Uttara Bank profit down 59pc amid surge in loan provisions

Uttara Bank experienced a 59 per cent tumble in earnings year-on-year in April-June (Q2) of the calendar year 2025 following a sudden increase in provision requirement.

Strict disciplinary measures by the central bank led to increased provisioning in both Q2 and H1 through June this year, company officials said.

Preferring anonymity, a senior official of the bank said classification of loans used to be a bit loose but now loans were considered as defaulted over the failure of three installment payments by borrowers.

The provisioning requirement also increased at varying rates.

For example, banks were previously allowed to keep general provisions at a rate of 0.25 per cent for non-classified SME loans. But now the provisioning requirement in this segment rose to 1 per cent, which leaves a significant dent on profits.

In case of classified loans, provision requirement increased sharply in the first half of this year, compared to the same period of the previous year.

As a result, the amount of provisioning made by Uttara Bank in H1, 2025 was almost equal to the profit reported for the six months through June this year.

The bank earned a profit of Tk 1.76 billion in H1, 2025, down from Tk 1.94 billion during the same period of the previous year.

The amount of provisions in H1, 2025 was Tk 1.70 billion, which was only Tk 760 million in the same quarter of the previous year.

In a filing on the website of the Dhaka Stock Exchange (DSE), the lender reported a consolidated EPS (earnings per share) of Tk 0.58 for Q2, 2025, reduced from Tk 1.42 for the same quarter of the previous year.

Uttara Bank has maintained a steady growth in profits over the last five years and accordingly the dividend payout rose over time.

It distributed a 12.5 per cent cash dividend for 2020 and the amount gradually increased to 17.50 per cent for 2024.

mufazzal.fe@gmail.com