Tarique Afzal — FE photo AB Bank wants to recover and reduce its volume of non-performing loan (NPL) on priority basis, the top executive of the bank said.
The other priorities the bank is considering to implement in short-term are increasing volume of deposit, boosting morale of its employee, imparting substantial training for them and investment on low-risk small and medium enterprises, he said.
"We have recovered significantly from huge volume of NPL last year and in first six months of this year… now our immediate target is to bring the percentage down below 10 per cent," President and Managing Director of the AB Bank Tarique Afzal told The Financial Express in an interview.
He said if the NPL can be reduced below 10 per cent, all the indicators will start showing healthy sign.
The AB Bank MD said the next step is to assess the real position of the bank as far as innovation and quality of banking services are concerned.
Mr Afzal said not only AB Bank; the whole banking industry in Bangladesh is facing a lot of challenges.
He said these challenges were anticipated long time ago.
"The growth of the customer or borrowers in the banking has not been very significant, the banks ended up going to the same borrowers year after year," he said.
He said whoever did well in manufacturing and garments sector all the banks ended up going to those corporate borrowers for money.
"As a result most borrowers became defaulters to at least three out of five banks," he said.
The banks did not assess whether one specific customer is capable or willing to deal huge amount of loans, he said.
He said there should be mandatory rule to ensure diversification of borrower and lenders in banks, not only in corporate but also in medium sector.
He said banks should identify Bangladesh market in four or five sectors and provide loans accordingly and maintaining diversification.
"Then every year there will be a graduation from small to medium business owners, medium to corporate business owners, thus there will be 100 new borrowers in the corporate and new borrowers in the small industry," he said.
"That would have given a new dimension in banking sector. There would be new income avenue for all," he said.
He said liquidity concentration in the banking is one of the key reasons for existing liquidity crunch.
"This is also the reason of rising interest rate," he said adding that introducing single interest rate is far-achieving now in the present industry scenario.
He said AB Bank has been able to contain its NPL which has not been growing recently.
"Now we are diversifying our portfolio, focusing on SME and retail," he said.
He said the bank management has another target for improving the relationship with its clients.
The AB Bank MD said the bank is also focusing on increasing agent banking outlets. Currently AB Bank has some 40 outlets, at the end of this year they want increase the number to 200.
He also identified lack of training of young and new bankers who have joined in the industry in recent years.
Tarique Afzal has recently been appointed as the President and Managing Director of AB Bank.
Prior to the appointment, he was the Acting President and Managing Director of the Bank. Earlier, he joined AB Bank as Deputy Managing Director.
AB Bank (formerly Arab Bangladesh Bank) was established on 31 December 1981. This is the first private bank in Bangladesh.
The bank's total deposits is Tk 235.44 billion, loans and advances Tk 241.07 billion, total assets Tk 322.53 billion, interest income Tk 194.7 billion and profit after tax Tk 20 million, according to its annual report 2018.
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