Drastic fall in net profit of Sonali Bank

FE Team | Published: September 27, 2012 00:00:00 | Updated: February 01, 2018 00:00:00

Badrul Ahsan
The net profit of the largest state-owned commercial bank, Sonali Bank has drastically fallen during the January-June period of this calendar year, according to latest data released by the central bank.
During the period, Sonali Bank has earned only Tk 890.16 million as net profit after taxation and provisioning whereas the total net profit of the bank was Tk 9.96 billion in the last calendar year-2011.
On the other hand, three other state-owned commercial banks (SCBs) have performed better during the period comparing to that of the year-2011, data showed.
However, high ups of Sonali Bank have blamed liquidity crisis, poor recovery, increase in classified loans and frequent interferences by the government in loan sanctioning and recovery activities as the main reasons behind the prevailing situation.
"We can never take any decision independently on loan sanctioning or taking action against the loan defaulters due to the direct interference by the government," a top official of loan recovery and classification department of Sonali Bank Ltd told the FE preferring anonymity.
"Besides, most of the big borrowers who received loans using political clout have stopped repaying loans at the fag end of the incumbent government which also badly affected the profitability of the bank," he added.
"Increase in classified loans and liquidity crisis have also played a pivotal role in bringing down the net profit of the bank."
According the BB data, classified loans of the bank have increased to around Tk 70.24 billion as of June, 2012 which was Tk 61.58 billion till December, 2011.
However, central bankers also expressed their dismay over the drastic fall in net profit of the bank and said that the situation is gradually going beyond the close supervision of the central bank.
Earlier on September 13 last, the central bank asked the commercial banks to settle all overdue accepted bills amicably within the next 15 days to ensure discipline in the banking sector, he said.
"The SCBs have also been asked to take effective measures concerning non-performing loans, particularly against the top 20 defaulters immediately, to improve their financial health," the central bank official added.
However, Bank and Financial Institutions Division under the Finance Ministry at a recent meeting gave a set of guidelines to the SCBs to help bring stability in the banks.
Some of the key instructions are formation of a taskforce to resolve audit objections, establishment of risk management unit in all the banks that would report to the central bank after every 15 days, important audit objections will have to be presented to the audit committee formed by the directors.
Besides, the meeting also gave strict instruction to the managing directors of the banks to resolve at least five per cent cases through alternative dispute resolution within the last three months.