Private banks’ capital goes up 7.75pc in six months

Private banks’ capital increased by 7.75 percent in the first half this year though their default loans marked a rise during the period due to the recent political unrest and low investments.
Their capital stood at Tk 42,592 crore as on June 30, a rise by Tk 3,065 crore from December 31 last year, according to central bank statistics.
Among 36 private banks, capital of all but three went up. The surplus capital of the banks was Tk 2,751 crore on June 30.
However, their default loans rose by more than Tk 6,000 crore during the January-June period.
Helal Ahmed Chowdhury, managing director of Pubali Bank Ltd, said though default loans increased in these banks, there was no provision shortfall against their bad loans. As a result, the banks were able to increase their capital, he added.
After 2015, the banks will have to maintain higher capital as per the Basel-III requirements, Chowdhury said.
At present, they maintain capital at 10 percent of their risk weighted asset in line with Basel-II requirements. Basel-III regime will be the latest version of risk-based capital standards set for banks worldwide.
Keeping the future requirements in mind, the banks are increasing capital every year so that they do not face pressure after 2015, the Pubali Bank chief executive said.
As the banks had to raise capital, most of them gave stock dividends instead of cash dividends in 2012, he said.
Chowdhury also blamed the rise in default loans in the private banks on political unrest, low investment in the run-up to the national elections and the central bank’s new loan provisioning rules.

However, he said, compared to the public banks, the financial base of the private banks is stronger as they are operating under strict monitoring by the central bank.
The state banks’ capital did not increase rather the amounts fell short of the requirements, according to central bank statistics.
On June 30, the capital shortfall of the state banks was Tk 9,062 crore and that of specialised banks Tk 5,650 crore.
Among the private banks, ICB Islamic Bank had the highest amount of capital shortfall — Tk 1,302 crore, followed by Bangladesh Commerce Bank’s Tk 250 crore, and Premier Bank’s Tk 183 crore.
Premier had a capital surplus of Tk 47 crore in December last year, but the other two had a deficit in the month.