct and apart from law and regulation touches on prime issues such as Conflict of Interest , Insider Trading, and Other general obligations

5.1 Code of Conduct

5.3 Dissemination of the statement of Ethics andCode of Conduct

Ensuring High Level of Ethics and Compliance

5.4 Board’s commitment to establishing high levels of ethics and compliance within

Communication of Code of Conduct new joiners and annually to existing employees

Installing a system of internal controls, which is reviewed, evaluated and updated on an ongoing basis

Instilling ethical principles in day-to-dayactivities and strategies

Establishing a clearly-defined organizational structure and ensuring individual accountability

Establishing a variety of monitoring mechanisms internal audit team

Ensuring instant action with zero tolerance for identified instances of unethical and/or non-compliant behavior

5.2 Disclosure Statement on Ethics

The IDLC Group remains committed to upholding the highest standards of ethics and compliance by its employees. This commitment is reflected in its Code of Conduct that covers, among other issues, the following areas:

Code of Conduct

Conflictof

Interest

InsiderTrading

Fraud

GeneralObligation

Their relationship with and responsibilities to IDLC.

Their relationship with and responsibilities to customers.

Compliance with laws and regulations.

Acting in a professional and ethical manner.

Protection of business assets.

Disclosure of conflicts of interest.

Prohibition of any conduct involving dishonesty, fraud, deceit or misrepresentation including insider trading.

An annual declaration is required to be signed by every employee of IDLC, confirming that they have read and understood the Code of Conduct.

The Human Resources department circulates the required declaration and ensures that all employees signed the declaration.

The Internal Control and Compliance (ICC) department, through regular audits, assesses whether any employees have breached the Code of Conduct.



5.3.1 Code of Conduct for Board members

The Board of Directors of IDLC is committed to the highest standards of conduct in their relationship with IDLC employees, customers, members, shareholders, regulators and the public. The Code provides a set of guiding principles to help us make the right decisions. This refers to conducting our business in accordance with all applicable laws and regulations and also represents our commitment to the spirit of the law. Our actions should reflect IDLC’s values, demonstrate ethical leadership and promote a work environment that upholds IDLC’s reputation for integrity, ethical conduct and trust. This Code is intended to provide a statement of the fundamental principles applicable to our Directors.

Our Directors are encouraged to bring forth questions about particular circumstances that may involve one or more of the provisions of this Code to the Chairman of the Board.

In compliance with the revised corporate governance code issued by the BSEC, the Board shall lay down the Code of Conduct of all Board members and annual compliance of the Code has to be recorded.

5.3.2 Scope of the Code of Conduct

(a) A member must observe the Board’s Code of Conduct whenever he/she:

· Conducts the business of the Board

· Acts as a representative of the Board

(b) The Board’s Code of Conduct shall not have any effect in relation to the activities of a Board member undertaken other than in an official capacity, except and in so far as otherwise indicated

(c) Where a Board member acts as a representative of the Board at the meeting of another public body or Committee, he/she must, when acting in that capacity, comply with the Board’s Code of Conduct, except and in so far as it conflicts with any other legal obligations to which he/she may be subject to.

5.3.3 General obligation

The Code of Conduct for Board members of the Company includes:

PrudentConduct

andBehavior

Businessopportunities

Con�ictof interest

Companyproperty

Con�dentialinformation

Compliancewith laws

andregulations

Fair Dealing Insidertrading

to use due care in theperformance of his/herduties, be loyal to thecompany, act in good faithwhich is the best interestof the company

Avoid appropriatingcorporate businessopportunities; usingCompany property orinformation, or theirposition as Board memberor competitng with thecompany for personal gain

Avoid having members’private interests interferewith the interests of thecompany or the ability toperform his or her dutiesand responsibilitiesobjectively and e�ectively

Ensure that themanagement is using theCompany’s assets.proprietary informationand resources to be usedby the Company and itsemployees only forlegitimatebusiness purposes

maintain con�dentialityof information entrustedto them in carrying outtheir duties andresponsibilities, exceptwhere disclosure isapproved

Ensure that themanagement is causingthe company to complywith all applicable laws,rules and regulations

Board members shallendeavor to deal fairlyand should promote fairdealing with customers,suppliers and employees

The Board members shallnot engage in insidertrading with respect to thepurchase and sale of theCompany’s securities



5.3.3.1 Conflict of interest

Each Board member shall endeavor to avoid having his or her private interests interfere with:

(i) The interests of the Company

(ii) His or her ability to perform his or her duties and responsibilities objectively and effectively

The Board members shall avoid receiving or permitting members of their immediate family to receive improper personal benefits from the Company, including loans from or guarantees of obligations by the Company.

A Board member shall make a full disclosure to the entire Board of any transaction or relationship that such a member reasonably expects could give rise to an actual conflict of interest with the Company and seek the Board’s authorization to pursue such transactions or relationships

5.3.3.3 Insider trading

The Board members shall not engage in insider trading with respect to the purchase and sale of the Company’s securities. The Board members shall not buy or sell securities while in possession of material non-public information about the issuer of that security, whether the issuer is IDLC or any other company. The Board members shall also not pass such information to someone who may buy or sell securities. The reason insider trading is illegal is because it gives the insider an unfair advantage in the market, puts the interests of the insider above those to whom he or she owes a fiduciary duty, and allows an insider to artificially influence the value of a company’s stocks and securities. The Code of Conduct for Board members sets forth guidelines for conduct and they

affirm compliance with the Code on an annual basis. Accordingly, IDLC’s Board designed the Code of Conduct for all the members of the Board and its annual compliance has been recorded for 2020. To abide by the code of integrity and good governance in line with the National Integrity Strategy of Bangladesh, IDLC constituted an ‘Integrity Committee’, composition and functions of which in detail are given on page no. 161 of this annual report.

5.4 Existence of effective anti-fraud programs and controls through whistle-blower mechanism

In recent times, the Company has come to identify the risk of fraud as one of the emerging issues in the overall risk management framework. Planned anti-fraud initiatives include the introduction of a whistle-blower mechanism. Whistleblower Guideline has been approved on December 17, 2017. Additionally, emphasis is placed on strengthening existing processes or activity levels and anti-fraud controls are embedded within the overall system of internal controls.

· Whistle Blower Policy

· Effective anti-fraud programs

· Accountability

5.5 Redress of investor’s complaints and recommendation

IDLC has a formal complaint and recommendation management process that is open to all stakeholders including both investors and customers. A dedicated complaints cell is headed by a senior member of the management for dealing with complaints and recommendations. Those may also be dropped at complaint boxes kept at all IDLC branches or can be submitted online on the IDLC website: www.idlc.com.



6.1 Roles and responsibilities of the Committee

The principal role and function of the HR and Compensation Committee is to assist the human resource department in developing and administering a fair and transparent procedure for setting policies on the Group’s overall human resource strategy. The responsibility of the committee is to ensure wide, equal opportunity and transparency in terms of suitable recruitment, compensation on the basis of merit, qualification and competence, adequate training and development facilities, performance evaluation and promotion based on individual performance and contribution and other benefits-related issues with regards to the Company’s operating results and comparable

market statistics. The Composition, responsibilities and process of holding of the meeting of the committee is stated on page no.159 of this annual report.

6.2 Composition of the Committee

As per Bangladesh Bank guideline, IDLC being a financial institution can only form 2 (two) committees: Executive Committee and Audit Committee, as sub-committee of the Board.

Hence, in compliance with the regulation, IDLC has form the committee with the senior executives’ including the CEO & MD, executive director of the board as disclosed in the table in section 1.14 above.

6. Nomination and Remuneration Committee (as part of Management Committee)Nomination & Remuneration Committee (also identified as HR & Compensation Committee) is a subcommittee of the management which is comprised of Senior Executives Only. The Board is not part of this committee as per Bangladesh Bank directive, and operates independently to ensure rights and value of the company’s human resource.

Nomination and Remuneration Committee

Contribution to Value Creation Developing an engaged, agile and innovative pool talent pool

Key functionalities

Strategic RiskRisks

ManagedEnvironmental and Social Risk

Ensuring application of policy

Aligning the Organizational Strategy to total

reward system

Administer fair and transparent procedure

Core Area of Expertise of the members of the committee

34% Financial expert11% IT11% Risk33% Business11% HR



Bangladesh Bank, vide DFIM Circular No. 13, dated November 30, 2015

Directors are only entitled to the remuneration for attending the meeting of the board and its sub-committees

The remuneration of the CEO & Managing Director is approved by the Bangladesh Bank as recommended by the board

Remuneration of all other employees are determined by the CEO & Managing Director.

DFIM Circular No. 02, dated March 25, 2015, of Bangladesh Bank

6.3 Key policies with regard to remuneration of directors, senior management and employees

6.3.1 Remuneration of Chairman, Directors, CEO and Senior Executives:

6.3.1.1 Chairman & directors:

As stated earlier, in compliance with the policy mentioned earlier, the chairman of the board and other members are entitled to the remunerations. The remuneration paid to the chairman and directors during 2020 have been disclosed on page no. 276 of this annual report.

6.3.1.2 CEO & Managing Director

Remuneration paid to the CEO & MD as approve by Bangladesh Bank has also been disclosed on page no. 276 of this annual report.

6.3.1.3 Remuneration of senior executives

Remuneration for senior executives is market-based and competitive in order to attract, motivate and retain skilled and competent employees. The total remuneration package to

senior executives comprises basic pay, allowances, retirement benefits (Gratuity and Provident Fund) and other benefits as per company’s policies. Executives are also paid a variable amount each year (yearly performance bonus) determined based on the performance of the company and the outcome in the executive’s personal area of responsibility and individually established targets that were set in the beginning of the year.

6.4 Number of Meetings held and work performed

IDLC’s Remuneration Committee has been established with the senior executives in the name “HR and Compensation Committee” on 24 May 2007 to provide a forum for discussion on the Company’s various HR-related issues.

There were eight meetings of the HR Compensation Committee in the 2020.

6.4.1 Work Performed in 2020 The eight meetings were held with following agenda:

1st quarter

Employee promotion

Performance bonus

2nd quarter 3rd quarter

Arranged e-learningprogram foremployees

4th quarter

Evaluation ofemployeeengagement programs

Implementation of working from home facility during pandemic



7. Human Capital

IDLC considers its human resources as its most important asset. We mobilize people and teams through engaging them with leading and cutting-edge financial industry practices and also as an attractive employer. IDLC offers a broad spectrum of opportunities for both professional and personal development as well as a work environment that is characterized by respect, trust, cooperation and collaboration. We do so because the knowledge, skills and enthusiasm of our employees are a major force that enables us to achieve consistent growth. IDLC believes its human resource is the most important driver of building and running the Company. Each and every employee is considered, developed and motivated to contribute optimally towards the achievement of corporate goals.

7.1 Human resources policy

Disclosure of general description of the policies and practices codified and adopted by the Company with respect to human resource development and management, including succession planning, merit-based recruitment process, performance appraisal system, criteria for promotion and reward and motivation, training and development, grievance management and counselling are well-defined in the section “Human Resource Accounting” on page no. 119 of this annual report.

7.2 Organizational chart

IDLC’s organizational chart outlines the internal structure of the Company. It emphasizes on the roles, responsibilities and relationships between individuals within the Company. It is used to depict the structure of IDLC as a whole as well as the Company segregated by divisions and departments.

The organizational chart is shown on page no. 63 of this annual report.

7.2.1Structure

The Company’s management structure comprises the CEO & Managing Director and the management team (ManCom).

The ManCom is responsible for developing organizational and business strategies, embracing innovation and ensuring that the Company conforms to best governance and operating practices. The ManCom is also responsible for organizational effectiveness and the development of IDLC’s values and culture. The ManCom is responsible for managing IDLC’s performance and key business issues in line with the Company’s long-term strategy and for talent and performance management. The ManCom is chaired by the

CEO & Managing Director and the team meets face-to-face and virtually on a regular basis.

7.2.2 Management Committee (ManCom)

The Management Committee is a group elected among the management staff to take responsibility of the governance and strategic direction of IDLC. The role of the Management Committee is to oversee IDLC in accordance with its Constitution under the Financial Institutions Act, 1993.

The Committee is responsible for all aspects of the ongoing operations of IDLC. It delegates day-to-day operations to the Executive Officer. A significant feature of good governance is a clear segregation of the responsibilities and accountability of the committee from those of the Executive Officer. ManCom is always aware of IDLC’s operations, keeps an eye on the big picture, monitors the strategic plan and if and whether the goals are being met. It needs to be satisfied that current events are in accordance with IDLC policies and objectives within the overall budget.

7.3 Performance review

The CEO is responsible for setting financial targets as well as operational and management goals for the members of the ManCom. Both short-term and long-term goals form part of the performance management of all senior executives. Long-term goals are directly linked with the Company’s vision. Short-term goals are generally directly linked to the objectives of the Company. The CEO and the Evaluation Committee conduct a detailed review of the performance of senior executives against these goals on an annual basis at the end of each year.

7.4 Succession Planning and Talent Management

Succession planning and talent management should be treated as continuous practice whereby Management and Board prepared for transitions at any time at a multiple level throughout the Company. This includes not only the Key Management Personnel level but also their direct reporting lines and other critical positions.

7.5 Grievance management and counselling

At IDLC, we are committed towards ensuring equal opportunity, equal rights. Any grievance are managed by HR department that listens to issues and solves them and where required provides counselling.

In addition to the general grievance management, we also have a specific forum for women, IDLC Ladies Forum , which is a platform to share and raise various issues and problems like discrimination, harassment, negative attitude towards women and any other issue that may affect women employees within the Company. This will enable IDLC’s management to better understand and address these issues and develop strategies accordingly. More about the committee is described in page no. 163 of this annual report.

Approaches to Optimizing Human Capital Outcomes:

Improving employee diversity to foster innovation and creativity

Nurture a culture of continuous learningthrough job rotation and training

Instill organizational valuesthrough teambuilding

Focus on talent sourcing and succession planning to ensure sustainability

HR Initiatives Regarding COVID-19

• IDLC introduced work from home to ensure health and safety of the employees

• To boost up employees' morale and mental health Introduced health portal and rigorously tracked employee health



8. Shareholders

8.1 Shareholders Rights

IDLC remains committed to maintaining open channels of communication with the shareholders and make sure all the shareholders rights are carried out. With this aim, IDLC resolves to be informative and accessible to all shareholders. Significant emphasis is given on feeding shareholders views to the Board, both positive and negative. The Chairman encourages all Directors to attend the AGM, providing shareholders in particular with the opportunity to hear directly from the Board and to question the Directors in person.

The basic rights that the shareholders enjoy are:

8.1.1 Control Structure fulfilling shareholder’s needs:

The control structure of IDLC is transparent and is allowed to change based on the need of the shareholders. Control structure is proportional to the share ownership. Rules for change of control exists and is transparent to all shareholders .Share transactions occur at transparent prices and is fair to all shareholders.

8.1.2 Equitable Treatment to all Shareholders:

IDLC strives to ensure that shareholders are subjected to equitable treatment. Within the same class, all shares carry same rights. Shareholder meetings ensure the shareholders do not face undue difficulty regarding participation and voting.

Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands every member present in person, or by proxy, attorney, or representative, shall have one vote in the Annual General Meeting. On a poll every member so present shall have one vote in respect of each share held by him/her. Every holder of one or more ordinary shares shall, on his name

being entered in the Register, be entitle to be present and to speak and vote at any General Meeting. Any share holder whose name is entered in the Register shall enjoy the same rights and be subject to the same liabilities as all other shareholders of the same class.

Entitlement of dividend

Effective participation and voting in Shareholder meetings

Right to elect the Board members

Ability to convey or transfer shares

Participation and informed on basic decisions including- amendments to governing documents, new share authorization and extraordinary transactions

Sufficient and timely information on the Board Meetings

Right to question the board and put input on fundamental issues

Allowed to consult with each other concerning their interest

Permission to voting in absentia

Basic Rights of Shareholders

Shareholders Power/Interest Matrix

Low HighInterestLow

High

Power

22.60% 56.66%

11.10%9.64%

Sponsors/DirectorsInstitutions

Foreign ShareholdersIndividuals

* Based on Shareholding of December 31, 2020



In compliance with Corporate Governance Code by BSEC, IDLC strives to establish accountability, transparency as well as protect the interest of minority shareholders. The shareholders have voting rights in proportion to the number of shares. The shareholders are entitled to dividend and paid if declared.

8.2.1.1 Communication through website

The Company’s website www.idlc.com displays, inter-alia, the Annual Reports, half yearly reports, quarterly reports, monthly business reviews, product offerings, recent announcements, presentations and event updates.

All disclosures required by the Bangladesh Securities and Exchange Commission, Listing Regulations of the Dhaka Stock Exchange Limited and the Chittagong Stock Exchange Limited and the Bangladesh Bank in the form of Price Sensitive Information (PSI) are made adequately and promptly. In addition to ensuring timely compliance, this also enables dissemination of information to all stakeholders and the public through print and online media.

· Be factual and subject to internal vetting and authorization before issue

· Not omit material information

· Express information in a timely, clear and objective manner IDLC strongly believes that all stakeholders should have access to complete information on its activities, performance and product initiatives.

IDLC protects the interest of minority shareholders by providing flow of information towards and keep them updated through necessary means. The Code of Compliance followed by the company ensures the affairs of company being conducted or the power of directors are being exercised in a manner that is not prejudicial to any of the shareholders vis-a-vis minority shareholders.

8.2 Strategy to facilitate effective communication with shareholders

It is the Company’s policy that all external communication by the Company will:

8.2.1 Way of communication with the stakeholders

The following diagram illustrates the multiple channels of communication with shareholders.

IDLC Website• Updates of recent �nancial information and latest investor information• Analyst brie�ng materials

2020 Shareholders visits

2020 Investor meeting

Around 19 visits by 32 shareholders(Reduced due to COVID-19)

Quarterly analyst brie�ngs discussingeach quarter including yearend�nancial performances

2020 Analyst brie�ngs

Reports and Announcements • Annual report & Sustainability report• Quarterly �nancial statements• Price sensitive disclosures • Announcements and press releases

Annual General MeetingsAverage attendance of shareholders in: • Past 5 years: 263• 2020: 239

Over 31 investor meetings

Teleconference meetingwith potentialforeign investors

Channels ofCommunication

withStakeholders

8.1.3 Protection of Minority Shareholders:

Communication

Focusing on Non-Public Material Information

Factual and subjective authorization

Information Delivery



8.2.1.2 Communication through quarterly reports

The Company reports to its shareholders four times a year through quarterly and half-yearly reports and a detailed Annual Report.

8.2.1.3 Quarterly earning disclosure

In the following day of the authentication of quarterly financial statements by the board, IDLC arranges a quarterly earning disclosure meeting with the analyst, press and foreign investors through webinar to explain and update further about the company in addition to the financials.

8.3 Policy on ensuring participation of shareholders

The Members whose names would appear in the Register of Members of the company and/or in the Depository on the ‘Record Date’ will be eligible to attend AGM and entitled to the Dividend as approved.

A Member may appoint a proxy to attend and vote in his/her place by filling proxy form as per Article 103 of the Articles of Association of the company. The proxy form, duly completed and stamped, must be deposited at the office not later than 72 hours before the time scheduled for holding the meeting;

Pursuant to Article 81 of the Articles of Association, a corporate member of the company, by resolution of the Board of Directors or other Governing Body of such body corporate, may authorize such person as it thinks fit, to act as representative at any meeting of the members of the company;

Annual Report, Attendance Slip and Proxy Form along with the Notice will be sent to all the Members by Courier Service/Post. The Members may also collect the Proxy Form from the Registered Office of the company. These will also be available in the website of the company: www.idlc.com;

Members/proxies need to register their entry at the AGM in the counter at the entrance of the AGM venue or incase of AGM through online digital platform need to fill up required informations to authenticate themselves.

8.3.1 Communication through AGM

All shareholders have the right to attend the Annual General Meeting where they can meet and communicate with the Directors and express their views regarding the Company’s business, its future prospects and other matters of interest. The shareholders are always encouraged to attend the meetings or, if they are unable to attend, to appoint proxies.

The shareholders who attend the AGM have the option to ask questions and give suggestions to the Board members during the AGM. The CEO & Managing Director, on behalf of the Board, answers the queries of the shareholders.

8.3.2 Process of communicating the schedule

As per the Companies Act, 2020 (2nd Amendment) at least 21 days before the AGM, soft copy notice of the AGM mailed to shareholders as whose names would appear in the Register of Shareholders of the company and/or in the Depository on the Record Date fixed at Thursday, March 11, 2021. Notice of the AGM is sent to the Dhaka Stock Exchange (DSE) Limited, Chittagong Stock Exchange (CSE) Limited, Bangladesh Securities and Exchange Commission (BSEC), online newspapers and print media. The notice of the AGM is also made available on the company website.

Total Number of Shareholders against total Number of Shares

8,309

251,367,187 8,064 8,439 8,748

7,171

377,050,780 377,050,780 377,050,780 377,050,780

2016 2017 2018 2019 2020

Total No. Shares Total No. Shareholders

Shareholding representation at the AGM in the last five years

70.63% 71.72% 70.06% 71.89%77.20%

2015 2016 2017 2018 201931 32 33 34

AGM No. & Financial Year

35

AGM attendance % of Non Executive Directors,Independent Directors & Statutory Auditors

Non Executive Directors Independent Directors

2015 2016 2017 2018 2019

56%

78% 75%88% 88%

100% 100% 100% 100% 100%

31 32 33 34 35AGM No. & Financial Year



Redress of investor’s complaints and recommendation

IDLC has a formal complaint and recommendation management process that is open to all stakeholders including both investors and customers. A dedicated complaints cell is headed by a senior member of the management for dealing with complaints and recommendations. Those may also be dropped at complaint boxes kept at all IDLC branches or can be submitted online on the IDLC website: www.idlc.com.

Services provided to shareholders:

8.4. Complaint Management Process

IDLC strongly believes in equitable treatment to every shareholder. We resolve the complaints on a priority basis and have committed to serve the appropriate mechanism in order to address the shareholders’ grievance within the time frame. To ensure effective stakeholder engagement as well as uphold stakeholder rights and accountability, a Complaint Management Policy is in place. The Directors are responsible for implementing and overseeing the compliance within the policy.

Receive Complaints

Resolution

Acknowledgmentand Due Diligence

Communication

Clarify source of Discontent

Closure of Complaint

Services Concentration 2020

0.21% Physical Share transfer

0.39% Dematerializationof Shares

19.09% Dividend Status25.30% Reissue of DividendTax Certificate

0.14% Lost of PhysicalShares28.08% General enquires

21.38% Enquires aboutDividend Taxdeduction5.41% RevalidatedDividend Cheque

Services Concentration 2019

0.34% Physical Share transfer

0.43% Dematerializationof Shares

16.84% Dividend Status24.27% Reissue of DividendTax Certificate

0.17% Lost of PhysicalShares25.47% General enquires

24.87% Enquires aboutDividend Taxdeduction7.16% RevalidatedDividend Cheque

8.5. Relationship with Investors

At IDLC, we aim to foster long-term relationship with our investors and attain significant mileage and brand value and funding in the long-run. Year 2020 was nothing like we had anticipated. It brought many challenges and sacrifices. A year where we put a significant emphasis on creating value to our investors-current and potential, through increasing transparency, improving communication and enhancing reach despite COVID-19 pandemic situation. In addition to our regular quarterly earnings webcasts, we have arranged Annual General Meeting of the Company through virtual digital platform the biggest meet of our shareholders.

Key activities during the year 2020

8.6 Dividend policy

IDLC is devoted to driving superior value creation for all its stakeholders through an appropriate capital strategy, the focus will continue to be on sustainable returns for longer term value creation ensuring the immediate, as well as long term needs of the business. Thereby, the Board adopted progressive and dynamic dividend and distribution policy in line with the prevailing laws and regulations prescribed by all regulatory authorities. 8.6.1 Dividend Distribution Policy

IDLC Finance Limited has formulated a dividend distribution policy in line with the Directive on Dividend Distribution and management of Bangladesh Securities and Exchange Commission (BSEC), no BSEC/CMMRRCD/2021-386/03, dated on January 14, 2021. This policy seeks to lay down a broad framework for the distribution of dividend by the Company to its shareholders. This policy narrates the details of Preamble, Objective, Regulatory Framework, Definitions, Current Practice, Interpretation, Payment & Category of Dividend, Parameters for Dividend Distribution, Tax calculation and deduction, Utilization of Retained Earnings, Dividend Disbursement Process, Unclaimed Dividend management, Reporting, Disclosure, Amendment, and Disclaimer in line with said directive of BSEC. Moreover, IDLC ensures timely adaption of any directives and circulars prescribed by Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange

4 quarterlyearningswebcastswithin 8

weeks pasteach quarter

Annual GeneralMeeting

through virtualdigital platform

Year roundmeetings,

calls and emailexchanges

with analystsand

shareholders



Limited, and Chittagong Stock Exchange Limited regarding dividend distribution and management from time to time. 9. Environmental and Social Obligation 9.1 Policy and practices on environmental and social obligation

At IDLC, we believe in the concept of a sustainable business, one that integrates good governance, environmental issues and social concerns with its business strategies to maximize value for stakeholders. IDLC’s sustainability model is based on the 3P approach – People, Planet and Profit:

· People : our stakeholders with whom we engage for our business and the community where we live

· Planet : our surrounding environment and the planet

· Profit : our profit-generating capacity for long-term sustenance

Accordingly, IDLC has aligned its CSR (corporate social responsibility) initiatives to deliver on this commitment and aid community empowerment and responsible environmental management in a sustainable manner.

9.2 Activities undertaken

At IDLC, we are also focusing on Earth and its sustainability, shifting from the traditional financing approach. In this regard, we are making our credit appraisal process to be much more stringent from an environmental and social (E&S) perspective – evaluating all the environmental and social factors such as project impacts on the environment and the community in the long run, prior to approving a loan. Being the only listed member of UNEP FI, we have been following Environmental Risk Management guideline 2011 by Bangladesh Bank. Taking this approach one step further, IDLC is in the process of adopting an extensive environmental and social management system (ESMS) across the organization with assistance from FMO, a Dutch development bank, and FI Konsult, IDLC’s appointed consultant for this project. The overall goal of this project is to help IDLC identify customers with potentially high environmental and social risks, enable them to evaluate the E&S performance of such customers through its due diligence and credit appraisal processes and make those customers, especially who are not in compliance with local E&S regulations, behave more responsibly through the use of environmental or social covenants in the facility agreements. This project will not only satisfy the Central Bank’s requirements but also enable IDLC to comply with internationally-acceptable risk management standards. Furthermore, execution of the green banking policy, which is in line with IFC Performance Standard, ADB Safeguard Policy and Bangladesh Bank guidelines is considered as yet another milestone towards sustainability.

Planet

Pro�t

People

CSR

Good Corporate Citizenship MatrixBenefits to Business

Low

Philanthropy

Pet Projects

Partnering

Propaganda Low

High

High

Bene

fits t

o So

ciet

y

In pursuance of these policy and practices, a detailed description of specific activates undertaken by IDLC is given on page no. 36 of this annual report.

9.3 Sustainability

One of our core aim is to ensure sustainability in the way we conduct business. We follow GRI standards and guidelines that enable us to be on the pathway of sustainable practices. We cover the details on this topic in our Sustainability Report.

10. IDLC’s Overall Governance

At IDLC, the Board of Directors are responsible to shareholders for ensuring that the Company is appropriately managed and that it achieves its strategic objectives. It meets regularly to determine the Company’s strategic direction, to review the Company’s operating and financial performance, to set the Company’s risk appetite and to provide oversight that the Company is adequately resourced and effectively controlled. In pursuit of business sustainability and within the ambit of our integrated reporting framework, our governance structure, stewarded by our well-composed Board (as detailed above with regards to their core responsibilities), helps in value creation over the medium and long term. Some of the drivers that enable us to generate consistent value include the following:

· Organizational leadership structure

· Comprehensive Code of Conduct in alignment with our ethics and philosophies

· Aligning resources with our growth aspirations and forecasting key risks that might impact our business over the long-term and their potential mitigation strategies

· Investment towards strengthening relationship with our key stakeholders

· Mitigation of key environmental and social risks in the long-term plans and manufacturing facilities

· Gauging the levels of innovation fostered within the enterprise and

· Best-in-class remuneration and incentives structures in alignment with the market.

IDLC’S PHILOSOPHIES ARE BASED ON OUR COLLECTIVE PASSION TO ENSURE GOOD GOVERNANCE ACROSS EVERY ASPECT OF THE ORGANIZATION. OUR AIM IS TO BE AN EXEMPLARY EXAMPLE IN THE STANDARD OF CORPORATE

GOVERNANCE PRACTICES



KEY POINTERS FOR THE STAKEHOLDERSIDLC is very much concern of the stakeholders’ interest on the company including the potential investors. IDLC with 35 years of financial expertise helps its clients to decide in taking right financial decisions. The following historical information will help our current and po-tential investors for their decision making:

STATUTORY REPORTING

Financial calendar to the stakeholders

Events for the year 2020 2019

Publication of Financial Statements for the 1st Quarter May 05, 2020 May 14, 2019

Publication of Financial Statements for the Half-year July 25, 2020 July 26, 2019

Publication of Financial Statements for the 3rd Quarter October 30, 2020 October 31, 2019

Annual Financial statements approved by the Board February 17, 2021 February 20, 2020

Date of Record March 11, 2021 March 12, 2020

Dispatching notice for the Annual General meeting March 10, 2021 March 14, 2020

Dispatching of Annual Report March 11, 2021 March 14, 2020

Holding of Annual General Meeting March 31, 2021 March 30, 2020

Transfer/ payment of DividendExpected within

April 26, 2021Expected within

April 26, 2020

Comparative Shareholding Structure of IDLC as on December 31

Types of Share Holders 2020 2019

No. of Shares % of Shares No. of Shares % of Shares

Sponsor/Director 213,642,577 56.66 213,642,577 56.66

Institutions 85,231,292 22.60 76,569,788 20.31

Individuals 36,337,253 9.64 40,663,518 10.78

Foreign 41,839,658 11.10 46,174,897 12.25

Total shares held 377,050,780 100.00 377,050,780 100.00

Top ten shareholders of IDLC as on December 31

Sl. No. Name of the shareholders2020 2019

No. of shares held

% of Issued shares

No. of shares held

% of Issued shares

The City Bank Limited (CBL) and its subsidiaries 87,510,575 23.21% 87,510,575 23.21%

1 The City Bank Limited (CBL) 33,935,329 9.00 % 33,935,329 9.00 %

2 City Bank Capital Resources Limited (CBCRL) 37,328,028 9.90 % 37,328,028 9.90 %

3 City Brokerage Limited 16,247,218 4.31 % 16,247,218 4.31 %

Transcom Group 50,273,164 13.33% 50,273,164 13.33%

4 Eskayef Bangladesh Limited 30,164,062 8.00% 30,164,062 8.00%

5 Transcraft Limited 15,132,033 4.01% 15,132,033 4.01%



Sl. No. Name of the shareholders2020 2019

No. of shares held

% of Issued shares

No. of shares held

% of Issued shares

6 Bangladesh Lamps Limited 4,977,069 1.32% 4,977,069 1.32%

7 Sadharan Bima Corporation (SBC) 28,727,494 7.62% 28,727,494 7.62%

8 Reliance Insurance Limited 26,393,553 7.00% 26,393,553 7.00%

9 Mercantile Bank Limited 20,737,791 5.50% 20,737,791 5.50%

10 Investment Corporation of Bangladesh (ICB) 26,257,444 6.96% 22,551,871 5.98%

Equity statistics of IDLC important to the stakeholders:

Particulars 2020 2019 2018 2017 2016

Number of shares in issue (No.) 377,050,780 377,050,780 377,050,780 377,050,780 251,367,187

Net asset value per share (BDT) 40.41 37.18 36.17 33.41 23.70

Market Capitalization (BDT in million) 23,905.02 17,118.11 26,280.44 32,162.43 14,327.93

Market value addition per share (BDT) 22.99 8.22 33.53 51.89 21.44

Shareholders’ equity (BDT in million) 15,238.46 14,017.57 13,637.32 12,597.48 8,937.84

IDLC’s share price as on December 31

Particulars 2020 2019 2018 2017 2016

Highest (BDT) 64.90 45.60 70.00 85.90 57.80

Lowest (BDT) 62.00 44.90 68.90 84.90 55.60

Closing (BDT) 63.40 45.40 69.70 85.30 57.00

Shares traded (No.) 1,051,391 258,509 225,194 878,209 1,695,625

Market Turnover (BDT in million) 66.55 11.72 15.67 74.97 96.50

IDLC'S TRADE MOVEMENT AGAINST PRICE

2016 2017 2018 2019 2020

1,69

6

878

225

259

1,05

1 57.0

85.3

69.745.4

63.4

DSE MARKET VOLUME (No. shares traded in Thousand)DSE MARKET PRICE (IN BDT)

Note : Figures as on December 31



DISCLOSURES UNDER PILLAR-III MARKET DISCIPLINEThe following detailed qualitative and quantitative disclosures are provided in accordance with Prudential Guidelines on Capital Adequa-cy and Market Discipline for Financial Institutions which has been published on December 28, 2011. The purpose of these requirements is to complement the capital adequacy requirements and the Pillar III – supervisory review process. These disclosures are intended for market participants to assess key information about the FI’s exposure to various risks and to provide a consistent and understandable disclosure framework as per regulatory requirement. The FI has an approved disclosure policy to observe the disclosure requirements set out by the Bangladesh FI and International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) into Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) where relevant to the FI.

A) Scope of application

Qualitative Disclosures:

The name of the top corporate entity in the group to which this guidelines applies.


An outline of differences in the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group (a) that are fully consolidated; (b) that are given a deduction treatment; and (c) that are neither consolidated nor deducted (e.g. where the investment is risk-weighted).

The IDLC Group has three wholly owned subsidiaries: IDLC Securities Limited, IDLC Investments Limited and IDLC Asset Management Limited, which are fully consolidated.

Any restrictions, or other major impediments, on transfer of funds or regulatory capital within the group.

Not applicable.

Quantitative Disclosures:

The aggregate amount of capital deficiencies in all subsidiaries not included in the consolidation that are deducted and the name(s) of such subsidiaries.

Not applicable.

B) Capital structure

Qualitative Disclosures

Summary information on the terms and conditions of the main features of all capital instruments, specially in the case of capital instruments eligible for inclusion in Tier 1 or in Tier 2.

Tier 2 capital includes:

i) General provision up to a limit of 1.25% of Risk Weighted Asset (RWA) for Credit Risk;

ii) Revaluation reserves:

• 50% Revaluation reserve for fixed assets;

• 45% Revaluation reserve for securities;

• 10% Revaluation Reserve for Equity Instruments

iii) All other preference shares.

Conditions for maintaining regulatory capital:

The calculation of Tier 1 capital, and Tier 2 capital, shall be subject to the following conditions:

i) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1 capital.

ii) 50% of revaluation reserves for fixed assets and 45% of revaluation reserves for securities are eligible for Tier 2 capital.


The amount of Tier 1 capital, with separate disclosure of:

Particulars Amount in BDT crore

Paid up capital 377.05

Non-repayable share premium account 126.06

Statutory reserve 295.09

General reserve 100.00

Retained earnings 621.00

Minority interest in subsidiaries 0.00

Non-cumulative irredeemable preference shares -

Dividend equalization account 4.65

(a) Total Tier 1 capital 1,523.85

(b) The total amount of Tier 2 capital 71.76

(c) Other deductions from capital -

(d) (d= a+b+c ) Total eligible capital 1,595.60

Basel II

Pillar I Pillar II Pillar III

Minimum Capital Requirement (MCR) Supervisory Review Process Disclosure & Market Discipline



C) Capital Adequacy


(a) A summary discussion of the FI’s approach to assessing the adequacy of its capital to support current and future activities.

Risk Weighted Assets (RWA) and Capital Adequacy Ratio (CAR)

IDLC has adopted Standardized Approach for computation of Capital Charge for Credit Risk and Market Risk while Basic Indicator Approach for Operational Risk. Total Risk Weighted Assets (RWA) of the Company is determined by multiplying the capital charge for market risk and operational risk by the reciprocal of the minimum capital adequacy ratio i.e. 10% and adding the resulting figures to the sum of risk weighted assets for credit risk. Total RWA is then used as denominator while total Eligible Regulatory Capital as on numerator to derive Capital Adequacy Ratio.

Strategy to achieve the required Capital Adequacy:

Operational level:

Immediate measures:

• Asking unrated Corporate clients to have credit rating from External Credit Assessment Institutions (ECAIs) recognized by Bangladesh Bank;

• Rigorous monitoring of overdue contracts to bring those under 90 days overdue;

• Assessing incremental effect of capital charge over the expected net income from financing before sanctioning any appraisal, which could be one of the criteria for taking financing decision.

Continuous measures:

• Concentrating on SME clients having exposure up to BDT 1 crore as this will carry 75% fixed risk weight (for regular contracts only);

• Financing clients having good credit rating;

• Using benefit of credit risk mitigation by taking eligible financial collaterals against transactions;

• Focusing more on booking high spread earning assets and thus increasing retained earnings.

Strategic level:

Injecting fresh capital by issuing right shares, if required- Right share was issued and capital was injected in 2017. As such we have adequate capital now.

Quantitative Disclosures of IDLC Group Amount in BDT crore

(b) Capital requirement for Credit Risk 7,378.71

(c) Capital requirement for Market Risk 857.78

(d) Capital requirement for Operational Risk 905.49

(e) Total and Tier 1 capital ratio:

• For the consolidated group; and

• For stand alone

Particular Consolidated Stand Alone

CAR on Total capital basis (%) 17.45 14.59

CAR on Tier 1 capital basis (%) 16.67 13.79

D) Credit Risk


(a) The general qualitative disclosure requirement with respect to credit risk, including:

Definitions of past due and impaired (for accounting purposes)

As per the Bangladesh Bank’s Prudential Guideline on Capital Adequacy and Market Discipline for Financial Institutions, the unsecured portion of any claim or exposure (other than claims secured by residential property) that is past due for 90 days or more, net of specific provisions (including partial write-off) will be risk weighted as per risk weights of respective balance sheet exposures. For the purpose of defining the net exposure of the past due loan, eligible financial collateral (if any) may be considered for Credit Risk Mitigation.

IDLC Group

Dec-16 Dec-17 Dec-18 Dec-19 Dec-20Total Eligible Capital Total Risk Weighted Assets (RWA)Capital Adequacy Ratio (CAR) %

14.50%16.42% 17.34% 17.50% 17.45%

942

6,49

6

7,99

9

8,23

4

8,41

0

9,14

2

1,31

3

1,42

8

1,47

2

1,59

6

in BDT Crore


Dec-16 Dec-17 Dec-18 Dec-19 Dec-20

13.25%

15.30% 15.47%

14.82%14.59%

Total Eligible Capital Total Risk Weighted Assets (RWA):Capital Adequacy Ratio (CAR) %

808

6,10

1

7,25

5

7,54

2

8,05

5

8,78

9

1,11

0

1,16

6

1,19

4

1,28

2

in BDT Crore



Description of approaches followed for specific and general allowances and statistical methods;

Specific and General provisions are maintained according to the relevant Bangladesh Bank guideline. For Example, 0.25% provision is maintained against SME-Standard loan/ lease, 1% provision is maintained against good loans (other than SME-Standard loan/ lease), 5% against SMA loan/ lease, 20% against sub-standard loan/ lease, 50% against doubtful loan/ lease and 100% against bad/loss loan/ lease after deducting the amount of interest expenses and value of eligible securities from the outstanding balance of classified accounts.

Discussion of the FI’s credit risk management policy.

Implementation of various strategies to minimize risk:

• To encounter and mitigate credit risk the following control measures are taken place at IDLC:

• Looking into payment performance of customer before financing;

• Annual review of clients;• Adequate insurance coverage for funded assets;• Vigorous monitoring and follow up by Special Assets

Management and collection Team;• Strong follow up of compliance of credit policies by

Credit Administration Department;• Taking collateral and performing valuation and legal

vetting on the proposed collateral;• Seeking legal opinion from internal and external lawyer

for any legal issues;• Maintaining neutrality in politics and following arm’s

length approach in related party transactions;• Regular review of market situation and industry

exposure;• Sector-wise portfolio is maintained within specific

limits to ensure diversification of loan assets.

In addition to the industry best practices for assessing, identifying and measuring risks, IDLC also considers Guidelines for Managing Core Risks of financial institutions issued by the Country’s Central Bank, Bangladesh Bank; vide FID Circular No. 10 dated September 18, 2005 for management of risks.

Approved Credit Policy by the Board of Directors

The Board of Directors has approved the Credit Policy for the company where major policy guidelines, growth strategy, exposure limits (for particular sector, product, individual company and group) and risk management strategies have been described/stated in detail. Credit Policy is regularly updated to cope up with the changing global, environmental and domestic economic scenarios.

Separate Credit Risk Management (CRM) Department

An independent Credit Risk Management (CRM) Department is in place, at IDLC, to scrutinize projects from a risk-weighted point of view and assist the management in creating a high quality credit portfolio and maximize returns from risk assets. Research team of CRM regularly reviews market situation and exposure of

IDLC in various industrial sub-sectors. CRM has been segregated from Credit Administration Department in line with Central Bank’s Guidelines. CRM assess credit risks and suggest mitigations before recommendation of every credit proposal while Credit Administration confirms that adequate security documents are in place before disbursement.

Special Assets Management and Collection Team

A strong Law and Recovery Team monitors the performance of the loans & advances, identify early signs of delinquencies in portfolio, and take corrective measures to mitigate risks, improve loan quality and to ensure recovery of loans in a timely manner including legal actions.

Independent Internal Control and Compliances Department (ICC)

Appropriate internal control measures are in place at IDLC. IDLC has also established Internal Control and Compliances Department (ICC) to ensures, compliance with approved lending guidelines, Bangladesh Bank guidelines, operational procedures, adequacy of internal control and documentation procedures. ICC frames and implements policies to encounter such risks.

Credit Evaluation

The Credit Evaluation Committee (CEC) regularly meets to review the market and credit risk related to lending and recommend and implement appropriate measures to counter associated risks. The CEC critically reviews projects considering the current global financial crisis and its probable impact on the project.

Risk Grading Model (RGM) helps a Financial Institution to understand the various dimensions of risks involved in transactions related to small business clients who are plying their businesses in various geographical locations across the country. IDLC has been developing and managing RGM to promote the safety and soundness of the Company by facilitating informed decision-making. This model measures credit risk and differentiate individual credits and groups of credits by the risk they pose. This allows management and examiners to monitor changes and trends in risk levels. The process also allows the management to manage risk to optimize returns.

To mitigate credit risk, IDLC search for credit report from the Credit Information Bureau (CIB) of Bangladesh Bank. The report is scrutinized by CRM and CEC to understand the liability condition and repayment behavior of the client. Depending on the report, banker’s opinions are taken from client’s banks. Suppliers’ and buyers’ opinion are taken to understand the market position and reputation of our proposed customers.

Credit Approval Process

To ensure both speedy service and mitigation of credit risk, the approval process is maintained through a multilayer system. Depending on the size of the loan, a multilayer approval system is designed. As smaller loans are very frequent and comparatively less risky, lower sanctioning authority is set to improve the turnaround time and associated risk. Bigger loans require more scrutiny as the associated risk is higher. So sanctioning authority is higher as well.



Credit Quality and Portfolio Diversification

IDLC believes in diversification in terms of products as well as sectors. To mitigate the Credit Risk, the company diversifies its loan exposure to different sectors confirming the Central Bank’s requirements. Threshold limit is set for any sector so that any adverse impact on any industry has minimum effect on IDLC’s total return. Central Bank’s instructions are strictly followed in determining Single Borrower/Large Loan limit. Significant concentration of credit in terms of groups or geographical location is carefully avoided to minimize risk.

Early Warning System

Performance of loans is regularly monitored to trigger early warning system to address the loans and advances whose performance show any deteriorating trend. It enables the company to grow its credit portfolio with ultimate objective to protect the interest of stakeholders.

NPL Management

IDLC measures its loan portfolio in terms of payment arrears. The impairment levels on the loans and advances are monitored regularly.

As per FID Circular No.3 dated March 15, 2007:

1. Loan/Lease, classified as bad/loss and with 100% provision, can only be written-off.

2. Approval from the Board of Directors has to be taken before write-off.

3. The financial institutions should constantly try to recover the loan/lease written-off amount. If legal action has not been taken against the client, legal charges should be placed before the write off.

4. To expedite the legal settlement or collection of the due amount, third party agents can be appointed by the financial institutions.

5. A separate ledger should be maintained for the written off loans/leases and the accumulated written off value should be disclosed separately under the heading of “notes to the account” in the annual report/balance sheet of the financial institutions.

6. Even if the loan/lease has been written off, the client should be classified as defaulter and reported to CIB accordingly.

Detail records for all such write off accounts are meticulously maintained and followed up.

Counterparty Credit Rating

IDLC is taking initiatives to rate the Corporate Clients of the company immediately by the External Credit Assessment Institutions (ECAIs)/Rating Agencies duly recognized by the Central Bank. As on December 31, 2020, 1,466 clients with total net exposure of BDT 3,614.65 crore were eligible for credit rating. Among these 1,466 clients, 254 clients having net exposure of BDT 2,375.33 crore had valid credit ratings. That is, about 66% of ratable exposure was rated. Around 15% of the unrated exposure belong to those clients who preferred not to renew rating to save renewal cost considering pandemic hit. Around 7% of the

unrated exposure belong to those clients who are historical irregular clients. Around 22% of the unrated exposure belong to clients with significantly small exposure of less than 1 crore who preferred not to do rating considering exposure amount. On the other hand, around 47% of unrated exposure belong to clients who are of SME type in nature and are not motivated to do rating due to their unstructured nature. We will proactively educate such clients so that they become motivated to do credit rating. Also, we are hoping ratio of rated clients would increase in 2021 after pandemic impact on overall financial status of different companies will be neutralized to some extent as clients would renew their expired rating then.

Methods used to measure Credit Risk

As per the directives of Bangladesh Bank, ‘The Standardized approach’ is applied by the company to measure its Credit Risk.

Quantitative Disclosures

(b) Total gross credit risk exposures broken down by major types of credit exposure.

Particular Amount in BDT croreLeasing 303.74 Long-term finance 5,668.42 Real estate finance 2,683.44 Car loan 115.04 Personal loan 11.42 Short term finance 89.10 Loan against deposit 43.92 Margin loan to portfolio investors 122.09 Interest receivable 270.19 Total 9,307.36

(c) Geographical distribution of exposures, broken down in

significant areas by major types of credit exposure.

PORTFOLIO EXPOSURE BY MAJOR TYPE

3% Leasing61% Long-term finance29% Real estate finance1% Car loan0% Personal loan1% Short term finance1% Loan against deposit1% Margin loan toportfolio investors3% Interest receivable

69% Dhaka 6% Chattogram2% Bogura 2% Sylhet3% Savar 2% Cumilla3% Jashore 1% Narsingdi1% Bhulta 2% Khulna1% Natore 2% Kushtia1% Habiganj 1% Mymensingh1% Rangpur 1% Chowmuhani1% Barishal 1% Rajshahi1% Faridpur

GEOGRAPHICAL DISTRIBUTION OF EXPOSURE



Area Amount in BDT crore

Dhaka 6,434.55

Chattogram 569.26

Bogura 190.00

Sylhet 147.30

Savar 325.69

Cumilla 174.46

Jashore 243.76

Narsingdi 75.91

Bhulta 90.44

Khulna 143.91

Natore 70.08

Kushtia 169.68

Habiganj 133.94

Mymensingh 93.36

Rangpur 122.28

Chowmuhani 106.79

Barishal 70.41

Rajshahi 61.83

Faridpur 83.71

Total 9,307.36

(d) Industry or counterparty type distribution of exposures,

broken down by major types of credit exposure.

Sector-wise exposure of IDLC Finance Limited

Amount in BDT crore

Agriculture 73.53

Brokerage & Securities 0.07

Cement and Allied Industry 131.52

Electronics and Electrical Products 99.94

Food Production and Processing Industry 487.90

Garments and Knitwear 644.56

Glass, Glassware and Ceramic Industry 42.46

Housing 2,767.54

Iron, Steel and Engineering 278.19

Jute and Jute products 29.59

Leather and Leather Goods 14.35

Others 1,853.50

Paper, Printing and Packaging 46.51

Pharmaceuticals and Chemicals 137.05

Plastic Industry 106.67

Power, gas water and sanitary services 47.94

Ship Manufacturing Industry 12.05

Telecommunication and Information Technology

149.06

Sector-wise exposure of IDLC Finance Limited

Amount in BDT crore

Textile 231.06

Trade and Commerce 1,851.96

Transport and Aviation 179.82

Grand Total 9,185.27

Beside these, IDLC group portfolio includes total margin loan to clients by our capital market subsidiaries (IDLC SL and IDLC IL) of amount BDT 122.09 crore. Therefore, the total industry exposure amounts to BDT 9,307.36 crore.

(e) Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit exposure.


Repayable on demand 1,017.36

Over 1 month but not more than 3 months 634.20

Over 3 months but not more than 1 year 2,590.12

Over 1 year but not more than 5 years 3,455.18

Over 5 years 1,610.50

Total 9,307.36

(f) Gross Non Performing Assets ( NPAs)

Non Performing Assets ( NPAs) to Outstanding Loans & advances

Movement of Non-Performing Assets (NPAs)


Opening balance 280.37

Additions 28.29

Reductions 144.38

Closing balance 164.28

Movement of specific provisions for NPAs


Opening balance 80.29

Provisions made during the period 56.95

Write-off (30.63)

Write-back of excess provisions (20.77)

Closing balance 85.86

E) Equities: banking book positions


The general qualitative disclosure requirement with respect to equity risk, including:

Differentiation between holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons; and



Total equity shares holdings are for capital gain purpose.

Discussion of important policies covering the valuation and accounting of equity holdings in the banking book positions. This includes the accounting techniques and valuation methodologies used, including key assumptions and practices affecting valuation as well as significant changes in these practices.

Quoted shares are valued at cost prices and if the total cost of a particular share is lower than the market value of that particular share, then provision are maintained as per terms and condition of regulatory authority. On the other hand, unquoted share is valued at cost price or book value as per latest audited accounts.


Value disclosed in the balance sheet of investments, as well as the fair value of those investments; for quoted securities, a comparison to publicly quoted share values where the share price is materially different from fair value.

(Amount in BDT Crore)

Particulars Cost Price Market Price

Quoted shares 437.75 460.62

Unquoted shares 53.42 -

The cumulative realized gains (losses) arising from sales and liquidations in the reporting period.

- Nil


Total unrealized gains (losses) 0.79

Total latent revaluation gains (losses)

Any amounts of the above included in Tier 2 capital.

-

Capital requirements broken down by appropriate equity groupings, consistent with the FI’s methodology, as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions regarding regulatory capital requirements.

Specific Risk- Market value of investment in equities is BDT 460.62 crore. Capital Requirement is 10% of the said value which stand to BDT 46.06 crore.

General Risk- Market value of investment in equities is BDT 460.62 crore. Capital Requirement is 10% of the said value which stand to BDT 46.06 crore.]

F) Interest rate in the banking book


The general qualitative disclosure requirement including the nature of interest risk and key assumptions, including assumptions regarding loan prepayments and behavior of non-maturity deposits.

Interest rate risk in the banking book arises from mismatches between the future yield of an assets and their funding cost.

Assets Liability Committee (ALCO) monitors the interest rate movement on a regular basis. IDLC measure the Interest Rate Risk by calculation Duration Gap i.e. a positive Duration Gap affect company’s profitability adversely with the increment of interest rate and a negative Duration Gap increase the company’s profitability with the reduction of interest rate.


The increase (decline) in earnings or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring interest rate risk broken down by currency (as relevant).

Maturity wise Distribution of Assets-Liabilities

(Amount in BDT Crore)

Particulars1 to

30/31 day (1

month)

Over 1 month

to 2 months

Over 2 months

to 3 months

Over 3 months

to 6 months

Over 6 months

to 1 year

A. Total Rate Sensitive Liabilities (A)

454.80 528.00 730.97 1079.84 896.34

B. Total Rate Sensitive Assets (B)

831.23 509.30 708.75 1073.17 1746.70

C. Mismatch 376.42 -18.70 -22.22 -6.67 850.36

D. Cumulative Mismatch 376.42 357.72 335.50 328.83 1179.19

E. Mismatch (%) 82.77 -3.54% -3.04% -0.62% 94.87%

Interest Rate Risk - Increase in Interest Rate

Magnitude of ShockMinor Moderate Major

2% 4% 6%

Change in the Value of Bond Portfolio -44.01 -88.02 -132.03

Net Interest Income 23.58 47.17 70.75

Revised Regulatory Capital 1575.18 1554.75 1534.33

Risk Weighted Assets 9141.98 9141.98 9141.98

Revised CAR (%) 17.23% 17.01% 16.78%

G) Market risk


a) Views of Board of Directors on trading/investment activities

All the Market Risk related policies/guidelines are duly approved by BOD. The BOD sets limit and review and updates the compliance on regular basis aiming to mitigate the Market risk.

Methods used to measure Market Risk

Market Risk is the probability of losing assets in balance sheet and off- balance sheet position arising out of volatility in market variables i.e. interest rate, exchange rate and prices of securities. In order to calculate the market risk for trading book purposes the company uses Standardized (rule based) Approach where capital charge for interest rate risk, price and foreign exchange risk is determined separately.



Market Risk Management system

Policies and processes for mitigating market risk

A Policy for managing Market Risk has been set out by the Board of Directors of the company where clear instructions has been given on Loan Deposit Ratio, Whole Sale Borrowing Guidelines, Medium Term Funding, Maximum Cumulative Outflow, Liquidity Contingency Plan, Local Regulatory Compliance, Recommendation/Action Plan etc. Treasury manages the Market Risk with the help of Asset Liability Management Committee (ALCO) and Asset Liability Management (ALM) Desk in the following fashion:

Interest Risk Management

Treasury Division reviews the risks of changes in income of the Company as a result of movements in market interest rates. In the normal course of business, IDLC tries to minimize the mismatches between the duration of interest rate sensitive assets and liabilities. Effective Interest Rate Risk Management is done as under:

Market analysis

Market analysis over interest rate movements are reviewed by the Treasury of the company. The type and level of mismatch interest rate risk of the company is managed and monitored from two perspectives, being an economic value perspective and an earning perspective.

GAP analysis

ALCO has established guidelines in line with central Bank’s policy for the management of assets and liabilities, monitoring and minimizing interest rate risks at an acceptable level. ALCO in its regular monthly meeting analyzes Interest Rate Sensitivity by computing GAP i.e. the difference between Rate Sensitive Assets and Rate Sensitive Liability and take decision of enhancing or reducing the GAP according to prevailing market situation aiming to mitigate interest rate risk.

Continuous Monitoring

Company’s treasury manages and controls day-to-day trading activities under the supervision of ALCO that ensures continuous monitoring of the level of assumed risks.

Equity Risk Management

Equity Risk is the risk of loss due to adverse change in market price of equities held by the Company. Equity Risk is managed by the following fashion:

IDLC minimizes the Equity Risks by Portfolio diversification as per investment policy of the company. The entire portfolio is managed by IDLC Investments Limited.


The capital requirements for Market Risk:

Particular Amount in BDT crore

Interest rate risk -

Equity position risk 85.78

Foreign Exchange Position and Commodity risk (if any). -

H) Operational Risk:Qualitative disclosure:

Views of Board on system to reduce Operational Risk:

All the policies and guidelines of internal control and compliances are duly approved by the Board. The Board delegates its authority to Executive Committee and to ManCom members as per company policy of delegation of authority. Audit Committee of the Board directly oversees the activities of internal control and compliance as per good governance guideline issued by Securities and Exchange Commission.

Performance gap of executives and staffs

IDLC’s recruitment strategy is based on retaining and attracting the most suitable people at all levels of the business and this is reflected in our objective approach to recruitment and selection. The approach is based on the requirements of the job (both now and in the near future), matching the ability and potential of the individual. Qualification, skills and competency form our basis for nurturing talent. We are proud to state that favorable job responsibilities are increasingly attracting greater participation from different level of employees in the IDLC family. We aim to foster a sense of pride in working for IDLC and to be the employer of choice. As such there exists no performance gap in IDLC.

Potential external events

No such potential external event exist to rise operational risk of IDLC at the time of reporting.

Policies and procedures for mitigating operational risk:

IDLC has also established Internal Control and Compliances Department (ICC) to address operational risk and to frame and implement policies to encounter such risks. ICC assesses operational risk across the Company as a whole and ensures that an appropriate framework exists to identify, assess and manage operational risk.

Approach for calculating capital charge for operational risk:

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. IDLC uses basic indicator approach for calculation capital charge against operational risk i.e. 15% of average positive annual gross income of the company over last three years.


Capital requirement for operational risk:

Particular Amount in BDT crore

Capital requirement for operational risk: 90.55



REPORT ON SECURITY CUSTODIAL SERVICE OF IDLC FINANCE LIMITED

Under rule 10(2) of the Securities and Exchange Commission

(Security Custodial Service) Regulations, 2003

IDLC Finance Limited is a registered Security Custodian vide registration license no SC-06/2007 dated May 24, 2007 issued by Bangladesh Securities and Exchange Commission. The major responsibilities of the Security Custodian are as follows:

• Custody of client’s securities

• Collection, book keeping and communication of gain, income, profit, stake on behalf of clients

• Collection, communication, dissemination and book keeping of any declaration, published or publicly available information, statement etc. of securities issuer

• Administer client’s security and account

To facilitate these service IDLC Finance Limited has also obtained Custody Depository participant License vide registration license no.

BSEC/Registration/ CDBL-DP-414, dated December 17, 2014 issued by Bangladesh Securities and Exchange Commission.

IDLC Finance Limited as a Security Custodian confirms that proper internal audit and evaluation process are in place to ensure the following:

• Secure and appropriate custodial service

• No unwarranted change in the assets, records, agreements etc. occur

• Each client receives his/her due dividends, bonus share, right share, interest, principal etc. in a timely manner

• Prevent loss, theft, damage due to natural calamity

In 2020, IDLC Finance Limited has entered into security custodian agreement with Axiata Investments (Labuan) Limited and Bharti International (Singapore) Pte. Limited to hold a total of 4,714,140,001 shares of Robi Axiata Limited.

Since 2017, IDLC is providing security custodian service for 8,968,648 ordinary shares of Aamra Networks Limited held by Augere Holdings (Netherlands) B.V. In 2017, another agreement was entered with SEAF Bangladesh Ventures LLC for providing custodian service for 1,285,832 ordinary shares of ADN Telecom Limited.

IDLC is also providing security custodian services to RAK Ceramics PSC, UAE through an agreement entered in 2014. As on December 31, 2020, IDLC Finance Limited is the custodian of 291,586,597 ordinary shares of RAK Ceramic (Bangladesh) Limited held by RAK Ceramics, PSC, UAE and 7 individual sponsor shareholders.



NOTICE OF THE 36TH ANNUAL GENERAL MEETING (THROUGH ONLINE DIGITAL PLATFORM)

Notice is hereby given to all the shareholders of IDLC Finance Limited (IDLC) that the 36th Annual General Meeting (AGM) of the company will be held on March 31, 2021 (Wednesday) at 11:00 a.m. (BST) by using Online Digital Platform (pursuance to BSEC Order no. SEC/SRMIC/94-231/25 dated July 08, 2020) through the following link: https://tinyurl.com/idlcagm2021, to transact the following business:

Ordinary Agenda:

FLG210331-0036-01 Adoption of Directors’ Report, Auditors’ Report and Audited Financial Statements for the year ended December 31, 2020;

FLG210331-0036-02 Declaration of dividend for the year 2020 as recommended by the Board;

FLG210331-0036-03 Election of Directors;

FLG210331-0036-04 Appointment of Auditors of the Company until the conclusion of the next Annual General Meeting (AGM) and fixation of their remuneration; and

FLG210331-0036-05 Appointment of auditors for certification on the compliance on conditions of Corporate Governance Code (CGC) for 2021 of the Company and fixation of their remuneration.

By order of the Board

Abul Fazal Mohamed Rubayat ACS ACMAGroup Company SecretaryDated: March 10, 2021

Notes:

• As notified earlier the “Record Date” fixed at Thursday, March 11, 2021. The shareholders whose names would appear in the Register of Shareholders of the company and/or in the Depository on the ‘Record Date’ will be eligible to attend the 36th AGM and entitled to the Dividend as approved;

• The shareholders will join the virtual AGM through the link: https://tinyurl.com/idlcagm2021. The shareholders will be able to submit their questions/comments electronically 24 (Twenty-four) hours before commencement of the AGM through this link and also during the Annual General Meeting. In order to login to the virtual AGM, the shareholder needs to click on the link and provide individual’s 16 digit Beneficiary Owners (BO) Account number or Folio number, name of respective shareholder, number of shares held and mobile number or email address.

• Shareholders are requested to login to the system prior to starting of the meeting at 10.30 a.m. on March 31, 2021 (Wednesday). The webcast will start at 11:00 a.m. For any IT related guidance and help with the login process the respected shareholders may contact at +8809609994350 or visit IDLC website.

• The notice of the 36th AGM, the link for the virtual AGM and detail login process to the virtual AGM has been sent through email of the respective shareholder's email ID and it is also available at: https://www.idlc.com/price-sensitive-information-and-notices;

• In compliance with the Clause No. 22(1) of the Listing Regulations, 2015, of Dhaka Stock Exchange Limited & Chittagong Stock Exchange Limited and condition No. 9(2) of gazette notification No. SEC/CMRRCD/2006-158/208/Admin/81, dated June 20, 2018, on Financial Reporting and Disclosure of Bangladesh Securities and Exchange Commission (BSEC) soft copies of the Annual Report along with the Attendance Slip, Proxy Form and the Notice, will be forwarded to all the Shareholders at their respective email address available with us as per CDBL record. The Shareholders may also collect the Proxy Form from the Registered Office of the company. These are also available in the website of the company: www.idlc.com. The printed annual report may be available if any shareholder requires in writing beforehand;

• A Shareholder may appoint a proxy to attend and vote on his/her place by filling proxy form as per Article 103 of the Articles of Association of the company. The proxy form, duly completed and stamped, must be deposited at the office or sent through email to [email protected] not later than 72 hours before the time scheduled for holding the meeting;

• Pursuant to Article 81 of the Articles of Association, a corporate shareholder of the company, by resolution of the Board of Directors or other Governing Body of such body corporate, may authorize such person as it thinks fit, to act as representative at any meeting of the shareholders of the company;

• Shareholders are requested to advise us on their option of receiving entitled cash dividend through email: [email protected] on or before March 25, 2021. Otherwise dividend will be paid off as deemed appropriate by IDLC.



REPORT OF THE AUDIT COMMITTEE

Scope of work of Audit Committee

The scope of the Audit Committee of IDLC Finance Limited is determined by its Terms of Reference (ToR) which, in turn, are shaped by directives from its principal regulators, Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC). These include, but are not limited to, exercising oversight over:

• The internal control system of the company

• Financial reporting

• The Internal Control and Compliance department

• Compliance with regulatory requirements

The Committee is authorized to investigate any matter within its terms of reference, access all documents and information of the company, seek information from any director or employee of the Group and co-opt any resource (including external professional assistance) it sees fit in order to fulfill its duties. However, the Committee has no executive function and its primary objective is to review and challenge, rather than assume responsibility for any matters within its remit.

The Committee presents a summary of its activities to shareholders and other interested parties by means of this report, and the committee Chairman attends all general meetings of the Company’s shareholders to answer any questions on the committee’s activities.

Review of financial statements by the Audit Committee

The Audit Committee reviewed the annual financial statements for the year 2020 and placed its recommendations to the Board of Directors.

Review of the activities of the Internal Control and Compliance (ICC)

Major activities of the ICC department during the year were as follows:

• Execution of risk-based annual audit plan 2020

• Conduct investigation as and when required

• Review of internal control system

• Issuance of timely responses to inquiries by regulators and other government agencies

• Coordination of regulatory inspections and statutory external audit

• Coordination of management responses to the external audit and regulatory inspection reports

• Management of IDLC Complaint Cell

• Monitoring of anti-money laundering (AML) and combating to the financing of terrorism (CFT) compliance activities

• Coordination with Risk Analysis Unit & Risk Management Forum activities in line regulatory directive

• Facilitation of Audit Committee meetings.

In addition to the above regular activities, the department also carried out following development functions during the year:

• Conducted special audit on documentation status of selected secured overdue accounts, so that management can undertake required measures to protect the company’s interest adequately;

• Reviewed process for collection of deeds under Tripartite / Bipartite Home Loan Agreements and strengthened database integrity to ensure greater accountability;

• Recommended for and, upon implementation, reviewed performance of daily reconciliation of Consolidated Customer Bank Account of IDLC Securities Limited for early detection of potential problems and quicker resolution;

• Conducted capacity building workshop for branch managers across IDLCFL regarding “Branch Compliance Risk Management”.

• Conducted in-house fresher and refreshers training program on AML/CFT regulations and its compliance procedure as part of overall awareness building efforts.

All this enables the Committee to evaluate major risk areas, issue broad level guidance for management so as to ensure effective controls are in place and to provide accurate, appropriate and timely information to the Board of Directors, regulatory bodies and shareholders.

External audit

Hoda Vasi Chowdhury & Co., Chartered Accountants, acted as statutory external auditors of the company for 2020. Prior to finalization of the consolidated financial statements of the company for the year ended 31 December 2020, the Audit Committee sat with the statutory external auditors to discuss their audit of the same.

Independence of External Auditor

As a policy, the Committee prohibits the external auditors from performing any work that they may subsequently need to audit, or which might otherwise create a conflict of interest. The Committee also monitors the balance between audit and non-audit related functions to ensure that auditor independence can be shown to be maintained.

The external auditors are not engaged by the company on any material non-audit work such as:

• Appraisal or valuation services or fairness opinions;

• Financial information systems design and implementation;

• Book-keeping or other services related to the accounting records or financial statements;

• Broker-dealer services;

• Actuarial services; and

• Internal audit services



The Audit Committee appraised the expertise, resources, independence and objectivity of the external auditors and also reviewed their effectiveness as external auditors before reaching the recommendation to the Board that their re-election should be proposed to shareholders.

Resolutions of the Audit Committee meeting

The Committee met five (5) times during the year 2020 and carried out the following tasks:

• Conducted discussions, with the statutory auditors and with management, on the financial statements of the company for the year ended December 31, 2019 before concluding that the financial statements provided a true and fair view;

• Reviewed the audited consolidated and separate financial statements of IDLC Finance Limited for the year ended December 31, 2019;

• Recommended for appointment of statutory external auditors of the company for the year 2020;

• Reviewed report of the audit committee for 2019 for inclusion in the Annual Report 2019 prior to its publication;

• Reviewed report of management discussion and analysis 2019 prior to its publication in the Annual Report 2019;

• Reviewed Internal Control & Compliance report of 2019;

• Reviewed and approved annual audit plan of the Internal Control & Compliance department for the year 2020;

• Recommended for appointment of auditors for certification on compliance with the conditions of Corporate Governance Guideline (CGG) for the year 2020;

• Reviewed the quarterly un-audited financial statements of IDLC Finance Limited and its subsidiaries for the first quarter ended on 31 March 2020;

• Adopted the nomination of Chairman of the Audit Committee made by the board of IDLC Finance Limited;

• Reviewed the quarterly un-audited financial statements of IDLC Finance Limited for the second quarter ended on June 30, 2020;

• Reviewed the quarterly Internal Control & Compliance activity report for the second quarter (Q2) ended on June 30, 2020;

• Reviewed the quarterly audited financial statements of IDLC Finance Limited and its subsidiaries for the third quarter (Q3) ended on September 30, 2020 for submission to regulatory authorities as part of the process for applying for issuance of non-convertible zero coupon bonds by IDLC Finance Limited;

• Reviewed the re-compliance report on Bangladesh Bank’s comprehensive inspection report on Corporate Head Office of IDLC Finance Limited based on the financials as of December 31, 2018;

• Reviewed the Anti-Money Laundering (AML) Activity Report of IDLC Finance Limited for the half year ended June 30, 2020;

• Reviewed quarterly Internal Control & Compliance report for the third quarter (Q3) ended on September 30, 2020;

• The Audit Committee reviewed the issues arising out of the earlier meetings of the Audit Committee;

• Reviewed update on annual audit plan 2020 and its outcome;

• Reviewed and approved annual audit plan 2021 of Internal Control & Compliance Department;

• Reviewed an update on regulatory circulars issued in the year 2020 from the central bank and other regulatory bodies;

• As a matter of course, at each meeting, confirmed minutes of the immediately preceding audit committee meeting;

• Reviewed other matters of interest that arose from time to time during the year ended 31 December 2020.

Based on its reviews and above mentioned discussions, the Audit Committee is of the view that the internal control and compliance system of the company is adequate for purposes of presenting a true and fair view of the activities and financial status of the company and for ensuring that its assets are safeguarded properly.

Mr. Niaz Habib Chairman, Audit Committee



ASSESSMENT REPORT ON THE GOING CONCERN OF IDLC FINANCE LIMITED

Going concern is a fundamental accounting concept that underlies the preparation of financial statements of companies. Under the going Concern concept, it is assumed that a Company will continue in operation and that there is neither the intent nor the need to either liquidate it or to cease trading.

The purpose of this going concern statement is to bring together the requirements of Company law, accounting standards and Listing Rules on going concern.

The management of IDLC has made this assessment based on the accounting period ended on or after December 31, 2020. The management’s assessment of whether the Company is a going concern involves making appropriate inquiries including review of budgets and future outcome of inherent risks involved in the business.

Considering the following major indicators, IDLC’s management has reached the conclusion that the financial statement for the year 2020 is prepared based on going concern assumption:

Financial Indications

Fixed term debt with realistic renewal or repayment.

At the close of financial year 2020, total borrowing from other banks and financial institutions was BDT 20,791 million. Based on our past experience, it can be said that there is every possibility that a major part of the debt would be renewed further or can be repaid from our existing cash flow.

Continuous financial support by lenders/ depositors

The Company enjoys a good track record and reputation in the settlement of its obligation with its lenders/ depositors. The Company was able to increase the level of confidence of depositors, which resulted in total deposit of BDT 78,764 million.

Positive key financial ratios

The Company’s financial ratios indicate sound financial strength and prospects and are evident from financial highlights given on page no. 106 of this Annual Report.

Consistent payment of dividends

IDLC has been paying dividend consistently to its shareholders over the years. We refer to financial highlights on page no.106 of this Annual Report to show our steady dividend payment records. Moreover, the Company has declared Cash dividend @ 35% (BDT 3.50 per Share) in 2020, which reflects the Company’s long-term operational viability.

Years 2020 2019 2018 2017 2016

Dividend% (Cash) 35% 35% 35% 30% 30%

Credibility in payment of obligations

IDLC has strong credibility in terms of payment of its obligations to lenders. The Company is particular in fulfilling the terms of loan agreements and has never defaulted, even in terms of convenience.

Increasing trend of investment portfolio

The Company’s investment in long term finance have increased by 2.04% and real estate finance have contracted by 4.72%, in 2020 as compared with year 2019.

Operating indications

Strengthening of Human Capital

During the year 2020, the Company has recruited 161 new employees, which resulted in a net headcount to 1,465 at the end of the year 2020, in comparison to 1,476 at the end of the year 2019. The net reduction is due to the departure of a few employees during the year.

Average length of service of an employee at IDLC was 5.26 years in 2020 (4.55 years in 2019). A report on human resource has been given on page no. 119 of this Annual Report.

Years 2020 2019 2018 2017 2016

Average length of service (in years)

5.26 4.55 4.37 3.53 3.53

Business expansion

IDLC has always been vested in growth through expanding our product offering through channeling resources towards developing products. However, due to the measures taken to contain the pandemic, expansionary undertakings had to be contained. We managed to officially launch “IDLC Shariah Fund”, which had undertaken at the end of 2019, and piloted Deposit Pension Scheme in our wealth management product basket. Despite the detriments from the pandemic we managed expansion in the form of activities. We did not slow down, rather channeled our efforts into activities that maximized value for our shareholders.

Corporate environment and employee satisfaction

There exists a healthy corporate environment in the Company. This is reflected in our Statement of Corporate Governance and Report on our Human Capital.

Other indications

Maintenance of Capital Adequacy Ratio (CAR)

As per the DFIM Circular Number 14, dated December 28, 2011 of the Bangladesh Bank prudential Guidelines on Capital Adequacy



and Market Discipline for Financial Institutions has come into force from January 01, 2012. As per the guidelines, Financial Institutions (FIs) are required to maintain a CAR @ 10%. Before its implementation, FIs have been reporting CAR to the Bangladesh Bank based on draft BASEL Accord for Financial Institutions.

In each quarter of 2020, IDLC Finance Limited as well as the Group had CAR above the minimum requirements of 10%.

Details are given in note No. 13.1 of the financial statements on page no. 270 and at “Disclosure under Pillar III-Market Discipline” on page no. 184.

Strong equity base

As on 31 December 2020, total equity of IDLC stands at BDT 15,238 million (BDT 14,018 million in December 31, 2019), representing

an increase of 8.71% over last year and reflects the Company’s long-term viability.

Strong CAMEL rating

CAMEL rating is used by the Bangladesh Bank as a tool for evaluating the strength and performance of a non-banking financial institution. The composite rating adjudged by the Bangladesh Bank signifies satisfactory performance of IDLC. The report contained no adverse material observations of the Bangladesh Bank on the activities of the Company.

Changes in government policy

The management anticipates no significant changes in legislation or government policy, which may materially affect the business of the Company.



STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR INTERNAL CONTROL, FINANCIAL REPORTING AND CORPORATE GOVERNANCE

Responsibility for financial statements

The Directors are responsible for ensuring that the Company keeps proper books of accounts of all the transactions and prepares financial statements, which give a true and fair view of the state of its affairs and profit/ loss for the year.

The Board of Directors accepts responsibility for the integrity and objectivity of the financial statements. It ensures that the estimates and judgments relating to the financial statements were made on a prudent and reasonable basis so that they reflect in a true and fair manner, the form and substance of transactions and reasonably presents the Company’s true state of affairs.

The Board of Directors confirm that the International Financial Reporting Standard (IFRS) and International Accounting Standards, as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh, have been adhered to, subject to any material departure being disclosed and explained in the notes to the accounts.

The Board also confirms that the Company keeps accounting records, which disclose with reasonable accuracy, the financial position of the Company, and which enables it to ensure that the financial statements comply with the requirements of the Companies Act, 1994, Securities and Exchange Rules, 1987, Financial Institutions Act, 1993, and Listing Regulations of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited and amendments thereto.

Responsibility for internal control systems

To ensure this, the Company has taken proper and sufficient care in installing a system of internal control, which is reviewed, evaluated and updated on an ongoing basis. The internal control and compliance department of the Company conducts periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed.

Responsibility for Corporate Governance

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 Board’s primary role is to provide leadership, ensure that it is appropriately managed and deliver long-term shareholder value. It also sets the Group’s 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.

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 Board’s view that the Company’s governance regime has been fully compliant with the best practices set out in the Code during the year under review.

Opinion of external auditors

The auditor of the Company, A Qasem & Co., Chartered Accountants, member firm of Ernst & Young Global Limited, have carried out annual audit to review the system of internal controls, as they consider appropriate and necessary, for expressing their opinion on the financial statements. They have also examined the financial statements made available by the management together with all the financial records, related data, minutes of shareholders and Board meetings, relevant policies and expressed their opinion.

Moreover, in compliance with the conditions of the revised Corporate Governance Code (CGC) notification No. SEC/CMRRCD/2006-158/207/Admin/80, dated June 3, 2018, and notification No. SEC/CMRRCD/2006-158/208/Admin/81, dated June 20, 2018, on financial reporting and disclosure issued by Bangladesh Securities and Exchange Commission (BSEC), Itrat Husain & Associates, Chartered Secretaries in Practice, have examined the compliance with the said conditions of Corporate Governance and certified that IDLC Finance Limited has complied with the conditions of Corporate Governance Code stipulated in the above mentioned notification.



DIRECTORS’ REPORT TO THE SHAREHOLDERS OF IDLC FINANCE LIMITEDDear shareholders,

We, the Board of Directors, present to you the performance of the Group and on a stand-alone basis, of a year (2020) that reflects an unprecedentedly challenging year and an altered world. The consequent impact is reflected in the audited financial statements of the Company and in the Auditor’s Report.

Bangladesh- Macroeconomic Review

World Economic Outlook

The epidemic that started at the end of 2019, transformed into a full-blown pandemic that brought the global economy to a halt and led to widespread economic devastation. The pandemic has dropped the world GDP growth rate to a negative 4.4 %, as projected by IMF. The pandemic has most heavily dented the global trade volume. Lockdowns, isolation and trade restrictions have reduced the global trade volume in 2020 by a staggering 10.43% from the last year. On the bright side, investments as a percentage of global GDP slightly decreased from 26.27% in 2019 to 26.11% in 2020. Moreover, global inflation remained around 3%.

Source: IMF World Economic Outlook, January 2021.

Challenges

1. The coronavirus pandemic reducing global economic activity, leading to severely hampered trade and growth of the national economy;

2. Increased severity of liquidity pressures;

3. Tendency of borrowers not to repay loans;

4. Challenging NPL management scenario;

5. Lower lending opportunity due to reduced private sector credit growth;

6. Interest cap mandate in banking sector creating pressures on lending rate on the NBFI sector.

Our country has shown extraordinary resilience during the pandemic. Despite such dire global scenario, Bangladesh has managed to be hopeful on the back of positives attained. Expert opinion that the impact on the emerging markets would be lower than on advanced economies, proved to be true for us. Bangladesh has a positive GDP growth rate projection of 5.20% for FY 2020-21,

according to Bangladesh Bank Monetary Poly Statement FY 2020-21. The annual average CPI-based general inflation stood at 5.65% in Fiscal Year 20-21 (as per Monetary Policy Statement FY 2020-21), which is slightly higher than the earlier projection of 5.5%. It is mainly due to the hike in medical care and health expenses due to the pandemic that has pushed up the non-food inflation.

WORLD ECONOMIC OUTLOOK GDP % GROWTH PROJECTIONS

3.71.7

2.8

-2.4

-4.9-3.5

6.34.3

5.553.1

4.2

Emerging Markets &Developing Economies Advanced Economics Global Economy

2019 2020 2021 2022

REAL GDP GROWTH RATE (%)

5.20%

2006 2008 2010 2012 2014 2016 2018 2020

5

5.5

6

6.5

7

7.5

8

8.5

(Projectedtarget)

TWELVE MONTH AVERAGE INFLATION (%)

Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec'19 Jun' 20

General Non-Food Food Core

2

4

6

8

Source: Bangladesh Bank Monetary Policy FY 2020-21



Another positive is the growth in remittance flow during the FY2020 by 10.9 % compared to 9% from the year before. Such growth can be attributed to government’s 2% cash incentive on remittance. This helped the government to significantly manage funds in the latter part of the year.

Both export and import volume declined that caused strain on raw material supply and RMG sector severely. However, with the ease of global lock downs by the latter part of the year, previous commitments by global buyers were kept, and we could see some light at the end of the tunnel.

The private sector credit growth continued on its declining trend; however, it was comparatively higher than the neighboring South Asian and East Asian economies. With several Government interventions in the form of stimulus packages to curb the adversities of the pandemic, it is expected that the growth rate would gradually improve to the expected level of 14.8 percent, by the end of June 2021.

On a commendable note, Bangladesh has maintained its credit rating of Ba3 (stable) from Moody’s, BB-(stable) from S & P, and BB- from Fitch.

Source: BB Monetary Policy FY 2020-21

Financial Industry Overview

The global economic recession, owing to the pandemic, consequently impacted the financial industry. The already high liquidity pressures in the market increased by several folds in the beginning of 2020 due to the pandemic. As such, the Government intervened through appropriate and timely policies. In order to increase money supply in the economy, the central bank formulated an expansionary monetary policy, reducing the Repo Rate, CRR and the ADR. Consequently, the liquidity in the market increased and overall cost of funds decreased for the industry as a whole, by the end of 2020. Both lending and borrowing rates have subsequently been brought down, which was the objective of the interest rate cap measure made effective from early 2020.

Source: Bangladesh Bank (Monetary Policy Statement 2020-21)

Capital Market Overview

Falling prices and trade volume along with volatility that started in the beginning of the year, continued throughout the period until the end. Till the first half of 2020, DSE broad index on average fell by a whopping 26.4% from the previous year and average trade volume dropped to Tk 3.8 bn from Tk 6.1 bn. However, the trade momentum picked up at the end and significant flourish was seen at the yearend for capital market players.

Source: Dhaka Stock Exchange (Monetary Policy Statement 2020-21)

Our performance

Year 2020 was a year like no other. We were tested and tried but it provided us the opportunity to better understand our agility and adaptability and improve. Our practiced resilience to battle multifold industry challenges helped us to quickly adapt to the altered business and working environment. We channeled our efforts towards value management and towards increasing efficiency. Consequently, we were able to log a Net Profit of BDT 2,541mn (2019: BDT 1,700mn) and were successful in delivering a commendable Return on Asset of 2.08% (2019: 1.50%) and Return on Equity of 17.37% (2019: 12.29%).

Our performance is attributable to the following prime factors:

• Timely strategic maneuvers resulting in value management

• Reduced cost of fund

• Constrained operating expenses

• Some positive impact of government intervention on the provisioning policy

Business analysis

With businesses being severely affected as a result of the global lockdowns, disrupted business channels, uncertain payout schedules and often lost contracts we strictly went for very cautious lending activity; an effort that can be seen echoed throughout the banking and financial industry. However, we differed from the others in terms of our agility and our dedication to come out strong in whatever be the circumstance. As a result, we were able to mobilize funds, despite the severe liquidity pressures during the first half of the year, and managed to channel revenue through well planned fund allocation. We increased our investment in Government bonds by BDT 1,664 million (121% growth) as a Group and by BDT 2,061 million on a stand-alone

PRIVATE SECTOR CREDIT GROWTH

0%

4%

8%

12%

16%

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

Program Annual

DSEX AND TURNOVERDSEX (RHS) Turnover (LHS)

0

1

2

3

4

5

6

7

NOMINAL INTEREST RATES (%)

7.95%

5.06%

2012 2013 2014 2015 2016 2017 2018 2019 2020

Lending Rate Deposit Rate

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%



basis, as of 31 December 2020, which helped us earn BDT 361 million as Interest Income (Group) and BDT 1,117 million as gain on Group basis.

Operating segment analysis

IDLC Group

As is the composition of the Group and the comparative size of the entities, the core finance business brings in the lion share of the Profit which is 88% of the total Profit before Tax in 2020, as represented in the graph below. However, with the improvement in the capital market, our subsidiaries attained the largest growth in comparison to the year 2019.

While our investment banking segment (IDLC Investments Limited), grew by 71%, our brokerage business (IDLC Securities Limited) rose by 99.5% and with a 184% increase our asset

management business (IDLC Asset Management Limited) attained profit before tax of BDT 21.36 million in the year 2020. This is also attributable to our agile fund management decisions to quickly adapt to the changing operating context.

Financial Performance AnalysisAmount in BDT million

ParticularsQuarterly and Annual Performance- IDLC GROUP

Q1 Q2 Q3 Q4 2020 2019Y-o-Y Growth

(%)Net interest income 1,137 1,000 1,015 1,341 4,493 4,671 -3.82%

Other operating income 32 159 729 1,254 2,175 947 129.62%

Total operating income 1,169 1,159 1,744 2,595 6,668 5,618 18.68%

Total operating expense 600 548 606 795 2,549 2,434 4.73%

Profit before provisions 569 611 1,138 1,800 4,118 3,184 29.35%

Provision for loans/investments (7) (5) (130) 457 315 423 -25.59%

Profit before taxes 576 616 1,268 1,343 3,804 2,761 37.76%

Provision for taxes 284 242 323 414 1,263 1,061 19.03%

Net profit after taxation 293 373 945 929 2,541 1,700 49.45%

IDLC Group quarterly performance analysis

Unlike the prior years and as is expected, the quarterly performance of the group was variant in nature, which is clearly observable from the table above. As the economy picked up momentum from the third quarter post the general holidays, our business activities revved up as well. Our loan disbursements improved, collections escalated to an average of over 70%, our fund management efforts started bearing fruit. With reduced lending opportunities we shifted our strategic focus towards government securities that caused Other Operating Income to significantly increase by 129.62%, and this helped counter the 3.82% decline in Net Interest Income.

On the back of controlled growth of 4.73% operating expenses and reduced requirement for provision for loans/investments we delivered a substantial consolidated profit of BDT 2,541 million. The game changer was the fourth quarter where the capital market trade volume increased considerably and we attained significant revenue and gain from our investments, brokerage and asset management businesses.

SEGMENT PROFIT BEFORE TAX IN BDT MN

2019 20203,339

2,547

205 238 21120 119

(25)Core financing

businessInvestment banking

businessBrokerage

businessAsset management

business



We maintained our prime strategic goal of “value management” for IDLC Finance Limited as well. In addition to the continued liquidity pressures from the year 2019 and market pressure from implementation of interest capping policy, came the onslaught of the pandemic. Considering this uncertain operating environment, it was key for us to focus on effective portfolio management, collection, and a stronghold on Non-Performing Loans (NPL) management. With the combined effort of government measures, drives from our Treasury, Wealth Management divisions and all the employees of the company, we were able to take a grip on the situation and amass considerable funds. This we channeled to government securities that allowed us to eventually book BDT 823 million of tax-free gain that led to a Net Profit after Tax of BDT 2,205 million for IDLC Finance Limited on a stand-alone basis, with an NPL of 1.79% at the end of the year.

In order to better comprehend the situation, we halted disbursements in the second quarter that translated to the BDT 123 million dip in Net Interest Income (NII) in Q2 in comparison to Q1. We continued to take a cautious approach to lending but the trend definitely improved as a result of reduced cost of fund and increased disbursements. This helped mitigate the overall decline of NII to only 1.81%.

Despite our cautious approach, we did not allow for erosion in overall portfolio of the company and managed a decent 0.44% growth in such tough times. A major contributor could be the 7.44% growth in SME loan portfolio. SME division holds 37% of our loan basket as of December 31, 2020, with a divisional loan portfolio standing at BDT 33,648 million at the end of the year. This division from the end of 2020 paced up its activities and by the start of the year 2021 it is contributing through a massive number of disbursements.

We continued on our target of extending customer reach at a granular level through our “Affordable Housing Loan which we inaugurated in 2019 under our Consumer Division. We can happily say that it has picked up pace and disbursed of BDT 452 million in 2020, that resulted in a growth in product portfolio by BDT 420.97 million, to reach BDT 662.55 million as of 31 December 2020. For portfolio of Corporate Division we were even more vigilant in

2020 considering per unit loan size. In spite of that the Corporate Division disbursed gross BDT 14,514 million, highest amongst all other divisions.

It is on the back of our efficient Treasury management of money market and bond market that enabled us to make the strategic shift towards tax-free government treasury bills and bonds. As reflected in the Table above, our Other Operating Income significantly increased by 171.12% in comparison to 2020.

Talking about Operating Expenses we stringently held its reign in the first three quarters by reducing advertisement costs, curtailing general operating expenses. However, with improvement in the business environment, significantly improved collection rates we took up brand strengthening and advertisement initiatives in the last quarter, contributing to the 7.23% increase in Operating Expenses. It needs to be mentioned here that despite the general trend, we did not opt for reduction in OPEX through downsizing “Salaries and Allowances”. In hindsight, we went ahead with the planned promotions in the first quarter and on-boarded the committed recruitments in order to retain confidence in our employees and other stakeholders. They were routed towards collection and deposit booking that helped us to enhance our liquidity position.

The Provision for loans/investment were impacted by the government intervention to safeguard borrowers from the sudden and massive economic impact of the pandemic. This can specifically be witnessed in the first three quarters. Although the intervention continued throughout 2020, we, prudently considered additional provisions in the last quarter, in order to safeguard the interest of the company and shareholders, after carefully assessing recoverability of the borrowers. Although this played a part in attaining the 44.84% growth in Net Profit After Tax (by BDT 682.55 million from 2019), but the prime reason remains the growth in our total operating income.

Efficiency drives

Drives that were initiated in the prior year came into effect in 2020. The customization of our core banking software indeed allowed for improved efficiency of disbursement, and it is expected that the

IDLC Finance Limited performance analysisAmount in BDT million

ParticularsQuarterly and Annual Performance- IDLC Finance Limited

Q1 Q2 Q3 Q4 2020 2019Y-o-Y Growth

(%)Net interest income 1,071 948 957 1,243 4,219 4,297 -1.81%

Other operating income 36 99 407 865 1,407 519 171.12%

Total operating income 1,106 1,047 1,364 2,108 5,625 4,815 16.82%

Total operating expense 498 465 512 683 2,157 2,012 7.23%

Profit before provisions 609 582 852 1,425 3,468 2,804 23.71%

Provision for loans/investments (78) (70) (57) 421 217 413 -47.59%

Profit before taxes 687 652 908 1,004 3,252 2,390 36.03%

Provision for taxes 252 214 267 315 1,047 868 20.59%

Net profit after taxation 435 439 641 690 2,205 1,522 44.84%



benefit derived would increase in the upcoming years. Moreover, with the implementation of Work From Home (WFH) facilities, our efficiency across the organization improved significantly and allowed us to seamlessly undertake business and improvement projects.

Further analysis on future planning is discussed in the Strategy and Resource Allocation on page no. 91.

Way Forward

The uncertain times prevails as the pandemic continues. It was predicted earlier that the brunt of the pandemic would end by 2020, but as the year unfolded, economists realized that recovery will take longer than expected. The emerging economies are expected to recover faster than the advanced economies, a welcoming news for our country, Bangladesh. As a result, IMF has predicted the GDP growth rate of Bangladesh in 2021 to be 5.152%, which is promising. With the availability of vaccines, we are optimistic that the spread would reduce and the global economy would recover. Trade volume is also projected to increase by 8.28 % than the last year as conditions are becoming more favorable to import and export. Based on such assumptions, the Government has undertaken plans with a target GDP growth of 8.2% for FY 21.

Hence, our aim for 2021 is to closely monitor the market dynamics, optimize liquidity management and attain portfolio growth with the funds amassed in 2020. We are hopeful that with a possible stabilized economy the financial sector would pick-up momentum and based on our strategic drives we would be able to reap discernible benefits. The following are planned for:

• Play close attention to NPL management;

• Enhance collection drives;

• Strengthen our distribution network and deepen market penetration;

• Enhance process automation;

• Forming partnership with major e-commerce players in the industry; and

• Continued efforts towards fortifying fee-based income generation capacity.

In conclusion, we draw your attention to the fact that despite grave market challenges, our prudent and timely steps of managing interest rates, fees and the fluctuating capital market, led to proficient liquidity management and contained our cost of fund to a minimum. It enabled us to curb the impact of the externalities. However, our prime goal is long-term sustainable growth that are reflected in the strategies discussed above.

IDLC’s contribution to the economy of Bangladesh

Being a key player in the financial market not only bestows IDLC with the responsibility of its shareholders but also to the national economy. IDLC, with its solid pillars of governance and compliance takes its role in social and economic development very seriously.

As such, in addition to providing financial solutions that help generate employment and contribute to the nation’s growth and development, we directly contribute to the government exchequer in the form of various taxes in correct measures. In 2020, IDLC deposited BDT 1,169 million to the Government exchequer against own income, which included BDT 1,119 million

as corporate income tax and BDT 50 million as value added tax. In addition, BDT 1,178 million was collected and deposited to the Government exchequer in the form of withholding tax, VAT and excise duty.

Despite the perceived dire economic circumstances, we did not engage in downsizing or salary curtailment, and even on boarded new recruitments committed in the start of 2020. Detail in this regard is on page no. 117 under the section Contribution to National Economy.

Management’s Discussion & Analysis

A more detailed discussion and analysis of the financials, as delivered by the CEO & Managing Director, is appended on page no. 53.

Key Operational and Financial Information

Key operational and financial information over the last five years, as per the requirements of No. SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018, has been presented on page no. 106.

Highlights of the Company’s operations as per the DFIM Circular No. 11 dated December 23, 2009, have also been presented on page no.112.

Risk Management

At IDLC, we believe that getting risk management right is an essential component of success. The identification, evaluation and management of risk, together with the way we respond to changes in the external operating environment are keys to sustainable growth and underpin the robustness of our business plans and strategic objectives, protecting our license to operate and our reputation and helping create a long-term source of competitive advantage.

Risk management is embedded in IDLC’s organizational structure, operations and management systems. Business risks across the Group are addressed in a structured and systematic way through a predefined risk management structure. This ensures that the Board’s assessment of risk is informed by risk factors and mitigating controls originating from and identified by the Group’s assets, functional departments and operations, including the Company’s subsidiaries. Moreover, IDLC possesses a detailed risk management system with procedures in place to support risk evaluation across the Group. The risks associated with the delivery of the business plan and annual work programs and the associated mitigation measures are maintained in asset or project risk matrices and registers.

IDLC possesses different committees for risk management. The Credit Evaluation Committee (CEC) and Asset and Liability Committee (ALCO) is constituted by the Company’s senior management team which regularly reviews issues related to the markets, credit and liquidity and, accordingly, recommend and implement appropriate measures to proactively identify and mitigate risks. IDLC possesses an approved Asset Liability Management (ALM) policy under the responsibility of the ALCO, together with a robust ALM management system and dedicated ALM desk to generate necessary information for improving ALCO’s decision-making abilities.



The Company’s Credit Risk Management (CRM) department independently scrutinizes projects from a risk-weighted perspective and assists relevant departments in setting business development priorities. These are aligned with the Company’s risk appetite while optimizing the risk-return trade-off derived from relevant risk exposures.

The CRM team also clearly defines exceptionally high-risk sectors and prohibits lending to those projects which the Company does not ascribe to, including those which represent negative environmental, social or ethical standards. A separate Operational Risk Management department is dedicated to oversee the operational risk and its mitigation at transactional level.

At an individual exposure level, a risk grading model (RGM) is used to promote corporate safety and sustainability by facilitating informed decision-making. At the portfolio level, the Company actively tracks the quality of its loans by analyzing risk migration and assessing trends in non-performing assets. Such indicators prompt timely decision-making by the relevant risk management committees and help preserve the quality of loans and advances.

IDLC’s Credit Administration Department (CAD) and Internal Control and Compliance (ICC) departments are responsible for assessing operational risks across the Company and also ensure an appropriate framework to identify, assess and manage operational risks.

IDLC has also established a BASEL Implementation Unit (BIU) responsible for implementing Capital Adequacy and Market Discipline (CAMD) instructions of the Bangladesh Bank across the Company and managing risk-based capital adequacy. The BASEL Implementation Desk (BID) specifically carries out risk-based capital analysis and places it to the BIU along with recommendations to facilitate enhanced decision-making for maintaining minimum/ regulatory capital and managing related risks.

Details about our risk management policies and practices are discussed in the ‘Statement of Risk Management on page no. 80.

Corporate and Financial Reporting Framework

The Directors of IDLC, in conformance with the BSEC Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018, confirm compliance with the financial reporting framework for the following:

• The financial statements, prepared by the management of IDLC make a fair presentation of its activities, operational details and results, cash flow information and changes in equity structure.

• Proper books and accounts of the Company have been maintained.

• Appropriate accounting policies, including International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS)/ as applicable/adopted in Bangladesh, have been consistently applied in preparation of the financial statements. Any change or deviation has been adequately disclosed.

• Accounting estimates are based on reasonable and prudent judgment.

• Internal control processes have been properly designed and effectively implemented and monitored.

• Minority shareholders have been duly protected as have effective means of redress.

• No significant doubt exists upon the Company’s ability to continue as a going concern.

• Comparative analysis of significant deviations have been highlighted and reasons have been explained in the sections above.

Compliance and conviction

IDLC is in complete compliance of all applicable laws and regulations and does not adhere to any non-compliance of regulatory requirements, any loan default by the company or its directors or senior management.

CEO and CFO’s declaration certificate

The CEO and CFO’s declaration to the Board is appended on page no. 222.

Senior management

Disclosure of all senior management personnel have been accounted for in page no. 68.

Related Party Transactions

Disclosure of all related party transactions, including basis for such transactions, has been provided in Note 40 on page no. 281.

Insider Trading

The members of the board of IDLC, or its sub –committee, or its senior management and their family members did not involve in any insider trading and did not violate the provision with regard to insider trading.

Shareholding Pattern

IDLC’s shareholding pattern as on December 31, 2020, is disclosed as per the new CGC of BSEC in Annexure-I of this annual report on page no. 205.

Board Meetings and Attendance by the Directors

During the year 2020, a total of ten meetings of the Board were held. Attendance by the Directors and remuneration to the Directors has been summarized in Annexure-II of this annual report on page no. 206.

Dividend

Proposed Annual Dividend-The Board has proposed Cash Dividend: 35% (@ BDT 3.50 per share) for the year for the year 2020.

Interim Dividend- No cash or bonus share dividend was declared as interim dividend during 2020. No Bonus Share shall be declared as interim dividend.

DirectorsResume and line of expertise

A brief resume of the directors are appended in page no. 57, which includes his/her nature of expertise and qualifications. An analysis of the directors’ experience and expertise and its impact on the corporate governance of the company is included in the Corporate Governance Report in page no. 147.



Related entities with the Directors

The names of the companies in which the directors holds directorship and membership of committees of the board are included in the note Related Party Transactions of the financial statements in Note 40 c, in page no. 281.

Retirement and re-election

As per Article 116 of the Articles of Association of the Company, the following Directors will retire from the office of the Company at the 36th Annual General Meeting:

Name of Director Particulars

Mr. Atiqur Rahman Director Nominated by Reliance Insurance Limited

Mr. Mohammad Mahbubur Rahman

Director Nominated by The City Bank Limited

Mr. Syed Shahriyar Ahsan Director Nominated by Sadharan Bima Corporation and

Mr. Mati Ul Hasan Director Nominated by Mercantile Bank Limited

However, they are also eligible for re-election.

Auditors

The statutory auditors of the Company, Hoda Vasi Chowdhury & Co. Chartered Accountants have successfully completed their first year as the statutory auditors of the Company, as appointed at the 35th Annual General Meeting. As per the stipulation of FID Circular No. 03, dated March 02, 1999, they are eligible for appointment for

three consecutive years. On the basis of the proposal of the Board’s Audit Committee, the Board recommends the reappointment of Hoda Vasi Chowdhury & Co. Chartered Accountants, as the auditors of the Company for the year 2021 at a remuneration of BDT 700,000 (BDT seven lac only) for IDLC Finance Limited (Solo) and BDT 100,000 BDT one lac only) each for the 3 subsidiaries, totaling BDT 1,000,000 (BDT ten lac only) for the Group.

Status of Compliance

Status of the compliance of conditions of Corporate Governance Code imposed by the Bangladesh Securities and Exchange Commission’s Notification No. SEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018 along with a certificate from a practicing Chartered Secretary has been enclosed in Annexure-III on page no. 207 of this annual report.

We also enclose a statement of compliance on the good governance guidelines issued by the Bangladesh Bank as Annexure-IV on page no. 219 of this annual report.

On behalf of the Board of Directors,

Aziz Al Mahmood Chairman IDLC Finance Limited



ANNEXURE IShareholding pattern as on December 31, 2020 as required by the Corporate Governance Code issued by BSEC

Particulars No. of shares held

% of total shares of IDLC Remarks

Shares held by:

(a) Parent or Subsidiary or Associated Companies and other related parties: NIL

Sub-Total NIL

(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children:

Directors, their spouses and minor children 50 0.00001%

Chief Executive officer (CEO) and his spouse and minor children NIL

Chief Financial Officer (CFO) and his spouse and minor children NIL

Company Secretary (CS) and his spouse and minor children NIL

Head of Internal control and Compliance (HICC) 2,776 0.00074%

Sub-Total 2,826 0.00075%

(c) Executives (Top five person other than CEO, CFO, CS, HICC):

1. M. Jamal Uddin, Deputy Managing Director NIL

2. Asif Saad Bin Shams, Head of Credit and Collection 16,000 0.00424%

3. Syed Javed Noor, Deputy Managing Director NIL

4. Mir Tariquzzaman, Chief Technology Officer (CTO) NIL

5. Md. Mesbah Uddin Ahmed, Head of Corporate NIL

Sub-Total 16,000 0.004242%

(d) Shareholders holding 10% or more voting right:

The City Bank Limited (CBL) and its subsidiaries 87,510,575 23.20923%

The City Bank Limited (CBL) 33,935,329 9.00020%

City Bank Capital Resources Limited (CBCRL) 37,328,028 9.90000%

City Brokerage Limited 16,247,218 4.30903%

Transcom Group 50,273,164 13.33326%

Eskayef Pharmaceuticals Limited 30,164,062 8.00000%

Transcraft Limited 15,132,033 4.01326%

Bangladesh Lamps Limited 4,977,069 1.32000%

Sub-Total 137,783,739 36.54249%

Total 137,796,065 36.54576%



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ANNEXURE III



COMPLIANCE REPORT ON CORPORATE GOVERNANCE CODE BY BSECStatus of Compliance with the Corporate Governance Code (CGC) as on December 31, 2020

[As per condition No. 1(5) (xxvii)]

Status of compliance with the conditions imposed by the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80, dated 3 June 2018, issued under section 2CC of the Securities and Exchange Ordinance, 1969:

(Report under Condition No. 9)

Condition No. TitleCompliance Status

Remarks (if any)Complied Not Complied

1 Board of Directors

1(1) Size of the Board of Directors:The number of Board members shall not be less than 5 (five) and more than 20 (twenty);

√

Number of Board members of IDLC Finance Limited is 10 (ten) including 2 (two) Independent Directors.

Refer to IDLC’s Corporate Governance Report on page no. 145 of this Annual Report.

1(2) Independent Directors (ID)

1(2)(a) At least one fifth (l/5) of the total number of Directors shall

be Independent Directors

√ Number of Board members of IDLC Finance Limited is 10 (ten) including 2 (two) Independent Directors.

Refer to IDLC’s Corporate Governance Report on page no. 145 of this Annual Report

1(2)(b) Criteria of “Independent Director”

1(2)(b) (i) Who either does not hold share in the company or holds less than one (1%) shares of the total paid up shares of the company;

√ None of the Independent Directors hold any share of the company

1(2)(b) (ii) Who is not a sponsor of the company or is not connected with the company’s any sponsor or director or nominated director or shareholder of the company or any of its associates, sister concerns, subsidiaries and parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship and his or her family members also shall not hold above mentioned shares in the company

√ None of the Independent Directors has such connection as affirmed.

1(2)(b) (iii) Who has not been an executive of the company in immediately preceding 2 (two) financial years;

None of the Independent Directors is ex-employee of the Company.

1(2)(b) (iv) Who does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies;

√

Such declaration was given during appointment

1(2)(b) (v) Who is not a member or TREC holder, director or officer of any stock exchange;

√

1(2)(b) (vi) Who is not a shareholder, director excepting independent director or officer of any member or TREC holder of stock exchange or an intermediary of the capital market;

√

1(2)(b) (vii) Who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the concerned company’s statutory audit firm;

√

1(2)(b) (viii) Who shall not be an independent director in more than 5 (five) listed companies; √

1(2)(b) (ix) Who has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI);

√

1(2)(b) (x) Who has not been convicted for a criminal offence involving moral turpitude.

√

1(2)(c) Independent Director(s) shall be appointed by the Board of Directors and approved by the Shareholders in the Annual General Meeting (AGM);

√

1(2)(d) The post of independent director(s) cannot remain vacant for more than 90 (ninety) days.

√ No such vacancy created





1(2)(e) The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) tenure only.

√ Reference to the Corporate Governance Report on page no. 146 of this Annual Report. & at www.idlc.com/management-team.php

1(3) Qualification of Independent Director(ID)1(3)(a) Independent Director shall be a knowledgeable individual

with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business.

√ Qualification of respective Independent Director is disclosed in Director’s Profile on page no. 61 of this Annual Report.

1(3)(b)(i) Business Leader who is/was a promoter or director of an unlisted company having minimum paid-up capital of One Hundred million or any listed company or a member of any national or international chamber of commerce or business association; or

Not applicable.

1(3)(b)(ii) Corporate Leader who is or was a top level executive not lower than Chief Executive Officer or Managing Director or Deputy Managing Director or Chief Financial Officer or Head of Finance or Accounts or Company Secretary or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted company having minimum paid up capital of Tk. 100.00 million or of a listed company; or

√

1(3)(b)(iii) Former official of government in the position not below 5th Grade of the national pay scale and educational background of bachelor degree in economics or commerce or business or law; or

Not applicable.

1(3)(b)(iv) University Teacher who has educational background in Economics or Commerce or Business Studies or Law; or

Not applicable.

1(3)(b)(v) Professional who is or was an advocate practicing at least in the High Court Division of Bangladesh Supreme Court or a Chartered Accountant or Cost and Management Accountant or Chartered Financial Analyst or Chartered Certified Accountant or Certified Public Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification; or

Not applicable.

1(3)(c) The independent director must have at least 10 (ten) years of in any field mentioned in clause (b);

√ Reference to the directors profile in pg. 61

1(3)(d) In special cases the above qualifications may be relaxed subject to prior approval of the Commission.

No such deviation occurred

1(4) Duality of Chairperson of the Board of Directors and Managing Director or Chief Executive Officer1(4)(a) The positions of the Chairperson of the Board and the

Managing Director (MD) and/or Chief Executive Officer (CEO) of the company shall be filled by different individuals;

√ Reference to the Corporate Governance Report on page no. 150 of this Annual Report

1(4)(b) The Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed company shall not hold the same position in another listed company;

√ Reference to the Corporate Governance Report on page no. 150 of this Annual Report.

1(4)(c) The Chairperson of the Board shall be elected from among

the non-executive directors of the company;

√

1(4)(d) The Board shall clearly define respective roles and responsibilities of the Chairperson and the Managing Director and/or Chief Executive Officer;

Such option is permitted by the Articles of the Company.

Reference to the Corporate governance report on page no. 150 & 152 of this Annual Report.

1(4)(e) In the absence of the Chairperson of the Board, the remaining members may elect one of themselves from non-executive directors as Chairperson for that particular Board’s meeting; the reason of absence of the regular Chairperson shall be duly recorded in the minutes.

√ No such situation was occurred to execute such option.

1(5) The Board of the company shall include the following additional statements or disclosures in the Directors’ Report prepared under section 184 of the Companies Act, 1994 (Act No. XVIII of 1994):

1(5)(i) Industry outlook and possible future developments in the industry;

√ Refer to the ‘Directors’ Report’ on page no. 199 of this Annual Report





1(5)(ii) Segment-wise or product-wise performance; √ Refer to the ‘Directors’ Report’ on page no. 200 of this Annual Report

1(5)(iii) Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any;

√ Refer to the ‘Directors’ Report’ on page no. 198, 202 of this Annual Report

1(5)(iv) Discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin, where applicable;

√ IDLC being a Financial Institution such formation of P&L is not followed rather format prescribed by Bangladesh Bank is followed

1(5)(v) A discussion on continuity of any extraordinary activities

and their implications (gain or loss);

No such item exists

1(5)(vi) A detailed discussion on related party transactions along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions;

√ Refer to the ‘Directors’ Report’ on page no. 203 and subsequently elaborated in the note no. 40 of ‘Audited Financial Statements’ of this Annual Report

1(5)(vii) A statement of utilization of proceeds raised through public issues, rights issues and/or any other instruments;

No such event occurred

1(5)(viii) An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct Listing, etc.

Not Applicable

1(5)(ix) If significant variance occurs between Quarterly Financial performance and Annual Financial Statements the management shall explain about the variance on their Annual Report.

√ No such variation has occurred which has properly been mentioned in ‘Directors’ Report’ on page no. 200 of this Annual Report

1(5)(x) A statement of remuneration paid to the directors including independent directors;

√ Refer to the Directors’ Report on page no. 206 as well as note no. 30 of the financial statements of this Annual Report

1(5)(xi) A statement that the financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity;

√ Refer to the ’Directors’ Report’ on page no. 203 of this Annual Report

1(5)(xii) A statement that proper books of account of the issuer company have been maintained;

√ Refer to the ’Directors’ Report’ on page no. 203 as well as the auditors; report on page no. 223 of this Annual Report

1(5)(xiii) A statement that appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;


1(5)(xiv) A statement that International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed;


1(5)(xv) A statement that the system of internal control is sound in design and has been effectively implemented and monitored;


1(5)(xvi) A statement that minority shareholders have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress;


1(5)(xvii) A statement that there is no significant doubt upon the issuer company’s ability to continue as a going concern, if the issuer company is not considered to be a going concern, the fact along with reasons there of shall be disclosed;

√ No such going concern issues have been aroused and a status of going concern key indicators have been mentioned on page no. 203 of this Annual Report.

1(5)(xviii) An explanation that significant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof shall be explained;

√ No such deviation has occurred which has properly been mentioned in "Directors’ Report" on page no. 203 of this Annual Report

1(5)(xix) A statement where key operating and financial data of at least preceding 5 (five) years shall be summarized;

√ Refer to the 'Key Operating Highlights' on page no. 106 and on page no. 202 of "Directors’ Report" of this Annual Report

1(5)(xx) An explanation on the reasons if the issuer company has not declared dividend (cash or stock) for the year;

√ The Board of Directors at 298th meeting of the Board, held on February 17, 2021 recommended cash dividend @ 35 % for 2020.





1(5)(xxi) Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend;


1(5)(xxii) The number of Board meetings held during the year and attendance by each director shall be disclosed.


1(5)(xxiii) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:-

1(5)(xxiii)(a) Parent/Subsidiary/Associated Companies and other related parties (name wise details);

√ Refer to the Annexure-I of the Directors’ Report on page no. 205 of this Annual Report.1(5)(xxiii)(b) Directors, Chief Executive Officer, Company Secretary, Chief

Financial Officer, Head of Internal Audit and their spouses and minor children (name wise details);

√

1(5)(xxiii)(c) Executives; √

1(5)(xxiii)(d) Shareholders holding ten percent (10%) or more voting interest in the company (name wise details).

√

1(5)(xxiv) In case of the appointment/re-appointment of a director the company shall disclose the following information to the shareholders:-

1(5)(xxiv) (a) A brief resume of the director; √ Information regarding the Directors’ are disclosed in brief profile of the Directors’ on page no. 57-62 of this Annual Report

1(5)(xxiv)(b) Nature of his/her expertise in specific functional areas; √

1(5)(xxiv)(c) Names of companies in which the person also holds the directorship and the membership of committees of the board.

√

1(5)(xxv) Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the company’s position and operations along with a brief discussion of changes in the financial statements

1(5)(xxv) (a) Accounting policies and estimation for preparation of financial statements

√ Refer to the Financial Capital, and Analysis with the Management Committee on page no. 26-27 & 101-105 of this Annual Report

1(5)(xxv)(b) Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes

√

1(5)(xxv)(c) Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof

√

1(5)(xxv)

(d)

Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario

√

1(5)(xxv) (e) Briefly explain the financial and economic scenario of the

country and the globe

√

1(5)(xxv)(f) Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company;

√

1(5)(xxv)(g) Future plan or projection or forecast for company’s operation, performance and financial position, with justification thereof, i.e., actual position shall be explained to the shareholders in the next AGM;

√

1(5)(xxvi) Declaration or certification by the CEO and the CFO to the

Board as required under condition No. 3(3) shall be disclosed as per Annexure-A;

√

1(5)(xxvii) The report as well as certificate regarding compliance of conditions of this Code as required under condition No. 9 shall be disclosed as per Annexure-B and Annexure-C.

√

1(6) Meetings of the Board of DirectorsConducting Board meetings and recording the minutes of the meetings and keeping required books and records in line Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB), in so far as those standards are not inconsistent with any condition of this Code.;

√ Reference to the Corporate Governance Report on page no. 153 of this Annual Report .





1(7) Code of Conduct for the Chairperson, other Board members and Chief Executive Officer1(7)(a) The Board shall lay down a code of conduct, based on the

recommendation of the Nomination and Remuneration Committee (NRC) at condition No. 6, for the Chairperson of the Board, other board members and Chief Executive Officer of the company;


1(7)(b) The code of conduct as determined by the NRC shall be posted on the website of the company including, among others, prudent conduct and behaviour; confidentiality; conflict of interest; compliance with laws, rules and regulations; prohibition of insider trading; relationship with environment, employees, customers and suppliers; and independency


2 Governance of Board of Directors of Subsidiary Company2(a) Provisions relating to the composition of the Board of

Directors of the holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company.

√ Refer to the ‘Directors’ Report’ of subsidiaries companies such as IDLC Securities Limited, IDLC Investments Limited and IDLC Asset Management Limited on page no. 301, 333, 361, respectively of this Annual Report2(b) At least 1 (one) independent director on the Board of Directors

of the holding company shall be a director on the Board of Directors of the subsidiary company.

√

2(c) The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company.

√

2(d) The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also.

√

2(e) The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.

√

3 Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS)

3(1) Appointment

3(1)(a) The Board shall appoint a MD or CEO, CS, CFO and HIAC; √

Refer to the Corporate Governance Report on page no. 150 & 156 of this Annual Report

3(1)(b) The positions of the MD or CEO, CS, CFO and HIAC shall be filled by different individuals;

√

3(1)(c) The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any executive position in any other company at the same time;

√

3(1)(d) The Board shall clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS;

√

3(1)(e) The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board as well as immediate dissemination to the Commission and stock exchange(s).

√

3(2) Requirement to attend Board of Directors’ Meetings:The MD or CEO, CS, CFO and HIAC of the company shall attend the meetings of the Board

Provided that the CS, CFO and/or the HIAC shall not attend such part of a meeting of the Board which involves consideration of an agenda item relating to their personal matters

√

Refer to the Corporate Governance Report on page no. 157 of this Annual Report





3(3) Duties of Managing Director (MD) or Chief Executive Officer (CEO) and Chief Financial Officer (CFO)3(3)(a) They have reviewed financial statements for the year and that

to the best of their knowledge and belief:√ Refer to the ‘Report of the CEO & MD and

CFO to the Board’ on page no. 222 of this Annual Report3(3)(a)(i) These statements do not contain any materially untrue

statement or omit any material fact or contain statements that might be misleading;

√

3(3)(a)(ii) These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws.

√

3(3)(b) The MD or CEO and CFO shall also certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members;

√

3(3)(c) The certification of the MD or CEO and CFO shall be disclosed in this Annual Report ;

√

4 Board of Directors’ CommitteeThe Board shall have at least following sub-committees:(i) Audit Committee; and √

(ii) Nomination and Remuneration Committee. As per Bangladesh Bank guidelines (DFIM Circular Letter No. 18 dated on October 26, 2011), IDLC being a Financial Institution (FI) can only form two subcommittees of the Board: Audit Committee (AC) and Executive Committee (EC). No other subcommittee of the Board is permitted by Bangladesh Bank.However, to comply with this clause, IDLC addressed this issue to BSEC and Bangladesh Bank and waiting for their holistic decision. From its initiation IDLC have Remuneration (HR and Competition) Committee to create balance and transparence to manage human capital. The committee is comprised of the members of the higher Management of IDLC with full supervision of the Board. The Company Secretary is the Secretary to the Committee.

5 AUDIT COMMITTEE:5(1) Responsibility to the Board of Directors

5(1)(a) The company shall have an Audit Committee as a sub-committee of the Board of Directors.

√ Refer to the Corporate Governance Report on page no. 165 of this Annual Report

5(1)(b) The Audit Committee shall assist the Board of Directors in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business.


5(1)(c) The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.


5(2) Constitution of the Audit Committee: 5(2)(a) The Audit Committee shall be composed of at least 3 (three)

members.√ Refer to the Corporate Governance Report

on page no. 166 of this Annual Report5(2)(b) The Board shall appoint members of the Audit Committee who

shall be directors of the company and shall include at least 1 (one) Independent Director.


5(2)(c) All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience;


5(2)(d) When the term of service of any Committee member expires or there is any circumstance causing any Committee member to be unable to hold office before expiration of the term of service, thus making the number of the Committee members to be lower than the prescribed number of 3 (three) persons, the Board shall appoint the new Committee member to fill up the vacancy immediately or not later than 1 (one) month from the date of vacancy in the Committee to ensure continuity of the performance of work of the Audit Committee;

No casual vacancies created during 2019





5(2)(e) The company secretary shall act as the secretary of the Committee


5(2)(f) The quorum of the Audit Committee meeting shall not constitute without Independent Director


5(3) Chairman of the Audit Committee5(3)(a) The Board of Directors shall select 1 (one) member of the Audit

Committee to be Chairman of the Audit Committee, who shall be an independent director.


5(3)(b) In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No. 5(4)(b) and the reason of absence of the regular Chairperson shall be duly recorded in the minutes.

√

5(3)(c) Chairman of the audit committee shall remain present in the Annual General Meeting (AGM).

Provided that in absence of Chairperson of the Audit Committee, any other member from the Audit Committee shall be selected to be present in the annual general meeting (AGM) and reason for absence of the Chairperson of the Audit Committee shall be recorded in the minutes of the AGM.

√

5(4) Meeting of the Audit Committee5(4)(a) The Audit Committee shall conduct at least its four meetings

in a financial year:Provided that any emergency meeting in addition to regularmeeting may be convened at the request of any one of themembers of the Committee;


5(4)(b) The quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two-third of the members of the Audit Committee, whichever is higher, where presence of an independent director is a must.


5(5) Role of Audit Committee: 5(5)(a) Oversee the financial reporting process √ Refer to the Corporate Governance Report

on page no. 165-167 of this Annual Report 5(5)(b) Monitor choice of accounting policies and principles √

5(5)(c) Monitor Internal Control Risk management process √

5(5)(d) Oversee hiring and performance of external auditors √5(5)(e) Hold the meeting with the external or statutory auditors for

review of the annual financial statements before submission to the Board for approval or adoption

√ Audit Committee at its 77th meeting held on February 15, 2020 conducted the session.

5(5)(f) Review along with the management, the annual financial statements before submission to the board for approval

√

5(5)(g) Review along with the management, the quarterly and half yearly financial statements before submission to the board for approval

√ Not applicable in 2020.

5(5)(h) Review the adequacy of internal audit function √

5(5)(i) Review the Management’s Discussion and Analysis before disclosing in this Annual Report ;

√

5(5)(j) Review statement of significant related party transactions submitted by the management

√

5(5)(k) Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors

√

5(5)(l) Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors

√





5(5)(m) Oversee whether the proceeds raised through Initial Public Offering (IPO) or Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per the purposes stated in relevant offer document or prospectus approved by the Commission:

Provided that the management shall disclose to the Audit Committee about the uses or applications of the proceeds by major category (capital expenditure, sales and marketing expenses, working capital, etc.), on a quarterly basis, as a part of their quarterly declaration of financial results: Provided further that on an annual basis, the company shall prepare a statement of the proceeds utilized for the purposes other than those stated in the offer document or prospectus for publication in this Annual Report along with the comments of the Audit Committee.

Not applicable in 2020

5(6) Reporting of the Audit Committee: 3(4)(a)(i) The Audit Committee shall report on its activities to the Board

of Directors.√ Refer to the Corporate Governance Report on

page no. 167 of this Annual Report5(6)(a)(ii) The Audit Committee shall immediately report to the Board of Directors on the following findings, if any:-

5(6)(a)(ii)(a) Report on conflicts of interests; √ No such event occurred5(6)(a)(ii)(b) Suspected or presumed fraud or irregularity or material defect

in the internal control system; √ No such event occurred

5(6)(a)(ii)(c) Suspected infringement of laws, including securities related laws, rules and regulations;

√ No such event occurred

5(6)(a)(ii)(d) Any other matter which shall be disclosed to the Board of Directors immediately.


5(6)(b) Reporting to the Authorities –

Reported to the Board of Directors about anything which has material impact on the financial condition and results of operation


5(7) Reporting to the Shareholders and General Investors

Report on the activities carried out by the Audit Committee, including any report made to the Board of Directors under condition 3.4.1 (ii)


6 Nomination and Remuneration Committee (NRC) As per Bangladesh Bank guidelines (DFIM Circular Letter No. 18 dated on October 26, 2011), IDLC being a Financial Institution (FI) can only form two subcommittees of the Board: Audit Committee (AC) and Executive Committee (EC). No other subcommittee of the Board is permitted by Bangladesh Bank.However, to comply with this clause, IDLC addressed this issue to BSEC and Bangladesh Bank and waiting for their holistic decision. From its initiation IDLC have Remuneration (HR and Competition) Committee to create balance and transparence to manage human capital. The committee is comprised of the members of the higher Management of IDLC with full supervision of the Board. The Company Secretary is the Secretary to the Committee.

6(1) Responsibility to the Board of Directors6(1)(a) Nomination and Remuneration Committee (NRC) as a sub-

committee of the Board6(1)(b) The NRC shall assist the Board in formulation of the nomination

criteria or policy for determining qualifications, positive attributes, experiences and independence of directors and top level executive as well as a policy for formal process of considering remuneration of directors, top level executive;

6(1)(c) ToR of the NRC shall be clearly set forth in writing covering the areas stated at the condition No. 6(5)(b);





6(2) Constitution of the NRC6(2)(a) The Committee shall comprise of at least three members

including an independent director;6(2)(b) All members of the Committee shall be non-executive directors;

6(2)(c) Members of the Committee shall be nominated and appointed by the Board;

6(2)(d) The Board shall have authority to remove and appoint any member of the Committee

6(2)(e) In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the board shall fill the vacancy within 180 (one hundred eighty) days of occurring such vacancy in the Committee

6(2)(f) The Chairperson of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee

6(2)(g) The company secretary shall act as the secretary of the Committee

6(2)(h) The quorum of the NRC meeting shall not constitute without attendance of at least an independent director

6(2)(i) No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the company

6(3) Chairperson of the NRC6(3)(a) The Board shall select 1 (one) member of the NRC to be

Chairperson of the Committee, who shall be an independent director

6(3)(b) In the absence of the Chairperson of the NRC, the remaining members may elect one of themselves as Chairperson for that particular meeting, the reason of absence of the regular Chairperson shall be duly recorded in the minutes;

6(3)(c) The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders

6(4) Meeting of the NRC6(4)(a) The NRC shall conduct at least one meeting in a financial year

6(4)(b) The Chairperson of the NRC may convene any emergency meeting upon request by any member of the NRC

6(4)(c) The quorum of the meeting of the NRC shall be constituted in presence of either two members or two third of the members of the Committee, whichever is higher, where presence of an independent director is must as required under condition No. 6(2)(h)

6(4)(d) The proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC;

6(5) Role of the NRC6(5)(a) NRC shall be independent and responsible or accountable to

the Board and to the shareholders6(5)(b) NRC shall oversee, among others, the following matters and

make report with recommendation to the Board:6(5)(b)(i) Formulating the criteria for determining qualifications, positive

attributes and independence of a director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following:

6(5)(b)(i)(a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully;

6(5)(b)(i)(b) The relationship of remuneration to performance is clear and meets appropriate performance benchmarks;





6(5)(b)(i)(c) Remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals;

6(5)(b)(ii) Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality;

6(5)(b)(iii) Identifying persons who are qualified to become directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board

6(5)(b)(iv) Formulating the criteria for evaluation of performance of independent directors and the Board

6(5)(b)(v) Identifying the company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria

6(5)(b)(vi) Developing, recommending and reviewing annually the company’s human resources and training policies

6(5)(c) The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report

7 External or Statutory Auditors7(1) The issuer Company shall not engage its external or statutory auditors

to perform the following services of the company, namely:-√ Huda Vasi Chowdhury & Co, Chartered

Accountants have declared such independence during their appointment7(1)(i) appraisal or valuation services or fairness opinions √

7(1)(ii) financial information systems design and implementation √

7(1)(iii) book-keeping or other services related to the accounting

records or financial statements;

√

7(1)(iv) Broker-dealer services; √

7(1)(v) Actuarial services; √

7(1)(vi) Internal audit services or special audit services; √

7(1)(vii) Any service that the Audit Committee determines; √

7(1)(viii) Audit or certification services on compliance of corporate

governance as required under condition No. 9(1); and

√

7(1)(ix) Any other service that creates conflict of interest. √

7(2) No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company; his or her family members also shall not hold any shares in the said company:

Provided that spouse, son, daughter, father, mother, brother, sister, son-in-law and daughter-in-law shall be considered as family members.

√

7(3) Representative of external or statutory auditors shall remain present in the Shareholders’ Meeting (Annual General Meeting or Extraordinary General Meeting) to answer the queries of the shareholders.

√

8 Maintaining a website by the Company

8(1) The company shall have an official website linked with the website of the stock exchange;

√ Web address is: www.idlc.com.

The required information are available in the website under the link:

http://www.idlc.com/price-sensitive-information-and-notices.php

8(2) The company shall keep the website functional from the date of listing;

√

8(3) The company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchange(s);

√





9 Reporting and Compliance of Corporate Governance

9(1) The company shall obtain a certificate from a practicing Professional Accountant or Secretary (Chartered Accountant or Cost and Management Accountant or Chartered Secretary) other than its statutory auditors or audit firm on yearly basis regarding compliance of conditions of Corporate Governance Code of the Commission and shall such certificate shall be disclosed in this Annual Report .

√ The required Certificate is available on page no. 207 of this Annual Report

The agenda will be placed in the 35th Annual General Meeting. Refer to the notice of the AGM, on page no. 192 of this Annual Report.

9(2) The professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the shareholders in the annual general meeting.

√

9(3) The directors of the company shall state, in accordance with the Annexure-C attached, in the directors’ report whether the company has complied with these conditions or not.

√ Refer to the ‘Directors’ Report’ on page no. 204 of this Annual Report



ANNEXURE IV-Statement of compliance with the good governance guideline issued by the Bangladesh Bank

Bangladesh Bank vide, DFIM Circular No. 7, dated 25 September 2007, issued a policy on the responsibility & accountability of the Board of Directors, Chairman & Chief Executive of financial institution. The Board of Directors of the Company has taken appropriate steps to comply with the guidelines.

A status report on compliance with those guidelines is stated below:

Sl. No. Particulars Status of Compliance 1. Responsibilities and authorities of the Board of Directors:

The Board of Directors should focus mainly on the policy matters and evaluation of the performance of the institution, such as:(a) Work-planning and strategic management:

(I) The Board shall determine the Vision/ Mission of the institute. In order to enhance operational efficiency and to ensure business growth, they shall chalk out strategies and work-plans on annual basis.

The Board shall review such strategies on quarterly rests and shall modify accordingly, if required. If any structural modification is required, shall bring those changes with consultation with the management.

Complied

(ii) The Board shall have its analytical review incorporated in the Annual report as regard to the success/failure in achieving the business and other targets as set out in its annual work-plan and shall apprise the shareholders on future plans and strategies.

Complied

(iii) The Board will set the Key Performance Indicator (KPI)s for the CEO and other senior executives and will appraise those on half yearly basis.

Complied

(b) Formation of sub-committee:Executive Committee may be formed in combination with directors of the Company for rapid settlement of the emergency matters (approval of loan/lease application, write-off, rescheduling etc.) arisen from the regular business activities. Except the Executive Committee and Audit Committee, no other committee or sub-committee can be formed, even in temporary basis.

Complied

(c) Financial management:

(i) Annual budget and statutory financial statements shall be adopted finally with the approval of the Board.

Complied

(ii) Board shall review and examine in quarterly basis various statutory financial statements such as statement of income-expenses, statement of loan/lease, statement of liquidity, adequacy of capital, maintenance of provision, legal affairs including actions taken to recover overdue loan/lease.

Complied

(iii) Board shall approve the Company’s policy on procurement and collection and shall also approve the expenditures according to policy. The Board to the maximum extend shall delegate the authority on the Managing Director and among other top executives for approval of expenditure within budget.

Complied

(iv) The Board shall adopt the process of operation of bank accounts. To ensure transparency in financial matters, groups may be formed among the management to operate bank accounts under joint signatures.

Complied

(d) Management of loan/lease/investments:(i) Policy on evaluation of loan/lease/investment proposal, sanction and

disbursement and its regular collection and monitoring shall be adopted and reviewed by the Board regularly based on prevailing laws and regulations. Board shall delegate the authority of loan/lease/investment specifically to management preferably on Managing Director and other top executives.

Complied



Sl. No. Particulars Status of Compliance (ii) No director shall interfere on the approval of loan proposal associated

with him. The director concerned shall not give any opinion on that loan proposal.

Complied

(iii) Any large loan/lease/investment proposal must be approved by the Board. Complied

(e) Risk management:

Risk Management Guideline framed in the light of Core Risk Management Guideline shall be approved by the Board and reviewed by the Board regularly.

Complied

(f) Internal control and compliance management:

An Audit Committee as approved by the Board shall be formed. Board shall evaluate the reports presented by the Audit Committee on compliance with the recommendation of internal auditors, external auditors and Bangladesh Bank Inspection team as well.

Complied

(g) Human resource management:

Board shall approve the policy on Human Resources Management and Service Rule. The Chairman and directors of the Board shall not interfere on the administrative job in line with the approved Service Rule.

Only the authority for the appointment and promotion of the Managing Director/ Deputy Managing Director/ General Manager and other equivalent position shall lie with the Board incompliance with the policy and Service Rule. No director shall be included in any Executive Committee formed for the purpose of appointment and promotion of others.

Complied

(h) Appointment of CEO:The Board shall appoint a competent CEO for the institution with the prior approval of the Bangladesh Bank and shall approve the proposal for increment of his salary and allowances.

Complied

(I) Benefits offer to the Chairman:

For the interest of the business, the Chairman may be offered an office room, a personal secretary, a telephone at the office and a vehicle subject to the approval of the Board.

Complied

2 Responsibilities of the Chairman of the Board of Directors:(a) Chairman shall not participate in or interfere into the administrative or operational

and routine affairs of the Company as he has no jurisdiction to apply executive power;Complied

(b) The minutes of the Board meetings shall be signed by the Chairman; Complied

(c) The Chairman shall sign-off the proposal for appointment of Managing Director and increment of his salaries & allowances;

Complied

3 Responsibilities of Managing Director:(a) Managing Director shall discharge his responsibilities on matters relating to financial,

business and administration vested by the Board upon him. He is also accountable for achievement of financial and other business targets by means of business plan, efficient implementation of administration and financial management;

Complied

(b) For day to day operations, Managing Director shall ensure compliance with the rules and regulation of the Financial Institutions Act, 1993 and other relevant circulars of Bangladesh Bank;

Complied

(c) All recruitment/ promotion, except those of DMD, GM and equivalent positions shall be vested upon the Managing Director. He shall act such in accordance the approved HR Policy of the institution;

Complied

(d) Managing Director may re-schedule job responsibilities of employees; Complied

(e) Except for the DMD, GM and equivalent positions, power to transfer and to take disciplinary action shall vested to the Managing Director.

Complied

(f) Managing Director shall sign all the letters/statements relating to compliance of policies and guidelines. However, Departmental/Unit heads may sign daily letters/statements as set out in DFIM circular no. 2 dated 06 January 2009 if so authorized by MD.

Complied



KARNAFULI DRY DOCK

Karnafuli dry dock is the first ever private sector 100,000 dead weight tonnage capacity dry dock in Chottogram.

It has been financed from The World Bank under Investment Promotion and Financing Facility II project.

The dry dock is expected to create a massive impact in the ship repairing and building industry of Bangladesh through foreign currency revenue generation and employment opportunities.

IDLC is proud to be a part in this leap forward in the nation's progress.



REPORT OF THE CEO AND MANAGING DIRECTOR AND THE CHIEF FINANCIAL OFFICERDate: February 17, 2021

The Board of DirectorsIDLC Finance LimitedBay’s Galleria (1st Floor)57 Gulshan AvenueDhaka.

Subject: Declaration on Financial Statements for the year ended on December 31, 2020

Dear Sirs,

Pursuant to the condition No. 1(5) (xxvi) imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/Admin/80, dated June 03, 2018 under section 2CC of the Securities and Exchange Ordinance, 1969, we do hereby declare that:

(1) The Financial Statements of IDLC Finance Limited for the year ended on December 31, 2020 have been prepared in compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in the Bangladesh and any departure there from has been adequately disclosed;

(2) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view;

(3) The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly presented in its financial statements;

(4) To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records;

(5) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and

(6) The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

In this regard, we also certify that:

(i) We have reviewed the financial statements for the year ended on December 31, 2020 and that to the best of our knowledge and belief:

(a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(b) these statements collectively present true and fair view of the Company’s affairs and are in compliance with existing accounting standards and applicable laws.

(ii) There are, to the best of knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board of Directors or its members.

Sincerely yours,

Arif Khan, CFA, FCMACEO & Managing DirectorDate: February 17, 2021

Md. Masud Karim Majumder, FCAChief Financial Officer (CFO)

Date: February 17, 2021



Independent Auditor’s Report

TO THE SHAREHOLDERS OF IDLC FINANCE LIMITEDReport on the Audit of the Consolidated and Separate Financial Statements

Opinion

We have audited the consolidated financial statements of IDLC Finance Limited and its subsidiaries (the “Group”) as well as the separate financial statements of IDLC Finance Limited (the “Company”) which comprise the consolidated and separate balance sheets as at 31 December 2020 and the consolidated and separate profit and loss accounts, the consolidated and separate statements of changes in equity and the consolidated and separate cash flow statements for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements of the Group and separate financial statements of the Company give a true and fair view of the consolidated financial position of the Group and separate financial statements of the Company as at 31 December 2020 and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 2.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), Bangladesh Securities and Exchange Commission (BSEC) and Bangladesh Bank, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of key audit matters Our response to key audit matters

Measurement of provision for loans, advances and leasesThe process for estimating the provision for loans, advances and leases portfolio associated with credit risk is significant and complex.

For the individual analysis for large exposure, provisions calculation consider the estimates of future business performance and the market value of collateral provided for credit transactions.

For the collective analysis of exposure on portfolio basis, provision calculation and reporting are manually processed that deals with voluminous databases, assumptions and estimates.

As at 31 December 2020, the Group reported total gross loans, advances and leases of BDT 93,073,616,160 (31 December 2019: BDT 92,345,977,331) and provision for loans and advances of BDT 1,750,303,084 (31 December 2019: BDT 1,741,869,167).

We have focused on the following significant judgements and estimates which could give rise to material misstatement or management bias:

We tested the design and operating effectiveness of key controls focusing on the following:

Credit appraisal, loan disbursement procedures, monitoring and provisioning process;

Identification of loss events, including early warning and default warning indicators;

Reviewed quarterly Classification of Loans (CL);

Our substantive procedures in relation to the provision for loans and advances portfolio comprised the following:

Reviewed the adequacy of the general and specific provisions in line with related Bangladesh Bank guidelines;

Assessed the methodologies on which the provision amounts based, recalculated the provisions and tested the completeness and accuracy of the underlying information;


Completeness and timing of recognition of loss events in accordance with criteria set out in FID Circular no 08, dated 03 August 2002, FID Circular no 03, dated 03 May 2006 and FID Circular no 03, dated 29 April 2013;

For individually assessed provisions, the measurement of the provision may be dependent on the valuation of collateral, estimates of exit values and the timing of cash flows;

Provision measurement is primarily dependent upon key assumptions relating to probability of default, ability to repossess collateral and recovery rates.

Assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines; and

Finally compared the amount of loan provision and loan classification disclosed in the financial statements with the quick summary report prepared by Bangladesh Bank.

Considering the unprecedented adverse impact on Bangladesh economy due to COVID 19, Bangladesh Bank has instructed NBFIs not to further downgrade any loan/lease/advance from its existing classification applicable as at 1 January 2020. Initially the duration of this moratorium for any further downgrade was up to 30 June 2020 but considering longer adverse impact of COVID 19 this has been further extended to 31 December 2020 vide DFIM Circular Letter no 06 dated 01 November 2020. Accordingly, amount and percentage of classified loan has improved as at 31 December 2020 as compared to 31 December 2019 since no additional classification or further downgrade of classified loans and advances have been recognized during the current period.

The said BB Circular has also instructed to consider all installments payable during the period from 1 January to 31 December 2020 as deferred and reschedule the number of installment and amount from 1 January 2021. As a result, the number of installments unpaid during January to December 2020 shall be added with the revised repayment schedule.

No penal interest or additional fee/charge/commission shall be imposed on these deferred instalments.

We have selected samples to check compliance of above Bangladesh Bank instructions. However, due to the current uncertainty of the overall economic situation both in Bangladesh and Globally there are inherent risk that the judgment applied by Management in assessing recoverability of interest income may be different than the actual situation in future.

See note no 7 and 12 to the financial statements

Impairment assessment of unquoted investments

In the absence of a quoted price in an active market, the fair value of unquoted shares and bonds, especially any impairment is calculated using valuation techniques which may take into consideration direct or indirect unobservable market data and hence require an elevated level of judgment.

We have assessed the processes and controls put in place by the Company to ensure all major investment decisions are undertaken through a proper due diligence process.

We tested a sample of investments valuation as at 31 December 2020 and compared our results to the recorded value.

Finally we assessed the appropriateness and presentation of disclosures against relevant accounting standards and Bangladesh Bank guidelines.

See note no 7 to the financial statements

IT systems and controls

Our audit procedures have a focus on IT systems and controls due to the pervasive nature and complexity of the IT environment, the large volume of transactions processed in numerous locations daily and the reliance on automated and IT dependent manual controls.

We tested the design and operating effectiveness of the Company’s IT access controls over the information systems that are critical to financial reporting.

We tested IT general controls (logical access, changes management and aspects of IT operational controls). This included testing that requests for access to systems were appropriately reviewed and authorized.

We tested the Company’s periodic review of access rights and reviewed requests of changes to systems for appropriate approval and authorization.

We considered the control environment relating to various interfaces, configuration and other application layer controls identified as key to our audit.


Reporting on other information

Management is responsible for the other information. The other information comprises all of the information in the Annual Report other than the consolidated and separate financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, on the other information obtained prior to the date of this audit report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the consolidated financial statements of the Group and also separate financial statements of the Company in accordance with IFRSs as explained in note 2, and for such internal control as management determines is necessary to enable the preparation of Consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing these Consolidated and separate financial statements, management is responsible for assessing the Groups’ and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most


significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, the Securities and Exchange Rules, 1987, the Financial Institutions Act, 1993 and the rules and regulations issued by Bangladesh Bank, we also report that:

(i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books;

(iii) the consolidated and separate balance sheet and consolidated and separate profit and loss account together with the annexed notes dealt with by the report are in agreement with the books of account and returns;

(iv) the expenditures incurred were for the purpose of the Company’s business for the year;

(v) the financial statements of the Group and the Company have been drawn up in conformity with the Financial Institutions Act, 1993 and in accordance with the accounting rules and regulations which were issued by Bangladesh Bank to the extent applicable to the Company;

(vi) adequate provisions have been made for loans, advances, leases, investment and other assets which are, in our opinion, doubtful of recovery and Bangladesh Bank’s instructions in this regard have been followed properly;

(vii) the financial statements of the Company conform to the prescribed standards set in the accounting regulations which were issued by Bangladesh Bank after consultation with the professional accounting bodies of Bangladesh;

(viii) the records and statements which were submitted by the branches have been properly maintained and recorded in the financial statements;

(ix) statements sent to Bangladesh Bank have been checked on sample basis and no inaccuracy has come to our attention;

(x) taxes and other duties were collect to be and deposited in the Government treasury by the Company as per Government instructions found satisfactory based on test checking;

(xi) nothing has come to our attention that the Company has adopted any unethical means i.e. ‘window dressing’ to inflate the profit and mismatch between the maturity of assets and liabilities;

(xii) proper measures have been taken to eliminate the irregularities mentioned in the inspection report of Bangladesh Bank and the instructions which were issued by Bangladesh Bank and other regulatory authorities have been complied properly as disclosed to us by management;

(xiii) based on our work as mentioned above under the auditor’s responsibility section, the internal control and the compliance of the Company is satisfactory, and effective measures have been taken to prevent possible material fraud, forgery and internal policies are being followed appropriately;

(xiv) the Company has complied with relevant laws pertaining to capital, reserve and net worth, cash and liquid assets and procedure for sanctioning and disbursing loans/leases found satisfactory;

(xv) we have reviewed over 80% of the risk weighted assets of the Company and we have spent around 1,500 person hours for the audit of the books and accounts of the Company;

(xvi) the Company has complied with relevant instructions which were issued by Bangladesh Bank relevant to classification, provisioning and calculation of interest suspense;

(xvii) the Company has complied with the 'First Schedule' of the Financial Institutions Act, 1993 in preparing these financial statements; and

(xviii) all other issues which in our opinion are important for the stakeholders of the Company have been adequately disclosed in the audit report.


Dated, Dhaka 17 February 2021DVC: 2103040770AS843681

Sabbir Ahmed, FCAEnrolment no 770

Hoda Vasi Chowdhury & CoChartered Accountants


IDLC Finance Limited and its Subsidiaries

CONSOLIDATED BALANCE SHEETAs at 31 December 2020

Note 31.12.2020 BDT

31.12.2019 BDT

PROPERTY AND ASSETSCash 3

In hand (including foreign currencies) 3.1 430,000 440,000 Balance with Bangladesh Bank and its agent (including foreign currencies) 3.2 1,520,439,941 2,176,870,971

1,520,869,941 2,177,310,971Balance with other banks and financial institutions 4

Inside Bangladesh 4(a) 20,474,935,773 12,922,670,075 Outside Bangladesh 4(b) - -

20,474,935,773 12,922,670,075 Money at call and short notice 5 - -

Investments 6Government 3,044,775,043 1,380,723,983 Others 5,613,758,625 5,554,544,240

8,658,533,668 6,935,268,223

Loans, advances and leases 7Loans, cash credit, overdraft etc. 93,073,616,160 92,345,977,331 Bills purchased and discounted - -

93,073,616,160 92,345,977,331 Fixed assets including land, building, furniture and fixtures 8(c) 1,028,267,669 1,119,976,393 Other assets 9 2,117,376,104 1,884,075,443 Non-banking assets - -Total Assets 126,873,599,315 117,385,278,436

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks,financial institutions and agents 10 20,790,990,945 14,227,773,689 Deposits and other accounts 11

Current accounts and other accounts etc. - -Bills payable - -Savings bank deposits - -Term deposits 76,273,087,133 75,415,433,310 Bearer certificate of deposits - -Other deposits 2,490,915,674 2,490,149,327

78,764,002,807 77,905,582,637 Other liabilities 12 12,080,141,073 11,234,350,677 Total Liabilities 111,635,134,825 103,367,707,003 Capital/Shareholders' equity

Paid-up capital 13 3,770,507,800 3,770,507,800 Share premium 14 1,260,585,930 1,260,585,930 Statutory reserves 15 2,950,870,065 2,509,921,870 General reserves 16 1,000,000,000 1,000,000,000 Dividend equalisation reserves 46,500,000 46,500,000 Retained earnings 6,209,997,420 5,430,052,634 Total Equity attributable to equity holders of the company 15,238,461,215 14,017,568,234

Non-controlling interest 3,275 3,199 Total Liabilities and Shareholders' equity 126,873,599,315 117,385,278,436




Note 31.12.2020 BDT

31.12.2019 BDT

OFF-BALANCE SHEET ITEMS

Contingent liabilities 17.1

Acceptances and endorsements - -

Letters of guarantee 90,066,000 50,000,000

Irrevocable letters of credit - -

Bills for collection - -

Indemnity bond - -

Corporate guarantee 1,550,000,000 750,000,000

1,640,066,000 800,000,000

Other commitments 17.2

Documentary credits and short term trade related transactions - -

Forward assets purchased and forward deposits placed - -

Un-drawn note issuance and revolving underwriting facilities - -

Un-drawn formal standby facilities, credit lines - -

Un-disbursed contracted loans and leases 1,238,511,635 1,238,722,240

1,238,511,635 1,238,722,240

Total Off-Balance Sheet items including contingent liabilities 2,878,577,635 2,038,722,240

Net Assets Value (NAV) per share 37 40.41 37.18

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

This is the consolidated balance sheet referred to in our separate report of even date.

Chairman Director CEO & Managing Director Company Secretary







CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2020

Note2020 BDT

2019 BDT

Interest income 19 12,100,085,456 13,183,089,035 Interest on deposits and borrowings etc. 20 (7,607,461,883) (8,512,176,946)Net interest income 4,492,623,573 4,670,912,089 Investment income 21 1,337,147,180 96,164,996 Commission, exchange and brokerage 22 505,274,959 410,459,017 Other operating income 23 332,477,932 440,562,062 Total operating income 6,667,523,644 5,618,098,164 Salaries and allowances 24 1,624,327,491 1,431,940,133 Rent, taxes, insurance, electricity etc. 25 50,986,243 58,428,798 Legal expenses 26 23,894,250 22,539,605 Postage, stamp, telecommunication etc. 27 46,782,578 43,491,044 Stationery, printing, advertisements etc. 28 111,491,619 161,843,179 Managing Director's salary and benefits 29 12,600,004 12,490,004 Directors' fees 30 1,854,086 1,990,581 Auditors' fees 31 1,236,250 1,228,928 Charges on loan losses - -Depreciation and repair of Company's assets 32 319,990,227 328,860,566 Other expenses 33 355,999,663 371,286,980 Total operating expenses 2,549,162,411 2,434,099,818 Profit before provision 4,118,361,233 3,183,998,346 Provision for loans and investments 12.6(ii)

General provision 20,127,413 70,258,720 Specific provision 359,519,439 357,945,424 Provision for diminution in value of investments (64,953,435) (5,310,393)Other provisions - -

Total provision 314,693,417 422,893,751 Total profit before taxation 3,803,667,816 2,761,104,595 Provision for taxation

Current tax expense 12.2 1,321,516,473 1,079,041,944 Deferred tax income Annex B (58,419,445) (17,859,563)

1,263,097,028 1,061,182,381 Net profit after taxation 2,540,570,788 1,699,922,214 Attributable to:

Shareholders of the Company 2,540,570,712 1,699,922,173 Non-controlling interest 76 41

2,540,570,788 1,699,922,214 Appropriations to:Statutory reserves 440,948,195 93,380,020 General reserves - -Dividend etc. - -

440,948,195 93,380,020 Retained surplus 2,099,622,517 1,606,542,153 Earnings Per Share (EPS) 36 6.74 4.51


This is the consolidated profit & loss account referred to in our separate report of even date.







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CONSOLIDATED STATEMENT OF CASH FLOWFor the year ended 31 December 2020

2020 BDT

2019 BDT

A) Cash flows from operating activitiesInterest received 10,803,787,896 12,938,761,799 Interest paid (4,329,066,024) (4,557,675,271)Dividend received 90,410,952 123,091,573 Fees and commission received 505,274,959 410,459,017 Paid to employees and suppliers (2,263,295,953) (2,131,115,918)Payment of income tax (1,098,008,107) (1,041,679,057)Received from other operating activities 1,573,663,655 407,785,167 Cash generated from operating activities before changes in operating assets and liabilities 5,282,767,378 6,149,627,310

Increase/(decrease) in operating assets and liabilitiesLease receivable 458,947,478 780,482,277 Long-term finance (1,131,384,226) (6,912,577,883)Real estate finance 1,328,284,054 (3,031,251,200)Car loan 100,291,068 159,088,073 Personal loan 30,725,424 2,984,657 Loan against deposit 271,157,373 47,396,901 Margin loan to portfolio investors (323,342,771) 627,143,115 Short term finance (156,273,344) 170,832,848 Other assets (243,046,986) (752,254,284)Term and other deposits 858,420,170 5,192,833,411 Payable and accrued expenses (2,978,161,307) (4,310,491,404)Deferred liability-employee gratuity 10,891,370 15,233,359 Portfolio investors' fund 38,079,336 (368,455,004)Deferred tax liability (7,634,839) 233,693,284 Interest suspense account (125,696,744) 157,605,188

(1,868,743,945) (7,987,736,663)Net cash flows from/(used in) operating activities 3,414,023,433 (1,838,109,353)

B) Cash flows from investing activitiesPurchase of fixed assets (56,846,163) (90,204,071)Disposal of fixed assets 14,573,251 10,855,287 Net proceeds of investment in securities (1,723,265,445) 365,209,284 Net cash flows from/(used in) investing activities (1,765,538,357) 285,860,500

C) Cash flows from financing activitiesDrawdown of term loans 6,977,746,021 10,117,227,869 Repayment of term loans (6,249,528,766) (6,785,695,099)Net drawdown of short term loan 5,835,000,000 (1,600,000,000)Dividend paid (1,315,877,663) (1,314,917,412)Net cash flows from/(used in) financing activities 5,247,339,592 416,615,358

D) Net increase/(decrease) in cash and cash equivalents (A+ B + C) 6,895,824,668 (1,135,633,495)E) Effects of exchange rate changes on cash and cash equivalents - -F) Cash and cash equivalents at beginning of the year 15,099,981,046 16,235,614,541 G) Cash and cash equivalents at end of the year (D+E+F) 21,995,805,714 15,099,981,046

Cash and cash equivalents at end of the yearCash in hand (including foreign currencies) (Note-3.1) 430,000 440,000 Balance with Bangladesh Bank and its agent bank(s) (Note-3.2) 1,520,439,941 2,176,870,971 Balance with other banks and financial institutions (Note-4) 20,474,935,773 12,922,670,075 Money at call and short notice (Note-5) - -

21,995,805,714 15,099,981,046 Net operating cash flow per share (Note-38) 9.05 (4.87)





BALANCE SHEETAs at 31 December 2020

Note 31.12.2020 BDT

31.12.2019 BDT

PROPERTY AND ASSETSCash 3

In hand (including foreign currencies) 3.1 340,000 340,000 Balance with Bangladesh Bank and its agent (including foreign currencies) 3.2 1,520,439,941 2,176,870,971

1,520,779,941 2,177,210,971

Balance with other banks and financial institutions 4Inside Bangladesh 4(a) 18,310,594,097 12,143,631,740 Outside Bangladesh 4(b) - -

18,310,594,097 12,143,631,740 Money at call and short notice 5 - -

Investments 6Government 3,017,589,671 956,582,294 Others 2,219,571,466 1,764,634,918

5,237,161,137 2,721,217,212

Loans, advances and leases 7Loans, cash credit, overdraft etc. 91,852,743,960 91,448,447,902 Bills purchased and discounted - -

91,852,743,960 91,448,447,902 Fixed assets including land, building, furniture and fixtures 8(c) 884,793,455 926,283,039 Other assets 9 5,612,814,286 5,238,018,539 Non-banking assets - -Total Assets 123,418,886,876 114,654,809,403

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks,financial institutions and agents 10 20,790,990,945 14,027,773,689 Deposits and other accounts 11

Current accounts and other accounts etc. - -Bills payable - -Savings bank deposits - -Term deposits 78,131,272,875 77,008,419,045 Bearer certificate of deposits - -Other deposits 2,490,915,674 2,490,149,327

80,622,188,549 79,498,568,372 Other liabilities 12 9,889,536,768 9,897,359,976 Total Liabilities 111,302,716,262 103,423,702,037 Capital/Shareholders' equity

Paid-up capital 13 3,770,507,800 3,770,507,800 Share premium 14 1,260,585,930 1,260,585,930 Statutory reserves 15 2,950,870,065 2,509,921,870 General reserves 16 1,000,000,000 1,000,000,000 Dividend equalisation reserves 46,500,000 46,500,000 Retained earnings 3,087,706,819 2,643,591,766

Total Equity 12,116,170,614 11,231,107,366 Total Liabilities and Shareholders' equity 123,418,886,876 114,654,809,403



Note 31.12.2020 BDT

31.12.2019 BDT

OFF-BALANCE SHEET ITEMS

Contingent liabilities 17.1Acceptances and endorsements - -Letters of guarantee 90,066,000 50,000,000 Irrevocable letters of credit - -Bills for collection - -Indemnity bond - -Corporate guarantee 1,550,000,000 750,000,000

1,640,066,000 800,000,000 Other commitments 17.2

Documentary credits and short term trade related transactions - -Forward assets purchased and forward deposits placed - -Un-drawn note issuance and revolving underwriting facilities - -Un-drawn formal standby facilities, credit lines - -Un-disbursed contracted loans and leases 1,238,511,635 1,238,722,240

1,238,511,635 1,238,722,240 Total Off-Balance Sheet items including contingent liabilities 2,878,577,635 2,038,722,240 Net Assets Value (NAV) per share 37 32.13 29.79

The annexed notes from 1 to 46 form an integral part of these financial statements.

This is the balance sheet referred to in our separate report of even date.








PROFIT AND LOSS ACCOUNT For the year ended 31 December 2020

Note 2020 BDT

2019 BDT

Interest income 19 11,859,045,694 12,936,084,679 Interest on deposits and borrowings etc. 20 (7,640,442,034) (8,639,581,266)Net interest income 4,218,603,660 4,296,503,413 Investment income 21 1,035,002,230 32,604,778 Commission, exchange and brokerage 22 46,694,278 53,374,175 Other operating income 23 325,141,702 432,922,088 Total operating income 5,625,441,870 4,815,404,454 Salaries and allowances 24 1,353,735,303 1,178,919,053 Rent, taxes, insurance, electricity etc. 25 42,123,906 45,233,286 Legal expenses 26 7,483,083 17,984,805 Postage, stamp, telecommunication etc. 27 39,065,352 35,866,522 Stationery, printing, advertisements etc. 28 103,891,684 142,334,199 Managing Director's salary and benefits 29 12,600,004 12,490,004 Directors' fees 30 1,238,137 1,409,523 Auditors' fees 31 891,250 883,928 Charges on loan losses - -Depreciation and repair of Company's assets 32 264,882,812 274,570,314 Other expenses 33 331,214,612 302,027,160 Total operating expenses 2,157,126,143 2,011,718,794 Profit before provisions 3,468,315,727 2,803,685,660 Provision for loans and investments 12.6(ii)

General provision 3,400,006 76,942,529 Specific provision 359,639,439 343,065,883 Provision for diminution in value of investments (146,437,727) (6,739,194)Other provision - -

Total provision 216,601,718 413,269,218 Total profit before taxation 3,251,714,009 2,390,416,442 Provision for taxation

Current tax expense 12.2 1,079,639,322 877,173,990 Deferred tax income Annex B (32,666,290) (8,950,813)

1,046,973,032 868,223,177 Net profit after taxation 2,204,740,977 1,522,193,265

Appropriations to:Statutory reserves 440,948,195 93,380,020 General reserves - -Dividend etc. - -

440,948,195 93,380,020 Retained surplus 1,763,792,782 1,428,813,245 Earnings Per Share (EPS) 36 5.85 4.04


This is the profit & loss account referred to in our separate report of even date.







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STATEMENT OF CASH FLOWFor the year ended 31 December 2020

2020 BDT

2019 BDT

A) Cash flows from operating activitiesInterest received 10,604,890,142 12,683,478,230 Interest paid (4,362,046,175) (4,685,079,591)Dividend received 26,101,806 54,478,019 Fees and commission received 46,694,278 53,374,175 Paid to employees and suppliers (1,920,361,102) (1,756,942,241)Payment of income tax (923,247,299) (822,882,600)Received from other operating activities 1,285,971,200 417,465,999 Cash generated from operating activities before changes in operating assets and liabilities 4,758,002,851 5,943,891,991

Increase/(decrease) in operating assets and liabilitiesLease receivable 458,947,478 780,482,277 Long-term finance (1,131,384,226) (6,912,577,883)Real estate finance 1,328,284,054 (3,031,251,200)Car loan 100,291,068 159,088,073 Personal loan 30,725,424 2,984,657 Loan against deposit 271,157,373 47,396,901 Short term finance (156,273,344) 170,832,848 Other assets (383,276,954) (833,969,071)Term and other deposits 1,123,620,177 5,705,448,688

Payable and accrued expenses (3,652,575,357) (3,595,494,739)Interest suspense account (125,696,744) 157,605,188

(2,130,183,701) (7,165,202,355)Net cash flows from/(used in) operating activities 2,627,819,149 (1,221,310,364)

B) Cash flows from investing activitiesPurchase of fixed assets (54,562,666) (64,068,377)Disposal of fixed assets 5,879,176 5,929,266 Net proceeds of investment in securities (2,515,943,925) 71,654,552 Net cash flows from/(used in) investing activities (2,564,627,415) 13,515,441

C) Cash flows from financing activitiesDrawdown of term loans 6,977,746,021 10,117,227,869 Repayment of term loans (6,249,528,766) (6,785,695,099)Net drawdown of short term loan 6,035,000,000 (1,550,000,000)Dividend paid (1,315,877,663) (1,314,917,412)Net cash flows from/(used in) financing activities 5,447,339,592 466,615,358

D) Net increase/(decrease) in cash and cash equivalents (A+B+C) 5,510,531,327 (741,179,565)E) Effects of exchange rate changes on cash and cash equivalents - -F) Cash and cash equivalents at beginning of the year 14,320,842,711 15,062,022,276 G) Cash and cash equivalents at end of the year (D+E+F) 19,831,374,038 14,320,842,711

Cash and cash equivalents at end of the yearCash in hand (including foreign currencies) (Note-3.1) 340,000 340,000 Balance with Bangladesh Bank and its agent bank(s) (Note-3.2) 1,520,439,941 2,176,870,971 Balance with other banks and financial institutions (Note-4 ) 18,310,594,097 12,143,631,740Money at call and short notice (Note-5) - -

19,831,374,038 14,320,842,711Net operating cash flow per share (Note-38) 6.97 (3.24)




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NOTES TO THE CONSOLIDATED AND SEPARATEFINANCIAL STATEMENTSAs at and for the year ended 31 December 2020

1. Company and its activities1.1 Legal status and nature of the Company

IDLC Finance Limited (The Company "IDLC") was incorporated in Bangladesh as a public limited company on May 23, 1985 under the Companies Act, 1913 in its earlier name of Industrial Development Leasing Company of Bangladesh Limited. The Company changed its name in August 2007. The registered office of the company is situated at Bay’s Galleria (1st Floor), 57 Gulshan Avenue, Gulshan 1, Dhaka. The Company is registered as a Financial Institution under the Financial Institutions Act, 1993, governed by Bangladesh Bank (the Central Bank of Bangladesh). The Company went for public issue of its shares in 1993. Its shares are listed in both the Stock Exchanges in Bangladesh.

1.2 Principal activities and nature of operation

When incorporated, the Company started with lease and term financing, as its core businesses. It expanded its activities into 'Short-Term Finance' (factoring of accounts receivable and work order financing) and 'Real Estate Finance' operations in 1997. It also started car loan and personal loan services to individuals in 2004 and 2007, respectively. Now, the company has evolved itself as multiproduct financial institution.

1.3 Subsidiary companies

1.3.1 IDLC Securities Limited (IDLC SL)

IDLC Securities Limited, a wholly owned subsidiary company (99.99%) of IDLC Finance Limited, was incorporated on April 19, 2006 as a private limited company under Companies Act, 1994. The Company had started its operation from September 2006. The main objective of the Company is to act as a member of stock exchanges to operate the Central Depository System (CDS) and to carry on the business of brokers, jobbers or dealers in stocks, shares, securities, commodities, commercial papers, bonds, obligations and debentures etc.

1.3.2 IDLC Investments Limited (IDLC IL)

As required by the Bangladesh Securities & Exchange Commission (BSEC), the Company formed a separate subsidiary (99.99%) on May 19, 2010 in the name and style of “IDLC Investments Limited” to transfer its merchant banking activities. As per Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996, the services of issue management, portfolio management, underwriting of shares and securities advisory services fall under the purview of merchant banking operation. The Company obtained license from the Bangladesh Securities and Exchange Commission (BSEC) on August 02, 2011 and commenced its business on August 16, 2011.

1.3.3 IDLC Asset Management Limited (IDLC AML)

IDLC Asset Management Limited (IDLC AML), another wholly owned subsidiary company (99.99%) of IDLC Finance Limited, was incorporated on November 19, 2015 as a private limited company under Companies Act, 1994.

The main objective of the Company is to carry out the business of asset management, primarily, through launching and managing mutual funds to cater diverse needs of investors. Beside institutional fund management IDLC AML also facilitates alternative investments in terms of private equity and venture capital.

2. Basis of preparation and significant accounting policies2.1 Statement of compliance

The consolidated financial statements and separate financial statements of the Company have been prepared on a going concern basis following accrual basis of accounting except for cash flow statement, in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh, except the circumstances where local regulations differ, and the Companies Act, 1994, the Financial Institutions Act, 1993, Securities and Exchange Rules, 1987 & the (Listing) Regulations, 2015 of Dhaka & Chittagong Stock Exchanges and other applicable laws and regulations.

The presentation of the financial statements has been made as per the requirements of DFIM Circular No: 11, dated December 23, 2009 issued by the Department of Financial Institutions and Markets (DFIM) of Bangladesh Bank. The activities and accounting heads mentioned in the prescribed form, which are not applicable for the financial institutions, have been kept blank in the financial statements.



The requirements of accounting standards as per IFRS that have been departed to comply with Bangladesh Bank requirements have been disclosed in detail in note-2.3 & Annexure-C.

However, this departure with IFRS has been made by following all of the relevant provisions of IAS-1 and the details disclosures are given in note-2.3 & Annexure-C by following the provision of Para 20 of IAS-1 (Presentation of Financial Statements).

2.2 Basis of measurement

This financial statements have been prepared based on International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) and no adjustment has been made for inflationary factors affecting the financial statements. The accounting policies, unless otherwise stated, have been consistently applied by the Company and are consistent with those of the previous year.

2.3 Disclosure of deviations from few requirements of IAS/IFRS due to mandatory compliance with Bangladesh Bank’s requirements

Bangladesh Bank (the local Central Bank) is the prime regulatory body for Financial Institutions in Bangladesh. Some requirements of Bangladesh Bank’s rules and regulations contradict with those of financial instruments and general provision standards of IAS and IFRS. As such the company has departed from those contradictory requirements of IAS/IFRS in order to comply with the rules and regulations of Bangladesh Bank, which are disclosed in Annexure-C along with financial impact where applicable.

2.4 Significant accounting policies

Same disclosed accounting policies and methods of computation have been followed in these Financial Statements as were applied in the preparation of the financial statements of IDLC Finance Limited & Group as at and for the year ended 31 December 2019.

2.5 Components of the financial statements

The financial statements comprise of (As per DFIM Circular No. 11, Dated 23 December 2009):

a. Consolidated and Separate Balance Sheet as at December 31, 2020;

b. Consolidated and Separate Profit and Loss Account for the year ended December 31, 2020;

c. Consolidated and Separate Statement of Cash Flows for the year ended December 31, 2020;

d. Consolidated and Separate Statement of Changes in Equity for the year ended December 31, 2020;

e. Liquidity Statement for the year ended December 31, 2020;

f. Notes to the Consolidated and Separate Financial Statements for the year ended December 31, 2020.

2.6 Directors' responsibility statement

The Board of Directors' takes the responsibility for the preparation and presentation of these financial statements.

2.7 Date of authorisation

The Board of directors has authorised this financial statements for public issue on 17 February 2021

2.8 Presentation and functional currency and level of precision

The financial statements are presented in Bangladesh Taka (BDT) currency, which is the Company's functional currency. All financial information presented in BDT has been rounded off to the nearest BDT.

2.9 Use of estimates and judgments

The preparation of financial statements in conformity with International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. It also requires disclosures of contingent assets and liabilities at the date of the financial statements.

The most critical estimates and judgments are applied to the following:

- Provision for impairment of loans, leases and investments

- Gratuity

- Useful life of depreciable assets

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

However, the estimates and underlying assumptions are reviewed on an ongoing basis and the revision is recognised in the period in which the estimates are revised. In accordance with the guidelines as prescribed by IAS 37: "Provisions, Contingent Liabilities and Contingent Assets", provisions are recognized in the following situations:



Provisions

Provisions are liabilities that are uncertain in timing or amount. Provisions are recongnized when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or the Group has a present obligation as a result of past events but is not recognized because it is not likely that an outflow of resources will be required to settle the obligation; or the amount cannot be reliably estimated. Contingent liabilities normally comprise legal claims under arbitration or court process in respect of which a liability is not likely to occur.

Contingent Assets

A contingent asset is possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent assets are never recognized, rather they are disclosed in the financial statements when they arise.

2.10 Basis of consolidation of operations of subsidiaries

The financial statements of the Company and its subsidiaries, as mentioned in note No. 1.3.1, 1.3.2 and 1.3.3 have been consolidated in accordance with International Financial Reporting Standard (IFRS) 10 "Consolidated Financial Statements". The consolidation of the financial statements have been made after eliminating all material inter company balances, income and expenses arising from inter company transactions.

The total profits of the Company and its subsidiaries are shown in the consolidated profit and loss account with the proportion of profit after taxation pertaining to non-controlling shareholders being deducted as 'Non-controlling Interest'.

All assets and liabilities of the Company and of its subsidiaries are shown in the consolidated balance sheet. The interest of non-controlling shareholders of the subsidiary are shown separately in the consolidated balance sheet under the heading 'Non-controlling Interest'.

2.11 Branch accounting

The Company has forty branches, with no overseas branch as on December 31, 2020. Accounts of the branches are maintained at the head office from which these accounts are drawn up.

2.12 Accounting for term finance & other finances

Books of accounts for term finance operation are maintained based on the accrual method of accounting. Outstanding loans, along with the accrued interest thereon, for short-term finance, and unrealised principal for long-term finance, real estate finance, car loans and other finances are accounted for as term finance assets of the Company. Interest earnings are recognised as operational revenue periodically.

2.13 Accounting policy for Leases (IFRS 16)

IDLC as a lessee

IDLC recognises a right of use asset and a lease liability from the beginning of 2019. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right of use asset is depreciated using the straight line methods from the commencement date (from the beginning of 2019) to the earlier of the end of the useful life of the right of use asset or the end of the lease term. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date (from the beginning of 2019), discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, IDLC’s incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in IDLC’s estimate of the amount expected to be payable under a residual value guarantee, or if IDLC changes its assessment of whether it will exercise purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right to use asset, or is recorded in profit or loss if the carrying amount of the right to use asset has been reduced to zero.

IDLC as a lessor

When IDLC acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, IDLC makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, IDLC considers certain indicators such as whether the lease is for the major part of the economic life of the asset. If an arrangement contains lease and non-lease components, IDLC applies IFRS 15 to allocate the consideration in the contract. IDLC recognises lease payments received under operating leases as income over the lease term.



2.14 Accounting for Margin Loan

Margin Loan to Portfolio investors is given at an agreed ratio (not more than the ratio prescribed by BSEC) between investor's deposit and loan amount to purchase securities against respective investor account. The new investor are to maintain the margin as per set rules and regulations. The margin is monitored on daily basis as it changes due to changes in market price of share. If the margin falls below the minimum requirement, the investors are required to deposit additional fund to maintain the margin as per rules otherwise the securities are sold to bring the margin to the required level.

2.15 Investment in securities

Investment in marketable ordinary shares has been shown at cost, on an aggregate portfolio basis. Investment in non-marketable shares has been valued at cost. Full provision for diminution in value of shares as on closing of the year on an aggregate portfolio basis is made in the financial statements as required by Bangladesh Bank DFIM circular No. 02 dated January 31, 2012. As per IFRS 9: "Financial Instruments", Financial Assets are classified as either: (i) Amortised cost, (ii) Fair value through profit or loss or (iii) Fair Value through other comprehensive income. In case of valuation of investment in government bonds (Note-6), we have followed amortised cost method, as it meets both of the following assessment criteria:

i) Business model assessment: The asset is held within a business model whose objective is to hold the financial asset in order to collect contractual cash flows; and

ii) Contractual cash flow assessment: The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding on a specified date.

2.16 Property and equipment

i) Recognition and measurement

Own assets

Items of own fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the assets to its working condition for its intended use as per International Accounting Standard (IAS) 16: ''Property, Plant and Equipment''.

ii) Subsequent expenditure on Fixed assets

Subsequent expenditure is capitalised only when it increases the future economic benefit from the assets and that cost can be measured reliably. All other expenditures are recognised as an expense as and when they are incurred.

iii) Depreciation

Depreciation is charged to amortise the cost of assets, over their estimated useful lives, using the straight-line method in accordance with IAS-16: "Property, Plant and Equipment". Full depreciation is charged on additions irrespective of date in the month in which the related assets are put into use and no depreciation is charged from the month of disposal. Asset category wise depreciation rates are as follows:

Particulars of Property, Plant & Equipment Rates (Yearly)

Furniture and fixtures 12.50%

Building 2.50%

Electrical equipment 20.00%

Curtain and carpets 33.33%

Office equipment 20.00%

Office decoration 20.00%

Telephone and telex 33.33%

Motor vehicles 25.00%

Computers 20.00%

Software (Office Operation) 33.33%

Software (Business Operation) 20.00%

Right-of-use Asset Lease term

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the profit and loss account.

Depreciation methods, useful lives and residual values, if any are reviewed at the balance sheet date.

2.17 Intangible assets and amortisation of intangible assets

Recognition & Measurement

Intangible assets comprise the value of computer software. Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.



Amortisation

Amortisation is calculated using the straight line method to write down the cost of intangible assets to their residual values over their estimated useful lives based on the management best estimates of 3 or 5 years.

Subsequent expenditure

Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits in the specifications to which it relates. All other expenditures are expensed as incurred.

2.18 Revenue recognition

Revenue is only recognised when it meets the following five steps model framework as per IFRS 15: "Revenue from Contracts with Customers"-

a) identify the contract (s) with a customers;b) identify the performance obligations in the contract;c) determine the transaction price;d) allocate the transaction price to the performance obligations in the contract;e) recognise revenue when (or as) the entity satisfies a performance obligation.

Interest income from loans and other sources is recognised on an accrual basis of accounting.

Lease income

Finance lease income is allocated over the lease term on a systematic and rational basis. This income allocation is based on a pattern reflecting a constant periodic return on net investment in the finance lease. The unearned lease income is recognised on installment date as revenue on an accrual basis over the terms of the lease. However, lease income is not recognised if capital or interest receivable is in arrears for more than three months.

Interest on real estate finance

Interest on real estate finance is recognised as revenue on an accrual basis and no interest on real estate finance is accounted for as revenue where any portion of capital or interest is in arrear for more than nine months.

Interest on term loans and short term finance

Interest on term loan and short term finance is recognised as revenue on an accrual basis and interest income on term loan is not recognised where any portion of interest is in arrear for more than three months.

Portfolio management fee

Portfolio management fees are recognised on the market value of the clients' portfolio on monthly basis and charged to client's balance on quarterly basis.

Issue management & Corporate advisory fee

Issue management and corporate advisory fees are recognised according to the stage of completion of services as agreed and defined in issue management and corporate advisory agreement between company and clients.

Brokerage commission

Brokerage commission is recognised as income when selling or buying order is signed and trade is executed.

Dividend income

Dividend is recognised as income when the right to receive income is established.

Profit or loss on sale of securities

Profit or loss arising from the sale of securities is accounted for only when the securities are sold/offloaded.

Fee based revenues

Fees on services rendered by the company are recognised as and when services are rendered.

Mutual fund management fees

As per the Securities and Exchange Commission (Mutual Fund) Rules, 2001, the Fund shall pay a management fee based on following criteria:

a. 2.50 percent per annum of the weekly average NAV up to BDT 5.00 crore;

b. 2.00 percent per annum for additional amount of the weekly average NAV up to BDT 25.00 crore over BDT 5.00 crore;

c. 1.50 percent per annum for additional amount of the weekly average NAV up to BDT 50.00 crore over BDT 25.00 crore; and

d. 1.00 percent per annum for additional amount of the weekly average NAV over BDT 50.00 crore, accrued and payable quarterly at the end of the period.



Mutual fund formation fee

As per the Securities and Exchange Commission (Mutual Fund) Rules, 2001, the Fund shall pay Mutual Fund Formation fee to the Asset Management Company as mentioned in the Published Prospectus of the Fund approved by Bangladesh Securities and Exchange Commission.

Mutual fund Pre-scheme formation fee

As per BSEC Directive vide ref no.: SEC/CMRRCD/2009 – 193/ 160 dated 28 May 2014, Asset Manager can accrue management fees from scheme of the Mutual Fund for the period starting from the registration date of the scheme to pre-trade period according to the Rule 65(2).

2.19 Interest suspense account

Lease income earned, interest on term finance (car loans, personal loans) overdue beyond three months period and interest on real estate finance overdue beyond nine months period and interest on short term finance overdue beyond permitted credit term plus ninety days period are not recognised as revenue and are credited to the interest suspense account.

2.20 Accounts receivable

Accounts receivable at the balance sheet date is stated at amounts which are considered realisable. Specific allowance is made for receivable considered to be doubtful for recovery.

2.21 Securitization

Securitization of various leases/loans result in sale of these assets to Special Purpose Vehicles ('SPVs'), which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the control of the contractual rights in the securitized assets are lost.

2.22 Borrowing cost

Borrowing costs are recognised as expense in the year in which they are incurred unless capitalisation is permitted under International Accounting Standard (IAS) 23: "Borrowing Costs".

2.23 Cash flow statements

Cash flow statements are prepared using the direct method as stipulated in International Accounting Standard (IAS) 7: "Cash Flow Statements", and in accordance with the instruction of Bangladesh Bank.

2.24 Conversion of foreign currency transactions

Foreign currency transactions are translated into BDT at rates prevailing at the respective dates of transactions, while foreign currency monetary assets at the end of the year are reported at the rates prevailing on the balance sheet date. Exchange gains or losses arising out of the said conversions are recognised as income or expense for the year after netting off.

2.25 Provision for doubtful accounts and future losses

Provision has been made at estimated rates on outstanding exposures, based on aging and continuous review of the receivables, as per the Bangladesh Bank Provisioning policy. A general provision has been made by the company to cover unforeseen losses on all leases and loans excluding those for which a specific provision has been kept. The provision is considered adequate to meet any probable future losses.

2.26 Write-off

Write-off describes a reduction in recognised value. It refers to the recognition of the reduced or zero value of an asset. Generally it refers to an investment for which a return on the investment is now impossible or unlikely. The item's potential return is thus cancelled and removed from ("written-off") the Company's balance sheet.

Recovery against debts written-off/provided for is credited to revenue. Income is recognized where amounts are either recovered and/or adjusted against securities/properties or advances there-against or are considered recoverable.

2.27 Employees' benefit obligation

2.27.1 Defined contribution plan

The Company operates a contributory provident fund scheme for its permanent employees. Provident fund is administered by a Board of Trustees and is funded by equal contributions both by the employees and the Company at a predetermined rate. The contributions are invested separately from the Company's asset.

2.27.2 Defined benefit plan

The Company also operates a funded gratuity scheme (which is a defined benefit scheme as specified in IAS 19). Gratuity fund is administered by a Board of Trustees and Company contributions are invested separately from company assets. Employees are entitled to gratuity benefit after completion of minimum years of service with the Company. The Company is contributing to the fund as prescribed by actuarial valuation report. The gratuity is calculated on the last basic pay and is payable at the rate of below table:



Duration of the services Amount entitled of receive

For services from 05 to below 10 years One month's basic pay for each year of service.

For services from 10 to below 15 years One & a half month's basic pay for each year of service.

For services from 15 years & above Two month's basic pay for each year of service

2.27.3 Other employees benefit obligation

The Company operates a group life insurance scheme for its permanent employees.

The Company also has real estate loan for its permanent employees. Employees are entitled to real estate loan after completion of minimum five years of services with the Company. In case of lateral entry, there are few exceptions also.

2.28 Taxation

Tax expense comprises of current and deferred tax.

2.28.1 Deferred tax

The Company accounts for deferred tax as per International Accounting Standard (IAS) 12: "Income Taxes". Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. It is measured at the tax rates that are expected to be applied to the temporary differences when they reverse based on the laws that have been enacted or substantively enacted by the date of reporting of the financial statements.

The Company provides disclosures based on the classes of assets and liabilities related to the temporary differences. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax liabilities are recognized for all taxable temporary differences and it is probable that temporary differences will not reverse in the foreseeable future. Both the Deferred tax assets and liabilities are reviewed at each reporting date considering the probability of benefit or detriment realizable. Deferred tax assets and liabilities are not offset and are presented separately as per Bangladesh Bank directive.

2.28.2 Current taxCurrent tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any, in accordance with provisions of Income Tax Ordinance, 1984. It is measured using tax rates enacted or substantively enacted at the reporting date. Applicable tax rate for the Company for the year 2020 will be declared by Finance Act 2021. For the purpose of these financial statements, management has assumed that the existing tax rates will be applicable for Income year 2020 as well, which are mentioned below:

Regular business tax rate Rates

IDLC FL- Publicly traded Financial institution 37.50%

IDLC SL- Private Limited company 32.50%

IDLC IL- Merchant Bank 37.50%

IDLC AML- Private Limited company 32.50%

Other business tax rate Rates

Dividend income 20.00%

Asset Management fee of Mutual funds 15.00%

Capital gain on sale of fixed assets 15.00%

Capital gain on sale of marketable securities 10.00%

The Company’s existing accounting policy for uncertain income tax treatments is consistent with the requirements of IFRIC 23 Uncertainty over Income Tax Treatments, which became effective on 1 January 2019.

2.29 Impairment of long-lived assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the book value of the assets may not be recovered. Accordingly, the Company estimates the recoverable amount of the assets. Impairment losses, if any, is recognised in the profit and loss account when the estimated recoverable amount of an asset is less than its carrying amount.

2.30 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank, term deposits and investment in call loan that are readily convertible to a known amount of cash (with less than three months maturity) and that are subject to an insignificant risk of change in value.



2.31 Bank loans

Bank loans are recorded at the proceeds received. Interest on bank loans is accounted for on accrual basis and charged to profit and loss account.

2.32 Earnings Per Share (EPS)

The Company calculates earnings per share in accordance with International Accounting Standard (IAS) 33: "Earnings Per Share" which has been shown in the face of the Profit and Loss Account and the computation is stated in note 36.

2.33 Related party disclosure

As per International Accounting Standard (IAS) 24: "Related Party Disclosures", parties are considered to be related if one of the party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. The Company carried out transactions in the ordinary course of business on an arm’s length basis at commercial rates with its related parties. Related party disclosures have been given in note 40.

2.34 Statutory reserves

As per clause no 6 of Financial Institutions Regulations, 1994, Financial Institution is required to transfer at least 20% of it's profit after tax and before appropriation of dividend in a particular year, if the financial institution's sum of Share Premium Account (if any) and Statutory Reserves is less than the paid up capital of that financial institution. Accordingly, 20% of current year's profit after tax has been transferred to Statutory Reserves Account.

2.35 Determination and presentation of operating segment

After incorporation, the company started with lease and loan as its core financing business. By times, it diversified its business into investment banking business, brokerage business and asset management business. The company has decided it's various operating segment considering nature of segmental business. Thus four operating segments of the Group are reported and presented. Profit and loss account of above operations and other operation have been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), and results of its operation has been combined, item by item, with the financial results of the Company.

Compliance with International Financial Reporting Standard (IFRS)

As on January 01, 2010, the Company determines and presents operating segments based on information that is internally provided to the Company's Management Committee (ManCom), which is the Company's Chief Operating Decision Maker (CODM). This is due to the adoption of the International Financial Reporting Standard (IFRS) 8 "Operating Segments". Since the adoption of this IFRS only affects presentation and disclosure aspects, there is no impact on the earnings per share.

An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with the Company's other components, whose operating results are regularly reviewed by the Company's ManCom to make decisions about resources allocated to the segments and assess its performance and for which discrete financial information is available.

For the separate financial statements, the Company has determined one reportable segments such as core financing business and for the consolidated financial statements, the subsidiaries of the Company have been determined to be a separate reportable segment in addition to the other segments. Thereafter, for the separate financial statements, the Company has one reportable segment which is core financing business and for the consolidated financial statements, the subsidiaries of the Company (IDLC Securities Limited, IDLC Investments Limited and IDLC Asset Management Limited) have been determined to be three separate reportable segments in addition to the core financing business.

Information about operating segment has been presented in note 34.

2.36 Dividend

Dividend is proposed, paid and recorded in line with all regulatory guidelines and on company policy.BSEC Directive no. BSEC/CMRRCD/2021-386/03 dated January 17, 2021 has been complied with and disclosures presented in Note 12.7.

2.36.1 Proposed dividend

Proposed dividend has not been recognised as a liability in the balance sheet in accordance with International Accounting Standard (IAS) 10: "Events After the Reporting Period".

2.37 Events after the reporting period

All material events occurring after the reporting date have been considered and where necessary, adjusted for or disclosed in note 45.



2.38 Minority interest in subsidiaries

A minority interest, which is also referred to as noncontrolling interest (NCI), is ownership of less than 50% of a company's equity by an investor or another company. For accounting purposes, minority interest is a fractional share of a company amounting to less than 50% of the voting shares. Minority interest shows up as a noncurrent liability on the balance sheet of companies with a majority interest in a company, representing the proportion of its subsidiaries owned by minority shareholders. Also, minority interest is reported on the consolidated income statement as a share of profit belonging to minority shareholders.

2.39 Liquidity statement

The liquidity statement has been prepared in accordance with remaining maturity grouping of Assets and Liabilities as of the close of the year as per following basis:

a. Balances with other banks and financial institutions are on the basis of their maturity term.

b. Investments are on the basis of their expected liquidation & residual maturity term.

c. Loans, advances and leases are on the basis of their repayment/maturity schedule.

d. Fixed assets are on the basis of their useful lives.

e. Other assets are on the basis of their adjustment terms.

f. Borrowings from other banks and financial institutions as per their maturity/repayment terms.

g. Deposits and other accounts are on the basis of their maturity term and behavioral past trends.

h. Other long term liabilities are on the basis of their maturity terms.

i. Other liabilities are on the basis of their settlement terms.

2.40 Status of compliance of International Accounting Standards and International Financial Reporting Standards

In addition to compliance with local regulatory requirements, in preparing the Consolidated Financial Statements and Separate Financial Statements, IDLC applied following IAS and IFRS:

Name of the IAS IAS No. Status

Presentation of Financial Statements 1 Applied *

Inventories 2 N/A

Statements of Cash Flow 7 Applied

Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied

Events after the Reporting Period 10 Applied

Income Taxes 12 Applied

Property, Plant and Equipment 16 Applied

Employee Benefits 19 Applied

Accounting for Government Grants and Disclosure of Government Assistance 20 N/A

The Effects of Changes in Foreign Exchange Rates 21 Applied

Borrowing Costs 23 Applied

Related Party Disclosures 24 Applied

Accounting and Reporting by Retirement Benefit Plans 26 N/A

Separate Financial Statements 27 Applied

Investment in Associates and Joint Ventures 28 N/A

Financial Reporting in Hyperinflationary Economics 29 N/A

Interests in Joint Ventures 31 N/A

Earnings per share 33 Applied

Interim Financial Reporting 34 Applied

Impairment of Assets 36 Applied

Provisions, Contingent Liabilities and Contingent Assets 37 Applied

Intangible Assets 38 Applied

Investment Property 40 N/A

Agriculture 41 N/A



Name of the IFRS IFRS No. Status

Share Based payment 2 N/A

Business combination 3 N/A

Insurance Contracts 4 N/A

Non-current assets held for sale and discontinued operation 5 N/A

Exploration for and Evaluation of Mineral Resources 6 N/A

Financial Instruments: Disclosures 7 Applied *

Operating Segments 8 Applied

Financial Instruments 9 Applied *

Consolidated Financial Statements 10 Applied

Joint Arrangement 11 N/A

Disclosure of Interest in Other Entities 12 N/A

Fair Value Measurement 13 Applied *

Revenue from Contracts with customers 15 Applied

Leases 16 Applied

N/A= Not Applicable

* As the regulatory requirements differ with the standards, relevant disclosures have been made in accordance with Bangladesh Bank's requirements (please see note 2.3 & Annexure B).

2.41 BASEL II & its implementation

To cope with the international best practices and to make the capital more risks sensitive as well as more shock resilient, guidelines on ‘Basel Accord for Financial Institutions (BAFI)’ were introduced on January 01, 2011 on test basis by the Bangladesh Bank. At the end of test run period, Basel Accord regime started and the guidelines namely "Prudential Guidelines on Capital Adequacy and Market Discipline for Financial Institutions (CAMD)" came fully into force from January 01, 2012 with its subsequent supplements/revisions. Instructions regarding Minimum Capital Requirement (MCR), Adequate Capital, and Disclosure requirement as stated in these guidelines have to be followed by all FIs for the purpose of statutory compliance. As per CAMD guidelines, Financial Institutions should maintain a Capital Adequacy Ratio (CAR) of minimum 10%. In line with CAMD guideline's requirement, IDLC has already formed BASEL Implementation Unit (BIU) to ensure timely implementation of BASEL II accord. Latest status of Capital Adequacy Ratio (CAR) has been shown in note - 13.1.

2.42 Financial risk management

IDLC always concentrates on delivering high value to its stakeholders through appropriate trade-off between risk and return. A well structured and proactive risk management system is in place within the Company to address risks relating to credit, market, liquidity, operations and money laundering and terrorist financing. In addition to the industry best practices for assessing, identifying and measuring risks, IDLC also considers guidelines for managing core risks of financial instructions issued by the Country's Central Bank, Bangladesh Bank, vide FID Circular No. 10 dated September 18, 2005 for management of risks and, more recently, DFIM Circular No. 03 dated January 24, 2016.

Credit Risk

To encounter and mitigate credit risk the company employed multilayer approval process, policy for maximum exposure limit of sector or groups, policy for customers' assets maximum exposure limit, mandatory search for credit report from Credit Information Bureau, looking into payment performance of customer before financing, annual review of clients, adequate insurance coverage for funded assets, vigorous monitoring and follow up by Special Assets Management Team, strong follow up of compliance of credit policies by Internal Control and Compliance Department (ICCD), taking collateral, seeking external legal opinion, maintaining neutrality in politics and following arm's length approach in related party transactions, regular review of market situation and industry exposure etc.

The Credit Evaluation Committee (CEC) regularly meets to review the market and credit risk related to lending and recommend and implement appropriate measures to counter associated risks. The CEC critically reviews projects from risk point of view. An independent Credit Risk Management Department is in place, at IDLC, to scrutinize projects from a risk-weighted point of view and assist the management in creating a high quality credit portfolio and maximize returns from risk assets.

Market Risk

The Asset Liability Management Committee (ALCO) of the Company regularly meets to assess the changes in interest rate, market conditions, carry out asset liability maturity gap analysis, re-pricing of products and thereby takes effective measures to monitor and control interest rate risk. IDLC has also strong access to money market and credit lines at a competitive rate through good reputation, strong earnings, financial strength, good governance and credit rating.



Liquidity Risk

Liquidity requirements are managed on a day-to-day basis by the Treasury Division which is responsible for ensuring that sufficient funds are available to meet short term obligations, even in a crisis scenario, and for maintaining a diversity of funding sources. Treasury Division maintains liquidity based on historical requirements, anticipated funding requirements from operation, current liquidity position, collections from financing and available sources of funds. An optimal match of risk and return is maintained while fulfilling liquidity requirements.

Operational Risk

IDLC has established an Operational Risk Management (ORM) department to address operational risk and to frame and implement policies to encounter such risks. Appropriate Operational Risk Management Framework (ORMF) are in place, at IDLC, to address operational risks. The ORM department assesses operational risk across the Company as a whole and ensures that an appropriate framework exists to identify, assess, report and manage operational risk. The function of the ORM department is to exercise constant vigilance against erosion of shareholders' value by identifying, assessing, reporting and managing operational risk resulting from inadequate or failed internal processes, people and systems or from external events.

Money Laundering and Terrorist Financing Risk

In IDLC, money laundering and terrorist financing risk takes two broad dimensions: a) Business risk which is the risk that IDLC may be used for money laundering or for the financing of terrorism and b) Regulatory risk which is the risk that IDLC fails to meet regulatory obligations under the Money Laundering Prevention

Act 2012 (subsequently amended in 2015) and the Anti-Terrorism Act 2009 (subsequently amended in 2012 and 2013).

To mitigate the risks, IDLC, while adhering to various guidelines and circulars issued by the Bangladesh Financial Intelligence Unit (BFIU), has in place a strict compliance program consisting of the following components:

a) Internal policies, procedures and controls, which are continually updated as and when required, to identify and report instances of money laundering and terrorism financing;

b) A dedicated structure and sub-structure within the organisation, headed by a Central Compliance Unit (CCU), for proactively managing AML and CFT compliance;

c) Appointment of an AML/CFT Compliance Officer, known as the Chief Anti Money Laundering Officer (CAMLCO), to lead AML/CFT efforts throughout the company;

d) Independent audit functions, including internal and external audit, to test the programs;e) Ongoing employee training programs.

Additional risks required to be addressed under regulatory requirements

DFIM Circular No.03 of 2016, introduced the Integrated Risk Management Guidelines for Financial Institutions ("the guidelines"). These guidelines supplement, and do not replace, existing risk management guidelines.

The Integrated Risk Management Guidelines for Financial Institutions specify a number of additional risks that financial institutions are now required to manage in a more structured manner. Key among these are:

Strategic Risk

Strategic risk has been defined as the risk of possible losses that might arise from adverse business decisions, substandard execution and failure to respond properly to changes in the business environment. The guidelines set out the respective roles of the board of the directors, senior management and business units in managing strategic risks, identify the steps to be followed in the strategic risk management process and also suggest measures for strategic risk control.

IDLC has been managing strategic risks ever since its inception. This is evident from the constantly evolving business model of the company over the years. The company has a clear strategic vision as to what it wants to be and a mission statement that states what it will do to achieve its vision. Strategic issues are discussed at a variety of forums including meetings of the Management Committee and of the IDLC Board. Over the past few years, a separate Strategic Planning department has been set up to assist senior management in this regard. The culmination of all these efforts are reflected in annual Strategy and Budget sessions, where the company sets outs its plans for the next year. With the introduction of the new guidelines, more changes will be made to the strategic risk management process as and when required.

Compliance Risk

Compliance risk is defined as the current or prospective risk of legal sanction and/or material financial loss that an organisation may suffer as a result of its failure to comply with laws, its own regulations, code of conduct, and standards of best practice as well as from the possibility of incorrect interpretation of laws or regulations. The guidelines set out the respective roles of the board, senior management and compliance function units in managing compliance risks and also require formulation of a written compliance risk management policy.



Historically, IDLC has always fostered a compliance oriented culture. This has been reinforced in a variety of ways, ranging from formal requirements to sign declarations of compliance with the IDLC code of conduct (which requires compliance with the law & regulations) to repeated communications from senior management stressing the need to do business in a compliant manner. In general, compliance risk management is embedded in the day to day business processes and practices of the company. Concerned departments are kept informed of latest legal and regulatory requirements by the ICC and Corporate Affairs departments. A consideration of compliance (or any potential non-compliance) with laws and regulations is a standard part of the company's regular decision making processes. Wherever deemed necessary, appropriate legal advice is sought from qualified internal and/or external legal counsel. In addition, compliance with laws and regulations has been introduced as a Key Control Standard (KCS) under the Operational Risk Management self-assessment toolkit. Unit operational risk managers are required to actively consider relevant legal and regulatory compliance requirements using the toolkit.

Reputation Risk

Reputation risk may be defined as the risk of loss arising from damage to an organization's reputation. The guidelines set out the respective roles of the Board and senior management in managing reputation risk and also require financial institutions to implement a sound and comprehensive risk management process to identify, monitor, control and report all reputational risks.

IDLC has already established a set of non-financial reputational risk indicators and put in place a process for monitoring these and any other matters that might give rise to potential reputational risk issues. Till date, no material reputational risk issue involving the company has been identified.

Environmental & Social RiskAs the best financial brand in promoting sustainable business practices, IDLC have adopted Environmental & Social Risk Management System (ESMS) as one of its integral parts of Credit Risk Assessment to compute environmental & social risks from its financial footprints. IDLC is one of the front runners to practice ESMS within its framework, a global standard to minimize environmental & social risks from the organizational activities. The ESMS system is based on the Environmental & Social Risk Management Guideline by Bangladesh Bank, the Environment Conservation Rules 1997, IFC Performance Standards, and ADB Safeguard Policy for financing. With the co-operation of FMO (Netherlands Development Finance Company), IDLC have the most efficient ESMS system of the market, blending the local & international standards for formulating E&S risks before financing any proposal. Also with the help of an exclusion list, IDLC is contributing to protect the Mother Nature by prohibiting any illegal/high E&S risk associated project financing. In addition to this, IDLC also adopted the 10 UNGC (United Nations Global Compact) principles within its organizational framework as the only member of UNEP FI (United Nations Environment Programme Finance Initiative) from Bangladesh. IDLC is also one of the founding signatories to the Principles for Responsible Banking (6 principles) and the Collective Commitment to Climate Action, Global initiatives introduced by UNEP FI, and signed the pledge of Tobacco Free Portfolios as well. Involvement with these initiatives guides IDLC to align its ESMS practices considering Global standards and adopt the best practices through peer learning. A dedicated E&S team is working collaboratively to ensure Environmental & Social Risk Management (ESRM) effectively across IDLC, and capacity building of business units as well as credit risk management officials to seize the opportunities of evolving economy and society towards sustainability. IDLC envisions in 21st century to create value for both society and stakeholders, and remain trustworthy as always amongst investors, customers, employees and society.

2.43 Custodial Service

IDLC Finance Limited is a registered Security Custodian vide registration license no SC-06/2007 dated May 24, 2007 issued by Bangladesh Securities and Exchange Commission. To facilitate this service IDLC Finance Limited has also obtained Custody Depository participant License vide registration license no. BSEC/Registration/ CDBL-DP-414, dated December 17, 2014 issued by Bangladesh Securities and Exchange Commission. The major responsibilities of the Security Custodian are as follows:

Custody of client’s securities;

Collection, book keeping and communication of gain, income, profit, stake on behalf of clients; Collection, communication, dissemination and book keeping of any declaration, published or publicly available

information, statement etc. of securities issuer; Administer client’s security and account.

IDLC Finance Limited as a Security Custodian confirms that proper internal audit and evaluation process are in place to ensure the following:

Secure and appropriate custodial service;

No unwarranted change in the assets, records, agreements etc. occur;

Each client receives his/her due dividends, bonus share, right share, interest, principal etc. in a timely manner;

Prevent loss, theft, damage due to natural calamity.

In 2020, IDLC Finance Limited has entered into security custodian agreement with Axiata Investments (Labuan) Limited and Bharti International (Singapore) Pte. Limited to hold a total of 4,714,140,001 shares of Robi Axiata Limited.

Since 2017, IDLC is providing security custodian service for 8,968,648 ordinary shares of Aamra Networks Limited held by Augere Holdings (Netherlands) B.V. In 2017, another agreement was entered with SEAF Bangladesh Ventures LLC for providing custodian service for 1,285,832 ordinary shares of ADN Telecom Limited.

IDLC is also providing security custodian services to RAK Ceramics PSC, UAE through an agreement entered in 2014. As on December 31, 2020, IDLC Finance Limited is the custodian of 291,586,597 ordinary shares of RAK Ceramic (Bangladesh) Limited held by RAK Ceramics, PSC, UAE and 7 individual sponsor shareholders.



IDLC Finance Limited IDLC Group 31.12.2020

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BDT3 Cash

3.1 Cash in hand (including foreign currencies)In local currency 340,000 340,000 430,000 440,000 In foreign currency - - - -

340,000 340,000 430,000 440,000 3.2 Balance with Bangladesh Bank and its agent

(including foreign currencies)In local currency 1,520,439,941 2,176,870,971 1,520,439,941 2,176,870,971 In foreign currency - - - -

1,520,439,941 2,176,870,971 1,520,439,941 2,176,870,971 1,520,779,941 2,177,210,971 1,520,869,941 2,177,310,971

3.3 Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR)

Cash Reserve Requirement and Statutory Liquidity Reserve have been calculated and maintained in accordance with Financial Institutions Act, 1993 & Financial Institutions Regulations, 1994, FID Circular No. 06, dated November 06, 2003, FID Circular No. 02 dated November 10, 2004 and DFIM Circular Letter No. 01, dated January 12, 2017 and DFIM Circular No. 03, dated 21 June 2020.Cash Reserve Requirement (CRR) has been calculated at the rate of 1.5% on Total Term Deposits which is preserved in current account maintained with Bangladesh Bank. 'Total Term Deposit' means Term or Fixed Deposit, Security Deposit against Lease/Loan and other Term Deposits, received from individuals and institutions (except Banks & Financial Institutions)Statutory Liquidity Reserve (SLR) has been calculated at the rate of 5.0% on total liabilities, including CRR of 1.5% on Total Term Deposit. SLR is maintained in liquid assets in the form of cash in hand (notes & coin in BDT), balance with Bangladesh Bank and other Banks and Financial Institutions, unencumbered treasury bill, bond and any other assets approved by Government gazette or by Bangladesh Bank.

a) Cash Reserve RequirementRequired reserve 1,056,418,090 1,612,759,969 1,056,418,090 1,612,759,969 Actual reserve maintained 1,132,223,690 1,632,844,673 1,132,223,690 1,632,844,673 Surplus/ (deficit) 75,805,600 20,084,704 75,805,600 20,084,704

b) Statutory Liquidity ReservesRequired reserve (including CRR) 4,797,695,226 4,631,075,947 4,797,695,226 4,631,075,947 Actual reserve maintained (including CRR) (note 3.3.1) 5,054,352,867 4,670,957,960 5,054,352,867 4,670,957,960 Surplus/ (deficit) 256,657,641 39,882,013 256,657,641 39,882,013

3.3.1 Actual reserve maintained (including CRR)The City Bank Limited 1,014,525,375 - 1,014,525,375 - Standard Chartered Bank - 166,726,092 - 166,726,092 Citibank N.A. - 34,591,834 - 34,591,834 Dhaka Bank Limited 2,531,998,505 1,000,000,000 2,531,998,505 1,000,000,000 Investment in Government Securities - 956,445,050 - 956,445,050 Bangladesh Bank 1,007,828,987 1,613,194,984 1,007,828,987 1,613,194,984 One Bank Limited - 900,000,000 - 900,000,000 Standard Bank Limited 500,000,000 - 500,000,000 -

5,054,352,867 4,670,957,960 5,054,352,867 4,670,957,960

4 Balance with other banks and financial institutions in Bangladesh

4(a) Inside Bangladesh:

Current deposits in local currencyWoori Bank limited 96,449 137,629 96,449 137,629 Bank Al- Falah Limited 16,300 9,070 16,300 9,070 One Bank Limited - - 16,793,693 66,239,237 Jamuna Bank Limited 5,630 6,320 42,763 6,320 The City Bank Limited 41,064,888 32,181,853 41,064,888 32,181,853 National Bank Limited 1,711,786 527,247 1,711,786 527,247 Islami Bank Bangladesh Limited 3,381,921 - 3,381,921 -



Bank Asia Limited 1,174,418 29,044,981 1,174,418 29,044,981 State Bank of India 43,894 44,584 43,894 44,584 Commercial Bank of Ceylon PLC 2,555,130 3,924,804 2,754,309 4,587,046 NCC Bank Limited 8,880,270 5,069,668 13,563,762 66,785,929 Citibank N.A. 17,471,213 14,047,630 17,471,213 14,047,630 Standard Chartered Bank (1,504,507,466) (1,087,934,127) (1,338,828,583) (1,039,898,129)Mutual Trust Bank Limited 25,737,247 2,742,716 25,737,247 2,742,716 Exim Bank Limited 2,373,404 2,710,698 2,373,404 2,710,698 Dutch Bangla Bank Limited 108,197,874 47,108,789 108,197,874 47,108,789 BRAC Bank Limited 6,484,920 627,069 7,914,977 1,295,529 Dhaka Bank Limited 5,445,283 4,794,329 5,445,283 4,794,329 United Commercial Bank Limited 30,293,368 8,557,226 30,293,368 8,557,226 NRB Bank Limited - - 196,437 193,477 Mercantile Bank Limited 4,015,891 1,938,830 4,015,891 1,938,830 bKash Limited 1,344,462 150 1,344,462 150 IDLC Investments Limited 253,309 2,484,482 - -

(1,243,959,809) (931,976,052) (1,055,194,244) (756,944,859)

Short-term deposit accountsPrime Bank Limited 586,664,610 1,312,285 586,664,610 1,312,285 Dutch Bangla Bank Limited - - 3,220,039 3,847,669 The City Bank Limited 884,448,463 1,039,083,037 884,448,463 1,039,083,037 BRAC Bank Limited - - 15,522,418 3,481,117 Southeast Bank Limited 4,905,430 9,841,683 4,905,430 9,841,683 Citibank N.A. 24,109,566 62,333,109 24,109,566 62,333,109 Standard Chartered Bank 917,362,042 203,412,145 918,065,945 203,673,837 Commercial Bank of Ceylon PLC 1,294,782 3,080,428 2,504,926 5,682,661 One Bank Limited 1,545,666,505 2,661,302,587 1,563,602,432 2,756,585,977 NCC Bank Limited - - 151,485,153 32,417,464 Exim Bank Limited 4,724,066,025 2,045,242,496 5,888,993,301 2,316,336,877 NRB Bank Limited 22 22 23 23 Dhaka Bank Limited 2,066,036,461 - 2,066,036,461 -

10,754,553,906 6,025,607,792 12,109,558,767 6,434,595,739

Fixed DepositsBRAC Bank Limited 1,500,000,000 - 1,500,000,000 - Meghna Bank Limited 750,000,000 750,000,000 750,000,000 750,000,000 NRB Commercial Bank Limited 70,000,000 - 70,000,000 - South Bangla Agriculture & Commerce Bank Limited 180,000,000 70,000,000 180,000,000 70,000,000 ONE Bank Limited 1,000,000,000 900,000,000 1,000,000,000 900,000,000 Southeast Bank Limited - 250,000,000 - 250,000,000 Jamuna Bank Limited 100,000,000 1,000,000,000 100,000,000 1,000,000,000 Dhaka Bank Limited 2,500,000,000 2,500,000,000 2,500,000,000 2,500,000,000 Standard Bank Limited 1,200,000,000 780,000,000 1,200,000,000 780,000,000 Export Import Bank of Bangladesh Limited 1,500,000,000 500,000,000 2,103,071,250 650,000,000 IPDC Finance Limited - - - 10,519,195 Trust Bank Limited - - 2,500,000 2,500,000 Standard Chartered Bank - - 15,000,000 32,000,000 Modhumoti Bank Limited - 300,000,000 - 300,000,000

8,800,000,000 7,050,000,000 9,420,571,250 7,245,019,195 18,310,594,097 12,143,631,740 20,474,935,773 12,922,670,075

4(b) Outside Bangladesh - - - - Total balance 18,310,594,097 12,143,631,740 20,474,935,773 12,922,670,075


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4.1 Maturity grouping of balance with other banks and financial institutions:

Payable on demand (1,243,959,809) (931,976,052) 299,810,617 (347,956,912)Up to 1 month 16,054,553,906 8,375,607,792 16,054,553,906 8,536,126,987 Over 1 month but not more than 3 months 3,500,000,000 4,400,000,000 4,112,571,250 4,407,000,000 Over 3 months but not more than 6 months - 300,000,000 - 300,000,000 Over 6 months but not more than 1 year - - 8,000,000 27,500,000 Over 1 year but not more than 5 years - - - - Over 5 years - - - -

18,310,594,097 12,143,631,740 20,474,935,773 12,922,670,075

5 Money at call and short notice - - - - - - - -

6 Investments

Government securitiesTreasury bill - - - - National Investment bonds - - - - Bangladesh Bank bill - - - - Government notes/bonds 3,017,589,671 956,582,294 3,044,775,043 1,380,723,983 Prize bonds - - - - Others - - - -

3,017,589,671 956,582,294 3,044,775,043 1,380,723,983

Other investmentsInvestment in non marketable ordinary shares (Note 6.1) 24,733,600 24,733,600 195,073,552 195,073,552 Investment in preference shares (Note 6.2) 111,958,000 83,992,500 111,958,000 83,992,500 Investment in debenture and bonds (Note 6.3) 180,000,000 300,000,000 429,761,646 603,001,618 Investment in venture capital (Note 6.4) 50,000,000 50,000,000 59,000,000 59,000,000 Investment in marketable securities (Note 6.5) 1,639,549,734 1,092,578,686 4,594,635,295 4,350,146,438 Investment in open end mutual fund (Note 6.6) 213,330,132 213,330,132 223,330,132 263,330,132 Other investments - - - - Gold etc. - - - -

2,219,571,466 1,764,634,918 5,613,758,625 5,554,544,240 5,237,161,137 2,721,217,212 8,658,533,668 6,935,268,223

6.1 Investment in non marketable ordinary shares

No. of SharesCredit Rating Agency of Bangladesh Limited 17,198 1,719,800 1,719,800 1,719,800 1,719,800

*The Bangladesh Rating Agency Limited (BDRAL) 61,442 6,144,200 6,144,200 6,144,200 6,144,200 Jayson Pharmaceuticals Limited - - - 159,999,952 159,999,952 Energypac Power Generation Limited - 16,869,600 16,869,600 27,209,600 27,209,600

24,733,600 24,733,600 195,073,552 195,073,552

* Previously the name was Dan & Bradstreet Rating Agency Bangladesh Ltd.6.2 Investment in preference shares

Chaldal Limited 111,958,000 83,992,500 111,958,000 83,992,500 111,958,000 83,992,500 111,958,000 83,992,500


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6.3 Investment in bonds

Mercantile Bank Limited 60,000,000 120,000,000 60,000,000 120,000,000 United Commercial Bank Limited 120,000,000 180,000,000 120,000,000 180,000,000 Paramount Textile Limited - - 80,027,899 119,647,504 Tarasima Apparels Limited - - 64,733,747 82,085,418 Impress-Newtex Composite Textile Limited - - 105,000,000 101,268,696 Total 180,000,000 300,000,000 429,761,646 603,001,618

6.4 Investment in venture capitalIDLC Venture Capital Fund I 50,000,000 50,000,000 59,000,000 59,000,000 Total 50,000,000 50,000,000 59,000,000 59,000,000 IDLC Finance Limited (IDLC FL) invested BDT 50.00 million in IDLC Venture Capital Fund I, an alternative investment fund. The objective of the fund is to provide superior risk adjusted returns over a medium to long term by investing in high growth companies, with good management and corporate governance through Equity and Equity Linked Instruments. IDLC Asset Management Limited (IDLC AML) also invested BDT 9.00 million in this fund.

6.5 Investment in marketable securities

Investment in marketable securities (Note 6.5.1) 1,639,549,734 1,092,578,686 4,569,065,679 4,316,843,758 Investment in DPM PLS Scheme - - 25,569,616 33,302,680

1,639,549,734 1,092,578,686 4,594,635,295 4,350,146,438

6.5.1 Investment in marketable securities

Details of marketable securities are given below:

IDLC Finance Limited IDLC Group

Business Segments Cost price BDT

Market price at the end of

the year BDT

Cost price BDT

Market price at the end of

the year BDT

Mutual Funds 195,847,280 217,801,811 220,103,843 242,172,946 Banks - - 349,116,513 252,458,046 Pharmaceuticals & Chemicals 481,169,831 726,526,205 1,355,657,748 1,608,853,116 Fuel & Power - - 163,693,135 150,369,535 Financial Institutions 9,999,990 9,999,990 9,999,990 9,999,990 Telecom 403,701,898 459,589,978 797,400,194 861,372,089 Food & Allied 398,831,317 468,515,462 654,084,303 741,989,203 Cement 149,854,475 150,809,000 563,679,348 494,807,621 Engineering & Others 144,943 644,608 455,330,605 468,217,993

1,639,549,734 2,033,887,054 4,569,065,679 4,830,240,539

All investments in marketable securities are valued on an aggregate portfolio basis, at cost value, at the balance sheet date. Market price for securities not listed as on reporting date, has been shown at cost for calculation purpose. As on December 31, 2020 there was BDT 261.17 million unrealised gain on consolidated investment in marketable securities and BDT 394.34 million unrealised gain on investment by IDLC Finance Limited in marketable securities.


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IDLC Balanced Fund 107,725,140 107,725,140 107,725,140 107,725,140 IDLC Growth Fund 105,604,992 105,604,992 105,604,992 105,604,992 IDLC Asset Management Shariah Fund - - 10,000,000 50,000,000

213,330,132 213,330,132 223,330,132 263,330,132

IDLC Finance Limited (IDLC FL) invested BDT 213.33 million as the sponsor in open-ended mutual fund (IDLC Balanced Fund & IDLC Growth Fund). IDLC Asset Management Limited (IDLC AML) is the fund manager of this mutual fund. The objective of the fund is to provide attractive risk adjusted returns to the unit holders by investing the proceeds in the Capital Market and Money Market. IDLC Asset Management Limited (IDLC AML) has, as of 31 December 2020, investment of BDT 10.00 million as the sponsor in IDLC Asset Management Shariah Fund, an open-ended mutual fund. The objective of the fund is to generate profit by investing in a portfolio of Shariah compliant securities, vetted by the Shariah Advisory Board. The fund intends to deliver the profit among the investors in the form of dividend as well as capital appreciation.


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6.7 Maturity grouping of investments

On demand - - - - Up to 1 month 163,954,973 110,944,829 3,116,532,535 2,185,171,088 Over 1 month but not more than 3 months 1,475,594,761 998,503,457 1,605,217,675 2,206,467,867 Over 3 months but not more than 6 months 60,000,000 60,000,000 72,024,491 173,293,187 Over 6 months but not more than 1 year 60,000,000 60,000,000 155,116,564 155,116,564 Over 1 year but not more than 5 years 60,000,000 180,000,000 254,845,628 369,308,928 Over 5 years 3,417,611,403 1,311,768,926 3,454,796,775 1,845,910,589

5,237,161,137 2,721,217,212 8,658,533,668 6,935,268,223

7 Loans, advances and leases

Inside Bangladesh:

Lease receivable (Note 7.1) 3,037,438,592 3,496,386,070 3,037,438,592 3,496,386,070 Long-term finance (Note 7.2) 56,684,178,337 55,552,794,111 56,684,178,337 55,552,794,111 Real estate finance (Note 7.3) 26,834,359,015 28,162,643,069 26,834,359,015 28,162,643,069 Car loans (Note 7.4) 1,150,423,436 1,250,714,504 1,150,423,436 1,250,714,504 Personal loan (Note 7.5) 114,226,333 144,951,757 114,226,333 144,951,757 Short term finance (Note 7.6) 890,991,693 734,718,349 890,991,693 734,718,349 Loan to subsidiaries (Note 7.7) - - - - Loan against deposit (LAD) 439,202,497 710,359,870 439,202,497 710,359,870 Margin loan to portfolio investors (Note 7.8) - - 1,220,872,200 897,529,429 Interest receivable (Note-7.9) 2,701,924,058 1,395,880,173 2,701,924,058 1,395,880,173

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331 Outside Bangladesh - - - -

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331

7.1 Lease receivable

Balance at January 1 3,496,386,070 4,276,868,347 3,496,386,070 4,276,868,347 Add: Addition during the year 704,709,483 795,923,403 704,709,483 795,923,403

4,201,095,553 5,072,791,750 4,201,095,553 5,072,791,750 Less: Realisation during the year 1,163,656,961 1,576,405,680 1,163,656,961 1,576,405,680 Balance at December 31 3,037,438,592 3,496,386,070 3,037,438,592 3,496,386,070

7.1a Lease receivable

Gross lease receivable 3,577,850,154 4,182,764,253 3,577,850,154 4,182,764,253 Less: Unearned lease income 540,411,562 686,378,183 540,411,562 686,378,183 Lease receivable 3,037,438,592 3,496,386,070 3,037,438,592 3,496,386,070

7.1.1 Aging analysis of lease receivable31.12.2020 31.12.2019

BDT % of total BDT % of total Up to one year 1,416,335,960 46.63 1,579,484,148 45.17 Above one year to three years 1,313,134,300 43.23 1,527,248,564 43.68 Above three years to five years 307,653,104 10.13 377,088,031 10.79 More than five years 315,228 0.01 12,565,327 0.36

3,037,438,592 100.00 3,496,386,070 100.00



7.2 Long-term finance

Balance at January 1 55,552,794,111 48,640,216,228 55,552,794,111 48,640,216,228 Add: Disbursement during the year 29,090,638,901 33,137,032,052 29,090,638,901 33,137,032,052

84,643,433,011 81,777,248,280 84,643,433,011 81,777,248,280 Less: Realisation during the year 27,959,254,675 26,224,454,169 27,959,254,675 26,224,454,169 Balance at December 31 56,684,178,337 55,552,794,111 56,684,178,337 55,552,794,111

7.3 Real estate finance

This represents loans to individuals, employees under the Company's real estate loan scheme and corporate bodies for purchase and construction of apartments and homes in urban areas for periods ranging from 5 to 20 years.

Balance at January 1 28,162,643,069 25,131,391,869 28,162,643,069 25,131,391,869 Add : Disbursement during the year 3,793,184,855 7,691,630,446 3,793,184,855 7,691,630,446

31,955,827,924 32,823,022,315 31,955,827,924 32,823,022,315 Less : Realisation during the year 5,121,468,909 4,660,379,246 5,121,468,909 4,660,379,246 Balance at December 31 26,834,359,015 28,162,643,069 26,834,359,015 28,162,643,069

7.3.1 Aging analysis of real estate finance

31.12.2020 31.12.2019BDT % of total BDT % of total

Up to one year 2,835,280,356 10.57 2,395,583,732 8.51 Above one year to three years 4,984,504,465 18.58 4,645,306,910 16.49 Above three years to five years 4,804,496,797 17.90 4,552,559,012 16.17 More than five years 14,210,077,397 52.95 16,569,193,415 58.83

26,834,359,015 100.00 28,162,643,069 100.00


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Balance at January 1 1,250,714,504 1,409,802,577 1,250,714,504 1,409,802,577 Add : Disbursement during the year 434,234,609 474,684,476 434,234,609 474,684,476

1,684,949,113 1,884,487,053 1,684,949,113 1,884,487,053 Less : Realisation during the year 534,525,677 633,772,549 534,525,677 633,772,549 Balance at December 31 1,150,423,436 1,250,714,504 1,150,423,436 1,250,714,504

7.5 Personal loan

Balance at January 1 144,951,757 147,936,414 144,951,757 147,936,414 Add : Disbursement during the year 36,180,669 60,440,509 36,180,669 60,440,509

181,132,426 208,376,923 181,132,426 208,376,923 Less : Realisation during the year 66,906,093 63,425,166 66,906,093 63,425,166 Balance at December 31 114,226,333 144,951,757 114,226,333 144,951,757

7.6 Short term finance

Factoring of account receivable 890,991,693 734,718,349 890,991,693 734,718,349

7.7 Loan to Subsidiaries

Balance at January 1 - - - - Add : Disbursement during the year 658,100,000 1,527,300,000 - -

658,100,000 1,527,300,000 - - Less : Realisation during the year 658,100,000 1,527,300,000 - - Balance at December 31 - - - -


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7.7.1 Loan to IDLC Investments Limited

Balance at January 1 - - - - Add : Disbursement during the year 413,100,000 522,300,000 - -

413,100,000 522,300,000 - - Less : Realisation during the year 413,100,000 522,300,000 - - Balance at December 31 - - - -

7.7.2 Loan to IDLC Securities Limited

Balance at January 1 - - - - Add : Disbursement during the year 245,000,000 1,005,000,000 - -

245,000,000 1,005,000,000 - - Less : Realisation during the year 245,000,000 1,005,000,000 - - Balance at December 31 - - - -

7.8 Margin loan to portfolio investors

Balance at January 1 - - 897,529,429 1,524,672,544 Add : Disbursement during the year - - 1,916,019,194 1,627,124,400

- - 2,813,548,623 3,151,796,944 Less : Realisation during the year - - 1,592,676,423 2,254,267,515 Balance at December 31 - - 1,220,872,200 897,529,429

Margin loan to portfolio investors are provided by the subsidiaries of the Company as part of their normal business activities and the Group considers this as having similar characteristics of retail/personal lending. Based on detailed review, the Group noted that shortfall, if any on individual client's portfolio and margin lending exposure are temporary in nature and any potential shortfall is expected to be recouped in near future. Moreover, the Group is also continuing its recovery efforts by requesting those clients to bring in additional fund to cover shortfall. Nevertheless, the Group is closely monitoring this matter and if it becomes obvious that additional provision will be required, then it shall be provided for in due course.

7.9 Interest Receivables

Lease receivable 98,955,445 92,247,707 98,955,445 92,247,707 Long-term finance 2,043,830,208 848,726,785 2,043,830,208 848,726,785 Real estate finance 512,637,451 385,815,354 512,637,451 385,815,354 Car loan 12,606,092 10,284,761 12,606,092 10,284,761 Personal loan 1,661,855 1,690,144 1,661,855 1,690,144 Loan against deposit (LAD) 23,896,801 45,354,825 23,896,801 45,354,825 Short term finance 8,336,206 11,760,597 8,336,206 11,760,597

2,701,924,058 1,395,880,173 2,701,924,058 1,395,880,173

7.10 Net loans, advances and leases

Gross performing loans, advances and leases (Note-7) 91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331 Less:Interest suspense (Note-12.5) 383,179,850 508,876,594 383,179,850 508,876,594 Provision for loans and advances/investments (Note-12.6 (i)) 1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167

1,954,965,515 2,170,320,041 2,133,482,934 2,250,745,761 89,897,778,445 89,278,127,861 90,940,133,226 90,095,231,570

7.11 Residual maturity grouping of loans, advances and leases

Repayable on demand 10,173,564,221 7,414,265,919 10,173,564,221 7,414,265,919 Over 1 month but not more than 3 months 6,341,954,981 6,531,086,051 6,341,954,981 6,531,086,051 Over 3 months but not more than 1 year 24,680,334,263 20,913,705,598 25,901,206,463 21,811,235,027 Over 1 year but not more than 5 years 34,551,847,366 37,664,426,484 34,551,847,366 37,664,426,484 Over 5 years 16,105,043,129 18,924,963,850 16,105,043,129 18,924,963,850

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331


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7.12 Loans, advances and leases on the basis of significant concentration

a. Loans, advances and lease to the institutions in which Directors have interest - 758,861 - 758,861

b. Loans, advances and lease to Chief Executive and other senior executives 35,424,532 38,180,415 35,424,532 38,180,415

c. Loans, advances and lease to customer groups:i) Real estate finance 26,686,347,988 27,875,232,760 26,686,347,988 27,875,232,760 ii) Car loan 1,161,686,746 1,258,964,436 1,161,686,746 1,258,964,436 iii) Personal loan 96,593,551 120,917,401 96,593,551 120,917,401 iv) Loan against deposit (LAD) 456,104,942 748,966,598 456,104,942 748,966,598 v) Small and medium enterprises 34,829,641,792 35,920,027,020 34,829,641,792 35,920,027,020 vi) Special program loan (BB refinancing scheme) 5,753,266,293 2,277,825,762 5,753,266,293 2,277,825,762 vii) Staff loan 350,765,564 291,042,026 350,765,564 291,042,026

viii)Industrial loans, advances and leases (Note- 7.12 (d)) 22,482,912,552 22,916,532,623 22,482,912,552 22,916,532,623

ix) Other loans and advances - - 1,220,872,200 897,529,429 91,817,319,428 91,409,508,626 93,038,191,628 92,307,038,055

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331

d. Details of Industrial loans, advances and leasesi) Agricultural industries 1,323,039,071 1,705,463,544 1,323,039,071 1,705,463,544 ii) Textiles, Apparels & Accessories 6,004,008,841 6,659,559,935 6,004,008,841 6,659,559,935 iii) Food and beverage 1,839,154,160 1,212,871,352 1,839,154,160 1,212,871,352 iv) Pharmaceuticals 831,883,502 682,799,922 831,883,502 682,799,922 v) Leather & leather products, chemicals 115,528,707 88,465,856 115,528,707 88,465,856 vi) Power, energy & engineering 2,426,792,197 3,041,500,219 2,426,792,197 3,041,500,219

vii) Real estate & Home appliances, cement, ceramics 3,539,317,731 3,975,851,581 3,539,317,731 3,975,851,581

viii) IT & services 5,257,928,132 3,894,199,289 5,257,928,132 3,894,199,289 ix) Transportation 812,557,237 856,337,884 812,557,237 856,337,884 x) Other industries 332,702,974 799,483,041 332,702,974 799,483,041

22,482,912,552 22,916,532,623 22,482,912,552 22,916,532,623

7.13 Loans, advances and leases -geographical location-wise

Inside Bangladesh:Dhaka 63,124,659,960 64,472,643,008 64,345,532,160 65,370,172,437 Chattogram 5,692,640,179 5,657,429,956 5,692,640,179 5,657,429,956 Bogura 1,899,990,740 1,883,643,641 1,899,990,740 1,883,643,641 Sylhet 1,472,972,886 1,442,664,585 1,472,972,886 1,442,664,585 Savar 3,256,880,355 3,309,865,258 3,256,880,355 3,309,865,258 Cumilla 1,744,563,269 1,726,741,096 1,744,563,269 1,726,741,096 Jashore 2,437,618,104 2,249,907,439 2,437,618,104 2,249,907,439 Narsingdi 759,147,394 675,322,408 759,147,394 675,322,408 Bhulta 904,392,983 741,095,472 904,392,983 741,095,472 Khulna 1,439,112,058 1,257,167,638 1,439,112,058 1,257,167,638 Natore 700,790,755 666,957,514 700,790,755 666,957,514 Kushtia 1,696,828,220 1,457,026,395 1,696,828,220 1,457,026,395 Habiganj 1,339,420,832 1,141,760,493 1,339,420,832 1,141,760,493 Mymensingh 933,570,982 948,309,040 933,570,982 948,309,040 Rangpur 1,222,761,383 1,145,557,077 1,222,761,383 1,145,557,077 Chowmuhani 1,067,907,830 971,010,853 1,067,907,830 971,010,853 Barishal 704,101,709 511,306,477 704,101,709 511,306,477 Rajshahi 618,272,714 527,976,857 618,272,714 527,976,857 Faridpur 837,111,607 662,062,695 837,111,607 662,062,695

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331 Outside Bangladesh: - - - -

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331


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There were no clients with outstanding amount and classified loans/investments exceeding 15% of total capital of the financial institution. Total capital of the financial institution was BDT 12,116.17 million as at 31 December 2020 (BDT 11,231.12 million in 2019).

7.15 Particulars of loans, advances and leasesi) Loans, advances and leases considered good in respect

of which the financial institution is fully secured 5,708,045,237 7,922,159,722 6,928,917,437 8,819,689,151 ii) Loans, advances and leases considered good

against which the financial institution holds no security other than the debtors' personal guarantee 5,701,322,601 7,218,574,983 5,701,322,601 7,218,574,983

iii) Loans, advances and leases considered good secured by the personal undertaking of one or more parties in addition to the personal guarantee of the debtors 80,443,376,122 76,307,713,197 80,443,376,122 76,307,713,197

91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331 iv) Loans, advances and leases adversely classified;

provision not maintained there against - - - - v) Loans, advances and leases due by directors or

officers of the financial institution or any of them either separately or jointly with any other persons [Note-7.12 (b) & (c) (vii)] 386,190,096 329,222,441 386,190,096 329,222,441

vi) Loans, advances and leases due from companies or firms in which the directors of the financial institution have interest as directors, partners or managing agents or in case of private companies, as members - 758,861 - 758,861

vii) Maximum total amount of advances including temporary advances made at any time during the year to directors or managers or officers of the financial institution or any of them either separately or jointly with any other person 386,190,096 329,222,441 386,190,096 329,222,441

viii) Maximum total amount of advances including temporary advances granted during the year to the companies or firms in which the directors of the financial institution have interest as directors, partners or managing agents or in the case of private companies, as member - 758,861 - 758,861

ix) Due from bank and financial institutions 4,121,089,581 1,881,310,807 4,121,089,581 1,881,310,807 x) Classified loans, advances and leases

a) Classified loans, advances and leases on which interest has not been charged (Note-7.16)

1,642,806,060 2,803,655,952 1,642,806,060 2,803,655,952

b) Provision required for the year 611,011,747 459,152,995 720,031,243 483,136,950 Provision released during the year (394,410,029) (45,883,777) (405,337,826) (60,243,199)Total provisions charged during the year (Note-12.6(ii)) 216,601,718 413,269,218 314,693,417 422,893,751

c) Amount of written off loans, advances and leases 306,259,500 - 306,259,500 - Total amount realised against loans and leases previously written off 40,170,396 45,368,181 40,170,396 45,368,181

d) Provision kept against loans and advances classified as bad debts (Note-7.17) 684,244,720 542,373,927 684,244,720 542,373,927

e) Interest credited to Interest Suspense Account (Note-12.5) 383,179,850 508,876,594 383,179,850 508,876,594

xi) Cumulative amount of written off loans, advances and leasesBalance at January 1 1,169,410,585 1,169,410,585 1,169,410,585 1,169,410,585 Amount written off during the year 306,259,500 - 306,259,500 -

1,475,670,085 1,169,410,585 1,475,670,085 1,169,410,585 The amount of written off loans, advances and leases for which law suits have been filed 3,055,793,695 2,315,121,996 3,055,793,695 2,315,121,996



7.16 Classification of loans, advances and leases

UnclassifiedStandard including staff loan 89,239,435,611 87,630,510,157 90,450,578,048 88,528,039,586 Special Mention Account (SMA) 970,502,289 1,014,281,793 970,502,289 1,014,281,793

90,209,937,900 88,644,791,950 91,421,080,337 89,542,321,379 ClassifiedSub-standard 351,835,471 746,777,119 361,565,234 746,777,119 Doubtful 466,040,039 651,075,517 466,040,039 651,075,517 Bad/Loss 824,930,550 1,405,803,316 824,930,550 1,405,803,316

1,642,806,060 2,803,655,952 1,652,535,823 2,803,655,952 91,852,743,960 91,448,447,902 93,073,616,160 92,345,977,331

7.17 Particulars of required provision for loans, advances and leases

Status Base for provision

Rate (%)

General ProvisionLoans and leases (Excluding SMA) 58,478,141,174 1.00% 584,781,412 585,742,912 596,990,134 581,224,229 Loans and leases SME-STD (Excluding SMA) 30,267,256,446 0.25% 75,668,141 71,306,635 75,668,141 71,306,635 Special Mention Account (SMA) 898,084,274 5.00% 44,904,214 47,154,370 44,904,214 47,154,370

705,353,767 704,203,917 717,562,489 699,685,234

Status Base for provision

Rate(%)

Specific provisionSub-standard 257,257,021 20% 51,451,404 123,714,545 51,451,404 123,714,545 Doubtful 245,743,547 50% 122,871,774 136,849,331 137,631,317 151,728,872 Bad/ Loss 684,244,720 100% 684,244,720 542,373,927 684,244,720 542,373,927

858,567,898 802,937,803 873,327,441 817,817,344 Required provision for loans, advances and leases 1,563,921,665 1,507,141,720 1,590,889,930 1,517,502,578 Required provision for diminution in value of investments 7,864,000 154,301,727 159,413,154 224,366,589 Total provision required 1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167 Total provision maintained (Note - 12.6 (i)) 1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167 Excess/(short) provision at 31 December - - - -

8 Fixed assets including land, building, furniture and fixtures

a. CostBalance at 01 January 1,924,185,117 1,302,436,541 2,296,151,837 1,508,163,591 Addition during the year 196,490,832 683,396,137 203,180,479 875,939,316

2,120,675,949 1,985,832,678 2,499,332,316 2,384,102,907 Disposal/Adjustments during the year (142,553,397) (61,647,561) (164,798,113) (87,951,070)Balance at 31 December 1,978,122,552 1,924,185,117 2,334,534,203 2,296,151,837

b. Accumulated depreciationBalance at 01 January 997,902,078 803,301,418 1,176,175,444 956,137,645 Charged during the year 236,765,041 254,776,553 285,866,458 302,983,900

1,234,667,118 1,058,077,971 1,462,041,902 1,259,121,545 Disposal/Adjustments during the year (141,338,021) (60,175,893) (155,775,367) (82,946,101)Balance at 31 December 1,093,329,097 997,902,078 1,306,266,535 1,176,175,444

c. Written down value (a-b) 884,793,455 926,283,039 1,028,267,669 1,119,976,393

A schedule of fixed assets including land, building, furniture and fixtures is given in Annexure-A


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9 Other assets

Investment in subsidiary companies (Note - 9.1) 4,099,999,790 3,999,999,790 - - Accounts receivable (Note - 9.2) 341,145,977 323,747,461 819,283,848 845,320,143 Advances, deposits and prepayments (Note - 9.3) 909,077,211 690,343,620 913,540,206 704,987,857 Deferred tax asset (Annexure B) 262,591,309 223,927,668 369,682,300 318,897,693 Investment in stock exchanges (Note - 9.4) - - 14,869,750 14,869,750

5,612,814,286 5,238,018,539 2,117,376,104 1,884,075,443

9.1 Investment in subsidiary companies

IDLC Securities Limited (Note- 9.1.1) 1,649,999,900 1,649,999,900 - - IDLC Investments Limited (Note- 9.1.2) 2,199,999,900 2,199,999,900 - - IDLC Asset Management Limited (Note- 9.1.3) 249,999,990 149,999,990 -

4,099,999,790 3,999,999,790 - -

9.1.1 Out of the total of 20,000,000 ordinary shares issued and paid up, IDLC Finance Limited holds 19,999,992 (including bonus shares issued in 2008, 2009 and 2010) ordinary shares of BDT 100 each.

9.1.2 Out of the total of 22,000,000 ordinary shares issued and paid up, IDLC Finance Limited holds 21,999,999 ordinary shares of BDT 100 each.

9.1.3

Out of the total of 15,000,000 ordinary shares issued and paid up, IDLC Finance Limited holds 14,999,999 ordinary shares of BDT 10 each. BDT 100,000,000 has been provided to IDLC Asset Management Limited for additional issuance of share and shareholding in the company, which is classified as Share Money Deposit in 2020 as it is awaiting approval from Registrar of Joint Stock Companies.

9.2 Accounts receivable

Interest receivable (Note - 9.2.1) 148,748,071 157,229,278 150,872,966 160,619,291 Other receivables (Note - 9.2.2) 192,397,906 166,518,183 668,410,883 684,700,852

341,145,977 323,747,461 819,283,848 845,320,143

9.2.1 Interest receivable

Interest receivable, Fixed deposit 93,947,361 145,835,694 96,057,413 147,269,120 Receivable from Investment in government bonds 49,694,043 2,763,584 49,708,886 2,763,584 Receivable from Investment in bonds 5,106,667 8,630,000 5,106,667 10,586,587

148,748,071 157,229,278 150,872,966 160,619,291

9.2.2 Other receivables

Accrued other income 42,411,625 47,039,424 42,411,625 47,039,424 Other receivable 149,986,281 119,478,759 625,999,258 637,661,428

192,397,906 166,518,183 668,410,883 684,700,852

9.3 Advances, deposits and prepayments

Deposits and prepayments 234,026,556 21,675,080 235,460,819 22,902,843 Advance against expenses 675,050,655 668,668,540 678,079,387 682,085,014

909,077,211 690,343,620 913,540,206 704,987,857

Advances, deposits and prepayments are considered good but not secured by collateral.



9.4 Investment in stock exchanges

DSE membership at cost - - 11,418,750 11,418,750 CSE membership at cost - - 3,451,000 3,451,000

- - 14,869,750 14,869,750

IDLC Securities Limited has received the following shares from DSE and CSE against the membership under demutualization scheme of the stock exchanges.

Stock Exchange Type of Shares Number of

Shares Face Value

Dhaka Stock Exchange Limited Floated (53.33%) 2,886,042 10 Blocked (46.67%) 2,525,287 10

5,411,329

Chittagong Stock Exchange Limited Blocked (100%) 4,287,330 10 4,287,330

Valuation of membership has been shown at cost in the accounts.

10 Borrowings from other banks, financial institutions

Inside Bangladesh (Note- 10.1) 20,790,990,945 14,027,773,689 20,790,990,945 14,227,773,689 Outside Bangladesh - - - -

20,790,990,945 14,027,773,689 20,790,990,945 14,227,773,689

10.1 Inside Bangladesh

Secured LoansSecured Long-term loans

Dutch Bangla Bank Limited - 833,333,333 - 833,333,333 Woori Bank 570,833,333 731,666,667 570,833,333 731,666,667

570,833,333 1,565,000,000 570,833,333 1,565,000,000

Secured Short Term Loan

Citi Bank N.A. 560,000,000 560,000,000 560,000,000 560,000,000 Bank Alfalah Limited 200,000,000 200,000,000 200,000,000 200,000,000 Standard Chartered Bank 2,000,000,000 1,700,000,000 2,000,000,000 1,900,000,000 Commercial Bank of Ceylon Plc 1,000,000,000 535,000,000 1,000,000,000 535,000,000 Total secured short term loan 3,760,000,000 2,995,000,000 3,760,000,000 3,195,000,000 Total secured loans 4,330,833,333 4,560,000,000 4,330,833,333 4,760,000,000

Unsecured loansZero Coupon Bond

A. K. Khan & Company Limited 40,567,444 127,261,086 40,567,444 127,261,086 Universal Jeans Limited 32,196,384 101,000,862 32,196,384 101,000,862 Sk. Akijuddin Limited 1,406,316,927 1,874,357,546 1,406,316,927 1,874,357,546 Grameen Telecom Trust 19,961,758 62,620,534 19,961,758 62,620,534 Square Pharmaceuticals Limited 16,098,192 50,500,431 16,098,192 50,500,431 Pragati Life Insurance Limited 3,219,638 10,100,086 3,219,638 10,100,086 BETS Consulting Services Limited 3,219,638 10,100,086 3,219,638 10,100,086 Dr. Abdus Shabur 643,928 2,020,017 643,928 2,020,017 Bangla Telecom Limited 6,890,755 14,343,795 6,890,755 14,343,795 Bangladesh Infrastructure Finance Fund Limited 68,907,545 143,437,946 68,907,545 143,437,946 Delsey Cotton Spinning Mills Ltd. 13,781,509 28,687,589 13,781,509 28,687,589

1,611,803,718 2,424,429,978 1,611,803,718 2,424,429,978


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BDTUnsecured Long-term loans

Kreditanstalt fÜr Wiederaufbau (KfW) 49,885,422 60,863,409 49,885,422 60,863,409 Bangladesh Bank ( JICA-FDI Fund) 220,944,444 147,222,222 220,944,444 147,222,222 Bangladesh Bank (BB Fund-Small Enterprise Refinancing Program) 4,325,000 12,465,278 4,325,000 12,465,278 Bangladesh Bank (Women-Small Enterprise Refinancing Program) 2,312,384,192 1,308,438,094 2,312,384,192 1,308,438,094 Bangladesh Bank (New Entrepreneur Refinancing Scheme) 3,053,157 4,915,080 3,053,157 4,915,080 Bangladesh Bank (Home Loan Refinancing Program) 399,796,095 453,643,857 399,796,095 453,643,857 Bangladesh Bank (Agro Loan Refinancing Program) 610,626,905 350,366,390 610,626,905 350,366,390 Bangladesh Bank (JICA Refinancing Program) 417,150,777 420,577,188 417,150,777 420,577,188 SME Foundation 151,940,000 100,135,000 151,940,000 100,135,000 Investment Promotion & Financing Facilities (IPFF) 553,426,022 512,854,343 553,426,022 512,854,343 Bangladesh Bank Solar Bio Gas & ETP Scheme 486,769,316 441,491,110 486,769,316 441,491,110 Bangladesh Bank Milk Production Scheme - 3,000,000 - 3,000,000 Bangladesh Bank (SMEDP 2) 987,725,362 957,212,469 987,725,362 957,212,469 Saudi Bangladesh Industrial & Agricultural Investment Company Limited 329,652,202 500,159,271 329,652,202 500,159,271 Bangladesh Bank Small Refinancing - Corona Affected-CMSMES 1,243,175,000 - 1,243,175,000 - Bangladesh Bank Refinance Scheme for Working Capital Loan To Large Corporates 37,500,000 - 37,500,000 -

7,808,353,894 5,273,343,711 7,808,353,894 5,273,343,711 Total unsecured long-term loan 9,420,157,612 7,697,773,689 9,420,157,612 7,697,773,689

Unsecured Short Term LoansShort-term loans

Trust Bank Limited - 800,000,000 - 800,000,000 Meridian Finance & Investment Limited - 150,000,000 - 150,000,000 South Bangla Agriculture and Commerce Bank Limited 580,000,000 100,000,000 580,000,000 100,000,000 Community Bank Bangladesh Limited 300,000,000 - 300,000,000 - Dhaka Bank Limited 700,000,000 - 700,000,000 - The City Bank Limited 2,200,000,000 - 2,200,000,000 -

3,780,000,000 1,050,000,000 3,780,000,000 1,050,000,000

Call Loans

United Finance Limited 250,000,000 - 250,000,000 - Sonali Bank Limited - 280,000,000 - 280,000,000 United Commercial Bank Limited 350,000,000 290,000,000 350,000,000 290,000,000 Bangladesh Development Bank Limited - 150,000,000 - 150,000,000 Pubali Bank Limited 960,000,000 - 960,000,000 - Mutual Trust Bank Limited 290,000,000 - 290,000,000 - Agrani Bank Limited 1,210,000,000 - 1,210,000,000 - Trust Bank Limited 200,000,000 - 200,000,000 -

3,260,000,000 720,000,000 3,260,000,000 720,000,000 Total unsecured short-term loans 7,040,000,000 1,770,000,000 7,040,000,000 1,770,000,000

Total Borrowings from other banks, financial institutions & agents 20,790,990,945 14,027,773,689 20,790,990,945 14,227,773,689



10.2 Security against borrowings from other banks and financial institutions

Secured 4,330,833,333 4,560,000,000 4,330,833,333 4,760,000,000 Unsecured 16,460,157,612 9,467,773,689 16,460,157,612 9,467,773,689

20,790,990,945 14,027,773,689 20,790,990,945 14,227,773,689

Secured loans are covered by first equitable mortgage of all present and future immovable properties and by floating charges on movable assets of the Company ranking pari-passu among the lenders. The Company has a Pari Passu Security Sharing Agreement (PPSSA) among the secured lenders stipulating the procedure in the sharing of the security provided by the Company. Loans repayable within one year have been placed under current liabilities. Details of loans are as follows:

10.3 Maturity grouping of borrowings from other banks and financial institutions

Payable on demand - - - - Up to 1 month 7,537,369,848 2,858,174,654 7,537,369,848 3,058,174,654 Over 1 month but within 3 months 3,145,894,065 2,582,477,968 3,145,894,065 2,582,477,968 Over 3 months but within 1 year 4,588,130,924 2,641,745,583 4,588,130,924 2,641,745,583 Over 1 year but within 5 years 5,235,294,473 5,537,738,832 5,235,294,473 5,537,738,832 Over 5 years 284,301,635 407,636,652 284,301,635 407,636,652

20,790,990,945 14,027,773,689 20,790,990,945 14,227,773,689

11 Deposits and other accounts

Current accounts and other accounts etc - - - - Bills payable - - - - Savings bank deposits - - - - Term deposits (Note- 11.1) 78,131,272,875 77,008,419,045 76,273,087,133 75,415,433,310 Bearer certificate of deposits - - - - Refundable deposits (Note- 11.2) 2,490,915,674 2,490,149,327 2,490,915,674 2,490,149,327

80,622,188,549 79,498,568,372 78,764,002,807 77,905,582,637

11.1 Term deposits

This represents deposits received from institutions and individuals for a period not less than three months.

Balance at January 1 77,008,419,045 71,338,071,965 75,415,433,310 70,257,701,507 Add: Deposits received during the year 34,047,485,305 38,331,088,741 34,047,485,305 38,331,088,741

111,055,904,350 109,669,160,706 109,462,918,615 108,588,790,248 Less: Matured/encashed during the year 32,924,631,475 32,660,741,661 32,924,631,475 32,660,741,661

Inter-company deposit - - 265,200,007 512,615,277 Balance at December 31 78,131,272,875 77,008,419,045 76,273,087,133 75,415,433,310

11.1.1 Rate of interest

Rate of interest on term deposit receipts ranges from 5.35% to 10.25% (2019: 5% to 13.25%).

11.2 Refundable deposits

The Company takes deposits from the clients of lease and loan on signing of agreement, refundable at the end of the contract period. Balance at December 31 stands as under:

Deposits against loan and lease rental 168,256,969 207,395,872 168,256,969 207,395,872 Deposits against financing as per term of agreements (Security deposits) 2,322,658,705 2,282,753,455 2,322,658,705 2,282,753,455

2,490,915,674 2,490,149,327 2,490,915,674 2,490,149,327

Security deposits are interest bearing while deposits against loan and lease are non interest bearing.


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Government - - - - Bank 10,500,096,020 14,450,000,000 10,500,096,020 14,450,000,000 Other institutions 38,240,078,780 36,074,017,012 36,381,893,038 34,481,031,277 Individuals 31,882,013,749 28,974,551,360 31,882,013,749 28,974,551,360

80,622,188,549 79,498,568,372 78,764,002,807 77,905,582,637

11.4 Maturity analysis of deposits

Maturity analysis of Term depositsPayable on demand - - - - Up to 1 month 4,243,449,754 5,963,188,703 3,735,264,013 5,387,710,560 Over 1 month but within 6 months 22,086,795,902 21,746,558,417 20,736,795,902 20,729,050,825 Over 6 months but within 1 year 5,952,647,336 6,392,132,235 5,952,647,336 6,392,132,235 Over 1 year but within 5 years 45,420,795,283 42,310,573,579 45,420,795,283 42,310,573,579 Over 5 years but within 10 years 402,019,489 571,448,057 402,019,489 571,448,057 Above 10 years 25,565,110 24,518,054 25,565,110 24,518,054

78,131,272,875 77,008,419,045 76,273,087,133 75,415,433,310

Maturity analysis of Refundable depositPayable on demand 168,256,969 180,232,870 168,256,969 180,232,870 Up to 1 month 16,445,300 13,708,231 16,445,300 13,708,231 Over 1 month but within 6 months 221,951,523 196,513,933 221,951,523 196,513,933 Over 6 months but within 1 year 388,566,694 182,670,637 388,566,694 182,670,637 Over 1 year but within 5 years 1,664,553,501 1,911,336,252 1,664,553,501 1,911,336,252 Over 5 years but within 10 years 31,141,687 5,687,404 31,141,687 5,687,404

2,490,915,674 2,490,149,327 2,490,915,674 2,490,149,327

12 Other liabilities

Payable and accrued expenses (Note- 12.1) 5,482,521,806 5,441,179,928 6,831,031,623 6,136,622,701 Provision for income tax (Note- 12.2) 2,233,115,280 2,076,723,257 2,518,089,999 2,294,581,634 Deferred liability-employee gratuity (Note- 12.3) - - 72,636,254 61,744,884 Portfolio investors' fund (Note- 12.4) - - 269,620,883 231,541,547 Interest suspense account (Note- 12.5) 383,179,850 508,876,594 383,179,850 508,876,594 Provision for doubtful accounts and future losses (Note- 12.6 (i)) 1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167 Unpaid/ Unclaimed dividend (Note- 12.7) 28,684,911 24,884,844 28,684,911 24,884,844 Deferred tax liability (Annexure B) 190,249,256 184,251,906 226,594,467 234,229,307

9,889,536,768 9,897,359,976 12,080,141,073 11,234,350,677

12.1 Payable and accrued expenses

Receipt against leases 665,664,875 605,534,735 665,664,875 605,534,735 Liabilities for expenses 3,500,728,062 3,976,943,532 4,718,683,785 4,531,488,158 Lease Liability 526,565,739 464,684,567 644,634,084 602,832,349 Liabilities for other finance 789,563,130 394,017,094 802,048,879 396,767,459

5,482,521,806 5,441,179,928 6,831,031,623 6,136,622,701



12.2 Provision for income tax

ProvisionBalance at January 1 9,442,368,881 8,565,194,891 10,969,747,130 9,890,705,186 Less: Adjustment during the year - - - -

9,442,368,881 8,565,194,891 10,969,747,130 9,890,705,186 Add: Provision made during the year** 1,079,639,322 877,173,990 1,321,516,473 1,079,041,944

10,522,008,203 9,442,368,881 12,291,263,603 10,969,747,130 Settlement of previous year's tax liability - - - - Balance at December 31 10,522,008,203 9,442,368,881 12,291,263,603 10,969,747,130

Advance taxBalance at January 1 7,365,645,624 6,542,763,024 8,675,165,496 7,633,486,439 Add: Payment made during the year:

Under sections 64 and 74 of ITO, 1984 796,967,649 629,123,093 828,599,374 689,263,312 Deduction at source 124,936,945 192,583,832 268,066,028 351,240,070 Others 1,342,705 1,175,675 1,342,705 1,175,675

923,247,299 822,882,600 1,098,008,107 1,041,679,057 8,288,892,923 7,365,645,624 9,773,173,604 8,675,165,496

Less: Adjustment during the year - - - - 8,288,892,923 7,365,645,624 9,773,173,604 8,675,165,496

Net balance at December 31 2,233,115,280 2,076,723,257 2,518,089,999 2,294,581,634

** For basis of calcuation of provision for taxation, please see note 2.28.2 & for reason for its changes, please see note 35.3

12.3 Deferred Liability-employee gratuity

Balance at January 1 - - 61,744,884 46,511,525 Add: Addition during the year - - 10,891,370 16,627,438

- - 72,636,254 63,138,963 Less: Payment during the year - - - 1,394,079 Balance at December 31 - - 72,636,254 61,744,884

12.4 Portfolio investors' fund

This represents the balance of deposits made with the IDLC Investments Limited by the portfolio investors to take margin loan and buy marketable securities. The balance of fund has been arrived at as follows:

Balance at January 1 - - 231,541,547 599,996,551 Add: Deposit and share sold by clients - - 5,498,852,570 4,172,359,163

- - 5,730,394,117 4,772,355,714 Less: Purchase of share and deposit withdraw by clients - - 5,460,773,234 4,540,814,167 Balance at December 31 - - 269,620,883 231,541,547

12.5 Interest suspense accounts

On lease finance 28,754,522 61,167,997 28,754,522 61,167,997 On real-estate finance 131,695,417 141,134,442 131,695,417 141,134,442 On term finance 220,199,122 302,065,923 220,199,122 302,065,923 On car loan 838,118 1,862,446 838,118 1,862,446 On personal loan 1,692,671 874,633 1,692,671 874,633 On short term finance - 1,771,153 - 1,771,153

383,179,850 508,876,594 383,179,850 508,876,594


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12.6(i) Balance at January 1 1,661,443,447 1,248,174,229 1,741,869,167 1,318,975,417 Provision required for the year 611,011,747 459,152,995 720,031,243 483,136,950 Provision released during the year (394,410,029) (45,883,777) (405,337,826) (60,243,199)Provision charged for the year (Note- 12.6 (ii)) 216,601,718 413,269,218 314,693,417 422,893,751 Write off during the year 306,259,500 - 306,259,500 - Balance at December 31 1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167

12.6(ii) Provision charged for the year

General provision 3,400,006 76,942,529 20,127,413 70,258,720 Specific provision 359,639,439 343,065,883 359,519,439 357,945,424 Provision for diminutions in value of investments (146,437,727) (6,739,194) (64,953,435) (5,310,393)Other Provisions - - - -

216,601,718 413,269,218 314,693,417 422,893,751

Reason for changes in provision charged for the year:

Solo:

Incremental provision of IDLC Finance Limited for the year ended December 31, 2020 was BDT 216.61 million, which was BDT 413.27 million in the same period of previous year. As per the breakdown of incremental provision for loans and investments, the main reason behind the 48% decrease (amounted BDT 196.67million) was the 96% decline in general provision charged during the year (BDT 73.54 million), the rise in release of provision for diminutions in value of investments by 2073% (BDT 139.7 million), while specific provision charged during the year increased by 5% (BDT 16.57 million) compared to the same period of previous year. Group:

Incremental provision of IDLC Group for the year ended December 31, 2020 was BDT 314.69 million, which was BDT 422.89 million in the same period of previous year. As per the breakdown of incremental provision for loans and investments, the main reason behind the 26% decrease (amounted BDT 108.20 million) was the 71.35% decline in general provision charged during the year (BDT 50.13 million), the rise in release of provision for diminutions in value of investments by 1123% (BDT 59.64 million), while specific provision charged during the year marginally increased by 0.44% (BDT 1.57 million) compared to the same period of previous year.

12.6(iii) Product wise break up of provision

Lease 95,524,202 120,705,409 95,524,202 120,705,409 Long- term finance 764,937,888 925,331,153 764,937,888 925,331,153 Real estate finance 384,933,831 407,642,431 384,933,831 407,642,431 Car loan 14,231,502 18,079,010 14,231,502 18,079,010 Investment in shares 7,864,000 154,301,727 159,413,154 224,366,589 Personal Loan 4,868,830 5,970,843 4,868,830 5,970,843 Short term finance 6,420,419 9,673,365 6,420,419 9,673,365 Loan against Deposit 4,630,993 7,557,147 4,630,993 7,557,147 Other Assets 288,374,000 12,182,361 290,632,760 14,561,119 Margin loan - - 24,709,505 7,982,100

1,571,785,665 1,661,443,447 1,750,303,084 1,741,869,167

12.7 Aging analysis of unpaid/unclaimed dividend

i. Unpaid/Unclaimed cash dividend:Upto 1 year 5,155,344 4,936,767 5,155,344 4,936,767 Over 1 year but within 3 years 7,216,455 9,013,060 7,216,455 9,013,060 Over 3 years but within 4 years 5,447,118 3,424,609 5,447,118 3,424,609 Over 4 years but within 5 years 3,357,094 2,195,716 3,357,094 2,195,716 Above 5 years 7,508,900 5,314,692 7,508,900 5,314,692

28,684,911 24,884,844 28,684,911 24,884,844



ii. Unpaid/Unclaimed stock dividend:Upto 1 year - - - - Over 1 year but within 3 years - - - - Over 3 years but within 4 years - - - - Over 4 years but within 5 years - - - - Above 5 years 756,185 765,357 756,185 765,357

756,185 765,357 756,185 765,357

13 Share capital

Authorised1,000,000,000 ordinary shares of BDT 10 each 10,000,000,000 10,000,000,000 10,000,000,000 10,000,000,000

Issued, subscribed and paid-up 377,050,780 ordinary shares of BDT 10 each 3,770,507,800 3,770,507,800 3,770,507,800 3,770,507,800

Paid-up share capital as on December 31, 2020 comprises the following:

Composition of shareholding:31.12.2020 31.12.2019

Sl. No. Name of the Shareholders % of Number ofholding shares BDT BDT

1 SPONSORS/DIRECTORS The City Bank Limited (CBL) and its subsidiaries 23.21 87,510,575 875,105,750 875,105,750 The City Bank Limited (CBL) 9.00 33,935,329 339,353,290 339,353,290 City Bank Capital Resources Limited (CBCRL) 9.90 37,328,028 373,280,280 373,280,280 City Brokerage Limited 4.31 16,247,218 162,472,180 162,472,180 Transcom Group 13.33 50,273,164 502,731,640 502,731,640 Eskayef Pharmaceuticals Limited 8.00 30,164,062 301,640,620 301,640,620 Transcraft Limited 4.01 15,132,033 151,320,330 151,320,330 Bangladesh Lamps Limited 1.32 4,977,069 49,770,690 49,770,690 Sadharan Bima Corporation (SBC) 7.62 28,727,494 287,274,940 287,274,940 Reliance Insurance Limited 7.00 26,393,553 263,935,530 263,935,530 Mercantile Bank Limited 5.50 20,737,791 207,377,910 207,377,910

56.66 213,642,577 2,136,425,770 2,136,425,770

2 GENERALInstitutions:Investment Corporation of Bangladesh (ICB) 6.96 26,257,444 262,574,440 225,518,710 Bangladesh Fund 1.32 4,958,554 49,585,540 51,594,090 Marina Apparels Limited 1.00 3,770,506 37,705,060 37,705,060 Other Institutions 13.33 50,244,788 502,447,880 450,880,020 Sub-Total 22.60 85,231,292 852,312,920 765,697,880

Individuals:General Public (Individuals) 9.64 36,337,253 363,372,530 406,635,180 Sub-Total 9.64 36,337,253 363,372,530 406,635,180


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3 FOREIGN

Institutions & Individuals 11.10 41,839,658 418,396,580 461,748,970 11.10 41,839,658 418,396,580 461,748,970

Total Holdings 100.00 377,050,780 3,770,507,800 3,770,507,800

The shares were listed with Dhaka Stock Exchange Limited on March 20, 1993, and with Chittagong Stock Exchange Limited on November 25, 1996, and quoted at BDT 63.40 at Dhaka Stock Exchange Limited and BDT 64.20 at Chittagong Stock Exchange Limited on December 31, 2020.

13.1 Capital Adequacy Ratio (CAR):

As per the Section 4(GHA) of the Financial Institutions Rule, 1994 and subsequently updated vide DFIM Circular No. 5, dated July 24, 2011, the minimum paid-up capital of the Financial Institution (FI) shall be BDT 100 crore; provided that the sum of paid-up capital and reserves shall not be less than the minimum capital required under the Risk-Based Assets of the company, criteria determined by the Bangladesh Bank. The surplus eligible capital of the company as well as the Group at the close of business on December 31, 2020 were BDT 403.28 crore and BDT 681.40 crore, respectively.

Details are as follows: IDLC Finance Limited IDLC Group

31.12.2020 BDT

31.12.2019 BDT

31.12.2020 BDT

31.12.2019 BDT

Core Capital (Tier-1)/Shareholders' EquityPaid-up capital (Note-13) 3,770,507,800 3,770,507,800 3,770,507,800 3,770,507,800 Share premium (Note-14) 1,260,585,930 1,260,585,930 1,260,585,930 1,260,585,930 Statutory reserves (note 15) 2,950,870,065 2,509,921,870 2,950,870,065 2,509,921,870 General reserves (Note 16) 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Dividend equalization reserves 46,500,000 46,500,000 46,500,000 46,500,000 Retained earnings 3,087,706,819 2,643,591,766 6,209,997,420 5,430,052,634 Non-controlling interest - - 3,275 3,199

A) Sub-Total 12,116,170,614 11,231,107,366 15,238,464,490 14,017,571,433

Supplementary capital (Tier -II)General Provision (Unclassified loans up to specified limit + SMA + off Balance Sheet exposure)* 705,353,767 704,203,917 717,562,489 699,685,234 Assets Revaluation Reserves up to 50% - - - - Revaluation Reserve for Securities up to 45% - - - - All others preference shares - - - - Others (if any other item approved by Bangladesh Bank) - - - -

B) Sub-Total 705,353,767 704,203,917 717,562,489 699,685,234

C) Total eligible capital 12,821,524,380 11,935,311,283 15,956,026,979 14,717,256,667

Total assets including off-balance sheet exposures 126,297,464,510 116,693,531,643 129,752,176,950 119,424,000,676

D) Total risk weighted assets 87,887,769,898 80,550,856,754 91,419,837,670 84,102,331,872

E) Required capital based on risk weighted assets (10% of D) 8,788,776,990 8,055,085,675 9,141,983,767 8,410,233,187

F) Surplus (C-E) 4,032,747,391 3,880,225,608 6,814,043,212 6,307,023,480

Capital Adequacy Ratio (%) 14.59 14.82 17.45 17.50

* Limited to 1.25% of RWA as per CAMD guideline.

31.12.2020 31.12.2019% of Number of

holding shares BDT BDT



14 Share premium

Balance at January 1 1,260,585,930 1,260,585,930 1,260,585,930 1,260,585,930 Add: Received during the year - - - - Balance at December 31 1,260,585,930 1,260,585,930 1,260,585,930 1,260,585,930

This represents Share Premium amount was received @50% over par value of share @BDT 100 against issue of 75,000 Ordinary Shares during IPO in 1993 and subsequently Share Premium amount was received @100 % over par value of share @BDT 10 per share on 125,683,593 no. of Ordinary Shares in 2017 against Rights Issue (1R:2).

15 Statutory reserves

Balance at January 1 2,509,921,870 2,416,541,850 2,509,921,870 2,416,541,850 Add: Transferred on appropriation of profit 440,948,195 93,380,020 440,948,195 93,380,020 Balance at December 31 2,950,870,065 2,509,921,870 2,950,870,065 2,509,921,870

In compliance with the clause no 6 of Financial Institutions Regulations, 1994, Financial Institution is required to transfer at least 20% of it's profit after tax and before appropriation of dividend in a particular year, if the financial institution's sum of Share Premium Account (if any) and Statutory Reserves is less than the paid up capital of that financial institution. Accordingly, 20% of current year's profit after tax has been transferred to Statutory Reserves Account.

16 General reserves

Balance at January 1 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Add: Transferred on appropriation of profit - - - - Balance at December 31 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000

17 Business commitments and contingencies

In the normal course of business, the Company makes various commitments and incurs certain contingent liabilities. No material losses are anticipated as a result of these transactions. These contingent liabilities and business commitments are quantified below:

17.1 Contingent liabilities

Acceptances and endorsements - - - - Letters of guarantee (Note - 17.1.1) 90,066,000 50,000,000 90,066,000 50,000,000 Irrevocable letters of credit - - - - Bills for collection - - - - Indemnity bond - - - - Corporate guarantee (Note - 17.1.2) 1,550,000,000 750,000,000 1,550,000,000 750,000,000

1,640,066,000 800,000,000 1,640,066,000 800,000,000

17.1.1 Money for which the Company is contingently liable in respect of guarantee given in favour of:

Directors or officers - - - - Government - - - - Banks and other financial institutions - - - - Others 90,066,000 50,000,000 90,066,000 50,000,000

90,066,000 50,000,000 90,066,000 50,000,000

17.1.2 The Company is contingently liable on behalf of IDLC Securities Limited for the guarantees given below in favour of:

Dhaka Stock Exchange Limited 1,500,000,000 700,000,000 1,500,000,000 700,000,000 Chittagong Stock Exchange Limited 50,000,000 50,000,000 50,000,000 50,000,000

1,550,000,000 750,000,000 1,550,000,000 750,000,000

17.2 Other commitments

Documentary credits and short term trade related transactions - - - - Forward assets purchased and forward deposits placed - - - - Un-drawn note issuance and revolving underwriting - - - - Un-drawn formal standby facilities, credit lines - - - - Lease and term finance commitments outstanding at December 31 518,405,256 289,816,587 518,405,256 289,816,587


BDT31.12.2019

BDT31.12.2020

BDT31.12.2019

BDT




BDT31.12.2019

BDT31.12.2020

BDT31.12.2019

BDTReal estate finance commitments outstanding at December 31 719,931,379 948,905,653 719,931,379 948,905,653 Car loan commitments outstanding at December 31 - - - - Personal loan commitments outstanding at December 31 175,000 - 175,000 - Loan Against Deposit commitments outstanding at December 31 - - - -

1,238,511,635 1,238,722,240 1,238,511,635 1,238,722,240

17.2.1 Sanction and Disbursements

On December 31, the Company had following amounts of sanction and disbursement :

31.12.2020 31.12.2019Contracts/ sanction

BDT

DisbursementBDT

Contracts/ sanction

BDT

DisbursementBDT

Lease and term finance 1,327,600,000 809,194,744 1,202,200,000 912,383,413Real estate finance 2,120,426,198 1,400,494,820 3,598,159,707 2,649,254,054Car loans - - - - Personal loans 1,500,000 1,325,000 - - Loan Against Deposit (LAD) - - - -

3,449,526,198 2,211,014,564 4,800,359,707 3,561,637,467

17.2.2 Capital expenditure commitmentsThere was no capital expenditure contracted but not incurred or provided for at December 31, 2020 (2019: nil). There was no material capital expenditure authorised by the Board but not contracted for at December 31, 2020 (2019: nil).

17.2.3 Unacknowledged debt

The Company had no claim, legal or others, which has not been acknowledged as debt at the balance sheet date.

IDLC Finance Limited IDLC Group 2020 BDT

2019 BDT

2020 BDT

2019 BDT

18 Income statementIncomeInterest, discount and similar income (Note-18.1) 12,867,946,118 12,914,211,438 13,346,821,684 13,156,162,458 Dividend income (Note-21) 26,101,806 54,478,019 90,410,952 123,091,573 Fees, commission and brokerage (Note-22) 46,694,278 53,374,175 505,274,959 410,459,017 Other operating income (Note-23) 325,141,702 432,922,088 332,477,932 440,562,062

13,265,883,904 13,454,985,720 14,274,985,527 14,130,275,110

ExpensesInterest on deposits and borrowings etc. (Note-20) 7,640,442,034 8,639,581,266 7,607,461,883 8,512,176,946 Administrative expenses (Note-18.2) 1,589,146,490 1,454,915,081 1,907,296,290 1,759,828,938 Other expenses (Note-33) 331,214,612 302,027,160 355,999,663 371,286,980 Depreciation on assets (Note-32) 236,765,041 254,776,553 285,866,458 302,983,900

9,797,568,177 10,651,300,060 10,156,624,294 10,946,276,764 Operating Income 3,468,315,727 2,803,685,660 4,118,361,233 3,183,998,346

18.1 Interest, discount and similar income

Interest income (Note -19) 11,859,045,694 12,936,084,679 12,100,085,456 13,183,089,035 Gain on sale of marketable securities & DSE share (Note - 21) (112,020,786) (83,552,594) (280,021,443) (122,836,562)Gain on sale of Government Treasury Bond (Note - 21) 823,117,480 - 1,117,064,968 - Income from investment in bonds (Note - 21) 297,803,730 61,679,353 409,692,703 95,909,985

12,867,946,118 12,914,211,438 13,346,821,684 13,156,162,458

18.2 Administrative expenses

Salary and allowances (Note-24) 1,353,735,303 1,178,919,053 1,624,327,491 1,431,940,133 Rent, taxes, insurance, electricity, etc. (Note-25) 42,123,906 45,233,286 50,986,243 58,428,798 Legal expenses (Note-26) 7,483,083 17,984,805 23,894,250 22,539,605 Postage, stamp, telecommunication, etc. (Note-27) 39,065,352 35,866,522 46,782,578 43,491,044


BDT31.12.2019

BDT31.12.2020

BDT31.12.2019

BDT



Stationery, printing, advertisement, etc. (Note-28) 103,891,684 142,334,199 111,491,619 161,843,179 Managing Director's salary and fees (Note-29) 12,600,004 12,490,004 12,600,004 12,490,004 Directors' fees (Note-30) 1,238,137 1,409,523 1,854,086 1,990,581 Auditors' fees (Note-31) 891,250 883,928 1,236,250 1,228,928 Depreciation & repair of Company's assets (Note-32) 28,117,771 19,793,761 34,123,769 25,876,666

1,589,146,490 1,454,915,081 1,907,296,290 1,759,828,938

19 Interest income

This represents interest income from the following products:

Lease finance 426,129,737 488,299,562 426,129,737 488,299,562 Real estate finance 3,350,459,922 3,398,500,857 3,350,459,922 3,398,500,857 Term finance 6,675,781,741 6,863,169,383 6,675,781,741 6,863,169,383 Short term finance 113,592,901 107,276,317 113,592,901 107,276,317 Car loan 142,966,674 175,809,520 142,966,674 175,809,520 Personal loan 15,091,747 20,082,134 15,091,747 20,082,134 Margin loan to portfolio investors - - 117,955,884 159,834,216 Loan to subsidiaries 1,060,711 1,596,800 - -

10,725,083,433 11,054,734,573 10,841,978,606 11,212,971,989 Interest on balance with other banks and financial institutions 1,025,139,729 1,794,587,107 1,149,509,177 1,883,354,047

Loan against deposit 108,822,532 86,762,999 108,597,673 86,762,999 11,859,045,694 12,936,084,679 12,100,085,456 13,183,089,035

20 Interest on deposits and borrowings etc.

Interest on term deposits 6,549,392,490 7,248,278,157 6,502,335,176 7,098,808,823 Interest on borrowings 693,979,513 925,986,578 696,039,008 935,051,390 Interest on secured/unsecured zero coupon bonds 163,694,200 196,159,850 163,694,200 196,159,850 Interest on security deposit 142,411,590 134,057,524 142,411,590 134,057,524 Interest on call loan 48,692,667 89,833,681 48,692,667 89,833,681 Interest on lease rent 42,271,574 45,265,476 54,289,242 58,265,678

7,640,442,034 8,639,581,266 7,607,461,883 8,512,176,946

21 Investment income

Gain on sale of marketable securities (112,020,786) (83,552,594) (280,021,443) (122,836,562)Gain on sale of Government Treasury Bond 823,117,480 - 1,117,064,968 - Dividend income 26,101,806 54,478,019 90,410,952 123,091,573 Income from investment in bonds 297,803,730 61,679,353 409,692,703 95,909,985

1,035,002,230 32,604,778 1,337,147,180 96,164,996

22 Commission, exchange and brokerage

Agency fees 16,896,667 19,154,666 16,896,667 19,154,666 Arrangement fees 29,483,926 32,436,738 29,483,926 32,436,738 Advisory fees - 1,366,609 - 1,366,609 Commission & brokerage - - 357,927,413 257,683,274 Underwriting commission - - 5,054,650 1,700,000 Documentation fees - - 61,000 84,000 Custodial fees 313,685 416,162 313,685 416,162 Fees from mutual fund & others - - 22,648,423 22,263,529 Issue management fees - - 20,500,000 2,600,000


2019 BDT

2020 BDT

2019 BDT



Portfolio management fees - - 21,463,690 37,494,238 Corporate advisory fees - - 10,867,765 18,514,389 Settlement charges - - 20,057,740 16,745,412

46,694,278 53,374,175 505,274,959 410,459,017

23 Other operating income

Application, processing and documentation fees 147,341,792 275,680,326 147,341,792 275,680,326 Loan settlement and others 106,032,109 89,395,692 106,032,109 89,395,692 Service charges 4,587,132 6,175,589 4,587,132 6,175,589 Gain on disposal of fixed assets 4,663,800 4,457,598 5,550,505 5,850,318 Account opening & BO account maintenance fees - - 2,297,247 2,225,615 IPO service charge - - 74,050 53,675 Revenue from write off collection 40,170,396 45,368,181 40,170,396 45,368,181 Commission on Corporate Guarantee 3,001,250 2,661,458 3,001,250 2,661,458 Miscellaneous income 19,345,223 9,183,244 23,423,451 13,151,208

325,141,702 432,922,088 332,477,932 440,562,062

24 Salaries and allowances 1,353,735,303 1,178,919,053 1,624,327,491 1,431,940,133 24.1 Salaries and allowances

Salaries and allowances of IDLC Finance Limited include annual contribution of BDT 48,186,376 to Provident Fund and BDT 38,247,520 to Gratuity Fund. Salaries and allowances of IDLC Group include annual contribution of BDT 56,905,730 to Provident Fund and BDT 55,014,274 to Gratuity Fund.

24.2 Employee benefitsIDLC Finance Limited operates a funded gratuity scheme (which is a defined benefit scheme as specified in IAS 19). Gratuity fund is administered by a Board of Trustees and Company contributions are invested separately from company assets. Employees are entitled to gratuity benefit after completion of minimum years of service with the Company. The Company is contributing to the fund as prescribed by actuarial valuation report. Disclosures of IDLC Finance Limited Employees' Gratuity Fund has been given below:

IDLC Finance Limited 2020 BDT

2019 BDT

Net defined benefit assets & liabilityDefined benefit obligation (Note: 24.2.1) (440,701,024) (279,868,761)Fair value of plan assets (Note: 24.2.2) 290,726,975 251,449,174 Net defined benefit obligation (149,974,049) (28,419,587)


2019 BDT

24.2.1 Change in benefit obligation

Benefit obligation at end of prior year (279,868,761) (282,364,295)Current service cost (34,230,613) (20,066,201)Interest expense (19,590,813) (24,706,876)Benefit payments 14,667,877 18,764,704 Remeasurements due to change in demographic assumptions - - Remeasurements due to change in financial assumptions (72,484,790) 42,659,784 Remeasurements due to experience adjustments (49,193,924) (14,155,877)Defined benefit obligation at end of year (440,701,024) (279,868,761)

24.2.2 Change in fair value of plan assets

Fair value of plan assets at end of prior year 251,449,174 209,563,537 Interest income 16,716,161 19,042,743 Employer contributions 38,247,520 40,478,301 Expense Adjustment (1,018,003) 1,129,297 Benefit payments from plan assets (14,667,877) (18,764,704)Fair value of plan assets at end of year 290,726,975 251,449,174


2019 BDT

2020 BDT

2019 BDT




2019 BDT

Fair value of plan assetsCash and cash equivalents 34,562,667 6,004,830 Debt instruments 256,164,308 245,444,344 Total fair value of plan assets 290,726,975 251,449,174

Significant characteristics of the plan

Plan sponsor : IDLC Finance Limited Name of the gratuity fund : IDLC Finance Limited Employees' Gratuity Fund Nature of benefits : Final salary defend benefit plan Risks associated with the plan : Plan sponsor bears interest rate risks associated of the planVesting criteria : 5 year of continuous service Applicable salary : Last drawn monthly basic salary Maximum limit of benefit paid : No upper limit on benefit Basis of gratuity : Accrued benefit Normal retirement age : 60 years

Benefit calculation : - Past service from 5 years to below 10 years: One month's basic pay for each year of service

- From 10 years to below 15 years: One & a half month's basic pay for each year of service

- From 15 years & above: Two month's basic pay for each year of service


2019 BDT

2020 BDT

2019 BDT

25 Rent, taxes, insurance, electricity, etc.

Rent, rate and taxes (Note: 25.1) 1,353,493 1,389,053 3,511,511 5,962,712 Insurance 4,348,279 3,659,334 4,718,728 4,776,093 Power and electricity 36,422,134 40,184,899 42,756,004 47,689,993

42,123,906 45,233,286 50,986,243 58,428,798

25.1 Disclosure related to Rent, rate and taxes:

Actual rent expenses 149,578,085 146,712,458 185,635,199 184,152,990 Less: Reclassification of rent expenses (as per IFRS 16: Leases) 148,224,592 145,323,405 182,123,688 178,190,278 Rent expenses as reported 1,353,493 1,389,053 3,511,511 5,962,712

In addition to the above mentioned change in rent expense, implementation of IFRS 16 has resulted in charging of depreciation against Right-of-use asset as disclosed in Annexure A and of Interest expense on lease rent, as disclosed in Note 20.

26 Legal expenses

Renewal and registration 2,853,017 6,660,952 4,074,317 8,820,552 Other professional charges 4,630,066 11,323,853 19,819,933 13,719,053

7,483,083 17,984,805 23,894,250 22,539,605

27 Postage, stamp, telecommunication, etc.

Postage 1,734,515 2,271,160 2,116,219 2,435,059 Telecommunication and internet etc. 37,330,837 33,595,362 44,666,359 41,055,985

39,065,352 35,866,522 46,782,578 43,491,044

28 Stationery, printing, advertisements, etc.

Stationery & printing 42,917,590 52,749,024 45,069,729 56,175,391 Advertisement and publicity 60,974,094 89,585,175 66,421,890 105,667,788

103,891,684 142,334,199 111,491,619 161,843,179



29 Managing Director's salary and benefits

Basic pay 6,000,000 6,000,000 6,000,000 6,000,000 Allowances 3,000,000 2,890,000 3,000,000 2,890,000 Bonus 2,500,000 2,500,000 2,500,000 2,500,000 Company's contribution to provident & gratuity fund 1,100,004 1,100,004 1,100,004 1,100,004

12,600,004 12,490,004 12,600,004 12,490,004

Managing Director's salary and benefits have been revised and is effective from March 2019.

30 Directors' fees

Honorarium for attending meeting 1,238,137 1,409,523 1,854,086 1,990,581 1,238,137 1,409,523 1,854,086 1,990,581

30.1 Directors' fees

In compliance with Bangladesh Bank's circular No. DFIM Circular No. 13, dated November 30, 2015, BDT 8,000 has been paid to directors of the board, excluding the CEO & Managing Director, for attending each meeting of the board and its sub-committees of IDLC Finance Limited.

31 Auditors' fees

Annual statutory audit fees (including VAT) 805,000 805,000 1,150,000 1,150,000 Other audit fees (including VAT) 86,250 78,928 86,250 78,928

891,250 883,928 1,236,250 1,228,928

32 Depreciation and repair of company's assets

Freehold assets (Annexure-A) 236,765,041 254,776,553 285,866,458 302,983,900 Repair and maintenance for premises, vehicles, computers and computers accessories 28,117,771 19,793,761 34,123,769 25,876,666

264,882,812 274,570,314 319,990,227 328,860,566

33 Other expenses

Bank charges 5,559,064 5,889,266 6,392,838 6,814,176 Books and periodicals 92,579 249,130 130,908 354,778 Car expenses 28,494,396 30,572,350 31,362,459 34,938,422 Donations and subscriptions 32,403,658 883,412 32,959,272 1,182,582 Medical & welfare expenses 19,061,560 13,991,342 20,829,852 15,549,376 Entertainment expenses 16,699,732 23,260,619 18,672,760 25,725,752 Consultancy fees 6,509,580 10,687,371 6,509,580 10,687,371 Office service expenses 75,425,535 88,715,738 93,011,135 108,887,230 Training expenses 4,381,708 8,235,406 4,501,555 10,659,418 Travel and conveyances 22,164,031 27,077,945 22,921,184 28,831,895 CDBL charges 900 900 750,985 1,158,880 Howla and Laga charge - - 48,002,023 40,691,742 Portfolio Management Charge 52,902,664 8,926,202 - - Sales Incentive 40,640,008 61,118,217 42,681,446 63,171,180 Repossession fees and others 26,879,197 22,419,262 27,273,666 22,634,178

331,214,612 302,027,160 355,999,663 371,286,980


2019 BDT

2020 BDT

2019 BDT



34 Operating Segment Report (IDLC Finance Limited & its subsidiaries)

Revenue and profit For the year 2020

Core financing business

Investment banking business

Brokerage business

Asset management

businessTotal

External revenueNet interest income 4,218,603,660 142,451,174 128,891,486 2,677,253 4,492,623,573 Investment income 1,035,002,230 150,736,698 140,390,373 11,017,879 1,337,147,180 Commission and brokerage 46,694,278 81,416,185 357,927,414 72,317,143 558,355,020 Other operating income 325,141,702 794,873 5,578,957 962,400 332,477,932

Inter-segment revenue/interest expense 46,221,464 (51,981,754) (45,108,875) (2,210,896) (53,080,061)Total Segment Revenue (A) 5,671,663,334 323,417,176 587,679,355 84,763,779 6,667,523,644

Other operating expenses 1,920,361,102 81,120,780 249,276,598 65,617,534 2,316,376,014 Major non-cash expenses:

Depreciation 236,765,041 10,755,263 29,627,496 8,718,658 285,866,458 Provision for future losses 228,422,825 26,564,335 70,634,054 (10,927,797) 314,693,417

Inter-segment expense (52,902,664) - (177,397) - (53,080,061)Total Segment Expense (B) 2,332,646,304 118,440,378 349,360,751 63,408,396 2,863,855,828

Reportable segment profit before tax (A-B) 3,339,017,030 204,976,798 238,318,604 21,355,383 3,803,667,816

For the year 2019



Brokerage business

Asset management

businessTotal

External revenueNet interest income 4,296,503,413 199,381,141 167,686,963 7,340,572 4,670,912,089 Investment income 32,604,778 (5,527,285) 67,278,914 1,808,589 96,164,996 Commission and brokerage 53,374,175 71,846,673 257,683,274 41,508,565 424,412,687 Other operating income 432,922,088 2,885,857 5,600,492 (846,375) 440,562,062

Inter-segment revenue/interest expense 147,872,533 (58,148,228) (98,381,588) (5,296,387) (13,953,670)Total Segment Revenue (A) 4,963,276,987 210,438,158 399,868,056 44,514,964 5,618,098,164

Other operating expenses 1,756,942,241 83,258,897 247,627,249 57,241,201 2,145,069,588 Major non-cash expenses:

Depreciation 254,776,553 11,145,283 29,678,256 7,383,808 302,983,900 Provision for future losses 413,269,218 (1,858,639) 6,270,705 5,212,467 422,893,751

Inter-segment expense (8,926,203) (1,865,529) (3,161,939) - (13,953,670)Total Segment Expense (B) 2,416,061,809 90,680,013 280,414,271 69,837,476 2,856,993,569

Reportable segment profit before tax (A-B) 2,547,215,178 119,758,145 119,453,784 (25,322,512) 2,761,104,595



For the year 2020



Brokerage business

Asset management

businessTotal

External assetsTotal assets 123,418,886,876 3,848,200,110 5,236,671,505 365,616,327 132,869,374,818

Inter-segment assets (4,100,253,099) (1,291,898,744) (603,623,660) - (5,995,775,503)Total Segment Assets 119,318,633,777 2,556,301,366 4,633,047,845 365,616,327 126,873,599,315

External liabilitiesTotal liabilities 111,302,716,262 1,498,376,148 686,090,953 43,727,171 113,530,910,534

Inter-segment liabilities (1,895,522,400) (253,309) - - (1,895,775,709)Total Segment Liabilities 109,407,193,862 1,498,122,839 686,090,953 43,727,171 111,635,134,825

For the year 2019



Brokerage business

Asset management

businessTotal

External assetsTotal assets 114,654,809,403 3,524,405,706 4,572,619,015 253,969,057 123,005,803,182

Inter-segment assets (4,002,484,272) (575,822,157) (1,042,218,317) - (5,620,524,746)Total Segment Assets 110,652,325,131 2,948,583,549 3,530,400,698 253,969,057 117,385,278,436

External liabilitiesTotal liabilities 103,423,702,037 1,000,382,071 529,464,925 46,504,031 105,000,053,065

Inter-segment liabilities (1,629,861,580) (2,484,482) - - (1,632,346,062)Total Segment Liabilities 101,793,840,457 997,897,589 529,464,925 46,504,031 103,367,707,003

35 Tax expenses

35.1 Current tax

Provisions for current tax has been made on the basis of the profit for the year as adjusted for taxation purposes in accordance with the provisions of Income Tax Ordinance, 1984 and amendments made thereto. The current tax rate for the Company is 37.50% on taxable income (In 2019: 37.5%). Adequate provision has been made for disputed tax against which appeal has been made and decision is pending.

35.2 Deferred tax

Deferred tax is provided using the balance sheet method for all temporary differences arising between the tax base of assets and liabilities and their carrying values for financial reporting purposes as per International Accounting Standard (IAS) 12 "Income Taxes". See Annexure B for detailed disclosure.


2019 BDT

2020 BDT

2019 BDT

35.3 Average effective tax rate

The average effective tax rate is calculated below as per International Accounting Standard (IAS) 12: "Income Taxes".

Tax expenses (A) 1,046,973,032 868,223,177 1,263,097,028 1,061,182,381 Accounting profit before tax (B) 3,251,714,009 2,390,416,442 3,803,667,816 2,761,104,595 Average effective tax rate (A÷B) 32.20% 36.32% 33.21% 38.43%

Reason for changes in Average effective tax rate:

Solo

The effective tax rate of IDLC Finance Limited has reduced over previous year mainly due to higher growth in profit before tax in comparison to current tax provision over previous year. Current year’s profit before tax has experienced a growth of amount BDT 861 million while tax expense rose by BDT 179 million, attributable to a significant portion of tax exempted income incurred in 2020.

Group

In the consolidated financial statements, the effective tax rate has reduced over previous year mainly due to higher growth in profit before tax in comparison to current tax provision over previous year. Current year’s profit before tax has experienced a growth of amount BDT 1,043 million while tax expense rose by BDT 202 million. The Group earned a significant gain from tax exempted income that resulted in the lower growth in tax expenses.



35.3.1 Reconciliation of effective tax rate:

IDLC Finance Limited 2020 2019

% BDT % BDT

Profit before income tax as per profit and loss account 3,251,714,009 2,390,416,442 Income tax as per applicable tax rate 37.50% 1,219,392,753 37.50% 896,406,166

Net inadmissable expenses (In 2019, net tax release due to reduction in tax rate in 2018 and prior years' adjustments) 5.39% 175,232,365 -0.34% (8,027,587)Tax savings from tax rates lower than business rate (ranging from 0% to 20% for exempted investment income, dividend income, capital gains, management fee of mutual funds, sale of stock exchange membership) -9.69% (314,985,796) -0.47% (11,204,589)Effect of deferred tax -1.00% (32,666,290) -0.37% (8,950,813)Reported average effective tax rate & total tax expenses 32.20% 1,046,973,032 36.32% 868,223,177

IDLC Group

Profit before income tax as per consolidated profit and loss account 3,803,667,816 2,761,104,595 Income tax as per applicable tax rate 37.10% 1,411,087,772 37.32% 1,030,548,040 Net inadmissable expenses (In 2019, net tax release due to reduction in tax rate in 2018 and prior years' adjustments) 9.58% 364,203,428 3.21% 88,696,996 Tax savings from tax rates lower than business rate (ranging from 0% to 20% for exempted investment income, dividend income, capital gains, management fee of mutual funds, sale of stock exchange membership) -11.93% (453,774,726) -1.46% (40,203,092)Effect of deferred tax -1.54% (58,419,445) -0.65% (17,859,563)Reported average effective tax rate & total tax expenses 33.21% 1,263,097,028 38.43% 1,061,182,381


2019 BDT

2020 BDT

2019 BDT

36 Earnings Per Share (EPS)

Basic earnings per share has been calculated as follows:Earnings attributable to ordinary shareholders (Net profit after tax) (A) 2,204,740,977 1,522,193,265 2,540,570,712 1,699,922,173 Weighted average number of ordinary shares outstanding during the year (B) 377,050,780 377,050,780 377,050,780 377,050,780 Earnings Per Share (A÷B) 5.85 4.04 6.74 4.51

Reason for changes in Earnings Per Share (EPS): Solo:

EPS of IDLC Finance Limited for the year ended December 31, 2020 is BDT 5.85, which was BDT 4.04 in the same period of previous year. The primary reason behind this growth is the rise in investment income (increase of BDT 1,002 million), decrease in Interest on deposit and Borrowings (reduction by BDT 999 million) and decline in provision for loans and advances (drop by BDT 197 million). On the other hand, operating expense rose at a proportionately lower rate (increased by BDT 145 million). As such, aggregately net profit after tax improved by BDT 683 million.Group:

In consolidated financial statement, EPS for the year ended December 31, 2020 is BDT 6.74, which was BDT 4.51 in the same period of previous year. The primary reason behind this growth is the rise in investment income (increase of BDT 1,240 million), decrease in Interest on deposit and Borrowings (reduction by BDT 905 million) and decline in provision for loans and advances (drop by BDT 108 million). On the other hand, operating expense rose at a proportionately lower rate (increased by BDT 115 million). As such, aggregately net profit after tax improved by BDT 841 million.

37 Net Asset Value (NAV) Per Share

Net Asset (total assets less total liabilities) (A) 12,116,170,614 11,231,107,366 15,238,464,490 14,017,571,433 Total number of ordinary shares outstanding (B) 377,050,780 377,050,780 377,050,780 377,050,780 Net Asset Value per share (NAV) (A÷B) 32.13 29.79 40.41 37.18




2019 BDT

2020 BDT

2019 BDT

38. Net Operating Cash Flows Per Share (NOCFPS)

Net cash flows from operating activities (A) 2,627,819,149 (1,221,310,364) 3,414,023,433 (1,838,109,353)Total number of ordinary shares outstanding (B) 377,050,780 377,050,780 377,050,780 377,050,780 Net operating cash flows per share (NOCFPS) (A÷B) 6.97 (3.24) 9.05 (4.87)

Reason for changes in Net Operating Cash Flows Per Share (NOCFPS):

Solo: NOCFS of IDLC Finance Limited for the year ended December 31, 2020 is BDT 6.97, which was BDT (3.24) in the same period of previous year. The primary reason behind this variance is the increase in cash generation from loans & advances by BDT 9,684 million and rise in receipt from Other Operating Income by BDT 868 million. On the other hand, cash generation from term & other deposits declined by BDT 4,581 million and payable and accrued expenses fell by BDT 57 million. As such, aggregately cash generation from operating activities has risen by BDT 3,849 million during the year 2020.

Group:In consolidated financial statement, NOCFPS for the year ended December 31, 2020 is BDT 9.05 which was BDT (4.87) in the same period of previous year. The primary reason behind this variance is the increase in cash generation from loans & advances by BDT 8,734 million and rise in receipt from Other Operating Income by BDT 1,166 million. On the other hand, cash generation payable and accrued expenses increased by BDT 1,332 million while from term & other deposits declined by BDT 4,334 million. So, aggregately cash generation from operating activities has risen by BDT 5,252 million during the year 2020.

39 Reconciliation of Net Profit with Cash Flows from Operating Activities

Net profit after tax 2,204,740,977 1,522,193,265 2,540,570,788 1,699,922,214

Items not involved in cash movement:Add: Depreciation 236,765,041 254,776,553 285,866,458 302,983,900 Add: Provision for loans and investments 216,601,718 413,269,218 314,693,417 422,893,751 Add: Provision for taxation 1,079,639,322 877,173,990 1,321,516,473 1,079,041,944 Add/ (Less): Accrued expenses 3,278,395,859 3,954,501,675 3,932,164,867 3,397,003,745 Add/ (Less): Accrued income (1,323,442,400) (335,555,945) (1,280,007,591) (255,309,682)Less: Gain On Disposal of Fixed assets (4,663,800) (4,457,598) (5,550,505) (5,850,318)Increase/(Decrease) in Employee gratuity - - 10,891,370 15,233,359 Increase/(Decrease) in deferred tax (32,666,291) (8,950,813) (58,419,446) (17,859,563)

Adjustments to reconcile net profit after tax to net cash provided by operating activities

5,655,370,426 6,672,950,345 7,061,725,831 6,638,059,350

Increase/(decrease) in operating assets and liabilities(Increase)/Decrease in Loans & advances 901,747,827 (8,783,044,327) 578,405,056 (8,155,901,212)(Increase)/Decrease in Other assets (318,733,591) (546,942,106) (208,552,349) (489,718,991)Increase/(Decrease) in Term & other deposits 1,123,620,177 5,705,448,688 858,420,170 5,192,833,411 Increase/(Decrease) in Payable and accrued expenses (3,685,241,647) (3,604,445,552) (3,690,349,760) (3,770,853,037)(Increase)/Decrease in Income tax (923,247,299) (822,882,600) (1,098,008,107) (1,041,679,057)Increase/(Decrease) in Portfolio investors fund - - 38,079,336 (368,455,004)Increase/(Decrease) in Interest suspense (125,696,744) 157,605,188 (125,696,744) 157,605,188

(3,027,551,277) (7,894,260,709) (3,647,702,398) (8,476,168,702)Net cash flows from/(used in) operating activities 2,627,819,149 (1,221,310,364) 3,414,023,433 (1,838,109,353)



40 Related party disclosure

a. Particulars of Directors and their interest in different entities

SLno.

Name of the Director Status in IDLC

Name of the firms/companies in which

interested is the proprietor, partner, director, managing agent, guarantor,

employee etc.

Status in interested entity

(%) of Holding/Interest in the concern as on

31.12.2020

1. Mr. Aziz Al Mahmood Chairman

Danish Condensed Milk Bangladesh Limited

Managing Director 75.00%

Danish Foods Limited Managing Director 75.00%

Danish Distribution Network Limited


Rubel Steel Mills Limited Managing Director 75.00%

Danish Dairy Firm Limited


Suborna Bhumi Housing Limited


Voice Tel Limited Managing Director 22.50%

Partex Tissue Limited Managing Director 70.00%

Danish Multipurpose Farm Limited


2. Mr. Atiqur Rahman Director

Transcom Limited

Group Finance Director

-M. Rahman Tea Co.

Limited7.29%

Monipur Tea Co. Limited 3.66%Marina Tea Co. Limited 8.11%W. Rahman Jute Mills

Limited0.01%

Heritage Agro Farms Limited

5.00%

3. Mr. Md. Abdul Wadud Director The City Bank LimitedDeputy Managing Director and Head of Commercial, Trade and SME-Medium Business Segment

-

4. Ms. Mahia Juned Director The City Bank Limited

Deputy Managing Director & Chief Operating Officer

-

City Hong Kong Limited Nominated director of City Bank

Ltd. -

5.Mr. Mohammad Mahbubur Rahman, FCA

Director

The City Bank Limited Deputy Managing Director & Chief

Financial Officer (CFO) -

City Bank Capital Resources Limited

Director nominated by CBL -

City Brokerage Limited Director nominated by CBL -

6. Mr. Md. Kamrul Hassan, FCA Director

Transcom Group of Companies

Executive Director - Finance -

Global Appliances Limited

Director Nominated

National Asset Management Limited

Director 12%



SLno.

Name of the Director Status in IDLC

Name of the firms/companies in which

interested is the proprietor, partner, director, managing agent, guarantor,

employee etc.

Status in interested entity

(%) of Holding/Interest in the concern as on

31.12.2020

7. Mr. Syed Shahriyar Ahsan Director

Sadharan Bima Corporation

Managing Director -

Investment Corporation of Bangladesh

Director – Nominated by SBC -

Central Depository Bangladesh Limited


National Tea Company Limited


SBC Securities and Investment Limited.

Chairman-Nominated by SBC -

Aroma Tea Limited Director – Nominated by SBC -

Asian Reinsurance Corporation

Council Member for Bangladesh -

Bangladesh Insurance Academy

Member – Board of Governors -

8. Mr. Mati Ul Hasan Director Mercantile Bank LimitedAdditional Managing Director &

CRO -

10. Mr. Niaz HabibIndependen

Director - - -

11. Mr. Matiul Islam Nowshad CMgr, FCMIIndependent

Director ZUNOKS Consulting Partner 25%

b. Significant contract where the Company is party and wherein Directors have interest - Nil

c. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercises significant influence over the other party in making financial and operational decision and include associated companies with or without common Directors and key management positions. The Company has entered into transaction with other related entities in normal course of business that fall within the definition of related party as per International Accounting Standard 24: " Related Party Disclosures." Transactions with related parties are executed on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other customers of similar credentials and do not involve more than a normal risk.

Details of transactions with related parties and balances with them as at 31 December 2020 were as follows:

Name of the related party Transaction nature Relationship

Balance as at January 1,

2020Addition Adjustment

Balance as at December 31, 2020

receivable/ (payable)

BDT BDT BDT BDT

The City Bank Limited and its subsidiaries Term Deposit Sponsor shareholder (514,382,735) (4,103,501,583) 1,530,000,000 (3,087,884,318)Mercantile Bank Limited Subordinated Bond Shareholder 120,000,000 - (60,000,000) 60,000,000 Transcom group Lease/Loan Shareholder 758,861 - (758,861) -

Term Deposit Shareholder (1,123,497,753) (487,274,182) 798,880,546 (811,891,389)

Reliance Insurance Limited Term Deposit Shareholder (672,000,000) (116,802,188) 240,802,188 (548,000,000)

Directors & their families Term Deposit Shareholder (120,011,496) (29,363,685) 41,828,415 (107,546,766)

IDLC Securities Limited Loan to IDLC IL Subsidiary - 654,900,000 (654,900,000) -



Name of the related party Transaction nature Relationship

Balance as at January 1,

2020Addition Adjustment

Balance as at December 31, 2020

receivable/ (payable)

BDT BDT BDT BDT

Term Deposit Subsidiary (1,021,770,653) (1,000,000,000) 1,421,770,653 (600,000,000)

Interest on Term Deposit Subsidiary (20,447,664) (3,623,611) 27,694,886 3,623,611

IDLC Investments LimitedBorrowings from IDLC SL Subsidiary - 654,900,000 (654,900,000) -

Borrowings from IDLC FL Subsidiary - 413,100,000 (413,100,000) -

Term Deposit Subsidiary (571,215,082) (1,153,316,670) 466,346,010 (1,258,185,742)

Interest on Term Deposit Subsidiary (4,607,075) (43,291,696) 14,185,769 (33,713,002)

IDLC Asset Management Limited Term Deposit Subsidiary - (74,223,967) 74,223,967 -

Loan Against Deposit Subsidiary - 29,474,859 (29,474,859) - Central Depository Bangladesh Ltd. Term Deposit Related Party (44,050,000) (10,000,000) - (54,050,000)

National Tea Company Ltd Employees Gratuity Fund Term Deposit Related Party (5,418,250) (3,964,650) - (9,382,900)National Tea Company Limited Employees Provident Fund Term Deposit Related Party (734,081) (3,140,731) - (3,874,813)Danish Condensed Milk (BD) Ltd. Employees Provident Fund Term Deposit Related Party - (41,530,000) - (41,530,000)

(3,977,375,929) (5,317,658,104) 2,802,598,713 (6,492,435,319)

d. Share issued to Directors and executives without consideration or exercisable at a discount - Nil

e. Lending policy to related parties

Related parties are allowed Loans and Advances as per General Loan Policy of the Company.

f. Loans, advances and leases to Directors and their related concern -Nil

g. Investment in the Securities of Directors and their related concern - Nil

41 Receivable from Directors

The company does not have any receivable from Directors as at December 31, 2020.

42 Disclosure on Audit committee

a. Particulars of audit committee

The Audit Committee of the Board was duly constituted by the Board of Directors of the Company in accordance with DFIM Circular no. 13 issued on October 26, 2011 by Bangladesh Bank and in accordance with Bangladesh Securities and Exchange Commission (BSEC) condition No. 5 of the notification No. SEC/CMRRCD/2006-158/207/Admin/80, dated June 3, 2018.

The Audit Committee of the Board of Directors as of 31 December 2020 consisted of the following members of the Board:

Name Status at the Company Status at committee

Mr. Niaz Habib Independent Director Chairman

Mr. Mohammad Mahbubur Rahman FCA Director Member

Mr. Md. Kamrul Hassan, FCA Director Member

Mr. Syed Shahriyar Ahsan Director Member

Ms. Mahia Juned Director Member



The company secretary is to act as the Secretary of the Audit Committee

b. Meetings held by the committee during the year by date: Meeting No Held on

72nd 20-Feb-2020

73rd 12-May-2020

74th 22-Jul-2020

75th 28-Oct-2020

76th 20-Dec-2020

c. Five meetings of the audit committee were held during the year 2020 where it carried out the following tasks:i) Conducted discussions, with the statutory auditors and with management, on the financial statements of the company for the year

ended December 31, 2019 before concluding that the financial statements provided a true and fair view;ii) Reviewed the audited consolidated and separate financial statements of IDLC Finance Limited for the year ended December 31,

2019;iii) Recommended for appointment of statutory external auditors of the company for the year 2020;iv) Reviewed report of the audit committee for 2019 for inclusion in the Annual Report 2019 prior to its publication; v) Reviewed report of management discussion and analysis 2019 prior to its publication in the Annual Report 2019;vi) Reviewed Internal Control & Compliance report of 2019;vii) Reviewed and approved annual audit plan of the Internal Control & Compliance department for the year 2020; viii) Recommended for appointment of auditors for certification on compliance with the conditions of Corporate Governance

Guideline (CGG) for the year 2020; ix) Reviewed the quarterly un-audited financial statements of IDLC Finance Limited and its subsidiaries for the first quarter ended

on 31 March 2020;x) Adopted the nomination of Chairman of the Audit Committee made by the board of IDLC Finance Limited;xi) Reviewed the quarterly un-audited financial statements of IDLC Finance Limited for the second quarter ended on June 30, 2020;xii) Reviewed the quarterly Internal Control & Compliance activity report for the second quarter (Q2) ended on June 30, 2020 ;xiii) Reviewed the quarterly audited financial statements of IDLC Finance Limited and its subsidiaries for the third quarter (Q3) ended

on September 30, 2020 for submission to regulatory authorities as part of the process for applying for issuance of non-convertible zero coupon bonds by IDLC Finance Limited;

xiv) Reviewed the re-compliance report on Bangladesh Bank’s comprehensive inspection report on Corporate Head Office of IDLC Finance Limited based on the financials as of December 31, 2018;

xv) Reviewed the Anti-Money Laundering (AML) Activity Report of IDLC Finance Limited for the half year ended June 30, 2020; xvi) Reviewed quarterly Internal Control & Compliance report for the third quarter (Q3) ended on September 30, 2020;xvii) The Audit Committee reviewed the issues arising out of the earlier meetings of the Audit Committee;xviii) Reviewed update on annual audit plan 2020 and its outcome;xix) Reviewed and approved annual audit plan 2021 of Internal Control & Compliance Department;xx) Reviewed an update on regulatory circulars issued in the year 2020 from the central bank and other regulatory bodies;xxi) As a matter of course, at each meeting, confirmed minutes of the immediately preceding audit committee meeting; and xxii) Reviewed other matters of interest that arose from time to time during the year ended 31 December 2020.



43 Foreign remittance

There were no foreign remittance during the year 2020.

44 Number of employees

The Company paid an aggregate amount more than BDT 36,000 per annum to 1,294 employees, who were in employment for full year or part of the year (2019: 1,304). (Group- 2020:1,465 employees, 2019:1,476 employees)

45 Events after the reporting period

45.1 Dividend for the year 2020

The Board of Directors of IDLC Finance Limited at its 298th Board Meeting held on February 17, 2021, recommended to the shareholders a cash dividend @35% i.e. BDT 3.50 per share (amounting to BDT 1,319,677,730) based on financial performance of 2020. This will be considered for approval by the shareholders at the 36th Annual General Meeting (AGM) to be held on March 31, 2021. Out of the distributable dividend, 1.58% is comprised of Taxed Dividend, amounting to BDT 20,881,445, which will be distributed without deduction of tax, as per Income Tax Ordinance, 1984.

46 General

46.1 The Company publishes its quarterly accounts as per the Bangladesh Securities and Exchange Commission (BSEC) Notification No. SEC/CMRRCD/2008-183/Admin/03-34, dated September 27, 2009.

46.2 The Company does not have any restriction on distribution and payment of dividends.

46.3 During the year under report, no matters were submitted to a vote of shareholders of the Company.

46.4 Previous year's figures have been rearranged where necessary to conform to current year's presentation.

Dated, Dhaka

17 February 2021




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Part

icul

ars

IDLC

Fin

ance

Lim

ited

IDLC

Gro

up

Car

ryin

g am

ount

T

ax b

ase

(Tax

able

)/de

duct

ible

te

mpo

rary

diff

eren

ce

Car

ryin

g am

ount

T

ax b

ase

(Tax

able

)/de

duct

ible

te

mpo

rary

diff

eren

ce

BDT

BDT

BDT

BDT

BDT

BDT

2019

Asse

ts (e

xclu

ding

land

):Fi

xed

asse

ts n

et o

f dep

reci

atio

n (A

nnex

ure-

A) 4

07,9

86,1

53

513

,376

,510

1

05,3

90,3

57

448

,553

,361

5

78,2

79,8

31

129

,726

,470

Diff

eren

ce o

f veh

icle

* (4

,786

,166

) -

4,7

86,1

66

(9,7

23,5

05)

- 9

,723

,505

Tota

l 4

03,1

99,9

87

513

,376

,510

1

10,1

76,5

23

438

,829

,856

5

78,2

79,8

31

139

,449

,975

Liab

ilitie

s:

Loss

on

sale

of s

econ

dary

shar

es 8

3,54

7,59

4 -

83,

547,

594

215

,706

,768

-

215

,706

,768

Leas

e Li

abili

ty-R

ent

464

,684

,567

-

464

,684

,567

6

02,8

32,3

49

- 6

02,8

32,3

49

Gra

tuity

pro

visio

n (n

et o

f pay

men

t) -

- -

61,

744,

884

- 6

1,74

4,88

4

Tota

l 5

48,2

32,1

61

- 5

48,2

32,1

61

880

,284

,001

-

880

,284

,001

IDLC

FL

IDLC

SL

IDLC

IL

IDLC

AM

L

Appl

icab

le ta

x ra

te (2

019)

37.5

0%35

.00%

37.5

0%35

.00%

Appl

icab

le

tax

rate

fo

r lo

ss

on

sale

of

se

cond

ary

shar

es (2

019)

10.0

0%10

.00%

10.0

0%10

.00%

Defe

rred t

ax as

set a

s on D

ecem

ber 3

1, 20

19 2

23,9

27,6

68

3

18,8

97,6

93



Defe

rred t

ax lia

bilit

y is a

rrive

d at a

s fol

lows

:

Part

icul

ars

IDLC

Fin

ance

Lim

ited

IDLC

Gro

up

Car

ryin

g am

ount

T

ax b

ase

(Tax

able

)/de

duct

ible

te

mpo

rary

diff

eren

ce

Car

ryin

g am

ount

T

ax b

ase

(Tax

able

)/de

duct

ible

te

mpo

rary

diff

eren

ce

BDT

BDT

BDT

BDT

BDT

BDT

2020

ROU

-Ren

t, ne

t of d

epre

ciat

ion

507

,331

,350

-

(507

,331

,350

) 6

14,9

70,0

87

- (6

14,9

70,0

87)

Tota

l tax

able

tem

pora

ry d

iffer

ence

s for

the

year

202

0 5

07,3

31,3

50

- (5

07,3

31,3

50)

614

,970

,087

-

(614

,970

,087

)

IDLC

FL

IDLC

SL

IDLC

IL

IDLC

AM

L

Appl

icab

le ta

x ra

te (2

020)

37.5

0%32

.50%

37.5

0%32

.50%

Def

erre

d ta

x lia

bilit

ies a

s on

Dec

embe

r 31

, 202

0 1

90,2

49,2

56

226

,594

,467

2019

ROU

-Ren

t, ne

t of d

epre

ciat

ion

491

,338

,416

-

(491

,338

,416

) 6

30,7

81,6

78

- (6

30,7

81,6

78)

Fixe

d as

sets

net

of d

epre

ciat

ion

(Ann

exur

e-A)

- -

- 1

3,68

2,88

3 1

2,66

9,49

5 (1

,013

,388

)

Tota

l tax

able

tem

pora

ry d

iffer

ence

s for

the

year

201

9 4

91,3

38,4

16

- (4

91,3

38,4

16)

644

,464

,561

1

2,66

9,49

5 (6

31,7

95,0

66)

IDLC

FL

IDLC

SL

IDLC

IL

IDLC

AM

L Ap

plic

able

tax

rate

Bus

ines

s or

Prof

essio

n(20

19)

37.5

0%35

.00%

37.5

0%35

.00%

Def

erre

d ta

x lia

bilit

ies a

s on

Dec

embe

r 31

, 201

9 1

84,2

51,9

06

234

,229

,307

2020

: Con

solid

ated

def

erre

d ta

x in

com

e w

as B

DT

58.4

2 m

illio

n, w

hich

incl

udes

BD

T 32

.66

mill

ion

for d

efer

red

tax

inco

me

of ID

LC F

inan

ce L

imite

d, B

DT

7.98

mill

ion

for d

efer

red

tax

inco

me

of ID

LC S

ecur

ities

Li

mite

d, B

DT

16.4

1 m

illio

n fo

r def

erre

d ta

x in

com

e of

IDLC

Inve

stm

ents

Lim

ited

and

BDT

1.36

mill

ion

for d

efer

red

tax

inco

me

of ID

LC A

sset

Man

agem

ent L

imite

d.

20

19:

Cons

olid

ated

def

erre

d ta

x in

com

e w

as B

DT

17.8

6 m

illio

n, w

hich

incl

udes

BD

T 8.

95 m

illio

n fo

r def

erre

d ta

x in

com

e of

IDLC

Fin

ance

Lim

ited,

BD

T 3.

64 m

illio

n fo

r def

erre

d ta

x in

com

e of

IDLC

Sec

uriti

es

Lim

ited,

BD

T 5.

30 m

illio

n fo

r def

erre

d ta

x in

com

e of

IDLC

Inve

stm

ents

Lim

ited

and

BDT

0.02

mill

ion

for d

efer

red

tax

expe

nse

of ID

LC A

sset

Man

agem

ent L

imite

d.

* Th

is re

pres

ents

the

perm

anen

t diff

eren

ce re

late

d to

sed

an c

ars,

not p

lyin

g fo

r hire

, ow

ned

by ID

LC. A

s pe

r the

pro

visio

ns o

f Inc

ome

Tax

Ord

inan

ce 1

984,

dep

reci

atio

n on

suc

h ca

rs is

allo

wed

onl

y up

to

cert

ain

limit

of c

ost (

curr

ently

BD

T 2.

5 m

illio

n pe

r car

) of s

uch

cars

for t

ax p

urpo

se. D

iffer

ence

for v

ehic

le re

pres

ents

the

amou

nt o

f dep

reci

ated

cos

t exc

eedi

ng su

ch li

mits

.



SL.

Nat

ure

of

Dep

artu

reTi

tle o

f IAS

/IFRS

Trea

tmen

t of I

AS/IF

RSTr

eatm

ent A

dopt

ed a

s per

Ban

glad

esh

Bank

Fina

ncia

l or P

rese

ntat

ion

Effec

t of t

he

Dep

artu

re1

Mea

sure

men

t of

pro

visio

n fo

r le

ases

, loa

ns

and

adva

nces

(fi

nanc

ial a

sset

s m

easu

red

at

amor

tized

cos

t)

IFRS

9 “F

inan

cial

In

stru

men

ts”

An e

ntity

sha

ll as

sess

at

the

end

of e

ach

repo

rtin

g pe

riod

whe

ther

th

ere

is an

y ob

ject

ive

evid

ence

tha

t a

finan

cial

ass

et

or g

roup

of

finan

cial

ass

ets

mea

sure

d at

am

ortiz

ed c

ost i

s im

paire

d.

If an

y su

ch

evid

ence

ex

ists,

expe

cted

cr

edit

loss

es a

re r

equi

red

to b

e m

easu

red

thro

ugh

a lo

ss a

llow

ance

at

an a

mou

nt

equa

l to:

a)

th

e 12

-mon

th e

xpec

ted

cred

it lo

sses

(e

xpec

ted

cred

it lo

sses

th

at

resu

lt fro

m t

hose

def

ault

even

ts o

n th

e fin

anci

al in

stru

men

t tha

t are

pos

sible

w

ithin

12

mon

ths

afte

r the

repo

rtin

g da

te);

or

b)

full

lifet

ime

expe

cted

cre

dit

loss

es

(exp

ecte

d cr

edit

loss

es

that

re

sult

from

all

poss

ible

def

ault

even

ts o

ver

the

life

of th

e fin

anci

al in

stru

men

t).

As p

er F

ID c

ircul

ar N

o. 0

8, d

ated

03

Augu

st

2002

, FI

D c

ircul

ar N

o. 0

3, d

ated

03

May

200

6 an

d FI

D c

ircul

ar N

o. 0

3, d

ated

29

April

201

3, a

ge

nera

l pro

visio

n at

0.2

5% to

5%

und

er d

iffer

ent

cate

gorie

s of

unc

lass

ified

loan

s (g

ood/

stan

dard

lo

ans

and

Spec

ial

Men

tione

d Ac

coun

ts (

SMA)

) ha

s to

be

mai

ntai

ned

irres

pect

ive

of o

bjec

tive

evid

ence

of

impa

irmen

t on

lea

se,

loan

s an

d ad

vanc

es.

Also

pro

visio

n fo

r su

b-st

anda

rd i

nves

tmen

ts,

doub

tful i

nves

tmen

ts a

nd b

ad lo

sses

has

to

be

prov

ided

at

20%

, 50

% a

nd 1

00%

res

pect

ivel

y fo

r in

vest

men

ts d

epen

ding

on

the

dura

tion

of

over

due.

In

sepa

rate

Fi

nanc

ial

Stat

emen

ts,

an

amou

nt o

f BD

T 21

6.60

mill

ion

has

been

ch

arge

d as

in

crem

enta

l pr

ovisi

on

for

leas

es, lo

ans a

nd a

dvan

ces,

whi

ch in

clud

es

BDT

3.40

mill

ion

as g

ener

al p

rovi

sion

on

good

loan

for t

he y

ear 2

020.

Also

, as a

t 31

Dec

embe

r 20

20,

accu

mul

ated

pro

visio

n fo

r le

ases

, lo

ans

and

adva

nces

sta

nd a

t BD

T 1,

571.

79 m

illio

n.

In

cons

olid

ated

Fi

nanc

ial

Stat

emen

ts,

the

sam

e am

ount

is

BDT

314.

69 m

illio

n w

hich

incl

udes

gen

eral

pro

visio

n of

BD

T 20

.13

mill

ion.

Also

, as

at

31 D

ecem

ber

2020

, ac

cum

ulat

ed p

rovi

sion

for

leas

es,

loan

s an

d ad

vanc

es s

tand

at B

DT

1,75

0.30

m

illio

n.

2Va

luat

ion

of

Inve

stm

ents

in

quo

ted

and

unqu

oted

shar

es

IFRS

9 "F

inan

cial

In

stru

men

ts”

Inve

stm

ent

in s

hare

s fa

lls e

ither

und

er a

t “fa

ir va

lue

thro

ugh

profi

t/lo

ss (

FVTP

L)’ o

r “fa

ir va

lue

thro

ugh

othe

r co

mpr

ehen

sive

inco

me

(FVT

OCI

)” w

here

any

cha

nge

in th

e fa

ir va

lue

in c

ase

of F

VTPL

at t

he y

ear-

end

is ta

ken

to p

rofit

or l

oss,

and

any

chan

ge in

fa

ir va

lue

in c

ase

of F

VTO

CI is

take

n to

oth

er

com

preh

ensiv

e in

com

e.

As p

er F

ID c

ircul

ar N

o. 0

8, d

ated

03

Augu

st 2

002

inve

stm

ents

in

quot

ed s

hare

s an

d un

quot

ed

shar

es a

re r

eval

ued

at t

he y

ear

end

at m

arke

t pr

ice

and

as p

er b

ook

valu

e of

las

t au

dite

d ba

lanc

e sh

eet

resp

ectiv

ely.

Pr

ovisi

on

shou

ld

be m

ade

for

any

loss

aris

ing

from

dim

inut

ion

in v

alue

of i

nves

tmen

t; ho

wev

er in

cas

e of

any

un

real

ized

gai

n, n

o su

ch g

ain

can

be re

cogn

ized

an

d in

vest

men

ts a

re re

cogn

ized

at c

ost o

nly.

Dur

ing

this

year

, to

tal

mar

ket

valu

e of

al

l sh

ares

of

IDLC

Fin

ance

Lim

ited

& its

su

bsid

iarie

s is m

ore

than

the

cost

pric

e.

As

on

Dec

embe

r 31

, 20

20

ther

e w

as

BDT

261.

17 m

illio

n un

real

ised

gain

on

cons

olid

ated

inv

estm

ent

in m

arke

tabl

e se

curit

ies

and

BDT

394.

34

mill

ion

unre

alise

d ga

in o

n in

vest

men

t by

ID

LC

Fina

nce

Lim

ited

in m

arke

tabl

e se

curit

ies.

(exc

ept i

nves

tmen

t in

gove

rnm

ent b

ond)

.

3Re

cogn

ition

of

inte

rest

inco

me

for S

MA

and

clas

sified

leas

e,

loan

s and

ad

vanc

es

IFRS

9 "F

inan

cial

In

stru

men

ts"

Inco

me

from

fina

ncia

l as

sets

mea

sure

d at

am

ortiz

ed c

ost

is re

cogn

ized

thr

ough

eff

ectiv

e in

tere

st r

ate

met

hod

over

the

te

rm o

f th

e in

vest

men

t. O

nce

a fin

anci

al

asse

t is

impa

ired,

inv

estm

ent

inco

me

is re

cogn

ized

in p

rofit

and

loss

acc

ount

on

the

sam

e ba

sis b

ased

on

revi

sed

carr

ying

am

ount

.

As

per

FID

ci

rcul

ar

No.

03

, da

ted

03

May

20

06,

once

an

in

vest

men

t on

le

ases

, lo

ans

and

adva

nces

is

term

ed a

s "S

peci

al M

entio

n Ac

coun

t (S

MA)

", in

tere

st

inco

me

from

su

ch

inve

stm

ents

are

not

allo

wed

to

be r

ecog

nize

d as

inco

me,

rat

her

the

resp

ectiv

e am

ount

nee

ds

to b

e cr

edite

d as

a li

abili

ty a

ccou

nt li

ke: i

nter

est

susp

ense

acc

ount

.

At t

he y

ear

end,

in

sepa

rate

Fin

anci

al

Stat

emen

ts

inte

rest

su

spen

se

acco

unt

has

decr

ease

d to

BD

T 38

3.18

mill

ion

from

BD

T 50

8.88

mill

ion

resu

lting

in d

eclin

e of

BD

T 12

5.70

mill

ion

of i

nter

est

susp

ense

. Th

is am

ount

has

bee

n sh

own

in o

ther

lia

bilit

ies i

n no

te 1

2.5

Anne

xure

C -

Dis

clos

ure

of d

evia

tions

from

few

requ

irem

ents

of I

AS/IF

RS d

ue to

man

dato

ry c

ompl

ianc

e w

ith B

angl

ades

h Ba

nk’s

requ

irem

ents



SL.

Nat

ure

of

Dep

artu

reTi

tle o

f IAS

/IFRS

Trea

tmen

t of I

AS/IF

RSTr

eatm

ent A

dopt

ed a

s per

Ban

glad

esh

Bank

Fina

ncia

l or P

rese

ntat

ion

Effec

t of t

he

Dep

artu

re4

Pres

enta

tion

of

cash

and

cas

h eq

uiva

lent

IAS

7 "S

tate

men

t of

Cash

Flo

ws"

Ca

sh e

quiv

alen

t ar

e sh

ort

term

, hi

ghly

liq

uid

inve

stm

ents

th

at

are

read

ily

conv

ertib

le t

o kn

own

amou

nts

of c

ash

and

only

incl

ude

thos

e in

vest

men

ts w

hich

ar

e fo

r a s

hort

tenu

re li

ke: 3

mon

ths

or le

ss

perio

d.

In

the

light

of

ab

ove,

ba

lanc

e w

ith

Bang

lade

sh B

ank

and

fixed

ter

m d

epos

its

shou

ld b

e tr

eate

d as

inv

estm

ent

asse

t ra

ther

tha

n ca

sh e

quiv

alen

t as

it is

illiq

uid

asse

t and

not

ava

ilabl

e fo

r use

in d

ay to

day

op

erat

ions

.

Bang

lade

sh

Bank

ha

s iss

ued

tem

plat

es

for

finan

cial

sta

tem

ents

vid

e D

FIM

Circ

ular

No.

11,

da

ted

23 D

ecem

ber

2009

whi

ch w

ill s

tric

tly b

e fo

llow

ed b

y al

l ban

ks a

nd N

BFIs.

The

tem

plat

es o

f fina

ncia

l sta

tem

ents

pro

vide

d de

tail

pres

enta

tion

for s

tate

men

t of c

ash

flow

s.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

5M

easu

rem

ent o

f de

ferr

ed ta

x as

set

IAS

12 "I

ncom

e Ta

x"A

defe

rred

tax

ass

et s

hall

be r

ecog

nize

d fo

r all

dedu

ctib

le te

mpo

rary

diff

eren

ces

to

the

exte

nt t

hat

it is

prob

able

tha

t ta

xabl

e pr

ofit

will

be

avai

labl

e ag

ains

t w

hich

the

de

duct

ible

tem

pora

ry d

iffer

ence

can

be

utili

zed.

As p

er D

FIM

circ

ular

No.

7, d

ated

31

July

201

1,

no d

efer

red

tax

asse

t can

be

reco

gniz

ed fo

r any

de

duct

ible

te

mpo

rary

di

ffere

nce

agai

nst

the

prov

ision

for l

ease

, loa

ns a

nd a

dvan

ces.

Dur

ing

this

year

ther

e is

no im

pact

in th

e fin

anci

al st

atem

ents

due

to th

is de

part

ure

as t

he C

ompa

ny d

id n

ot c

onsid

er a

ny

dedu

ctib

le t

empo

rary

diff

eren

ce a

gain

st

the

prov

ision

fo

r le

ases

, lo

ans

and

adva

nces

.

6Pr

esen

tatio

n an

d di

sclo

sure

of

Fin

anci

al

Stat

emen

ts

and

Fina

ncia

l In

stru

men

ts

IAS

1 "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

"

IFRS

9 “F

inan

cial

In

stru

men

ts”

&

IFRS

7 "F

inan

cial

In

stru

men

ts:

Disc

losu

re"

Oth

er

Com

preh

ensiv

e In

com

e (O

CI)

is a

com

pone

nt o

f fin

anci

al s

tate

men

ts o

r th

e el

emen

ts o

f O

CI a

re t

o be

inc

lude

d in

a s

ingl

e O

ther

Com

preh

ensiv

e In

com

e st

atem

ent.

IAS

1 re

quire

s se

para

te

line

item

fo

r in

tang

ible

ass

ets

on th

e fa

ce o

f sta

tem

ent

of fi

nanc

ial p

ositi

on.

IFRS

9

and

IFRS

7

requ

ire

spec

ific

pres

enta

tion

and

disc

losu

re r

elat

ing

to a

ll fin

anci

al in

stru

men

ts.

Ba

ngla

desh

Ba

nk

has

issue

d te

mpl

ates

fo

r fin

anci

al s

tate

men

ts v

ide

DFI

M C

ircul

ar N

o. 1

1,

date

d 23

Dec

embe

r 20

09 w

hich

will

str

ictly

be

follo

wed

by

all b

anks

and

NBF

Is.

The

tem

plat

es o

f fin

anci

al s

tate

men

ts i

ssue

d by

Ba

ngla

desh

Ba

nk

do

not

incl

ude

Oth

er

Com

preh

ensiv

e In

com

e (O

CI)

nor

are

the

elem

ents

of

O

ther

Co

mpr

ehen

sive

Inco

me

allo

wed

to

incl

ude

in a

Sin

gle

Com

preh

ensiv

e In

com

e St

atem

ent.

Inta

ngib

les

asse

ts a

re n

ot s

epar

atel

y pr

esen

ted

on t

he f

ace

of s

tate

men

t of

fina

ncia

l po

sitio

n;

rath

er it

is p

rese

nted

alo

ng w

ith th

e lin

e ite

m o

f fix

ed a

sset

s.

As p

er B

angl

ades

h Ba

nk g

uide

lines

, fin

anci

al

inst

rum

ents

are

cat

egor

ized

, re

cogn

ized

and

m

easu

red

diffe

rent

ly f

rom

tho

se p

resc

ribed

in

IAS

39. A

s suc

h so

me

disc

losu

re a

nd p

rese

ntat

ion

requ

irem

ents

of I

FRS

7 an

d IA

S 32

hav

e no

t bee

n m

ade

in th

e ac

coun

ts.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

7Pr

epar

atio

n of

“S

tate

men

t of

Cash

Flo

ws”

IAS

7 "S

tate

men

t of

Cash

Flo

ws"

The

Cash

flow

sta

tem

ent c

an b

e pr

epar

ed

usin

g ei

ther

the

dire

ct m

etho

d or

the

in

dire

ct

met

hod.

Th

e pr

esen

tatio

n is

sele

cted

to

pres

ent

thes

e ca

sh fl

ows

in a

m

anne

r th

at i

s m

ost

appr

opria

te f

or t

he

busin

ess

or in

dust

ry. T

he m

etho

d se

lect

ed

is ap

plie

d co

nsist

ently

.

As p

er D

FIM

Circ

ular

No.

11,

dat

ed 2

3 D

ecem

ber

2009

, Cas

h flo

w s

tate

men

t ha

s be

en g

uide

d by

th

e Ba

ngla

desh

Ban

k w

hich

is

the

mix

ture

of

dire

ct a

nd in

dire

ct m

etho

d.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.



SL.

Nat

ure

of

Dep

artu

reTi

tle o

f IAS

/IFRS

Trea

tmen

t of I

AS/IF

RSTr

eatm

ent A

dopt

ed a

s per

Ban

glad

esh

Bank

Fina

ncia

l or P

rese

ntat

ion

Effec

t of t

he

Dep

artu

re8

Curr

ent/

Non

-cur

rent

di

stin

ctio

n

IAS

1 “P

rese

ntat

ion

of F

inan

cial

St

atem

ent”

As p

er P

ara

60 o

f IA

S 1

“Pre

sent

atio

n of

Fi

nanc

ial

stat

emen

t”

An

entit

y sh

all

pres

ent

curr

ent

and

non-

curr

ent

asse

ts

and

curr

ent

and

non-

curr

ent

liabi

litie

s as

se

para

te c

lass

ifica

tion

in i

ts s

tate

men

t of

fin

anci

al p

ositi

on.

As p

er D

FIM

Circ

ular

No.

11,

dat

ed 2

3 D

ecem

ber

2009

, Ban

glad

esh

Bank

has

issu

ed te

mpl

ates

for

finan

cial

sta

tem

ents

whi

ch is

app

licab

le f

or a

ll th

e Fi

nanc

ial I

nstit

utio

ns. I

n th

is te

mpl

ates

ther

e is

no c

urre

nt a

nd n

on-c

urre

nt s

egm

enta

tion

of

asse

ts a

nd li

abili

ties.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k. M

oreo

ver,

the

liqui

dity

st

atem

ent

show

s th

e ag

ing

profi

le o

f al

l fin

anci

al a

sset

s an

d lia

bilit

ies

from

whe

re

curr

ent/

non-

curr

ent p

ortio

n of

ass

ets

and

liabi

litie

s can

be

obta

ined

.

9O

ff-ba

lanc

e sh

eet

item

sIA

S 1

"Pre

sent

atio

n of

Fin

anci

al

Stat

emen

ts"

Ther

e is

no c

once

pt o

f off

-bal

ance

she

et

item

s in

an

y IF

RS;

henc

e th

ere

is no

re

quire

men

t fo

r di

sclo

sure

of

off-b

alan

ce

shee

t ite

ms

on t

he f

ace

of t

he b

alan

ce

shee

t.

As p

er D

FIM

Circ

ular

No.

11,

dat

ed 2

3 D

ecem

ber

2009

, off

-bal

ance

sh

eet

item

s (e

.g.

lett

er

of

cred

it, le

tter

of g

uara

ntee

etc

.) m

ust b

e di

sclo

sed

sepa

rate

ly o

n th

e fa

ce o

f the

bal

ance

shee

t.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

Ther

e is

no

finan

cial

im

pact

fo

r th

is de

part

ure

but

ther

e is

a di

sclo

sure

in t

he

finan

cial

stat

emen

ts.

10Im

pairm

ent o

f M

argi

n Lo

an

(Loa

ns a

nd

rece

ivab

les)

IFRS

9 “F

inan

cial

In

stru

men

ts”

Mea

sure

men

t af

ter

initi

al r

ecog

nitio

n at

am

ortiz

ed c

ost

and

reco

rdin

g of

cha

nges

th

roug

h pr

ofit a

nd lo

ss.

As

per

Bang

lade

sh

Secu

ritie

s an

d Ex

chan

ge

Com

miss

ion

(BSE

C)

Circ

ular

N

o.

SEC/

CMRR

CD/2

009-

193/

196

date

d 28

D

ecem

ber

2016

, pro

visio

ns fo

r the

yea

r 201

6 on

impa

irmen

t of

prin

cipa

l por

tion

of m

argi

n lo

an s

hall

be k

ept

at 2

0% o

n ea

ch q

uart

er f

or t

he fi

ve q

uart

ers

star

ting

from

Dec

embe

r 201

6.

Ther

e is

no s

uch

impa

ct fo

r thi

s. H

owev

er,

we

have

bee

n m

aint

aini

ng f

ull p

rovi

sion

for u

nrea

lized

loss

(if a

ny) o

f mar

gin

loan

in

the

port

folio

.

11

Com

plet

e se

t of

fina

ncia

l st

atem

ents

IAS

1 "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

"

As p

er I

AS 1

: "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

’’ co

mpl

ete

set

of

finan

cial

st

atem

ents

are

i) st

atem

ent o

f fina

ncia

l pos

ition

,

ii)st

atem

ent

of p

rofit

or

loss

and

oth

er

com

preh

ensiv

e in

com

e,

iii) s

tate

men

t of c

hang

es in

equ

ity,

iv) s

tate

men

t of c

ash

flow

s,

v) n

otes

, com

prisi

ng si

gnifi

cant

acc

ount

ing

polic

ies a

nd o

ther

exp

lana

tory

info

rmat

ion

and

vi)

st

atem

ent

of

finan

cial

po

sitio

n at

th

e be

ginn

ing

of

prec

edin

g pe

riod

for

retr

ospe

ctiv

e re

stat

emen

t.

As p

er D

FIM

Circ

ular

No.

11,

dat

ed 2

3 D

ecem

ber

2009

, com

plet

e se

t of

finan

cial

stat

emen

ts a

re

i) b

alan

ce sh

eet,

ii) p

rofit

and

loss

acc

ount

,

iii) s

tate

men

t of c

ash

flow

s,

iv) s

tate

men

t of c

hang

es in

equ

ity,

v) s

tate

men

t of l

iqui

dity

,

vi)

note

s, co

mpr

ising

sig

nific

ant

acco

untin

g po

licie

s and

oth

er e

xpla

nato

ry in

form

atio

n.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

Ther

e is

no

finan

cial

im

pact

fo

r th

is de

part

ure

in th

e fin

anci

al st

atem

ents

.



SL.

Nat

ure

of

Dep

artu

reTi

tle o

f IAS

/IFRS

Trea

tmen

t of I

AS/IF

RSTr

eatm

ent A

dopt

ed a

s per

Ban

glad

esh

Bank

Fina

ncia

l or P

rese

ntat

ion

Effec

t of t

he

Dep

artu

re12

Inta

ngib

le a

sset

IAS

1 "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

"

As p

er I

AS 1

: "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

’’ pa

ra 5

4: t

he s

tate

men

t of

fin

anci

al p

ositi

on s

hall

incl

ude

sepa

rate

lin

e ite

m fo

r int

angi

ble

asse

ts.

As p

er D

FIM

Circ

ular

No.

11,

dat

ed 2

3 D

ecem

ber

2009

, the

re is

no

optio

n fo

r sep

arat

e lin

e ite

m fo

r in

tang

ible

ass

et in

the

bala

nce

shee

t.

We

pres

ent i

ntan

gibl

e as

set i

n th

e ba

lanc

e sh

eet

as p

art

of fi

xed

asse

ts a

nd p

rovi

de d

etai

ls in

an

nexu

re-A

as s

epar

ate

line

item

.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

Ther

e is

no

finan

cial

im

pact

fo

r th

is de

part

ure

in th

e fin

anci

al st

atem

ents

.

13O

ther

co

mpr

ehen

sive

inco

me

IAS

1 "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

"

As p

er I

AS 1

: "P

rese

ntat

ion

of F

inan

cial

St

atem

ents

’’ O

ther

Co

mpr

ehen

sive

Inco

me

(OCI

) is

a co

mpo

nent

of

finan

cial

st

atem

ents

or

the

elem

ents

of

OCI

are

to

be in

clud

ed in

a si

ngle

OCI

stat

emen

t.

Bang

lade

sh

Bank

ha

s iss

ued

tem

plat

es

for

finan

cial

st

atem

ents

w

hich

w

ill

stric

tly

be

follo

wed

by

finan

cial

inst

itutio

ns. T

he te

mpl

ates

of

fina

ncia

l st

atem

ents

iss

ued

by B

angl

ades

h Ba

nk

do

not

incl

ude

Oth

er

Com

preh

ensiv

e In

com

e (O

CI)

nor

are

the

elem

ents

of

O

CI

allo

wed

to b

e in

clud

ed in

a si

ngle

OCI

stat

emen

t.

As su

ch th

e fin

anci

al in

stitu

tion

does

not

pre

pare

th

e ot

her

com

preh

ensiv

e in

com

e st

atem

ent.

How

ever

, ele

men

ts o

f OCI

, if a

ny, a

re s

how

n in

th

e st

atem

ents

of c

hang

es in

equ

ity.

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed

as

per

the

guid

elin

e an

d te

mpl

ates

issu

ed b

y Ba

ngla

desh

Ban

k.

Ther

e is

no

finan

cial

im

pact

fo

r th

is de

part

ure

in th

e fin

anci

al st

atem

ents

.

14D

isclo

sure

of

pres

enta

tion

of

profi

t

N/A

Ther

e is

no

requ

irem

ent

to

show

ap

prop

riatio

n of

pr

ofit

in

the

face

of

st

atem

ent o

f com

preh

ensiv

e in

com

e.

As p

er D

FIM

circ

ular

no

11, d

ated

23

Dec

embe

r 20

09,

an

appr

opria

tion

of

profi

t sh

ould

be

di

sclo

sed

in th

e fa

ce o

f pro

fit a

nd lo

ss a

ccou

nt

Fina

ncia

l St

atem

ents

fo

r 20

20

and

corr

espo

ndin

g ye

ar

2019

ha

ve

been

pr

epar

ed a

s pe

r gu

idel

ine

(DFI

M C

ircul

ar

No.

11,

dat

ed 2

3 D

ecem

ber

2009

) of

Ba

ngla

desh

Ban

k.

Ther

e is

no

finan

cial

im

pact

fo

r th

is de

part

ure

in th

e fin

anci

al st

atem

ents

.



SAHEDUR RAHMAN

When everyone was advising me to go abroad for work, I went against the tide and decided to stay back and do something in Bangladesh. Who would look after my mother if I went away?

We owned some rice fields in our village and so I decided to start my own agricultural venture.

Several setbacks including closedown of my fishery project, death of 5 thousand chickens and business losses over the years could not hold me back.

Today, my farm has 84 cattle, 45,000 poultry, 34 fishery ponds, and also fruit gardens. Thanks to IDLC for having faith in small entrepreneurs like me.

Thank you IDLC !



IDLC SECURITIES LIMITEDManagement Committee (ManCom)


ARIF KHAN, CFA FCMAGroup CEO & Managing Director

Mr. Saifuddin has over 19 years of experience working in the financial sector including brokerage industry. Prior to joining IDLC Securities Ltd as Managing Director, he worked as the Head of Credit & Collection of Personal Finance Division of IDLC Finance Limited.

He is a Chartered Financial Analyst (CFA) with the CFA Institute, U.S.A. He has completed his MBA from the Institute of Business Administration, University of Dhaka and holds an

MBS degree from University of Rajshahi.

MD SAIFUDDIN, CFAManaging Director

Mr. Masud Karim Majumder is a Fellow Chartered Accountant (FCA) with over a decade of corporate experience. His areas of expertise spans over Financial Planning and Control, Budgeting, Corporate and Financial Reporting, Strategic Planning and Taxation. Prior to that, he was working in KPMG Bangladesh as an Audit Supervisor. Mr. Majumder completed his Bachelor of Commerce (Honors) and Masters in Finance from the University of Dhaka.

MASUD KARIM MAJUMDER, FCAGroup Chief Financial Officer

Mr. Golam Ahad Chowdhury, with his two decades of capital market exposure, plays key role in formulating and executing business strategies to shape the future of the business.

He has expertise in business people development and compliance risk management. He completed both his Bachelor of Commerce and Masters of Commerce from the

Management Department of University of Dhaka.

GOLAM AHAD CHOWDHURYHead of Trading and Business



Mr. A. H. M. Nazmul Hasan is a seasoned Capital Market professional with more than 14 years of industry exposure. He is instrumental in Operations, FinTech, Risk Management,

Margin Management, Product and Process development. He graduated from Delhi University and completed MBA from Dhaka University.

Mr. Md. Momin Uddin has more than 15 years of experience in different capacities in brokerage business starting from Finance, Accounts, Operations and Development of

Foreign & Institutional brokerage. He has completed his MBA in Finance from East West University.

A.H.M. NAZMUL HASANHead of Operations

MD. MOMIN UDDINHead of International & Institutional Sales

Ms. Shamima Akter Lovely has over 19 years of working experience in renowned Financial Institutions, Multinationals, Large Local Corporates and Development sectors in the fields of planning, leading and implementing all areas of Human Resources Management. She has completed PGDHRM from Institute of Personnel Management, Dhaka. Master of Social Sciences (M. S. S.) & Bachelor of Social Sciences (B. S. S.) Department of Sociology from University of Dhaka Department of Sociology.

SHAMIMA AKTER LOVELYGroup Head of HR, Current Charge

Mr. Kazi Monirul Islam is a Chartered Financial Analyst (CFA) with 12 years of industry experience. His expertise spans over Equity Research, Portfolio Management, Corporate Advisory, Private Equity and Strategic Planning. He is a graduate from the Department of Finance, University of Dhaka.

KAZI MONIRUL ISLAM, CFAHead of Research

With over a decades of industry experience, Mr. Sakhawat Hossain is serving IDLC capital market operation in the areas of financial management, financial reporting, budgetary control, taxation, administration and corporate affairs. He completed his BBA major in finance from University of Dhaka. Before Joining IDLC, he was Audit Supervisor at KPMG Bangladesh.

SAKHAWAT HOSSAINHead of Finance



DIRECTORS’ REPORTTo the Shareholders of IDLC Securities Limited

Dear valued shareholders,It is with immense pleasure that the Board of IDLC Securities Limited (IDLC SL) presents the Directors’ Report, the audited financial statements of the Company for the year ended December 31, 2020 and the Auditor’s Report thereon along with a capital market overview, the Company’s performance and other matters in compliance with the Companies Act, 1994, and the guidelines issued by the Bangladesh Securities and Exchange Commission.

Total market capitalization of Bangladesh stands around USD 56 billion with 597 securities including stocks, corporate bonds, treasury bonds and mutual funds whereas the equity market capitalization stands around USD 49 billion. Interestingly, the top 10 market cap companies represent about 50% of the equity market capitalization and all 12 listed MNCs represent about 36% of the equity market capitalization. The country’s equity market is still in nascent stage. While our market-cap-to-GDP is less than 15%, it is much higher for countries like Indonesia (37%), the Philippines (65%), Vietnam (68%), India (81%), Thailand (101%), and Malaysia (112%). We believe there is ample scope for the market to grow significantly over time with the listing of new equities in the coming days. Besides, the demand for investment vehicles will continue to increase in line with rising MAC (Middle and Affluent Class) population in our country. Boston Consultant Group expects that Bangladesh’s MAC population will triple to 34 million by 2025 from 11.7 million in 2015. On top of that, we believe, strategic partnership of Dhaka Stock Exchange (DSE) with Shenzhen stock

exchange will bring many qualitative improvements in our market including adoption of technology, launching of new products and thus accelerate the growth of our market. In this highly prospective environment, IDLCSL is focusing on knowledge based brokerage services, productivity improvement of sales personnel and increase of operating efficiency with new technology adoption in order to capture a substantial share of this emerging growth potential.

DSEX generated a 21.3% return in 2020 after two bearish years (2018: -13.8%, 2019: -17.3%). It was the second-highest return of the world (after USA NASDAQ 43.4%) in this pandemic year. Bangladesh stock market had a bearish run for 2.5 years till H1 2020. However, we are experiencing a positive market momentum from July 2020. In 2020, the COVID-19 pandemic impacted the stock market to a great extent. Like the other countries, the market fell by 19.1% till the mid of March until the regulator introduced a floor price for stocks to prevent the free-fall of stock prices. Both exchanges remained closed for 66 days because of the nationwide lockdown measures. However, under the new commission, both bourses reopened on May 31, 2020. Since the reopening in May, the market generated a 34.8% return till the end of 2020, resulting in a 21.3% return in 2020. Although the average daily turnover of the market was only BDT 3.9 billion in the first half of the year, it became BDT 8.2 billion in the second half. The average turnover reached BDT 6.5 billion in 2020 which is around 35% higher than the average turnover of BDT 4.8 billion in 2019.

The recovery in the stock market during the second half of 2020 was mainly driven by the following catalysts.

First, the decline in the deposit rate persuaded investors to look for alternative investment opportunities. Hence, the liquidity in the stock market started increasing since June.

Second, due to subsequent correction in the market in 2018, 2019, and early 2020, many stocks were trading near their historical lowest P/E. During that period, the dividend yields of some stocks were higher than the average deposit rate in the market, thus attracting value investors.

Third, the recovery of economic activities during the post-lockdown period revived optimism among the investors. Recovery in export and strong remittance inflow further strengthened positive investor sentiment.

Fourth, the new regulatory commission took an investor-friendly approach which further helped investors regain faith in the market structure. The strict stance of the BSEC on compliance issues, enlistment of reputed companies such as Walton and Robi, and emphasizing on a vibrant bond market gained traction.

The market recovery brought a relief in the brokerage business despite challenges in first half. Our net brokerage commission income increased from BDT 217.0 million 2019 to BDT 309.9 million in 2020, growing by 42.8% year-on-year basis. The growth was driven by 50 bps market share gain (from 3.5% in 2019 to 4.0% in 2020) in the brokerage business and increase in average market turnover. In addition, IDLC SL made BDT 373.3 million investment in treasury bonds for the first time to benefit from the declining interest rate scenario and earned BDT 111.5 million after tax basis. Overall, IDLC SL earned a net profit after tax of BDT 166.0 million in 2020 compared to BDT 98.6 million in 2019, implying 68.4% year-on-year earnings growth.

MATIUL ISLAM NOWSHAD

Chairman



Financial highlights of 2020

Operational highlights of 2020

Amount in BDT Million

Particulars 2016 2017 2018 2019 2020Total turnover of IDLCSL 82,949.95 174,273.61 125,934.40 80,529.32 108,112.27

Total turnover of IDLCSL growth (%) 30.05% 110.09% -27.74% -36.05% 34.25%

Total assets 2,145.14 4,135.97 4,934.67 4,541.25 5,214.78

Total assets growth (%) 37.72% 92.81% 19.31% -7.97% 14.83%

Total shareholders' equity 1,128.65 3,108.10 3,473.65 3,572.24 3,738.30

Total shareholders' equity growth (%) 10.08% 175.38% 11.76% 2.84% 4.65%

Brokerage commission income 283.61 542.46 387.85 257.68 357.93

Brokerage commission expense 33.79 61.98 54.48 40.69 48.00

Net brokerage commission income 249.82 480.48 333.37 216.99 309.93

Net brokerage income growth (%) 26.44% 92.33% -30.62% -34.91% 42.83%

Net interest income 52.98 81.93 149.26 167.69 128.89

Net interest income growth (%) -26.04% 54.64% 82.18% 12.34% -23.14%

Income from investment 70.75 255.82 268.00 64.12 140.21

Investment income growth (%) 36.92% 261.60% 4.76% -76.08% 118.68%

Operating expenses 186.95 247.53 237.63 233.45 230.72

Operating expenses growth (%) 3.28% 32.40% -4.00% -1.76% -1.17%

Net profit before tax & provision 191.77 575.66 518.00 220.94 353.88

Net profit before tax & provision growth (%) 29.98% 200.18% -10.02% -57.35% 60.17%

Net profit after tax 103.38 379.47 365.53 98.58 166.06

Net profit after tax growth (%) 7.60% 267.07% -3.67% -73.03% 68.44%

Return on total assets* 5.58% 14.79% 8.06% 2.08% 3.40%

Return on equity* 9.60% 21.44% 11.11% 2.80% 4.54%

* Time weighted ROA & ROE in 2017

Currently, IDLC SL has more than 16,300 clients including 391 institutional and foreign clients. Moreover, the Company serves more than 4,500 customers as a panel broker of its enlisted merchant banks. In 2020, IDLCSL closed 1,146 inactive accounts. As a result, total number of accounts in 2020 shows a growth of 3.0%.

Key achievements of 2020

• Regained market share by 50 bps. Market share increased from 3.5% in 2019 to 4.0% in 2020.

• Restructured the reward system of our sales team, making it more performance-oriented.

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 No. of account at the beginning 13,960 15,352 17,171 16,510 15,834 Account opened during the year 1,878 2,358 1,506 1,288 1,620 Account closed during the year (486) (539) (2,167) (1,964) (1,146) No. of accounts at year end 15,352 17,171 16,510 15,834 16,308 Growth (year on year) 9.97% 11.85% -3.85% -4.09% 2.99% Composition of client base: Individual 14,933 16,363 15,685 15,010 15,459 Institution & Foreign 287 685 713 351 391 NRB 132 123 112 473 458 Total 15,352 17,171 16,510 15,834 16,308



Net brokerage commission income in BDT mn

2016 2017 2018 2019 2020

250

480

333

217

310

Return on total assets

2016 2017 2018 2019 2020

5.58%

14.79%

8.06%

2.08%3.40%

Net Profit after Tax in BDT mn

2016 2017 2018 2019 2020

103

379 366

99

166

Return on Equity

2016 2017 2018 2019 2020

9.60%

21.44%

11.11%

2.80%4.54%

IDLCSL Market Share

3.48%4.02%

4.72%

3.54%4.00%

2016 2017 2018 2019 2020

Total turnover of IDLCSL in BDT mn

2016 2017 2018 2019 2020

82,950

174,274

125,934

80,529

108,112



Human resource development

IDLCSL strongly believes that its human resources are its most precious assets and recognizes them as building blocks for the Company to perform sustainably. Even during the pandemic, IDLCSL continues to develop and implement proper human resource policies to motivate its employees and ensures their optimum contribution towards the achievement of common goals. As our resources represent a significant competitive edge, the Company continues its policy of recruiting the best professionals and implementing diverse training and motivational programs to develop and retain high-quality, performance-oriented personnel. As part of IDLCSL’s human resource development program, a significant number of employees underwent training, which included both managerial development and technical modules.

During 2020, 137 participants were trained in multiple local and customized training programs. We believe in high morale and motivated employees all around the organization.

At the end of 2020, the total number of employees stood at 124 as compared with 121 in 2019.

No. of Employees

2016 2017 2018 2019 2020

127

136134

121

124

Top-five risks impacting our business and key mitigation strategies

Risk Mitigation Strategy

Political uncertainty Balancing between scale of the business and uncertainty

Regulatory RiskImprove internal control, training and mentoring employees for enhancing compliance

Investment riskPrudent investment exposure management

Retention of skilled human resources

Performance and motivation management

Shift in technology

Closely monitor technological changes to adopt the appropriate technology and remain contemporary with regards to the prevailing standards

Outlook for 2021

Though the pandemic is yet to be over, we think the investors hold a better economic outlook than they did in early 2020, mainly driven by the invention of the COVID-19 vaccine and

gradual recovery of economic activities with better economic figures. Therefore, we think, the catalysts that initiated the positive momentum in the second half of 2020 is likely to prevail in 2021 as well. Such a scenario should create two opportunities for the capital market participants as well as IDLC SL.

First, we expect a year-on-year increase in trading activities in the stock market and increased commission income.

Second, the turnaround in stock market performance (in terms of the return) - due to increase in liquidity, expected recovery in economic activities, and regulatory support - offers a better prospect from stock market investment.

Meanwhile, IDLC SL is sincerely planning to transform its business through adoption of technology. The Dhaka Stock Exchange (DSE) is looking forward to providing Application Program Interface (API) access to the brokerage firms, thus enabling them to operate in the DSE trading platform from their own trading interface. This transformation is expected to enhance our market penetration through launching our own mobile app based trading by targeting tech-savvy investor groups. In addition, the transformation is expected to improve the risk management process, enhance business intelligence, and reduce operating expenses over mid to long term horizon. Your company has already started assessing top technological platforms and business models of India and China and expects to implement the technology in 2021.

Books of accounts

At IDLC Securities, proper books of accounts have been maintained. The appropriate accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in the preparation of the financial statements and any departure there-from has been adequately disclosed. The financial statements prepared by the management of IDLC Securities Limited present fairly its state of affairs, the result of its operations, cash flows and changes in the shareholders’ equity.

Internal control

The system of internal control is sound in design and has been effectively implemented and monitored.

Distribution of profits

Considering Company’s investment opportunities, growth potentials and comparative cost benefit analysis of paying out dividend and overall better tax management, the Board of IDLC Securities Limited decided not to disburse any dividend to the shareholders of the Company for 2020.

Appointment of auditors

In terms of Article 102 of the Articles of Association of the Company, the Company shall, at each Annual General Meeting (AGM), appoint an auditor or auditors to hold office until the next AGM. The shareholders of IDLC Securities Limited at its 14th meeting appointed Hoda Vasi Chowdhury & Co., Chartered Accountants,



as the auditors for the company for 2020. Accordingly, the auditors of the Company, Hoda Vasi Chowdhury & Co., Chartered Accountants, has completed their first year of audit of the Company. They are eligible for re-appointment as Auditors of the Company for the year 2021 and they have also offered themselves for re-appointment. The Board has recommended Hoda Vasi Chowdhury & Co. Chartered Accountants, to the shareholders at the AGM to be appointed as the auditors of the Company for the year 2021 at an existing remuneration of Taka 100,000 only.

Going concern

It is assumed IDLC Securities Limited will able to continue as a going concern by generating values to its shareholders.

Appreciation

I would like to thank the Board and colleagues for their continued support and unstinted cooperation and on their behalf express my sincere appreciation to the entire IDLC Securities team. I would like to acknowledge the exceptional efforts of our employees who worked hand-in-hand to meet the challenges of a difficult year. They were called upon to embrace major difficulties, at the same time maintaining the highest standards of service

to our clients and also adhering to the compliance of rules and regulations.

Special thanks to our parent company, IDLC Finance Limited for providing all out support as and when required for the company to grow and expand its operations.

On behalf of the Board, I would like to thank our loyal customers and honorable shareholders (especially IDLC Finance Limited, our parent company) for their trust reposed on us. The members of the Board would also like to thank the Bangladesh Securities and Exchange Commission (BSEC), the Dhaka Stock Exchange Limited (DSE), the Chittagong Stock Exchange Limited (CSE) and the Central Depository Bangladesh Limited (CDBL), who have remained as partners in the growth of our Company.

For and on behalf of the Board of Directors,

Matiul Islam Nowshad Chairman IDLC Securities Limited

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERSOF IDLC SECURITIES LIMITEDReport on the Audit of the Financial Statements

OpinionWe have audited the financial statements of IDLC Securities Limited (the “Company”) which comprise the statement of financial position as at 31 December 2020 and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statement including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respect, of the financial position of the Company as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as explained in note 3.

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other MattersThe financial statements of the year ended 31 December 2019, were audited by another auditor who expressed an unmodified opinion on those statement on 20 February 2020.

Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the financial statements of the Company in accordance with IFRSs as explained in note 3, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing these financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company’s to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying


transactions and events in a manner that achieves fair presentation.

Report on Other Legal and Regulatory RequirementsIn accordance with the Companies Act, 1994 and the Securities and Exchange Rules 1987, we also report that:


(ii) in our opinion, proper books of account as required by law have been kept by the Company’s so far as it appeared from our examination of those books;

(iii) the statement of financial position and statement of profit or loss and other comprehensive income together with the annexed notes dealt with by the report are in agreement with the books of account and returns; and

(iv) the expenditures incurred were for the purpose of the Company’s business for the year.

Dhaka, 14 February 2021DVC No: 2103070770AS311836 Sabbir Ahmed, FCA, Partner

Enrolment no 770Hoda Vasi Chowdhury & Co

Chartered Accountants



Notes31.12.2020

BDT31.12.2019

BDT

ASSETS

Non-Current Assets 275,895,047 730,092,238 Property, plant and equipment 4 18,553,641 27,864,713 Intangible asset 5 90,571 402,254 Right-of-use-assets 6 67,345,508 89,634,883 Investment in Stock Exchanges 7 14,869,750 14,869,750 Investments in bond 8 144,761,645 575,031,466 Deferred tax assets 9 30,273,932 22,289,172

Current Assets 4,938,889,168 3,811,154,569 Advances, deposits and prepayment 10 3,513,482 3,337,686 Investment in marketable securities 11 1,894,069,565 2,085,402,765 Accounts receivable 12 79,650,535 138,505,730 Short term loan to IDLC Investments Limited 13 - - Margin loan to clients 14 459,933,748 167,287,246 Short term investments 15 417,500,000 - Cash and cash equivalents 16 2,084,221,838 1,416,621,142

Total Assets 5,214,784,215 4,541,246,807

Shareholders' equity and liabilities

Shareholders' equity 3,738,295,357 3,572,236,944 Share capital 17 2,000,000,000 2,000,000,000 Retained earnings 18 1,738,295,357 1,572,236,944

Non-Current Liabilities 73,407,402 88,730,692 Lease liabilities 19 73,407,402 88,730,692

Current Liabilities 1,403,081,456 880,279,171 Accounts payable 20 1,128,912,400 493,038,398 Short term loan 21 - 200,000,000 Liabilities for expenses 22 23,493,467 25,040,277 Provision for income tax 23 133,304,683 115,463,646 Provision for diminution in value of investments 24 110,512,811 44,358,094 Provision for operations 25 6,858,095 2,378,758

Total liabilities 1,476,488,858 969,009,863 Total shareholders' equity and liabilities 5,214,784,215 4,541,246,807

The annexed notes form an integral part of these financial statements.

Dhaka, 14 February 2021DVC No: 2103070770AS311836

Chairman Director Managing Director Company Secretary

See the annexed report of even date


STATEMENT OF FINANCIAL POSITIONAs at 31 December 2020

Sabbir Ahmed, FCA, PartnerEnrolment no 770




Notes2020BDT

2019BDT

Operating IncomeBrokerage commission income 26 357,927,414 257,683,274 Brokerage commission expense 27 (47,999,319) (40,691,742)Net brokerage commission income (a) 309,928,095 216,991,532 Interest income 28 139,107,800 186,176,694 Interest expense 29 (10,216,314) (18,489,731)Net interest income (b) 128,891,486 167,686,963 Net investment income (c ) 30 140,212,976 64,116,975 Other brokerage income (d) 31 3,110,011 3,323,369

Total Operating Income (A=a+b+c+d) 582,142,568 452,118,840

Operating ExpensesSalaries & allowances 32 159,433,558 148,890,050 Rent, taxes, insurance, electricity, etc. 33 19,108,608 24,868,281 Legal expenses 34 1,924,083 2,533,782 Postage, stamp, telecommunication, etc. 35 6,710,710 6,872,712 Stationery, printing, advertisements, etc. 36 3,882,430 9,066,502 Directors' Fee & Meeting Expenses 37 248,949 273,558 Audit fee 115,000 115,000 Depreciation and amortization (4+5+6) 29,627,496 29,678,256 Other expenses 38 9,673,842 11,153,683

Total Operating Expenses (B) 230,724,675 233,451,824 Operating Profit (A-B) 351,417,893 218,667,016 Non-operating Income 39 2,468,946 2,277,122 Profit before Provisions and Tax 353,886,839 220,944,138 Provision for diminution in value of investments 24 (66,154,717) (3,891,947)Provision for operations 25 (4,479,337) (2,378,758)Profit before Provision for Income Tax 283,252,785 214,673,434 Provision for Income Tax 117,194,372 116,089,888

Current tax 23 125,179,132 119,725,004 Deferred tax income 9 (7,984,760) (3,635,116)

Net Profit 166,058,413 98,583,546 Other comprehensive income - - Total Comprehensive Income 166,058,413 98,583,546



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended 31 December 2020










ParticularShare

Capital BDT

Retained Earnings

BDT

Total Equity BDT

Balance as on 01 January 2019 2,000,000,000 1,473,653,398 3,473,653,398 Addition during the year - 98,583,546 98,583,546 Balance as on 31 December 2019 2,000,000,000 1,572,236,944 3,572,236,944

Balance as on 01 January 2020 2,000,000,000 1,572,236,944 3,572,236,944 Addition during the year - 166,058,413 166,058,413 Balance as on 31 December 2020 2,000,000,000 1,738,295,357 3,738,295,356



STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2020







2020BDT

2019BDT

A. Cash flow from operating activitiesNet profit during the year 166,058,413 98,583,546 Adjustments for:Depreciation & amortization 29,627,496 29,678,256 Gain on disposal of property, plant and equipment (736,710) (1,494,746)Cash generated from operating activities before changes in working capital: 28,890,786 28,183,510

Changes in workings capital:(Increase)/decrease in accounts receivable 58,855,195 98,977,201 (Increase)/decrease in deferred tax assets (7,984,760) (3,635,116)(Increase)/decrease in margin loan to clients (292,646,502) (41,237,823)Decrease/(increase) in advances, deposits and prepayments (175,796) 9,722,375 Increase/(decrease) in accounts payable 635,874,002 (522,742,853)(Decrease)/increase in provision for expenses (1,546,810) (7,869,066)(Decrease)/increase in provision for operations 4,479,337 2,378,758 Increase/(decrease) in provision for current tax 17,841,038 (6,395,354)(Increase)/decrease in short term investments (417,500,000) - Increase/(decrease) in lease liabilities (15,323,290) 88,730,692

Net cash flow from operating activities 176,821,614 (255,304,130)

B. Cash flow from investing activitiesAcquisition of property, plant and equipment 3,021,345 (117,641,070)Investment in shares/securities 191,333,200 40,634,499 Investment in Stock Exchanges - - Investment in Bond 430,269,821 (419,665,113)Provision for diminution in value of investments 66,154,717 3,891,947 (Disbursement)/Reimbursement of Short term loan to IDLC Investments Limited - 178,400,000 Net cash (used in)/ flow from investing activities 690,779,083 (314,379,737)

C. Cash flows from financing activitiesReceipt of short term loan - Standard Chartered Bank (200,000,000) (50,000,000)Net cash flow from in financing activities (200,000,000) (50,000,000)

D. Net surplus/(deficit) in cash & cash equivalents for the year (A+B+C) 667,600,697 (619,683,867)E. Cash & cash equivalents at the beginning of the year 1,416,621,142 2,036,305,009 F. Cash and cash equivalents at the end of the year 2,084,221,839 1,416,621,142

Cash and cash equivalents:

Cash in hand 90,000 100,000 Cash at bank 1,481,060,588 360,250,489 Fixed deposits 603,071,250 1,056,270,653

2,084,221,839 1,416,621,142



STATEMENT OF CASH FLOWSFor the year ended 31 December 2020








NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2020

1. Company and its activities

1.1 Legal status of the Company

IDLC Securities Limited (IDLCSL) was incorporated with the Registrar of Joint Stock Companies and Firms (RJSC) vide registration no. C-61319 (3328)/06 with effect from 19 April 2006 as a private limited company limited by shares having its registered office at DR Tower (4th Floor), 65/2/2, Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000 under the Companies Act 1994. The Company is a Trading Right Entitlement Certificate (TREC) holder of both Dhaka Stock Exchange Limited (058) and Chittagong Stock Exchange Limited (119). The Company commenced its business operations on 18 September 2006 as a wholly owned subsidiary of IDLC Finance Limited.

1.2 Nature of business

The principal activities of IDLC Securities Limited are to act as a member of stock exchanges, the central depository system (CDS) companies and to carry on the business of broker, jobbers or dealers in stocks, shares, securities, bonds, debentures. The Company is also authorized to buy, sell, hold or otherwise acquire or invest the capital of the Company in shares, stocks and fixed income securities, etc. The Company has nine (09) branches in Bangladesh located at Purana Paltan , Chattogram, Dhanmondi, Mohakhali (DOHS), Gulshan, Narayanganj, Uttara, Gazipur, and Sylhet. IDLC Securities Limited possesses following licenses from regulatory authorities:

Name of Institutions License No: Nature of Business

Bangladesh Securities and Exchange Commission (BSEC) 3.1/DSE/58/2006/130 Stock Broker Business with DSE

Bangladesh Securities and Exchange Commission (BSEC) 3.1/DSE/58/2008/233 Stock Dealer Business with DSE

Bangladesh Securities and Exchange Commission (BSEC) 3.2/CSE/119/2006/135 Stock Broker Business with CSE

Bangladesh Securities and Exchange Commission (BSEC) 3.2/CSE/119/2006/176 Stock Dealer Business with CSE

Central Depository Bangladesh Limited (CDBL) CDBL- DP 229 Depository functions

2. Basis of preparation of financial statements

2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the Companies Act, 1994 and other applicable laws and regulations.

2.2 Other regulatory compliance

As required, IDLC Securities Limited also complies with the applicable provisions of the following major laws/ statutes: -Securities and Exchange Rules, 1987;

-Securities and Exchange Commission Act, 1993;

-Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorized Representatives) Rules, 2000; -Income Tax Ordinance, 1984;

-Income Tax Rules, 1984;

-Negotiable Instruments Act, 1881; and

Other applicable laws and regulations.


These financial statements have been prepared on a going concern basis under the historical cost convention in accordance with International Financial Reporting Standards (IFRS).



2.4 Components of financial statements

-Statement of Financial Position

-Statement of Profit or Loss and Other Comprehensive Income

-Statement of Changes in Equity

-Statement of Cash Flows

-Notes to the Financial Statements

2.5 Functional and presentational currency

These financial statements are presented in Bangladeshi Taka (BDT) which is the functional currency of the Company.The amounts in these financial statements have been rounded off to the nearest integer.


The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. It also requires disclosures of contingent assets and liabilities at the year end.

Provisions and accrued expenses are recognized in the financial statements in line with International Accounting Standard (IAS) 37: “Provisions, Contingent Liabilities and Contingent Assets” when - the Company has a legal or constructive obligation as a result of past event; and

i. It is probable that an outflow of economic benefit will be required to settle the obligation.

ii. A reliable estimate can be made for the amount of the obligation.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which from the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

However, the estimates and underlying assumptions are reviewed on an ongoing basis and the revision is recognized in the period in which the estimates are revised.

2.7 Statement of cash flows

Statement of Cash Flows is prepared in accordance with International Accounting Standard (IAS) 7: "Statement of Cash Flows" and the cash flows from operating activities are presented under the indirect method as prescribed by the Securities and Exchange Rules, 1987.

2.8 Going concern

The Company has adequate resources to continue in operation for the foreseeable future. For this reason the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the Company provide sufficient funds to meet the present requirements of its existing businesses and operations.

2.9 Recognition and measurement of financial assets

In accordance with International Accounting Standard (IAS) 39, financial assets may be recognized at fair value, with gain and losses taken to the income statement in net investment income. A financial asset or financial liability is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.


Revenue is only recognized when it meets the following five steps model framework as per IFRS 15: “Revenue from Contracts with Customers”:

a) identify the contract (s) with a customer(s); b) identify the performance obligations in the contract; c) determine the transaction price; d) allocate the transaction price to the performance obligations in the contract; e) recognise revenue when (or as) the entity satisfies a performance obligation.

Interest income from loans and other sources is recognised on an accrual basis of accounting.

a. Brokerage commission Brokerage commission is recognized as income when selling or buying order executed.



b. Interest income from margin loan

Interest Income from margin loan is recognized on accrual basis. Such income is calculated on daily margin loan balance of the respective parties. Income is recognized on monthly basis and applied to the customers' account on quarterly basis.

c. Dividend income and gain/(loss) on sale of marketable securities

Dividend income is recognized when right to receive or payment is established whereas profit or loss arising from the sale of securities is accounted for only when shares are sold in the market and profit is realized or loss is incurred.

2.11 Investment in stock exchanges for membership

In accordance with section 8 of the Exchanges Demutualization Act, 2013, both stock exchange memberships have been converted into shares through the issuance of two completely de-linked assets to the former members in the Exchange, namely (a) fully paid-up shares and (b) trading right. Exchanges shall have the authority to issue Trading Right Entitlement Certificate (TREC), as per the Exchanges Demutualization Act, 2013 and as outlined in the scheme, to provide the right to trade any securities enlisted in Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) to eligible brokers and dealers. Such TRECs will be totally separated from the ownership of the Exchange as there is no obligation for TREC holders to be or remain shareholders of the exchange.

2.12 Cash and cash equivalents

Cash and cash equivalents include cash in hand, cash at bank and fixed deposits which are held and are available for use by the Company without any restriction. There is insignificant risk of change in the value of the above items.

3. Significant accounting policies3.1 Property, plant and equipment and depreciation

All Property, Plant and Equipment are stated at cost less accumulated depreciation as per IAS-16 " Property, Plant and Equipment". The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use.

3.1.1 Depreciation and Amortization

Property, Plant and Equipment are stated at cost less accumulated depreciation. Depreciation is charged using the straight-line method on the acquisition cost of PPE and such cost is written off over the estimated useful lives of assets, in accordance with IAS 16. Depreciation for full month is charged on additions irrespective of date when the related assets are put into use and no depreciation is charged for the month of disposal. The rates of depreciation used to write off the amount of assets are as follows:

Category of assets Rate of depreciation

Computer peripherals 20.00% p.a.

Office equipments 20.00% p.a.

Electrical equipments 20.00% p.a.

Motor vehicles 25.00% p.a.

Office decoration 20.00% p.a.

Furniture & fixtures 12.50% p.a.

Telephone and telex 33.33% p.a.

Curtain & carpet 33.33% p.a.

Right of use assets Lease term

3.1.2. Intangible Assets and Amortization of Intangible assets

The main item includes in intangible asset is computer software. Intangible asset is recognized if it is probable that future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably in accordance with IAS 38: "Intangible Assets". Accordingly, these assets are stated in the Statement of Financial Position at cost less accumulated amortization. Intangible asset is amortized over a period of three (03) years.



3.2 Provision for tax

3.2.1. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any, in accordance with provisions of Income Tax Ordinance, 1984. It is measured using tax rates enacted or substantively enacted at the reporting date. Applicable tax rate for the Company for the year 2020 will be declared by Finance Act 2021. For the purpose of these financial statements, management has assumed that the existing tax rates will be applicable for Income year 2020 as well, which are mentioned below:

Regular business tax rate Rate

Private Limited Company 32.5%

Other business tax rate Rate

Dividend Income 20%

Capital gain on sale of fixed assets 15%

Capital gain on sale of marketable securities 10%

The Company’s existing accounting policy for uncertain income tax treatments is consistent with the requirements in IFRIC 23 Uncertainty over Income Tax Treatments, which became effective on 1 January 2019. We already accounted for uncertainty of taxes and further disclosure is not required.

3.2.2. Deferred tax

The Company accounts for deferred tax as per International Accounting Standard (IAS) 12: "Income Taxes". Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. It is measured at the tax rates that are expected to be applied to the temporary differences when they reverse based on the laws that have been enacted or substantively enacted by the date of reporting of the financial statements.

The Company provides disclosures based on the classes of assets and liabilities related to the temporary differences.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax liabilities are recognized for all taxable temporary differences and it is probable that temporary differences will not reverse in the foreseeable future. Both the Deferred tax assets and liabilities are reviewed at each reporting date considering the probability of benefit or detriment realizable.

3.3 Provision for expenses

Provision for expenses is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and reliable estimate of the amount can be made.

3.4 Provision for diminution in value of investments

Investment in quoted shares and un-quoted shares are revalued at the year end at market price and as per book value of last audited statement of financial position. Provision should be made for any loss arising from diminution in value of investment. As such the company measures and recognizes investment in quoted and unquoted shares at cost if the year end market value (for quoted shares) and book value (for quoted shares) are higher than the cost except investment in mutual fund. In case of provision for unrealized loss in portfolio (Own portfolio) has been made as per BSEC press release BSEC/2019/196 dated 16 July 2020.

3.5 Employee benefits

IDLC Securities Limited maintains defined benefit plan for its eligible permanent employees. Employee provident fund and gratuity plan are considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to employees as per condition of the fund. The eligibility is determined according to the terms and conditions set in the service rules of the company. The provident fund is recognized under Income Tax Ordinance 1984.

3.6 Related party disclosure

As per International Accounting Standard (IAS) 24: "Related Party Disclosures", parties are considered to be related if one of the parties has the ability to control the other party or exercise significant influence over the other party in making financial



and operating decisions. The Company carried out transactions in the ordinary course of business on an arm's length basis at commercial rates with its related parties. Related party disclosures have been given in note 41.

3.7 Events after the reporting date

Events after the reporting date that provides additional information about company's financial position at the reporting date are reflected in the financial statements. Events after the reporting date that are material but not adjusting event are discussed in the notes when material.

3.8 Application of International Accounting Standards (IASs):

The Financial Statements have been prepared in compliance with requirement of IAS/IFRS as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and applicable in Bangladesh. IDLC-SL applied following IAS and IFRS:

Name of the IAS IAS No. Status

Presentation of Financial Statements 1 Applied

Statements of Cash Flow 7 Applied

Accounting Policies, Changes in Accounting Estimates and Errors 8 Applied

Events after the Balance Sheet Period 10 Applied

Income Taxes 12 Applied

Property, Plant and Equipment 16 Applied

Employee Benefits 19 Applied

Borrowing Costs 23 Applied

Related Party Disclosures 24 Applied

Provisions, Contingent Liabilities and Contingent Assets 37 Applied

Intangible Assets 38 Applied

Financial Instruments: Recognition and Measurement 39 Applied

Name of the IFRS IFRS No. Status

Revenue from Contracts with Customers 15 Applied

Financial Instruments 9 Applied

Financial Instruments: Disclosures 7 Applied

Leases 16 Applied



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4. Property, plant and equipment

A. Cost:

Opening balance 129,923,554 134,385,221

Addition during the year 1,116,579 12,429,089

131,040,133 146,814,310

Disposal for during the year (9,164,992) (16,890,757)

121,875,141 129,923,554

B. Accumulated depreciation:

Opening balance 102,058,841 106,764,440

Charged for the year 10,417,367 10,961,124

112,476,208 117,725,564

Disposal for the year (9,154,707) (15,666,723)

103,321,501 102,058,841

C. Written down Value (A-B) 18,553,641 27,864,713

A schedule of property, plant and equipment is given in Annexure - A.

5. Intangible asset

A. Cost:

Opening balance 6,928,848 6,928,848

Addition during the year - -

6,928,848 6,928,848

B. Accumulated amortization

Opening balance 6,526,594 6,105,340

Amortization for the year 311,683 421,254

6,838,277 6,526,594

C. Written down value (A-B) 90,571 402,254

6. Right-of-use-assets

A. Cost :

Opening balance 107,930,761 -


112,336,913 107,930,761

Disposal for the year (11,579,724) -

100,757,188 107,930,761



Charged for the year 18,898,446 18,295,878

37,194,324 18,295,878

Disposal for the year (3,782,643) -

33,411,681 18,295,878

C. Written down Value (A-B) 67,345,508 89,634,883



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7. Investment in Stock Exchanges

Dhaka Stock Exchange Limited (DSE) (Note: 7.1) 11,418,750 11,418,750

Chittagong Stock Exchange Limited (CSE) (Note: 7.2) 3,451,000 3,451,000

14,869,750 14,869,750

7.1 Dhaka Stock Exchange Limited (DSE)

Purchase of DSE membership from Mehnaz Mannan & Co. 11,193,750 11,193,750

Share transfer stamp duty 225,000 225,000

11,418,750 11,418,750

7.2 Chittagong Stock Exchange Limited (CSE)

Purchase of CSE membership from Technohaven Securities Limited 3,400,000 3,400,000

Share transfer stamp duty 51,000 51,000

3,451,000 3,451,000

14,869,750 14,869,750

This represents the amount paid for purchasing membership of Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE) including stamp duty for transferring shares.

Stock Exchange Types of Shares Number of shares Face value (Taka)

Dhaka Stock ExchangeFloated (53.33%) 2,886,042 28,860,420 Blocked (46.67%) 2,525,287 25,252,870

5,411,329 54,113,290

Stock Exchange Types of Shares Number of shares Face value (Taka)

Chittagong Stock Exchange Blocked (100%) 4,287,330 42,873,300 4,287,330 42,873,300

As per the provision of the Exchanges Demutualization Act, 2013 and in accordance with the Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, DSE allotted total 5,411,329 ordinary Shares at face value of Tk.10.00 each and CSE allotted total 4,287,330 ordinary shares at face value of Tk.10.00 each against the membership respectively.

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8. Investments in Bond

Investment in Zero Coupon Bond 126,732,921 184,548,428

Investment in Bangladesh Bank Treasury Bond - 373,298,545 Interest capitalized during the period 18,028,724 17,184,493

144,761,645 575,031,466



9. Deferred tax assets

Deferred tax asset for 2020 is arrived at as follows:

Carrying Amount Tax base Taxable Temporary Difference

Taka Taka Taka

As on 31 December 2020Assets:Fixed assets net of depreciation 16,821,368 38,058,120 21,236,751

Right of Use Assets 67,345,508 - (67,345,508)Capital loss from sale of securities in Capital Market: 56,908,198 - 56,908,198 Carry forwarded from 2019 8,776,629 Add: Capital loss in 2020 48,131,569 Liabilities:Provision for gratuity 48,341,699 - 48,341,699

Lease Liabilities 73,407,402 73,407,402

Total 262,824,174 38,058,120 132,548,543

Applicable tax rate (For fixed assets net of depreciation & provision for gratuity) 32.5%

Applicable tax rate (for Capital loss from sale of securities) 10%

Deferred tax assets as on 31 December 2020 30,273,932


Deferred tax income accounted as on for 31 December 2020 7,984,760

As on 31 December 2019Assets:Fixed assets net of depreciation 25,569,211 45,900,610 20,331,399 Right of Use Assets 89,634,883 - (89,634,883)Capital loss from sale of securities in Capital Market: 8,781,629 - 8,781,629

Carry forwarded from 2018 -

Add: Capital loss in 2019 8,781,629 Liabilities:Provision for gratuity 41,747,105 - 41,747,105 Lease Liability 88,730,692 88,730,692 Total 164,828,637 45,900,610 69,955,941

Applicable tax rate (For fixed assets net of depreciation & provision for gratuity) 35%Applicable tax rate (for Capital loss from sale of securities) 10%



Deferred tax income accounted as on for 31 December 2019

3,635,116

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10. Advances, deposits and prepayment

Advances and prepayments (Note: 10.1) 3,028,732 2,852,936

Security deposit (Note: 10.2) 484,750 484,750

3,513,482 3,337,686



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31.12.2019Taka

10.1. Advances and prepayments

Advances (Note: 10.1.1) 2,181,761 2,173,122

Prepayments (Note: 10.1.2) 846,971 679,814

3,028,732 2,852,936

10.1.1. Advances

Advance to Dhaka Stock Exchange Limited 850,000 850,000

Advances for Expenses - 15,000

Advances for services /to suppliers 949,294 949,294

Advances to Chittagong Stock Exchange Limited 100,000 100,000

Advance to Bloomberg Finance L.P. 282,467 258,828

2,181,761 2,173,122

10.1.2. Prepayments

Rent (Note: 10.1.2.1) - -

Insurance premium (Note: 10.1.2.2) 846,971 679,814

846,971 679,814

10.1.2.1. Rent

Due to implemention of IFRS 16 prepaid rents are included as ROU assets

10.1.2.2. Insurance premiumGroup life 456,291 441,320

Hospitalization 86,910 70,404

Office insurance 303,770 88,980

Motor vehicles - 79,110

846,971 679,814

10.2. Security deposit

Security deposit at CDBL 100,000 100,000

Security deposit at CSE 25,000 25,000

Security deposit at Dhaka Telephone Company 5,000 5,000

Security Deposit for DOHS Branch 180,000 180,000

Security Deposit for Sylhet Branch 100,000 100,000

Security Deposit for Head Office 66,750 66,750

Security deposit to Nabarun Agencies 8,000 8,000

484,750 484,750

11 Investment in marketable securities

Investment in shares available for sale (Note: 11.1) 1,795,433,909 1,988,887,339

Investment in shares (Strategic Investment) (Note: 11.2) 38,295,680 36,175,450

Investment in non-tradeable shares (Note: 11.3) 60,339,976 60,339,976

1,894,069,565 2,085,402,765



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11.1. Investment in shares available for sale

The investments in shares are categories as financial assets held for trading as per IAS 39. The details of the investments are as follows:

Business Segments No. of Shares

Total Cost of Shares as on 31.12.2020

(Taka)

Market price as on 31.12.2020

(Taka)

Food & Allied 50,000 57,414,940 59,040,000

Pharmaceuticals & Chemicals 2,384,696 441,193,193 411,337,692

Bank 8,107,419 337,485,541 243,582,142

Miscellaneous 1,020,466 75,109,062 86,256,147

Cement 3,061,119 370,600,175 297,813,735

Insurance 10,878 108,780 428,593

Telecommunication 1,168,683 292,037,557 283,381,292

Engineering 686,511 162,782,632 156,143,178

Fuel & Power 528,990 58,702,029 45,955,544

1,795,433,909 1,583,938,324

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11.2 Investment in shares (Strategic Investment) 38,295,681 36,175,450

11.3 Investment in non-tradeable shares

Energypac Power Generation Limited(246,750 shares @ Taka 41.90 each) 10,340,000 10,340,000 Jayson Pharmaceuticals Limited(1,923,076 shares @ Taka 26 each) 49,999,976 49,999,976

60,339,976 60,339,976

Energypac Power Generation Limited has started trading effective from 19 January, 2021 and as at 31 December, 2020 its price was Tk. 31.00. As these shares are under lock-in period these are started at cost.

12. Accounts receivable

Receivable from DSE (Note: 12.1) 2,478,480 8,324,572 Receivable from CSE (Note: 12.2) - 357,346 Receivable from clients (broker) (Note: 12.3) 56,151,658 88,052,993 Receivable from sale of shares (Note: 12.4) 12,509 2,923 Interest receivable (Note: 12.5) 5,021,163 21,007,498 Interest receivable from Treasury Bond (Note: 12.6) - 1,956,587 Inter company receivable (Note: 12.7) - - Dividend receivable 13,196,898 15,668,610 Dividend receivable (Strategic Investment) 226,549 189,205 Other receivable 2,563,278 2,945,996

79,650,535 138,505,730

12.1. Receivable from DSE

Sale for broker 2,478,480 8,324,572

Sale for dealer - -

2,478,480 8,324,572

This balance has been resulted from sale of shares through Dhaka Stock Exchange Limited (DSE).



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12.2. Receivable from CSE

Sale for broker - 357,346 Sale for dealer - -

- 357,346

This balance has been resulted from sale of shares through Chittagong Stock Exchange Limited (CSE).

12.3. Receivable from clients (brokers) 56,151,658 88,052,993

12.4. Receivable from sale of shares 12,509 2,923

This balance has been resulted from the sale of marketable securities during the year.12.5. Interest receivable 5,021,163 21,007,498

The interest has been accrued from Fixed Deposit Receipt (FDR).

12.6. Interest receivable from Treasury Bond - 1,956,587 12.7. Inter company receivable

IDLC Finance Limited - - IDLC Investments Limited - - IDLC Asset Management Limited - -

- -

13. Short term loan to IDLC Investments Limited - - The amount represents due from IDLC Investments Limited as the inter-company lending.

14. Margin loan to clients

Opening balance 167,287,246 126,049,423 Addition during the year 292,646,502 41,237,823

459,933,748 167,287,246

15. Short Term Investments Fixed Deposit Receipt (FDR) (Note: 15.1) 417,500,000 -

417,500,000 - 15.1. Fixed Deposit Receipt (FDR)

Name of the Bank Branch FDR No.

IDLC Finance Limited Dilkusha 10252206364314 200,000,000 - IDLC Finance Limited Dilkusha 10252206364312 200,000,000 - Standard Chartered Bank Gulshan 93066347113* 8,000,000 - Standard Chartered Bank Gulshan 93066347051* 7,000,000 - Trust Bank Limited Dilkusha 0017-0330029778 2,500,000 -

417,500,000 -

*FDR # 93066347113 & 93066347051 kept under lien with Standard Chartered Bank as security for Overdraft.

16. Cash and cash equivalentsCash in hand 90,000 100,000 Cash at bank (Note: 16.1) 1,481,060,588 360,250,489 Fixed Deposit Receipt (FDR) (Note: 16.2) 603,071,250 1,056,270,653

2,084,221,838 1,416,621,142



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16.1. Cash at bank

Name of the Bank Branch Type A/C No.

Standard Chartered Bank Dhaka Main SND 02-3066347-01 310 1,000

Standard Chartered Bank Dhaka Main SND 02-3066347-03 701,966 -

Standard Chartered Bank Dhaka Main CD 01-3066347-01 10,527,315 2,567,834

Standard Chartered Bank (CCA) Dhaka Main CD 01-3066347-02 99,111,714 28,366,717

NCC Bank Ltd. (CCA) NCC Bank Bhaban SND 0103-0325000302 133,809,812 31,416,499

NCC Bank Ltd. NCC Bank Bhaban SND 0103-0325000311 - -

NCC Bank Ltd. (IPO) NCC Bank Bhaban SND 0103-0325000295 16,508,240 687,631

NCC Bank Ltd. NCC Bank Bhaban CD 0103-0210003197 9,425 -

NCC Bank Ltd. (Strategic Inv.) NCC Bank Bhaban SND 0103-0325000384 1,167,100 313,335

Standard Chartered Bank Dhaka Main CD 01-3066347-05 52,926,254 888,974

One Bank Limited (CCA) Principal SND 001-5025642009 17,670,403 14,983,099

One Bank Limited (IPO) Principal SND 001-3000000944 5,002 1

Brac Bank Limited (CCA) Graphics Building SND 1513101749870001 15,522,418 3,481,117

Commercial Bank of Ceylon PLC (CCA)

Dhaka SND 2802005291 1,210,144 2,602,233

EXIM Bank Limited (CCA) Shantinagar SND 11313100024301 1,128,670,446 271,094,380

Dutch Bangla Bank Limited (CCA) Sylhet SND 121-120-2668 3,220,039 3,847,669

1,481,060,588 360,250,489

16.2. Fixed Deposit Receipt (FDR)

Name of the Bank Branch FDR No.

Trust Bank Limited Dilkusha 0017-0330029778 - 2,500,000 Standard Chartered Bank Gulshan 93066347051* - 7,000,000 Standard Chartered Bank Gulshan 93066347094 - 25,000,000 IDLC Finance Limited Dilkusha 10252206364303 - 600,000,000 IDLC Finance Limited Dilkusha 10252206364310 - 271,770,653 IDLC Finance Limited Dilkusha 10252206364308 - 150,000,000 IDLC Finance Limited Dilkusha 10252206364313 200,000,000 - EXIM Bank Limited Motijheel 0822331 203,071,250 - EXIM Bank Limited Motijheel 0822679 200,000,000 -

603,071,250 1,056,270,653

*FDR # 93066347051 kept under lien with Standard Chartered Bank as security for Overdraft.

17. Share capital

Authorised capital 2,000,000,000 2,000,000,000 20,000,000 shares of Taka 100 each

Issued, subscribed & paid up capital : 2,000,000,000 2,000,000,000

The issued, subscribed and paid-up capital of Taka 2,000,000,000 is divided into 20,000,000 ordinary shares of Taka 100 each. Details are as follows:



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31.12.2019Taka

IDLC Finance Limited19,999,992 shares of Tk. 100 each fully paid up 1,999,999,200 1,999,999,200 Mr. Asif Saad Bin Shams8 shares of Tk. 100 each fully paid up 800 800

2,000,000,000 2,000,000,000

18. Retained earningsOpening balance 1,572,236,944 1,473,653,398 Net profit for the year 166,058,413 98,583,546

1,738,295,357 1,572,236,944

19. Lease liabilitiesOpening Balance 88,730,692 - Add: Addition during the year 4,406,152 98,367,906

93,136,844 98,367,906 Less: Adjustment during the year 19,729,442 9,637,214

73,407,402 88,730,692

20. Accounts payable

Payable to clients (Note: 20.1) 929,500,938 345,598,242 Public issue application money (Note: 20.2) 30,687,390 4,990 Payable to DSE (Note: 20.3) 86,234,866 99,141,755 Payable to CSE (Note: 20.4) 145,451 1,902,459 Deferred liability - employees' gratuity (Note: 20.5) 48,341,699 41,747,105 Other payable (Note: 20.6) 34,002,056 4,643,847 Inter company payable (Note: 20.7) - -

1,128,912,400 493,038,398

20.1 Payable to clientsBroker 929,488,423 345,595,316 Dealer 12,515 2,926

929,500,938 345,598,242

This balance represents the clients' sale proceeds of shares and deposits against share purchase which is currently lying with the company's bank A/C.

20.2 Public issue application money 30,687,390 4,990

20.3 Payable to DSE

Purchase for broker 34,093,336 98,315,099

Purchase for dealer 52,141,530 826,656

86,234,866 99,141,755

This balance has been resulted from purchase of shares through Dhaka Stock Exchange Limited (DSE).

20.4 Payable to CSE

Purchase for broker 145,451 1,902,459

Purchase for dealer - -

145,451 1,902,459

This balance has been resulted from purchase of shares through Chittagong Stock Exchange Limited (CSE).



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20.5 Deferred liability - employees' gratuity

Opening balance 41,747,105 32,087,130


48,341,699 41,747,105

Payment during the year - -

48,341,699 41,747,105

20.6 Other payable

Payable to CDBL 55,750 -

Payable to Investec Securities Proprietary Limited 4,729,741 79,138

Payable to Internet Connectivity Charge 10,000 -

Payable to Decker & Co. LLC 21,710 14,844

Payable to Exotix Partners LLP 6,143,762 1,074,754

Payable to Maybank Kim Eng Securities Pte Ltd. 43,040 -

Payable to welfare fund 912,289 772,433

Interest payable - 541,667

Miscellaneous payable 22,085,764 2,161,011

34,002,056 4,643,847

20.7 Inter company payable

Payable to IDLC Finance Limited - -

Payable to IDLC Investments Limited - -

Payable to IDLC Asset Management Limited - -

- -

21. Short term loan Short term loan - IDLC Finance Limited - -

Short term loan - Standard Chartered Bank - 200,000,000

- 200,000,000

22. Liabilities for expenses

Audit fee 115,000 115,000 Legal & professional fee 308,243 480,743 Office rent 1,233,592 235,441 Utilities 814,665 721,665 Office maintenance 1,346,967 856,428 Salaries & allowances 19,631,000 22,631,000 Motor vehicle expenses 44,000 -

23,493,467 25,040,277

23. Provision for income tax

Opening balance 115,463,646 121,858,999 Provision during the year 125,179,132 119,725,003

240,642,778 241,584,004



31.12.2020Taka

31.12.2019Taka

Paid during the year 31,631,725 60,140,219 Tax deducted at source (Note: 23.1) 75,706,370 65,980,139

(107,338,095) (126,120,358) 133,304,683 115,463,646

23.1. Tax deducted at source

The amount has been deducted by Dhaka Stock Exchange Limited (DSE) & Chittagong Stock exchange Limited (CSE) from the transaction amount as per section 53BBB of the Income Tax Ordinance 1984.

Dhaka Stock Exchange Limited For broker 51,326,663 36,855,534 For dealer 1,312,601 1,535,328

52,639,264 38,390,862

Chittagong Stock exchange Limited For broker 1,000,246 1,426,974 For dealer 400,068 446,234

1,400,314 1,873,208 Total tax deducted on turnover as per section 53BBB 54,039,578 40,264,070 Tax deducted at source on bank interest and dividend income 21,666,792 25,716,069

75,706,370 65,980,139

24. Provision for diminution in value of investments

Opening balance 44,358,094 40,466,147 Provision for the year 66,154,717 3,891,947

110,512,811 44,358,094

25. Provision for operations

Opening balance 2,378,758 - Provision for the year 4,479,337 2,378,758

6,858,095 2,378,758

2020Taka

2019Taka

26. Brokerage commission

Commission for Dhaka Stock Exchanges (DSE): Broker 343,520,968 239,269,572 Dealer 6,563,004 7,652,689

350,083,972 246,922,261

Commission for Chittagong Stock Exchanges (CSE):

Broker 5,843,101 8,918,253

Dealer 2,000,341 1,842,760

7,843,442 10,761,013 357,927,414 257,683,274

27. Brokerage commission expenseLaga charges (Note: 27.1) 26,131,010 19,149,769 Charges on corporate/bank guarantee 3,001,250 2,661,459 International market development fees 18,867,059 18,880,514

47,999,319 40,691,742



31.12.2020Taka

31.12.2019Taka

27.1. Laga charges DSE for broker 25,273,289 17,969,445

DSE for dealer 625,018 743,479

25,898,307 18,712,924

CSE for broker 200,413 399,101

CSE for dealer 32,290 37,744

232,703 436,845 26,131,010 19,149,769

28. Interest incomeInterest on FDR 49,410,311 105,452,591

Bank interest 49,976,286 53,983,298

Interest against short-term loan to IDLC Investments Limited 1,561,554 678,913

Interest on margin loan 38,159,649 26,061,892

139,107,800 186,176,694

29. Interest expenseInterest on short-term 2,363,171 9,820,069

Interest on overdraft 208,269 171,410

Interest on Office Space 7,644,874 8,498,252

10,216,314 18,489,731

30. Net investment income Capital gain/(loss) from sale of securities (48,131,569) (8,781,629)Capital gain/(loss) from sale of securities (Strategic Investment Fund)

2,120,231 -

Dividend income 47,122,020 50,213,255

Dividend Income (Strategic Investment Fund) 1,092,216 593,706

Income from Zero Coupon Bond 18,028,724 17,184,493

Income from Treasury Bond 26,024,908 4,907,150

Gain/(loss) on sale of Govt. Treasury Bond 93,956,446 -

140,212,976 64,116,975

31. Other brokerage income

Account opening fee 653,500 463,500

BO account maintenance fee 1,528,100 1,584,450

Transmission fee 103,647 136,665

Demate & remate fee 12,000 41,000

Pledge unpledge & others fee 294,913 24,573

IPO service charge 74,050 53,675

Wealth Certificate 5,801 1,800

Cheque dishonour charge 438,000 294,500

Research Service Income - 723,206

3,110,011 3,323,369

2020Taka

2019Taka



31.12.2020Taka

31.12.2019Taka

32. Salaries & allowances

159,433,558 148,890,050

Salaries & allowances includes key management compensation of BDT 23,411,117 (2019: BDT 26,612,675). Key management personnel comprises the Management Committee, including the Managing Director who exercise significant authority and play strategic role in the company.

33. Rent, taxes, insurance, electricity, etc.

Rent, rates & taxes - 1,518,475

Service charge 5,803,086 5,161,200

Office maintenance 8,084,895 10,617,321

Office insurance 312,741 538,305

Repair & maintenance 705,013 1,825,073

Utilities 4,202,873 5,207,907

19,108,608 24,868,281

33.1. Disclosure related to rent, taxes, insurance, electricity, etc.

Actual rent expenses 23,106,248 23,889,500

Less: Reclassification of rent expenses (as per IFRS 16: Leases) 23,106,248 22,371,025

Rent expenses as reported - 1,518,475

34. Legal expenses

Renewal & registration 896,247 1,717,362

Subscription & fees 427,836 299,170

Legal & professional fees 600,000 517,250

1,924,083 2,533,782

35. Postage, stamp, telecommunication, etc.

Postage and courier 42,929 64,033

Telephone expenses 1,982,505 1,826,361

Government fees & stamp duty 31,767 35,626

Internet connectivity charges 4,653,509 4,946,692

6,710,710 6,872,712

36. Stationery, printing, advertisements, etc.

Printing & stationeries 1,424,561 2,101,610

Advertisement 280,750 1,520,408

Selling Expense 300,584 1,098,918

Corporate Social Responsibility 701,070 174,188

Branding & marketing expenses 622,558 1,942,395

Business promotional expenses 552,907 2,228,983

3,882,430 9,066,502

2020Taka

2019Taka



31.12.2020Taka

31.12.2019Taka

37. Directors' Fee & Meeting Expenses

Directors' fees 215,750 172,500

Meeting expenses 33,199 101,058

248,949 273,558

38. Other expenses

Staff training 34,565 723,073 Medical and welfare expenses 357,625 185,971 Entertainment 236,842 599,392 Motor vehicle expenses 1,892,657 2,335,129 Newspapers & periodicals 32,739 75,167 Travelling and conveyance 539,373 965,676 Employees' group insurance premium 547,291 522,116 Employees' hospitalization insurance premium 863,376 849,947 Software maintenance 3,985,165 3,213,828 CDBL transaction fee 462,755 885,710 Bank charges 721,454 797,672

9,673,842 11,153,683

39. Other non-operating income

Miscellaneous income 1,144,690 782,377

Gain on disposal of Right use of assets 587,546 -

Gain on disposal of fixed assets 736,710 1,494,745

2,468,946 2,277,122

40. Number of employeesThe number of employees for the whole year who received a total remuneration of Taka 36,000 or above were 129 which was 133 on 31 December 2019.

41. Related Party Transaction

Parties are considered to be related if one party has the ability to control the other party or exercises significant influence over the other party in making financial and operational decision and include associated companies with and without common Directors and key management positions. The company has entered into transaction with other related entities in normal course of business that fall within the definition of related party as per International Accounting Standard 24 : " Related Party Disclosures." Transactions with related parties are executed on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other customers of similar credentials and do not involve more than a normal risk.

Name of the related party

Relationship Nature of transaction

Transaction during year

Closing balance as on 31.12.2020

Closing balance as on 31.12.2019

IDLC Finance Limited Parent Company Short Term Loan - - -


Subsidiary of IDLC Finance Limited

Loan - - -

42. Date of authorisation

The Board of director has authorised these financial statements for issue on 14 February 2021.

Dated, Dhaka14 February 2021

2020Taka

2019Taka




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IDLC INVESTMENTS LIMITEDManagement Committee (ManCom)



Rubayet-E-Ferdous is the Chief Operating Officer of IDLC Investments Limited since August, 2011. He has over 20 years of experience in the capital market. He is an MBA and completed his graduation in Economics from University of Calcutta, India. He has been instrumental in launching some of the milestone equity raising deals in Bangladesh Capital Market. He has been leading the Investment Banking and Margin Loan & Operations team of the Company and played a key role in the growth of the company.

RUBAYET-E-FERDOUSChief Operating Officer

He has over 16 years of industry experience of Treasury Management, Portfolio Management, Public Equity Research and working under various capacities. Form 2010 he was head of the Research Department and started managing proprietary

investments of IDLC Group. He completed his BBA in Finance & Banking from University of Dhaka in 2000 and MBA from the Institute of Business Administration

(IBA), University of Dhaka in 2004.

MD MONIRUZZAMAN, CFAManaging Director

Mr. Majumder is a Fellow Chartered Accountant (FCA) with over a decade of corporate experience. His areas of expertise spans over Financial Planning and Control, Budgeting, Corporate and Financial Reporting, strategic Planning and Taxation. Prior to that, he was

working in KPMG Bangladesh as an Audit Supervisor. Mr. Majumder completed his Bachelor of Commerce (Honors) and Masters in Finance from the University of Dhaka.

MASUD KARIM MAJUMDER, FCAGroup Chief Financial Officer





With over a decades of industry experience, Mr. Sakhawat Hossain is serving IDLC capital market operation in the areas of financial management, financial reporting, budgetary control, taxation, administration and corporate affairs. He completed his BBA major in finance from University of Dhaka. Before Joining IDLC, he was Audit Supervisor at KPMG Bangladesh.


Mr. Abul Ahsan Ahmed is a seasoned professional with over 16 years of industry experience. His areas of expertise spans over portfolio management, product and process

development, team building and sales & marketing. He is an MBA graduate, major in Finance.

ABUL AHSAN AHMEDHead of Discretionary Portfolio Management



DIRECTORS’ REPORT to the Shareholders of IDLC Investments Limited

Directors’ Report to the Shareholders

The Directors have the pleasure in presenting to the members of IDLC Investments Limited the Directors’ Report, the audited financial statements for the year ended December 31, 2020 and auditor’s report thereon along with the capital market overview, the Company’s performance and other matters in compliance with the Companies Act, 1994, and Corporate Governance code of the Bangladesh Securities and Exchange Commission.

The Company's principal activities encompass investment banking (issue management, underwriting and corporate advisory), discretionary portfolio management and margin lending.

IDLC Investments provides a high standard of professional and personalized services to its local and NRB customers. The Company possesses a proven track record of catering to a diverse set of client needs while concurrently maintaining strict compliance with the country’s laws and the highest ethical standards. IDLC Investments is positioned as one of the top-ranking merchant banking enterprises in the country, renowned for its quality investment banking and portfolio management services.

IDLC Investments Limited has received ‘Euromoney Awards for Excellence 2020’ as the ‘Best Investment Bank in Bangladesh’ for the third consecutive year in a row in recognition of deal quality,

outstanding financial performance compared to other market participants, and track record of delivering tailored and innovative solutions to clients across a range of products and services.

Operational highlights:

Investment banking:

Our Investment Banking team of IDLC Investments Limited (IDLCIL) has consistently provided tailored and innovative solutions for the strategic needs of its clients. The year 2020 has been a challenging year for not only Bangladesh but also the entire world. The disruption in the business environment caused by the COVID-19 pandemic was an unprecedented event. Ensuring safety of our organization’s human resources was our top priority during the early phase of the pandemic. Despite unfavourable circumstances, Investment Banking has concluded the year with resounding success true to its reputation as one of the leading investment banks in the country with footprint in initial public offerings (IPO), repeat public offerings (RPO), rights issue management, merger & acquisitions, corporate advisory, business restructuring, equity valuations, underwriting and arrangement of pre-IPO placement / capital raising, among others.

Our key strength lies in our ability to value and position the target company in the financial markets correctly, devise the best financial structure, showcase the enterprise to the right investors and round-up the entire process smoothly and efficiently, leveraging our strong liaison and co-ordination with stakeholders; thereby ensuring growth and continuous value-creation for our clients.

2020 was a notable year for investment banking on various aspects. We managed the IPO of Robi Axiata Limited, the biggest ever IPO in the history of Bangladesh with a size of BDT 5,237 million during the year. This is also the listing of a multinational company in our bourses after a decade. We also completed the BDT 1,250 million IPO of Mir Akhter Hossain Limited, which is the first organization from the engineering and construction sector to be listed in the stock exchanges. In the M&A frontier, we completed the merger of Confidence Power Holdings Limited with Confidence Oil and Shipping Limited. We are acting as trustee of the first perpetual bond to be issued by a bank in the country namely that of The City Bank Limited. Apart from providing trustee services to a few perpetual bonds, we also continue to act as trustee of a number of privately placed bonds while several other deals are under process. Besides, investment banking signed a number of new deals during the year.

IDLC Investments has successfully floated 14 IPOs, RPO and Rights Issue that have raised BDT 18,230 million as of December 31, 2020. By managing IPOs, RPOs, rights issues, private placements and capital raising activities, IDLCIL helped to raise BDT 36,311 million for its clientele, so far. The Company has also provided underwriting services to 58 issuers till December 2020. Currently, IDLCIL is working as the issue manager for 9 IPO-bound companies and a number of corporate advisory deals.

MATIUL ISLAM NOWSHAD

Chairman



Regulatory reforms regarding primary and secondary market may have impact in the short term horizon. Reluctance of well governed local corporates, multinationals and even government entities in using primary market as the preferred source of financing as well as market risks affecting the capital market continue to be the crucial challenges for investment banking. IDLCIL’s focus for overcoming these challenges includes leveraging its strong brand equity and transparent engagement with regulators, investors and other stakeholders.

Apart from working on new issue management deals, IDLCIL will continue to focus on new avenues of investment banking services including mergers & acquisitions, corporate advisory and equity valuation among others.

Discretionary portfolio management (DPM):

IDLC Investments Limited (IDLCIL) has been serving retail, high net worth and institutional investors for the last 13 years under the umbrella of Discretionary Portfolio Management (DPM) services. Starting from 2007, we have been providing discretionary portfolio management services with dedicated a team and diversified product basket based on risk-return profile. Our product basket includes ‘MAXCAP’-designed for HNWs and Institutions, ‘Profit-Loss Sharing Scheme’- a partnership between client and IDLC, ‘Capital Protected Scheme’- designed for 100% risk averse investors, ‘Portfolio Advisory Services’- investment advisory arm and ‘Easy Invest’- targeting retail investors.

We focus on fundamental analysis for portfolio diversification encompassing top-down investment philosophy. Macro-economic outlook works as a guiding principle for our investments. Thorough assessments of the corporate governance practices and the management of the company are two prime considerations while selecting a stock. However, we do capitalize the technical analysis tools for market timing and asset re-balancing.

The first half of 2020 has experienced an unforeseen shutting down of economic activities throughout the country. In spite of challenging circumstances, we have generated a 24.2% return for our clients with an alpha of 2.9%. Our asset under management (AUM) has reached BDT 1,660 million as of 31st December 2020. We also introduced interest income facilities on the free cash balance of portfolios, a unique step in the industry, from January 2020 to maximize the return of our clients.

For 2021, we will focus on generating alpha for our clients, beating the FDR returns while minimizing risk through a more disciplined and proactive fund management. We will strengthen the efforts of our sales force by expanding the team and onboarding more Institutional & HNW prospects. Introducing digital platform for client services will be our prime priority in 2021.

Margin loan product:

‘Cap Invest’, a margin product was started from December 2004 under merchant banking division of IDLC Finance Limited which was transferred to IDLC Investments Limited (IDLCIL), a fully-owned subsidiary company of IDLC Finance Limited from August 2011. IDLCIL is advising its clients by counselling regarding stock analysis, effects of leverage, importance of effective risk control and the significance of disciplined portfolio management in order to build long term wealth.

Cap Invest - activities in 2020:

The year 2020 was not easy to make business as it was the year of COVID-19 pandemic. All the business of the country was closed under lock down for almost three months from March to May of the year 2020. Before the lockdown, we counseled our clients to reduce margin and diversify their portfolio. During this lockdown, we smoothened our operational process to avoid client movement especially fund withdrawal, close of account etc. After the lockdown, we advised our clients to execute their trade online or over phone.

Risk management:

From the very beginning IDLCIL was proactive regarding minimizing risk with its own tools. We were the pioneer in introducing the concept of mark-to-market (MTM) among our peers in the Bangladesh market. Through MTM process, we were able to protect client’s equity level in the down market. We also offer different types of ‘Approved List of Securities (ALOS)’ with netting ratio on the basis of the client’s portfolio status to minimize the risk and margin burden for both the clients and the company.

Financial highlights:

In 2020, IDLCIL attained a net operating income of BDT 283.52 million, which was BDT 174.18 million in 2019. Consequently, the Company registered a profit after tax of BDT 167.17 million, representing a favorable growth of 58% year-on-year. The following table demonstrates the breakdown of revenue streams from different products.

A1: Portfolio operations:

Amount in BDT mn

Operational income 2016 2017 2018 2019 2020

Net interest income 140.22 102.60 133.58 129.28 74.74

Portfolio management services 44.56 46.61 45.20 34.57 26.38

Settlement and transaction fees 20.02 58.63 31.13 16.75 20.06

Documentation fees 0.75 0.95 0.55 0.08 0.06

Total operational revenue 205.55 208.79 210.46 180.68 121.23

Operational income in BDT mn

2016 2017 2018 2019 2020

140.22

44.56

102.60

133.58

45.20

129.28

34.57 26.38

74.74

16.75 20.060.06

46.6158.63

0.95

31.13

0.55 0.0820.02

0.75

Net interest income Portfolio management servicesSettlement and transaction fees Documentation fees



In 2020, our net interest income stood at BDT 74.74 million from a BDT 129.28 million in 2019. Portfolio management services decreased given the lower value of asset under management. Settlement and transaction fees increased given the higher transactions in client accounts.

A2: Investment banking:

Amount in BDT mn

Investment banking 2016 2017 2018 2019 2020

Issue management fees 11 3 16 3 21Underwriting 0.2 - - 2 5Corporate advisory fees 17 44 44 14 9Total revenue from investment banking 28 47 60 19 35

Investment banking in BDT mn

11

3

16

3

21

0.2 - - 2 5

17

44 44

14 9

Issue management fees Underwriting Corporate advisory fees

2016 2017 2018 2019 2020

Revenue from investment banking stood at BDT 34.92 million in 2020 wherein 59% contribution came from Issue management fees. Corporate advisory fees contributed 27% and underwriting fees 14%.

A3: Investment income:

The broad market index DSEX gained 21.31% at the end of the year, though the year began with a very depressing move. Foreseeing volatility in the equity market, we reduced our exposure significantly at the beginning of the year. We parked those money into treasury bonds and other fixed income instruments. We also forecasted a significant fall in the yield curve, which indeed took place near the end of the year. A considerable drop in interest rate gave us some windfall gains from treasury bonds, which was also tax free. We also injected some funds into equity near the bottom of the market and made handsome gains when the market started to recover during the fourth quarter.

Amount in BDT mn

Investment income 2016 2017 2018 2019 2020

Income from equity investments 68.36 257.86 (41.41) (17.67) (117.09)

Income from fixed income securities 20.21 26.49 27.70 85.13 336.34

Total Investment income 88.56 284.35 (13.70) 67.46 219.25

Investment income in BDT mn

2016 2017 2018 2019 2020

Income from equity investmentsIncome from fixed income securities

68

258

(41)(18)

(117)

20 26 28 85

336

B) Operational expenses:

Amount in BDT mn

Operational expenses 2016 2017 2018 2019 2020

Salary and allowances 49 58 63 64 66

General and administrative expenses 30 31 31 29 26

Total operational expenses 79 89 94 93 92

Operational expenses in BDT mn

2016 2017 2018 2019 2020

Salary and allowancesGeneral and administrative expenses

49 58

63 64 66

30 31 31 29 26

The Company incurred a total cost of BDT 91.88 million during 2020, under which 72% was incurred on salary and allowances and the rest was for general and administrative purposes 28%.

Human resource development:

We believe in performance, meritocracy, and equal opportunity in every aspect of human resource management. We maintain a culture of continuous learning and invest substantially in talent management. As part of IDLCIL’s human resource development program, employees of IDLCIL underwent training, which included both development in managerial capacities and technical modules. In 2020, 32 participants were trained in local and customized training programs where atleast one individual has attended multiple trainings.



Number of permanent employees

No. of employees 2016 2017 2018 2019 2020

Male 24 24 27 23 22Female 5 5 5 5 5Total 29 29 32 28 27

No. of employeesMale Female

2016 2017 2018 2019 2020

24 24 27

23 22

5 5 5 5 5

Outlook and Strategies:

We are hoping that 2021 will be a better year than 2020. We have a very liquid money market at the moment. The deposit rates and call money rates are at its historic lows. When the cost of fund is so low, the cost of doing business also goes down. As a result, the listed firms will have lower interest burden. Also for company valuations, the discount rate that we use to discount the future cash flows will be lower, resulting in a higher valuation. Any asset price grows when discount rates are low. We have already witnessed this phenomenon in 2010 and 2017. We are also having a low interest rate regime now, which will help boost the growth of the equity asset class.

Coming to challenges, we still need to see the full blown recovery of the SME sector. The banking sector will face the reality once the moratorium period is over. NPL is expected to shoot up and banks will have to face it diligently. We also need to observe the business expansions and private sector credit growth. So far the GDP is mainly driven by government mega infrastructure projects.

On the strategy front, we will take the maximum benefit of the capital market while keeping a constant eye on the downside. We will mostly invest in fixed income instruments like zero coupon bonds. We would try to expand our businesses in the portfolio management and margin lending, while strengthening our position in investment banking.

Books of accounts:

Proper books of accounts of IDLC Investments Limited have been maintained. The accounting estimates are based on reasonable and prudent judgment. International Accounting Standards (IAS)/ International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in the preparation of the financial statements and any departure therefrom has been adequately disclosed. The financial statements prepared by the management

of IDLC Investments Limited present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

Internal control:


Distribution of profit for 2020:

The Company reported a profit of BDT 167,168,376 in 2020. The Board has proposed cash dividend: 2.83% (@ BDT 2.83 per share) to the shareholders for the year 2020.

Appointment of Auditors:

In terms of Article 18.2 of the Articles of Association of the Company, the Company shall at each annual general meeting, appoint an auditor or auditors to hold office until the next annual general meeting. The Auditors of the Company, Hoda Vasi Chowdhury & Co., Chartered Accountants, has completed the first year as Auditor of the Company. They are eligible for re-appointment as Auditors of the Company for the year 2021 and they have also offered themselves for re-appointment.

Going concern:

There are no significant doubts upon the IDLC Investments Limited's ability to continue as a going concern.

Appreciation:

I would like to thank my Board colleagues for their continued support and on their behalf I would like to express my heartiest gratitude to the entire team of IDLC Investments Limited. It would be unfair to not acknowledge the exceptional efforts of our employees who worked in praiseworthy partnerships to meet the many challenges in pandemic. They were called upon to embrace some major challenges while concurrently maintaining the highest standards of service to our clients. They met the challenges and we thank each of them for their extraordinary performance.

In conclusion, I would like to thank our loyal clients and honorable shareholders for their continued faith and support, on behalf of the Board. Taking this opportunity, the members of the Board would also like to thank the Bangladesh Securities and Exchange Commission, Dhaka and Chittagong stock exchanges and Central Depository Bangladesh Limited who continued to remain our partners in our journey of growth.

For and on behalf of the Board of Directors,

Matiul Islam Nowshad Chairman IDLC Investments Limited


OpinionWe have audited the financial statements of IDLC Investments Limited (the “Company”) which comprise the statement of financial position as at 31 December 2020 and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statement including a summary of significant accounting policies and other explanatory information.




Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal Controls

Management is responsible for the preparation and fair presentation of the financial statements of the Company in accordance with IFRSs as explained in note 3, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.



Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company’s to cease to continue as a going concern.

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF IDLC INVESTMENTS LIMITEDReport on the Audit of the Financial Statements


Dhaka, 14 February 2021DVC No : 2103070770AS879621



• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Report on other Legal and Regulatory RequirementsIn accordance with the Companies Act, 1994 and the Securities and Exchange Rules 1987, we also report that.


(ii) in our opinion, proper books of account as required by law

have been kept by the Company’s so far as it appeared from

our examination of those books;

(iii) the statement of financial position and statement of profit

or loss and other comprehensive income together with the

annexed notes dealt with by the report are in agreement

with the books of account and returns; and

(iv) the expenditures incurred were for the purpose of the

Company’s business for the year.





Particulars Notes31.12.2020

BDT31.12.2019

BDT

Assets

Non-current assetsProperty, plant and equipment 5 7,574,030 12,220,851 Intangible asset 6 244 79,390 Right-of-use assets 7 27,252,437 32,702,924 Investments in bond 8 132,185,371 152,111,840 Deferred tax asset 9 39,674,193 23,263,647

206,686,276 220,378,652 Current assetsInvestment in securities 10 958,804,457 1,293,341,472 Margin loans to portfolio clients 11 760,938,452 730,242,184 Account receivables 12 427,296,734 400,527,723 Short term investments 13 1,057,085,742 - Cash and cash equivalents 14 426,203,673 866,893,468 Advances, deposits and prepayments 965,112 758,612 Advance income tax 443,109,891 376,839,997

4,074,404,061 3,668,603,456 Total Assets 4,281,090,337 3,888,982,108

Shareholders' equity and liabilities

Shareholders' equityShare capital 15 2,200,000,000 2,200,000,000 Retained earnings 16 962,109,157 794,940,780

3,162,109,157 2,994,940,780

Non-Current liabilitiesLease liabilities 17 30,632,719 32,898,804 Deferred liabilities - gratuity payable 24,294,555 19,997,779

54,927,274 52,896,583

Current liabilitiesShort-term loan 18 - - Portfolio investors' fund 19 269,874,193 234,026,031 Account payables 20 118,426,970 81,883,464 Liabilities for expenses 21 40,501,999 22,749,564 Provision for diminution in value of investments 22 41,036,343 14,778,971 Provision for margin loan 23 20,110,168 19,803,205 Provision for income tax 24 574,104,232 467,903,510

1,064,053,905 841,144,745 Total shareholders' equity and liabilities 4,281,090,337 3,888,982,108











STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended 31 December 2020

Particulars Notes2020BDT

2019BDT

Operating incomeInterest income 25 74,737,249 129,275,136 Income from portfolio management services 26 26,375,031 34,570,675 Settlement and transaction fees 27 20,057,740 16,745,412 Documentation charges 28 61,000 84,000 Income from investment banking 29 34,922,415 18,581,057 Investment income 30 150,736,698 (5,527,285)Other income 31 68,508,798 72,991,862

375,398,931 266,720,857 Operating expenseGeneral and administrative expenses 32 (81,120,781) (81,393,368)Depreciation on property, plant and equipment (10,676,118) (11,058,764)Amortization on IT software (79,145) (86,519)Profit before provision for diminution in value of investments and margin loan 283,522,887 174,182,206

Provision for diminution in value of investments (26,257,372) 7,675,613 Provision on margin loan (306,963) (5,816,974)Profit before income tax 256,958,552 176,040,844

Provision for income taxCurrent tax (106,200,723) (75,356,679)Deferred tax expense 33 16,410,547 5,297,806 Net profit 167,168,376 105,981,971 Other comprehensive income - - Total comprehensive income 167,168,376 105,981,971










STATEMENT OF CASH FLOWSFor the year ended 31 December 2020

Particulars 2020BDT

2019BDT

A. Cash flow from operating activitiesNet profit during the year 167,168,376 105,981,971 Item not involving in movement of cash:Depreciation on property, plant and equipment 10,755,263 11,145,284 Loss/(Gain) on disposal of fixed asset (149,995) (920,354)Provision for diminution in value of investments 26,257,372 (7,675,613)Provision (release)/charged for margin loan 306,963 5,816,974 Provision for income tax 106,200,723 75,356,679 Liabilities for expenses 17,752,435 343,237 Decrease/(increase) in deferred tax assets (16,410,547) (5,297,806)(Increase)/decrease in lease liabilities (2,266,085) 32,898,804 Increase in deferred liabilities - gratuity payable 4,296,776 5,573,384 Cash generated from operating activities before changes in working capital 146,742,905 117,240,589

Changes in working capital:Decrease/(increase) in account receivables (26,769,011) (24,665,122)Decrease/(increase) in advance, prepayments & deposits (206,500) 2,788,000 Decrease/(increase) in Short Term Investments (1,057,085,742) - Increase in advance income tax (AIT) (66,269,894) (85,566,087)Increase/(decrease) in account payables 36,543,506 (175,562,118)

(1,113,787,640) (283,005,327)Net cash flow from operating activities (A) (799,876,359) (59,782,767)

B. Cash flows from investing activitiesPurchase of property, plant and equipment (578,814) (44,154,678)Sale proceed of property, plant and equipment 150,000 2,024,123 Purchase of marketable securities 334,537,015 676,840,944 Purchase of zero coupon bond 19,926,468 10,955,878 Margin loan realized from portfolio clients (30,696,269) 668,380,937 Net cash (used in)/flow from investing activities (B) 323,338,401 1,314,047,202

C. Cash flows from financing activities Receipt/(repayment) of loan - (178,400,000)Issuance of stock - - Receipt/(repayment) of portfolio investors' fund 35,848,162 (472,317,780)Net cash from/(used in) financing activities (C) 35,848,162 (650,717,780)Net cash surplus for the year (A+B+C) (440,689,796) 603,546,656

Cash and bank balance at the beginning of the year 866,893,468 263,346,812 Cash and bank balance at the end of the year 426,203,673 866,893,468

Cash and Bank Balance:

Cash at bank 25,103,673 145,678,386 Fixed deposits 401,100,000 721,215,082

426,203,673 866,893,468






(Amount in BDT)

Particulars Share Capital

Retained Earnings

Total Equity

Balance as on 01 January 2020 2,200,000,000 794,940,780 2,994,940,780 Net profit for the year - 167,168,376 167,168,376 Balance as on 31 December 2020 2,200,000,000 962,109,157 3,162,109,157

Balance as on 01 January 2019 2,200,000,000 688,958,809 2,888,958,809 Net profit for the year - 105,981,971 105,981,971 Balance as on 31 December 2019 2,200,000,000 794,940,780 2,994,940,780



STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2020






NOTES TO THE FINANCIAL STATEMENTSAs at and for the year ended 31 December 2020

1 Company and its activities 1.1 Background and legal status

IDLC Investments Limited (the "Company") is a private limited company incorporated on 19 May 2010 under the Companies Act, 1994 having its registered office at D R Tower (4th floor), 65/2/2, Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000, Bangladesh. It is a wholly owned subsidiary of IDLC Finance Limited since inception. The Company received Merchant Banking License (license no. MB-67/2011) from Bangladesh Securities and Exchange Commission (BSEC) on 02 August 2011 and commenced its operation on 16 August 2011.


IDLC Investments Limited provides high standard of professional and personalized services to its local and Non Resident Bangladeshi (NRB) clients. The company's principal activity includes the following:

i. Investment banking (issue management, underwriting of shares, and corporate advisory); ii. Discretionary portfolio management;

iii. Non-discretionary portfolio management;

iv. Own portfolio management, etc.

2 Basis of preparation2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the Companies Act, 1994 and other applicable laws and regulations.


As required, IDLC Investments Limited also complies with the applicable provisions of the following major laws/ statutes: - The Income Tax Ordinance, 1984;

- The Income Tax Rules, 1984;

- Negotiable Instrument Act, 1881;

- Securities and Exchange Rules, 1987;

- Securities and Exchange Commission Act, 1993;

- Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996; and





-Statement of Financial Position

-Statement of Profit or Loss and Other Comprehensive Income

-Statement of Changes in Equity

-Statement of Cash Flows

-Notes to the Financial Statements

2.5 Functional and presentation currency

The financial statements are presented in Bangladeshi Taka (BDT) currency, which is the functional currency of the company. All financial information presented in Taka has been rounded off to nearest BDT except as stated otherwise.




The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed ongoing basis. Revision of accounting estimates is recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

In particular, the key areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are described in the following notes:

Note: 5 Depreciation on property, plant and equipment.Note: 9 Deferred tax assets

Note: 12 Accounts receivablesNote: 20 Accounts payablesNote: 21 Liabilities for expensesNote: 24 Provision for income tax

2.7 Going concern

The Company has adequate resources to continue in operation for the foreseeable future. For this reason the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the company provide sufficient funds to meet the present requirements of its existing businesses and operations.

2.8 Reporting period

The financial period of the Company is similar to calendar years covers one year from 01 January to 31 December and is being followed consistently.

3 Significant accounting policies The accounting policies set out below have been applied consistently (otherwise as stated in Note-3.4) to all periods presented

in these financial statements.

3.1 Property, plant and equipment

3.1.1 Recognition and measurement

Property, plant and equipment are stated at cost less accumulated deprecation. The cost of the property, plant and equipment includes purchase price/construction cost and other directly attributable costs of bringing the property, plant and equipment to working conditions for their intended use.

3.1.2 Subsequent costs

The cost of replacing part of an item of property, plant and equipment are recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit and loss account as incurred.

3.1.3 Depreciation & Amortization

Depreciation on property, plant and equipment is charged using straight-line method over their estimated useful lives. Depreciation rates are as follows:

Nature of Assets Rate of DepreciationCurtain and carpets 33.33%Electrical equipment 20.00%IT software and development 33.33%Furniture and fixture 12.50%Office decoration 20.00%Office equipment 20.00%Telephone and telex 33.33%Motors vehicles 25.00%Right of use assets Lease term

Depreciation on all items of property, plant and equipment is calculated and charged from the date of putting the assets in to use irrespective of the value and purchase/ acquisition date of the property, plant and equipment.

3.2 Intangible assets


Intangible assets viz computer software those are acquired by the Company and which have finite useful lives, are measured at cost less accumulated amortization and impairment loss, if any.



3.2.2 Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates.

3.2.3 Amortization

Amortization is calculated using the straight line method to write down the cost of intangible assets to their residual values over their estimated useful lives based on the management's best estimates; i.e., 3 years (33.33%).

3.3 Impairment

The carrying value of the Company's assets other than inventories, are reviewed at closing date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the asset or its cash-generating unit exceeds its recoverable amount. Impairment losses, if any, are recognized in the profit and loss account.

3.4 Investment in shares

Investments are stated at cost or market value whichever is lower. A security which is not listed at stock exchange as on the reporting date then the price is shown at cost.

3.5 Taxation

3.5.1 Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any, in accordance with provisions of Income Tax Ordinance, 1984. It is measured using tax rates enacted or substantively enacted at the reporting date. Applicable tax rate for the Company for the year 2020 will be declared by Finance Act 2021. For the purpose of these financial statements, management has assumed that the existing tax rates will be applicable for Income year 2020 as well, which are mentioned below:

Regular business tax rate RatesMerchant Bank 37.50%

Other business tax rateDividend income 20.00%Capital gain on sale of fixed assets 15.00%Capital gain on sale of marketable securities 10.00%

The Company’s existing accounting policy for uncertain income tax treatments is consistent with the requirements of IFRIC 23 Uncertainty over Income Tax Treatments, which became effective on 1 January 2019. We already accounted for uncertainty of taxes and further disclosure is not required.

3.5.2 Deferred tax

The Company accounts for deferred tax as per International Accounting Standard (IAS) 12: "Income Taxes". Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. It is measured at the tax rates that are expected to be applied to the temporary differences when they reverse based on the laws that have been enacted or substantively enacted by the date of reporting of the financial statements.

The Company provides disclosures based on the classes of assets and liabilities related to the temporary differences. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax liabilities are recognized for all taxable temporary differences and it is probable that temporary differences will not reverse in the foreseeable future. Both the Deferred tax assets and liabilities are reviewed at each reporting date considering the probability of benefit or detriment realizable.


Revenue is only recognised when it meets the following five steps model framework as per IFRS 15: "Revenue from Contracts with Customers"

a) identify the contract(s) with a customers; b) identify the performance obligations in the contract; c) determine the transaction price; d) allocate the transaction price to the performance obligations in the contract; e) recognise revenue when (or as) the entity satisfies a performance obligation.

Interest income from margin loans and other sources is recognised on an accrual basis of accounting.



3.6.1 Interest income

Interest income is recognized on the loan balance of portfolio clients on monthly accrual basis and charged to clients’ balance on quarterly basis.

3.6.2 Portfolio management fees

Portfolio management fees are recognized on the market value of the clients’ portfolio on monthly accrual basis and charged to clients’ balance on quarterly basis.

3.6.3 Issue Management & Corporate Advisory

Issue management and corporate advisory fees are recognized according to the stages of completion of services as agreed and defined in Issue management and corporate advisory agreement between company and client.

3.6.4 Dividend income and profit or loss on sale of securities

Dividend is accounted for as income when right to receive is established whereas profit or loss arising from the sale of securities is accounted for only when the securities are sold/offloaded.

3.7 Provision

A provision is recognized in the accounts when the Company has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.

3.8 Events after the balance sheet date

Events after the balance sheet date that provide additional information about the Company's position at the balance sheet date are reflected in the financial statements. Events after the balance sheet date that are not adjusting event are disclosed in the notes when material.


The Financial Statements have been prepared in compliance with requirement of IAS as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and applicable in Bangladesh. IDLC Investments Limited applied following IAS and IFRS:

Name of the IAS No. StatusPresentation of Financial Statements 1 AppliedStatements of Cash Flow 7 AppliedAccounting Policies, Changes in Accounting Estimates and Errors 8 AppliedEvents after the Reporting Period 10 AppliedIncome Taxes 12 AppliedProperty, Plant and Equipment 16 AppliedEmployee Benefits 19 AppliedBorrowing Costs 23 AppliedRelated Party Disclosures 24 AppliedProvisions, Contingent Liabilities and Contingent Assets 37 AppliedIntangible Assets 38 AppliedFinancial Instruments: Recognition and Measurement 39 Applied

Name of the IFRS No. StatusLeases 16 AppliedRevenue from Contracts with Customers 15 AppliedFinancial Instruments 9 AppliedFinancial Instruments: Disclosures 7 Applied

4 Financial Risk Management

The Company has exposure to the following risks from its use of financial instruments:

Credit risk

Market risk

Liquidity risk

This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital.

The Board of Directors (BOD) has overall responsibility for the establishment and oversight of the Company's risk management framework.



4.1 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's loans and advances to customers and investment securities. These loans and advances are fully backed by the securities held by the customer.

With respect to credit risk arising from the other financial assets of the Company, the maximum exposure is equal to the carrying amounts of the financial assets.

4.2 Market risk

The Company's activities may give rise to risk at the time of settlement of transactions and trades. Market risk is the risk of losses due to failure of entity to honor its obligations to deliver cash, securities or other assets as contractually agreed.

For such transactions the Company only allows the purchase of tradable securities if the customer has adequate cash/purchase power beforehand.

4.3 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they falls due. The Company's approach to managing liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company's reputation. Typically, the Company ensures that it has sufficient cash and cash equivalents to meet expected operational expenses, including financial obligations through preparation of the cash flow forecast, prepared based on time line of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date.



31.12.2020BDT

31.12.2019 BDT

5 Property, plant and equipment

A. Cost

Opening balance 45,082,381 45,910,658 Add: Addition during the year/period 578,814 6,001,266

45,661,195 51,911,924 Less: Disposal during the year/period 1,500,000 6,829,543

44,161,195 45,082,381 B. Accumulated depreciation

Opening balance 32,861,530 32,979,026 Add: Charged during the year/period 5,225,630 5,608,277

38,087,160 38,587,303 Less: Disposal during the year/period 1,499,995 5,725,773

36,587,165 32,861,530 C. Written down value (A-B) 7,574,030 12,220,851

A schedule of property, plant and equipment is given in Annexure-A.6 Intangible asset

A. Cost Opening balance 2,068,954 2,068,954 Add: Addition during the year/period - -

2,068,954 2,068,954 B. Accumulated amortizationOpening balance 1,989,565 1,903,045 Add: Charged during the year/period 79,145 86,519

2,068,710 1,989,565 244 79,390

7 Right-of-use assets

A. Cost :


Add: Addition during the year/period - 38,153,412

38,153,412 38,153,412

Less: Disposal during the year/period - -

38,153,412 38,153,412



Add: Charged during the year/period 5,450,487 5,450,487

10,900,975 5,450,487

Less: Disposal during the year/period - -

10,900,975 5,450,487

C. Written down value (A-B) 27,252,437 32,702,924

A schedule of right-of-use assets is given in Annexure-A.

8 Investments in bondInvestment in zero coupon bond (Note: 8.1) 105,000,000 101,268,695 Investment in treasury bond (Note: 8.2) 27,185,372 50,843,145

132,185,371 152,111,840



31.12.2020BDT

31.12.2019 BDT

8.1 Investment in zero coupon bondInvestment in commercial bond 101,268,695 163,067,717 Add: Interest capitalized during the period 3,731,305 11,700,977

105,000,000 174,768,695 Less: Scrip matured - 73,500,000

105,000,000 101,268,695

IDLC Investments Limited made investment in commercial zero coupon bond issued by Impress-Newtex Composite Textiles Limited vide bond certificate ref # INCTL ZCB: 01-21 in 12 May 2016 for face value of 210,000,000.

8.2 Investment in Treasury BondInvestment in Treasury Bond (Note: 8.2.1) 8,980,791 50,843,145 Treasury Bond for DPM Client (Note: 8.2.2) 18,204,580 -

27,185,372 50,843,145

8.2.1 Investment in Treasury Bond Opening balance 50,843,145 - Add: Investment during the year/period 3,351,184,743 50,843,145

3,402,027,888 50,843,145 Less: Encashment during the year/period 3,393,047,096 -

8,980,791 50,843,145

8.2.2 Treasury Bond for DPM Client Opening balance - - Add: Investment during the year/period 21,515,371 -

21,515,371 - Less: Encashment during the year/period 3,310,791 -

18,204,580 - *Treasury Bonds are kept for Discretionary Portfolio Management Clients fund.

9 Deferred tax assetDeferred tax assets is arrived at as follows:

Carrying Amount

Tax base Taxable/(deductible)

temporary difference

BDT BDT BDT

As on 31 December 2020

Property, plant and equipment 7,574,275 16,284,751 (8,710,476)*Difference for vehicle (1,614,583) - (1,614,583)Gratuity provision (net of payment) (24,294,555) - (24,294,555)Right-of-use assets 27,252,437 - 27,252,437 Lease liability (30,632,719) - (30,632,719)Realised loss on investments (254,242,322) - (254,242,322)Net taxable temporary difference (292,242,219)Applicable tax rate 37.50%Applicable tax rate for capital gain/(loss) from capital market 10.00%Deferred tax - assets 39,674,193



31.12.2020BDT

31.12.2019 BDT

Carrying Amount

Tax base Taxable/(deductible)

temporary difference

BDT BDT BDT


Property, plant and equipment 12,300,241 19,002,711 (6,702,470)*Difference for vehicle (2,239,583) - (2,239,583)Gratuity provision (net of payment) (19,997,779) - (19,997,779)Right-of-use assets 32,702,924 - 32,702,924 Lease liability (32,898,804) - (32,898,804)

Realised loss on investments (123,377,545) - (123,377,545)

Net taxable temporary difference (152,513,257)Applicable tax rate 37.50%Applicable tax rate for capital gain/(loss) from capital market 10.00%

Deferred tax - assets 23,263,647

* This represents the permanent difference related to sedan cars, not playing for hire, owned by IDLCIL. As per the provisions of Income Tax Ordinance, 1984, depreciation on such cars is allowed only up to certain limit of cost (currently BDT 2.5 million per car) of such cars for tax purpose. Difference for vehicle represents the amount of depreciated cost exceeding such limits.

31.12.2020BDT

31.12.2019 BDT

10 Investment in securitiesInvestment in available-for-sale securities (Note: 10.1) 820,726,864 1,147,530,816 Investment in initial public offering (Note: 10.2) - - Investment in DPM PLS scheme 25,569,617 33,302,680 Investment in non marketable securities 112,507,976 112,507,976

958,804,457 1,293,341,472

10.1 Investment in marketable securities

Sector-wise details of marketable securities holding position as of 31 December 2020 is given below:

Name of industry Cost price Market price as on 31.12.2020

Cement 12,239,534 12,199,086 Engineering 115,087,705 117,566,687 Fuel & Power 101,746,499 101,137,331 Mutual Funds 24,256,563 24,371,135 Pharmaceuticals & Chemicals 323,942,186 340,017,813 Telecommunication 21,521,732 27,377,587 Miscellaneous 99,501,785 103,735,529 Food 120,015,527 129,061,901 Bank 2,306,552 2,303,600 Insurance 108,780 428,593

820,726,864 858,199,262

All investment in marketable securities are valued on aggregate portfolio basis, at the lower of cost and market value, at the balance sheet date.

Market price for securities not listed as on reporting date, has been shown at cost for calculation purpose.



31.12.2020BDT

31.12.2019 BDT

10.2 Investment in initial public offering (IPO) - -

11 Margin loans to portfolio clients

Opening balance 730,242,184 1,398,623,120

Add: Loan disbursed during the year/period 1,623,372,692 1,585,886,577

2,353,614,876 2,984,509,697

Less: Loan reimbursed during the year/period 1,592,676,423 2,254,267,514

760,938,452 730,242,184

12 Account receivables

Receivable from corporate advisory 37,756,433 33,382,351 Receivable from portfolio advisory services 877,687 877,687 Receivable from issue management fees 14,850,000 6,600,000 Receivable from Underwriting Commission 5,812,848 - Receivable from brokers 325,168,246 343,752,519 Receivable on FDR Interest 34,425,502 - Other receivables 8,406,018 15,915,166

427,296,734 400,527,723

13 Short Term Investments Fixed deposit receipt (Note: 13.1) 1,057,085,742 -

1,057,085,742 -

13.1 Fixed deposit receipt

Institution Branch Type Instrument No 350,000,000 -

IDLC FL Dilkusha FDR

10252212385025 107,085,742 -

10252212385018 200,000,000 -

10252212385023 100,000,000 -

10252212385024 300,000,000 -

10252212385026 1,057,085,742 -

14 Cash and cash equivalents

Cash at bank (Note: 14.1) 25,103,673 145,678,386

Fixed deposit receipt (Note: 14.2) 401,100,000 721,215,082

426,203,673 866,893,468

14.1 Cash at bank

Name of the Bank Branch A/C No Type

Standard Chartered Bank Gulshan 1110866 CD 3,113,600 16,212,473

Commercial Bank of Ceylon

Sylhet 1807005260 CD 25,000 25,000

Commercial Bank of Ceylon

Sylhet 8807005815 SND 174,179 637,242

One Bank Limited Principal 001300000988 SND 11,528,639 9,981,652 One Bank Limited Principal 0013000001906 SND 5,265,054 56,257,585

One Bank Limited Principal 0013000002206 SND - - NRB Bank Limited Dilkusha 1081030007238 SND 119,484 117,179 NRB Bank Limited Dilkusha 1081030007229 SND 47,415 46,850



31.12.2020BDT

31.12.2019 BDT

NRB Bank Limited Dilkusha 1081030029855 SND 29,290 29,200 NCC Bank Limited Principal 0103-0325000393 SND 4,648,388 61,716,261

Jamuna Bank Motijheel 0024-0320001558 SND 37,133 -

BRAC Bank Limited Motijheel 1505201920062001 CD 115,490 654,945

25,103,673 145,678,386

14.2 Fixed deposit receipt

Institution Branch Type Instrument No

IDLC FL Dilkusha FDR

10252212385016 - 214,209,902 10252212385017 - 106,399,169

10252212385018 - 104,869,072

10252212385019 - 125,736,939 10252212385027 200,000,000 - 10253112385011* 700,000 - 10252212385022* 400,000 -

10252212385021* - 20,000,000

EXIMShantinagar

branchFDR

11360100048821 - 150,000,000 01060100212706 200,000,000 -

401,100,000 721,215,082

*Fixed Deposit Receipts are kept with IDLC Finance Limited represents the Discretionary Portfolio Management Clients fund under Capital Protected Scheme.

15 Share capital

Authorized Capital30,000,000 ordinary shares of BDT 100 each 3,000,000,000 3,000,000,000

Issued, subscribed & paid up capital 2,200,000,000 2,200,000,000

The issued, subscribed and paid-up capital of BDT 2,200,000,000 is divided into 22,000,000 ordinary shares of BDT 100 each. Details are as follows:

IDLC Finance Limited21,999,999 shares of BDT 100 each fully paid up 2,199,999,900 2,199,999,900 Mr. Asif Saad Bin Shams 1 share of BDT 100 each fully paid up 100 100

2,200,000,000 2,200,000,000

16 Retained earnings

Opening balance 794,940,780 688,958,809 Net profit for the year 167,168,376 105,981,971

962,109,157 794,940,780

17 Lease liabilities

Opening balance 32,898,804 - Add: Addition during the year - 34,965,412

32,898,804 34,965,412 Less: Adjustment during the year 2,266,085 2,066,607

30,632,719 32,898,804



18 Short term loan

Borrowing from IDLC Finance Limited (Note: 18.1) - - Borrowing from IDLC Securities Limited (Note: 18.2) - -

- -

18.1 Borrowing from IDLC Finance Limited

Opening balance - - Add: Loan received during the year 413,100,000 522,300,000

413,100,000 522,300,000 Less: Loan paid during the year 413,100,000 522,300,000

- -

Borrowing from IDLC Finance Limited, parent company, to accommodate the regular financial requirements for margin lend-ing which is effective from 16 August 2011 vide sanction letter reference no. 410.9/4103 for a demand loan having limit of BDT 6,500 million and renewed for a revolving demand loan having limit of BDT 1,700 million on 01 January 2020 vide sanction letter ref # IDLC/TR/2020/169.

18.2 Borrowing from IDLC Securities Limited

Opening balance - 178,400,000 Add: Loan received during the year 654,900,000 183,800,000

654,900,000 362,200,000 Less: Loan paid during the year 654,900,000 362,200,000

- -

Loan from IDLC Securities Limited, wholly owned subsidiary of IDLC Finance Limited, to accommodate the regular financial requirements which was effective from 01 January 2012 vide agreement no IDLCSL/12/01/54 for intercompany lending and borrowing facility and renewed for a revolving demand loan having limit of BDT 600 million on 01 January 2020 vide sanction letter ref # IDLCSL/2020/01/001.

19 Portfolio investors' fund

Opening balance 234,026,031 706,343,811 Add: Deposit and share sold by clients 5,496,621,397 4,068,496,386

5,730,647,428 4,774,840,197 Less: Purchase of share and withdraw by clients 5,460,773,234 4,540,814,167

269,874,193 234,026,031

Portfolio investor's fund represents the unutilized balance of the IDLC Investments Limited's clients portfolio.20 Account payables

Payable against clients' withdrawal & others 7,966,334 29,846,744 Broker payables 108,870,100 50,302,800 Other payables (Note 20.1) 1,590,536 1,733,919

118,426,970 81,883,464

20.1 Other payables

IDLCIL employees' welfare fund 264,628 357,575 Others 1,325,907 1,376,344

1,590,536 1,733,919

21 Liabilities for expenses

Salary and allowance 29,422,311 20,229,878 CDBL charges 998,263 192,010 Postage and courier 3,774 7,051 Office rent 538,844 440,671 Office maintenance 2,946,153 601,636

31.12.2020BDT

31.12.2019BDT



Telephone & telex bill 61,992 72,851 Utilities 4,544,442 462,556 Legal & professional fees 1,852,699 487,199 Printing & stationery 16,684 2,516 Director's Remuneration 69,750 71,250 Car maintenance and others 47,087 181,945

40,501,999 22,749,564

22 Provision for diminution in value of investments

Opening balance 14,778,971 22,454,584 Add: Charged during the year 26,257,372 -

41,036,343 22,454,584 Less: Released during the year - 7,675,613

41,036,343 14,778,971

23 Provision for margin loan

Provision for margin loan (Note: 23.1) 7,609,385 7,302,422 Provision for unrealized loss in portfolio 12,500,783 12,500,783

20,110,168 19,803,205

Provision for margin loan is being kept at 1% as per Rules 36 of Merchant Banker and Portfolio Manager Rules, 1996 of Bangladesh Securities and Exchange Commission.

23.1 Provision for margin loan

Opening balance 7,302,422 13,986,231 Add: Charged during the year 306,963 -

7,609,385 13,986,231 Less: Released during the year - 6,683,809

7,609,385 7,302,422

General provision is being kept at 1% as per Rules 36 of Merchant Banker and Portfolio Manager Rules, 1996 of Bangladesh Securities and Exchange Commission.

24 Provision for income tax

Opening balance 467,903,510 392,546,831 Add: Charged during the year 106,200,723 75,356,679

574,104,232 467,903,510

2020BDT

2019BDT

25 Interest income

Income from DPM clients 26,104 3,432 Income from Cap Invest clients 79,770,131 133,768,892

79,796,235 133,772,324 Less: Interest expenses on borrowing (Note: 25.1) 5,058,986 4,497,188

74,737,249 129,275,136

25.1 Interest expenses on borrowing

IDLC Finance Limited 548,767 670,133 IDLC Securities Limited 1,561,554 678,913 Interest expenses on right-of-use assets 2,948,665 3,148,143

5,058,986 4,497,188

31.12.2020BDT

31.12.2019BDT



26 Income from portfolio management services

Income from DPM clients 18,376,510 24,799,374 Portfolio advisory service - 76,618 Income from Cap invest clients 7,998,521 9,694,683

26,375,031 34,570,675

27 Settlement and transaction fees

Income from DPM clients 6,277,878 7,396,764 Income from Cap invest clients 17,947,456 12,328,548

24,225,334 19,725,313 Less: CDBL expenses 4,167,594 2,979,901

20,057,740 16,745,412

28 Documentation charges

Income from DPM clients 8,000 55,500 Income from Cap invest clients 53,000 28,500

61,000 84,000

29 Income from investment banking

Issue management 20,500,000 2,600,000 Underwriting 5,054,650 1,700,000 Corporate advisory 9,367,765 14,281,056

34,922,415 18,581,057

30 Investment income

Capital gain/(loss) on investments (Note: 30.1) (130,869,778) (35,025,639)Capital gain/(loss) on Treasury Bond 199,991,042 - Dividend income from marketable securities 13,780,092 17,359,366 Income from zero coupon bond 3,731,304 11,700,977 Income from treasury bond 64,104,037 438,011.00

150,736,698 (5,527,285)

30.1 Capital gain/(loss) on investments

Sale price 2,530,607,180 2,194,428,779

Less: Cost of investment 2,661,476,958 2,229,454,417

(130,869,778) (35,025,639)

31 Other income

Interest income on SND accounts 22,898,271 21,172,290 Interest income on fixed deposit receipt 44,815,654 48,933,715 Gain on disposal of fixed asset 149,995 920,353 Income from DPM-PLS Scheme 41,417 533,166 Other charges 603,461 1,432,337

68,508,798 72,991,862

2020BDT

2019BDT



32 General and administrative expenses

Salary and allowances (Note: 32.1) 66,212,629 64,025,028 Statutory audit fees 115,000 115,000 Other professional fees 2,710,225 902,500 Postage and courier 44,060 58,250 Renewal and registration 187,000 202,800 Director's remuneration 180,000 156,500 Printing & stationery 302,640 427,490 Promotional expenses 899,017 1,645,130 Motor vehicle expenses 712,465 1,404,651 Insurance 57,708 578,454 Travel and conveyance 217,780 788,274 Training and developments 25,220 1,211,855 Entertainment 1,608,433 1,839,599 Loss on disposal of fixed assets - - Other operational expenses 394,469 214,916 Office rent, maintenance & services (Note: 32.2) 7,454,136 7,822,921

81,120,781 81,393,368

32.1 Salary and allowances

Salary and allowances 60,206,089 55,327,738 Gratuity 4,296,776 6,967,463 Provident fund (Company's contribution) 1,709,764 1,729,827

66,212,629 64,025,028

Salaries & allowances includes key management compensation of BDT 19,443,614 (2019: BDT 21,951,312). Key management personnel comprises the Management Committee, including the Managing Director who exercise significant authority and play strategic role in the Company.

32.2 Office rent, maintenance & services

Office rent (Note:31.2.1) 2,158,018 2,209,985 Office maintenance 2,253,810 2,788,009 Office services 557,134 285,258 Office utilities 1,455,383 1,640,851 Telephone & telex 699,507 455,584 IT maintenance 330,284 443,234

7,454,136 7,822,921

32.2.1 Office rent

Actual rent expenses 8,902,768 8,954,735 Less: Reclassification of rent expenses (as per IFRS 16: Leases) 6,744,750 6,744,750 Rent expenses as reported 2,158,018 2,209,985

33 Deferred tax expense

Closing balance of deferred tax asset 39,674,193 23,263,647 Opening balance of deferred tax asset 23,263,647 17,965,841

16,410,547 5,297,806

2019BDT

2018BDT



34 Related party transaction

Name of the related party Relationship Nature of transaction

Balance as on

01.01.2020Addition Adjustment Balance as on

31.12.2020

IDLC Finance Limited Parent company Loan - 413,100,000 (413,100,000) -

FDR 57,250,000 1,153,316,670 (466,346,010) 1,258,185,742

IDLC Securities Limited Subsidiary to

Parent company Loan - 654,900,000 (654,900,000) -


The number of employees for the whole year who received a total remuneration of Tk 36,000 or above were 29 which was 35 on 31 December 2019.

36 Events after the reporting period 36.1 Dividend for the year 2020

The Board of Directors of IDLC Investments Limited at its 66th Board Meeting held on February 14, 2021, recommended to the shareholders a cash dividend @ 2.83% i.e. BDT 2.83 per share (amounting to BDT 62,260,000) based on financial performance of 2020. This will be considered for approval by the shareholders at the 11th Annual General Meeting (AGM) to be held on March 25, 2021. Out of the distributable dividend, 100% is comprised of Taxed Dividend amounting to BDT 62,260,000 (company’s dividend income from 2018 to 2020 was BDT 78,093,337 net of TAX BDT 62,474,670), which will be distributed without deduction of tax, as per Income Tax Ordinance, 1984.

37 Date of authorisation

The Board of director has authorised these financial statements for issue on 14 February 2021.

Dated, Dhaka14 February 2021




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53



IDLC ASSET MANAGEMENT LIMITEDManagement Committee (ManCom)



Mr. Kazi Mashook ul Haq is a seasoned professional with over 11 years of Capital Market experience. His areas of expertise spans over Issue Management of Mutual Funds,

Operations, Finance, Customer Service and Regulatory Compliance. He received his undergraduate degree in Civil Engineering from BUET and completed his Masters of

Business Administration (MBA) with a major in Finance from IBA, Dhaka University.

KAZI MASHOOK UL HAQChief Operating Officer

Mr. Rajib has over 17 years of industry experience of Treasury Management, Portfolio Management, Public Equity Research and working under various capacities. From 2010, he was head of the Research Department and started managing proprietary

investments of IDLC Group and took up his current role as Managing Director of IDLC Asset Management since 2016. He completed his BBA in Finance & Banking from

University of Dhaka in 2000 and MBA from the Institute of Business Administration (IBA), University of Dhaka in 2004.

RAJIB KUMAR DEYManaging Director





Mr. Ahmed Abdullah-Al-Tamjeed is a passionate value-driver through the product he is marketing. He seeks to explore ‘how’ the product acts on enriching the lives of people and design the best engagement mode for the target group. Mr. Tamjeed has a professional journey of over 10 years. An MBA from the Institute of Business Administration (IBA), University of Dhaka, his areas of interest and expertise span over product innovation, brand & marketing management, business acceleration and business development.

AHMED ABDULLAH AL TAMJEEDHead of Marketing & Sales

With over a decades of industry experience, Mr. Sakhawat Hossain is serving IDLC capital market operation in the areas of financial management, financial reporting, budgetary control, taxation, administration and corporate affairs. He competed his BBA major in finance from University of Dhaka. Before Joining IDLC, he was Audit Supervisor at KPMG Bangladesh.


Mr. Shaikh Malik Al – Razi is leading the portfolio management team of IDLC Asset Management Limited (IDLC AML). He brings more than nine years of experience in portfolio management, equity research and investment banking. He specializes in

Fuel & Power, Pharmaceuticals and Telecommunications. Before joining IDLC AML, he headed the research team of IDLC Investments Limited. He has passed level III of the CFA Program in 2019 and awaiting charter. He completed Masters of Business Administration

(MBA) from Department of Finance, University of Dhaka.

SHAIKH MALIK AL- RAZIHead of Portfolio Management



DIRECTORS’ REPORT to the Shareholders of IDLC Asset Management Limited

Dear Shareholders,

With immense pleasure the Board of IDLC Asset Management Limited (IDLC AML) are presenting the Directors’ Report, the audited financial statements of the Company for the year ended December 31, 2020 and the Auditor’s Report thereon in compliance with the Companies Act, 1994, and the guidelines issued by the Bangladesh Securities and Exchange Commission.

IDLC Asset Management Limited (IDLC AML) is IDLC’s capital market subsidiary that has just completed five years. To realize the vision of being the best financial brand in the country, the management of IDLC entered into the asset management industry to serve the investment needs of retail investors and the financial community at large. Accordingly, to cater the retail investors, IDLC AML introduced the Systematic Investment Plan (SIP), which is already a successful retail investment plan in our peer country India.

Market and Industry Overview

Asset management industry is still at a nascent stage in Bangladesh. The primary business of the industry is to mobilize funds from institutes and individuals and manage the asset to generate superior risk adjusted return. At present, mutual funds and alternative investment options are the main investment

vehicles available to the industry. The industry is run mainly in compliance with Bangladesh Securities & Exchange Commission (Mutual Fund) Rules, 2001.

The asset management industry is cyclical in nature. However, globally mutual fund is one of the most preferred investment tool for investors, in the long horizon. The structural improvement in the market and investors’ growing awareness of professional approach to investment in the last few years are promising signs for the industry as it is expected to increase the demand for professional asset management services. We believe, with IDLC group’s brand recognition, technology and process at our disposal, coupled with the strong presence of IDLC Investments Limited and IDLC Securities Limited in their respective business line, pivoted towards the asset management industry to meet the rising demand of such services, is the natural course for us.

Currently, the industry is dominated by government owned ICB and a handful of private players. There are 61 open end mutual funds and 37 closed end mutual funds currently operating in the market. The size of total asset under management (AUM) was approximately BDT 129.5 bn as of December 2020. The industry is still focused on institutional clients. There has yet not been any significant effort to mobilize the savings of individuals to help them achieve their financial goals. IDLC AML aims to popularize the concept of mutual fund among retail investors. The company is fully committed to invest in people and relevant processes, to develop products with game changing features, to deploy sales and marketing networks that would define industry standards and bring about a complete customer care setup, always ready to go extra miles to serve the customers. We believe IDLC AML would be able to generate superior return on the asset under management by deploying its fundamental analysis driven strategy that has proven to be spectacularly successful in managing IDLC’s own capital market investments.

Operational Milestones

In 2020, IDLC AML continued to expand its business. The company has been progressing according to its long-term vision of being the country’s no. 1 asset management company in terms of investor’s trust and asset under management. Major milestones achieved during the year are as follows:

• Launch of online onboarding portal: In November 2020, IDLCAML successfully launched its online onboarding portal, first of its kind in the industry. Now, investors can complete the whole process of investment in mutual funds of IDLC Asset Management Limited through online from anywhere. Amid the current pandemic situation when the physical movement of people is restricted, we believe our initiative will ensure the highest convenience for the investors.

NIAZ HABIB Chairman



Overview of Financial Performance

The year 2020 started amid great distress as the world witnessed the terror of the worst global pandemic in a century. While governments throughout the world were fighting to stop the spread of Covid-19, stock markets also reflected the fear as they went through correction during February and March. However, the year ended in optimism with huge stimulus packages from governments, rapid development of multiple vaccines, and a bull trend in stock markets. Bangladesh confirmed its first Covid-19 patient on 8th March. The broad index DSEX lost 19.1% by 18th

March 2020; however, recovered thereafter. DSEX ended the year with +21.3% return. IDLC AML has generated an operational revenue of BDT 83.34 mn in 2020. Of the total operational revenue, 57.80% came from portfolio management fee, 24.88% from mutual fund management fee, 2.3% from venture capital fund management fee, 1.80% from advisory income and the rest of 13.22% came from investment income.

in BDT mn

Particulars 2016 2017 2018 2019 2020

Operational revenue 19.9 101.9 92.5 43.3 83.3

Profit before tax 15.3 51.2 46.3 (20.0) 23.6

Net profit after tax 10.4 39.1 34.5 (26.8) 14.4

Total Assets 119.0 186.5 225.2 271.7 386.0

Total shareholders’ equity 110.4 149.5 184.0 207.5 321.9

Operational Revenue 202057.80% PortfolioManagement Fee24.88% Management Fee from Mutual Fund2.30% Management fees from IDLC Venture Capital Fund I13.22% Income from Investment1.80% Advisory Income

In 2020, the company generated pretax profit of BDT 23.57 mn, net off all operational expenses. After deducting for tax payable to government exchequer, IDLC AML booked an after tax profit of BDT 14.42 mn. In 2020, the company’s ROE stood at 5.4% and ROA stood at 4.4%.

Roadmap to 2021

2021 will be a year to strengthen our foothold in the asset management industry through enhancing our client base with more diverse investment product offerings and enriching our customers’ experience with more convenient investment solutions. Our focus for this year would be on:

• Creating awareness among retail investors about the benefits of long term investment through mutual funds

• Making the customer service unit more equipped so that highest level of service and customer satisfaction can be ensured

• Building up the company’s corporate advisory business

• Exploring opportunities to build up the company’s presence in the nascent Private Equity and Venture Capital industry of Bangladesh

• To construct an extensive sales, distribution and marketing channel to broaden the customer base for distributing units of mutual funds

• To develop and deploy IT and network infrastructure capable of facilitating the realization of the vision of IDLC AML

Books of accounts

At IDLC Asset Management Limited, proper books of accounts have been maintained. The appropriate accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards (IAS)/ International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in the preparation of the financial statements and any departure there-from has been adequately disclosed. The financial statements prepared by the management of IDLC Asset Management Limited present fairly its state of affairs, cash flows and changes in the shareholders’ equity.

Internal control


Distribution of profit for 2021

The Company reported a net profit of BDT 14.42 mn in the year 2020. Considering the company's investment opportunities and growth potentials and comparative cost benefit analysis of paying out dividend and overall better tax management, the board of IDLC Asset Management Limited decided not to declare any dividends to the shareholders of the Company for 2020.

Return Ratio

2016 2017 2018 2019 2020

ROA ROE

9.50%

25.59%16.90%

10.80%

4.39%9.91%

30.07%

20.84%

13.71%

5.45%



Appointment of auditors

In terms of Article 132 of the Articles of Association of the Company, the Company shall at each annual general meeting, appoint an auditor or auditors to hold office until the next annual general meeting. The Auditors of the Company, Hoda Vasi Chowdhury & Co, Chartered Accountants, has completed the first year as Auditor of the Company. As per the BSEC restriction on re-appointment of the same auditor for more than three consecutive years for a listed Company, the existing auditor is eligible for re-appointment as Auditors of IDLC Group for the year 2021. We will appoint the same auditor for the IDLC Group so that the Auditor can consolidate the Group financial statements without any review of other auditors’ work.

Going concern

There is no significant doubt on IDLC Asset Management Limited’s ability to continue as a going concern.

Appreciation

In conclusion, on behalf of the Board, I would like to thank our loyal clients and honorable shareholders for their continued faith and support. Taking this opportunity, the members of the Board would also like to thank the Bangladesh Securities and Exchange Commission, Dhaka and Chittagong Stock Exchanges, Central Depository Bangladesh Limited, Trustee(s), Custodian(s) and other relevant Stakeholders who continued to remain our partners in growth.

Niaz Habib ChairmanIDLC Asset Management Limited

OpinionWe have audited the financial statements of IDLC Asset Management Limited (the “Company”) which comprise the statement of financial position as at 31 December 2020 and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statement including a summary of significant accounting policies and other explanatory information.




Responsibilities of Management and Those Charged with Governance for the Financial Statements and Internal ControlsManagement is responsible for the preparation and fair presentation of the financial statements of the Company in accordance with IFRSs as explained in note 3, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.



Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company’s to cease to continue as a going concern.

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF IDLC ASSET MANAGEMENT LIMITEDReport on the Audit of the Financial Statements


• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Report on other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994 and the Securities and Exchange Rules 1987, we also report that:

I. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for

the purpose of our audit and made due verification thereof;

II. in our opinion, proper books of account as required by law have been kept by the Company’s so far as it appeared from our examination of those books;

III. the statement of financial position and statement of profit or loss and other comprehensive income together with the annexed notes dealt with by the report are in agreement with the books of account and returns; and

IV. the expenditures incurred were for the purpose of the Company’s business for the year.








Notes31.12.2020

BDT31.12.2019

BDT

ASSETS

Non Current Assets

Property, plant and equipment 4 7,712,399 10,608,493

Intangible assets 5 1,904,592 3,074,390 Right-of-use asset 6 13,040,792 17,105,454 Deferred tax asset 7 797,655 -

23,455,437 30,788,337

Current Assets

Investments 8 291,577,172 108,163,470

Advance, deposits & prepayments 9 - 10,563,538

Accounts receivables 10 8,511,616 7,578,369

Advance income tax 11 24,638,473 23,486,192

Cash and cash equivalents 12 37,833,843 91,093,942 362,561,104 240,885,512

Total Assets 386,016,542 271,673,849

EQUITY AND LIABILITIES

Equity

Share capital 150,000,000 150,000,000

Share money deposit 100,000,000 - Retained earnings 71,889,156 57,465,027

321,889,156 207,465,027

Non Current Liabilities

Provisions for diminution value in investments - 10,927,797

Leased liability - Right of Use 14,028,224 16,518,285

Deferred tax liability 7 - 560,195

14,028,224 28,006,276

Current LiabilitiesProvision for audit fees 115,000 115,000 Provision for expenses 14 4,666,751 1,270,134 Provision for income tax 15 45,317,412 34,817,412

50,099,162 36,202,546

Total Equity and Liabilities 386,016,542 271,673,849









Notes2020BDT

2019BDT

Operating Income (a)

Portfolio management fee 48,168,720 15,011,703

Management fees from mutual fund 20,730,025 22,263,529

Management fees from IDLC Venture Capital Fund I 1,918,398 -

Advisory income 1,500,000 4,233,333

Income from investment 16 11,017,879 1,808,589

83,335,022 43,317,154

Operating Expenses (b)

General & administrative expenses 17 65,617,534 57,241,199

Depreciation on property, plant and equipment 8,718,658 7,383,809

74,336,192 64,625,008

Operating Profit /(Loss) for the year (a-b) 8,998,830 (21,307,854)

Interest income 4,326,242 8,694,379

Interest expenses 18 (1,648,989) (1,353,807)

Loss on disposal of fixed asset - (1,022,379)

Miscellaneous Income 962,400 176,004

Profit/(Loss) before provisions 12,638,482 (14,813,658)Release / (Provisions) for diminution value in Investments 10,927,797 (5,212,467)

Profit/(Loss) before provision for income tax 23,566,279 (20,026,124)

Provision for income tax

Current tax (10,500,000) (6,786,271)

Deferred tax income/(expense) 19 1,357,849 (24,173)

(9,142,151) (6,810,443)

Profit/(Loss) for the year 14,424,128 (26,836,567)

Other comprehensive income - -

Total Comprehensive Income 14,424,128 (26,836,567)



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the year ended on 31 December 2020









STATEMENT OF CASH FLOWSFor the year ended on 31 December 2020

31.12.2020BDT

31.12.2019BDT

A. Cash flow from operating activitiesProfit/(Loss) during the year 14,424,128 (26,836,567)Items not involving in movement of cash:Loss on disposal of fixed asset - 1,022,379 (Release)/Provisions for diminution value in investments (10,927,797) 5,212,467 Increase in deferred tax assets (797,655) - (Decrease)/Increase in deferred tax liabilities (560,195) 24,172 Increase in Current tax liability 10,500,000 6,786,271 Income tax paid during the period (1,152,280) (7,110,011)(Decrease)/Increase in Leased liability - Right of Use (2,490,061) 16,518,285 Depreciation on property, plant and equipment 8,718,658 7,383,809

17,714,799 3,000,804

Changes in working capital:Increase in account receivables (933,247) (1,532,906)Decrease/(Increase) in advance, prepayments & deposits 10,563,538 (5,287,260)Increase/(Decrease) in account payables 3,396,616 (5,194,919)

13,026,907 (12,015,084)Net cash flow from operating activities (A) 30,741,707 (9,014,280)

B. Cash flows from investing activitiesPurchase of property, plant and equipment (588,104) (28,028,651)Proceeds from sale of property, plant and equipment - 183,119 (Purchase)/Sale of investments (183,413,702) 7,908,981 Net cash flow/(used in) investing activities (B) (184,001,806) (19,936,551)

C. Cash flows from financing activitiesProceed from issuance of ordinary shares - 50,000,000 Share money deposit 100,000,000 - Net cash flow from financing activities (C) 100,000,000 50,000,000

D. Net cash surplus/(deficit) for the year (A+B+C) (53,260,099) 21,049,167 E. Cash and cash equivalents at the beginning of the year 91,093,942 70,044,775 F. Cash and Cash Equivalents at the end of the year 37,833,843 91,093,942







Particulars Share Capital Share money deposit

Retained Earnings

Total Equity

BDT BDT BDT BDT

Balance as at 31 December 2018 100,000,000 84,301,595 184,301,595

Paid-up share capital 50,000,000 - - 50,000,000

Loss for the period - (26,836,567) (26,836,567)

Balance as at 31 December 2019 150,000,000 - 57,465,027 207,465,027

Share money deposit 100,000,000 - 100,000,000

Profit for the period - - 14,424,128 14,424,128

Balance as at 31 December 2020 150,000,000 100,000,000 71,889,156 321,889,156


STATEMENT OF CHANGES IN EQUITYFor the year ended on 31 December 2020






NOTES TO THE FINANCIAL STATEMENTSAs at and for the year ended 31 December 20201 Company and its activities1.1 Legal status and nature of the company

IDLC Asset Management Limited was incorporated in Bangladesh on 19 November 2015 vide registration # C-127068/2015 as a private company limited by shares, under Companies Act, 1994. The registered office of the Company is situated at Symphony (Level – 04), Plot # SE (F): 9, Road # 142, Gulshan Avenue, Bir Uttam Mir Shawkat Sarak, Dhaka 1212. It is a subsidiary Company of IDLC Finance Limited that holds 99.99% ownership of the company. The Company recieved following licences from Bangladesh Securities and Exchange Commission:

SL Nature of Business Licence No. Issue Date Applicable Rules

01 Asset Manager BSEC/Asset Manager/2016/25 June 07, 2016 Banladesh Securities and Exchange Commission

(Mutual Fund) Rules, 2001

02 Fund Manager AIFM-13/2018 July 16, 2018 Bangladesh Securities and Exchange Commission (Alternative Investment) Rules, 2015


IDLC Asset Management Limited provides high standard of professional services to its individual and institutional clients through mutual funds, portfolio management and other services. The company's principal activities include the following:

i. Asset management through mutual funds for retail and institutional clients;

ii. Portfolio management services for institutional clients;

iii. Alternative investment in private equity, venture capital and other related investment opportunities;

iv. Corporate advisory services, etc.

2. Basis of preparation and significant accounting policies2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) covering International Accounting Standards (IAS), the Companies Act, 1994 and other applicable laws and regulations of Bangladesh.


As required, IDLC Asset Management Limited also complies with the applicable provisions of the following major laws/ statutes:

-The Income Tax Ordinance, 1984;

-The Income Tax Rules, 1984;

-Negotiable Instruments Act, 1881;

-Securities and Exchange Rules, 1987;

-Securities and Exchange Commission Act, 1993;

-Securities and Exchange Commission (Mutual Fund) Rules, 2001 (Amended in 2013);

-Bangladesh Securities and Exchange Commission (Alternative Investment) Rules, 2015; and





- Statement of Financial Position

- Statement of Profit or Loss and Other Comprehensive Income

- Statement of Changes in Equity

- Statement of Cash Flows

- Notes to the Financial Statements



2.5 Functional and presentational currency

These financial statements are presented in Bangladeshi Taka (BDT) which is the functional currency of the company. The amounts in these financial statements have been rounded off to the nearest integer.


The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision of accounting estimates is recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

In particular, the key areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are described in the following notes:

Note: 4 Depreciation on property, plant and equipment.Note: 7 Deferred tax Assets

Note: 10 Accounts receivablesNote: 15 Provision for income tax

2.7 Going concern

The Company has adequate resources to continue in operation for the foreseeable future. For this reason, the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the company provide sufficient funds to meet the present requirements of its existing businesses and operations.

3 Significant accounting policies3.1 Basis of accounting

The financial statements have been prepared under the historical cost convention and after due compliance with the International Financial Reporting Standards (IFRSs), the Companies Act, 1994 and other applicable laws and regulations.

3.2 Property, plant and equipment


Property, plant and equipment are stated at cost, less accumulated depreciation in compliance with IAS-16: Property Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use.

3.2.2 Subsequent costs

The cost of replacing part of an item of property, plant and equipment are recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss and other comprehensive income account as incurred.

3.2.3 Depreciation

Depreciation on property, plant and equipment is charged using straight-line method over their estimated useful lives. Depreciation rates are as follows:

Nature of Assets Rate of DepreciationCurtain and carpets 33.33% p.a.Electrical equipment 20.00% p.a.Furniture and fixture 12.50% p.a.Office decoration 20.00% p.a.Office equipment 20.00% p.a.IT equipment 20.00% p.a.Telephone and telex 33.33% p.a.Motors vehicles 25.00% p.a.

Depreciation on all items of property, plant and equipment is calculated and charged from the date of putting the assets in to use irrespective of the value and purchase/ acquisition date of the property, plant and equipment.

3.3 Intangible assets


Intangible assets viz computer software those are acquired by the Company and which have finite useful lives, are measured at cost less accumulated amortization and impairment loss, if any.

3.3.2 Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates.



3.3.3 Amortization

Amortization is calculated using the straight line method to write down the cost of intangible assets to their residual values over their estimated useful lives based on the management's best estimates.

3.4 Impairment

The carrying value of the Company's assets other than inventories, are reviewed at closing date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the asset or its cash-generating unit exceeds its recoverable amount. Impairment losses, if any, are recognized in the profit and loss account.

3.5 Financial Instruments

3.5.1 Financial Assets

Financial assets of the company include cash and cash equivalents, accounts receivables and other receivables. The company initially recognizes receivable on the date they are originated. All others financial assets are recognized initially on the date at which the company becomes a party to the contractual provisions of the transaction. The company derecognizes a financial asset when, and only when the contractual rights or probabilities of receiving the cash flows from the asset expire or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risk and rewards of ownership of the financial asset are transferred.

3.5.1.1 Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and bank deposits when it has a short maturity of three months or less from the date of acquisition.

3.5.2 Financial Liabilities

The company initially recognizes financial liabilities on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired.

These are recognised when its contractual obligations arising from past events are certain and the settlement of which is expected to result in an outflow from the company of resources embodying economic benefits.

3.5.2.1 Accounts Payable and Other Payables

Accounts payable and other payables are recognised when its contractual obligations arising from past events are certain and the settlement of which is expected to result in an outflow from the group of resources embodying economic benefits.

3.6 Investment in shares

Investments are stated at cost or market value whichever is lower. A security which is not listed at stock exchange as on the reporting date then the price is shown at cost.

3.7 Taxation

3.7.1 Current tax

Provision for income tax is made on the basis of company’s computation based on the best estimate of taxable profit in accordance with the Income Tax Ordinance, 1984.

3.7.2 Deferred tax

Deferred tax is calculated as per International Accounting Standard (IAS) 12 "Income Taxes". Deferred tax is recognised on difference between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences.


3.8.1 Portfolio management fees

Portfolio management fees are recognized on the market value of the clients’ portfolio on daily accrual basis and charged to clients’ balance on quarterly basis.

3.8.2 Dividend income and profit or loss on sale of securities

Dividend is accounted for as income when right to receive is established whereas profit or loss arising from the sale of securities is accounted for only when the securities are sold/offloaded.

3.8.3 Mutual fund management fees

As per the Securities and Exchange Commission (Mutual Fund) Rules, 2001, the Fund shall pay a management fee to the Asset Management Company –

a. 2.50 percent per annum of the weekly average NAV up to BDT 5.00 crore (Five crore Taka);

b. 2.00 percent per annum for additional amount of the weekly average NAV up to BDT 25.00 crore (Twenty Five



crore Taka) over BDT 5.00 crore (Five crore Taka);

c. 1.50 percent per annum for additional amount of the weekly average NAV up to BDT 50.00 crore (Fifty crore Taka) over BDT 25.00 crore (Twenty Five crore Taka); and

d. 1.00 percent per annum for additional amount of the weekly average NAV over BDT 50.00 crore (Fifty crore Taka), accrued and payable quarterly at the end of the period.

3.8.4 Mutual fund formation fee

As per the Securities and Exchange Commission (Mutual Fund) Rules, 2001, the Fund shall pay Mutual Fund Formation fee to the Asset Management Company as mentioned in the Published Prospectus of the Fund approved by Bangladesh Securities and Exchange Commission.

3.8.5 Mutual fund Pre-scheme formation fee

As per BSEC Directive vide ref no.: SEC/CMRRCD/2009 – 193/ 160 dated 28 May 2014, Asset Manager can accrue management fees from scheme of the Mutual Fund for the period starting from the registration date of the scheme to pre-trade period according to the Rule 65(2).

3.9 Provision

A provision is recognized in the accounts when the Company has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.

3.10 Employee benefits

IDLC Asset Management Limited maintains defined benefit plan for its eligible permanent employees. Employee gratuity plan is considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to employees as per condition of the fund. The eligibility is determined according to the terms and conditions set in the service rules of the company.

3.11 Lease (IFRS 16)

IDLC Asset Management Limited applied IFRS 16 for its rental properties, office space. Accordingly it recognize Right of Use (ROU) Asset, lease liabilities in the statement of Financial position and depreciation expenses and interest expenses in the statement of profit or loss and other comprehensive income.

3.12 Events after the reporting date

Events after the reporting date that provide additional information about the company's position at the reporting date are reflected in the financial statements. Events after the reporting date that are not adjusting event are disclosed in the notes when material.


The Financial Statements have been prepared in compliance with requirement of IAS and IFRS as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) and applicable in Bangladesh. IDLC Asset Management Limited applied following IAS and IFRS:

Name of the IASs No. StatusPresentation of Financial Statements 1 AppliedStatements of Cash Flow 7 AppliedAccounting Policies, Changes in Accounting Estimates and Errors 8 AppliedEvents after the Balance Sheet Period 10 AppliedIncome Taxes 12 AppliedProperty, Plant and Equipment 16 AppliedEmployee Benefits 19 AppliedBorrowing Costs 23 AppliedRelated Party Disclosures 24 AppliedProvisions, Contingent Liabilities and Contingent Assets 37 AppliedIntangible Assets 38 Applied

Name of the IFRSs No. StatusRevenue from Contracts with Customers 15 AppliedLease 16 AppliedFinancial Instruments 9 AppliedFinancial Instruments: Disclosures 7 Applied



4. Property, plant and equipmentTangible AssetsA. Cost

Opening balance 15,676,799 10,554,669 Add: Addition during the year 299,354 7,705,339

15,976,153 18,260,008 Less: Disposal/adjustments during the year - (2,583,209)

15,976,153 15,676,799 B. Accumulated depreciation

Opening balance 5,068,306 3,746,170 Add: Charged during the year 3,195,448 2,699,848

8,263,754 6,446,018 Less: Disposal/adjustments during the year - (1,377,712)

8,263,754 5,068,306 C. Written down value (A-B) 7,712,399 10,608,493

5. Intangible AssetsA. Cost Opening balance 5,878,701 5,878,701

Add: Addition during the year 288,750 -

6,167,451 5,878,701 Less: Disposal/adjustments during the year - -

6,167,451 5,878,701 B. Accumulated amortizationOpening balance 2,804,312 1,338,209 Add: Charged during the year 1,458,548 1,466,103

4,262,860 2,804,312

Less: Disposal/adjustments during the year - -

4,262,860 2,804,312 C. Written down value (A-B) 1,904,592 3,074,390 A schedule of property, plant and equipment and intangible assets is given in Annexure-A.

6 Right-of-use assetsA. Cost


Add: Addition during the year - 20,323,312

20,323,312 20,323,312


20,323,312 20,323,312

B. Accumulated amortization


Add: Charged during the year 4,064,662 3,217,858

7,282,520 3,217,858


7,282,520 3,217,858

C. Written down value (A-B) 13,040,792 17,105,454

A schedule of property, plant and equipment and intangible assets is given in Annexure-A.

31.12.2020BDT

31.12.2019 BDT



7 Deferred tax asset/(liabilities)

Deferred tax asset is arrived at as follows:

Carrying Amount Tax base (Taxable)/deductible temporary difference

BDT BDT BDT


Property, plant and equipment 9,616,992 11,083,881 1,466,889

Right of use assets 13,040,792 - (13,040,792)Lease liability (14,028,224) - 14,028,224

Net deductible temporary difference 2,454,322

Applicable tax rate 32.50%

Applicable tax rate 10.00%

Deferred tax - Assets /(liabilities) 797,655

Deferred tax asset is arrived at as follows:

Carrying Amount Tax base (Taxable)/deductible temporary difference

BDT BDT BDT


Property, plant and equipment 13,682,883 12,669,495 (1,013,388)

Right of use assets 17,105,454 - (17,105,454)

Lease liability (16,518,286) - 16,518,286 Net deductible temporary difference (1,600,556)Applicable tax rate 35.00%Deferred tax - liabilities (560,195)

31.12.2020BDT

31.12.2019 BDT

8 Investments

Investment in available-for-sale securities (Note: 8.1) 272,577,172 49,163,470 IDLC Asset Management Shariah Fund 10,000,000 50,000,000

IDLC Venture Capital Fund I 9,000,000 9,000,000

291,577,172 108,163,470

8.1 Investment in available-for-sale securities

Sector-wise details of marketable securities holding position is given below:

Name of industry Cost price as on

31.12.2020 Market price as on

31.12.2020 Cost price as on

31.12.2019 Market price as on

31.12.2019

Bank - - 31,858,291 25,531,000 Cement 30,985,164 33,985,800 - - Telecommunication 70,275,226 82,172,182 16,431,886 11,717,800 Pharmaceuticals & Chemicals 93,349,340 115,094,300 39,793 132,623 Food & Allied 77,822,519 85,371,840 - - Textile - - 40,023 63,374 Hotel & Leisure 17,764 147,522 37,300 161,731 Insurance 108,780 428,593 - - Information Technology - - 569,070 512,163 Engineering 18,380 68,483 187,107 116,983

272,577,172 317,268,719 49,163,470 38,235,674

All investment in marketable securities are valued on aggregate portfolio basis, at the lower of cost and market value, at the reporting date.



31.12.2020BDT

31.12.2019 BDT

9 Advance, deposits & prepayments

PricewaterhouseCoopers Bangladesh Private Limited - 10,552,557

Advance against expenses - 10,981

- 10,563,538

10 Accounts receivables

Interest receivable - 275,675

Mutual fund management fees receivable 5,399,508 4,692,644

Receivable from IDLC Balanced Fund 143,122 125,551

Receivable from IDLC Growth Fund 194,144 137,055

Receivable from IDLC Asset Management Shariah Fund 112,295 37,080

Receivable from IDLC Venture Capital Fund I 925,430 627,700

Cash Dividend Receivable 444,119 5,625

Corporate Advisory Fees 1,000,000 1,433,333

Receivable from the Unit Holders of DBH & GDF Mutual Funds 292,611 -

Other receivables 387 243,706

8,511,616 7,578,369

11 Advance income tax

Opening balance 23,486,192 16,376,182

Addition during the period:

Advance corporate income tax - 6,283,308

Tax deducted at source 1,152,280 826,702

24,638,473 23,486,192

12 Cash and cash equivalents

Cash at Bank (Note: 12.1) 37,833,794 80,574,747

Cash at portfolio with IDLC Securities Limited 49 -

Fixed deposit receipt (Note: 12.2) - 10,519,195

37,833,843 91,093,942

12.1 Cash at Bank

Name of the Bank Branch A/C No Type

BRAC Bank Limited Bijoy Nagar 1532203891815001 CA 1,314,567 13,515

ONE Bank limited Principal 0013000002032 SND 260,522 80,300,290

Standard Chartered Bank Gulshan 02-1307951-01 STD 1,627 260,692

Exim Bank Limited Shantinagar 11313100059116 SND 36,256,828 -

NRB Bank Limited Principal 1011030069892 SND 1 1 NRB Bank Limited Banani 1022010036414 CD 248 248

37,833,794 80,574,747



12.2 Fixed Deposit Receipt

Institution Branch A/C NoTerm

Months

IPDC Finance Limited Gulshan05367 3 - 5,259,598

05368 3 - 5,259,598

- 10,519,195

13 Share capital

Authorized Capital

25,000,000 ordinary shares of Taka 10 each 250,000,000 250,000,000

Issued, subscribed & paid up capital 150,000,000 150,000,000

150,000,000 150,000,000

The issued, subscribed and paid-up capital of Taka 150,000,000 is divided into 15,000,000 ordinary shares of Taka 10 each. Details are as follows:


14,999,999 shares of Taka 10 each fully paid up 149,999,990 149,999,990

Mr. Akhteruddin Mahmood1 share of Taka 10 fully paid up 10 10

150,000,000 150,000,000

14. Provision for Expenses

Salary and allowance 1,486,659 42,557 Insurance premium payable 37,501 - Professional and legal fees 1,235,790 532,250 Training 139,764 181,610 Marketing and communication expenses 1,076,711 - Selling and distribution expenses - 196,358 Donations and subscriptions 127,778 - Utilities 77,367 82,780 IT Software maintenance 291,375 115,113 Car maintenance and others 20,000 19,557 Printing & stationery 143,060 32,124 Postage, stamp & telecommunication etc. 20,745 - Other payables 10,000 67,786

4,666,751 1,270,134

15. Provision for income taxOpening balance 34,817,412 28,031,141

Add: Charged during the year 10,500,000 6,786,271

45,317,412 34,817,412

2020BDT

2019BDT

16 Income from investment

Capital gain on investments 8,703,061 580,670 Dividend income from marketable securities 2,314,818 440,196

11,017,879 1,020,866

31.12.2020BDT

31.12.2019 BDT



17 General and administrative expenses

Salary and allowances 44,946,001 40,106,002 Statutory audit fees 115,000 115,000 Renewal and registration 138,053 239,438 Motor vehicle expenses 262,940 626,292 Entertainment 127,753 26,142 Postage, stamp & telecommunication etc. 255,664 237,976 Courier & Parcel Expenses 7,285 - Printing & stationery 424,938 897,267 Marketing and communication expenses 2,090,910 7,472,591 Selling and distribution expenses 2,041,438 2,052,963 Director's remuneration 187,000 151,000 Books and periodicals 5,590 30,481 Donations and subscriptions 127,778 - Consultancy fees 11,579,642 975,450 Legal expenses 300,000 - Training expenses 60,061 489,084 Bank charges 112,320 127,237 CDBL charges 287,330 272,270 Repair and maintenance 985,536 600,767 Office rent, maintenance & service, etc. (Note: 17.1) 1,562,296 2,821,240

65,617,534 57,241,199

17.1 Office rent, maintenance & service, etc.

Office rent (Note: 17.1.1) - 845,199

Office maintenance 886,682 1,319,706

Office utility 675,614 656,335

1,562,296 2,821,240

17.1.1 Office rent

Actual rent expenses 4,048,098 4,562,035

Less: Reclassification of rent expenses (as per IFRS 16: Leases) 4,048,098 3,716,836

Rent expenses as reported - 845,199

18 Interest Expenses Interest for Loan against Deposit (LAD) 224,859 -

Interest expenses (Lease liability - right-of-use Asset) 1,424,129 1,353,807

1,648,989 1,353,807

19 Deferred tax income/(expense) Closing balance of deferred tax asset/(liabilities) 797,655 (560,195)

Opening balance of deferred tax asset/(liabilities) (560,195) (536,022)

1,357,849 (24,173)


The number of employees for the whole year who received a total remuneration of Taka 36,000 or above were 18 which was 21 on 31 December 2019.

21 Date of authorization

The Board of director has authorized these financial statements for issue on February 14, 2021

2020BDT

2019BDT




KHUSHIR KHEYA

Together we have the power to make the world a better and more joyous place.

With that perspective, IDLC launched “Khushir Kheya” in 2017, a volunteering platform for the youth to contribute to the community and improve lives and our surroundings.

Through this platform, IDLC has contributed through facilitating basic social necessities- education, healthcare among others. It has completed projects such as renovation of schools, facilitating education for the physically challenged, providing free healthcare and surgeries through setting up of health-camp and launch of a boat ambulance.

IDLC is happy to have impacted 9,600 lives (till date) positively and to bring smile on many faces.



ANNUAL REPORT REVIEW CHECKLISTParticulars Page Number

Corporate Objectives, Values & Structure Clarity and presentation:

• Vision and Mission 13

• Overall strategic objectives 13

• Core values and code of conduct/ethical principles 13

• Profile of the Company 240, 398

• Director’s profiles and their representation on Board of other companies & Organization Chart 57, 63

Management Report and analysis including Director’s Report / Chairman’s Review/CEO’s Review etc.

• A general review of the performance of the company 49-55

• Description of the performance of the various activities/products/segments of the company and its group companies during the period under review. (Weightage to be given for pictorial / graphical / tabular presentations used for this purpose)

49-55, 101-105, 122-132, 199-202

• A brief summary of the Business and other Risks facing the organization and steps taken to effectively manage such risks 80-89

• A general review of the future prospects/outlook. 51, 55

• Information on how the company contributed to its responsibilities towards the staff (including health & safety) 29, 120

• Information on company's contribution to the national exchequer & to the economy 117-118, 115

Sustainability Reporting

• Social Responsibility Initiatives ( CSR) 35, 43, 44, Sustainability

Report• Environment related Initiatives 36

• Environmental & Social Obligation 36

• Integrated Reporting 6

Appropriateness of Disclosure of Accounting policies and General Disclosure

• Disclosure of adequate and properly worded accounting policies relevant to Assets, liabilities, Income and expenditure in line with best reporting standards.

240-251

• Any Specific accounting policies 240

• Impairment of Assets 246

• Changes in accounting policies/Changes in accounting estimates 241

• Accounting policy on subsidiaries (if there is no any subsidiary, full marks should be granted) 312, 343, 370

Segment Information

• Comprehensive segment related information bifurcating Segment revenue, segment results and segment capital employed

277-278

• Availability of information regarding different segments and units of the entity as well as non-segmental entities/units

277-278

• Segment analysis of

• Segment Revenue 277-278

• Segment Results 277-278

• Turnover 277-278

• Operating profit 277-278

• Carrying amount of Net Segment assets 277-278



Particulars Page Number

Financial Statements (Including Formats)

• Disclosures of all contingencies and commitments 271-272

• Comprehensive related party disclosures 281

• Disclosures of Remuneration & Facilities provided to Directors & CEO 276

• Statement of Financial Position/Balance Sheet and relevant schedules 227, 233, 308,339, 366

• Income Statement/Profit and Loss Account and relevant schedules 229, 235, 309, 340, 367

• Statement of Changes in Equity/Reserves & Surplus Schedule 230, 236, 310, 342, 369

• Disclosure of Types of Share Capital 269-270

• Statement of Cash Flow 232, 238, 311, 341, 368

• Consolidated Financial Statement (CFS) 227-232

• Extent of compliance with the core IAS/IFRS or equivalent National Standards 248-249

• Disclosures/Contents of Notes to Accounts 240, 312, 343,370

Information about Corporate Governance

• Board of Directors, Chairman and CEO 57, 145

• Audit Committee (Composition, role, meetings, attendance, etc.) Internal Control & Risk Management 157, 193

• Ethics and Compliance 171

• Remuneration and other Committees of Board 174, 157

• Human Capital 176

• Communication to Shareholders & Stakeholders - Information available on website - Other information

178

• Management Review And Responsibility 176

• Disclosure by Board of Directors or audit Committee on evolution of Quarterly Reports 166, 194

• Any other investor friendly information 180

Risk Management & Control Environment

• Description of the Risk Management Framework 80

• Risk Mitigation Methodology 83

• Disclosure of Risk Reporting 82

Stakeholders Information

• Distribution of shareholding (Number of shares as well as category wise, e.g Promoter group, FII etc) 56

• Shares held by Directors/Executives and relatives of Directors/Executives 205

• Redressal of investors' complaints 180

Graphical/ Pictorial Data:

• Earnings per Share 106-107

• Net Assets 106-107

• Stock Performance 106-107

• Shareholders’ Funds 106-107

• Return on Shareholders Fund 5, 106-107




Horizontal/Vertical Analysis including following.

Operating Performance (Income Statement) 109, 111

• Total Revenue 109, 111

• Operating profit 109, 111

• Profit Before Tax 109, 111

• Profit after Tax 109, 111

• EPS 109, 111

Statement of Financial Position ( Balance Sheet)

• Shareholders Fund 108, 110

• Property Plant & Equipment 108, 110

• Net Current Assets 108, 110

• Long Term Liabilities/Current Liabilities 108, 110

Profitability/Dividends/ Performance and Liquidity Ratios

• Net Interest income Ratio 106-107

• Profit before provisions and Tax 106-107

• Price earning ratio 106

• Capital Adequacy Ratios 116

• Return on Capital Employed 106-107

• Debt Equity Ratio 106-107

Statement of Value Added and Its Distribution

• Government as Taxes 113

• Shareholders as dividend 113

• Employees as bonus/remuneration 113

• Retained by the entity 113

• Market share information of the Company’s product/services 114

• Economic value added 115

Presentation of Financial Statements

• Quality of the Report/ Layout of Contents Qualitative

• Cover and printing including the theme on the cover page Qualitative

• Appropriateness and effectiveness of photographs and their relevance Qualitative

• Effectiveness of Charts and Graphs Qualitative

• Clarity, simplicity and lucidity in presentation of Financial Statements Qualitative

Timeliness in issuing Financial Statements and holding AGMs

• 3 months time to produce the Annual Report and hold AGM are considered reasonable for full marks March 31, 2021

• Delay after the initial period of 3 months -deduction of 2 marks is to be made for each month

• If the period is over 6 months – no marks shall be awarded




Additional Disclosures

• Sustainability Development Reporting Separate report published

• LEED Certification Gold under Commercial Interior 129

• Value Creation Process 22

• Business Model 18

• Stakeholder and Materiality 09-10

• Human Resource Accounting 119

• Strategy and Resource Allocation 91

• Custodial Service 191

• Corporate Governance Certificate 207

Specific Areas for Banking Sector

Disclosure of Ratings given by various rating agencies for the Bank and for its Instruments issued by /of Bank. For eg. FD, CD, Tier I and Tier II Bonds

1

Details of Advances portfolio Classification wise as per the direction issued by the central bank of the respective countries

256

Disclosure for Non Performing assets:

• Movements in NPA 188

• Movement of Provisions made against NPA 188

Maturity Pattern of Key Assets and Liabilities (ALM) 189

Classification and valuation of investments as per regulatory guidelines/Accounting Standards 294

Business Ratio/Information:

• Statutory Liquidity Reserve (Ratio) 252

• Net interest income as a percentage of working funds / Operating cost - Efficiency ratio 106

• Return on Average Asset 106

• Cost/ Income ratio 27

• Net Asset Value Per Share 106-107

• Profit per employee 121

• Capital Adequacy ratio 116

• Cost of Funds 112

• Cash Reserve Ratio/Liquid Asset ratio 252

• Dividend Cover ratio 106

• Gross Non-Performing assets to gross advances / Non-Performing Loans (Assets) to Total Loans (Assets) 5, 82

Details of credit concentration/Sector vise exposures 82

The break-up of “Provisions and contingencies’ included in the Profit and Loss Account 260

Disclosure under regulatory guidelines 197

Details of Non-Statutory investment portfolio 254

Disclosure in respect of assets given on operating & finance lease 242

Disclosures for derivative investments N/A

Bank's Network : List of Centers or Branches 394



CORPORATE GOVERNANCE DISCLOSURE CHECKLISTPage Number

l. BOARD OF DIRECTORS, CHAIRMAN AND CEO

1.1 Company's policy on appointment of directors disclosed. 145

1.2 Adequate representation of non executive directors i.e. one third of the board, subject to a minimum of two 146

1.3 At least one independent director on the board and disclosure / affirmation of the board on such director's independence. 146

1.4 Chairman to be independent of CEO 150

1.5Responsibilities of the Chairman of the Board appropriately defined and disclosed. Disclosure of independence of Non Executive Directors

150

1.6 Existence of a schemen for annual appraisal of the boards performance and disclosure of the same 150

1.7 Disclosure of policy on annual evaluation of the CEO by the Board. 152

1.8Disclosure of policy on training (including details of the continuing training program) of directors and type and nature of training courses organized for directors during the year Existence of a scheme for annual appraisal of the boards performance

152

1.9At least one director having thorough knowledge and expertise in finance and accounting to provide guidance in the matters applicable to accounting and auditing standards to ensure reliable financial reporting.

153

1.1 Disclosure of number of meetings of the board and participation of each director (at least 4 meetings are required to be held) 153

1.11 Directors issue a report on compliance with best practices on Corporate Governance that is reviewed by the external auditors 154, 207

2 VISION/MISSION AND STRATEGY

2.1 Company's vision/mission statements are approved by the board and disclosed in the annual report. 13, 164

2.2 Identification of business objectives and areas of business focus disclosed 13, 164

2.3 General description of strategies to achieve the company's business objectives 13, 164

3 AUDIT COMMITTEES

3.1 Appointment and Composition 165

3.1.1Whether the Audit Committee Chairman is an independent Non - Executive Director and Professionally Qualified

165

3.1.2Whether it has specific terms of reference and whether it is empowered to investigate / question employees and retain external counsel

165

3.1.3 More than two thirds of the members are to be Non Executive Directors 165

3.1.4All members of the audit committee to be suitably qualified and at least one member to have expert knowledge of finance and accounting.

165

3.1.5 Head of internal audit to have direct access to audit committee 165

3.1.6The committee to meet at least four times a year and the number of meetings and attendance by individual members disclosed in the annual report.

165

3.2 Objectives & Activities

3.2.2Statement on Audit Committee's review to ensure that internal controls are well conceived properly administered and satisfactorily monitored

166

3.2.3Statement to indicate audit committees role in ensuring compliance with Laws, Regulations and timely settlements of Statutory dues

166

3.2.4 Statement of Audit committee involvement in the review of the external audit function 167

Ensure effective coordination of external audit function 167

Ensure independence of external auditors 167

To review the external auditors findings in order to be satisfied that appropriate action is being taken 167

Review and approve any non-audit work assigned to the external auditor and ensure that such work does not compromise the independence of the external auditors.

168

Recommend external auditors for appointment/re-appointment. 167



Page Number

3.2.5Statement on Audit committee involvement in selection of appropriate accounting policies that are in line will applicable accounting standards and annual review.

168

3.2.6Statement of Audit Committee involvement in the review and recommend to the board of directors, annual and interim financial releases

168

3.2.7 Reliability of the management information used for such computation 168

4 Internal Control & Risk Management

4.1 Statement of Director's responsibility to establish appropriate system of internal control 168

4.2Narrative description of key features of the internal control system and the manner in which the system is monitored by the Board, Audit Committee or Senior Management.

168

4.3 Statement that the Director's have reviewed the adequacy of the system of internal controls 169

4.4 Disclosure of the identification of risks the company is exposed to both internally & externally 169, 80

4.5 Disclosure of the strategies adopted to manage and mitigate the risks 170, 83

5 Ethics and Compliance

5.1Disclosure of statement of ethics and values, covering basic principles such as integrity, conflict of interest, compliance with laws and regulations etc.

171

5.2Dissemination/communication of the statement of ethics & business practices to all directors and employees and their acknowledgement of the same

171

5.3 Board's statement on its commitment to establishing high level of ethics and compliance within the organization 171

5.4Establishing effective anti-fraud programs and controls, including effective protection of whistle blowers, establishing a hot line reporting of irregularities etc.

173

6 Remuneration Committee

6.1 Disclosure of the charter (role and responsibilities) of the committee 174

6.2Disclosure of the composition of the committee (majority of the committee should be non-executive directors, but should also include some executive directors)

174

6.3 Disclosure of key policies with regard to remuneration of directors, senior management and employees 175

6.4 Disclosure of number of meetings and work performed 175

6.5 Disclosure of Remuneration of directors, chairman, chief executive and senior executives. 206, 328

7 Human Capital

7.1

Disclosure of general description of the policies and practices codified and adopted by the company with respect to Human Resource Development and Management, including succession planning, merit based recruitment, performance appraisal system, promotion and reward and motivation, training and development, grievance management and counselling.

176

7.2 Organisational Chart 63

8 Communication to Shareholders & Stakeholders 178

8.1Disclosure of the Company's policy/strategy to facilitate effective communication with shareholders and other stake holders

178

8.2Disclosure of company's policy on ensuring participation of shareholders in the Annual General Meeting and providing reasonable opportunity for the shareholder participation in the AGM.

179

9 Environmental and Social Obligations

9.1Disclosure of general description of the company's policies and practices relating to social and environmental responsibility of the entity

181

9.2 Disclosure of specific activities undertaken by the entity in pursuance of these policies and practices 181



INTEGRATED REPORTING CHECKLISTSl. No. Particulars Page Reference Chapter/Section Reference

1 Elements of an Integrated Report

1.1 Organizational overview and external environment

An integrated report should disclose the main activities of the organization and the environment of which it operates.

16 18 26 71

101

240

Products & Services, Business Modelss, Our Capitals Operating Context & Risk Management, Performance Analysis with the Management Committee, Note 1: Company and its activities

An integrated report should identify the organization's mission and vision, and provides essential context by identifying matters such as: • The organization's:

• culture, ethics and values 13 Our Philosophies

• ownership and operating structure including size of the organization, location of its operations)

21 56

394 398

National Footprint, Shareholding Composition, IDLC's Branch Network, IDLC at a glance

• principal activities and markets 18 122 240

Business Models, Business Segment Reviews, Note 1: Company and its Activities

• competitive landscape and market positioning (considering factors such as the threat of new competition and substitute products or services, the bargaining power of customers and suppliers, and the intensity of competitive rivalry)

75 Market Forces & Competitive Landscape

• position within the value chain 22 24

Value Chain, How We Create Value

• Key quantitative information

e.g. The number of employees, revenue and number of countries in which the organization operates highlighting, in particular, significant changes from prior periods

4 21

101

Highlights, National Footprint, Performance Analysis with the Management Committee

• Significant factors affecting the external environment and the organization's response (include aspects of the legal, commercial, social, environmental and political context that affect the organization’s ability to create value in the short, medium or long term)

72 Macroeconomic Factors & Their Impacts

Eg:

• The legitimate needs and interests of key stakeholders 9 10 34 38

Stakeholder Identification, Materiality Determination Process, Social & Relationship Capital, Stakeholder Engagement

• Macro and micro economic conditions, such as economic stability, globalization, and industry trends

49 53 71 72 75

122-138 198, 301, 333, 361

Message from the Chairman, CEO's Statement, Overview & Macroeconomic Highlights, Macroeconomic Factors & Their Impacts, Market Forces & Competitive Landscape, Business Segments Reviews, Directors' Reports

• Market forces, such as the relative strengths and weaknesses of competitors and customer demand

72 75

Macroeconomic Factors & Their Impacts, Market Forces & Competitive Landscape

• The speed and effect of technological change 73

32 122-138

Macroeconomic Factors & Their Impacts - Technological, Intellectual Capital, Business Segment Reviews

• Societal issues, such as population and demographic changes, human rights, health, poverty, collective values and educational systems

73 Macroeconomic Factors & Their Impacts - Social

• Environmental challenges, such as climate change, the loss of ecosystems, and resource shortages as planetary limits are approached

74 Macroeconomic Factors & Their Impacts - Environmental

• The legislative and regulatory environment in which the organization operates

74 Macroeconomic Factors & Their Impacts - Legal



Sl. No. Particulars Page Reference Chapter/Section Reference• The political environment in countries where the organization operates and

other countries that may affect the ability of the organization to implement its strategy

72 Macroeconomic Factors & Their Impacts - Political

1.2 Governance

An integrated report should show how does the organization's governance structure support its ability to create value in the short, medium and long term.

91 141

Strategy and Resource Allocation, Statement of Corporate Governance

An integrated report needs to provide an insight about how such matters as the following are linked to its ability to create value: • The organization's leadership structure, including the skills and diversity

(e.g., range of backgrounds, gender, competence and experience) of those charged with governance and whether regulatory requirements influence the design of the governance structure

57 141

Board of Directors, Statement of Corporate Governance

• Mandatory and voluntary code of corporate governance adopted by the Company.

171 Statement of Corporate Governance - Ethics and Compliance

• Code of ethical conduct adopted by the Company in relation to ethical business.

• Specific processes used to make strategic decisions and to establish and monitor the culture of the organization, including its attitude to risk and mechanisms for addressing integrity and ethical issues

• Particular actions those charged with governance have taken to influence and monitor the strategic direction of the organization and its approach to risk management

80 141

Statement of Risk Management, Statement of Corporate Governance

• How the organization's culture, ethics and values are reflected in its use of and effects on the capitals, including its relationships with key stakeholders

91 26-37 171

Strategy and Resource Allocation, Capitals, Statement of Corporate Governance- Ethics and Compliance

• Whether the organization is implementing governance practices that exceed legal requirements/ Key Policies

171 Statement of Corporate Governance- Ethics and Compliance

• The responsibility those charged with governance take for promoting and enabling innovation

181 Statement of Corporate Governance - IDLC’s Overall Governance

• How remuneration and incentives are linked to value creation in the short, medium and long term, including how they are linked to the organization's use of and effects on the capitals.

22 28

119

"Value Chain, Human Capital, Human Resource Accounting

1.3 Stakeholder Identification/ relationships An integrated report should identify its key stakeholders and provide insight into the nature and quality of the organization's relationships with its key stakeholders, including how and to what extent the organization understands, takes into account and responds to their legitimate needs and interest. Stakeholders are the groups or individuals that can reasonably be expected to be significantly affected by an organization's business activities, outputs or outcomes or whose actions can reasonably be expected to significantly affect the ability of the organization to create value.

9 10 24 34 38

Stakeholder Identification, Materiality Determination and reporting, How We Create Value, Social & Relationship Capital, Stakeholder Engagement

An entity may disclose the following in their integrated reports in respect of stakeholder relationships:• How the company has identified its stakeholders. 9

38Stakeholder Identification, Stakeholder Engagement

• Stakeholder engagement methodology.

• Identification of material matters of stakeholders. 38 Stakeholder Engagement

• How the Company has applied such matters. 38 Stakeholder Engagement

• How the stakeholders are engaged in assessing impacts, implications and outlook in respect of Company's Business Models.

18 141

Business Models, Statement of Corporate Governance

Capitals

An integrated report needs to provide insight about the resources and the relationships used and affected by the organization, which are referred to collectively as the capitals and how the organization interacts with the capitals to create value over the short, medium and long term

18 22 24

26-37 91

Business Models, Value Chain, How We Create Value, Capitals, Strategy & Resource Allocation

An integrated report need to identify the various forms of capitals which are essential for the success of its business operations.

22 Value Chain

Eg:

Financial Capital -The pool of funds that is available to the organization for use in the production of goods or provsion of services.

26 101

Financial Capital, Performance Analysis with the Management Committee

Manufacturing Capital -Manufactured physical objects that are available to the organization for use in the production of goods and provision of services.

30 Manufactured Capital



Sl. No. Particulars Page Reference Chapter/Section ReferenceIntellectual Capital -Organizational Knowledge based intangibles. 32 Intellectual Capital

Human Capital -People's competencies, capabilities and experience, and their motovations to innovate.

28 119

Human Capital Human Resource Accounting

Social and Relationship Capital -The institutions and the relationships within and between communities, groups of stakeholders and other networks and the ability to share information to enhance individual and collective wellbeing.

24 34 38

How We Create Value, Social and Relationship Capital, Stakeholder Engagement

Natural Capital -All renewable and non-renewable environmental resources and processes that provide goods and services that support the past, current and future prosperity of the organization.

36 Natural Capital

Note: However an entity can do its own classification of capitals based on its business activities. An entity needs to ensure that it does not overlook a capital that it uses or affects

1.4 Business model

An integrated report should describe the organization’s business modelAn integrated report need to describe the Business Models, including key: 9

18 22 24 71 72

Stakeholder Identification, Business Models, Value Chain, How We Create Value, Overview & Macroeconomic Highlights, Macroeconomics Factors & Their Impacts

• Inputs

• Business activities

• Outputs

• Outcomes

Features that can enhance the effectiveness and readability of the description of the Business Models include:• Explicit identification of the key elements of the Business Models

• A simple diagram highlighting key elements, supported by a clear explanation of the relevance of those elements to the organization

• Narrative flow that is logical given the particular circumstances of the organization

• Identification of critical stakeholder and other (e.g., raw material) dependencies and important factors affecting the external environment

• Connection to information covered by other Content Elements, such as strategy, risks and opportunities, and performance (including KPls and financial considerations, like cost containment and revenues).

18 22

26-37 91

101

122-138

Business Models, Value Chain, Capitals, Strategy & Resource Allocation, Performance Analysis with the Management Committee Business Segment Reviews

Inputs

An integrated report shows how key inputs relate to the capitals on which the organization depends, or that provide a source of differentiation for the organization, to the extent they are material to understanding the robustness and resilience of the Business Models.

18 22 94

Business Models, Value Chain, Strategy & Resource Allocation - What makes our Business Models highly adaptable

Business activities

An integrated report describes key business activities. This can include:

• How the organization differentiates itself in the market place (e.g., through product differentiation, market segmentation, delivery channels and marketing)

18 78 94

122-138

Business Models, Entity Analysis - Key Competencies, Strategy and Resource Allocation - What makes our Business Models highly adaptable to change, Business Segment Reviews

• How the organization approaches the need to innovate 96 Strategy and Resource Allocation - Emphasis on development of our intellectual and human capitals,The role of innovation…capitals

• How the Business Models has been designed to adapt to change. 94 Strategy & Resource Allocation - What makes our Business Models highly adaptable

When material, an integrated report discusses the contribution made to the organization's long term success by initiatives such as process improvement, employee training and relationships management

53

96

97 100 28 32

CEO's Statement, Strategy and Resource Allocation: - Emphasis on development of our intellectual and human capitals - The role of innovation…capitals - Our scope of long term value creation, Human Capital, Intellectual Capital

Outputs



Sl. No. Particulars Page Reference Chapter/Section ReferenceAn integrated report identifies an organization's key products and services. There might be other outputs, such as by-products and waste (including emissions), that need to be discussed within the Business Models disclosure depending on their materiality.

16 18 98

27, 29, 31, 33, 35, 37

Products and Services, Business Models, Strategy & Resource Allocation - Trade-offs we seek to avoid, Capitals - Top Trade-offs

Outcomes

An integrated report describes key outcomes, including:

• Both internal outcomes (e.g., employee morale, organizational reputation, revenue and cash flows) and external outcomes (e.g., customer satisfaction, tax payments, brand loyalty, and social and environmental effects)

22 26-37 117

122-138

Value Chain, Capitals, Contribution to the National Economy, Business Segment Reviews

• Both positive outcomes (i.e., those that result in a net increase in the capitals and thereby create value) and negative outcomes (i.e., those that result in a net decrease in the capitals and thereby diminish value).

27, 29, 31, 33, 35, 37

97

Capitals - Top Trade-offs Strategy and Resource Allocation - Key interdependencies, complexities & trade-offs between capitals,

Organizations with multiple Business Models Some organizations employ more than one Business Models (e.g., when operating in different market segments). This requires a distinct consideration of each material Business Models as well as commentary on the extent of connectivity between the Business Modelss (such as the existence of synergistic benefits)."

18 53

122-138

Business Models, CEO's Statement, Business Segments Reviews

Note: The integrated report of an organization with multiple businesses needs to balance disclosure with need to reduce complexity; however, material information should not be omitted.

1.5 Performance

An integrated report needs to explain the extent to which the organization has achieved its strategic objectives for the period and what are its outcomes in terms of effects on the capitals

26-37 53

101

Capitals, CEO's Statement, Performance Analysis with the Management Committee

An integrated report should contain qualitative and quantitative information about performance that may include matters such as: • Quantitative indicators with respect to targets and risks and opportunities,

explaining their significance, their implications, and the methods and assumptions used in compiling them.

26 80 93

101

Financial Capital, Statement of Risk Management, Strategy and Resource Allocation - Risks and Opportunities, Performance Analysis with the Management Committee

• The organization’s effects (both positive and negative) on the capitals, including material effects on capitals up and down the value chain.

22 97

26-37

Value Chain Strategy and Resource Allocation - Key interdependencies, complexities & trade-offs between capitals Capitals

• The state of key stakeholder relationships and how the organization has responded to key stakeholders' legitimate needs and interests.

38 96

Stakeholder Engagement, Strategy and Resource Allocation - Responses to issues raised through stakeholder engagement,

• The linkages between past and current performance, and between current performance and the organization's outlook.

53

91 92

100 26

101

122-138

CEO's Statement, Strategy & Resource Allocation - Strategic progression of IDLC - Current allocation of assets & bottom-line composition - Scope of long term value creation, Financial Capital, Performance Analysis with the Management Committee, Business Segment Reviews

KPIs that combine financial measures with other components (e.g., the ratio of greenhouse gas emissions to sales) or narrative that explains the financial implications of significant effects on other capitals and other causal relationships (e.g., expected revenue growth resulting from efforts to enhance human capital) may be used to demonstrate the connectivity of financial performance with performance regarding other capitals. In some cases, this may also include monetizing certain effects on the capitals (e.g., carbon emissions and water use).

26-37 91

Capitals, Strategy & Resource Alloc ation



Sl. No. Particulars Page Reference Chapter/Section ReferenceInclude instances where regulations have a significant effect on performance (e.g., a constraint on revenues as a result of regulatory rate setting) or the organization's non-compliance with laws or regulations may significantly affect its operations.

74 74

82 83

Macroeconomic Factors & Their Impacts - Environmental - Legal, Statement of Risk Management - Performance Metrics - Risk and Our Responses

1.6 Risks, opportunities and internal controls

An integrated report should explain what are the specific risks and opportunities that affect the organization's ability to create value over the short, medium and long term, and how is the organization dealing with them and effectiveness of the system of internal controls.

53 80 93

122-138

CEO's Statement, Statement of Risk Management, Strategy & Resource Allocation - Risk & Opportunities, Business Segments Reviews

This can include identifying:

• The specific source of risks and opportunities, which can be internal, external or, commonly, a mix of the two.

80 93

122-138

Statement of Risk Management, Strategy & Resource Allocation - Risk & Opportunities, Business Segments Reviews

• The organization's assessment of the likelihood that the risk or opportunity will come to fruition and the magnitude of its effect if it does.

81 Statement of Risk Management - Risk Heat Maps

• The specific steps being taken to mitigate or manage key risks (e.g: Risk Management Framework, Risk Management review process and reporting structure) or to create value from key opportunities, including the identification of the associated strategic objectives, strategies, policies, targets and KPls.

80 93

122-138

Statement of Risk Management, Strategy & Resource Allocation - Risk & Opportunities, Business Segments Reviews

• Risk Management Report (Which includes details about risk, root course, potential impact, response to risk, risk rating).

80 Statement of Risk Management

• Response on the effectiveness of the internal controls and the board's responsibility for the disclosures on internal controls to safeguard stakeholder interest.

168

193

Statement of corporate governance - Acknowledgment of Directors’ responsibility in respect of internal control of IDLC, Report of the Audit Committee - Review of the activities of the Internal Control and Compliance Department (ICC)

1.7An integrated report should describe its strategic direction (Where does the organization want to go and how does it intend to get there)

49 53 91

Message from the Chairman, CEO's Statement, Strategy & Resource Allocation

An integrated report needs to identify:

• The organization's short, medium and long term strategic objectives 92, 93

122-138

Strategy & Resource Allocation - Goals & Objectives Business Segment Reviews

• The strategies it has in place, or intends to implement, to achieve those strategic objectives

49 53 94

Message from the Chairman, CEO's Statement, Strategy & Resource Allocation - Business Model adaptibility & change requirements

• How the entity has positioned in the wider market 53 94

122-138

CEO's Statement, Strategy & Resource Allocation - Business Model adaptibility & change requirements Business Segment Reviews

• How the long term strategies relate to current Business Models 91 Strategy & Resource Allocation

• The resource allocation plans it has to implement its strategy 94

96

Strategy & Resource Allocation - Business Models adaptibility & change requirements - Resource allocation approach

• How it will measure achievements and target outcomes for the short, medium and long term 92, 93

98

Strategy & Resource Allocation - Goals & Objectives - Measuring the efficacy of our objectives

This can include describing:

• The linkage between the organization's strategy and resource allocation plans, and the information covered by other Content Elements, including how its strategy and resource allocation plans:

91 Strategy & Resource Allocation

• relate to the organization's Business Models, and what changes to that Business Models might be necessary to implement chosen strategies to provide an understanding of the organization's ability to adapt to change

94

Strategy & Resource Allocation - Business Models adaptability and change requirements



Sl. No. Particulars Page Reference Chapter/Section Reference• are influenced by/respond to the external environment and the identified

risks and opportunities affect the capitals, and the risk management arrangements related to those capitals

53 91

CEO's Statement Strategy & Resource Allocation

• What differentiates the organization to give it competitive advantage and enable it to create value, such as: 96

97

97

Strategy & Resource Allocation - Capitals that form our competitive advantage - The role of innovation in harnessing the potential of our capitals - Environmental & social considerations in our strategy formulation

• the role of innovation

• how the organization develops and exploits intellectual capital

• the extent to which environmental and social considerations have been embedded into the organization's strategy to give it a competitive advantage

• Key features and findings of stakeholder engagement that were used in formulating its strategy and resource allocation plans.

96 Strategy & Resource Allocation - Responses to issues raised through stakeholder engagement

1.8 Outlook

An integrated report should explain what challenges and uncertainties is the organization likely to encounter in pursuing its strategy, and what are the potential implications for its Business Models and future performance

26-37 49 53 71 91

122-138

Capitals, Message from the Chairman, CEO's Statement, Operating Environment & Risk Management, Strategy & Resource Allocation, Business Segment Reviews

An integrated report shouId highlight anticipated changes over time and provides information on:• The organization's expectations about the external environment the

organization is likely to face in the short, medium and long term 71

122-138Operating Environment & Risk Management, Business Segment Reviews

• How that will affect the organization

• How the organization is currently equipped to respond to the critical challenges and uncertainties that are likely to arise

53 94

122-138

CEO's Statement, Strategy and Resource Allocation - Business Models adaptability and change requirements, Business Segment Reviews

The discussion of the potential implications, including implications for future financial performance may include: • The external environment, and risks and opportunities, with an analysis of

how these couId affect the achievement of strategic objectives 71 72 93

Overview & Macroeconomic Highlights, Macroeconomic Factors & Their Impacts, Strategy & Resource Allocation - Risks & Opportunities

• The availability, quality and affordability of capitals the organization uses or affects (e.g., the continued availability of skilled labour or natural resources), including how key relationships are managed and why they are important to the organization’s ability to create value over time

22 24 97

26-37

Value Chain, How We Create Value, Strategy and Resource Allocation - Key interdependencies, complexities & trade-offs between capitals, Capitals

Disclosures about an organization's outlook in an integrated report should consider the legal or regulatory requirements to which the organization is subject.

6 About Our Integrated Report

1.9 Basis of preparation and presentation

An integrated report should answer the question: How does the organization determine what matters to include in the integrated report and how are such matters quantified or evaluated?

6 10 11

About Our Integrated Report, Materiality Determination Process, Navigating Through This Report,

An integrated report describes its basis of preparation and presentation, including: • A summary of the organization's materiality determination process 10

11Navigating Through This Report, Materiality Determination Process

• Brief description of the process used to identify relevant matters, evaluate their importance and narrow them down to material matters

10 11

Navigating Through This Report, Materiality Determination Process

• Identification of the role of those charged with governance and key personnel in the identification and prioritization of material matters.


• A description of the reporting boundary and how it has been determined 6 About Our Integrated Report

(Eg: Include process used for identifying the reporting boundary, geographic scope, the entities represented in the report and the nature of the information provided for each entity)• A summary of the significant frameworks and methods used to quantify or

evaluate material matters 6

10

203

About Our Integrated Report, Navigating Through This Report, Directors' Report - Corporate & Financial Reporting Framework



Sl. No. Particulars Page Reference Chapter/Section Reference(e.g., the applicable financial reporting standards used for compiling financial information, a company-defined formula for measuring customer satisfaction, or an industry based framework for evaluating risks).

2 Responsibility for an integrated report An integrated report shouId include a statement from those charged with governance that includes:


• An acknowledgement of their responsibility to ensure the integrity of the integrated report

• An acknowledgement that they have applied their collective mind to the preparation and presentation of the integrated report

• Their opinion or conclusion about whether the integrated report is presented in accordance with the Framework

3 Other Qualitative Characteristics of an Integrated Report

3.1 Conciseness

An integrated report should be concise.

An integrated report needs to include sufficient context to understand the organization’s strategy, governance, performance and prospects without being burdened with less relevant information.

11

A mapping of the content, highlighting the connectivity of this report is provided in: Navigating Through This Report The structure of the report follows a logical sequence, incorporating insights on: The Company Stewardship Operating Environment & Risk Management Management Discussion & Analysis Governance Financial Statements

Eg:

Follows logical structure and includes internal cross-reference as appropriate to limit repetition.Express concepts clearly and in as few words.

Favours plain language over the use of jargon or highly technical terminology.

Avoids highly generic disclosures.

3.2 Reliability and completeness

An integrated report should include all material matters, both positive and negative, in a balanced way and without material error

91

168

Strategy and Resource Allocation, Statement of corporate governance- Acknowledgment of Directors’ responsibility in respect of internal control of IDLC"

The organization achieves the reliability and completeness through:

Eg:

• Selection of presentation formats that are not likely to unduly or inappropriately influence assessments made on the basis of intergrated report.


• Giving equal consideration to both increases and decreases in the capitals, both strengths and weaknesses of the organization, both positive and negative performance, etc.

26-37 101

Capitals Peformance Anaysis with the Management Committee

• When information includes estimates, this is clearly communicated and the nature and limitations of the estimation process are explained.

240, 312, 343, 370 Notes to the Consolidated and Separate Financial Statements - Use of estimates & judgements

3.3 Consistency and comparability

The information in an integrated report should be presented:

• On a basis that is consistent over time 101

154

Performance Analysis with the Management Committee, Statement of Corporate Governance - Directors' report on preparation and presentation of financial satements and corporate governance

• In a way that enables comparison with other organizations to the extent it is material to the organization's own ability to create value over time

6 About our Integrated Report

Eg:

• Using benchmark data, such as industry or regional benchmarks 53 CEO's Statement



Sl. No. Particulars Page Reference Chapter/Section Reference• Presenting information in the form of ratios (e.g., research

expenditure as a percentage of sales, or carbon intensity measures such as emissions per unit of output)

101 Performance Analysis with the Management Committee

• Reporting quantitative indicators commonly used by other organizations with similar activities, particularly when standardized definitions are stipulated by an independent organization (e.g., an industry body).

• Reporting policies are followed consistently from one period to other unless a change is needed to improve the quality of information reported.

• Reporting the same KPIs if they continue to be material across reporting period.

• When a significant change has been made, the organisation explains the reasons for the change describing its effect.

240, 312, 343, 370 Notes to the Consolidated and Separate Financial Statements - Significant accounting policies

3.4 Connectivity of information

An integrated report should show a holistic picture of the combination, interrelatedness and dependencies between the factors that affect the organization's ability to create value over time.

18 22 24

Business Models, Value Chain, How We Create Value

Eg: Connectivity between

• Capitals 22 97

26-37

Value Chain, Strategy and Resource Allocation - Key interdependancies, complexities and Trade-offs between capitals, Capitals

• Content elements 11 Navigating Through This Report

• Past, Present & Future 26-37 49 53 91

101

122-138

Capitals, Message from the Chairman, CEO's Statement, Strategy & Resource Allocation, Performance Analysis with the Management Committee Business Segment Reviews

• Finance and other information 26 101

Financial Capital Performance Analysis with the Management Committee

3.5 Materiality

An integrated report should disclose information about matters that substantively affect the organization's ability to create value over the short, medium and long term

10 Materiality Determination Process

3.6 Assurance on the Report

• The policy and practice relating to seeking assurance on the report 7

197

About Our Integrated Report - External Assurances Statement of Directors’ Responsibility for Internal Control, Financial Reporting and Corporate Governance

• the nature and scope of assurance provided for this particular report 7

223, 306, 337, 364

About Our Integrated Report - External Assurances, Independent Auditor's Report To the Shareholders of IDLC Finance Limited, IDLC Securities Limited, IDLC Investments Limited, IDLC Asset Management Limited

• any qualifications arising from the assurance, and the nature of the relationship between the organization and the assurance providers.

None



IDLC’S BRANCH NETWORKIDLC Finance Limited

CORPORATE HEAD OFFICEBay’s Galleria (1st Floor), 57 Gulshan Avenue, Dhaka 1212 Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 883 4377, 883 5887E-mail: [email protected]

DILKUSHA BRANCHD R Tower (5th Floor) 65/2/2 Bir Pratik Gazi Golam Dastagir Road, Purana Paltan, Dhaka 1000 Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 956 3620E-mail: [email protected]

GULSHAN BRANCHBay’s Galleria (4th Floor), 57 Gulshan Avenue, Dhaka 1212Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 883 4148E-mail: [email protected]

UTTARA BRANCHParadise Tower (5th Floor), Plot No. 11, Sector No. 3Uttara Model Town, Dhaka 1230Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 895 9190E-mail: [email protected]

DHANMONDI BRANCHHouse No. 39/A (3rd Floor), Road No. 14/A, Dhanmondi, Dhaka 1209 Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 5812 3161 Ext - 122E-mail: [email protected]

MIRPUR BRANCHPlot No. 01, Green Avenue Park (3rd Floor)Road no. 3, Block-A, Sec-6, Mirpur, Dhaka 1216Telephone: 16409IP : +8809609994352E-mail: [email protected]

ELEPHANT ROAD BRANCHPearsons Tower (1st Floor), 299 Elephant Road, Dhaka 1205Telephone: 16409IP : +8809609994352E-mail: [email protected]

IMAMGANJ BRANCH57/58 Mitford Road (3rd Floor), Chowk Bazar, Dhaka 1100Telephone: 16409IP : +8809609994352E-mail: [email protected]

KERANIGANJ BRANCHA K Tower (1st Floor)Nagar Mahal Road, Nadidhara IspahaniEast Aganagar, South Keraniganj, Dhaka 1310Telephone: 16409IP : +8809609994352E-mail: [email protected]

NARAYANGANJ BRANCHSattar Tower (4th Floor)50 S. M. Maleh Road, Tanbazar, Narayanganj 1400Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 764 8217E-mail: [email protected]

GAZIPUR BRANCHRahmat Tower (2nd Floor), Holding No. 1034, OutparaJoydebpur, Gazipur 1700Telephone: 16409IP : +8809609994352Facsimile: +880 (2) 926 3569E-mail: [email protected]

TONGI BRANCHSena Kalyan Commercial Complex (1st Floor)Plot No. 9/F, Tongi, Gazipur- 1710 Telephone: 16409IP : +8809609994352E-mail: [email protected]

SAVAR BRANCHSavar New Market (3rd Floor)Holding No. 3, Savar Pouroshova, Savar, Dhaka 1340Telephone: 16409IP : +8809609994352E-mail: [email protected]

NARSINGDI BRANCHT Hussain Tower, Holding No. 382Kalibari road, Narsingdi Bazar, Narsingdi 1600Telephone: 16409IP : +8809609994352Facsimile: + 880 (2) 945 2078E-mail: [email protected]



BHULTA BRANCHHazi A Aziz Super Market (2nd Floor)Mouza: Golakandail, P.O: Bhulta, P.S.: Rupganj, District: Narayanganj 1460Telephone: 16409IP : +8809609994352E-mail: [email protected]

FARIDPUR BRANCHHafeez Building (2nd Floor), 94 Mujib Shorok, Faridpur 7800 Telephone: 16409IP : +8809609994352E-mail: [email protected]

CHATTOGRAM BRANCHWorld Trade Center (5th Floor)102-103 Agrabad Commercial Area, Chattogram 4100Telephone: 16409IP : +8809609994352Facsimile: +880 (31) 715 895E-mail: [email protected]

CUMILLA BRANCHArtisan Nasir Center (3rd Floor)437 Nazrul Avenue, Kandirpar, Cumilla 3500Telephone: 16409IP : +8809609994352Facsimile: +880 (81) 64907-8 (Ext-110), 72 881 (Ext-110)E-mail: [email protected]

NANDANKANON BRANCHA. K. Mansion (1st Floor)17 J.C. Guha Road, Nandankanon, Chittagong 4100Telephone: 16409IP : +8809609994352Facsimile: +880 (31) 612 762

CHOWMUHANI BRANCHN S S Bhaban (2nd Floor), Feni Road, Chowmuhani, Noakhali 3821 Telephone: 16409IP : +8809609994352E-mail: [email protected]

KUSHTIA BRANCHMomtaz Tower (2nd Floor), 5/1 Jaliram Agarwala Lane, Roxy Goly, Kustia 7000Telephone: 16409IP : +8809609994352E-mail: [email protected]

JASHORE BRANCHRashid Center (2nd Floor), 7/A R. N. Road, Jashore 7400Telephone: 16409IP : +8809609994352Facsimile: +880 (421) 608 96E-mail: [email protected]

KHULNA BRANCHSyed Ali Hossain Tower (Ground Floor), 181 Khan A Sobur Road, Khulna 9100Telephone: 16409IP : +8809609994352E-mail: [email protected]

BARISHAL BRANCHL L Tower (2nd Floor), Holding No. 119, Sadar Road, Barishal 8200Telephone: 16409IP : +8809609994352E-mail: [email protected]

RANGPUR BRANCHPaper Palace Tower (Ground Floor)House No. 306, Road No. 1, Central Road, Rangpur 5400Telephone: 16409IP : +8809609994352E-mail: [email protected]

BOGURA BRANCHSairul Complex (1st Floor), Sherpur Road, Sutrapur, Bogura 5800Telephone: 16409IP : +8809609994352Facsimile: +880 (51) 698 39E-mail: [email protected]

RAJSHAHI BRANCHSahidullah Tower – 1 (2nd Floor)32/A Ranibazar, Ghoramara, Boalia, Rajshahi 6100Telephone: 16409IP : +8809609994352E-mail: [email protected]

NATORE BRANCHLily plaza (2nd Floor), Holding No. 838. Kanaikhali, Natore 6400Telephone: 16409IP : +8809609994352E-mail: [email protected]



MYMENSINGH BRANCHSwapnaneer Tower (1st Floor), 27 C K Ghosh Road, Mymensingh 2200Telephone: 16409IP : +8809609994352E-mail: [email protected]

SYLHET BRANCHCasablanca (2nd Floor), 982 Dargah Gate, Sylhet 3100Telephone: 16409IP : +8809609994352Facsimile: +880 (821) 728 244E-mail: [email protected]

HABIGANJ BRANCHShankar City (1st Floor), Ram Krishna Mission Road, Ghatia Bazar, Habiganj 3300Telephone: 16409IP : +8809609994352E-mail: [email protected]


HEAD OFFICED R Tower (4th Floor), 65/2/2 Bir Protik Gazi Golam Dastagir RoadPurana Paltan, Dhaka 1000Telephone: 16409IP : +8809609994352Fax: +880 (2) 9574366Email: [email protected]

GULSHAN BRANCHSymphony (Level – 04)Plot # SE (F): 9, Road # 142Gulshan Avenue, Dhaka-1212.Telephone: 16409IP : +8809609994352Fax: +880 (2) 9883898 Email: [email protected]

CHATTOGRAM BRANCHAyub Trade Centre (6th Floor), 1269/B Sk. Mujib Road, Agrabad Commercial Area, Chattogram 4100 Telephone: 16409IP : +8809609994352Fax: +880 (31) 251 4059 Email: [email protected]

DHANMONDI BRANCHConcord Royal Court (2nd Floor), House No: 275/G (Old) 40 (New), Road: 27 (Old) 16 (New), Dhanmondi R/A, Dhaka 1209 Telephone: 16409IP : +8809609994352Fax: +88-02-9102622 Email: [email protected]

DOHS MOHAKHALI BRANCHB.H. NIBASH, House No. B 105, (3rd Floor, North Side) Flat No. 4 (A), Road No. 8, New DOHS, Mohakhali, Dhaka 1206 Telephone: 16409IP : +8809609994352Fax: +880 (2) 871 4510 Email: [email protected]

GAZIPUR BRANCHRahmat Tower (2nd Floor), Holding No. 1034, Mouza: Outpara, Joydebpur, Gazipur 1700 Telephone: 16409IP : +8809609994352Fax: +88-02-9263539 Email: [email protected]

KHATUNGONJ BRANCHGolsen Park, M.H No. 3/A, Ramjoy Mohajan Lane, Khatungonj, P.S. Kotwali, Chittagong 4100 Telephone: 16409IP : +8809609994352Fax: +880 (31) 2866494Email: [email protected]

NARAYANGONJ BRANCHSattar Tower (Ground floor), Municipal Holding No. 50S.M. Maleh Road, Tanbazar, P.S - Narayanganj, Narayanganj 1400. Telephone: 16409IP : +8809609994352Fax: +88-02-7632896 Email: [email protected]



SYLHET BRANCHR N Tower (4th Floor), Chowhatta, SylhetTelephone: 16409IP : +8809609994352Fax: +880 (821) 728 244 Email: [email protected]

UTTARA BRANCHMonsur Complex (4th Floor), Plot # 59/A, Road # 7, Sector # 4, Uttara Model Town, Dhaka 1230. Telephone: 16409IP : +8809609994352Email: [email protected]


HEAD OFFICE D R Tower (4th Floor), 65/2/2 Bir Protik Gazi Golam Dastagir RoadPurana Paltan, Dhaka 1000Telephone: 16409IP : +8809609994352Fax: +880 (2) 957 1171Email: [email protected]


HEAD OFFICE Symphony (Level – 04)Plot # SE (F): 9, Road # 142Gulshan AvenueBir Uttam Mir Shawkat Sarak, Dhaka-1212.



IDLC AT A GLANCEIDLC Finance Limited (IDLC FL)Public Limited Company, listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited

IDLC Securities Limited (IDLC SL)

Wholly owned subsidiary of IDLC FLPrivate Limited Company limited by shares

IDLC Investments Limited (IDLC IL)


IDLC Asset Management Limited (IDLC AML)


Type of Business Financial Institution

Key business segmentsSmall Medium Enterprise (SME) financing; Corporate financing; Consumer financing including home loans, car loans & personal loans; and Wealth Management.

Former name Industrial Development Leasing Company (IDLC) of Bangladesh Limited (Renamed on August 5, 2007)Company incorporation number C-14218/1992 of 1984-85 Date of incorporation 23 May 1985Bangladesh Bank License number BCD (Non-banking)/Dhaka/2/95 dated 07 February 1995Number of branches 30Tax Identification number (ETIN): 549619260951VAT registration number: 001273718-0101Address of Corporate Head Office Bay's Galleria (1st Floor), 57 Gulshan Avenue, Dhaka 1212.Telephone +880 (2) 883 4990 (Auto Hunting)Facsimile +880 (2) 883 4377Contact Center 16409Email address [email protected]

Type of Business Merchant Bank

Key business segments

Portfolio Management, Issue Management

Company incorporation number

C-84849/10

Date of incorporation 19 May 2010

BSEC Licence number

MB-67/2011 dated 02 August 2011

Commencement of operation 16 August 2011

Tax Identification number (ETIN): 869368715769

VAT registration number: 001656972

Number of branches NIL

Address of Registered Office

DR Tower (4th Floor), 65/2/2, Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000

Telephone + 88 09609994352

Facsimile +880 (2) 956 3620

Contact Center 16409

Email address [email protected]

Type of Business Brokerage HouseDate of incorporation

19 April 2006


C-61319 (3328)/06

Commencement of operation

18 September 2006

BSEC license number as Broker

Corporate Member: Dhaka Stock Exchange Limited

BSEC Reg No.3.1/DSE-58/2006/130

Corporate Member: Chittagong Stock Exchange Limited

BSEC Reg No.3.2/CSE-119/2006/135

BSEC license number as Dealer

Dhaka Stock Exchange Limited

BSEC Reg No.3.1/DSE-58/2008/233

Chittagong Stock Exchange Limited BSEC Reg No.3.2/CSE-

119/2009/176Tax Identification number (ETIN):

814688547577

VAT registration number:

002379539-0208

Number of branches:

10

Address DR Tower (4th Floor), 65/2/2, Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000

Telephone + 88 09609984352

Facsimile +880 (2) 957 4366



Type of Business Asset Management

Key business segments

Mutual Fund, Portfolio Management, Venture Capital, Alternative Investments Fund Management, etc.

Date of incorporation

19 November 2015


C-127068/2015

Commencement of operation:

01 July 2016

BSEC licence number

BSEC/Asset Manager/2016/25 dated 07 June 2016

Tax Identification number (ETIN):

712782428191

VAT registration number:

002078126-0101

Number of branches:

NIL

Address of Registered Office

Symphony (Level – 04), Plot # SE (F): 9, Road # 142, Gulshan Avenue, Bir Uttam Mir Shawkat Sarak, Dhaka-1212.




PROXY FORMI/We ...................................................................................................of...............................................................................................................

........................................................................................................................ being a member of IDLC Finance Limited and a holder of .................

.......................................... shares hereby appoint Mr./ Ms. ....................................................................................................................................

of.................................................................................................................................................................. as my/our proxy to vote for me/us

and on my/our behalf at the 36th Annual General Meeting of the Company to be held on Wednesday, March 31, 2021, at 11:00 a.m. through Online

Digital Platform (link: https://tinyurl.com/idlcagm2021), and at any adjournment thereof.

Signed this day of March 2021

Signature

Revenue

Stamp of

BDT 20

Signature

Name : Name :

(Proxy) (Member)

Folio/BO ID No

NOTE :

a) This form of proxy, duly completed, must be deposited at least 72 hours before the meeting at the Company’s registered office or sent scan copy through email at [email protected]. Proxy is invalid if not signed and stamped as explained above.

b) Signature of the shareholders should agree with the specimen signature registered with the Company and Depository Register.

ATTENDANCE SLIP

I hereby record my attendance at the 36th Annual General Meeting of the Company being held on Wednesday, March 31, 2021, at 11.00 a.m. through

Online Digital Platform (link: https://tinyurl.com/idlcagm2021), as a holder of..................................................................................................................

............................................................................................................................................................................................. shares of the Company.

Signature

Name :

(Member/Proxy)

Folio/BO ID No.

NOTE :

Signature of the shareholders should agree with the specimen signature registered with the Company and Depository Register.

IDLC FINANCE LIMITEDBay’s Galleria (1st Floor)57 Gulshan Avenue, Gulshan-1, Dhaka-1212Tel: +88 02 8834990, Fax : 8834377E-mail : [email protected]

IDLC FINANCE LIMITEDBay’s Galleria (1st Floor)57 Gulshan Avenue, Gulshan-1, Dhaka-1212Tel: +88 02 8834990, Fax : 8834377E-mail : [email protected]

36th Annual General Meeting

36th Annual General Meeting

Documents

annual-report-2020-642658.pdf - IDLC - Login