RIL Money and Banking – The Factbook of BD Financial Market
Broad money accelerated by 8.6% growth (YoY) to BDT 18,894 bn at the end of Nov 2023 as against the projected growth of 9.5% for Dec 2023. BB sets the broad money target 9.70% for H2FY24.
Private sector credit growth slowed by 9.9% (YoY) in November 2023, mainly because of continuous hike in policy rate, liquidity crunch in banking system, and global economic uncertainty. Consumer Price Index (CPI), reached at 9.41% in Dec 2023, compared with 9.49% in the previous month. Amid hawkish monetary policy and stable fiscal stance, BB projected inflation to 7.50% (YoY) for H2-FY24.
The call money rate hits a 11 year high at 9.19% on December 28, 2023 amid overall liquidity crunch in Bangladesh’s banking system. The Bangladesh Bank has expanded the policy rate (Repo rate) by 25 basis points to 8.0%, which is the eight straight hike since May 2022, to contain inflation which results up the borrowing more expensive for private sector. Policy rate increased by 325 basis points from Dec 2020 till date.
Advance to Deposit Ratio (ADR) of the banking system was increasing gradually since March 2022 until March 2023, yet remaining well below the allowable limit set by BB. The classified loans of the banking sector dwindled by BDT 6.5 bn and aggregate non-performing loans stood at BDT 1,554 bn at the end of first quarter FY23-24, which was 9.93% of the total amount of loans.
Return on assets (ROA) and return on equity (ROE), two key indicators of banking sector’s profitability reached at 0.43% and 7.88% respectively in final quarter of FY23. In same quarter banking sector capital to risk weighted assets ratio (CRAR) declined by 4 basis points to 11.19% from 11.23% in the previous quarter, due to increase in classified loans in the banking sector.