Net profit of most banks listed with the capital market rose in July-September period of 2014 compared to the same period of the previous year amid relaxed loan rescheduling facility against defaulted loans and increased interest margin on working capital.
Out of the 30 banks listed with the capital market, net profit of 18 banks increased during the third quarter of the calendar year, according to data published by the Dhaka Stock Exchange.
Bankers and experts said the facility period for relaxed provisioning had expired in July this year but its impact helped most of the banks keep reduced amount of provisioning against the classified loans increasing the their net profit during the third quarter of the calendar year.
In terms of doing business, banks are passing the tough time as import of capital mercenary has been dissatisfactory for around one year and the banks are holding huge amount of idle money, they said.
They, however, said it would be difficult for the banks to sustain the earning at the end of the year as loan provisioning might increase significantly in the coming days.
The BB on December 23 last year had relaxed rescheduling policy for six months for all kinds of loans of the businesses which had suffered losses due to the then political unrest centring holding of national elections.
Under the relaxed policy, the scheduled banks regularised loans of more than Tk 15,000 crore taken by the unrest-hit businesses as of December 31, 2013.
On the other hand, due to the pre-polls unstable political situation and rise in defaulted loans, last six months of 2013 were tough for the overall banks and all other businesses, the experts said.
As the political situation is now relatively better than the previous year, so do the businesses, they said.
The banks that made increased profit are: AB Bank, BRAC Bank, City Bank, Dhaka Bank, Eastern Bank, EXIM Bank, ICB Islami Bank, Islami Bank Bangladesh, Mercantile Bank, Mutual Trust Bank, National Bank, NCC Bank, ONE Bank, Rupali Bank, Shahjalal Islami Bank, Social Islami Bank, Southeast Bank and Trust Bank.
On the other hand, net profit of Al-Arafah Islami Bank, Bank Asia, Dutch-Bangla Bank, First Security Islami Bank, IFIC Bank, Jamuna Bank, Premier Bank, Prime Bank, Rupali Bank, Standard Bank, United Commercial Bank and Uttara Bank declined during the period.
Dhaka University finance department professor M Baki Khalili, while talking to New Age on Friday, said, ‘First of all, increased interest margin on working capital might be the main reason behind the rise in profit of the banks as the long-time loan disbursement is very much insignificant.’
Interest margin on working capital is now around 9 per cent, he mentioned.
As the banks’ loan rescheduling under the Bangladesh Bank’s relaxed rules was significant that might be another reason that helped the banks gain increased net profit compared with the same period of the previous year, he said.
Meghna Bank managing director Mohammed Nurul Amin told New Age, ‘The relaxed period of defaulted loan rescheduling has already expired, but it has an impact on the banks’ increase in profit during the period.’
Claiming of having no immediate impact of declined interest rate on deposits, the former president of Association of Bankers Bangladesh also said that it would take at least six months to put an impact on banks’ profit.’
Although banks are having huge amount of liquidity, diversification of business might be another ingredient that has helped banks in achieving improved earning with the help of relatively calm political situation, Amin said.
Diversification of business like SMEs, credit cards etc might also help the entities gather increased profit, he said.
Of the 30 listed banks, 11 banks made net profit above Tk 50 crore. Shahjalal Islmai Bank made net profit of Tk 85.89 crore against its profit of Tk 62.86 crore in the same period of the previous year.
AB Bank made Tk 84.23 crore, BRAC Bank Tk 75.56 crore, Mercantile Bank Tk 74.49 crore, Southeast Bank Tk 71.77 crore, City Bank Tk 55.65 crore, Trust Bank Tk 55.09 crore and Dutch-Bangla Bank earned Tk 52.51 in the July-September period.
On the other hands, Al-Arafah Islami Bank, Premier Bank and ICB Islamic Bank were the worst performing banks registering losses worth Tk 2.26 crore, Tk 2.02 crore and Tk 0.89 crore respectively in July-September period of the year.
-With New Age input
