2012 Management Report

MANAGEMENT REPORT
078 Financial Analysis

081 Wholesale Banking
082 Retail Banking
084 SME Banking
086 Green Banking
088 International Trade
089 NRB Operations
090 Treasury Operations
092 Information Technology Services
Group Human Resources
094
Special Asset Management
096
Corporate Social Responsibility
097
Risk Management Unit
100
MTB Securities Ltd.
104
MTB Capital Ltd.
106
MTB Exchange (UK) Ltd.
107
Letter of Gratitude
108
MTB Annual Report - 2012

Management Report - Financial Analysis
Further Information
In 2012, Mutual Trust Bank Ltd. (MTB) focused on the

expansion and diversification of various business lines. A
strategic approach streamlining diverse business
opportunities had been undertaken, but due to the adverse
economic situation it was not a completely successful
business year. We achieved a remarkable line in
diversification of business, though the year was marked
with fierce competition amongst the major players seeking
to streamline themselves successfully in order to keep
pace with the industrys transformation.
As of the year 2012, MTBs total assets along with
subsidiaries had risen by 22.0% over 2011, reaching BDT
93.2 billion. Accompanying this quantitative growth has
been an improvement in asset quality, with our careful risk
management measure contributing to high quality loans
and advances. The NPL ratio of the bank increased by
1.2% to 3.7%, which is still lower than that of the average
country NPL.
Due to the difficult economic situation, in 2012, our net
income reduced by 18.9% going down to 328 million from
404 million in the previous year. A number of successful
strategies were taken in the year 2012, including steady
growth of our savings and lending businesses,
development of more innovative and customer centric
financial products.
Summary of Assets in Balance Sheet:

BDT Millions
Total Assets
Loans/ Advances
Investments
Fixed Assets
Other Assets
2012
2011
93,162
56,511
23,251
2,385
3,372
76,331
47,005
19,756
1,553
2,597
Overdraft against Margin loans stands at BDT 4.1 billion in

2012 from 3.5 billion in 2011 in MTB Securities Ltd. a
subsidiary of MTB.
Loans and Advances
56,511
60,000
MTB also had to increase its Cash Reserve Requirement

(CRR) maintained with Bangladesh Bank and its agents in
2012. The earning assets grew at a rate of 18.2% to BDT
78.8 billion.
22
20
18
54
30
MTB is delighted to have availed funding from UBL Dubai

to finance through our Offshore Banking Unit (OBU)
starting from the year 2010, though it reduced in the year
2012, and stood at USD 1 million i.e. BDT 80.2 million at
the year end.
Analysis of Consolidated Financial Statements

Assets
The Banks total assets posted a 22.0% increase in 2012,
rising from BDT 76.3 billion to BDT 93.2 billion. The major
contributor to this growth was the increase in Investments,
which jumped by 18.0%, or from BDT 19.8 billion to BDT
23.3 billion and in loans and advances, which jumped by
20.2%, or from BDT 47.0 billion to BDT 56.5 billion. Fixed
assets of the Bank also increased remarkably i.e. raised to
BDT 2.4 billion from BDT 1.6 billion, an increase of 53.6%.
(%)
Change
Loans and Advances by the Bank & Subsidiaries:

The Banks exposure to loans and advances increased
from BDT 47.0 billion to BDT 56.5 billion in 2012 registering
a 20.2% growth over last year. MTBs credit portfolio is
mostly comprised of corporate, consumer and SME clients.
BDT Millions
Financial Information
To Our Shareholders
Management Report
Governance
Overview of MTB
078
47,005
50,000
40,000
30,000
33,884
39,676
2009
2010
28,529
20,000
10,000
2008
2011
2012
At the end of year 2012, the Banks total credit was up by

20.2% over 2011, showing an increase of BDT 9.5 billion.
Despite this large growth, loans classified as substandard
and below experienced a slight growth of 1.2%, which is
being addressed carefully by the Bank. This allowed the

Liabilities and Shareholders Equity

Liabilities
Total liabilities (excluding equity) stood at BDT 88.3 billion
at the end of 2012, which was 23.5% more than the
previous years figure. This increase in liability is mainly
due to increase in deposits from customers and borrowing
from other banks, financial institutions and agents.
Deposits
Deposits, representing the largest portion of total liabilities
accounts for 85.1%, showing an increase of 27.3%, or BDT
16.1 billion, to BDT 75.1 billion from BDT 59.1 billion. Over
the past four years, MTB was able to almost double its
deposits portfolio from BDT 33.8 billion in 2008 to BDT 75.1
billion in 2012.
The Consolidated Earnings per Share (EPS) stood at BDT

1.29 (Face value per Share BDT 10) and Return on
Average Equity (RoAE) at 6.8% during 2012. Market
capitalization stood at BDT 55.7 billion as of December
2012. During 2012, the Bank declared 10% stock as final
dividend.
Summary of Shareholders Equity
BDT Millions
Paid up Capital
Statutory Reserve
Revaluation Gain
General Reserve
Retained Earnings
59,050
42,354
46,041
33,820
2008
2009
2010
2011
2012
Deposit Mix and Growth

The deposit mix showed significant changes during the
year 2012.
Amount in
BDT million
2011
2012
Growth
(%)
Mix
BDT Millions
BDT Millions
75,140
2011
(%)
Change
2,543
1,637
121
277
255
2,543
1,474
122
362
311
11%
-1%
-23%
-18%
Return on Average Assets (ROAA )
Total Deposits
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2012
2.00%
1.80%
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
1.79%
0.86%
0.60%
2008
2009
2010
2011
0.39%
2012
Capital Adequacy
The Banks Capital Adequacy Ratio (CAR) decreased by
1.3% at the end of 2012. The main reasons for decrease
were the increase of risk weighted assets and decrease in
profitability. In terms of capital adequacy, Tier 1 capital
edged up to post 7.1% at the end of 2012. A significant
positive effect was made in Tier 2 capital through
subordinated debt.
2012 2011
3
201
18
29
12%
2%
12%
60%
15%
1%
13%
60%
47
13%
11%
The proportion of high cost deposits i.e. fixed deposits

increased by 29% (from BDT 35.2 billion to BDT 45.3
billion). Deposit Products had also increased by 47% to
BDT 9.8 billion from BDT 6.6 billion. In addition to this, zero
cost deposit had increased by 3.0% or BDT 269 million
(from BDT 8.8 billion to BDT 9.1 billion).
Overview of MTB
1.79%
Position of Capital Adequacy Ratio:

CD & Other
Accounts
9,051 8,782
Bills Payable
1,814
602
Savings Deposits 9,224 7,840
Fixed Deposits
45,301 35,193
Other Deposit
Products
9,750 6,633
Governance
2011
47,005
1,195
2.54%
Management Report
Total loans & advances

Non-performing loans
NPL ratio
Required/Base Ratio
Tier 1 Ratio (%)
Tier 2 Ratio (%)
Maintained Ratio
2012
2011
10.0%
7.1%
3.6%
10.7%
10.0%
8.1%
3.9%
12.0%
(%)
Change
-1.0
-0.2
-1.3
To Our Shareholders
BDT Millions
2012
56,511
2,085
3.69%
However, the Bank has been able to keep the NPL ratio at
a manageable level due to prudent risk management
strategies, a committed recovery team and an excellent
monitoring and control system.
Shareholders Equity
Shareholders equity increased BDT 4.8 billion to BDT 4.9
billion in 2012. This rise, propelled by earnings growth, was
also reflected in consolidated net income. General reserve
is kept at BDT 277 million due to a policy for strengthening
the reserve base for taking over any future claim for
corporate tax and others.
Further Information
Banks NPL ratio a slight increase to 3.7% from 2.5%.
079
080

Further Information
Net Interest Income

Total interest income in 2012 showed a positive growth of
29% to reach BDT 7.8 billion from BDT 6.1 billion despite
numerous challenges. Interest expenses in the year were
BDT 7.0 billion which increased by 34% from 2011 (BDT
5.2 billion). Comparatively, the growth of interest expense
is much higher than the growth of interest income, the
resultant net interest margin (NIM) showed a negative
growth by 4.1% in 2012 (BDT 850 million in 2012 and BDT
888 million in 2011).
BDT Millions
Net Interest Income

1,400
1,200
1,000
800
600
400
200
-
1,245
737
870
2008
2009
2010
888
850
2011
2012
Non-interest Income
In 2012, investment income, fee income from
assurance/guarantee,
beneficiary
certificates
and
brokerage, credit cards and foreign exchange trading gains
reached an amount of BDT 2.7 million collectively, which
was 20% higher than 2011 (BDT 2.2 billion). Investment
income consists of interest earned on treasury bills &
bonds and dividend received on shares.
Non-Interest Income
BDT Millions
To Our Shareholders
Management Report
Governance
Overview of MTB
Earning Analysis
3,000
2,154
2,216
2010
2011
2,656
1,674
2,000
1,102
1,000
2008
2009
2012
Operating Expenses
Total operating expenses increased by 14.6%, or BDT 276
million, resulting in an amount of BDT 2.2 billion in 2012.
This is because of a significant increase in people cost,
rental, advertisement and other expenses, which include
mainly employee training, business development,
registration fees, security services for additional branches,
etc.
The Bank provided full provision for gratuity payment,
which was BDT 46 million in 2012. Increase of fixed assets
caused a 29% increase in depreciation charged during
2012.The headcount increased by 4% throughout the year
mainly due to opening of new branches and expansion of
business network.
Operating Income per employee

Profit before tax per employee
2012
2011
2.7M
0.6M
2.5M
0.8M
081
Branch-support Wholesale Banking provides structuring,

approval, monitoring and compliance support for clients
booked at the branch level who have been availing
wholesale banking facilities across the entire network. Of
MTBs total credit portfolio of BDT 41.7 billion, approximately
over 73.8% belongs to the portfolio under supervision of this
unit. The unit finances the establishment and expansion of
The Syndication Unit, participated in syndicated deals, albeit

cautiously because of dry liquidity scenario and slow growth
in the syndication market. Total portfolio built during 2012
was over BDT 1.7 billion from syndication. New deals include
CP Bangladesh Ltd. (poultry), Orascom (telecom), BSRM
(steel), Packaging World, Propac (packaging) and
post-delivery USD finance to Biman Bangladesh Airlines
through our offshore banking unit. Income earned during this
year was approximately BDT 317.4 million, of which interest
earned was BDT 312.3 million and non funded income was
BDT 5.0 million.
The Cash Management Unit facilitates nationwide sales
collection and payment services and engages as a
banker-to-the-issue (BTI) and Lead Banker for IPOs.
Additionally, it procures deposits, contributing to portfolio
growth. During 2012, the unit successfully performed BTI
role for 8 (eight) accounts while another 33 (thirty three)
accounts have already been booked. It also played lead
bankers role for 1 (one) account while 11 (eleven) other
accounts have been booked. New names for nationwide bill
collection service are Robi, Banglalion and Abdul Monem
Ltd. Another mentionable achievement of cash management
unit during the year was opening DSE clearing account for
trade settlement that would help source substantial
transactional deposits to enhance the banks ability to lend
more at competitive interest.
Management Report
This year, we also provided long-range sovereign risk-grade

investment options to clients through sales of treasury bonds
worth over BDT 2.0 billion, offloading the banks primary
dealers HFT portfolio.
To Our Shareholders
In 2012, the asset side wholesale banking team improved

the banks capacity to deliver financial solutions to wholesale
clients through different trade finance solutions e.g. draft
purchase arrangement through Wells Fargo, HK, and
factoring support for deferred export bills from DS-Concept
Factoring GmBH.
Centralized Wholesale Banking deals with selected

corporate clients to provide solutions to their comprehensive
financing needs. The clients are booked by the unit, ensuring
personalized service. Established in 2011, the unit provides
origination and client coverage for top-notch corporate
clients and has booked fresh large and top-tier customers of
different industries with a particular focus on non-funded
income. The prominent names booked in the year were
Citycell (telecom), Sylvan Agricultural Ltd. (food processing
unit of PRAN-RFL Group), Saiham Group, HR Textile,
Dignity Textile, Nikita Apparels, Donglian Fashion (RMG),
Faisal Spinning (textile) and Magnum Engineering &
Construction Ltd. (real estate). Total portfolio built up during
the year was approximately BDT 2,750 million comprising of
BDT 1,450 million in funded facilities and BDT 2850 million
import & BDT 1524 million export in non-funded facilities.
Income earned was approximately BDT 429 million, of which
non-funded income was BDT 51 million (12%) and interest
earned was BDT 378 million.
projects through long-term financing and supports their

continued growth through working capital facilities.
Further Information
The banking industry of Bangladesh, as a whole, continued

to operate amidst a challenging environment in 2012. In the
backdrop of the macroeconomic conditions and continued
challenges encountered by the banking sector globally as
well as the ever-changing competitive landscape of the
banking industry in Bangladesh, our Wholesale Banking
Division (WBD) exhibited resilient performance during the
year registering 24% growth over last year. Commission and
exchange earnings have also increased by 1.3%. WBD
offers a range of credit and capital market products and
delivers integrated financial solutions to corporate and
institutional banking clients all over the country through 5
(five) major units: [i] Centralized Wholesale Banking Unit [ii]
Branch-Support Wholesale Banking [iii] Syndications &
Structured Finance Unit [iv] Cash Management Unit and [iv]
Offshore Banking Unit.
Governance
Overview of MTB

Management Report - Wholesale Banking

Management Report - Retail Banking
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
082
Retail Banking Customers confidence, loyalty, and

satisfaction is gauged through multiple products (including
savings, credit cards, loans and mortgages) and multiple
channels (branches, ATMs, Kiosks, Internet Banking and
superior services). At MTB, we aim to deliver a simple,
efficient and fair customer experience, innovative products,
and multiple delivery channels to be the Bank of choice for
our customers.
2012 Initiatives
This year, in our continuing efforts to meet customer
expectations and create the best experience by providing
the widest range of products in the market, we launched
some attractive new deposit products and campaigns.
MTB Shanchay
MTB Shanchay is a savings product for the Base of the
Pyramid. It will provide access to banking facilities
enabling the management of financial needs for those in
the low income group.
MTB Care
MTB Care, a unique proposition of MTB, is a savings
product for children with special needs. This product
assists special needs children in opening and maintaining
accounts at a lower cost compared to other savings
products. MTB is committed to helping special needs
children have access to banking services.
Customer Meet Program for Branches
This year, we held 10 Customer Meet Programs across our
branches, which elicited valuable feedback from existing
customers and expectations of potential customers. A good
number of initiatives have been implemented based on
suggestions and feedback from these meetings.
Student Banking Campaign
A Student Banking Campaign was launched across various
universities to assist students and guardians to open
student accounts.
MY MTB & ME
MY MTB & ME campaign offered exciting rewards to
savings account holders, credit card holders and internet

banking users.
MTB CEOs Deposit Marketing Award
To inspire employees to reach out to more customers, the
MTB CEOs Deposit Marketing Award was launched.
Three phases of the award were conducted this year.
MD & CEO'S Award for Product Champion and Star
MTBian
This award was given to branch and individual employees
who showed stunning performance in certain products.
Cards Business
Our debit card business has grown 49% from last year
(2011). Contributing to this growth has been the
introduction of the Classic card, Gold card, Dual Currency
card, e-statements and card cheque facilities. Our 2012
Credit card outstanding portfolio is BDT 171.8 million, a
growth of 200% from the year before, aided by our new
dedicated cards sales team (which began in March 2012).
Number of Debit Cards
Credit Card Outstanding

(in million)
171.8
2012
55,248
57.17
2011
37,004
2012
2011
We have continued our deployment of Point of Sale (POS)

terminals at different renowned merchants, installing more
than 850 this year.
Service Quality
With the guidelines of MTB Winning, an etiquette and
service excellence guideline for employees, our Service
Quality (SQ) Department is meeting the commitments and
standards for the services that MTB promises.
70
72
250
60
200
50
150
100
32
40
30
20
50
0
10
207
329
2011
Training Participants
2012
Number of Training
Training Hour
The SQ Department ran several Service Excellence

Training programs with customer facing units as part of
our ongoing Quality Improvement Program. A total of 329
employees attended training programs conducted by SQ
Department. Additionally, a number of spot surveys were
conducted throughout the year to ensure service quality
levels were being maintained.
MTB Contact Centre
Since its establishment on December 27, 2011, our
Contact Centre (MTB CC) has continued to offer an
uninterrupted 24/7, 365 days per year service. This year,
MTB CC received more than 100,000 inbound calls, and
has served each and every client.
We have also made outbound calls to more than 100,000
customers. Both the self service based Interactive Voice
Response (IVR) system and our Specialized Agent service
ensure world class customer experience. With an average
16% monthly increase in call volume, MTB CC has
increased customer convenience. Customers can reach us
by dialing 16219 from any mobile operator, and
09604016219 from both mobile and T&T numbers. MTB
clients outside the country can reach us by dialing
+8809604016219.
Security is a top priority, and we run various levels of

security checks. Customers are assigned a highly secured
computer generated 4 digit secret number (TPIN) to
authenticate activities in related accounts.
The following services are available through the MTB CC:
Account Service
Account Balance Information
Transaction Details Information
Cheque Book Request
Customer Feedback & Complain
Remittance Service
Remittance Send & Receive Inquiry
Exchange House Related Inquiry
NRB Account Balance & Transaction Details
Card Service
Debit and Credit Card Activation
Card Transaction Details
Card Block, Lost & Stolen Report
Credit Card Balance Inquiry
Card Cheque Activation & Block
Card Replacement
Credit Card Application Status Inquiry
Credit Card Payment Inquiry
Credit Card Statement Inquiry
Card Dispute Resolving Request
Product Information
Deposit Product Information
Loan Product Information
Cards Product Information
NRB Product information
SME Product Information
Internet Banking & SMS Banking Related Information
Application for New Credit Card & Loan
Foreign Currency Exchange Rate
Daily Foreign Currency Exchange Rate Inquiry
Outlook 2013
We are looking forward to more innovative value
propositions in retail banking next year, in our continuing
efforts to fulfill the widespread needs of retail customer
segments through the highest levels of service and
comprehensive delivery of all our retail products and
services.
Governance
80
Management Report
300
To Our Shareholders
90
350
MTB CC continuously runs various outbound campaigns,

encouraging our valued clients to strengthen their
relationship with the Bank even more. They inform
customers regarding our range of products and services
which is also another MTB CC requirement.
Further Information
Quality Improvement Program
083
Overview of MTB

Management Report - Retail Banking

Management Report a - SME Banking
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
084
MTB recognizes the important role played by small and

medium enterprises (SMEs) in the development of the
economy. Since 2007, we have been providing our
services for urban, semi-urban and rural customers. We
are committed to playing our part in supporting this engine
of growth by providing the necessary access to finance
needed by SMEs, evidenced by the fact that we offer one
of the lowest lending rates in the market for SME clients.
MTB supports micro enterprises and SMEs across
agriculture, renewable energy and other productive
sectors. We also have a special focus on women
entrepreneurs. MTB offers special current accounts and
deposit products with market incentives for SMEs to
facilitate better business management. We also offer
training and workshops for access to finance, financial
counseling, overcoming legal barriers, commercial
linkages and business advisory services.
We continue our planned expansion and diversification by
introducing new loan products for SME entrepreneurs and
comprehensive financial solutions for farmers. MTB has

also focused on providing banking facilities and linkages
with micro level customers, sharecroppers, marginal
farmers and hawar area beneficiaries as our ongoing
strategy to support the financial inclusion of low income
groups. Overall statistics up to 2012 are as follows;
Number of SME Borrowers
7378
Loan disbursed (in BDT millions)
9025.9
Loan Outstanding (in BDT millions)
3323.7
Loan Products
Deposit products
12
2
Backed by refinancing facilities from Bangladesh Bank,

MTB has introduced a loan product, carrying a lower rate of
interest, for green or environment-friendly projects - MTB
Green Energy - to support our environmentally conscious
customers. We have also designed a specifically targeted
credit product MTB IT Genius for IT entrepreneurs.
MTB Buniad: fixed deposit product
Loan Products:
MTB IT Genius: MTB IT-Genius is tailor-made for

ICT entrepreneurs, as a first time initiative by any bank
in Bangladesh.
MTB Light Engineering: Designed to finance the light

engineering sector and its sub-sectors.
MTB Krishijat: Designed to finance the agro

processing industry and its sub-sectors
MTB Gunabati: Designed to finance women-led SMEs

engaged in manufacturing and special service
industries that are 100% pre-financed by the SME
Foundation. We apply single digit rate of interest - 9%
p.a under the MTB Gunabati Loan scheme.
MTB Mousumi: Designed to finance SMEs engaged in

seasonal businesses.
MTB Krishi: Specifically designed to finance the

agricultural sector and its sub-sectors.
MTB Bhgyabati: For women entrepreneurs, these

loans are fully refinanced by Bangladesh Bank.
MTB Small Business: This product is designed for all

types of business requirements for micro and small
enterprises.
MTB Revolving: This product is designed to meet

working capital requirements and support continuous
growth (CC (H) & revolving type loan).
MTB Microfinance: This product is designed for

NGOs (MFI NGOs) to supply wholesale credit for
onward lending to their beneficiary members in the
form of micro credit.
MTB Diggon: This product is extended on the basis of

fixed deposit receipts (FDR).
NGO Linkage Program

NGOs support sustainable development through programs
for poverty reduction, gender equity and climate change
adaptation and mitigation. MTB is proud to support the
development of these target groups through our NGO
linkage program by ensuring access to credit.
Financing to Community based Organizations (CBOs)
Mutual Trust Bank Ltd. (MTB) is the first bank to provide
financial support to CBOs, having financed 18 CBOs,
creating positive development impact in terms of
employment and poverty alleviation.
SME Focus in 2013
MTB will continue to focus on financial inclusion through
the delivery of financial services at affordable costs. We will
continue to develop new ideas and processes and explore
the use of innovative technologies as delivery mechanisms
to support the growth of our SME business. We will modify,
update and develop our policies and programs periodically
to support enterprise creation, foster entrepreneurship and
facilitate access to finance and banking facilities for SMEs.
Overview of MTB
Governance
MTB Probaho: interest bearing current deposit

product
Complete Financial Solution for Agro-Based Farms

For farms and agro-enterprises that have different
financing requirements (e.g. for solar irrigation pumps,
farm equipment, seed and fertilizer) MTB is a one-stop
financial facility.
Management Report
MTB Green Energy: Designed to finance the

renewable energy sector (solar, bio-gas); agri-SMEs
and farmers are the target customers.
To Our Shareholders
Our Deposit and Lending Products

Deposit Products:
MTB Supports the Development of Women

Entrepreneurs
MTBs core offering for women entrepreneurs are two loan
products MTB Bhagybati and MTB Gunabati. Special
features include low interest rates, no collateral, lower
processing fees, easy processing, flexible repayment and
grace periods (depending on business nature). The MTB
Women Entrepreneur Cell has also extended additional
support through workshops for bank financing, dealing with
legal barriers, linkages with training institutes for
business-based training, support at local and international
fairs to display customer products and business advisory
services.
085
Further Information

Management Report - SME Banking

Management Report - Green Banking
Governance
Overview of MTB
086
Further Information
To Our Shareholders
Management Report
our alternate delivery channels under one umbrella and

giving customers the convenience of banking anytime,
anywhere through internet banking, mobile banking and
electronic payments. Internet banking provides MTB's
customers with access to account information, summary of
accounts, and account statements. They can also order
cheque books, transfer funds to any MTB account, set up
payees (within MTB), view credit card details, and pay
credit card and utility bills and manage their profile
information.
Opening of 1st MTB solar irrigation system at Barguna
Green Banking is a philosophy that guides the way we

work limiting the use of paper as much as possible and
encouraging the use of online and electronic transactions
for processing. We aim to spread awareness amongst our
clients about environmental and social responsibility and
environmentally friendly business practices. Underlying
principles include the implementation of environmental
standards for lending (especially in assessing
capital/operating loans to businesses involved in the
extraction of natural resources).
Our Green Initiatives
For Customers
Alternate Delivery Channel (ADC) - bringing together all
Kiosks for smart banking- MTB Smart Banking Kiosks offer

24/7 ATMs, cash & cheque deposit and bill payment
facilities, internet banking access with extended hours for
customer service from 9 a.m. to 5 p.m. This initiative
provides our customers hassle-free service and paperless
banking.
Green energy products under Green Finance for
investment in energy efficient industries, with re-financing
from Bangladesh Bank. MTB has made investments in
solar energy (solar irrigation plant & solar home
system-under linkage programs) and bio gas plants. We
have disbursed BDT 0.5 million to a solar irrigation plant,
and BDT 97.5 million in solar home systems this year.
MTB Krishi - for financing the agricultural sector (crops,
fisheries, livestock, etc.). Under this loan scheme, we have
disbursed BDT 485.4 million in 2012.
For Employees
Green Office Guide - For in-house environment
management, we have prepared and circulated the MTB
Green Office Guide. This guide is the first such guide in the
local banking industry providing information and guidance
on how we can ensure in-house environment
management. It includes practical information on:
World Environment Day We observed the day, June 05,

2012 by writing an article on the days theme Green
Economy: Does it include you?
To Our Shareholders
We believe that every Green Banking step we take will

contribute a little in ensuring a greener and sustainable
world, and we strive to remain the trend setter in Green
Banking practices.
Paper use
Energy use
Office equipment
Meetings and conferences
Water use
Carpooling
Responsible purchasing
Online communication
Waste and recycling
Our Green Engagement

Earth Hour As a token of our allegiance and commitment
to the environment and society, we expressed our solidarity
along with the rest of the world by participating in the Earth
Hour by switching off electric lights for one hour at our
corporate head office. Khondkar Morshed Millat, Deputy
General Manager, Bangladesh Bank was present and
appreciated MTB as a green corporate citizen in the
banking industry. MTB center was completely shrouded in
darkness from 8.30 pm to 9.30 p.m. as we switched off for
Earth Hour.
Further Information
a)
b)
c)
d)
e)
f)
g)
h)
i)
e-notice board/intranet - Our corporate e-notice

board/intranet displays all regulatory and internal circulars,
office orders, office notes, etc, and thereby saves a lot of
paper.
Overview of MTB
e-Dispatch- We have started sending e-cards on festivals to

our clients. Our Research and Development department
(R&D) publishes periodicals, MTBiz, regularly taking into
account national and international economic data and events.
Apart from that MTB news & events are also articulated there.
We have introduced e-MTBiz, and started send it over email.
We also use http://www.slideshare.net/Mtbiz for hosting and
archiving MTBiz, and avoid printing.
Online leave management facility - We have introduced

online leave management for our employees, with in-house
software application, doing away with paper leave
applications and manual leave registers.
Governance
Solar powered branches and ATM- We have three solar

powered branches-Ishwardi, Belkuchi & Hasnabad SME
branches, and a solar powered Green ATM at Kapasia,
Gazipur. Our green ATM saves 90% energy compared to
conventional ATMs.
087
Management Report

Management Report - Green Banking
Celebrating Earth Hour 2012

Management Report - International Trade
Management Report
To Our Shareholders
Total national growth in LC opening, during the 2011-2012

fiscal year, showed a negative growth by 4.0% against a
positive 34.0% growth in the previous fiscal year. This
negative growth continued to 10.9% at the end of
July-September quarter of this year. Total national export
stood at USD 24.3 billion in current fiscal year against USD
22.9 billion of the previous fiscal year, a growth of 5.9%.
But, this growth stood at 3.1% at the end of
July-September quarter of this year.
Import
Import volume of MTB during the year 2012 was USD
479.6 million (up to Dec 12) compared to USD 476.8 million
in 2011 (up to Dec 11), which showed a slight growth by
0.6%. The major import areas were raw materials, fabrics
and accessories, chemicals, electronic goods and other
consumer products, capital machinery, medical equipments and food grains (vegetable oil, pulse, rice, sugar
etc.).
Further Information
The International Chamber of Commerces (ICC) Rethinking Trade and Finance survey revealed While 2011
opened with positive growth prospects for world exports
and imports, with both projected to recover their pre-crisis
volume level by December 2010, a series of global shocks:
the Arab Spring disruptions, the earthquake in Japan and
the debt crises in the euro-zone and the US resulted in
uneven performance throughout 2011 and is dampening
what had looked like a robust recovery. As a result, the
outlook for 2012 is expected to have a negative carry-over,
with annual trade growth forecast at 5.2% for 2012 and
7.2% in 2013.
Governance
Overview of MTB
088
Export
During 2012, total export volume of MTB stood at USD
310.1 million (up to Dec 12) compared to USD 306.2 million
in 2011. This reflects a slight increase in growth by 1.3%.
The bank has given emphasis on export of traditional items
like jute, jute goods, raw jute, leather and ready-made
garments.
Import (BDT Millions)

35,869
37,471
480
Industry
2012
477
MTB
2011
Export (BDT Millions)
25,113
24,435
310
Industry
2012
306
MTB
2011
089
With attractive and competitive NRB products and

services, MTB remains the preferred bank to NRBs. We
have representatives and correspondents in most of the
remittance sending countries to bring the services of the
bank to the doorstep of NRBs. With a focus on product
quality and service excellence, our portfolio of deposits has
reached BDT 570 million, which shows a significant
growth.
To serve NRBs and travelers, we have MTB Booths at

Dhakas Hazrat Shahjalal Intl Airport (Concourse Hall,
Arrival and Departure lounges) and at Shah Amanat
International Airport (SAIA), Chittagong to facilitate
currency exchange transactions. This has enhanced our
brand image among travelers and NRBs. This year our
airport booths purchased different foreign currencies
amounting to BDT 38.6 million and sold BDT 26.2 million,
respectively.
This year, we continued to serve Hajjis at Hajji Camp,
Ashkona, Dhaka. Our booth offered pilgrims the
opportunity to convert their local currency into Saudi Riyal
and other foreign currencies at a very special rate with no
endorsement fee.
In 2012, we procured inward foreign remittances of USD
144.7 million, equivalent to BDT 11.6 billion, a 6.3% growth
over 2011.
MTB NRB Division recognizes that every Non Resident

Bangladeshi (NRB) has distinctly different needs and we
meet these by providing exemplary levels of personal
service, convenience and security. Prosperity, financial
confidence and the well-being of our clients are the main
priorities of our division. Our divisions competitive strength
lies in the use of technology and our ability to deliver
world-class service with fast response time. Our divisions
philosophy is based on three core values: operational
excellence, customer focus and product leadership.
Further Information
Inauguration of MTB Hajj Booth at Hajj Camp
To Our Shareholders
Management Report
Governance
Overview of MTB

Management Report - NRB Operations

Management Report - Treasury Operations
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
090
Our Treasury department deals with money market, fixed

income market, foreign exchange, asset-liability
management, corporate sales and primary dealers
business as a profit center with its own trading and
investment activities. Primarily our Treasury is divided into
the following three main wings:
a) Dealing Room (Front Office) operations dealing with
call money, REPO, reverse REPO, interbank
placements, sale/purchase of foreign currencies,
maintenance of the cash reserve ratio (CRR) & statutory
liquidity reserve (SLR), submission of primary auction
bids to Bangladesh Bank and the primary dealership
business (government securities - treasury bills &
treasury bonds - in the secondary market).
b) Back Office (Treasury Administration) operations responsible for verification and settlement of the deals
conducted by the dealers in front office. The major
functions are maintenance of principal account with
Bangladesh Bank, reconciliation of Bangladesh Bank
A/C. and Nostro A/C, issuance of Bangladesh Bank
cheques, all regulatory reporting, entries of securities
purchase/sales & REPO, maintenance of Net Open
Position (NOP), preparation and passing of deal
vouchers, maintenance and funding of Nostro accounts,
execution of all deal transactions as per value date and
revaluation of government securities.
c) Mid-Office (Risk Information Unit) operations - reports to
ALCO (headed by MD & CEO) on different risk aspects
of the bank; and regularly monitors whether treasury
activities and deals are done within board approved
limits. This unit reports independently on crucial triggers,
risk exposure (e.g. interest rate shock, exchange rate
fluctuation) and the effect on the balance sheet of the
bank.
Treasury Services
MTB Treasury has the widest range of services customized
to our client requirements. Our focus is to be the risk
solution provider of choice and the premier market maker
in the country. MTB treasury currently offers sophisticated
solutions supported by a large sales force and a

state-of-the-art dealing room in Bangladesh. The major
objectives are:
Sound liquidity position of the bank.
Forecasts of monetary policy and interest rate behavior of
the market.
Arbitrage in the money market
Projections of bank fund situation
Money Market
Money market refers to the raising and deployment of
short-term resources, with maturities generally not
exceeding one year. The MTB money market desk is one
of the most active and efficient desks in the interbank
market of the country. The money market is sub-divided
into Call Money, Term Money, SWAP, REPO and Reverse
REPO.
Our main responsibility is to meet CRR & SLR
requirements fully as per Banking Company Act and
Bangladesh Bank instructions by investing in various
government securities like treasury bills, treasury bonds
and qualified debentures. After meeting the CRR and SLR,
we invest surplus funds in the money market.
DIBOR
The interbank market is considered to be risk free though
banks do carry counterparty risk. However, the interbank
market carries the lowest risk after sovereign risk; hence
the interest rates prevailing in the interbank market
constitute benchmark rates. The call money rate as
indicated by the overnight Dhaka Interbank Offered Rate
(DIBOR) is the most widely accepted benchmark rate for
corporate debt paper and bank credit extended on floating
rates.
To be a market leader in the primary dealership

market and to establish a unique brand in the
secondary securities market.
Help enhance the liquidity and depth in the securities

market through selling government securities and
establish new trading relationships with other parties.
Increased revenue generation.
Capture a high market share.
Aid in the development of the secondary market by

popularizing government securities to individuals and
institutions.
Help Bangladesh Bank achieve their strategic

monetary targets.
Asset - Liability Management

Our treasury plays an active role in Asset Liability
Management (ALM), which is the ongoing management of
the banks balance sheet in order to ensure the right
balance between the sources and uses of funds in respect
to their maturity profile, cost, yield and risk exposure. This
dynamic process examines volumes, mix, maturities,
yields, sensitivities, quality and costs in order to maintain
liquidity and Net Interest Margin (NIM). Our Asset-Liability
Committee (ALCO) comprised of senior management,
meets monthly to discuss the market (economic factors,
market status, peer group analysis, projection of interest
rate, exchange rate and spreads, gaps in liquidity structure,
internal transfer pricing, regulatory compliance, etc.) and
takes strategic decisions on fixation of asset liability
pricing. Special ALCO meetings are also held to respond to
the unusual or seasonal market behavior or other volatile
market scenarios as and when required.
Domestic borrowings, volatility in the capital market, price
Overview of MTB
Governance
Management Report
In 2013, we will continue our focus on strengthening our

capabilities in forecasting cash flow effectively and
managing the surplus or shortfall of funds in a prudent
manner, and strive to contribute significantly to the profit
and growth of MTB.
To Our Shareholders
Primary Dealer
MTB is a Bangladesh Bank approved Primary Dealer (PD)
engaged in activities, which support the primary and
secondary markets for government securities. In this
capacity, we are able to make business deals with the
Bangladesh Bank, such as underwriting new government
debt. We bid for government securities competitively and
purchase the majority of Treasuries at auction. Through our
branch network, we plan to expand our business further by
redistributing these securities to clients, creating and
broadening the initial market in the process. Our objectives
are:
hikes in necessary commodities and hiked fuel prices in the

international market stimulated the liquidity crunch in 2012.
ALCO exerted rigorous efforts to manage the challenges
brought up by these issues.
Foreign Exchange
Our treasury department engages in the foreign exchange
(FX) market through the purchase and sales of foreign
currencies. Our corporate and institutional marketing team
provides up-to-date market intelligence and advice and
ensures the timely execution of customer deals including
spots, forwards and swaps. Officials involved in the fixation
of foreign exchange rates meet on a daily basis to review
the prevailing market conditions, exchange rates, exposure
and transactions to mitigate foreign exchange risk.
091
Further Information

Management Report - Treasury Operations

Management Report - Information Technology Services
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
092
Recognized across the industry as a user of the most

advanced banking technologies in the country, Information
Technology (IT) at MTB has been about creating synergies
across our operations, adding value to all our stakeholders
and enabling financial inclusion across the nation. Ongoing
investments in IT systems allow us to benefit from
technological innovation, improve our ability to meet
evolving business needs and deliver on customer service
expectations and efficiency demands.
IT facilitates all our core business processes and

components and serves to support, sustain, transform and
realize our strategic objectives. IT also plays a pivotal role
in ensuring that our business is better able to comply with
regulatory requirements.
We have designed innovative e-delivery channels,
e-Business platforms for corporate entities, and an internet
banking channel for individuals and merchants. The
internet banking software, developed in-house, has added
In March 2012, we completed the VISA certification

process successfully for acquiring the cards of other VISA
members and have started accepting VISA cards of other
banks in our ATM network. This has facilitated enhanced
access to other banks VISA customers and increased fee
income.
Our POS network launched in July 2011, now stands at
over 1,000 POS machines.
MTB Smart Banking (Kiosk)
MTB has installed five kiosks in prime locations around the
country. Our interactive MTB kiosks provide ATMs, cash/
cheque deposit machines, access to internet banking, and
a kiosk attendee to provide assistance and preliminary
banking services.
Internet Banking
A substantial expansion in the customer base was
experienced through the enhancements to our internet
banking services, now re-branded as MTB Internet
Banking. The state-of-the-art software, built in-house,
enabled us to overcome the hurdles to the single customer
identification number and improved access security. MTB
Internet Banking is one of the best internet banking suits
within the local banking industry.
SMS Alerts
SMS Alerts, one of the most valued fraud detection
services offered to our customers, was enhanced this year,
by offering customers the alerts to all transactions in
addition to ATM and POS transactions.
Automated Clearing House Operations
By installing Magnetic Ink Character Recognition(MICR)
Cheque scanning machines in 67 branches in 2012, we
have ensured that all our MTB branches can have clearing
cheques scanned at their own premises, thereby reducing
VMware Server
VMware virtualization helps reduce capital expenses
through server consolidation and improve operating
expenses through automation, while minimizing lost
revenue by reducing both planned and unplanned
downtime. MTB uses the full server resources of server
systems by deploying VMware applications.
MTB Corporate Intranet
The internal web portal popularly known as Corporate
Intranet or iMail, was enhanced with new features including
daily performance dashboards and live account opening
meters (which has renewed staff enthusiasm and acts as
an incentive). The HR management system was enhanced
with the introduction of Online Leave Application and
Approval System, Training Management System and
Performance
Management
System
(PMS). The
introduction of an online requisition system has brought
about an end to paper based requisitions in the bank.
Participation in National Payment Switch Bangladesh
(NPSB)
MTB has begun the process to join the NPSB, which will
connect all switches in banks, mobile operators and
internet banking solutions enabling inter-bank payment
instructions to be sent via the NPSB for clearing and
settlement. This will create a common platform for
debit/credit/prepaid cards, internet and mobile based
payments in the country for all the banks and financial
institutes. E-commerce will spread and transaction costs
will go down.
Outlook for 2013
Our technology platform is poised to scale up financial
inclusion across the nation. Achieving business volume
growth by improving customer convenience, attention to
data security and bringing in cost efficiencies across our
operations would be our key strategies in 2013.
Overview of MTB
Governance
At MTB, we have been using the EFT to process

remittances to all banks and many remote locations, with a
95% success rate of same-day transfers. We also used the
EFT to process a large number of dividend warrants to
other banks, ensuring quick dividend proceeds to
beneficiaries.
Management Report
Expansion in ATM & POS Network

Since our first ATM was installed in 2011, we now have 150
ATMs across the country, making us one of the top five
ATM service providing banks in the country. We are
constantly working on expanding our ATM network to
increase our reach. Currently, approximately 75% of cash
withdrawals of our card holders take place through MTBs
own ATMs while 25% is through the VISA network. In 2012,
we added nearly 100 ATMs to the network.
Electronic Fund Transfer Network

Transactions through the Bangladesh Electronic Fund
Transfer Network (BEFTN), the electronic fund transfer
gateway introduced by Bangladesh Bank late in 2011,
increased in 2012. A growing number of customers enjoy
the ability to transfer funds electronically through the
central bank without sending physical instruments.
To Our Shareholders
Efficiencies have been achieved in our internal processes

and paper usage minimized by automating back office
functions and frontline services.
the lead time enabling same day clearing, ensuring

customer satisfaction. New branches were opened with
cheque scanning facilities from day one.
feature-rich enhancements to online products and

business portals. We are poised to launch mobile banking
through secure SMS. This year, we created one of the
largest ATM switches across the nation; introduced globally
renowned data security measures and improved
efficiencies in our banking links with business partners,
including merchants and correspondent banks.
093
Further Information

Management Report - Information Technology Services

Management Report - Group Human Resources
To Our Shareholders
Management Report
Governance
Overview of MTB
094
Further Information
Induction of 2nd batch of MTB Management Trainees (MMT 2012)
MTB and its subsidiaries strive to create the kind of work

environment in which every employee feels proud and is
able to develop his or her full potential and capabilities. We
recognise that our success is deeply embedded in the
success of our human capital. During 2011-12, we
continued to strengthen our HR processes in line with our
objective of creating an inspired workforce. The employee
engagement initiatives included placing greater emphasis
on learning and development, launching leadership
development
programmes,
introducing
internal
communication, providing opportunities to staff to seek
inspirational roles through internal job postings and
periodic job rotations, streamlining the Performance
Management System (PMS), making the compensation
structure more competitive and streamlining the
performance-linked rewards and incentives.
People (2010-2012)
Year
2010
2011
2012
Number of People
1,089
1,269
1,316
In 2012, GHR has emphasized training programs on 1)

Performance Management System culture 2) PMS rating
techniques 3) effective performance review process; and
developed an online system to identify employee
objectives for 2012. All employees declared and recorded
their objectives, which was reviewed and evaluated by
his/her line manager. These changes have helped to
increase the ownership of appraisers and reviewers in the
performance management process.

Management Report - Group Human Resources
Staff Demography (2012)
3.5%
32.5 years
4.5 years
4.7%
Clear Job Descriptions (JD) will ensure the smooth work

flow and accountability of employees. For this, GHR has
conducted five JD trainings all over the country and also
created an online process, which is hosted on our
corporate intranet pages to demonstrate employee
activities related to business goals.
Learning and Development (2012)
Training
20%
Below 30 years
Above 30years to 40 years
Above 40 years to 50 years
Above 50 years
To promote a culture of leadership development and to

build a pipeline of potential leaders within the Bank, many
leadership development processes have been introduced.
MTB Leadership Practices were designed for employees at
different levels to promote desired behaviour and facilitate
objective assessment.
Programs Participation
In House (MTBTI)
70
900
Local /Out Source
66
280
International program
03
Training Participation Rate
65%
07
94%
GHR has taken initiative for e-learning facilities through our

corporate intranet system through daily
Quiz. ITS
division along with the support of MTBTI commenced this
flexible program for employees to reduce costs associated
to training.
We believe learning is an ongoing process. Towards this
end, MTB has built training infrastructure which seeks to
upgrade skill levels across grades and functions through a
combination of in-house and external programmes. In
2012, GHR has invested in training for all employees at the
time of their joining and further career development
opportunities. The flagship in-house programmes include
the Induction Programme MTB Orientation for new
entrants, Banking Law & Practice, credit and foreign
exchange programmes for building a pool of specialists.
GHR has conducted a training needs assessment in 2012
for further development in 2013. External programmes for
team-building, leadership, organizational development,
management development programmes and people
management programmes have been organized in support
with reputed banking and management institutions for
middle management personnel. MTB initiated a
Pre-Branch management training program for employees
before every posting to ensure the right manpower
allocation and right skill set; and to have direct impact on
their operational and service level.
MTB believes that a transparent organization structure
ensures efficient communication and also promotes a
performance-driven work culture. MTB has its own
corporate HR page, an intranet portal created to offer a
one-click destination to employees for easy access to HR
related information, policies, procedures and circulars.
The Management Trainee Programme focuses on

grooming business leaders of tomorrow through a rigorous
12-month cross-departmental and branch exposure
training. In 2012, GHR has selected 12 new MTB
Management Trainees. MTBs workforce at the year-end
was 1316 compared to 1269 at the end of 2011.
Our Green Banking philosophy has been embraced by
GHR in all our functions - recruitment and selection,
training and development, compensation and benefit,
performance
measurement,
working
environment.
Initiatives included proper use of water, paper, electricity,
energy; on-line communication; solar energy plan for own
consumption; automatic shut down of computers, fans,
light, air cooler, etc. We have also included e-learning and
nomination process for employee training and provided
supporting online information for employee awareness on
environmental, social risk and the relevant issues as the
part of the bank's human resource development.
Furthermore, GHR has started initiatives to implement
green strategic HR planning, which is a set of achievable
targets and strategies (under PMS), and disclosure of job
postings on websites, setting up Green Branches,
improved in-house environmental management, such as
video conferencing in lieu of physical travel. MTB has
introduced electronic reporting lines and reporting system
database and we have implemented background checking
for potential employees and exit interviews for further
development process.
MTB aims to engage in best-practice human resource
management, which will facilitate excellence and enable
the bank to be recognized nationally and internationally as
an employer of choice and a model of best practice human
resource management.
Overview of MTB
4.9 years
13%
Governance
37.5 years
2%
Management Report
Female 231
Average Service Employee

Length in MTB
Turnover
Rate
To Our Shareholders
1085
Average
Age
Male
Number
of
Employees
Profile by Age
Further Information
Gender
095

Management Report - Special Asset Management
Management Report
Governance
Overview of MTB
096
The Special Assets Management Department (SAMD) has been established for the recovery and regularization of
Non-Performing Loans (NPLs), complying with all circulars/norms/regulations of Bangladesh Bank and MTB Credit Risk
Management guideline. Our team, committed to a continuous recovery effort, consists of a combination of experienced and
young professionals under the direct supervision of the Deputy Managing Director (DMD) and prudent guidance of the
Managing Director & CEO. The team provides support to branch executives and officials in keeping their NPL ratio at the
lowest through speeding up the process of recovery and regularization. Below is a snapshot of our performance over the
past seven years.
Figures in BDT Millions
Years
2006
2007
2008
2009
2010
2011
2012
1.0
80.1
4.9
Classified Loan
1.6
35.9
411.2
593.4
560.3
374.3
751.1
Total
1.6
35.9
411.2
593.4
561.3
454.4
756.0
Recovery
Further Information
To Our Shareholders
Written-Off
097
Corporate Social Responsibility (CSR) is embedded within

the ethos of Mutual Trust Bank Ltd (MTB). We believe that
to be a good corporate citizen, we not only have to perform
well, but do it in way that is beneficial to the society as a
whole.
The initiatives undertaken in 2012 focused on education,
especially for women and children; vocational training, skill
development for the underprivileged and disabled to allow

them a chance for a sustainable living and promotion of
arts and culture in the country. Additionally, we provided
support to distressed people especially during winter. Many
of these initiatives were new projects which began in 2012,
and based on the success of the program, will continue in
2013. Contributing to the success of all these initiatives
was the active participation by all the employees of MTB.
Further Information
MTB donates to the family of late Hazrat Ali for his act of bravery
To Our Shareholders
Management Report
Governance
Overview of MTB

Management Report - Corporate Social Responsibility

Annual contribution to a family affected by the BDR tragedy
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
098
Scholarship program to commemorate the

Inauguration of MTB Meghna Branch
Scholarship program to commemorate

the inauguration of MTB Kapasia Branch
MTB sponsored North South Universitys Masters of Ideation

Program Finale
099
MTBDhaka University Alumni Association (DUAA)

Scholarship Awards Ceremony 2012
Winter clothing distribution at Dinajpur
Winter clothing distribution at Naogaon
Relief distribution amongst flood affected people at

Chokoria, Chittagong
Further Information
MTB Director Mr. Anjan Chowdhury is distributing

winter clothing amongst poor people at Pabna
To Our Shareholders
Management Report
MTB donates to Dhoritri Foundation
Governance
Overview of MTB


Management Report - Risk Management Unit
To Our Shareholders
Management Report
Governance
Overview of MTB
100
Mutual Trust Bank Limited (MTB) is exposed to risks associated to its lending and trading businesses and operational
activities. Managing such a wide range of risks has always been a primary concern of the bank.
On the other hand, to ensure the solvency of the bank against potential losses arising from those risks, the bank maintains
adequate capital in order to absorb financial losses that may potentially occur. MTB proactively manages its risks - we aim
to take precautionary measures before incidents occur. The Risk Management Unit (RMU) of the bank is responsible for
establishing the Banks risk management framework, ensuring that procedures for identifying, monitoring, mitigating, and
managing risks are in place, and operating effectively to ensure compliance with Risk Management Guidelines, Core Risk
Management Guidelines, and Guidelines relating to Basel Accords.
We are extensively working on capacity building by way of organizing trainings, exchanging ideas about Basel-II, and risk
management in order to create enterprise-wide risk awareness, and instill a risk management culture.
Risk Appetite
Our bank does not try to eliminate risks as a whole-it assumes both tangible and intangible risks during the course of regular
operations. Our Board determines the level of risk we are willing to take in achieving our strategic objectives. MTBs risk
appetite framework sets out specific principles, objectives and measures which link diverse considerations such as strategy
setting, risk recognition, target capitalization levels and acceptable levels of earnings volatility. It is built within a business
as usual process.
Risk Governance
The risk governance structure for MTB is shown below:
Board and Senior Management Oversight

Policies, Procedures and Limit Structure
Risk Management, Monitoring & Management Reporting Systems
Internal Controls and Comprehensive Audits
Further Information
Defining Risk Appetite

Risk Management Structure
Risk Management Reporting
This risk governance system is comprised of a different process levels-measure, monitor, learn and set. Effective risk
management requires regular practice of such a governance system.
Risk Management Practice in MTB under Basel II Accord

MTB follows the three approaches to determine the capital requirement, based on Total Risk Weighted Assets (RWA) under
Pillar-I of Basel-II Accord:
Standardized approach for credit risk
Standardized approach for market risk
Basic Indicator approach for operational risk
101
Overview of MTB

Pillar-I
Pillar-II
Pillar-III
MCR
SRP (ICAAP)
Market Discipline
Governance
Besides, additional capital requirement has been determined for the risks, as specified by the regulator in Internal Capital
Adequacy Assessment Process (ICAAP) process document guideline, under Pillar-II of Basel-II. Under Pillar-III, the
qualitative and quantitative information is disclosed in this annual report, as well as, in the website as per Bangladesh Bank
instruction.
Residual Risk
Credit Concentration
Risk
Credit Risk
Market Risk
Operational Risk
Interest rate risk in the

banking book
Qualitative Information
Quantitative Information
Liquidity risk
Reputational risk
Management Report
Evaluation of Core Risk

Management
Settlement risk
Strategic risk
To Our Shareholders
Environmental risk
Other material risk
Basel-II Framework
Measurement
Management
Monitoring
Risk management process

Internal modules/models used under Pillar-II as ICAAP Documents
Bangladesh Bank has defined 10 risky areas and it is up to us at MTB to measure these risks. Under the instruction of
Bangladesh Bank, we have developed our own formula (internal model) to identify those risks in both quantitative and
qualitative form. For this, MTB needs to undertake an Internal Capital Adequacy Assessment Process (ICAAP). To monitor
these activities, a separate Supervisory Review Process (SRP)-Supervisory Review Evaluation Process (SREP) dialogue
will be undertaken with the Bangladesh Bank.
Core Risk Management
The six core risk areas, we have been working with, and guided by Bangladesh Bank, are:
Further Information
Identification
At MTB, we identify and assess risks; select and implement risk control measures and monitor the risks. All these processes
are in line with the guideline provided by the regulatory body. Our risk management process is as follows:
102

Overview of MTB
Credit Risk
Asset - Liability/Balance Sheet Risk
Foreign Exchange Risk
Internal Control and Compliance Risk
Money Laundering Risk
Information and Communication Technology Risk
Governance
Internal modules have been developed, in accordance with

Bangladesh Bank Guidelines, for calculation of required
capital against each of these core risks.
Credit Risk Management
The instruments and tools, through which we manage
credit risk, are as follows:
Exposure Ceilings
Review/Renewal
Risk Rating Model
Further Information
To Our Shareholders
Management Report
Risk-based Scientific Pricing

Portfolio Management
us to manage, monitor and control performance of assets

(loans) in a proactive manner to prevent them from turning
into non-performing assets (NPA). Statements on early
alert accounts, delinquent and specially mentioned
accounts are generated and necessary action is taken by
the credit monitoring cell.
Non-performing Loan (NPL) Management
MTBs Special Assets Management Department (SAM) is
responsible for effective NPL account management and is
totally independent of credit origination and approval
functions. SAM operates autonomously and prepares and
implements our recovery strategy.
Asset - Liability Risk Management
MTBs Asset-Liability Management Committee (ALCO) is
headed by the Managing Director and CEO, and considers
the management of risk sensitive assets and liabilities,
credit risk, capital risk, market risk, interest rate risk and
liquidity risk. The functions of the committee include:
Credit Audit/Loan Review Mechanism

Credit Policies and Principles
MTBs credit is restricted to carefully determined
customers through a thorough credit appraisal system.
This minimizes costs and losses from potential bad debts.
To improve asset quality and protect our bank from
bankruptcy we adopt strict policies including:
Not to extend credit to persons/entities not supported

by CIB report
Maintain a feasible ratio of loan and deposit
Avoid directed lending
Ensure the highest ethical standards in all credit

activities
Extend credit in the areas where risks are sufficiently

understood and can be managed
Compliance with regulations
Credit Administration
MTBs credit disbursement functions are strictly handled by
our Credit Administration Department (CAD) which
ensures that:
Documented credit approval is obtained
Legally enforceable security documents have been

prepared
Limit creation and loan documentation check list

(LDCL) has been obtained
All standard charges of documents have been

executed.
Credit Monitoring
Our Credit Monitoring System (CMS) is a tool that allows
Monitoring the risk levels of the Bank

Articulating the interest rate position & fixing the
interest rate on deposits & advances
Fixing differential rate of interest on Bulk Deposits
Facilitating
and
coordinating
the
bank-wide
implementation of the ALM system
Foreign Exchange Risk Management

MTBs policy regarding foreign exchange, in line with the
policy given by our regulator, has well-defined internal
approval procedures and position limits for each foreign
currency transaction, as well as vigorous accounting and
information systems and internal compliance controls. Our
internal audit system reports on foreign exchange risk
management policy on a quarterly basis to the senior
management.
To minimize potential losses due to foreign exchange risk,
our bank emphasizes monitoring of the following:
Monitoring dealers dealing limit
Reconciliation
positions
Daily reconciliation of NOSTRO accounts
Matching of open items
L/C related unmatched items and unmatched items

other than L/Cs
of treasury
front and back office
Internal Control and Compliance Risk Management

MTB has a structured Internal Control and Compliance
(ICC) division of which there are three distinct units headed
by a senior level executive:
Audit and Inspection
Compliance
Monitoring
MTBs policy guidelines have been drawn according to

Bangladesh Bank regulations regarding prevention of
money laundering and combating the financing of
terrorism.
Correct and full documentation of Know Your Customer

(KYC) which enables the prudential prevention of
money laundering.
Regular training for employees on prevention of money

laundering and combating financing of terrorism.
MTB has an experienced Chief Anti-Money Laundering

Compliance Officer (CAMLCO) and 86 Branch
Anti-Money
Laundering
Compliance
Officers
(BAMLCOs) to ensure regular monitoring, compliance
and accountability both at corporate head office and
branch level respectively.
Updating Know Your Customer (KYC) and Transaction

Profile (TP) of the customers at least once a year.
Quarterly meeting of Central Compliance Unit (CCU) to

ensure compliance with AML instructions.
Activities regarding money laundering are reported to

the Managing Director and CEO, who oversees the
banks AML campaign.
Visiting branches to check the status of AML

compliance.
MTB has integrated core banking software regarding

customer information which helps to maintain updated
KYC profile & Transaction profile, as well as, monitor
and detect suspicious transactions.
Each branch has assigned an official with specific AML

compliance responsibilities.
MTB has developed MTB Customer Acceptance

Policy.
Compliance with all regulatory instructions.
Business partners, which include customers, suppliers,

retailers, and other stake-holders who have access to
organizational ICT infrastructure on site or using
remote access
Core business and related processes; this includes the
understanding of the organizational activities and
processes
Data and data infrastructure, including the organization
of data used for business purposes, and infrastructure
used to capture, store, manage, publish, archive, and
remove the data
Software and related applications, including the
understanding of business applications (standard and
special purpose) software management practices used
to process the business information
Hardware, network, and related communication
technologies; these look at the hardware side of
equipment used in processing and transmission of
information across the stakeholders
Security measures and related development
processes; the security in banking industry is a major
concern. As such, addressing security issues starts
from the development process (each phase) to daily
management of ICT, to ensure that risks are if not
totally removed, but minimized at low rate of
occurrences
Stress Testing- Sensitivity Analysis

Our forward-looking stress testing and sensitivity analysis
sheds light on inherent risk exposures and offers
alternative insight into the potential severity of negative
outcomes. The metrics generated help our management
evaluate capital and liquidity needs under adverse
scenarios, inform the setting of risk tolerances, and
facilitate the formation of appropriate contingency plans.
Regulatory Risk Reporting
Bangladesh Bank assesses our capacity to assume risk,
and we regularly submit to them a periodic Risk
Management Paper (RMP) containing an analysis and
evaluation of the overall risks we face.
Overview of MTB
Governance
Management Report
MTBs Activities Regarding Money Laundering Risk

Management
The MTB Data Centre, equipped with sophisticated

technology, network and security systems tackles ICT
security threats. Our ITS division upgrades the existing
system regularly and controls ICT related risks. When
developing and implementing ICT Management
frameworks, the ITS department addresses issues related
to:
To Our Shareholders
Money Laundering Risk Management

MTB, as a financial intermediary, is committed to taking
preventive measures against money laundering and
terrorist financing in line with the Money Laundering
Prevention Act, 2009; Anti Terrorism Act, 2009; Guidance
Notes on Prevention of Money Laundering of Bangladesh
Bank; and the instructions circulated by them from time to
time. MTB applies risk sensitive customer due diligence
(CDD) measures, monitors business relationships and
records in line with regulations.
Information and Communication Technology (ICT)

Risk Management
MTB has evolved to a one-stop centre for a wide range of
financial services for our valuable customers. MTB has its
own IT Security Policy which is in compliance with
guidelines regarding ICT Security provided by Bangladesh
Bank. These policies define responsibilities and
requirements for protecting information and information
systems. They also define hardware, network, and related
communication technologies and their use in providing
financial services.
The mission of MTBs compliance function is to promote

the culture and practice of compliance with legal and
regulatory requirements and the Banks ethical standards.
Internal control and compliance division reports on
non-compliance detected by internal and external audits to
the audit committee of the board for appropriate and
necessary action.
103
Further Information


Management Report - MTB Securities Limited
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
104
Investor Awareness Program

MTB Securities Limited (MTBSL) is one of the leading
stock brokerage service providers in Bangladesh, offering
full-fledged international standard brokerage services for
individual, institutional and foreign clients. The company is
a fully owned subsidiary of Mutual Trust Bank Limited. With
its 18 outlets spread throughout the country in strategic
business locations, the company aims to lead the countrys
capital market.
underpinned by its strong business network and superior

service quality. Furthermore, the company has earned
recognition for its professionalism in its trade execution
capabilities and settlement procedures from local financial
institutions, corporates, and brokers alike. The companys
ability to foster a diverse and loyal client base is a result of
its commitment toward building long lasting relationships
based on mutual trust and respect.
With membership on the Dhaka Stock Exchange (DSE),

MTBSL is dedicated to providing a high level of
professional and personalized service to its domestic and
international customers. It has a proven reputation in
serving customers, whilst maintaining stringent compliance
practices and strong ethical standards. MTBSL is also
recognized by regulators as one of the most compliant
brokerage institutes of the country.
Services Provided by MTBSL
The company is placed among the top 10 most active

members of Dhaka Stock Exchange. This success is
Stock Brokerage
We have made a dedicated effort in developing a solid
trading infrastructure, establishing a spacious trading floor,
trading booths for ladies, multiple VIP trading booths and
separate tele-trading booths. Some of our featured
services are:
Margin Trading - We arrange margin facilities for
clients;

Management Report - MTB Securities Limited
Online Trading - Enabling order placements over phone

or e-mail;
Female Trading Booth Separate trading booths for

ladies to facilitate trading for women investors;
VIP Trading Booth - Offering seclusion and privacy to

institutional investors, we have set up separate VIP
trading booths in every outlet.
Client Services
We believe that "Quality makes a sale but salesmanship
makes a resale". Holding this belief as the key criterion, we
have formed a fine-tuned customer service team
composed of fresh business school graduates and veteran
customer care personnel who are amiable, efficient and
receptive to customers' queries.
Margin Trading
MTBSL provides brokerage margins to facilitate leverage
to investors as per Margin Rules 1999. A customer
undergoes credit evaluation to avail margin loans.
Securities purchased through margin loans are kept in our
Beneficiary Owner Account (BO) account and all the client
accounts are run under omnibus accounts.
Full Service Depository Participant (DP)

MTBSL offers all services of a full service DP with its
dedicated CDBL operator. Some of the DP services
include:
BO account opening and maintenance.
Dematerialization and re-materialization
Pledging, un-pledging and confiscation
Transfer transmission of securities
Overview of MTB
Depository Participant
Governance
Institutional Help Desk - Any institution or large investor

can avail customized client service through a separate
institutional help desk;
Management Report
105
Orders can be received through email, telephone or fax
Trade execution confirmation can be provided through

email, SMS or fax (according to client preference)
Settlement done through DVP (Delivery VS Payment)

RVP (Receipt VS Payment) basis
Portfolio and date-wise client ledger (on demand) sent

via email everyday
Updated dividend and rights issue news
NRB Trading Facilities
Non Resident Bangladeshis (NRB) can invest in the

Bangladeshi capital market from anywhere in the world
A Non-resident Investor Taka Account (NITA) will be

opened with any preferred custodian bank
This will allow 100% repatriation of investment, capital

gains and dividend
NRB clients can apply for IPOs as well as buy and sell
shares in the secondary market. They can use internet
trading facilities, e-mail, fax or phone to place trade
orders.
Specially dedicated trader and workstation for foreign

trades
Further Information
To Our Shareholders
Features of MTBSL Foreign Trade Wing

Management Report - MTB Capital Limited
Further Information
To Our Shareholders
Management Report
Governance
Overview of MTB
106
MTB Capital Limited (MTBCL) is a fully owned subsidiary

of Mutual Trust Bank Limited and is a full-fledged Merchant
Banker licensed by the Securities and Exchange
Commission (SEC) on December 06, 2010. MTBCL was
incorporated to explore new markets and unresolved
demand for merchant banking services. MTB Capital is
dedicated to providing a high level of professional and
personalized service to its clients. Preferential treatment
with quality service to clients is what the Company believes
to be its ultimate goal.
continue to maximize shareholder value in future. We

anticipate a better year in 2013 and hope to earn a target
profit of BDT 17 million.
Products & Services

We offer merchant banking services of every kind including
issue management, underwriting, investor portfolio
management (including NRBs; both discretionary and
non-discretionary) and financial advisory (mergers and
acquisitions, capital restructuring etc.).
Capital Market Operations and Equity Investment
The country's capital market witnessed a disappointing
2012. We anticipate market conditions will improve to
provide a favourable climate in which to continue our
business growth with strong fundamentals. Almost all
Merchant Bankers are suffering under huge unrealized
losses and negative equity clients against which they are
charging fees and commissions. In comparison, we are
fortunately safe from such negative equity clients.
In 2012 our portfolio (including clients) stood at over BDT
50 Million and signed nine underwriting agreements worth
BDT 345 Million. MTBCL submitted a prospectus for the
IPO of Crystal Insurance Company to the SEC for the
issuance of primary shares for BDT 60 Million. We also
submitted an Information Memorandum (IM) for Zaheen
Spinning Ltd. to the SEC for raising their paid-up capital to
the tune of BDT 638 Million. In continuation with our issue
management services, we are in the process of signing
with a number of other companies for their forthcoming
IPOs (to the tune of BDT 1,290 Million).
Despite the dampened capital market, we earned BDT 3.9
million in capital gains & dividends for our own portfolio.
This performance underpins our belief that we can
MTB Capital Ltd. signs agreement with

Zaheen Spinning Limited
107
MTB Exchange (UK) Limited (MTB UK), a fully owned

subsidiary of Mutual Trust Bank Limited (MTB) has been in
operation since February 15, 2011. We were the third
exchange house opened among other private commercial
banks exchange houses in the UK. Competition has
dramatically intensified as there are now 10 exchange
houses owned by Bangladeshi commercial banks, in
addition to traditional money transfer companies.
According to UK money market experts, about 60 percent
of the total remittance from the UK to Bangladesh comes
through informal channels.
In 2012, market uncertainty and fears of unemployment
due to the ongoing global recession lowered the levels of
remittances sent by Bangladeshi migrants. A total of USD
5.3 million, equivalent to BDT 425.9 million was remitted by

MTB UK in 2012, a growth of (4.1)% over the previous
year.
At MTB UK, we monitor every single transaction that
passes our counters. This vigilance has earned us the trust
of our customers and appreciation of compliance experts
and regulators. We also contribute to the total deposit base
of MTB by selling MTB products and services to
Non-Resident Bangladeshis (NRB) in the UK.
Further Information
MTB Exchange (UK) Limited, 3rd Board Meeting
To Our Shareholders
Management Report
Governance
Overview of MTB

Management Report - MTB Exchange (UK) Ltd.

Management Report - Letter of Gratitude
Management Report
Governance
Overview of MTB
108
The Members of the Board of Directors of MTB would like to express their gratitude to
all honorable shareholders, valued clients, patrons, employees and well wishers of
this institution for their continued support and co-operation without which the Bank
would not be able to reach its present position. We are also indebted to the
Government of Bangladesh, the Ministry of Finance, Bangladesh Bank, the Securities
and Exchange Commission, Office of the Registrar of Joint Stock Companies and
Firms, the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) for
their immense support and cooperation.
Further Information
To Our Shareholders
On behalf of the Board of Directors,
Dr. Arif Dowla

Chairman

2012 Management Report

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MANAGEMENT REPORT

078 Financial Analysis

Group Human Resources

Special Asset Management

Corporate Social Responsibility

Risk Management Unit

MTB Securities Ltd.

MTB Capital Ltd.

MTB Exchange (UK) Ltd.

MTB Annual Report - 2012

In 2012, Mutual Trust Bank Ltd. (MTB) focused on the

Summary of Assets in Balance Sheet:

Overdraft against Margin loans stands at BDT 4.1 billion in

MTB also had to increase its Cash Reserve Requirement

MTB is delighted to have availed funding from UBL Dubai

Analysis of Consolidated Financial Statements

Loans and Advances by the Bank & Subsidiaries:

At the end of year 2012, the Banks total credit was up by

MTB Annual Report - 2012

Liabilities and Shareholders Equity

The Consolidated Earnings per Share (EPS) stood at BDT

Deposit Mix and Growth

Return on Average Assets (ROAA )

The proportion of high cost deposits i.e. fixed deposits

Position of Capital Adequacy Ratio:

Total loans & advances

Banks NPL ratio a slight increase to 3.7% from 2.5%.

MTB Annual Report - 2012

Net Interest Income

Net Interest Income

Operating Income per employee

Branch-support Wholesale Banking provides structuring,

The Syndication Unit, participated in syndicated deals, albeit

This year, we also provided long-range sovereign risk-grade

In 2012, the asset side wholesale banking team improved

Centralized Wholesale Banking deals with selected

projects through long-term financing and supports their

The banking industry of Bangladesh, as a whole, continued

MTB Annual Report - 2012

MTB Annual Report - 2012

Retail Banking Customers confidence, loyalty, and

savings account holders, credit card holders and internet

Number of Debit Cards

Credit Card Outstanding

We have continued our deployment of Point of Sale (POS)

The SQ Department ran several Service Excellence

Security is a top priority, and we run various levels of

MTB CC continuously runs various outbound campaigns,

Quality Improvement Program

MTB Annual Report - 2012

MTB Annual Report - 2012

MTB recognizes the important role played by small and

comprehensive financial solutions for farmers. MTB has

Loan disbursed (in BDT millions)

Loan Outstanding (in BDT millions)

Backed by refinancing facilities from Bangladesh Bank,

MTB Buniad: fixed deposit product

MTB IT Genius: MTB IT-Genius is tailor-made for

MTB Light Engineering: Designed to finance the light

MTB Krishijat: Designed to finance the agro

MTB Gunabati: Designed to finance women-led SMEs

MTB Mousumi: Designed to finance SMEs engaged in

MTB Krishi: Specifically designed to finance the

MTB Bhgyabati: For women entrepreneurs, these