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It is indeed a pleasure for me to present the performance of the Bank for the year 2013. City Bank passed another eventful year in terms of its expansion and consolidation drives despite the tumultuous political and economic situation that prevailed throughout the year. Our triumphant journey continued as usual along the line of improving upon the trend-setting innovative banking practices for which we are famous and well reputed already. At this august moment, I sincerely offer my heartfelt gratitude to the Board of Directors of the bank for appointing me the Managing Director and CEO of this great institution. I congratulate our valued clients, patrons, well-wishers and honorable shareholders for their active support, cooperation and strong association with us without which it would not have been possible for the management team to take the Bank to the enviable level where it is now. City Bank is one of the most respected and top banking brands in the country today. It is a matter of pride for me to be able to sit at the helm of affairs of such an institution. I will surely do my best to repay the trust and confidence of all of you.

In 2013, in view of the prevailing macro market situation, our focus was on the improvement of asset quality and creation of selective new assetswith the aim of maintaining a sound and safe portfolio. Simultaneously, good liquidity and lower cost of fund throughout the year gave us additional strength. Like before, our effort has been to bring stable and predictable earnings. Our endeavor was to achieve meaningful long-term goal ensuring fundamental growth in every aspect. Needless to say, in 2013 we kept our focus on core business and never took the sight away from macro market conditions and from cautious calculation of associated risk factors.

If I may nowpinpoint a few macro economic aspects of the past year, I would start by saying that despite various stresses faced by the financial sector, some positive developments also took place in the macro field in general and in the banking industry in particular. Gross international foreign exchange reserves continued to increase throughout the year and attained a healthy level of meeting more than six months’ import payments. Inflationary pressure was in a tolerable single digit level. Liquidity position in the banking system also improved considerably as evidenced from significant decline in call money rate. Though call money rate started at double digit in the beginning of 2013, it immediately reduced to single digit within a couple of months and continued at below 7 per cent level throughout the year. Exchange rate of USD/BDT also witnessed a similar trend. It started at 79.50 at the beginning but within a month BDT gradually gained against USD and maintained 77.75 level during the rest of the year. Bangladesh Bank being the Central Bank of the country actively fosters a stable and efficient financial system as part of its commitment to promoting the country’s economic growth and sustainable development. Bangladesh Bank introduced macro-prudential oversight forsupervising the banking system and performance of banks and non-bank financial institutions in a broad spectrum.

During the year 2013, we continued our efforts to further improve the deposit mix targeting agood reduction in the cost of funds. Our long-term endeavor to reach to the larger number of clients by providing easy access to technology driven services to the massescontinued as well during the year under review. Our networks have expanded through the introduction of different and innovative modes of delivery channels that currently include 213 ATMs, the newly launched internet banking platform called “City Touch”, 20 Cash Deposit Machines (CDMs), Priority Banking and Wealth Management services called “Citygem”, two separate state-of-the-art Call Centers for cards and retail / SME clientele and also City Wallet– the basic mobile banking solution for urban based customers. In 2013 we have also acquired a new business in Malaysia namely CBL Money Transfer SdnBhd in order to support the country’s much needed supply of greenback. We also have put major efforts to change the deposit mix and to maintain a healthy and comfortable liquidity position. The deposits grew by BDT 13.40 billion in 2013 from BDT 94.1 billion to BDT 107.5 billion. That basically tells you that under a highly competitive market condition, we were able to achieve 14.2% growth in deposit mobilization. This competition was intensified further with the opening of 9 new banks during the year in question. We succeeded not only in deposit mobilization but also in containing the market heat of higher interest rate by reaching favorable deposit mix as evidenced in our relatively low cost of funds. Our aggregate cost of funds was 7.6% at the end of 2013, just marginally higher than 7.5% of the previous year. Besides deposit, the loans and advances stood at BDT 89.9 billion at the end of 2013 from BDT 83.3 billion in 2012, thus having grown by 7.9 %. The Bank continued to diversify its lending portfolio in 2013. It successfully distributed portfolios across different sectors in order to reduce client specific and industry specific concentration and overall portfolio risk.

However, the rate of return on loans and advances increased to 15.1% in 2013 from 14.9% of 2012. Classified loan as a percentage of total loans increased to 8.1% as of 31 December 2013 from 7.5% as of 31 December 2012. Bank has maintained additional provision of BDT 807 billion despite the concerns of profitability. The amount of default loans in the banking industry doubled in 2013 mainly due to new classification system, sluggish business conditions and some scams. Under the pressure of the forces of overall macro economic and industry situation, our Operating Profit decreased by 9.2%, but the Profit After Tax increased by 19.5% from BDT 762.7 billion to BDT 911.2 billion.

We are proud to announce that City Bank received a major award – “Achievement Award” – from Association of Chartered Certified Accountants known as ACCA (a UK based global professional body represented in 173 countries) recently. They recognized the Bank for its contribution to the development of the finance professionals and promoting transparency and corporate governance. Center for NRB, a forum of non resident Bangladeshis, has also applauded the Bank as one of the “Top 10” banks who made significant contribution to channelize workers’ foreign remittance through official banking channel in the country.

We are currently working on launching full-fledged bank-led-agent-managed mobile banking services, drive up ATMs, EMV / chip cards, prepaid card, country’s first Business to Business card, remittance companies in other countries and so on. I am happy to note here that in the credit card space, our Bank has already become the market leader in acquiring business and is poised to reach the top spot in issuing business soon too.

In maintaining adequate capital against overall risk exposure of the Bank, our guiding philosophy has been to strengthen risk management and internal control. Bank’s regulatory capital as on 31 December 2013 stood at BDT 16.7 billion. As at the end of 2013, Capital Adequacy Ratio – under Basel II – was 11.7% against Bangladesh Bank’s minimum requirement of 10.0%. Meanwhile, we received approval from Bangladesh Securities & Exchange Commission for obtaining BDT 3 billion Subordinated Bond for strengthening Tier–II capital and total capital adequacy ratio in compliance with existing BASEL-II and upcoming BASEL-III requirements.

On the CSR front, as an institution that dearly believes in its community development responsibilities, City Bank has partnered with Eminence, a leading not-for-profit organization that focuses on social development. We also partnered with Partners for World Health (a US based not-for-profit organization working in the area of community health) and we organized the First Global Conference on Community Health, 2013 by participating as a Platinum Sponsor. As an institution bent on contributing to the society, we also promoted rural health workers by providing them with hands-on training and knowledge with the help of medical professionals from USA. Apart from that, the Bank also has undertaken few praiseworthy initiatives that include supporting the Rana Plaza victims, assisting the under privileged children in association with SEDF Trust, promoting Bangladesh Hockey Team, assisting the women of a village in the border area of Jessore to make them self sufficient and so on.

Service Excellence is one of the core values that we cherish and believe in. Service quality is the anchor of our culture,which determines whether customers will be repeat customers for us or not. To ensure that they do and to confirm the trust and confidence of them, we conduct mystery shop surveys every year. The feedbacks received from such surveys are then processed to bring about further service improvements. We did the same in 2013 and we not only received an overall higher-than-market-average rating from the mystery shoppers but also successfully retained our ISO certifications on processes and procedures.

As a bank we always focus on attracting, developing and motivating the very best individuals and encouraging our internal talents. Building a robust and productive workforce is crucial to our highly technology oriented work environment. We always keep that in mind and continuously run training programs for the ones that need catching ups. Recently we have started recruiting Management Trainees every year. The future leaders of this Bank are very likely to come out from that pool. I believe this regular recruitment of Management Trainees will ensure continuity of the leadership over the years.

2013 was undoubtedly a challenging year for Bangladesh economy and 2014 will, no doubt, offer its share of new challenges. With our excellent track record of over 31 years of ethical and prudent banking, we want to emerge as one of the most trusted partners of progress to trade and business of the country. As we look forward, we are committed to build a shared prosperity for our society to continue to meet the needs of future generations. The combined experiences of the senior management team have given us strength to see us through difficult times. We are confident that we are on the right track and we draw our strength from our tradition of ethical business practices. Our objectives are simple enough: to continue to improve our operational efficiency and to offer innovative products and services to cater to the contemporary needs and tastes of the customer base. Given the uncertainties of the external environment, our approach in 2014 will be conservative especially in the areas of managing the balance sheet and maintaining asset quality.

I express my gratitude to the Chairman and the Board of Directors of City Bank for their prudent stewardship and cooperation all along. A great debt is owed to our customers and shareholders who believed in us and remained loyal to City Bank brand throughout. Last but certainly not the least, I thank my team for their constant enterprise, dedication, and commitment to be the part of a winning team.

SOHAIL R. K. HUSSAIN
Managing Director & CEO
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