In the first half of 2024, listed banks in Bangladesh saw a notable boost in interest income, rising by 26% year-on-year to Tk 13,045 crore. This increase was driven by higher lending rates and improved yields from treasury bonds, following Bangladesh Bank’s shift to a market-driven interest rate regime in May. The central bank’s removal of the Six-month Moving Average Rate of Treasury Bills (SMART) and the 9% cap on lending rates allowed banks to capitalize on better returns from government securities.
Despite the uptick in income, banks faced challenges with profit growth due to rising provisioning needs. Combined profits grew 8% year-on-year to Tk 4,100 crore, but provisioning for bad loans surged 81% to Tk 5,485 crore, reflecting the high level of default loans, which have hit a record Tk 182,000 crore.
Some banks, like BRAC Bank, benefited significantly from this environment. BRAC Bank’s investment income doubled to Tk 1,191 crore, leading to a 77% increase in profit to Tk 591 crore. Conversely, National Bank reported the highest loss of Tk 1,066 crore. Overall, while banks are reaping rewards from treasury investments, managing credit risk remains a critical challenge.
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