Six banks achieve record profit on treasury gains

Infographic: TBS

Six listed banks achieved record profits in 2024 — the highest in their history — driven primarily by strong returns from treasury bonds and increased lending rates, which boosted their core business earnings.

Among the 36 listed banks, 11 have so far disclosed their annual financial results and declared dividends for shareholders. Of these, six—BRAC Bank, City Bank, Eastern Bank, Pubali Bank, Prime Bank, and Uttara Bank—reported historic profits.

Among the six banks, BRAC Bank and City Bank joined the exclusive Tk1,000 crore profit club, with BRAC Bank leading at Tk1,432 crore—the highest profit ever recorded in Bangladesh's banking sector, except foreign banks.

Commenting on the bank's performance, Managing Director and CEO of City Bank, Mashrur Arefin, said through a press release, "People have placed their trust in City Bank, resulting in a surge in deposits. Our cost-to-income ratio dropped from 60% to just 42%, leading to a substantial rise in profit.

"We also increased employee salaries by Tk300 crore to motivate our workforce. Our board is honest and committed to the bank's growth. We uphold a superior level of governance practices. These are the primary drivers behind our performance," he added.

City Bank also proposed to pay 12.50% cash and 12.50% stock dividend to its shareholders for the last year.

Besides, BRAC Bank recorded a consolidated net profit of Tk1,431.84 crore last year, marking a 73% increase from the previous year.

Building on its robust profit, the bank has recommended a 12.5% cash dividend and a 12.5% stock dividend.

Pubali Bank and Prime Bank posted the consolidated net profit of Tk780 crore and Tk751 crore, respectively.

Pubali Bank declared a 12.50% cash and 12.50% stock dividend, while Prime Bank proposed a 17.50% cash and 2.50% stock dividend.

Eastern Bank and Uttara Bank proposed the highest dividends among their peers last year, with each declaring 17.5% cash and 17.5% stock dividends.

In its 2024 annual report, Eastern Bank announced recording its highest-ever profit, maintaining an average annual growth rate of 15% over the past five years.

This exceptional profit growth was achieved through robust expansion in loans, investments and deposits, timely repricing of the loan portfolio following the implementation of market-based lending rates, effective asset-liability management, rising interest rates on government securities, prudent risk management strategies, controlled operating expense growth relative to income, and diversified revenue streams, the bank said.

Eastern Bank's annual report highlights that Bangladesh's banking sector currently faces mounting challenges, including rising non-performing loans (NPLs), tightening liquidity conditions, and slowing deposit and credit growth. 

Following the political transition in August 2024, the Bangladesh Bank has intensified financial sector reforms to address structural weaknesses, focusing on macroeconomic stabilisation, crisis prevention, legal/policy reforms for banking sector issues, and recovery of misappropriated banking assets.

The liquidity shortage that began in June 2021 persisted through the first half of FY25, driven by multiple factors: Bangladesh Bank's foreign exchange interventions to support the taka, slow loan recoveries, high NPL volumes, and tepid deposit growth despite higher interest rates. Public confidence has been further eroded by scandals in Islamic banks, leading to increased cash hoarding. 

While contractionary monetary policies to combat inflation have exacerbated liquidity pressures, the Bangladesh Bank has continued providing targeted liquidity support to maintain stability in vulnerable banks, aiming to restore trust through stronger governance and banking system resilience.

Banking sector deposits grew by just 7.44% year-on-year in December 2024, down from 11.04% growth in December 2023, despite rising interest rates. Domestic credit growth similarly slowed to 9.12% YoY in December 2024 from 11.89% a year earlier. This credit slowdown reflects multiple pressures: higher borrowing costs, business environment disruptions from mid-2024 political unrest, reduced lending capacity at banks burdened by defaults and deposit outflows, and general risk aversion.

The sector's advance-deposit ratio (ADR) climbed to 81.17% in December 2024 from 80.38% a year prior, while the gross NPL ratio more than doubled to 20.20% from 9.00% over the same period. This asset quality deterioration may worsen following the central bank's recent tightening of loan classification standards, reducing the overdue period for fixed-term loans from six to three months.