Let me begin by saying that I’m honored to serve as Chairman of the City Bank Limited for the last few years. It’s actually an honor to lead this team of professional bankers who all share a common commitment to build on City Bank’s proud history of more than 32 years.
After the financial crisis of last few years, it feels like the global economy has finally begun to turn a corner. The economies continued to improve throughout the year. While the Central Bank maintained the historically stable taka-dollar exchange rates, there was high liquidity during the year, which ultimately reduced the cost of fund for the bank. There was also the low inflation rate, high foreign exchange reserve, good inward remittance flow etc. All this, undoubtedly, gave businesses some favorable winds. Despite political disruption prior to national elections, economic growth and exports growth outpaced the projections. Inflation too, was slightly below forecast, and the current account posted another surplus in place of the anticipated deficit. All this, for next year, eases up the realization of the growth projections.
But while being so optimistic, we should not be oblivious to the fact that a higher growth trajectory will need stronger revenues, more infrastructure and human resource spending, more private investment, and a solution to the power deficit and the removal of a few more of the perennial roadblocks.
Across the banking industry, regulation continued to be a key theme. A number of policy measures continued during the year emphasizing risk management, corporate governance, stress testing, enhanced CSR and Green Banking activities in the banks as well as monitoring of fraud-forgeries through self-assessment of Anti-Fraud Internal Controls. A revised guideline for CAMELS rating has been put into effect in order to make it more suitable with international standard. Monitoring of investment in shares by the scheduled banks has been stringent. Risk Management Committee at the board level has been made mandatory to ensure proper risk management practice in the banks. Presently the banks are being rated for their overall risk management performance.
DELIVERING RECORD FINANCIAL RESULTS IN 2014
Against this backdrop, I’m pleased to report that 2014 was a record year for City Bank. We continued to extend our loan book, which grew by 29%. We earned BDT 2,215 million, up 143 percent from last year, reflecting record results in all of our business segments. This also means that we achieved all of our financial objectives. We earned BDT 2.66 per share (2013 was BDT 1.1) with a return on equity of 10.6 per cent (2013: 7.3%), Return on Assets of 1.4 per cent (2013: 0.7%) and ended the year with a strong Common Equity Tier 1 capital ratio of 10 per cent (2013: 9.04%). These figures act as good measures to gauge our progress toward maximizing the Total Shareholder Returns.
BUILDING ON OUR STRENGTHS TO GROW OUR BUSINESSES
Looking ahead, we understand the drivers of growth will be different from those of the past decade. Here I feel confident that City Bank can adapt to changes and capitalize on new opportunities including the shift in demographics, the emergence of new technologies and the changing needs and preferences of its valued clients. We know the pace of consumer banking in Bangladesh will continue to be moderate following many years of strong credit growth, but it cannot be overlooked that consumer spending will accelerate. Hence our position as being the number 1 in Credit Card business as both issuer and acquirer of cards augurs well for us, no doubt. We are indeed extremely well positioned to serve our clients through different routes as we have one of the largest distribution networks in terms of ATMs, POS, Branches, Cards Service Centers and Call Centers. The addition of a virtual network pillar in the form of Internet Banking has made our position even stronger. We also have premium offering for the premium segment – that is, CitygemPriority Banking, a full-service wealth management platform that gave us the largest market share of the high-net-worth individuals’ pie in retail banking.
There is no question that our home market is a competitive banking environment and pressure from continued low interest rates will remain a challenge for the profitability next year. Within
this context, we are committed to improve on our industry leading efficiency ratio and deepening client relationships through cross-sell, a proven capability for City Bank. Overall, I believe we can continue to extend our lead in Bangladesh as a ‘market maker’, and ‘a harbinger of innovation’ among the local banks.
Now I would like to talk a little about technology. The rapid pace of technological breakthroughs are changing client expectations, transforming business models and redefining the competitive landscape.
Meanwhile, the regulatory environment is also continuing to evolve. Here our financial strength gives us the flexibility to effectively manage regulatory changes while investing in technology. We planned to digitize and simplify the processes to lower the costs of doing business and also to deliver a faster, better client experience. Hence 2014 saw a number of major investments in this area, which included our taking up the ‘Loan Origination and Collection System’ project; the introduction of ‘Citytouch Internet Banking’; the launch of Citytouch at bank’s ATMs; the completion of five new IT projects which were aimed at benefitting our trade services, retail, Islamic banking and corporate clientele.
We remain committed to returning capital to shareholders through dividend increase. And lastly, we will consider targeted acquisitions that fit our strategy and risk appetite, and deliver strong returns for our shareholders over the long term.
BRINGING THE BEST OF CITY BANK TO OUR CLIENTS
United by our vision of always earning the right to be our clients’ first choice, we put customers at the center of everything we do. Whether it’s helping them buy their first home, start their own business, travel worry-free, pay for their children’s education or prepare for a comfortable retirement, we enable nearly a million clients in achieving their individual goals. At the end of 2014, we funded BDT 25,316 million to SMEs, and BDT 86,916 million to medium and large companies to help them build their businesses. We are proud to declare that we became the no. 1 in credit card business in both acquiring and issuing sides with a market share of 27%. We also opened 70,000 new current and savings accounts during the year generating a growth volume of BDT 7,277 million (27%) in those accounts.
To be the right choice for our customers, in 2014 we launched Walk-up ATMs too, which was first of its kind in Bangladesh. Such ATMs placed at the roadsides in open spaces allows customers to withdraw money on the go. It was a matter of significant convenience really. Then to top it up came the country’s first Drive-Through ATMs. Placed at some worthy locations, this new kind of ATMs gives customers the convenience of using the machine without having to leave the comfort of their cars. We also introduced our flagship branch in Jamuna Future Park last year. This is a state-of-the-art branch where customers can access branch services, card services and electronic channel banking services as well as Citygem Priority Banking– all under one umbrella. In the overseas market, our Malaysian subsidiary, CBL Money Transfer Sdn. Bhd also opened its third branch at the very centre of Kuala Lumpur’s foreign wage earners’market.
MAKING A POSITIVE DIFFERENCE IN COMMUNITIES
2014 has been a great year for City Bank in CSR activities. This year, the bank has focused on diverse areas of social development ranging from cultural activities to disaster management, education, and support for underprivileged women and children. In 2014, we invested more than BDT 32.4 million in community efforts. We supported 145 underprivileged children with disabilities through SEID Trust. We provided educational and vocational training support by distributing desktop computers to a college in Bogra. We donated BDT 10 million to the Prime Minister’s Relief Fund to distribute relief to flood victims of Sirajgonj. Also, to support the flood affected farmers who lost their crops because of the devastating floods, City Bank in a combined effort with several others banks distributed seeds to more than 11,000 farmers at Islampur of Jamalpur District, which was a unique initiative.
I strongly believe 2015 will be an even better year for the bank. We will not only achieve sustainable growth, but also complete some major technological initiatives to usher in a new future for the bank. In 2015, I trust, you will see the bank reaching a truly new height in achieving both its short-term and long-term goals, i.e., profitability and institution building.
In conclusion, I thank all my colleagues on the esteemed Board of Directors for their continued faith on my leadership and their support and guidance over the years. Without their support I would not have been able to lead the Bank into making this exciting journey. I also thank the brilliant senior management of the Bank who created many new leaders in its folds and ensured an excellent culture of care and teamwork, which had in effect made the difficult journey of the values driven cultural change – the shift to a merit and performance based culture – seem so bearable. I am grateful also to the regulatory bodies for all their support. My heartfelt thanks to Bangladesh Bank, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. and Central Depositary Bangladesh Ltd. Your faith and trust on City Bank have encouraged us to do better.
Finally, I thank the many shareholders of the Bank for their continued support throughout the difficult periods. Your loyalty to City Bank and your guidance and feedback have always powered me with greater zeal in my endeavor to help creating a better institution, a more respectable brand.