Staying relevant is the key

Prime Bank, which is 30 years old, achieved attractive growth in deposits even in 2024. This was possible due to the bank performing well across all indicators, including compliance and capital. 

Simultaneously, the bank aims to reach the new generation by providing easy banking services through digital transformation. The bank's CEO Hassan O Rashid spoke with The Business Standard's Tonmoy Modak about how it was possible to perform well amid the volatile conditions of the banking sector in 2024.

What has been your top priority? 

Throughout our 30-year journey, we have always focused on sustainable banking. Deposit growth plays a critical role in making a bank sustainable, and it will continue to do so in the future. A bank typically fails due to a liquidity crisis, which ultimately affects its capital. That is why we have always aimed to maintain liquidity in both good and challenging times.

From our experience over the past one to two years, we've seen that deposit withdrawal pressure can arise at any time. In light of this, we incorporated deposit growth into our business planning right from the beginning, as part of both balance sheet expansion and classic crisis management. As a result, we were able to achieve Tk5,500 crore in deposit growth within a year.

To achieve this, we put in effort not just at the branch level, but also across corporate, retail, and SME segments. Our top priority was ensuring that our business plan was executed properly. Wherever change was needed, we addressed those areas based on customer feedback.

How was the year 2024 for your bank?

2024 was a very good year for us as our profit after tax reached Tk740 crore, the highest in our history. We achieved our targets across every category. As a result, just a few days ago, we were able to declare a 17.5% cash dividend and a 2.5% stock dividend for our shareholders.

While the banking sector did face a crisis in 2024, we must always remember that every crisis brings with it an opportunity. I would like to express my gratitude to our board and colleagues, as it was through their efforts that we were able to prudently seize this opportunity.

Credit growth in the banking sector was not very high in 2024. How do you view this?

We have always tracked to ensure that the rate at which we are taking deposits does not exceed the market rate. If we had offered a higher rate, we might have achieved even greater deposit growth, but we would have faced two challenges. Firstly, our deposit costs would have increased, and secondly, finding appropriate investment opportunities would have been difficult.

In 2024, the interest rate on treasury bills and bonds was attractive, which benefited us. We couldn't achieve very high credit growth, and this has had an impact on our balance sheet. 

However, due to investments in treasury bills and bonds, we have been able to provide good returns to our depositors. The advantage of investing in treasury bills and bonds is that the return is better and there is no credit risk.

Infographic: TBS

How did you grow in 2024?

In 2024, we saw healthy asset growth, which was evenly distributed across our corporate, retail and SME segments. It would have been better if the growth had been higher, but ultimately it depends on market conditions. 

However, the country's entrepreneurs are gradually emerging from the situation they were in over the past year. Although inflation remains high, major business groups have started seeing an increase in turnover. People's purchasing power has increased somewhat, so now we need investment. 

We've already seen some investment beginning to flow into the SME and retail sectors. However, in my view, many investors are currently waiting for the national election. Once that takes place, both domestic and foreign investment are likely to pick up again. 

What's your bank offering to customers?

Once a customer comes to us, we need to offer them something special to keep them with us. From this standpoint, we are trying to make banking even easier and more convenient. We have an app called MyPrime. 

Customers can perform their daily essential banking, starting from transferring money, bill payments, and MFS payments, all through this app. We want our customers to be able to interact with the bank 24 hours a day from the comfort of their homes.

Furthermore, we are constantly focusing on adding new products. For example, while we already have regular credit cards, we want to add new propositions there. Additionally, we are providing digital nano loans to garment workers. 

"Every crisis brings with it an opportunity — 2024 was proof of that."

They don't need to come to the bank for this. They can apply for the loan via their mobile phone, and it gets approved within minutes. We are gradually trying to create this kind of convenience.

To make banking even easier for the new generation, we need to move towards digital transformation. We need to make digital banking even more straightforward.

How did you maintain compliance?

For a bank, governance is its main pillar. Over the past 4-5 years, Prime Bank hasn't had any issues with compliance. In fact, an interesting incident occurred 2-3 years ago. At that time, the US government imposed sanctions on a military officer from our armed forces and a former inspector general of police. 

Due to this, we had to close their bank accounts. There was a lot of discussion about this at the time, and even a case was filed against me. 

However, we didn't compromise on compliance. From that, I want to say that compliance is in our DNA. My three thousand colleagues and the board of directors believe that it's possible to conduct even better business through compliance. 

What lessons can we learn from the instability in the banking sector in 2024?

The first lesson is that we need to be more transparent. There's no way to hide non-performing loans. However, one thing I must say is that the 5-7% growth that Bangladesh has experienced over the past 15-20 years was a bull run. 

A correction was bound to happen at some point, and that's what we've seen over the last two years. The lesson to be learned from this is that we all need to focus on sustainable banking. This doesn't just mean the portfolio. It's about how you run the entire bank, how you acquire and manage business — it needs to be sustainable. In other words, you shouldn't stumble again after another two years. 

For sustainability, you need to have sufficient capital and build reserves, so that you can absorb shocks of this kind. To achieve this, banks need to grow bigger by maintaining compliance, a sustainable model, and sufficient capital.