Bangladesh Bank has raised concerns over the rising nonperforming loans (NPLs) in the manufacturing sector, which account for 55.10% of the total NPLs in the banking sector. The central bank’s Financial Stability Report 2022, released on Sunday, said the gross NPL ratio in the manufacturing sector stood at 9.13% in December 2022, higher than the industry average of 8.16%. The report said the ship-building and ship-breaking sub-sector had the highest gross NPL ratio of 22.43% in 2022, up from 18.75% in the previous year.
The report also said the overall asset quality of the banking sector has experienced a slight deterioration, with the ratio of bad and loss loans to gross NPL rising to 88.67% in December 2022 from 88.17% in 2021. The cumulative bad and loss loan volume within the banking sector reached nearly Tk1.07 lakh crore by the end of December 2022, marking an increase from Tk91,058 crore a year ago. The report said the rising NPLs in the manufacturing sector could pose a risk to the banking sector, as this sector accounts for a significant portion of the banking industry’s loans. BB has urged banks to take steps to recover the bad loans and improve the asset quality of the banking sector.
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