Loss of Tk1.37 lakh crore in the banking sector

The financial distress of the banking sector has affected all the major indicators. Although some banks made good profits, it did not survive the wash. For the first time, the entire sector has suffered a major loss. 

In 2025, the net loss of the banking sector was Tk1,36,666 crore. In 2024 too, the net profit was Tk12,158 crore. In previous years, the entire sector had always been profitable. 

Such a picture has emerged in the Annual Financial Stability Report 2025 published by Bangladesh Bank.

According to Bangladesh Bank data, the net interest income of the banking sector in 2025 was negative Tk12,537 crore. This means that the amount of income from loans has been less than the amount of interest paid to depositors.

The previous year, there was a net interest income of Tk29,391 crore. However, non-interest income increased from Tk63,861 crore in 2024 to Tk83,171 crore. 

Last year, operating expenses including salaries and allowances were Tk51,630 crore, which was Tk48,993 crore the previous year. In total, the pre-tax loss of the banking sector was Tk1,24,284 crore and the net loss stood at Tk1,36,666 crore.

The financial stability report did not provide information on bank-based profit and loss. However, the book ‘Activities and Information on Banks and Financial Institutions’ published by the government along with the national budget provides information on all the indicators of each bank. 

According to it, the top 10 banks with net losses incurred losses of Tk1,54,745 crore. Out of these, the top five are the merged banks.

Last year, First Security Islami Bank incurred a net loss of Tk66,386 crore. Social Islami incurred a net loss of Tk31,000 crore, Exim Bank incurred a net loss of Tk28,909 crore, Global Islami incurred a net loss of Tk13,144 crore, and Union Bank incurred a net loss of Tk4,685 crore. 

The next largest banks in terms of losses were AB Bank, which had a net loss of Tk3,706 crore, IFIC Bank Tk2,561 crore, National Bank Tk2,430 crore, Premier Bank Tk993 crore and Padma Bank Tk930 crore.

Despite the extreme hardship, some banks have made record profits. BRAC Bank tops the list. The bank made a net profit of Tk1,581 crore last year. 

In addition, City Bank made a profit of Tk1,306 crore, Pubali Bank made a profit of Tk1,790 crore, Eastern Bank made a profit of Tk910 crore and Prime Bank made a profit of Tk890 crore. Out of the 36 banks listed in the capital market, 16 banks were able to pay dividends last year.

Bangladesh Bank spokesperson and executive director Arif Hossain Khan told Daily Samakal that various initiatives have been taken to overcome the hardships of the banking sector. 

An incentive package of Tk60,000 crore has been given to boost the economy, including reopening closed factories, he said, adding that if these loans are distributed properly, loan recovery will increase and the situation in the banking sector will improve rapidly.

Stakeholders said that during the Awami League government, loans were regularly shown in various ways. However, in August 2024, the interim government took charge and started bringing the real picture of defaulted loans to the fore, and the picture of the entire sector has come to the fore. 

Defaulted loans had increased to 35.73 per cent by the end of September last year. Due to special rescheduling, it decreased by Tk87,298 crore in the last three months to Tk5,57,217 crore in December last year, which is 30.60 per cent of the total loan. 

The bad condition of the entire sector has come to the fore due to the increase in distressed loans, mainly including the bringing to light of hidden defaulted loans. Last year, a record Tk1,70,000 crore of loans was rescheduled. 

Despite this, distressed loans in the banking sector have increased to Tk10,87,590 crore, which is 59.73 per cent of the total loan. A year ago, distressed loans were Tk7,56,553 crore.

According to the report, the overall capital deficit of the banking sector has gone into negative territory for the first time due to the massive increase in defaulted loans. Banks are supposed to keep 12.5 per cent of their total risk-based loans as capital. 

At the end of last year, it fell to negative 2.64 per cent. At the end of the previous year, capital was much lower than the requirement. However, it was positive 3.08 per cent. This situation has arisen in the entire sector mainly due to the impact of the deficit of Tk2,78,000 crore of 20 banks. 

Bangladesh Bank has tightened the rules for declaring dividends to strengthen the financial base of the extremely distressed banking sector. 

In light of last year’s guidelines, if a bank’s defaulted loans were 10 per cent or more for 2025, that bank could no longer pay dividends. Again, banks with capital or provision deficits were not allowed to pay dividends, no matter how much profit they made. Under this rule, only 16 out of 36 banks listed on the capital market were able to pay dividends this time. 

Along with these guidelines, two new conditions have been added for 2026. This time, if the paid-up capital is less than Tk2,000 crore, the bank will not be able to pay cash dividends for 2026.