Profits and deposits decline at nine foreign banks
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Both deposits and profits have declined at foreign banks operating in Bangladesh. Their total deposits fell by Tk 1.11 billion in one year while their profits dropped by Tk 4.94 billion.
The information was revealed in a report titled “Foreign Bank Operations in Bangladesh: Trends and Operational Analysis” published by Bangladesh Bank on Wednesday, October 14.
According to the report, deposits at foreign banks fell to Tk 873.79 billion in the first six months of this year from January to June. The amount stood at Tk 874.90 billion during the same period last year. Accordingly, the banks’ total deposits declined by Tk 1.11 billion in one year.
Additionally, the combined profits of foreign banks fell to Tk 23.22 billion at the end of June this year from Tk 28.16 billion during the same period last year. This means their profits declined by Tk 4.94 billion in one year.
However, the report did not explain the reasons behind the decline in profits and deposits.
The foreign banks operating in Bangladesh include The Hongkong and Shanghai Banking Corporation (HSBC), Standard Chartered Bangladesh (SCB), Citibank N.A., Commercial Bank of Ceylon, Woori Bank, State Bank of India, Habib Bank, National Bank of Pakistan and Bank Alfalah.
A large portion of these banks’ deposits consists of funds held in low interest bearing current and savings accounts. At the end of June this year, Tk 328.01 billion of the total deposits held by foreign banks was in these types of accounts.
The second largest share of deposits was held in foreign currency accounts. These accounts contained Tk 170.88 billion.
In addition, fixed or term deposits amounted to Tk 126.65 billion. Banks generally offer higher interest rates on fixed or term deposits. However, foreign banks hold a smaller amount of deposits in these accounts.
Meanwhile, despite holding a large volume of low interest-bearing deposits, foreign banks remain relatively cautious in lending. Their combined outstanding loans stood at Tk 487.04 billion at the end of June this year compared with Tk 483.55 billion at the end of June last year. Accordingly, loans provided by foreign banks increased by Tk 3.49 billion in one year.
Most of their loans went to the industrial sector. Loans disbursed to this sector amounted to Tk 254.03 billion in June this year.
Foreign banks provided the smallest amounts of loans to the transport and construction sectors. At the end of June this year, loans disbursed to the transport sector amounted to Tk 100 million. During the same period, loans disbursed to the construction sector totaled Tk 4.28 billion.
