You’ve been with AB Bank since March 2011, almost 15 years, while the bank started in 1982. What was the background and purpose of founding AB Bank? How successful has it been? What are some of its key achievements over the past 43 years?
AB Bank had such a good beginning that fresh graduates even left govt. jobs to join AB Bank. Over time, our image has certainly suffered somewhat. We were once labeled as “First of many Firsts”.
We were the first to do syndicated financing, the first to introduce ATMs in Bangladesh, and the first to introduce the teller system. But with time, in some areas there was deterioration—particularly over the last 15 years in the absence of corporate governance, the bank suffered like many others.
After August 5 last year, what’s the status and trend of deposits in Bangladesh’s banks?
The entire financial sector fell into trouble. We all believed things would improve after August 5, but it is a major shift and will take a reasonable time under the current context. A bank is essentially built on trust, because people deposit their hard-earned money in the Banks.
Due to lack of corporate governance, non-performing loans in the banking sector reached 30%, and if stressed accounts are included, it’s almost 60%. Therefore, it is obvious that general people will lose confidence in the overall banking sector and so it happened.
But after the interim government came in after August 5, and with the new governor took charge, and many changes occurred—confidence started to return.
The lifeline of a bank is deposit. The more the people grows into confidence, deposit will continue to grow with the banks and the more can be invested elsewhere and make a profit—that’s basic banking.
What is AB Bank’s NPL situation over the past year?
After August 5, we saw huge rise in NPL, Tk540,000 crore of non-performing loans in our total banking sector, which is 30% of total loan. NPL for AB also been affected negatively.
Over the last year, if you ask about our achievements, I’d say maintaining public confidence in us has been a major success. Even during this critical time, customers continued to maintain deposits with us which reflects their faith in AB Bank.
With so many banks in the country, how do you stand out?
The services offered in the Banks are very similar in overall Banking industry. Therefore, service is the most important factor; the better the service, the stronger the trust. “Service is the name of the game” right now.
We’re trying to enhance our digital banking services so customers can access them without coming to the bank, since younger customers prefer not to visit branches physically.
We have a banking app called “AB Direct,” which allows self-onboarding of customers. Through it we’re also bringing customers with small ticket items into our services. The app has transaction ceilings suited for general customers. They can open accounts, transfer funds, use NPSB and RTGS, and open DPS or fixed deposits—essentially do basic banking.
We’re also increasing our customer touchpoints, sub-branches at the grassroots level, plus agent points where banks typically don’t go. This helps create entrepreneurs as well.
What role should the government play in building public confidence and ensuring deposit security?
The government particularly the Central Bank as they are doing should keep on urging the people to have faith and trust in the banking sector. We have seen the Honorable Governor assuring people that their deposit will be safe, no matter what happens to a particular bank.
Which areas are you emphasizing in AB Bank’s loan portfolio?
AB Bank has always been known for corporate banking and trade finance, where large loans are given. 90% of our portfolio is corporate loans. Now we are focusing on SME and Retail also, we’re moving towards digital banking. Customers can apply online and get approval online under Bangladesh Bank’s nano-loan project. Customers won’t have to come physically to sign documents. We hope this will be a breakthrough and we plan to start this service by January next year.
How is the response in the retail business?
Since I took over, I’ve tried to focus more on SME and retail. But investment hasn’t been happening much in the country, unemployment has increased, and inflation is still high. Given that backdrop, retail lending is somewhat risky.
Many bankers see high operational costs as a barrier to microcredit. What’s your take?
We call it “supervisory credit.” The smaller the loan, the closer the monitoring required, which raises operating costs. For example, Bangladesh Bank mandates agricultural lending accounts for each bank, but not all banks have the network to manage it. Without proper monitoring, loans can become bad.
Having said that, repayment rates are still very good. If 3–4% of loans go non-performing out of 100%, that’s acceptable norm across the banking industry.
What major deposit schemes or product changes are underway at AB Bank?
We’ve tweaked many products. Previously our DPS plans were 3, 5, 7, or 10 years. We’ve extended them to 1–20 years based on customer need. Essentially, we’re modifying our product portfolio to make it more attractive to customers.
Since you officially became MD & CEO on May 5 this year, what’s been your toughest decision?
The biggest challenge was addressing non-performing loans. We formed a special asset management team and a special task force.
We were focused on corporate clients. Our top 20 customers alone defaulted on almost Tk20,000 crore. Recovering from big clients is difficult; some have moved abroad. Still, we are after these clients.
We have about 1,200 cases in Artho Rin Adalot totaling over Tk16,000 crore.
What’s your vision? Where do you want to leave AB Bank at the end of your tenure?
I want to leave the bank at a place where public trust is fully restored. It’s not about numbers. I want to recreate the positive vibe among that people once they had about AB Bank.
What can you say about some confusion among customers about the Asset Quality Review?
When newspapers reported on the Asset Quality Review, mentioning our bank and two others, people thought AB Bank might be merged.
Bangladesh Bank should clearly state that Asset Quality Review does not mean merger only, it is one of the many options to restore sustainable Business.
Moreover, all Banks will be under review gradually, as it is a part of total transformation of the financial sector.
