Since its establishment, the City Bank’s continuous endeavor has been to increase the shareholders’ value, and be respected as a dynamic yet compliant organization. It has been the Board’s and Management’s tireless effort in developing the bank as one of the leading banks in the industry with a basic mission to understand and fulfill the needs of our valued customers.
Despite the continuation of global economic recession, Bangladesh has attained its targeted GDP growth of 6%. Maintaining food security for a large population, managing the effects of climate change, creating employment opportunities for its foreign-returned labor force, and marshaling the infrastructural development remained the major challenges for Bangladesh economy in 2010. To boost the economic growth, Bangladesh needs to address power and gas shortage, improve investment climate, upgrade infrastructural capacity and create corporate governance across its business and corporate sectors.
The bank has achieved an outstanding growth in 2010 in terms of operating profit, loans & advances, and overall balance sheet. Strong balance sheet management and focus on core banking business made it possible to attain a strong financial performance in the year in question. Profit before tax (PBT) of the bank stood at BDT 2,999M in 2010, which is a rise of BDT 1,611M over 2009 PBT of BDT 1,388M. Despite significant rise in tax expense and provision of BDT 814M, Profit after tax (PAT) has reached BDT 1,849M in the year 2010, which is a BDT 1,030M growth over 2009 (2009 PAT was BDT 819M).
Earning per shares stands at BDT 59.35 compared to 27.35 of 2009. To support the massive business growth, a right of 1: 1 was issued in the year 2010 which resulted in a capital adequacy ratio of 11.15% against the regulatory requirement of 9%. In regard to loans and advances, NPL has been brought down to 4.42% (2009 was 4.9%). Apart from that, Bank has maintained an additional provision of BDT 205M to cover any emergencies and to maintain the confidence of the stakeholders.
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Now, the bank is focusing on right placement of its prime resource – human resources. The bank believes in putting the right people at the right place. In most part of the 2010, our 2,685 employees worked together to make possible
the technological advancement, expansion and modernization that we set to achieve and to anticipate the customers’ needs and ensure their satisfaction.
We successfully closed a number of growth initiatives that were part of our strategy for 2010. Those will surely bring good results in the following years. One of our major focuses was to grow in low cost deposit. Due to that effort, our cost of fund stood at 4.90% at end of 2010 - down from 6.10% in 2009. Due to capping on lending rate, the bank was not in a better position in terms of yield on advance. Therefore, managing the low cost deposit with a view to improving the net interest margin was an important challenge.
2010 has been a successful year for American Express cards in terms of its business growth, its contribution to the bank’s bottom-line and the expansion of its merchant acquiring reach. Our credit card revolving portfolio (in simple words, the interest yielding book) reached BDT 2,665M at the year-end having 57,000 Amex cards and 34,300 Visa cards in circulation. The number of Visa debit cards also grew significantly – it reached 130,000. No less significant is our achievement in card merchant acquiring business. By the end of the year we became # 1 in the industry both in terms of number of merchants acquired and the monthly billing / charge volume generated. Launch of Amex corporate card was another milestone for the year. Though I am yet to see any satisfactory growth there, I am for a long-term view in this regard. I believe with a little bit of favorable regulatory policy, corporate card will see its wings spreading in a grand style someday. In 2010, there were also the opening of 1 Agri Branch, some 30 new ATMs, 1 Sales Center and 1 state-of-the-art Call Center. The launch of City Wallet (the first SMS Banking product in the country which is accessible directly from your phone set’s menu option), i-Banking (internet banking with limited facilities), City Global (foreign currency accounts suite) and the re-launch of Islamic Banking under the brand name City Manarah – all added to the value of the franchise tremendously. The separation of brokerage business and its subsequent launch as City Brokerage Limited as a subsidiary of the bank allowed us to focus more in the core banking business that we do.
Priorities for 2011
Sustainable business growth, dynamic and talented human capital, excellent risk management, involvement of mid level management in the decision making processes and an efficient IT platform – these are the factors that created a solid foundation for City Bank already. These key strengths provided the reason for The Asian Banker to recognize City Bank as “The Strongest Bank in Bangladesh – 2010”. In the coming years, the performance can now only go higher and be better. In consultation with the Management Committee of the bank and with the Board of Directors to some extent, I have charted out below the Priorities for 2011, which I am sure will take the bank to a new height hitherto unclimbed. These are:
Uphold the bank client relationship and serve customers with the true spirit of the campaign called “2011 – The Year of Service Excellence”
Manage expenses effectively in order to lower the cost-to-income ratio to the industry average level
Bring change in mix in loans and advances
Remodel the retail banking business in line with customer value segmentation – top tier, middle tier and low tier customers
Intensify the growth in SME business
Integrate the Green Banking model with our overall business model
Explore and grow in agri business
Pursue growth in City Manarah – retail Islamic Banking; and also incorporate SME and Corporate Islamic financing
Focus on Business Process Reengineering (BPR) of operation processes and MIS capability for achieving optimum productivity at a minimum cost
Engage more meaningfully and vigorously in CSR activities in specific areas like education, sports, urban environment sustainability and culture
Manage credit risk through diversification of credit concentration
Implement ICAAP, the Pillar-II of BASEL-II requirement
Moving towards 2011, we welcome the withdrawal of cap on lending. I believe the major challenges will be to manage the cost of deposit and maintain the quality of assets. The withdrawal of cap in working capital financing in productive sectors may shrink the credit growth in productive sectors. The other challenges facing the credit growth would be the shortage in electricity and gas, the rising trend in global oil and commodity prices, the slowing down of wage earners’ remittance due to the unexpected Arab Spring that shook the Middle East, and the volatility in our stock market. The liquidity crisis of late 2010 taught us to be cautious in managing asset and liability at the time of financial unrest. However, huge projected government spending on infrastructure and development works may balance out the adverse inflationary pressure on food and commodity prices. I am confident that City Bank will be capable of managing the liquidity related challenges efficiently just like the previous years. With an ongoing focus on executing the priorities set above and managing the risk while growing our business prudently, we will surely continue to sail forth at full steam.
Finally, I acknowledge the contribution of our stakeholders, the guidance of the Board of Directors and the support of the regulators in framing business-friendly policies. I also thank our 600,000+ customers for their continuous support and unwavering confidence in us. In the end, I must say I feel privileged to serve this bank under a dynamic and visionary Chairman like Mr Aziz Al Kaiser and a Board of Directors that is enterprising and so very bright.
My management team and I commit to do even better in 2011.