Bangladesh’s banking sector is undergoing a flight to quality, driven by confidence as depositors become more selective about where they keep their money and pay much closer attention to governance, liquidity and financial strength than before.
The shift, according to City Bank Managing Director and CEO Mashrur Arefin, is primarily driven by confidence.
“Depositors today are paying much closer attention to governance, liquidity and financial strength than before.”
In a period when many depositors became more selective about where they keep their money, customers preferred banks with strong governance, sound risk management and consistent performance.
As a result, stronger banks are attracting a larger share of deposits, while weaker institutions are facing higher funding costs and liquidity pressure.
Mashrur Arefin said the shift is ultimately a reward for disciplined banking practices. For City Bank, founded in 1983 as the country’s first private commercial bank and one of Bangladesh’s first-generation banks, the environment has reinforced what he described as its biggest strength – trust built over four decades.
“Our approach has been very simple – stay disciplined when the market becomes difficult.” Its performance in 2025 reflected that structure.
City Bank delivered a record net profit of Tk1,324 crore, up 31 per cent year-on-year, while maintaining a non-performing loan ratio of 2.5 per cent, down from 3.7 per cent a year earlier. It also handled $8.01 billion in trade business, the highest among local private commercial banks.
“What helped us most was our ability to balance growth with prudence. We never chased growth at the expense of quality.”
That operating discipline has remained consistent across cycles.
City Bank strengthened credit underwriting standards, increased provisions, strengthened recovery efforts and remained selective in lending. It continuously monitors borrowers, uses early-warning systems and maintains prudent provisioning.
Provision coverage reached 128 per cent in 2025, reflecting a strong buffer against future risks. “In banking, sustainable strength comes from discipline and consistency, not short-term gains.”
Mashrur Arefin said a strong balance sheet rests on three pillars – quality assets, adequate capital and strong liquidity.
City Bank’s Capital Adequacy Ratio stood at 15.74 per cent, while Liquidity Coverage Ratio and Net Stable Funding Ratio were 231.52 per cent and 104.62 per cent, respectively.
The bank’s business model is highly diversified, helping it generate earnings from multiple businesses rather than relying on a single source of income.
“Our philosophy is clear—diversification improves resilience.”
It is reflected in the bank’s credit structure. Corporate banking accounts for 58 per cent of loans, while retail and SME represent 21 per cent and 20 per cent respectively.
Retail and cards have become important contributors to earnings while also providing a more diversified risk profile. At the same time, the bank remains cautious in sectors facing economic stress and continues to prioritise fundamentally strong borrowers.
Fee and commission income contributed nearly Tk1,000 crore—around 21 per cent of the total, while treasury, trade services, cards and retail banking all performed strongly.
Total operating income reached Tk4,888 crore in 2025, helping earn a record net profit. “Strong balance sheets create strong earnings.”
Mashrur Arefin said stronger institutions can mobilise deposits more efficiently, maintain liquidity and compete more effectively because customers trust them.
“The stronger the balance sheet, the lower the funding pressure and the greater the ability to serve customers competitively.”
Even in a high-rate environment, City Bank’s cost of deposits remained around 5.5 per cent, which reflects the strength of its franchise and customer relationships.
Mashrur Arefin, also the chairman of the Association of Bankers Bangladesh, believes the ongoing flight to quality is largely structural and will continue.
City Bank is positioning itself for that future by focusing on sustainable growth, strong asset quality, diversified earnings and long-term customer relationships.
“The banks that will succeed in the future are those that combine strong governance, sound risk management, digital capability and customer-centricity.”
Against that backdrop, City Bank’s medium-term focus is to strengthen its position as one of Bangladesh’s most trusted and best-governed banks by growing low-cost deposits, expanding digital and transaction banking and maintaining strong asset quality.
Its longer-term ambition is to build a bank that performs consistently across economic cycles.
“We do not want simply to become bigger. We want to become stronger, more resilient and more customer-centric.”
Ultimately, Mashrur Arefin said, “Banking is a trust business, and institutions that protect that trust will continue to lead the sector.”
