Net income of all banks after provisioning and tax dropped by nearly 33 per cent or Tk 8.96 billion as of June 30 of the current calendar year.
According to unaudited and provisional figures, compiled by Bangladesh Bank (BB), the net income of the banks came down to Tk 18.45 billion as of June 30, 2017 from Tk 27.41 billion as of June 30, 2016.
Bankers attributed that the net profit of the banks decreased significantly during the period under review mainly due to higher provisioning requirements against the bad debts.
The provisioning against total bad debts of all banks rose to Tk 52.56 billion on June 30, 2017 from Tk 34.08 billion as of June 30, 2016, the BB data showed.
Some banks did not perform as per their respective desired levels during the period under review mainly due to increase in their volume of non-performing loans (NPLs).
The volume of classified loans rose by more than 19 per cent to Tk 741.48 billion as on June 30, 2017 from Tk 621.72 billion as on December 31, 2016. The amount of NPLs was Tk 633.65 billion a year before.
"There is a twin-effect of classified loans in the banking system," a senior executive of a leading private commercial bank (PCB) told the FE Tuesday.
He said the banks will have to keep the interest earned from classified loans to their interest-suspense account, instead of taking it into profit account.
Besides, the banks will have to ensure required provisioning against total classified loans from their profits, the private banker explained.
He also said the falling trend in interest rate spread has also pushed down the overall net profits of the banks during the period under review.
The weighted average spread between the lending and deposit rates offered by the commercial banks came down to 4.72 per cent in June 2017 from 4.85 per cent in June 2016.
The private banker expects the profits might rise in the second half of this year if the banks could reduce the amount of NPLs through strengthening their recovery drives.
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