- Increased interest rates on bank loans
- Received various government bills
- Increased investment in bonds and foreign trade
The country's banking sector is facing a multi-faceted crisis including rising defaulted loans, liquidity crisis, and dollar crisis. However, despite the crisis, the operating profit of most banks increased by the end of 2023. The country's Islamic banks are ahead in the list of operating profit growth.
However, operating profit is not the actual profit of a bank. Operating profit is what remains after deducting expenses from income. And after deducting defaulted debt, accruals, and corporate tax from the operating profit, what remains is the net profit. Listed banks pay dividends to shareholders from net profit.
Last year, the Financial Institutions Department urged stock market investors not to invest only by looking at operating profit. There is also a ban on the disclosure of operating profit information by the regulatory body.
However, the information obtained based on personal communication from various banks has shown that the operating profit of most of the banks has increased compared to the previous year. However, the operating profit of some banks has decreased. Apart from this, some banks are also in losses.
The operating profit of the bank increased mainly based on the increase in the interest rate of bank loans and receipt of various government bills and investment in bonds and foreign trade.
According to the data received from the bank, as always, the private sector Islamic banks have made the highest profit. At the end of 2023, the bank's operating profit was Tk 2 thousand 781 crores. Last year the bank's operating profit was Tk 2,646 crore. That is, the operating profit of the bank has increased by Tk 135 crore in one year. However, the state-owned sector Sonali Bank has also reported record operating profit.
In 2023, the profit of state-owned Rupali Bank increased by 560 percent. Because the operating profit of the bank in 2023 is Tk 700 crore. But a year ago it was Tk 106 crore. Rupali Bank's operating profit has increased by Tk 594 crore in one year due to an increase in loan collection. Meanwhile, the profit of the state-owned Janata Bank stood at Tk 1,230 crore. However, the bank's operating profit in the previous year was Tk 928 crore.
Union Bank has achieved an operating profit of Tk 455 crore in 2023. The previous year the profit of the bank was Tk 415 crore. Social Islami Bank has made a profit of Tk 600 crore during the discussion period. But a year ago the bank's operating profit was Tk 520 crore.
First Security Islami Bank has made an operating profit in the outgoing year. During the period under discussion, the bank's operating profit was Tk 742 crore. It was Tk 705 crore in the previous year. At the same time, Meghna Bank's operating profit increased from Tk 75 crore to Tk 165 crore.
In 2023, the operating profit increased in Pubali Bank. The bank made a profit of Tk 1,756 crore during the period under discussion. The profit of the bank was Tk 1 thousand 133 crore last year. Madhumati Bank is on the same list. The bank's profit for the year 2023 is Tk 222 crore.
Profits of state-owned Agrani Bank also increased during the discussed period. Apart from this, most of the banks including City, Prime, Eastern, IFIC, UCB, and Premier are on the list of profit increase.
Mercantile Bank's operating profit has decreased even though it has not gone into the loss. The bank made an operating profit of Tk 545 crore in 2023. The previous year's profit was Tk 845 crore. The operating profit of the Bangladesh Development Bank formed with the money of the state, has been the same as last year. During this time the operating profit of the bank is Tk 25 crore.
At the same time, some banks have incurred losses in operating expenses. This list includes specialized agricultural banks of the state. The bank's loss in 2023 is Tk 749 crore. The previous year's loss was Tk 561 crore. However, at the end of the year, the bank's new managing director instituted a 100-day program to reduce losses. In this, the bank has made a profit of Tk 124 crore in the last 5 months. Apart from this, the bank has reduced loss-making branches by 86 in one year.
Apart from this, the list of losses includes the state-funded Basic Bank. In 2022, the bank had a loss of Tk 127 crore. In 2023, it has increased to more than 200 crore rupees.
When asked about these issues, the managing director of a bank said that the operating profit of all banks has increased, but this is not the subject. Since 2021, the horror of Corona is prevailing in the country. In this situation, the regulatory body Bangladesh Bank has given several concessions. As a result of these concessions, most of the banks have not kept the necessary provisions. Although there are not those facilities now, many defaulted loans have been regularized under special facilities in the past few years. Due to which provision did not have to be kept. Apart from that, Bangladesh Bank has raised the maximum loan limit this year. Despite the foreign exchange crisis, those who had dollars in their hands did well. So the profit of those banks increased. However, some banks could not take advantage for the dollar crisis. Because they are still requesting dollars from other banks.
Incidentally, the biggest obstacle to increasing operating profit is defaulted loans. Because if there is an increase in defaulted loans in a bank, the provision has to be kept higher. Therefore, even if the business increases, the defaulted loan is destroying the profit. According to analysts, mismanagement and corruption are mainly responsible for the current plight of banks. Thousands of crores of taka have been embezzled through fraud and corruption in the banking sector. Administrative and legal reforms have been taken to resolve the crisis in this sector. But at the current level, the move will not be sufficient to overcome the crisis. To get out of this situation, the approval of the bank and the formation of the board of directors should be stopped mainly due to political considerations. A strong commission should be formed to prevent irregularities. Money Debt Courts need to be strengthened. If necessary, should take measures to dispose of appeals in the tribunal. Above all, this sector should be brought into an orderly structure through administrative and legal reforms. It is expected to bring benefits to the economy of the country besides protecting the interests of the depositors.
According to the data of Bangladesh Bank, at the end of the September quarter of 2023, the total amount of disbursed loans of the country's banking sector is Tk 15 lakh 65 thousand 195 crore. Of this, Tk 1 lakh 55 thousand 397 crore have become defaulted loans. This is 9.93 percent of total disbursed loans. This is Tk 21 thousand crore more than the same period of the previous year (September-2022). At the end of September of that year, the amount of defaulted loans was Tk 1 lakh 34 thousand 396 crore.
MTB Managing Director and Chief Executive Syed Mahbubur Rahman said that this is not real profit. That is why it is better to refrain from publishing it.
ARS
