Operating profits of PCBs rise despite NPLs

Operating profits of the country's private commercial banks (PCBs) showed an upturn in the first six months (H1) of this calendar year (2019) although the volume of classified loans in the banking sector is on the rise, bankers said.

Of 40 PCBs, 19 marked an upward trend in operating profits, while no bank witnessed downturn, according to provisional data for the six-month period from January to June. The data of the rest were not immediately available.

Un-audited operating profits, however, do not indicate the actual financial position of the banks, as they have to leave aside funds for provisioning bad debts and taxes payable to the government.

Among the PCBs, the operating profit of Islami Bank Bangladesh Ltd rose to Tk 12.23 billion in the January-June period of 2019 from Tk 10.21 billion in the same period of 2018.

The operating profit of Pubali Bank Ltd rose to Tk 5.40 billion in the first six months of this year from Tk 4.47 billion in H1 of 2018.

Southeast Bank Ltd earned Tk 5.05 billion as operating profit during the period under review against Tk 4.56 billion in the same period last year.

The operating profit of Dutch-Bangla Bank Ltd rose to Tk 5.10 billion in H1 of 2019 from Tk 4.18 billion in the same period last year. The profit of NCC Bank Ltd reached Tk 3.60 billion from Tk 2.97 billion.

Bank Asia Ltd and Mercantile Bank Ltd made Tk 4.65 billion and Tk 3.31 billion as operating profits against Tk 4.17 billion and Tk 3.25 billion respectively.

Al-Arafah Islami Bank Ltd earned Tk 4.05 billion as operating profit against Tk 2.60 billion, while operating profit of First Security Islami Bank Ltd rose to Tk 2.81 billion from Tk 1.28 billion.

The operating profit of EXIM Bank Ltd rose to Tk 3.30 billion in the period under review from Tk 3.25 billion in the same period of 2018.

The operating profit of Shahjalal Islami Bank Ltd rose to Tk 3.20 billion in H1 of 2019 against Tk 2.10 billion in the same period last year, while the profit of Social Islami Bank Ltd reached Tk 2.94 billion from Tk 2.75 billion.

The operating profit of Mutual Trust Bank Ltd rose to Tk 2.73 billion during the period under review from Tk 2.29 billion in the same period of last year.

Premier Bank Ltd made operating profit worth Tk 2.54 billion in H1 of 2019 against Tk 2.12 billion in the same period of 2018.

Meghna Bank Ltd made operating profit worth Tk 450 million in H1 of 2019 against Tk 350 million in the corresponding period, while South Bangla Agriculture and Commerce Bank Ltd earned Tk 900 million against Tk 880 million.

Modhumoti Bank Ltd earned Tk 960 million as operating profit in Jan-June period of this calendar year compared to Tk 880 million in the same period of 2018, while the profit of NRB Bank rose to Tk 390 million from Tk 270 million.

NRBC Bank Ltd made operating profit amounting to Tk 900 million in H1 of 2019 against Tk 770 million in the same period last year.

The rising trend in the volume of credit, particularly in the private sector, has helped the banks pick up on their operating profits in H1 of 2019 compared to the same period last year, according to the senior bankers.

Meanwhile, the total outstanding loans with the private sector rose to Tk 9,879.29 billion in April 2019 from Tk 8,815.11 billion a year ago, according to the central bank's latest statistics.

Besides, some banks, having offshore banking unit (OBU) operations, earned a notable amount through providing foreign currency loans to their customers. Currently, 35 commercial banks, out of 58, are running their OBUs across the country, they added.

"Interest rate on London Inter-Bank Offered Rate (LIBOR), particularly for 182-day, dropped to 2.32 per cent on June 28 from around 3.0 per cent a month ago," a senior executive of a leading PCB said.

The private bankers also said some banks have already been able to earn a significant amount from their treasury operations.

However, some banks could not perform in H1 of 2019 as per expectation mainly due to an increase in their volume of non-performing loans (NPLs), according to the bankers.

The volume of classified loans increased by more than 18 per cent to Tk 1,108.73 billion in the first quarter of 2019 from Tk 939.11 billion in the previous quarter, the Bangladesh Bank (BB) data showed.

The private bankers opined that the operating profits may rise in the second half (H2) of this year, if the banks are able to reduce the amount of their NPLs by gearing up recovery drives across the country.

"It's a normal profit trend," M A Halim Chowdhury, managing director (MD) and chief executive officer (CEO) of Pubali Bank Limited,

He also said higher volume of disbursed loans has helped the banks to earn such profits.