BRAC Bank PLC. (BRACBANK) Earnings Call Transcript & Summary

Thank you, Masu. Ladies and gentlemen, good evening, Salaam-Alaikum. I'm calling from Dhaka, Bangladesh. My name is Selim Hussain and I'm the Managing Director and CEO of BRAC Bank, Bangladesh. It is 8 PM. here in Dhaka, and we'd like to thank you for joining us in what is the 2022 full year earnings disclosure program. We expect this program to take a little less than 90 minutes. We'll give you an update on the different businesses, including a major subsidiary, bKash, and then we'll follow that up with a short question-and-answer session, where we'll try to answer any questions that you may have. Let's start off by getting into the opening statements. Ladies and gentlemen, this is a live webcast in our earnings disclosure quarter. This link has been shared with different stakeholders through the different media. We are also live on Facebook with this particular presentation. Next slide, please. Thank you. These are the usual disclosures. I won't go through all of them. They're pretty standard. And what we intend to do today is initially take you through an update on the economic outlook and the overall market update that will be done by Shaheen Iqbal, our Deputy Managing Director and Head of Treasury and Financial Institutions. Then we get individual updates from our SME, retail, corporate banking, business heads, risk management, the distribution network, digital transformation update -- a short update on sustainable finance. And this year, we also like to spend a few minutes talking about our people and organizational update. And we follow all that with our CFO, taking you through the actual financials ending with an update from bKash, our largest subsidiary and following that up with a short Q&A session as well. Ladies and gentlemen, let me hand over now to Shaheen Iqbal, Deputy Managing Director and Head of Treasury and Financial Institutions. Shaheen, over to you.

Thanks everyone. Good evening to you all from Dhaka. I think Bangladeshi economy started well in 2023. We had some challenges in 2022 because of you can work on price and commodity price that really impacted our overall [indiscernible] imbalance. This year, we are seeing improvement in terms of U.S. dollar liquidity and also our own reserve position is gradually stabilizing. We are still seeing upward pressure on interest rate because of high inflation and taka still under pressure against USD so we likely to see the pressure gradually coming up. And probably by the end of this year, situation would improve significantly from this level. Yes, please. In a recent study, Boston Consulting Group has shown that Bangladesh is going to be a BDT 1 trillion economy by 2030. This is build by expanding middle and affluent class because of the higher consumer base. So this is, again, a wonderful news. The country's brand value has increased by 37% in a year. So overall, the economic potential is really, really high. So every indicator is showing that the economy is moving nicely along. Even in the next slide, we'll be showing that if you can move to the next slide. So even though we are going to see a little lesser growth in terms of GDP, even then the growth is quite significant, like more than 5% growth projected by each and every stakeholders like IMF, World Bank, [ ADB ] and the government projected for 6.5%. And that is going to again jump upward in 2024. So county's fundamental in general is pretty good. And that the country is one of the fastest-growing economy in the world in the years to come. I think that's a small brief from my side. Over to you Selim Bhai.

Thanks, Shaheen. I think the takeaway essentially is that '22 was a difficult year in terms of macroeconomic stress. The war in Ukraine, increases in oil commodity prices, foreign exchange, liquidity challenges, inflation, all that put a lot of stress on the banking sector. But importantly, I think the country ended the year relatively much more stable than it had started it. And as you just saw, while there are short-term challenges in the medium to long term, Bangladesh is considered to have quite significant economic potential, something that has also been recognized by independent analysts. Let's move into our SME business, a very important business. SME loans represent 50% plus of BRAC Bank's total loan portfolio. And I'll hand over to Syed Abdul Momen, Tomal is his nickname, Tomal, over to you.

Thank you, Selim Bhai. Good evening, everyone, from Dhaka. The year 2022 was another fantastic year for BRAC Bank's SME team. Last year, our overall customer numbers grew by 17%. We had a strong asset growth. SME assets last year grew by 24% across all the business lines of SME, which has enabled us to remain the dominant player in the industry in terms of SME financing. The growth was mainly driven by our small business team, which is the core strength of our bank. Small business assets grew by more than 35%. On emerging corporate segment, we focused more on recovery because the customer of these segments are mostly manufacturing concerns, and they were still in the process of recovery from post-pandemic stress. The MFI financing segment, which is another major segment for our SME growth, experienced and low growth due to the subdued fund requirement by the MFIs. Our specially designed proposition to increase access to finance to women entrepreneurs has actually started producing results. And last year, we experienced a whooping 127% growth in our women entrepreneur portfolio. In 2022, we have redesigned our SME liability propositions as well, with an aspiration to become the preferred transaction bank for SMEs across the country. We have engaged and aligned all our channels, specifically the SME sales channel, the distribution network and the agent banking network accordingly. This initial drive resulted in an 11% growth in SME liability portfolio. As part of the SME liability drive, we have launched a unique customized priority banking service for the first time in Bangladesh for SME customers, we named it Borenno. And for the first time in Bangladesh, such kind of proposition has been launched. Under this proposition, high-value SME customers across the country will enjoy all priority banking services of our bank. Last year, our SME trade volumes have also grown by 42% year-on-year. In 2022, we have also launched a new business proposition for financing the suppliers and distributors of large corporate customers. And this is an end-to-end digital platform-based lending. We are expecting this business to grow significantly in 2023 and make this a good source of non-funded income for this business. We have continued to be the leading bank in disbursing loans to the targeted SME segments from various government refinancing schemes. In 2022, BRAC Bank alone disbursed BDT 844 crores of loans from government packages. We have also maintained the quality of SME portfolio. The portfolio at risk 30-day overdue have reduced by 1.6% in 2022, which is in line with our core strategic objective to have the best portfolio quality in the industry. And one of our core strategic objectives is to bring down our cost of operation through digitization. In 2022, we have started rolling out the end-to-end digitization of SME, small business loans, and we have launched a loan origination platform, which has significantly improved the productivity of our sales force and reduce the turnaround time of processing any loans. We have also launched, as I said, the supplier and distributor financing business, which is a complete digital platform. In 2023, we are confident that our growth momentum will accelerate further, and we will move ahead in full throttle on our journey to significantly increase our market share in a new innovative and cost-efficient way. Thank you. That's all from myself, Selim Bhai.

Thanks a lot, Tomal. Our takeaways are essentially -- sorry, can we go back to the previous slide. Our takeaway from this SME business update, essentially, good growth in loans and advances, driven also by very strong growth from the women's entrepreneurship business, deposits starting to pick up, a lot of investment in new technology and new processes as well. Trade volumes also starting to grow very significantly, a number of new products, particularly the rollout of a new high network banking proposition called Borenno for SME customers, I think that is a big milestone for us. And of course, the loan originating system for SME, which we've been waiting for, that is now partially rolled out already. Thanks very much, Tomal. Let's move on to retail banking, and we get an update from Manila, Head of Retail Banking division.

Good evening, everyone. We have had good growth across all customer segments, sub-segments of retail banking during 2022. I will cover the major areas. Our customer assets continued to grow significantly during the first half of 2022. After that, due to rising inflation we have taken conservative approach and tightened our risk parameters. As a result, our overall portfolio grew year-on-year by 16%. We have crossed the [ BDT 87,000 crore ] milestone last year, being the largest customer assets portfolio in this banking industry. We continued our strong portfolio monitoring and collection efforts that resulted in both par and [indiscernible] reductions last year, along with total recovery of BDT 85 crore. Credit cards continue to be a good story for us with 26% year-on-year growth. And last year, we crossed the BDT 1,000 crore milestone of card outstanding. Our customer deposits portfolio also grew by 17% year-on-year due to regulatory changes in particular fixed deposit rates, customers were more inclined towards fixed deposits, which resulted in our cost of deposit increased by 65 basis points. In terms of sub-segment, we continued our focus on TARA, our women banking segment, where we have significantly grown our loan portfolio by 34% year-on-year and our deposit portfolio by 29% year-on-year. During last year, we introduced multiple new products to enhance our customer value propositions. Lastly, in terms of digital transformation journey, 66% of our CASA accounts were opened digitally in December last year, and we've opened totaled 52,000 accounts to the EQIC digital system. We also opened 15,000-plus fixed deposit and DPs digitally through our Astha mobile app. That's all update from my side. Thank you.

Thanks, Mahiul. So takeaways, again, good balance sheet growth. Credit cards are doing brilliantly. We've already become the second largest player in the market. You will notice that the women's banking component here, TARA, there was a similar reflection in SME is also growing very, very strongly. And the merchant acquiring business is also doing quite brilliantly. You would also have heard Mahiul speak about the investment in technology. A number of different digital lending solutions have already been rolled out. And I'm sure you'll hear more about that in '23. All said and done, a pretty strong growth across all sub-segments and a good showing for the full year. This despite the fact that as Mahiul mentioned, we deliberately slowed down in Q3 and Q4 with regard to lending. There was a need to become a little bit more conservative because of the high inflation rates during that period Thanks, Mahiul. Let's move on to the next segment, which is Corporate Banking, and we'll get an update from our Deputy Managing Director and Head of Corporate Banking, Tareq Refat Ullah Khan.

Assalamu Alaikum and a very good evening to you all. I'm delighted to present to you today the outstanding results [indiscernible] Corporate Banking division over the past year. Despite the challenges posed by the post-pandemic macro-economy, war between Russia and Ukraine and the impact of the same on global and local economy we have successfully navigated through the storm and [indiscernible] even stronger. Our financial performance for the year has been exceptional, with a massive growth in asset for 38% year-on-year, in deposit even higher for 50%. And 50% of the same deposit is in CASA, mainly current account and savings account, I mean low-cost deposits. And [indiscernible], 32% year-on-year basis, which are very -- which are way above the industry growth. This is evidence to be trust our clients have in us. Our success is driven by the [indiscernible] to innovation, customer satisfaction and risk management. We have continued to invest in cutting-edge technology to provide our clients with the exceptional digital experience. Our team has also worked tirelessly to ensure that our [indiscernible] and personalized attention no matter where their location is. We have also maintained a prudent [indiscernible] management, which has allowed us to weather the storm of the past few years with minimal impact. We have continued to invest in our risk management infrastructure to ensure that we are always [indiscernible] I mean, portfolio risk and NPL by 1.4%, everything that we are on the right track. However wherever there are several challenges that could impact our business in the coming months. particularly fast [indiscernible] highlight the foreign currency liquidity remains a significant concern for us, especially given the recent fluctuation in [indiscernible]. This fluctuation could impact our revenue to provide our plans with the foreign countries that need to contact their businesses going forward. Secondly, we're also facing sluggish market conditions, which could impact our revenue growth as well. Finally, we're also aware about the current level of inflation. However, despite of the challenges, we remain confident that in our ability to navigate through this risk and continue to deliver strong financial results. We have a highly skilled team of professionals who are dedicated to provide our clients with innovative and effective financial solutions. We have been maintaining a robust relationships with various foreign banks, multilaterals and financial institutions. On top of it, a healthy [indiscernible] is supported by our country-wide physical business and [indiscernible] help us extend the uninterrupted fetal requirement of foreign currency to our customers. This is actually helping us to cater large-ticket businesses and also increasing presence in multinational client spaces. We are also committed to investing in new technologies and expanding our product offering to new players and to meet the evolving needs of our clients. In conclusion, I would like to express my [indiscernible] to our clients, our MD and CEO and Board of Directors for their continued support and trust in us. We remain committed to our objective to be the most preferred and trusted [indiscernible] partner in the industry by providing exceptional and [indiscernible] financial solutions in the coming days. Thank you Selim Bhai. That's all.

Thanks very much, Tareq. Absolutely outstanding results from our Corporate Banking division. And the wholesale bank, you will listen to treasury and financial institutions after this, but the wholesale bank has really started to partner some of the best names in the country. And there is a serious recognition from not only local corporates, but also from large multinational corporates that BRAC Bank has now become a major player in the wholesale game. Thank you again, Tareq. Let's move to Treasury and Financial Institutions, Chania.

Thank you, Selim Bhai. I think the big success for Brandbank, one of the main success stories like the kind of growth we had on deposits and loan again, we are early-mover on and we took the advantage of the market, and we were liquid from the very beginning. So we were able to clear all the available opportunities. Particularly, I must say like on the foreign currency side, there are a lot of stress, not liquidity challenges in the market, but we remain liquid and we were able to grab all the opportunities that to [indiscernible]. So this crisis period was an opportunity for BRAC Bank. I think we are rightly capitalizing on those as well. On the treasury side, like we are making the market and we have been the market leader. And on the standalone like the only FX trading platform that is [indiscernible] local bank, we have achieved number one position last year. We crossed BDT 3 billion mark and we achieved more than 75% growth. So this is, again, a significant achievement. All together, I think, for both treasury and also for the -- our Internet lines like other businesses, we did a fantastic job in supporting both the segment and the last year was really a very good year for our business. Thank you. On the next slide, I just like to add on the credit rating side, like we remain the best bank in the industry by Moody's. We are the only bank equivalent to [indiscernible] by S&P, we're the only bank rated by S&P and by [indiscernible] we can say we are [indiscernible]. So all together, BRAC Bank really established itself as a top tier bank in terms of all the credit rating as well. Thank you.

Thanks, Shaheen. Let me add to this slide. While this is a reflection of the international and independent credit rating agencies, you know these names, Standard & Poor, Moody's and the ones on the left are local credit rating agencies. Let me also remind you that the Central Bank also conducts different assessments by themselves in terms of core risk guidelines, in terms of money laundering, in terms of internal control, in terms of technology assessment, etcetera. And while I am not able to share details of all these ratings because it's private, I would like to share with you the fact that BRAC Bank in '22 received the highest ratings of any local private bank in the country. So we are very happy with the various ratings received from the Central Bank in these various areas, risk, credit risk, operational risk, information security, internal control a number of different areas. So that was very, very satisfied by -- thank you, Shaheen. Let's move to risk and get a short update from our Head of Credit Risk Management because I'm sure all of you would be interested in knowing how the portfolio is faring after quite strong loan growth.

Thank you, Selim Bhai. Good evening, everyone. In 2022, in addition to managing asset portfolio, we actually worked extensively on risk governance and risk infrastructure just to build an efficient and effective risk functions. If you look at the left side, you will find that we are trying to set up a best-in-class credit underwriting process, introducing front-to-back workflow for small business loans and digital straight-through processing for retail loans. We have also enhanced digital monitoring by introducing early warning models, which is predictive models in certain portfolios, which we plan to roll out in across business segments. Performance management is also in place for risk managers with dashboard of metrics for risk efficiency. On risk governance and culture, we have initiated extensive discussions of things like ICAP stress testing, portfolio analytics and capital adequacy in bank's Board risk management committee. On the right-hand side, you will notice that our nonperforming loans in 2022 decreased by 20 basis points from 3.9% to 3.7%, along with reduction of 30 days past due portfolio from 6.3% to 4.9%, if compared with 2021. We have presented the par and NPL trend of the bank on a 6-year horizon, and you will find that asset quality is consistent over the pre and post-COVID period, which is very important. Meantime, as of December 2022, our credit coverage stands at 111%, actually lower than the previous years where we had excessive provisions in loan loss as per our conservative strategy considering the pandemic uncertainties. Please note that at present, we do not have any forbearance in place. And given this fact, we believe 100-plus credit coverage ratio is adequate as we speak. To sum this up with better underwriting decisions in recent years and strong performance by our collections team in 2022, our asset quality has improved a lot. And that's all from me. Thank you once again.

Thank you, Joy. I think Joy summed it up very nicely. Portfolio continues to improve. There is no forbearance in BRAC Bank. We are the only bank in the country that continuously report portfolio -- 30-day portfolio at risk or 30 days DPD as well. That, in our opinion, is a better indication of portfolio stress and NPLs. So you can see the 22% is coming after the pandemic in '20 and '21. We've done away with all forbearance, and the portfolio is starting to look better day by day. Thanks very much, Joy. The next slide is about distribution network and alternate banking channels. And I would like to actually start off by giving you a quick sense as I have in the past, but I need to emphasize that. Next slide, please, there. So our physical distribution coverage is a combination of -- on the left-hand side, you can see branches, sub-branches, SME unit offices, agent banking, offices, etcetera. And these are supplemented by the various digital solutions we have. Our app, the ATMs, the CDMs, the corporate banking payment solutions, cost machines, QRs, etcetera, etcetera. So ours is very much a hybrid solution, ideal for a company like Bangladesh, where we feel a digital-only or even a physical-only solution would not be ideal. So ours is a combination of the 2. And how this is working out will be further illuminated by Nurun Nahar, our Chief Technology Officer a little later, but let's hear from Sheikh Ashfaque, our Head of Branches first.

Hello. Good evening, everyone. This is Sheikh Mohammad Ashfaque, the Head of Branches. As you know, in 2022, the banks in Bangladesh had quite a few challenges to deal with and collecting deposits was at the top of all banks' agenda. Despite an interest rate-driven competition, our branches took a simple strategy of nurturing the relationship with customers and keeping a close time. The fundamental strength of the bank was a key factor for the customer to choose BRAC Bank and branches played a pivot role to [indiscernible] on a continuous fashion. And our process and policies have already been reorganized to ensure a great level of customer experience. Our deposit mobilization was extremely well. While we kept on emphasizing our AML framework, our AML framework with great care and as part of our strategic expansion, we've greatly focused on increasing our presence to sub-branch vertical and started building the infrastructure in 2022. The results were quite impressive. As you can see, our deposit growth was around BDT 50 billion with 121,000 new customers' acquisition. Although the number of cash and noncash services have increased, and it is to inform you that 90% of our branches have been rated within the top 2 tiers of audit and AML ratings. These were the updates from distribution network. And I'm now handing over to Nazmur Bhai, who heads the Alternative Banking Channel.

Thank you, Ashfaque. Good evening, everybody. Our alternative banking channels comprised of 4 major channels, namely alternate delivery channels; secondly, call center; thirdly, agent banking outlets; and finally, online banking app, Astha, with nearly 300,000 customers. Last year, we on-boarded 295 new agents and reached 1,000 mark with the fourth biggest agent network in the country. We have acquired over 100,000 accounts, which resulted closely to BDT 1,000 crore deposit base. As part of our penetration strategy, most of our deposit portfolio comes from SME. Moreover, we have managed to be the biggest SME loan provider through agent channel by having 65% market share within 3 years. We have already built the capability, which is the best-in-class in the local market. Unlike many competitors, our agent banking solution straddles all segments that is retail for low-income accounts, SME for lending and deposit businesses and corporate for distributors to enhance the transaction banking business. Through this coordination, agent banking has become an important addition to our overall armory. A number of initiatives have been taken last year, introducing toll-free phone banking service for the first time in Bangladesh by any bank replacing the entire ATM fleet and introducing the real-time care deposit measures. Moreover, expanding service features in mobile app [indiscernible] to enhance customer experiences. In summary, we believe that the customers of all segments will divert from the traditional channels to these low cost and convenient channels. And through these alternate banking channels is emerging to be an integral part to achieve our overall banking strategies. Thank you. Thank you very much.

Thanks, Nazmur. As he emphasized, the agent banking solution is a very important channel, which supplements branches and sub-branches and provides essential support to all 3 customer segments: SME, retail and corporate. Thanks again, Nazmur. Let's move on to an update from our Chief Technology Officer, Nurun Nahar Begum. Nahar will give us an update on our digital transformation.

Good evening, everyone, and assalamu alaykum. Our digital transformation journey continues to be focused on delivering tangible business objectives. We have implemented various solutions such as supply chain financing, litigation management, document management, loan origination system and more. In order to enhance our customer experience, our retail Internet banking Astha has become one of the most popular app, and we are currently in the process of transforming it into a Super app. We continue to invest in technology to support business growth and improve operational efficiency by leveraging the latest technological enhancement. Our digital customer on-boarding and end-to-end lending apps transform business process. Our investment in [indiscernible] has made us more agile and responsive to changing customer needs while also allowing us to easily collaborate with partners. We have taken necessary measures to better manage the bank's cybersecurity risks and ensure compliance with relevant regulations and standard. Like other banks, we faced some challenges as well. However, we are able to overcome them through proper planning and implementation. Next slide, please. I would like to show you how our bank is moving from manual to digital. 61% of our total transaction volume were being served digitally. We can see the trend has been increasing every quarter over the past 3 years.

Thank you very much. This is a very illuminated graph. It shows how we've moved in a 3-year period from 24% to 61%. You will notice that manual transaction levels more or less remain the same as they were at the start of 2020, but the digital numbers have grown quite significantly. Thanks again, Nahar. I'll give you a quick update on our sustainable financing initiative. It's a very important part of the bank. It is a key business strategy. The bank today is one of the highest -- in fact, the highest created ESG bank in the country as far as Moody's is concerned. The Central Bank has also rated us in -- amongst the top 10 sustainable banks of the country. And this is an area where we currently have about just under BDT 700 million invested. The destination is going to be significantly more than this, and we hope by the end of this year, to have reached the BDT 1 billion mark. So that is just to give you a little bit of flavor of what we're doing in terms of sustainable financing. Next slide is about people, and we listen to Akhteruddin Mahmood, our Head of HR. Mahmood.

Thanks, Selim Bhai. A very good evening, ladies and gentlemen. As strengthening the diversity of the bank is one of the key strategies we have set a very stringent target for us, which is to move up the male and female ratio from current 22% to 30% over the next 36 months. We can go to the next slide. And we are also proud the first company in the market to hire trans-women or transgenders in the bank breaking all social taboos that you've seen in the previous slide. So looking into this slide, as you can see that 80% of our workforce is millennial and hence, they are agile, fierce and prone to fast-changing business landscape. We are also digitally savvy, which is a key to our journey towards becoming more digital in the coming years. And in order to serve the exponential business growth, the bank has introduced the HR business partnering role last year -- and as a result, people agenda is [indiscernible] more productivity, more proactively and care. Management being one of the strategic pillars of our business, we rewarded our extraordinary performance in a differentiated manner, thus recognizing the good and outstanding performance over last year. As we all know that right set of behaviors drive superior business results, we have redefined a new set of measurable behaviors manifested from our values, and we call it [indiscernible] in short, and there are 5 values, which we can share later on. Now moving on, leveraging the young and digital workforce, as you can see in the [indiscernible] below -- the bank has embarked into capacity building of our coworkers with rigor and as a result, we have introduced an internal e-learning platform called ALO, which stands for Alternate Learning Outlet and coincidently, ALO means light in our local language, Bangla. One of the best achievements in the learning and development space, total trading man hours for the year increased from 170,000 to 200,000 hours, indicating bank's commitment to upskill our workforce. So that's all from the people in our organization lens. Thank you all again, and over to you, Selim Bhai. Thanks a lot.

Thanks very much, Mahmood. Before we get into the actual financials, next slide, please, I spent a couple of minutes talking about what we call our overall franchise development. So if you look at 2022, what has happened? Firstly, the year represented very healthy liquidity, both in local currency and in foreign currency. You heard from our Head of Treasury, you saw that the bank [indiscernible] ratio was approximately 79% or 80% throughout the year. You heard from our Head of Credit Risk Management, how the portfolio quality has improved year-on-year. You learned about the expanded physical hybrid distribution solution that we have rolled out better capital management, our CFO, will talk about that as well. And you'll see that despite challenging circumstances, difficult macroeconomic environment, the bank has improved its earnings, both in terms of the bank itself and in its subsidiaries. Overall, our journey towards larger and more sustainable business growth is pretty much on. Let's move to the next slide, and we'll hand over to our Deputy Managing Director and Chief Financial Officer, Masud Rana. Masud?

Thank you, Selim Bhai. Good evening and Assalamu Alaykum to all. I think as Selim Bhai was mentioning the previous slide, underpinning this development or, I would say, all these are the strength of our bank, we have embarked on a new journey last year, starting from the last year. And we actually strategize that -- this is the time when most of the other banks were trying to reorganize, we try to grow ourselves exponentially. And as you can see, and you have heard from our business leaders, our technology to people and all front, we have actually had a very, very good year in 2022. Bank has actually delivered a very strong set of results, aligning this strategy. And to start with -- if you look at our deposit customer deposit has grown by about 24%, which is approximately 3.5x of the industry. On the other hand, if you look at our lending book, it has grown by about 28%, which is roughly 2.5x of industry average. Our revenue has grown year-on-year at 14%, resulting profit after tax is about 4%. I'll come to that a little later, and we'll walk you through how it has happened. Our overall balance sheet has grown by about 25%. Given the circumstances and the business environment, it's a staggering growth. Our capital, this is regulatory capital, by the way. This has also grown by 11%. On an underlying basis, this is the highest volume of equity base underlying basis. And we believe in going forward, you'd get to see it going to strengthen further. On the right-hand side, if we look at the financial metrics, particularly ROE and ROA, return on equity and asset has been a little softer. We all understand given the restriction on our interest rate and all. It remains a bit challenged to push it. However, the way we have strategies and the way we are growing, going forward, let's say, after 24 and onwards, you'll get to see these are coming back to the previous level like 11% and 12%. If we look at the earnings per share, it has grown to 3.85 Tata per share. Our net asset value has also grown. NPL coverage, we have heard from our credit as we have about 111%. But fundamentally, our book quality has gone better and it's improving over a period. Shortly, we'd also share the Q1 results. You'll get to see that it's improving further. In terms of capital adequacy ratio, it's 14.4%. Most of it, about 90% is Tier 1. If I'm not mistaken, it's the highest tier in terms of percentage and volume together. We have the highest in terms of the core capital. While coming back to the cost to income ratio and of the efficiency ratio, if I may call it, it has gone a bit soft -- predominantly led by the cost of funding as we understand in 2022, the landscape was quite challenging. Given our deliberate strategy, we have re-strategized our funding tactic and thereby increasing our cam deposit. And particularly, when I come to the later stage, you'll see that the combination has got a bit different than other years, but it was a deliberate strategy to go and increase our deposit base with a different mix. And therefore, we had to incur a little bit higher costs in terms of -- in comparison with previous years. If we exclude the cost of funding, our OpEx ratio in terms of our revenue remains 41%. However, the incremental cost-to-income ratio of 5% if we look at it, 3% of constitute or coming from the funding cost and the remaining 2% coming from the operating costs. And we need to be manful that we have grown our balance sheet or franchise about 25%. The spread, yes, it has contracted because the incremental cost of fund. And perhaps you all are aware, there is a regulation that -- and the expectation from the regulatory is to manage a banking business within 4%. So we have been designing our businesses and going forward, the strategy is to remain at 4% and deliver the superior financial numbers. So if we move on -- this is the customer deposit, and we would like to share this journey of the last 6 years, and it has been consistently growing at a good rate. However, as I say, in with our strategy, we have undertaken a new journey and 2020 was the first year. And perhaps it could have been even better. But in the first 2 quarters, we have grown quite rapidly. And accordingly, according to the market and all, we have refocused and adjusted the pace [indiscernible]. But we believe and strongly believe this year we can do even better, given the conducive environment. I think the strength that [indiscernible] mentioned in the very first slide, has helped us making this business more nimble. And due to this adaptability and resilience, we could refocus our energy and the approach and feet accordingly. So therefore, if you look at the customer deposit has grown in all the fronts, SME, retail and corporate, as I said, our delivery, we have grown our corporate deposit base. If we move on the share of deposit remains more or less similar. And of course, as we expanded our cold on the corporate side, it has gone up. But the future plan is to grow the deposit of retail and particularly SNE. As Tomas was mentioning, we have had a number of initiatives and plans to further grow our ACE deposit. And we had a wonderful growth in our transaction banking, both in corporate, and we have just introduced it for the SME, and we hope to grow in martial in the years to come. If we move on customer deposit mix; our CASA it was 51% at the end of the last year, which is a bit -- yes, it has decreased. But I think given the context, it was necessary. And going forward, we -- the outlook is -- it will remain a bit challenging. The liquidity will be can. And so therefore, it was appropriate for us to work on this mix and take it forward. Moving on customer asset -- predominantly, our business is specially driven. And as you can see, the major growth has come from the SME and of course, driven by the small businesses. Retail has also grown and corporate has a fantastic year last year. You may have a question that, okay, I mean, particularly on the corporate side, it was a particular selective growth and of course, within our risk appetite. We have had a long discussion before we launched this drive. And we hope to grow our business in a balanced fashion like having this mix of -- if you look at the next slide, the customer, this is regulatory, by the way, SME, retail and we would like to grow our balance sheet in a balanced strategy. Next -- if we look at -- I think Selim Bhai would like to say a few words here. But resulting to this fantastic growth in our balance sheet, we could see a very, very handsome book in our market share.

Thanks, Masud. I just wanted to emphasize that the strong 25% on growth in funds under management has led resulted in a very handsome growth in both loans and deposits in terms of market share. So if you look at '21 to '22, our market share for loans has grown by 31 bps and the market share for deposits has grown by 35 bps -- in both cases, this is quite significant. And on a -- and if we can keep this up over the next 3 years, '23, '24 and '25, we will certainly achieve our objective of being about 4.5% of the whole market by the end of '25. So I think this strong market share growth is a very good outcome of everything that we've done in '22. Thanks, Masud. Let's move on.

I think let's go move on, move on. I think this would give you a fair idea of how our performance in terms of our profit and loss. So let's start with this interest income. Gross interest income has grown by about 32%. Of course, this has come from the balance sheet growth that we had. But at the same time, the cost of fund, as I was mentioning, about gone up by 74%. Investment income, the fixed income portion remained a bit flat, slightly down year-on-year, particularly because of the yield, particularly from the G6, while our capital market return has been quite good as we refer reached our investment in other stock market. On the other hand, because of the volume driven last year, the fees income has also grown. And of course, there has been other -- like our trade was about nearly BDT 3 billion. So if we look at -- our expenses have grown by about BDT 3 billion, which is about 24%. A part of it, I mean if we look at about 70% of it is actually the people cost. One portion of each export was the regulatory advise of minimum wages for the lowest trader of the bank. Of course, we had also had some market adjustments, but we look at it as an investment because, as I said, for our strategy and for the growth, we are actually investing in our people, our technology infrastructure, so that going forward, we can support the growth that we aspire to. If we look at our general provision and specific provision, the loan impairment piece, we have actually had some positives because as our book has improved, the quality has improved, we could release year-on-year. We could have a lesser loan impairment, particularly if you look at whatever the credit cost was about 50 to 4 basis points. But within that, there was some buffering. In the past, there has been some reform in the tax law therefore, like the capital gain would be used to have in the G6, the government's bond of the fixed income portion that was not there. And overall, our effective tax rate has increased a -- so net-net, our profit after tax, which was about BDT 555 crores last year has become 5076 stores this year, about 4% growth. Just moving to our consolidated results. Next, if you look at our consolidated performance, I think that assets, deposit loans remain more or less similar, but look at the profit after tax. It has grown by about 32%. As I will explain in the late side on the next slide, that it has predominantly coming from the subsidiaries, the big cash. It has moved to profitability, and therefore, this strain growth of 32% year-on-year. Our balance sheet, as a group become about 65,000 for, which is app more than last year. Our capital is quite strong on a group basis that decreasing with an adequacy of 19% plus. If we look at the next slide, our 2 capital market subsidiary has done relatively well in a sense that if we look at the market, most of the capital market margin banks or brokers had a very rough time. But even within that situation, I think our merchant bank and brokerage has done pretty well. Our exchanges agent exchange business that we have in U.K. is restarting his journey in 2023. So overall, I think Vikash has made it possible for us to get a good number because posted I think about in 3 years positive numbers. I will get to hear from CFO of bKash. So overall, our last year, consolidated profit of BDT 465 million become BDT 612 million. And if we look at -- in terms of our share, it would be about BDT 601 crores. So we would like to hear from Moin Bhai, CFO, bKash, on the bKash journey of 2022.

Masud, thank you, and good evening to everyone. So as always, I'll take you through 6 key health parameters of bKash. I'll start off with the customers. So we clocked 65.3 million customers at the end of 2022, which was 57.6% same time last year, meaning that we are net addition to our customer base was BDT 7.7 million. Roughly, we were acquiring about 36,000 customers a day in 2022. Moving on to the right side. So of the BDT 65.3 million, 36.1 million were active clients. So this is about 55% of the total customer base we were active Market share, 67%. And this number was around the same. To be precise, this number was 66.3% at the end of 2021. So we've -- despite fierce competition, we gained 1 percentage point in terms of market share. Merchants, 287,000 merchants were in our -- on our net. The same number was about BDT 275,000 in the end of 2021, meaning we added about 12,000 more merchants in 2022. Average monthly transaction volume was 584 billion. That's the average every month. In total, we had about SEK7,000 billion worth of transactions in 2022, which was about 20% more than 2021. Number of agents was 340,000 agents spread across Bangladesh, which we added about 71,000 agents more in 2020 to me 2021. So those were the key highlights of bias. Moving on to the financials. Gross revenue went up by 22%. So we did about BDT 3,910 crores worth of gross revenue, which was, as I said, 22% higher. And the primary driver of this is increased volumes. As I mentioned, we did 20% more volumes in 2022. That's the primary driver of the increase in gross margin. So 20% increase in volumes. Our interest income increased our float interest income increase, which is a part of gross revenue is because our float increase taking off that, we did a net revenue of BDT 3,431 crores. Our cost of services was BDT 2,493 crores, making the gross profit at BDT 938 crores. So if you notice, if you observe that our gross profit ratio was 27% in 2022 as opposed to 23.7% in 2021. Now that is a significant increase given the huge volume that we have, a serious increase like that in gross profit actually led to our margins increasing. Our operating and administrative expenses in total increased by about 23% over 2021 and '22. So that leaves us with an operating profit -- or rather an operating loss of BDT 77 crores in 2022. Now the next line, net finance income is -- this is the income that we derive from our own working capital, which increased to BDT 121 from BDT 77 crores in 2021. The primary driver of this is we received the funding of SoftBank in December 2021. So the full 2022, we -- bKash derive the benefit of this fund. Just taking that into account, we make a net profit. And the rest is -- the 5% is the profit WPP contribution. -- which is 2%. And the profit before tax is BDT 3 crores, and we had an income pro- income tax provision of BDT 25 crores, thus making a profit after tax of BDT 17 crores. As Masud Bhai mentioned, this was the first -- the last time we made profits was in 2018. So after 3 consecutive years, bKash made a profit of BDT 17 crores. So those were the 2 quick slides from my end, and I'm happy to take any questions.

So what we will do now, Masud, if you are also finished, what we'd like to do is actually give you a wrap up first on what the whole year was about. Essentially, as you see the year started off quite difficult -- with great difficulty, macroeconomic stress, high inflation, trade deficits, balance of payment challenges, massive depreciation in currency, foreign exchange, liquidity, scarcity, et cetera, et cetera. So it was a very difficult year overall. Despite all that, BRAC Bank has grown at approximately 25% in terms of funds under management and profits have been 4% higher than last year. For the consolidated entity, overall profitability is significantly better because as Moin just said, has finally given us some positive news as well. And hopefully, that will continue. Let's now get into the Question-and-Answer Session. And what we do is if Dave, if we have any questions for bKash, we will ask for Moin to answer those first, and then we'll get into questions for BRAC Bank.

Okay sir. We have received a couple of questions for bKash, so Moin bhai. But the first question is that, what led to bKash's gross profit margin increase?

Okay. Thank you. So the simple answer to that is -- there are 2 reasons why gross profit margin increased. One is our source of fund costs declined. Now we have -- we essentially have 4 sources of funds. One is the fund sourcing through the agent, one is fund sourcing through banks, one is fund sourcing from cards. One is inward foreign remittance and one is direct disbursement. So our proportion of funds coming in from banks, cards, remittance and government disbursement increased in 2022 over 2021. So that led to a weighted average cost of funding declining. And the other factor is our effective commission that we pay to our agents declined in 2022. So those are the 2 real factors as to why the gross margins increased in 2022.

The next question on, what is the revenue model of deposit and lending products of bKash?

Okay. So let me go one by one. So the revenue model for lending is, bKash partners with a bank and the revenue that comes out from the bank, which is in the form of interest income or other income, that is shared between bKash and the bank, and that's how it works for lending. For savings, we partner bKashes again, we are just a channel through which we help the ultimate institution in whose books the savings will be -- so it's a percentage of what -- is a percentage of the savings that we channel for the institutions.

The next question is on the -- what is the current share mix of bKash, meaning how much is coming from the cash in, cash out, and merchant trade...

The revenue mix?

Yes, about the revenue mix.

Okay. So this -- there are I'll tell you the 3 big revenue drivers of bKash. So the first one is cash out revenue, which is about 67% of the total revenue. The second biggest one is interest income from float, which is about 11%, and the third biggest one is the peer-to-peer or the P2P transaction, which is roughly 8%. So those are the drivers of revenue for bKash.

That's the questions that we received till now for bKash. If we get something else, we will come back to you again. Sure. Sir, can you step for the brand BBL's questions?

Please.

The first question is about the rate cap. The question is sir, what is your expectation regarding reference based lending rate? Do you expect -- due to this change, BRAC Bank [indiscernible] improves after that?

So we will have to -- all discussions around this new corridor in terms of the lending rate are conjecture only at this moment. We will learn more about it as it is rolled out and probably in the month of June, not before that. But initial discussions suggest that it will be, say, a 3% margin added on to the 6-month T-bill rate. The 6-month T-bill rate will be considered as indicative of the market rate, and the 3% spread, which is a maximum spread of 3% will be considered the premium on that rate. So currently, for example, that T-bill rate would be close to 7%. So 3% on top of that would come to about 10%, which is roughly 1% higher than the existing 9% lending rate. So what would the impact of that be? Quite significant actually, if we end up with a 10% lending rate cap, and that's a good 1% over what we have today. Our interest expenditure could increase theoretically almost 25% overnight. So a very significant increase. How that will still be structured, because there are other rules and regulations. For example, there are restrictions around the overall net interest margin that a bank is allowed to work in. Our CFO, Masud Rana referred to that earlier, that is 4%. So the question is whether that kind of restriction will remain going forward. We will know more about it, as we enter into June perhaps. All the same, I think it's a positive move from the Central Bank. A move away from the current restrictions, which were put in place April 2020, and a move towards a more market-based interest rate regime.

Thank you, sir. The next portion in our BRAC Bank's overall success. So the question was about that BRAC Bank has made the most remarkable [ phase ] of success in 2022. So in which area this success was actually coming?

So the -- firstly, it was started by, I think, Masud Rana, our CFO, referred to a strategic agenda that we put in place end of 2021. That is -- the bank felt that we were fit for growth and set us target. We set ourselves a target, and this was later on agreed by our Board to double our business and almost double the market share over the next 4 years. That is 2, 3, 4 and 5. And to achieve that, we needed to grow at roughly 21%, 22% year-on-year. So a CAGR of 22% over the 4-year period, would have delivered that doubling of business and almost doubling of market share. So the first year '22 has reflected almost 25% plus growth in funds under management. So we've exceeded our plans, and that is a significant validation of not only our strategy, but also our belief in our overall capacity. Now what delivered? All 3 business segments delivered -- so it's not as if one did the other did not. And this is despite us slowing down the retail banking business and lending business in the second half of the year, when inflation rates became quite high, and there were some concerns around lending to individuals. So we became a little conservative with our risk appetite controls. Despite all that, the year still ended very, very strongly. Challenges for us really are around the cost-to-income ratio for '22, as you can see, is quite high, 58% compared to 53% last year. But that is mainly borne out of -- as our CFO, Masud Rana showed you, a significant increase in staff costs, which were a result of certain regulatory changes made in the first quarter of the year. Masud considers this to be an investment in people, we all do as well. I think that helped our entire team stretch further than we had even believed possible ourselves. So the fact that we have, in a very difficult year grown strongly, is an indication that all parts of the bank have done very well. And I also must refer to the continued support received from our technology and operations teams, our logistics teams, our internal control, anti-money laundering teams, HR, finance, every part of the bank has stood up and has been counted. Overall, a very collaborative effort. Thanks [ team ].

Thank you, sir. Referring to the earlier question, what was the key reasons of growth in corporate banking during 2022 -- which was moderately...

Let me respond to that. Firstly, loans grew almost 40%. They also reflect -- firstly, sorry, that growth in lending is very much in line with our risk appetite statement. So you'll notice that overall, the bank and even the corporate banking loan portfolio has improved, so the customers we have led to are all top-notch customers. And secondly, the growth in deposits is really a reflection of the very strong transactional banking capabilities that the corporate bank has now rolled out. These include different products and services to transaction banking clients and a very, very effective corporate payments module called CORPNet, that has done quite brilliantly and is continuing to completely decimate the opposition. The last point that I must also recognize, is that the bank has grown stronger and better over the last 2 or 3 years, and much of the wholesale banking success story is based on the fact that there is a certain amount of flight to quality or flight to safety. And many large, better-known wholesale banking partners are now interested to do business with BRAC Bank. In other words, we have reached a position in the market where our wholesale bank is now generating mindshare.

The next question about -- recently Bangladesh Bank issued a circular about the off-balance sheet provisions. So how management taking that will impact BRAC Bank's partners?

I don't think it will impact us negatively at all. I think it's very positive from the overall industry perspective. The industry needs to migrate towards more internationally accepted provisioning standards. So we welcome these sort of regulations, and it's -- they will not impact us negatively at all.

The next question is, where do you see [indiscernible] rate to stabilize?

I think firstly, the Central Bank is following a cautious and conservative approach towards -- as it moves towards a market-based rate. I don't think we'll see a fully market-driven exchange rate this year. But as you may have already noticed that the current rates offered by the BAFEDA, as we call it, the foreign exchange dealing organization. That is already quite close to what we call the curve market rate and you will also notice that the real effective exchange rate for the Taka is a lot better than what it was, perhaps 5 or 6 months earlier. As the rates are progressively improved -- or sorry, as the Taka has progressively depreciated, I think we will end up with some -- what rate we will end up with is difficult to really say right now. Perhaps in the short term, rates may jump up a little bit. But I think by the end of the year, we expect to be nothing absolutely out of the ordinary. I will ask Shaheen Iqbal to comment on this, without actually referring to a particular number, Shaheen.

So Selim bhai, it is difficult to really indicate particular number. But we can see so far from base, Taka has depreciated around 27% and probably another 5% will be enough to stabilize Taka against U.S. dollar in my view. As we have already seen that, import obligation has come down, export and remittance is doing good. I think we have passed the peak and probably the Taka is going to stabilize gradually. So I think going forward, I don't see significant volatility, but measured volatility.

Thank you, Shaheen Bhai. Reference to that question, do you expect treasury to go up in later part of the 2023 and early of 2024?

It's likely, but it depends on a number of factors. As you know, like how much government need to borrow from the market, how much government would borrow from Central Bank. So all these factors would come into play. But in a free market scenario, like as interest rate is moving up, inflation is on the higher side, we do you expect to see gradually yields moving upwards. And also, like -- as there will be lesser legality, like you can say, [ contractionary ] policy, Central Bank passes that, then we do expect to see the yield moving upward gradually.

Thank you, Shaheen bhai. We have received some questions about our -- one of the subsidiary BRAC Saajan. The question was about that, BRAC Saajan has come back to business in the U.K. -- struggle -- facing challenges to return to business in full swing?

Yes, of course. The company, BRAC Saajan, was rendered in operation for more than 2 years. As a result, it had laid off most of its staff and [Technical Difficulty] all this is now coming back. So more people are being recruited to fill up the vacant positions and the relationships with all the different agents who were the backbone for their business is now being renegotiated. So it is going to take a bit of time, but we're already getting about $200,000, $250,000 worth of remittances every day. That is still no more than 10% of what it was back in 2019. But we are investing heavily in that business and expect that within the next 1 year, BRAC Saajan will be back to pre-pandemic levels, which was close to $400 million of remittances annually.

Thank you, sir. We come to the last question about this on Agent Banking and our sub-branches. The question is about how many agent outlets and sub-branch you are looking to open in 2023?

Okay. We'll ask Nazmur Rahim, Head of Alternate Banking Channel to answer the question on Agent Bank and Ashfaque, our Head of branches can respond to the question on sub-branches?

Yes. Thank you, Selim bhai. We are expecting to increase the Agent Banking number by 1,400 by this year end.

So is that 1,400 new agents?

The total number of agents. Like this year, we started with 1,000. So 400 new agents will be there. Yes.

400 new agents this year. How many new sub branches do we plan to...

We would like to open 50 sub branches this year. But one also needs to remember that there has been a regulation changes from the Central Bank. So there has been new rules imposed regarding urban and rural ratios. So we are working on it, and we still hope to open around 50 subbranches this year.

Subbranches, branches, agent banking outlets, all are important components of our bricks-and-mortar solution. And as I keep on repeating, they are a part of the total hybrid solution for BRAC Bank. So you have the digital solutions on one hand, and you have the physical solutions on the other. Both the high-touch and high-tech working together in our country that makes sense. A pure digital or neo-banking solution, would we feel not make much sense in Bangladesh. So are there any other questions there?

We have one last question, sir. This is about our product [Foreign Language]. The question is that, is priority to banking for SME customer same as retail or corporates?

It is very similar. It is not exactly same. Importantly, Borenno represents a milestone in BRAC Bank in the sense that our attempts to corporatize our SME business and step up the delivery of customer solutions to all kinds of SME customers, not just lending customers, that's what [Foreign Language] is all about. [ Toman ] Borenno? Yes. Actually, the Borenno is slightly different because for Borenno, we have seen the need of -- or we have tried to find out the need of large SME customers. Mostly, they go and take services from the branch. So for large or higher segment SME customers, we have provided some additional features, services, which will be provided from our channels to the Borenno customers. So these are not -- this is a bit different customized for SME customers. And -- but there are some services which are similar to the -- our priority customers as well. But there is something more which serves the purpose and needs of high-ticket SME customers.

These are all questions that we have received from our shareholders.

We're just under 90 minutes, pretty much in line with what we planned [Technical Difficulty]. Thank you for joining us and sharing the update on what's been a very good year. The expectation is that 2023 will also be another very good year for BRAC Bank, and we'll, of course, share with you the first quarter results quite shortly, I think. I think in what -- by the end of this month, Masud?

Yes. Perhaps even earlier.

Okay, okay. Thank you, again, ladies and gentlemen, for joining us. Goodbye from Dhaka, Bangladesh.