‘DBH predominantly provides home loans to middle-class clients’

DBH Finance PLC is the only private-sector lender dealing exclusively with home loans. For more than 25 years, the company has been assisting prospective home buyers to fulfil their accommodation needs. Targeting the middle-income group of customers, the company is spreading its products and services across the country.

Recently, in addition to conventional business, the company launched an Islamic wing to offer Shariah-compliant products, said Nasimul Baten, managing director & CEO of DBH Finance PLC, during an interview with The Business Standard.

How can middle-class people get loans to build their own houses?

There are several ways a middle-income earner customer can make their own house and DBH can assist them with any type of residential housing need. 

First, they can select an apartment as per their budget and get a maximum of 80% financing facility from us against the apartment. Or if they have a piece of serviced land, they can plan to construct a house or building as per budget and DBH can finance for the construction. 

If they do not have land and do not want to buy from a developer, they can form a group comprising like-minded friends, colleagues, and relatives and go for a group construction where they will get one unit each. DBH can finance such group constructions.

From its inception till date, DBH is catering for all such customers and providing them with financial assistance based on their requirements and repayment capacity.  Our average loan size is approximately Tk35 lakh, which suggests that we are predominantly financing the middle-income group customers.

What is the maximum tenure of loans?

Clients can take loans for a maximum tenure of 25 years. As there is no lower cap, clients can take loans for shorter terms also. Or they can take loans for longer terms but can reduce terms by making part payments or by reducing the tenure later. The initial duration of the loan also depends on the age of the client.

Do you do business only in Dhaka and Chattogram?

Earlier real estate developments were more focused in Dhaka and Chattogram and our businesses were more focused in these areas. But with the growth of the economy and increase in per capita income, housing developments increased over the years. Now we have 14 branches in Dhaka, Chattogram, Rajshahi, Khulna, Rangpur, Sylhet, Cumilla, Gazipur, Savar and Narayanganj. We are gradually opening more branches to increase our coverage, particularly for the affordable housing segment.

Recently your company opened an Islami wing. Tell us about it.

The journey of Islamic finance started in Bangladesh in 1983. Now many banks are engaged in Islamic finance. There is a noticeable and growing demand for Shari'ah-compliant Islamic financial products, and many of our customers were asking for such products and services. This encouraged us to introduce DBH Islamic to cater for the client's needs accordingly.

DBH Islamic provides Shari'ah-compliant Islamic financing services from all of its 14 branches. We provide Islamic home financing and also mobilise mudarabah term deposits through DBH Islamic. 

We have plans to introduce more products from this wing. Our core focus is to ensure strict compliance with Shariah so that we can earn the trust of the customers to provide them with fully Shariah-compliant Islamic products. 

We have a very competent and experienced Shariah supervisory committee comprising Islamic scholars, Islamic bankers and academia who are guiding us to offer products and services ensuring Shariah guidelines. 

We introduced this wing in May and though opened only for three months, we are getting very good responses from customers for both financing and placement of deposits.   

Tell us about the current situation of the housing business.

Due to a number of factors, real estate sector growth has been on the slower side in FY 2022-23. The Russia-Ukraine war affected the economies all over the world and Bangladesh was no exception. 

The hike in fuel price, inflation, currency devaluation, and increase in raw material prices — all impacted the growth of the real estate sector which affected us to some extent. Also, the introduction of the revised DAP (Detailed Are Plan) by the Rajdhani Unnayan Kartripakkha (Rajuk) in August 2022 created a stalemate in real estate developments. As a result, developers slowed down the undertaking of new projects.

However, housing is a basic need and the demand-supply gap is huge. So the demand for housing for the middle class is still very strong who look for affordable housing solutions. As a specialist housing finance institution, we are actively working with this segment of customers and we have increased our focus on affordable housing.

What is your company's business status?

Despite the economy and real sector going through a tough time, we have been able to finish the year 2022 with growth in terms of business compared to the previous year. Though profitability reduced slightly because of lower spread as the cost of funds increased due to inflation. But we have been able to keep check of our non-performing loans (NPLs), which helped us to keep loan-related provisions at a lower level, which contributed towards profitability.

DBH with its core focus in housing finance disbursed in excess of Tk14,500 crores to more than 55,000 families in the last 25 years. Our non-performing loans have never crossed 1% and out of our total loan disbursements, our cumulative written-off loan is only Tk94 lakh in the last 25 years. DBH's current loan portfolio is in access of 4,400 crore people and it has a deposit portfolio of more than 4,000 crores, comprising mostly retain and corporate deposits.

DBH is the only AAA-rated financing institute in the country for 18th consecutive years. DBH also obtained the "Gold Award" for Corporate Governance Excellence in the non-bank financial institution (NBFI) category from the Institute of Chartered Secretaries of Bangladesh (ICSB) for the last four consecutive years. 

Our lowest level of non-performing loans and highest credit rating make us one of the strongest and safest institutions in the country's financial sector. These ratings reflect the company's good corporate governance, strong capital base, market leadership in the housing finance industry, and long-standing track record of sound asset quality. These factors help us to gain and keep the trust of our depositors and other stakeholders, which is very important for any financial institution to excel.