Padma Bank, formerly known as Farmers Bank, which was under severe fund withdrawal pressure in 2018 experienced a return of depositors in the last two years amid improved capacity to return money to clients.
The return of depositors was reflected in its rising deposits as the bank saw an increase of Tk1,386 crore in fund flow in 2019 and 2020.
The bank also started the new year 2021 with a good amount of deposit inflow as in January, a fresh Tk450 crore was added to its deposits, according to its statement.
The deposit inflow increased because the bank got back customer confidence, said Md Ehsan Khasru, managing director of the bank.
The bank is now able to return money to customers according to their demand, which helped it gain customer confidence, he added.
The bank made client payments of Tk4,125 crore in the last two years. The rise of low-cost deposits helped the bank reduce revenue loss.
Also, a total of 26,217 new current accounts were opened during this period. These are low-cost accounts for the bank as no interest has to be paid. The opening balance of these accounts was Tk163 crore at the end of last year.
The total number of current accounts of the bank stood at one lakh at the end of 2020.
The bank also saw improvements in other financial indicators, which helped it get permission from the Bangladesh Bank to resume lending, which remained closed for three years.
The bank's Advance Deposit Ratio (ADR) came down to 99.41% in January which was 126% in the same month of 2019 when the regulatory-authorised ceiling was 85%.
However, the ratio was increased to 87% for banks considering the Covid-19 pandemic.
The central bank lifted the ban on Padma Bank's lending activities in November last year. The bank is now preparing to resume fresh lending.
The bank's non-performing loan which shot up to 72% in 2019 came down to 60% in December last year, thanks to loan recovery and rescheduling.
The bank has set the target to bring down the default loan rate to less than 50% by this year. It recovered Tk1,486 crore in the last two years, of which Tk242 crore was cash recovery.
Padma Bank intensified its loan recovery drive by taking a hard line against defaulters, said Khasru.
He said they are taking legal help to trace borrowers who were in hiding.
On the other hand, the bank reduced its deposit and management costs significantly, which helped it reduce losses, said the top executive.
The bank which was taking deposits at above 12% in 2019 is now offering 8%, he said.
Moreover, rental costs of branch offices across the country were revised down significantly, he added.
The bank saw a 50% reduction in losses last year even during the pandemic. Its operating loss stood at Tk151 crore at the end of last year.
Now the bank has set a target to bring down losses to Tk61 crore this year and is projected to reach breakeven by next year, said Khasru.
He took the helm of the bank in January 2018 when it was in severe crisis after being hit by loan scams.
The government injected above Tk1,000 crore into the bank through state-owned banks and financial institutions as part of its restructuring, aiming to save it from collapsing.
With the help of government funds, the bank has been recovering from its ailing state and gaining customer confidence.
Three years are not enough to improve a bank from the zero level, said Khasru.
The bank saw significant improvements in the last two years, but more time is needed for a full recovery, he added.