Strategic Finance and Investments Limited (SFIL), a Bangladesh Bank-licenced full-service multiproduct financial institution, started its journey around a year ago to lead as a change agent in its fraternity.
A simple mission was set to help customers achieve their financial goals and dreams through personal connections, simple solutions, and lifetime relationships.
The name itself bears the clue to what makes a big difference in its journey to grow bigger and better – being strategic, according to Irteza Ahmed Khan, managing director and chief executive officer of the company.
In an exclusive interview with The Business Standard, he shared the company's vision, strengths, and future plans.
"We will keep exploring new things alongside doing traditional businesses in non-traditional ways," said Irteza, who has a long track record in specialised financing in Bangladesh.
"We are not scratching the surface without our own edges," he said when asked how his company would make a difference in the crowded non-bank financial institution (NBFI) market of Bangladesh.
The internal edge
The key strengths of SFIL lie in its unique shareholding structure. 98% of its shares are owned by institutional shareholders – 50% by foreign fund managers in Canada and the US in the form of foreign direct investment and the remaining 48% by local institutions.
Its high institutional shareholding encourages and facilitates structured operations, internal control and compliance, and good corporate governance.
Besides, it has strengths and expertise in terms of homegrown talents, understanding of business environment and processes, and access to enriched client-partner bases.
These together have created a strong internal ecosystem to offer to clients.
"We are committed and equipped to extend a complete array of industry-leading products and services, including corporate, SME, and retail lending, term deposits, saving schemes, and corporate advisory," Irteza said.
"Our focus areas for investments are infrastructure, manufacturing, SMEs, cluster-based financial inclusion, mortgage, auto, exports, green projects, agro, emerging industries, technology, and innovation."
SFIL has secured an independent credit rating – long-term rating A+ and short-term rating ST2 – with a stable outlook based on its financial performance, capital base, asset quality, management experience, and sufficient liquidity.
The power of change
Irteza said constant innovations are crucial to staying ahead of the curve.
"We have seen a paradigm change when it comes to how people prefer doing their banking nowadays. Digital and mobile financial services are now the norms for many customers. The power of change is forcing every company to think and act fast to stay afloat," he said.
SFIL plans to increase its reach to a vast base of clients on the back of technology. Digital transformation with a human touch, partnerships, strengthening of environment, and social and governance policy and practice are Irteza's top of mind.
As part of the diversification plan, SFIL has already formed SFIL Securities Limited. It is a 100% subsidiary that has been awarded a TREC licence by the Dhaka Stock Exchange (DSE) to operate as a licenced broker and dealer. It will serve the needs of stock trading requirements for international and domestic institutions, retail clients, and non-resident Bangladeshis.
It will be devoted to providing the highest level of professional and personalised services to its domestic and international clients, said Irteza.
"SFIL envisions transforming itself into a digital bank in the future where a smartphone would handle everything from the client side and the bank would digitally gather and analyse data to extend services and take care of the clients," he added.
Blending investment banking concept in financing
Irteza said they analyse the objectives of a client firm – current performance, growth prospects, capital requirements, strength of the management team and sponsors, and strategies embraced – to assess the need for financing.
SFIL additionally offers a client firm corporate advisory services for tailor-made solutions so that the firm grows and SFIL's business remains secure.
"Our internal ecosystem at SFIL – that includes strengths both at home and abroad in diversified areas, including capital market, money market, and other technical specialisations – has also given us an edge to offer our clients the much-needed augmented support to qualitatively grow their business," Irteza said.
"First we fund then we lend" strategy
The success of an NBFI largely depends on how well it can diversify its funding mix.
In absence of sustainable, long-term funding options in Bangladesh, NBFIs generally drive lending business with short-term borrowed funds from banks in the form of fixed deposit receipts (FDRs) or credit lines as well as public deposits at a higher rate.
This creates an inherent systematic adverse impact on risk-weighted assets, capital adequacy, and liquidity management.
SFIL is going beyond the traditional sources of funds. To reduce the cost of funds as well as asset and liability management (ALM) risks and diversify funding baskets, it is crucial for SFIL to secure stable alternative funding sources.
It is actively working on sourcing low-cost, long-term foreign funding where its foreign shareholders are playing a big role to bridge the gap. It has plans to issue corporate bonds to enhance its funding mix with longer maturity to support its business growth momentum.
Also, SFIL will go for an initial public offering (IPO) in the capital market within the stipulated time frame.
Managing a healthy portfolio
"We are very selective in picking clients and are focusing on diversifying our lending portfolio in the fields where we have edges and opportunities to lead," Irteza said.
Alongside small and mid-sized corporate, SME, and retail financing, SFIL is keen to play a role in financing infrastructure and technology business, which the country demands at this stage of rapid development.
It has built a robust credit screening process and has professional teams to outperform its peers along with a strong monitoring process of clients' businesses.
Bond of transparency
SFIL's brand motto is "Bond of Transparency", which is the secret to every successful relationship.
"We maintain transparency in everything – client interaction, product offering, documentation, transaction, reporting, etc. It is the key which binds SFIL with its clients, shareholders, and stakeholders, and the bonding is meant for the long term," Irteza said.
He emphasised that cultivating the bond of transparency is critical in ensuring that SFIL clients benefit from their relationship with the company.
"We cherish and nurture every client who works with us, knowing that their interest will be carefully protected."