It is a pleasure to have you with us as we present not only our results but also the strength and resilience of each of our business segments that together drive our growth journey. I'll begin by walking you through the overall picture and then invite our segment leaders to share deeper insights into their respective areas. Later in the session, the CFO of bKash will also walk you through the highlights of bKash's performance, which continues to play a pivotal role in our broader ecosystem. Let's begin by setting the broader context in the economic landscape in which we operate, actually. Bangladesh's macroeconomic outlook has improved over the last two quarters, with easing inflation and stronger external position. The current account turned positive, supported by export recovery, which is 7.7% year-on-year, and robust remittance inflows, which is hefty, 26.8% year-on-year.
Imports remain subdued, that is around 1.8% year-on-year, amid weak private trade growth, that is 6.5% year-on-year. This has kept GDP growth modest at 4% in 2025. Looking ahead, we expect sustained export and remittance growth, keeping current account in surplus, with inflation on gradual decline. A policy rate cut is likely once inflation comes under 7%, paving the way for lower interest rates, and we are also hoping stronger trade demand and GDP growth recovery to 5.1%- 5.5% in 2026. Over the last five years. Can you go to the next slide? Yeah, and the next slide, please.
Over the last five years, our assets and deposits have grown steadily in line with our strategic intent. This consistent trajectory of market share expansion in both loans and deposits clearly reflects the strength of our execution, as portrayed in this slide. You can see in the slide clearly. Now, we'd like to go to the SME division. SME is particularly our DNA and continues to be the backbone of our inclusive growth. I'll hand over to our AMD and Head of SME, Syed Abdul Momen, to take you through these highlights.
Thank you. Thank you. Thank you, Tareq Bhai. So, respected colleagues, shareholders, and partners, it's a privilege for me to share how our SME Banking Division has performed during the first half of 2025. SME continues to be the heart of BRAC Bank by the end of June 2025. Our SME customer base has reached 734,000, which is a 24% increase year-on-year, and we have onboarded 73,000 new customers during this year alone, which is an 11% growth. So this shows the trust that the entrepreneurs have on us. And this year also, our SME deposits grew by 42% year-on-year, and during this year, there is a 17% growth in our deposits. CASA Mix has suffered a bit. It has come down to 44% from 54% due to the high interest rate environment, but still, the base is very strong.
The cost of deposits have also went up to 5.35%, which is in line with the market trends, and our SME loans have also grown 14% year-on-year and only 2% during H1, which is a bit slow compared to our previous year's performance. The slow asset growth reflects the sluggish economic activity and the cautious demand for credit across the markets. Even in this backdrop, we have maintained steady momentum and disciplined capital deployment, which is shown by our portfolio yields, which has improved to 12.23% from 9.49% a year ago and to 10.25% in December, so this shows that we have maintained a better pricing discipline this year. Asset quality stays the same, very resilient at 3%. NPL stood at 2.74% compared to 1.96%, which is mainly because of the new classification policy that has been introduced by the Central Bank this year.
But on a like-to-like basis, our NPLs remained unchanged, reflecting our true strength in managing the book. The SME Trade Finance has been a highlight of this year, and the volume grew by 53% year-on-year, reaching $118 million in H1 2025 compared to $77 million last year. So in summary, the first half of 2025 for SME has been strong customer growth, solid deposit mobilization, resilient portfolio performance, despite slow economic activities, and a big boost in our trade finance.
While overall credit demand has been cautious amid sluggish economic activity, our SME franchisee has continued to deliver profitable and sustainable growth. With more than 734,000 entrepreneurs banking with us, BRAC Bank stands proud and undisputed leader in the SME Banking Industry, fueling businesses, creating jobs, and driving Bangladesh's economic progress, which we foresee to do even better during the remainder of the year. Thank you very much. Over to you, Tareq Bhai.
Thank you, Tamal, for your brief highlights. Our SME franchise actually remains unmatched, expanding customers, deposits, and trade volumes, proving our leadership in this segment. So now, let's go back to Corporate and Institutional Banking . Corporate and Institutional Banking , the partner of choice for large businesses. I'll go through the slides for the Corporate and Institutional Banking division. This segment remains a cornerstone of our bank's growth story, and it demonstrates the trust that large businesses continue to place in BRAC Bank. In the first half of 2025, we delivered a 20% year-on-year growth in deposit with strong momentum in trade finance. Trade volume alone extended by 38%, reaching to $3.4 billion compared to $2.4 billion last year, including a robust $780 million trade in key public sector entities, which actually we embarked on last year, particularly.
Our portfolio grew by 12%, even amid a challenging macroeconomic environment, and yields improved to 9.4%. On the digital front, corporate banking doubled its client base in just 1.5 years, processing 4 million transactions with a 42% year-on-year growth. Of course, we have navigated short-term pressures, particularly on asset quality, but with disciplined risk management and targeted client support, we are already seeing performances. What is most encouraging is that new client acquisition is over BDT 5,700 crore fresh trade limits sanctioned during this period. It is a clear vote of confidence from our corporate partners. Looking ahead, our focus is twofold. One is to deepen wallet share with our top-tier clients by offering integrated banking solutions, and second, to drive cross-border trade opportunities that leverage Bangladesh's growing economy. We'll also continue to invest in digital platforms for corporate clients, ensuring efficiency, transparency, and world-class services delivery.
In short, despite macroeconomic headwinds, our Corporate and Institutional Banking division remains resilient, trusted, and forward-looking. It's just not about getting large numbers, but it's also about large relationships that we nurture and grow for the long term. Now, we'll go into the Retail Banking segment. Retail continues to be our growth accelerator, driving deposit and lending momentum. I'll hand over to our DMD and Head of Retail Banking, Mahiul Islam.
Thank you. Good evening. It's my pleasure to share our Retail Banking updates on the first half of this year. Before I begin, let me extend my gratitude to our investors and our customers for the continued trust in BRAC Bank. During the first half of 2025, we have sustained our growth in deposits and assets despite a challenging economic environment. Deposits remain our key strength, increased by 38% year-on-year, reaching BDT 36,500 plus crores. Compared to December, that's a healthy annualized growth of 30%, reflecting customers' confidence in us. Our CASA Mix, however, dipped slightly to 34%, a reminder that we must keep working towards lower-cost, stable funding. Meanwhile, the cost of deposits increased from last year in line with industry trends.
In terms of assets, we have delivered robust growth with the portfolio expanding 26% year-on-year and 12% since December, reaching BDT 10,900 plus crores, loans being the main driver, up by 29%. Our yields improved to 10.6%, up from 9.1% last year, reflecting both market conditions and prudent pricing. Credit discipline remains front and center, but we face challenges in portfolio due to macroeconomic stress that resulted in an increase of par by 39 basis points, and NPL increased to 3.42%, mainly due to changes in Bangladesh Bank's regulatory guidelines on loan classification. Beyond the numbers, what excites us is the transformation in how we serve our customers. Digital account onboarding surged 83% year-on-year with over 94,000 new accounts, proof that customers are embracing simpler, faster Retail Banking solutions.
Digital loan disbursement volumes nearly grew by four times to BDT 456 crores as customers increasingly rely on our digital platforms. Now, as we look ahead to the rest of 2025, our focus is clear: sustain deposit growth while optimizing low-cost funds, maintain asset quality through disciplined risk management, and accelerate digital adoption to create seamless customer experience. Thank you.
Thank you, Mahiul. Now, we'll go to the Branch Network. Our Branch Network is evolving into a modern digital fast ecosystem. Let me hand over to our DMD and Head of Branch Distribution Network, Sheikh Mohammad Ashfaque.
Thank you, Tareq Bhai. Good evening, everyone. I am Sheikh Mohammad Ashfaque, Deputy Managing Director and Head of Branches of BRAC Bank. It gives me great pleasure to share that half-yearly performance of Branch Network for 2025. We have achieved BDT 8,985 crore in deposit growth, a 58% rise from last year's 5,654 crore. We onboarded 137,000 new customers, disbursed BDT 1,044 crore in assets, and issued 6,200 new credit cards. Each number is a reflection of growing trust in our bank and the depth of relationship with customers. What drives this success is not just numbers but actions. A few notable action items are our network expansion with 14 new sub-branches in new territories. We launched the first Digital First , first branch in Gulshan North Avenue, and introduced a centralized queue management system for measuring service delivery standard.
We partnered with three insurers, launching full-fledged bancassurance products. This is a new opportunity that opened up after Bangladesh Bank has permitted banks to sell insurance products directly to banks' customers. We recruited specialized retail assets specialists to concentrate more on retail assets and launched three digital productivity tools to increase efficiency. This journey is about building stronger relationships, blending innovation with trusted products, and ensuring the best service to remain at the top of the mind of the customers. Thank you, everyone.
By blending digital innovation with physical presence, we are delivering superior customer experience and growth through our Branch Network. Thank you, Ashfaque, for your highlight. Now, Risk Management remains at the heart of our strategy. I'll invite our DMD and CRO, Mr. Ahmed Rashid Joy, to share the updates regarding Risk Management and Sustainable Finance.
Thank you, Tareq Bhai. Good evening, everyone. We continue to present our portfolio quality trend, which is PAR and NPL since 2017, because so many things have happened across these years, like COVID pandemic-related restructuring, and then we also doubled our portfolio almost 200% in the last four to five years, and the other economic uncertainties that we have in our country, including foreign exchange crisis and high inflation. So, if you look at the trend, our PAR 30-day PAR remains static. The trend is flat, though the volume has increased about around BDT 500 crore plus, but in terms of percentage, it is static, 4.23% as of H1. The NPL has increased, as you are well aware, that the definition of NPL has changed because of the Central Bank new regulations. Also, they have changed the definition of past due from March.
We knew this because since last September, we have been exercising this that how much NPL will increase when the 90 DPD definition will come into effect. We knew that our NPL ratio will increase by 30-40 basis points. That has happened, as you can notice. Next slide, please. On the left side, you will see our stressed portfolio trend, which includes the normal NPL, the co-rescheduling, which is the normal rescheduling, and also the pandemic-related restructuring. You will also notice that after 2023, the pandemic-related restructuring has disappeared, and they don't exist in our books anymore. What we have now is the NPL and the normal rescheduling, conventional rescheduling. Our stressed portfolio trend as of H1 was 3.90%, which is below four.
On the right side, upper right side, you will see our NPL coverage ratio, which is 108% as of June 2025. And our strategic target is to keep this around 110%, around that percentage, and we are maintaining that. The credit cost has increased to 70 basis points in the second quarter. And one of the reasons was that the general provision rate for SME portfolio has increased from 0.25% to 1% because of the change of regulation by the Bangladesh Bank. And our SME portfolio is a big amount. We have a large portfolio on that. So that has resulted in increased credit cost to 70 basis points during this half. On the bottom side, you will see we are doing a lot of things on the statistical modeling and other modeling things.
We will continue to focus on these things to manage our portfolio more scientifically and price our risk accordingly. So this is on the credit risk management things. Go to the next slide, please. Sustainable finance. We have been awarded as one of the best sustainable banks, top sustainable banks. And we received excellent rating from the Central Bank with two other banks. This was given by the Bangladesh Bank yesterday. And we have been achieving this rating in the last five years consecutively. Recently, we were awarded with the highest score by Bloomberg on the Bloomberg ESG score, which they do it on all the publicly listed companies in Bangladesh. So, among those listed companies, we got the highest score on the Bloomberg ESG score.
We have published a sustainability rating, which is fully transparent, and which includes GHG emission disclosure in accordance with the ISSB GRI and PCAF standards. We were the first country in Bangladesh to publish the IFRS S1 and S2 report in accordance with the ISSB's guidelines. We are also issuing one social bond worth BDT 1,000 crore in accordance with the ICMA principles. We have received the Central Bank approval and are waiting for the approval from the Securities Exchange Commission. So, these are the highlights on the sustainable finance portfolio. We are doing a lot on this, and we will continue to do a lot on this. I think that's it from me. Thank you. Over to you, Tareq Bhai.
Yeah. Thank you for the highlight. With the advanced models and disciplined trade oversight, we are safeguarding asset quality while enabling growth. Sustainability is not an add-on. It is embedded in everything we do. Recognition from regulators and global institutions reflects our leadership in green and sustainable finance. Now, we'd like to go to the financial updates. I'll hand over to the AMD and CFO, Mr. Masud Rana to present the details.
Thank you. Thank you, Tareq. Good evening and salam to our viewers. Let me start with a small synopsis of the overall last six months. The bank has actually delivered a very good set of results in the first six months. To start with, we have grown our or continue to grow our customer base. About 134,000 new customers have been onboarded during this last six months, predominantly in the retail and also in the SME space. Strong balance sheet growth momentum continues. If we look at our balance sheet grew by about 23% at annualized rate in the last six months. On a year-on-year basis, it has grown by about 26%, led by the deposit. Deposit, we have grown about BDT 10,000 crore deposit in the first half. And our year-on-year deposit continues to be at a very commendable rate of 33%.
Thereby, with this strong growth in the balance sheet, particularly in the deposit side, our market share, we have gained about 20 basis points in the market share, reaching about 4.1%, as Tareq was mentioning in his deliberation. If we look at our financial performance, fundamentally strong background, the bank has been delivering a very consistent set of results. Particularly, if we look at our net interest margin, it has been stable. In fact, in the last six months, it has grown, slowly growing. We expect this to continue by the year-end. In terms of our asset pricing, particularly in the space of our local currency pricing, it is evolving, led by our SME business segment, followed by corporate and retail. Interestingly, in the first six months, retail has been doing really well. We can see the momentum coming back to retail assets.
It's grown by about 12%-13% in this last six months. And the cost-to-income ratio remained around 48%. Particularly, if I would like to highlight, our trade throughput has increased to $3.5 billion, corresponding last year, same period, it was $2.5 billion. So in fact, we have grown by $1 billion in the first half. And we are expecting to close to the $7 billion mark this year. Our remittance business is also another good story. Year-on-year, about 27% growth, as we can see. Joy just mentioned our NPL. If you look at our NPL, it has increased by about 48 basis points year-on-year. But like-for-like basis, if this similar regulation applied to the last year, we would see a more or less similar NPL ratio, which means our book quality remains more or less similar during this period. Our strong collection and rate of recovery continued.
We have collected about BDT 51 crore in the first half, maintaining and controlling on the capital attribute ratio of 14% plus. And the good credit rating continues. If I continue on the story of our deposit, as you can see, as a franchise, as an enterprise, we have grown our deposit base by 33% year-on-year. But look at our customer segments. All three segments have been growing deposits: SME 42%, Retail 38%, and Corporate 20%. Moving on, if we look at all our three business segments in terms of their contribution to the overall deposit mix, it has been more or less similar. But the pie or the share or the volume of it is consistently increasing. In the first half, Retail was contributing about 48%, Corporate 30%, and 22% by SME. I'd like to highlight the SME deposit portion.
SME has been growing their deposit base quite strongly in the last two, three years. As you can see, they have grown significantly, and we expect to continue this momentum. Moving on, loans and advance. I mean, CASA, it has been a bit slow and soft in the last six months, particularly, I would say, last 18 months, as we have been strategically moving the dial, particularly growing the deposit base, leaning heavily on the term deposit. But I'm pleased to share that in the last six months, it has been stabilized, and we have been focusing on the CASA more now. I'm sure when we'll come back, inshallah, in the September quarter, you'll get to see the CASA is moving ahead. Moving on, if we look at the deposit, year-on-year, 15% as a bank. SME and Retail grown quite strongly.
Corporate, understandably, slow with our selective particular segments. We remain a bit cautious and very selective in terms of our growth. However, in the first half, while this has been dominated and influenced by the economic condition, but the outlook seems really positive, particularly in the July and August. We must hope that the second half of this year will be quite strong. If we move. In terms of segmental contribution, as you can see, retail is coming up, and also corporate is growing. Overall, we are still maintaining a very good diversification within our lending book. So if we go to the next slide, this is a Standalone Performance. The highlighting, as I was mentioning, yield on assets, our price, as you can see from the year-on-year, it has been growing about 127 basis points. As I was mentioning, it is led by our local currency book, predominantly.
Cost of deposit has grown by about 79-80 basis points. But we hope to make a win on that, and we'd like to continue focusing on CASA and bring it down further going forward. Spread or interest margin has been quite stable, ranging from 4.4%-4.6%, and we expect this to remain at that level going forward. CASA Mix, it's 40% in the first half. NPL, with the new definition, it's 3.4%, but as I said, like-to-like, it would actually remain more or less similar because when we did our calculation in September, when this new regulation implementation date was announced, roughly, it was about 60-65 basis points, which is absolutely similar to our estimation, but beyond that, the general provision, which was actually we couldn't foresee the kind of change that would have happened.
So predominantly, with the granular book of SME, we had to incur about 75 basis points on the existing big chunky book, which is around BDT 1.2 billion , which also has an implication of our return on asset and return on equity. Revenue, as you can see, it has grown by about 25% year-on-year. Cost-to-income ratio remained flat. The profit after tax grown by year-on-year 20%. The bank registered BDT 620 crore for the first half. But as I was saying, within this, the extra LI or the loan impairment that has come from the general provisioning and the Special Mention Account, that has also impacted a bit softer ROA and also ROE. But on an underlying basis, both ROA and ROE remain similar to last year.
If we look at our consolidated performance, I'm really happy to share that our subsidiary, particularly bKash, is strongly contributing to the overall group results. And overall consolidated profit after tax is BDT 906, about 53% year-on-year growth. Overall, the balance sheet for both solo and consolidated basis, they're growing at a very healthy rate of about 20 plus percentage. And it's really happy to see the way it's growing in line with our strategy. I think we'll get to hear from bKash CFO, Moin Bhai. Moin Bhai, are you there?
Yes. Thank you, Masud Bhai. Thank you. So, I'll give you a brief how the first half of the year has gone by for bKash. So, if I look at the six health indicators, first being the total customer base. We finished the first half of the year with 81 million customers. We continue to acquire at the rate of a little more than 30,000 customers a day. So, we've added about 1.6 million customers for the first six months of the year. Moving to the right side of active customers, this has grown by 5% to $45 million. And it's about 56% of the total customer base. Market share, it's 80.6% as opposed to 65.3%. So, this 80.6%, we have for the past four months, the entire data that we've received from the central bank website, not all operators have given in the data.
It's just 80.6% is not the real market share. This is what we could get from the central bank database. In terms of merchant, 800, so the merchant number has remained flat. We have been focusing more on the quality of merchant, making sure that they are serviced properly rather than acquiring. So that's why the merchant number has remained more or less flat. In terms of the average monthly transaction volume, it stands at about BDT 1,120 billion a month, which is a 28% growth over the previous year. And this has been the primary driver of the growth in financial performance for bKash, which I will just talk to you in the next slide. In terms of agents, which is the backbone of the bKash infrastructure, we added about 25,000 agents the same period.
So we finished at about 373,000 agents spread across. I'll give you the next slide there. So this is the performance, the P&L for the first half. So we finished with BDT 3,631 crores, which is a 30% increase as gross revenue. This is very much in line with the volume numbers that I shared in the earlier slide, which is a 28% growth. So revenue-wise, it's a 30% growth. This has been one of the ever-highest growths that we have in the recent past. Now, moving on to cost of services. This cost of services really means the commission that we pay to the channel, which is the distributors, the agents, merchants, Telcos. That has grown by 26%. So net revenue growth of 30%. However, cost of services has grown by 26%.
And that's because we optimized we continue to optimize on the channel cost, which leads us to a growth of gross profit of 38%. So we had a growth of BDT 1,165 crores as gross profit coming to expenses. Operating expenses increased by 21%. The primary driver of this is salaries. And in terms of salaries, I mean, there's been headcount increases. And also, cost has increased given the adjustments in inflation. And foreign exchange losses were there. So that's the primary driver increase of 21%. Commercial expenses increased by 14%. We had two EVs in the first half of the year. And we also focused on savings during the first quarter of this year, which is the key driver of the commercial expenses. Leads us to an operating profit of BDT 319 crores, which is a 144% increase over prior year.
The next line would be net finance income, which is the interest income that we've earned from our own working capital. That is BDT 117 crores, 35% higher than last year. The two reasons why is because we're making profits, we're adding cash, and also the effective interest rates have gone up, then that leads us to a profit before Workers' Profit Participation Fund of BDT 436 crores. Then you take off WPPF, we make a profit of BDT 415. Adjusting income tax, it comes to BDT 308 crores for the year, which is a 182% increase over prior year. In summary, it's been a fantastic set of results for BRAC Bank. The growth is primarily being driven by volume and adjustments in general costs. That's it from me.
Okay. With record transaction volumes and profitability, bKash is actually shaping the future of digital financial inclusion. Thank you, Moin Bhai. But I would like to request you for a couple of minutes to stay over there if there is any question. I will hand over to Mr. Dave. Do you have any questions?
Thank you, Tareq Refat. We have received a few questions, but this is the first time that we didn't get any questions for bKash. So if I get anything in the meantime, I'll come back to Moinuddin. So Tareq Refat, the first question is that, can you share BRAC Bank's strategy for its Corporate segment?
All right. Actually, Corporate and Institutional Banking segment, BRAC Bank is actually new into this arena because it started a revamp journey in the year 2017 or 2018. It's almost eight and a half years, but within these eight and a half years, Corporate and Institutional Banking portfolio, I mean, the fund under management has been quadrupled almost.
It is from BDT 6,000 crore to almost BDT 23,000 crore within the last eight and a half years, and we have embarked on new avenues, but at the same time, we have to remain cautious about this particular segment that the growth is fully aligned with the risk appetite, and our journey has begun to be the most preferred corporate banking partner in the industry in terms of transaction banking and other trade and other areas. So our strategy is very clear and is cascaded down to all the colleagues that have been working with us for the last couple of years. Thank you.
Thank you, Tareq Bhai. The second question is that, what is BRAC Bank's strategy to enhance low-cost deposit collection, considering that the declining is CASA?
Okay. I think the suitable answer could be from our channel head, Mr. Ashfaque.
Okay. Although it's correct that our CASA ratio has reduced, but if you look at, you will find that our deposit growth is highest in terms of volume. Our portfolio also shows that retail savings growth is showing good momentum in the last six months. Going forward, in the last few months, our strategy will be to open more CASA account, concentration on payroll accounts. And in the SME and Corporate fronts, we will try to open more collection accounts and ensure customer sales are routed through us. We believe that through service, innovation, and digital adoption of customers, we will be able to reduce our cost of deposit in the coming months. Thank you.
Thank you, Ashfaq Bhai. Over to Tareq Bhai. The next question is, what is the average duration of BRAC Bank's treasury portfolio?
Okay. I think our CFO should answer this question.
Our average duration would be 3.1 years, slightly over three years, overall duration of our investment book.
Thank you, Masud Bhai. I think the next question is related to you. So the question is that, what are BRAC Bank's plans for realizing gains from its held-for-trading securities?
Yeah. As we speak, since we have grown our deposit base and the lending growth has been a bit muted, so obviously, resultant excess liquidity has been parked in the government bonds and bills, and as we speak, we are standing on a huge unrealized gain. The plan is to carry on because, as you can understand, the interest rate curve is going to be soft and would be coming down, and we are expecting some phased cut in the policy rate, so net net, we forecast that interest rate will go down in the next couple of quarters, and possibly, this transition from excess liquidity on government bond to move to the lending and it will be balanced approach from our side will be to realize this gain over the next 12-18 months.
Yeah. Thank you, Masud bhai. At last, we got two questions regarding bKash. So I will go back to Moin Bhai. So, Moin Bhai, the first question is, Moin Bhai, what is the share of digital transaction revenue for bKash in H1 2025 compared to last year of the same duration?
For market share of?
Market share of digital transaction revenue.
So, as I mentioned, you're talking about the market share. So the market share last year was 65%. This year, we're saying it's 80%. But however, the 80% does not cover the entire industry as we have not received data from the entire industry. So this is not a like-for-like comparison.
Okay. Thank you, Moin Bhai. The next question is, what is the reason of growing profit of bKash, and which is the main revenue stream presently?
The single biggest reason for the profit drivers is the volumes, which has grown by almost 30%. What was the other question?
The question is that which is the main p rimary driver is cash-out and peer-to-peer transactions?
Those are the two significant contributors to gross margins.
Thank you, Moin Bhai. And that's all from my side, Tareq Bhai.
All right. If you don't have any questions, then you can conclude the session here. But in summary, I would like to comment on in the closing statement that we are resilient, diversified, and future-ready. With SME leadership, corporate trust, and retail growth, a modern branch network, strong risk management, sustainable financing leadership, and fintech innovation through bKash, we are creating long-term value for stakeholders. Thank you. We can conclude the session now.
Thank you.