PCBs ride on savings certificates rate cut
Post 26pc growth in deposit, profit in 2003-04
Rejaul Karim Byron
The gradual trimming of interest rates on savings instruments have generated renewed interest among investors to switch to private commercial banks (PCBs) that resulted in a deposit growth of 26 percent in a year ending June 2004.The PCBs also witnessed a whopping 26 percent increase in profit during the period, thanks to the continuing high spread between loans and deposits. Bank analysts attributed the increases to interest rate cut by the nationalised commercial banks (NCBs) and credit restrictions imposed by the central bank on them. They said that with the credit restrictions, the NCBs are finding it difficult to invest their idle funds, which forces them to discourage deposits. At the end of June this year, PCBs recorded a total profit of Tk 996 crore, compared to Tk 788 crore during the past fiscal year while their combined deposits marked an increase of Tk 10,046 crore reaching Tk 55, 362 crore. Islami Bank, Bangladesh ranked the highest in attracting deposits amounted to Tk 7,784 crore in last one year. Pubali Bank ranked second with Tk 3,622 crore, followed by Uttara Bank tapping Tk 3,320 crore. Meantime, collective advances by these PCBs have also gone up by 18 percent (Tk 6,439 crore) to stand at Tk 41,347 crore. Islami Bank continued to maintain its dominating position in advance head providing Tk 7,064 crore, followed by Pubali Bank which disbursed Tk 2,596 crore. Prime Bank was the third highest lender with Tk 2,051 crore. In the profit earning list, Islami Bank recorded highest profit with Tk 145 crore, followed by Uttara Bank with Tk 62 crore and Prime Bank with Tk 61 crore. Explaining the growth of PCBs, a senior official of Pubali Bank told The Daily Star, "NCBs have reduced their rates on deposits lower than PCBs, while government has significantly cut rates on savings, that is why PCB deposits have gradually increased." An official of Mercantile Bank, which ranks 11th in profit figures among the PCBs, said, "Competition has intensified among the 31 PCBs along with the foreign banks, and that is why deposits have gone up." "Deposits have come towards PCBs because of the memorandum of understanding signed between NCBs and the Bangladesh bank to discourage deposits," says an official from National Credit and Commerce Bank.
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