Bangladeshi banks record lowest profits in South Asia: Reports

Bangladesh Bank data reveals a decline in return on assets (ROA), dropping from 0.52 per cent in 2022 to 0.43 per cent in June 2023.

Comparatively, South Asian countries exhibit higher ROA figures: 5 per cent in the Maldives, 2.05 per cent in Nepal, 1.98 per cent in Bhutan, and 1.48 per cent in Pakistan.

Afghanistan and Sri Lanka record 1.37 per cent and 1.36 per cent respectively, while India’s ROA rose to 1.14 per cent in 2023.

As per reports, factors contributing to Bangladesh’s banking challenges include the prevalence of borrowers intentionally defaulting on payments, even with favourable terms like single-digit interest rates and payment holidays even as influx of fourth-generation banks reportedly intensified deposit competition, consequently driving down ROA.

Policy interventions like interest rate caps for deposits and loans further reportedly narrowed profit margins, adversely impacting bank revenues while business slowdowns induced by the COVID-19 pandemic compounded the profitability issue, accentuated in 2018 due to liquidity constraints and lower Islamic bank profits.

Fibre2Fashion News Desk (DR)