Ticker: BRACBANK

Consumer Sector: Banking Industry

Current Price: Php 38.50 as of 19 Feb 2023

Company Profile
BRAC Bank Limited is one of the leading commercial banks in Bangladesh, offering a range of financial
products and services to individuals, small and medium-sized enterprises (SMEs), and corporate clients.
Established in 2001, the bank is part of the BRAC group, one of the largest non-governmental organizations
in the world, and has quickly established itself as a trusted and innovative player in the country's
financial sector.
With a strong focus on customer-centricity and technology-driven solutions, BRAC Bank has built a reputation
for delivering high-quality and reliable services to its customers. The bank's product offerings include
personal and business banking, wealth management, corporate banking, and SME banking, with a range of
credit and deposit products to meet the diverse needs of its clients. The bank's online and mobile banking
platforms provide convenient and secure access to its services, and its network of branches and ATMs ensures
easy access to its customers.
Sponsor’s Director’s Ownership
Name Designation Shareholding (%)

BRAC Sponsor 46.165

Late Sir Fazle Hasan Abed Sponsor 0.001
Late A. S. Mahmud Sponsor 0.001
Late Faruq A. Choudhury Sponsor 0.001
Dr. Saleh Uddin Ahmed Sponsor 0.001
Dr. Ahsan H. Mansur Independent Director Nil
Mr. Asif Saleh Nominated Director 0.002
Ms. Fahima Choudhury Independent Director Nil
Ms. Farzana Ahmed Independent Director Nil
Dr. Zahid Hussain Independent Director Nil
Mr. Meheriar M Hasan Nominated Director Nil
Mr. Shameran Bahar Abed Nominated Director 0.071
Dr. Mustafa Kamal Mujeri Independent Director Nil
Mr. Faruq Mayeenuddin Ahmed Independent Director Nil
Mr. Salek Ahmed Abul Masrur Independent Director Nil
General Public Other than Sponsor/Director 53.758

Industry Overview
The banking industry in Bangladesh has grown significantly in recent years, driven by a strong economy and
an increasing demand for financial services. However, the industry remains highly competitive, with a large
number of banks operating in the country. The SME sector is a key area of focus for many banks, given the
significant growth potential of this segment.

Ariful Islam Abir | 1

Recent Financial Performance Company Information
BRAC Bank has a robust financial performance Trading Code BRACBANK
track record, with strong profitability, asset quality, Year End 31-Dec
and capital adequacy ratios. As of 2021, As of Market Cap BDT 57,618.535
September 2021, the bank's total assets stood at Share Outstanding 1,497 M
BDT 449,084 million. Also, the bank was also able Paid-up Capital BDT 14965.8
to turn in a remarkable 18% YoY growth in loan Free Float 53.76%
portfolio, with excellence in cost optimization 52 Weeks Low-High 37.30-53.30
efforts yielding a reduction in cost-to-income ratio Forward P/E 10.96
to 53% in 2021, vs. 58% in 2020. The bank's net Sector P/E 10.65
profit for the first nine months of 2021 was BDT
5,547 M, reflecting a growth over 11% compared to Price Performance
the same period in the previous year. The firm’s One Month Performance 0.00%
balance also showcases its strong financial Three Month Performance 0.00%
standpoints. One Year Performance -25.96%

Industry Overview Shareholder's Position

Individual Insiders 0.07%
• The banking industry in Bangladesh has
General Public 42.90%
shown consistent growth in recent years,
driven by a growing economy and a shift Insitutions 57.00%
towards a cashless society. Financial Information
• According to the Bangladesh Bank, the Income
2021 2020 2019
country's central bank, the banking sector Statement
has grown at a CAGR of 14% over the past Revenue 15,038
23,364 M 20,336 M
M
five years.
Operating 21,388
• Total assets of the banking sector reached Profit
10,944 M 8,602 M
M
BDT 34.8 trillion ($410 billion) in June Expenses
1,242 M 1,174 M
11,440
2021 M
EBT 7,890 M 6,735 M 290 M
• Six large banks account for over 50% of the
NPAT 5,547 M 451 M 565 M
sector's total assets – BRAC is one of them.
Balance Sheet
• Monetary policy support measures include 2021 2020 2019
Total Assets 367,920
liquidity support and reductions in policy 449,084 M 396,982 M
M
rates. Total 330,262
394,665 M 350,505 M
• Asset quality has been improving, with the Liabilities M
NPL ratio declining to 7.5% in June 2021. Shareholder's 37,658
54,419 M 46,477 M
Equity M
• The sector has already been profitable, with Retained 9,795
pre-tax profit increasing by 34.6% YoY in 13,680 M 12,379 M
Earnings M
H1 2021. Cash Flow
2021 2020 2019
Statement
CFO 22,706
Investment Rationale 1,166 M 18,615 M
M
CFI -21,379
Though we had a negative result on DDM for lack 12,635 M -22,811 M
M
of data – analyzing from BRAC Bank’s recent great CFF -1,383 M -918 M -.17 M
recovery on financial performance from COVID, Historical
with it’s subsidiary bKash getting investment from 2021 2020 2019
Dividend
SoftBank, the robust management BRAC has and Cash Dividend 7.50% 10% 7.50%
the growing rate of Bangladesh’s Banking industry Stock Dividend 7.50% 5% 7.50%
and the country itself, this makes BRAC Bank Ltd Payout Ratio 3.77% 4.60% 3.52%
a great investment option.

Ariful Islam Abir | 2

Investment Concerns
• Regulatory risks: The Bangladesh Bank,
the country's central bank, regulates the
banking industry and may introduce new
regulations or change existing ones, which
could increase the bank's compliance costs
or restrict its operations. For example, the
central bank may increase the minimum
capital requirements for banks or introduce
new restrictions on lending practices.
• Concentration risks: SME loans represent
a significant portion of BRAC Bank's loan
portfolio, which could make it more
vulnerable to sector-specific risks or
economic downturns. In addition, the bank Key Financial Ratios
has a high concentration of deposits from a Liquidity Ratios 2021 2020 2019
small number of large customers, which Current Ratio 106.01% 95.58% 99.26%
could increase its funding risks in case of Operating Efficiency Ratio
customer withdrawals or a loss of Total Asset Turnover 8.73% 10.59% 9.80%
confidence in the bank
Fixed Asset Turnover 525.99% 615.88% 440.15%
• Economic risks: Bangladesh is a Profitability Ratio
developing country with an economy that is
EBIT Margin 39.47% 48.12% 64.26%
sensitive to external factors such as changes
Net Profit Margin 11.87% 9.61% 15.66%
in global commodity prices, trade tensions,
ROA 1.04% 1.02% 1.53%
and geopolitical risks. A slowdown in
ROE 8.55% 8.70% 14.99%
economic growth or a recession could lead
Growth (YOY)
to lower demand for credit, higher default
Sales Revenue -7% 17% 17%
rates, and lower profitability for the bank.
Operating Profit -18% -12% 21%
• Interest rate risks: As the country is going
Net Profit 15% -28% 2%
through a downturn, changes in interest
rates might happen, particularly in the case Leverage Ratios
of a sudden and significant increase, could Debt to Equity Ratio 725.23% 865.76% 877.00%
affect the bank's net interest income, which Debt To Total Assets 87.88% 101.36% 89.76%
is a key driver of profitability. Moreover,
the bank may face challenges in managing
interest rate risks associated with its loan
and deposit portfolios.
• Credit risks: BRAC Bank has a significant
loan portfolio, and any increase in the NPL
ratio could adversely affect the bank's
financial performance. The bank's
borrowers may face difficulties in repaying
their loans due to various reasons such as
economic downturns, natural disasters, or
sector-specific risks such as the ongoing
pandemic's impact on the hospitality and
tourism industry.

Ariful Islam Abir | 3