2012 Governance

Profile of the Board of Directors
Chairmans Statement
Managing Director and CEOs Economic Review
MTB Management Committee
MTB Committees
Corporate Governance
Compliance Report on SECs Notification
Report of the Board Audit Committee
Report on Internal Control and Compliance
Market Discipline Pillar III Disclosure
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MTB Annual Report - 2012
Governance - Profile of the Board of Directors
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Dr. Arif Dowla, Chairman
Dr. Arif Dowla is the Chairman of Mutual Trust Bank Ltd. (MTB) since
J anuary 17, 2012. He is the third incumbent in the apex position of this
third generation bank. Dr. Dowla is the Managing Director of the renowned
conglomerate, Advanced Chemical Industries (ACI) Ltd., as well as its
various subsidiaries. Son of Mr. M. Anis Ud Dowla, a leading name in
Bangladesh's corporate business and trade and industry circles, Dr.
Dowla is the Chairman of Tetley ACI (Bangladesh) Ltd. He is also the
Managing Director of ACI Pure Flour Limited, ACI Foods Limited, ACI
Motors Limited, ACI Logistics Limited, ACI Agro Chemicals Limited,
Premiaflex Plastic Limited, Stochastic Logic Limited. He is currently a
Director of ACI Formulations Limited, ACI Godrej Agrovet (Pvt.) Limited,
Creative Communication, Apex Leather Craft Limited and Consolidated
Chemicals Limited.
Dr. Dowla obtained a PhD degree in Mathematics from the University of
California, San Diego, USA. He is also a member of the American
Mathematical Society.
Dr. Dowla is Young Global Leader Honoree 2009 bestowed by World
Economic Forum.
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Mr. Rashed Ahmed Chowdhury, Vice Chairman
Mr. Rashed Ahmed Chowdhury is the Vice Chairman of Mutual Trust Bank
Ltd. (MTB). He is the Director of Associated Builders Corporation Ltd.
(ABC), a pioneer in the field of construction and real estate development
in Bangladesh. He is also the Chairman of Banga Garments Ltd. and ABC
Building Products Ltd. (ready-mix concrete). He is a Director of ABC Real
Estates Ltd. and Shamsuddin Towels Limited. He has served as Senior
Vice President of Bangladesh Terry Towel Manufacturers and Exporters
Association.
Mr. Chowdhury obtained Higher National Diploma in Business Studies
from West London College, UK and a Post Graduate Degree in
Management from Kingston University of the United Kingdom.
He is a member of Chartered Management Institute, UK and is a Founder
Trustee and Syndicate Member of Independent University, Bangladesh
(IUB). He is a founding member of Cadet College Club Limited and served
as its Vice President.
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Mr. Syed Manzur Elahi, Director (Founding Chairman)
Mr. Syed Manzur Elahi is the Founding Chairman of Mutual Trust Bank
Ltd. (MTB). Mr. Elahi is a prominent businessman of the country and is the
Chairman of Apex Group, a leading business organization of the country.
He is the Chairman of Apex Tannery Ltd., Apex Adelchi Footwear Ltd.,
Apex Pharma Ltd., Blue Ocean Footwear Ltd., Apex Enterprise Ltd., Apex
Investment Ltd., Grey Advertising (Bangladesh) Ltd., Quantum Market
Research, Manusher J onno Foundation, the Holiday Publications,
Bangladesh Freedom Foundation and Central Depository Bangladesh
Ltd. (CDBL). He is also a Director of the Financial Express, Credit Rating
Agency of Bangladesh Ltd. (CRAB) and East West University.

Mr. Elahi is the former Chairman of the Bangladesh Association of Banks,
and has served as a Director on the Boards of Bangladesh Bank, Sonali
Bank and Bangladesh Krishi Bank. He has served as President of the
Metropolitan Chamber of Commerce and Industry (MCCI) and as Vice
Chairman of the Bangladesh Association of Publicly Listed Companies.
Mr. Elahi was the Chairman of the East West University Foundation. He
has also served as a Director of the Export Promotion Bureau,
Bangladesh. Besides being an eminent industrialist, Mr. Elahi was also
appointed Adviser to the Caretaker Government of Bangladesh twice
(1996 & 2001), for his leadership qualities, professionalism and
non-partisanship.
He is the President of the Dhaka University Alumni Association and a
Trustee Board member of the Centre for Policy Dialogue. He was also the
Honorary Consul of Belgium in Bangladesh. He has won various awards
for his contributions to the business sector of the country, including
"Business Executive of the year 2000" by the American Chamber of
Commerce, Bangladesh and later the "Business Person of the Year 2002"
award, sponsored by the Daily Star and DHL Worldwide Express. Mr.
Elahi holds an M.A. (Econ.) from the University of Dhaka.
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Mr. M. A. Rouf, JP, Director
Mr. M. A. Rouf, J P is one of the Sponsor Directors of Mutual Trust Bank
Ltd. (MTB). He is the Chairman of Britannia Properties Ltd., Britannia
Holdings & Management Ltd., Britannia Developments Ltd. and Diamond
Properties (Bangladesh) Ltd. a group of companies in Bangladesh. He
serves as the Chairman of Balaka Bangladeshi Food Ltd. in UK. Mr. Rouf
is also the Chairman of Diamond Properties (UK) Ltd. He also assumes
the role of a Director of Tiger Tours Ltd. and Sonata Shipping Lines Ltd. Mr.
Rouf is the elected Regional President for the Bangladesh British
Chamber of Commerce in the UK for Scotland for the last 14 years and
was appointed as a Delegate for the Department of British Trade Mission
of Bangladesh. He is a J ustice of Peace (J P) for Scotland. Mr. Rouf
obtained an Associate Degree in Textile Engineering and Management
from the then East Pakistan Institute of Textiles. He is a life time member
of University of St. Andrews and also a member of St. Andrews Golf Club
the second oldest golf club in the world. He has also held the post of Vice
Chairman of University of St Andrews Union Debating Society for the last
15 years.
Mr. Hedayetullah, Director
Mr. Hedayetullah, Director of Mutual Trust Bank Ltd., is also the Chairman
of the Executive Committee of MTB. He obtained B.Sc. (Honours) degree
in Leather Technology from the British School of Leather Technology,
Northampton, UK and M.A. in International Business from Webster
University, Regents College, London, UK.
He is the Chairman of Hedayetullah Securities Ltd. He is also the
Managing Director of BW International Ltd. (a joint venture PU outsole
factory with China) and RYT J oint Co. Ltd. (a joint venture outsole factory
with J apan).
He is a Director of Apex Tannery Ltd, FB Footwear Ltd. (a joint venture
factory with Italy) and Apex Property Development Ltd.
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Mr. Md. Abdul Malek, Director
Mr. Md. Abdul Malek, Director of Mutual Trust Bank Ltd. (MTB), obtained
B.Sc. Engineering (Civil) from BUET, a renowned engineering institution of
the country. He is the Chairman of Sheltech Consultants (Pvt.) Ltd.
(SCPL). Since its establishment in 1990 as a major practitioner in Urban
Planning, Architectural, Engineering Design and Tourism Development,
the firm has successfully conducted many projects for major International
Development Funding agencies, which includes Asian Development
Bank, The World Bank, UNDP, EEC, SDC, FINNIDA, USAID, UNICEF,
DFID, DGIS and RNE on behalf of the Govt. of Netherlands.
Mr. Md. Wakiluddin, Director
Mr. Md. Wakiluddin, Director of Mutual Trust Bank Ltd. (MTB) is the
Chairman of Baridhara Enterprise (Pvt.) Ltd. He is the Managing Director
of Swadesh Properties Ltd. & Baridhara Corporation Ltd. He is also a
Director of HURDCO International School.
Mrs. Khwaja Nargis Hossain, Director
Mrs. Khwaja Nargis Hossain, Director of Mutual Trust Bank Ltd. (MTB)
received Masters degree in Islamic History from the University of Dhaka.
She is also a Corporate Director of SAHCO International Ltd. and a
member of BOAO Forum for Asia (BFA), China. BFA is a non-profit
international organization formed by 26 Asian countries and Australia for
socio-economic development of the people of Asia and rest of the world.
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Mr. Anjan Chowdhury, Director
Mr. Anjan Chowdhury, Director of Mutual Trust Bank Ltd. (MTB) represents
ASTRAS Limited on the MTB Board and has replaced the iconic and
legendary MTB Chairman, Late Mr. Samson H. Chowdhury.
He is the Managing Director of Square Toiletries Limited, Square
Consumer Products Limited, Aegis Services Limited, Square Securities
Management Limited, Square Spinning Limited, Mediacom Limited and
private TV channel - Maasranga Television Limited. He is also the
Chairman of Oracle Travels Ltd.
He is a Director of Square Pharmaceuticals Limited, the largest
pharmaceutical and bulk drug manufacturing company of the country and
also a Director of Square Hospital Limited, a well reputed international
standard private hospital in Bangladesh.
He is a Director of Square Textiles Limited, Astras Limited, Health
Products Limited, Pharma Packages (Pvt.) Limited, Barnali Printers
Limited, Square Holdings Limited, New Dhaka Refractories (BD) Limited,
Square Informatix Limited, Square Distributions Ltd., Square Air Ltd. and
Abahani Ltd.
He is the President of Bangladesh Agro Processors Association,
Executive Committee Member of Bangladesh Golf Federation and
member of the Committee of The Metropolitan Chamber of Commerce &
Industry (MCCI).
Mr. Anjan Chowdhury is the President of Annada Gobinda Public Library,
Life Member of Pabna Press Club, Member of Pabna Station Club, Life
Member of Pabna Rifles Club and Pabna Bonomali Institute, Executive
Committee Member of Pabna Police Line Development Committee,
Regent Board Member of Pabna University of Science & Technology,
Committee Member of Pabna District Law Enforcing Committee, Savar
Golf Club, Gulshan Club, Uttara Club, Dhaka Club and American
Recreation Association (Club). Mr. Chowdhury is an Executive Committee
Member of Kurmitola Golf Club and Chairman of its Development
Committee.
Mr. Q. A. F. M Serajul Islam, Director
Mr. Q. A. F. M. Serajul Islam, Managing Director & CEO, Pioneer
Insurance Company Limited represents Pioneer Insurance Company
Limited as a Director on the Board of Mutual Trust Bank Ltd. (MTB). He
obtained Post-Graduate degree in Physics in 1972. He developed a keen
interest in insurance and in 1978 joined the state owned Insurance
Company Shadaran Bima Corporation (SBC). He held important positions
in different departments of SBC and in 2003, he voluntarily retired from
Shadaran Bima Corporation (SBC) as Deputy General Manager.
Then he joined Progati Insurance Limited as Deputy Managing Director in
2003. In September 2005, he switched to Pioneer Insurance Company
Limited as an Additional Managing Director then he assumed the office of
Managing Director & CEO on 14th J anuary 2007. In 2011, under his skillful
leadership, Pioneer Insurance Company Limited became the 2nd largest
Company in terms of premium income among 43 non life insurance
companies.
Besides his educational degree, he also obtained professional degree,
BIA Diploma in General Insurance, from Bangladesh Insurance Academy
in 1986, and since then he is associated with BIA as a resource person.
He took part in training courses on General Insurance and Re-Insurance
both at home and abroad which included a three week in-house training
on Re-Insurance at Tysers, UK.
In addition, he negotiated Re-Insurance treaties of SBC, Progati
Insurance Limited and Pioneer Insurance Company Limited with
re-insurance companies of UK, France, Germany, Switzerland, Malaysia,
Singapore, India, Bahrain, etc.
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Mr. Anis A. Khan, Managing Director & CEO
Mr. Anis A. Khan (AAK) is Managing Director & CEO of Mutual Trust Bank
Ltd. (MTB), since April 15, 2009. Prior to joining MTB, AAK headed the
countrys largest multiproduct financial institution (non-banking), IDLC
Finance Limited (IDLC), from 2003 to early 2009, as its CEO & Managing
Director.
AAK, a career banker, earlier served for 21 years, in a multitude of roles,
with the erstwhile Grindlays Bank p.l.c., ANZ Grindlays Bank and
Standard Chartered Bank (SCB), both in Bangladesh and abroad. He has
received wide and intensive on job exposure and training on banking and
management practices, including wholesale, SME and retail banking,
international trade, leasing, factoring, banking and NBFI operations, legal
and compliance, mergers and acquisitions, business process
re-engineering and transformation and upgradation of information
technology platforms in Dhaka, Chittagong, Mumbai, Dubai, London and
Melbourne. His last posting for Standard Chartered Bank was in Dubai,
UAE.
AAK serves as nominee director on the boards of Industrial and
Infrastructure Development Finance Company Limited (IIDFC),
Bangladesh Rating Agency Limited and BD Ventures Limited. He is a
member of the Chamber Committee of the Metropolitan Chamber of
Commerce & Industry, Dhaka (MCCI) and chairs its Commercial
Legislation Sub-Committee. He is a life member of the SAARC Chamber
of Commerce and Industry (SAARC CCI).
He serves as the Vice Chairman of Primary Dealers Bangladesh Limited
(PDBL), Member of the Executive Committee of Bangladesh Foreign
Exchange Dealers Association (BAFEDA), Member of the Board of
Governors of the Association of Bankers, Bangladesh (ABB) and
Bangladesh Institute of Bank Management (BIBM). AAK was elected as
Fellow of the Institute of Bankers, Bangladesh (IBB) in December 2012.
AAK qualified for the Bangladesh Civil Service after passing the BCS
Examination in 1982. His academic and professional qualifications include
masters degree and post graduate diplomas in law, human resource
management and French and Spanish languages.
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042
Governance - Chairmans Statement
Dr. Arif Dowla
Chairman
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043
Governance - Chairmans Statement
As the world becomes a smaller place, drawn together by increasingly intertwined economies and global markets, it is essential
to be firm, sincere and dedicated to be successful in business. That is our goal to be successful in business. It is obvious
that, our achievements during the years of experience will have a profound influence on our future growth. This is the drive and
ambition that, in my opinion, will serve us well in todays business world.
Dear Respected Shareholders,
MTB's persistent focus on emerging opportunities has enabled us to show qualitative growth in a very challenging environment. In order
to provide superior banking services and move towards becoming one of the best performing banks in the country, we are consistently
innovating and adding value through technology-led delivery channels supported by a wide range of product offerings. The expanding
reach to grassroots levels through financial inclusion is another constructive initiative for us to forge ahead. We continue to invent new
business models and set new benchmarks for ensuring sustainable performance.
The global economic environment remained delicate throughout the Fiscal Year 2012. In fact, it turned sharply adverse from September
2011, due to the turmoil in the euro zone and concerns about the fading prospects for the U.S. economy. Global business and consumer
confidence declined significantly in the second half of the Fiscal Year 2012.
While I write this message, there seems to be a sense of gloom around our economy. There are concerns about slowdown in investment,
oil prices, energy crisis and corporate performance. Our capital and money markets are demonstrating high volatility, further impacting
this sentiment. However, if we look beyond the headlines towards a slightly longer time horizon, we can foresee a rather different picture.
Shareholders are the main concern for MTB and good returns can only be continued through the support and admiration of our
employees, customers and the community. Our goal is to be a good corporate citizen to serve our stakeholders more.
In 2012, MTB group grew considerably with bank branches growing from 76 to 86. The network is expanding fast and we now have 150
MTB 24/7 ATMs and over 1,000 Point of Sales (POS) devices installed across the nation.
Over the last few years, the executive team has handled the objectives of growth, profitability and risk management in an admirable
manner, further strengthening the balance sheet and the key drivers of profitability. This strategy has been advanced across all
businesses, while ensuring that capabilities continue to be built to participate in the future growth opportunities that our country will
provide. The Board continues to focus on a sound governance framework that encourages this balance and supports long-term
sustainable value creation.
We are confident about our countrys future and about the growth and profitability of the MTB Group in the years ahead. The Group is
strongly positioned in each of its businesses and focused on sustainable growth and profitability. We look forward to the years ahead with
excitement and optimism.
We believe our business plan for 2013 will be achieved with an enhanced platform. Our commitment towards corporate and social
responsibilities will continue while considering all economic, environmental and social factors.

I am very thankful to my fellow Directors, who have given their unstinting co-operation and support. Moreover, I appreciate the Managing
Director & CEO and all our employees of MTB Group for their dedication and efforts during the difficult year of 2012.
I am grateful to our customers and clients for their enduring confidence in our service quality according to their needs, as well as our
shareholders, stakeholders and our regulators for continuing to believe in our vision for growth.
I am delighted to invite you to attend this years Annual General Meeting on April 29, 2013 at the Bashundhara Convention Center02,
BlockC, Umme Kulsum Road, Bashundhara R/A, Baridhara, Dhaka 1219 and look forward to seeing you there.
Thank You.
Dr. Arif Dowla
Chairman
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044
Governance - Pqvigvbi evZv
Dr. Arif Dowla
Chairman
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045
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046
Governance - Managing Director and CEOs Economic Review
Anis A. Khan
Managing Director and CEO
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047
8.00%
6.00%
4.00%
2.00%
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7.2%
6.0%
GDP
GOB WB ADB IMF
6.0%
5.8%
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What we say to customers is very simple: If the challenges we are addressing are your challenges if you think we
can help you make better decisions - come and talk to us. We understand our business, and we understand our
customers. We want to be part of the conversation around the questions that matter.
GLOBAL ECONOMY
The global economy continued to show moderate growth in 2012; however, a downside risk emerged towards the end of the
period due to increasing concerns about the U.S. budget deficit, the European sovereign debt crisis and slowing growth in
emerging markets.
Global Financial Markets
Emerging market yields are likely to increase amid expected policy tightening in high-income countries. Spreads for
developing countries might also widen, as the declining trend in risk premiums partly reflects the very low policy rates and
quantitative easing in high-income countries. These easy monetary conditions have suppressed the price of risk in both
developed and developing countries, and prompted a search for yields similar to that observed in the pre-crisis period.
Policy tightening in high-income countries together with on-going banking sector deleveraging limiting the availability of
funding, will put upward pressure on the cost of cross-border financing in coming years.
Global Capital Markets
The United States' stocks still dominate world market cap by a wide margin at 29.9%. J apan has the second largest stock
market representation at 8.2%, followed by the UK (6.8%), China (5.4%) and France (4.4%). China is remarkable because
it made up just 1.7% of global market cap at the start of 2004, and now it has the fourth largest representation.
However, the Dow J ones, NASDAQ and S&P have seen positive growth compared to the same period last year. Among the
Asian market Indices, only NIKKEI 225 is declining. American and European capital markets saw a significant recovery in
various indices after the global economic meltdown and projected higher growth outlook. However, the world capital markets
turned around in 2012 after a long bearish trend in 2010-11.
BANGLADESH ECONOMY
Gross Domestic Product (GDP)
The Government of Bangladesh (GoB) has set a target of 7.2% GDP growth rate in the current fiscal year (FY), expecting
the thriving export and agriculture sectors to propel the growth rate beyond the 6.3% achieved in FY 2011-12. The GoB also
expects the global economy to experience a major turnaround by the year 2013.
048
Inflation
Inflation is a major concern for a country like ours, where a large number
of people hover around the poverty line. The government of Bangladesh
is trying its best to address this issue. However, its contractionary
monetary policy and expansionary fiscal policy have complicated the
situation and made the possibility elusive.
Remittance
Total remittance receipts in 2012 increased by 16.5% to USD 14.2 billion
against USD 12.2 billion in 2011. The month of December 2012 saw
non-resident Bangladeshis send USD 1.3 billion in remittances, sharply
up by 16.4% from November 2012 receipts. This figure is also 11.8%
higher than the USD 1.1 billion recorded for December 2011, which
boosted the foreign currency reserve of Bangladesh Bank (BB).
BANKING SECTOR SCENARIO
Major indicators describing banking sector performance showed mixed
trends during FY 2012. The overall deposits-advance ratio increased,
risk weighted capital asset ratio (RWCAR) for all banks remained fixed,
while the ratio of non-performing loans (NPL) to total loans for the
banking sector, in both gross and net terms, increased. The return on
assets (ROA) and return on equity (ROE), two important measures of
bank profitability, declined while the interest rate spread (IRS) for all
banks increased during FY 2012.
Deposits
Total deposits (excluding interbank items) of the scheduled banks
increased by BDT 836.2 billion from 2011 to BDT 5.0 trillion in 2012. MTB
deposits registered an increase of BDT 16.1 billion or 27.0% from 2011
to 2012.
Advances / Credit
Advances increased by BDT 603.7 billion or 16.0% to BDT 4.39 trillion at
the end of 2012. MTB advances registered an increase of BDT 9.5
billion or 20.0% from 2011 to 2012.
Money Market
Bangladesh Bank reduced the repo and reverse repo rates by 50 basis
points and at present, the repo rate is at 7.3% and reverse repo rate is at
5.3%. The weighted average call money rate in the interbank market
remained below 10% for the last four months (September-December
2012).
Liquidity Position
Total liquid assets of scheduled banks stands higher at BDT 1.5 trillion as
of end December 2012 against BDT 1.3 trillion in J une 2012. Required
liquidity of the scheduled banks also stands higher at BDT 878.6 billion
as of end December 2012 against BDT 797.7 billion in J une 2012. Rise
in foreign currency in the way of loans, remittances along with
distribution of burden of treasury bills & bonds among all the banks
instead of primary dealer banks only, helped ease liquidity pressure.
New Policy for Loan Administration
The central bank issued a new circular in 2012 with instructions aimed at
tightening credit and improving loan administration through revised
policies on loan classification, loan rescheduling and provisioning. This
move will have a big impact on the profitability of the countrys banking
industry.

Distribution of total liquid assets
(as of end Dec 2012)
Balance
with BB 32.29%
Cash in T-bills
+
Balances with
SCB5.51%
Unsubscribed
approved
securities
62.20%
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049
Capital Adequacy Management
Banks in Bangladesh need to strengthen their capital base in order to adopt Basel III standards. Basel III has changed the
nature of banking - it is more difficult for banks to finance long term assets, long term dividends, long term project finance
and loans with comparatively poor financial strength; which is why maintaining high levels of capital is important.
The Risk Weighted Capital Adequacy Ratio (RWCAR), however, remained significantly above the regulatory requirement of
10% for foreign commercial banks (FCBs) and marginally higher for private commercial banks (PCBs) and scheduled
commercial banks (SCBs). The RWCAR of MTB remained at 10.7%, above the regulatory requirement of 10%.
Challenges
Bangladesh Bank has recently awarded licenses to five commercial banks which will intensify competition in the banking
arena.
At present, banks face several challenges, such as increase in interest rates on deposits, a tighter monetary policy, a large
government deficit, increased stress in some sectors (e.g. power and real estate) and implementation of BASEL II and the
upcoming BASEL III framework.
BANGLADESH CAPITAL MARKET SCENARIO
While the Bangladesh capital market is one of the smallest markets in Asia, it is the third largest in the South Asian region.
Last year, the capital market experienced massive volatility in market capitalization and index movement. Compared to the
bullish performance from 2007 to 2010, recent market performance has been insignificant.
The performance of the Dhaka Stock Exchange during the last two years has raised questions about the structural
impediments facing the capital markets in Bangladesh. Many small investors saw their life savings dissipate due to a free
fall in the price of stocks they had invested in. Unfortunately, this phenomenon is not unique to Bangladesh. While the large
emerging markets and world equity benchmarks are enjoying strong investor demand, the world's next emerging markets,
the so-called Next-11 (N-11) including Bangladesh, Pakistan, Sri Lanka and Vietnam, have lost some of their attractiveness.
Rampant inflation, chronic trade deficits, and a lack of structural reform have deterred investors.
BANGLADESH CAPITAL MARKET
(http://www.bespokeinvest.com/thinkbig/2012/5/11/changes-in-share-of-world-market-cap.html)
However, the market is composed of well diversified sectors. Among the sectors, banking, fuel and power and
pharmaceuticals hold the largest market capitalization - over 60% of the total. During the last fiscal year, the market
capitalization and turnover have significantly decreased by 12.4% and 35.0% respectively. The contraction of the market
can also be explained by the percentage of market capitalization as compared to GDP at current price. It has shown that the
current market capitalization is 28.8% of the GDP in 2012, which was 45.0% in 2011.
Source: www.dsebd.org
Human Resources
MTB has taken some major Human Resources (HR) initiatives during 2012 in order to cement its position in the top league
of banks. Substantial training and developmental activities were carried out during 2012, which included comprehensive
programs in the areas of credit, foreign exchange dealings, branch management and risk management, among others,
through the MTB Training Institute for new and existing employees.
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During 2012, the bank added staff to its workforce in various cadres and scales. The newly recruited MTB Management
Trainees (MMTs) were inducted into the organization with various training programs aimed to groom, equip and mentor them
for their roles. Other current and new employees were also given training at various levels on various topics as part of our
ongoing program to keep skill and competence levels high.
MTB MANAGEMENT POLICIES
The year 2013 is the year for us to move forward steadily toward the achievement of our goals by fully capturing
opportunities with proactive ideas and action. While maintaining our focus on the development of business and synergies
between MTB and MTB subsidiaries, we will continue to strengthen initiatives in strategic business areas and establish a
solid financial base and corporate infrastructure.
Our focus in 2013 will be directed in three strategic business areas:
Retail Customers
We will fully identify the needs and desires of each customer segment and offer the optimal set of products and services
and make every effort to improve our financial consulting capabilities for retail customers.
Tailor-made Solutions for Corporate Clients
In our business for corporate clients, against a backdrop of changing external business climate, we will reinforce our
solution-providing capabilities and lending business by evolving organizational framework for marketing and optimizing
staff allocation.

Non-asset Businesses- Payment & Settlement Services
Transaction Services is a profitable business that does not require the use of assets and is effective in improving our
risk-return profile. We will establish a Transaction Business Planning Department to promote transaction services for our
valued clients.
Apart from the above, we have also planned to increase our operational excellence and shareholders return through various
strategies, which are:
Establish a solid financial base and corporate infrastructure
In order to strengthen our corporate infrastructure to support the sustainable development of our business, we will upgrade
our risk management system and develop human resources with world-class business capabilities. We will also upgrade our
group-wide management capabilities by diversifying and enhancing our business portfolio, while reinforcing strategic
business areas. We will continue to pursue operational efficiency through business process re-engineering, proactively
address the changing regulatory environment and further strengthen our group-wide compliance and control systems.
Capital policy and returns for shareholders
In the medium-term management plan, we have set a Core Tier I ratio target of 9% as of 2014, which will be approximately
80% higher than the Basel II required level of 5%, as per guideline of the Bangladesh Bank.
MTBs basic shareholder return policy is to return a consolidated dividend yield ratio of over 8% through stable and
consistent distribution of profit, while enhancing retained earnings to maintain financial soundness, and to achieve
sustainable growth of enterprise value.
MTB FINANCIAL SNAPSHOT 2012
As of December 31, 2012, MTBs operating profit was BDT 1.3 billion. Deposits grew to BDT 75.1 billion, 27.3% over 2011.
Loans and advances rose by 20.2% to BDT 56.5 billion. Funds under management in 2011 were BDT 106.1 billion growing
to 131.7 billion in 2012, an increase of 24.1%. Non-performing loans were at 3.7%. Capital adequacy ratio as per BASEL II
was 10.7% (required 10%).
051
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MTBs consolidated operating result (in millions) during 2012 is summarized below:
2012 2011 Growth %
Profit before tax 818.8 975.7 -16.1
Tax 490.9 571.5 -14.1
Net profit after tax 327.0 404.2 -19.0
Earnings per Share 1.3 1.6 -19.0
Book Value per Share 19.0 18.9 0.004
Outlook for 2013
While we have no doubt that 2013 will be challenging, we are nonetheless very optimistic about MTB Groups future and our
ability to continue to deliver superior returns to our stakeholders.
We firmly believe we can meet stakeholders expectations through the initiatives we have designed. We hope we can
continue to count on your understanding and support in the years ahead.
Finally I would like to thank our customers, stakeholders, Bangladesh Bank, Securities and Exchange Commission, Dhaka
Stock Exchange, Chittagong Stock Exchange, the Ministry of Finance, other regulatory bodies and of course the employees
of the group on whom our success depends.
Anis A. Khan
Managing Director & CEO
052
Governance - MTB Management Committee (MANCOM)
1. Mr. Md. Hashem Chowdhury
Deputy Managing Director
2. Mr. Anis A. Khan
3. Mr. Md. Ahsan-uz Zaman
Additional Managing Director
4. Mr. Quamrul Islam Chowdhury
5. Mr. J oyanta Kumar Mandal
Group Head of Treasury
6. Mr. Md. Nazrul Islam Mazumder
Chief Executive Officer, MTBSL
7. Mr. Iqbal Mahmud
Group Chief Risk Officer
8. Mr. Meer Sajed-Ul-Basher, FCA
Group Chief Financial Officer
9. Mr. Syed Rafiqul Hossain
Head of Wholesale Banking &
MTB Dhaka Division Branches
10. Mr. Kashif Rahman Siddiqui
Head of Syndications & Structured
Finance
11. Mr. Mohammad Ali Chowdhury
Head of Chittagong Division
Branches
12. Mr. Mohammed Sami Al Hafiz
Group Chief Communications
Officer
13. Mr. Md. Nurul Islam
Group Head of Human Resources
14. Mr. Md. Shah Alam Patwary
Group Chief Information Officer
15. Mr. Khondaker Rahimuzzaman
Head of NRB & Other MTB
Branches
16. Mr. Swapan Kumar Biswas
Head of Banking Operations
Department
17. Mr. Md. Bakhteyer Hossain
Head of International Trade
Services
18. Mr. Md. Zakir Hussain
Head of Credit Risk Management
19. Mr. Goutam Prosad Das
Group Head of Internal Control &
Compliance
20. Mr. Khairul Bashar Abu Taher
Mohammed
Chief Executive Officer, MTBCL
Sitting (from left to right) Standing (from left to right)
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Board Executive Committee
Mr. Hedayetullah Director Chairman of the Committee
Mr. Md. Abdul Malek Director Member of the Committee
Mr. M. A. Rouf Director Member of the Committee
Mr. Anjan Chowdhury Director Member of the Committee
Mr. Anis A. Khan Managing Director & CEO Member of the Committee
Board Audit Committee
Mr. Syed Manzur Elahi Founding Chairman & Director Chairman of the Committee
Mr. Rashed Ahmed Chowdhury Vice-Chairman Member of the Committee
Mr. M. A. Rouf Director Member of the Committee
Mr. Md. Wakiluddin Director Member of the Committee
Mrs. Khwaja Nargis Hossain Director Member of the Committee
Mr. Anis A. Khan
Chairman
Mr. Md. Ahsan-uz Zaman
Additional Managing Director
Member
Mr. Quamrul Islam Chowdhury
Member
Mr. Md. Hashem Chowdhury
Member
Mr. Md. Zakir Hussain
Head of Credit Risk Management
Member
Mr. Md. Nurul Islam
Group Head of Human Resources
Member
Mr. Goutam Prosad Das
Group Head of Internal Control &
Compliance
Member
Mr. Swapan Kumar Biswas
Head of Banking Operations
Department
Member
Mr. Khondaker Rahimuzzaman
Head of NRB & Other MTB
Branches
Member
Mr. Syed Rafiqul Hossain
Head of Wholesale Banking & MTB
Dhaka Division Branches
Member
Mr. Kashif Rahman Siddiqui
Head of Syndications & Structured
Finance
Member
Mr. Meer Sajed-Ul-Basher
Group Chief Financial Officer
Member
Mr. Joyanta Kumar Mandal
Group Head of Treasury
Member Secretary
Mr. Nurul Maruf Khan
Senior Vice President
Member
Mr. Md. Shah Alam Patwary
Group Chief Information Officer
Member
Mr. Gazi Yar Mohammad
Senior Vice President
Member
Mr. Iqbal Mahmud
Group Chief Risk Officer
Member
Asset Liability Committee (ALCO)
053
Governance - MTBCommittees
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054
Governance - Corporate Governance
We strive to earn and retain the trust of our shareholders
through our high standards of corporate governance. We
have rigorous oversight and regulations in place, and we
work to embed those practices in our culture.
1. Board of Directors
1.1. Composition of the Board
The Board consists of 11 highly accomplished directors,
who are professionals in management, law and business.
They possess the skills, experience and knowledge to set
directions and oversee the overall activities of the bank.
1.2. Meetings
During the year, board meetings were held at
approximately monthly intervals, to formulate policy, set
goals and evaluate overall performance.
1.3. Boards Responsibilities
The main responsibilities of the Board are:
a) Developing and implementing corporate strategies;
b) Monitoring and reviewing the corporate governance
framework;
c) Monitoring and reviewing the risk management
process;
d) Reviewing business results and monitoring budgetary
control;
e) Maintaining a direct, ongoing and healthy
communication with regulatory bodies;
f) Setting standards and monitoring compliance with our
social responsibility policies and practices; and
g) Recommending shareholders to appoint an external
auditor.
1.3.1 Company Secretary
The company secretary is responsible for advising the
Chairman and the Board on all corporate governance
matters, board procedures and compliance with applicable
rules and regulations. The Board Secretary maintains
minutes of the board meetings.
1.4. Training for New Directors
Presentations are made by the senior management to the
Board from time to time on industry related matters.
1.5. Delegation of Power
The Board has delegated appropriate administrative,
financial and business authority to the management as per
Bangladesh Bank guidelines. As approved by Bangladesh
Bank, the role of the Executive Committee is:
a) To review the policies and guidelines issued by
Bangladesh Bank; and
b) To approve credit proposals as per approved board
policy.
The Executive Committee is comprised of the following
members:
1. Mr. Hedayetullah Director Chairman
2. Mr. Md. Abdul Malek Director Member
3. Mr. M. A. Rouf Director Member
4. Mr. Anjan Chowdhury Director Member
5. Mr. Anis A. Khan Managing Member
Director & CEO
2. Role of Chairman, Managing Director & CEO
2.1. Role of the Chairman
The Chairman is a non-executive director, elected by the
Board, responsible for organizing the business of the
board, ensuring its effectiveness and setting its agenda.
The Chairman is not involved in the day-to-day business of
the bank. He ensures that board members undertake
appropriate induction, covering terms of appointment,
duties and responsibilities.
Our governance responsibilities are integral to our performance and long-term sustainability
Our corporate governance standards reflect emerging best practices and meet or exceed legal and regulatory
requirements
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2.2. Role of the Managing Director and CEO
The Managing Director is responsible for overall activities
of the business and for formulating and implementing
board strategy and policy. He has control of the bank on a
day-to-day basis and is accountable to the Board for its
financial and operational performance.
3. Appointment to the Board
3.1. Director Appointments
Appointment of a new director is made with the consent of
all directors at the immediate annual general meeting
(AGM). A detailed biography, a declaration of his or her
non-engagement with other financial institutions and that
he/ she is not a loan defaulter is required to be submitted to
the Bangladesh Bank. As per the Bank Companies Act,
1991 a person cannot be a director of more than one
financial institution, and we adhere to this rule.
4. Re-election of the Directors
According to the Articles of Association of the bank, each
director other than MD & CEO, retires by rotation once
every three years and is required to stand for re-election by
shareholders at the annual general meeting.
5. Appraisal of the Managing Director & CEO
5.1. Appraisal of the Managing Director & CEO
The performance of the Managing Director is reviewed
every year by the full Board against financial and non
financial targets, which are in line with the short, medium
and long term objectives of the Bank.
5.2. Removal of the Managing Director & CEO
The Board is not authorized to remove the Managing
Director without prior consent of the Bangladesh Bank.
6. Directors Remuneration
6.1. Directors Remuneration
The directors do not receive any type of remuneration or
incentives. The board members receive BDT 5,000 for
attending board and committee meetings.
The remuneration package of the Managing Director is
determined by the Board and requires Bangladesh Banks
approval. He is entitled to get incentive bonus as per
Bangladesh Bank guidelines. The Managing Director has
been appointed for a three-year term and his remuneration
is not reviewed by the Board during such time.
6.2. Disclosure of Directors Remuneration
The law requires the disclosure of information related to the
remuneration paid to the Managing Director and directors.
Remuneration paid to the Managing Director is disclosed
on page 181 of this report. The directors fees during 2012
were as follows:
Sl. Name of the Directors Position Remuneration
BDT
1 Dr. Arif Dowla Chairman 65,000
2 Mr. Rashed Ahmed Chowdhury Vice Chairman 85,000
3 Mr. Syed Manzur Elahi Director 70,000
4 Mr. Hedayetullah Director 85,000
5 Mr. M. A. Rouf Director 80,000
6 Mr. Md. Abdul Malek Director 80,000
7 Mrs. Yasmeen Haque * Director 15,000
8 Mr. Md. Wakiluddin Director 80,000
9 Mr. Md Nasirullah * Director 15,000
10 Mrs. Khwaja Nargis Hossain Director 65,000
11 Mr. Mahaboob Morshed Hassan * Director 10,000
12 Mr. Anjan Chowdhury Director 35,000
13 Mr. Q.A.F.M. Serajul Islam Director 40,000
TOTAL 725,000
*Ceased to be Director at the 13th AGM held on May 27,
2012
7. Relations with Shareholders
7.1. Notice of the Annual General Meeting (AGM)
The annual report including financial statements and the
notice of the meeting are sent to shareholders at least 14
days prior to the AGM.
7.2. Beneficial Use of the Annual General Meeting
(AGM)
The primary means of communication between the bank
and shareholders are the MTB annual report and the AGM.
Required information is received by the shareholders prior
to the AGM, which gives them an opportunity to exercise
their prerogative to raise any business-related issues,
either verbally or in writing at the AGM. The Board is
present at the AGM to answer any queries of the
shareholders.
8. Accountability
8.1. Financial Reporting, Statutory and Regulatory
Reporting
In the preparation of quarterly and annual financial
statements, MTB has complied with the requirements of
the Companies Act 1984, Bank Companies Act 1991,
Bangladesh Bank, Dhaka Stock Exchange and Chittagong
Stock Exchange.
8.2. Report of the Board Audit Committee in the Annual
Report
The report is given on pages 66 of the Annual Report
8.3. Declaration by the Board that the Business is a
Going Concern
This is given in the Directors Report on page 123 the
Annual Report.
9. Audit Committee and Audit
The Audit Committee provides direction to the audit and
risk management functions in the bank and monitors the
quality of internal audits and management audits. The
responsibilities of the Audit Committee are:
a) Ensure proper disclosure of the financial statements;
b) Recommend appointment/removal of external
055
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056
auditors and fixing their remuneration;
c) Review the financial statements before submission to
the Board;
d) Review the adequacy of the internal control systems;
e) Review the findings of internal investigations;
f) Discuss the scope of audit with external auditors; and
g) Looking into reasons of substantial defaulters, if any,
of non-payment to stakeholders.
The Audit Committee is comprised of the following
members:
1. Mr. Syed Manzur Elahi Founding Chairman
Chairman
& Director
2. Mr. Rashed Ahmed Chowdhury Vice- Member
Chairman
3. Mr. M. A. Rouf Director Member
4. Mr. Md. Wakiluddin Director Member
5. Mrs. Khwaja Nargis Hossain Director Member
9.1. External Audit
A. Qasem & Co., Chartered Accountants is the statutory
auditor of the bank. They do not provide any other
accounting, taxation or advisory services to the bank
except audit of cash incentives payable to exporters.
9.2. Audits by Bangladesh Bank
Bangladesh Bank also undertakes audit and inspection of
MTB at regular intervals. The reports of the central bank
are reviewed by the Board and its Audit Committee. The
bank gives utmost importance to the inspection report and
corrective actions are taken regarding the lapses
mentioned in the report.
10. Internal Control
The internal control system is designed to manage rather
than eliminate the risk of failure in achieving business
objectives. Internal controls are aimed at providing
reasonable and not absolute assurance against material
misstatement or loss. The internal Audit Division of the
bank as well as the Board reviews the internal control
system and its effectiveness.
11. Awards and Recognition
MTB received the Merit Certificate under the Institute of
Chartered Accountants of Bangladesh (ICAB) National
Award 2011 for its published accounts for the year 2011 in
the banking category under the financial sector.

12. Contribution to National Exchequer
At MTB, we recognise that we have certain responsibilities
to the development of the society and the country as a
whole. MTB has contributed significantly to the government
exchequer during 2011. The details are:
Items 2012 2011
Income Tax from Bank Earnings 443 307
Income Tax, VAT and Excise Duty
deducted at source 946 693
Income Tax from Employee's
earning 43 32
Total 1,433 1,033
13. Disciplinary Committee
At MTB, we have four (4) written guidelines which are: a)
Mutual Trust Bank Ltd. Employees Service Rule-2000, b)
MTB Code of Conduct, c) MTB Winning and 4) MTB
Compliance Manual. These guidelines are based on the
following principles:
a) INTEGRITY: This implies adherence to accepted moral
principles of being honest, impartial and fair-minded.
b) CONFIDENTIALITY: Among the basic tenets upon
which the banking system is founded, is confidentiality.
This requires the utmost professional conduct in respecting
and protecting the privacy and secrecy of the employer, the
employers customers, fellow employees and any other
groups on the understanding that information acquired has
been obtained in confidence and merits the same care as
protection of funds.
c) LOYALTY: Above the requirement of honesty and
integrity, members owe their primary business loyalty to
their employer and must remain faithful to the employers
customers, the Bank and the profession.
d) LEGALITY: The ethical conduct of banking depends
upon the propriety and behavior of those engaged as
professionals in the banking industry. In this case,
members should always avoid any form of dubious
business practice in contradiction to the law and
regulations of the country.
If an employee is accused of violating any of the above, the
Disciplinary Action Committee plays a crucial role in
resolving the matter.

14. Risk Management Unit (RMU)
The RMU has taken various steps to identify risks, which
are related to the lending, trading and operating activities of
the bank. The unit works to create risk awareness and
instill a risk management culture; it evaluates risk on a
comprehensive basis including, among others, balance
sheet management, capital adequacy, credit and
operational risk.

15. Our Governance Structure
The Board and its committees act independently. Every
board and committee meeting includes in-camera sessions
without management present.
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Shareholders
Shareholders
Auditors
Management
Asset Liability Committee
(ALCO)
Management Committee
(MANCOM)
Credit Evaluation
Committee
Promotion/Recruitment
Committee
Disciplinary Action
Committee (DAC)
Purchase Committee
Board Executive
Committee
Board Audit
Committee
Board of
Directors
BDT Millions
065
Governance - Compliance Report on SECs Notification
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4 (ii)
4 (iii)
4 (iv)
4 (v)
4 (vi)
4 (vii)
4 (viii)
5.
5 (i)
5 (ii)
5 (iii)
5 (iv)
5 (v)
6.
6. (i)
6 (i) a)
6 (i) b)
6 (ii)
7.
7 (i)
7 (ii)
Financial information systems design and implementation.
Book-keeping or other services related to the accounting
records or financial statements.
Broker-dealer services.
Actuarial services.
Internal audit services.
Any other service that the Audit Committee determines.
No partner or employees of the external audit firms shall
possess any share of the company they audit at least during
the tenure of their audit assignment of that company.
SUBSIDIARY COMPANY:
Composition of the Board of Directors
Appointment of independent director
Review of minutes of Board meeting by the holding company.
Reviewed the affairs of the subsidiary company also.
Review the financial statements by the Audit Committee of
the holding company
DUTIES OF CHIEF EXECUTIVE OFFICER (CEO) AND
CHIEF FINANCIAL OFFICER (CFO):
The CEO and CFO shall certify to the Board that:-
They have reviewed financial statements for the year and
that to the best of their knowledge and belief:
these statements do not contain any materially untrue
statement or omit any material fact or contain statements
that might be misleading;
these statements together present a true and fair view of the
companys affairs and are in compliance with existing
accounting standards and applicable laws.
There are, to the best of knowledge and belief, no
transactions entered into by the company during the year
which are fraudulent, illegal or violation of the companys
code of conduct.
REPORTING AND COMPLIANCE OF CORPORATE
GOVERNANCE:
Obtainment of certificate regarding compliance of
conditions of Corporate Governance Guidelines
Directors statement on compliance with these conditions.
The Bank has appointed
two independent directors
on March 30, 2013 which
are awaiting approval from
regulators.
Condition
No.
Title
Explanation for
non compliance
with the condition
Compliance status
(Put in the
appropriate column)
Complied
Not
Complied
The Bank has appointed two
independent directors on March 30,
2013 which are awaiting approval
from regulators.
066
Governance - Report of the Board Audit Committee
The bank formed an Audit Committee on J anuary 18, 2003 comprising 3 (three) members of the Board as per BRPD
Circular no. 12 dated December 23, 2002 of Bangladesh Bank and the Notification of Securities and Exchange Commission
No. SEC/CMRRCD/2006-158/134/Admin/44 dated August 07, 2012. However, the Audit Committee was reconstituted on
J anuary 17, 2012 comprising 5 (five) members of the Board as per BRPD Circular Letter No. 08 dated J une 19, 2011.
Role of the Committee
The Audit Committee of the Board of a bank can play an effective role in building a bridge among the board, management,
shareholders, depositors and other stakeholders; and help in ensuring efficient, safe and sound banking practices. The
Board of Directors of MTB recognizes the importance of the Audit Committee, which assists the Board in fulfilling its
oversight responsibilities including implementation of objectives, strategies and overall business plans. The committee is
primarily responsible for:
a) Internal Control
i) Evaluating whether management is setting the appropriate compliance culture by communicating the importance of
internal control and the management of risks and ensuring that all employees have good understanding of their roles
and responsibilities.
ii) Reviewing arrangements made by the management for building a suitable Management Information System (MIS)
including computerized system and applications.
iii) Consideration of whether internal control strategies recommended by internal and external auditors have been
implemented by the management.
iv) Reviewing existing risk management policies and procedures for ensuring an effective internal check and control
system.
v) Reviewing corrective measures taken by the management regarding reports related to fraud-forgery, deficiencies in
internal control or similar issues detected by internal and external auditors and inspectors of regulatory authorities and
informing the board on a regular basis.

b) Financial Reporting
i) Reviewing annual financial statements determining whether they are complete and consistent with accounting
standards set by regulatory authorities.
ii) Meeting with the management and external auditors to review financial statements before finalization.

c) Internal Audit
i) Review the activities and organizational structure of the internal audit functions and ensure that no unjustified
restrictions or limitations are made.
ii) Review the efficiency and effectiveness of internal audit functions.
iii) Review the findings and recommendations made by the internal auditors for removing the irregularities detected, if any,
are duly acted upon by the Management in running the affairs of the bank.
d) External Audit
i) Reviewing the audit performance of external auditors and their audit reports.
ii) Reviewing the findings and recommendations made by the external auditors for removing irregularities, if any, and
ensuring that they are duly acted upon by the Management.
iii) Making recommendations to the board regarding the appointment of external auditors.
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067
Governance - Report of the Board Audit Committee
e) Compliance with Existing Laws and Regulations
Reviewing whether laws and regulations (Bangladesh Bank and other bodies) and internal regulations approved by the
Board have been complied with.

f) Other Responsibilities
i) Placement of compliance report before the Board regarding regularization of the errors and omissions, fraud and
forgeries and other irregularities as detected by the internal and external auditors and inspectors of regulatory
authorities.
ii) Performing other oversight functions as requested by the Board and evaluation of the committees own performance on
a regular basis.
Composition of the Committee
The members of the Audit Committee are:
1) Mr. Syed Manzur Elahi Chairman
2) Mr. Rashed Ahmed Chowdhury Member
3) Mr. M.A. Rouf Member
4) Mr. Md. Wakiluddin Member
5) Mrs. Khwaja Nargis Hossain Member
The Company Secretary of the Bank functions as the secretary to the Committee as per regulatory guidelines. The
Managing Director & CEO, other members of corporate management, representatives of the external auditors, Head of
Credit Risk Management, Head of Internal Control & Compliance, Head of Special Asset Management and other bank
officials are invited to attend the meetings as and when the Committee requires their presence.
Meetings
The Committee meets regularly with the Heads of Credit Risk Management, Internal Control & Compliance, Group Finance,
Special Asset Management Department, other Bank Officials and external auditors to consider the banks financial
reporting, audit review, internal control & compliance position, recovery of special assets and other relevant issues.
During the year, five meetings of the Audit Committee were held.
Activities
During the year under review, the Committee, inter alia, performed the following tasks:
Reviewed the internal audit plan for the year 2012 along with its implementation.
Reviewed the draft financial statements and recommended to the Board for consideration after holding meetings with
the representatives of the external auditors.
Reviewed the management letter issued by external auditors, management responses thereon and corrective
measures taken to avoid recurrence of the lapses mentioned therein.
Reviewed the half-yearly financials prepared to evaluate the performance for onward submission to the shareholders
as statutory requirements.
Reviewed the major internal audit findings (branches and divisions/departments of Corporate Head Office) with a view
to taking corrective actions on time.
Reviewed the major findings/observations in Bangladesh Banks Inspection Report and advised management to take
steps for rectification of lapses/irregularities toward fulfilling compliance requirements of the regulator.
Placed compliance report/minutes before the Board detailing the decisions taken/recommendations made by the
Committee in its various meetings for information/concurrence of the Board.
Approval of Financial Statements
The Audit Committee reviewed and examined the Annual Financial Statements 2012 prepared by the management and
audited by the external auditors A Qasem & Co. and recommended to place the same before the Board for consideration.
The Board approved the same in its 150th meeting held on March 30, 2013.
Acknowledgement
The Board Audit Committee expresses its sincere thanks to the members of the Board, Management and the Auditors for
their support in carrying out its duties and responsibilities effectively.
Syed Manzur Elahi
Chairman of the Board Audit Committee
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Internal control and compliance is the process designed to provide reasonable assurance regarding the achievement of
objectives in the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with
applicable laws, regulations and internal policies. It plays an important role in preventing and detecting fraud and protecting
the organizations resources.
Mutual Trust Bank Ltd. (MTB) has restructured the Internal Control and Compliance Division (ICC) headed by a senior level
executive in the light of Core Risk Management guidelines of Bangladesh Bank. The Division is comprised of three
departments; Audit and Inspection, Compliance and Monitoring. The bank has an Internal Control and Compliance Policy
and Compliance Manual duly approved by the Board of Directors.
The ICC division ensures a clear internal control structure in the bank with clear and appropriate assignments, personnel
accountability and delegation of authorities to functional management. This has been done to create control and ensure a
compliance culture under the active guidance and supervision of senior management and the Board of Directors.
As an internal control tool, the Audit and Inspection Department undertakes periodic and special audits and inspections on
the branches and departments/divisions of the Head Office in order to sort out weaknesses and defects in control
processes; and reports to management for taking corrective measures to protect the interests of the bank.
The Compliance and Monitoring Department ensures timely and proper compliance of relevant laws, all regulatory
instructions and internal policies and procedures in the day-to-day operations of the bank. They assess operational risks
and take appropriate measures for mitigation.
The ICC division reports on serious non-compliance issues detected by internal and external auditors with up-to-date
compliance position thereon, large financial risk exposures, control weaknesses and other risk areas to the Audit Committee
of the Board for review and remedial measures.
The ICC Evaluation Committee assists the Management Committee (MANCOM) in certifying to the Board of Directors on
the effectiveness of internal control policy, practice and procedure of the Bank annually as a regulatory compliance.
The overall internal control and compliance position of the bank was at satisfactory levels during the year 2012.
068
Governance - Report on Internal Control and Compliance
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069
Governance - Market Discipline Pillar III Disclosure
1. Introduction
In accordance to Pillar III of the revised Framework for International Convergence of Capital Measurement and Capital
Standards (Basel II) and adopted under the Bangladesh Bank rules and regulations on risk based capital adequacy (issued
through Revised RBCA Guidelines, dated December 29, 2010), we are now required to make more in-depth and expanded
public disclosure regarding our risk profile (capital structure, capital adequacy, risk management, and risk measurement).
2. Disclosure Policy
The Bank calculates Risk Weighted Assets (RWA) as per Basel-II guidelines (BRPD circular no.09, dated December 31,
2008) under:
a) Standardized approach for credit risk,
b) Standardized approach for market risk, and
c) Basic indicator approach for operational risk.
3. Scope of Application:
The Risk Based Capital Adequacy framework applies to all banks on Solo and Consolidated basis, where Solo basis refers
to all positions of the bank, its local and overseas branches/offices, and Consolidated basis includes subsidiary companies.
Mutual Trust Bank Limited applies both Solo and Consolidated basis as the bank has three (3) subsidiaries, namely i)
MTB Securities Limited ii) MTB Capital Limited iii) MTB Exchange UK Limited.
4. Components of Disclosure Framework:
i. Regulatory capital
ii. Capital adequacy
iii. Credit risk in banking book
iv. Specific provisions
v. Equities: disclosures for banking book positions
vi. Interest rate risk in the banking book
vii. Market risk in trading book
viii. Operational risk
i. Regulatory Capital
a. Qualitative Disclosures
The terms and conditions of the main features of all capital instruments have been segregated in terms of
eligibility criteria (BRPD circular no. 35 dated 29th December 2010, and other instructions given by Bangla-
desh Bank).
Core Capital (Tier-1) of MTB comprises of paid up capital, statutory reserve, general reserve and retained
earnings.
Supplementary Capital (Tier-2) comprises of general provisions (unclassified loans and off-balance sheet
exposure), revaluation reserves for securities up to 50% and MTBs partially convertible subordinate bond, as
approved by Bangladesh Bank, and Securities and Exchange Commission.
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The Bank does not have any Tier-3 Capital.
b. Quantitative Disclosures BDT Millions

Particulars Solo Consolidated
Total Eligible Capital
The amount of Tier 1 capital, with separate disclosure of:
Tire-1 Capital:
Paid up capital
Statutory reserve
General reserve
Retained earnings
Total Tier-1 Capital *(after deduction)
Tier-2 Capital:
General Provision
Revaluation Reserves for Securities up to 50%
Subordinated debt
Total Tier-2 Capital
Tier 3 Capital
Total eligible capital
*Shortfall in provisions required against investment in shares BDT 61.0 million from solo and BDT 65.9 million from consoli-
dated basis has been deducted.
ii. Capital Adequacy
a. Capital Calculation Approach
Assessment of capital adequacy is carried out in conjunction with the capital adequacy reporting to the Bangla-
desh Bank, and the three standardized and basic indicator approaches for risk (credit, market and operational
risk).
b. Capital of the Bank BDT Millions
Capital Adequacy Ratio (CAR) Solo Consolidated
Total
MTB 10.9% 10.7%
Requirement as per BB 10.0% 10.0%
The surplus will act as buffer to support future activities.
Tier 1
MTB 7.3% 7.1%
Requirement as per BB 5.0% 5.0%
Our policy is to maintain a strong capital ratio with high rating.

Risk Weighted Assets 2012 2011
Risk Weighted Assets 65,221.0 57,925.9
We maintain capital levels sufficient to absorb all material risks.
Capital
MTB 6,976.8
Requirement as per BB 6,522.1
Surplus 454.7
The surplus is to meet Stress Tests and ICAAP requirements. Our strategy is to maintain 1-2% capital buffer.
MTB ensures compliance with the regulatory requirements, and satisfaction of external rating agencies, and other stake-
holders including depositors.
2,543.5
1,638.7
361.8
204.4
4,687.4
861.3
60.4
1,406.2
2,327.9
0.0
7,015.3
2,543.5
1,637.3
276. 8
255.2
4,646.9
875.4
60.4
1,394.1
2,329.9
0.0
6,976.8
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c. Capital Management
Initiatives to ensure adequate capital include the following:
Issuance of subordinated debt to raise Tier-2 capital, and to minimize the gap between Tier-1 and Tier-2
capital.
Consistently encouraging corporate clients to complete external credit rating to assess counterparty Credit
Risk status, and to reduce capital requirements.
Improving and enhancing eligible collateral, by way of collateral optimization.
Assessment of risk profile and credit rating of new clients.
MTBs CAR is periodically reviewed and assessed by the Risk Management Unit (RMU), and reported to
senior management. Moreover, we have planned to initiate:
Revaluation of fixed assets to enhance supplementary capital,
Revaluation of collateral securities for ensuring sound asset quality,
Revaluation of securities to strengthen Tier-II Capital.
Capital Adequacy Solo Consolidated
Capital requirement for Credit Risk 5,513.0 5,564.5
Capital requirement for Market Risk 424.4 452.6
Capital requirement for Operational Risk 491.7 505.0
Total and Tier-1 capital ratio:
- For the consolidated group (%) 66.8 66.6
- For standalone Tier 1 capital out of maintained CAR (%) 7.3 7.1
iii. Credit Risk in banking book
a. Qualitative Disclosure
MTB manages credit risk through a robust process that enables the bank to proactively manage its loan portfo-
lios in order to minimize losses, and earn an acceptable level of return for shareholders.
b. Credit Risk Management at MTB
MTBs Credit Policy Manual (CPM), approved by the Board of Directors, defines organizational structure, roles
and responsibilities and processes whereby credit risks can be identified, quantified, and managed. Credit
instruction manuals address regulatory issues and establish control points. Product Policy Guidelines (PPG)
establish a system of identifying and monitoring problem accounts, at the early stages of delinquency, so that
timely corrective measures can be taken (for retail and SME clients as well).
MTB manages credit risk through continuous measuring and monitoring of risks at obligor (borrower) levels
and portfolio level. We follow the Bangladesh Bank prescribed Credit Risk Grading Model (CRGM), and have
developed a credit appraisal/approval process. The CRGM captures quantitative and qualitative issues related
to management risk, business risk, industry risk, financial risk, and project risk, and transaction-specific credit
features, while assessing the overall grading of a borrower. External credit ratings of our clients, when
available, are also taken under consideration. MTBs total rated corporate clients are 14.14% of its total clients
(funded and non-funded), which was only 5.95% in 2011. Delegations of credit approval authority are defined
for ensuring good governance and better control in credit approval.
c. Loan Classification Criteria
All the loans and advances are grouped into four categories for the purpose of classification: (i) Continuous
Loan (ii) Demand Loan (iii) Fixed Term Loan and (iv) Short-term Agricultural and Micro Credit.
Continuous and Demand Loans are classified:
Sub-standard - if past due for 3 months or more, but less than 6 months;
Doubtful - if past due for 6 months or more, but less than 9 months;
Bad/Loss - if past due for 9 months or more.
Fixed Term Loans are classified:
Sub-standard - if the defaulted installment is equal to or more than the amount of installment (s) due
within 3(Three) months;
Doubtful - if the defaulted installment is equal to or more than the amount of installment (s) due within 6
(Six) months;
Bad/Loss - if the defaulted installment is equal to or more than the amount of installment (s) due within 9
(Nine) months.
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BDT Millions
072
Short-term Agricultural and Micro Credit are classified:
Sub-standard - if the irregular status continues after a period of 12 (twelve) months;
Doubtful - if the irregular status continues after a period of 36 (thirty six) months;
Bad/Loss - if the irregular status continues after a period of 60 (sixty) months.
A continuous credit, demand loan or term loan which remains overdue for a period of 60 days or more is classi-
fied as a Special Mention Account (SMA). BDT Millions
Capital Adequacy Amount
a) Total gross credit risk exposures broken down by major types of credit exposure 55,082.2
Term Loan 13,539.5
SME Financing 3,323.0
Consumer Financing 810.2
Retail Financing 1,458.7
General Loan 178.9
Demand Loan 2,130.2
Payment Against Documents (PAD) 196.2
Trust Receipts 6,912.0
Lease Finance 397.4
House Building Loan 1,446.4
Staff/ Employee Loan 525.6
Loans and Advances -Offshore Banking Unit 80.2
Loan to Subsidiaries 2,696.6
Cash Credit 8,634.3
Secured Overdraft 10,335.2
Bills Purchased and Discounted 2,417.8
Payable in Bangladesh 2,366.1
Payable Outside Bangladesh 51.6

b) Geographical distribution of exposures, broken down in significant areas
by major types of credit exposure. 56,511.1
Urban 52,099.0
Dhaka Division 39,191.0
Chittagong Division 10,537.6
Rajshahi Division 886.9
Sylhet Division 532.8
Khulna Division 610.5
Rangpur Division 339.9
Barishal Division 00.0
Rural 4,412.4
Dhaka Division 1,942.6
Chittagong Division 1,937.5
Rajshahi Division 477.9
Sylhet Division 11.3
Khulna Division 00.0
Rangpur Division 2.5
Barishal Division 40.6
c) Industry or counterparty type distribution of exposures, broken down by major
types of credit exposure. 56,511.1
Agriculture 738.5
Ready-Made Garments 2,492.2
Textile 4,049.0
Ship Building 641.1
Ship Breaking 115.8
Other Manufacturing Industry 10,722.9
SME Loans 2,428.0
Construction 502.1
Power, Gas 951.6
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Capital Adequacy Amount
Transport, Storage and Communication 1,163.1
Trade Service 7,507.5
Commercial Real Estate Financing 3,751.8
Residual Real Estate Financing 1,130.9
Consumer Credit 1,539.3
Capital Market 4,349.0
NBFIs 6,501.9
Others 7,926.4
d) Residual contractual maturity breakdown of the whole portfolio, broken
down by major types of credit exposure 56,511.1
On demand 4,202.3
Not more than three months 20,394.7
More than three months but less than one year 13,763.8
More than one year but less than five year 13,386.4
More than five year 4,763.9
iv. Specific Provisions - Guidelines for Loan Loss Provisions
The Bank follows Bangladesh Bank guidelines regarding loan classifications, provisioning, and any other issues
related to Non-performing Loan (NPL). Internal credit guidelines direct loan provisioning review procedure, debt
write-off, facility grading, reporting requirement and interest recognition.
Particulars Rate

General Provision
Against all unclassified loans of Small and Medium Enterprise (SME) 0.25%

Against all unclassified loans and off-balance sheet exposures (other than loans
under Consumer Financing, Loans to Brokerage House, Merchant Banks,
Stock dealers etc., Special Mention Account as well as SME Financing.) 1%
On the unclassified amount for (i) Housing Finance and (ii) Loans for
Professionals to set up business under Consumer Financing Scheme,
Brokerage House, Merchant Banks, Stock Dealers, etc. 2%
On the unclassified amount for Consumer Financing other than Housing
Finance, Loans for Professionals and Loans to share business 5%
On the outstanding amount of loans kept in the 'Special Mention Account'. 5%
Specific Provision
Specific provision on Substandard Loans and Advances: 20%
Specific provision on Doubtful Loans and Advances: 50%
Specific provision on Bad & Loss Loans and Advances: 100%
Throughout the year, we reviewed loans and advances to assess whether objective evidence of impairment had arisen.
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BDT Millions
074
Gross Non Performing Assets ( NPAs) Amount
Non Performing Assets ( NPAs) to Outstanding Loans & Advances (%) 3.7
Movement of NPAs
Opening balance 1,195.1
Additions 889.9
Reductions -
Closing Balance 2,085.0
Movement of specific provisions for NPAs
Opening balance 716.5
Provisions made during the period 345.6
Write-off 135.8
Write-back of excess provisions -
Closing Balance 926.3
Amount of Impaired Loans
The amount of classified and unclassified loans and advances/investments are given below as per Regulatory bodys
instruction:
Particulars Amount
Continuous Loans 512.7
Demand Loans 252.2
Term Loans 1311.7
Short Term Agro Credit and Macro Credit 8.4
Total 2,085.0
Specific and General Provisions
Specific and general provisions were made on the amount of classified and unclassified loans and advances/investments,
off-balance sheet exposures, and off-shore banking units of the Bank.
Particulars Amount
Provision on classified loans and advances/ investments 918.3
Provision on unclassified loans and advances/ investments 697.2
Provision on Off-balance sheet exposure 176.8
Provision for Off-shore Banking Unit 0.8
Total 1,793.1
v. Equities: Disclosures for banking book positions
MTBs stock brokerage functions have been undertaken by a subsidiary - MTB Securities Limited as a corpo-
rate member of Dhaka Stock Exchange Limited (Member No. 197). For equity financing, only investment in
unquoted securities are considered as Banking Book Assets; investment in equity for relationship or strategic
reason is considered under trading book. Investment in equity securities are broadly categorized into two
parts:
i) Quoted securities (common or preference shares and mutual funds) traded in the secondary market
(trading book assets).
ii) Unquoted securities are categorized as banking book equity exposures which are further sub-divided into
two groups:
a) unquoted securities which are invested without any expectation that these will be quoted in near
future i.e. Held To Maturity (HTM);
b) unquoted securities acquired under private placement or IPO which are going to be traded in the
secondary market after completing required formalities.
The primary aim is capital gain or dividend income. Dividends received from these equity securities are accounted for as
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BDT Millions
BDT Millions
BDT Millions
075
and when received. Both quoted and un-quoted equity securities are valued at cost, and necessary provisions are main-
tained if the prices fall below the cost price. As per Bangladesh Bank guidelines, (HFT) Held for Trading equity securities are
marked-to-market (revaluated) once a week, and HTM equity securities are amortized annually. HTM securities are revalu-
ated if reclassified to HFT (with approval of the Board of Directors). The quoted shares of the bank are valued at cost or
market price, whichever is lower.
Equities Amount
a) Value disclosed in the balance sheet of investments, as Cost price 784.1
well as the fair value of those investments; for quoted
securities, a comparison to publicly quoted share values
where the share price is materially different from fair value.
Market price 708.4
* Difference (75.7)
b) The cumulative realized gains (losses) arising from sales
and liquidations in the reporting period. 0.0

c) Total unrealized gains (losses) 0.0

d) Total latent revaluation gains (losses) 0.0

e) Any amounts of the above is included in Tier 2 Capital. 0.0

f) Capital requirements broken down by appropriate
equity groupings, consistent with the banks Specific Risk 84.2
methodology, as well as the aggregate amounts and
the type of equity investments subject to any supervisory
provisions regarding regulatory capital requirements. General Market Risk 84.2
vi. Interest Rate Risk in the banking book
Interest rate risk occurs when changes in market interest rates might adversely affect a bank's financial condition,
affecting both current earnings (earnings perspective) and net worth of the bank (economic value perspective).
The short term impact of changes in interest rates is on the banks Net Interest Income (NII). Longer term, changes
in interest rates impact asset cash flows, liabilities, and off-balance sheet items. This poses a risk to the net worth
of the bank, arising out of all re-pricing mismatches, and other interest rate sensitive positions. MTB assesses the
economic value at risk due to interest rate shock on a quarterly basis.
Interest Rate Risk in the banking book Amount
Total Risk Sensitive Assets 44,492.5

Total Risk Sensitive Liabilities 47,713.8

Cumulative Gap
<3months (251.3)
3-6 months 3,674.9
6-12 months (3,221.3)

CAR before Shock (%) 10.7
Net Interest Income impact
Assumed Change in Interest Rate 1.0% 2.0% 3.0%

Capital after Shock 6,951.9 6,919.7 6,887.5
CAR after shock (%) 10.7 10.6 10.6
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076
vii. Market Risk
Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in different
market variables, namely:
i) Interest rate movements
ii) Currency - foreign exchange rate movements
iii) Equity - stock price movements
iv) Commodity - commodity price movements

MTBs Market Risk Policy, approved by the Board of Directors, covers assessment, monitoring, and management of the above
market risks. The Board sets limits and reviews compliance on a regular basis, in order to provide cost effective funding to finance
asset growth, and trade related transactions.
a. Methods Used to Measure Market Risk
Our standardized approach to measure market risk calculates the minimum capital requirement, for each risk sub-category,
in terms of two separately calculated capital charges for specific risk and general market risk.
b. Market Risk Management System
The Treasury Department manages market risk covering liquidity, interest rate, and foreign exchange risks, with oversight
from Asset Liability Management Committee (ALCO), comprising of senior executives of the bank. ALCO is chaired by the
Managing Director and CEO. ALCO meetings are held at least once in a month.
c. Policies and Process for Managing Market Risk
There are approved limits for credit deposit ratio, liquid asset to total asset ratio, maturity mismatch, commitments for both
on-balance sheet and off-balance sheet items, and borrowing from money market and foreign exchange position. The limits
are monitored and enforced on a regular basis to protect against market risks. The Treasury department of the bank reviews
the prevailing market conditions, exchange rates, foreign exchange position, and transaction to mitigate foreign exchange
risks on a daily basis. Foreign exchange risk is computed on the sum of net short positions, or net long positions, whichever
is higher of the foreign currency positions held by the bank. The bank adopts the maturity method in measuring interest rate
risk in respect of securities in trading book. In order to mitigate risk related to market, RMU of MTB has internally developed
Value at Risk module (VaR) to analyze equity investment (own portfolio), and Foreign Exchange position of the bank.
Quantitative Disclosure of Market Risk Amount

The Capital Requirement for:
Interest Rate related instruments 150.2
Equities 168.3
Foreign Exchange Position 134.1
Commodity Risk 0.0
Total 452.6
viii. Operational Risk
Operational risk arises from inadequate or failed internal processes, people and systems, or from external causes, whether
deliberate, accidental or natural - inherent in all of the Banks activities. The policy for operational risks including internal control
and compliance risk is approved by the Board, taking into account all the relevant guidelines of Bangladesh Bank. The Audit
Committee of the Board directly oversees the activities of the Internal Control and Compliance Division (ICCD) to protect against
all operational risks.
a. Performance Gap of Executives and Staff
MTB has made efforts to be the best pay master and ensures workplace safety for employees with consistent employment
practices and non-discrimination regarding compensation, health and safety. Our strong brand image plays an important role
in employee motivation. As a result there is no significant gap.
b. Systems
We have invested heavily in IT infrastructure for better automation, online transaction platform and network links to avoid
business disruption and system failure. The Banks IT system does not allow any kind of external access, safeguarding from
external fraud (theft/ hacking of information assets, forgery etc.).
c. Policies and Processes for Managing Operational Risk
The preparation of policy guidelines on risk-based internal audit system is under process. According to the guideline, the
activities of branches will be rated in terms of their risk status. It is the policy of the bank to conduct audit on all the branches
at least once a year. ICCD directly reports to the Managing Director and CEO, and the Audit Committee of the Board. In
addition there is a vigilance team (RMU) which was established in 2009 to identify, assess, monitor, control and managing
operational risk, rectify risk events, and implement any additional procedures required for compliance. The Human
Resource Division of MTB has also introduced a vigorous Performance Management system (PMS) to evaluate human
resources in terms of performance, and instill a performance-based culture within the organization.
Quantitative Disclosure of Operational Risk Amount
The Capital requirement for Operational Risk: 505.0
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BDT Millions
BDT Millions

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