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Brac Bank: leading the future of finance in Bangladesh

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The winner of Bangladesh’s Best Domestic Bank is an unsurprisingly dominant force in Bangladesh’s banking sector, with a strong focus on the country’s vast pool of small and medium-sized enterprises (SMEs), a partnership with the leading domestic mobile financial service, and a stated drive to ‘help clients to prosper’.

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Brac Bank was founded in 2001 as the banking arm of BRAC – Building Resources Across Communities, the world’s largest non-governmental organization (NGO). The bank was started with a primary vision to serve Bangladesh’s ‘unbanked’ SMEs. Over the past two decades, it has become a leader in the country in lending to both the SME and retail sectors and is now a major player in the wholesale banking sector, too. All signs point to a strengthening future as the bank looks to continue growing its coverage across SME, retail, commercial and corporate banking sectors.

Under the leadership of managing director and chief executive officer Selim R F Hussain, Brac Bank has grown its SME lending to more than 47% of its total loan portfolio, as of December 2019, while corporate and retail lending represented 35% and 18%, respectively.

SME loans had accounted for 35% of Brac Bank’s total portfolio when Hussain joined in 2015. But he instilled a renewed focus on SMEs, which grew to 39% of the bank’s total loan portfolio by the end of 2016. Hussain set a goal to increase the sector’s share of the portfolio to more than 50% by 2020, which the bank is on a clear track to achieving.

Importantly, Brac Bank is a full-service bank and has grown well across all client segments. Despite difficult market conditions in 2018-2019, the bank continued to be very profitable, with industry-leading 16% return on equity and 1.65% return on assets figures and a 15% capital adequacy ratio.

The bank has won the respect of its peers and attracted investment from international investors as it has grown, becoming one of the largest financial institutions in Bangladesh and achieving the highest international credit rating of any Bangladeshi bank. For its triumphant rise it has been awarded Asiamoney’s Best Domestic Bank three years running, from 2018 to 2020.

Brac Bank has also twice been awarded Best Digital Bank – a segment where it continues to be a leader. Its digital prowess follows a prescient decision to create a mobile finance services division in 2011 and invest in bKash – the primary mobile money service in Bangladesh and a ubiquitous name not just in the financial technology space but throughout the entire country.

Cutting edge services

Brac Bank is the controlling shareholder of bKash, a subsidiary which also counts China’s Ant Financial Services, the Bill and Melinda Gates Foundation and International Financial Corporation among its investors. With bKash integrated with Brac Bank, customers can pay different kinds of bills, repay loans, move funds to and from accounts, and generally avail of many kinds of banking and digital payment services.

The mobile app has captured more than 25 million users and signed up more than 30,000 merchants. From its creation, Brac Bank’s partnership with bKash has proved to be an astounding success in a banking system that is being transformed by mobile finance. Brac Bank has significantly enhanced its own technology platform over the past three years. The bank embarked on a three-year Digital Roadmap in 2019 aiming to offer many new products and services to its customers, and Hussain expects the first phase of that concerted effort to be completed within 2020.

"Brac Bank has been awarded Best Domestic Bank three years running by Asiamoney."

Brac Bank’s digital banking services are used across Bangladesh and chime with the bank’s roots in financial inclusion. Being founded by an NGO, this sense of corporate and social responsibility has always defined Brac Bank. The bank’s name and its tagline – ‘unwavering trust’ – leverage the NGO’s fame and embody its founding ethos. It was not launched as a traditional commercial financial institution, instead it stepped in to provide small ticket loans for budding entrepreneurs at a time when it was nearly impossible for SMEs to find financing anywhere else.

Brac Bank represents these core values on an international platform, by being a member of the Global Alliance for Banking on Values (GABV) – the only Bangladesh-based bank to join the alliance. GABV comprises more than 60 financial institutions and 16 strategic partners and operates across Asia, Africa, Australia, Latin America, North America and Europe. It serves more than 67 million customers, with more than $200 billion in assets under management and is supported by more than 76,000 co-workers.

Servicing the unbanked

Brac Bank has always championed the GABV philosophy of ‘people, planet and prosperity’ – a very relevant approach to banking in Bangladesh, which is a country in need of strong private sector institutions to drive financial inclusion and guide a predominantly rural population through a modernizing financial system.

Unsurprisingly, Brac Bank also offers the leading women’s banking proposition in Bangladesh and has been a member of the Financial Alliance for Women, an international women’s banking forum, since 2017. The bank also signed up to the United Nations Global Compact in 2019 and has aligned its values and policies to the UN Sustainable Development Goals.

Brac Bank has a strong CSR focus, consistently stepping up in times of hardship and contributing regularly to the Prime Minister’s Relief Fund. Among its commitments to society is the bank’s support of the famous Prothom Alo Trust scholarship, which helps educate meritorious students from poor families who ordinarily would not be able to afford higher learning. The bank also generously supports and sponsors students at the undergraduate level at two of Bangladesh’s best educational institutions, Dhaka University and Brac University.

Overall, Brac Bank is a standard bearer for corporate governance, financial performance and values-based banking in the Bangladesh banking industry.

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