‘We are continuously digitalising our services to build a smart Bangladesh through smart banking’

Mercantile Bank has done well despite the global economic downturn. In 2022, the bank's total income increased by 9.89% to Tk2,955.55 crore, with both net interest income and non-interest income showing growth. 

The bank kept its operating expenses under control at Tk821.88 crore, resulting in a cost-to-income ratio of 53.52%. The bank's net profit after tax stood at Tk220.26 crore, translating into earnings per share of Tk2.03. 

The return on average equity was 8.87% in 2022. MBL's balance sheet also remained strong and resilient throughout the year, with total assets growing by 6.37% to Tk38,232.85 crore, compared to Tk35,941.14 crore in 2021. 

Loans and advances to customers reached Tk28,089.05 crore in 2022, while deposits from customers also increased by 4.50% to Tk29,406 crore, reflecting our strong customer base and trust. Mercantile Bank's capital adequacy ratio remained well above the regulatory requirement of 12.50%, at 14.35% in 2022.

In a recent interview with The Business Standard, Md Quamrul Islam Chowdhury, the managing director and CEO of Mercantile Bank, spoke about the bank's pivot towards digitalisation and how it helped them maintain strong performance.  

The banking sector experienced a massive transformation in digital banking after Covid-19. What initiatives did Mercantile bank undertake to stay competitive in the market?

Mercantile Bank always prioritises technology to stay up-to-date. In this continuation, a state of the art app "MBL Rainbow" was introduced  to cater to the needs of our customers. Along with this, Core Banking Software (CBS) Temenos T24 has been upgraded from R10 to R19. With this new version, we will be more protected against various cyber threats. 

We are continuously digitalising our services in order to build a smart Bangladesh through smart banking. 

What security risks do you see for customers in terms of digital transactions?

Although digital transformation has brought many benefits to the banking industry, it has also resulted in enhanced risks that need to be actively managed and mitigated. Major risks arise from breaches of security for access to the computer system, tampering with the system, and unauthorised  use of it.

To minimise such kinds of risks, MBL has established a well  equipped IT division and maintained  IT policy to comply with the  ICT guideline of the Bangladesh Bank and to secure the smooth operation of business. 

What does Mercantile Bank aim to achieve in the next five years?

By adhering to regulations, MBL's major objective is to take the top spot in the commercial banking industry. For that reason MBL's business plans are concentrated on sustainable long-term growth of the business, better deposit mix, improving the quality of assets, rationalising operating cost, improving operational efficiency and productivity of resources, better and faster customer service, expansion branches, offering number of new products in retail banking, SME financing and card services, and strengthening the overall risk management and corporate governance system. 

What challenges do you see in the banking sector in the coming years amid high inflation and rising dollar price?

With high inflation and rising dollar price, the banking sector will face multifarious challenges like rise of non-performing loans, increasing pressure on maintaining provision and minimum capital requirement, liquidity crisis, shrinking spread as such degradation of income, slowdown of export import business due to volatile foreign currency market, sluggish private credit growth, increasing trade -based money laundering, increase in different financial irregularities, etc.

What initiatives should banks take to manage default loans in line with the IMF's conditions?

Banks should take the following initiatives to manage default loans: prudent NPL management; implementation of various effective strategies; proactive communication with customers to ensure timely payment; efforts to recover irregular and NPL loans and increase contribution to sustainable and green finance; dedicated efforts towards regular monitoring, recovering and regularising  non-performing loans (NPLs) both onsite and offsite; making all-out efforts for recovery of NPLs; and initiating legal action against willful defaulters.