Mr. Selim R.F. Hussain is the Brac Bank’s new Managing Director & CEO appointed in November 8, 2015. Mr Hussain is a career banker and was formerly the CEO & Managing Director of IDLC Finance Limited. He is widely recognized and highly acclaimed across the financial sector for being the architect of IDLC Finance’s meteoric rise during his tenure. He was also the Chairman of the Board of Directors from 2010 to 2012 of IDLC Finance’s two subsidiaries – IDLC Investments Limited and IDLC Securities Limited.
Mr Hussain has an Honours degree in Accounting from Dhaka University and an MBA (Major in Finance) from the Institute of Business Administration, also from Dhaka University. He worked in various roles with the two largest multi-national banks in Bangladesh, ANZ Grindlays Bank and Standard Chartered Bank, for twenty four years, before moving to the IDLC Group in 2010. He has resided and worked in India and Australia for significant periods of his career and, prior to taking over the helm at IDLC Finance Limited, was the Head of Finance & Strategy for Standard Chartered Bank’s Consumer Banking Division in Mumbai, India. Mr. Hussain was also CFO for Standard Chartered Bank, Bangladesh, from 2002 to 2007. Mr Hussain was also a Director at the Credit Rating Agency of Bangladesh (CRAB) and the Vice Chairman of the Bangladesh Leasing & Finance Co Association (BLFCA) since 2012.
Mr Hussain will lead a large branch banking and SME network and is expected to step up Brac Bank’s business momentum and inclusive banking initiatives and thereby fulfill the bank’s vision of being a socially responsible and profitable financial institution focused on building a poverty free Bangladesh. He is expected to become a director at various other Brac Bank subsidiaries e.g. Brac EPL Investments Ltd, Brac EPL Stock Brokerage Ltd, Brac Sajaan Exchange Ltd., Brac Information Technology Services Ltd and also at the latest Brac investment, IPDC of Bangladesh.
Mr Hussain is married with one son and aside from enjoying reading and traveling; he is a keen cricket and football enthusiast.
In Bangladesh’s consensus-seeking banking sector, Selim R.F Hussain, the MD and CEO of Brac Bank is known as a straight talker.
When I reached at his newly refurbished MD secretariat at the fourth floor of the bank’s headquarter in Niketon, Mr Hussain had a total of eight files in his desk. An half an hour appointment was pre-fixed with him and he kept his word and time-a usual thing for him.
He however excused himself from me to take a look into those files. Tea was served in between.
Six to seven minutes later, his desk was clear. With clinical efficiency, he had gone through all of those, signed and instructed his secretary to take relevant actions.
“More files will come, so I would appreciate if you try to be to the point while asking questions,” he said.
I tried. What followed for the next 20 minutes or so was a no-nonsense conversation in which Mr Hussain shed some light in his career and talked about his future plan with Brac Bank.
FINTECH: You have been in the banking sector for more than 30 years. Can you tell us something about your illustrious career?
SRF Hussain: I have completed my honors in accounting from Dhaka University in 1982. After that I have completed by MBA in Finance from Institute of Business Administration (IBA). As a part of completing the MBA in IBA, a student has to complete a three month long internship program. I did my internship at the American Express Bank. The country operation manager of American Express Bank was Mr Mobarak Hossain at that time. He offered that the best performing intern would get a full time job in the bank. There were five to six interns including me from IBA at that time in the American Express Bank. I got the job. So, it was in the year 1986, when I started my banking career.
By the end of the year, I left American Express and joined Grindlays Bank. I was there up until 2000. In between 1986 and 2000, I went out on different assignments to different countries for Grindlays Banks and I stayed there for quite some times to do my jobs. At the beginning of the 90’s, I stayed in Melbourne for about one and half year as a part of the international audit team of Grindlays bank. After that I went to Mumbai in the same capacity (member of international audit team) and stayed there for nearly about three years. From there, I came back to Dhaka again and was made the head of Planning and Technology of ANZ Grindlays Bank.
In 2000, Standard Chartered bought ANZ Grindlays. So, then as a part of the process, I became a banker with Standard Chartered. Initially, I was the head of transaction banking and cash management. Later, I became the Chief Financial Officer (CFO) of Standard Chartered in Dhaka. After remaining CFO there for a few years, I went back to Mumbai in 2008. I was made the Head of Finance and Strategy for their consumer banking division. I lived there for two and half years. I came back to Bangladesh in 2010 and joined IDLC finance as its Chief Executive Officer (CEO).
From 2010, I ran the IDLC Finance for nearly about the next six years. In November, 2015, the Chairman of Brac Bank Sir Fazle Hasan Abed made me an offer and he asked me if I would be interested in coming to Brac Bank as its MD and CEO. I took his offer and I joined there.
FINTECH: You headed IDLC Finance for nearly about six years. In those six years, IDLC Finance has become the best non-bank financial institution (NBFI) of the country. How did you do that?
SRF Hussain: It was my first assignment in any NBFI. Before that, I have always worked in the commercial banks. In fact it was my first job in a local financial institution as I have always worked in multinational banks. When I joined IDLC Finance, I found that the employees there had a feeling of being the step brother of commercial banks. Most of the employees thought that in front of bankers, they were nobodies.
So, at first, what I did was, I instilled a belief and passion among the employees that IDLC Finance could become one of the best financial institutions in the country. I asked them to focus on bringing results so that IDLC Finance could become a top class financial body.
Yes, of course, the license of NBFI doesn’t allow it to provide wide ranges of services like banks but I wanted IDLC to best the areas in where both bank and NBFI could work. I tried to significantly increase its SME loan portfolio. I did that because commercial banks and NBFIs-all of them were scratching each other’s back in getting their shares of pies in the corporate banking sector. Within the license constraints of an NBFI, IDLC was doing its best to compete with banks in terms of bagging corporate banking clients but it was a fiercely competitive market out there.
I didn’t fear competition, in fact I embrace that but I found that the potential of SME was largely been unutilized by most of the financial institutions. Besides, the risk is lower in SME banking than the corporate banking. So, I opted for a large re-branding of IDLC with increased focus on SMEs and that attempt paid off in spades. I think, the huge expansion in SME loan portfolio aided IDLC to reach where it is now.
When I left IDLC Finance in 2015, it was overall performing better than many of the commercial banks in the country. The profit (against the size of portfolio) that it was making and the market capitalization that it had were way more than many of commercial banks.
FINTECH: What was it like when you joined the Brac Bank? Were you given the charge of a sinking ship or a prospering colony?
SRF Hussain: Interestingly, when I joined the Brac Bank, I found it to be in an almost similar state as IDLC Finance was when I joined there. While IDLC lacked the confidence to compete with the commercial banks as an NBFI, Brac Bank lacked the vision and mentality to be the best bank in Bangladesh. I was surprised to find out that there was no commonality of purpose. Almost no one was sure about what they were doing and no one talked to anyone outside their department.
Besides, the metrics that indicate the health of a bank was not strong. Earnings per share were lower in 2015 than they had been five years earlier. Returns on the banks equity had slipped to 13.32% in 2015, from 18.95% in 2010. The bank’s Dhaka-listed shares were, in the third quarter of 2015, trading in the high 40s-exactly where they were five years earlier.
FINTECH: What were the steps that you took to bring in the changes?
SRF Hussain: At first, I tried to give them a commonality of purpose. I simply told them that we want to be the best bank in Bangladesh. I impregnated that belief among the employees that if we try hard, we could be the best in the business within the next five years. The point that I tried to make there was, if we aimed for the sky, we might not get there in short time, but our effort would surely elevate our positions in the market. I told them so, because I believed in so.
I have to be frank. When I joined Brac Bank, I knew relatively little about the bank other than knowing that it was the financial arm of World’s largest non-government organization (NGO) Brac. I somehow had this idea that Brac Bank was primarily an SME bank but I was very surprised to find that it was definitely not the case.
At that time, just 35% of all outstanding loans by volume were disbursed to the SMEs, with large corporations making up 52% of the loan book. In 2015, Brac Bank controlled less than 5% of the local SME lending market. Even a decade ago from then, it uses to control 15% of the market. So, like the way I took in IDLC Finance, I had taken another concerted effort in Brac Bank to increase its SME loan portfolio.
I instructed my teams to locate and finance worthy young entrepreneurs. Because of that effort, the bank’s outstanding SME portfolio expanded on an annualized basis by 28%, or Tk 1,380 crore in the calendar year 2016.
Home loans rose upto 164% year on year in 2016, with auto loans up 255% and car loans rising upto 98%. By the end of 2016, total lending to large corporates made up 41% of the bank’s loan book. It was 51% when I joined. The SME lending meanwhile increased by 5% and comprised of 39% of bank’s loan book.
By 2020, we want SME to contain 50% of our loan portfolio. We don’t want the corporate banking to grow at 30% rate because that will incur excessive risk. It will increase the chance of NPL. The number of large investment has been reduced down and the emergence of new large business has been stagnated to some extent in Bangladesh now. So most of the banks are doing corporate banking with the same customers and that is very risky.
Besides, our new strategy has already proven to be right. The bank made a profit of Tk 406 crore in 2016 which was 74% higher than the profit-Tk 234 crore that it made in 2015. It had a strong asset growth of 17% in 2016. From an asset of Tk 23,160 crore in 2015, it rose to Tk 26,832 crore in 2016.The core banking non-performing loan (NPL) was reduced down to 3.4% from 6% in one year.
We are very transparent about our activities. From June last year, as the first commercial bank of the country, Brac Bank has started the practice of publicly disclosing the earning of the bank. We arrange that event in front of media and also stream the event online so that anyone can see it.
FINTECH: It was known in the banking sector that Brac Bank gives relatively lower salary than most other banks. But after you joined, you had revised the salary structure. Why did you do that?
SRF Hussain: I have significantly revised the salary structure in Brac Bank on numerous occasions. I told my chairman that this is not an NGO bank. This is a listed commercial lending bank. We can’t compromise hiring the best in the business just because we are not willing to pay what it needs. I told my chairman that people say, you don’t want to increase the salary of the employees. He replied, ‘Who told you such thing? You prove and deliver and I have no problem giving higher salaries.’
After I have joined, I have recruited close to 1,400 people, while more than 750 people have left. I brought in a lot of new thinking, talent that was trained up at HSBC, Citi, and Standard Chartered.
I brought in the best people in the market because I have a five year plan to make the Brac Bank the best bank in the country. We want to be the best in each sector. Many people ask me, why you use the word ‘best’ so much? Why don’t you use words like highest profit or highest income? I said, no. I want to be the best for every stakeholder. If I become the highest profit maker, then I will be the best for my board, not necessarily for my consumers. But I want to be the best for them as well.
FINTECH: The technological disruption is going to hit hard the banking industry. What is your plan to cope with that?
SRF Hussain: I had spent the first 24 years of my banking career in multinational banks. These banks are always adept in bringing technological changes on time. Back in 1994, when I was the head of Planning and Technology for the ANZ Grindlays bank, we upgraded our core banking system (CBS). At that time, we had a system called PC Bank and we upgraded the system. So I had some experience of looking after the transformation. In 1997, ANZ Grindlays planned to upgrade the system again as a part of bringing holistic changes in all the ANZ Grindlays branches across the globe. And it wasn’t just technology change; it was also a structural change of large scale. It was an important strategic step forward for the bank. I was the project manager of that CBS up-gradation project. So, I know the importance of upgradation of technologies.
After I joined Brac Bank, I have invested heavily-close to $20 million in new technologies. A new core banking system was developed; new credit card system with updated technologies was introduced. For the nature and scope for financial management, we are implementing new Enterprise Resource Planning (ERP) software. We are already in the market for new KYC AMAL solution. We also have massive investment in cyber securities. So, in every sector of technology, we are heavily investing.
FINTECH: bKash has grown very big. Does bKash’s success aid Brac Bank?
SRF Hussain: Brac Bank own 51% in bKash, so obviously bKash’s success aids Brac Bank. bKash still operates under the license of Brac Bank. They don’t have a license of their own. For the first five year, bKash has been a remittance platform. But now they are going through technology migration. By the end of this year, you will see new products and services from them.
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