Brac Bank's half-yearly profit grows 39pc

Brac Bank has diversified its SME financing by branching out across the country to maintain its market-leading position in the segment, its chief executive said yesterday.

Selim RF Hussain said many banks are increasingly shifting their focus to small and medium enterprises, making the market more competitive.

"So, Brac Bank has undertaken strategic initiatives to face the growing competition."

He spoke while disclosing the bank's half-yearly earnings at a programme at its headquarters in Dhaka.

The bank's profits posted 39 percent year-on-year growth to Tk 242.1 crore in the January-June period of this year.

In the period, earnings per share surged to Tk 2.66 from Tk 2.10 in the same period last year.

SME lending has been at the heart of the bank since its inception. Over the years, it has also made foray into retail and corporate space.

Within the retail segment, the bank witnessed significant growth in home and auto loans in the first half, up 6 percent and 49 percent respectively.

Of its total loans, 40 percent went to the SME sector, followed by 38 percent to the corporate sector and 22 percent to retail in the six months of 2017.

Hussain said the bank is continuously working to improve the service quality to retain its position among the SME lenders.

Brac Bank's strength in SME business lies in the strong workforce dedicated to handling the banking segment.

Hussain also credited the efficient management of cost of fund for the continued profit amid difficult market conditions and increasing competition.

The cost of fund for Brac Bank was 3.5 percent in the first half, up from 3.4 percent in the same period last year.

"We have managed to keep the cost of fund low as the major portion of our deposits is current and savings, which carry less interest," he said, adding that the bank would not attract funds with long tenure.

The banker said the bank intends to carry on its advance-deposit ratio of over 83 percent throughout 2017.

Default loan of the bank decreased to 3.7 percent in January-June, from 4.2 percent in the first half of last year.

The bank has remained cautious about corporate lending and focused on building new relationship, he said. 

The bank added 47 new corporate clients in the first half whereas the number was 25 in the same period a year ago.  At the Dhaka Stock Exchange yesterday, Brac Bank's stocks declined Tk 0.9 or 1.04 percent to end the week at Tk 85.40.