Liquidity crisis, lower lending rate, provision shortfall and NPL have eaten up huge amount of profits
Abu Sazzad: Operating profits of most commercial banks in the just concluded year registered higher growth despite a number of challenges including liquidity crisis, lower lending rate, provision shortfall and huge burden of NPL. Such obstacles played major reasons behind earning more profit in the last year 2018, banking sources said.
Out of the banks, Islami Bank Bangladesh Limited (IBBL) has earned the highest operating profit amounting to Tk 2,720 crore in the concluded year 2018 which was Tk 2,250 crore in 2017.
Of the private commercial banks, Pubali Bank is holding the second highest position in making profit of Tk 1025 crore, followed by Tk 1,000 crore for Southeast Bank, Tk 922 crore for Dutch-Bangla Bank, Tk 811 crore for Bank Asia and Tk 780 crore for Eastern Bank, Tk 722 crore for Al-Arafah Islami Bank, Tk 710 crore for EXIM Bank, Tk 673 crore for Mercantile Bank, Tk 655 crore for NCC Bank, Tk 620 crore of Jamuna Bank, Tk 618 crore for Premier Bank, Tk 572 crore for One Bank and Tk 515 crore for Mutual Trust Bank.
The bank-wise profit for 2018 was Tk 475 crore of Shahjalal Islami Bank, Tk 410 crore of First Security Islami Bank, Standard Tk 380 crore, South Bangla Tk 205 crore, Modhumoti Bank Tk 200 crore, Bangladesh Development Bank Tk 116 crore, Meghna Bank Tk 193 crore, and Social Islami Tk 275 crore.
On the other hand, of the state-owned commercial banks, Sonali Bank marked the highest operating profit amounting to Tk 1,900 crore while it was Tk 1,205 crore in 2017. The operating profit of Agrani Bank and Rupali were Tk 900 crore and 345 crore respectively in 2018.
Apart from this, out of the fourth generation bank, NRB Commercial Bank and NRB Global banks profit were Tk 203 crore and Tk 110 crore respectively in 2018.
Banking sources said, the fourth generation banks have failed to earn the expected level of profit margin due to lower lending rate and rising of default loans.
Some banks have already been able to reduce the volume of their NPLs through boosting their recovery drives along with rescheduling of their troubled credits ahead of the national polls, and for this, some banks attain the higher growth in operational profits, they said.
Sources also said that the renowned private commercial bank, Mercantile Bank had sold the IDLC share amount of Tk 52 crore in 2017, and for which, the operating profit of the bank was remarkably shoot up at Tk 711 crore but the real operating profit was Tk 659 crore.
Dr. AB Mirza Azizul Islam, the former Advisor of the Caretaker Government said real profits may be significantly lower after proper loan classification and provisioning. Operating profit, however, does not indicate the real financial health of a bank since the lenders have to make room for provisioning against non-performing loans and taxes that have to be paid to the government from the profits, Islam pointed out.
He, however, predicted that the net profit will decline from the previous year as the NPL amount have significantly risen and such bad debt is foiling the financial soundness of the banking sector. The majority of the banks have widened their respective balance sheets, which reflected in the higher operating profit figures, he added.