State banks’ loss-making branches shrink
State-run banks saw a significant decline in the number of loss-making branches last year as Bangladesh Bank’s plan to reinvigorate the institutions is at long last bearing fruit. At the end of December last year, the total number of loss-making branches of Sonali, Janata, Agrani, Rupali and BASIC banks stood at 335, down from 474 a year earlier. Sonali, Bangladesh’s largest bank, cut down its loss-making branches by 52 last year to 181. Its loan-deposit ratio crept up to 35.78 percent last year from 33.22 percent a year earlier. During the course of 2017, Agrani’s loss-making branches shrunk to 43 from 78. Its loan-deposit ratio rose to 54 percent last year from 48 percent. Rupali brought down the number of loss-making branches to 33 from 87, with its loan-deposit ratio crawling up 1.52 percent to 62 percent last year. Scam-hit BASIC Bank too cut down its loss-making branches in 2017 to 21 from 28. Last year, the bank lent aggressively exceeding the 85 percent ceiling for loan-deposit ratio set by the BB. The ratio surged to 98.27 percent last year from 83.62 percent a year earlier. Janata though saw its loss-making branches increase to 57 from 48. At the end of December last year, the total number of branches of the five banks stood at 3,695.
BB urges commercial banks to remain alert over import-export mismatch
Bangladesh Bank (BB) governor on Saturday called the public and private commercial banks to remain alert over the growing mismatch in the growth of import and export. He indicated that such trend would create scope of money laundering and thus damage financial institutions and economy as a whole. He said the import grew by 25 per cent over the last six months while the export rose by hardly 6.0 per cent. The BB governor urged the banks to remain cautious to the matter, which could have negative impact on the country’s financial system.
DSE to drop IBBL from DS30 index
Islami Bank Bangladesh Limited (IBBL) will be dropped from the blue chip index DS30 for the company’s failure to comply with the membership retaining requirements. The Dhaka Stock Exchange (DSE) rebalances its DS30 index as per criteria set by S&P Dow Jones Indices. According to DS30 criteria, eligible stocks must have a float-adjusted market capitalisation worth above Tk 500 million as of the rebalancing reference date. And the eligible stocks also must have a minimum three-month average daily traded value worth 5.0 million as of rebalancing reference date. Stocks must be profitable as measured by positive net income over the last 12-month period, as of the rebalancing reference date. Meghna Petroleum will also be excluded from the blue chip index DS30. On fulfilment of criteria, two other companies will be included in the DS30 index. The companies are Al-Arafah Islami Bank and United Power Generation & Distribution Company. The effective date of semi-annual rebalancing of DSE 30 index would be from July 22, 2018.
Govt’s bank borrowing: June net amount balloons as ADP execution revs up
The government’s net borrowing from the banking system marked an abrupt jump in the last week of June, driven by demand from development projects. Such borrowing was at a negative level, amounting to Tk 66.63 billion as on June 21 but it turned positive a week later, according to the central bank’s confidential reports. The government borrowed Tk 13.96 billion from the banking system on a single day on June 30 to partly finance its budget deficit. It was the last working day of the just-concluded fiscal year (FY). In June alone, the government’s net borrowing stood at Tk 137.90 billion following faster implementation of development projects, officials familiar with the government debt-management told the FE. Net borrowing from the banking system increased slightly by 1.03 per cent or Tk 9.25 billion to meet its budgetary expenses. The aggregate amount of borrowing from the banking system rose to Tk 906.42 billion until June 30 from Tk 897.16 billion a year ago, the Bangladesh Bank (BB) data showed. Initially, the government’s bank borrowing target was set at Tk 282.03 billion for FY 2017-18, but was later revised lower to Tk 199.17 billion. In FY 17, such borrowing was negative amounting to Tk 83.79 billion, according to the budget documents.
Weekly analysis: Stocks end flat amid high turnover
Stocks finished almost flat last week that ended Thursday as investors booked some profits with cautious positioning. Week-on-week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 3.37 points or 0.06 per cent to settle at 5,358. The food & allied sector posted the highest loss of 2.94 per cent, followed by banking with 2.0 per cent and pharmaceutical 0.52 per cent. The DS30 index, comprising blue chips, also fell 19.68 points to finish at 1,906 points. However, the DSE Shariah index advanced 6.06 points to end at 1,267. Total turnover on the DSE stood at Tk 48.50 billion, registering an increase of 58 per cent, from Tk 30.56 billion in the previous week, as last week saw five sessions instead of previous week’s four. The daily turnover averaged Tk 9.70 billion, which was 27 per cent higher than the previous week’s average of Tk 7.64 billion. The market capitalisation of the DSE inched higher by 0.12 per cent as it was Tk 3,864 billion on opening day of the week while it rose to Tk 3,868 billion on Thursday. Of the traded issues, 171 closed higher, 148 ended lower and 25 issues remained unchanged on the DSE floor. However, the Chittagong Stock Exchange (CSE) finished slightly higher with the CSE All Share Price Index – CASPI -advancing 9.0 points to settle at 16,513. The Selective Categories Index – CSCX – also gained 11 points to close at 9,994.
BSEC to replace OTC with ATB
The Bangladesh Securities and Exchange Commission is going to replace over-the-counter market with alternative trading board where the shares of companies delisted from the stock exchanges’ main board and any public limited companies of any size would be traded. The BSEC has recently framed the ATB rules and published the rules for public opinions. BSEC officials said that any equity, corporate bond, derivatives and open-end mutual fund would be traded on the ATB platform. They said that the companies at the ATB would enjoy various facilities including relaxed rules and penalties. This would be a trusted platform where any company could sell its ownership to another company or individual. There would not be any minimum or maximum paid-up capital requirement and the companies would not require declaring dividend and quarterly earnings disclosure. Besides, any new products including sukuk could be traded on the platform.
Bangladesh Bank sets transaction ceiling for contactless card payment
Bangladesh Bank has set per transaction ceiling of Tk 3,000 for the credit cards which would be operated in contactless system also known as near field communication system. NFC enables a cardholder to pay bills just by bringing a card within four centimetres of a point-of-sale machine of a merchant instead of swiping or inserting the card into the POS machine. To facilitate the process, the BB on Thursday issued a circular relaxing the second factor authentication or personal identification number condition for transactions through credit cards. The central bank in its circular, however, said that banks would be allowed to operate NFC technology for only EMVCo complaint credit cards.
Current account deficit crosses $9.0b in 11 months
The country’s current account deficit crossed $ 9.0 billion in the first eleven months of the fiscal year just gone by, the central bank said. Bangladesh Bank data showed that the current account deficit reached $ 9.37 billion in July-May period of Fiscal Year (FY) 2018, which was $ 2.21 billion in the same period of the FY’17. The widening current account deficit put the external balance of payments with the rest of the world under substantial pressure. According to Bangladesh Bank Quarterly, about 60 per cent of current account balance deficit was financed by capital and financial account surplus. Central bank statistics also showed that in July-May period of FY’18, financial account balance recorded a surplus of $ 8.03 billion, which is almost double over the same period of FY17. Overall balance of payments (BoP) posted a deficit of $ 0.97 billion, which was a surplus of $2.68 billion in the first 11 months of FY17. Merchandise trade gap stood at $ 17.22 billion, up from $ 9.36 billion in the same period of FY17. Service trade gap also crossed $ 4.0 billion during the period.
New exportables up for cash incentives
New eligible traditional and non-traditional export items are going to get cash incentive/subsidy this fiscal year (FY), 2018-19, sources said. Some 27 export-oriented sectors enjoyed export subsidy or cash incentive in last FY. The authorities will review the same for the existing sectors and also consider proposals and recommendations for new sectors for FY ’19. Five to 10 exportables like razor and razor blades, chlorine, hydrochloric acid, caustic soda, hydrogen peroxide and motorcycle may get the facility. The incentive/subsidy rates for jute and jute goods, leather and leather goods, new products and new market expansion facility may remain unchanged. Same is the case for small and medium garment factories and textiles sector, the official stated. The rates for frozen shrimp and fish will also remain unchanged. For FY ’19, the government earmarked some Tk 45 billion as cash incentives/subsidy for the country’s export-oriented sectors, according to a ministry official. Bangladesh earned $34.65 billion in FY ’17, $34.10 billion in FY ’16, $31.20 billion in FY ’15, $30.18 billion in FY ’14 and $27.02 billion in FY ’13 through exports.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$71.01||↑0.27||↑4.19%|
|Crude Oil (Brent)||$75.33||↑0.71||↑4.42%|
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.76|
|GBP 1||BDT 110.74|
|EUR 1||BDT 97.87|
|INR 1||BDT 1.22|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.