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      Chairman's Statement  
      Dear Shareholders  
   
     
   
 

I welcome you on behalf of the Board of Directors to the 24th Annual General Meeting of United Leasing Company Limited.
I take this opportunity to brief you on the economy, the financial services sector and the performance of your Company
during the year.
 
      Economy  
   
     
The GDP growth of 6.32% in fiscal year 2011-2012 was slightly lower than the 6.66% of the previous fiscal year. This happened because of the challenging global scenario resulting from a downswing economy of Europe and sluggish recovery of the US economy and above all, a slow moving domestic economic environment. The country experienced a mixed economic scenario during the fiscal with a decrease in agricultural growth, from 5.1% in previous fiscal to 2.5%,
which was mainly offset by higher growth in industry (9.5% in fiscal year 2012 from 8.2% in previous fiscal).
   
Annual average inflation rose significantly to 10.6% in fiscal year 2012 from 8.8% in the previous fiscal. The first half of 2012 witnessed significant balance of payment pressure due to high global oil prices and low aid disbursements, forcing significant depreciation of the Taka and depletion of foreign exchange reserve. Government’s borrowing from the banking sector also rose sharply during this period and inflation rose to double-digit level. In the second half, however, proactive steps were taken for monetary tightening to lower import demand which was supplemented by adequate domestic food grain output and higher remittance, as a result of which the inflation eased to single digit and Taka stabilised.
   
 
     
Financial Services Sector
 
   
     
Bangladesh Bank continued its reform activities and took several measures during the year to strengthen operations and improve capabilities of the banks and financial institutions. Stricter provisioning policy was imposed on Banks. The gross NPL ratio and the net NPL ratio of overall banking sector slightly increased and the risk weighted capital asset ratio to some extent declined, due to this. However, this was a one-off event that will benefit the sector in the long run as this will lead to tighter NPL management.
     
A harder stance was taken by Bangladesh Bank against money laundering and terrorist financing. The law was amended and all the banks and financial institutions were required to establish adequate policy and operational measures to identify such transactions.
     
Clearing and settlement of interbank paper based and electronic fund transfers were fully automated, IT platform in Bangladesh Bank’s Credit Information Bureau were upgraded and IT platform comprising ERP, core banking and data warehouse with gateways were established.
     
The focus of the Financial Institutions this year was on the lending business as the capital market continued with its lacklustre performance. The situation did not improve despite several measures taken to boost the stock market.
 
 
      Company performance  
   
     
I am pleased to inform you that even under these challenging environment; your Company’s revenue registered a 25.20% growth over last year. Net Profit After Tax achieved a 7.35% growth over last year.
     
Earnings Per Share (EPS) on the basis of current number of share, increased by 7.81% (from Taka 1.92 in 2011 to Taka 2.07). Net Asset Value (NAV), on the basis of current number of share, increased by 8.89% (from Taka 16.19 in 2011 to Taka 17.63).
     
 
      Business  
   
     
Despite the challenges in 2012, your Company was able to meet its business targets. The deposit client base has increased by 27% while the lending client base increased by 15% over last year. Total portfolio had a 15% growth and reached Tk. 9 Billion. Short term portfolio grew at 56% and stood at Tk. 1.2 billion.
 
Your Company now has a diversified range of financial services. Besides the historic asset financing solution in the form of lease, we are now providing sophisticated working capital solutions that are interlaced with service to both medium and small businesses. We also have an array of deposit solutions that appeal to a diverse client base.
 
Geographical reach was expanded further in 2012 with offices opened in Rajshahi, Khulna and Rangamati. Your Company has now offices in all the divisional headquarters in Bangladesh.
 
 
      Cost Management  
   
     
Cost of deposit experienced a considerable increase (38.27%), due to tight liquidity situation that prevailed in the Country for almost the entire year. This resulted in intense competition for deposits and a sustained upward pressure on deposit rates. Despite the stiff competition, your Company was able to generate sufficient deposits to support our financing business.
  
         
     
During the year, there were significant cost increases that were beyond our control. Fuel prices witnessed unprecedented increase in a single year that impacted many cost items including increase in cost of utilities. Since July 2012, Value Added Tax (VAT) increased from 4.5% to 15% for service providers and all stamp charges doubled, increasing our cost of doing business.
  
     
 
     
The other component of operating cost increase was due to our setting up of new offices this year as well as the full year’s impact of geographic expansion and product diversification in 2011. On the whole, operating costs increased by 14.72%, which considering an inflation rate of 10.6%, is not very significant.
  
         
     
You will be pleased to learn that in the face of increasing cost, our cost control supervision has been enhanced and costs are reviewed and variances of all the cost items are analysed on a monthly basis.
  
         
      Risk Management  
   
     

The developments and activities of Company's three risk management components during 2012 were as follows:

  
      Pre-emptive Risk Management  
     
In continuation of your Company’s effort to inculcate the international best practices, the Board updated the policy and policy guidelines of Corporate Governance. Two new policy and policy guidelines were also approved by the board, one dealing with Purchase and Procurement while the other dealt with Prevention of Money Laundering, Terrorist Financing, Bribery and Unethical Financing.
  
         
     
Operational Risk Management (ORM) Committee was very active during the entire year. Many processes were revised in light of the expanding branch network and growing complexity of transactions. To ensure fairness of treatment among all the offices across the Country, all approval, documentation and even administrative requests are now electronically queued.
  
         
     
These paperless processes have substantially reduced paper consumption 35% of the workstations of your Company have been labelled ‘green’ where no print out takes place. These restructurings increased efficiency, minimized risk and yet at the same time have reduced cost and contributed to environment sustainability.
  
         
     
The Industry Risk assessment team enhanced its scope of activities and is now also responsible for providing value added services to our credit-sale financing clients.
  
         
     
Credit Risk Management faced a challenge to support the increasing volume of credit visit requirement, which grew as a result of increased marketing efforts. They were successfully able to meet the challenge through achieving better efficiency.
  
         
     
Asset Liability Management Committee (ALCO) continued their contribution through effective fund management and played a major role in keeping the Company’s fund cost competitive and making available the required fund during the entire period of liquidity crunch. I take pleasure in informing you that there is no pari-passu charge on any Company asset. Overdrafts are secured either by deposit with the same bank or with deposits of other banks/ FIs.
  
         
     
Human resource department successfully met the challenges of on time and appropriate staffing of posts created during the expansion of branch network. Last year, the Company focused on per person productivity. A quantitative evaluation system for all field level officers was eveloped and implemented. Regular trainings were arranged as an ongoing effort to strengthen the understanding of our employees and thereby improve efficiency. During the year the Company provided a total of 1552 man days of training to 266 employees.
  
         
      Contemporaneous Risk Management  
     
Operations department improved their efficiency and adequately supported the increasing volume generated by marketing. The collection, recovery and litigation teams were effective in keeping collection rate high and their recovery efforts yielded tangible results. 2012 was challenging year from Collection perspective, as business environment was not conducive to voluntary repayments caused by tight liquidity situation. However, through intensive and proactive monitoring, we were able to collect from our borrowers and our non performing loan ratio came down to below 3.5% which is a significant achievement. Overall recovery ratio was 95.72% in 2012. An active effort was also undertaken to recover from long standing problem exposures.
  
         
      Post-facto Risk Management  
     
There has been further development in portfolio risk analysis and early warning system. Innovative analytical system has been developed that allows us to understand probable future risks and take pre-emptive measures to mitigate them.
  
         
     
Internal Compliance Department continued evaluating the performances and effectiveness of the control mechanisms through audits of all departments and branches of your Company. Additionally, the team evaluated policy documents and audited operating procedures to ensure the effectiveness of the risk control systems. As usual, the audit and inspection reports were regularly placed to the Audit Committee of the Board for its review and recommendations.
  
         
     
The Management Information Systems department improved the reporting quality. This helped the senior management team to better direct the operations of the Company and enabled the mid level managers to better supervise their resources.
  
         
      Post Balance Sheet Date Events  
     
Subsequent to the balance sheet date, the Directors recommended 3 shares for every 20 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.
  
     
 
      Outlook  
 
     
2013 will be a challenging year, considering both the international and domestic economic scenario. The fact that this is an election year cannot be ignored either.
  
 
 
 
GDP growth is expected to be lower than 6.3% in 2013 as investment is not likely to increase as envisaged. The steady rise in remittance inflows notwithstanding, domestic demand for investments will remain weak due to continued credit-tightening measures to moderate inflation.
  
 
 
 
Bangladesh Bank monetary policy stance will be to preserve economic stability and it will continue to support a market-based exchange rate while seeking to avoid excessive foreign exchange rate volatility. Tougher regulatory environment is expected as Bangladesh Bank will become more active in monitoring prevention of Money laundering and Terrorist Financing.
  
 
 
 
Your Company is poised to confront the challenges in 2013. It has strengthened its footprint and is able to provide service to clients located anywhere in Bangladesh. It is imminent that the rising competition would create price competition. We would avoid competing on price and continue providing value added services that are appreciated by our clients.
  
 
 
 
There is scope for improvement of our service quality both to our deposit customers and our lending clients. Training will be arranged to instill service attitude and enhance resource capabilities. We will continue to build our client base and expand our portfolio across all products. The Company will also pursue measures for non-funded revenue generation.
  
     
      Acknowledgment  
 
     
We wish to thank our valued customers, shareholders, regulators, lenders and the international agencies for their continuous support and cooperation.
  
 
 
 
I take the privilege of thanking my colleagues in the Board of Directors of the Company for their contribution towards development of the Company and the support rendered to me during the year in conducting the meetings of the Board of Directors.
  
 
 
 
Last but not the least, I also express my gratitude to all the employees of the Company for their sincere and dedicated services to the growth of the Company.