Banks’ NPLs rise 15pc in Q1

Country's banking system gasps under an over 15 per cent rise in their non-performing loans (NPLs) in the first quarter (Q1) of this year, belying the central bank surveillance.
The volume of the dud loans rose to Tk 594.11 billion during the January-March period of this calendar year from Tk 513.71 billion in the preceding quarter, according to the central bank's latest statistics.
The share of NPLs in the lending operations of the banks rose to 9.92 per cent during the period under review from 8.79 per cent three months back.
"The volume of NPLs normally rises slightly during Q1 and Q3 of each year," Shubhankar Saha, a spokesperson for the Bangladesh Bank (BB), told the FE Tuesday.
Mr. Saha, also executive director of the BB, expects the amount of classified loans to go down in the second quarter (Q2) of the year.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits. These altogether stood at Tk 5986.48 billion as on March 31 last, the BB data showed.
The amount of classified loans found a high rise because of less rescheduling of unpaid loans and a relaxed trend in recovery, according to the bankers.
Most bankers normally remain less serious in the Q1for recovering their classified loans, they explained.
"Some rescheduled loans might be entered into non-performing territory during the period under review," Nurul Amin, Chief Executive Officer and (CEO) and Managing Director (MD) of Meghna Bank Limited, said while explaining the upturn in NPLs.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), advised that the bankers take vigorous efforts for the recovery of their unpaid loans from the default debtors.
Talking to the FE, MD and CEO of the NCC Bank Limited Golam Hafiz Ahmed also expected that the volume of NPLs would decrease gradually in the coming quarters.
Economic analysts are of the view that growing NPLs add to the operating costs of the banks and the burden is shifted to fresh borrowers by way of wide spread between deposit and lending rates and also to depositors by lowering interests on public deposits.
During the January-March 2016 period, the total amount of NPLs with six state-owned commercial banks (SoCBs) rose to Tk 272.89 billion from Tk 237.45 billion in the previous quarter.
On the other hand, the volume of classified loans with 39 private commercial banks (PCBs) reached Tk 253.31 billion in the Q1 from Tk 207.60 billion three months ago.
The NPLs with nine foreign commercial banks (FCBs) came down to Tk 18.22 billion during the period under review from Tk 18.97 billion of the previous quarter.
The classified loans with two development-finance institutions (DFIs) remained unchanged at Tk 49.69 billion in the Q1, the BB data showed.
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