Dear Shareholders and Stakeholders

Assalamu ‘Alaikum Wa Rahmatullah.

It is indeed a great honor for me to welcome you all to the 24^th Annual General Meeting of IIDFC PLC. At the very beginning, I wish you all sound health and happiness. I would like to express my heartfelt gratitude and regards to all of you for your continued support and inspiration that helped us to continue our business operation despite facing tremendous challenges throughout the year 2024. In 2024, Bangladesh encountered significant economic challenges marked by persistent inflation, a decline in private investment, a decrease in foreign exchange reserves, and ongoing political instability. These factors collectively contributed to an adverse economic climate, complicating fiscal management and diminishing the confidence of both domestic and international investors. However, despite having adverse circumstances, IIDFC found its path of continued value creation for all stakeholders. 

From the beginning of 2024, many finance companies have been facing liquidity pressure. The interbank call money rate increased to 10.23 percent at the end of December 2024 from 9.19 percent at the end of December 2023. In 2024, the Bangladeshi economy encountered substantial challenges characterized by elevated inflation rates, a cost-of-living crisis, and a fragile banking sector compromised by loan defaults. The economy also grappled with an expanding balance of payments deficit, diminishing foreign reserves, a depreciating currency, escalating income inequality, and sluggish export growth. These challenges were exacerbated by structural inefficiencies and inadequate governance, which ultimately led to a decline in confidence in the economic landscape. The Finance Company Act 2023 imposes a cap on deposits for Finance Companies and requires them to recover the cost of funds from borrowers. Consequently, like other financial institutions, IIDFC could not realize its receivables from the borrowers at a satisfactory level and had to collect high-cost deposits from investors. 

To strengthen the foundation of the business and safeguard from future uncertainties, IIDFC had taken provision of Tk 490.29 crore till the year 2024 as part of its five years plan for absorbing the provision shortfall as per approval from Bangladesh Bank. 

Bangladesh's economy is recovering in 2025, buoyed by rising remittances, stable exports, and falling inflation. However, challenges like slower GDP growth and the need for structural reforms persist. Considering the overall economic challenges, the management of the Company emphasized doing business cautiously and reducing NPL to maintain a healthy portfolio.

Now, I have the honor and pleasure to present the Annual Report for the year ended on December 31, 2024.

GLOBAL ECONOMY

The post-pandemic global economic recovery has been uneven and fragile, hindered by geopolitical and policy challenges. The Ukraine-Russia conflict has disrupted energy supplies and food exports, fueling inflation and slowing growth, especially in Europe and developing regions. Additional U.S. tax tariffs on imports have further strained international trade, raised costs for businesses and consumers, and increased market uncertainty. These factors complicate recovery efforts and call for coordinated global policy responses.

In the World Economic Outlook (WEO) April 2025, International Monetary Fund (IMF) International Monetary Fund (IMF) has projected that global growth is to drop to 2.8 percent in 2025 and 3 percent in 2026, down from 3.3 percent for both years in the January 2025 WEO Update, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (2000-19) average of 3.7 percent. In the reference forecast, growth in advanced economies is projected at 1.4 percent in 2025, with the U.S. expected to slow to 1.8 percent due to policy uncertainty, trade tensions, and softer demand. Growth in the euro area is forecasted at 0.8 percent, a slight decline. Emerging market and developing economies are anticipated to experience slower growth at 3.7 percent in 2025. Global headline inflation is expected to decline, reaching 4.3 percent in 2025.

ECONOMY OF BANGLADESH

Bangladesh initially experienced a bounce back in its economic growth following the pandemic. However, in the fiscal year 2023–24, the country saw a sharp slowdown, with GDP growth plummeting to just 4.22%. This marked the weakest growth in four years, falling significantly short of the government’s ambitious targets of 6.5–7.5%. The turbulence of 2024, characterized by political unrest, protests, and soaring inflation, had a serious impact in FY2024–25, leading growth projections to drop to the 3–4% range, according to the World Bank, IMF, and ADB.

CHALLENGES

Bangladesh's economy is facing a series of serious challenges that threaten its growth and stability. Economic growth has slowed, with GDP projections dropping to around 3.3% due to weak investment, sluggish exports, and global uncertainty. Persistent high inflation is eroding household purchasing power and straining fiscal resources. The banking sector is struggling with rising non-performing loans and liquidity issues, while low tax revenues limit the government's development funding. Additionally, Bangladesh's heavy reliance on garment exports makes it vulnerable to tariff shocks, especially as it prepares to graduate from its Least Developed Country (LDC) status in 2026, which will remove vital trade privileges.

The recent trends in weighted average lending and deposit rates showed upward movement. The weighted average lending rate increased consistently and stood at 11.84 percent at the end of December 2024. At the same time, the weighted average deposit rate stood at 6.01 percent at the end of December 2024 from 4.92 percent of end January 2024, later it increased further and reached to 6.29 percent at end of May 2025. 

In FY 2023-24, both stock markets, the Dhaka Stock Exchange PLC. (DSE) and the Chittagong Stock Exchange PLC. (CSE), experienced some volatility. The market capitalization of all securities decreased significantly in both markets. The market capitalization of DSE and CSE decreased by 15.15 percent and 9.5 percent (approx..) respectively in December 2024 compared to the end of trading in July 2023. During the same period, the DSE Broad Index (DSEX) and CSE Overall Price Index decreased considerably by 17 percent and 22 percent respectively. 

Due to continuing overall current account balance deficit, foreign exchange reserves declined to around US$ 26.21 billion at the end of December 2024 from around US$ 27.13 billion at the end of December 2023. It is noteworthy that exports increased by 10.36 percent to US$ 44949.30 million during July-May FY 2024-25 compared to the same period of pervious fiscal years. Bangladesh import slightly increased by 5.31 percent to US$ 63963.1 million during July-May FY 2024-25 compared to the same period of pervious fiscal years. Foreign exchange reserves stood at US$ 24863 million at the end of September 2024. According to Bangladesh Bureau of Statistics (BBS), in 2023 total export and import of goods and services recorded an increase by  US$ 1106 and decrease by US$ 11101 million respectively resulting in a trade deficit at goods and services of US$ 9995 million. The growth of export and import in December, 2023 increased by 1.93 and decreased by 11.84 percent respectively comparing to December, 2022. World Economic Outlook July 2024 published that the world trade volume of goods and services slowed down from 5.6 percent in 2022 to 0.8 percent in 2023. However, Bangladesh’s export growth is on a positive trend. Besides, total receipts of remittances increased by 2.75 percent to US$ 21,610.73 million during FY 2022-23 against the decrease of 15.12 percent during FY 2021-22.

Despite all challenges, the economy of Bangladesh performs reasonably well due to time-benefitting, appropriate, and supporting monetary and fiscal policies. The near-term economic outlook seems quite favorable, but it critically depends on the length and intensity of Russia-Ukraine war, the spree of interest hikes by the Fed and exchange rates. Improvements in these challenges will expedite Bangladesh’s future economic gains. However, in case of any adverse consequences of the above external issues, the Bangladesh economy has shown enough resilience to remain stable in its current condition.   

IIDFC’s Performance

The business portfolio of IIDFC decreased to Tk. 1,002.64 crore in 2023 from Tk. 1,178.44 crore in 2022. The Company’s consolidated operating loss stood at Tk. 52.52 crore at the end of 2023 from operating loss of Tk. 28.65 crore in 2022. The Company’s non-consolidated operating income stood at negative balance of Tk. 66.16 crore in 2023.

IIDFC’s Consolidated Loss before Provision and Tax was Tk. 84.29 crore in 2023 and Loss after tax was Tk. 170.19 crore in 2023. IIDFC’s Non-Consolidated Loss before Provision and Tax was Tk. 86.77 crore in 2023 and Loss after tax was Tk. 166.98 crore in 2023 as against Tk. 293.69 crore loss in 2022.

In 2020, IIDFC obtained 5 years’ time i.e. up to 2024 from Bangladesh Bank to make up provision shortfall against previous NPL in addition to current-year’s additional requirement. According to the time plan approved by Bangladesh Bank, till 31 December 2023, IIDFC has kept 441.93 crore as the accumulated provisions for loans and advances (including investments) and the accumulated interest suspense is BDT 136.7 crore. The rest amount of required provision and interest suspense of BDT 66.07 crore will have to be provided in 2024 along with any additional requirements from new classification of loans and advance.

CONCLUDING REMARKS

Due to global pandemic impact followed by the Russia-Ukraine war crisis and ongoing economic challenges, IIDFC, like many other financial institutions, faced challenging time throughout the year 2023. However, despite having such adverse situation, IIDFC managed to persist due to its prudent strategies and decisions. We believe the situation not only impacted the overall business environment severely, but also created new opportunities for the financial sector.

I would like to extend my appreciation and gratitude to the honorable Chairman and respected members of the Board of Directors for their continued support and guidance. I am deeply indebted to the officials of regulatory bodies for their prudent guidance. Finally, I would like to thank all our valued stakeholders as well as my colleagues for their sincere support throughout the journey.

Mr. Abu Shadat Mohammad Shahin

Managing Director