Mixed trend marks H1 profit earning by PCBs

FT ONLINE

The unaudited operating profit of the country's private commercial banks (PCBs) showed a mixed trend in the first half (H1) of the current calendar year (2018).

Of the 40 PCBs, the operating profit of 14 recorded an upward trend, while that of six banks witnessed a downturn, according to the provisional data for the six-month period from January to June.

The data of the rest PCBs were not immediately available.

In the final count, the amount of profit may be a little higher or lower, said officials of different commercial banks.

The unaudited operating profit, however, does not indicate the actual financial position of a bank. The banks have to leave aside funds for provisioning their bad debts and taxes payable to the government.

The rising trend in credit, practically in the private sector, helped the banks to pick up their operating profit in the first half of the year compared to that of the same period last year, according to the bankers.

The private sector credit growth was higher than the target, set by the central bank for the January-June period of the just-concluded fiscal year (FY), 2017-18. However, the last couple of months of the year saw a falling trend in the private sector credit growth.

The credit growth rate came down to 17.65 per cent in April 2018 on a year-on-year basis from 17.98 per cent in March, according to the Bangladesh Bank's (BB) latest statistics.

It was 18.49 per cent in February 2018.

The central bank earlier projected that the private sector credit would grow at the rate of 16.80 per cent in June 2018.

"The private sector credit growth increased significantly in the recent months due to higher trade financing by the banks for settling import payment obligations," a senior executive of a PCB said.

The country's overall imports grew by over 15 per cent in the first 10 months of FY 2018, mainly due to higher import of food grains and fuel oils.

The settlement of letters of credit (LCs), in terms of value, rose to nearly US$ 43 billion during the July-April period of FY 18 from $ 37.37 billion in the same period of FY 17.

Besides, the upward trend in interest rate spread also pushed up the overall operational profit of the banks, according to another private banker.

The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.46 per cent in April 2018 from 4.41 per cent in January, the BB data showed.

The senior bankers also said some banks could not perform as expected during the period under review, mainly due to an increase in their volume of non-performing loans (NPLs).

The volume of NPLs in the banking system jumped by over 19 per cent to Tk 885.89 billion during the January-March period of this year from Tk 743.03 billion in the preceding quarter.

M A Halim Chowdhury, managing director (MD) and chief executive officer (CEO) of Pubali Bank Limited, said a large volume of NPLs and a sluggish trend in the share market have pushed down the banks' profit during the period.

Between January 01 and June 28, DSEX, the prime index of the Dhaka Stock Exchange (DSE), slumped more than 839 points or 13.44 per cent, ending at 5,405.

The banks' profit may decrease in the second half (H2) of this year, as they have decided to slash their interest rates on lending and deposit in line with the decision of the Bangladesh Association of Banks (BAB), the bankers opined.

On June 20, the BAB decided to bring down the interest rates on both lending and deposit to 9.0 per cent and 6.0 per cent respectively from July 01.

Among the PCBs, the operating profit of Islami Bank Bangladesh Ltd rose to Tk 10.20 billion in the January-June period of 2018 from Tk 8.81 billion in the same period of 2017.

Southeast Bank Ltd earned Tk 4.56 billion as operating profit during the period under review against Tk 4.11 billion in the same period last year.

The operating profit of Pubali Bank Ltd came down to Tk 4.51 billion in the first six months of this year from Tk 4.58 billion in H1 of 2017.

Bank Asia Ltd and Mercantile Bank Ltd made Tk 4.18 billion and Tk 3.25 billion as operating profit against Tk 3.07 billion and Tk 3.24 billion respectively.

The operating profit of Dutch-Bangla Bank Ltd rose to Tk 4.18 billion in H1 of 2018 from Tk 3.50 billion in the same period last year, while the profit of National Bank Ltd rose to Tk 3.10 billion from Tk 3.00 billion.

Al-Arafah Islami Bank Ltd earned Tk 2.60 billion as operating profit against Tk 3.20 billion, while operating profit of First Security Islami Bank Ltd came down to Tk 1.28 billion from Tk 2.22 billion.

The operating profit of EXIM Bank Ltd rose to Tk 3.25 billion in the period under review from Tk 3.20 billion in the same period of 2017.

NCC Bank Ltd made operating profit worth amounting to Tk 2.98 billion in H1 of 2018 against Tk 2.37 billion in the same period last year.

The operating profit of Shahjalal Islami Bank Ltd rose to Tk 2.15 billion in the period under review against Tk 1.73 billion in the same period last year.

The profit of Social Islami Bank Ltd (SIBL) rose to Tk 2.75 billion from Tk 2.55 billion.

Meghna Bank Ltd made operating profit worth Tk 350 million in H1 of 2018 against Tk 510 million in H1 of 2017, while South Bangla Agriculture and Commerce Bank Ltd earned Tk 880 million against Tk 630 million.

The operating profit of Mutual Trust Bank Ltd rose to Tk 2.29 billion during the period under review from around Tk 1.80 billion in the same period of last year.

Jamuna Bank Ltd made operating profit worth Tk 2.65 billion in H1 of 2018 against Tk 1.86 billion in the same period of 2017.

Modhumoti Bank Ltd earned Tk 880 million in operating profit in H1 of this calendar year compared to Tk 720 million earned in the same period of 2017.

Eastern Bank Ltd and Union Bank Ltd earned Tk 3.65 billion and Tk 1.04 billion respectively in H1 2018 as operating profit as against Tk 3.75 billion and Tk 1.18 billion during the same period of last year.