Higher operating costs eat up DBBL’s CASA deposit benefits

Current and savings accounts, known as CASA to bankers, was always an important matter for efficient lenders as it increases a bank’s net interest imargn.

CASA became the most sought-after deposits from April last year when Bangladesh Bank capped the lending rate to 9 percent for all loans except credit card. Since then relatively better banks have been giving extra effort to increase their stakes of CASA in total deposits.

Yet, no banks could take their CASA deposits to over 45 percent. But Dutch-Bangla Bank Limited (DBBL) has long been enjoying the benefits of CASA, which is by far the highest among all local banks. The bank’s countrywide ATM network, agent banking outlets and mobile financial services help it get low-cost deposits.

“FDR (fixed deposit receipts) accounts for only 8.5 percent of our total deposits and the remaining 91.5 percent is CASA or low-cost deposits. But we lose the advantage as our operating cost is higher than other banks,” said Abdul Kashem Mohammad Shirin, managing director of DBBL.

Deposits under CASA cost the bank less than 2 percent, while its operating cost for mobilising Tk 100 deposit stands at 4.5 percent. So, the total cost of funds rises to 6.5 percent, at par with peer banks, he said.

For example, many of DBBL peer banks’ cost of deposit are around 5 percent, but their operating cost is around 2 percent, said Shirin.

CASA constitutes 40-45 percent of deposits in banks like City, EBL and MTB, but their operating cost is halved than the DBBL, according to industry insiders.

DBBL has the highest ATM fleet with nearly 5,000 booths across the country. It has a service named ‘Fast Track’ by which customers of the bank can withdraw cash, deposit money and get services like assistance for opening of bank account and Rocket account and obtaining cheque book, ATM card, card replacement, reporting of lost card, etc.

“We have to spend a lot of money to set up these establishments and networks. We also need huge money to run these establishments on a day-to-day basis,” said Shirin explaining why DBBL’s operating cost is higher than many other banks.