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Modhumoti Bank Limited aspires to lead the country's banking industry through ensuring qualitative standards, riding on its two strengths - corporate governance and steady growing approach.
To achieve this vision by next three to five years, the fourth-generation bank that started operations in 2013 has intensified its focus on digital transformation and borrower-screening process with the 'not aggressive banking operation' strategy.
Modhumoti Bank managing director and CEO Md Shafiul Azam shared the bank's current and future plans in an exclusive interview with The Financial Express (FE) as it celebrates 10th founding anniversary today (Sunday).
"We want to be seen as a leading bank here in terms of qualitative standards. We want to empower our valued customers with providing technology-depended modern banking services," he said.
Mr Azam said the fourth-generation bank started its business 10 years ago with an eye to covering unbanked population through providing disciplined and structured banking services.
With a steady growth approach in mind, he said, they primarily emphasised the bank's structure with employing highly efficient and skilled professionals to pay attention to three major pillars of the conventional lender - risk, operation and business.
As a result, the bank has been enjoying good but steady growth in almost all parameters like deposits, loan and advances, export, import and remittance, cited Mr Azam.
"Corporate government is the strength of our bank. Our respected board members set policy guidelines and periodically monitor the progress with no undue influence. In fact, the people in the management enjoy absolute freedom in their operations."
Citing a home-grown sound banking health rating model launched by a Bangladeshi daily for the banks being listed on the stock market, he said, the rating did not cover Modhumoti Bank as it is not listed.
"But we input our data in the model and saw that Modhumoti Bank is the second top bank having sound financial health in various parameters like ROA (return on asset), ROE (return on equity), capital adequacy and classified loan," he told the FE.
As per Bangladesh Bank guidelines, he said banks need to have capital adequacy of 12.50 per cent, but Modhumoti Bank has capital adequacy of 16.60 per cent.
"The ratio of classified loans or non-performing loans (NPLs) of our bank is 1.70 per cent, which is the lowest in the industry," he mentioned.
When asked how his bank managed to keep the ratio of bad loans at below 2.0 per cent, he cited four factors contributing to bringing NPLs to this level.
The 'not aggressive' business policy is the first one followed cautious loan selection approach. The board is very conservative to this matter. Rigorous supervision of borrowers is another part, said Mr Azam.
Despite all the cautiousness, the CEO said, some loans can, sometimes, turn bad for some reasons.
"Here is the fourth key factor coming into play to recover those [loans]. It's a highly skilled, dedicated and devoted legal team. If any bank focuses on this area, the result will possibly to come in favour of the bank."
On the future expansion of its business, the Modhumoti Bank MD said they would not expand their business riding on branches and sub-branches, which is not cost-effective in this modern era of banking.
Instead of the traditional approach, the bank planned to adopt the agent banking model to expand business, said the banker having around 33 years of experience in the industry.
On digital banking, he said Modhumoti Bank has a mobile app-based internet banking facility to help customers transact, pay bills and recharge mobile numbers.
"We're now putting high focus on digital transformation of the entire banking operations, which is the key in this era of modern banking," he added.
Modhumoti Bank serves a large customer base through a network of 48 branches, 47 ATM booths and 600 agent banking outlets across the country.
Until 2022, its deposit portfolio stood at Tk 71.87 billion while the volume of loans and advances was Tk 55.85 billion.
The bank earned export proceeds amounting to Tk 55.73 billion and paid import bills equivalent to Tk 38.65 billion.
It also received inward remittance amounting to Tk 3.0 billion in 2022. The net profit of the bank after paying tax in 2022 was Tk 1.0 billion.