How City Bank became a top lender

Mashrur Arefin
MD and CEO of City Bank

While the country's financial sector is passing through a challenging period with more than a dozen banks with weak financials, City Bank has emerged not only as one of the top lenders but also as a pioneer of financial technology.

The private commercial lender has gone through ups and downs in the 42 years since it was founded, but has finally come out on top through its performance, good governance, growth, and innovation.

In its early years, the bank faced major operational and governance challenges to the point of being labelled a "problem bank."

By 2006-2007, non-performing loans were rising, deposit growth had slowed, and the Bangladesh Bank even appointed two observers to the board of the bank.

But now, City Bank is one of two lenders to have entered the "Tk 1,000 crore net profit club", achieving a historic milestone with a consolidated net profit of Tk 1,014 crore in 2024, the highest in the bank's history.

This was up 59 percent from Tk 638 crore in 2023. Not only profit but deposits have also grown nearly 13 times and loans 17 times since 2007.

Through strong governance, disciplined lending, technology-led modernisation, and a diversified loan portfolio, the bank successfully overcame its troubled past, said Mashrur Arefin, managing director and CEO of City Bank.

"And now we are a leading private commercial bank," he said.

Over the last six years, the bank's operating profit rose from Tk 699 crore to Tk 2,351 crore, 3.36 times higher, while net profit increased from Tk 222 crore to Tk 1,015 crore, nearly five times higher.

When most banks in the country are struggling with high non-performing loans, City Bank has managed to keep its bad loans at a low level.

"We have significantly reduced our NPL ratios through rigorous credit assessment, centralised collections, technology-enabled early-warning systems, and strong provisioning standards," said Arefin.

"It was 5.3 percent when I took over as CEO six years ago, and it is now 3.7 percent at the end of 2024," he said.

City Bank began the journey in 1983, with 12 visionary entrepreneurs taking the step of establishing Bangladesh's first private commercial bank amid a turbulent time.

On March 27 that year, the bank opened its first branch on Bangabandhu Avenue. "At that time, the founding entrepreneurs didn't have much idea about achieving the right return on equity or return on assets. Their core mission was to do something for the country," said the managing director of City Bank.

"Their maths was far simpler than ours today," he said.

Following the early challenges, the bank's eventual transformation began in 2007 under the leadership of the then chairman, Aziz Al Kaiser Tito, who took a firm resolve to turn the bank around.

A team of six to seven bankers with experience in major international banks was brought in with a reform mandate.

The first CEO was Kazi Mahmood Sattar, followed by Sohail RK Hussain, who now runs Bank Asia. Arefin, the third CEO from that team, took office in 2019.

"My two predecessors did their parts brilliantly," said Arefin. "Looking back, we started by immediately doing a number of things."

City Bank is one of two lenders to have entered the Tk 1,000-crore net profit club, achieving a historic milestone

Those included centralising credit, trade, and operations by ending branch-based lending; revamping the brand with a new logo and the brand payoff line 'Making Sense of Money; and restructuring the balance sheet by introducing retail loans.

The CEO said they also relaunched cards with American Express and reimagined the corporate, commercial, and medium-loan segments.

"During my time as the CEO, the loan portfolio became significantly diversified after we started small and microfinance lending as well," added Arefin.

"Now we are into every sector for deposit collection and loan underwriting—from large power sector lending to digital nano loans of just Tk 4,000 on bKash platform," he said.

In this process, City Bank also brought in International Finance Corporation as the bank's single largest shareholder, launched Citytouch digital banking, and introduced new services such as Citygem Priority Banking, City Alo for women, City Islamic, and Bancassurance.

The bank's Citytouch app saw transaction volumes of about Tk 1.2 lakh crore last year.

The bank also formed four subsidiaries, including a remittance company in Malaysia that operates 15 branches and sends about $300 million annually to Bangladesh.

Arefin said several bold reforms have transformed City Bank into one of the top-performing banks in Bangladesh.

It strengthened governance by ensuring a clear separation between board and management roles.

"We also diversified our portfolio by expanding into SME, retail, and microfinance, while maintaining a strong corporate and trade business," said Arefin.

"Last year, our trade volume was $7.2 billion, and our nano loans reached 65 lakh people on bKash. This ability to operate at two poles of the socioeconomic strata is something perhaps only City Bank can do," he said.

On governance, the managing director said, "We follow a strong framework. We have independent board committees overseeing risk, audit, and compliance."

"Credit decisions are fully policy-driven, backed by system-based controls and aligned with regulatory best practices. Business units are completely separated from credit decision-making and credit administration," he said.

On digital initiatives, Arefin talked about their Citytouch banking app.

"It offers Tap & Pay, instant virtual cards, bill payments, loans against deposits, and much more. In 2024 alone, it processed 16 million transactions, serving more than 848,000 users," he said.

"In addition, we have introduced digital DPS, enabling customers to open and manage deposit schemes entirely through Citytouch," he said.

"And with bancassurance, we sold 31,000 insurance policies in just one year from our counters -- a 58 percent market share," he said.

The CEO said the bank now wants to balance sustainable growth with resilience.  

"We will scale up SME and retail lending with a focus on quality. A key priority is also to expand City Impex, our new online platform for seamless trade services," said Arefin.

Meanwhile, Hossain Khaled, chairman of City Bank, said they also aim to strengthen payments and merchant ecosystems and deliver more services digitally.