Asiamoney best bank awards 2020: Bangladesh
Best domestic bank: Brac Bank
|Selim R F Hussain, 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.”
Best corporate and investment bank: Eastern Bank
|Ali Reza Iftekhar, Eastern Bank
No surprise here for regular Asiamoney readers. Although Eastern Bank was incorporated in 1992, its run as Bangladesh’s one-stop solution for corporate customers dates back to 2002. Since then, it has consistently buttressed its reputation for innovative products and services, a quality portfolio and sustainable growth.
It is sometimes hard to discern where Eastern Bank ends and a variety of industries begin. The institution boasts unparalleled reach into agriculture, aviation, cement, energy, infrastructure, pharmaceuticals, power, telecommunications, ready-made garments, textiles, the list goes on.
The bank’s structured finance division has long played a pioneering role in offering products that prod peers to raise their games, too. Now, the unit is championing financing options in energy efficiency, including sustainable and green initiatives. And 2019 was a banner year in these and other segments.
Over the last year, Eastern Bank arranged a $78 million syndicated term loan for Midland East Power, a $55 million deal for Bangla Trac Power, a $25 million transaction to increase Butterfly Manufacturing’s energy efficiency, as well as a $10 million loan so that Eco Ceramics Industries can go green.
Eastern teamed up with the Asian Development Bank on a $20 million credit facility and a revolving credit scheme for $100 million. It also signed deals with the International Islamic Trade Finance Corporation and its sister institution Islamic Development Bank.
Steady growth in its regional branch network consistently pulls in more business. The trade offices it has opened in China and India add to a network that stretches from Hong Kong to Myanmar. Under chief executive Ali Reza Iftekhar, Eastern Bank has entered fintech partnerships from Singapore to Dubai.
The 9.14% rise in net interest income stacks up well against peers and speaks to the overall success of the strategy. So does the 19.6% jump in returns on average equity, 10.8% growth in loans and 20.3% rise in deposits. The bank’s non-performing loan ratio is 3.2%, versus 4.36% in 2014.
Growth areas in the year ahead include onshore agent banking services, for which the bank won central bank approval in 2018. Supply-chain financing also shows promise.
Coupled with one of Bangladesh’s strongest balance sheets, these and myriad other opportunities beckon as Bangladesh opens to a fast globalizing world.
Best international bank: Standard Chartered
|Naser Ezaz Bijoy, Standard Chartered Bank|
Anyone searching for Asia’s next boom town could do worse than check Naser Ezaz Bijoy’s whereabouts. His stints in Vietnam, the Philippines and the United Arab Emirates dovetailed nicely with those countries’ transitions from development backwaters to investment darlings.
As fate would have it, Bijoy’s time in Dhaka running Standard Chartered Bank coincides with Bangladesh approaching boom-economy status.
StanChart walks away once again with Asiamoney’s top international honours, not just because of its unrivalled role as trusted gateway to a rather event-rich place, and not just because of its pivotal role in the growth of retail banking in the eighth-most populous nation.
Nor is it just because of the bank’s unique place at the centre of the global payments system, trade and investment flows or in pioneering digital banking.
It is the expertise StanChart brings to an economy growing at 8%.
“This place still has huge, unrealized potential,” Bijoy says. “The domestic economy is quite large and set to grow exponentially.”
The same could be said of StanChart’s Bangladesh operations. Its 2,100-strong staff and 24 branches in seven cities around the nation make it an unparalleled conduit to rural consumers.
Equally intriguing is the deep network of investment corridors that Bijoy’s team built with cash-rich east Asia. In October 2019 alone, for example, year-on-year income from the Japan corridor jumped 95%. The China channel was up 45% that same month. South Korea links also brim with potential.
Such outreach explains why StanChart accounted for 8% of all external trade financing in 2019, 15% of power generation financing, 25% of the onshore dollar clearing business and fully 52% of all SME lending by foreign banks.
And then there are the deals the bank oversaw: the $1.5 billion expansion of Dhaka International Airport’s new terminal 3, the enormous Dhaka MRT line and the four-lane Kalna Bridge project, as well as the 225-kilometre Padma Rail Link.
Bankers aren’t necessarily altruists, but as Bijoy sees it, the better the Bangladesh economy does and the faster per-capita incomes blow past the $2,000 mark, the more business StanChart and its peers will do.
Those peers are upping the pressure on StanChart to maintain its position at the front of the pack. Citi, for example, put up serious competition in 2019. Its role in leading Bangladesh’s largest local-currency loan syndication deal and first-ever international corporate bond give it a credible claim on the award.
For now, though, StanChart is still the leader of the pack.
Best digital bank: Prime Bank
|Rahel Ahmed, Prime Bank|
Few economic peers are going digital as rapidly as Bangladesh. Even in this disruptive context, 25-year-old Prime Bank is a stand out. A bank that is, in the words of chief executive Rahel Ahmed, “moving faster than technology.”
Prime Bank’s downtown HQ certainly fits the bill. Its open floor plan, cavernous high-ceilinged rooms, chic coffee bars and futuristic furniture feel more like a Silicon Valley campus than a representative of the banking establishment.
The real buzz, though, is the recently launched PrimeDiGi platform, an app that includes the nation’s first-ever digital savings account and has all the associated credible cybersecurity bells and whistles.
As Ahmed explains it, Bangladesh, like peers in developing Asia, is working to harness the so-called fourth industrial revolution with world-class know-your-customer safeguards. PrimeDiGi, in this regard, is the core of the bank’s strategy to stay at the forefront of an industry evolving at blistering speed.
There are myriad ways Prime is innovating. It introduced a real-time business to provide enhanced trade and cash-management options to corporate customers. Yet the real tasks, as Ahmed sees it, are “keeping pace with the country’s digital growth” and exploring “the untapped potential of the digital landscape of Bangladesh.”
To win a bigger share of the local market, Prime is constantly enhancing its self-service banking channel Altitude.
Recent initiatives include more digital payment options, e-loans, e-credit and nano-lending to reach the poorest of the poor.
Prime is also raising its tech game to woo a young population anxious to move up the wage ladder.
At present, 60% of Bangladesh’s population is between 15 and 45 years old. By 2025, it will make up an estimated 66%. The needs and interests of this demographic are evolving in sync with the nation’s 8% growth.
Today, this group of internet-savvy, mobile-phone-crazed consumers accounts for 72% of Prime’s total clients – customers who can vote with their feet if the bank’s digital offerings fall behind.
Of PrimeDiGi users, for example, 95% are between 18 and 45. This reach means Prime is well positioned to help Bangladesh increase financial inclusion through digital means. Yet it also ups the pressure on Ahmed’s programming and coding teams to ensure that “faster than technology” is a corporate way of life and not just a marketing slogan. Given Prime’s keen focus on the digital world, there is every reason to bet on its continued leadership.
Best bank for SMEs: IDLC Finance
|Arif Khan, IDLC Finance
Once again this year, Bangladesh’s leading non-bank financial institution is a shoo-in for top lender in the small and medium-sized enterprises sector.
Starting with its first dedicated SME branch in the northern Bogura district back in 2006, IDLC has been doing its bit to strengthen the Bangladesh economy’s foundations from the ground up.
All too often, developing-nation governments give outsized importance to the top-down economy – to corporate giants that make headlines abroad. It is SMEs, though, that drive the lion’s share of growth and create jobs – and Arif Khan, who has run IDLC since March 2016, is well aware of this.
Khan’s raison d’être is “financing happiness,” he says.
Yet his team is financing inclusion even at a time of declining private-sector credit growth, as seen over the last year. Despite the global trade war, IDLC in 2019 delivered an impressive 8.3% year-on-year jump in portfolio growth. Its total SME portfolio rose to $448 million, from $410 million in 2018. In fact, November 2019 saw the highest-ever monthly disbursement of $27.6 million. Overall last year, the client base grew 10.3%.
“To us,” Khan says, “these numbers present a fascinating tale of success and inspire us to achieve greater heights. We are committed to expanding our presence across the country and provide impeccable service” by “establishing ourselves as a data-driven and efficiently run organization.”
Mohammad Jobayer Alam, head of the SME division, is particularly bullish on thinking small to reap big rewards.
“It’s the very small segment that we are targeting,” he explains, whereas most other financial institutions in Bangladesh are turning elsewhere.
One deterrent: credit risk management requirements can be quite onerous and resource intensive, so IDLC built its own credit-scoring system in conjunction with the IFC and Crisil, an Indian analytics firm.
It allows IDLC to push into the under-served market for loans of between $2,500 and $17,000. This range is too high for traditional microfinance operations, but too low for conventional banks. In 2019, IDLC disbursed $15.1 million in very small enterprise (VSE) financing.
IDLC’s Purnota unit, which targets female entrepreneurs, is growing and drawing rave reviews around the industry. Along with various lending offerings, including unsecured loans, the service offers training on book-keeping and advice on securing operating licences in assorted industries.
What’s more, IDLC is managing to expand into under-served businesses with minimal blowback. Its non-performing loan ratio is 2.9%, well below the industry average of 11.9%, and it boasts a 1.4% return on assets, versus the industry average of 0.7%. Not bad for an operation that thinks small.
Best bank for CSR: The City Bank
|Mashrur Arefin, The City Bank
When this 37-year-old institution won Asiamoney honours in the past, it was in premium services. No other local lender can compete with its priority banking division, Citygem. More recently, though, the bank led by chief executive Mashrur Arefin is impressing us with its corporate social responsibility efforts.
Year after year, Citygem rolls out new services to its 4,500-plus customer base, one certain to expand with Bangladesh’s consistently buoyant economy. The services come with all sorts of bells and whistles: VIP lounges at Hazrat Shahjalal International Airport? Check. Exclusive banking centres from Dhaka and Chittagong? Absolutely. Access to world-class medical centres and valet parking services? Most definitely.
Equally notable is how The City Bank is raising its CSR game. Take its innovative push into banking for women. The ‘City Alo’ offering boasts women-only branches and specially designed entrepreneurship courses in conjunction with North South University.
Its collaboration with the IFC sponsors financial-literacy support groups with names such as ‘Breaking up the boy’s club,’ ‘How moms make budgets’ and ‘Building resilience through inclusion.’
“Our mission on gender,” as Arefin puts it, “is to empower you by giving you financial assistance and support to expand your business or better manage your personal necessities with a reimagined banking experience.”
At the flagship City Alo branch downtown on Gulshan Avenue, clients enjoy something approaching the WeWork treatment. Women can walk in, grab a cup of coffee and decompress in the lounge-type seating area while meeting bank officers.
The bank is also supporting the Dhaka Metropolitan Police in counter-terrorism efforts and is helping to finance the government’s anti natural-calamity and relief-fund efforts. It is raising awareness of Down Syndrome risks and promoting the teaching of science, technology, engineering and mathematics classes in schools and colleges. It is supporting programmes for the holistic development of children with special educational needs, including autism.
Its initiatives extend to fighting human trafficking and smuggling in rural communities, as well as rural education, clean water, farming and public health and hygiene.
The City Bank facilitates a laptop programme targeting the visually impaired. It distributes blankets to the poor at 102 branches countrywide. Not exactly the community you would expect a bank geared toward premium clients to service. Kudos to The City Bank for doing its part to help spread the benefits of economic growth.
Best for microfinance: ASA
The Association for Social Advancement has come a long, long way since its humble beginnings in the remote village of Tapra 42 years ago.
Founder and president Shafiqual Haque Choudhury isn’t coy about recounting how ASA was born of stark necessity after the bloody, post-independence days of the mid 1970s. The economy was in ruins, with widespread famine, and government institutions were incapable of stabilizing the nation. Non-government organizations stepped in to save the day.
Some key domestic ones were created – and microfinance pioneer ASA was arguably the most important of the lot. Grameen Bank may have come first, and founder Muhammad Yunus may have won a Nobel Peace Prize, but ASA’s exponential growth, pioneering spirit and promotion of microfinance wins our top honour once again.
In the last year, its network of branches grew to 3,065 from 3,045 in 2018, covering almost 90% of the nation’s communities.
The mission, as Choudhury puts it, is to “improve the life quality of the people living at the bottom of the socioeconomic pyramid and establish a society free from poverty and economic disparity.”
This means that, for all ASA’s success and innovation, there is still much work to be done.
Like most of its peers in south Asia, Bangladesh is a decidedly overbanked place. Yet the vast majority of the population lives in far-off rural and nominally urban areas with limited access to traditional bank accounts and lines of credit.
ASA is a vital bridge between its seven million clients and the fast-globalizing economy with which they are keen to interact.
In our latest review period, ASA disbursed some Tk310 billion ($3.6 billion) in loans, up from Tk284 billion a year earlier, and maintained double-digit returns on equity once again. ASA’s solid financials owe much to steady loan growth and a 99% recovery rate on outstanding IOUs.
ASA’s dogged promotion of microfinance increasingly takes its executives to far-flung places. At present, Choudhury says, ASA is offering technical assistance in Ghana, India, Kenya, Myanmar, Nigeria, the Philippines, Pakistan, Rwanda, Sierra Leone, Tanzania, Uganda and Zambia. That’s quite a global multiplier effect for an institution that started 80 kilometres from Dhaka.
Along with financing, ASA runs a growing roster of non-financial technical assistance programmes as varied as agriculture, education, healthcare, hygiene, physiotherapy and sanitation. Naturally, micro loans related to these and other areas are readily available.
Women entrepreneurs are a particular focus in lending programmes, of course. So are, increasingly, small companies in one of the developing world’s most promising but liquidity-starved economies.