Local banks’ overseas branches post higher profit

The net profit of seven overseas branches run by three Bangladeshi banks climbed more than 23 percent year-on-year to $5.30 million last year, central bank data showed.

Two state-run commercial banks – Sonali and Janata – and private commercial lender AB Bank perform their international banking services through seven full-fledged branches in the UAE and India.

According to the Bangladesh Bank Stability Report 2022, the performance of the branches was mostly fluctuating.

Customer deposit increased 24.73 percent year-on-year to $343.64 million last year. It was $275.50 million in 2021.

Loans and advances rose $3.90 million to $98.22 million.

In 2022, the branches recorded a notable increase in total assets, which stood at $463.82 million.

A 55.12 percent increase was observed in cash and balance kept with the central bank as it rose to $291.96 million.

However, the balance with other banks and financial institutions declined 52.37 percent to $32.07 million last year.

Property, equipment and other assets surged 113.94 percent to $41.56 million, the BB said. 

Overall, the total asset of the branches in 2022 was 25.60 percent higher than a year earlier.

The return on assets decreased to 1.14 percent from 1.28 percent in 2021, partially due to an increase in the total asset.

The return on assets of Janata Bank's UAE operation was 0.87 percent in 2022. It was 2.65 percent for AB Bank's India operation and 2.31 percent for Sonali Bank's operation in the neighbouring country.

The BB report said although the overseas branches are running in a smooth way, prudent monitoring is required to ensure proper compliance by the branches in order to avoid any potential risk.

It said as the overall financial health and banking activities of the branches represented a very insignificant portion of parent banks' aggregate balance sheet exposures, no significant financial threat was observed in 2022.

The branches have been brought under the AML-CFT (Anti-money Laundering and Counter-terrorism Financing) regime to strengthen their compliance culture.

Apart from the three banks, 20 lenders provide overseas banking services to collect remittances and carry out other activities through 28 exchange houses, five representative offices and six subsidiary companies.