National Credit and Commerce (NCC) Bank PLC is expected to strengthen its focus on Islamic banking services to meet demand of its growing number of Shariah-based clients, and to transform the bank into their reliable Islamic partner.
As part of the plan, the second generation conventional bank has decided to initially open Islamic banking windows in its 62 branches in the next one year.
The market for such unconventional banking is growing and many aspirations of the Shariah-based clients could not be met by the existing players, NCC Bank Managing Director and Chief Executive Officer (CEO) M. Shamsul Arefin said.
He was sharing the bank's current and future plans of actions in an exclusive interview with The Financial Express (FE) recently.
The banker, having around 31 years of experience in the banking industry, said that the demand for Islamic banking continued to rise despite the fact that many of their expectations to banks remained unmet.
In November 2022, he said, the bank opened a full-fledged Islamic banking branch in the city's posh Gulshan area where administrative costs are high, but the branch received remarkable response from the targeted groups there.
"In just one year, we managed to receive Islamic deposits amounting to Tk 12 billion. We made handsome profits from the branch. It means the Islamic banking has huge potential here," he said.
In response, Mr. Arefin said, the bank alongside its conventional banking has planned to focus more on the unconventional banking operations with transforming it into a reliable Islamic banking partner. As part of the objective, they decided to open Islamic banking windows or corners in its 62 branches in the next one year.
"We've already sought approval from the Bangladesh Bank (BB) for opening such a window, which will be spread across other branches in phases," said the bank's top executive.
According to him, the bank has already started hiring human resources and providing necessary training to their employees to run a window of Shariah-based banking operations in their conventional banking branches.
Talking about the bank's strongest parts that differentiate the bank from other banks, he said the corporate governance practice and diversified portfolio are two major strengths of the lender.
He said the board members of the bank give them enough freedom to make decisions without any intervention, which is unique. They, however, advised to maintain credit quality.
"So, we can take decisions freely because we know our board will approve it," he added.
As a matter of fact, he said, the bank managed to maintain key indicators like capital adequacy, ADR (advance deposit ratio) and forex in a comfortable situation, which is reflected in the central bank's recent recognition of categorising the lending entity as a green-zoned bank.
He said there are many banks facing difficulties in settling LC (letter of credits) payments amid forex dearth and face cut in credit limit by their corresponding banks, but the NCC Bank did not face any such problem in a single case.
Because of the bank's satisfactory repayment performances, he said, its corresponding banks have enhanced credit limits up to 50 per cent.
Regarding the NPL (non-performing loan), he said the NPL as percentage of total outstanding loans was 6.85 per cent by the end of 2022 and it declined to 5.66 per cent in 2023.
To reduce the burden of bad loans, the experienced banker said the bank put utmost priority to cash recovery. The amount of bad loans dropped to Tk 12.96 billion in 2023 from Tk 14.36 billion recorded a year ago.
"We have planned to bring down the NPL below 3.0 per cent by 2026," Mr Arefin said.
Regarding the priority lending areas, the NCC Bank's top executive said that corporate lending accounts for 70 per cent while SMEs retails and others hold the remaining part.
"We want to reduce corporate lending concentration by 10 per cent within 2026 by concentrating our focus on SMEs, retails and others," he added.
NCC Bank serves a large customer base - comprising individuals and institutions - through a network of 128 branches, 7 sub-branches and 126 ATMs across the country until June, 2024.
As of June 2024, the bank's deposit portfolio stood at Tk 241.20 billion, while the volume of its loans and advances was Tk 229.65 billion.
It bagged export proceeds amounting to Tk 45.96 billion and paid import bills equivalent to Tk 107.29 billion. It also received inward remittance amounting to Tk 34.44 billion until June, 2024.
The bank earned Tk 4.81 billion in profit before tax in 2023.
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