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

Ladies and gentlemen, good evening, [Foreign Language]. Welcome to Dhaka, Bangladesh. It is 7:30 p.m. at night, and let me also welcome you to BRAC Bank's Q3 '23 earnings disclosure program. Can we have the presentation on the screen, please there? Ladies and gentlemen, thank you for joining us. We expect this to be a 1-hour program and ending with a question-and-answer session as well. Dear viewers, this is a live webcast in our earnings disclosure portal, and this link has been shared with different stakeholders. We are also live with this presentation on our Facebook page. Let's move on to the forward-looking statements, the usual caveats. And beyond that, let's look at the content for today's program. We have the usual economic outlook and the market update from Shaheen Iqbal, Deputy Managing Director and Head of Treasury and Financial Institutions. Then the 3 segments, SME, retail, corporate and update from treasury and of course, from risk management. And then our CFO will take us through the financial performance for the first 9 months of '23. We'll get an update from bKash, the CFO from bKash. And finally, we'll have a short Q&A as well. Let's move to the next slide, and I'll hand over to Shaheen Iqbal, Treasurer and Head of Financial institutions here at BRAC Bank. Shaheen, over to you.

Thank you so much. Good morning, everyone. I think let's move to the next slide. Despite various macroeconomic challenges, like the Country managed to grow pretty well. The production is to grow 6% in 2024 and 6.6% in 2025. I think despite various challenges, this is still a commendable performance. If you can move to the next slide. From various agencies like we can see from low bound of 5.6% to 7.5% than various projections. But in general, country is expected to grow something like 5.5% to 7%. So this is still a good growth path for the country. On the bottom part, you can see like the country is gradually improving from one of the worst FX crisis that the country has faced so far. Trade balance has improved significantly. Remittance growth has stabilized, current account has moved to positive side, overall balance is gradually improving even though negative. So in our view, like probably next 6 months' time, our country are gradually coming out of this crisis. And you have already seen that interest rate has already increased, actions is gradually stabilizing. I think the next 6 months is a crucial period and from there gradually we could be coming out of this situation and probably moving to the normal situation. There's an update from my side. I think I'll hand over to Selim Bhai again for the next slides. Thanks.

Thanks, Shaheen. Thank you. Before we get into the business updates, let me give you a short pressie of these 9 months. We've had a strong balance sheet growth that continues. And if we compare BRAC Bank's loan growth, it's approximately 25% against 7% for the industry, that is August end figures. BRAC Bank's September end figures were 27% growth in deposits over this year. And that, again, compares very favorably to a 13% growth as at August end for the industry. Deposits grew across all 3 segments and loans were mainly focused in SME and corporate. Our cost of deposits has increased but that is very much in line with market conditions, increased interest rates across the world and also here in Dhaka. Our CASA mix has declined from the 50s to 49%. Customer numbers have grown very well, almost 290,000 new customers. That is approximately a 20% growth in the first 9 months of the year itself. Very importantly, despite the growth in customer lending, which is 25% year-on-year, asset quality has improved 30-day portfolio at risk has improved from 5.7% in the pre-pandemic 2019 level to 4.7% already. And of course, our Head of Credit Risk Management, Ahmed Rashid Joy will expand further in this area. We've maintained a strong liquid position with A/D ratios below 80% throughout these 9 months. And that, too, has been a deliberate strategy to ensure that we had strong liquidity and very little risk of any kind from the market. If we move to the next slide, we can start talking about what happened in SME, and we'll hand over to our Head of SME and Deputy Managing Director, Syed Abdul Momen Tomal.

Thank you, Selim. Good evening, everyone, from Bangladesh. Actually, the SME growth momentum in all segments has continued and we will be seeing -- we have experienced a 16% growth in our customer numbers year-to-date. And if it is year-on-year, we have seen a 22% growth in our customer numbers. And this is the first time because we have invested a lot in growing our deposits, especially SME deposits by involving or engaging the branches and all the channels together, along with the sales channel of SME assets. So you can see there is a significant growth in asset like year-on-year, there is a 41% growth in our deposit portfolio and YTD, it's a 28% growth. As usual, the CASA mix has decreased because of the significant increase in interest rates of our deposits. And this is the first time we have seen the deposit growth percentage is more than our asset growth percentage. Asset growth in SME year-on-year is 31% and YTD 20%, which is also very high compared to the market growth. And this has happened because of our foresight of the market beforehand. And you can see there is a significant improvement in our asset quality as well despite the growth in assets. Like if you see the yield, this has improved because of the rate change in our asset and also deposits, and our 30-day PAR has significantly decreased year-on-year from 4.8%, it has come down to 3.1%. NPLs have improved from 3.23% to 2.52%. And also, there is an improvement of trade volume by 5%. I would say that this is a very good performance in terms of SME business given the current scenario. And also our digital advancement initiatives have also started significantly, and we have actually deployed our loan origination platform across all the country. And this will significantly have an impact on our cost-to-income ratio. And we will -- we are foreseeing to finish the year with a very good numbers or even higher growth. So that's all from SME business. Selim Bhai, back to you.

Thanks, Tomal. Let's move to Retail Banking and Mahiul Islam, Head of Retail Banking.

Thank you, Selim Bhai. Good evening, everyone. In Retail Banking, we continued our growth momentum, particularly in customer acquisition and deposit portfolio. And I will cover the major areas. Our total customer number grew by 28% year-on-year and with 258,000 net inclusion in this year. Customer deposits portfolio grew by 22%, with around BDT 4,000 crores deposit growth, net growth. Compared to end December, we grew our deposits by 17%. Despite liquidity stress in the market, we have quite significantly grown our liability book, which is a reflection of customers' trust on BRAC Bank. However, due to rising interest rates, our customers were more inclined towards fix deposit, which reduced our CASA mix to 42% and thereby the cost of deposits also increased by 60 basis points. In terms of digitalization, we continued our strong focus by 83% of our CASA accounts opened digitally in September. And year-to-date, we opened more than 95,000 accounts digitally through e-KYC. We also opened more than 10,000 fixed deposits and 17,000 DPAs digitally during this period through our Astha mobile app. As a result of rising inflation and macroeconomic situation, we have taken a strategic approach to go for selective lending in specific customer segments, such as employee banking, government sector. And so our customer assets portfolio growth was limited to 8% year-on-year. However, our yield improved by 60 basis points to 8.55%. In terms of portfolio monitoring, we continued our strong efforts that resulted in moderate PAR increase by 40 basis points and infill increased by only 22 basis points year-on-year. Compared to the industry, our retail portfolio remains in a better position. We have introduced early warning system for credit cards, and the same is work in process for personal loan. In terms of credit cards, our portfolio grew by 22% year-on-year, and we crossed the BDT 1,200 crores milestone. Our merchant acquiring business also had a strong growth of 34% year-on-year. And particularly, our regional remittance despite this strong FX crisis situation had an excellent growth of 117% to USD 612 million. That's all from my side. Thank you.

Thanks, Mahi. So we can see good growth in customer deposits, strong growth in the credit cards portfolio, slightly muted in other retail lending, which is a natural function of the reduced risk appetite. Let's move on to Corporate Banking now and Tareq Refat Ullah Khan, Deputy Managing Director and Head of Corporate Banking. Tareq?

Thank you, Selim Bhai. Good evening, ladies and gentlemen. [Foreign Language]. The Corporate Banking division of BRAC Bank has consistently delivered outstanding results for over the last couple of years. And the numbers of -- for quarter 3 2023 are in line with this positive trend. The sustainable growth can be attributed to a strong foundation, which we have built over the years, which essentially improves robust liquidity management, capable resources, solution-driven approaches and a growing range of digital banking solutions. These factors have not only helped us to attract industry-leading relationships, but also provided them with exceptional banking services that actually made us their preferred corporate banking partner over the years. In the realm of deposits, our extensive transaction banking win and vast distribution network, along with competitive and solution-driven product offerings have given us a competitive ace in driving deposit growth of over 31% year-on-year basis. Maintaining a healthy CASA has been one of the top priority of ours with a focus on transaction banking, particularly on robust digital banking solution, which we have already launched in our platform called Corpnet. Our CASA mix among the best -- among one of the best in the industry, while we serve over 950 plus clients in digital platform with an average monthly transaction volume of approximately 15,000 to 20,000 pro rata. In addition to liquidity, our local currency liquidity, our different teams have also contributed to foreign currency liquidity support, which actually supported us to actually have a 13% year-on-year trade growth even in challenging foreign currency market scenario. In terms of loans in advance, our commendable 21% growth in loans and advanced alliance with our risk appetite and highlights our ability to serve a growing list of clients in competitive and challenging market. Leveraging our strong offshore banking capabilities and relationship management skills, we have successfully onboarded new limits of more than BDT 6,000 crores in 16 industry-leading accounts till quarter 3, 2023. This year, we've also onboarded or added a couple of MNC clients in our portfolio, focusing on ability to serve a diverse range of corporate entities. In terms of portfolio management, at this enterprise level, our portfolio management approach has seen significant enhancements over the years, which including strong credit underwriting standards, credit administration and operational oversight. Our viewer as portfolio monitoring system and derisking initiatives have contributed to further improvements in portfolio quality. There is 92 basis points in PAR and 62 basis points in non-performing loans. Despite a challenging foreign exchange scenario, we have provided unwavering support to both existing and new clients, ensuring their trade ecommerce are made to sustain their growth in the business industry. We have achieved around $3.5 billion mark trade volume by September 2023 to aim -- our aim is to hit actually surpass $4 billion mark by this year end, which will definitely establish ourselves as one of the best trade facility in banks in the industry. Our strategic objective is to double our portfolio in terms of loans deposition trade volume within the next 4 years. And that will definitely set the operation is substantial, impactful and supporting them for our customers. Last year, we aligned fully with this objective. And during the last -- first 9 months of 2023, we have been on the right trajectory for growing our books in line with our objectives. Our intent is to sustain this growth and continue as the industry's most preferred corporate banking partners. Thank you. Thank you for your trust in partnership. Over to you, Selim Bhai.

Thank you, Tareq. Let's now listen again to Shaheen Iqbal, who will talk about treasury and financial institutions.

Thank you, Selim Bhai. I think, Selim Bhai earlier had highlighted like our A/D ratio is below 80%, in fact, far -- below that one. We have built a considerable liquidity reserve, which has really supported us to support our clients' loan requirement and also to build a sizable government treasury bill and bond portfolio. So in this market scenario, I think BRAC Bank is well positioned to support any requirement and also take position as per the recon of the market. I think we are the strongest brands in terms of both local currency and banks liquidity. So BRAC Bank is really well positioned to take advantage of the market movement and market situation. In terms of market making on both commerce securities and the FX, we are a market leader and let them also managed to attain sustainable rating from both S&P and Moody's. From S&P, recently they have down the industry outlook to negative, but they maintain stable outlook for BRAC Bank. And also, we are the only be unrated is over under sovereign by Moody's in this market. So these are very good achievement from BRAC Bank side and I'm happy to present this before you. Thank you, Selim Bhai.

Thank you, Shaheen. Let's now listen to Ahmed Rashid Joy, Head of Credit Risk Management for an important update on risk.

Thank you, Selim Bhai. Good evening, everyone. We begin with the general enterprise-wide PAR and NPL slides, and we are continuing presentations till 2017. The recent trend is very good. You can see that the PAR ratio has dropped from 4.9% to 4.7%. It's on 30 DPD basis. And the NPL ratio also dropped from 3.7% to 3.4%. And we are presenting it in a longer horizon, but I would like to draw or compare these numbers with the pre-pandemic number of 2019. So the ash color bar is the PAR volume that's in absolute term, and the blue bar is the infill volume. You can notice that the PAR amount from 2019 has increased from BDT 1,618 crores to BDT 2,074 crores as of Q3, which is an increase of 40% in terms of amount. And the NPL amount was BDT 1,053 crores, which is now BDT 1,652 crores, which increased by nearly 5%. But during the same time, from 2019 at that time, our portfolio was like BDT 26,000 crores, which is now like BDT 48,000 crores. Portfolio increased by 84%. So against a portfolio increase of 84% our PAR increase increased by 40% and the NPL amount increased by 57%. But having said that, I'd like to draw your attention that after 2019, we have noticed so much of crisis like it was a once-in-a-lifetime pandemic situations. And then there was forbearance and moratorium associated with this pandemic. And then the Ukraine-Russia were the interest rate hike in the global level. The exchange rate in local market has hiked a lot. The local inflation also increased. Oil price was increased. And so much we have seen during this time. Even after that, we can confidently say that we are still holding on our portfolio quality. And we are going to -- we are also going to present you segmental PAR and infill ratio for a better understanding there, yes. So this is the same thing we are presenting from 2017 on SME, on retail and corporate. And you can see even on the -- there was a spike after 2020 or 2021 post-pandemic and pandemic time in all the segments. But you can look at the recent trend, for SME, the PAR is decreasing. And as Tomal said, the NPL is also decreasing. For retail, we are seeing a bit of spike from 4.5% to 5%, increased by 50 basis points from last year. And the NPL increased by only 30 basis points. Corporate PAR and NPL is static almost. But this is not only that we look at the enterprise-wide PAR NPL and segment-wise, we are diving deep into each segment and each subsegments. For example, let me give you one example. In SME, we financing around 90 subsectors like groceries, like pharmaceutical shops, like clothing stores, like steel mills, I mean, small scale steel mills and others. So what we did is that we check the PAR and NPL ratio for each subsegments and also each region-wise and product wise. So we monitor all these things in 3 parameters in 3 dimensions, like subsegments, region and product wise for the last 12 months, and we are seeing -- witnessing is the SME is performing in all the sectors very consistently. In retail, what we did is that we segmented the retail borrowers in income group-wise and profession-wise and product wise. So we have seen that the lower income group, there is tendency of increasing PAR and NPL as expected because the inflation is high. And for that matter, the overall retail's PAR has increased. So what I wanted to say is that we are taking this since we are in an uncertain economic situations. We are diving deep into each portfolio, each segments and subsegments and then monitoring the PAR and NPL. Next slide. This is our NPL coverage ratio the last end of Q3, you can see that our coverage increased to 122% in the last quarter. In our presentation, we said that we will maintain it around our strategic level of 115%. But this quarter, we have been extra cautious and -- but we will also witness our portfolio quality in Q4 and then restrategize what we'll maintain. And for this matter, the credit cost has been 67 bps in this quarter. So our NPL coverage is still strong. This is a portfolio quality in terms of international standards. You will see that regular repayment is 96.17%. That's regular repayment, I mean, terms. Our 90 DPD NPL ratio is 3.83%. In the previous slide, the 3.4% NPL that we presented was as per the regulatory definition, the local definition. But as per the international standard, is 3.83%. We don't have any portfolio under our stay order, as we said earlier. I mean, stay order from the court not to declare any one NPL, which happens in this country. But on the bottom, as you'll see that we have a 0.47% of conventional rescheduling. That's 0.47% in our portfolio. And then the extended COVID restructuring of 3.29%. So even some people had this 90 DPD NPL of 3.83% and then add 0.47% and 3.29%, the sales assets might be 7% plus. But our 30 DPD portfolio at risk ratio is only 4.7%. So even if the stressed asset is 7% plus, the 30 DPD ratio is 4.7%, which indicates that even our COVID restructuring portfolio is performing better with that 30 DPD ratio. Ladies and gentlemen, we have recruited some data scientists and risk model -- and risk credit modeling experts. We are working on the extensively on the roll rate analysis for SME and retail just to have forecast the bucket movements in the next 12 months, we are also analyzing the vintage for each portfolio and also for the subsegments. We are working on the 12-month ECL, expected credit loss, so that we can forecast our NPL accordingly. But for that matter, we required on econometric model that given the macroeconomic uncertainties and disruptions, what our credit portfolio will be in the future. So we are working on that econometric models and we are very close to that. We have also completed the credit bureau based credit scoring, which gives us strong results. And on the collection and recovery, we have also completed a behavioral scorecard for some products and we will start working on the collection scoring model. So what I wanted to say is that we will have end-to-end credit risk models and these scorecard systems. And when we have -- all these models will be in operations very soon. We can confidently more strongly monitor our portfolio and predict in a sophisticated way. So that's all from me, Selim Bhai. Thank you.

Thank you, Joy. Ladies and gentlemen, as you can see from the presentation just made on risk, the BRAC Bank portfolio continues to improve year after year and it is quite transparent as well. You notice that NPL 30-day PAR numbers are not just very good, they are completely free of all stay orders which is a perennial challenge in our country. Anyway, let's look into the next few slides. And what we'll do is I will take you through some graphs on customer deposits and loans and then hand over to Masud Rana, our Deputy Managing Director and CFO, who will then take you through the financials. So you can see that over the last 4 years, how our deposits have grown, and this is year-on-year for Q3. So '22 same time to '23. September '23 over September '22, represents a 28% growth and not only have retail and corporate growth, but very importantly, our efforts in the relatively new segment in terms of deposit mobilization, SME have also given us very strong growth. Next slide. And that is also represented by this pie chart, where you see that SME now represents 19% of our total customer deposits and continues to grow quite strongly. Retail is around the 49%, 50% mark, and corporate has over the last couple of years, grown to the 32% level as well. If you look at the next slide, which is essentially CASA term deposit mix. The mix is around 49% when we were in the middle of the pandemic, but still, I think, quite healthy and probably the best in the private banking segment [Audio Gap] 1 maybe 2 institutions. Next slide, we show you how loans have grown over the last year Q3 over Q3, 23%, 23% over 22%, and you can see the growth focus mainly in SME and corporate slightly muted in retail, which is again a function of the enhanced risk measures that we have put in place. The segmental loss mix will show you that SME is now 46%. There is a portion of SME that we manage, which is roughly 4% to 5% and sometimes even 6%, which is reclassified as corporate. Otherwise, it would have been, say, 51%, 52% SME and 31%, 32% corporate. Retail is struggling a little bit at 17% in '23. But again, that is a contrast strategy. So overall, if you look at deposits and loans, a very diverse portfolio. SME is largest in lending, retail largest in deposits and corporate banking, providing strong support in the 30s in both deposits and in lending. I'll stop there and hand over to our CFO, Masud Rana. Masud?

Thank you, Selim Bhai. Good evening and [Foreign Language] everyone. Actually, up till Q3 2023, Bank has delivered a very strong set of results as you can hear from our Managing Director and also our business leaders. To start with, our deposit book has grown on an annualized 27%. I think that these results, we must acknowledge that the advisory from our Board. Thanks to our leadership team and most importantly, our 11,000 staff who has executed the plan. And I think we have delivered according to our plan, and we could mostly could execute most of it. As a result, particularly in the deposit side, for the last 2 years, we have grown into a kind of a machine. And I would like to express my gratitude to our channels, particularly our branches, which has done a fantastic job over the years, last year and also this year. They have delivered a very good result in terms of acquiring new customers and new customer deposits. Loan annualized 25% growth, not from the beginning of the year. Our revenue over a period year-on-year has grown by about 21%. I will detail it a bit later. Our balance sheet as a total size has grown by 26% year-on-year. and it has now reached to about BDT 67,000 crores. Our regulatory capital has moved into a sizeable number, best of my knowledge, it should be the second largest in terms in the market. Overall, the function of all this plan and execution our reported profit after tax is BDT 503 crores, which is 28% higher from the last year, same period. If we look at our financial metric, particularly the ROE has improved by about 1%. ROA slightly more or less similar to last year. And I believe this will improve further as we go along. And by the year-end, it should remain more or less similar or slightly above. Our EPS has grown by 28% similar to our earnings. As our Head of Risk mentioned, we have increased our NPL coverage to 22%. But looking at our portfolio quality consistently over the last 3 quarters, we would like to have a relook at this quarter depending on the outlook and all. Perhaps we would remain a bit conservative here and perhaps we'd like to continue with a higher coverage ratio, which, of course, has an impact on our return on equity and return on assets but given the outlook, I think this justifies. In terms of our cost-to-income ratio, this has improved by about 2%, but if we only consider our OpEx, I mean, our gross income versus our OpEx, it has improved by 6%. The 6% and 2%, the 4% is predominantly the cost of liquidity, which has gone pretty high. I will detail in the next slide. Our net asset value has gone up. Coming back to the capital adequacy ratio. I think since last year in, it has dipped a bit, but we need to remember we have grown quite rapidly. I think we have put on some plans. If you remember in the last quarter, it was 13.25%. In fact, we could improve by about 26, 27 bps. I think by the year-end, it should go a bit slightly up than what we can see now. In terms of spread, we remain more or less similar last year. Yes, we have driven our yield on assets but at the same time, the cost of deposit and cost of fund has gone up significantly. I think if we have a look at our consolidated or improved performance, it's more or less similar reflection. The deposit is more or less similar. I think total revenues moved slightly up, mostly contributed by our major subsidiary bKash, total asset also gone. These are in line with the overall bank solo performances. I think just to highlight, as a group, we have a very strong capital adequacy ratio. The cost of cost-to-income ratio has also improved by here EBIT and mostly coming from the bKash. Now let's look at our balance sheet overall. The solo balance sheet. I think the solo balance sheet has strongly grown. I think the proportion and the overall remains same, and we fundamentally move as our treasurer mentioned, we've moved our moneys to -- while we grow our deposit and remain very liquid over the last 12 to 13 months. And overall, I think given this liquidity is invested in our loans and advances and also, as you can see, our investment book has also grown. Similar picture in our group balance sheet in the next slide. The group balance sheet, more or less similar picture. I think -- no, the balance sheet. A similar picture in the overall group balance sheet. Predominantly, this is solo book and also bKash book, which is the largest too. Well I'll share that overall subsidiary sharing a bit later. If you look at our solo P&L, profit and loss income statement. Our income has grown year-on-year 21%. If we just -- just to give you a sense of how strongly it has grown, I'd like to detail and go through that slide there, the income revenue, yes. The total revenue breakdown, we have -- just wanted to give you a sense of our net interest income and nonfunded income. If you can look at our NII has grown by about 15%. But if we dissect it, our gross interest income grew 38% while at the same time, our balance sheet has grown about 25%. So therefore, we have driven our balance sheet in terms of volume and also in terms of trade. While at the same time, our deposit and funding cost has gone up almost twice the rate we have grown our interest income and therefore, the net interest income is only 15%. But at the same time, this has been supplemented by the incremental balance sheet in terms of commission brokerage from the growth. And also, we had a very strong growth in terms of our trade business, which has also produced a nonfunded income. FX while last year was a special year while the volatility was quite high, and therefore, few one-offs. This year, it has been stabilized a bit, but still there is a good flow of FX team in the last 9 months. So overall, I think the 21%, as you can see the mainly contributed by our strong balance sheet growth driven and also nonfunded income. If we go back to our profit and loss account of solo, yes. Our OpEx or operating expenses. That has remained at a level which we maintained for last 2 quarters, particularly, as I said, the cost to income share has improved by 2%. But if you exclude the funding cost, it has actually improved by about 6%. And as you can see, and for the last 2 quarters, we have been -- the bank is producing positive job. The income growth is higher than the expense grow. We remain very conservative in terms of our loan provisioning. As you can see, the general provision is driven, but specific provision, we remain a bit conservative here. And the function of all the quarter 3 numbers is BDT 503 crores, which is about 28% higher than last year. So I'd like to share our subsidiaries share of our last 9 months results. If you look at -- we have got 2 capital market subsidiaries, one merchant back and one in brokerage firm. The merchant bank actually reported BDT 2 crores loss is predominantly from the M2M losses from its security holding. And on the brokerage side, it's BDT 2 crores compared to last year. It's gone down because of the market condition. However, I think brokerage has done quite well. It has deconcentrated its income stream from mainly to some due to and we have gone into retail market, which is paying quite good dividends. I think once the market is up and running or it's stabilized, we see much better results from these 2 subsidiaries. One of our subsidiary exchange house is actually reestablishing itself in the U.K. and last 9 months have been very turbulent from them. They're repositioning themselves. However, they have reported BDT 9 crores loss. However, we would like to hear from bKash CFO about bKash performance. But put all together, bKash has done pretty well compared to last year. And overall, at a group level, our results is about 53% higher than last year, which is definitely contributed by the cash positive number. If Moin Bhai has joined, I would like to request Moin Bhai to take us through the bKash perform -- results for Q3.

Thank you, Bhai, and a very good evening to all the viewers. As always, I will take you through the first -- the first line is the sixth health indicator as to how bKash performed. Starting off with the customers. So at the end of September 2023, we clocked 72 million verified customers. So over the past 9 months, we added 6.7 million customers to the base, which roughly is about 25,000 customers being added to the system every day. Moving on to the active customers. At the end of September, we -- our active customer base was 38 million, which is, the definition is one transaction every 3 months. So 38 million customers of 72 million registered based, translates to a 53% active ratio. Our market share was 64.2%. In terms of merchants, we are about 300,000 merchants across the country who will accept bKash as a channel for payments. Our average monthly transaction was almost [ $700 billion ]. This is a 22% rise over the same time -- compared to the same time last year. In terms of number of agents, there is about 340,000 agents across the country, which is 27,000 more than what it was in September 2022. Deb, if we can move to the next slide. So the first line, gross revenue. We finished the first 3 months of the year with BDT 3,468 crores of gross revenue. The gross revenue comprised of 2 distinct parts. One is the fees, the commissions that we earn from cash out and P2Ps and merchant payments and the other one is the interest income that we earn from the customer float. So the transaction increase was 17%, while the interest from float was 43%. Combining the 2, it was -- we were a 21% increase. So that brings us a net revenue after VAT of BDT 3,050 crores, which is a 22% increase over prior year. Cost of services increased by 17% is exactly in line with the increase in operations of 17%. So cost of services has remained the same, which translates to a gross profit of BDT 909 crores, which is 26% increase over prior year. So the difference between the increase in gross profit and net revenue is interest earnings. Next, operating administrative expenses. There are 3 drivers of this increase of 22% over prior year. The first driver is the technology related annual maintenance charges. They all went through an increase at the backdrop of the FX rate increases. The second one is the increase in depreciation as we invest more into technology. And the third one is the increase in staff costs. There are about 144 staff more compared to the same time last year. Commercial expenses increased by 26% or BDT 50 crores. The primary reasons are the increase in customer acquisition as we acquired more customers, the expenses of customer acquisition cost increases. And we have made investments behind communication in the Asia Cup part of -- a portion of the World Cup cricket cost is here. So those are the 2 big reasons as to why the commercial expenses increased. So that gives us with an operating profit of BDT 12 crores as opposed to BDT 61 crores loss at the same time last year. Net finance income is the interest earning that we made from our own working capital. So there were BDT 122 crores that we earned as net finance income. Again, this is at the backdrop of higher interest rates. Our effective interest rate was a little -- almost touching 8% for 2023. That brings us to a more -- profit before contribution to workers' profit participation fund of BDT 135 crores of that contribution to WPS is BDT 7 crores. PBT is BDT 128 crores with income tax of BDT 48 crores, we landed at a profit after tax of BDT 88 crores as opposed to a profit of BDT 4 crores in the first quarter of 2022. That is in a nutshell how bKash has paired financially for the first 9 months of this year. Thank you.

Thanks, Moin. Let's get into question-and-answer session where we will be answering questions from the different stakeholders and we'll end that with an outlook over what we expect to happen over the next 3 months. Deb, can we look into the actual questions, please.

Yes, sir. Should we start with the bKash one first?

Please, let's finish Moin off first.

Okay. Moin, the first question is bKash profit increased significantly over last year, and it is coming predominantly from the finance income that you have already presented. So do you believe if this float balance income disappears from next year? In that case, could bKash make positive contribution?

So if you just recall the numbers that I gave you, yes, interest income did -- was the largest contributor to the increase in profits. However, we've -- from operations, there was a 17% growth in revenues. If the question is if interest income declines, will that have an impact on the profitability of bKash? The short answer is, yes, it will have a serious impact on the profitability. And then compare 2023 with 2022, the yields on both, but particularly with government securities dramatically increase, which has been the key driver of this profit increase.

Thank you, Moin Bhai. The next question is why is bKash not more aggressive in expanding its payments network?

We -- as we have made some significant investments in the payments platform. It's in the process of being implemented. And hopefully, by the end of quarter 1 of '25, bKash will -- is expected to come to the market with more serious and a more organized approach to building the payments ecosystem.

Thank you, Moin Bhai. The next question is about the digital banking PAR. So the question is that will bKash upgraded digital banking license? And what will be the share in the structure look like for this new digital bank.

Well, it's really up to the regulators to the answer to the first question is, the regulators will award the license. And then the shareholders of bKash would be the proposed shareholder to digital bank license whenever we can.

Thank you, Moin Bhai. That's all the questions that I have for you. So sir, can we go back to our solo bank related questions.

Please, please.

The first question is that certainly, BRAC Bank is known for its high CASA, and this allows it to have a higher interest rate than other banks. But in Q3, 2023, CASA ratio fell below 50% and net interest margin has also declined. So what do you expect going forward regaining CASA ratio? And as interest rate is rising, so is there any initiative to make or keep the CASA ratio above or around 50% level.

Okay. Firstly, with rising interest rates, it is very difficult for us to attract more deposits in retail CASA. Obviously, for every individual, it makes so much more sense now to place funds in term deposits, 1-month, 3-month, 6-month term deposits as opposed to leaving their funds idle in a lower rate savings account or current account. That's predominantly because the interest differential between a savings account and a term deposit is quite high now. that would be less so in a lower interest rate environment. Therefore, the CASA mobilization effort is mainly driven by transaction banking in the corporate banking business. And that has done very well over the last couple of years. And we actually expect that by the end of the year, we will get back to the 50% level that we normally have. But still, I must highlight that at the current levels, we are the second best bank in the country. There is perhaps one, maybe 2 banks at most private sector banks, which have better CASA levels than us.

Thank you, sir. The next question is that with private sector credit growth on the overall decline and rising inflation, forcing banks to increase the deposit rates. How will BRAC Bank navigate the ongoing in coming quarters? And will the current macroeconomic condition affect BRAC Bank's medium-term strategy?

For a start, you will notice that we have been heavily focused on strong liquidity for almost 2 years now. And that is to give our shareholders much more comfort in times of stress. So even today, we have an A/D ratio considerably below 80%. We have not yet tapped our wholesale banking limits at all. So close to BDT 2,000 crores of limits are available for us to use in the interbank market. So we remain very conservative in that area, and we'll continue to do so over the next year as well. Sorry, what was the last question there, Deb?

The last question was that this current macroeconomic condition that just in the first question that we understand picking our major strategy or not?

To an extent, yes. Firstly, with private sector credit having come down significantly in the industry, over the last one year, we remain very much an outlier with our 20% plus growth rates, that is also a function of our very strong SME growth, small business in particular, an area where we are predominant. Going forward, private sector credit is likely to drop further, and with the overall macroeconomic situation is still quite stressful. And with some clouds on the horizon in terms of the overall political environment over the next 3 months or so, we expect that private sector credit growth is going to slow down even further. And frankly, I would be surprised if the third quarter BRAC Bank asset growth was anywhere near what it was during the first 3 quarters. That is, I think, quite normal.

Thank you, sir. Linked with the earlier question, treasury rates are rising. Lending rate is also tied with 182 days treasury bill rate. Now what is the probable impact on spread and NIM of BRAC Bank?

We should just think that just because the lending rates are rising yields on customer assets are rising. That all of those rising rates will be converted or translated into higher rates for the customers. At BRAC Bank, we're far -- we believe that we need to find a balance between lending interest rates and what customers can repay. We do not want to be unusually. So while we could increase rates up to 11%, 11.5% maybe going forward, 12%, whether we will actually do so. It depends upon our overall assessment of the credit worthiness of the clients and the ability -- their ability to repay their loans. So at the moment, while it does seem that spreads will increase, we must also remember that customer deposits tend to rise faster than lending rates. So there may be a lead -- a lag time in that area as well. Overall, I think our anticipation is that for most of the next quarter, our interest -- our spreads will remain roughly what they were as at end September.

Thank you, sir. The next question is that as BRAC Bank's loan book is growing rapidly. So what is the outlook of capital adequacy ratio in coming days?

You will notice that the capital adequacy ratio has fallen, and there are some initiatives in that area in terms of ensuring that all of our book is properly credit rated. We do only the best business, the business that generates best return for ourselves. And also, there is a subordinate debt initiative that we plan to roll out shortly. So the expectation is that we will get back to 14% capital adequacy levels by the end of the year.

Thank you, sir. The next question is that impression hits very hard this year and people's earnings and purchase power shrinks rapidly. So do you see any probably to increase in NPL in coming days?

That is always a challenge, and that is the reason why we have significantly slowed down our retail or consumer finance, that you'll notice has grown at roughly 8%, 9% over the last 9 months. And we've strengthened our risk parameters around the personal loan, the home loan and the auto loan, all other credit -- retail credit facilities. And I think we need to be more and more mindful of the fact that a lot of our customer disposable income has evaporated.

Thank you, sir. The next question is, as FX liquidity is very tight in the market, do you see any impact in your trade and corporate business in coming days?

Well, our strength as our Head of Treasury and our Head of Corporate Banking mentioned earlier, our ability to generate foreign currency liquidity, particularly at relatively lower rates is an important driver for our Wholesale Banking business, and that continues to be the case. I see no reason why we should not do even better in that area going forward.

Thank you, sir. The next question is that have you already implemented smart plus margin in all segments? And can you please give some color on how to plan to raise these loan yields on all segments?

No. We've done it selectively as we see fit, where depending upon our relationship with each customer in each segment, subsegment. So we are not going to give CASA -- increased rates across all segments to the highest level possible. That is not a good business strategy. So it is selected to be implemented as and where we see fit.

Thank you, sir. This question is related to NIM on Corporate segment. So a question that NIM of corporate peers or BRAC Bank improving cash flow. While you have seen backing a year-on-year NIM compression. Can we explain why are the corporate bank doing better than BRAC who have higher retail and SME loan mix?

Tareq Refat Ullah, would you like to answer that?

Yes. We have already implemented -- gradually implemented revisiting our corporate banking pricing of different customer segments. And by the end of this year, probably we'll be able to fully reprice our loan books. That is the norm and mind.

Let me add here to Tareq that the BRAC Bank investments in the Corporate Banking portfolio are really at the top end of the Echelon. In other words, Tareq and his corporate team bank was the best of the best. Therefore, the interest rates at that level are very different from the medium of commercial segments or slightly lower-end customers that many other banks would be partnering.

Thank you, sir. We -- just have one question left. The last question is that recently BRAC Bank got approval to issue TakaPay Card. What will be the bank's plan regarding this?

Well, the TakaPay Card is an important milestone in the Bangladesh banking industry. It is a payment scheme similar to Visa MasterCard or American Express that the Central Bank is rolling out. It is very much in a pilot stage right now, but one expects that over the next year, the debit card will have stabilized, and we will be able to roll it out to all customer segments. And then gradually, different services will be added on to the debit card. And from there, we will also be able to graduate to TakaPay credit card. The expectation is that within a couple of years' time, every service that we are able to offer on a Visa or a MasterCard will also be available on the TakaPay Card.

Thank you, sir. That's all from my side.

Okay. Let me just end by reminding everybody that inflationary pressures are still high in Bangladesh with the overall uncertain global geopolitical environment, the difficult economic outlook, a slight slowdown in export orders and very importantly, with general elections in January '24, the expectation for the last quarter of '23 is relatively muted compared to the earlier 3. And going forward, one will have to look at everything from a different perspective after elections. So till then, while BRAC Bank is still in a very strong situation. Ladies and gentlemen, I would like to wish you a good night, and thank you for joining us tonight.