Foreign banks' net profit falls 38% in H1

Foreign commercial banks operating in Bangladesh saw their combined net profit fall 38% to Tk2,321 crore in the first half of 2026 as weaker trade activity and limited income-generating opportunities weighed on earnings.

Their net profit declined by Tk1,417 crore from Tk3,738 crore in July-December 2025, according to a Bangladesh Bank report.

Year on year, net profit fell by Tk494 crore from Tk2,815 crore in January-June 2025.

Infographics: TBS

Despite the decline in earnings, the nine foreign commercial banks operating through 67 branches across the country maintained strong capital positions, ample liquidity, and relatively healthy asset quality, the report says.

Although foreign banks account for a relatively small share of the banking sector's total deposits and loans, they play an important role in trade finance, foreign exchange transactions and services for multinational corporations.

Their combined pre-tax profit fell to Tk3,632 crore in January-June 2026, down 18.4% from the same period a year earlier and 17.3% from the preceding six months. Returns on assets and equity also moderated during the period.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told TBS that the banking sector is going through an extremely difficult period, with limited opportunities to generate income constraining profitability.

"When the non-performing loan ratio exceeds 30% and the volume of distressed assets is more than 50%, losses become inevitable," he said.

Mahbubur said higher global commodity prices had reduced import volumes while increasing the foreign currency needed to pay for imports. Production had also been disrupted by continued constraints in gas and electricity supplies, reducing import and export activity, and adversely affecting banks' income and profits.

Deposits remain strong as lending growth slows

Foreign banks held deposits of Tk87,378.5 crore, equivalent to around 4% of total deposits in Bangladesh's banking sector.

Unlike domestic lenders, which serve a broader retail customer base, foreign banks focus heavily on corporate clients. Their deposits are dominated by current accounts, savings accounts and resident foreign currency accounts, helping them maintain relatively low funding costs.

Their outstanding loans stood at Tk48,704 crore at the end of June 2026, up just 0.7% from Tk48,355 crore a year earlier.

Foreign banks handle 18.6% of export receipts

Foreign banks processed $3.95 billion in export receipts in January-June 2026, accounting for 18.6% of Bangladesh's total export receipts, according to the report.

On the import side, foreign banks facilitated payments worth $4.62 billion, accounting for more than 13% of the country's total import payments.

Although foreign banks handled a larger share of export receipts than of import payments, their net foreign currency contribution depends on the actual value and timing of the associated inflows and outflows.

NPL ratio rises, but capital buffers remain strong

Foreign banks' non-performing loan (NPL) ratio rose to 6.5% at the end of June 2026, from 6.1% a year earlier.

Despite the deterioration, the ratio remained significantly lower than that of domestic banks, according to the report. The relatively lower level of default exposure reflects foreign banks' focus on large corporate borrowers, multinational subsidiaries and highly rated export-oriented businesses.

Their capital adequacy ratio stood at 41.21% at the end of June 2026, substantially above the regulatory minimum. The Tier 1 capital ratio remained close to 39.4%, indicating a substantial buffer against potential financial shocks.

Liquidity indicators also remained strong, with liquid assets accounting for nearly half of total assets and customer deposits exceeding gross loans by more than 28%.

The sector's total assets reached Tk3,10,621.3 crore, supported by substantial capital reserves and a relatively conservative lending strategy.