AB Bank boosts focus on SMEs, retail banking

AB Bank PLC plans more focus on SMEs and retail banking, aiming to strengthen its ongoing financial inclusion initiative and bring more unbanked people into the banking system, the bank's top executive has said.

"We'll prioritise SMEs (Small and Medium Enterprises), CMSMEs (Cottage, Micro, Small and Medium Enterprises) and retail banking over corporate financing in the next 3-4 years to diversify risks and ensure sustainable returns," said Syed Mizanur Rahman, Acting Managing Director (MD) and Chief Executive Officer (CEO) of AB Bank.

He shared the bank's new strategy in a recent exclusive interview with The Financial Express (FE) ahead of the bank's 43rd anniversary celebration on Saturday.

As the country's first private bank, AB Bank formally commenced its operations on the day of 1982, with a mission to become the best-performing bank in Bangladesh. The first-generation private commercial bank has extensively widened its services in more than four decades both at home and abroad.

AB Bank has long been recognised as a trade finance-focused institution since its inception, the CEO said, adding that a significant number of corporate entities have grown and flourished with the support of the bank.

"We've also planned to expand both our agent banking and sub-branch operations to enhance 'access to finance' for marginal people across the country," he explained.

AB Bank is now working to set up 50 more sub-branches in the coming days for ensuring access to finance for the low-income group as well as the poor, aiming to help achieve sustainable development of Bangladesh, according to Mr. Rahman.

"We need to expand our branch network to make SMEs and retail banking more accommodative and sustainable, ensuring a return on investment while diversifying the risks associated with such supervising credits," the experienced banker noted.

As part of digital transformation, AB Bank has already revamped its internet banking app - AB Direct - to offer next-generation digital services and payment solutions.

Our customers can perform basic banking transactions from the comfort of their homes or offices using the App, without needing to visit the branches," Mr. Rahman said while replying to a query.

Actually, customers of AB Bank can now enjoy banking services from anywhere and everywhere using the AB Direct app, he added.

Besides, AB Bank is now working to offer nano loans through AB Direct App where the customers do not have to visit the branches, according to the acting MD.

Mr. Rahman also spoke on different issues like enhancing deposit mobilisation, reducing the amount of non-performing loans (NPLs), higher inflow of remittances and ensuring good governance in the country's banking sector.

Regarding deposit mobilisation, he said depositors suffered seriously in the last 15-16 years mainly due to the lack of good governance in the country's banking sector.

"Money circulation in the banking sector has decreased due to a lack of public trust in the entire sector," the executive said, adding that all commercial banks, including the central bank, must work together to restore public confidence in the sector.

He also said that under the leadership of its current governor, Dr Ahsan H Mansur, the Bangladesh Bank (BB) is now working to restore financial discipline in the country's banking system.

"We've developed some deposit schemes backed by insurance as well to safeguard our depositors' interests," the acting MD said, adding that AB Bank is committed to protecting depositors' interests by all means.

Earlier, on December 9, Mr. Rahman launched four new deposit schemes - AB Ilham, AB Amani, Kotipoti Deposit Scheme (KDS), and AB Swachchhandya - aiming to mobilise more deposits from general customers, just a day after assuming the role of acting MD and CEO of the bank.

Mr. Rahman was previously working as an additional managing director of the bank where he joined in March 2011. He was serving as Deputy Managing Director of the bank from June 2022 prior to this promotion.

AB Bank has already undertaken a series of measures to restore the confidence and trust of its stakeholders by promoting good governance within the private commercial bank.

As part of these measures, three deputy managing directors have been removed, and a new official has been appointed to head the Internal Control and Compliance Department, according to Mr Rahman.

"We're now working to enhance employee motivation as it is crucial for ensuring a healthy working environment within the bank," he continued.

Regarding the upward trend of non-performing loans (NPLs) in the country's banking sector, the senior executive said that the volume of classified loans in the banking system continued to rise primarily due to a lack of good governance.

Classified loans in Bangladesh's banking sector keep rising fast with the cumulative volume having made a quantum leap by over Tk 2.0 trillion year-on-year until December last, official statistics show.

With such leaps in the volume of NPLs, the figure hit a record-high at Tk 3.45 trillion by the end of last calendar year, accounting for 20.20 per cent of the entire loans worth Tk 17.11 trillion disbursed by the country's all scheduled banks.

"...the situation has already started improving after the change in state power on August 5 last year," Mr. Rahman said, adding that customers, particularly borrowers, are now reaching out to the relevant officials to know about the status of their loans.

He also said AB Bank has already formed a special taskforce to strengthen NPL recovery drives across the country. "We've also placed a separate focus on our top 20 defaulters for the same reason."

Besides, AB Bank has already filed cases against loan defaulters to recover Tk 8.0 billion, the acting MD added.

"We're working continuously and applying all possible efforts to reduce the volume of classified loans by intensifying recovery drives in line with the central bank's directives," he said, in response to another query.

About higher inflow of remittances in the month of March this year, the acting MD said people's mindset had changed after the changeover in state power on August 5 last year, encouraging them to send their hard-earned money back home through the formal channels instead of unofficial ones.

"The inflow of remittances crossed the $3.0-billion mark for the first time in Bangladesh's history, reflecting the confidence of non-resident Bangladeshis in the interim government," he explained.

Bangladeshi citizens working abroad sent remittances equivalent to $3.29 billion in March, nearly a 65-percent jump from the $1.99 billion that came in the same month a year earlier, driven by the celebration of the Eid-ul-Fitr festival. Inward remittances were $2.53 billion in February this year, the data shows.

AB Bank is now trying to boost collection of inward remittances by improving the quality of their services, according to the acting CEO.

Currently, AB Bank is running businesses with 104 branches, including foreign one in Mumbai, India, 57 sub-branches, more than 200 agent banking centers, 270 plus ATMs (Automated Teller Machines) located in both urban and rural areas across the country.

AB Bank made a conscious effort to revive its former identity, which it carried as Arab Bangladesh Bank Limited for 25 years. As a result, the bank chose to rename itself as AB Bank PLC, a change that received official approval from Bangladesh Bank on November 14, 2007.

Mr Rahman has more than 27 years of banking experience. Under his leadership, the Retail Banking Division, Agent Banking Division, Business Development Unit and Shariah-based Islamic Banking Services were established in the bank.

Before joining AB Bank, he worked for Dhaka Bank, IPDC, Bank Al Falah and United Commercial Bank.

Over the years Mr. Rahman acquired extensive knowledge in different segments of the banking industry with a distinct focus on branch banking, retail, process transformation, business development and corporate communication.

He completed his MBA from the Institute of Business Administration at University of Dhaka.

siddique.islam@gmail.com