Banks' profits rise slightly

Posted by BankInfo on Thu, Jul 02 2015 09:12 am

Most private banks saw their profits rise, though slightly, in the first six months this year despite political unrest and a cut in lending rates.

Bankers expect the profits to get healthier by the yearend if political stability prevails.

Profits of Islami Bank Bangladesh,c the largest private bank, rose 1.45 percent year-on-year to Tk 840 crore in January-June, according to preliminary statistics.

Pubali Bank, another large bank, made profits of Tk 350 crore during the period, a rise by 2.94 percent year-on-year.

Bank officials said political unrest during January-March affected the country's trade and commerce, taking a toll on their business.

Managing Director of Mutual Trust Bank Anis A Khan said banks are now trying to recover their losses and profits may rise in the next six months.

Mohammad Abdul Mannan, managing director of Islami Bank, said, besides political uncertainty, stagnation in investment has led to excess liquidity in the banking system.

 

Big businesses are not interested to go for fresh investments now, he added, but hoped investment may pick up in the second half.

Mannan also said, though lending rates have been falling gradually, banks cannot cut deposit rates just as, which is why making profits has become difficult.

Banks had excess liquidity of Tk 103,756 crore at the end of April this year, according to central bank statistics.

An official of United Commercial Bank said banks are being compelled to reduce lending rates due to stiff competition. Banks will lose clients if they do not lower interest rates, he said, adding that 75 percent of their income comes from interest.

The average lending rate was 11.88 percent in April this year, down from 13.25 percent in the same month last year, according to Bangladesh Bank. Managing Director of Pubali Bank Md Abdul Halim said export-import started gaining momentum as political stability has been restored. Profits will go up further by the end of the year, he added.

According to the central bank, private sector credit growth is increasing gradually -- it rose to 13.27 percent at the end of April this year from 12.27 percent in June last year.

News:The Daily Star/2-Jul-2015

 

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