Bruised by inflation, foreign exchange volatility, and a surge in non-performing loans, Bangladesh’s banking sector has nonetheless held its ground — emerging as the country’s lone financial engine in a year of global and domestic disruption.
With the capital market still lacklustre, banks have shouldered the full weight of financing both government and private enterprise, keeping the wheels of development turning.
In 2024, the sector showed remarkable grit, navigating macroeconomic turbulence while maintaining liquidity and credit flow across industries. This resilience was not just structural — it was strategic. As investor sentiment cooled, the private sector leaned harder on banks, reaffirming their role as the backbone of Bangladesh’s economic recovery.
Profits Surge as Six Banks Break Records
Performance-wise, several private commercial banks surged ahead, with six institutions — BRAC Bank, Pubali Bank, Jamuna Bank, Bank Asia, Shahjalal Islami Bank, and Dhaka Bank — surpassing their entire 2024 profit figures within just the first nine months of 2025 — a testament to operational strength and depositor confidence.
Combined, these banks earned Tk 7,411 crore from investments, mostly in treasury bonds — a roughly 70 percent increase from the previous year.
Moreover, BRAC Bank and City Bank crossed the Tk 1,000 crore profit mark in 2024 for the first time in the country’s banking history, while others recorded their highest-ever earnings.
Sustainability Ratings Reflect Governance Strength
Recognizing this momentum, Bangladesh Bank named 10 banks and two non-bank financial institutions (NBFIs) as sustainable performers in its Sustainability Rating 2024. The banks include BRAC Bank, City Bank, Dutch-Bangla Bank, Eastern Bank, Jamuna Bank, Mutual Trust Bank, NCC Bank, Prime Bank, Pubali Bank, and Shahjalal Islami Bank. Among NBFIs, IDLC Finance and IPDC Finance retained their positions.
These 12 institutions were evaluated across five key indicators: the sustainable finance index, CSR activities, green project financing, the core banking sustainability index, and banking services coverage.
Banks with strong risk management, healthy capital adequacy, and low non-performing loans scored higher, while metrics like Tier-1 capital to risk-weighted assets, CMSME loan share, large-loan exposure, and agent banking reach added depth to the rankings.
The sector also saw moderate asset growth, with total assets rising 9.65% in 2024 to Tk 26,29,775 crore — reversing declines from 2021 and 2022, according to the central bank’s Financial Stability Report.
Liquidity remained sound, with the Advance-to-Deposit Ratio at 81.55% — well below the 87% ceiling — while strong deposit growth continued to fuel rising loan demand.
In a year defined by uncertainty, Bangladesh’s banking sector didn’t just endure — it evolved. With sustainability, profitability, and resilience converging, it has reaffirmed its role as the country’s principal engine of financial stability and growth.
Governance: The Line Between Success and Struggle
“Some banks in the banking sector have performed very well, while others have done quite poorly,” said Syed Mahbubur Rahman, CEO and Managing Director of Mutual Trust Bank.
“The main factor behind weak performance in some banks is governance — banks with better governance have performed better. Those where the Board of Directors interfered in day-to-day operations have not done well,” he said.
On the other hand, banks that followed proper corporate governance practices have consistently performed well, and their non-performing loans have remained within limits, he added.
The sluggish pace of NPL recovery has also contributed to the accumulation of NPLs.
Additionally, the Russia-Ukraine war, global tensions, local currency depreciation, and other domestic economic challenges are straining business operations and reducing borrowers’ repayment capacity — further accelerating the banking sector’s NPLs in Bangladesh, according to Bangladesh Bank’s Financial Stability Report.
Even though some banks have underperformed, the banking sector has made a major contribution to the economy — especially as the capital market remains small and its role in capital formation negligible, he said.
The bond market is also nearly non-existent. Since independence, industrialisation, employment, and per capita income growth have been supported 80–90 percent by the banking sector, directly and indirectly, he clarified.
Banks have facilitated letters of credit for trade, enabled remittance inflows, and provided refinancing during Covid-19.
From agricultural loans to start-up financing, the sector has stepped in whenever funding was needed. Most CSR spending in the country also comes from banks.
“The banking sector is definitely playing a significant role in overall economic activity,” he said.
“The banks are contributing to sustainable finance too,” added Rahman, also a former president of the Association of Bankers, Bangladesh (ABB).
Some banks are doing extraordinarily well in increasing their sustainable and green financing.
Toufic Ahmad Choudhury, a former Director General (DG) of the Bangladesh Institute of Bank Management (BIBM), said that although there were high NPLs in the banking sector “under the carpet,” which were not previously disclosed, the poor health of some banks is now clear. “This is a positive sign that the problem of some banks is now diagnosed.”
Most importantly, the central bank is focusing on the banking sector to ensure good governance in every bank. “It is another good sign that good governance is now being ensured across the sector,” he said.
Regarding the merger of five banks, he said that if new leadership can boost public confidence and the government does not interfere unnecessarily, only then can the banks be revived.
Depositor Confidence and the Road to Reform
Banking sector deposits registered an average annual growth rate of 7.69 percent by the end of 2024, compared to 10.15 percent the year prior, according to Bangladesh Bank data. Deposit growth slowed mainly due to high inflation and a confidence crisis in several banks.
Inflation in Bangladesh has hovered above 9 percent since May 2023, and stood at 8.36 percent in September 2025.
Among asset managers who invest in bank shares and analyse their performance most closely is Mir Ariful Islam, CEO and Managing Director of Sandhani Asset Management.
He said some banks saw significantly higher deposit growth due to better governance, even as overall deposit growth slowed amid high inflation.
People shifted funds from poorly governed banks to stronger ones. Despite lower deposit rates than treasury yields, confidence in well-managed banks drove this trend.
“To reform the sector, Bangladesh Bank’s ongoing initiatives must be properly implemented. Bank boards should be composed of professionals,” he added.
Bangladesh Bank has introduced several reforms to improve governance and ensure accountability.
Ahsan Habib
