State banks’ loss-making branches shrink

The number of loss-making branch of five state-owned commercial banks came down 24 percent to 270 in the first half of the year.

All five banks except Janata saw a sharp decline in the number of loss-making branches thanks to an expansion of loan activities at branch level, said bank officials.

Sonali, the largest state-owned bank, saw its loss-making branches come down to 137 at the end of June from 181 six months earlier.

During the period, Agrani bank brought down its loss-making branches to 31 from 57, Rupali to 27 from 33 and BASIC Bank to 16 from 21, according to data from the central bank.

Only Janata, which is mired in controversies surrounding loans amounting to Tk 8,300 crore, saw a rise in loss-making branches in the first six months of the year: from 57 to 59. The state banks put in more efforts on reducing their number of loss-making branches due to constant pressure from the Bangladesh Bank, said Alauddin A Majid, chairman of BASIC Bank.

Previously, the head offices would give low interest against the deposits collected by branches. Now, they have reversed the situation to show the branches as profitable.

“A lower number of loss-making branches ultimately do not have any significant impact on a bank's financial health. But a low number surely looks good,” said Majid.

He said the number of loss-making branches of BASIC Bank has come down as the bank's classified loans were concentrated in some branches.

Meanwhile, the state banks saw a sharp rise in credit growth in the first half of 2018 from a year earlier.  Sonali's credit growth was 4.62 percent in June this year, up from 1.33 percent from a year earlier.

At the end of June, Janata's credit soared to 7.90 percent from 3.60 percent, Agrani's to 8.62 percent from 5.70 percent and Rupali's to 8.51 percent from 4.70 percent, central bank data shows.