The slowdown in economic activity is beginning to take a toll on the banking sector as businesses hold back on investment, weakening credit demand and slowing interest income – the main source of earnings for most banks.
In response, many banks have increasingly turned to government securities to generate income.
Meanwhile, depositors are shifting money away from weaker, riskier banks towards stronger institutions, creating an uneven distribution of liquidity across the sector.
Of the 36 banks listed on the stock market, 30 had declared their January–September financial results as of November 1. Of these, 22 reported profits and eight posted losses.
Earnings remained concentrated among a handful of banks, while several others incurred substantial losses.
An analysis of the nine-month results of the 30 banks shows that their combined net loss widened to 40.91 billion taka in January–September 2026, from 915 million taka in the same period of 2025.
Although combined profits among banks reporting positive earnings rose by 29.4% to 93.18 billion taka, aggregate losses increased by 83.9% to 134.09 billion taka.
The contrasting performance comes amid a prolonged slowdown in private-sector credit growth, which stood at just 4.75% in August 2026, according to Bangladesh Bank data.
By comparison, credit to the public sector expanded by 32.45%, while government borrowing grew by 36.40%.
The divergence suggests that credit growth is increasingly being driven by public-sector borrowing rather than private investment and business expansion.
With businesses reluctant to borrow amid economic uncertainty, high borrowing costs and energy shortages, banks have increasingly turned to government securities to deploy surplus funds.
Treasury bills and government bonds offer relatively predictable returns without exposing banks to the same level of default risk associated with private-sector lending.
The shift has become more important as weak private investment and rising non-performing loans put pressure on traditional interest income.
However, investment income and net interest income offer different insights into a bank's underlying performance. A bank may report higher profits even as its core lending operations remain under pressure.
Among the profitable lenders, BRAC Bank posted the highest earnings at 17.63 billion taka, up from 12.12 billion taka a year earlier.
Investment income accounted for approximately 53.6% of BRAC Bank's total operating income, compared with 21.4% from net interest income.
While investment income primarily comes from government securities, net interest income largely reflects lending activities. The figures indicate that investments contributed more than traditional lending to the bank's operating income during the period.
Pubali Bank ranked second, with earnings of 15.85 billion taka, compared with 9.11 billion taka in the same period of 2025.
City Bank reported a profit of 8.56 billion taka, followed by Prime Bank at 6.85 billion taka and Eastern Bank at 6.74 billion taka.
City Bank was even more reliant on investment income, which accounted for around 72% of its operating income. Net interest income contributed less than 8%, underscoring the much larger role of investment activities in generating its operating income.
On the other side of the ledger, Islami Bank Bangladesh emerged as the largest loss-making bank, posting a loss of 32.86 billion taka against a profit of 998 million taka a year earlier.
National Bank recorded the second-largest loss at 30.17 billion taka, while AB Bank and IFIC Bank posted losses of 28.17 billion taka and 25.07 billion taka, respectively.
Rupali Bank also saw a substantial deterioration, with its loss widening to 9.96 billion taka from 1.58 billion taka.
The bank's interest expenses exceeded its interest income during the January–September period. Its net interest loss of 2,000 crore taka nearly wiped out income from investments, commissions and other operating activities. This left the bank with an operating loss before provisions of 933.40 crore taka and a net loss of 995.92 crore taka.
Of the 30 banks analysed, 18 improved their financial results year-on-year, while 12 recorded a deterioration. The number of loss-making banks also rose to eight from seven.