Banking is a long-term business of trust: NRB Bank chairman

Banking is a long-term business of trust that requires sustainable growth, said Mohammed Mahtabur Rahman, chairman of NRB Bank Limited.

After the new generation bank's stock market debut on 27 February, the non-resident Bangladeshi businessman spoke to TBS on how the NRB sponsor-directors envision its business growth alongside its contribution to the economy and society.

The NRB Bank was the first among the 10 new-generation banks that got licences a decade ago and Mahtabur Rahman was a key figure among the 46 non-resident Bangladeshi (NRB) sponsors to pursue the NRB community's urge to own a bank.

"We did not build a bank to make an overnight profit and withdraw it hastily. Instead, we eye decades-long bonding with our clients that should continue over generations," the chairman said, adding that the public shareholders too should be patient investors of the bank.

Thanking stock investors for a huge oversubscription in its Tk100 crore initial public offering, he said, "We, the directors, are internally committed to paying fair dividends to the shareholders regularly so that their long-term return on investment remains satisfactory and the investor-entrepreneur relationship continues for long."

"We did not build a bank to make an overnight profit and withdraw it hastily. Instead, we eye decades-long bonding with our clients."

"We did not chase aggressive growth by hunting big ticket businesses at the expense of financial stability and a smoother operation," Mahtabur said, adding, "Our goal is to be a household name, providing for more and more people's banking needs."

For instance, the NRB Bank has attained and retained around 1.5 lakh unique banking clients with the help of its 51 full-fledged branches, 29 sub-benches, over 300 agent banking outlets and of course, its modern app for everything a client needs, the chairman said.

Leading the new generation banks, the NRB Bank has over 51,000 credit card clients with a total exposure of Tk300 crore.

Having a total deposit of over 6,100 crore as of September last year, the NRB Bank maintains its capital base and liquidity above the regulatory threshold for a strong shock absorption capability, said the seasoned banker.

"We could have chased gigantic deposits and offered loans for a much faster balance sheet expansion. However, that might accompany operational hiccups in cases of sudden withdrawal of large deposits or repayment defaults by large borrowers," said Rahman.

"The loyal clients' smaller deposits and loans made us stronger as they deem the NRB Bank as their preferred financial service provider," he said.

Retail, SME, student loans, and housing loans for expatriate Bangladeshi are the focus areas of the NRB Bank.  

The bank wants to have 5 lakh clients in the next couple of years and for that, it would keep expanding its offerings and network and leveraging technology would be a major part of the plan. By June this year, the NRB Bank will have a network of 100 branches and sub-branches.

As a result of asset-light expansion, 95% of its assets are income-generating right now, while it is hovering around 65-70% for many previous-generation banks.

Collaboration helps avert gigantic capital expenditure, Rahman said while talking about the bank's decision to use other banks' ATM networks for some fees and no transaction charge from its clients.

"The NRB Bank has built ATM booths only at its branches and the rest of the national network is free as well for our clients," Mahtabur said, adding that the decision paid off as the return on the capital saved is higher than the cost of fees it pays to the ATM partners.

Mahtabur Rahman, also the chairman and managing director of UAE-based fragrance giant Al Haramain Perfumes, said the NRB Bank has been a well-governed one as its sponsors, directors — all of whom are NRBs — or any of their relatives do not even use the bank's credit cards.

"We, as the board, request additional collateral if a prospective borrower contacts any of the directors or sponsors before loan application," he said.

NRB Bank's non-performing loans (NPLs) are well below the industry average at less than 4% in September 2023 and its chairman said it was due to borrowers' risk in their businesses, not because of any willful default.

"I, myself, do not borrow from banks as advised by my father who took me to the Middle East for pilgrimage and fragrance business. I even pay my international suppliers in advance and avail some discounts, instead of borrowing through a letter of credit from banks and paying interest," the NRB Bank chairman added.