Dear Shareholders

On behalf of the Board of Directors I welcome you to the 28th Annual General Meeting of United Finance Limited. I take this opportunity to brief you on the state of the economy, the financial services sector and the performance of your Company during 2016.


The Bangladesh economy grew by 7.11% in the fiscal year 2015-16, propelled by a more stable political climate, increasing industrial sector growth and the investment friendly fiscal and monetary stance of the government. The industrial sector consisting of small, medium and large manufacturing units recorded a growth of 11.09% during the year. This growth was accompanied by a decreased inflation rate of 5.92% which was the result of the prudent monetary policies adopted by the central bank.

The investment to GDP ratio (29.65%) resulted in increased export growth at a robust 9.77%. In terms of balance of payments this has contributed to a surplus balance in both the current and capital accounts of the country.

With an ADP implementation rate of 92% during the year, the infrastructural development activities continued full swing across the country and this is expected to provide a boost for further economic growth in the coming years.

Financial Services Sector

With its prudent monetary policy, Bangladesh Bank has kept price levels stable, reduced interest rates and stabilised the dollar exchange rate throughout the year. With a foreign exchange reserve of more than USD 32 billion and consistent sterilisation efforts, the domestic economy was kept shielded from unstable global monetary effects.

The money supply grew in tandem with GDP growth and inflation was kept in check. The stock market volatility was closely monitored by regulators to prevent excessive speculation.

Though 2016 saw a slowing down of the remittance inflow, this did not contribute to any deficit in the current account balance and the year ended with a surplus in the balance of payments. This gave the central bank the flexibility to efficiently manage the financial sector as a whole.

Company Performance

I am pleased to inform you that your Company registered a 2.34% growth in operating revenue in 2016. Though the operating revenue grew slightly, the operating profit declined over the previous year due to reduction of margin across the lending portfolio and higher operating costs.

Earnings Per Share (EPS) on the basis of current number of shares, decreased by 8.80% (from Tk. 2.02 in 2015 to Tk. 1.84 in 2016). Net Asset Value (NAV), on the basis of current number of shares, decreased by 1.14% (from Tk. 17.49 in 2015 to Tk. 17.29 in 2016).


Deposit Products

In 2016, our public deposit portfolio grew by 27.31% to Tk. 8.68 billion. The broad array of deposit product offerings of your Company appeals to a wide range of customers and new deposits were booked at relatively lower cost from the previous year.

Asset Products

United Finance continued to deliver financial services in all 64 districts of the country through its 19 offices. The Company’s asset portfolio grew by 15.62% to Tk. 13.80 billion from Tk. 11.94 billion in the previous year. This portfolio consists of both short term revolving working capital solutions and long term asset financing options.

Long Term Financing

Your Company offers a number of long term financing options which help to meet the financing requirements of a broad spectrum of clients. The long term portfolio constitutes 75% of the asset portfolio of the Company consisting primarily of lease and term financing facilities to businesses and home loans aimed at the lower to middle income group to improve their standard of living by fulfilling their aspiration of home ownership. During the year this portfolio grew by 18%, reaching the Tk. 10.35 billion mark.

Working Capital Solutions

The working capital solutions offered by the Company were well received by clients in 2016. This allowed your Company to further diversify its credit risk by penetrating multiple sectors and client bases. The unique service elements built into these products have been very successful as they help clients to transfer some of their operational activities to the Company. Working capital finance stands at Tk. 3.06 billion or around 22% of the total asset portfolio.

Distributor finance, with a growth rate of 31%, was one of the main contributors to the increase in the short term portfolio. This product has gained popularity in smaller cities and towns by providing working capital to distributors for procurement of goods from suppliers.

Through our agri-financing activities in remote rural areas during 2016, your Company was able to improve the livelihood of an additional 2,306 farmers, thereby helping to generate employment for 522,484 seasonal agricultural workers and growth opportunities for 21 agricultural input businesses. The rural business portfolio ended the year 2016 at Tk. 389.2 million in loans to farmers.

Cost Administration

Due to excess liquidity in the market, deposits were collected at comparatively lower rates. In 2016 although the deposit portfolio grew by 27.31%, the financial cost of your Company in 2016 grew by 3.84% only.

Salaries and allowance increased by 20.59% due to incremental human resource deployment to better manage the portfolio. Rental expenses increased by 11.95% due to the upward revision of rental terms for some branches. Other costs also increased in tandem with growing business volumes and the impact of inflation. In all, total operating costs increased by 16.32%.

Risk Management

The Company addressed its three key risk management components during 2016 as follows:

Pre-emptive Risk Management

Business and operational processes were further strengthened through rigorous review and re-engineering. These activities are creating a solid operational foundation which will enable your Company to achieve robust growth in its areas of focus in the future.

Enhancing the capacity of its human resources was a key component of the strategy in 2016. During the year the Company provided in-house, local and foreign training to 335 employees equivalent to 9,308 man-days.

Contemporaneous Risk Management

The collections, follow up and recovery activities of the Company were strengthened by deployment of service and collection personnel at the branch level.

Post-facto Risk Management

Your Company’s Research and Advisory services team conducted a continuous stream of customer satisfaction surveys, both industry and company-specific analyses to equip management with reliable inputs to better align all activities with market realities. Risk grading models were updated to reflect more accurate credit risk profiles of borrowers.

Management information systems continued to be fine-tuned for better reporting capabilities, thereby facilitating more focused decision making by management.

Both Compliance and Internal Audit activities were augmented through adoption of more rigorous audit methodologies which have allowed the Board Audit Committee of your Company to provide high level oversight over management activities.

Sustainability Initiatives

Your Company places great importance on environmental sustainability. This is reflected in both its financing and internal activities and a separate sustainability report has been prepared and included in this Annual Report.

Post Balance Sheet Date Events

Subsequent to the balance sheet date, the Directors recommended 1 share for every 10 shares held and cash dividend of Tk. 0.50 per share. There were no circumstances in the Company in which non-disclosure affected the ability of the users of the financial statements to make proper evaluation and decisions.


As we approach 2017, we expect that the Bangladesh economy will be able to maintain the current trend of relatively high GDP growth coupled with a low to moderate inflation rate through pursuance of the existing monetary and fiscal policies. Private investment growth is most likely to remain at present levels and infrastructure development initiatives are expected to be the major drivers of GDP growth in 2017. The government is forging ahead with its infrastructural development projects with investment from both the public and private sectors. The balance of payments is expected to register a surplus due to improvements in the trade balance. Any downside risks that may have an impact on the GDP growth are expected to be carefully managed by the government and its agencies.

Bangladesh Bank is expected to continue steering and facilitating the financial sector towards higher private investment whilst keeping the inflation rate in check. The central bank is also likely to continue to rigorously monitor lending activities to ensure that non-performing loans are kept under control.

The key challenge that your Company is expected to face in 2017 is the shrinking interest rate margins due to intense competition as well as the existing monetary stance of the central bank. Therefore, achieving sustainable balance sheet growth whilst building a healthy and profitable investment portfolio in the sectors it operates in, will be the primary focus of your Company in the coming year. Your Company aims to tackle these challenges in 2017 by strengthening its internal capacity to deliver services more efficiently and through achieving better economies of scale in its operational activities.


We wish to thank our valued customers, shareholders, regulators and other stakeholders for their continuous support and cooperation.

I take the privilege of thanking my colleagues on the Board of Directors of the Company for their contribution towards the sustainable growth of the Company and the support rendered to me during the year in conducting the meetings of the Board of Directors.

Lastly, I express my sincere gratitude to all employees of the Company for their dedication and professionalism in the discharge of their responsibilities during the year.