directors' report - Dutch-Bangla Bank Limited

Cash in hand and balances with Bangladesh Bank
and its agent bank(s) (including foreign currencies)
As at 31 December 2010, cash in hand and
balances with Bangladesh Bank and its agent banks
(including foreign currencies) stood at Taka
10,019.7 million as against Taka 6,653.9 million of
2009 registering a growth by Taka 3,365.8 million
or 50.6%. The increased cash was required to
provide uninterrupted cash services to our growing
customers through multiple delivery channels.
Online transaction facilities with 96 branches, 1,100
units of ATMs, 50 Fast Tracks and growing number
of account holders substantially increased cash
requirement in branches and ATMs. Substantial
growth in deposits and the increase of CRR by
0.50% at the end of 2010 by Bangladesh Bank
required higher balance with Bangladesh Bank to
maintain the increased CRR.
Balance with other banks and financial institutions
The Treasury Division of the Bank has to maintain
some special notice deposits (SND) accounts and
current deposits (CD) accounts with other banks
and financial institutions in and outside the country
for smooth functioning of treasury operations and
trade finance. A portion of the excess fund, if any,
after meeting the requirement to finance loan
portfolio and investments including SLR is placed
with other banks and financial institutions as term
deposits for optimizing the profit of the Bank. As at
31 December 2010, balance outstanding with other
banks and financial institutions substantially
decreased to Taka 2,695.8 million from Taka
10,213.8 million at the end of 2009 for higher
utilization of funds in loan portfolio.
Money at call and short notice
Money at call and short notice stood at Taka
1,400.0 million at the end of 2010 compared to
Taka 820.0 million at the end of 2009. The average
yield on fund placement at call and short notice of
the Bank was 6.61% for 2010 as against 8.06% for
2009. Short term excess fund is placed in money
market to augment the return on fund.
Investments
The Bank's investments stood at Taka 11,001.6
million at the end of 2010 that was higher by
13.6% from Taka 9,685.9 million of 2009. The
investments mainly included Government securities
for Taka 9,738.6 million (88.5% of total
investments) maintained mainly to cover SLR
requirement. In addition, investments were planned
in a way to provide sufficient liquidity and flexibility
in treasury operations and to boost the income from
investments as well as the total profitability of the
Bank.
Treasury team of the Bank was very much watchful
to manage market risk & uncertainty and ensure
maximum return from investments in security,
bonds, term deposits and call money market though
there was higher level of liquidity prevailing in the
market until before last quarter of 2010. The Bank
was able to maintain cash reserve requirement
(CRR) and statutory liquidity ratio (SLR) successfully
throughout the year though the money market
witnessed acute liquidity crisis in December 2010 to
meet the increased CRR by 0.50% required by
Bangladesh Bank with effect from 15 December
2010.
Loans and advances
Loans and advances of the Bank stood at Taka
67,657.7 million at the end of 2010, a growth of
39.8% over Taka 48,411.0 million in 2009. The
Bank continued to diversify its portfolio in 2010 to
have a diversified client base and portfolio
distributed across the sectors to reduce client
specific and industry specific concentration and to
reduce overall portfolio risk. Considering future
market direction and to capitalize on our robust IT
platform and the strongest ATM network, a number
of retail and SME loan products aimed at specific
target groups were launched in 2010 to augment
fee income and improve yield and spread on total
loan portfolio. At the end of 2010, DBBL's total
outstanding loans to SME stood at Taka 18,879.6
million compared to Taka 9,694.8 million of 2009.
At the end of 2010, DBBL's total outstanding retail
portfolio stood at Taka 1,535.0 million compared to
Taka 1,229.3 million of 2009.
Weighted average rate of return on total loans and
advances decreased to 11.55% in 2010 from
12.96% in 2009.Classified loans as a percentage of
total loan portfolio remained unchanged at 2.46%
at the end of 2010. However, full provision was
made against classified loans. Serious efforts are
being continued to bring down the amount and
percentage of classified loan further by exploring all
options including legal actions and out of court
settlements depending on the merit of the cases.