Profits down, liabilities increase: Central bank

The overseas branches of Bangladeshi banks are not doing well due to financial losses and rampant irregularities, which reflects on the financial condition of last year.

At the end of last year, overseas branches’ net profits stood at $4.30 million, which is 1 per cent lower than the previous year, according to the latest data from Bangladesh Bank (BB).

It said the total liabilities of the overseas branches of local banks stood at $315.03 million at the end of 2021, which is $31.32 million higher than the previous year.

The customers’ deposits are consisting of 87.45 per cent of the total liabilities, said the BB data.

Almost all the overseas branches and exchange houses are incurring losses because their expenses far exceed their income, said Mohammed Nurul Amin, former chairman of the Association of Bankers, Bangladesh (ABB).

Now overseas operations are shutting down because of scams and irregularities, he added.

The customers’ deposits in overseas branches stood at $275.50 million last year, up from $223.31 million a year ago. On the other hand, loans and advances stood at $94.32 million, which is 11.76 per cent higher than the previous year.

Currently, three banks — Sonali, Janata and AB — have overseas banking operations with seven full-fledged branches in India and the United Arab Emirates.

However, 20 banks are providing overseas banking services for collecting foreign remittances and other activities through 25 exchange houses, seven representative offices and five subsidiary companies.

Central bank officials said that prudent monitoring is required to ensure overseas branches’ proper compliance with the regulations imposed by the regulators of both home and host countries.

Over the past few years, Janata Bank, Sonali Bank, Agrani Bank, National Bank, Exim Bank, Pubali Bank, Prime Bank, AB Bank and Mutual Trust Bank shut down their overseas branches and exchange houses in multiple countries after suffering huge financial losses.

The National Bank closed its exchange house in the United States in February this year. The bank’s Managing Director Md Mehmood Husain said they had to do that because the exchange house incurred losses for several years.

He added, “Not just National Bank, most of the subsidiaries of other banks are also incurring losses too due to a lack of in-depth planning. However, we still have exchange houses in Malaysia, Singapore, Greece and Maldives, and they are profitable.”

Agrani Bank and Exim Bank also closed their exchange houses in Canada last year. Mehmood said, “Most of the banks opened overseas branches and exchange houses in western countries on emotion, instead of running surveys first to check the feasibility of the move.

“The lack of in-depth survey, proper planning and having no idea about the coverage area are the key reasons behind the closure of these subsidiaries.”

He added, “The overseas branches and exchange houses also needed big investments in the necessary technology to carry out business, but most the banks did not make adequate investments for this.”