In the first half of 2023, listed banks displayed a varied performance in generating profits compared to the same period in the previous year.
While over half of the banks that disclosed their half-yearly financial statements reported growth in net profit, others faced declines due to provision expenses against non-performing loans (NPLs).
Out of the 29 listed banks that released their H1 2023 financial statements, 17 witnessed positive growth ranging from 1 per cent to 48 per cent in their net profits compared to the corresponding period last year.
The rise in operating income was a key driver of the growth.
Notable performers included The City Bank, Prime Bank, BRAC Bank, Social Islami Bank, First Security Islami Bank, Global Islami Bank, Islami Bank Bangladesh and Midland Bank.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said the overall bank performances for January-June were satisfactory. He, however, acknowledged that NPLs remained a concern, leading banks to set aside provisions that impacted their earnings per share (EPS).
The City Bank recorded a 10 per cent year-on-year growth in operating profit, reaching Tk 13.56 billion for January-June 2023. During the same period, the company reported a net profit of Tk 2.37 billion, reflecting a 9.0 per cent increase from the previous year.
For some banks, a decrease in provisions contributed to a year-on-year growth in net profit for H1 2023 compared to the previous year.
For example, take the case of Global Islami Bank, whose operating profit actually declined by Tk 660 million.
But the company's total provisions and provision for income tax decreased by a combined amount of Tk 880 million, contributing to the rise in net profit.
The company's EPS rose by an impressive 48 per cent to Tk 0.74 for H1 compared to the same period of the previous year.
In the case of Prime Bank, its consolidated EPS advanced by 21 per cent to Tk 1.93 for H1 2023, compared to the same period of the previous year, driven by an increase in net interest and investment income.
According to the managing director of Pubali Bank, banks that prioritise strong corporate governance were also able to achieve growth in net profits.
Apart from provision expenses, it was found that banks that faced rises in operating expenses also encountered difficulties in reporting a growth in net profits.
Southeast Bank experienced a 39 per cent decline in consolidated EPS, which fell to Tk 1.50 for H1 2023 compared to the same period of the previous year. In a disclosure, the company said that its EPS decreased due to an increase in interest expenses and provisions against loans and advances.
Dutch-Bangla Bank also saw a 3 per cent decline in consolidated EPS, reaching Tk 3.21 for H1 compared to the same period of the previous year.
Other banks that experienced a decline in consolidated EPS for H1 2023 include United Commercial Bank, NRBC Bank, Trust Bank, Mercantile Bank and One Bank. Their consolidated EPS declined compared to the same period of the previous year.
Most of the banks that disclosed their half-yearly financial statements experienced a rise in their operating cash flow because the growth of the disbursement of loans and advances was less than that of the growth of deposits.
The banking sector comprises 35 companies and is one of the major sectors with a significant share in market capitalisation.
Many banks are unable to see price movements as the price discovery is hindered by the floor price earlier imposed by the securities regulator.
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