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

[Foreign Language] and Good evening. This is Selim Hussain. I'm the Managing Director of BRAC Bank, and I am welcoming you, everybody from all around the world to BRAC Bank's first quarter earnings disclosure program. We're located here in Dhaka, Bangladesh, and it is 8:00 p.m. Dear viewers, this is a live webcast in our earnings disclosure portal, and this link has been shared with different relevant stakeholders through advertisement, website post, Facebook post. We also are going live with this presentation on our Facebook page. Shall we start then? Thank you. Next slide, please. Next slide, please. Thank you. The usual forward-looking statements with inherent risks and uncertainties, the normal disclosures. What we have for you today is a shortened program. We expect to complete everything within 1 hour's time. This is the first quarter 2023 results. We are also cognizant of the fact that we had a similar program for the full year 2022 just about 2 weeks ago. So we will not take too much of your time today. We'll start off with an economic update, a market update. We look and -- quickly look through the SUV retail corporate businesses, treasury and financial institutions give you an update on risk management look at the financial performance, and get an update on Bkash and then move into a Q&A session where we will try to answer as many of your questions as possible. As I said, the expectation is that we will finish everything in 1 hour's time. Dave the next slide. And I'll hand over to our Treasurer, Shaheen Iqbal, Deputy Managing Director and Head of Treasury and Financial Institutions. Shaheen?

Thank you, Selim bhai. Good evening, everyone. Bangladesh is facing significant challenge in terms of managing this inflation, like many other companies. So as inflation has become a major challenge, like we are expecting a new monetary policy in July, whereby Central bank has indicated that they are going to address some of the key challenges in terms of interest rate and exchange driven. So we really have to look into those policies. In our view, like both Central Bank and government has taken it seriously to [ continue ] inflation and overall economic management. In general, like on interest rate side or do you expect to see interest rate moving upward and has changed, again, [ meet the ] under pressure, despite continued to remain as it is until end of this year because there are a lot of pressure in terms of import and other challenges. So in general, like both exchange and liquidity is a big challenge for the year. And within this changing condition, we are navigating in a quite challenging environment. That's my view on overall economy and the market. Thank you, Selim bhai, Back to you.

Thanks, Shaheen. May I just add to what our Treasurer, Shaheen Iqbal said a little while earlier. I think the overall situation in the month of May is actually much better than it has been over the last 6 or 7 months. And I'm referring to, particularly to the foreign exchange liquidity situation. The market from what we hear from our correspondent banking partners all across the world has improved significantly. The number of payment deferrals or delays has improved markedly. And overall, the exchange rate situation is a lot better than it was, particularly last year. The expectation also is that there will be a gradual move to a more market-based exchange rate and interest rates over the next few months as well. So we'll talk more about that later on. Let's move now to the first of our business highlights and Tomal, Syed Abdul Momen Tomal, the Head of SME Banking Division and Deputy Managing Director, will update us on his business.

Thank you. Thank you, Selim bhai. The SME business has also done pretty well during Q1. Despite the challenges mentioned by Shaheen bhai, the economic challenges, I think -- the SME segment has been quite resilient, specifically the segment that we operate in, the small business segment. So a lot of resilience is being shown by this segment. So if you see that our customer numbers have grown by 22% compared to -- since December, and if I compare it with March, it is like a 19% increase on the customer numbers. As we mentioned earlier, during our yearly disclosure that our deposit engine has started in full flow. And you can see that there is a 23% increase in our SME deposit source, which is not usually happens in earlier years. So the -- and we expect the SME deposits to grow even more during the remainder of the year. However, the CASA mix due to the market condition and there is an increase in our cost of deposits. But if you see, it was higher than by 64 bps in -- if I compare it with March '23 -- '22, but if I compare it with December, then it has increased by only 9 bps. And in terms of the growth in asset portfolio, yes, the momentum that we have built in 2022 has continued. In 2023, the momentum is even higher. You can see there is a 28% growth since December. And obviously, the small business is the main growth engine, and they have grown by more than 35%. And even with this growth, the portfolio quality continues to improve. The par has decreased by 50 bps. And also NPL has decreased by 20 bps since December '22. And our trade volume also continues to grow despite the challenging market conditions. That's all from SME, Selim bhai. Thanks you.

Thanks very much, Tomal. So key takeaways from the SME update: one, asset growth continues to be very strong; two, the portfolio quality continues to improve quite significantly, I might add over the last 3 months; and three, the deposit mobilization engine is really just starting to generate dividends. You will hear a lot more about this next quarter, but a number of new products and new structures in the deposit mobilization efforts are now we can see starting to generate good dividend. We'll talk about that more as we go through the slides. Thanks again, Tomal. Let's move to retail banking, Mahiul Islam, Head of Retail Banking division.

Thank you, Selim, good evening. In Retail Banking, we had good momentum in customer acquisition and cards business during the first quarter of 2023. Our customer numbers grew by 16%, and this quarter, we crossed the 1 million mark. In terms of customer deposits, we also continue to grow sustainably at 20% year-on-year with BDT 3,300 crores net growth. And even if you compare with last quarter, it has grown by 5%, sustaining the annualized growth rate of 20%. Our customer assets growth, while it was moderate at 9% year-on-year, with BDT 611 crores net growth. This was mainly due to rising inflation, where we have tightened our risk parameters from second half of last year. Now we have started to ramp up our asset acquisition, keeping in line with our risk appetite. We continued our strong momentum on portfolio or strong monitoring on portfolio and collection efforts that resulted in both par and NPL reductions year-on-year. However, compared to last quarter, we have observed a bit of stress in our portfolio, and we are taking additional measures accordingly. Credit cards continues to be a success story for us and its portfolio grew by 28% year-on-year, and our merchant acquiring volumes have also grown significantly by 53%. In terms of remittance business, our volumes have grown by 65% year-on-year. And compared to last quarter, we have observed significant growth of 101% due to a stable market environment. Another good news is BRAC Saajan, which is our subsidiary based in U.K., they have successfully resumed its business starting from early this year. That's all from my side. Thank you.

Thanks, Mahi. So important takeaways from the retail banking update, customer numbers are growing consistently. Customer deposits growing very, very nicely again. Customer assets slightly slowed down, but that's a conscious decision in the current high inflation environment. I did mention that from May onwards, we are starting to ramp up the customer acquisition in retail lending. But very satisfactory progress in the credit card and debit card business, acquiring, issuing volumes have been very, very satisfactory, and the Remittance business is also starting to grow very nicely. Thanks Mahi. Let's move to Tareq Refat Ullah, our Deputy Managing Director and Head of Corporate Banking Division.

Selim bhai. Dear valued audience [Foreign Language] and a very good evening to you all. Our quarter 1 results are consistently positive and in line with our growth aspiration. We have achieved growth in deposits for 25% year-on-year and in asset for even higher which is 50% year-on-year. All of our channels vibrantly walk together to mobilize liquidity. And as a result, we have achieved a phenomenal growth in deposits year-on-year. However, in the first quarter of '23, we offloaded a portion of high cost deposits, and that actually adjusted the growth momentum for the time being, which has also helped us to reduce our cost of deposits by 123 bps in quarter 1 2023. Our remarkable asset and trade growth was possible because of our stronger liquidity in terms of both foreign currency and local currency. Please also note that we have continued onboarding new relationships in line with our risk appetites, and that has helped us to grow our portfolio as well. Although our portfolio quality improved significantly year-on-year, you can see on the slide, clearly, However, there is a slide in quarter 1 2023, compared to December 2022. This has escalated from the stress portfolio, which were under forbearance support during the COVID period. This is not a surprise. And as we are also expecting this expected slide from this portfolio as well. In conclusion, we expect to remain major partner bank of our valued clients, and we also continue to prove the momentum in the coming periods as well in line with our growth strategy. Thank you all. This is all from Corporate Banking division. Over to you, Selim bhai.

Thanks, Tareq. Again, key takeaways, a good growth in both deposits and loans, particularly compared year-on-year to Q1 '22. And even if you look at the last quarter or the trailing quarter, Q1 '23 compared to December '22, you'll see that loans have grown very nicely at 18% plus deposits a little less so, but that, as Tareq mentioned, is because a number of more expensive deposits were exited, a slight deterioration in NPL. But again, as Tareq mentioned, this is already managed and accommodated in our debt provisioning. And in reality, these are not surprises. Overall, a pretty good first quarter for Corporate Banking division. Let's move now to the treasury and financial institution space, and we'll get an update from Shaheen Iqbal, our Deputy Managing Director and Head of Treasury and FI.

Thank you, Selim. Again. I think as Tareq mentioned, our Head of Corporate Banking, like we are really reducing our various risk, concentration risk and also we were diversifying our portfolio, both in deposits. At the same time, we are doing in loans. So on the deposit side, like we -- at the same time, we were very liquid. And also, we diversified away from any concentration rate that we've had. So this is a great success for the bank. And also, we have significantly reduced our risk in terms of Contagion like we have reduced our risk on banks and FI significantly. So that we are safe from any contagion risk as well. Overall, the bank is very liquid in a very sustainable manner. We also reduced our risk through reduction of the duration of government securities. So overall bank's balance sheet is in a very well -- is very well positioned. And I think we can really grab market opportunities going forward as well. On the market side, we continue to lead the market in making market in FX and other securities as well. And also, we have done few landmark deals like we have signed 100 million long-term facility with Jica in the first quarter. So I think, overall, our achievement in both foreign currency, local currency and overall market making was really impressive I think. That's all. Thank you.

Thanks, Shaheen. Let's move now to risk management and listen to our Head of Credit Risk Management, Ahmed Joy.

Thank you, Selim bhai. Hello, everyone. We ended the first quarter of 2023 with NPL ratio of 3.7% and 30-DPD par ratio of 4.1% as you can see. Now if we look at this on a quarter-to-quarter basis for the last 1 year, and even on an annual basis since 2017, you will find that the NPL ratio is quite static, which is now over and around 4 percentage level. However, our 30-DPD par ratio referred to the green curve has improved gradually. It declined from pre-pandemic level of 6%, which was in 2018 and beyond that to present level of 4 percentage. So 30-DPD par has improved a lot, I would say. Next slide. In Q1 2023, our NPL coverage ratio was 111%. During the same period, the bank's cost of credit was 70 bps, which is basically 16 bps higher than the previous quarter. Now we incurred this higher credit costs just to maintain our strategic level NPL coverage ratio of 110%, and that's what we intend to continue. We will maintain this level of 110%. So in brief, I would say that with better underwriting decisions and strong performance from our collection team in recent years, our asset quality remain under check. It's under control. The portfolio is pretty much under control. So that's it from my side.

Thanks, Joy. Dave, can we move back one slide, I would just like to highlight something in this particular slide. Ladies and gentlemen, if you look at the par level in the first quarter of '23, you'll see that par figure is pretty similar to that in 2019. That gives you a very good sense because a 30-day DPD or 30-day par is probably the highest level of nonperforming assets in any financial institution. As today, as at end of Q1, is pretty similar to that 4 years ago. It gives you a sense of how well the portfolio has been managed even during these very difficult times. And you will also understand, I'm sure, recognize that the portfolio itself has grown very significantly in the last 4 years. I'm talking about the overall asset volumes. Let's move to the financials. And what I'll do is actually show you a few slides where we compare Q1 '23 results to the first quarter of '22 and the first quarter of '21 as well. So over the last 3 years, you can see how all 3 segments have grown continuously. This gives you a sense over the last 3 years how the first quarter growth for '23 has panned out. If you look at the next slide, what we're trying to do here is give you a sense of Q1 '23 compared to the last 1 year. So you have the first quarter of '22, the second quarter of '22, the third quarter and the fourth quarter of '22. On the left-hand side, you have the whole bank. The green piece is SME, retail is blue, corporate is golden. And if you look at them, you'll see that there is a consistent growth in customer deposits across all 3 segments. It is accelerated in retail, which is our main deposit mobilization engine but it has also started very well in SME. And of course, corporate is also very large and is the corporate banking division in BRAC Bank is very much self-funded. Let's move to the next slide. Again, we're doing -- giving you a sense of our CASA balances in March '23, they compare well with last year, 53% CASA but obviously less than what it was back in '21 when it was an all-time high of 58%. Next slide. Again, what we're doing here is showing you 3 years comparison of customer loans. And you can see in all 3 segments, there is continuous growth, and this is a comparison of the first quarter of '23 to the first quarter of '22 and then the first quarter of '21. And the next slide actually is a comparison of the trailing 4 quarters. Here again, you will see good growth in all 3 segments. Corporate, in particular, has grown quite strongly. But SME too, if you look at year-on-year, it is growing very, very strongly as well. Retail is relatively flat, but that is a conscious decision that we've taken in terms of the high inflation rates and the impact thereof on individual customer disposable surpluses. That was a conscious decision. I would like to repeat what our Head of Retail Banking said earlier that from May onwards, we intend to open up the sluice gates and start growing retail assets again. Otherwise, our growth is driven more or less by all segments and is well aligned to strategy. I'll ask our CFO and Deputy Managing Director, Masud Rana, to take over now and take us through the actual financials. Masud?

Thank you, Selim bhai. Good evening, and [Foreign Language] to you all. As you heard from our India and our business sites, so we have had a fantastic Q1. Our balance sheet has grown. And this is the first quarter, but I think the morning shows the day, we have a good plan for this year. And as we continue the momentum of 2022, it really reflects in our numbers. Like as you can see, on an annualized basis, our deposit has grown about 16%. On the other hand, loan has grown about 20%. Our balance sheet itself is [indiscernible] 12%, sort of [indiscernible] capital, the regulatory capital itself. The revenue year-on-year is about 13% higher However, if we look at the profit after tax, the bottom line, it's almost flat. I'll explain it a bit later, but yes, of course. But fundamentally, if you look at, we believe the way we have been approaching this business and designing this business. We are quite happy with the proceeding of the first quarter. Yes, we heard from our treasure the economic conditions, the business environment, given all that, I think it's a pretty good result, a very good set of numbers. If we look at the return on equity, yes, it has been a bit soft, both return from assets and return from equity. As I said, our regulatory capital has grown by about 12%, while our profit has been flat. So therefore, that deep in these 2 return matric. While EPS has grown slightly year-on-year. And as we heard from our Head of Credit we may intend to maintain a coverage of 110% going forward. So we maintain that. And as a result, there has been some slightly higher cost of credit in the particularly first quarter. The cost-to-income ratio, yes, it is 61%, but we need to mindful of some regulatory requirements, particularly on the OpEx side, our staff cost has grown, which was not there. On a like-to-like basis, it would have been really 57%, 58%. And at the same time, the cost of fund has also grown significantly if we compare with the last quarter -- last year's quarter. Our capital adequacy is 13.8%. And as you all know, it's predominantly led by the core capital, Tier 1. Our NAV has grown about BDT 1. We maintain more or less similar and continue with that trade-off -- slightly over 4%. So if we look at the stand-alone performance P&L, I'd like to quickly -- next slide, please. So we try to capture the year-on-year as well as the trailing quarter, the Q1. The way we are -- what I am very interested and very pleased to share that our revenue has grown. If you see 13% year-on-year. However, on a quarter-to-quarter, like the fourth quarter of the last year, it has been flat. On an underlying basis, the business is -- has grown. In a sense, generally, the first -- fourth quarter and first quarter is not comparable. We all know, I mean as a professional bank. But if we look at on an underlying basis, it has grown about by 6% to 7% with the cost of fund going up. Like if we look at our -- year-on-year, our revenue has grown that -- NI has grown about 13%. At the same time, the nonfunded income has also grown by about the same amount. But there are some one-offs which were kind of balancing each other. Like we observe a subdued return from the fixed income portion like the GSX and government securities and also capital market is kind of flat. While yes, the outlook suggests that the interest should go up and accordingly, we should expect a better return. And we have, as Shaheen bhai mentioned, we are actually working at addressing those tender adjustments so that we can accordingly adjust with the risk. I think the major year-on-year comparisons that cost has been grown by about 20% with a 7% negative delta. But as I said, last year, the same period, we did not have that kind of a staff cost dimension that we have now. On the other hand, not to forget about the inflation that has translated. I think if I look at numbers across the market, across the industry. I think that's quite evident that in the OpEx, everybody has that pressure. And that will be a challenge how we would manage and do our business going forward. I think what is important here is that the way we are designing our business. Generally, Q1 is subdued quarter for us. I think most of the players in the industry. But for the last couple of years, we have been trying to design it so that it gives a kind of a consistent return over -- across the quarters. So the way we have planned is that you will see in the coming quarters, it will grow I mean if everything remains as we have planned for and with a conducive environment, of course. So we expect to see this in going quarters. It should grow and increase. So if we look at the consolidated numbers to the next slide. I think balance sheet, as I said, it has grown quite satisfactory with given all that, move to the consolidated number. So the deposit here is 20% annualized growth on the loan side, 20% more or less similar to the bank level. Revenue is 22%, thanks to our major subsidiary bKash which has -- given this 9% delta here. And if we look at the PAT, bKash has good story to share with you. I'm sure Moin bhai has joined, we'll listen to him. Overall, in terms of balance sheet side, it has grown on an annualized basis 16%. To be mentioned, I think, very strong capital adequacy at a group level. Cost-to-income ratio since our subsidiaries, particularly bKash has done well. Our cost to income ratio at the group level has improved. I think if we look at our -- share of our subsidiaries, the next slide, please. This is the first quarter snapshot of our overall subsidiary shares. So understandably, first quarter has been very subdued in terms of the capital market players so which is reflective of the results of our 2 subsidiaries, both Merchant Bank and the broker is from. But we have taken measures. I think relative to the market, this is good results. Going forward, if the market gets into a better condition, we should be the firms who get most of the benefits. Looking at this, I think I'll request Moin bhai to shed some light on Q1 performance of bKash. Moin bhai, over to you.

Thank you, Masud bhai. Good evening to all of you. Just continuing with what Masud just mentioned, bKash, we had the best ever quarter in terms of volumes and profits. So before I start off, I'll just quickly take you to 6 health parameters of bKash. So the first one being number of customers. So a registered customer base at the end of first quarter '23 was 67.9 million, which is up by 7.6 million over the same time last year. Active ratio, active clients is 39.6 -- of the 67.9 million, 39.6 million were active, which is about 58%. It's a significantly high number comparable. If you compare with other similar players across the globe, this is a very respectable number of 58% being active. In terms of market share, we gained marginally by 0.3% and at the backdrop of stiff competition. Our market share, let's say, remained -- we held on to our market share. In terms of merchants, we were 293,000 merchants, were accepting bKash, which is -- this is up by 25,000 merchants year-on-year. Average monthly transaction volume, we clocked BDT 671 billion of average monthly transactions for the first quarter, which was up by 23% year-on-year. In terms of agent points, which is one of our biggest assets, we were at 352 -- 353,000 agents spread across the country. And we added about 75,000 agents more same time last year. So all in all, all the indices are looking up. They're looking north. And moving on to our financials. Then, if you could move to the next slide, please. So if you look at gross revenue, let me start off with net revenue that's after taking off that. So net revenue increased by 25% at the backdrop of volumes increasing by 23%, as I mentioned earlier, our volume -- our net revenue increased by 23%, which is a very respectable healthy growth. Cost of services was BDT [ 697 ] crores. So cost of services as a percentage of net revenue was 71%. If you look at the same time last year, it was 77%. So gradually and because of the product mix our gross profit is increasing. So our gross profit in the first quarter of '23 was 29%. And while same time last year it was 23%. So we had a solid 5% increase in gross profit. As I said, a couple of factors. One is that we are increasing -- we are seeing that people -- our cost of funds is lower. If you source funds from alternative sources like banks or cards or source, it's lower. And we are also gradually rationalizing the commission that we pay to the channels. Both of them put together are effective gross profit increases. In terms of expenses, operating expenses were BDT 199 crores as opposed to BDT 173 crores. The basic driver of this expenses increase was three. One is people cost. We added about 96 more payment resources between the 2 periods. The other one was depreciation and the third one was softer maintenance expenses. So these were the primary drivers of the increase in operating and administrative expenses. Commercial expenses remain remains the same, so I'm not going to dwell on that too much. So operating profit was BDT 13 crores as opposed to BDT 62 crore loss same time last year. Net finance income was BDT 42 crores which was 36% higher than same time last year. This is at the backdrop of our effective interest rate, which was in 2022 was in the range of 6.53%. It's -- this quarter, we clocked effective rates a little more than 7%. That made our net finance income to BDT 42 crores. And then our profit before workers' profit participation fund was BDT 54 crores. And profit before tax is BDT 52 crores. And taking into account income tax, we clocked BDT 36 crores as the first quarter bottom line for bKash, which as I said, is one of the highest so far. That's about it from my end Masud bhai.

Thank you, Moin bhai. Over to you, Selim bhai.

Thanks, Moin. Thanks, Masud. Let's actually move into the questions now. Before we end with an outlook from myself, do we have any questions that we can ask Moin to answer for us?

yes Sir, we received a couple of questions for BKash. Moin bhai I'm just starting. The first question is that is bKash finally back to sustainable profitability after years of investment? Or will it revert to loss after they're doing the SoftBank cash placement?

Well, we have we made profits in 2022. We made profits in the first quarter. It's -- so we have -- over the past -- over the past 15 months, we've made profits. However -- and we hope to continue. However, because of certain strategic intent, we might invest in areas which will give us further revenues for the future because you see, at the end of the day, we are creating an ecosystem. For example, merchant payments, which is not very prevalent or progressive here it requires investments. So Yes, we hope that this trend of profit continues, but there will be investments that will be made in the future.

The next question is, can bKash shed some light on how transaction mix is the improvement, like cash in cash out ratio, B2B payments, et cetera?

So our biggest contributor to our revenues is cash out, which contributes about 75% of the revenues. Our next biggest contributor is person to person, which is about 80%. And after that, we have merchant payments which is also the third largest contributor in terms of commercial revenue. What we would like to see eventually is move the needle of the merchant payment higher. So that -- and that is really our purpose Bkash purposes to ensure that there are more digital merchant payments being done.

Okay. The next question is what is driving transaction volume of bKash. And we know there are a couple of new products launched by bKash. So the related question is what new products have gained traction during the last 1 year?

We've had very respectable gains in inward remittance. We have had gains in alternative sourcing of funds, i.e. funds coming in through cards, comments coming in through banks. We've had very significant growth in transfer money, which is money -- funds being transferred from bKash to banks. So those are the 3 big ticket drivers of volume growth. And not to mention, there is organic growth. You see the customer base is increasing, there's active ratio is increasing. All that leads to an organic growth.

The next question is, has there been any changes in commission sharing with agents and dealers?

Yes. As I mentioned in my P&L slide, yes, we are trying to rationalize our commissions that we pay to our channel partners. However, it's not a straight jacket approach. There is an element of performance-based incentives that we pay to our agents, which has resulted -- eventually resulted in more optimum usage of -- or payout of commission rates.

Thank you Moin bhai. Till now these are the questions that we have received for bKash. So if we get anything [indiscernible] so we'll come back. Sir, can we ask the other question that received?

No. We'll do that later. Let me actually get into outlook and overview of what we've been talking about for the last hour or so. So if you look at Q1, how do I see it from the bank's perspective, from my perspective, our growth continues if you compare to industry a significant outlier, both in deposits and loans. That is an important point, particularly since historically, the first quarter has always been a relatively muted quarter for BRAC Bank. For us to be able to continue our momentum from '22 and especially the last quarter of '22 into '23, I think that bodes well for the rest of the year as well, both in terms of overall balance sheet, client numbers and of course, P&L as well. Importantly, in these 3 months, our market share has increased by 5 bps in loans and 7 bps in deposits. I'm referring to end February numbers as available from the Central Bank. So that means a 5 bps of loans market share growth, 7 bps of deposit market share growth in just 2 months alone, pretty, pretty positive results. Deposit growth has been across all segments, slightly muted in corporate banking, but that's also because as they have in the last month of Q1, which is March. They have exited some large expensive deposits. We are witnessing very strong customer confidence in BRAC Bank. That is particularly relevant in the current environment where there is local currency stress across the market. Importantly, our asset quality, customer asset quality continues to improve. As Ahmed Rashid Joy, our Head of CRM, showed you. I think our numbers are today compared to what they were in volume terms almost exactly the same as in 2019, give or take, maybe BDT 50 crores, BDT 60 crores. So that, I think, is a fantastic achievement. Taka liquidity has been very, very strong. Our [indiscernible] ratio remains below 80% even today. So we are very, very liquid and have deliberately maintained the balance sheet at that level. Foreign currency liquidity as our Treasurer mentioned, again, we are more liquid than most banks in this country. We are open for all kinds of FX business as well. Bank-wide, our digitalization initiatives continue. They are a very important part of what we are doing. We didn't spend much time talking about that in the first quarter, but we'll certainly do so at the half year. Challenges of course, the market continues to be tight in terms of FX and of local currency as well. So that is always a challenge for us. Our Treasurer also mentioned that we've had to rein in our own exposures in the local market. So that does dampen to the extent investment income. The overall global economic outlook continues to remain depressing, high inflation, high interest rates in the U.S., recessionary -- potential recessionary impact in those countries that we export garments to. Our remedies flows have slightly slowed down across the country. This holiday season or Eid season, they were lower than what was expected. So that remains a challenge in terms of managing or controlling unofficial remittances, which we call hundi. That is not for BRAC Bank alone, but for the whole industry. And there is an expectation that over the next 2 months, the pricing mechanism in the country with regard to Taka interest rates and foreign currency exchange rates will become more market aligned. We'll have to wait and see how that works out. But overall, a good, very satisfactory first quarter, and we expect momentum to continue to grow. We hope to end this year with a stronger balance sheet growth than even last year. So I'll stop there, and we'll ask Dave if he has any questions for us. Dave?

We have received few questions. So we have received questions on [ probable ] rate cap. So the first question is that impact of management changes to rate cap [indiscernible] on BRAC bank's NIM outlook. And will it be a game changer? And what would that mean for ROE?

So firstly, we're not exactly sure how this will work out. There are many different restrictions on pricing in Bangladesh, both for foreign currency and local currency. There is an expectation that over the -- by July, the Central Bank will put in place some kind of a reference rate, benchmark rate, which may, for example, be the 6-month T-bill rate. And they could add, say, something like 2% or 3% to that and use that as the new interest rate gap. 3% on the 6-month T-bill rate today would be something closer to 10% than to 9%. And that means that our lending rate or asset yields could increase quite significantly. But we must also remember that there is a possibility that deposits will also become more expensive. So the overall cost of deposits might also move up. How it will impact our actual net interest margin which is roughly around 4% now has to be seen because the Central Bank also has a restriction on the net interest income or the spread or margin as we call it. The prescribed margin is 4%. Anything over that generates a lot of sensor from the Central Bank. So we'll have to wait and see if they allow that to be withdrawn. If not, it will not make much of a difference. This change in the interest rate regime. So we'll have to wait. If it does change, and we are able to generate more NIM, then obviously, it will generate more PAT and will have a very positive impact on our ROE.

The next question is, can you please give us some guidance on key metrics for 2023. Like [indiscernible] loan growth at [indiscernible].

Obviously, you'll remember the disclaimer statements. We started off with as we began this program. Obviously, I cannot make projections or forecast in terms of numbers or percentages I can tell you that we are growing strongly, and there is no reason why we should not be able to continue our growth momentum in both deposits and customer assets. Our aspirations are high. Our aspiration is always to do better than last year. Now how that actually pans out across what is likely to be another difficult year, we'll have to wait and see. But we are in terms of our overall competitive landscape, we are in a favorable position. Our bank has a very strong credit rating and increasingly customers across all 3 customer segments are recognizing the value of partnering BRAC Bank. Our focus on corporate governance our compliance with regulations, our transparency, the way we do business, the kinds of business we do are all attracting more and more customers to our counters. So I see no reason why we should not expect a strong year, even though this is just the fourth month of the year, I can tell you that our aspirations are high.

The next question is, do you expect NPLs to deteriorate, given the relative margin [indiscernible] outlook for 2023?

You will have seen that our NPLs have been very well managed they are at well below 4%. There are some challenges in the corporate banking portfolio, nothing that as Tareq Refat Ullah, our Head of Corporate Banking, mentioned earlier, nothing that are surprises to us. We will have to take care of that part of the business. But other than that, we remain very confident in corporate -- in SME and retail banking. So overall, we continue to expect to see an improvement in portfolio quality and do not expect any serious deterioration.

The next question is when can the customers see nano loan from BRAC Bank? When people can open a small amount of DPS [indiscernible] through bKash?

The DPS that is subject to an integration with bKash that will be rolled out this year. It may take a little bit of time. There are some technical issues. We are dependent upon bKash for that, but we are making every effort to roll out the DPS capability within this year. We are not particularly interested in nano lending. To the best of my knowledge, it is not something that has been particularly profitable with the partners that are working with bKash currently and certainly is in an interest rate regime where you have lending rate caps in single digits. I find that kind of business to be very difficult to put in place. What we are investing in is digital lending in terms of retail, in terms of small business, most of that would be rolled out by the end of this year, and you will see significant improvements in volumes and productivity as well from the kind of digital lending that we are focusing on. This is different from very small amounts of loans, which we call nano lending.

Recently, we have seen BRAC Bank rating AAA, trade rating. BRAC Bank conducts rating with S&P and Moody's. Do you have a plan to do it with Fitch as well?

Not immediately. These ratings are quite expensive. And as you will recall from our P&L, the one area that we need to put in more effort is management of costs. We think about it 2 international rating agencies. Do we need a third one? It's certainly something we think about. Thank you.

From financial statements, we see BRAC Bank continuing its last year's growth taking deposit and loans and advances, and that also [ contributed ] first quarter. So the investors like to know what is special in that?

What is special about BRAC Bank? For one thing, let's start off with the fact that the bank is recognized as a role model, a leader in terms of corporate governance in terms of sustainable and ethical banking in this country. Number two, our Board is considered to be probably the best Board in the country in the way it conducts business in the way it has empowered management to operate and the way it has guided this large ship across the last 6, 7, 10 years. What else? Our service standards have improved very significantly with the advent of these various digital services. If you look -- compare us today to 2020 January when 17%, 18% of our transactions were digital or alternative in nature. Today, that number has jumped to between 65% and 70%. And in terms of numbers of transactions, tickets, we say that close to 85% of all transactions in the bank are now digital in nature, which means that the quality of that service, the quality of that transaction is far superior to what we used to do when we ran it through paper and analog mechanisms. Today, BRAC Bank's retail app -- banking app Astha is, by far, the most superior app in the country. And its only 2 years old. Today, BRAC Bank corporate payment system CORPnet is the largest and most popular corporate payment platform in the industry. And there are a number of other different digital products that we have rolled out as well. So the quality of our service, the nature of our service has also improved and is continuing to improve. Lastly, the trust of the customers in the BRAC brand, that is very, very strong. BRAC represents corporate governance, BRAC represents socially responsible financing. BRAC, the brand itself represents caring for people. It is something that has been in this country for over 50 years, and it is a brand that is very well accepted and trusted in Bangladesh.

We have seen BRAC Bank is providing around 50% dividend for the last couple of years. When the shareholders can expect more dividend in view of rising net profit? What banks can do to divide this stock market? What is [ performing badly ] right now?

Firstly, in terms of dividend payments, we have some complicated some would say even in practical restrictions in place with regard to issuing dividends. We are forced to issue a certain amount of cash dividend simply because otherwise, we attract super taxes, et cetera, et cetera. So we are forced to issue a certain amount of cash dividend. Now this is a business that is generating an ROE of roughly 10%, and the potential is to actually increase that beyond 10%. Would you, as an investor, want cash or would you want to reinvest your dividend, your cash in this company and continue to generate value at 10% or more. In most cases, certainly most professional shareholders, institutional shareholders actually want to roll their money in this kind of business. It is also necessary for the company's own growth potential. If the company can grow at 25%, 30% year-on-year, this is a country you want to reinvest in rather than take out cash. So I think in terms of answering your particular question there, the Board is very cognizant that a certain amount of cash has to be paid out. But equally, they realize this is a company with a very strong growth platform in place now, and it makes sense to continue to reinvest back in this company and hopefully generate even better double-digit ROE going forward.

That's all for the BRAC Bank, but we have received 2 questions for bKash. So coming back to Moin bhai. Moin bhai?

Is Moin here? Thanks.

Moin bhai, in your discussion earlier [indiscernible] you have mentioned that you would like to increase the transaction with merchant. So one question is related to that -- how would you do that? What would be the goal? How can you achieve this higher transaction with the merchants?

Okay. So there are various approaches one can take to increase our scale up merchant payments. So we are approaching this issue on 3 or 4 different perspectives. We're looking at it from a technological point of view. We're looking at what are the pain points of merchants? Why -- what is the value -- why would a merchant shift from a cash-based transaction to a digital-based transaction? So we're trying -- we've understood that we are trying to -- we are trying to figure out ways as to the value it would -- digital transaction would add to the consumer, to the merchants and also spread the digital ecosystem. So it is not something that we will achieve overnight, but it's a gradual process that will happen. And we have seen that happening in many parts of the world, including neighboring countries.

And last question is OpEx growth is slowing. Can you please give us some guidance on how OpEx and equity investment to grow transaction volume and mix look like in short term and midterm?

So OpEx growth is slowing. That's a fair statement to make. It is -- you see in the first quarter of 2023, we did not indulge or involved in any big ticket marketing campaign. We did have small bursts of it. And we did not have any major technological spend as well. But in the coming quarters, you would -- this trend is most likely to change where you will see more investments being made, particularly in the merchant payment space.

Thank you Moin Bhai, and that's all from my side.

Thanks very much, Dave. Thank you, ladies and gentlemen, for joining us tonight. We wish you a good evening and [Foreign Language]. Thank you again.