18pc NPL rise in Jan-Mar despite BB watch

Classified loans in the country's banking system jumped by over 18 per cent or Tk 112.37 billion in the first quarter (Q1) of the current calendar year, despite close monitoring by the central bank.

According to the central bank's latest statistics, the amount of non-performing loans (NPLs) bloated into Tk 734.09 billion during the January-March period from Tk 621.72 billion in the preceding quarter.

The share of NPLs also rose to 10.53 per cent during the period under review from 9.23 per cent three months back.

On the other hand, the amount of classified loans swelled up by 23.56 per cent or Tk 139.98 billion in the Q1 of 2017 compared to the same period of the previous year. The amount of NPLs was Tk 594.11 billion as on March 31, 2016.

Talking to the FE, a senior official of the Bangladesh Bank (BB) said the amount NPLs normally rises during the Q1 and Q3 of each calendar year.

"We expect the amount of NPLs may fall in the second quarter (Q2) of the current calendar year," he said while explaining the ongoing trend of NPLs.

The classified loans cover substandard, doubtful and bad/loss of total outstanding credits which stood at Tk 6970 billion as on March 31 last. It was Tk 5986 billion a year ago.

During the January-March 2017 period, the total amount of NPLs with six state-owned commercial banks (SoCBs) rose to Tk 357.17 billion from Tk 310.26 billion in the previous quarter.

On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) amounted to Tk 297.27 billion in the Q1 of 2017 from Tk 230.57 billion three months before.

The NPLs of nine foreign commercial banks (FCBs) came down to 22.82 billion during the period under review from Tk 24.05 billion of the previous quarter.

The classified loans with two development-finance institutions (DFIs) remained unchanged at Tk 56.84 billion in the Q1, according to the official figures.

The amount of classified loans increased significantly during the period under review because of less rescheduling and relaxed trend in recovery, according to the bankers.

They also said most of the bankers normally remain less serious in the first three months of a calendar year for recovering their non-performing loans.

As such, a note of caution came from a senior banker.    

"It's an alarming situation in the country's banking sector. So bankers should be more careful about the issue in the coming months of this calendar year," Nurul Amin, Chief Executive Officer and (CEO) and Managing Director (MD) of Meghna Bank Limited, said explaining the rising trend in NPLs.

Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), said some rescheduled loans might enter the NPL territory that might push up the amount of classified loans during the period under review.