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Best domestic bank: Brac Bank
|Selim Hussain, BRAC Bank|
Last year was a tough one for Bangladesh’s banks. Political instability took a toll in an otherwise strong economy, and many lenders experienced a dip in profits and an increase in bad loans. But one lender sailed serenely through the storm in 2018, staying above the fray.
Under Selim Hussain, the straight-talking chief executive who joined in November 2015, Brac Bank has been transformed into the country’s best and most-innovative financial institution. Its market capitalization as of February 2019 was about $1 billion, putting it well ahead of rivals Eastern Bank and The City Bank. Brac Bank generated net interest income of Tk11.5 billion ($137 million) in the first nine months of 2018, up 24% year on year, and it reported pre-tax profit of Tk4.09 billion, up 3.1% from the same period a year ago.
Its status as the country’s best full-service lender is buttressed by the strength of its small and medium-sized enterprise business. Smaller firms accounted for 40% of Brac’s total loan portfolio at the end of 2017, and Hussain says he wants lending to SMEs to make up more than half the bank’s book by 2020.
But it is the roaring success of mobile payments service bKash that continues to catch the eye. Founded in 2011 and still managed as a subsidiary of Brac Bank, bKash has also attracted a number of heavyweight equity investors, including China’s Ant Financial Services, the IFC, and the Bill & Melinda Gates Foundation. The number of merchants using bKash now tops 30,000, while an estimated 24 million citizens use the service regularly.
Brac Bank has done many smart things over the years but none, surely, was as far-sighted as its decision to found and then sink its valuable time and money into developing the country’s largest mobile financial service provider.
Best corporate and investment bank: Eastern Bank
|Ali Reza Iftekhar, Eastern Bank|
Six local and foreign bank chief executives nominated Eastern Bank for this award. No other names were offered up by the half dozen, and for good reason. Eastern Bank has for years been widely viewed as the best local provider of quality corporate banking services.
It is highly regarded by multilateral financial institutions, having co-financed projects with the likes of the Asian Development Bank and the IFC. Its regional branch network is also growing in reach and influence. Trade offices in China and India are tipped to open soon, adding to its existing portfolio in Myanmar and Hong Kong.
Eastern Bank’s managing director and CEO, Ali Reza Iftekhar, signed an agreement with the German development finance institution DEG last year, with the aim of disbursing more capital to companies and infrastructure projects. The two institutions have three existing financing agreements in place, worth a combined $100 million.
Eastern Bank also won approval from the central bank last year to provide onshore agent banking services and supply chain financing.
The Dhaka-based financial institution boasts one of the sector’s strongest balance sheets and one of the lowest non-performing loan ratios. It reported net interest income of Tk5.76 billion ($69 million) in the nine months to the end of September 2018, a year-on-year increase of 32%, while pre-tax profit came in at Tk3.84 billion in the same period, slightly higher than the same period a year ago.
Best international bank: Standard Chartered
|Naser Ezaz Bijoy, Standard Chartered|
Standard Chartered is hands down the best foreign bank operating in Bangladesh. It opened its first branch there in 1948, acquired ANZ Grindlays in 2000, and snapped up a commercial banking business from American Express five years later. It now boasts 24 branches and booths dotted around seven cities, employing 2,100 people and providing services ranging from credit cards and auto finance to personal loans and Islamic banking.
Corporate and institutional clients, including many of the world’s biggest firms, automatically turn to StanChart in search of products including trade finance, cash management, foreign exchange, lending, securities and debt capital markets.
Every piece of raw data bolsters its claim to be Bangladesh’s best foreign bank. In 2018, Standard Chartered accounted for 8% of all external trade finance, 30% of all completed letters of credit and 25% of the onshore US dollar clearing business. It is the dominant custodian bank, and accounts for 63% of all small and medium-sized enterprise lending by foreign banks. Moreover, a strong onshore presence allows it to plan for the future.
Bangladesh’s garments industry may be geared to the fashion demands of Western firms and consumers, but big-ticket infrastructure and corporate investment is ever more likely to flow in from Japan, China, Singapore and India.
The biggest inbound FDI deal in recent years was the purchase by Japan Tobacco of local group Akij Group for $1.5 billion in August 2018. StanChart was exclusive financial adviser to Japan Tobacco on that deal. It also provided custodian and FX services to the Shanghai and Shenzhen bourses when they joined forces in February 2018 to buy a 25% stake in Dhaka Stock Exchange.
Speaking to Asiamoney, Standard Chartered’s country chief executive, Naser Ezaz Bijoy, flagged up the importance of the bank’s new China desk, which caters to more than 30 mainland companies in Mandarin, and its dedicated Japan- and India-focused relationship managers.
Best for premium banking services: The City Bank
|Mashrur Arefin, The City Bank|
No other lender in Bangladesh can compete with The City Bank’s priority banking division, Citygem. This is the third year in a row that the lender, now run by chief executive Mashrur Arefin, has secured this award, and it shows no sign of being bested by its peers, or of resting on its laurels. Each year, the Citygem team finds new services to offer to a customer base that numbers more than 4,500, and which is only set to grow further in line with Bangladesh’s expanding economy.
In 2018, the lender opened its second international lounge at Hazrat Shahjalal International Airport in Dhaka, catering to its own Sapphire-level priority customers and holders of American Express platinum cards.
Everything Citygem does emanates from its two exclusive banking centres in Dhaka and Chittagong. The team certainly knows its clientele, and understands which buttons to press to secure their enduring loyalty.
Each customer gets his or her own dedicated relationship manager, access to a centralized travel concierge service and a wide array of wealth management products, from real estate advisory to equity trading solutions.
When clients pay a visit, they can be certain that their car remains safe and sound, personally supervised by a valet – a vital service in a place where roads are cluttered with traffic. Customers are also guaranteed exclusive deals at any one of four world-class medical facilities run by Parkway Hospitals Singapore, including a 10% discount on health screening packages, exclusive consultation for the entire family and free access to regular health talks and seminars.
Best digital bank: Brac Bank
That Bangladesh as a country is managing to shed its image as a fintech laggard has much to do with a seminal decision made by Brac Bank in 2011. The lender boasts an impressive range of own-brand digital services.
Customers can pay bills, view active loan information and account statements, see their transaction history, pay for visa applications and transfer funds to any other Brac account, all via a mobile app.
But it is the bank’s decision eight years ago to create a new mobile financial services division and to be brave enough to give it wings, that guarantees Brac Bank this award. That new service is, of course, bKash.
Right from the start, bKash was treated as neither a bank-led nor a telco-led company. It secured investment from the IFC and China’s Ant Financial Services, among others, and brought in experts who cut their teeth in industry rather than finance.
Its mobile services were transparent, simple and easy to use. Anyone over the age of 18 could open an account for free and get to work sending and receiving money, making payments, recharging their mobile balance and paying bills.
By any measure, bKash has proved to be a staggering success, so much so that it is busy exploring ventures and opportunities with several of Bangladesh’s other big lenders, including The City Bank. Data is hard to come by, but when Asiamoney paid chief executive Kamal Quadir a visit in 2018, we found a profitable firm growing at an exponential rate and processing five million transactions each day. Well done Brac Bank.
Best bank for SMEs: IDLC Finance
|Arif Khan, IDLC Finance|
Founded in 1985 under the aegis of multilateral institutions including the Aga Khan Fund for Economic Development and the IFC, IDLC Finance really found its role in life in 2006, following the launch of its small and medium-sized enterprise business. Since then, it has become Bangladesh’s most influential provider of SME services. Outstanding loans to SMEs amounted to $415 million at the end of 2018, up from $350 million in the previous year. At the end of 2018, SME lending comprised 43% of its portfolio, against 21% a decade ago.
Over the course of the review period, IDLC Finance’s client base grew 11% to 14,000.
According to diagnostic tests carried out by the IFC, it is one of the most-efficient SME lenders in Bangladesh, with a cost-to-income ratio of 39% at the end of 2018, and a non-performing loan ratio of 2.8%.
Run by managing director and chief executive Arif Khan, the bank boasts 28 dedicated SME centres dotted around Bangladesh, employing 450 staff, all of whom can take part in some or all of its 83 annual training programmes.
But it is the financial institution’s deep bench of services that really impresses. It offers everything from supplier and distributor finance to factoring and corporate finance.
An internal credit scoring system developed in alliance with the IFC and Indian analytics expert Crisil enables small business clients to gauge and minimise credit risk.
Another creditable development in recent years is Purnota, a broad suite of financial and non-financial services that targets female entrepreneurs and offers an array of services and products from unsecured loans and skills training to book-keeping and advice on how to secure operating licences across a host of industries.
Best bank for CSR: HSBC
|Francois de Maricourt, HSBC|
It isn’t every day you find a bank willing to do its bit for working women (and men) in the world’s oldest profession, so let’s hear a round of applause for HSBC. The British lender takes its commitment to corporate social responsibility seriously everywhere it operates. But it goes a step further in Bangladesh, where it focuses on sustainable finance and supply chains, and on improving wider financial literacy and general employability.
In a country where few have access to clean water, its WaterProgramme is genuinely important. It has installed rainwater harvesting systems and solar-powered reverse osmosis plants in the districts of Satkhira, Sunamganj, Meherpur and Khulna, serving community clinics, schools and, in the city of Banishanta, a brothel reckoned to be the largest in the country.
HSBC is busy empowering women entrepreneurs in Chittagong, where it is disbursing start-up loans to female-owned firms and running 16 corporate training programmes.
Country chief executive Francois de Maricourt has worked hard to improve financial literacy, joining forces with the British Council in Dhaka and Chittagong to provide training to 2,000 students in 20 schools in underprivileged communities.
HSBC’s 2018 Business Case Competition was attended by 168 students from 22 universities, and the winning team flew to Hong Kong to attend a regional competition.
Textile manufacturing, a key export sector, received a boost in 2018 when HSBC and the United Nations Development Programme joined forces to help foster a more sustainable domestic supply chain. The initiative aims to improve community wellbeing and skills training, tackle environmental and social issues, and reduce carbon emissions.
HSBC is also helping to support disaster management projects, notably supporting displaced Rohingya from Myanmar and providing clean drinking water to thousands of people in flood-prone areas.
Best for Microfinance: ASA
Since its inception in Bangladesh in 1978, ASA has been one of the world’s great microfinance pioneers, promoters and innovators.
Each year, it extends and expands its reach in the fast-growing south Asian nation. At the end of December 2018, ASA had 3,045 branches, collectively covering 88% of a country where most families live in poorly connected rural or semi-urban areas and lack access to a formal bank account or formal lines of credit.
Over the course of the review period, the Dhaka-based financial institution disbursed Tk284 billion ($3.38 billion) in loans to more than 7.1 million individuals and small and micro enterprises.
Its return on equity was 17.26% in the second half of 2018, while its return on assets was 8.95% – respectable results for a financial institution of any size or location.
Its presence stretches across an economy that is only now being stitched together, but it tends to focus on primary industries, ranging from fishing and farming to forestry. It focuses on delivering financial services that are, first and foremost, client-friendly rather than complex.
Simplicity and reliability are at the heart of everything it does in Bangladesh. Its customers are treated as participants rather than customers, by ensuring that they take part in the decision-making.
Likewise, its branch network, while vast, is designed expressly to make banking a simple process. Customers can withdraw savings at any time, education loans are available for members’ children, and special and interest-free loans are extended, when needed, to clients affected by disaster – a regular occurrence in a low-lying country prone to floods, tornadoes and tropical cyclones.
ASA is an impressive microfinance lender providing invaluable support to millions of individuals and small companies in one of the world’s most-exciting but difficult emerging markets.