AB Bank Limited: A Leading Private Sector Bank in Bangladesh

Overview

AB Bank PLC is a private-sector commercial bank in Bangladesh and the country's first private bank. It was incorporated on 31 December 1981 as Arab Bangladesh Bank Limited, a joint venture between Bangladeshi sponsors and Dubai Bank Limited of the United Arab Emirates, and it opened its first branch at Karwan Bazar in Dhaka on 12 April 1982. The bank was renamed AB Bank Limited in 2007 and is listed on the Dhaka Stock Exchange. Its head office is at The Skymark, 18 Gulshan Avenue, in Dhaka's Gulshan-1 district.

For much of its history AB Bank was regarded as one of the pioneers of modern private banking in Bangladesh, introducing products that competitors later copied. Since 2024, however, it has become one of the weakest banks in the country. After concealed loan losses surfaced following the political changeover of August 2024, the bank recorded the first full-year losses in its history, its capital turned negative, and it has operated with emergency liquidity support from Bangladesh Bank. At the end of 2025 it held deposits of Tk 33,299 crore against loans of Tk 35,952 crore, more than half of which were classified as non-performing. A turnaround programme built on deposit stabilisation, fresh capital and a shift towards retail and small-business lending is under way under new leadership.

History

AB Bank was created at the start of Bangladesh's experiment with private-sector banking. Denationalisation in the early 1980s opened the industry to private owners, and Arab Bangladesh Bank — incorporated on 31 December 1981 and in business from 12 April 1982 — was the first private commercial bank to open its doors. Its founding chairman was M. Morshed Khan, a businessman who later served as foreign minister, and his family and Pacific Group interests remained the dominant sponsor shareholders for decades.

The foreign partner did not stay long. Dubai Bank Limited, which later changed its own name to Union Bank of the Middle East, decided in early 1987 to concentrate on its home market and sold its shares to the Bangladeshi sponsor shareholders, leaving the bank fully locally owned barely five years after it opened. The bank nevertheless kept its Arab-era name for another two decades, until shareholders approved a change of name in September 2007 and Bangladesh Bank approved "AB Bank Limited" on 14 November 2007.

The bank was an early innovator. Bank histories credit it with a string of firsts in Bangladeshi banking, among them an early ATM installation, a merchant banking wing, syndication finance and the first locally owned finance house abroad, in Hong Kong. It opened a branch in Mumbai, India, on 6 April 1996, which remains its only overseas branch. In 2014 it completed the acquisition of Cashlink Bangladesh Limited, the multi-bank ATM switching network, taking a 90 percent stake. For years the formula worked: by 2009 AB Bank was among the most profitable listed banks in the country.

The decline began in the following decade and is examined in the Challenges and Controversies section below. Profits dried up in 2017, the bank failed to pay a dividend and its shares were relegated to the Z category of the stock exchange reserved for poor performers. A partial recovery under a special rescheduling policy in 2019 was not sustained, and the full scale of the bank's problems became visible only after August 2024.

Ownership and Leadership

AB Bank is a publicly listed company. Its sponsor shareholding was historically concentrated in the family and business interests of founding chairman M. Morshed Khan, who at one point held around a quarter of the shares and, according to reporting by The Daily Star and The Business Standard, nominated most of the directors on the board. The four subsidiaries — AB Investment Limited (merchant banking), AB Securities Limited (brokerage), Cashlink Bangladesh Limited (ATM switching) and AB International Finance Limited in Hong Kong — are between 90 and 100 percent owned by the bank.

The board was reconstituted after the political changeover of August 2024, bringing in several former bank managing directors as directors. Kaiser A. Chowdhury, who had himself served as the bank's managing director from 2005 to 2012, was elected chairman in May 2025. He was succeeded in June 2026 by Md Fazlur Rahman, a chartered accountant who joined the bank as a vice-president in 1997 and served as its president and managing director from 2012 to 2014; Rahman took over as chairman on 18 June 2026, having previously been vice-chairman, and Feroz Ahmed serves as vice-chairman.

Executive leadership has changed just as quickly. Syed Mizanur Rahman, a long-serving AB Bank executive who became managing director and CEO in May 2025, left in late 2025 to become managing director of Meghna Bank, taking up that post on 4 December 2025. Additional managing director Reazul Islam then ran the bank as acting managing director and CEO through the first half of 2026. On 19 August 2026 the bank appointed Areef Billah Adil Chowdhury as managing director. Chowdhury came from National Bank, where he had been managing director, and had earlier led Bank Asia as its president and managing director — a background in restructuring banks.

Products and Services

AB Bank offers conventional retail, corporate and SME banking, together with a dedicated Islamic banking branch in Dhaka's Kakrail area and an offshore banking unit. Retail products include current and savings accounts, fixed deposits and monthly savings schemes, personal and home loans, and Visa debit and Mastercard credit cards. In October 2026 the bank added "AB Century", a fixed deposit that matures in 100 days, as part of a push to rebuild its deposit base.

Corporate banking remains dominant: at the end of 2025 corporate loans of about Tk 31,975 crore represented roughly 91 percent of the loan book, concentrated in sectors such as steel, textiles and readymade garments, trade finance and syndication. This concentration is what the current strategy seeks to reduce, shifting new lending towards retail customers, women entrepreneurs and micro, small and medium enterprises. The bank also provides treasury services, remittance and non-resident Bangladeshi (NRB) services, priority banking and custodian services.

The subsidiaries extend the offer beyond branch banking. AB Investment Limited conducts merchant banking, including issue management and portfolio services; AB Securities provides stock brokerage; Cashlink operates ATM switching infrastructure; and AB International Finance in Hong Kong provides trade and finance services, supported by representative offices in London and Yangon.

Branch Network and Outreach

AB Bank's physical network is mid-sized by Bangladeshi standards. As of April 2026, when the bank marked its 44th anniversary, it operated 104 branches — including the Mumbai branch, its single branch outside Bangladesh — and 64 sub-branches. A year earlier it reported more than 270 ATM booths across the country, and its agent banking network, a channel it has expanded to reach rural and low-income customers, stood at 235 outlets in October 2025.

The network is heavily weighted towards the main commercial centres, with Dhaka and Chittagong accounting for a large share of branches and ATMs, reflecting the bank's corporate origins. Sub-branches and agent outlets are the main vehicles for its financial inclusion plans, and management has announced further sub-branch expansion aimed at low-income customers.

Financial Performance

AB Bank's published results divide into two sharply different periods. Until the mid-2010s it was a consistently profitable, dividend-paying bank. The deterioration that began in 2017 deepened after 2024, when audits and inspections brought previously undisclosed bad loans onto the books.

The year 2024 produced the first full-year loss in the bank's history: a net loss after tax of Tk 1,918 crore on a standalone basis (Tk 1,906 crore consolidated). Losses roughly doubled in 2025, to Tk 3,706 crore standalone and Tk 3,889 crore consolidated, making AB Bank one of the largest loss-makers among private banks in a year when the banking sector as a whole lost a record Tk 1.36 lakh crore. The core problem is interest income: because so much of the loan book pays nothing, standalone net interest income was negative Tk 3,543 crore in 2025, only partly offset by fees, commissions and other income.

The balance sheet at 31 December 2025 showed total assets of Tk 41,911 crore and deposits of Tk 33,299 crore, up modestly from Tk 32,292 crore a year earlier — a sign that depositors, so far, have stayed. Loans and advances stood at Tk 35,952 crore, of which Tk 20,323 crore, or 56.5 percent, were classified. That year-end figure was itself an improvement on the position reported at the end of September 2025, when defaulted loans were put at Tk 30,138 crore — nearly 84 percent of the loan book — after Tk 20,023 crore of previously hidden bad loans surfaced within a year; a central bank rescheduling facility in late 2025 returned part of the portfolio to unclassified status.

Capital has been wiped out. The bank's capital to risk-weighted assets ratio was negative 3.78 percent at the end of 2025 against a regulatory requirement of 12.5 percent, and Bangladesh Bank data put its capital shortfall at Tk 6,551 crore. The bank has depended on the central bank for cash as well as forbearance: Bangladesh Bank extended Tk 3,070 crore in liquidity support during 2025, and cumulative support reached Tk 4,270 crore by late September 2026. There have been early signs of stabilisation — the net loss narrowed to Tk 880 crore in the third quarter of 2026, from Tk 1,342 crore a year earlier — but the bank remains loss-making and under close supervisory scrutiny.

Digital Banking

Digital channels are delivered mainly through AB Direct, the bank's internet and mobile banking platform, first launched in 2017 and revamped in 2025. Through AB Direct, customers can check balances and statements, transfer funds to accounts at any bank in Bangladesh, pay utility bills and credit card bills, recharge mobile phones and locate branches and ATMs, with two-factor authentication for security. The bank has also announced plans to offer app-based nano loans, small instant credits that do not require a branch visit, as part of its retail and inclusion strategy.

These channels sit alongside SMS banking, a nationwide ATM network shared through the bank's own Cashlink switch, agent banking outlets with biometric service points, and a 24-hour contact centre. Management presents digital banking as central to the turnaround, since a retail-led digital model needs less capital than the corporate lending that produced the bank's problems.

Challenges and Controversies

AB Bank's present crisis has deep roots in governance failures that were documented long before 2024. A Bangladesh Bank inspection in 2017 found that about Tk 165 crore had been laundered to the United Arab Emirates through two little-known companies in the guise of investment. The central bank posted an observer at the bank in May 2017, and chairman M. Wahidul Haque resigned in December 2017 at the central bank's directive; he was arrested by the Anti-Corruption Commission the following month in connection with the laundering case.

A second wound was self-inflicted through connected lending. The bank had guaranteed Tk 350 crore of loans taken by Citycell, the mobile phone operator owned by its founding chairman, M. Morshed Khan. When Citycell collapsed, the liability fell on AB Bank; its exposure reached about Tk 705 crore by October 2018, and in December 2018 the board — which included Khan's nominees — waived around Tk 229 crore of interest and rescheduled the loan on terms far softer than central bank rules allowed, according to The Daily Star's investigation. The Anti-Corruption Commission subsequently filed cases over the Citycell borrowing.

These were not isolated episodes. In 2008 the securities regulator fined the bank Tk 10 crore for breaching securities rules through excessive margin loans, most of them to its own employees and their relatives. A former deputy managing director was charged in 2016 with embezzling Tk 325 crore, and a former vice-president received a life sentence the same year for embezzling funds with his wife. Default loans climbed from Tk 967 crore at the end of 2017 to Tk 1,664 crore a year later, and although reported figures later improved under rescheduling policies, the underlying portfolio kept deteriorating.

The reckoning came after August 2024, when a forensic audit by a foreign auditor appointed under the government's Banking Reform Task Force, together with Bangladesh Bank's asset quality review, exposed loans worth tens of thousands of crores of taka that had been kept off the default list. The consequences — record losses, negative capital, restrictions on business and reliance on central bank liquidity — are described in the Financial Performance section. AB Bank was not included in the 2025 merger of five distressed Shariah-based banks into Sammilito Islami Bank, as that scheme covered Islamic banks only, and the central bank has instead pursued a supervised turnaround of the bank as a standalone institution.

Corporate Social Responsibility

AB Bank's social programmes date back to its profitable years and have centred on education. They include the Morshed Khan Education Stipend for students of Chittagong Collegiate School and College, an education trust fund for the children of the bank's non-cadre employees, and support for autistic and visually impaired children, alongside blood donation drives run with Sandhani, food distribution in orphanages and computer donations to schools.

As with other distressed banks, community spending has shrunk with the bank's finances. Bangladesh Bank data show that AB Bank contributed Tk 1.6 crore to disaster management in the first seven months of 2024, modest beside the sums spent by profitable banks, and its recent CSR activity has largely been limited to participation in sector-wide relief efforts. A fuller programme depends on the return to profitability the turnaround targets.

Outlook and Conclusion

AB Bank's management has set out a five-year strategy that runs to 2030. Its first phase, through 2025, was stabilisation; from 2026 the stated goal is sustainable growth. The plan's main elements are to protect and grow the deposit base, rebuild capital — the board has said it wants to bring in strategic investors and has begun collecting fresh capital from sponsor directors — and to rebalance the loan book away from large corporate exposures towards retail and MSME lending. The bank set a target of bringing its non-performing loan ratio below 25 percent during 2026.

The appointment in August 2026 of a managing director with experience of restructuring other banks, and the narrowing of quarterly losses during 2026, give the plan some credibility. Against that stand the scale of the hole in the balance sheet — a capital shortfall of Tk 6,551 crore at the end of 2025 — continued operating losses, and an economy-wide banking crisis in which the sector's overall capital ratio is negative. AB Bank's future will be decided less by its branch network or its history of innovation than by whether recoveries from defaulted borrowers, fresh shareholder capital and regulatory patience can together restore a positive capital position. Four decades after it opened as the symbol of a new era in Bangladeshi banking, the country's first private bank is fighting to remain part of the system it helped to create.