After showing noticeable improvements during
Q2FY15, banking sector indicators for Q3FY15 show some concerns for a variety
of reasons. The ratio of gross non-performingloans (NPL) to total outstanding loans increased to 10.5 % at the end of
Q3FY15 from 9.7 % at the end of Q2FY15. The ratio of net NPL also increased from
2.7% at the end of December 2014 to 3.7 % at the end of March 2015 due mainly
to increase in the gross NPL. Provision shortfall increased from (-) Tk.8.0 billion
at the end of December 2014 to (-) Tk.37.8 billion at the end of March 2015. In
Q3FY15, the capital adequacy ratio (CAR) decreased to 10.7 % from 11.4 % in
Q2FY1 5. Among the profitability measures, return on asset (ROA) in the banking
sector declined from 0.9 % at the end of December 2013 to 0.6 % at the end of
December 2014 due to maintaining higher provision by banks and the net losses
made by SCBs and SBs. Return on equity (ROE) of the banking industry also
decreased to 8.1 % at the end of December 2014 from 10.8 % at the end of
December 2013. However, a positive development was, monthly interest rate
spread for all banks, measured as the difference between monthly weighted average
interest rate of advances and deposits, decreased to 4.87 % at the end of Q3 FY15
from 5.21 % in December 2014.
The ratio of gross NPL to total outstanding loans
of the banking sector increased from 9.7 % at the end of December 2014 to 10.5 %
at the end of March 2015. Outstanding loan of the sector increased by 0.9 % during
Q3 FY15 over Q2FY15 while total classified loan increased by 9.0 % over the
same period. The deterioration in gross NPL ratio of the sector was mainly due
to the increase in non-performing loans of PCBs that grew by 23.5 % during the
period under review. The ratio for PCBs increased to 6.0 % at the end - March
2015 from 5.0 % at the end-December 2014. Gross NPL ratio of SCBs, SBs and FCBs
also increased to 22.5 %, 33.5 % and 8.3 % respectively from 22.2 %, 32.8 % and
7.3 % respectively during the period.
Similarly, the net NPL ratio for all banks
increased from 2.7 % at the end of December 2014 to 3.7 % at the end of March 2015.
(Table VI.3, Chart VI. 3). Provision shortfall in the banking sector deteriorated
during Q3FY15 and stood at (-) Tk. 37.8billion which increased from (-) Tk.8.0
billion at the end of December 2014(Table 6.1). In Q3FY15provision shortfall in
SCBs was (-) Tk.17.5 billion and net NPL ratio of this bank group increased to
8.6 % from 6.12 % in Q2FY15. Net NPL ratios for SBs, PCBs and FCBs also
increased from 25.5 %, 0.8 % and (-) 0.9 % respectively at the end of December
2014to 26.3 %, 1.5 % and (-) 4 % respectively at the end of March 2015.
Return on assets (ROA) declined from 0.88 % at the end of December 2013
to 0.64 % at the end of December 2014 due to maintaining higher provision for
the bad debts mainly by SCBs. The ROA for SCBs deteriorated from 0.53 % at the
end of December 2013 to (-) 0.55 at the end of June2014. However, the ratio for
SBs, PCBs and FCBs improved from (-) 1.09 %, 0.95 % and 2.98 % respectively to
(-) 0.68 %, 0.99 % and 3.38 % respectively during the same period. Similarly, return on equity (ROE) of
the banking industry decreased to 8.09 % at the end of December 2014 from 10.80
% at the end of December 2013. The ROE for SCBs decreased to (-) 13.46 % in
December 2014 from 10.03 % at the end of December 2013 mainly due to the
negative net income (after provision and tax) of this category of banks.
However, the ratios for SBs, PCBs and FCBs improved from (-) 8.90 %, 9.76 % and
16.93 % respectively to (-) 5.97 %, 10.26 % and 17.67 % respectively during the
period.
Bank Group
|
Deposit growth
|
Loans/Advance Growth
|
Advance-Deposit Ratio (ADR)
|
|||
March 15
|
December 14
|
March 15
|
December 14
|
March 15
|
December 14
|
|
SCBs
|
14.5%
|
11.8%
|
8.3%
|
8.4%
|
55.2%
|
53.5%
|
SB
|
13.0%
|
9.7%
|
5.9%
|
7.9%
|
73.3%
|
76.7%
|
PCBs
|
13.2%
|
15.5%
|
17.8%
|
17.5%
|
77.9%
|
78.2%
|
FCBs
|
-4.3%
|
-1.3%
|
-2.2%
|
-4.6%
|
59.5%
|
61.8%
|
All
|
12.5%
|
13.3%
|
14.2%
|
14.0%
|
70.5%
|
71.0%
|
At the end of Q3FY15, the growth rate
(year-on-year) of deposits was lower than that of advances. The advance-deposit ratio (ADR) marginally decreased from 71.0 % in end-December 2014 to 70.5 % in end-March
2014 and remained far below the maximum regulatory ceiling. The growth rate of
deposits decreased from 13.3 % at end of December 2014to 12.5% at end of March
2014. On the other hand, the growth of advances increased marginally from 14.0 %
to 14.2 % during the period. The liquidity position of the banking sector as a
whole, improved at the end of Q3FY15; leading to a further easing of money
market conditions though excess reserve has gone down.
Monthly interest rate spread for all banks,
measured as the difference between monthly weighted average interest rate of
advances and deposit, decreased to 4.87% at the end of Q3FY15 from 5.21 % at
the end of Q2FY15. Banks slash both of their deposit and lending rates due to
lower credit demand and prevailing easy money market conditions. Bank-wise data
show that during Q3FY15 lending rates declined faster than deposit rates, as a
result interest rate spread decreased over the period. Monthly weighted average
call money rate
increased from 7.93% in December 2014 to above 8.57 % in January 2015 but
gradually came down to 7.68 % at the end of Q3FY15.
