Lending growth failed to keep pace with the deposit growth in banks in September, putting lenders in an uncomfortable situation as they cannot make the most of cheap funds because of depressed demand from borrowers.Loans and advances stood at Tk 1,065,570 crore as of September, up 9.56 per cent from a year ago, central bank data showed.Year-on-year lending growth was 8.95 per cent in June this year and 10.95 per cent in December last year.
Fund disbursement from the stimulus packages unveiled by the government in response to the pandemic-induced economic slowdown helped the credit growth pick up slightly despite a lower demand from the private sector. But the demand for loans will go up once the economic impact of the coronavirus pandemic disappears.
Deposits at banks rose 12.39 per cent year-on-year to Tk 1,345,436 crore in September although the weighted average interest rate on deposits fell to 4.73 per cent, the lowest in a decade.The deposit growth stood at 10.49 per cent in June and 12.32 per cent in December last year. This means banks will incur a loss in the coming days if the deposit growth continues to run higher than the lending growth.
The difference between deposit and credit growths was also exposed by the latest data on advance (loan) and deposit ratio (ADR) calculated by banks.The ADR was 74 per cent in September, down 76.22 per cent three months earlier and 77.34 per cent in December.As per a central bank instruction, conventional banks have to maintain 87 per cent in ADR, meaning that they are allowed to lend Tk 87 against every Tk 100 mobilised.Shariah-based banks are allowed to keep their ADR level within 92 per cent.The decline in the ADR indicates that banks are grappling with excess liquidity.
Six out of nine foreign commercial banks registered a negative credit growth in September. As much as 27 local banks had less than 10 per cent credit growth.Money injection into the banking industry has been on the rise because of the stimulus packages and the robust growth of remittances in the recent periods, said MdArfan Ali, managing director of Bank Asia.
EmranulHuq, managing director of Dhaka Bank, said a majority of businesses adopted a go-slow policy when it comes to expansion.”Many businesses that had earlier planned to set up new industrial units or expand the existing ones have changed their plan. They will at least observe the overall situation until the end of February.”The slowdown in credit growth indicates a struggling economy.The economy will pick up once the vaccine for the coronavirus is available in the country, Huq said.
Future of export hinges on continuity of EU duty benefit PRI study says.
The future of Bangladesh’s exports heavily depends on the continuation of duty-free privileges to the European Union, the country’s largest export bloc, following the 2024 status graduation, according to findings of a study released yesterday.If the EU extends the duty privileges, then other developed countries will follow suit, said MA Razzaque, research director of Policy Research Institute (PRI).As a least developed country (LDC), Bangladesh currently enjoys duty-free access to the EU under the latter’s Everything But Arms (EBA) initiative, with around 61 per cent of its yearly exports destined for the region.Of these exports, garments account for about 64 per cent, or $24 billion.
So far, only the EU has assured that it would continue providing the zero-duty benefit until 2027 to allow Bangladesh a period for preparations following its status graduation from an LDC to a developing one.If the privilege is not extended, then local exports will face 9.5 per cent to 10 per cent duty on shipments to the EU, which may pose a challenge in staying competitive in the EU markets, Razzaque said.Therefore, Bangladesh needs such an extension to go beyond 2027 even though its economy has been severely affected in the Covid-19 fallouts, he added.The EU is set to review the existing Generalised System of Preferences (GSP) facility in 2023.So Bangladesh needs to engage in dialogues with the EU to secure duty-free privileges for the new era past the graduation, said the PRI research director.
The stock market witnessed a fall yesterday as investors exhibited a tendency towards profit booking amidst the fear of a second wave of the coronavirus pandemic.The DSEX, the benchmark index of Dhaka Stock Exchange, dropped 33.40 points, or 0.65 per cent, to 5,074.Stocks of some companies witnessed an increase of 8 to 12 per cent in the past two weeks, for which many investors took to availing themselves of the profits, said a stockbroker, adding, “This is normal.”
When investors take profits, their confidence grows simultaneously, increasing the depth of the market, he said.The inclination was predominantly to sell most of the multinational and blue chip stocks because those recently rose by a higher extent, the stockbroker added.Stocks of Reckitt Benckiser Bangladesh fell 4.63 per cent while Unilever Consumer Care 5 per cent yesterday, according to the DSE data.Banks and non-bank financial institutions (NBFIs) also faced the same fate over apprehensions of a decline in their profits.
Mutual Trust Bank Limited (MTB) recently opened 5 new sub branches.
Mutual Trust Bank Limited (MTB) recently opened its Solmaid Sub-branch, Meradia Sub-branch, Dhaka Uddyan Sub-branch, RabindraSharani Sub-branch and Dakshinkhan Sub-branch across Dhaka. Syed Mahbubur Rahman, Managing Director & CEO, Mutual Trust Bank Limited (MTB), inaugurated the sub-branches as the chief guest through a virtual inaugural ceremony.
Insurance expert Md. Kazim Uddin has joined as Chief Executive Officer of National Life Insurance Company Ltd recently. Before joining as Chief Executive Officer he had been serving as Acting Chief Executive Officer in the company. Mr. Kazim is a highly experienced insurance personality and a good organiser. He started insurance career in this company from entry level and served 33 years in different positions along with Deputy Managing Director since 2014. He obtained various higher training both home and abroad. In the meantime he visited Japan, Korea, Singapore, UAE and India.
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