The operating profit of the country's private commercial banks (PCBs) showed a mixed trend in the first six months (H1) of the current calendar year (January-June 2015).
Most of the banks, particularly the large ones, could not perform in line with their expectation during the period under review. It happened mainly due to lower credit demand with falling trend of interest rates on lending, according to the bankers.
They said the banks, having lower credit portfolios, performed better than the large ones because of lower non-performing loans.
Of the 39 PCBs, 14 marked an upward trend in operating profit, while five witnessed a falling trend, according to provisional data. Data of rest of the banks was not immediately available.
The un-audited operating profit does not indicate the actual financial position of a bank. Because, the banks have to leave aside funds for provisioning the bad debts and taxes payable to the government.
However, in the final calculation, the amount of profit may be slightly higher or lower than the un-audited operating profit, said officials of different PCBs.
The interest rate spread in the country's banking sector fell in the last one year, as the interest rate on lending decreased more than that of deposit, according to the central bank statistics.
The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.84 per cent in April 2015, from 5.14 per cent in the same month of the previous year.
"Interest income contributed about 80 per cent of operating profit of a particular bank," a senior official of a leading PCB told the FE.
The weighted average rates on lending dropped to 11.48 per cent from 13.25 per cent during the period under review, while interest rates on deposit came down to 7.04 per cent from 8.11 per cent.
He also said the operating profit of some banks decreased mainly due to increase in the volume of classified loan in the first quarter (Q1) of this calendar year following political turmoil.
The volume of non-performing loans (NPLs) in the country's banking system increased by nearly 9.0 per cent to Tk 546.58 billion during the January-March period of 2015, from Tk 501.56 billion in the preceding quarter.
The banker also said there is a twin-effect of classified loans in the banking system.
"The banks will have to keep the interest earned from classified loans to their interest suspense account, instead of taking it into profit account."
He also said the banks will have to ensure provisioning against total classified loans from their profits.
"We expect that the operating profits may rise in the second half of this year, if the present political stability continues," he hoped.
Among the banks, the operating profit of Islami Bank Bangladesh Ltd rose to Tk 8.40 billion during the period under review, from Tk 8.28 billion in the same period of 2014.
Southeast Bank Ltd earned Tk 4.13 billion as operating profit against Tk 4.16 billion, while National Bank Ltd's profit came down to Tk 3.92 billion from Tk 4.10 billion.
Pubali Bank Ltd earned Tk 3.50 billion in operating profit in the first six months of this calendar year, compared to Tk 3.30 billion in the corresponding period of the previous year.
IFIC Bank Ltd earned Tk 2.25 billion as operating profit against Tk 1.97 billion, while operating profit of EXIM Bank Ltd rose to Tk 2.70 billion from Tk 1.96 billion.
NCC Bank Ltd made operating profit worth Tk 1.80 billion in H1 of 2015, against Tk 1.75 billion in the same period of the previous year.
Al-Arafah Islami Bank Ltd and Mutual Trust Bank Ltd earned Tk 3.15 billion and Tk 1.40 billion as operating profit against Tk 2.73 billion and Tk 1.30 billion respectively.
The operating profit of Mercantile Bank Ltd came down to around Tk 2.0 billion from Tk 2.15 billion, while Standard Bank Ltd's profit dropped to Tk 1.50 billion from Tk 1.87 billion.
Shahjalal Islami Bank Ltd made operating profit worth Tk 1.36 billion during period under review, against Tk 1.23 billion in the same period of 2014.
Bank Asia Ltd earned Tk 2.53 billion in operating profit in H1 of this calendar year, compared to Tk 2.75 billion in the corresponding period of 2014.
Union Bank Ltd posted an operating profit of Tk 600 million against Tk 200 million, while Modhumoti Bank Ltd's profit rose to Tk 290 million from Tk 240 million.
South Bangla Agriculture Bank Ltd and NRB Commercial Bank Ltd earned Tk 275 million and Tk 370 million as operating profit against Tk 130 million and Tk 120 million respectively.
Meghna Bank Ltd made operating profit worth Tk 250 million in the first six months of 2015 against Tk 30 million in the same period of the previous year, while Midland Bank Ltd earned Tk 280 million against Tk 52.5 million.
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