Asiamoney Best Bank Awards 2017: Bangladesh
Best domestic bank: The City Bank
Bangladesh has a lot of banks, 57 in total. Many are small and troubled, but Dhaka also hosts the headquarters of a handful of first-rate banks that invest in themselves, their customers and the country around them.
Three lenders stand head and shoulders above the rest: Brac Bank, Eastern Bank and The City Bank. And of that trio, the latter stands aloft, a worthy winner of the award for best bank in Bangladesh.
The City Bank, ably run by managing director and CEO Sohail Hussain, is on a multi-year run of good form. It posted a sharp rise in earnings and income in the last full financial year, with net interest income up 7.5% in the 12 months to the end of March 2016, investment income up 57% and pre-tax profit rising 25%.
Non-performing loans remain below the industry average, and the bank has continued to invest heavily in its digital banking offering, its onshore wealth management operations – which is also the best among domestic banks – and in its physical network, adding 38 domestic branches over the last financial year.
Hussain is proud of being the most-followed Bangladesh lender on Facebook, and in Dhaka recently, he outlined to Asiamoney his key ambitions for the years to come, which include a big new push into project finance and a concerted effort to further improve the bank’s wealth management and digital banking services.
Best corporate and investment bank: Eastern Bank
Ali Reza Iftekhar,
Eastern Bank, led by Ali Reza Iftekhar, remains one of Bangladesh’s best-run lenders. Its balance sheet is strong – it boasts one of the country’s lowest ratios of non-performing loans, at 2.69% as of the end of 2016. And its credit rating is solid, with Moody’s confirming the bank’s Ba3 rating with a stable outlook in February 2017, for a second straight year.
Bank chiefs and analysts interviewed in Dhaka for these awards unanimously praised Eastern Bank’s corporate banking platform. “They have been the best in this area for many years,” notes the CEO of a rival lender. Its corporate banking division has emerged as a key provider of project finance, trade finance and mergers and acquisitions advice.
Over the past three years, it has introduced 12 new-to-the-country financial products and services, and takes great pride in its corporate governance. Bangladesh’s capital markets are more of a work in progress.
Investment banking is a marginal pursuit in this south Asia nation, and the Dhaka Stock Exchange lacks depth. That is likely to change in the coming years, as a new generation of rising corporate stars taps the local market for capital.
And when they do, Eastern Bank is likely to be a key player. It regularly underwrites the deals that do pass through the DSE, an example being the initial public offering of Fortune Shoes, which raised Tk220 million ($3 million) in October 2016. A small deal, but bigger ones will come.
Best digital bank: Standard Chartered
There are plenty of candidates for this award – The City Bank and Eastern Bank both have strong digital offerings and are installing upgrades to keep themselves ahead of the pack – but Standard Chartered is a cut above the rest in the digital world.
Bangladesh is still a mostly cash-based economy, but that is changing, and the better banks are tweaking or overhauling their systems to cater to the changing demands of retail and corporate customers.
Standard Chartered has integrated a real-time gross settlement (RTGS) solution into its internet banking platform – a useful addition for any client seeking to complete high-value, low-volume interbank payments – and was the first lender to process a payment through the central bank’s RTGS platform. It is working to digitize more of its cash management services, introducing a best-in-class account payables management systems to all of its corporate clients and upgrading its systems in order to process more than 100,000 transactions an hour.
In 2016, StanChart introduced a new smartphone-based mobile wallet aimed at boosting financial inclusion among the country’s underbanked and unbanked populace, and has joined forces with bKash, the country’s largest mobile financial services provider, to make it easier and cheaper for smaller Bangladeshi corporates to complete low-value, high-volume transactions.
Best bank for SMEs: Brac Bank
|Selim Hussain, Brac Bank|
Brac Bank’s offering is not just devoted to small and medium-sized enterprises. There are good retail and corporate banking divisions at work here, too. But finding thriving Bangladeshi corporates and extending finance to them is what Brac Bank has been doing better than any of its domestic peers since it was founded 16 years ago.
Under chief executive Selim Hussain, Brac Bank has honed its attention on SMEs, increasing its share of overall lending to smaller enterprises to 39% of the total loan book at the end of 2016, up from 34% a year earlier. Hussain told Asiamoney that he wants that share – which had slipped before his arrival in December 2015 – to pass 50% by 2020.
And this is not just rhetoric: while Brac Bank under Hussain is intent on becoming the best overall lender in Bangladesh in the medium term, it is also clearly focused on cementing its place as the country’s most committed and preeminent SME lender.
In 2016, the bank’s outstanding SME portfolio expanded on an annualized basis by 28%, or Tk13.8 billion ($172 million), while the ratio of bad loans to overall lending in the SME division fell to 3.7% in December 2016, against 7.6% a year earlier.
Best international bank: Standard Chartered
Standard Chartered stands head and shoulders above its foreign peers in Bangladesh. HSBC has a solid local operation and a few other pan-Asian lenders are here in spirit, but no one can compete with the London-based, emerging market-focused lender.
StanChart’s country head and CEO, Abrar Anwar, told Asiamoney in Dhaka that Bangladesh was one of the bank’s “top-10” sovereign priorities, and it’s not hard to see why. This is one of the fastest-growing frontier markets, filled with people keen to learn and spend and make a better life for themselves. Moreover, it’s a market that, for the first time in years, isn’t riven with political conflict.
There is much to like here, a fact that StanChart, which posted domestic pre-tax profit of $180 million on total revenues of $281 million in the full year 2016, knows only too well. Its local finances are more than healthy; Standard Chartered was rated triple-A for the eighth straight year in 2016 by the country’s main credit rating agency, CRISL, and boasts a local capital adequacy ratio of 15.8%.
Few of its peers come close to matching its national presence, which includes 96 ATMs and 25 branches. It was the first lender, foreign or local, to issue credit cards, and remains the biggest domestic card distributor to this day. Around half of all local deposits with foreign banks are held by StanChart, which also accounted, at the end of 2016, for 79% of all advances extended to local customers by all foreign lenders.
Best private bank: Citygem (The City Bank)
Wealth management is still a young business in Bangladesh. If you are local and wealthy, your assets are often managed elsewhere, by private bankers in the likes of London, Dubai, or Singapore. But some lenders are seeking to make an impact, rolling out quality wealth-management services to high net-worth and mass-affluent clients.
Spearheading this push into domestic wealth management is Citygem, the priority banking arm of The City Bank, which has consistently grown in size and scale since being launched in 2013. In 2016, The City Bank opened eight new Citygem centres around the country, including, in November 2016, in the affluent Dhaka suburb of Banani. Each is designed to both act and look the part, with its polished and burnished offices, complimentary lunches, valet services, state-of-the-art lounges, on-site broking and real estate advice, and private offices for physical and virtual meetings.
The City Bank has also sought out fresh ways to attract new customers, becoming the sole local distributor of American Express cards, offering a 24/7 airport pick-up and drop-off service, free access to City Bank’s Amex Lounges at Dhaka Airport’s international and domestic terminals, and in 2016 signing an agreement with fitness club Aamra Active, giving Citygem customers discounts on memberships.
Best bank for CSR: Dutch-Bangla Bank
Dutch-Bangla Bank, founded in 1996 by a group of Bangladesh based entrepreneurs, working in cohort with the Netherlands based Development Finance Company, has always taken its responsibilities in the field of corporate social responsibility seriously.
The lender launched its first financial inclusion campaign in 2007, with the stated aim of bringing more people in rural regions into the banking sector and of boosting financial literacy across the country. A year later, it issued its inaugural standalone corporate and social responsibility report. Dutch-Bangla Bank is one of just two local lenders to implement a state-backed mobile banking system that aims to promote financial inclusion.
Its CSR mandate goes way beyond the world of banking and finance. Dutch-Bangla Bank has in recent years run campaigns to send blankets to victims of the 2015 Nepal earthquake, extended financial scholarships to more than 5,000 local students, donated Tk100 million ($1.25 million) to diabetic associations, funded campaigns to help reduce homelessness, and organized a plastic-surgery camp, which, as part of the ‘Smile Brighter’ programme, transforms the lives of hundreds of Bangladeshi children born with cleft lips and palates.
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