Banking sector under pressure due to bad loans and risky credit, losses reach Tk 1.36 trillion

PNN News Desk. Dhaka

The country’s banking sector has come under severe financial pressure in 2025. According to the central bank’s recent report, several banks’ massive losses have pushed the entire banking industry into a net loss of Tk 1,36,666 crore at the end of the year.

According to the Bangladesh Bank’s Financial Stability and Monthly Review report, while the banking sector remained profitable over the past few years, a major shift has occurred in 2025. The sector made significant profits in 2022 and 2023, but profits declined in 2024. In the following year, assessment of the actual financial condition of several banks revealed a clearer picture of losses.

The central bank stated that as part of banking sector reform activities, the asset quality of several banks was evaluated by international audit firms. This assessment revealed the financial weakness and true condition of risky assets in some banks. Some of these banks are currently in the process of merger.

According to published financial statements, Islamic banking institutions have suffered the most losses. High credit risk, deterioration of asset quality, and financial irregularities have been reflected in their results. Several state-owned and private banks have also been included in the loss list.

On the other hand, some local and multinational banks have managed to maintain strong profitability. In particular, international banks along with some top private commercial banks posted notable profits, which helped reduce the overall loss level.

The report also highlighted a concerning rise in distressed loans. A large portion of total loans is currently in risky condition. These include classified loans, written-off loans, court-stayed loans, and restructured loans.

Economists say that while transparent assessment of the banking sector is positive in the long run, the large volume of risky loans and financial distress in weak banks could become a major challenge for the financial system. They stress stronger governance, effective supervision, and strict measures for loan recovery.

Bangladesh Bank said reforms will continue to ensure a more stable and sustainable banking sector. Necessary steps are also being taken to reduce risky loans and restore confidence in the financial sector.