Operating profits of PCBs show upturn
Operating profit of the country’s private commercial banks (PCBs) showed an upturn in the first six months of the current calendar year. Of the 39 PCBs, 13 marked an upward trend in operating profits while only one witnessed a downturn, according to provisional data for the January-June 2016 period. The data of the rest were not immediately available. In the final count, the amount of profit may be a little higher or lower, said officials of different commercial banks. The un-audited operating profit, however, does not indicate the actual financial position of a bank as the banks have to leave aside funds for provisioning the bad debts and taxes payable to the government. Increasing trend of credit practically in private sector has helped the commercial banks to pick up their operating profits in the first half of the year over that of the same period last year, according to the bankers. The private-sector credit growth rose to 16.40% in May 2016 on a year-on-year basis from 15. 56% in April last, according to the central bank latest statistics. The credit growth was 15.16% in March.
Most banks have sound capital base
Most of the private and foreign commercial banks succeeded in maintaining the new international standard capital adequacy ratio. On March 31 this year, the banks’ average capital to risk weighted asset ratio or CRAR was 10.62%, which is similar to the latest requirement. CRAR is a measure of a bank’s capital and is used to protect depositors and promote the stability and efficiency of financial systems around the world. The CRAR of the private banks was 11.96% and that of the foreign banks 25.99%. However, the average CRAR of the state banks was 6.50%. Bangladesh Bank last year took an initiative to improve banks’ financial health by increasing their CRAR in line with Basel III standards, which was introduced in January this year. Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen regulation and supervision and reduce risks of the banking sector globally. Last year, the central bank decided to implement the Basel III framework and conducted a quantitative impact study.
Private-sector credit grows over 16.0% in May
Private-sector-credit growth crossed 16% in May-the highest in last three and a half years-as sustained political stability encouraged entrepreneurs to borrow more for expanding their businesses, bankers said. Falling trends in interest rates have also contributed to the increase in the private-sector-credit growth following foreign-currency loans having been converted to local-currency ones by corporate entities. The growth in credits to private sector was up to 16.40% in May 2016, on a year-on-year basis, from 15. 56% last April, according to central bank’s latest statistics. The credit growth was 15.16% in March. “The private-sector-credit growth is now on right track to support the target of higher economic growth set by the government,” Biru Pasksha Paul, the chief economist at the Bangladesh Bank (BB), told the FE Wednesday. The chief economist also said the central bank was now working to formulate the next monetary policy which will examine where the private-sector credit is going. Talking to the FE, another BB official said the private-sector credits grew significantly as political stability along with confidence level of the entrepreneurs in the government improved gradually.
Trade deficit continues to narrow
Trade deficit narrowed 6.33% in the first 11 months of the outgoing fiscal year as export growth surpassed that of import. Between July last year and May this year, trade deficit stood at USD6.27 billion in contrast to USD6.69 billion a year earlier, according to Bangladesh Bank’s balance of payments data. In the first ten months of fiscal 2015-16, exports grew 8.01% and imports 5.22%, which had the effect of slightly squeezing the trade deficit. Though the country’s garment sector suffers from an image crisis regarding the working conditions, its exports appear to be going from strength to strength. In the first 11 months of the fiscal year, garment exports grew 9.42% — a development that tilted the trade balance in Bangladesh’s favour. Among the main export markets, the country’s exports to both the US and Europe soared, said Finance Minister AMA Muhith in his budget speech. The reason for the slow import growth is the lack of investment appetite. In the first 11 months of fiscal 2015-16, capital machinery imports increased 12.87%, down from 20.76% recorded a year earlier, according to letters of credit settlement statistics.
Bangladesh Bank buys USD 4.1 billion in FY16 to keep taka stable
Bangladesh Bank purchased US dollars’ worth USD 4.1 billion from the scheduled banks in the just concluded fiscal year 2015-16 with the aim of curbing depreciation of the greenback against the local currency taka, BB officials said. Dollar purchase by the BB from the scheduled banks increased by 9.9% in FY16 as the central bank had purchased USD 3.76 billion in FY15. A BB official told New Age on Thursday that the central bank was compelled to buy huge amount of greenbacks from the local banks in the last few fiscal years due to sluggish business amid political uncertainty and fragile law and order situation. The BB purchased dollars’ worth USD 17.6 billion from FY13 to FY16 as the country during the period witnessed dull business that failed the banks use their greenbacks in investment, he said. The BB data showed that the central bank had purchased dollars’ worth USD 5.2 billion in FY14, USD 4.5 billion in FY13, USD 157.0 million in FY12, USD 316.5 million in FY11 and USD 2.16 billion FY10. The BB official said that the central bank were purchasing the greenbacks from the local banks continuously to protect the interests of exporters and expatriate Bangladeshis by keeping stable the exchange rate of the taka against the dollar. The selling and buying rate of dollar became stable at around BDT 77.4 to BDT 77.4 in recent years as the BB continued to buy huge amount of dollar from the banks. The US dollar would have depreciated significantly against the taka in the last few fiscal years if the central bank did not purchase the greenbacks.
Bangladesh Bank differs with ADB on SME growth ratings: ‘SME is now a priority sector’
The central bank refutes the Asian Development Bank (ADB) survey finding that growth of small and medium enterprises (SME) in Bangladesh has slowed down for funding constraints, asserting that this priority sector of the economy is expanding. In a country diagnostic study titled ‘Bangladesh consolidating export-led growth, transforming into a thriving middle income economy’, the ADB observed that limited access to finance curbs SME growth and cuts back on this sector’s job-and income- creation potential. “Recently SME is considered a priority sector of Bangladesh and the sector is expanding. So, Bangladesh Bank may differ with the statement of the ADB,” the BB said in a letter to the bank and financial institutions division (BFID) to refute the ADB view. The Bangladesh Bank statistics show country’s SME lending on the increase every year with loans and grants from the Japan International Cooperation Agency (JICA), the ADB, and the World Bank’s International Development Association (IDA). In 2015, some BDT 1.15 trillion was disbursed as SME loan, up from BDT 1.0 trillion in 2014 and BDT 83.23 billion in 2013. The disbursement rates are 110%, 113%, and 115% respectively of annual targets.
Fund raising through IPOs falls by BDT 4.5 billion in FY16
Fund raising from the capital market through initial public offerings declined by 34.3% or BDT 4.5 billion in the just concluded fiscal year 2015-16 compared with that in the previous fiscal year. According to a Dhaka Stock Exchange report, 11 companies raised BDT 8.6 billion through IPOs while 16 companies had collected BDT 13.1 billion from the market under the same process in the fiscal year 2014-15. Experts and stakeholders attributed the fall in the entities’ fund collection from the capital market to a prolonged downward trend at the market. An official of the Bangladesh Securities and Exchange Commission told New Age recently that opposition of a section of investors to allowing IPOs frequently to protect the secondary market from further sluggishness was the main reason that refrained the commission from allowing higher number of IPOs. Enhancing the capital market’s contribution to the industrial development would not be possible unless the secondary market becomes vibrant and stable, experts said. The DSE key index, which has been on a downward trend since the market crash of 2010-11, finished at 4,507.58 points on June 30, 2016, 75.52 points down from 4,583.10 points on June 30, 2015, as the market remained mostly volatile throughout the year due to investors’ concern about the law and order situation in the country. The aggregate turnover at the bourse also declined to BDT 1.1 trillion in FY16, BDT 51.1 billion down from BDT 1.1 trillion in the fiscal year 2014-15. Apart from the fragile law and order situation, banks’ capital market exposure adjustment-related fear that resulted in subsequent fall in share prices was another major reason for the market fall during the year. As a result of investors’ shakiness regarding the market, the DSEX declined to one-year low at 4,171.40 points on May 2, 2016.
Source: http://newagebd.net/238607/fund-raising-ipos-falls-BDT -448cr-fy16/
BSEC for reduction in CDBL fees
The securities regulator has brought amendment to the depository rules proposing reduction in security transaction fees charged by the Central Depository Bangladesh Limited (CDBL). The officials of the Bangladesh Securities and Exchange Commission (BSEC) said the regulator took the initiative to reduce the CDBL fee following the demand of the stakeholders such brokerage firms and merchant banks. As per the amendment, the securities regulator has proposed the CDBL fee of BDT 12 for the transaction of shares, units of closed-end mutual funds and bonds worth BDT 2.5 million each. Under the existing rules, the CDBL is supposed to charge BDT 25 for the transaction worth BDT 2.5 million each. But the CDBL charges BDT 15 for the transaction worth BDT 2.5 million each. The securities regulator approved the proposed amendment at its commission meeting held on June 29 last.
Parliament passes BDT 4.64t Appropriation Bill
The parliament passed Thursday the Appropriation Bill, 2016, authorising the government to spend BDT. 4.64 trillion for meeting revenue, development and charged expenditures in the next financial year, starting today (Friday). Finance Minister AMA Muhith moved the bill in the House seeking a total allocation of BDT 4.64 trillion for the next fiscal year beginning July 01 to June 30, 2017. An appropriation bill or running bill or supply bill is a legislative motion that authorises the government to spend money from the national exchequer. The amount is a gross figure to spend but it will be equivalent to BDT 3.4 trillion if net spending is accounted for. The House approved a total allocation of BDT. 3.1 trillion against 56 demands for grants by different ministries, divisions and organisations by voice vote while BDT. 1.5 trillion was charged on the consolidated fund. Lawmakers moved 403 cut motions against 56 demands for grants but most of the cut motions were mutually resolved leading to direct voice vote.
Bangladesh Bureau of Statistics busy rebasing GDP estimate
Government’s statistical agency has initiated rebasing country’s GDP in the current year with 2015-16 as the new baseline, encompassing lot many emerging areas of economic activities. Official sources said the Bangladesh Bureau of Statistics (BBS) has decided to go whole hog with the rebasing mission under IMF guidelines. A period exercise called rebasing which includes new economic activities in the GDP is meant for reflecting an accurate picture of the economy. It usually shoots the size of the economy up by 10-20%. And it helps raise the per-capita income. People familiar with the developments at the BBS said the authority wants the completion of the rebasing within this December so that it could be applied for the current year’s GDP measurement. The government has projected the GDP growth for the fiscal 2016-17 at 7.2%. But some at the BBS said it would be very hard for them to complete the spadework within such a short period. They said they need at least three years for such type of rebasing the GDP, arguing that actual data are available in two to three years.
Power sector on track to reach generation target by 2021
A senior power official has said that there will be no shortage of electricity when the country’s generation reaches its target of 24,000 MW by 2021. “For the first time, the electricity generation reached a record mark with 9,036 MW on June 30, thus fulfilling the consumer’s demand,” Mohammad Hossain, Director General of Power Cell, Power Division under Power, energy and Mineral Resources Ministry said, reports BSS. He said the government was now in a position to reach its desired target of generating 24,000 MW by 2021. The power generation capacity has already reached 14,539 MW, bringing 76% of the population under the electricity coverage. The power cell director general said Bangladesh’s capability to generate power has increased three-fold to 14,539 MW in seven years of the Awami League’s two consecutive terms. Power Development Board (PDB) spokesman Saiful Hasan Chowdhury said the government is supplying power to the consumers according to the regular demand.
BGMEA rules out immediate terror attack fallout
The apparel sector leaders have claimed that the Gulshan café siege incident would not immediately affect the readymade garment (RMG) sector. They, however, said it is not the right time to make any comment on the issue. Such comment might create adverse impact to some extent, said BGMEA President Md Siddiqur Rahman said at a press conference in Dhaka on Monday. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) organised the news conference on labour situation ahead of Eid at its headquarters in the city. “Two to three big buyers that source apparels from Bangladesh have already confirmed that they will not reduce their business orders from Bangladesh,” he disclosed. Six Italians, killed during the attack, were engaged in garment trade in the country and, at least, two of them lived in Dhaka city for a long time, Siddiqur Rahman said, it would take 15 to 16 days’ time to assess the impact, if any, as buyers’ representatives are on Eid vacation.
JICA firmly with Bangladesh, says its president
Laying emphasis on extra safety of its personnel, the Japan International Cooperation Agency (JICA) has said it remains “firmly committed” to contributing to the development of Bangladesh, reports UNB. “We at JICA will continue giving top priority to the safety of JICA-related personnel and thoroughly assessing the situation on the ground in the places where we do our work,” said JICA President Shinichi Kitaoka in a statement received in Dhaka on Wednesday. The people who were killed and injured not only participated in survey work in Bangladesh, together with JICA they also contributed to the growth of developing countries and were expected to continue doing so, he said.
Feeding six cash-strapped financial institutions: Government ready with BDT 6.0 billion bailout
The government is ready with a BDT 6.0 billion bailout for six cash-strapped financial institutions, including four state-owned banks, competent sources said. They said the money is meant to help the financial outfits meet their capital shortfall, recapitalisation, fund assistance and provision deficit. “Some BDT 18 billion had been allocated for replenishing capital of the state-owned banks and agencies in the revised budget of the last fiscal year (FY). The original allocation for bank recapitalisation for the last FY 2015-16 was BDT 50 billion.” a senior official of the Ministry of Finance told the FE Friday. A sum of BDT 12 billion was disbursed to the scam-hit BASIC Bank in the last fiscal, he added. Some BDT 2.0 billion out of the remaining BDT 6.0 billion will be distributed to the Bangladesh House Building Finance Corporation (BHBFC) as fund assistance while BDT 1.40 billion for Bangladesh Krishi Bank meeting provision shortfall, BDT 1.78 billion for Sonali Bank (UK) Limited as paid-up capital, BDT 550 million for Rajshahi Krishi Unnayan Bank to meet capital deficit, BDT 250 million to Ansar-VDP Bank for recapitalization and BDT 11.3 million for Grameen Bank for paid-up capital of government part, according to the finance ministry data.
Bangladesh Power Development Board seeks tax waiver on share offloading
The Bangladesh Power Development Board (BPDB) has sought waiver from paying advance income tax (AIT) as it has moved to offload 10% more shares of Dhaka Electric Supply Company (DESCO) in the stock market, officials said. According to Section 53M of Income Tax Ordinance, 5.0% AIT has to be paid in case of offloading shares of taxable entities. The National Board of Revenue (NBR) had earlier identified the BPDB as a taxable entity and informed that AIT is applicable to offloading its shares. BPDB secretary Zahurul Huq in a recent letter to Power Division secretary Monowar Islam sought ministry’s intervention again to get tax waiver. In 2011, the government had asked the BPDB to offload 10% shares of DESCO. He wrote that the BPDB is a loss-making entity. Thus it can be given waiver from paying AIT in case of offloading shares. Mr Huq also wrote that the government has taken initiative to make investment in power sector by mobilising money from the stock market. Investment in power sector will further increase if tax waiver is given in case of 10% share offload of DESCO. It will help attain the government’s target in power generation.
Bashundhara Paper Mills to float IPO worth BDT 2.0 billion
The Bashundhara Paper Mills, a sister concern of the Bashundhara Group, has moved to go public under the book building method. The company has aimed to raise a fund worth BDT 2.0 billion by floating IPO (initial public offering) for purchasing machineries, repayment of bank loans and business expansion. The company has already completed its road show to uphold financials, the reason of going public and future plan. Mohammad Obaydur Rahman, managing director of the AAA Finance & Investment, said the company would modernise and import machineries with the IPO fund. According to Rahman, of BDT 2.0 billion, BDT 1.2 billion will be used for machinery import, whereas BDT 400 million to BDT 600 million will be used for repayment of bank loans. The paid-up capital of the Bashundhara Paper Mills is BDT 1.47 billion. As per the financial statement for the year ended on December 31, 2015, the company’s earnings per share (EPS) was BDT 3.63, which was BDT 4.40 in previous year. The company’s net asset value (NAV) per share was BDT 30.60 as of December 31, 2015 and BDT 30.92 as of December 31, 2014.
No control over drug prices as regulator loses bite
The government has no control over fixing fair prices of medicines in the country although it is committed to ensure quality drugs at affordable rates to people. Sources said the price control committee of the government is dominated by different drug manufacturers’ associations and there is hardly any meeting held to review tag prices and current market prices of medicines. According to market information, prices of different essential drugs increased by at least 10% during the last two years. Though the Directorate General of Drug Administration (DGDA) had prepared a price list of 117 essential drugs in 1994, data has not been updated to assess level of increase in drug prices genetically, they added. Officials said revision of the price against a drug is done based on the company’s demand and its proposal. They said the data is maintained in files genetically.
Japan to provide record BDT 128.2 billion for six projects
Japan will provide Bangladesh with a loan worth BDT 128.2 billion (¥ 173.5 billion) for six projects in power, communication and natural disaster management sectors. The amount of loan will be the highest lent to Bangladesh by Japan since 1972. Bangladesh Economic Relations Division Acting Secretary Kazi Shafiqul Azam and Japan International Cooperation Agency representative Mikio Hataeda signed the Official Development Assistance (ODA) loan agreement at a ceremony held at the NEC conference room in the capital yesterday. State Minister for Finance and Planning MA Mannan and Japanese Ambassador Masato Watanabe were present during the agreement signing ceremony. The annual interest of the loan will be 0.01%, which will have a 10-year gross period and to pay back in 40 years. State Minister for Finance and Planning said: “Japan has given ¥ 1.0 trillion as loan, ¥ 500.0 billion as assistance and ¥ 65.0 billion as technical assistance since establishing bilateral relationship between the two countries in 1972.” The six projects are Jamuna Railway Bridge Construction Project, Dhaka Mass Rapid Transit Development Project, Cross-Border Road Network Improvement Project, Matarbari Ultra Super Critical Coal-Fired Power Project, Energy Efficiency and Conservation Promotion Financing Project and Disaster Risk Management Enhancement Project.
GP employees allowed to form union
Employees of Grameenphone can now form trade union to protect their labour rights, according to a court order. The Labour Appellate Tribunal in Dhaka yesterday allowed an appeal of Grameenphone Employees’ Union to this effect. “Allowing the appeal of Grameenphone Employees’ Union means the Labour Directorate must register the trade union now so that it can operate its activities officially,” Tapos Kanti Baul, a lawyer for the union, told The Daily Star yesterday. The employees’ union applied for registration in 2012 with the Labour Directorate but it rejected the application. When the union challenged the decision, Labour Court-1 upheld the Labour Directorate’s decision, said AKM Nasim, another lawyer for the union. The union then challenged the order with the Labour Appellate Tribunal, and the two-member bench of the tribunal led by its Chairman Justice Md Shamsul Huda yesterday granted the union’s appeal. “The timeframe to give registration to Grameenphone Employees’ Union by the Labour Directorate can be known after the release of the full verdict. However, as per precedence, the Labour Directorate gives registration within 30 days of receiving judgement,” he added. Mia Masud, a leader of GPEU, said they will set their next course of action after receiving the full verdict. Abdul Baset Majumder, a lawyer who represented Grameenphone, told The Daily Star that they will challenge the judgment at the High Court as soon as possible.
World Stock and Commodities
|Index Name||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)*||$45.41||+0.27||+0.60%|
|Crude Oil (Brent)*||$46.76||+0.36||+0.78%|
|Dow Jones Industrial Average||18,146.74||+250.86||+1.40%|
|USD 1||BDT 78.33*|
|GBP 1||BDT 101.46*|
|EUR 1||BDT 86.56*|
|INR 1||BDT 1.16*|
*Currencies and Commodities are taken from Bloomberg.