Little cheer for state banks in 2015

State-owned commercial banks saw their operating profits decline 4.69 percent year-on-year in 2015 owing to low credit growth and large amount of non-performing loans.

In 2015, the six state-owned banks logged in Tk 3,207 crore in profits, in contrast to Tk 3,365 crore a year earlier.

Of the six banks, Janata and Sonali saw their profits increase slightly. Janata's profits rose about 10 percent from the previous year to Tk 1,151 crore, which is more than its target for 2015.

In 2015, the bank's target was to register Tk 1,100 crore of profits.

The bank's profits grew due to increase in credit, especially to small and medium enterprises, said MA Salam, Janata's managing director.

Last year, Janata disbursed large amounts of loans to women entrepreneurs across the country.

Janata also restructured about Tk 5,000 crore loans in 2015. However, it cannot count the interests on the loans as income, as per the central bank condition.

If the condition was not tagged, Janata's profits would have been even more, said a high official of the bank.

Sonali registered profits of Tk 871 crore, which suggests the bank is slowly shaking off the effects of the Hall-Mark scam. Pradip Kumar Dutta, managing director of Sonali Bank, said the amount was not up to expectations due to slow loan growth.

The bank has become cautious about granting loans after the Hall-Mark scam. Many of its officials have Anti-Corruption Commission cases hanging over their heads, which have made others wary.

"Even after promising all sorts of incentives, they are still reluctant about giving loans."

Besides, big public sector organisations like the Bangladesh Petroleum Corporation is not taking loans from them this time, which contributed to the slow loan growth, he added.

Until the first week of November, Sonali's loans dropped 0.17 percent year-on-year in 2015, according to central bank statistics.

Another scam-hit bank, BASIC, saw its losses swell to Tk 219 crore in 2015, owing to bad decisions of the past board. They sanctioned loans without doing diligence and those have now turned bad.

"We are determined to overcome the loss and make a profit by next December," said Alauddin A Majid, chairman of BASIC Bank, adding that the condition of the bank is improving by the day.

Seeing its sorry balance sheet, Finance Minister AMA Muhith on December 30 last year authorised Tk 1,200 crore to meet its capital shortfall.

Even after that, the bank will be in the deficit by Tk 1,500 crore, according to Majid.

The bank will make up a portion of it by improving its financial condition, he said, while expressing hope that the government will provide the remaining amount.

The operating profits of Agrani, Rupali and Bangladesh Development Bank Ltd also decreased last year.

Apart from the low credit growth, 22 percent of the loans of the state-owned banks are non-performing. These banks cannot convert the interest against these loans into income.

As of September last year, interest of Tk 4,616 crore of the banks have been suspended, meaning had they not been bad loans the amount could have been counted as income.