The risk assets of five state-owned banks remained at an alarming stage in the first nine months of 2011 calendar year because of weak recovery of their default loans and high borrowings from the call money market.

Owing to the causes, asset earnings of the state-owned banks were bellow the expectation in January-September period of the last calendar year, a report said. The banks are state-owned Sonali, Agrani, Janata, Rupali and BASIC.

The situation prevailed in the five state-owned banks in the period would not affect the government in the short term, but huge borrowing from the local call money market would certainly hamper the implementation of the government directives for the banks, reads a recent report of Banking and Financial Institution Division on five state owned banks’ financial status in January-September period of 2011.

It revealed that the default loan recovery of the banks ranged between 17 and 75 per cent in the time term the rates not satisfactory. In the period, the top 20 defaulters of the five banks accounted for between 17 and 38 per cent of the total defaulted loans.

As per the report, risk assets of the largest state-owned bank, Sonali, decreased by 9.71 per cent in the nine compared to Tk 326.90 billion in 2010 calendar year.

Agrani’s risk assets raised by 13.55 percent to Tk 217.87 billion in the periods while that of Janata reduced by 20.23 percent to Tk 249.08 billion. Risk assets of Rupali increased by 95.93 per cent to Tk 217.87 billion. BASIC Bank’s risk asset was 12.11 per cent higher to 60.91 billion in first six months of 2011 compared to that in 2010.

Though Sonali was once a money lender, it became the biggest borrower from the money market. Data showed on an average Sonali borrowed Tk 4.20 billion from the call money market each day from December 7 to December 14. The total borrowed amount of the few days stood at Tk 25.25 billion. Agrani borrowed Tk 70.52 billion in total in the period and Rupali Bank Tk 20.35 billion.

Janata Bank, on the other, borrowed Tk 1.15 billion on October 31 while its total borrowing was Tk Tk 35.13 billion for the days mentioned above.

Dr AB Mirza Azizul Islam, former finance adviser to a past caretaker government, told daily sun that state banks should not operate for long time with liquidity borrowed from call money market.

The state of solvency of the state-owned banks would be questioned if they continued borrowing extensively from call money market, he added. As per a Memorandum, risk assets of state-owned banks should not be over 5 per cent of their capital. But the rate was much higher than the limit in the reviewed period, which would result in reducing banks’ profit, Azizul Islam also said.

Data of top 20 defaulters of four banks, except for BASIC Bank, show that their total default loans amounted at Tk 3.65 billion till September 30, said the report submitted to finance ministry on December 31, 2011.

Sonali could retrieve Tk 3.43 billion or 62.78 percent of its defaulted loans recovery target in the nine months, Janata recovered Tk 2.031 billion or 70 percent of its target, Agrani Tk 1.90 billion or 46.58 percent of target and Rupali Tk 357.7 million or only 18.63 percent of its target. Rupali could not recover sufficient amount of its defaulted liabilities in the period.

Sonali Bank earned 1.40 per cent from assets till September 30, 2011 against 0.32 per cent in 2010 while Agrani bagged 0.40 per cent in the period against 1.33 per cent in 2010. Janata earned 1.19 per cent of its total assets in the nine months against 1.38 per cent a year back, Rupali earned 054 per cent of its total assets in the nine months against 1.15 per cent a year back, according to the latest report.

The number of loss-making branches of Janata dropped to 71 in the period from 96 in the previous year while such branches of Sonali came down to 83 in the period from 90 a year back. The number of loss-making branches of the Agrani Bank dropped to 48 while Ruplai’s loss-making branches remained 22.

Sonali Bank’s capital gain was Tk 4.182 billion till September 30 against a shortfall of Tk 2.04 billion in 2010 while Janata made a capital shortfall of Tk 2.12 billion against a shortfall of Tk 222.7 million one year back.

The Daily Sun/Bangladesh/ 8th Jan 2012