Risky investments and the nation’s stock market downturn caused 31 banks to experience unrealized losses totaling Tk 3,600 crore in 2024. The loss was computed on paper as a result of the drop in market prices, even though the banks did not sell shares. State-owned banks incurred the largest losses of these, although private banks were also unable to escape losses. Foreign banks, however, were exempt from losses if they refrained from investing in the stock market.
Analysts indicate that the primary cause of the banks’ losses is inadequate performance or significant investments in ‘junk stocks’. A case in point is the Beximco Green Sukuk bond. Following the political shift in August 2024, the value of this bond plummeted by nearly 50% when Salman F. Rahman, the owner of the Beximco Group, was arrested. Furthermore, several banks experienced losses even after investing in struggling institutions like ICB Islamic Bank and People’s Leasing.
Most banks have been compelled to set aside provisions due to these losses. Nevertheless, three banks—Mercantile Bank, BRAC Bank, and Prime Bank—have reported gains from their stock market investments.
Janata Bank has suffered the largest loss, approximately Tk 4 billion. The losses for this bank stem from investments in Beximco Sukuk Bonds, Bangladesh Fixed Income Fund, Summit Power, and Best Holdings. Additionally, the bank holds junk shares valued at around Tk 50 billion in its portfolio.
Sonali Bank has recorded the second highest loss after Janata Bank, amounting to Tk 398 billion. Eastern Bank has faced a loss of Tk 353 billion, while Southeast Bank has incurred a loss of Tk 326 billion. AB Bank, Exim Bank, National Bank, and Agrani Bank have also reported losses exceeding Tk 200 billion each. Moreover, Uttara Bank, NCC Bank, Rupali Bank, NRB Commercial Bank, and Shahjalal Islami Bank have acknowledged losses ranging from Tk 100 to Tk 200 billion.
Bangladesh Academy for Securities Market Director General Toufiq Ahmed Chowdhury emphasized that banks must exercise caution when investing in the stock market. It is inappropriate to invest in shares that carry the risk of uncertain returns compared to deposits. He further stated, “Investing in junk stocks is unacceptable in any circumstance. This requires trained and professional personnel.”
Market stakeholders have pointed out that the banks’ losses highlight their poor portfolio management and lack of expertise. They are primarily hiring experienced officers in loan management to make investments in the stock market. However, the stock market is an entirely different domain, where specialized knowledge is crucial.
Analysts argue there are other factors contributing to the losses, even though the DSEX index dropped 16% in 2024. Even in a down market, competent portfolio managers may generate profits. They think that banks might suffer greater losses in the future as a result of the absence of competent management.
