Dhaka Wednesday, September 28, 2022

Meghna Bank plans transformation and to build strong customer base


Published:
2021-03-10 14:45:06 BdST

Update:
2022-09-28 13:06:35 BdST

Sohail RK Hussain has over 30 years of experience and expertise in corporate, SME, green, retail and infrastructure financing. Hussain served The City Bank as managing director and CEO from November 2013 to January 2019.

Under his leadership, the bank won many prestigious awards such as the Asia Money Best Bank Award, Finance Asia Best Bank Award, Euro Money Best Bank Award, ICMAB Best Corporate Award, . Previously, Hussain also served at the Eastern Bank, Standard Chartered Grindlays Bank and ANZ Grindlays Bank.

He was also the vice-chairman of the Association of Bankers, Bangladesh and former director of City Bank Capital Resources Ltd, City Brokerage Ltd, VIPBL and IIDFC. He holds a master’s in business administration degree from the Institute of Business Administration.

Meghna Bank Managing Director Sohail RK Hussain shared his business plan in an exclusive interview with  Business TrIbune, recently.   

Meghna Bank has taken up a robust business transformation plan to boost customer satisfaction and raise the bank’s credibility to local sponsors as well as possible international partners, said the bank’s managing director and chief executive officer, Sohail RK Hussain , While a new generation of banks is struggling to build a strong customer base, Meghna Bank is trying to stand out among the crowd.

The bank has set a new milestone to reach one lakh new customers, within two years, through adopting new initiatives – offering low cost in customer support and rapid expansion of digital services. "We are planning to go for an international credit rating for the first time in our eight years of journey to gain customer confidence and a good reputation in foreign markets," said Sohail.

In order to expand digital services, the bank set a target to invest Tk60 crore for the purpose and will provide many new services for customers at low cost, plus expand ATM booths rapidly. Meghna Bank customers will be able to access 2,600 ATM booths – the highest ever amount in the country – in the next two months, free of cost, as the bank is going to collaborate with other banks to this end.

"We are doing digital banking with our 47 branches, which is extraordinary progress for us, while agent bank and opening sub-branches in 1,000 square-feet space are in the pipeline," said the managing director. Sohail, who took the helm of the bank last year, intends to take the bank to a new height, applying his previous expertise of transforming the troubled bank into a strong financial institute.

Sohail has more than 30 years of work experiences in the banking sector, including in the leadership roles in City and EBL.

In the interview, Sohail dwelt on how he wanted to transform Meghna Bank, the coronavirus-induced challenges for the banking sector along with the economy, how the government stimulus packages were helping to overcome the situation.

He also gave his views on what other steps could be taken by the government as well as by the central bank to support the businesses, deal with the long-standing non-performing loan crisis and how an improved corporate governance framework can help mitigate the problems.

Speaking about his position at Meghna and his future plan to scale up the bank’s performance, Sohail said, ‘I have taken the charge of Meghna Bank at a difficult time when the entire nation is going through the challenge of tackling the coronavirus crisis while the banking sector is also facing the challenge of implementing the 9 per cent lending rate cap.’

‘However, I feel good and very much optimistic about the prospect of the bank as the challenges are less difficult for new generation banks like Meghna than for other banks,’ he elaborated. ‘

The board of directors of the bank has mandated me to transform the bank,’ he mentioned, adding that the transformation included incorporation of technology, segmentation of customers, an extensive drive for attracting customers using alternative channels, redesigning business strategies, adopting the best practices and launching the best lending and deposit products for the customers.

Mentioning the sponsors’ support as vital for the transformation, the newly-appointed Meghna Bank CEO said that he was very glad that the bank’s board had decided to inject another Tk 200 crore into the bank for an effective and smooth implementation of the transformation plan.

which will increase the bank's lending capacity, he said. ‘As part of the business plan, we have segmented our customers and developed separate value propositions for them and have re-launched the retail banking service,’

he elaborated, adding that the bank would activate its mobile financial services too. The bank would also integrate its MFS with the agent banking and retail banking services so that the bank clients would get more options than other banks offer, he said. The general, salaried, microfinance and SME segments of our customers would get a series of unique solutions that are expected to ensure the utmost satisfaction for them, he added.

For instance, the e-commerce businesses would get a platform to become connected with their market, Sohail said, adding that the bank would tie up with the fintech companies, would work as an intermediary and would provide payment gateway services to the e-commerce entities.

Moreover, the retail, SME and card segments would get high focus and the growth in the segments would be higher than the growth in the corporate segment.

Speaking about the corporate-centric value propositions, Sohail said, ‘Being a specialist in structural finance, I would introduce the expertise at Meghna Bank as I have executed billions of dollars of structural finance transactions when I was in The City Bank as its managing director and CEO,’ the seasoned banker said.

"Our portfolio is not very big, but we are in a strong position and have been witnessing a lot of improvements since 2019," he continued.

Non-performing loans of the bank came down to 6.4% last year from 7.5% and the bank has set the target to bring it down to 5% next year.

About Meghna Bank’s financial indicators, he pointed out that the capital adequacy ratio of the bank was around 18 per cent, the advance deposit ratio around 80 per cent and the non-performing loans ratio was around 7.25 per cent.

The initial years are very important for any new bank and so are for Meghna that has handled a series of challenges at the initial stage fairly well.‘

I am confident that it would be possible to bring down the NPL within 5 per cent by the next year,’ he asserted, adding that the bank’s final goal was to bring down the NPL to below 3 per cent by the year 2022.

About the 9 per cent lending rate implementation challenge, Sohail said that lending at 9 per cent interest to the retail and SME segments would not be sustainable and that’s why they were focusing on adopting an open API, collaboration with fintech companies and third parties with a view to considerably reduce the requirement of heavy investments.

The bank had no major problem or no scam while its board is honest and vibrant, and fairly up to the mark, said Sohail. "We are in a good position to take it forward now," he added.

Before the pandemic, the banking industry got technology which facilitated establishing a new digital channel to keep up banking; however, that does not mean that the years-long old channel has been discarded immediately – for which the bank has to foot a bill that is a burden as well, according to the banker.

He said the advantage of Meghna Bank is that it is not a new bank anymore as eight years have passed since it was established and now is the time for competition in the market.

To talk about disadvantages, the banker focused on the physical infrastructure of the bank that has not reached the optimum level yet.

"We are talking about fixed assets. Even people are assets. If a bank is 30 years old, it has a lot of manpower and its top level becomes heavy. This is a problem for first tier banks, because if you look at their salaries, it is a huge problem for them and even many banks cut their employees' pay during the pandemic," he observed.

To talk about performance, Sohail said performance does not refer to just setting the target, fulfilling or increasing it, which really does not work for the management in true sense.

"I see some big banks exercise a culture of downsizing. In this case, they are thinking short term," he added.

To boost customer credibility, Meghna has planned to have on board a strategic partner by the year 2022 or 2023 when the bank would have enough assets and financial strength to have such a partner at fair value after the implementation of the business plans, he said.

Prior to this, the bank would have the Moody’s international rating in a couple of years, Sohail said. Asked the reason for the lack of credibility in the sector, he said that confidence started from corporate governance and it differentiated between the role of management and of the board. "Our middle will be strengthened.

If a bank wants to grow, management of its middle section is very important," he continued. In 2020, the number of loss-making branches increased considerably, and in response to this, some banks adopted pay cut measures but Meghna Bank faced much less of this problem. Sohail said,

"We will increase the number of branches to 80-100, but that will take a long time, like 10 years or so. Now we have 48 branches. We do not open more than two or three branches every year."

The banker termed the first seven years of their journey Phase 1. Now the bank is in eighth year, which he prefers to call Phase 2, which has got a lot of new initiatives. "We want to inform our customers that we are standing out as a variety of customer service providers," vowed the banker.

Being a member of a banker family, Sohail said he enjoys banking while his three other siblings are also involved in the profession. In his eyes, his elder brother Selim RF Hussain, who is leading Brac Bank, one of the largest banks in the country, is an ideal banker.



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