Most of the banks listed with the stock exchanges registered a profit fall in the January-September period of this year compared with that in the same period of the previous year.
Out of the 30 listed banks, 18 banks witnessed profit erosion, 11 banks posted profit growth and one bank made loss during the first nine months of the year, according to Dhaka Stock Exchange data.
Financial market experts said that the banking sector went through a volatile situation amid huge non-performing loans, pressure on exchange rate, rising current account deficit, and major liquidity stress that ate into the profits of the banks.
They also said that the political uncertainty in the year of national elections also played a key role in dragging down banks’ profits.
As per Bangladesh Bank data, defaulted loans soared by 20.23 per cent to Tk 89,340 crore as of June 30, 2018 from Tk 74,303 crore as of December 31, 2017.
Experts said the banks had to keep 100 per cent provision against their classified loans, which led to a decline in their profit margin.
From July to April of the fiscal year of 2017-18, the current account deficit stood at $9.37 billion as the country›s capacity to export continued to lag behind its appetite for imports.
On September 30, the interbank exchange rate was Tk 83.75 a dollar, up from Tk 80.80 a year earlier, according to BB statistics.
Bankers said that the banks had experienced major liquidity stress and volatility in interest rate in this period that created pressure on their profits.
The government has also been creating pressure on the banks to reduce lending rates.
Bankers also said that funds continued to flow to the national savings certificates as the depositors apprehended that the rates on the bank deposits might decline to 6 per cent while they receive more than 11 per cent rates in NSCs.
Experts observed that lack of governance and monitoring, presence of political influence and absence of proper regulatory policy were the main reasons for the crisis in the banking sector.
Of the banks, Exim Bank reported highest profit decline in the first nine months of the year losing 92.47 per cent compared with that in the same period of the previous year.
In the period, Exim Bank profit after tax dropped by Tk 156.25 crore to Tk 12.73 crore from Tk 168.98 crore in the same period of the previous year.
Profits of One Bank, Al-Arafah Islami Bank and United Commercial Bank dropped by Tk 135 crore, Tk 121 crore and Tk 75.21 crore respectively.
Standard Bank, Trust Bank, IFIC Bank and First Security Islami Bank each declared profit fall by more than 40 per cent.
On the other hand, Pubali Bank posted huge profit in the nine months. The bank’s profit increased by Tk 115.88 crore in the period to Tk 268.61 crore. Profits of National Bank also rose by Tk 100 crore, Bank Asia Tk 68 crore and Mutual Trust Bank Tk 67 crore.
ICB Islamic Bank was the only bank which incurred losses in the first nine months of this year.
The bank showed Tk 35.68 crore in losses against losses of Tk 28.13 crore in the same period of 2017.
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