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The country’s estimated real GDP growth was 6.66% for 2011, up from 6.07% in the previous year, thanks to the strong performance of the manufacturing and construction sectors, along with contributions from the service sector. High growth rates in exports and imports helped the industrial sector realise an estimated growth rate of 8.16%, while the service sector recorded moderate growth. The agriculture sector experienced slower growth rates in 2011.

Point-to-point Consumer Price Index (CPI) inflation had increased to 11.97% as of September 2011, up from 7.61% a year earlier, while the annual average (headline) CPI inflation rose to 9.73%, compared to 8.12% in September 2010. This rise was largely due to high, volatile food and non-food commodity prices in global markets. Overall interest rates in the call money market remained volatile throughout the year trading in a range of 7%-20%. National currency, the Taka has depreciated at a higher rate compared to the previous year.

Future

It is anticipated that sustained export growth, especially in garment exports and wage remittances, will support strong economic performance in the next fiscal year. At the same time, the Bangladeshi Government is expected to reduce spending and may also hike fuel and power tariffs to maintain macroeconomic stability. The real GDP growth of 7.0% targeted in the 2012 national budget continues to be a realistic goal. Domestic demand remains upbeat in the economy and is supported by declining poverty rates, as reported in the recent Household Income and Expenditure Survey produced by the Bangladesh Bureau of Statistics.

Short-term economic risks include rising food and fuel prices, deteriorating remittances (with a possible drawdown in reserves) and a growing fiscal deficit - as well as stock market volatility and its potential impact on the banking sector. Over the longer term, alleviating power shortages, raising public investment and removing bottlenecks for private investment will be critical to ensuring sustainable growth.

Bangladesh Operations

Commercial Bank launched its banking business in Bangladesh by acquiring the operations of Credit Agricole Indosuez, a French multinational bank, in November 2003. Over the past eight years, the Bank has expanded its Bangladesh network to 17 outlets: seven branches, two booths, two off-shore banking units and six SME centres. In addition, the Bank has 17 online ATMs across the country, including four at offsite locations.

Within the past 8 years of commencement of the business, Commercial Bank has established its position well above the other regional banks operating in Bangladesh and caters to a range of clientele which includes a healthy mix of corporate and retail customers and is backed by a wide product range.

Credit Rating Information Services Limited (CRISL) gave Commercial Bank’s Bangladesh Operations an AAA rating in 2011.

During the past year, Commercial Bank launched a global dual-currency Visa credit card, giving Bangladeshi customers’ access to more than 2,000 Visa ATMs nationwide. The Bank has also entered into agreements with Prime Bank and Islamic Bank of Bangladesh to carry out cash management services and remittances disbursement through their branch networks.

Future Outlook

The Bank has set ambitious growth targets for deposits, advances and profit levels. The current array of strategic initiatives in Bangladesh includes maintaining non-performing assets below 3%, increasing the number of branches, commencing gold lending, adding more ATMs to the existing network and partnering with another popular ATM network to increase the number of shared machines. There are also plans to introduce at least five more products to expand the Bank’s asset and liability portfolios.

Key financial ratios for the Bank’s Bangladesh Operations over the past five years are as follows:

Maldivian Operations

The easing of the global financial crisis in 2011 encouraged a revival in the Maldivian tourism industry, permitting the Bank to resume lending to existing Maldivian clients on a selective basis. ComBank e-Exchange, Bank’s web-based money transfer facility, extends to the Maldivian marketplace.

e-Exchange

ComBank e-Exchange, a web-based money transfer system, allows Sri Lankans working abroad to make remittances through direct agents in 12 countries. In operation since 2003, e-Exchange assures Sri Lankans overseas a safe and efficient way to send money home. In 2011, the Bank launched an SMS alert service for all beneficiaries of e-Exchange remittances. Back office operations were extended to cover 24/7 support to remittance customers and agents overseas. Bank conducted several promotional campaigns locally as well as in selected overseas corridors during the year.

Over the past year e-Exchange entered new markets and expanded its reach in existing ones such as Saudi Arabia, Lebanon and Malaysia. To improve service to beneficiaries, and in particular to reduce turnaround time on collections, dedicated remittance counters were set up at 70 branches across Sri Lanka. The Bank also added eight e-Exchange partners, increasing the total to 66 overseas remittance agents. A dozen Business Promotion Officers work aggressively in foreign markets to promote remittances and cross-sell other products and services.

In 2011 e-Exchange recorded an overall growth of approximately 15%. This product recorded a 30% growth in remittances from the Middle East, a region that accounts for 60% of Sri Lankans working abroad. To better serve this key market, the Bank has launched a new partnership with Al Rajhi Bank, the remittance business leader in the Kingdom of Saudi Arabia. Al Rajhi Bank has integrated its ePay system with ComBank e-Exchange, making it easier for expatriate workers to transfer remittances to their home accounts. Commercial Bank is the first Sri Lankan bank to enter into such an arrangement with Al Rajhi Bank.

Future Outlook

Bank intends in introducing a Remittance Card in order to divert counter traffic to ATMs and also to strategically retain cash customers who does not maintain accounts with the Bank enabling their remittance payments 24/7. e-Exchange platform will be developed as a payout solution enabling external entities to handle payments on behalf of the Bank. This will help the Bank to reach out to the customers in areas where we do not have our own presence, to build a good payment network in Bangladesh and to develop the product to global standards. Several other initiatives such as an electronic customer feedback system, web tracking facility and a SMS based solution for migrant workers have also been planned to improve the customer service standards.