BRAC Bank aims to double its market stake by 2025

BRAC Bank Limited has set a target to double its business stake in the country's banking industry by 2025, riding on two of its strengths - corporate governance and digital transformation.

It set the goal under a four-year development plan conceived in January 2022, when the country's leading private commercial bank had already captured 2.2 per cent share in the market.

"Now, we want to increase our stake to a range between 4.5 per cent and 5.0 per cent by 2025. This is our aspiration," managing director and chief executive officer of the bank Selim R. F. Hussain told the FE in an exclusive interview.

The bank aims to achieve the ambitious target at a time when the economy has since then remained under pressure because of the volatility in the global macroeconomic fronts.

The bank managed to achieve a 24 per cent deposit growth in 2022 when the industrial average deposit growth was only 7.0 per cent, Mr. Hussain argued, further pointing out that the bank registered a 28 per cent growth in lending compared to the industrial average of only 13 per cent.

"We want to achieve a 30 per cent growth in our balance sheet by the end of this year. The sound corporate governance and our dedicated team basically encouraged us to reach these short-and long-term goals," he added.

Terming governance as the bank's top strength, he said institutional ownership is the biggest benefit with BRAC holding 46 per cent stake and nominating three directors in the bank board. Five other independent directors are highly-qualified.

"There is none from the business community, which is unique. The board basically set policies and guidelines. They don't interfere otherwise and give us absolute authority to execute the policies. This is one of the reasons why we're growing fast," said the MD.

"I and the management can work with great freedom under the environment of strong governance, transparency, efficiency and ethical banking that people probably don't get in other banks here," he added.

About the bank's digital transformation plan adopted in 2018, he said the bank invested a huge amount of money and efforts to make it a leading 'phygital' (physical and digital) bank to serve both the tech-savvy younger generation and those who love physical banking.

He said the bank has managed to develop a digital infrastructure where many of their services are available while many more are in the offing.

The CEO said that there are four objectives of digital banking - enhancing customers' experience or service quality, cutting cost, increasing revenues and strengthening control over the entire transactions.

"We're now getting benefits out of the investments made in the last five years. In early 2020, around 18 per cent of the bank's overall transactions were digital. Now it rose to around 70 per cent and it is continuously growing," he said.

Besides, he said, BRAC Bank's credit rating is the highest in the country. As a result, it became the second highest profit-making bank in the country.

Terming the growing NPL (non-performing loans) a biggest challenge for the banking sector here, Mr Hussain said there are factors contributing to the inflated bad loans.

The legal framework, including the existing laws, needs to be strengthened with introducing more courts, but there has been insufficient investment in this area over the last few years, he said.

Simultaneously, he added, loan provisioning and classification rules need to be tightened and aligned to the international standards.

"There is a need to enhance corporate governance in the banking system. Unfortunately, a culture of impunity is prevailing among some large customers. These factors have all contributed to create an environment where borrowers feel that they don't need to repay at all," said the CEO BRAC Bank that has less than 4.0 per cent of NPL.

Starting its journey in 2001, BRAC Bank has been able to expand its business substantially over the years by opening 187 branches with 457 SME Unit outlets, 11 sub-branches and 1,000 agent banking outlets until 2022.

The bank earned a revenue of Tk 37,833 million and its net profit after tax stood at Tk 6,122 million in 2022.

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