Fourth-generation banks are struggling to perform well; meanwhile, NRB Commercial Bank is standing apart from others, competing with the country's top 10 banks through a massive expansion of its services to draw in customers.
The bank adopted a strategy to provide government services to attract customers, which finally enabled it to reduce its deposit cost to 4.7%, and even lending to 7.5%, when many third-generation banks could not afford such rates.
The bank provided direct services to 72 lakh customers last year, and it now wants to reach one crore clients this year, said Parvez Tamal, chairman of the bank, who has taken the bank to new heights in his three-year tenure.
In an interview with The Business Standard, he said the bank is now going to enter the stock market to add more value by gaining the confidence of foreign partners as well as customers.
NRB Commercial Bank – which got its licence in 2013 – is going to be the first of nine new banks to be listed on the Dhaka Stock Exchange (DSE).
The main theme of the bank is not profit generation but getting more customers by providing services, said Tamal.
He said customer satisfaction will ultimately bring about profit.
NRB Commercial Bank started its journey in the competitive market where old banks already have a strong position. It is difficult for newcomers to get a stake in the old market. So, the bank started to explore a new market instead of running after the traditional one.
He said the bank targeted the cottage and micro segment, which is mostly abandoned by old banks. With this objective, the bank spread its service points to rural areas to reach village people where non-governmental organisations are working.
Currently, the bank has 400 service points – 75% of which are in rural areas.
The bank is now among the top five banks in terms of the number of customers.
As of December last year, the bank had 3,800 employees. During the pandemic, the bank recruited 1,800 new employees. The bank has crossed some third-generation banks in terms of profits, earning an operating profit amounting to Tk324 crore last year.
Further, the bank has set a target to set up 400 more service points to get more customers.
The bank's chairman said the bank is providing various government services such as bill collection and land registration. It is also the sole agent of the Bangladesh Road Transport Authority.
Customers are growing accustomed to using NRB Commercial Bank by availing government services through it. As a result, they are being encouraged to open accounts with the bank. Through this process, the bank is getting customers and low-cost deposits.
The bank has a target to reduce the deposit cost to 4% this year, he said.
Tamal was involved in the banking business in Russia for many years and has an IT engineering background.
Using his experience, Tamal wants to build NRB Commercial Bank with a vast customer network.
He said the bank's listing on the stock market will open up a new opportunity for it to come out of lending limitations by increasing its paid-up capital.
The lending capacity of a bank depends on its paid-up capital.
Moreover, banks will get access to the export-import business by gaining the confidence of cross-border partners. Foreign partners will give the bank value as listed banks have more transparency.
Tamal said the bank has already been investing in the stock market and it will increase its investment after being listed.
The Initial Public Offering (IPO) subscription of the bank will start from today (3 February) and it aims to raise Tk120 crore from investors in the stock market.
The investors will be able to buy the company's primary shares till the evening of 9 February.
Previously, on 18 November last year, the bank got the securities regulator's approval to raise the funds through an IPO.
According to an audited report of the year ended on 31 December, 2019, the bank's net profit was Tk115.36 crore.
In the January-June period of this year, the bank's net profit was Tk36.21 crore and its earnings per share (EPS) was Tk0.62.
Additionally, its net asset value per share without revaluation was Tk13.86. The bank's five years weighted average EPS was Tk1.55.
During the period, its net interest income was Tk81.38 crore, investment income was Tk95.42 crore and total operating income was Tk228.42 crore.
The bank's authorised capital was Tk1,000 crore while its paid-up capital was Tk582.52 crore and post paid-up capital Tk702.52 crore.
Asian Tiger Capital Partners Investments Limited and the AFC Capital Limited are the issue managers of the IPO.
NRB Commercial Bank was established on 20 February, 2013 and started operating on 2 April the same year.