The volume of non-performing loans (NPLs) in the country's banking system jumped 19.51 per cent or Tk 121.31 billion in the last calendar year (2017) despite close monitoring of the central bank.
The NPLs rose to Tk 743.03 billion as on December 31 last year, from Tk 621.72 billion on the same day of the previous year (2016), according to Bangladesh Bank's (BB) latest statistics.
It was Tk 513.71 billion as on December 31, 2015.
Officials of the central bank, however, said stronger recovery drives by the commercial banks and rescheduling of loans pushed down the NPLs in the final quarter (Q4) of the last calendar year.
During the October-December period of 2017, the NPLs dropped by more than 7.0 per cent or Tk 60.04 billion to Tk 743.03 billion from Tk 803.07 billion in the Q3. It was Tk 741.48 billion in the Q2.
"The amount of classified loans normally falls during the final quarter of each calendar year, as the banks gear up recovery drives to raise their income," a senior official of the BB told the FE on Thursday.
He also expressed concern that the amount of NPLs might rise in the first quarter (Q1) of this year due to a sluggish pace in recovery drives by the commercial banks.
The share of NPLs in the total outstanding loans came down to 9.31 per cent during the period under review from 10.67 per cent three months back. It was 9.23 per cent as on December 31, 2016.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits, which stood at Tk 7,981.96 billion as on December 31 last. The amount was Tk 6,739.20 billion a year ago.
Talking to the FE, Syed Mahbubur Rahman, Chairman of Association of Bankers, Bangladesh (ABB), said the volume of NPLs dropped in the final quarter of last year, following a rising trend in disbursing new loans, recovery drives and rescheduling.
Mr. Rahman, also managing director (MD) and chief executive officer (CEO) of Dhaka Bank Limited, admitted that the amount of classified loans might rise slightly in the Q1 of this calendar year.
"A major portion of the restructured large loan in 2015 has already turned into bad loan," the senior banker said while explaining the main factor behind the increased amount of NPLs in 2017.
The central bank had cleared proposals of 11 business groups for restructuring their large loans amounting to around Tk 153.26 billion.
Echoing Mr. Rahman, M A Halim Chowdhury, MD and CEO of Pubali Bank Limited, said the aggregate amount of NPLs may decrease in 2018, as most of the banks are providing loans with due diligence to avoid risk.
During the period under review, the total amount of NPLs with the six state-owned commercial banks (SoCBs) rose to Tk 373.26 billion from Tk 310.26 billion a year before. It was Tk 385.17 billion in the Q3 of 2017.
On the other hand, the total amount of classified loans with the 40 private commercial banks (PCBs) reached Tk 293.96 billion as on December 31 last, from Tk 230.57 billion on the same day of 2016. It was Tk 339.73 billion in the Q3 of 2017.
The NPLs of the nine foreign commercial banks (FCBs) came down to Tk 21.54 billion during the period under review, from Tk 24.05 billion a year ago. It was Tk 22.98 billion as on September 30 last year.
The classified loans with the two development-finance institutions (DFIs) also dropped to Tk 54.26 billion as on December 31 last from Tk 56.84 billion a year ago. It was Tk 55.18 billion in the Q3 of 2017.
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