BRAC Bank aiming for more than 30% deposit growth in 2025

BRAC Bank has achieved a 36% deposit growth, amounting to approximately Tk17,500 crore. While the deposit growth in the banking sector in 2024 was around 7.5%, how did BRAC Bank manage to achieve such remarkable growth?

This didn't happen overnight. Since 2018-19, we have been making significant investments in technology. The results of these investments, which began 5-6 years ago, have been a major factor in our deposit growth in 2024. In addition to technology, we have taken several initiatives to improve customer experience. We also focused on improving systems, processes, and physical infrastructure. As everything has been built up step by step, the bank has gradually grown. 

Moreover, due to the collaboration between the board and management in ensuring governance, discipline, transparency, and effective finance, NPL, and capital management, the bank's profile and reputation have significantly improved. This has resulted in customers turning to a reliable and quality bank like BRAC Bank, especially during stressful market conditions. As a result, 2024 has become our best-ever performance year in terms of customer volume and deposits.

Infograph: TBS

Not only deposits, but by the end of 2024, our loan outstanding has also increased by 20%, or Tk11,000 crore, which is far above the market average. Additionally, our foreign trade business has grown significantly. Last November, we saw an average of 50,000 new accounts being added every month. The continuous efforts in these areas have contributed to the growth of our business and profile.

How is BRAC Bank benefiting from investments in technology?

At the end of 2021, we launched a new banking app called 'Astha.' It is the number one product in the market in terms of customer experience. This app provides a variety of services, from depositing or withdrawing money to making payments. In February, retail transactions alone on this app reached Tk19,000 crore.

Investing in technology has not only improved customer experience but also significantly reduced the cost of transactions. Furthermore, transactions are better controlled. In today's world, without strong technology and banking apps, no bank can grow in the future.

From which sectors are deposits coming in well, and which sectors are prioritised in your lending?

BRAC Bank gives priority to three customer segments—SME, Retail, and Corporate. Our total lending portfolio consists of 50% in the SME sector, 35% in the Corporate sector, and 15% in the Retail sector. On the other hand, the deposit scenario is the opposite. 50% comes from Retail, 20-21% from SMEs, and the remaining 28-29% from the Corporate sector. It's a very good fit, and we provide all-around services to all types of customers.

Good deposits usually lead to surplus liquidity. How do you manage liquidity?

If a bank has surplus liquidity, it needs proper treasury, asset, and capital management. In this regard, investing in government securities is a good option. In 2024, BRAC Bank's average Advance to Deposit Ratio was 70, meaning we had a good surplus of funds, which we invested in government securities to earn a good profit.

Despite investing in government securities, our loan growth has been much higher than other banks, and our NPL remains very low. All in all, the financial strength of our bank is very strong.

What kind of growth can you expect in your profit for the best year?

Since this is price-sensitive information, it would not be appropriate to share exact figures at this moment. However, I would say that when our final figures come in April, both our customers and shareholders will be very pleased.

Despite the instability in the banking sector, how have you kept the NPL ratio low?

Over the last 24-25 years, we have learnt how to do SME business. Initially, we faced many losses. When I joined BRAC Bank in 2015, the NPL ratio was in double digits. Now, it stands at  2.80% as of September 2024. Over the last decade, we have improved in various ways. 

First, in client acquisition, we have set benchmarks for different segments to determine what services or offers to provide. Retail, Corporate, and SME require different strategies. Second, we created a clear roadmap for banking by discussing it with the board and everyone involved. 

As a result, we know which businesses to target and which ones to avoid. Third, our monitoring and maintenance processes are very strong, and recovery collections are also crucial. Thanks to these efforts, BRAC Bank is able to recover about 35% of written-off loans each year. In short, we have learnt how to run a business effectively.

The central bank has announced that it will follow stricter guidelines for NPL declarations. How might this affect BRAC Bank?

We have already been following these standards. Since 2019, the central bank has been following specific policies for NPLs, and our strategy has been more conservative. As a result, the new guidelines may cause our NPL to increase by a maximum of 30 basis points.

Even if the NPL increases, there will be no harm to the banking sector. Banks already have non-productive loans, but they have not been recognized. These loans were hidden under the carpet. Once the new regulations are implemented, the real situation in the banking sector will be revealed, and the financial strength of the sector will improve.

What are your future plans for depositors and liquidity management?

For liquidity management, a strong treasury team is essential. I believe BRAC Bank has the best treasury team in the country. In addition to having our own technology, we manage foreign exchange through a software called Electra. We are also planning to purchase an Asset Liability Management (ALM) software to further improve our liquidity management.

We will continue our deposit mobilisation drive because, first and foremost, banks need to focus on deposits. To achieve this, we need to build the bank's reputation, improve its profile, strengthen its technical capacity, and do everything necessary. Therefore, we are prioritising deposits. Even though profitability may decrease slightly, we aim to achieve 30% growth in deposits this year.