TT-Clean: 77.1 | TK BC-Selling: 78.1
TK OD-Sight: 76.88 TK | TC-Selling: 78.1 TK

TT-Clean: 77.1 | TK BC-Selling: 78.1
TK OD-Sight: 76.88 TK | TC-Selling: 78.1 TK


TT-Clean: 77.1 | TK BC-Selling: 78.1
TK OD-Sight: 76.88 TK | TC-Selling: 78.1 TK

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Important Business News Extracts August 28 2016

Banks’ NPLs likely to swell further in next quarters

The volume of non-performing loans (NPLs) in the country’s banking sector might even grow bigger at the end of the current quarter (July-September), some senior bankers have expressed the fear. The bankers have a feeling that some borrowers would default on repayments against both rescheduled and restructured large loans during the remaining quarters of the current calendar year. The senior banker’s observations came in the wake of the NPL amounts having risen by more than 23.0% or BDT 120.0 billion in the first half (H1) of the current calendar year. The volume of non-performing loans (NPLs) rose to BDT 633.7 billion as on June 30 last from BDT 513.7 billion as on December 2015. It was BDT 525.2 billion a year before. Most of the restructured large loans’ repayments are scheduled to start in the third quarter of this calendar year at the end of the one-year grace period, according to a BB senior official. Most of the proposals on large loan restructuring were approved between July and August last year (2015), he explained. The central bank earlier had cleared proposals of 10 business groups for the restructuring of their large loans worth BDT 140.5 billion. A total of 22 commercial banks had earlier forwarded the proposals to the BB for approving loan restructuring on behalf of their clients. The share of classified loans also rose to 10.1% of the total outstanding loans during the period under review from 8.8% six months before.

Source: http://print.thefinancialexpress-bd.com/2016/08/25/150094

Seven banks face BDT 62.3 billion provision shortfall

Seven banks including scam-hit BASIC and Sonali banks faced a provision shortfall of BDT 62.3 billion against their general and defaulted loans as of June 30, 2016. The shortfall was BDT 53.5 billion as of December 31, 2015. The other five banks which failed to keep required provision are Rupali Bank, Bangladesh Commerce Bank, National Bank, Premier Bank and Bangladesh Krishi Bank. As of June 30, 2016, provision shortfall of BASIC Bank increased to BDT 36.5 billion from a shortfall of BDT 33.1 billion as on December 31, 2015, that of Rupali Bank rose to BDT 7.8 billion from a zero-shortfall and that of Bangladesh Commerce Bank increased to BDT 2.5 billion from a shortfall of BDT 2.2 billion. The provision shortfall of Sonali Bank stood at BDT 10.9 billion as of June 30, 2016 against a shortfall of BDT 16.7 billion as of December 31, 2015. Provision shortfall of National Bank decreased to BDT 892.1 million from BDT 1.5 billion in deficit, that of Premier Bank increased to BDT 1.8 billion from a zero-deficit and that of Bangladesh Krish Bank stood at BDT 2.0 billion from a surplus amount of BDT 1.9 billion six months ago. The overall provision shortfall in the banking sector also increased to BDT 44.5 billion as of June 30, 2016 from that of BDT 42.8 billion as of December 31, 2015, the BB data showed.

Source: http://newagebd.net/248203/7-banks-face-BDT -6233cr-provision-shortfall/

State-run banks hold BDT 358.9 billion defaulted loans

The eight state-run banks held 56.6% or BDT 358.9 billion of the total defaulted loans in the banking sector as of June 30, 2016 as they disbursed huge amount of loans to their clients violating rules, said officials of Bangladesh Bank and an expert. Four out of the eight banks also failed to keep required provision against their disbursed loans and advances after the end of June, 2016. The eight banks are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, BASIC Bank and Bangladesh Development Bank. The total classified loans were BDT 633.7 billion in the country’s banking sector as of June 30, 2016. A BB official told New Age on Wednesday that the defaulted loans in the banking sector including that in the state-run banks had earlier declined significantly in 2014 and 2015 as most of the banks rescheduled their defaulted loans by managing no-objection certificates from the central bank. But, the rescheduled loans again entered in the defaulted zone that fuelled the non-performing loans in the state-run banks. The defaulted loans and written-off loans together in the eight state-run banks stood at BDT 579.7 billion at the end of the first half (January-June) of 2016. The eight state-run banks wrote off uncollectible loans amounting to BDT 220.8 billion as of March 31, 2016. Banks are allowed to write off loans when those become defaulted loans of bad or loss category.

Source: http://newagebd.net/248623/state-run-banks-hold-BDT -35894cr-defaulted-loans/

Bangladesh Bank to ask banks on steps taken to reduce NPLs

The central bank is set to ask banks, having more than 5.0% classified loans on total outstanding, to inform about their initiatives for reducing the volume of such loans, officials said. As per the decision, the Bangladesh Bank (BB) is going to send letters to 30 banks out of 56 next week in this connection. Besides, the central bank, in its letter, will come to know from the banks concerned about increased trend of non-performing loans (NPLs) in the second quarter (Q2) of the current calendar year. The BB’s latest move came in the wake of the NPL amount having risen by more than 23% or BDT 120 billion in the first half (H1) of the current calendar year. The volume of classified loans rose to BDT 633.65 billion as on June 30 last from BDT 513.7 billion as on December 2015. It was BDT 525.2 billion a year before. Six state-owned commercial banks (SoCBs), 18 private commercial banks (PCBs), four foreign commercial banks (FCBs) and two specialised banks (SBs) are on the list of those having over 5.0% NPLs on their total outstanding loans. Among the banks, a FCB has 88.8% classified loan on total outstanding during the period under review while 76.4% NPL with a PCB, according to the central bank’s confidential report.

Source: http://print.thefinancialexpress-bd.com/2016/08/26/150217

Banks often troubled by influential defaulters

Influential defaulters took advantage of the loan rescheduling policy repeatedly, Bangladesh Institute of Bank Management or BIBM said in a study. BIBM prepared the report, ‘Implication of Loan Rescheduling and Write-off on the Performance of Banks’, early this month after analyzing data from 2010 to 2014 and recording statements of bankers. The government, judicial authority, the central bank, law enforcement agencies, political parties, trade associations and the media should work to restrain bad borrowers from unethical practices, it said. The rescheduling of delinquent loans is actually a deferral process of accumulating default loans. The move puts immense pressure on the bank’s capacity to recover the loans, which are not only “toxic assets” but will go on to become irrecoverable in the long run. Banks on average rescheduled BDT 10,909 crore a year between 2010 and 2014, according to the BIBM study. In 2015, banks rescheduled BDT 263.1 billion in bad loans, which is 50.1% more than in 2014, as per central bank statistics. Besides, under pressure from influential businessmen, the central bank last year offered a special restructuring opportunity for loans upwards of BDT 5.0 billion. Under the facility, BDT 164.1 billion was restructured in loans. The loans were already rescheduled and restructured several times. The study shows that the recovery of rescheduled loans is small and realization of funds from large borrowers even smaller. It seems that banks always try to facilitate large loans or large composite loans, allowing multiple rescheduling for a longer period with negligible down-payment, interest blocking, extension of fresh loans to sister concerns, according to the study findings.

Source: http://www.thedailystar.net/business/banks-often-troubled-influential-defaulters-1276690

BSEC forms probe body on Summit Power issue

The securities regulator has formed a four-member committee to probe whether the High Court’s order was followed properly in completing the amalgamation process of the listed company Summit Power. The Bangladesh Securities and Exchange Commission (BSEC) issued an administrative order on formation of the probe body on Friday night. The BSEC body, led by executive director Mahbubul Alam, will submit the report in 15 working days. Both the stock exchanges will hold emergency meetings on the issue today (Saturday). Both the bourses Wednesday suspended share trading of Summit Power due to non-compliance with completion of the company’s amalgamation process.


BDT 300.0 million of 2 delisted MFs remains undistributed for 5 months

Funds worth around BDT 300.0 million of two closed mutual funds still remain undistributed even after five months of their delisting from the stock exchanges after their tenure expired over tax complexity. Investors do not know whether or when they will get the remaining amount of the mutual funds. The mutual funds — Grameen One: First Scheme of Grameen Mutual Fund One and AIMS First Guaranteed Mutual Fund — which were managed by AIMS of Bangladesh were delisted from the Dhaka and Chittagong stock exchanges on March 2, 2016. The Bangladesh Securities and Exchange Commission on May 4 approved the financial statements of the funds with a number of observations from the auditor asking the trustee of the MFs to pay unit holders’ funds within seven working days. The Bangladesh Securities and Exchange Commission recently sought a number of clarifications from the sponsors, asset managers and auditors of the two closed MFs which were operated by AIMS of Bangladesh regarding the objections raised by the auditor. A BSEC letter issued on August 8 asked the asset manager to submit year-wise detail unsettled Tax and VAT liabilities of the funds, if any, for the previous year rather than the last financial statement that was not paid by or collected from the beneficiaries. The commission in its letter also asked the AMC to provide day-wise sales or encashment details of assets, it said. The BSEC letter asked the parties to reply within ten working days of receiving the letter. AIMS First Guaranteed Mutual Fund, a BDT 90-crore fund in terms of issue price, was enlisted with the stock exchanges in 2000, while Grameen Mutual Fund One, a BDT 41.61-crore fund, was enlisted with the bourses in 2005.

Source: http://newagebd.net/248618/BDT -30cr-2-delisted-mfs-remains-undistributed-5-months/

Ex-directors of People’s Leasing move to repay loans amid pressure

Five directors of People’s Leasing and Financial Services, who were removed from the board last year for taking loans of about BDT 400 crore from the company breaching rules, have now moved to pay back the loans to avoid arrests. According to Bangladesh Bank rules, directors of banks and financial institutions or their family members cannot take loans from their own companies. Panic gripped the directors, especially after the Anti-Corruption Commission arrested Khabir Uddin Miah, one of the five directors, a few days ago. Pranab Kumar Bhattacharya, a spokesman of ACC, confirmed that two persons, including Miah, have been arrested on the basis of a case filed by the anti-corruption watchdog. “Some of these directors have contacted us to settle their loans. One has already offered to pay back BDT 100 crore and we have sent the proposal to the central bank for its approval,” said Sami Huda, acting managing director of the financial institution. Bangladesh Bank detected the irregularities in September 2014 and suggested the company remove the directors and file cases against them to recover the funds misappropriated between 2002 and 2014. Though the accused were removed from the board, no cases were filed. Then chairman M Moazzam Hossain claimed he was not removed, he resigned himself.

Source: http://www.thedailystar.net/business/ex-directors-peoples-leasing-move-repay-loans-amid-pressure-1276684

Inflation may reach 6.2% this year: BMI Research

Inflation may reach 6.2% at the end of this fiscal year, a research firm said, though the government aims to keep the rate at 5.8%. Inflation risks are tilted towards the upside due to accelerated credit flows and a likely recovery in commodity prices over the coming months, London-based BMI Research said in a report. In addition, the high rate of non-performing loans, which was 9.9% in the first quarter this year, could be exacerbated by lax credit standards and obligatory loans to inefficient state enterprises. However, the decision to hold interest rates steady, coupled with the central bank’s selective easing measures, may provide some support to growth, which the BMI forecasts at 6.5% year-on-year in 2016 . The central bank’s rate cut and expansion of ‘selective easing’ measures in January facilitated the credit growth to the private sector, which rose 5.1% between January and May, up from 3.7% during the same period of 2015. The central bank is also likely to continue with the ‘selective easing’ in the form of cheaper loans to targeted sectors, so that private sector credit growth remains on track for the 16.5% target this fiscal year.

Source: http://www.thedailystar.net/business/inflation-may-reach-62pc-year-bmi-research-1275778

Government plans to invest pension funds

To bring dynamism in the process, a committee will be formed soon for amending 1974 public retirement law and later an executive order might be issued to make the plan effective, if necessary, official sources said. A pension fund is a common asset pool run by a financial intermediary on behalf of a company and its employees, to generate stable growth over the long term and provide pensions for the employees when they retire. In this context, the government will also create universal pension scheme for harmonising between private and public pension schemes. According to the proposed scheme prepared by the Finance Ministry, a pension authority will be formed to operate the pension fund that may be contributed by both the private and public employees and firms. The government primarily estimated that the size of the public pension fund will be BDT 16,535 crore.

Source: http://www.dhakatribune.com/business/2016/08/26/govt-plans-invest-pension-funds/

Government signs USD 23.9 milion loan deal with International Fund for Agricultural Development

The Government has signed USD 23.86 million loan agreement with the International Fund for Agricultural Development, a United Nation agency, to fund the Second National Agricultural Technology Program. The total cost of NATP-II is USD 214 million where World Bank will fund USD 176 million and USAID USD 7.4 million. The NATP-II will cover 57 of the country’s 64 districts and span a broad range of agroecological zones across Bangladesh. The financial agreement was signed by Economic Relations Division’s senior secretary Mohammad Mejbahuddin and IFAD country program manager Hubert Boirard. ‘In Bangladesh, poverty in rural areas is still three times higher than that in urban areas. Under the new program, farming households will benefit directly or indirectly from extension services, hands-on training and on-farm demonstrations of climate-smart technologies and applied research,’ said Boirard while signing the agreement. The program will also strengthen the capacity of the National Agriculture Research System to generate and disseminate agricultural technologies aimed at increasing farm productivity and reducing post-harvest losses. It will also promote farmer groups and producer organizations and link them to existing markets.

Source: http://newagebd.net/248399/govt-signs-23-86m-loan-deal-ifad/

Exports by EPZ factories rise 9.0%

Exports by the factories located in the country’s export processing zones rose 9.16% year-on-year to USD 6.7 billion last fiscal year. The export target was set at USD 6.0 billion for 2015-16, although the exports figure reached USD 6.1 billion in the previous year, Bangladesh Export Processing Zones Authority said in a statement yesterday. In 2015-16, the enterprises based in Chittagong EPZ accounted for the biggest share of exports — USD 2.42 billion — followed by Dhaka at USD 2.2 billion. There are eight EPZs under Bepza where more than 430 factories are located. These factories account for about 20% of the total national exports. The factories have invested USD 3.8 billion as of 2015, employing more than 439,512 people, according to the Bepza website. Some 58.0% of these enterprises are wholly foreign-owned, 14.0% are joint ventures and 28.0% locally-owned.


Duty drawback, other factors impede apparel exports

Multiple factors came into play as the apparel export to some of the 11 prospective non-traditional markets slowed last fiscal when the export performance in nine East European countries remained unimpressive. Factors like higher duty, complex rules of origin and the absence of continued efforts to promote products and explore markets played the spoiler, said industry insiders. Devaluation of currencies against the US dollar in the importing countries and the aftermath of a couple of tragic industrial accidents followed by the country’s post-election political turmoil also played a part in the lacklustre export performance, according to them. Apparel exports to the non-traditional markets witnessed more than 20.0% growth during the period from the fiscal year (FY) 2011-12 to FY 2013-14, according to data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). But the growth slowed down to 10.5% in the FY 2015-16. In the previous fiscal year the rate stood at 8.9%. Out of the USD 4.31 billion apparel exports to non-traditional markets, including the 11 prospective ones, in the last fiscal year, knitwear fetched USD 2.1 billion and woven wear USD 2.2 billion. Of the USD 4.3 billion, the country earned USD 3.2 billion from these 11 markets against USD 2.9 billion in FY 2014-15, according to official data of the Export Promotion Bureau (EPB).

Source: http://print.thefinancialexpress-bd.com/2016/08/27/150288

External borrowing for oil import falls headlong

Bangladesh Petroleum Corporation (BPC) borrowing from the Islamic Development Bank (IDB) for oil import has been on a headlong fall for a slip in international oil prices over the years, officials said Friday. As such, the state-owned petroleum-marketing agency goes on making substantial profits even after some price cuts in recent times. Energy Division officials said loan from the Islamic Trade Finance Corporation (ITFC) under the IDB plunged 70.0% to only about USUSD 800 million this year from a peak of USD 2.6 billion in 2012. The corporation every year borrows from the IDB’s trade-financing wing, ITFC, to procure crude and refined oils from world’s major oil suppliers like Kuwait, Saudi Arabia and the UAE. According to the BPC, its borrowing peaked in 2012 as it took the highest USD 2.6 billion worth of credits from the ITFC due to higher oil-import bills that time. In 2012, the oil price jumped to USUSD 128 per barrel. Currently, an international oil slump pegged the price down to USD 48.95 per barrel, as on August 25. After a record-high borrowing in 2012, the oil loan went on a downturn: USD 2.0 billion the following year, USD 1.20 billion in 2014, and USD 1.0 billion from 2015. Currently, the government has to repay IDB’s short-term loan (6-month period) at 4.2% interest. The country’s oil-importing agency, BPC, had been in the red since 1999 but made a turnaround since September-October 2014 by counting profits.

Source: http://print.thefinancialexpress-bd.com/2016/08/27/150246

Government to add 150 MW power by October

To fulfill the peoples’ demand for electricity, the government is ready to add an additional 150 MW power to the national grid to reach the total capacity up to 15,131 MW by October this year, reports BSS. The government, led by Prime Minister Sheikh Hasina, will celebrate the electricity installation capacity of 15,000 MW during the power and energy week in November this year. According to the Bangladesh Power Development Board (BPDB), the highest generation of power was recorded at 9,036 MW on June 30 this year, breaking all previous records in a single day. Earlier, the maximum electricity generation was 8,348 MW on June 16, 2016, while 8,348 MW on April 9, 2016, 8,032 MW on July 7, 2015, 7,923 MW on July 1, 2015, 7,418 MW on July 18, 2014 and 6,675 MW on July 12, 2013.

Source: http://print.thefinancialexpress-bd.com/2016/08/25/150135

Local and Global Stock Indices

Index NameClose ValueValue ChangePercentage Change
Dow Jones Industrial Average18,395.40↓53.01↓0.29%
Nikkei 22516,360.71↓195.24↓1.18%
FTSE 1006,838.05↑21.15↑0.31%

World Commodities

CommodityClose ValueValue ChangePercentage Change
Crude Oil (WTI)*$47.64↑0.31↑0.65%
Crude Oil (Brent)*$49.92↑0.25↑0.50%
Gold Spot*$1,321.18↓0.79↓0.06%

Major Currencies Exchange Rates Movement in Last Seven Days






Dear Valued Patrons,

At the very onset, let me express my heartiest gratitude for allowing us to serve you and I also wanted to reach out to you directly with an assurance that Dhaka Bank is fully equipped to support you during this difficult time.

Last couple of weeks ago we all were living in a peaceful condition, performing our daily tasks freely and perfectly. Entire economy and business environment was also in a good shape, until COVID-19 put a forceful stoppage to the overall life style and economy of the world. We all know that social distancing and cleanliness are the keys to prevent this pandemic. Hence, we urge your conscious effort to limiting public interaction and suspending wherever possible.

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