Bank lending in Bangladesh remained largely stagnant during the first half of 2026, with the loan portfolios of a significant number of lenders either contracting or showing only marginal growth as the banking sector faced increasing pressure from rising classified loans.
According to Bangladesh Bank data, outstanding loans and advances held by the country’s 61 scheduled banks increased by only 1.77 per cent between December 2025 and June 2026. The total rose from around Tk 17.77 lakh crore to Tk 18.09 lakh crore over the six-month period.
Bank-wise figures show that at least 14 banks either reduced their loan books or recorded little meaningful growth during the period. The trend was particularly visible among several large lenders.
Sonali Bank recorded the sharpest contraction. Its outstanding loans declined by 9.85 per cent, or Tk 9,399 crore, falling from Tk 95,381 crore in December to Tk 85,983 crore in June.
Jamuna Bank’s loan portfolio fell by 8.86 per cent, while NRBC Bank recorded a 7.05 per cent decline. Dutch-Bangla Bank, one of the country’s largest private-sector lenders, saw its outstanding loans decrease by 2.93 per cent, from Tk 44,884.35 crore to Tk 43,568.58 crore.
Several other banks also reported reductions in their loan books. Eastern Bank’s loans fell by 2.38 per cent, Prime Bank’s by 1.55 per cent, Agrani Bank’s by 0.90 per cent and Standard Bank’s by 0.54 per cent. Rajshahi Krishi Unnayan Bank recorded a 1.27 per cent decline, while BASIC Bank’s loans fell by 1.02 per cent.
Banks undergoing merger-related processes also recorded relatively weak loan growth. Janata Bank’s loan portfolio increased by 3.03 per cent during the six months, while Rupali Bank’s grew by 1.46 per cent.
The performance of several large banks is significant because the overall growth in lending was supported by a relatively small number of lenders. As a result, the modest expansion across the banking sector does not reflect a broad-based increase in credit activity.
Community Bank Bangladesh recorded the highest percentage growth, with its loan portfolio increasing by 50.12 per cent. However, the rise came from a comparatively small base, with loans increasing from Tk 1,088 crore to Tk 1,634 crore.
Uttara Bank expanded its lending by 13.68 per cent, while Bengal Commercial Bank recorded 12.35 per cent growth and Citizens Bank 9.55 per cent.
In absolute terms, City Bank posted the largest increase among the banks mentioned. Its loan book grew by Tk 4,086 crore, representing an 8.14 per cent rise.
Classified loans rise faster than lending
The slowdown in credit expansion has coincided with a deterioration in the quality of bank assets. Classified loans across the banking system increased from Tk 5.57 lakh crore in December to Tk 6.07 lakh crore in June, representing an 8.85 per cent increase within six months.
Consequently, classified loans accounted for 32.78 per cent of total outstanding loans in June, compared with 30.60 per cent in December.
The figures present a difficult situation for lenders. Overall loan growth has remained weak while troubled loans have increased much more rapidly. This combination can encourage banks to adopt a more cautious approach towards new lending as they seek to manage existing credit risks.
The latest Bangladesh Bank data also show that credit growth differed significantly between the public and private sectors. Private-sector lending increased by 1.78 per cent between April and June, while public-sector lending fell by 10.91 per cent.
Credit flows to different economic activities were also uneven. Trade loans increased by 4 per cent during the quarter, but term loans rose by only 0.48 per cent. Working-capital financing declined by 0.47 per cent, while lending to the construction sector fell by 3.17 per cent.
These figures indicate that the slowdown is not uniform across all forms of bank financing. While certain areas, particularly trade, continued to receive additional credit, other forms of financing used for business operations and longer-term investment remained subdued.
Investment in government securities surges
Instead of significantly expanding their loan books, banks increased their holdings of government securities, including Treasury bills and bonds.
Investment in these instruments rose by 21.53 per cent over the six months to June, increasing from Tk 6.15 lakh crore to Tk 7.47 lakh crore. The pace of growth was considerably higher than that of bank lending during the same period.
Banks also increased their borrowing from Bangladesh Bank. Such borrowing rose by 29.54 per cent, from Tk 1.77 lakh crore in December to Tk 2.29 lakh crore in June.
The latest quarterly figures point in the same direction. Bank investment increased by 11.45 per cent, substantially faster than the growth in credit.
Taken together, the figures suggest that banks are continuing to deploy and manage large volumes of funds, but a growing share is being directed towards government securities and liquidity management rather than an expansion of lending to the wider economy.
The trend also reflects the pressure created by the rapid increase in classified loans. Banks have to balance the need to maintain liquidity and manage existing problem assets with the demand for fresh credit from businesses and other borrowers.
For the banking sector, the challenge is therefore not simply to increase loan disbursements. Improving the quality of existing assets, recovering troubled loans and controlling the risks associated with new lending are equally important. The data up to June show that, amid weak credit growth and rising classified loans, banks are taking a more cautious approach to expanding their loan portfolios.
