Banking Sector Reports Record Losses

Bangladesh Banking Sector Faces Record Losses as Bad Loans Surge

Bangladesh’s banking sector has fallen into record losses as loan fraud, rising defaulted loans and growing provisioning shortfalls continue to weaken banks’ financial health.

According to data from the central bank, the sector remained profitable until December 2024, when banks earned 0.43% against their assets and 8.70% against their capital. However, the situation deteriorated sharply as previously hidden non-performing loans began to surface following the change in government in August 2024.

By March 2025, defaulted loans had risen to more than Tk 1.82 lakh crore, while the provisioning shortfall stood at Tk 26,585 crore. As a result, the banking sector recorded an average loss of 0.18% against its assets and 3.99% against its capital.

The losses continued to increase throughout the year. By December 2025, losses against assets had reached 4.81%, while losses against capital stood at a staggering 243.90%. The sector’s total losses in monetary terms exceeded Tk 1.5 lakh crore.

Defaulted loans also surged to Tk 5.57 lakh crore in December 2025, while the provisioning shortfall exceeded Tk 1.91 lakh crore, further eroding banks’ capital.

Private-sector banks have been hit the hardest, with an average loss of 6.92% against assets in December 2025. State-owned commercial banks recorded losses of 0.32%, while specialized state-owned banks lost 2.80%. In contrast, foreign banks remained profitable, recording a 3.84% return against assets.

The situation worsened further in March, when defaulted loans climbed above Tk 6.45 lakh crore and the provisioning shortfall exceeded Tk 1.30 lakh crore.

The central bank has taken several measures to stabilize and recover the banking sector, but progress has remained slow as banks continue to struggle with bad loans, capital shortages and declining income.