UCB eyes sustainable profitability within two years

United Commercial Bank (UCB), one of the oldest private banks in Bangladesh, looks to return to sustainable profitability within around two years as it takes steps to improve governance, recover loans, and enhance asset quality.

Suffering from rising default loans, the private bank is tightening credit risk, restructuring legacy non-performing loans (NPLs), and enhancing lending through data-driven tools to emerge as a strong lender.

"At the same time, we're growing quality deposits, diversifying funding, and driving efficiency through cost control and digital transformation," said Chairman Sharif Zahir in an interview with The Daily Star.

"The recent rise in deposits and new accounts reflects renewed confidence," he said.

He took charge of the board of the UCB after Bangladesh Bank (BB) reconstituted it following the political changeover in early August last year as part of efforts to bring discipline into the banking sector.

Sharif Zahir

The sector has been mired in loan irregularities, a lack of corporate governance, and a build-up of soured loans.

Since 2018, the UCB had been heavily influenced by former land minister Saifuzzaman Chowdhury Javed and his family members.

Zahir said the new board had strengthened internal controls, enhanced audits, and was working closely with regulators to ensure full transparency.

"Legal steps are underway to recover any misappropriated funds… I'm confident we're on the right path, and that stability and progress are well within reach," he said.

The UCB's profit dipped to Tk 8 crore in 2024, down from Tk 219 crore a year ago. The bank did not give any dividend last year as its profits slumped.

As of now, the UCB holds Tk 61,800 crore in deposits, and its outstanding loans stand at Tk 60,894 crore. Its NPL ratio to outstanding loans is 14 percent. The bank has a network of 231 branches, sub-branches, and around 650 agent banking outlets.

Zahir said the UCB's savings deposits have surpassed Tk 10,000 crore. The private bank has opened over 300,000 new accounts in the first half of 2025.

"This is a testament to the trust and confidence our customers place in us," he said.

Zahir, replying to a question on the extent of misuse of funds in the bank during the tenure of the past board, said like any long-established institution, a bank can inherit legacy issues.

"While past actions may not have met today's standards, we have zero tolerance for misuse, then or now. Rather than focus on names—which are for auditors and regulators—we're focused on action," he said.

"This isn't about blame—it's about building a system where such lapses aren't possible. At today's UCB, governance is a daily discipline, embedded from boardroom to branch. That's the institution we're building—and we're well on our way," he said.

To put the UCB back on strong footing, its board has decided to issue new shares to a strategic investor to raise funds amounting to half of the bank's paid-up capital.

Zahir, also managing director of one of the leading garment exporters, Ananta Group, said the funds would be used to strengthen the capital base, support loan recovery efforts, invest in technology, and expand UCB's digital and retail banking footprint.

"While discussions with potential strategic investors are ongoing, we are committed to ensuring that any capital infusion aligns with regulatory requirements and supports our long-term growth," he said.

He declined to give further details, saying, "Details about the investor will be disclosed in due course, following regulatory approval and due diligence."

In his interview, Zahir also spoke about the internal conflict that affected the bank in the past.

Responding to a question, he said the internal conflict was an unexpected and difficult chapter—a plot twist no bank ever anticipates, yet many are forced to navigate.

"While it created turbulence at the governance level, we acted swiftly and decisively to stabilise operations," he said.

"Through transparent communication, strict regulatory compliance, and the steadfast commitment of our leadership team, we effectively insulated the bank's core functions from reputational risk," said Zahir.

"But rather than dwell on the past, our focus is firmly on the future. We are committed to upholding strong governance, safeguarding depositor interests, and ensuring steady, sustainable growth," he said.

He said given the UCB's current trajectory—marked by robust deposit growth, improved governance, and ongoing loan recovery—they anticipate returning to a position of sustainable profitability within the next 18 to 24 months.

"Once our capital adequacy and asset quality are fully restored within a few weeks, we aim to resume attractive dividend payouts to our valued shareholders," said Zahir.

He said the UCB was driving a digital-first strategy, investing in AI tools, open banking application programming interfaces (APIs), and integrated digital platforms.

Recently, it launched Bangladesh's first microservices-based open API banking platform.

On UPAY, UCB's mobile financial service (MFS) platform, he said it entered a highly competitive MFS market dominated by early movers.

"Challenges included limited brand visibility and a need for broader agent and merchant networks," he said.

"We are now investing in technology upgrades, expanding partnerships, and launching targeted campaigns to differentiate UPAY through innovative features and seamless integration with the UCB's core banking services," said Zahir.

"Our goal is to make UPAY a preferred choice for both urban and rural customers by focusing on convenience, security, and value-added services," he said.

To improve transparency and corporate governance, Zahir said the UCB revamped its governance by strategically restructuring the board and strengthening internal controls aligned with global standards.

Enhanced independent oversight and robust board committees ensure strong checks and balances, rebuilding trust and ensuring accountability at all levels, he said.

"We have overhauled our risk management framework, introducing advanced analytics for early detection of credit risks and strengthening compliance with regulatory standards," he said.

"Our risk committee now includes independent directors with extensive banking experience, ensuring objective oversight," said Zahir.

These reforms are designed to safeguard the UCB against future shocks and align it with global best practices in risk management, he said in the interview marking the 42nd anniversary of the private bank.

UCB began operations on June 27, 1983.

"As we turn 42, we're not mid-life—we're mid-momentum. Our best chapters are not in the archives—they're ahead of us. And yes, we've got both the roadmap and the resolve to write them well," he said.