BRAC Bank, EBL post robust Q2 growth on returns fuelled by surplus liquidity

BRAC Bank and Eastern Bank Limited (EBL) gained a significant year-on-year growth in profit in the second quarter through June this year, riding on increased investment income.

During the April-June period, BRAC Bank's profit surged more than 23 per cent year-on-year to Tk 3.07 billion, while EBL recorded a 10.81 per cent growth in profit to Tk 1.96 billion, compared to the same period last year.

Both banks performed well even in the six months through June this year. BRAC Bank's profit jumped 35.88 per cent year-on-year to Tk 7.09 billion in January-June, whereas EBL posted an 8.91 per cent higher profit to Tk 3.51 billion in the first half of this year, compared to H1 last year.

BRAC Bank leverages sound asset quality

BRAC Bank, currently the largest listed bank in the country by market capitalisation --Tk 137.4 billion -- attributed its earnings growth to higher investment and interest income.

With Treasury bill and bond yields remaining elevated and private sector credit growth sluggish, trusted banks having excess liquidity have been channeling funds into government securities for risk-free returns.

In addition, banks, which have made prudent equity investments, are benefiting from favourable movements in the capital market.

BRAC Bank, known for maintaining a low level of non-performing loans, compared to the industry average, has also benefited from wider net interest margins in the high interest rate regime.

While weak banks have been struggling to profit even from the current interest rate spread, BRAC Bank has leveraged its sound asset quality to generate higher returns.

The bank's earnings per share (EPS) rose to Tk 1.54 for Q2, 2025 from Tk 1.25 for the same period last year.

For the first half (January-June) of 2025, EPS stood at Tk 3.56, up from Tk 2.62 for the corresponding period last year.

Alongside profit growth, BRAC Bank reported a notable improvement in its cash position. The net operating cash flow per share (NOCFPS) jumped to Tk 44.24 in January-June this year from Tk 30.99 a year earlier.

According to the bank, the sharp rise in NOCFPS was driven by increased deposit inflows and bank borrowings, while loan disbursement remained lower in H1 this year than in H1 the year before.

Amid heightened concerns over the liquidity crisis facing some banks, customers have been moving funds to financially-sound institutions, such as BRAC Bank, resulting in higher deposit growth.

However, due to subdued demand for credits in the private sector, the bank has not been able to expand its loan book proportionately, leading to a buildup of liquidity.

BRAC Bank's net asset value (NAV) per share also increased to Tk 42.60 as of June 30, up from Tk 39.38 at the end of December last year. The rise in NAV was attributed to increased retained earnings and a positive revaluation of government securities.

Meanwhile, despite the positive earnings disclosure, BRAC Bank's share price fell 2.03 per cent to Tk 67.60 per share on Tuesday on the Dhaka Stock Exchange.

Eastern Bank: low level of bad debts drives growth

Eastern Bank having a market value of Tk 41.3 billion also maintained growth on higher investment and interest income.

With a much lower level of bad debts than the industry average, EBL invested excess liquidity in high-yielding Treasury bills and bonds.

The bank's earnings per share (EPS) rose to Tk 1.23 in Q2 this year from Tk 1.11 in the same period last year.

For the first half of 2025, EPS stood at Tk 2.20, up from Tk 2.02 for the corresponding period last year.

The net operating cash flow per share jumped to Tk 13.49 during the January-June period this year from Tk 12.79 a year earlier.

The bank's net asset value (NAV) per share also went up to Tk 27.71 as of June 30 from Tk 26.92 at the end of last year.

Meanwhile, the stock of EBL moved up 0.39 per cent to Tk 26 per share on Tuesday on the Dhaka Stock Exchange.

farhan.fardaus@gmail.com