Written by The Banking Post
Most listed banks reported stronger profits in the first quarter, driven largely by higher returns from investments in government securities amid sluggish credit growth.
Despite a rise in interest income, higher deposit rates pushed up funding costs, squeezing net interest margins. However, gains from Treasury bills and bonds helped offset the pressure, boosting overall profitability.
Out of 23 banks that disclosed January–March results so far, 12 posted year-on-year profit growth, while five saw profits decline. Three banks reported wider losses, and one remained nearly flat. Islami Bank slipped back into losses during the quarter.
Top performers included BRAC Bank, City Bank, Dutch-Bangla Bank, Uttara Bank, Jamuna Bank, Midland Bank, Mutual Trust Bank, NRB Bank, Shahjalal Islami Bank, Southeast Bank and United Commercial Bank, with profit growth ranging from 6.5 per cent to as high as 194 per cent.
BRAC Bank led the pack with a profit of Tk 6.96 billion, followed by Dutch-Bangla Bank at Tk 2.61 billion and City Bank at Tk 2.41 billion. Prime Bank, Eastern Bank and Southeast Bank also posted solid earnings.
City Bank’s profit more than doubled year-on-year, supported by strong income across business segments. “While I am happy with such a strong increase in profit, I am equally concerned about the sharp slowdown in credit growth,” said its chief executive, warning that the trend could weigh on future performance.
Eastern Bank reported a 28 per cent rise in earnings, backed by investment income, foreign exchange gains and lower provisioning. Its managing director said the bank remains focused on maintaining asset quality, liquidity and capital strength.
Analysts say banks are increasingly shifting funds into government securities as private-sector credit demand weakens amid economic uncertainty. “Banks with lower non-performing loans can invest more in Treasury bonds, which offer risk-free returns and support profit growth,” said a market analyst.
Well-managed banks also benefited from deposit inflows, as customers moved funds away from weaker institutions.
However, banks with poor asset quality continued to struggle. Rising non-performing loans forced them to set aside large provisions, eroding profits.
National Bank’s losses surged more than fourfold to Tk 11.33 billion, while AB Bank and IFIC Bank also reported sharp increases in losses. Islami Bank posted a loss of Tk 2.88 billion, reversing a profit recorded a year earlier.
Analysts warn that while Treasury income is supporting profits in the short term, sustained growth will depend on a recovery in credit demand and improvements in asset quality.
