BRAC Bank to issue country's first social bond worth Tk1,000cr

Infographics: TBS

BRAC Bank has decided to raise Tk1,000 crore by issuing a social bond — the first of its kind in Bangladesh — to support easier access to financing for social development initiatives.

The leading private sector lender made this decision at a board meeting held on 4 June, as disclosed on its website.

According to the disclosure, the bond will be a coupon-bearing, unsecured, and fully redeemable instrument with a tenure of seven years. Its issuance is subject to approval from the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC).

The coupon rate for the BRAC Bank Social Subordinated Bond, payable every six months, will be the average fixed deposit rate in the banking sector plus 2.5%, the bank stated.

The bond proceeds will help strengthen BRAC Bank's Tier 2 capital base and support its commitment to social development, according to the disclosure.

Shaheen Iqbal, deputy managing director of BRAC Bank, told TBS, "The social bond has been designed in alignment with the International Capital Market Association (ICMA) standards." 

Since its inception, BRAC Bank has remained committed to social development by promoting financial inclusion and ensuring access to finance at the grassroots level, he said.

"This bond will specifically target inclusive sectors such as agriculture, healthcare, women entrepreneurs, and microcredit firms — key areas that drive job creation and economic empowerment," Shaheen said.

A core challenge we aim to address is securing long-term funding to expand financial inclusion. This bond will enable us to raise sustainable capital and channel it toward underserved segments, fulfilling our broader mission, he added.

The ICMA, established in Switzerland in 1969, is a global not-for-profit trade association serving participants in cross-border debt capital markets. The organisation has developed three specialised bond categories – green bonds, sustainable bonds, and social bonds – to promote inclusive economic development.

ICMA defines social bonds as instruments that finance both new and existing projects delivering measurable positive social outcomes. Governed by the Social Bond Principles (SBP), these bonds enable issuers to fund socially beneficial and sustainable initiatives while generating greater societal value. SBP-aligned issuances combine transparent reporting of social impact with attractive investment opportunities, creating a framework that benefits both issuers and investors pursuing meaningful social change, according to its website.

In 2022, BRAC Bank pioneered Bangladesh's first affordable housing bond, raising Tk600 crore with investment participation from the International Finance Corporation (IFC), a member of the World Bank Group. This landmark transaction marked the bank's inaugural foray into specialised bond issuances within the country's capital markets.

BRAC Bank's financial performance

The bank registered significant growth in consolidated profit by 53% to Tk486 in the January-March quarter of 2025, primarily driven by strong returns from its investments in government securities, commonly known as Treasury bonds.

Currently, BRAC Bank is the highest profit-maker among local lenders, with only UK-based multinational Standard Chartered Bank ahead of it. 

In 2024, BRAC Bank posted a profit of Tk1,432 crore, while Standard Chartered secured Tk3,300 crore — the highest ever recorded in the country's banking industry.

Meanwhile, BRAC Bank also reported that its consolidated net asset value (NAV) per share rose by 7% to Tk47.05 compared to December 2024, and the consolidated net operating cash flow per share (NOCFPS) jumped by 76% year-on-year to Tk54.40.

The bank said in its statement filed on the Dhaka Stock Exchange (DSE), during the reported period in 2025, it managed to register robust growth in profit driven primarily by incremental investment income and interest income.

According to the bank's unaudited financial statement, it earned Tk983 crore from government securities, including capital gains – an 83% year-on-year increase – as Treasury bonds offer double-digit interest rate.

Attracted by high interest rates on fixed-income instruments, BRAC Bank invested Tk32,482 crore in government securities – a 13% increase from December 2024.

However, its net interest income – the core segment of its banking operations – declined by 10% year-on-year to Tk410 crore during the first quarter due to rising borrowing costs.

Over the quarter, interest paid on deposits and borrowings surged by 77% to Tk1,384 crore, while interest income from loans increased by 45% to Tk1,794.75 crore compared to the previous year at the same time.

Meanwhile, due to the macro-economic challenges, BRAC Bank's classified loans jumped by 17% to Tk2,073 crore at the end of March, with a ratio of 3.30% – well below the sector average.

Earlier, building on its robust profit, the bank had recommended a 12.5% cash dividend and a 12.5% stock dividend for its shareholders for the previous year.

To approve the dividend, the bank will hold its annual general meeting on 19 June, with the record date set for 25 May.

BRAC Bank shares closed at Tk49 at DSE, and the market cap of the bank stood at Tk9,755 crore.