Home ›› 10 May 2023 ›› Front
Four state-tun banks – Sonali, Rupali, Agrani, and Janata – had high excess liquidity even a year ago but are now in a tight spot.
Industry insiders said the on-going forex crisis, slow deposit growth, and growing credit demand in the post-pandemic period are the key reasons behind this.
Surplus liquidity at the four banks fell by 44.43 per cent last year. Of them, Janata Bank, Agrani Bank, and Rupali Bank are in a difficult situation while Sonali Bank’s liquidity has improved somewhat.
Banks generally hold excess funds in the forms of cash, bills, bonds, and treasury securities.
Sonali Bank’s excess liquidity was Tk 40,352 crore at the end of December last year, down from Tk 45,898 crore a year ago, as per the central bank data.
The bank’s excess liquidity dropped by 12.08 per cent last year despite positive deposit growth. Its loans and advances increased more than deposits, which impacted liquidity.
The bank’s deposits rose by 5.08 per cent to Tk 1,41,949 crore at the end of last year. On the other hand, its loans and advances increased by 22.5 per cent to Tk 84,600 crore. A high official of the bank told The Business Post their excess funds fell due to the foreign exchange crisis.
He said import financing increased last year due to volatility in the USD market, which caused credit growth to rise.
Sonali Bank’s Chief Executive Officer and Managing Director Md Afzal Karim said they were able to raise the advance to deposit (AD) ratio at the end of 2022.
He said the bank has also reduced its non-performing loans (NPLs) to 15 per cent now from 18.5 per cent a year ago. “As a result, performing loans have increased.”
Janata Bank’s excess liquidity plunged by 86.27 per cent to Tk 2,576 crore at the end of 2022. The state-run bank borrows money from the call money market every day, said an official of its treasury department.
He said the bank’s deposits fell slightly last year due to inflationary pressure.
The bank’s deposits stood at Tk 1,01,467 crore in December 2022, which was Tk 1,01,621 crore in the same month of the previous year. However, the bank’s net interest income stood at Tk 509 crore, which was negative Tk 82 crore in December 2021.
Agrani Bank’s excess liquidity dipped by 83.75 per cent to Tk 2,471 crore at the end of last year, with its deposit growth falling by 7.72 per cent.
An official of the bank’s treasury department said their excess funds decreased mainly due to the negative deposit growth and taking US dollar support from the central bank.
He said the bank had a huge surplus fund amidst the coronavirus pandemic but is now facing a cash shortage.
Rupali Bank’s excess funds fell by 45.58 per cent to Tk 3,844 crore at the end of last year, with its loans and advances rising more than deposits. The bank’s deposit growth was only 2.14 per cent while its loan growth was 14.32 per cent. A senior central bank official said slow default loan recovery is the reason why the state-owned banks lost their surplus liquidity.
He said these banks hold the major portion of NPLs in the banking industry.
At the end of December last year, NPLs stood at Tk 1,20,657 crore, with the four state-run banks holding Tk 40,932 crore, as per the central bank data.
This is the second part of a three-part series. The final part will be published tomorrow.
