Additional managing director (AMD) of Mutual Trust Bank (MTB), Ahsan-uz-Zaman, observed that Bank interest rates in Bangladesh is still very high. “I personally think the interest rate is very high, but it is a function of the inflation rate and it is also a function of the cost of deposit in the market which is high.” He said that his Bank would set up agri-branches in rural areas to serve the unbanked people.

“Apart from setting up rural branches, we are also setting up agri-branches as a big plan to serve the under-served and unbanked particularly in rural areas,” Ahsan-uz-Zaman said, in an exclusive interview with The Independent.

Responding to a question about the Bank’s new products and services, Ahsan-uz-Zaman said every bank tries to enhance the quality of its services, and
the Mutual Trust Bank also tries to understand clients so as to make its services more acceptable to them.

“In 2011, we introduced and extended our ATM network. We are among the few banks that have ATM networks across the country. In one year, we’ve set up 93 ATMs across the country, and the number is going to further increase in the coming months,” he added.

Early last year, the Bank also introduced POS (Point of Sales) machines and currently it has about 400 POS machines at various business establishments, he pointed out.

He further said that since a lot of Bangladeshis are living abroad, the Bank has made a constant effort to make it convenient for these non-resident Bangladeshis (NRBs) to send money to the country. “We have various remittance agreements with different exchange houses across the Middle East and some other countries.

We have already signed an agreement with Western Union which has a major money transfer channel in the world,” he added.

The MTB has introduced two savings products—an account called MTB Junior for school-going kids, which can be opened by the parents, and MTB Graduate, which is meant for university-going young adults. “We have also introduced a product for women, which is called Ruby,” he added.

In the medium and small-enterprise areas, the bank had introduced MTB Probaha and MTB Buniad, he said.
“Probaha is a current account which will pay interest and MTB Buniad is a fixed deposit type product for two years or three years for the business community,” he explained.   

When asked how he would evaluate the overall performance of his bank, Zaman said it was a difficult environment for the Bank last year. “But we are happy that at least we were able to increase our loan portfolio and we have grown by 18 per cent roughly year by year.

On the deposit side, we have grown by about 31 per cent,” he noted.
Explaining the challenges that the bank had faced, he said the cost of getting deposit was quite high and it was mostly on the fixed deposit side. “So, we did a good job in terms of deposit cost as the cost of deposit increased by 16 per cent,” he added.

“Our net income increased by about 37 per cent, because of the expenses which increased by 62 per cent. The net interest margin fell to about 29 per cent.

Our operating expenses have also gone up to about 38 per cent,” he observed.
This, he said, was a result of the increase in the Bank’s establishment cost and an increase in its fixed assets. “So, our operating profit as a result could actually be in absolute terms about Tk. 120 crore compared to Tk. 200 crore in the previous year,” he said.

The MTB has plans to grow its branch network very aggressively, he said, adding, “Currently, we have about 76 branches.”

Because of this expansion plan and increase in the MTB’s establishment costs, the Bank’s net profit after tax was approximately Tk. 40 crore compared to Tk. 98 crore in the previous year.

Asked about the target of his Bank for current and next years, the AMD said the Bank’s plan was to grow its deposit base by 28 per cent in 2012 and its loan portfolio by 22 per cent.

“It is going to be a challenge because our net profit level in 2012 is pretty aggressive and we want to grow our net profit about 18 per cent over the year,” he added. About reaching out the banking services to the unbanked people, he said, “We do that by our own and we have a significant presence in deprived areas.
Apart from setting up rural branches, we are also setting up agro-branches to serve the under-served and unbanked folks, particularly in rural areas. And we’ll do it through our alternative delivery channel, namely internet, as well.”

“We are also going to enhance the ability of the clients to access banking services through their mobile phones,” he added.

Clients could also get access to their accounts by giving the bank a call, he said, adding, “We are not doing things in the traditional way as we are trying to serve the clients by developing our in-house capabilities.”
Replying to a question about the uniqueness of his bank, Zaman said, “We try to understand the clients’ needs, and provide customised banking solutions for them.

“I think we give a lot of importance to the quality of our services.”
Explaining the CSR activities of MTB, Zaman pointed out that the Bank is well aware of its responsibility to the community and participated in its CSR activities by helping needy children, providing scholarships, financial assistance to the poor and distressed. “And during times of natural calamities, we help the affected,” he added.

The Bank also participated in various projects, which had a beneficial impact on environment and society, he said.

The Bank had provided financial support and training to about 120 handicapped people, donated funds to female Bangladeshi painters and set up a school in a remote char area in Bhola. “We have an MTB Foundation which is headed by our founding chairman.” When asked about the necessity of launching new banks in the country, Zaman responded positively, saying as the country was growing there was a need for increasing banking services.

He further said, “I think about 80 to 90 per cent of the urban people avail banking services. Well, the mandate for the new banks is to serve the areas which were not served before.

So they will be concentrated more in the non-urban areas and this is going to bea challenge for them.”
He claimed thatMTB’s interest rate is low.

With regard to the government’s restricted credit growth policy, Zaman said, “If you restrict the credit growth, the interest rate would be a bit higher.”

“I think it is a function of all this, and the increased browning requirement of the government requires funds in the markets.

This is creating pressure on the market and the cost of funds is growing up,” the AMD added.
“The interest rate is needed to be raised initially to restrict demand for the masses.

The increased subsidy requirement of the government in agriculture, energy, fuel and fertilizer is also very high.

And there are reasons that need to be supported.
The requirement is high and it is going up. So once we are able to control that I think the impact would be visible,” he explained at length.

The Independent/ Bangladesh/ 14th May 2012