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12:00 AM, January 03, 2016 / LAST MODIFIED: 10:07 PM, January 05, 2016

Banks saw slim profits in 2015

Banks managed to log in profits for 2015 despite a tough start to the year by way of political turmoil for the first three months.

The growth in profit was slim though, owing to lowering of lending rates and sluggish business environment.

Islami Bank registered the highest profit among banks in 2015, of Tk 1,807 crore. The amount is an increase of 5.75 percent year-on-year.

Islami Bank's share in total credit is also the highest among banks in 2015, of around 9 percent.

Pubali Bank, which is another large bank, logged in Tk 795 crore in profit last year, which is more or less the same as in the pervious year. The bank's share in total credit is around 3 percent.

Anis A Khan, chairman of the Association of Bankers, Bangladesh, said the banking industry's prospects for the year looked uncertain and dismal in the first quarter.

"But given our peoples' resilient and hard-working nature, business picked up later in the year, with the result being that banks had a steady year of growth, if not spectacular."

 Khan, who is also the managing director of Mutual Trust Bank, said his bank's profit increased about 11 percent last year and for the first time since its inception in 1999 crossed the Tk 300-crore mark.

MTB logged in profits of Tk 303 crore for 2015, while its deposits increased 22 percent and credit grew 23 percent from the previous year.

AMM Farhad, deputy managing director of Social Islami Bank, said lowering the bank's interest rate spread and reducing various commissions brought down banks' profits last year.

Furthermore, the foreign exchange rate was very stable, so the gain the banks make from this area was smaller last year.

As a result, the banks' profit did not increase much last year, he added.

But, it is the hangover from the big scams of 2011-12 that weighed the heaviest on the banks' business: they were simply cagey when it came to disbursing loans, which eventually hit their profitability, according to bank officials.

Banks also make profits through the export and import business and this avenue too was not kind to them. In other words, the export-import growth has been slow.

An official said a major cause of slow import is that the fuel and commodity prices have fallen drastically in the international market. This caused a dent in trade financing.

Typically, a bank's profitability depends on the quality of its loans and its recovery of bad loans.

In this regard, even after providing various facilities to big defaulters the amount of bad loans in the banking sector is still very high.

Khan said the non-performing loan ratios are still under pressure.

The ratio has been kept somewhat under control through various restructuring and business-friendly measures by Bangladesh Bank and the commercial banks to support the enterprises that were affected by political unrest.

Admittedly, the affected businesses need hand-holding to see them through their difficult times, which can only augur well for the overall national economy in the long-run with improvements in the energy supply situation and infrastructure.   

"The industry is now more mature. There is keen competition among the 56 banks and attention to customer service is of the utmost importance now," Khan added.b

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