Operating profits of most of the banks inched up in the January-June period of the year 2017 as banks went for aggressive lending exceeding the central bank-set target.
Officials of Bangladesh Bank said that banks in the six months disbursed loans beyond the central bank’s target of 16.8 per cent for the January-June period of the year.
As per the central bank data, the private sector credit growth was between 17 per cent and 19 per cent in last few months.
Besides the higher credit flow in the first half, a sudden rise in interest rate might be another reason for the banks’ operating profit growth, BB officials said.
Central bank officials and bankers, however, said that the banks might face net profit fall due to a sharp increase in nonperforming loans in the banking sector.
In the January-March period of the year, the amount of classified loans in Bangladesh’s banking sector soared by 19.22 per cent or Tk 14,286 crore as the restructured loans again became classified in absence of any measure against the wilful defaulters.
As per the BB data, the amount of classified loans increased to Tk 88,589 crore at the end of March 2018 from Tk 74,303 crore on December 31, 2017.
Of the banks, Islami Bank Bangladesh made highest —Tk 1,020 crore — operating profit in January-June this year against Tk 881 crore in the same period of the previous year.
Operating profit of Southeast Bank was Tk 456 crore in the first half of the calendar year while the figure was Tk 411 crore in the same period a year ago.
Al-Arafah Islami Bank’s operating profit, however, dropped a bit to Tk 260 crore from Tk 320 crore.
Asked about the reason for operating profit growth of most of the banks, Eastern Bank managing director Ali Reza Iftekhar told New Age, ‘The operating profit growth of the banks is very much noraml due to the growth in balance sheets.’
‘We should not give much attention to operating profits, rather we should focus on reducing nonperforming loans,’ he said.
A reduction in nonperforming loans would help banks to attain higher profits after taxes, otherwise they would not be able to keep anything from their operating profits after provisioning, deducting taxes and exclusion of other expenses, he said.
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