The un-audited operating profits of the country's private commercial banks (PCBs) got into a mixed bag in the just-concluded calendar year, primarily due to the swelling of non-performing loans (NPL).
Bankers attributed the fall in operating profits of some larger banks to the rise in their NPLs, as a portion of the even rescheduled loans again turned classified for borrowers' inabilities to repay the same.
Besides, the sluggish trend in the country's capital market alongside the private-sector credit growth and different loan scams led to the lower level of profits of the banks in 2014, according to the bankers.
A good number of PCBs were able to record only a modest rate of growth in their operating profits in 2014 over the previous calendar year.
But the growth rates of operating profits of some other PCBs in 2014 were lower than those in 2013, they added.
The volume of classified loans increased 11.58 per cent to Tk 572.91 billion in the July-September period of the year from Tk 513.44 billion in the previous quarter. It was Tk 481.72 billion in the first quarter in 2014.
The central bank started persuasion of the banks from the first week of December to reduce the volume of classified loans by the yearend through intensifying recovery drives across the country.
"Some banks have been able to increase the amount of operating profits following the rescheduling of their good number of loans during the last week of December 2014," a senior official of a leading private commercial bank (PCB) told the FE.
He also said some loans had been rescheduled in line with the central bank advice.
It is gathered that some banks do have the intention to increase their operating profits with a big difference in comparison with the previous months of the year by adopting some unethical practices, according to an insider.
In spite of a strong supervision by Bangladesh Bank, the banks are still doing this.
As such, the real operating profits of the banks have not been reflected, the source added. The Bangladesh Bank (BB) is now working to formulate a special policy on restructuring large loans.
The first meeting of the six-member committee was held at the central bank Wednesday.
"We're working on the issue," a BB senior official told the FE.
He wouldn't elaborate.
Talking to the FE, anther BB official said the central bank will look into any unethical practice and 'window-dressing'.
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 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 collection, in the form of direct taxes, collected by the NBR, depending upon the level of such profits.
The FE could collect figures of operating profits of 22 banks, out of a total of 39, including nine new PCBs, until its going to the press Wednesday.
Of those banks, the Islami Bank Bangladesh Ltd. (IBBL) was the top operating-profit earner in 2014. Its earnings rose to Tk 17.25 billion in 2014 from Tk 16 billion a year ago.
The United Commercial Bank Ltd was placed in the second position with an estimated earning of Tk 8.85 billion in operating profit -- up from Tk 7.10 billion in 2013.
The Southeast Bank Ltd stood third with an estimated earning of Tk 8.33 billion in operating profit, compared to that of Tk 6.70 billion in 2013.
The operating profit of the Prime Bank Ltd. dropped to Tk 7.10 billion in 2014 from Tk 8.32 billion in the previous year while Pubali Bank's operating profit came down to Tk 7.67 billion from Tk 8.15 billion.
Al-Arafah Islami Bank made an operating profit worth Tk 6.45 billion in 2014 against Tk 4.57 billion of the previous year while Mutual Trust Bank earned Tk 2.80 billion, up from Tk 2.11 billion in 2013.
The operating profits of EXIM Bank rose to Tk 6.25 billion in 2014 from Tk 5.25 billion and the Social Islami Bank Ltd (SIBL) to Tk 4.70 billion from Tk 3.25 billion.
The IFIC Bank rose to Tk 4.08 billion from Tk 4.03 billion and Mercantile Bank to Tk 4.50 billion from Tk 4.30 billion.
The operating profit of the National Credit and Commerce Bank Ltd (NCCBL) came down to Tk 3.86 billion in 2014 from Tk 4.05 billion in the previous year while Shahjalal Islami Bank's operating profit dropped to Tk 2.50 billion from Tk 2.80billion.
The First Security Bank Ltd posted an operating profit worth Tk 2.11 billion in 2014 compared to Tk 2.0 billion in 2013.
Dhaka Bank rose to Tk 4.75 billion from Tk 4.56 billion and the Premier Bank to Tk 2.65 billion from Tk 1.52 billion.
Bank Asia made an operating profit worth Tk 6.02 billion in 2014 against Tk 5.48 billion of the previous year while Jamuna Bank earned Tk 3.45 billion, up from Tk 3.21 billion in 2013.
The Modhumoti Bank Ltd posted an operating profit worth Tk 510 million in 2014 to Tk 120 million in 2013 while Union Bank's rose to Tk 420 million from Tk 250 million.
The NRB Commercial Bank's profit rose to Tk 390 million from Tk 110 million and South Bangla Agriculture Bank to Tk 310 million from Tk 140 million.
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