Classified loans leap to Tk 143.60b in 9 months

Loads of classified loans in the country`s banking sector have leapt by nearly 28 per cent or Tk 143.60 billion in the first nine months of the current calendar year, belying close monitoring by the central bank.

The volume of non-performing loans (NPLs) rose to Tk 657.31 billion as on September 30 from Tk 513.71 billion on December 2015. It was Tk 547.08 billion a year before, according to the central bank latest statistics.

On the other hand, the amount of classified loans increased by nearly 4.0 per cent or Tk 23.66 billion to Tk 657.31 billion during the third quarter (Q3) of the current calendar year from Tk 633.65 billion in the preceding quarter.

"The amount of classified loans in the banking system increased further during the period under review because some borrowers did not make repayment of installments against their rescheduled loans," a senior official of the Bangladesh Bank (BB) told the FE Wednesday.

He holds the hope that the volume of NPLs would fall in the fourth quarter of this calendar year.

The share of classified loans also rose to 10.34 per cent of the total outstanding loans during the period from 8.79 per cent nine months before.

The classified bank credits cover substandard, doubtful and bad/loss of total outstanding credits which stood at Tk 6359.87 billion as on September 30 last from Tk 5846.15 billion on December 31. It was Tk 6300.19 billion on June 30, 2016.

During the period, the total amount of NPLs with six state-owned commercial banks (SoCBs) swelled to Tk 299.56 billion from Tk 237. 45 billion as on December 31 last. It was 300.77 billion in the Q2 of this calendar year.

On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) reached Tk 276.89 billion in the Q3 from Tk 207.60 billion in the final quarter of last year. It was Tk 253.15 billion as on June 30 last.

The NPLs from nine foreign commercial banks (FCBs) rose to Tk 22.69 billion during the period from Tk 18.97 billion in the Q4 of 2015. It was Tk 21.56 billion in the Q2 of this calendar year.

The classified loans with two development-finance institutions (DFIs) rose to Tk 58.17 billion in the Q3 of 2016 from Tk 49.67 billion nine months before. It was Tk 58.17 billion in the Q2 of this calendar year.

"A portion of special rescheduling loans has already turned into classified ones again mainly for lack of requisite repayment," Nurul Amin, Chief Executive Officer (CEO) and Managing Director (MD) of Meghna Bank Limited, said while explaining the upturn in the NPLs.

Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), believes that the amount of classified loans would decline in the final quarter of 2016 as the banks have already expedited drive for recovering their NPLs.