directors' report - Dutch-Bangla Bank Limited

the Bank rose by Taka 1,660.0 million or 80.3% to
Taka 3,726.8 million from Taka 2,066.8 million of
the previous year. Net interest income increased
mainly due to lower cost of fund resulting from
improved deposit mix and higher average loan
portfolio though yield on loans and advances
declined. Cost of fund declined from 6.53% in 2009
to 4.41% in 2010 while yield on loans and advances
declined from 12.96% in 2009 to 11.55% in 2010
mainly due to reduction in interest rate for market
competition and regulatory restrictions . However,
the share of net interest income to the total income
of the Bank increased to 52.1% in 2010 compared
to 42.9% of the previous year.
Investment income
During the year 2010, the investment income of the
Bank declined by Taka 55.4 million or
(-4.2%) to Taka 1,278.8 million from Taka 1,334.2
million of the previous year. Investment income
decreased mainly due to lower yield in 2010.
Non-interest income
The non-interest income consists of the
commission, exchange and other operating income
of the Bank. Total non-interest income of DBBL
increased by Taka 735.9 million or 51.9% in 2010
over the previous year. Commission and exchange
income increased by Taka 282.1 million or 32.8%
during the year 2010. Notable growth was achieved
in other operating income which grew by Taka
453.8 million to Taka 1,010.9 million in 2010 from
Taka 557.1 million in 2009 a rise by 81.4%. Other
operating income increased due to growing value
added services provided by online banking network
of the Bank.
Total operating expenses
Total operating expenses of the Bank during the
year grew by Taka 837.8 million or 39.5%. Higher
operating expenses were necessary to support the
overall business and profit growth of the Bank
during the year 2010. Increased expenses were
required to support capacity building and expansion
of distribution network and multiple delivery
channels. Ten (10) new branches were opened in
2010 and seven (7) SME service centers were
converted into SME/Agriculture branches in
2010.Four hundred (400) ATM units and fifty (50)
new Fast Tracks were installed in 2010. Recruitment
of new personnel, maintenance and upgradation of
IT network including ATM and Fast Track,
expansion of branch network, and introduction of
new products for SME and retail customers are
attributable to higher operating expenses.
However, because operating expenses grew at a
slower rate than operating income, the Bank's cost
to income ratio significantly improved to 41.4% in
2010 from 44.1% of the previous year
Provision for loans & advances and off-balance
sheet exposures
Total provision for loans & advances and offbalance
sheet exposures increased by Taka 35.4
million or 8.3% during the year. The specific
provision against loans decreased by Taka 237.2
million (-85.7%) though total loans & advances
grew by 39.8% during the year 2010 maintaining
quality of assets. Close monitoring and supervision
of the good and particularly non-performing loans
improved overall quality of loan portfolio requiring
lower provision. The general provision for
unclassified loans and off-balance sheet exposures
increased by Taka 272.6 million to Taka 422.8
million from Taka 150.2 million of the preceding
year due to higher outstanding balance of loans and
off-balance sheet exposures.