Mounting defaults push Rupali Bank PLC into Tk396cr quarterly loss
Interest income falls 23% to Tk658 crore, while cost of funds rises 15% to Tk1,304 crore
State-owned Rupali Bank PLC has plunged deeper into financial distress, posting a consolidated net loss of Tk396 crore in the first quarter of 2026 amid mounting default loans, widening provisioning gaps and weakening capital buffers.
The lender's latest financial disclosures show a sharp deterioration in its balance sheet, driven by rising non-performing loans (NPLs), negative retained earnings and a significant erosion of capital adequacy.
According to a price-sensitive statement filed with the Dhaka Stock Exchange yesterday, the bank's standalone performance for the January–March quarter was hit by a steep decline in operating income.
Keep updated, follow The Business Standard's Google news channel
During the period, interest income fell 23% year-on-year to Tk658 crore, while the cost of funds rose 15% to Tk1,304 crore. This imbalance pushed net interest income deep into negative territory at Tk645.78 crore, indicating that the bank is paying substantially more to depositors than it is earning from loans and investments.
Retained earnings also slipped further into negative territory, standing at Tk351 crore at the end of the quarter.
As a result, loss per share stood at Tk8.12, while net asset value (NAV) per share declined 23% to Tk27.05.
Analysts warn that without a substantial capital injection and a comprehensive overhaul of its loan recovery and risk management framework, the bank's recovery prospects remain highly uncertain.
The financial stress is further aggravated by a surge in classified loans. According to the 2025 audit report prepared by Mahfel Huq and Co, Rupali Bank's default loans rose to Tk20,015 crore at the end of last year, accounting for 39.05% of total outstanding loans.
To cover these bad assets, the bank was required to maintain provisions worth Tk14,014 crore, which it failed to fully provide for.
Despite this gap, Bangladesh Bank granted the bank special regulatory forbearance on 30 April 2026, allowing it to prepare financial statements without fully recognising the provisioning shortfall.
The audit also flagged a critical breach of capital adequacy norms. While the minimum Capital to Risk-Weighted Assets Ratio (CRAR) requirement is 12.5% including the conservation buffer, the bank's solo ratio stood at just 2.88%, while the consolidated ratio was 2.94%.
In addition, the bank's paid-up capital of Tk487.93 crore remains below the regulatory minimum requirement of Tk500 crore, underscoring its limited capacity to absorb further financial shocks.
The worsening financial condition has also impacted its stock market performance. For the first time in its history, Rupali Bank PLC has been downgraded to the "Z" category, or junk status, by the Dhaka Stock Exchange after failing to declare dividends for two consecutive years.
Yesterday, shares of the state-owned lender edged down 0.62% to close at Tk16.10.
The government remains the dominant shareholder, holding 90.19% of the bank's shares, while institutional investors and the general public hold 3.32% and 6.49%, respectively.
