Loan Portfolio Analysis of City Bank PLC

Abstract

This report provides a detailed analysis of the CBL's (City Bank PLC) loan portfolio from FY 2019 to FY 2023. This report aims to assess the loan distribution with respect to the sectorial and geographical concentration, maturity groupings, and performance across various business segments to provide a holistic view of the loan portfolio management strategy adopted by CBL over the last five years. The total loans, advances and investments for the bank concerning the years 2019-2023 were most greatly attributed to loans, which on average comprised 82% of the total. The loan portfolio continued through five years of the trending upward. Over March 2023, this means that for CBL, loans have continued to be the bulk of its disbursements in 1M, lending only the remainder to cash credit, overdraft and bills purchased and discounted. Sector-wise concentration shows that CBL has primarily concentrated its loans in the RMG sector and consumer credit. On average, the RMG sector received 17% of the total loans and has followed an upward trend over the years. Consumer credit made up an average of 16% of total loans, similarly trending upwards. The loan portfolio of CBL is geographically concentrated in major cities like Dhaka and Chattogram. Loans accounted for 79% of total loans on average in Dhaka (urban), though this concentration has dropped in the past two years. The share of loans to Chattogram (urban) was 10% of total loans and was also in a declining trend over the years. The highest loan disbursements for rural were observed in Dhaka (rural) before increasing trends in Chattogram (rural) in the latter half of the five years. The report goes on to provide a further breakdown of the loan’s resident by residual maturity. Repayable on Demand loans comprise 27.04% in 2023 where as in 2019, it was only 14.63%. The proportion of loans due in the next 3 months increased to 28.93%, indicating a short-term lending approach. Loans with maturities between 3 months and 1 year made up 22.42%, as loans from 1 to 5 years composed 25.75%. Rates on loans maturing after 5 years were at 23.20%, still a little down from the previous years. In total, the City Bank portfolio shows a shift towards shorter-term loans whilst maintaining a relatively stable allocation of longer-term segments. Business segment-wise loans show that City Bank focused heavily on SME loans, which accounted for 30.56% of total loans in 2023. The rest of the portfolio was allocated to segments such as corporate loans, Retail loans, Off-shore Banking Unit (OBU), and Staff loans. Overall, this report gives you an insight about the loan structure of City Bank over the period from 2019 to 2023, while capturing the trends through sectorial, geographical and maturity-based loan distribution. So please help us understand CBL's lending pattern through a simple data analysis with respect of meaning of data and behavior of Bangladeshi economy. The results are fundamental to comprehend the bank's risk appetite, loan concentration strategy, and its overall financial position throughout the assessed period.