Arab Bangladesh Bank Limited (ABBL) a joint collaboration bank with Dubai Bank Limited. It was formed in
Dhaka on 31 December 1981. It started banking operations on 12 April 1982 as a scheduled private sector commercial bank. Initially the authorised capital of the bank was Tk 200 million divided into 2 million shares of Tk 100 each. The issued and paid up capital was Tk 80 million. The authorised capital of the bank has later been enhanced to Tk 800 million. The paid up capital was also enhanced at different times of its operation and stood at Tk 409.94 million in December 2000. ABBL is the first Arabian-Bangladeshi joint venture private commercial bank in Bangladesh and was formed with the assistance and support of the Dubai-based Galadari family, a group active in international trade, finance and industry.
A 9-member board of directors including the chairman governs the overall affairs of the bank. The chief executive of the bank is its managing director. In all, 1,472 employees, including the executives and officers, work in the bank in various capacities. The bank has 62 branches (urban-46, rural-15 and overseas-1). The Head Office of the bank is located at Dilkusha, Dhaka.
ABBL was set up to conduct all types of traditional commercial banking functions including foreign exchange business and other financial services. It has been able to achieve satisfactory progress in all areas of its planned activities including deposit mobilisation, credit expansion, servicing imports and exports, remittance services, investment, and product innovation.
At the end of 1982, the first year of the banking business, the total deposits of ABBL amounted to Tk 136.71 million. This stood at Tk 16,217.5 million on 31 December 2000. The deposit-mix of the bank in 2000 was composed of fixed deposits (56.6%), savings deposits (21.84%), and current and other deposits (21.56%). The amount of total reserve funds of ABBL was Tk 354.81 million in 2000 as against Tk 202.48 million in 1995.
Total loans and advances of ABBL increased from Tk 116.96 million in 1982 to Tk 12,548.4 million in 2000. Responding to the needs of the market, ABBL introduced three new schemes: Student Loan, Personal Computer Loan for Educational Institutions (for their laboratories), and Monthly Interest Payment Facility to term deposit holders. The broad economic areas in which the bank lends (and the total outstanding amount of advances to those areas in million Taka) up to 31 March 2000 were: agriculture and fisheries (278), industry (2,811), retail/wholesale trade and hotels and restaurants (3,769), transport/communication and storage (180), insurance, real estate and trade service (1,384), special credit programmes, including poverty alleviation and income generating activity (520), and others (1,874). Up to 31 March 2000, ABBL provided financial support in the form of loans and advances to 88 large and medium scale and 145 small and cottage industrial projects amounting to Tk 2,300 million. It has also extended project financing in syndication with other banks. The ratio of advances and deposits during the year 1999 and 2000 were 80.66% and 77.38% respectively.
In 2000, the bank's total classified loans were 23.45% of its total loans and advances. It maintained a provision of Tk 1,435.4 million for them, which affected the bank's performance and degraded the quality of its lending assets. The quantum of investment of the bank rose to Tk 2,429.66 million in 2000 from Tk 23 million in 1982. Of the total investment in 2000, 93% was in government treasury bills. The rest was invested in other sectors including debentures of ICB, ordinary shares of companies and prize bonds. In that year, the bank earned an income of Tk 170.21 million from its investments.
In the financial year ending on 30 June 2000, total foreign exchange business of the bank was Tk 11,600 million, which included imports (34.48%), exports (58.19%) and remittances (7.33%). ABBL has foreign correspondent relationships with 221 banks/bank offices and other financial institutions at different international financial
centres. The overseas operations of the bank are conducted through its Mumbai branch in India and its subsidiary company, the AB International Finance Limited in Hong Kong. The bank has two foreign representative offices - one in London and the other in Yangon.
Total assets of the bank including the off-balance-sheet
items were valued at Tk 31,111.6 million in 2000, when its liquid assets
were Tk 9,838.1 million. The bank earned a net profit of Tk 366.5 million
that year. Its interest income increased from Tk 608.3 million in 1999
to Tk 1,288.9 million in 2000. On the other hand, interest expenses had
also increased from Tk 995.0 million in 1999 to Tk 1,370.5 million in
2000. There have been wide fluctuations in both the total incomes and
total operating expenses of the bank over the last few years of its operation.
[S M Mahfuzur Rahman]