The unaudited operating profits of the country's private commercial banks (PCBs) witnessed a remarkable growth in 2017, mainly due to high credit growth to the private sector.
Most of the banks saw the profit in the just-concluded calendar year riding on higher import payments, enhanced credit flow to the private sector, and significant return from their capital market investments, according to bankers.
Operating profit, however, does not indicate the real financial health of a bank. Because, the banks have to make room for provisioning against bad loans and taxes that have to be paid to the government from the profit.
Operating profits of the banks and non-banking financial institutions are a major source of income tax, collected from the business entities by the National Board of Revenue (NBR).
As such, the aggregate position of operating profits of the PCBs has an impact on revenue collection, in the form of direct taxes, collected by NBR.
"Higher import payments, trade financing and return from the capital market investment have contributed to the banks' hefty profit growth in 2017," a senior official of a leading PCB told the FE on Sunday.
Meanwhile, the private sector credit growth increased significantly in the recent months due to higher trade financing for settling the import payment obligations.
The growth in the private sector credit flow rose to 19.06 per cent in November 2017 on a year-on-year basis from 18.63 per cent in October, according to the central bank's latest statistics. It was 15.61 per cent in January 2017.
The credit growth has already crossed the target, set earlier by the Bangladesh Bank (BB) in its latest monetary policy statement (MPS).
On July 26, BB projected in its first half-yearly (H1) MPS for the current fiscal year (FY), 2017-18, that the private sector credit would grow at 16.2 per cent in December 2017 and at 16.3 per cent in June 2018.
The total outstanding loans with the private sector rose to Tk 8,269.44 billion in November 2017 from Tk 8,126.80 billion in October. It was Tk 6,945.58 billion in November 2016.
Besides, some banks have been able to increase their operating profits following higher earnings from their treasury operations, the banker explained.
He also said the banks having OBU (Offshore Banking Units) operations with notable amounts earned significantly through providing foreign currency loans to their customers.
Currently, 35 commercial banks, out of 57, are running their OBUs across the country as per a directive issued by the Banking Control Department of BB on December 17, 1985.
Talking to the FE, another senior executive of a PCB said the stock market bounced back significantly in 2017 after the debacle in 2010-11.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), registered 1,208 points or 24 per cent gain to settle at 6,244 points at the closing session of the year, showing a sign of recovery after a prolonged bearish trend.
The daily average turnover at DSE stood at Tk 8.75 billion, up by 77 per cent year-on-year, which was seven-year high since the market debacle around six years ago.
After a long time, the banking sector observed a rally, and the banks' stocks were the market movers, while the prices of many bank stocks more than doubled in 2017, according to the market insiders.
The FE could collect the operating profit figures of 27 banks, out of a total of 40, including nine new PCBs, until going to press on Sunday.
Of those banks, Islami Bank Bangladesh Ltd (IBBL) was the top operating profit earner in the outgoing calendar year. Its earning rose to Tk 22.50 billion in 2017 from Tk 18.00 billion in 2016.
National Bank Ltd stood in the second position with an estimated earning of Tk 12.16 billion in 2017 from Tk 10.95 billion in 2016.
Pubali Bank Ltd was in the third position with earning of Tk 9.15 billion in operating profit, up from Tk 7.21 billion in 2016.
Southeast Bank Ltd made Tk 9.01 billion profit in 2017, compared to Tk 8.63 billion in the previous calendar year.
The operating profit of Eastern Bank Ltd rose to Tk 7.50 billion in 2017 from around Tk 7.0 billion, and that of Bank Asia Ltd to Tk 6.71 billion from Tk 5.92 billion.
Al-Arafah Islami Bank Ltd made an operating profit of Tk 8.09 billion in 2017 against Tk 7.54 billion of the previous year, while Mutual Trust Bank Ltd earned Tk 4.17 billion, up from Tk 3.61 billion in 2016.
The operating profit of EXIM Bank rose to Tk 7.11 billion in 2017 from Tk 6.50 billion of the previous year, and that of Social Islami Bank Ltd (SIBL) to Tk 6.60 billion from Tk 6.01 billion.
Mercantile Bank Ltd booked an operating profit worth Tk 7.11 billion in 2017 against Tk 5.08 billion of the previous year, while the profit of Meghna Bank Ltd rose to Tk 1.10 billion from Tk 1.02 billion.
South Bangla Agriculture and Commerce Bank Ltd posted an operating profit worth Tk 1.82 billion in 2017 against Tk 1.54 billion in 2016, while the profit of Modhumoti Bank Ltd rose to Tk 1.51 billion from Tk 1.06 billion.
The operating profit of Standard Bank Ltd rose to Tk 3.60 billion in 2017 from Tk 3.52 billion in the previous year, while that of Premier Bank Ltd reached Tk 4.50 billion from Tk 3.32 billion.
Jamuna Bank Ltd booked an operating profit worth Tk 4.85 billion in 2017 against Tk 4.50 billion of the previous year, while NRB Bank Ltd's profit rose to Tk 870 million from Tk 810 million.
The operating profit of National Credit and Commerce Bank Ltd (NCCBL) rose to Tk 5.30 billion in 2017 from Tk 4.68 billion in the previous year, while that of Shahjalal Islami Bank Ltd reached Tk 3.60 billion from Tk 3.13 billion.
IFIC Bank Ltd posted an operating profit worth Tk 5.04 billion in 2017 against Tk 4.30 billion in the previous year, while One Bank Ltd's profit rose to Tk 5.40 billion from Tk 4.52 billion.
Dutch-Bangla Bank Ltd made an operating profit worth Tk 7.50 billion in 2017 against Tk 6.12 billion of the previous year, while NRB Commercial Bank's profit rose to Tk 2.01 billion in 2017 from Tk 1.71 billion.
On the other hand, the operating profit of the City Bank Ltd came down to Tk 6.97 billion in 2017 from Tk 7.52 billion in 2016, while Farmers Bank Ltd's operating profit dropped to Tk 260 million from Tk 920 million.
