Dhaka, Bangladesh (BBN)- The operating profits of the country's private commercial banks (PCBs) got into a mixed bag in the just-concluded calendar year, primarily due to the swelling of classified loans.
Senior bankers attributed the fall in operating profits of some larger banks to the rise in their nono-performing loans (NPLs), as a portion of the even rescheduled loans again turned classified for borrowers’ inabilities to repay the same.
Besides, the sluggish trend in the country’s capital market alongside the private-sector credit growth and different loan scams led to the lower level of profits of the banks in 2014, they added.
A good number of PCBs were able to record only a modest rate of growth in their operating profits in 2014 over the previous calendar year. But the growth rates of operating profits of some other PCBs in 2014 were lower than those in 2013, according to the bankers.
The amount of classified loans increased 11.58 per cent to BDT 572.91 billion in the July-September period of the year 2014 from BDT 513.44 billion in the previous quarter. It was BDT 481.72 billion in the first quarter in 2014.
The central bank of Bangladesh started persuasion of the banks from the first week of December to reduce the volume of classified loans by the yearend through intensifying recovery drives across the country.
“Some banks have been able to increase the amount of operating profits following the rescheduling of their good number of loans during the last week of December 2014,” a senior official of a leading private commercial bank (PCB) told BBN in Dhaka. “Some loans had been rescheduled in line with the central bank advice”.
Operating profits, however, do not indicate the real financial health of a bank. Because, the banks have to make room for provisioning against bad loans and taxes that have to be paid to government from such profits.
The operating profits of banks and non-banking financial institutions are a major source of income taxes collected from business entities by the National Board of Revenue (NBR).
As such, the aggregate position of operating profits of PCBs has an impact -- favourable or otherwise -- on revenue collection, in the form of direct taxes, collected by the NBR, depending upon the level of such profits.
Among the PCBs, the Islami Bank Bangladesh Ltd. (IBBL) was the top operating-profit earner in 2014. Its earnings rose to BDT 17.25 billion in 2014 from BDT 16 billion a year ago.
The United Commercial Bank Ltd was placed in the second position with an estimated earning of BDT 8.85 billion in operating profit -- up from BDT 7.10 billion in 2013.
The Southeast Bank Ltd stood third with an estimated earning of BDT 8.33 billion in operating profit, compared to that of BDT 6.70 billion in 2013.
The operating profit of the Prime Bank Ltd. dropped to BDT 7.10 billion in 2014 from BDT 8.32 billion in the previous year while Pubali Bank’s operating profit came down to BDT 7.90 billion from BDT 8.15 billion.
Al-Arafah Islami Bank made an operating profit worth BDT 6.45 billion in 2014 against BDT 4.57 billion of the previous year while Mutual Trust Bank earned BDT 2.80 billion, up from BDT 2.11 billion in 2013.
The operating profits of EXIM Bank rose to BDT 6.25 billion in 2014 from BDT 5.25 billion and the Social Islami Bank Ltd (SIBL) to BDT 4.70 billion from BDT 3.25 billion.
The IFIC Bank rose to BDT 4.08 billion from BDT 4.03 billion and Mercantile Bank to BDT 4.50 billion from BDT 4.30 billion.
The operating profit of the National Credit and Commerce Bank Ltd (NCCBL) came down to BDT 3.86 billion in 2014 from BDT 4.05 billion in the previous year while Shahjalal Islami Bank’s operating profit dropped to BDT 2.50 billion from BDT 2.80billion.
The First Security Bank Ltd posted an operating profit worth BDT 2.11 billion in 2014 compared to BDT 2.0 billion in 2013.
Dhaka Bank rose to BDT 4.75 billion from BDT 4.56 billion and the Premier Bank to BDT 2.65 billion from BDT 1.52 billion.
Bank Asia made an operating profit worth BDT 5.85 billion in 2014 against BDT 5.48 billion of the previous year while Jamuna Bank earned BDT 3.45 billion, up from BDT 3.21 billion in 2013.
The Modhumoti Bank Ltd posted an operating profit worth BDT 510 million in 2014 to BDT 120 million in 2013 while Union Bank’s rose to BDT 420 million from BDT 250 million.
The NRB Commercial Bank’s profit rose to BDT 390 million from BDT 110 million and South Bangla Agriculture Bank to BDT 310 million from BDT 140 million.
BBN/SSR/AD-01Jan14-12:28 pm (BST)