Staff Reporter :
Bangladesh bank has diagnosed 12 banks including six state-run ones are in critical condition, as their combined non-performing loans (NPLs) amount to Tk 1,45,633 crore at the end of December, which is 62 percent of the total NPLs, according to the latest the central bank’s internal report.
Among those 12 banks are in critical condition, nine have already moved to the ‘red zone’ referring their fragile financial health.
Banks in the ‘red zone’ are AB, National, Bangladesh Commerce, Padma, BASIC, National Bank of Pakistan, Janata, Agrani and Rupali.
However, the yellow zone contained 3 commercial banks (Bangladesh Development Bank and Sonali Bank, First Security Islami Bank) that were close to becoming in the red zone, according to the latest edition of the “Banks Health Index and HEAT Map”, a biennial report prepared by the Financial Stability Department of the central bank.
This report has been prepared based on data from 54 banks for the past six semi-annual periods, spanning December 2020 to June 2023 by using six different ratios of CAMELS rating (capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk) excluding the sensitivity to market risk but including the leverage ratio proposed in Basel-3, estimating Z-scores.
The central bank’s report came at a time when the discussion of merging weak banks with strong banks is gaining momentum in the country.
Banks in the “Red Zone” are the worst or poor, the banks in the “Yellow Zone” are weak, and the banks in the “Green Zone” are in good condition.
As many as 29 banks were in the yellow zone, meaning their financial health was between good and fragile, said the report.
On the other hand, only 16 banks, including eight local ones, have found a place in the green zone.The banks that were in the green zone are: Prime Bank, Eastern Bank, HABIB Bank, NCC Bank, Midland Bank, Bank Alfalah, Bank Asia, Shimanto Bank, Jamuna Bank, Shahajalal Islami Bank, Woori Bank, HSBC, Commercial Bank of Ceylon, CitiBank N?, Standard Chartered Bank Bangladesh and State Bank of India.
Meanwhile, the health of 38 banks deteriorated during the review period of December 2020 to June 2023, while 16 banks’ health improved, as per report.
Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and ICB Islamic Bank are excluded from the analysis because their data sets are different from the rest.
Likewise, Bengal Commercial Bank, Citizens Bank, Community Bank Bangladesh and Probashi Kallyan Bank are not taken into account due to lack of historical data.
