Sonali Bank eyes end to capital shortfalls, boosts digital transformation

Amid what is arguably the most challenging period for the banking sector, Sonali Bank PLC is aiming to fully overcome its longstanding capital and provisioning shortfalls by the end of the year.

Leveraging growing deposits and investment portfolios despite ongoing economic sluggishness, the country's largest commercial bank is also focusing on improving asset quality through intensified cash recovery drives and the application of rigorous borrower selection criteria to prevent further build-up of Non-Performing Loans (NPLs).

Md Shawkat Ali Khan, managing director (MD) and chief executive officer (CEO) of Sonali Bank PLC, shared insights on the bank's significant progress in addressing these challenges in an exclusive interview with The Financial Express.

Reflecting on the bank's performance over the past year under his leadership, Mr Khan said he assumed charge at a time when the entire sector was navigating a difficult period.

"After taking responsibility, I focused on revitalising our existing human resources through regular communication and motivation, encouraging teamwork to restore the confidence of our valued clients," he said.

Thanks to these team efforts, Mr Khan, who became the bank's managing director on October 30, 2024, said the deposit portfolio rose to around Tk 1.74 trillion, demonstrating growing public confidence in the bank's services.

Terming capital shortfall a major challenge for state-owned commercial banks, he said Sonali Bank had significantly reduced its deficit over recent months.

"The capital shortfall in 2024 stood at Tk 59.0 billion, and we have now curtailed it to Tk 23.0 billion. We are hopeful there will be no capital or provisioning shortfall by the end of this year. We are actively working towards this," he added.

He emphasised that the bank has strengthened its focus on cash recovery drives to improve asset quality. "If the quality of assets improves, the capital shortfall will automatically decrease, eliminating the need for provisioning."

At the same time, the bank has placed considerable attention on borrower selection when approving new loans, to prevent any further accumulation of NPLs.

Addressing recent liquidity pressures in the sector, he said Sonali Bank has sufficient liquidity to support socioeconomic activities and continue investing in diversified areas to earn profits, even amid shrinking investment avenues.

"Thanks to proper liquidity management, the bank forecasts an operating profit of Tk 80 billion by the end of the year, up from less than Tk 60 billion in 2024," he said.

He added, "Liquidity will not be a problem for our bank, even if the central bank removes liquidity-support mechanisms such as ALS (Assured Liquidity Support) for primary dealer banks by the year-end."

On digital transformation, the managing director highlighted the bank's commitment to cutting-edge technology, enabling a rapidly expanding, tech-savvy population to access banking services more conveniently.

As part of this approach, the bank continues to introduce innovative products and technology-driven solutions to further empower clients.

"We have digitised products like e-wallet and e-Sheba, and we also operate our own payment gateway. Our plan is to empower clients to access all our services from home," he said.

"We aim to improve service quality to global standards by leveraging technology. Ultimately, we want to restore the 'Sonali Jug'-the golden era of Sonali Bank," he concluded.

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