Dhaka Bank Limited has planned to focus its financing in retail and small and medium enterprises (SME) for minimising risk and diversifying portfolios by 2025, the bank's top executive has said.
Under the plans, the investment in retail and SME will be reached at 40 per cent of its total loans and advances within the next four years from the existing level of 20 per cent.
"We'll double our investment in retail and SME sectors aiming to facilitate the ongoing financial inclusion initiatives through bringing more un-banked people in the banking network," Emranul Huq, managing director (MD) and chief executive officer (CEO) of Dhaka Bank told the Financial Express (FE) recently ahead of the bank's 26th anniversary.
Dhaka Bank started its journey on July 05, 1995 with a slogan 'Excellence in Banking.'
"We're also focusing on the CMSMEs sector, gradually aiming to help achieve sustainable development of Bangladesh," the CEO explained. "Dhaka Bank has always been a part of the country's development."
The leading PCB is also working continuously to develop digital banking instead of the existing 'brick and mortar' one for providing world-class services to its customers, according to the top executive.
As part of the moves, Dhaka Bank has introduced one of the most prominent mobile banking apps 'DBL Go,' Internet Banking, Bills to Cash, Trade Cloud, Ezy Bank and many other tech-based services for its customers, who are being highly benefited from these services.
"Although we have always been focusing on technology-based banking, in recent times FinTech has been the core of our focus," Mr. Huq said while replying to a query.
FinTech is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services using smartphones or internet.
"We're working to introduce more tech-based products and services in the coming days to meet the growing demand for our valued clients, particularly the new generation," the CEO said while replying to another reply.
He also said since inception Dhaka Bank is one of the tech-based banks and till now we have been among the top most digital banks of the country.
Dhaka Bank has been awarded for the Robotic Process Automation in the year 2020.
Besides, the second generation PCB has been honoured with the highly esteemed 'Best Corporate and Investment Bank of Bangladesh 2021' award from AsiaMoney for its comprehensive coverage from corporate clients to investment banking and the capital markets, combined with its ability to ride out the coronavirus pandemic, the CEO added.
As per the strategies, Dhaka Bank has always prioritized quality over quantity and therefore steady growth maintaining the quality is its ultimate goal.
"And in case of short term strategy, we are monitoring the overall business segments both national and international and trying to move with the best tide so that we can reach our destination up and top," the CEO explained. "We also want to take our beloved organization to the topmost position in the industry."
He also said Dhaka Bank has already built a large network of correspondence banking with almost all the multilateral agencies and hundreds of correspondents across the world.
The leading PCB handles around 3.5 per cent of the country's foreign trade having almost all the large business houses in the portfolio, according to the CEO.
Regarding fund management strategy, the CEO said Dhaka Bank has taken extensive strategies to channel the excess liquidity through its treasury business.
"We're mainly focused on shorter term investment rather than going for a long term financing in order to match the bucket of the lending and borrowing portfolio," Mr. Huq, 35-year experienced commercial banker, said while replying to another query.
He was appointed as the MD and CEO of Dhaka Bank with effect from February 22, 2020. Prior to this role, he was serving the PCB as the Additional Managing Director and Chief Business Officer.
Mr. Huq started his career with Bank of Credit & Commerce International (BCCI) in Dhaka as Management Trainee in 1986.
Before joining Dhaka Bank in 1998, he also worked at Eastern Bank Limited and Credit Africa Bank Limited in Zambia in various capacities.
The senior banker welcomed the Bangladesh Bank (BB)'s policy supports saying that such supports are helping the scheduled banks to strengthen their capacity to face challenges as well as to survive the world's one of the most difficult and critical times.
He also said the BB has imposed an additional 1.0 per cent provision to cover the associated risks.
"With this arrangement, in spite of having difficulties in maintaining profitability, risks are covered to a greater extent and ultimately the banks are in the process to strengthen their base," the CEO explained.
On the other hand, the government is backing up the banking sector by covering partial expenditures related to implementation of the stimulus packages for various business sectors, which is also a great support for the industry, he added.
About the upward trend of classified loans in the country's banking system, Mr. Huq said non-performing loans (NPLs) are an inseparable part of the lending business and this can't be zeroed.
"However, if we can strengthen our credit assessment capabilities, that will reduce the probability of creating NPLs almost by 50 per cent. Rest is related to monitoring and recovery," he noted.
He also said close monitoring of the credit portfolio helps the banks to keep the NPLs at a lower level. "I think that will be the ultimate strategy in the coming years."
Meanwhile, the amount of classified loans increased by more than 7.0 per cent to Tk 950.85 billion in the first quarter of 2021 from Tk 887.34 billion in the preceding quarter despite providing policy support by the central bank.
Regarding possible extra challenges in the country's banking sector, the senior banker said this is one of the major concerns for the banking industry in the next couple of years.
As per the various facilities allowed by the government and the central bank of Bangladesh since March 2020, many borrowers have been exempted from making regular repayments.
Moreover, classification status of the loan portfolios is not being changed.
All these facilities were awarded by the government to ease up the pressure on the business community as well as to help the economy to get back to the normal phase.
However, what will happen once all these facilities are over that could be a matter of concern, according to the CEO.
"This is obvious that all the banks will not be able to handle the crisis with the same efficiency. But on a broader note, the overall banking industry will overcome the challenge if we can take our decisions with prudence," he noted.
He also said the interest rates on deposits have come down, which reduces the cost of doing business. "For this reason the survival of the banking industries is possible."
The weighted average interest rate on deposits fell to 4.14 per cent in May 2021 from 5.24 per cent in the same period of 2020 while such rate on lending came down to 7.40 per cent from 8.18 per cent, according to the central bank's latest statistics.
However, the weighted average spread between the lending and deposit rates offered by all the scheduled banks rose to 3.26 per cent in May 2021 from 2.94 per cent in the same period of the last year.
During the period, the interest rate spread widened as the banks cut their deposit rates deeper than that of the lending rates, the BB data showed.
Currently, Dhaka Bank serves a large customer base comprising individuals and business entities through a network of 105 branches across the country.
Besides, the PCB is also providing services to the clients through more than 50 ATM (automated teller machine) booths along with 14 sub-branches.
siddique.islam@gmail.com