Ethics, trust, and inclusive growth define Midland Bank's journey

Midland Bank PLC, a fourth-generation bank in Bangladesh, has attained steady progress through prudent management, ethical values, digital innovation, and a focus on inclusive growth. In an exclusive interview with The Financial Express, the bank's Managing Director and CEO, Md Ahsan-uz Zaman, discussed its overall performance, credit management, approach to risk and liquidity, and broader vision for sustainability.

The following are the full texts of the interview:

Q: How is your bank performing now in terms of overall business, deposit growth, and credit operations?

A: Our position is currently quite strong. The banking sector has faced some dislocations and a certain degree of trust deficit, but I believe our customers and the general public understand the DNA of Midland Bank. There has been what I call a "flight to capital", and some banks, including ours, have benefited from it.

Considering our age, our growth has been encouraging. I believe a person's character is reflected in his work. Although we are called a new-generation bank, I don't think that label still applies -- in a 54-year-old country, a 12-year-old bank can hardly be called "new".

Our deposit growth has been in double digits, and we have been able to sustain that. Credit growth, however, has been somewhat slower due to subdued demand. Still, we have achieved growth that reflects the broader trend of the sector. Profitability remains steady, and as a listed public limited company, we have a responsibility to ensure adequate returns to our shareholders -- which we have been doing consistently, though not excessively.

We offer returns in two forms -- dividends and capital appreciation. Our shares trade well above the face value of Tk 10. However, while profitability is important, we do not pursue it blindly. Excessive risk-taking can lead to liquidity stress. Our focus is on sound liquidity management so that any client -- big or small -- can withdraw funds on demand. I can say with confidence that even if many of our customers came to withdraw their money at once, we would be able to pay them, as we have already demonstrated.

Q: Could you quantify the performance in terms of dividend and capital appreciation?

A: We have consistently paid around 5.0 per cent dividend, and last fiscal year, we moved into the 6.0-percent range. Despite being a relatively small bank, there is strong demand for our shares, with frequent trading. The price and demand of a company's shares reflect its position and public confidence -- and our share value remains well above face value.

Q: How extensive is your branch network now?

A: Our network has expanded significantly, though not entirely through branches. Both the country and the bank need inclusive growth, which is why our tagline is "Bank for Inclusive Growth". Growth must occur where financial services are absent -- not just in urban areas crowded with banks.

We have focused on rural expansion. We now operate around 150 agent banking centres and 63 branches, with a total of around 230 distribution points. Our strongest presence, however, is in internet banking.

Midland Bank has been a digital bank for years -- long before the current wave of "digital banking". We launched Bangladesh's first digital savings account seven years ago. Anyone can open an account instantly through our website using e-KYC verification from the national ID database, with digital signature and nominee information. This eliminates the need to visit a branch. Even non-resident Bangladeshis can open digital savings accounts from abroad. In essence, we are creating value for customers everywhere.

Q: You spoke about public and shareholder trust in your bank. What is the secret behind that trust?

A: The secret lies in ethics -- and ethics are not built overnight. I would not claim that we have achieved complete trust, but I believe we are earning it gradually. Trust grows when people see that a bank keeps its promises and returns deposits on demand, regardless of the amount.

Q: Many banks are struggling with classified loans. What is your bank's position in this regard?

A: Our ratio of classified loans is significantly lower than the industry average. However, no bank can be entirely immune from macroeconomic pressures. The overall economy remains somewhat soft, and as our clients are affected, we too are impacted -- particularly those with large exposures. Last year, our classified loan ratio was around 3.0 per cent, which has now increased to about 5.0 per cent -- still a healthy figure. Our goal is to maintain it at this manageable level.

Q: What is the key to keeping your classified loans within such limits?

A: It starts with asking the right questions before lending, like "why does the client need the money?" If the purpose seems legitimate and the client appears credible, we move forward. We closely monitor borrowers even after disbursement of the loan to ensure funds are used properly. We also guide clients and caution them if we notice excessive risk-taking. We analyse CIB data from Bangladesh Bank, which helps us detect early signs of stress. We remain vigilant about insider loans, board influence, and any irregularities among staff. Strong ethical guidance from our board, integrity within management, and active supervision have kept us resilient even in a challenging banking environment.

Q: It's often said that boards tend to influence loan decisions. What is your experience?

A: If management works according to regulations and the board's policy direction, there should be no problem. Much depends on how executives exercise their authority -- both formal and informal. I will not say I am entirely comfortable, but I have no worries. Our board wants transparency, integrity, and service to the people and the country.

Personally, I set high targets for myself -- higher than anyone else's. Sometimes it makes people wonder if our bank is struggling when I seek more business. But it is not about weakness. It is about responsibility and ownership.

Q: Since your branch network is still small, what makes customers choose your bank over larger ones?

A: We cannot reach everyone with physical branches, but we assure clients they do not always need to visit the bank. They can transact digitally from anywhere.

We are launching Midland Banking Centres -- small hubs with an ATM, CRM, and one staff member available from morning till night to assist with account opening and transactions. This will help customers who are not yet fully comfortable with online banking.

Q: What are the major challenges for the banking sector today?

A: I prefer to call them opportunities, not challenges. There is plenty of room to work. The key lies in improving ethics and integrity. A banker must be trustworthy. If we prevent moral decay, we can control bad loans. Owners, employees, and regulators -- all must act transparently. If we can achieve that, today's challenges will turn into tomorrow's opportunities.

Q: What are your bank's main strengths and weaknesses compared to others?

A: Our main weakness is our smaller branch network, and we cannot meet all large borrowers' needs. On the other hand, depositors often expect a slightly higher return, which in turn affects lending rates. Yet we have earned customer trust by providing practical solutions.

Our strength lies in serving small and marginal customers -- those who struggle to open accounts or access credit. We study customers' needs -- for example, helping someone plan savings to buy an apartment. We also believe a portion of our assets should be invested in the capital market. We have our own asset management company and plan to launch two mutual funds soon.

If all our customers came tomorrow to withdraw their funds, we would be ready to pay. That, to me, is the true strength of a sound and ethical bank.

Q: What is your bank's position in green finance?

A: We are participating in all of the government's and Bangladesh Bank's green refinancing schemes, such as the Green Transformation Fund and the Green Technology Fund, offering long-term financing for environment-friendly projects. We have earned strong recognition in this area.

Q: Where do you see Midland Bank in the next five to ten years?

A: Our dream is that when someone thinks of taking a loan or depositing money, Midland Bank naturally comes to mind. I mean, we wish to make Midland synonymous with banking service.

We want to be part of people's hopes and achievements, share their joys and struggles, and remain by their side at every step. We aim to expand by opening at least three branches a year -- one urban and two rural -- while ensuring we can return every depositor's money on demand.

rahmansrdk@gmail.com