Profitability of the scheduled banks faced a fresh blow at the September-end quarter of the year 2019 amid growing non-performing loans in the banking sector.
Both two parameters of profitability — returns on asset (RoA) and returns on equity (RoE) — of the banks deteriorated at the end of September, 2019.
As per the Bangladesh Bank’s financial stability assessment report released on Sunday, returns on equity of the scheduled banks were 1.9 per cent negative, which were 3.6 per cent three months ago.
Besides, returns on asset of the banking sector dropped to 0.1 per cent at the September-end quarter from 0.2 per cent at the June-end quarter, the BB report said.
It said that the RoA of most of the banks remained below 2 per cent while the RoE remained below 5 per cent for a large number of banks.
Bankers said that the country’s banking sector had failed to improve its health due to growing volume of defaulted loans also known as non-performing loans.
The amount of the banks’ defaulted loans swelled to Tk 1,16,288 crore at the end of September last year from Tk 1,12,425 crore at the end of June as the special loan rescheduling policy encouraged borrowers to be chronic defaulters.
With the addition of fresh Tk 3,863 crore in defaulted loans in July-September, the ratio of defaulted loans increased to 11.99 per cent from 11.69 per cent of the outstanding loans.
The RoA of 49 banks was within 2 per cent at the end of September, 2018 and the number of banks managed to secure 2 per cent RoA increased to 53 at the end of September, 2019.
The number of banks securing 2-4 per cent RoA dropped to 4 at the end of September, 2019 from 8 banks a year ago, the BB report showed.
As the number of banks that secured up to 5 per cent RoE increased to 24 at the September end last year from 21 a year ago, the number of comparatively poor performing banks increased.
The number of banks that secured above 5 per cent RoE dropped to 33 at the September end, 2019 from 36 a year ago, meaning that the number of better performing banks decreased.
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