We put safety of our customers' deposits first
Amid one of the worst crises in Bangladesh’s banking history—largely due to lack of corporate governance—Eastern Bank set itself apart with strong financial performance. In an interview with The Business Standard’s Sakhawat Prince, Ali Reza Iftekhar, managing director and CEO of Eastern Bank PLC, explained how the bank reported exceptional growth in deposits, credit, and profits in 2024, reflecting its resilience and growing customer confidenc
Deposits represent people's hard-earned money. People will only deposit where they feel their money is safe and accessible when needed. This is a fundamental element of the relationship between banks and customers.
Our success is not confined to just 2024. Over the past 15–20 years, we have consistently been able to build trust among our customers. We did not merely show them dreams—we made them a reality. We have built enough confidence that customers feel secure in depositing their savings with Eastern Bank.
At the same time, they know they can withdraw their funds whenever needed. Our journey has been a long and consistent one. Our deposit growth did not only begin after August—there was significant growth in the first two quarters of 2024 as well.
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Public trust in our bank is exceptionally strong. We are a reputable institution in the banking industry and strong in every aspect. We have successfully delivered on our commitments in terms of service, product proposition, and diversification.
In 2024, along with deposit mobilisation, we opened nearly 147,000 new CASA accounts under inclusive banking. These accounts incur low costs. As a result, we achieved 25% deposit growth, while our cost of deposits remained at an acceptable level.
Had we relied solely on fixed deposits, our cost of deposits would have been much higher. We plan to continue with this same model in the future. In 2025, our deposit growth target sets at 25%.
One of the reasons some banks are in poor condition today is their failure to retain customer trust. There are several reasons behind this—at some point, they failed to return depositors' money. At that time, banks in stronger positions gained a competitive edge in deposit collection.
Over the last 15–20 years, our average dividend percentage has been 28%, and for the outgoing year, we proposed a 35% dividend. Those who have invested in our shares have high confidence in the bank, as they receive a substantial dividend at the year-end.
Our bank's Capital to Risk Weighted Assets Ratio (CRAR) is very strong. We maintain reserves exceeding the required capital to improve our shock absorbing capacity in difficult times.
The biggest challenge currently facing the banking sector in Bangladesh is non-performing loans (NPLs). At present, the overall NPL ratio in the industry is over 20%. However, over the last two decades, our average NPL rate has been 3.21%. It would have been even better had we been able to keep it below 2%.
We have a robust customer selection process for lending. As Managing Director, I am not directly involved in loan approvals. We have an independent team for that. One team handles customer acquisition, another handles loan approval, a third monitors loans, and a fourth is responsible for collections. This structured approach allows for effective NPL management.
In the past year, overall private sector credit growth was below 8%, whereas our bank recorded over 16% growth in credit. Our average annual loan growth is between 16–20%.
We select good customers, and good customers choose us. In the last 5–7 years, our SME and retail loans have seen significant growth. We are ahead of the market in both loan and deposit growth.
In 2024, of our 16% loan growth, the majority of our investments were in garments and pharmaceuticals. The bank's export business in RGM sector grew by more than 30%. Selecting good customers is our top criterion. We have focused more on financing infrastructure, chemicals, and essential commodities.
In 2024, our 25% deposit growth witnessed deposit portfolio growth by Tk 9,159 crore. It could easily have been Tk 12,000 crore.
Our efficient Asset Liability Committee (ALCO) determines how much new deposit is needed and how much loan disbursement should be increased.
We realised that if we could not invest the deposit productively, it would result in losses for the bank. So, we only accepted as much deposit as was necessary for the bank's operational appetite.
This year, we plan to collect Tk 11,000 crore plus in deposits.
Our digital banking service is called Sky Banking. We revamped it just five months ago. Transactions and customer numbers are rising daily on this platform. It's a revolutionary step. Most of our services are accessible through Sky Banking.
As a result of going digital, we have virtually stopped opening new branches. Instead, we plan to reach more customers through sub-branches and agent banking.
In the next five years, those banks that fail to establish strong app-based banking will face serious challenges. Our Sky Banking system was entirely home grown.
We also launched Islamic banking windows last year, through which we received significant deposit inflows—and we continue to do so. Many services and transactions can now be completed without visiting the bank at all.
This year poses serious challenges for the banking sector, much of which is political—since business is closely tied to politics. Growth tends to be slower amid uncertainty. However, if businesses can align themselves within that uncertainty, there is great potential for growth.
I believe a bank must maintain a strong balance sheet. This requires a solid capital base and adequate provisioning. A bank should plan in a way that ensures its sustainability for at least a hundred years.
Again, as most of bank's assets are funded by customer deposits, a strong balance sheet is essential to retain customer confidence. The banks that faced trouble in 2024 largely did so because of weak balance sheets.
