AB Bank PLC is set to intensify its focus on small and medium enterprises (SMEs) and retail banking, with the goal of enhancing its financial inclusion efforts and integrating more unbanked individuals into the banking system, according to the bank’s top executive.

Syed Mizanur Rahman, the Acting Managing Director and Chief Executive Officer of AB Bank, stated, “In the next 3-4 years, we will prioritize SMEs, CMSMEs (Cottage, Micro, Small and Medium Enterprises), and retail banking over corporate financing to diversify risks and ensure sustainable returns.”

He outlined the bank’s new strategic direction in a recent exclusive interview with The Financial Express (FE) in anticipation of the bank’s 43rd anniversary celebration on Saturday.

As the first private bank in the country, AB Bank officially began its operations in 1982, with the ambition of becoming Bangladesh’s top-performing bank. Over the past four decades, this pioneering private commercial bank has significantly expanded its services both domestically and internationally.

The CEO noted that AB Bank has been recognized as a trade finance-oriented institution since its inception, highlighting that many corporate entities have thrived with the bank’s support.

“We also plan to enhance our agent banking and sub-branch operations to improve access to finance for marginalized individuals throughout the country,” he elaborated.

Currently, AB Bank is working on establishing 50 additional sub-branches to facilitate financial access for low-income and impoverished groups, with the aim of contributing to Bangladesh’s sustainable development, as stated by Mr. Rahman.

“The expansion of our branch network is essential to make SMEs and retail banking more accessible and sustainable, ensuring a return on investment while mitigating the risks associated with such supervisory credits,” the seasoned banker emphasized.

As part of its digital transformation initiative, AB Bank has upgraded its internet banking application, AB Direct, to provide advanced digital services and payment solutions.

“Our customers can now conduct essential banking transactions from the convenience of their homes or offices using the app, eliminating the need for branch visits,” Mr. Rahman stated in response to an inquiry. He further noted that AB Bank customers can access banking services from virtually any location with the AB Direct app.

Additionally, AB Bank is in the process of introducing nano loans through the AB Direct app, allowing customers to complete transactions without visiting a branch, as mentioned by the acting Managing Director.

Mr. Rahman also addressed various topics, including the enhancement of deposit mobilization, the reduction of non-performing loans (NPLs), the increase in remittance inflows, and the promotion of good governance within the banking sector of the country.

Regarding deposit mobilization, he noted that depositors have encountered considerable difficulties over the last 15 to 16 years, largely due to insufficient governance in the banking sector. “The flow of money within the banking system has decreased because of a lack of public trust in the entire sector,” the executive stated, highlighting the necessity for all commercial banks, including the central bank, to work together to rebuild public confidence in the industry. He also mentioned that under the guidance of its current governor, Dr. Ahsan H Mansur, the Bangladesh Bank (BB) is actively striving to restore financial discipline within the nation’s banking system.

“We have introduced several deposit schemes that are insured to protect the interests of our depositors,” the acting Managing Director remarked, affirming that AB Bank is dedicated to safeguarding the interests of its depositors by all possible means.

Previously, on December 9, Mr. Rahman unveiled four new deposit schemes—AB Ilham, AB Amani, Kotipoti Deposit Scheme (KDS), and AB Swachchhandya—aimed at attracting more deposits from general customers, just a day after taking on the role of acting MD and CEO of the bank.

Mr. Rahman had been serving as the additional managing director of the bank since March 2011 and was the Deputy Managing Director prior to his recent promotion in June 2022.

AB Bank has already initiated a series of actions to restore the confidence and trust of its stakeholders by fostering good governance within the private commercial bank. As part of these initiatives, three deputy managing directors have been dismissed, and a new official has been appointed to lead the Internal Control and Compliance Department, as stated by Mr. Rahman.

“We are currently focused on enhancing employee motivation, as it is essential for maintaining a healthy working environment within the bank,” he added.

Concerning the increasing trend of non-performing loans (NPLs) within the nation’s banking sector, a senior executive indicated that the rise in classified loans is largely attributed to inadequate governance.

Official data reveals that classified loans in Bangladesh’s banking sector have surged significantly, with the total amount increasing by over Tk 2.0 trillion year-on-year as of December last year. This escalation has resulted in a record-high NPL figure of Tk 3.45 trillion by the conclusion of the previous calendar year, representing 20.20 percent of the total loans amounting to Tk 17.11 trillion disbursed by all scheduled banks in the country.

Mr. Rahman noted, “The situation has begun to improve following the change in government on August 5 of last year,” adding that borrowers are now actively contacting relevant officials to inquire about their loan statuses. He also mentioned that AB Bank has established a special task force aimed at enhancing NPL recovery efforts nationwide. “We are particularly focusing on our top 20 defaulters for this purpose,” he stated.

Additionally, the acting Managing Director reported that AB Bank has initiated legal proceedings against loan defaulters to recover Tk 8.0 billion. “We are diligently working and making every effort to decrease the volume of classified loans by intensifying recovery initiatives in accordance with the directives of the central bank,” he remarked in response to another inquiry.About higher inflow of remittances in the month of March this year, the acting MD said people’s mindset had changed after the changeover in On August 5 of the previous year, the state power urged individuals to remit their hard-earned earnings back to Bangladesh through official channels rather than informal ones.

He noted that the remittance inflow surpassed the $3.0 billion threshold for the first time in Bangladesh’s history, indicating the trust that non-resident Bangladeshis have in the interim government. In March, Bangladeshi expatriates sent remittances totaling $3.29 billion, marking an impressive 65 percent increase from the $1.99 billion recorded in the same month the previous year, largely due to the Eid-ul-Fitr celebrations. The data also revealed that inward remittances amounted to $2.53 billion in February of this year.

AB Bank is currently focused on enhancing its collection of inward remittances by improving service quality, as stated by the acting CEO. The bank operates with 104 branches, including an international branch in Mumbai, India, along with 57 sub-branches, over 200 agent banking centers, and more than 270 ATMs situated in both urban and rural regions across the country.

AB Bank has made a deliberate effort to restore its previous identity, which it held as Arab Bangladesh Bank Limited for 25 years. Consequently, the bank opted to rebrand itself as AB Bank PLC, a change that received official endorsement from Bangladesh Bank on November 14, 2007.

Mr. Rahman possesses over 27 years of experience in the banking sector. Under his guidance, the bank established the Retail Banking Division, Agent Banking Division, Business Development Unit, and Shariah-compliant Islamic Banking Services. Prior to his tenure at AB Bank, he was employed by Dhaka Bank, IPDC, Bank Al Falah, and United Commercial Bank.

Throughout his career, Mr. Rahman has gained extensive expertise across various segments of the banking industry, with a particular emphasis on branch banking, retail operations, process transformation, business development, and corporate communication. He earned his MBA from the Institute of Business Administration at the University of Dhaka.