Most listed commercial banks are going through hard times in the second half of the year as a huge provisioning against non-performing loans pushed them to the negative profit zone.

Some banks even incurred losses in the third quarter as their core banking business was hit by low credit growth, according to their quarterly disclosures made public recently.

Of the 30 listed banks, 16 registered negative net profit growth year-on-year in July-September, six incurred losses and seven made positive growth.

Losses from the investment in the stockmarket also added to their worries, bankers said.

“Revenues fell in July-September mainly for two reasons,” said K Mahmood Sattar, managing director of The City Bank.

Interest rates were high, but demand for loans was low; and the banks also had to set aside huge funds to stay safe against classified loans, he said.

In the July-September period, the total specific provisions for classified loans at all listed banks doubled to around Tk 1,200 crore, compared to the second quarter.

Sattar said most of the burden of non-performing loans came from the ship-breaking industry.

“Steel prices dropped faster locally compared to the international markets,” he said.

He said, except for a few, net profit of all banks declined compared to the same period last year; even some of them incurred losses during the third quarter.

“The situation may worsen further in December when the new regulations on loan provisioning will come into effect,” he added.

BRAC-EPL Stock Brokerage said the third quarter saw the impact of provisioning like no other previous quarters and it became the single most vital element, affecting the banks' profitability.

“Loan provisioning is the biggest chunk of total provisions and in the third quarter it witnessed a skyrocketing growth on the backdrop of new loan provisioning guideline,” the stockbroker said in an analysis.

The new guideline will shorten the timeframe for loan classification, causing provisions to rise, even if the total amount of classified loans remains the same.

In June this year, Bangladesh Bank made it mandatory for banks to classify loans for non-repayment within three months instead of six months earlier, amid opposition from banks. The new rules aim to reduce the number of willful defaulters and benefit both banks and borrowers.

“Banks with medium or low asset qualities started to charge higher provisions early to smooth out their net profit even though one more quarter is left before the guideline will become effective,” said the BRAC-EPL analysis.

Nurul Amin, managing director of NCC Bank, said the negative earnings or losses were for temporary reasons, including higher loan provisioning and the new regulations, poor business and lower credit growth.

“Although the banks fared badly, I am optimistic as the demand for private sector credit will increase in the last quarter, helping the banks to maintain profitability like previous years,” said Amin, also the president of Association of Bankers, Bangladesh.

Ali Reza Iftekhar, managing director of Eastern Bank, also said majority of the banks' income from core business dropped significantly.

In addition, he said, many of the banks incurred losses from their investment in the stockmarket.

Although the banks' average exposure to the stockmarket remained low at 3 percent of their liabilities, the continuous fall in stock prices hit the portfolio of the banks and their clients.

News: The Daily Star/Bangladesh/22-Nov-12

A 11-member delegation of Woori Bank led by its President and CEO of Lee Soon Woon call on Bangladesh Bank Governor Dr Atiur Rahman at the latter’s office in Dhaka Tuesday. During the meeting, they discussed various matters including banking, industries, trade and investment.

News: The Daily Sun/Bangladesh/21-Nov-12

Md. Nurul Islam, Deputy Managing Director of Islami Bank Bangladesh Limited, seen at inauguration of a training course recently at the Islami Bank Training & Research Academy, recently.

A training course on "Islamic Banking" organised by Islami Bank Bangladesh Limited for 35 officials of Agrani Bank was recently inaugurated at Islami Bank Training & Research Academy (IBTRA).

Md. Nurul Islam, Deputy Managing Director of the Bank was present in the function as chief guest.

News: The Daily Sun/Bangladesh/21-Nov-12

Al-hajj Mohammad Hasan, Chairman, Executive Committee of Shahjalal Islami Bank Limited presides over the 508th meeting of the Bank at its head office in Dhaka Monday.

The 508th Executive Committee meeting of the Shahjalal Islami Bank Limited (SJIBL) was held Monday at the head office of the bank.

The meeting was presided over by Al-hajj Mohammad Hasan, Chairman of the Executive Committee of the bank said a press release.

The meeting discusses among various issues relating to more investment in different sectors.

Al-hajj Anwer Hossain Khan, Chairman, Al-hajj Tofazzal Hossain, Vice Chairman, Al-hajj Sajjatuz Jumma, Al-hajj Engineer Md. Towhidur Rahman, Al-hajj Mohammed Solaiman, Al-hajj Mohiuddin Ahmed, Directors, Md. Abdur Rahman Sarker, Managing Director, Md. Mukhter Hossain, Additional Managing Director, Md. Abdul Jabber Chowdhury and Md. Shafiul Azam, Deputy Managing Directors were present in the meeting.

News: The Daily Sun/Bangladesh/21-Nov-12

AAM Zakaria, Managing Director of First Security Islami Bank Limited inaugurates an ATM Booth at Andorkillah in Chittagong city recently.

First Security Islami Bank Limited (FSIBL) opened an ATM Booth at Andorkillah in Chittagong city recently.

AAM Zakaria, Managing Director of the bank inaugurated the booth, said a press release.

Md Abdul Quddus and Syed Waseque Md Ali, Deputy Managing Directors of the bank, Kazi Osman Ali and Syed Habib Hasnat, SEVP, Quazi Latiful Islam, zonal head, Chittagong, branch managers of Chittagong zone were also present on the occasion.

30 ATM booths of the bank will be set up by December 2012 in various locations of the country in the 1st phase and 50 more will be set up in the 2nd phase all over the country.

News: The Daily Sun/Bangladesh/21-Nov-12