Private credit growth inches up in Dec
Despite demand for loans being suppressed by the ongoing business slowdown, private sector credit growth crept up in December after undergoing a steep descent in the previous two months. The year-on-year credit growth stood at 8.37 per cent in December, up from 8.21 per cent a month earlier, showed data from Bangladesh Bank. In its monetary policy statement for fiscal 2020-21, the central bank set a private sector credit growth target of 11.5 per cent by December last year and 14.8 per cent by June this year. But till date, this has turned out to be far from reality because of the financial meltdown brought on by the coronavirus pandemic. For this reason, the credit growth inched up last month, which is why the increase in growth should not be termed an extraordinary phenomenon, they said. In accounting, accrued interest refers to the amount of interest that has been incurred, as of a specific date, on a loan but has not yet been paid out. Accrued interest can be in the form of accrued interest revenue for banks. The banking sector is also facing a burden of excess liquidity due to the feeble credit demand from businesses and commoners in tandem. Excess liquidity in banks escalated 95 per cent year-on-year to Tk 204,700 crore in December last year. There had been no extraordinary reason for the increase in credit growth in December as banks had not experienced any robust loan demand from borrowers, said Emranul Huq, managing director of Dhaka Bank. Adding accrued interest to the principal loans amount pushed the credit growth for the time being, he said. Borrowers had enjoyed a loan moratorium throughout last year, meaning that a majority of clients did not pay the interest associated with loans they availed. So, banks were forced to add the accrued interest to the principal loan amount of borrowers, Huq said. Several global think tanks have recently forecasted that the global economy will rebound strongly from the second half of this year. The outstanding loans in the private sector stood at Tk 11,41,342 crore as of December in contrast to Tk 11,20,902 crore the previous month.
Beximco Pharma stocks soar on Sanofi takeover news
While investors continued to exhibit a tendency towards profit-booking, stocks of Beximco Pharmaceuticals rose 5.15 per cent to Tk 208.40 yesterday after news broke that it would buy a major stake in Sanofi Bangladesh. The DSEX, the Dhaka Stock Exchange’s (DSE) benchmark index, dropped 20 points, or 0.35 per cent, to 5,815 yesterday. The local drug company’s stock was the most sought-after of the day thanks to the firm’s recent announcement that it would buy 54.6 per cent of Sanofi’s Bangladesh unit in order to diversify its product base. The remaining 45.4 per cent shares are owned by the Bangladesh government, according to a disclosure on the DSE website. The base-price consideration for the majority stake is £35.5 million, subject to the deduction of the company’s net financial debt and adjustments for short or excess over an agreed normative working capital at the closing date. The DSE’s turnover, an important indicator of the market, rose 19 per cent to Tk 1,454 crore. Newly listed Energypac Power Generation topped the gainers’ list, rising 9.92 per cent, followed by Nitol Insurance, Shyampur Sugar Mills, Shinepukur Ceramics and Northern Insurance. Paramount Insurance Company shed the most, falling 7.61 per cent, followed by Eastern Insurance Company, Peoples Insurance Company, Mercantile Insurance Company and Northern Islami Insurance. The port city bourse also fell yesterday as the general index of the Chittagong Stock Exchange, the CASPI, dropped 34 points, or 0.20 per cent, to 16,986. Among the 253 stocks to witness trade, 67 advanced, 145 fell and 41 remained unchanged.
Social distancing proves a boon for bicycle exporters
The need to maintain social distancing in order to avoid infection amid the ongoing coronavirus pandemic has buoyed the global demand for bicycles. And with Bangladesh being an exporter of bikes, the country is also reaping the benefits of the spiraling demand for two-wheelers. Bicycle exports are surging as an increasing number of people are using two-wheelers to avoid mass transportation that puts them at risk of infection, such as buses and the metro. Bike shipments amounted to $65 million in the July-December period of fiscal 2020-21, marking a 44 per cent year-on-year growth, according to data from the Export Promotion Bureau (EPB). Bangladesh fetched $126 million from bike exports in fiscal 2014-15, which was the highest in the last 10 years. But since then, bicycle shipments, which are mainly destined for European markets, had been on the wane, EPB data shows. Bari, also secretary of the Bangladesh Bicycle & Parts Manufacturers’ and Exporters’ Association, expects that export earnings from bicycles will cross $115 million by the end of the ongoing fiscal year. Apart from export, the domestic market for bikes also expanded in 2020 thanks to the increased demand for alternative modes of transport to maintain social distance.
SR Group sets up largest chemical plant in north
SR Group has set up a chemical manufacturing plant in Bogura, the largest of its kind in the northern region of the country, at an investment of Tk 850 crore. The project went into operation last month. Located on 35 acres of land in the Mirzapur area on the Dhaka-Rangpur highway under Sherpur upazila, SR Chemical Industries was established last year and started producing caustic soda on December 16. So far, it has manufactured more than 650 tonnes of liquid caustic and 450 tonnes of caustic soda and sold them in the domestic market. The products are being used in paper mills, water treatment plants, and disinfectant industries, according to Asif Rabbani, managing director of SR Chemical. The annual production capacity of the factory is 54,000 tonnes, including 30,000 tonnes of caustic soda, 12,000 tonnes of bleaching powder and 12,000 tonnes of bleaching fine. Some other items will be produced as byproducts. Once full-fledged production begins, it can produce seven types of chemicals, including caustic soda (flake), liquid caustic bleaching power, bleaching fine, hydrochloric acid, sodium hypochlorite and liquefied chlorine worth Tk 500 crore annually. About 60 per cent of the fund came from Islami Bank Bangladesh and the rest from SR Group’s own coffer. The plant will create jobs for 1,000 people. It has already recruited 800 people, including technicians, engineers and workers, said Md Rayhan Ferdoush, head of the production. SR Group runs 17 units in the areas of telecom, transport, logistics, restaurant, garment accessories, food processing, fast-moving consumer goods, CNG processing, information technology and chemicals.