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BRAC Bank 2016 Scorecard

The scorecard is divided between basic requirements, quantitative factors supplemented with brief explanations, and qualitative elements. These sections provide details of a bank’s mission and transparency; builds on this with carefully selected data that highlights the extent to which a bank is engaging in sustainability as its core activity; and explains how a sustainability agenda translates into the everyday work of a bank and its co-workers.

Basic requirements

Basic Requirements

Show the Basic Requirements

Quantitative factors

Quantitative Factors

Show the Quantitative Factors

Qualitative elements

Qualitative Elements

Show the Qualitative Elements

Regulated financial institution

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The bank provides evidence that it is a regulated financial institution including:

  • Where it operates
  • Under what regulatory framework it operates
  • Evidence of client deposit and financing relationships

BRAC Bank Limited received the Banking License in the year 2001 under the Bank Company Act, 1991 as amended in 2013. It is a local private commercial bank operating under the regulatory framework of the Central Bank of Bangladesh. All the financial services related to deposits, loans and cash payments and other foreign exchange related transactions are performed under the supervision of the Central Bank of Bangladesh. The webpage of BRAC Bank Limited can be found www.bracbank.com.

Mission Statement

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Mission Statement as published on its website or in any official document with specific relevant references to it value-based banking strategies

BRAC Bank aims to become a sustainable, socially responsible, values-based financial institution by ensuring the following:

  • Sustained growth in the “Small & Medium Enterprise” sector
  • Continuous low-cost deposit growth with controlled growth in retail assets
  • Funding of Corporate Assets through self-liability mobilization.
  • Growth in assets through syndications and investment in faster growing sectors
  • Continuous endeavor to increase fee-based income
  • Costs for credit losses not above 2% to maintain a steady profitable growth
  • Efficient synergies between the Bank’s branches, SME unit offices and BRAC field offices for delivery of remittance products and the Bank’s other products and services
  • Management of the various lines of business in a fully controlled environment with no compromise on service quality
  • Keep a diverse and competent team fully motivated and driven towards realizing the Bank’s mission

Reporting Transparency

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Annual Reports must be publicly available

Further proof of engagement in transparent reporting practices is encouraged

- BRAC Bank Limited discloses its audited financial statements through online and print media following AGM approval.
- It publishes its unaudited financial statements (Balance sheet, Profit & Loss Statement, Cash flow statement and Liquidity Statement) every quarter through both online and print media.
- BRAC Bank also publishes its Annual Basel disclosure in the Annual Report as well as in the website.
- The CSR details are published in the website. BBL arranges quarterly disclosure on financials and management issues presented by the CEO and CFO including an online Q&A session.

These factors are related to the Principles of Values-based Banking and provide insight into three key elements of a bank’s activity linked to its:

  • financial viability,
  • focus on the real economy and
  • focus on a triple bottom of line of people, planet and prosperity

Bank Resiliency through Earnings – 3 year Average Return on Assets

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Return on Assets tell you how profitable a bank is. It is a good measure of a bank’s operating performance relative to the total amount of money it manages. This is important because values-based banks need to be resilient financially to deliver long term, positive impact.

It’s also reasonable to assume that if a bank’s profits are excessively high they may be taking inappropriate risks and may be enjoying unreasonable profits at the expense of their customers.

To really understand how profitable a bank is, and to avoid comparing ‘apples with oranges’, it’s important to compare a bank’s profitability with other banks in the same market. Therefore this measure is compared with a peer group selected and transparently described by the bank.

3-year Average Return on Assets:
Return on Assets 2016: 1.37%
Return on Assets 2015: 1.01%
Return on Assets 2014: 0.75%
Explanation: Over the last few years BRAC Bank has significantly grown and efficiently managed its assets to generate earnings.

Market Comparison – 3 Year Average Return on Assets

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Return on Assets tell you how profitable a bank is. It is a good measure of a bank’s operating performance relative to the total amount of money it manages. This is important because values-based banks need to be resilient financially to deliver long term, positive impact.

It’s also reasonable to assume that if a bank’s profits are excessively high they may be taking inappropriate risks and may be enjoying unreasonable profits at the expense of their customers.

To really understand how profitable a bank is, and to avoid comparing ‘apples with oranges’, it’s important to compare a bank’s profitability with other banks in the same market. Therefore this measure is compared with a peer group selected and transparently described by the bank.

3-year Average Return on Assets:
(Source:Financial Stability Report_Bangladesh Bank)
Return on Assets 2016: 0.71%
Return on Assets 2015: 0.8%
Return on Assets 2014: 0.7%
Explanation: BRAC Bank is well above the industry benchmark due to its efficiency in managing assets especially maintaining a below average rate of Non-performing Loans relative to the industry.

Bank Resiliency through Capital – Equity to Total Assets

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The Equity to Total Assets ratio tells you how strong a bank is. The Equity of a bank represents the money invested by its owners to cover any losses it may incur. This ratio uses the total balance sheet of the bank, which means it provides a transparent and conservative measure of a bank’s resiliency. This is important for values-based banks which are focused on lasting benefits to society, and so want to develop strong capital positions that make them stronger over the long-term.

Other measures, such as risk weighted assets capital ratios, can be used for the same purpose but they are both more complex and less transparent, so the Scorecard has chosen to use Equity to Total Assets. As a guide the Scorecard currently recommends this level to be at 8% or higher.

Equity to Total Assets 2016: 8.87%
Equity to Total Assets 2015: 8.71%
Equity to Total Assets 2014: 8.99%
Explanation: Equity to total assets were reasonably stable in last three years. The increase from 2015 to 2016 is due to higher growth in equity compared to assets.

Bank Resiliency through Asset Quality – Low-quality Assets to Total Assets

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Low quality assets (such as loans to enterprises that struggle to repay them), at levels significantly above the market average, are generally a bad thing for banks because they represent the risk of financial losses in the future.

Values-based banks should have strong customer relationships, and have a deep understanding of their activities and the sectors they work in. Together this will limit the chances of loans and investments going wrong and should make working through challenges with clients easier when problems do occur. Meaningful relationships with customers and precisely this expertise, is at the core of a values-based approach to banking.

The quality of a bank’s assets should be compared with banks in the same market to understand how it is doing relative to market conditions. Therefore this measure is compared with a described peer group.

Low-quality Assets to Total Assets 2016: 2.60%
Low-quality Assets to Total Assets 2015: 4.28%
Low-quality Assets to Total Assets 2014: 4.12%
Explanation: Improved alignment of business strategy and structure allowed the Bank to significantly reduce the overall ratio of its low quality assets.

Market Comparison – Low-quality Assets to Total Assets

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Low quality assets (such as loans to enterprises that struggle to repay them), at levels significantly above the market average, are generally a bad thing for banks because they represent the risk of financial losses in the future.

Values-based banks should have strong customer relationships, and have a deep understanding of their activities and the sectors they work in. Together this will limit the chances of loans and investments going wrong and should make working through challenges with clients easier when problems do occur. Meaningful relationships with customers and precisely this expertise, is at the core of a values-based approach to banking.

The quality of a bank’s assets should be compared with banks in the same market to understand how it is doing relative to market conditions. Therefore this measure is compared with a described peer group.

(Source:Financial Stability Report_Bangladesh Bank)
Low-quality Assets to Total Assets 2016: 9.2%
Low-quality Assets to Total Assets 2015: 8.8%
Low-quality Assets to Total Assets 2014: 5.21%
Explanation: BRAC Bank is in a better position relative to the industry due to its robust underwriting standard and efficient loss recovery management.

Bank Resiliency through Client Based Liquidity – Client Deposits to Total Assets

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Banks finance their assets (such as loans, investments and their wider activities) with money that is:

  • deposited with them by customers,
  • and/or borrowed from others (mostly other banks) and then lent on to clients,
  • or sourced from investors.

A large amount of borrowing from the markets to finance a bank’s activity is, by definition, riskier because markets are more volatile. Banks are both stronger and more values-based when more of the money they use to finance their activity comes from customers.

High levels of funding from customer’s deposits also suggests a strong connection with clients and the real economy – both important elements of a values-based bank. Ideally 75% of a bank’s assets are funded through clients.

Client Deposits to Total Assets 2016: 69.88%
Client Deposits to Total Assets 2015: 66.33%
Client Deposits to Total Assets 2014: 75.21%
Explanation: BRAC Bank funds significant portions of its Loans/Assets from deposits rather than relying on borrowing.

Assets Committed to the Real Economy to Total Assets

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Values-based banks are strongly and directly connected to financing the real economy because that’s where they can have a positive impact on people’s lives and safeguard the environment.

Real economy assets in a values-based bank should, therefore, be relatively high. By the same token financial economy assets should be relatively low because their impact on people’s lives is, at best, indirect. The Scorecard seeks to have the level for this ratio above 50% and ideally close to 65%.

Assets Committed to the Real Economy to Total Assets 2016: 74.10%
Assets Committed to the Real Economy to Total Assets 2015: 70.45%
Assets Committed to the Real Economy to Total Assets 2014: 63.46%
Explanation: BRAC Bank has a well-maintained and good quality asset portfolio in the real economy.

Revenues from the Real Economy to Total Income

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If a bank is earning more of its revenues from the real economy, it is both making more of a difference to people’s lives and is a more resilient institution.

Revenues from the financial economy tend to be more volatile, are more removed from most people’s lives, are highly unlikely to be sustainable and mean a bank is less resilient over the long term. Ideally 75% of a bank’s revenues will be from the Real Economy.

Revenues from the Real Economy to Total Income 2016: 85.38%
Revenues from the Real Economy to Total Income 2015: 79.27%
Revenues from the Real Economy to Total Income 2014: 82.63%
Explanation: Major portion of the income generated from real economy revenue

Assets Committed to the Triple Bottom Line to Total Assets

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This figure provides the best indication of a bank’s commitment to a values-based banking model. Triple Bottom line assets don’t just mean assets in the real economy. They specifically refer to money invested by a bank in individuals and enterprises that deliver positive social, environmental and economic benefits to society.

Not all intermediated money will be committed, however, because some liquidity needs to be available for the bank to support its clients in case of disruptions in the market. Therefore the Scorecard targets this factor to be between 25% and 55%.

Assets Committed to the Triple Bottom Line to Total Assets 2016: 29.58%
Assets Committed to the Triple Bottom Line to Total Assets 2015: 30.57%
Assets Committed to the Triple Bottom Line to Total Assets 2014: 31.65%
Explanation: BRAC Bank is well known as an SME friendly bank in the country and continued to invest on an average around BDT5,000 million per year in TBL.

Leadership

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Leadership

The bank’s leadership and governance is focused on values-based banking, and the diversity of its leaders reflect this culture.

The bank’s leadership and governance is focused on sustainability, and the diversity of its leaders reflect this culture.

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The bank’s leadership and governance is focused on values-based banking, and the diversity of its leaders reflect this culture.

The board adheres to the triple bottom line (People, Planet, and Prosperity) approach and tries to ensure that these values are maintained across the organization.

BRAC Bank strongly endorses values like transparency, integrity, open-mindedness and assertiveness when selecting its leaders.

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The bank’s leadership and governance is focused on values-based banking, and the diversity of its leaders reflect this culture.

The Board has approved the Corporate Governance Policy and meticulously looks over its implementation across the organization. Focus on institutional and independent directors on the board helps ensure good corporate governance. The Board constitutes of members from  different institutions as nominated Directors. And also Independent Director which help in ensuring good corporate governance.

  • Meritocratic criteria over seniority is promoted for leadership selection.
  • Succession Planning has been initiated as part of ongoing ERP migration project.

Launched TARA, a women forum to promote self-development, communication and leadership coaching.

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The bank’s leadership and governance is focused on values-based banking, and the diversity of its leaders reflect this culture.

Largest shareholders are BRAC, world’s largest NGO.  Among the 7 member Board of Directors, 3 are Independent Directors; the rest represents BRAC’s and other interests. Out of the total Board members, we have  25%  female representatives.

 

  • Re-structured senior management team.
  • Female executives are present in the Senior Management Team. Approximately, 14% of the senior management team is female.

BRAC Bank is also the proud employer in the local banking sector with the highest number of female employees, approximately 1200. We have around 14% female staff in the total work force.

Organisational Structure

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Organisational Structure

The bank is organised to support its mission focus.

The bank is organised to support its mission focus.

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The bank is organised to support its mission focus.

The banking model of BRAC Bank is based on four pillars: Ethics, Transparency, Governance, and Compliance.

The organizational structure of the Bank possesses the importance of sustainable banking and the structure comprises of SME, Retail and Corporate divisions that believes in four pillar concepts. With this belief, we want to be the best bank in the country.

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The bank is organised to support its mission focus.

As a third generation commercial bank, BRAC Bank has strong footprints on Retail, Corporate and SME banking. However, to increase contribution to the development of the country, BRAC Bank has a special focus on increasing its stake on SME Banking. Hence, we possess an SME division with the largest workforce in our Bank.

We also have a Sustainable Finance Unit (SFU) and a CSR department to support green financing activities and corporate social activities of the Bank.

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The bank is organised to support its mission focus.

  • BBL received an Appreciation Letter in April 2016 from the Central Bank for achieving the Agriculture and Rural Credit Target for the fiscal year 2014-15.
  • We have 452 SME unit offices, which represent the strongest customer reach in SME segment in the country

Products and Services

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Products and Services

The bank’s core products and services are fair, transparent and directly contribute to its values-based mission.

The bank’s core products and services are fair, transparent and directly contribute to its sustainability mission.

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The bank’s core products and services are fair, transparent and directly contribute to its values-based mission.

BRAC Bank believes in 3P philosophy: People, Planet and Prosperity. Our business propositions, products and services reflects our concern for environment friendly and inclusive products.

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The bank’s core products and services are fair, transparent and directly contribute to its values-based mission.

BRAC Bank set up attractive product propositions with very competitive rates and flexible terms and conditions.

BRAC Bank has introduced "Planet solutions", a sustainable business finance scheme. This scheme aims to provide affordable financing to textile manufacturers and technology service providers to improve their water and energy efficiency following recommendations from listed energy auditors.

Besides this BRAC Bank is actively participating in  52 different refinancing schemes under sustainable financing offered by the Central Bank of Bangladesh.

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The bank’s core products and services are fair, transparent and directly contribute to its values-based mission.

  • As Planet Solution is the first of its kind in Bangladesh and has created a lot of positive attention in the industry, clients have shown active interest in the product and the Bank has started approving loans under the scheme.
  • BRAC Bank has opened 100,442 accounts for garment workers.
  • It has opened many 10 taka accounts to bolster financial inclusion.
  • For financial inclusivity, BRAC Bank offers school banking  in its product range.

Management Systems

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Management Systems

The bank’s management systems are transparent, include values-based criteria and exist to increase the institution’s positive impact.

The bank’s management systems are transparent, include sustainability criteria and exist to increase the institution’s positive impact.

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The bank’s management systems are transparent, include values-based criteria and exist to increase the institution’s positive impact.

BRAC Bank management believes in an open and transparent management style. None of the people working in the Bank should feel isolated. Positive support structure is omnipresent to assist and resolve any issues.

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The bank’s management systems are transparent, include values-based criteria and exist to increase the institution’s positive impact.

Various forums are here to address different types of issues.

  • Asset Liability Committee (ALCO) diligently manages liquidity of the bank and fixes the interest rates.
  • Enterprise Risk Governance Forum (ERGF) has been established as a one-stop risk escalation and solution forum/platform. It meets within 6 hours of any occurrence or if it suspects any misconduct. The Forum comprises of all the Divisional Heads of Risk, Control, Compliance, Security and Governance.
  • Enterprise Risk Management Committee (ERMC)  addresses all the risk issues of the Bank. Any unsolved issues go to the Board Risk Management Committee for further resolution.
  • A Speak-up Policy has been formulated which provides stakeholders with a secure, confidential way to report concerns about any misconduct take place.
  • A TARA forum has been created. All the female employees of the Bank are part of this forum. This forum gives female employees a sense of belonging, solidarity, a platform to speak-up.

Every person in the organization knows that there is somebody they can talk to which increases the sense of inclusivity.

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The bank’s management systems are transparent, include values-based criteria and exist to increase the institution’s positive impact.

  • Senior Management Team convenes in regular periodicity for  various management decisions and future course of action.
  • The TARA Product has been launched for female customers as part of financial inclusion efforts. It helps to establish women’s leadership, as well as helps to grow our economy .
  • The BRAC Bank TARA debit card has been floated in the market, which gives special offers and discounts for the TARA cardholders.

Human Resources Tools

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Human Resources Tools

The bank’s values-based mission is the starting point for its incentive, compensation, and performance structure.

The bank’s sustainability mission is the starting point for its incentive, compensation, and performance structure.

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The bank’s values-based mission is the starting point for its incentive, compensation, and performance structure.

Re-structured the performance management process with equal focus on performance and values. BBL values are also aligned with GABV's Principles of Values-based Banking.

Compensation policies and practices:

  • To be Fair & Transparent and aligned with industry
  • Motivate Employees, to give more for fulfilling their needs
  • Attract talent, develop and retain them
  • Reward the best and be fair to the rest
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The bank’s values-based mission is the starting point for its incentive, compensation, and performance structure.

Performance Management:

  • Implemented new performance management process considering both performance (goal achievement) and value based behavior (how goals have been achieved)
  • Implemented Mid-Year Review in addition to Annual Review
  • Initiated ERP migration project to implement Oracle Performance Management, 360-degree feedback & Talent Management modules
  • Linkage between Performance Rating and Promotion & Salary Increment

 

Compensation policies and practices

  • Annual Cost of Living Adjustment (COLA) year on year
  • Compensation & Benefit Survey conducted by Cerebrus, India
  • Market adjustment based on survey data point
  • Salary Structure revised for tax alignment
  • Revised HR policies to facilitate employees' benefits
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The bank’s values-based mission is the starting point for its incentive, compensation, and performance structure.

Performance Management

  • All permanent employees' annual assessments have been completed under the new assessment scale
  • Mid-year review for all permanent employees has also been completed.

Compensation policies and practices

  • Attrition Rate has reduced from 16% (in 2015) to 11% (in 2017)
  • Compa Ratio as "1" & "2" performers' compensation have been increased nearer to 50th percentile of banking sector data
  • Re-launch Daycare facilities
  • Introduced co-sponsored Transport Facilities for pick-up & drop-off.

Performance Reporting

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Qualitative Elements provide substantial and important information on a bank’s value-based banking approach and results. This information is used to provide a comprehensive evaluation of a bank’s efforts, capabilities and performance. The information for each element is organised to provide insight from strategy to results as follows:

Performance Reporting

The bank reports on the impact of what it does, not just its financial performance in an honest, transparent and accessible way.

 

 

The bank reports on the impact of what it does, not just its financial performance in an honest, transparent and accessible way.

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The bank reports on the impact of what it does, not just its financial performance in an honest, transparent and accessible way.

 

One of the four pillars of BRAC Bank is Transparency. The performance report of the Bank is publicly available through Online and print media.

BBL discloses the institutions’ activities, results and impacts to give clear insights to its stakeholders, both internal and external.

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The bank reports on the impact of what it does, not just its financial performance in an honest, transparent and accessible way.

 

Annual report is one of the media through which the Bank makes its performance publicly available in every year.

BBL disclose Quarterly and annual Financials in its website. Moreover, to give clear insights in details BBL arranges quarterly disclosure on financials and management issues presented by the CEO and the CFO including an online Q&A session.

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The bank reports on the impact of what it does, not just its financial performance in an honest, transparent and accessible way.

Stakeholders understanding about BBL activities and Performance.

In 2016, BRAC Bank received award from “Institute of Cost and Management Accountants of Bangladesh (ICMAB)” for producing the 3rd best Annual report in the industry for the year 2015. Our relentless effort for improvement has achieved us the 1st prize in the year 2017 for publishing the best presented Annual Report of 2016 in the category of Private Commercial Banks.

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