During fiscal 2008, global financial markets experienced unprecedented volatility and uncertainty, with a number of major financial institutions in the U.S. and Europe failing and facing significant issues of confidence. Credit markets tightened as capital and liquidity became increasingly scarce, which lead to extraordinary government and central bank intervention in many markets to protect national financial systems. All this occurred alongside a slowing global economic environment and declining confidence in major markets around the world. The Bangladesh economy and the business of the country in the year 2008 was faced with staggering inflation and the conditions were not helped much by the natural disasters, like that of SIDR cyclone and insistent flood, unprecedented rise in the price of global food grains, edible oil, steel and uncertainty in global economical crisis and political instability. Positive side is, with these conditions at the backdrop, City Bank has performed well over the past year when compared to previous years and to our major competitors.

While the details of our performance, innovations, processes, compliance initiatives and financials are explained in extensive details further on in this report, I will for the most part, synopsize the rudiments of the Bank’s overall operations in my review.

Overall Performance
City Bank achieved a record level of operating profit in 2008, an achievement of which we are extremely proud of considering the difficult milieu as mentioned above. The strong underlying performance is a testament to the strength of the Bank’s core business, its management and the benefit derived from the centralized banking framework. The Bank’s operating profit for 2008 was recorded at Taka 1,754.92 million, an increase of 39.74% compared to the year ending 31 December 2007. Net Profit stood at Taka 398.11 million was impacted by the need to keep provisions for loans and advances, shortfall in employee gratuity liability and tax provisions. Earnings per share grew to Taka 29.14 for the full year compared to Taka 25.14 in 2007.

With a tight and controlled monetary policy regime now instituted, the balance sheet posted a significant growth in deposits and advances, of 11.09% and 28.49% respectively. The total deposits vested with the Bank reached Taka 45,034.33 million while loans and advances increased by Taka 7,632.47 million and reached to Taka 34,420.94 million. City Bank’s capital adequacy ratio was 11.01% at the end of 2008 compared to the 10% required by the Central Bank and we are heading towards fulfilling the requirement of Basel II ensuring strict adherence to the guideline of Central Bank. Taka 178.20 million of new capital was raised during the year through bonus declaration which improved the capital position of the bank. The Bank’s results showed continued growth momentum across all the business lines as well as increased productivity which saw an improvement in EPS, net assets value per share, cost of funds, yield on loans and advances, return on assets and net profit per employee.

It is important to recognize that the healthy performance and results achieved by your bank has been achieved against the backdrop of global financial turmoil and in the local context, against high inflation and a high cost of funds, which sit uneasily alongside an ongoing restructuring process in the Bank.

Regarding Loans and Advances, while the Bank was not able to escape the challenges cascading from the macro environment and our Non Performing Loans (NPL) at the end of 2008 which notched 6.30%; what is positive in this light is that the Bank possesses adequate provision covers which is healthy and satisfying confidence building measure for our stakeholders. Other aspects are remarkable that we aggressively hunted for collecting and retaining quality staff strength which came at around 2,100 employees and the fact that our operating environment involves expansion, continuous technological advancement and unremitting modernization to retain the winning flavor.



New logo and the new brand philosophy – ‘Making Sense of Money’ came out in 2008. Launching new logo has solidified the Bank’s presence across the country and eased our access and eventually expanded our reach in clients.

To us, delivering to our customers is the foremost motto. With the infusion of 15 ATM booths, 3 SME centers and 5 SME service centers, 3 DST centers and relocations of 6 branches we remain one of the largest amongst banks in Bangladesh. Located strategically around the country and accessible in some of the most difficult areas as well, all of our branches in the year under review have become enabled to provide on-line banking service.

We have posted a highly satisfactory year with regard to operational deliverables aligned with our plans laid out at the beginning of 2008. After several years of extensive planning and unbridled anticipation, we have brought entire branches under Core Banking Applications using the most advanced systems, namely Finacle, supported by one of the worlds most sophisticated IT companies Infosys. We have also rolled out including the entirety of the Head Office in 7 version of Finacle in mid 2009, which enabled the entire Bank to one operational platform and setting the stage for the innovative ideas, solutions, products and services we aim to continue infusing into our winning stance.

Focus for 2009
We expect the economic uncertainty that we faced in 2008 to continue in 2009; however we remain confident that our strengths, our strategy and our keen focus on our key priorities will enable us to manage through these challenges, to grow and maintain our record of success over the long term.

The signs for 2009 are not too difficult to read. We are contemplating another year of challenge. We however expect the Bank’s progress to mirror its growth trends. We are looking forward to higher growth rates in total deposits, advances and total assets and expect to meet our projections. Under the current regulation of the central bank, the bank is under pressure to reduce its lending rates. The Bank expects this down trend to be passed on to borrowing rates as well and will be under pressure to source funds at rates to protect its margins. The contribution from commission and fee-based income too will be under pressure. To retain profitability, we are expecting improvements in cost to be delivered via productivity gains expected form the re-engineering of work processes, improved IT infrastructure and cash management system. A top priority for 2009 will be better management of NPLs through a re-organization of our credit granting mechanisms and through minimizing the net charge on loan losses.

The year 2009 will see the Bank forging ahead with all the measures, our KPI based action plans, our value matrix approach to product evaluation and the enhancement of our products with our ‘unimaginably beyond expectation’ features, introduction of new line of business like brokerage operation and so much more.

With the improvements contemplated in the business volumes and the productivity gains, the Bank is confident of maintaining a reasonable operating profit growth in 2009. Other aspect is our cost management initiative. Our recipe is not one of cost cutting but of cost management and one we aggressively intend to pursue to rein our cost growth within tolerable limits. It is also expected to further improve the main KPIs, namely Return on Assets, Return on Equity and the Capital Adequacy ratios, from the levels recorded in 2008.

Despite the severity of our current challenges, I remain undeterred. I believe that our combination of strong business, market positions, diverse earning power and talented work force will see us through, and that we will emerge as one of the strongest and best banks in the country.

We have realized that to have an attractive value proposition on paper and to be able to deliver that proposition effectively are two entirely different prospects. Thus building up and deploying our HR base, CITY Team, to optimum effect is a key challenge. We are challenged to maintain a reasonable pace in growth of business volumes, so necessary for us to be a vibrant player in a market that is slow growing due to external factors. The Bank’s contention is that unless the profits we refer to are in excess of economic costs i.e. the cost of all the money working for us we may actually be destroying the wealth. Thus our challenge will be to attain sustainable profitability. A sound and adequate capital base able to support our planned asset growth and render the Bank as a strong and stable entity is therefore of prime importance.

Our focus will remain on the following key areas to meet our 2009 objectives:

• Improving profitability by bringing in growth in loans and advances and deposit base.
• Investing in people to attain high level of employee satisfaction and engagement, enhance diversity of workforce and commitment to corporate social responsibility and strong community involvement.
• Attaining high levels of customer satisfaction and loyalty with deeper relationships with existing customers as well as acquiring new customers.
• Achieve improved productivity in our operations, maintaining sound ratings and sound practices in corporate governance, compliance processes and maintain strong capital ratios.