The unaudited operating profits of the country's private commercial banks (PCBs) witnessed a mixed trend in the just-concluded calendar year with those of larger banks falling significantly.
Bankers attributed the fall in operating profits of major banks to the rise in their non-performing loans caused by the country's prevailing political turmoil coupled with the decline in the interest rate spread.
A number of PCBs were able to record only a modest rate of growth in their operating profits in 2013 over those of the previous calendar year. But the growth rates of operating profits of some other PCBs in 2013 were lower than those in 2012, they added.
Talking to the FE, a senior official of a leading PCB said conventional banks performed better than Shariah-based Islamic banks due to the higher yields of government-approved securities in 2013.
The interest rate on treasury bills (T-bills) was, on an average, more than 10 per cent in 2013 while the yield of government bonds was over 12 per cent, according to the PCB official.
Currently, three T-bills are being transacted through auctions to adjust the government's borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds having the tenures of two, five, 10, 15 and 20 years are being traded in the market.
The interest rate spread in the country's banking sector came down to below 5.0 per cent in October last because of the lower credit demand prompted by the ongoing political uncertainty.
The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.95 per cent in October 2013 from 5.13 per cent in January last year.
The weighted average rate on lending came down to 13.42 per cent in October, while the interest rate on deposits was 8.47 per cent.
In January last the average lending rate was 13.73 per cent and average deposit rate 8.60 per cent, according to the Bangladesh Bank (BB) statistics.
Besides, the sluggish trend in the country's capital market, lower import payments and different loan scams led to the lower level of profits of the banks in 2013, the private banker explained.
 "Some banks have been able to raise their operating profits with the BB's relaxation of the loan rescheduling policy," the banker noted.
Earlier on December 23 last, the central bank relaxed the loan rescheduling policy for the next six months to facilitate financing for businesses affected by the ongoing political unrest.
The central bank has taken the latest measure as the country's overall business activities came under tremendous pressure in the recent months following frequent spells of blockade and shutdown programmes, enforced by the opposition parties over formation of the poll-time government.
Operating profits, however, do 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 such profits.
The operating profits of banks and non-banking financial institutions are a major source of income taxes collected from business entities by the National Board of Revenue (NBR). As such, the aggregate position of operating profits of PCBs has an impact, favourable or otherwise, on revenue collections, in the form of direct taxes, collected by the NBR, depending upon the level of such profits.
The FE could collect data on operating profits of 18 banks, out of a total of 39 including nine new PCBs, until its going to the press Tuesday.
Of those banks, the Islami Bank Bangladesh Ltd. (IBBL) was the top operating-profit earner in 2013. But its earnings came down to Tk 16 billion in 2013 from Tk 18.30 billion a year ago.
The Prime Bank Ltd. was placed in the second position with an estimated earning of Tk 8.50 billion in operating profit, down from Tk 9.75 billion in 2012.
The Pubali Bank Ltd. was placed in the third position with an estimated earning of Tk 8.15 billion in operating profit, compared to that of Tk 6.40 billion in 2012.
The operating profit of the National Bank dropped to Tk 6.70 billion in 2013 from Tk 7.80 billion in the previous year. The UCBL earned Tk 7.11 billion in operating profits against Tk 5.90 billion and Southeast Bank Ltd. Tk 6.80 billion against Tk 5.53 billion.
The operating profit of Eastern Bank Ltd. rose to Tk 5.70 billion last year from around Tk 5.65 billion in 2012 while Bank Asia earned Tk 5.48 billion against Tk 5.03 billion.
The National Credit and Commerce Bank Ltd (NCCBL) earned Tk 4.05 billion against Tk 4.03 billion.
Al-Arafah Islami Bank made an operating profit worth Tk 4.70 billion in 2013 against Tk 4.52 billion of the previous year while Mutual Trust Bank earned Tk 2.11 billion, up from Tk 1.33 billion in 2012.
The operating profit of Social Islami Bank Ltd (SIBL) came down to Tk 3.25 billion in 2013 from Tk 3.85 billion in the previous year while the Shahjalal Islami Bank's operating profit dropped to Tk 3.0 billion from Tk 4.57 billion.
The IFIC Bank rose to Tk 4.03 billion from Tk 3.46 billion and Mercantile Bank to Tk 4.30 billion from Tk 3.50 billion. The First Security Bank Ltd. posted the operating profit worth Tk 2.0 billion in 2013 compared to Tk 1.98 billion in 2012.
The operating profits of EXIM Bank came down to Tk 5.20 billion from Tk 5.50 billion and those of Standard Bank Ltd fell to Tk 3.30 billion from Tk 3.53 billion.
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