New Age: The chief executive officer of Agrani Bank has trashed the reports about possible job cuts in the bank as rumours, but said the corporatised state lender will be cleared of corrupt and inefficient people so that it becomes commercially viable.

In an interview with New Age at his office Saturday, Syed Abu Naser Bukhtear Ahmed, who was appointed CEO of the bank for the second time early this year, elaborated on his plans to bring the ailing bank in the red and add fresh blood to revive its fortunes.

‘We will like to maintain a workforce of not more than 11,000. Around 500 people are going to retire by December and a fresh batch of 500 energetic officials and employees will come in.’

It means that the bank’s workforce will remain at the same level of 11,064 employees and officers it now employs.

He recalled the financial state of Agrani Bank when he first took over as its CEO in October 2004 under a World Bank–funded reform project.

‘Daunting challenges awaited me then. I inherited a balance sheet full of negative figures.’

Things changed for the better by the time he finished his first three years’ tenure in October 2007. Some indicators, including capital adequacy ratio, non-performing loan status and profit showed improvements.

Naser was reappointed CEO of the bank in April this year after the bank, along with two other state-owned banks Sonali and Janata, was transformed into a public limited company, giving more power to the board of directors reconstituted with public and private sector people.

This time he found the bank in a better position. The non-performing loan of the bank was 0.34 per cent or Tk 3,500 crore in September 2004 which came down to 28 per cent or Tk 2,800 crore in September 2008.

The CEO now in his second term with the bank has vowed to improve all the indicators, saying there will be no negative figures, just after two and a half years in 2010.

‘Is it tough for a bank having no capital shortfall to reduce the default loans of about Tk 2,800 crore?’ he asked, adding that the bank’s capital short fall was only Tk 350 crore in December 2007, which came down to zero in June 2008.

‘The bank plans to go tough with the top defaulters who are avoiding repayment by filing writ petitions with the courts. Some 20 defaulters account for the bank’s Tk 850 crore default loans while top 50 defaulters is now holding around Tk 1,200 crore,’ he added .

He also said non-payment of big loans is causing the bank’s capital shortfall. But now the bank’s capital shortfall has become zero.

‘We are hoping half of the defaulter loans will be recovered by the year end,’ he added.

Agrani Bank has 866 branches strategically located in almost all the commercial areas throughout the country with 11,064 employees. The number of non-profitable branches was 446 in June 2004 while the number came down only to 92 branches in June 2008. He hoped by the year end, the number of non-profitable branches will be 60. In 2007, the bank’s operating profit was Tk 526 crore from Tk 357 crore in 2006.

Currently, Agrani Bank’s operating profit till September is Tk 400 crore while bank has set Tk 600 crore as its profit target in the current year. As on June 30, 2008, the bank’s deposit was Tk 141.02 billion and the advances Tk 108.83 billion in July 2008. Capital adequacy ratio is now 7.72 per cent while half year ago it was (-) 13.97 per cent. Return on equity is now 35.47 per cent while half year ago it was zero. On June 30, 2008, advance deposit ratio was 77.17 per cent while half year ago it was 76.85 per cent.

‘Like other government banks, Agrani also faces the same situation when it comes to business growth because huge loans have been taken by the government sectors. The standard of an average business growth is five per cent but only Agrani bank has achieved only 2.85 per cent,’ said the Agrani Bank CEO.

‘There was no provision against classified loans when I took over in 2004. I have already allocated Tk 2,000 crore as provision for classified loans and only written off Tk 400 crore’, he added.

The CEO said his main challenge will be to recover bad loans. He said his main task would be to reconstruct business plans while the second task would be to restructure the capital base to reduce the capital shortfall.

‘Amount of loan to agriculture and small and medium enterprises should be raised to increase the profit of the bank,’ he added.

‘The Bangladesh Bank has already made disbursement of agriculture loan compulsory for all banks and I have told the board of the bank that we need to disburse more loans to agriculture and SME sectors instead of giving big loans to big factories,’ he added. He has also plans to bring some 100 branches under automation by the end of 2008.