Chief executive officers of state-owned commercial banks (SCBs) Sonali, Janata and Agrani have failed to improve the banks' performance in "core areas" in the last six months of corporatisation.
In a recent review report on Quarterly Performance Indicators (QPIs) of the CEOs and MDs of the banks, a working group on SCB restructuring headed by Bangladesh Bank Deputy Governor Nazrul Huda found no significant improvement in non-performing loans (NPLs), business growth and deposit mobilisation.
As the regulator of banks, the central bank has decided to strengthen its monitoring and asked the CEOs to speed up efforts to improve their performance.
The government corporatised the three former nationalised commercial banks in November last year in line with recommendations of the World Bank under a bank modernisation project.
The highly-paid CEOs have been recruited to carry out the tasks, but the quarterly review that covered the three months to June showed 'no significant improvement' in the banks.
According to the report, the NPLs of Sonali, the country's largest commercial bank by assets, reached Tk 8,547 crore or 44.35 percent of its total loans in June.
The bank posted NPLs at Tk 6,859 crore or 35.36 percent of its total loans in December 2007.
The bank's recovered loans stood at Tk 246 crore against Tk 190 crore targeted for the three months to June.
Janata recorded Tk 1,965.2 crore in NPLs at the end of June, up from the expected amount of Tk 1,863.4 crore. The NPL-total loans ratio increased to 16 percent against the 15 percent target. Agrani's NPLs climbed to Tk 2,992.46 crore or 27.5 percent against the expected level of Tk 2,729 crore or 22.47 percent of its total loans.
Sonali also lags in net interest margin and maintenance of general loan loss provision of Tk 3,621 crore against the target of Tk 5,150 crore. But the bank achieved the target of net profit before tax worth Tk 200 crore and return on assets -- 0.84 percent. The bank failed to achieve the targets of good loan, net interest income and total deposit, the review report revealed.
Janata Bank failed to achieve the total deposit target and non-interest bearing deposit. But the bank's position on good loans, net interest income and non-funded income improved. Operating efficiency and profitability of the bank also improved.
Agrani failed to achieve the targets of good loan, net interest income, non-funded income and total deposit, but reached the target of non-interest bearing deposit as percentage of total deposit. Operating efficiency and profitability of the bank showed signs of improvement, the report said.
Syed Abu Naser Bukhtear Ahmed, CEO of Agrani Bank, said he had tried his best to improve the performance of the bank. “I am confident that the bank will do better by December."
Ahmed blamed the slow loan recovery on the "legacy of the past" and imprisonment of some businessmen, who are loan recipients.
Finance adviser AB Mirza Azizul Islam last week sat with the banks separately and expressed his concern over the poor performance, especially in core areas.
“If the officials fail to achieve the targets, we must terminate them with one month notice," the adviser told reporters after the meetings.
However, the adviser said, the banks achieved most of the targets they had been set.
Senior officials with the banks however said the government institutions owe 32 percent of loans, while 33 percent of loans are stuck in court cases.