Dhaka, Bangladesh (BBN)– The overall asset quality of the country’s banking sector deteriorated slightly in 2016 mainly due to higher classified loans particularly in the public banks.
The gross non-performing loans (NPL) ratio of the banking sector rose to 9.2 per cent in 2016 from 8.8 per cent a year before due to higher NPL ratio of the sate-owned commercial banks (SoCBs), according to Financial Stability Report (FSR) 2016, published by the Bangladesh Bank (BB) on Monday.
Similarly, net NPL ratio increased by 50 bps mainly due to higher provisions shortfall in the SoCBs.
“Due to a sizeable provision shortfall of three SoCBs, further shortfall in banking sector’s overall loan loss provision was recorded in 2016,” the FSR explained.
Rolling out the FSR 2016 at the central bank headquarters in Dhaka, BB Governor Fazle Kabir alerted the bankers so that “corporate default culture” couldn’t grab country’s financial sector.
At the report-launching meeting, country’s top bankers urged all stockholders to help address the classified-loan issue properly to ensure the stability in the country’s banking sector.
Anis A Khan, chairman of the Association of Bankers, Bangladesh (ABB), advised that the banks take effective measures to improve upon their efficiency, productivity and profitability through reducing the volumes of NPL.
Arif Khan, chief executive officer (CEO) and Managing Director of IDLC Finance Limited, said Bangladesh’s banking-sector NPL far outstrips that of India, Thailand and Malaysia.
“We need to address the NPL issue properly for ensuring the stability in the country’s financial sector,” Mr. Khan explained.
Among others, Allah Malik Kazemi, change management adviser of the BB, Deputy Governors of the central bank Abu Hena Mohd. Razee Hassan, SK Sur Chowdhury and SM Moniruzzaman, Chief Economist of the BB Dr. Faisal Ahmed and Abrar A. Anwar, CEO of the Standard Chartered Bangladesh, also spoke on the occasion.