Brac Bank
If there’s any bank in Bangladesh that wears its values on its sleeve, it’s the one Selim Hussain has directed since 2015.
Few other bank chief executives could get away with saying things like “every kind of financing that we do has a values-based lens to it” and “if it’s good for society, if it’s good for mankind, it’s good for us”. But under Hussain, Brac Bank has staked a credible claim to being a financial backbone of Bangladesh’s economy.
Its name, after all, stands for Building Resources Across Communities. And, increasingly, it is doing just that – and profitably. In the most recent fiscal reporting period, net profit rose 5.7% from a year earlier. Brac’s Tk5.67 billion ($67 million) after-tax take compares with Tk3.98 million before Hussain took the reins.
That success owes much to Brac’s openness to disruption. It is still the nation’s best full-service lender, with increasing focus on the small and medium-sized enterprises market.
SMEs account for more than 45% of Brac’s total loan portfolio, well on track to the 50%-plus share that Hussain has in his sights. That compares with 37% for corporate loans and 18% for retail.
After a rough period between 2018 and 2019, when trade-war headwinds slammed markets everywhere, Brac’s tally of SME non-performing loans is moving in the right direction: 2.5% as of the third quarter of 2019, compared with 4.2% in the same 2018 period and 4.7% in 2017.
“The SME space is where so much of the real energy in this economy is right now,” says Syed Abdul Momen, head of Brac’s SME division. “That will not change anytime soon.”
What is changing, though, is how meteoric growth in Bangladesh’s mobile finance space – and Brac’s place as its biggest provider – is transforming the landscape. The astounding success of mobile payments unit bKash continues to impress. It is not just the connections this nine-year-old service has made, although investment from Jack Ma’s Ant Financial Services, the Bill & Melinda Gates Foundation and the IFC certainly help. BKash has already won 25 million active users and connects consumers with 30,000 merchants.
No challenge in Bangladesh looms larger than pulling the country’s largely rural population of 165 million into the financial system. Brac is helping Bangladesh do it, while enriching shareholders.
“Our bank always wants to be involved in financial inclusion and to do the right thing,” says Hussain. “And commercially, it’s very, very viable.”