Commercial Bank of Ceylon PLC, celebrating 20 years of excellence in 100 years of legacy in Bangladesh

Commercial Bank of Ceylon (CBC), established in Bangladesh in 2003, has embarked on a strategic journey to elevate customer service standards through digital innovation.

In a recent interview with The Business Standard, Najith Meewanage, CEO of CBC's Bangladesh Operations, outlined the bank's business focus for the next five years, expressing optimism about contributing to the nation's growth trajectory and fostering a dynamic banking environment.

With 29 years of banking experience, Meewanage advocated for proactive strategies, combined with continuous evaluation and adjustments, to minimise default loan issues in Bangladesh.

TBS: Tell us about the financial performance of CBC Bangladesh.

Najith Meewanage: CBC Bangladesh demonstrates robust financial performance, fueled by steady balance sheet growth, surpassing the $1 billion mark within its first two decades of operations.

Impressively, CBC maintains a consistently low Non-Performing Loan ratio of around 1%, reflecting its prudent risk management practices. Our services are trusted by over 75% of the embassies operating in Bangladesh, underscoring our reliability and credibility within the diplomatic community. This speaks volumes about our high standards of service.

With a Capital Adequacy ratio of around 40%, significantly exceeding the BASEL-III requirement of 12.50%, CBC ensures a strong financial foundation and unwavering stability. In 2022, a remarkable 60% increase in our bottom line further solidifies our commitment to sustained growth and financial excellence.

What is the business plan of the bank in the next five years in Bangladesh?

Our strategic focus in Bangladesh for the next five years centres on exponential balance sheet growth through targeted sector investments. Emphasising good corporate governance, we aim to exceed industry standards, ensuring transparency and accountability. With a rigorous risk management approach, our goal is to maintain the industry's lowest non-performing loan ratio. 

Further, our plans on horizontal expansion in addition to vertical expansion will certainly help to diversify financial solutions provided to our clientele. Our vision includes elevating customer service standards through digital innovation, providing a seamless and personalised experience.

These pillars collectively underpin our dedication to sustainable growth, financial stability and delivering exceptional value to our customers in Bangladesh.

What challenges do foreign banks face in banking operations in Bangladesh in terms of providing customer service and regulatory rules?

Operating in Bangladesh, we prioritise adherence to local rules and guidelines, ensuring seamless compliance. By aligning with the diverse demands and tastes of our customers, we have mitigated potential challenges.

Foreign banks, equipped with multicultural capabilities, excel in navigating the dynamic regulatory landscape. Our commitment to understanding and respecting local nuances has enabled us to provide superior customer service.

Consequently, CBC has not encountered significant challenges. Instead, we view our multicultural proficiency as strength, allowing us to contribute positively to Bangladesh's banking sector and consistently meet the evolving needs of our diverse customer base.

Default loan is a serious problem in Bangladesh. What is your observation about the cause of default loans and what measures should be taken to combat the issue?

Default loans in Bangladesh demand a multi-faceted approach. Upholding good governance is paramount, coupled with rigorous financial statement analysis and compulsory credit ratings. Ensuring the credibility of credit rating agencies through frequent inspections is vital. Stringent scrutiny of past loan records, free from external influence, is essential. Adequate collateral and periodic asset revaluation bolster risk mitigation.

What is your observation about the banking culture in Bangladesh?

Despite the current challenges in Bangladesh's banking sector, the outlook is promising. The projected GDP growth exceeding 7% in the coming years and the country's graduation to middle income country status in 2026 paint a landscape of abundant opportunities from now onwards. As the economy gears up to become the 25th largest by 2035, the banking industry is poised for a transformative shift.

The confluence of economic advancements and infrastructural developments sets the stage for a vibrant banking culture. We are optimistic about contributing to and thriving in this evolving landscape, capitalising on the nation's growth trajectory and fostering a dynamic banking environment.

What challenges do you see for the banking industry in the near future amid the dollar crisis?

In light of recent global challenges, including the Covid-19 pandemic and geopolitical tensions, emerging economies like Bangladesh are grappling with forex reserve and local currency depreciation. Despite these pressures, Bangladesh still maintains around five times its import value in forex reserve, indicating a degree of resilience.

Recent adjustments in policy rates have been made to address the situation, and support from international entities such as the IMF, ADB, and the World Bank highlights the strong foundation of Bangladesh's economy.

Implementing a free float exchange rate and an inflation-adjusted policy rate is a prudent strategy, anticipated to stabilise the exchange rate and bolster forex reserves over time. The positive trend in the current account balance is promising, but attention is needed on the financial account, particularly on the Foreign Direct Investment, to ensure a comprehensive recovery.