A total of 14 private commercial banks (PCBs) in Bangladesh showed increased operating profits during six months to this past June, mainly banking on the country's booming foreign-trade activities, bankers say.
Of the 42 PCBs in the country, the FE obtained provisional data of 15 for the first half of this calendar year, from January to June 2022. The operating profit of one out of the 15 declined during the half yearly period.
The position of the rest of the PCBs on this account were not immediately available.
In the final count, the amounts of profit would be a little higher or lower, said officials of different commercial banks about their half-yearly financials.
The un-audited operating profit, however, does not reflect the actual financial position of the banks as they have to set aside funds for provisioning bad debts and paying taxes.
Higher foreign trade, covering export and import, helped the banks to earn more as operating profit during the period under review, the senior bankers explained.
Actually, the foreign trade increased significantly during the period under review amid the gradual reopening of economic activities-both domestic and global-after more than one year of pandemic pause.
Meanwhile, Bangladesh's import expenses have ballooned on account of a fresh hike in prices of essential commodities, including fuel oil, on the global market mainly due to the ongoing Russia-Ukraine war, the bankers added.
The settlement of letters of credit (LCs), generally known as actual imports, in terms of value, rose by 48.25 per cent to $67.87 billion during the July-April period of the outgoing fiscal year (FY), 2021-22, from $44.78 billion in the same period of the previous fiscal, according to latest BB statistics.
On the other hand, the opening of LCs, generally known as import orders, grew over 44.53 per cent to $78.65 billion during the period under review from $53.04 billion in the same period of FY '21.
However, credit flow into Bangladesh's private sector increased further in May 2022 - following rising demand for loans, particularly for trade financing, to settle import-payment obligations.
The credit flow rose to 12.94 per cent in May on a year-on-year basis, from 12.48 per cent a month before, according to the central bank's statistics.
"We've been able to book the higher profits during the H1 of 2022 following hefty growth of foreign trade, particularly for imports," a senior executive of a leading private commercial bank told the FE on Saturday.
Some banks have also booked such earning significantly from their treasury business, the senior banker explained.
Currently, the Bangladesh Taka (BDT) is maintaining a depreciating trend - mainly due to higher outflow of foreign exchange - following a hefty growth in import payments amid global price rises, compared to the inflow in the last few months.
"The banks have earned a significant amount of money as 'exchange gain' during the H1 of 2022," the private banker added.
In the meantime, the local currency has lost its value by Tk 7.65 or nearly 9.0 per cent since January 2022. The dollar traded at Tk 85.80 on January 08 last.
The US currency was quoted at Tk 93.45 each on Thursday, unchanged from the previous level, according to the market operators.
However, the banks, which had managed non-performing loans (NPLs) properly, have been able to book better operating profits during the H1, the bankers said.
The amount of classified loans in Bangladesh's banking system increased by 9.85 per cent to Tk 1,134.41 billion during the January-March period of 2022, from Tk 1,032.74 billion in the preceding quarter (Q4 of 2021), as the central bank revoked policy relaxation on loan repayment.
"The banks may face challenges to book similar operating profits by the end of this calendar year if the central bank takes tightening measures to contain the inflationary pressure on the economy," another senior banker predicts.