Banks' income soars

The Daily Star

Banks posted record profits in 2008, despite fallout from the global financial crisis.

Operating income for most banks rose by 20-40 percent in 2008 from a year ago, according to data collected from individual banks.

“Despite a noticeably deteriorated macroeconomic environment, the banking industry did better in 2008 because of their innovative planning and strategy,” said Mahmud Sattar, managing director and chief executive officer of The City Bank.

EXIM Bank's operating income rose by more than 25 percent to Tk 355 crore from Tk 282 crore in 2007.

AB Bank's operating income jumped 29 percent to Tk 430 crore in 2008 and Dutch-Bangla Bank about 36 percent, Prime Bank 20 percent, BRAC Bank 70 percent, Mutual Trust Bank 55 percent, Mercantile Bank about 25 percent, Social Investment Bank 43 percent and Pubali Bank 20 percent.

State-owned Sonali, Janata, Agrani and Rupali banks showed a significant rise in operating income -- between 20 percent and 30 percent.

Southeast Bank's earnings rose only by 6 percent.

Income by IFIC, a first-generation private bank, declined by Tk 12 crore to Tk 318 crore in 2008. ICB Islami Bank's income also went down to Tk 69.6 crore in 2008 from Tk 87.6 crore in 2007.

As in the preceding years, the driver of this growth was net interest income. Corporate and retail customers' base was also up significantly in the immediate past year, according to the financial statements of the banks.

“Banks are developing various products to cater to customers. Earlier, there were only a few products in the banking industry,” said Syed Abu Naser Bukhtear Ahmed, managing director of Agrani Bank.

Income from interest rates accounts for 60 percent of Agrani's Tk 633 crore in operating income in 2008. The remaining 40 percent came from fees and commissions.

Naser Bukhtear attributed the income growth to the huge price hike of commodities in the first nine months of 2008. “Banks made a huge profit in that period,” he said.

Bangladesh was largely immune to the global financial crisis in 2008, but the country took an initial hit at the beginning of 2009 with growth slowing in exports and remittances.

“Banks will feel the pinch of the global financial crisis this year,” said Mahmud Sattar.

Bangladesh Bank's latest move to limit the lending rate at 13 percent may pare down banks' profit in 2009, said Sattar, also president of Association of Bankers' Bangladesh, a forum of banks' managing directors.

“All of these factors contribute to a more complex and unpredictable operating environment in which our performance will face much pressure and challenges this year,” said Naser Bukhtear.