Islami Bank sets sights on top spot after stunning comeback

After narrowly escaping a liquidity collapse triggered by massive loan irregularities linked to the S Alam Group, Islami Bank Bangladesh PLC is now on a determined path to reclaim its past glory -- aiming to become the country's leading commercial bank once again.

In an exclusive interview with The Financial Express (FE), Islami Bank Chairman Obayed Ullah-Al Masud shared how the bank has begun staging an impressive comeback through a structured three-phase recovery roadmap initiated by the Bangladesh Bank-appointed board in August 2024.

"The roadmap had three parts: inventory period (August-December 2024), turnaround time (January-December 2025), and moving ahead (2026). Encouragingly, we're progressing faster than the plan," said Mr Masud, who brings 40 years of banking experience to the board.

According to him, Islami Bank's total deposits rose from Tk 1.53 trillion in August 2024 to Tk 1.73 trillion by June 2025. Net deposits increased by Tk 200 billion, with 2.43 million new accounts opened in just 10 months.

Crucially, the bank's current account balance swung from a Tk 23.08 billion deficit last August to a Tk 79.38 billion surplus by June, marking a dramatic financial recovery.

Asked about employee morale following the bank's crisis, Mr Masud said many staff feared getting implicated in Anti-Corruption Commission (ACC) probes. "Our first job was to remove fear and rebuild trust," he said.

Through internal audits, the new board identified and removed those involved in irregularities: nine staff were dismissed, 24 suspended, charge-sheets issued against 71 officers, and 192 were served explanation notices.

Beyond punitive action, the board prioritised open communication with employees to transform fear into purpose. "Now, there is no panic in any branch-only confidence," said Mr Masud. "And the results are visible."

Responding to Bangladesh Bank's challenge of boosting deposits by Tk 20 billion monthly, the bank exceeded expectations, mobilising Tk 50 billion in June 2025 alone -- a rare achievement, Masud claimed, and a testament to a re-energised workforce.

However, the scale of past irregularities remains staggering. The bank's total loan disbursement stood at Tk 1.83 trillion until June 2025, with the S Alam Group alone receiving Tk 788.32 billion -- more than 43 per cent of the total.

"This scale of loan capture is unheard of anywhere in the world," Mr Masud said.

He acknowledged the ongoing challenge of managing liabilities with only 57 per cent of loanable assets intact. At its first meeting, the board dismissed seven deputy managing directors, appointed four audit firms, and initiated legal proceedings-including cases under the NI (Negotiable Instruments) Act, 24 cases in the Artha Rin Adalat (Money Loan Court), and 15 criminal cases.

International efforts are also underway. "We've appointed global recovery agents on a commission basis to trace and retrieve the laundered money," Mr Masud revealed. "It may take time, but I am hopeful."

Addressing the bank's non-performing loans (NPLs), he said the classified loan ratio had reached 52 per cent, but excluding the S Alam Group, it stands at 30 per cent.

He noted that many otherwise solid borrowers defaulted because branches could no longer disburse working capital, as funds were being diverted centrally for the group.

To reduce this burden, Islami Bank plans to expand its deposit base to Tk 2.0 trillion by year-end, directing investments into government securities and SMEs to support struggling but viable businesses. The target is to cut the non-S Alam NPL ratio from 30 per cent to below 10 per cent by March 2026.

Looking forward, Masud said the bank is committed to returning to its original model of Shariah-based, transparent banking, free from the influence of any vested interests.

"We want to take Islami Bank back to the position it held before the entry of S Alam Group -- a benchmark many banks still look up to. Given our current pace, we believe we'll get there soon."

For now, Bangladesh's largest Shariah-based lender is proving that even after a crisis of historic proportions, recovery -- with the right leadership and accountability -- is not only possible, but well within reach.

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