The latest figures from Bangladesh Bank reveal that 17 out of the country’s 52 banks have successfully maintained non-performing loans (NPLs) below 10%, demonstrating strong financial discipline despite a sector-wide rise in bad debt. The sector-wide NPL ratio had previously surged to over 12% during the tenure of the Awami League government, with June last year recording 211,391 crore BDT in defaulted loans, equivalent to 12.56% of total disbursed loans.
After the change in government in August, reported NPLs increased rapidly, largely due to previously concealed bad loans from the prior administration coming to light. By September, the total amount of NPLs in the banking sector had climbed past 650,000 crore BDT, representing nearly 36% of total loans.
Despite this challenging environment, one-third of the banks maintained strong performance. Among them, six banks – Citizens Bank, Eastern Bank, Bengal Commercial, Brac Bank, Prime Bank, and City Bank – have NPLs under 5%. Citizens Bank, a newer entrant in the sector, has the lowest NPL rate at just 1.74%, followed by Eastern Bank at 3.09% and Bengal Commercial at 3.24%. Brac Bank, a leading private sector lender, reports an NPL rate of 3.58%, Prime Bank 4.01%, and City Bank 4.76%.
Brac Bank Managing Director Tarek Refaat Ullah Khan explained to Prothom Alo, “Our loan management division is highly professional. We monitor clients closely and support them if difficulties arise. These initiatives are key to maintaining low NPLs.” Similarly, City Bank MD Masrur Arefin noted that their loan approval and risk management processes are fully independent, with 30% of their loans corporate-based and the rest diversified across consumer, CMSME, and credit card sectors, keeping default rates low.
Other banks with NPLs below 10% include Midland Bank (5.40%), Pubali Bank (5.50%), Meghna Bank (6.11%), Mutual Trust Bank (6.83%), Community Bank (7.07%), Shahjalal Islami Bank (7.67%), NCC Bank (8.31%), Dhaka Bank (8.44%), Uttara Bank (8.91%), Trust Bank (8.95%), and Jamuna Bank (9.06%). Prime Bank DMD Ziaur Rahman anticipates reducing NPLs below 3% by the end of December through careful monitoring, recovery, and prevention strategies.
Conversely, several banks are struggling with extraordinarily high NPLs, particularly some Islamic banks and older commercial banks affected during previous governance periods. Union Bank leads with 96.64%, followed by First Security Islami Bank at 96.20% and Global Islami Bank at 95.70%. Exim Bank, Social Islami, First Security Islami, Global Islami, and Union Bank have been merged into a new entity, the Combined Islami Bank, in an effort to stabilise the sector.
Bangladesh Bank spokesperson Arif Hossain Khan emphasised, “Banks are being urged to accurately report the true state of their loans. While NPLs have increased, many banks are still in a strong position, and we expect overall ratios to gradually improve with the measures being implemented.”