City Bank revises investment amount in digital bank

The City Bank Ltd has revised the investment amount to be invested in a proposed digital bank named “Digi10 Bank Plc.

In a stock exchange filing on Wednesday, the first-generation private lender said the board has revised the investment amount to Tk 138.8 million instead of the earlier disclosure of Tk 277.80 million.

The proposed digital bank is a joint venture consortium comprising 9 commercial banks who together will apply for a digital bank with the proposed name of ‘Digi10 Bank Plc’, according to the filing.

The revised amount would be equivalent to 11.11 per cent of the total paid-up capital of the proposed digital bank of Tk 1.25 billion.

On Tuesday, the bank said in a stock exchange filing, that it decided to invest a maximum Tk 277.80 million in the proposed digital bank.

A digital bank, also known as Neobank or virtual bank, operates exclusively online without traditional physical networks. That is the main difference between a digital bank and a conventional bank.

It will, however, have physical registered headquarters.

The Bangladesh Bank invited applications for proposals to form digital banks on June 21. The deadline was initially set at August 1 this year.

The deadline was extended to August 17 to give entrepreneurs more time to prepare detailed applications with all the necessary documents.

As per the guidelines, a digital bank will have a minimum paid-up capital of Tk 1.25 billion. The capital will come from sponsors.

Sponsors’ shares cannot be transferred within five years from the commencement of the business, without prior permission from the Bangladesh Bank.

The guidelines are aimed at inspiring fintech companies, tech firms, microfinance institutions, mobile financial service-providers, banks, and financial institutions to come up with joint ventures for setting up digital banks.

A digital bank must go for an initial public offering (IPO) within five years from the date of getting licence from the central bank, according to the guidelines.

Digital banks will not be allowed to carry out transactions in foreign currencies or engage in trade finance. It will, however, be allowed to collect wage earners’ remittances.

It may issue virtual cards, QR codes, and other advanced technology-based products for facilitating transactions.

City Bank’s net profit grew 9 per cent year-on-year to Tk 2.37 billion in the first half through June this year.

However, its annual profit dropped nearly 5 per cent to Tk 4.51 billion in 2022. The company disbursed 10 per cent cash and 2 per cent stock dividend for the year.

In terms of asset quality, the bank’s non-performing loan (NPL) stood at 3.90 per cent in 2022, down from 4.90 per cent a year before while the sector average is 8.16 per cent.

The loan book recorded a growth of 24 per cent to reach an outstanding total of Tk 354.77 billion while deposits grew by 18 per cent to Tk 331.89 billion at the end of 2022, according to its annual report.

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