United Commercial Bank (UCB) will diversify its loan portfolio this year as it seeks to pave the road to robust growth, the head of the bank said. M. Shahjahan Bhuiyan, managing director, has unveiled the strategic path in a recent business conference of branch managers of the bank. The bank aims to reduce the corporate loan share to 40 per cent from the existing 55 per cent and balance it by increasing small and medium enterprise loans to 40 per cent and retail loan to 20 per cent.

Mr. Bhuiyan said, "We're planning to reshuffle our loan portfolio to absorb the shock of increased cost of borrowing and generate at least 1.0 per cent extra from yield in advance". A recent analysis showed that yield from advances on corporate loan is around 13 per cent. By contrast, yield on advances to SME and retail loan is 14 and 16 per cent respectively. The bank MD estimated it can make additional profit of Tk 7.5 million to 10 million, if it can restructure the loan portfolio successfully.

The private lender is also stressing recovery of loans that were written off earlier by negotiations and court actions. Mr. Bhuiyan said the bank has also set the target of implementing Basel II capital adequacy requirement and aims to select an appropriate Core Banking System (CBS) this year. Implementing a robust CBS, he added, will enable the bank to centralise its banking and embrace technology-driven banking to face the competition successfully. "Diversification of portfolio, reduction of large loan and increased focus to retail and SME segments will be the key to our success in 2011", the bank chief said.

UCB, a first generation bank, has made robust growth last year and was ranked 8th in terms of operating profits, which amounted to Tk. 5.0 billion. Total deposit of the bank reached to Tk 1,131.9 billion and the bank set a target of Tk. 6.5 billion operating profit in 2011.

News Source: Financial Express/Bangladesh/12 Jan 2011