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Despite the business collapse, the coronavirus epidemic and non-performing loans, net profit in the banking sector increased by 33.60 percent in the first half of 2020 from the previous year.
According to experts, this jump in net profit is actually a mirage. According to them, the bank’s profits have increased only on paper.
The central bank has granted the facility to default on loan installments this year so that borrowers do not become delinquent.
The ongoing economic recession, as well as the ease of payment in installments, have adversely affected the recovery of loans by banks.
But banks are adding interest on bad loans to their income books. As a result, its profits have been artificially increased.
But this interest rate has to be removed from the income sector by the banks again, if the loans are not repaid.
A Bangladeshi Bank official said: “The banking sector regulator is working on the issue of increasing artificial profits in the banking sector.”
Banks will not be able to take all of the unearned interest in the income sector. A specific instruction will be issued soon in this regard. As a result, the net profit will be reduced by the end of this year.
Ahsan H Mansoor, Executive Director of the Bangladesh Policy Research Institute, said: “The central bank must take the issue seriously, otherwise the directors of private banks will enjoy dividends from ordinary people’s deposits.”
He added: “Many bank directors are known to be involved in financial scandals. So they will try to enjoy more dividends through artificial gains. They must strictly curb those instincts.
Ahsan H. Mansoor thinks that the real income of the banks should be calculated based on the amount of the loan repaid.
According to the central bank, between April and June, banks recovered Tk 89.7 crore in delinquent loans.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said delinquent loans did not increase much in the first half due to the ease of deferred loan installments.
“It has helped banks increase their net profits,” he said. Because, they have to show less security reserves compared to delinquent loans.
In June this year, the amount of delinquent loans stood at Tk 96,117 crore, which is 14.50 percent less than last year.
Managing Director of Bank Asia. “Increasing net earnings will not present a major challenge for the banking sector if the issuance of free dividends to shareholders can be controlled,” said Arfan Ali.
He said the central bank should present further instructions on the distribution of dividends.
The net profit of the private commercial banks in the first six months was Tk 3,292 crore. That was 3,395 crore last year.
The profit of foreign banks was 1,091 million Tk, 12.90 percent more than last year.
According to the Bangladesh Bank, the net loss of six state commercial banks between January and June was 65 million. At the same time, last year, the loss was 1,056 million rupees.
Three specialized state-owned banks, Bangladesh Krishi Bank, Prabasi Kalyan Bank and Rajshahi Krishi Unnayan Bank, have doubled their combined net losses over the same period a year ago. Last year the loss was Tk 959 crore, but this year the loss was Tk 1,062 crore.
