City Bank Subsidiary

City Bank Subsidiary in Hong Kong

To ensure end to end service to our corporate customers who are engaged in trade finance with their business partners in Hong Kong, we are in the process of opening up our overseas finance company City Hong Kong Limited (a subsidiary of City Bank PLC.) in the business district of Kowloon in Hong Kong subject to approval from the regulatory authorities in Hong Kong. We have already received approval from Bangladesh Bank.

We strongly believe this will have a major contribution to the trade growth of Bangladesh, especially the country’s RMG and other sectors.

CBL Money Transfer Sdn. Bhd.

CBL Money Transfer Sdn. Bhd. (CBLMT) is a private company limited by shares, incorporated under the laws of Malaysia and registered with the Companies Commission of Malaysia with Registration No. 769212 M. The Company is in the business to provide money services under the Money Service Business Act, 2011, through a Class B License Serial No. 00081 issued by Bank Negara, Malaysia. CBLMT is engaged in money service business operations.

On 4th April 2013, City Bank PLC entered into an agreement to purchase 75% ordinary shares of CBLMT with an agreement to eventually acquire 100% of its shares. The Company started out as a subsidiary of City Bank on 10th September 2013. On 8th June 2016, City Bank became holder of 100% shares of CBLMT, making it a fully-owned subsidiary.

Impact created in 2018

The year 2018 was a significant one for CBLMT. Robust business momentum translated into net profit increasing by 1,813% over the last year. Net profit for the year 2018 stood at MYR 1,016,047 against MYR 53,104 in 2017. The balance sheet size is MYR 5.24 m.

CBLMT has 11 branches in its network, including the Head Oice branch.

Outlook, 2019

CBLMT plans to launch Mobile Remittance Services (MRS) for its customers in Malaysia. This will facilitate customers to remit money to their home countries from their dwelling places itself, rather than they having to visit CBLMT branches instead, except for the time of the first transaction.

Furthermore, CBLMT is also preparing to obtain regulatory approvals to become an International Money Transfer Operator (IMTO) so that remittance companies across the world can use the CBLMT channel to remit money to Bangladesh, Indonesia, the Philippines, Nepal, India, Pakistan and Vietnam corridors, cities where they are currently offering remittance services

City Brokerage Limited

City Brokerage Limited (CBL), a wholly-owned subsidiary of City Bank PLC., is one of the leading brokerages in the Bangladesh capital markets. CBL offers full-fledged international-standard brokerage services to retail, institutional and foreign clients. Having considerable access to both domestic and foreign institutional retail investors, City Brokerage has been able to build a premium portfolio of investors. Also, City Brokerage is a ‘TREC Holder’ of both the bourses of Bangladesh (Dhaka and Chittagong). The Company thrives on the quality of its human capital, which includes a highly professional and well-experienced research team..

City Brokerage was incorporated on 31 March, 2010 as a private limited company under the Companies Act, 1994, vide certificate of incorporation no. C 83616/10. The registered office of the company is situated at City Centre, Level 13, 90/A Motijheel C/A, Dhaka-1000. The Company has four branches in Dhaka, located at Motijheel, Gulshan, Dhanmondi and Nikunja, and one branch each in Chattogram and Sylhet. The legal status of the Company has been converted into public limited company from private limited company in June 2012, in compliance with Bangladesh Securities and Exchange Commission (Stock Dealer, Stock Broker and Authorised Representatives) Rules, 2000.

Impact created in 2018

City Brokerage is a specialist in foreign and institutional broking. Despite the increased competition and weak performance of the broader markets in 2018, during which DSEX went down by 13.80%, CBL managed to secure a dominant market share position in foreign trade, local institutional trade as well as block sourcing.

City Brokerage also efficiently sourced block trades to provide liquidity, thereby minimising the market impact cost.

In another achievement of the year, City Brokerage arranged several roadshows, investor conferences, fairs and corporate events, both in Bangladesh and abroad, with a view to ensuring continual customer engagement and brand awareness.

Key competitive advantages

  • City Brokerage has a dedicated team of skilled professionals to ensure the dispensation of the highest level of brokerage services to its investors. The senior management consists of professionals with proven management skills and advanced knowledge in their respective areas.
  • City Brokerage has a strong research team with a cumulative experience of over 25 years. The team has specialist knowledge in both top-down and bottom-up analysis. It serves top global frontier and emerging market portfolio managers, as well as brokers operating in North America and Europe, with macro, sectoral and company-specific research reports.
  • City Brokerage’s research resources are published on Bloomberg, Reuters and Factset, etc., indicating rich content quality and deep analysis.
  • City Brokerage helps clients to maximise their investment objectives in a dynamic environment through superior trade execution and continuous research support.

Outlook 2019

  • City Brokerage aspires to be the digitised one-stop investment management solution platform for all clients.
  • It intends to introduce Order Management System (OMS) software with a view to facilitating efficient and real - time trading through mobile, laptop, desktop PC, etc. to increase and solidify its retail market share, leveraging 131 branches of City Bank PLC.
  • Furthermore, City Brokerage looks forward to penetrating Non-Resident Bangladeshi (NRB) investors to bring them on board into the capital market of Bangladesh, leveraging custodian license of City Bank PLC.

City Bank Capital Resources Limited

City Bank Capital Resources Limited, a fully-owned subsidiary of City Bank PLC., is a public limited company by shares and was incorporated in Bangladesh on 17 August 2009, vide registration no. C 79186/09 under the Companies Act, 1994. Subsequently, the Company obtained Merchant Banking License (Registration Certificate No: MB 54/2010) from Bangladesh Securities & Exchange Commission on 06 December 2010. The registered office of the Company is situated at 90/1, City Center (13th floor), Motijheel, Dhaka - 1000, Bangladesh.

Authorised capital: BDT 3 bPaid-up capital: BDT 2.55 bOwnership interest in capital: 99.99% Net profit after tax: BDT 155 m

City Bank Capital Resources delivers a wide range of investment banking services, including merchant banking activities such as issue management, underwriting, portfolio management and corporate advisory.

Impact created in 2018

  • Achieved net profit of BDT 155 m in the year 2018, as compared with BDT 200 m in 2017
  • Investment Banking Division (IBD) team completed a number of deals, registering a substantial growth of 138.56% in 2018 YoY, and the cumulative value stood at BDT 36 b, up sharply from BDT 15 b of the previous year
  • IBD has a diversified product bouquet of Tier-II subordinated bonds for scheduled banks, zero-coupon bonds, commercial paper, preference shares, debt restructuring, term loans, working capital facilities, issue management services, advisory services, underwriting, agency and trusteeship, etc.
  • Steep growth of 60% achieved in CBCRL’s share of DSE trade volumes in 2018
  • Outstanding growth of 43% in margin loans, from BDT 282 m to BDT 400 m, despite lacklustre capital markets

Core strengths

  • No negative equity of clients’ assets in portfolio management
  • Strong and well-experienced Investment Banking team
  • Robust profit growth over the past 5 years, despite mixed capital market performance
  • Investment in diversified financial assets
  • Well-experienced Board of Directors providing strategic supervisory and oversight
  • Judicious focus on achieving the most optimum balance between risk and return on behalf of clients through such products as hybrid/balanced growth products and systematic investment solutions
  • Focus on institutional investment portfolio and high net worth (HNI) individuals

Capital Market Outlook 2019, in line with the macroeconomic factors

We expect 2019 to be a positive year for investors, and the market will, in all probability, yield a lower double-digit return in 2019. Bangladesh capital markets witnessed a subdued year in 2018, as investors faced a number of issues, including political uncertainties in the election year, woes in the countries’ banking sector, depreciation of BDT against the US dollar, sell call pressures from foreign investors and inactive presence of institutional investors. However, the market is expected to rebound in 2019, as large-cap stocks are trading at attractive valuations. Foreign investors are highly likely to retake their positions in the market, now that there is stability in the post-election environment. Institutional investors will be enthusiastic to take advantage of attractively priced blue-chip stocks.

GDP growth target for the country has been set at 7.80% in the FY19 budget. Continued political stability and increased business optimism is expected to lead to accelerated growth in domestic consumption and gross ixed investment. We project ~8.0% growth for FY 2019, whereas the economy grew at a record 7.86% in FY18.

Exports grew almost 13% to $27.56 b in the first eight months of the previous fiscal (July-February) over the same period a year earlier, riding on higher garment shipments, according to data released by the Export Promotion Bureau. Furthermore, completion of RMG factory remediation is also likely to ensure maximum capacity utilisation in the RMG sector, ensuring further contributions to export growth.

Import growth is set to plummet from the 31.75% growth witnessed in FY18 to around 15% in FY19. Part of the massive growth in imports in FY18 was due to both pre-election year spending by the Government, and also emergency import of food grains in order to make up for flood-related losses with respect to the rice crop. These two factors are not expected to repeat in 2019. Also, the sudden unexpected fall in the price of oil to around USD 50/bbl in December 2018 will also lower the fuel import bill.

Remittance is expected to rise in FY19 by around 15% due to the lag of larger number of workers going abroad in recent years, along with the depreciation of the BDT encouraging the usage of official channels to send back remittance. However, the sudden fall in oil prices pose a risk to remittance growth beyond 2019.

Current account deficit (CAD) is expected to be smaller in FY19, as compared to FY18, due to higher exports and remittance, combined with reduced import growth. The financial account saw record inflows of USD 9.076 b in FY18 due to foreign investments and aid inflows, a major factor that drove it was the Rohingya crisis. The aid - related inflows may not repeat in FY19, which creates a risk that the financial account may not be able to balance out the CAD. Therefore, there is a risk that the overall balance of payments may record a deficit in FY19, increasing the pressure on the exchange rate.

Domestic liquidity conditions are expected to remain tight in FY19. The central bank is expected to continue with a contractionary stance to address the expected increase in inlation and lack of growth in net foreign assets, while the reduction of excess liquidity in the banking system will constrain capital supply. On the demand side, private sector credit growth is expected to increase as companies embrace fresh investments after the elections and the government borrowing from banking sector will increase once NSC rates are revised downwards. We expect a rise in interest rates of 100 200 bps in 2019.