Dhaka, Bangladesh (BBN) – The operating profit of the country’s private commercial banks (PCBs) showed a mixed trend in the first six months of the current calendar year.
“Non-primary dealer (PD) banks have done better than the PD ones during the period under review,” a senior banker told BBN in Dhaka, adding that the PD banks have experienced a tough time in their operational performance due to liquidity constraint on account of their holding of a large chunk of government securities.
“Most of the leading PCBs are still working to prepare their half-yearly financial statements, which will be finalized soon” a senior official of a leading PCB said.
The un-audited operating profit, however, does not indicate the actual financial position of a bank. The banks have to leave aside funds, on account of provisioning for their classified loans and also for payment of taxes to the government.
Among the banks, the operating profit of the Shahjalal Islami Bank was BDT 2.43 billion during the first six months of 2012 against that of BDT 1.56 of the same period of the previous year. The Uttara Bank earned BDT 1.85 billion against BDT 1.71 billion.
The Al-Arafah Islami Bank earned BDT 2.85 billion as operating profit against BDT 1.70 billion earned during the corresponding period of the last year, while that of the EXIM Bank rose to BDT 2.26 billion from BDT 1.05 billion.
The operating profit of the Bangladesh Commerce Bank came down to BDT 200 million during the period under review from BDT 230 million of the same period of the previous year.
The Bank Asia earned BDT 2.54 billion as operating profit against BDT 2.15 billion, while that of the Jamuna Bank rose to BDT 1.56 billion from BDT 1.49 billion.
The operating profit of the Standard Bank rose to BDT 1.92 billion during the first six months of this year from BDT 1.34 billion in the corresponding period of the previous year. The Premier Bank earned around BDT 1.00 billion as operating profit against BDT 1.11 billion.
A leading private PD bank earned BDT 1.78 billion as operating profit during the period, compared to that of BDT 2.01 billion in the same period of the previous year.
“Now we’re not able to compete with the non-PD banks as we are holding government securities worth BDT 240 billion against our underwriting obligations,” a senior member of the Primary Dealers Bangladesh Limited (PDBL) said while explaining their present situation.
He also said the cost of fund for the PD banks has increased in the recent months, as there is a correlation between inter-bank call money rate and interest rates on deposit.
The profit of some non-PD banks declined due to rising trend of classified loan in the recent months following a sluggish trend in business, the bankers said.
“There is a twin-effect of default loans in the banking system,” a chief executive officer of a leading PCB said.
The banks will have to keep the interest earned from default loans to their interest suspense account, instead of taking it into profit account, he said, adding that the banks will have to ensure provisioning against total default loans from their profit.
BBN/SSR/AD-02July12-1:49 am (BST)