Thriving in turbulence: How star banks leveraged good governance, digital innovation to outperform others
While the banking sector struggled with its lowest deposit growth in years, a few private banks managed to thrive in 2024. By leaning into digital innovation, earning public trust, and staying true to strong governance, they turned a crisis into an opportunity, attracting record deposits as customers looked for safer places to keep their money
In 2024, the country's banking sector experienced its lowest deposit growth in recent history. However, some private commercial banks managed to excel that year. The average deposit growth dipped to 7.44% year-on-year in December last year, while some banks achieved growth of over 20% to 30% during the year.
It can be attributed to their strong reputations and consistent quality of service. It came at a time when depositor confidence was shaken due to widespread corruption scandals exposed after the fall of Sheikh Hasina's regime.
However, the number of banks that maintained steady deposit inflows is not very high.
Among 43 private commercial banks, not all maintained it, while eight banks– City, BRAC, Eastern, Dutch-Bangla, Prime, Mutual Trust, Bank Asia, and Pubali– made record high deposit collections during the year.
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Digital innovation, massive investment in IT, continuous deposit campaigns and good governance on board are behind it.
For instance, City Bank achieved a 31% deposit growth in 2024 – the highest in its history – compared to an annual average of 18-20% in previous years, according to central bank data.
The bank mobilised Tk12,169 crore in deposits last year, with 55% collected in just three months through September.
Strong deposit growth enabled these banks to generate record revenue in 2024, amid an economic crisis, benefiting from low-cost funds and investments in treasury bills and bonds, bankers said.
This surge was driven by depositors shifting funds to well-reputed banks, fearing losses after the country's largest deposit bank, Islami Bank, failed to repay its customers. By the end of December 2024, City Bank's total deposits stood at nearly Tk51,500 crore.
Speaking to TBS, Md Arup Haider, deputy managing director and head of retail banking at City Bank, said online banking is one of the secret sauces. City Bank now serves 3 lakh customers daily, with 80% via digital channels.
Public trust is the fundamental asset of a bank's business. However, City Bank did not earn it overnight— it was the result of a long journey. The core reason behind City Bank's improved image is a culture of good governance. People now believe that the bank operates within rules and regulations, which means their money is safe, he said.
Meanwhile, BRAC Bank, one of the largest private commercial banks in SME (Small and Medium Enterprise) financing, recorded a 36% deposit growth – the highest in its history.
The bank mobilised nearly Tk17,800 crore in deposits last year, up from Tk13,000 crore the previous year, according to central bank data.
Speaking to TBS, Selim RF Hussain, managing director and CEO of BRAC Bank, said they started to invest heavily in IT six years back, which resulted in high deposit growth in 2024.
He said digital innovative products helped the bank to improve customer experience.
Another well-reputed bank, Eastern Bank, saw a 24% growth in deposits last year, with an increase of Tk9,000 crore – the highest in its recent history.
By the end of December, the bank's total deposits stood at Tk46,453 crore, according to central bank data.
Ali Reza Iftekhar, managing director of Eastern Bank, said the strong balance sheet that the bank built for years helped to retain depositor confidence even in a crisis period.
"One key reason some banks are struggling now is their failure to maintain customer trust. When they couldn't repay depositors, it gave better-performing banks a clear advantage in attracting new deposits."
"In the past 15-20 years, our average dividend payout has been 28%. Even in the last financial year, we achieved record profits and paid a 35% dividend. Our investors have strong confidence in us, as they receive a good amount of dividends at the end of the year," he said.
Mutual Trust Bank also saw nearly 24% deposit growth last year, collecting over Tk6,000 crore, according to provisional central bank data. In 2023, their deposit growth was 12.86%.
Syed Mahbubur Rahman, Managing Director of MTB, said, "The banking crisis after 5 August began when customers went to withdraw money and returned empty-handed."
"For the past 4 to 5 years, we have focused on depositors. If a bank has deposits, it can invest in various sectors. Banks with good deposits have made good profits by investing in government treasury bills and bonds. This is because the repo rate was low last year, allowing banks to borrow liquidity at a lower cost and invest in government loans."
Dutch-Bangla Bank experienced nearly 10% deposit growth last year, compared to 7.9% the previous year.
"When we began technological development in 2004, our total deposit was only Tk2,700 crore. Over time, that has increased to Tk55,500 crore," said Abul Kashem Md Shirin, Managing Director of Dutch-Bangla Bank.
He said achieving such growth over the past two decades was possible due to their technological advancements.
Prime Bank's deposit growth rose sharply from 14.83% in 2023 to 20.64% in 2024.
Managing Director of Prime Bank, Hassan O Rashid, said, "A bank fails due to a liquidity crisis, which ultimately impacts its capital. That's why we have always aimed to remain liquid during both good and bad times."
"From our experience over the past 1-2 years, we have seen that deposit withdrawal pressure can arise at any time. With that in mind, we have focused on deposit growth as part of our business planning for balanced sheet growth and classic crisis management. As a result, Prime Bank was able to achieve a deposit growth of Tk5,500 crore within a year," he added.
In the past year, Pubali Bank recorded a deposit growth of Tk14,000 crore. One of the key reasons for this, according to Mohammad Ali, Managing Director and CEO of Pubali Bank PLC, is the bank's extensive network and the confidence customers have in it.
"After 5 August, the vulnerabilities of weak banks became apparent. Bangladesh Bank Governor Ahsan H Mansur said that some banks may not even be able to recover. An example of this is – if a patient has 40-50% burns, they can be cured. But if 90% of the body is burnt, doctors often cannot save the patient despite their best efforts," he said.
"When our bank was nationalised in 1984, the default loan rate was 54%. At present, our non-performing loans are less than 3%, which is lower than international standards."
"Pubali Bank is a traditional bank with a history spanning 66 years. Over the decades, it has seen its fair share of ups and downs. At one point, it even faced a financial crisis, but the recovery didn't happen overnight. It took nearly 21 years to fully bounce back," he said.
Sheikh Mohammad Maroof, managing director of Dhaka Bank PLC, shared that his bank has seen consistent growth, largely thanks to its nano savings programme.
"2024 has been a unique year for the banking sector," he said. "A bank's strength lies in returning depositors' money on time. But now, customers also value how easy and convenient banking services are."
He added, "In the past, people had to visit the bank for any service. Now, with digital banking, they can do everything from home. We've partnered with bKash to offer nano digital deposit services, and last year alone, we opened nearly one million such accounts. In just the first two months of this year, we've opened another three lakh."
