Banks asked to raise core capital ratio
The central bank yesterday asked banks to raise their core capital ratio to 3.25 per cent in 2023 after they failed to put in place enough shareholders’ equity and reserves in line with international standards to absorb unexpected shocks. In 2014, the Bangladesh Bank issued the guidelines on risk-based capital adequacy for banks in line with the Basel III Accord, the primary banking regulation that sets the minimum tier 1 capital ratio requirement for financial institutions.The BB ordered banks to maintain at least 3 per cent tier 1 capital, also known as the leverage ratio, by 2015 to strike a balance between capital and assets.Tier 1 capital is used to describe a bank’s capital adequacy and refers to core capital that includes equity capital and disclosed reserves.Banks will get the entire 2022 to prepare to lift the leverage ratio. They will raise the ratio by 25 basis points every year until 2026 to reach 4 per cent. The current ratio is 3 per cent.Banks in Bangladesh maintained a (CAR) of 11.60 per cent last year, BB data showed. This is way less than 18.6 per cent in Pakistan, 16.5 per cent in Sri Lanka, and 15.8 per cent in India.
Light engineering lights up export hope
Bangladesh’s light-engineering sector (LES) lights up trade hopes as it achieved nearly 81-per cent growth in shipments to overseas markets in the last fiscal year (FY), analysts say, as the country strives to enlarge its slim export basket. They said light-engineering, a hub for nearly 800,000 jobs, after meeting some 30 per cent of local demands, earned about half a billion US dollars in foreign exchange on average per annum. According to the Export Promotion Bureau (EPB), the Bangladeshi small and medium scale manufacturers exported US$529 million worth of engineering goods in the FY 2020-2021, posting an 80.60 per cent growth year on year. In the previous FY2020, the export of engineering products fetched $292.92 million, EPB data showed.A recent International Finance Corporation IFC study showed Bangladesh’s LES has in its employment 600,000 people involved in 50,000 micro-enterprises and 10,000 Small and Medium Enterprises (SMEs).An FE analysis has found the country’s export of the engineering products in FY2017 was highest within a decade as Bangladesh earned a record amount of $688.84 million. But the shipments had faced a steep fall since the subsequent fiscal year with $355.97 million earned in FY2018, $341.3 million in FY2019 and $292.92 million in FY2020.
Stocks break four-day rally
Stocks witnessed a modest correction on Wednesday, snapping a four-day record breaking rally, as shaky investors preferred to book profit on quick-gaining issues. After hitting a new high in the previous day, the market opened on high note and the key index crossed the 6,800-mark, but failed to sustain that level amid profit booking sell-offs on financial stocks. At the end of the session, DSEX, the key index of the Dhaka Stock Exchange (DSE), went down by 15.31 points or 0.22 per cent to settle at 6,771, after gaining 170 points in the past four consecutive sessions. The DSE Shariah Index (DSES) also shed 2.77 points to close at 1,466. However, the DS30 index, a group of 30 prominent companies, advanced 4.65 points to settle at 2,426.Turnover, a crucial indicator of the market, stood at Tk 24.65 billion on the country’s premier bourse, which was 7.78 per cent lower than the previous day’s turnover of Tk 26.73 billion. The daily average turnover maintained above Tk 24 billion in the last 11 consecutive sessions on the DSE. Top negative index contributors were Robi Axiata, Investment Corporation of Bangladesh, Dutch-Bangla Bank, Al-ArafahIslami Bank and Islami Bank Bangladesh as they collectively brought the DSEX down by 14 points, according to data from amarstock.com, a market data analyst. The optimistic investors were remained active in the market amid the stock market regulator’s extended credit facilities, said a top broker. The Bangladesh Securities and Exchange Commission (BSEC) last week revised the limit of margin loan facilities based on the DSE key index – at a maximum rate of 1:0.80 when the DSEX is below 8,000.The Chittagong Stock Exchange also ended marginally lower with its All Shares Price Index (CASPI)-shedding 21 points to finish at 19,746 while the Selective Categories Index – CSCX losing 10 points to close at 11,840. Of the issues traded, 172 declined, 125 advanced and 31 issues remained unchanged on the CSE. The port city bourse traded 44.23 million shares and mutual fund units with turnover value of Tk 924 million.