Thank you for visiting our website and welcome to City Bank.
Through the good times and the more challenging times, City Bank is always here to help you and your family or business achieve your financial goals.
I feel privileged to share with you our successes, challenges and the future directions in response to ever changing global, national economic and social environment and its impact on the banking industry.
ECONOMY – MAN-MADE OBSTACLES
For the last two consecutives fiscal years, the economy of Bangladesh has been experiencing lower growth compared to its potential. It achieved 6% growth in FY 2013 (ended 30 June 2013). Man-made obstacles such as politicalcontention, deepening uncertainty centering on political transition and the inadequate improvements in the enabling infrastructure i.e. power, gas and other facilities continued to pull down the pace of our economy. However, more than 11% growth of exports with flat level of imports and a satisfactory growth of inward remittances (12.6%) in FY 2013 contributed to a large surplus (USD 5.1 billion) in Balance of Payments (BoP). Gross foreign exchange reserve shot up to USD 18 billion by the year end 2013 and the large surplus of BoP put pressure on the exchange rate towards appreciation. Bangladesh Bank intervened frequently to prevent such large appreciations.
INFLATION – A TOUGH ROAD
Average inflation, as you know, experienced a consistently upward trend in 2013. The rise in food inflation pushed up average inflation from 6.06% in January 2013 to 7.53% in December 2013. Higher distribution costs due to frequent and non-stop nationwide strikes and sharp rise of food inflation in India (which is correlated with Bangladesh food inflation) are major reasons behind such upward trend of inflation. The second half yearly (H2, FY 2014) monetary stance of Bangladesh Bank targeted a monetary growth path aiming to bring down average inflation to 7% which was 10.6% in the last fiscal year, while ensuring that credit growth is sufficient to stimulate inclusive economic growth.
BANKING – THE POST-TURMOIL LANDSCAPE
Banks in Bangladesh faced one of the worst years in recent past in 2013 in terms of falling credit demand, rising NPL, weakening governance, lower profitability and deteriorating trustworthiness. Extending credit and maintenance of asset quality were major challenges in 2013 mainly due to a pervasive sense of uncertainty centering political transition, non-stop strikes and blockades, subdued economic activities and spillover effects of certain large scale financial scams. Non-performing loan (NPL) rose to 12.8% in September 2013 which was 4.05% higher than that of corresponding period last year. However, the NPL scenario of the scheduled banks has improved in December 2013 just because of flexible loan rescheduling policy allowed by the Central Bank to mitigate sufferings of business houses for political unrest. The ample liquidity has piled up in the banking industry mainly due to low private sector credit demand caused mainly by political uncertainties and infrastructure bottlenecks. In order to ensure good health of the banking system and to bring all banks under strict monitoring and control mechanism, anumber of remedial measures have been taken by Bangladesh Bank. These include amendment of Bank Company Act 1991, issuance of new corporate governance guidelines for Board of Directors, Chief Executive Officers and Advisors and Consultants of the bank companies, and implementation of credit and risk management training and a number of reform measures at the administrative level.
CITY BANK – ALWAYS A STRONG BRAND
We achieved satisfactory growth in profit after tax (19.5%) despite the decrease in operating profit by 9.2% over last year. The Bank has continued to deliver consistent financial performance despite several challenges like excessive liquidity, growth of NPL and subdued economic activities. We remained highly vigilant to maintain the quality of loan portfolio throughout the period and managed to keep our NPL ratio at 8.1% at year-end 2013 compared to 7.5% of previous year-end. Efficient balance sheet management has produced satisfactory result in core banking activities. Our excess liquid assets were invested in safer vehicles i.e. govt. T-Bills/Bonds in absence of adequate credit demand from private sector which eventually gave us lesser investment income due to lower trend of yield on govt. T- Bills & Bonds than that of the yield on advance. Growth of total revenue stoodat 3.9% whereas normal growth of operating expenses recorded a positive growth of 19%, but all this and other unavoidable factors led to a 9% reduction in our operating profit. However, on the brighter side of things, significant reduction (16.6%) of provision against loans eventually helped to achieve a 19.5 % growth of Profit After Tax (PAT) in 2013. Consequently our Earnings per Share (EPS) has increased to BDT 1.31 in 2013 against BDT 1.1 in 2012. Board has recommended a Bonus Dividend @ 20 percent or BDT 2.0 dividend per share (DPS) for the year 2013 after a mandatorytransfer of BDT 0.52 per share to statutory reserve. These bonuses have been issued from the balance of share premium and retained earnings of current year and previous years at a proportion of 12% & 8% respectively.
HOLISTIC APROACH IS THE KEY
As a responsible corporate citizen, as always, we at City Bank are committed to creating value and generating benefits for the society we operate in. In line with our corporate philosophy, we have placed special emphasis on ‘adaptability’ as a key element of sustainable growth: adaptability in a changing environment, the attitude to embrace new technology and solving the important issues in a more holistic way. Adaptability as a core component of sustainable development recognizes that growth must be both inclusive and environmentally sound to reduce poverty and build shared prosperity for our society to continue to meet the needs of future generations. We keep our shareholders’ interest on top of our agenda when determining our corporate strategy. Our success in achieving consistent business and financial performance testifies that the vision in our corporate strategy is being executed. Being a values-driven bank, we believe in responsible leadership and strong control and compliance practices. As much as we emphasize thinking creatively and moving quickly, our highest priority has always been doing things the right way. We are dedicated to strengthening our regulatory compliance program across the company. The aim is not just to clean up errors after they happen, but to prevent them from happening at all at the outset. We have yet to go a long way and I expect my respected shareholders will be with me in this journey.
SO MANY MORE TOOLS
In 2013, we launched City Touch – the strongest Internet banking platform this country has seen so far; City Gem – Priority Banking services with a focus on managing the wealth of high net worth individuals; Domestic Airport Lounge –which made us go beyond serving the American Express cardmembers at the international airport only; American Express Platinum credit card – the best ever global card solution for the “selected few”;a full-fledged remittance company in Malaysia named CBL Money Transfer Sdn. Bhd. with two branches. It was not only the launches of new products and business advancement tools, but also the extension of platforms that defined the year: 2 new branches were added to our branch network; 47 new ATMs joined the fleet, thus taking the total to 213; and moreover we have joined the global Facebook community which, in no time, garnered us with more than 100,000 “likes” and has become an active tool for our marketing promotions. A number of automation of our banking system also took place that includesfull restructuring of the Bank’s GL with the expert help of PricewaterhouseCopers, India. We want to lead in the digital age, to drive commerce, to provide meaningful value to customers throughout Bangladesh, and to continue to be a great place to work.
PERFECTLY POSITIONED TO WIN
As we remain grateful and resolute as before, I would like to take this opportunity to express my sincere gratitude to all our stakeholders including shareholders, customers and regulators especially Bangladesh Bank, Securities & Exchange Commission, Dhaka and Chittagong Stock Exchange, RJSC, Large Tax Payer Unit, Vat Commissionarate and external auditors for their continued support and judicious guidance. I am grateful to my fellow Members of the Board of Directors for their valuable support and constant cooperation. My sincere appreciation goes to Team City Bank and its leader Mr. Sohail R K Hussain, the new Managing Director & CEO. MrHussain took over following the departure of Mr K MahmoodSattar who made an immense contribution in setting up the building blocks of success in his 6 years with the Bank. We believe in the strength of our people, and our people in turn believe in the core values of the Bank. That has always been the case with City Bank where the value pillars drive business and the business happens in order to ensure long-term and sustainable growth and the wellbeing of all our stakeholders. Wishing you all a brilliant 2014.