Most of the banks in Bangladesh made higher operating profits in the just concluded year amid swelling of bad loans in the country’s banking sector.
Although the majority of the banks managed to attain higher operating profits in 2018, it would now depend on the banks whether they would be able to make higher net profits or not, said Bangladesh Bank officials.
According to available data, operating profits of 19 banks out of 24 increased in the period and that of the rest five decreased.
Operating profit is the profit generated from the core business of a company that includes interest and taxes. Dividend is disbursed by a bank to its shareholders after excluding taxes and other expenses from its operating profit.
Bank officials said rampant credit disbursement by the banks in 2017, when banks disbursed loans without complying with rules properly, might be the main reason for achieving higher amount of operating profits by the banks in 2018.
But the banks were subsequently forced to streamline advance deposit ratio that reduced their financial capacity to disburse loans in the year of 2018, they said.
Besides, the defaulted loans of the banks hit Tk 99,370 crore as of September 30, 2018, which is 11.48 per cent of Tk 8,65,930 crore total outstanding loans in the country’s banking system.
BB officials said if the banks failed to bring down their defaulted loans, their net profits would take a hit in final count as they would have to keep provisions against the defaulted loans.
‘It’s usual that the operating profits of the banks will increase as their balance sheets are growing every year,’ said Dhaka Bank managing director Syed Mahbubur Rahman.
Asset quality of the banks and their distributable profits are much more important than the operating profits, said Mahbubur, also the chairman of Association of Bankers, Bangladesh.
‘We will be able to know the real picture within next two months when net profits would be calculated,’ he said.
Of the banks, Islami Bank Bangladesh posted the highest operating profit — Tk 2,770 crore — among the scheduled banks in 2018. The bank’s operating profit was Tk 2,420 crore in 2017.
Along with Islami Bank, Sonali Bank, NBL, Southeast Bank and Pubali Bank made more than Tk 1,000 crore in operating profits in the just concluded year.
IBBL’s profit increased by 14.46 per cent or Tk 350 crore in 2018 compared with that in the previous year.
Sonali Bank made second highest — Tk 1,900 crore —operating profit in 2018 against Tk 1,206 crore in the previous year.
Operating profit of the bank grew by 57.54 per cent or Tk 694 crore in 2018.
National Bank’s operating profit increased by 6.36 per cent to Tk 1,229.63 crore in 2018 from Tk 1,156 crore in the previous year.
Operating profit of Southeast Bank increased to around Tk 1,000 crore in 2018 from Tk 906 crore in the previous year while that of Pubali Bank rose to Tk 1,000 crore from Tk 915 crore.
Agrani Bank made Tk 900 crore in operating profit in 2018 against Tk 717 crore in the previous year.
Eastern Bank’s operating profit in 2018 stood at Tk 780 crore while the figure was Tk 750 crore a year ago.
Operating profit of Al-Arafah Islami Bank rose to Tk 721 crore from Tk 703 crore, that of EXIM Bank to Tk 710 crore from Tk 610 crore and that of Social Islami Bank to Tk 700 crore from Tk 650 crore.
Operating profit of Bangladesh Development Bank Limited, Rupali Bank, NRB Global Bank, Meghna Bank and Mercantile Bank dropped in last year compared with their profits in the previous year.
BDBL’s operating profit fell by 84 per cent or Tk 633 crore to Tk 116.6 crore in 2018 against Tk 750 crore a year ago.
Operating profit of Rupali Bank fell by 36.34 per cent to Tk 345 crore in 2018 against Tk 542 crore in the previous year.
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