Standard Chartered Bangladesh (SCB) witnessed a staggering 41 percent year-on-year rise in profits last year, a record in its 120 years' presence in the country, riding on higher interest income and earnings from investments in treasury bills and bonds.

The British multinational bank logged profits of Tk 2,335 crore in 2023, up from Tk 1,655 crore in 2022, according to its financial reports.

With that, it remains the top profit-making bank in the country. Other lenders' individual profits are still below the Tk 1,000-crore level.

In a response to queries from The Daily Star, SCB said prudent risk management, efficient liquidity deployment decisions, and advanced financing solutions helped deliver a good set of results in a difficult year.

It was all supported by client, colleagues, regulators and other stakeholders, it said.

The bank's financial report showed that its net interest income surged 58 percent year-on-year to Tk 2,018 crore.

Meanwhile, its investment income, most of which came from treasury bills and bonds, increased 66 percent to Tk 1,224 crore.

However, the bank's commission, exchange and brokerage income dropped 1 percent to Tk 1,024 crore.

Asif Khan, chairman of Edge Asset Management, said SCB has a strong franchise and that tends to lead to profitability in Bangladesh.

"Recently we have seen that other well-managed banks like BRAC Bank also reported good numbers and my sense is that this trend will continue as the flight towards quality happens," he said.

In addition, interest rates have been increasing, which is usually a positive sign for interest margins of these banks, he added.

Bangladesh's overall financial sector is suffering from a lack of confidence due to a pile-up of default loans.

The amount of bad loans that SCB has is still low compared to its total lending. In 2023, the amount was Tk 785 crore, which was 2.63 percent of its total loan portfolio of Tk 29,820 crore.

Of the Tk 29,820 crore, a major part was in the form of short-term loans of Tk 5,838 crore and personal loans of Tk 2,852 crore.

The loan portfolio is concentrated in Dhaka division, which accounted for around 93 percent, or Tk 27,691 crore, of the amount.

The bank reduced the number of branches and ATM booths, cutting down its costs for rent, insurance, electricity and so on by 15 percent to Tk 22 crore.

The bank kept a much higher regulatory capital, cash reserve ratio and statutory liquidity ratio compared to the requirement.

Out of its total investment of Tk 21,236 crore, it invested almost all of the fund in treasury bonds, bills, and sukuk issued by the government.

Apart from this, it has an investment of Tk 1.8 crore in shares of Central Depository Bangladesh. However, SCB has no investment in the stock market.

In 2023, the bank's advance deposit ratio was 61.35 percent while classified loans were 3.23 percent of its total loans.

SCB's return on assets grew to 4.09 percent last year while it was 3.28 percent the preceding year.

During the period, its deposits grew by Tk 5,500 crore while loans grew by Tk 5,000 crore.

"Well-judged investment decisions helped optimise our investment income. Alternate financing solutions for large projects helped drive non-funded income, despite reduced foreign exchange income," the bank said.

"Strong governance and high liquidity remained hallmarks of Standard Chartered Bangladesh," it said.

Its robust risk management approach resulted in a decrease in non-performing loan (NPL) ratio, it added.