Jim McCabe

Standard Chartered Bank will continue to improve its services in Bangladesh to outperform its competitors as the country offers a huge opportunity, a top official said.

"Our future looks brighter in Bangladesh. But we don't take it for granted," Jim McCabe, chief executive officer of the Bank for its Bangladesh operations, told The Daily Star last week.

His comments came as the emerging markets-focused Bank saw a record net profit of $4.75 billion (3.53 billion euros) in 2011. Last year was the Bank's most profitable year on record.

Its net profit was up 12 percent from the year before, thanks to operating income of $17.64 billion.

It was the ninth successive year of record income and profit as continued strong performances in developing markets offset woes in Western economies that are now under pressure and struggling to recover from the global financial crisis.

"In the last several years, it has been a good growing story for us. This year will be the tenth. Everybody is so focused to make it 10 in a row. No financial institution in the history can say that. Every big bank has suffered a setback at some points in the last nine years."

"What charms me is that our footprint still looks very good. It could be very good in 2012."

He said the Bank's future looks bright in Asia, which accounts for more than 75 percent of its profits, as the region is increasingly becoming the bedrock of the global economy amid a shift in economic and political power from West to East.

"Apart from Asia, our footprint is in Africa and the Middle East. These markets are continuing to prosper and are the recipient of investment. Our strong presence in this part of the world has given us plenty of opportunities to grow."

He said the record results continue to give the Bank the stronger platform in this part of the world. "And our customers look to us for more and more primary provider of financial services."

"We have a strong customer and client base. We have continued to deepen our relationship with them everyday."

Standard Chartered, headquartered in London, is the only global Bank to have been upgraded by all ratings agencies since the financial crisis in 2008. The Bank has already met its Basel III capital funding ratio.

"We have a very strong capital base. We have a very strong liquidity position. As an institution, the Bank is in a very good shape. We are the largest correspondence Bank in the world. We are the Bank of the bankers."

The Bank now operates in 72 countries.

"We are making good use of the branches and make very good use of our distribution network. In each country we have a proper strategy and proper focus on the size and products and customers according to what we are allowed to do."

McCabe said the Bank is working hard to maintain a solid pool of liquidity. "I must say, up until today we have been very successful. It's difficult to always maintain sufficient liquidity when markets are a little bit constricted."

On interest rates in Bangladesh, he said he thinks any high interest environment puts pressure on everyone.

"The government is trying very hard to contain inflation. We are trying very hard to control what is not necessary so that all of the productive parts of the economy can be given the best resources possible to keep growing."

The Bank is also closely working with the central bank on sovereign bonds.

He said the market appetite for Bangladesh's sovereign bonds is strong, as Bangladesh plans to raise $500 million from the bond market.

"In the conventional marketplace, $500 million will be a lower level to issue bond. But $500 million is a good number to start with."

It is likely that the bond could be launched in 2012.

The StanChart chief executive said Bangladesh is an important market for the Bank. "We have a very, very long history here. This is a market that is a priority for the Bank. All of our resources, capabilities and advices are available."

"Our business is growing and doing very well in all fronts -- consumer and wholesale banking. We have a healthy growth. The growth here in Bangladesh is certainly no different from the parent company."

He said Bangladesh was ranked in the top 13 or 14 countries globally that have driven the record profit of the Bank.

He also said the Bank's SME business is growing. That is one of the key growth areas of the Bank.

McCabe said the Bank is always focused on improving services, as people make many decisions on the basis of the services they receive. "We want to out-serve everybody.

McCabe said the Bank uses its leadership position to brand Bangladesh's companies abroad.

"We are introducing more products. We are also finding ways to improve cash flow and cash management and electronic fund transfer."

He said, in case of high interest rate environment, time is really money and it really matters more when money costs more. Anything that is productive and quicker is adding value to the companies.

In Bangladesh, the Bank has 1,300 staff and 250,000 customers in the consumer banking and 400 in the corporate clients.

McCabe said the recent developments in Bangladesh's economy are not unexpected.

"What is happening in Bangladesh was forecast. This is not something surprising. Everybody knew that power utilisation is rising in early stages. There would be a greater demand in fuel oil usage."

"There will be an increase in imports. We all knew inflation would rise. We knew that balance of payments would be tighter. All these things were identified nine months to one year ago."

"What is happening today is not unusual and wrong. It just needs to be managed properly. The government is working hard to try and manage it."

Bangladesh had a fantastic run of so many years of growth, he said.

“It will have another year of growth. Because of the external pressures it would be challenging. Infrastructure built up in the country is very significant. There are just some short-term pressures on the economy."

He said their strategy for Bangladesh is sound. "We are optimistic about the country's future. In the next five years, it would continue to grow and play an important role in the region."

"Everything Bangladesh makes is of good quality. It is true that during high inflation people get scared. But this is part of the Bangladesh's growth and development as it moves forward.

He said there are some infrastructure challenges in Bangladesh and the country would have to manage them with the realities with right infrastructures.

McCabe also said it is not true that foreign banks have higher spread in Bangladesh. "We don't charge the most. Other local banks charge more. We don't pay the least on deposits. We are very proud that we are more efficient than anybody else. That efficiency is worth a lot especially as rates rise."

He rules out any plan to be listed on the Bangladeshi stockmarket for now.

The Daily Star/Bangladesh/ 6th March 2012