Janata sinks into colossal losses

Janata Bank logged in losses of Tk 3,132 crore in the first nine months of 2018, a stunning reversal in fortune for the state-owned bank as loan irregularities finally take a toll.

The bank was Tk 268 crore in profit at the end of December last year.

At the beginning of the year, Bangladesh Bank unearthed two big loan scams of AnonTex and Crescent involving a total of Tk 8,300 crore.

Both the large clients turned defaulters in June, sinking the bank into losses to the tune of Tk 1,589 crore -- for the first time in five years.

The losses continued to pile up, leading to capital shortfall of Tk 3,923 crore in September. In contrast, at the end of December the bank was in capital surplus of Tk 26 crore.

“The spike in default loans accounts for the huge losses,” said a senior executive of Janata, adding that the bank has to maintain huge provisioning from its profit against the default loans.

As a result, the bank has no provisioning shortfall but losses, he added.

Janata maintained provisioning of Tk 5,840 crore as of September, the highest among the four state-owned commercial banks.

Between the months of January and September, Janata's default loan ratio soared to 31.31 percent, in contrast to 18.22 percent at the end of last year, according to data from the central bank.

As of September, Janata's total outstanding loans stood at Tk 14,376 crore, the highest among the state banks.

Bangladesh Bank found that the bank lent to 31 business groups violating the single borrower exposure limit. Janata's single borrower exposure limit is 15 percent of its capital.

Of the 31 groups, 11 turned defaulters.

Janata is the only state-owned commercial bank out of four to have registered losses this year. Sonali made the highest profit of Tk 873 crore, followed by Agrani at Tk 36 crore and Rupali at Tk 16 crore.

Courtesy: The Daily Star Business Jan 03, 2019