Meghna Bank Raises Tk 1.50 Billion Through IPO
Meghna Bank Limited is diversifying its investment portfolios with a focus on retail and small and medium enterprises (SMEs) to minimize risk, the bank’s top executive said.
According to plans, investment in retail and SMEs will reach 50 percent of its total loans and advances over the next two years, from the current level of 30 percent.
âWe are now focused on improving our investments in the retail and SME sectors to facilitate ongoing financial inclusion initiatives by attracting more unbanked people into the banking network,â Sohail RK Hussain, Director General (MD) and Chief Executive Officer (CEO) of Meghna Bank revealed while sharing its future business plans in an exclusive interview with the Financial Express (FE) recently.
The fourth generation PCB started its operation from 09 May 2013.
Meghna Bank has already taken a series of steps including digitization aimed at transforming the PCB into a robust and specialized bank by 2023.
âWe want to move forward with a modern banking system by offering various innovative products and services to attract more customers in the coming days,â Hussain said, responding to a question.
As part of these plans, Meghna Bank is already strengthening its various channels such as digital financial solutions, mobile app-based solutions, agent banking and online banking to provide faster services to customers using the modern technologies.
Meghna Bank plans to expand its services at the doorstep of its valued customers across the country using the latest financial technologies (FinTech) in the near future, according to the CEO.
âWe will leverage digital solutions to integrate customers at lower cost, which will complement the operations of its ‘Brick and Mortar’ branch network,â he noted.
âWe will be providing 40 percent of our services on Fintech platforms in the near future,â Hussain said in answering another question.
He also said that Meghna Bank has already created a separate division to properly manage digital banking services.
Mr. Hussain joined Meghna Bank on April 22, 2020 to facilitate the PCB transformation process by applying his previous experience in the field.
Mentioning various innovative products and services, the senior banker said that free health insurance will be provided if someone opens a savings account or term deposit accounts with Meghna Bank.
“This is a very successful product during the ongoing Covid-19 pandemic. No bank currently offers such a facility to its customers covering the range of its deposit products,” noted the CEO.
Meghna Bank also offers Sreyoshi savings accounts to female clients with free insurance coverage against 18 types of health issues, he added.
In addition, Meghna Bank customers are allowed free use of 11,500 automated teller machines (ATMs) across the country, he added.
The CEO also said: “We have already launched OBU (Offshore Banking Unit) to facilitate business support of foreign currency units for domestic customers.”
Meghna Bank has also opened its Islamic banking machine to provide Sharia-based services to customers, he said, adding that nine more Islamic banking machines will come into operation by the first quarter (Q1) of 2022.
In addition, Meghna Bank plans to raise Tk 1.50 billion through an Initial Public Offering (IPO) subscription by 2022 to expand the capital base of PCB.
This is in addition to additional capital of between Tk 1.0 and 2.0 billion raised from existing shareholders, according to the CEO.
âOur CRAR (Asset-Weighted Risk Capital Ratio) is currently around 16 percent. We believe in building a strong capital base above 18 percent. Large-cap banks will be better positioned to serve their clients. customers in the post-pandemic era, âhe noted.
Mr. Hussain also spoke on various issues including the execution of the financial stimulus packages announced by the government, future challenges for the banking sector, the situation of non-performing loans (NPL) and liquidity management in the near future. in the midst of the Covid-19 pandemic.
Regarding the bank’s financial health, the CEO said that Meghna Bank achieved an operating profit of Tk 970 million in the first nine months of the current calendar year, compared to Tk 240 million in the previous year. the same period of 2020. “These good results will continue.”
On the other hand, the share of nonperforming loans in the total outstanding loans of Meghna Bank fell to 5.2% in 2020 from 7.6% two years ago.
“We plan to keep additional provisions against loans to deal with possible challenges in the banking industry in the post-pandemic era,” the senior banker said when answering a question about future challenges for the banking industry. .
In accordance with the regulations, all listed banks must maintain provisions of 0.25% to 2.0% on the general category of loans, 20% on the sub-standard category, 50% on impaired loans and 100% on the loan category. category of bad or bad debts. ready.
Banks generally keep the required provisions for classified and unclassified loans from their operating profits in order to mitigate risk.
The CEO expects the Meghna Bank board to agree to receive a lower dividend by the end of this calendar year to support the bank.
Mr Hussain, also a former vice-president of the Association of Bankers, Bangladesh (ABB) called for reform of the judicial system to speed up the process of recovering classified loans, saying it would also help improve the financial health of banks.
“The quality of the audit as well as enhanced due diligence, post-disbursement monitoring and increased use of arbitration as a means of resolving disputes with clients will need to be improved to curb the upward trend in loans. overdue in Bangladesh’s banking sector âsaid the senior banker while explaining how to deal with the challenges of NPLs.
The arbitration law needs to be amended in this regard, he said, adding that a joint team from ABB, Bangladesh International Arbitration Center (BIAC) and the central bank had already submitted recommendations to the Commission. Bangladesh Bank (BB) in 2019.
At the same time, the amount of loans classified in the banking sector increased significantly in the first half (S1) of the current calendar year despite the political support provided by the central bank.
The volume of non-performing loans increased by almost 12%, from Tk 104.71 billion to Tk 992.05 billion as of June 30, 2021, from Tk 887.34 billion six months ago, according to the latest data from Tk. the BB.
Currently, Meghna Bank serves a large clientele of individuals and institutions through a network of 47 branches across the country.