Six banks report strong performance, while five post record losses

Banking Sector’s First-Half Results: Six Soar, Five Sink

How the first half of 2025 treated the banking sector depends largely on whom the banks had been lending to over the past decade and a half.

From January to June, six listed commercial lenders reported record profits, fuelled by low bad-loan ratios and strong, secure earnings from treasury bonds. In stark contrast, five others plunged into a combined Tk 6,000 crore loss after toxic assets were exposed in the wake of the 2024 political transition, forcing hefty provisioning.

Financial statements show BRAC Bank, Pubali Bank, Prime Bank, Eastern Bank, Jamuna Bank, and Bank Asia all posted their highest-ever profits for the period, with combined earnings up 80 percent year-on-year. On the losing side, AB Bank, First Security Islami Bank, IFIC Bank, National Bank, and Social Islami Bank suffered the sector’s worst half-year losses, together amounting to Tk 6,000 crore.

“Non-performing loans (NPLs) were the decisive factor,” said Md Main Uddin, professor of banking and insurance at Dhaka University. “A bank with high bad loans can’t earn interest from them and must set aside provisions, directly hitting profits. Banks with low NPLs could instead channel funds into treasury bonds, which have recently offered historically high, risk-free returns.”

Among the top performers, BRAC Bank led with Tk 708 crore in profit, followed by Pubali Bank (Tk 578 crore) and Prime Bank (Tk 415 crore). Jamuna Bank and Eastern Bank each crossed Tk 300 crore, while City Bank, Bank Asia, Dhaka Bank, Mercantile Bank, Shahjalal Islami Bank, and Southeast Bank also reported strong growth.

Losses at the other end were steep. AB Bank posted the largest shortfall at Tk 1,758 crore, citing a Tk 1,473 crore fall in net interest income due to rising NPLs—up 33 percent to Tk 25,765 crore—and narrower spreads amid high interest rates. First Security Islami Bank reported a Tk 1,691 crore loss after a sharp rise in classified investments cut net investment income by Tk 1,977 crore year-on-year. IFIC Bank’s net interest income swung to a negative Tk 970 crore from a positive Tk 443 crore a year earlier due to “deteriorating asset quality.” National Bank blamed poor loan recovery and higher deposit and borrowing costs for its Tk 985 crore loss, though it said its new board was stepping up recovery efforts and focusing on low-cost deposits.

A senior banker, requesting anonymity, said depositors were moving funds toward lenders with strong governance, even at the cost of lower interest returns, due to perceived asset safety. Well-managed banks, he noted, were flush with deposits, while weaker ones struggled to attract funds.

“This trend may continue in the coming years,” he added. “Well-governed banks will keep outperforming.”