City Bank PLC. (CITYBANK) Earnings Call Transcript & Summary

And good afternoon, everyone. Welcome to City Bank PLC's Earnings Disclosure Web event of the Fourth Quarter of 2023. I am Syeda Saima Hossain, your host for the event, welcoming you today. Thank you all very much for joining us. Today, we have here amongst us the Honorable Managing Director and Chief Executive Officer of City Bank PLC, Mr. Mashrur Arefin; Additional Managing Director and Chief Business Officer, Mr. Sheikh Mohammad Maroof; Additional Managing Director and Chief Financial Officer, Mr. Mohammad Mahbubur Rahman; and Deputy Managing Director and Head of Internal Control and Compliance, Mr. Akm Saif Ullah Kowchar. At City Bank, we take great pride in engaging the investment community in our endeavors. While disclosing our performances and actions, we adhere to a strict code of full transparency and responsibility. City Bank has always measured its success not only in terms of its bottom line numbers, but also in terms of the goals it has set for itself in order to become one of the finest banks in Bangladesh. Our success is attributed to the continued growth of our business as well as the market's evolution to satisfy the -- to satisfy the increasing sophisticated expectations of our respective clients in the areas of liquidity, service, reliability and mobility. We have made it this far with the help of our community, team and stockholders by tenaciously adhering to the motto of service and trust. In light of this, we have gathered here today to discuss the bank's current financial situation and its forward-looking strategies. We shall start with our MD and CFO, Mr. Mohammad Mahbubur Rahman, presenting the financial performance, followed by our Managing Director and CEO, Mr. Mashrur Arefin, addressing all of you and finally end with a question-and-answer session. Before we proceed, I'd like to inform you all that while scheduling this event, we attempted to choose the most fitting time slots that we could accommodate most of the participants, both from foreign and local vicinities and time zones. I'd also like to add that we have opened our Q&A portal, which you can see at the bottom right corner of your screen. [Operator Instructions]. Ladies and gentlemen, I now request our AMD and CFO, Mr. Mahbubur Rahman, to start with the financial performance presentation. Over to you, sir.

You are on mute.

Good afternoon, and [ Assalamu Alaikum ]. We are very happy to meet you after third quarter earnings disclosure, and we're going to present the full year performance. And as a CFO, actually, I'm highly delighted to present one of the strongest financial performance of City Bank in our history. So let's start the presentation. And with us also, we have our CRO, Mr. Asif also. Our host actually forgot to mention his name. So let's start our presentation. Let me actually -- there is some technical glitch. Okay. As usual, we present our -- we'll actually present our balance sheet position as well as the financial performance simultaneously. Here, you can see we ended 2023 with TK 397.4 billion of loan with 11.5% year-on-year growth. And -- but in the countries, private sector credit growth was around 10%. So our growth was higher than the private sector average credit growth. But on an average, our loan book actually grew by around 13%. But our interest income actually grown by 31.9%, almost 32% because the yield on advance has increased from 6.9% to 8%. So with average growth of 13% and higher yield growth, we have achieved very significant growth in interest income. That actually -- this has contributed actually mostly for the higher profit growth for the City Bank. And in this slide, you can see that over 5 years, actually, how actually we are maintaining consistent loan growth. and how actually we are diversifying our portfolio from reducing -- by reducing concentration in corporate and increased loan books in other areas, especially small and microfinance. Here, you can see that in 5 years back, small and microfinance contributed only 3% of the total portfolio, but now it is contributing 10% and retail contributed 14%, now it's contributing 16%. So you can see how actually we are diversifying our book. And in 2023, these few segments actually has given a very significant growth. Corporate has grown by 14%. Small and microfinance, which is our -- one of the priority area, grew by 23%. Retail has grown by 10%. And here, actually, you can also see these are some areas actually which are contributing quite significantly for maintaining our growth in loans and advance and as well as diversifying our portfolio. We have started our women banking a few years back. And now in 2023, it has grown by TK 4.7 billion with 41% growth. SMEs, which I already mentioned that it has grown by 23%. And within SME, we have actually have concentration in agriculture, women enterprise and remittance loan. In corporate also, the book has grown by 14%. Islamic banking, which we revamped a few years back, and you can see that how actually it is giving benefit in recent years. Like in 2023, it has grown by 104% City Retail, it has grown by 10% already mentioned. And another area that is the digital banking, where actually we are also a pioneer in the industry. And in last year, we have disbursed around TK 5 billion under nano lending through our mobile banking platform with the partnership of bKash. Then deposit. Deposit also, we end the year with TK 392.5 billion of deposit from TK 331.8 billion deposit 1 year back with 18.3% year-on-year growth. Interest expense actually has grown significantly because of the volume growth as well as the increase of interest rate in the market. It was 3.2% in 2022 and which increased to 3.5% in 2023. And the interest rate actually grown because of the inflation and increase of treasury bill and bond rate and also the impact of the monetary policy and some liquidity crisis in the market. And also, the OB -- the offshore banking borrowing cost has increased significantly because of the increase of SOFR rate in the international market and also devaluation of currency. Here also, you can see in 5 years -- last 5 years, how actually we are also consistently growing in deposit. And also, if you look at the pie chart, it shows that how actually our current and savings account has increased from 36% to 51% in 5 years. And the volume is out of TK 392 billion deposit, CASA is contributing TK 197.9 billion, almost TK 200 billion deposits coming from current and savings account. So this is actually the core strength in our financial structure, which is actually ensuring the profitability and also the liquidity of the bank. So here also, we are showing that which business segment is actually contributing most in the deposit growth. Retail is the main contributor. And still, they have grown 16.7% in 2023. Quite significant growth is still even after having quite substantial portfolio under retail. Corporate has also grown by 10% and other business has grown by 37.8%. And here is some of the actually segment of products actually, which are contributing to the higher growth in deposit. Women's banking is also giving us quite substantial growth in deposit with 19% growth. City Retail, they are maintaining around 14% growth. Corporate is growing around 20% in terms of growth actually. Islamic banking also in deposit also, they are actually contributing quite significantly with 45% growth. And Citytouch, actually here, actually, we need to just mentioning the volume of transaction we are actually carrying out through Citytouch our mobile banking platform. In last year, actually, we have completed around TK 64,000 crore or TK 647 billion of transaction through Citytouch. Actually, it actually -- it is helping us to actually build deposit as well as the current and savings account. Here, actually, you can see the spread cost of deposit and yield advance. The yield of advance in 2023 was 8% and cost of deposit was 3.5% and the spread was 4.5%. The green line actually represents the spread. And you can see that though actually the yield on advance actually reduced before introduction of smart rate in 2023, but we maintain our spread by actually minimizing the cost of deposit. The red line, you can see that we are actually reducing the cost of deposit by maintaining -- by having higher current and savings account and through other innovative products. So net interest income has actually grown -- ultimately actually grown quite significantly in 2023. The net interest income was TK 15.8 billion, which increased from TK 12.3 billion with 28% growth. And that is the actually main reason for having higher growth. That means our growth in profitability, that means we are actually generating our profit from our core business. Investment has actually rate of treasury bill bond is still increasing. And in last -- especially in 2023, it increased quite significantly from 2023. For example, treasury bill bond rate was 7.3%, it increased to 11.5%. So we took the opportunity by actually having more investment in investment and the investment volume has grown from TK 66 billion to TK 78.4 billion with 18.7% year-on-year growth. So our investment income also accordingly actually increased from TK 3.7 billion to TK 4.9 billion with 30% year-on-year growth. But the main challenge we have faced from actually trade business because of the international -- volatility in the international market as well as our local FX scenario. So that's why actually the export business has actually had a little bit degrowth in 2023 with 4.8% degrowth. Import actually has a huge degrowth in 2023 with 42.3% year-on-year degrowth. And because of that, also the trade-related income also declined from TK7.3 billion to TK 5.6 billion with 23.8% year-on-year degrowth. But another core business of City Bank is card business, where actually we are maintaining growth. Our card base has increased by 8.7%. Credit card bill business has increased by around 3% and credit card income has also actually grown by almost 6% from TK 1.6 billion to TK 1.7 billion. So whatever actually I've explained actually all actually culminates into the revenue. So the revenue actually increased altogether by 12.3% from TK 24.5 billion to TK 27.6 billion. On a solo basis and on a consolidated basis, it has increased by 11.3% because our subsidiaries actually revenue decreased a little bit, which we will actually discuss later on. So after revenue, then we deduct the operating cost. The revenue increased by around 12%, but our operating cost actually increased by 10.2% from TK 13.2 billion to TK 14.6 billion. And there are 2 main components in the operating cost. One is the staff cost, which has increased from TK 7.2 billion to TK 8.1 billion with 11.6% year-on-year growth. Other operating expense has grown from TK 6 billion to TK 6.5 billion with 8.4% year-on-year growth. The main reason of increase of salary cost is the increment. We have actually successfully controlled the new recruitment by following some cost savings mechanism initiative. And also, that's why actually other operating costs actually also increased only by 8.4%. But still, actually, we donated in different government initiative. We have actually invested quite substantially in IT projects. So this has actually caused the increase of other operating costs. So after deducting operating costs from the revenue, we get the operating profit. The operating profit actually increased from TK 12.3 billion to TK 13.9 billion with 12.4% year-on-year growth. So in terms of the volume in volume growth and percent growth, this is actually quite substantial growth we have managed in operating profit. Then after operating profit, we deduct the debt charge or provision charge, which has declined a little bit with 5.7% year-on-year degrowth. We charged TK 2.8 billion in 2023, which was TK 2.9 billion 1 year back. Our NPL ratio has actually improved from 3.9% to 3.6%, though the volume has increased, and we ended the year with TK 14.3 billion of NPL. But the most important part is that we are maintaining adequate provision and not only adequate provision, our provision cover ratio is more than the requirement, which has also increased in 2023 from 104.7% to 110%. So in terms of volume also, you can see that the provision coverage -- provision is increased -- has increased. So it shows that we are actually maintaining quite strong risk management to face any unforeseen situation in coming days. So you have -- Here, actually, you can see the performance in summary of our group. I have explained about City Bank name we have City Brokerage. We have our Merchant Bank win that is City Bank Capital Resources Limited and [ CBIL ] Money Transfer and Citi Hong Kong. Actually, City Brokerage and the Merchant Bank, they are actually the very strong player in the capital market, but you know the capital market situation of Bangladesh. And because of that, actually, the profit of City Brokerage has declined by 51% from 2022 and ended with TK 61 million. And our Merchant Bank's profit also declined by 23% from TK 198 million to TK 152 million. CBIL Money Transfer, which is the exchange house we have established in Malaysia has declined by TK 54 million to TK 31 million because of the country's FX rate, actually, their FX business has declined and also they have carried out a long campaign in Malaysia. So that's why their cost has increased. So because of that, the profit there has declined a little bit. While our city Hong Kong, the profit they are actually gaining their strength in Hong Kong market. So gradually, their profit is increasing, and it has increased from TK 7 million TK 21 million in 2023. So profit -- then the tax -- from the profit before tax, actually, we then deduct the tax, and that has increased by 2%. Actually, because of higher capital gain from treasury bill and bond and some dividend income, our tax rate tax expense hasn't actually increased that much despite having higher growth in operating profit. So because of actually the successful management of tax expense, our net profit also actually basically increased from TK 4.7 billion to TK 6.3 billion with 33.5% year-on-year growth. So this is the highest ever profit in City Bank's history. Here, actually, you can see in the last 5 years how our profit after tax has increased quite consistently. And on a consolidated basis also, it has increased. And now actually, I'm just -- I'll mention some key ratios for the shareholders. Return on equity has increased from 14.4% to 7.7%. Return on asset has increased from 1% to 1.2%. And our Board actually recommend -- proposed cash dividend for 2023, where actually they have proposed 10% stock dividend and 15% cash dividend. Our earnings per share is 5.9% increased from 3.9%. Book value NAV has increased from 27.7% to 31.4%. And one of the most important ratio is the capital adequacy ratio, where actually also we have actually -- we have had quite significant growth from 14.5% to 15.8%, very strong capital position we are maintaining now on a solo basis, on a conso basis also, our capital position has increased from 13.9% to 15.3%. In 2023 also will be known for launching some innovative products and new business segments, like we have launched -- our CEO will actually explain more regarding all this thing, like we have partnered with government to launch universal pension scheme, then we have the first bank in the country which got bancassurance license. Then we have launched green savings account. Then we have -- in line with our Central Bank's guideline, we have revamped our RFCD foreign currency -- actually deposit campaign. And without mentioning this thing, actually, our presentation will be income in sustainable finance, actually, we have also done a remarkable job in the last few years. Our CRO, Mr. Asif is champion for leading this sustainable finance program. And City Bank actually recognized as one of the best sustainable bank by City Bank in the last 3 consecutive years. City Bank also recognized by the banker as the highest ranked bank for sustainable revenue ratio. And also, we are one of the leading pioneer bank in the country, which signed Net Zero Banking Alliance. And we haven't just signed, we have also the pioneer in submitting the target or how to actually target for us to reduce the carbon emission. So with this, actually, I'd like to actually conclude my presentation, and I'm handing over the session to our host.

Indeed, a fine year for City Bank. Thank you very much, sir, for your enlightening financial performance presentation. Also my mistake, I have missed on mentioning that our Chief Risk Officer, Mr. Mesbaul Asif Siddiqui, is also present in today's panel for earnings disclosure. Now moving on. Ladies and gentlemen, it is my great pleasure to call upon Mr. Mashrur Arefin, Managing Director and CEO of City Bank plc, to speak about the views and forward-looking strategies of the bank.

You're on mute.

Thank you, Mahbub. Thank you, our host, Saima. And thank you, Sheikh Mohammad Maroof, our Chief Business Officer; and also DMD and the CRO, Chief Risk Officer, Asif and also DMD and Head of ICC Internal Control and Compliance, Saif Ullah Kowchar; and CFO and additional MD, Mahbubur Rahman. Thank you all. First of all, I'm happy that investors are happy because of that high dividend that we have declared. So it's 15% cash. maximum in this country, you can give 17.5% in cash. So we are very near to the maximum, which is decided or which is determined by the law. And also, there is a stock dividend of 10%. So overall, this personal level of -- there is a huge amount of happiness as CEO because you are the investors. And whatever we offer, the first thing that we want to offer is the shareholders' value. Then, of course, comes alongside that comes customers' value and also employee value. So the 3 values we chase. And as the shareholders, I'm happy. I've been communicated by many investors and shareholders that they are happy with the result of 2023. Yes, though it's about quarter 4, but as Mahbub has presented, because quarter 4 is quarter 4, so it is actually -- we are explaining to you the result of the last full year. So with -- in a happy note, I can also say that I have a certain amount of regret. This profit of TK 638 crores could easily have been TK 6.38 billion after tax could have been actually TK 1,045 crores, meaning TK 10.45 billion instead of TK 6.38 billion. But we have kept additional loan provision of TK 2.94 billion. And another thing is that the FX earning because there is crisis, there was a crisis in the dollar market, treasury earning has dropped by TK 245 crores. TK 2.45 billion at the income level, which is basically at the operating line level, which is basically TK 153 -- TD 1.53 billion at the after-tax level. So these 2 together, TK 2.94 billion and TK 1.53 billion could have taken City Bank at TK 10.45 billion of profit after tax. So -- but actually, on the dollar side, there was nothing much we could do. We couldn't buy dollars. Dollars were not available at many of the months that we have had in last year. And on the additional provision side, I think we should have kept even bigger. because you know that there is a financial kind of challenges, downturn, sort of a climate going on, though everything is now again picking up after a happy election outcome, the ruling party is again in power and there is no [indiscernible]. So that's a good sign, and that's the reason I say that this is going to be a growth year, year of growth. So -- but at the same time, due to the depression in the business community and the problems that -- which are continuing at the global level, our -- many of our good customers in corporate and in commercial segment, they are a little slow in making loan repayments. So from that point of view, I can also share with you that the 90 days past due of the company is growing as with any other bank in Bangladesh. So from that point of view, additional provision, loan provision of TK 2.94 billion is almost -- it's good. from Bangladesh context, it's okay, but it should have been TK 5 billion. So I am actually happy with TK 6.43 billion -- TK 6.38 billion after tax. But just half jokingly, I mentioned that we could have made it TK 10.45 billion if we didn't -- if we hadn't kept additional provision and if there was not this big blow of FX earning coming down by TK 2.45 billion. Despite that, as Mahbub bhai has explained, why we have done well, I would like to only say that the balance sheet finally is showing certain kind of a change in the -- basically on the asset side. The change has been shown by Mahbub, which is now showing to you that corporate lending has come down to 49%. We are big in corporate banking. We are big in manufacturing. We are big in RMG. We are big in power sector. We are big in infrastructure side. So it's a huge corporate bank, and it's very difficult to -- with that kind of a corporate banking suddenly to slow down is difficult because customers' working capital needs are increasing. New big companies are also joining the fold. So still, our overall focus remains the same. that is to grow in retail and cards and small and micro finance and medium area. The ones that are actually businesses that are owned by individuals. So there, I'm happy that finally, finally, I would say that 51% of the lending book is on the noncorporate side. So this is one. And this is risk diversification, needless to say. So this is -- and also thing is in credit card, the interest earning is much higher than all other loan products. So around it is 20%. So I wish we could channelize the whole amount of our lending volume to card business, but that doesn't happen, that reality is different. It's not so easy. And I am also happy about our inroad into certain new areas. In addition to small and microfinance and retail I'm happy, especially for 3 reasons. Our entry into nano lending, digital lending area, where so far, Mahbub has said for disbursement has been [ TK 8,000 crores ] in total. Mahbub showed little backdated data. He showed the data like TK 493 crores -- sorry, now I'm getting confused with billion million. And again, I have come back to Bangladesh's lakhs and crores. So nano lending is growing. Nano lending is growing -- sorry, my correction, Nano lending total disbursement has been INR 800 crores so far. So Mahbub, am I right?

Yes, till today actually, yes, probably till December, probably you have the...

So in Taka, so it's INR 800 crores. Mahbub said INR 493 crores. This is one area I'm especially happy about. We are also happy about 104% growth of Islamic banking side. The total loans and advance growth there has been substantial TK 1,824 crores, meaning TK 2,000 crores nearly. And the third one I'm happy about is the women banking, our inroad, our successful entry into that and 41% year-on-year growth on women Banking. It grew by TK 472 crores nearly. So TK 470 crores is nearly USD 47 million. So these 3 are areas which are showing where the bank, the direction that you're heading or taking in terms of creating a different kind of asset book, different kind of portfolio mix in our asset book. So the card and retail and small and microfinance focus will remain and 3 more focus because of the successes that you're seeing will be added, women banking lending and Islamic banking lending or they call it investment and nano lending digital. So this is one. Another thing is on the deposit side, the good thing is that, again, we are seeing women banking deposit has grown at around 20%, whereas typical retail deposit growth has been only 14%. And Islamic Banking has grown by 45%. So it makes me happy when I look at City Bank branches and everywhere I see signboard of City Islamic in all our branches, which is good. That's the reason City Islamic is another becoming a very popular sub-brand within the City Bank's bigger brand with 45% growth. And interestingly, the most important thing on the deposit side is the trend that I see in the transaction volume of Citytouch, digital banking. Citytouch, last year, we had TK 64,000 crores meaning around USD 6.4 billion worth of transaction -- USD 6 billion transaction in Citytouch. But if you look at last month's number, February number, it is very clear that this year, Citytouch is going to cross USD 10 billion, which is TK 1 lakh crore transaction volume will be crossed. The milestone will be reached and also milestone will be -- we'll go ahead of that. We'll go ahead of that around -- I'm expecting USD 12 billion of transaction of Citytouch as opposed to last year's USD 6.4 billion worth of transaction. So that shows the popularity of the bank. And that's the reason Mahbub has already mentioned to you the cost of deposit has been the main player in giving us this kind of a profitability. Cost of deposits has successfully has been coming down. If you look at last few years, it was once upon a time the cost of deposit -- last year, it has increased. Of course, market is kind of heating up due to a little bit of a scarcity in liquidity. That's the reason 3.2% cost of deposit has come to 3.5%. Normally, fixed deposit rates are now hovering around 9%, 10% in most of the banks. But there, we maintained overall cost of 3.5%. Of course, it's dropped by 30 basis points from 2022, but still it's a biggest strength and only I think 2 or 3 banks can boast below 4% cost of deposit in Bangladesh, I think 3 banks, only 3 banks. Now -- so this is one -- so this is the reason we must be focusing on our CASA. CASA, once upon a time I remember, current and savings account low-cost deposit was 32%, 33%. Now entire deposit book, 51% is CASA. So these are the few things I wanted to say. And also, I would like to say a few other things like where we are heading, where we are heading. You see ratio-wise, if you look at, it makes me happy that we are maintaining a good return on equity, I think the highest in the market, 17.7% return we are providing to our investors and shareholders. And spread-wise, it makes me happy, very happy that overall spread, we have been maintaining 4.5%. Last year, we could maintain. And if you look at just 5 years ago, this spread was 5.6%, but those were the golden days when interest rate cap on lending didn't come. Now the cap is still there, but it has taken a different shape and form. You know that now there is a 6 months treasury bill bond rates average plus 3.5%. So interest rate is going up. The yield -- that's the reason we are lucky that last year, the yield increased from 6.9% of 2022 to 8%. So 1.1% yield has grown. Overall cost of deposit has grown by only 0.3%. So basically, 3.7% has grown to 4.5%, meaning 80 basis points we have had net growth in yield. So this makes me happy. ROE makes me happy. What -- another thing makes me happy is that, again, foreign trade business is picking up. Last year, we had $5.7 billion -- around $6 billion worth of foreign trade business. This year, now the dollar situation is kind of becoming a little more steady than what it was last year. And with the addition of -- one is cash dollar-based thing, RFCD account that is going on campaign and another is normal, what you call it, electronic dollar, that is the OBU offshore banking dollar deposit campaign that is also going on in City Bank. All these things will ease up the foreign trade-related situation, and that's the reason our business units, especially corporate, medium and commercial will have enough dollars in hand for them to open LCs. So I personally feel I'm happy that around $6 billion, $5.7 billion of [indiscernible] we did last year. And this year, we are going to again touch $7 billion of $400. This second thing makes me happy. And the third thing that makes me happy and nervous at the same time is that NPL ratio. NPL ratio is 3.7% now. But as I said already mentioned, I've been very candid with you that the industry is experiencing growth in the days positive area, meaning 90 days not paying scenario is kind of making us not nervous, but making us more careful. We got to be really careful. And this is the reason we would like to actually bring about in the next 3 years' time, serious change in the portfolio mix of the lending business. But this is another thing. And the last thing I would like to say that capital adequacy ratio. Capital adequacy is at 12.5% is the requirement. And there actually, we are maintaining now 15.8% capital adequacy. But with the dividend cash going out, it will come by a few notch. I think it will be 15.5% or so. Right now, I'm unable to -- Yes, it is 15.9%, so it will come down from 15.9% to 15.6% or 7% after we pay out the dividend. But at the same time, we're not sitting idle. Every quarter, we keep on adding new profits. So I'm particularly happy about the Tier 1 ratio of the capital. I'm sure you know your investors, you know that, that is the core capital of the bank and including buffer, basically 4.5% plus 2.5%, 7% Tier 1 is required. And as opposed to that, our Tier 1 ratio is 11%. So this is another good area of City Bank. We are now focusing on is led by our CRO and DMD, Asif, he is there. In today's call, we are focusing on risk-weighted asset-based lending growth also. But this is contradictory statement when you're focusing on retail and card-related growth where RWA is 100 -- TK 100 loan is TK 100 RWA. At the same time, the bank is saying that it is going to grow on RWA basis in lending, meaning it's, of course, a little bit of a contradiction is there, but both are true statements. We would like to grow in the individuals and the small micro women, Islamic segment. But at the same time, we don't want to take our focus under the leadership of Asif, we don't want to take up our focus from RWA-based asset growth so that capital consumption is less. Now this is it from my side. And before I finish, I would like to thank all the investors for keeping their faith intact on us. City Bank has had this growth of INR 638 crores, where I clearly mentioned easily -- sorry, the PAT. Easily, the PAT today could have been easily TK 1,045 crores. So we have already built that kind of an institution, that kind of an institution. And this makes me happy. This is now a challenging year going on. Our entire focus this year is on digital transformation of the bank. We are now whatever Citytouch is achieving for us, that is for existing City Bank customers. But we are going into a digital bank, which is AI-powered, which is big-data powered, which is machine-learning powered. So we are going into a digital bank where your accounts are opened instantly on the phone, your retail lending and lending are given instantly on the go and your credit card, you get in a virtual form, your credit card plastic is issued in a loan in a plastic is issued there. So we are coming up with a hyper-personalized digital bank capable of lending into the individual and the small micro segment and Islamic and women's segment and also account opening and also, as I said, and now I'm repeating, AI powered so that we have always -- we have certain capability in predicting the moves of the individual customers. So this is the focus area of the current year. In addition to the focus area, 2 main is that RWA-based lending, 3 main in the growth in the noncorporate side lending, and third main is our focus on NPL management since default rate in the market overall is increasing. So we got to be careful. So the care and focus will remain. I am again looking forward to a great year. Our subsidiaries has had bad years overall, though they have added TK 23 crore in the profit after tax level, 3, 4 subsidiaries of ours. But the main 2 ones, or 3, Malaysian remittance company and here, the Merchant Bank and the City Brokerage. But I hope the City Brokerage and Merchant Bank will do a better year, will show us a better year because capital market situation will stabilize. I'm really hoping the floor has gone from many of the companies. So -- they need to also do well, and we are -- most of us are sitting in this investment earning disclosure. We sit at different boards of those subsidiaries. So we are very much focused on also because it's all about consolidated basis doing well. So you've got to do well, not as Solo City Bank, but our subsidiaries also do well. Malaysia will do well. Remittances again, volume is picking up. And another focus of ours is -- for maintaining the CASA and individual level popularity of the bank, we are focusing on universal pension scheme with the government. We are the largest contributor to the government from any of the bank. From all banks put together, our contribution is by far the largest. No bank even is at 10% of ours. We are continuously, continuously, we are contributing into new UPS account opening. And all those universal pension accounts are actually -- so far up to now, we have opened in total 6,000 new accounts of universal pension, which is a program of Bangladesh government for all 18 crore people. So City Bank is the biggest government partner. City Bank also in the RFCD account is another focus. We have added new USD 14 million there. On the OBU fixed deposit side also, City Bank is far ahead of other banks. We have so far added a little more than USD 5 million offshore banking fixed deposits. So all these areas, all these focus will make us further popular. And finally, I will talk one line about bancassurance. Bancassurance has been launched from all of our branches. We are now selling insurance products, life insurance products of Guardian Life. So far, underwriting has been completed for 25 or so accounts. Applications submitted have been almost 50 new thing for this economy, for this country. That will also make us popular at the grassroot level, at the branch level. So more customers will open due to universal pension and bancassurance, more customers and due to RFCD campaign, RFCD-related focus that's going on, more individual customers will open current and out to the bank, and that's our strength. And it will be a good year in terms of foreign exchange in terms of our capability in U.S. dollars, both on liquidity side and on exchange side. Overall, that's where I would like to end. Thank you all, our investors. I congratulate you on getting 20% -- 25% of dividend, cash and stock put together. So wish us luck so that we can again come up with this kind of a good profit, this kind of an ROE, which is above 15%. It may not always be 17.7% as it has been in 2023, but it shouldn't be ever for City Bank below 15%. So we are very much mindful about that. We are focused and dedicated towards that. Thank you all. Thank you.

Thank you, sir, for your comprehensive and eloquent speech.

Ladies and gentlemen, we have now reached our Q&A session. The first question is, in the current market, what is the plan to manage low-cost deposit?

For low-cost deposit, I've already answered. The plan is the thing CASA-related focus that's going on at branch level at small microfinance level and also at other business units at women banking level and Islamic level. With that, new added 3, 4 opens is universal pension, RFCD account and also bancassurance. So this will bring inure or allure many of the individuals to come to City Bank and open their basic bank account, which is CASA account. Thank you.

Thank you, sir. The next question is, do you expect fees income to grow this year given strong negative growth in 2023?

No, there has not been a strong negative growth of fee income in 2023. There has been -- I'm sharing with you the number. I don't know who said that there is a strong negative growth in fees income. Fees income is now 26% of City Bank's total income. And I'm telling you about the total nonfunded income. There has been a drop. There has been a drop, but that drop -- a total drop of TK 245 crores, TK 2.45 billion drop came from the -- due to the treasury exchange gain, FX-related exchange gain and revenue. But the bank's overall other fees income from TK 5.96 billion, it has grown actually from 2022 to 2023. TK 5.96 billion has come to TK 669 crores. There has been a growth of TK 73 crores -- so there has been a growth of 12.3% fees and commission. The rest was not in our hand. It was a macro level issue, dollar issue. So fees income drop is a wrong way of looking at it. It will continue growing because as you know that we are focusing on bancassurance, universal pension and this and that, more individual customers come to us, more activities, more banking transactions, more nonbanking activities they do and more fee we earn.

The next question is, what is the plan for maintaining same line of profitability in 2024?

Okay. Again, I'm finishing off in just 1, 2 lines. I narrated the same thing actually, just to maintain the same level of profitability with same level of additional provision being kept against loans. The challenge is there. Challenge is not to maintain the same level of profitability at the operating line level. It's a large balance sheet. It's both sides. It's a very good team. There are all leaders and all KPIs are very much global class discipline. I don't see any reason why, as I said, dollar situation is also stabilizing. I don't see any reason that on the operating line, operating profit line will be hit. No way, I believe. Now only thing that can happen is cost of deposit will further grow. It's okay. But yield will also grow. The earning from loans will also grow because interest rate is moving up slowly. Now I think the issue is -- issue will be only with regard to loan provision. the overall, the climate that I'm seeing now, and I already mentioned that 90 days past due volumes are increasing in all the banks, all the banks. Now there, we need to be careful. And if we are successful there in maintaining the same NPL level of 3.5%, 3.6%, 3.7%, I think we'll be able to again sell through this extremely challenging year, which has been -- which has been -- which is looking like a blessing also due to a very calm and cool closure of an election, general election. So I believe it's a growth year up to operating line level. Below operating profit line, you need to be -- we got to be careful about loan provisioning. So that's it. I believe it will be a good year overall.

The next question is, how is the bank placed in terms of FX liquidity?

FX liquidity has never been an issue for City Bank. City Bank maintains very healthy relationship with international lenders. We had once upon a time, almost $0.5 billion of our OBU lending book from where we support the large, big corporate houses, big volume LCs through [ UPAS ] mechanism. And FX liquidity book, we are also big in exports. Export proceeds come. We call it BPA in our Nustri account. City Bank never had any issue with FX liquidity. City Bank, we faced a little bit of issue with foreign exchange because of the low supply of dollar from export and the workers' foreign remittance. So again, as long as you have great global partners on the lending side, liquidity support will come from them. And plus also this OBU fixed deposit is nothing but liquidity. The customers. And basically, we will slowly replace our OBU lending with your and our global Bangladeshi community and foreign customers also. There, anybody can open by going to City Bank PLC's website. Anybody, anyone on earth can just open in 20 minutes' time. Just go to www.citybankplc.com and the main page features City OBU fixed deposit. So there, just open your fixed deposit account and go to your bank in whichever country you are and do an we transfer using City Bank's swift code, send money to your account and tell us in which tenor of FD you're opening term deposits, 3 months or 5 years or 1 year or whatever. We are giving an interest rate of 6.5% to today is around 8.7% interest that you are getting. So that is also FX liquidity. So FX liquidity situation due to OBU fixed deposit due to RFCD, though it is cash dollar, but somehow we'll transform it, convert it into liquidity. I'm also looking at a bright -- I'm seeing a bright line on the FX liquidity side.

Thank you, sir. The next question is, it's great to know that City Bank is committed to net zero by 2050. Can you kindly tell us which year you have chosen as the baseline?

Asif, our net zero expert, the person who is championing the City Bank Sustainable Bank, what we call it, march ahead. We are the only bank alongside BRAC Bank. consecutively 3 years, Central Bank has rated as top sustainable bank. That is the biggest feather in our crown, biggest feather. So the world is changing. We are focusing on green and sustainable. And I missed out on that point. That's a focus area. So over to Asif to answer this question.

Yes. Thank you, MD and CEO and also Assalamu Alaikum and Ramadan Karim to all the investors and the shareholders. Basically, our base year is 2023 because beginning of the 2023, we have done the assessment in 2023. It's in line with the United Nations SDG commitments to make -- go to net zero in 2050. But 2050 is far away from that. So there is another standard is giving -- submitting a target or having the target of carbon reduction emission in 2030 -- up to 2030. So we have actually assessed reduction in major areas where we lend and submitted to the United Nations environment program, which is -- which actually drives the Net Zero Banking Alliance. So there are 5 industrial sectors that we have taken target for the reduction. So base year is beginning of 2023. Thank you.

Thank you, sir. The next question is, are you seeing diversification to areas other than RMG? If yes, what are those sectors?

Over to our Chief Business Officer and additional MD, Sheikh Mohammad Maroof.

Thank you very much. Thank you. Yes, actually, we are looking into a few areas other than RMG to attract and get more exports. Since I'm sure our CEO mentioned that we are focusing hugely in small and micro and we have realized that there is a good and strong export base in small and micro. So from last year, we have taken that initiative. And from small and micro and medium segment, there are a number of clients who does export in small volumes. We are catering them. And I hope that with this initiative in the next 2 years' time, our total export from this sector may cross $80 million to $100 million. Thank you.

If you allow me, just I want to add with CBO. Basically, in 2022 December, our RMG exposure, funded exposure out of the total exposure was 17%. In 2023 December, it is reduced to 15.4%. So that is a strategy. Bank's balance sheet is growing, but the contribution of the RMG has reduced. So as in the textile, it reduced from 5%. It actually remained unchanged but the majority, we have reduction by almost 1.5 percentage point.

The next question is, what is the plan for AI-driven business growth for the year 2024?

AI-driven business growth, I'm taking up this question. AI-driven business growth is very -- sounds very, what you call it, trendy kind of a question. First, let us bring in AI. Actually, right now, any -- if you look at the entire Bangladesh banking sector, there is only one AI-driven lending product that is City Bank bKash digital Nano loan. That is fully AI-driven. It runs on Alibaba, Alipay's credit scoring engine. Now as I already said, that City Bank's biggest priority this year is to turn the bank -- transform the bank into digital banking. One of the core areas of digital banking entire suite that we are looking at as opposed to the Internet banking, which we now have, and we call it digital banking though, under the brand name Citytouch, but that is more of an Internet banking or mobile banking. We are bringing digital banking, full-fledged, meaning the loan products and deposit products also and also customer service side, meaning the AI-driven chatbot will be there, AI-driven credit scoring engine will be there. AI-driven anti-money laundering and terrorist financing activity monitoring on the deposit side will be there. So that is something which is coming, which is coming under the digital banking suite that we are hoping to bring in very soon.

Thank you, sir. The next question is, what is City Bank doing to help increasing the IT export of Bangladesh? What is the strategy of City Bank's government bond investment, especially 20-year government bond?

IT strategy -- okay, on the government bond side, I actually was regretting that I didn't mention anything on the investment income side when I was asked the question that how do you think that you will maintain the same profitability this year? This is a good time to invest into government treasury build bonds now. That's all I can say. Good investment income is there. You can -- you all know that treasury government securities rates are going up, and we are continuously trying to invest. There is interest revenue to be had. There is also capital gains to be made. So that is one of the core focus area, which I missed out earlier. So the rest of the -- more to this will be mentioned by Sheikh Mohammad Maroof, our CEO, as soon as I stop answering your IT question. IT is a priority area, and there are huge, huge number of IT farm software exporting farms. They are growing in this overall economy of $470 billion, IT's contribution is not really that significant, but I think there are $2 billion of export there. So we have a team there in the -- within the corporate bank, which tries to bring in good IT companies as corporate customers or commercial customers into City Bank. That focus will remain, and we are the largest bank we are the largest bank supporting the -- what you call it, the outsourcing...

Freelancer.

Freelancers.

This is the bank for freelancers. This is the bank for freelancers and freelancers -- freelancers what you call it, freelancers, incoming dollar or remittances or other remittances as opposed to workers for remittance is a good source of remittance inflow for City Bank. City Bank must bring in new, new IT firms, especially software exporting companies as your -- as our lending customers, which the focus is on. We discussed this at our senior management level long ago. And that's the reason Aamra Technologies is our customers. That's the reason QCash, this is our customer. And just off the head, I mentioned these two. And there are also -- there are also many others, but I shouldn't be telling the names. I just realized. So there are good customers we have. Plus also, we are the largest bank for freelancers. We have had around 400 freelancers came only a few months ago in presence of the Planning Minister, we have had Freelancer Summit in Bangladesh conference in one of the big venues in Gulshan. So that's it. And on the investment bonds, investment income side, as I said, interest revenue to be had and capital gain to be had and a core focus area. Over to Maroof.

Just before I made my comments on the investment bank, I would like to add a few more points along with what our CEO mentioned on the remittance and ITs and export of alternate in a country where 80% of the exports are from RMG. So there -- you can understand that their scopes and volume from other or alternate source of export are not too much as of now because, as you know, probably there is a report on dailies on today's dailies on export from different sectors. And we have seen that other than export, different alternate export sectors has faced a decline in last year. So as a part of diversification, we are looking into different export segment. As I mentioned earlier, it was in small and micro. We are also very much active in different EPZ where we have seen that the number of clients we are not doing typical export, like there are companies who are doing [indiscernible], there are companies who are doing fish gears, there are companies who are doing tickets. And we are very active and we are gradually getting into this space because as of now, these spaces are fully occupied to foreign banks. But City Bank with the strength in OBU and with the strength in trade finance, gradually, we are going to the space of export, which is not lying in typical RMG sector. And I must mention that as a bank, we are not only strong in employee remittance, we are also strong in remittance as well. Like we are working with a lot of NGOs, a lot of foreign companies who do receive remittances from overseas for their day-to-day operations, and they do receive donation from different NGOs as well. So I mean, our remittance and foreign inward remittances consists of 3 components. One is export, export from RMG and a little bit of export from footwear and some other areas. We have got a very good strong remittances that are coming through different end use and typical worker remittance. Now coming back to that point on investment, as you know, that we are very carefully watching the trend of T-bill and T-bonds. If you go to the trend of last 12 years, we have seen dips and top of investment bond. And to our best of understanding, I think the market may again going towards the top. So we are watching it very, very carefully as it was mentioned by our CEO that we find it a good year to make good investment in T-Bond because as you know, as a part of SLR, we need to invest in bonds and T-bills. And in a year when you see that market yield may top out, right, in that scenario, we will invest in these bonds in different tenors based on the yield and after analyzing the trend analysis of this bond for the last 10, 12 years, we will be making some investment in bonds. And I think that will give us another good source of revenue for upcoming few years. Thank you very much.

Just one thing, Saima and one thing to our honorable investors is that last year from 2022 crores to 2023 crores, investment income of City Bank grew by 32%, which is almost 1/3 it grew. 2022 investment income was 2,000 -- anyway, I always confuse with million, billion is it was -- I think it's in crore, TK 200 -- anyway, forget it. Now it grew by TK 937 crores in 2023. The previous year was TK 2,960 crores and that then -- then in 2023, it was TK 3,898 crores. Sorry, for this time, I'm promising. From next time, I will only keep one figure with me, not million, billion and also crore. It's so confusing. So investment income last year grew by 32%. So that is one of our core area of strength. We have a very [indiscernible]. Done, Saima?

Thank you, sir. That brings us to the end of today's question-and-answer session. Thank you all for your participation and patience. Before concluding, let me inform you that the recorded version of the entire event will be made available in the same web link as per the live program very shortly. Those of you who missed the live event or want to seem it through it at a later time will find the whole event documented there. The financial presentation will also be made available in City Bank's website under the Investor Relations section. We appreciate your participation and patience. Thank you again for your interest in C.

Just from -- I must apologize. As I said that I got so much confused with million, billion, crore. I made a mistake there also, I told you about interest income figures as investment income. Investment income from TK 377 crores last year, it rose up to TK 491 crores, a correction, which is again 31% growth. So not that much wrong on the -- what you call it, on the percentage side, growth percentage side, I said 32%, actual figure is 31%. But -- so that remains as a core area, and I confused interest income and investment income because of that crore, BDT, million, et cetera, figures. So sorry for that. So, thank you. And another -- just one line is that operating cost. Operating cost has been reducing, reducing 59% to 51%. It has come. This is another area where our focus is on under the leadership of our Chief Information Officer, Aziz and Deputy Managing Director, who is also the cost CEO of the bank. We are running our programs to bring down other expenses again. Not so much on the salary and allowance expense because we'll be needing more resources to run this large institution and the new initiatives, but focus is on to contain other expenses. Thank you.

Thank you very much for joining us. Goodbye. Stay safe and stay well.

Okay. Goodbye.

Thank you.

Thank you. Thank you.