AB Bank aims to expand services to every corner of Bangladesh

AB Bank, formerly Arab Bangladesh Bank, the first private bank in the country, started its journey on 12 April 1982 with the motto "to achieve excellence," and since then, it has been one of the leading banks in the country.

The journey, however, hasn't been an easy one. Despite numerous changes and challenges, the bank has maintained its position as an innovative institution with a focus on technology. In the past three years, the bank has been on a path of revival, expanding its services and earning good scores.

On the occasion of the bank's 40th anniversary, Tarique Afzal, Managing Director, AB Bank, spoke to The Business Standard's Sakhawat Prince and Tonmoy Modak on the current state of banks, its own state of affairs, its customer-centric services and future plans.

What is the overall financial position of AB Bank?

AB Bank's loan amount in 2018 was Tk22,540 crore. The company's debt stood at Tk27,034 crore in three years. During this time, our growth has been more than 20%. Besides, the amount of our deposits in 2018 was Tk24,745 crore

What initiatives did AB Bank take to expand its customer services?

AB Bank has successfully launched internet banking, SMS banking, state-of-the-art information communication technology, appropriate network solutions, 24/7 ATM services and various e-services to achieve excellence in this new era of technological advancements. 

AB Bank has greatly expanded its services at home and abroad in the last four decades. At present, it has 105 branches. It has an overseas branch in Mumbai, India and more than 260 ATMs across the country. The core banking operation involves five subsidiaries, a foreign banking unit and custodial services. The bank has set up a Yangon Representative Office in Myanmar to expand its overseas operations.

What role did AB Bank play during the Covid-19 pandemic?

Like other countries in the world, Bangladesh also faced a volatile situation during the pandemic. Everyone faced problems and no one was ready for it. The prime minister's incentive packages kept the economy afloat and helped revive it. 

We gave a Grade Seven salary to garment employees. AB Bank has succeeded in distributing almost all the targets of all types of the incentive packages.

How was it possible for the ADR (Advance/Decline Ratio) to change from 100% to 86.26% in three years?

The central bank's policy is that the ADR should be 87%. [ADR compares the number of stocks that increased in value to the number of stocks that decreased in value].

One of the reasons why our ADR has come down in the last three years is because our deposits have increased. We basically work in a regulated environment. The change in our image over the last three years, especially with the new board, has increased customer confidence in us. Due to these reasons, our retail deposits have increased.

We have also brought new products to the market. All in all, our deposit status has been steadily increasing every year since 2018. This is the main reason for our improvement. It has also changed the mindset of our bank.

What kind of customer is AB Bank emphasising on for disbursement of loans?

Earlier, only corporate loans were given. We have been able to move away from that. At present we have increased the distribution of CMSME loans. We are also focusing on consumer and agricultural loans.

How successful is AB Bank in increasing loans and deposits?

In 2018, we reduced our bad debts from just over 33% to 13.88%. We doubled our net profit in 2021 compared to 2019. Deposits, share prices or earning per share are in a good position as we have been able to maintain the continuity of this development. Operating profit has also increased. These combinations have played a role not only for us but also in raising the confidence of our customers.

We also have a strong position on potential defaulters. I have filed many cases over these and received decrees from the courts in many cases. These have helped the organisation recover money and increase revenue. 

For the last two years, we have been paying dividends to stock market customers with the permission of the central bank and the board. Our approach and the sincerity of the staff have achieve this in a combined effort. 

Even so, we know that we are still far from where we want to be. But we are on the right track.

Based on which qualities or products do you think customers will choose AB Bank?

I think our customer service is different from others. From our 16207 call centre number to our agent banking and branch locations or head offices for customer service, we actually try to give them the best. We try to go out of our way to help our customers. This is our main strength and mantra.

As we are guided by this mantra, we have been able to reach today's position by handling well the situation we had in 2017-18.

What are AB Bank's future goals?

It took AB Bank 40 years to reach this stage owing to customer confidence, the bank's contribution to the economy and its current institutional shape. 

In this 40 year journey, AB Bank has gained the confidence of the customers even during difficult times due to everyone's sincerity and support, including that of our stakeholders and the central bank. That's how we have been able to stay in the market for so long. 

Our goal in the future is to provide banking services to every person in every region of Bangladesh.

What is your advice on the bane of financial institutions: default loans?

It's very simple. Our banks need to be more vigilant. There are two easy ways to reduce bad credit. One is the establishment of good governance in the sector and the other is the expansion of small and medium enterprises. Along with these, the administration also needs to help with proper and strict enforcement of the law. 

If these steps are taken, default loans will reduce in number. Doing these will build a resistance against defaulters. 

Expansion of small and medium enterprises will reduce the level of intentional and large defaulters from Bangladesh. If it is possible to expand small, medium and agro-industries, we will be able to distribute the risks. Then, in turn, as the level of risk decreases, the amount of defaulters will decrease. 

Also, we know who the defaulters are. They have been identified. It is imperative that the identified defaulters be disciplined.

What is the position of AB Bank in the implementation of the new salary-allowance?

Increasing the salaries and allowances of the workers will increase our GDP. Our spinning capacity will increase, civil capacity will increase and money flow will be better. The inconsistencies of moving from one position to another will be removed. AB Bank has already implemented the new salary-allowance scheme from April, which we have informed the Bangladesh Bank.