Pubali Bank Posts Second-Highest Half-Year Profit Among Private Banks

Private sector lender Pubali Bank delivered a strong financial performance in the first half of the year, reporting the second-highest after-tax profit among Bangladesh’s listed private commercial banks. According to the bank’s half-yearly financial statements, it earned a net profit after tax of BDT 6.85 billion during the January-June period, reflecting an increase of BDT 1.07 billion, or approximately 18.5 per cent, compared with BDT 5.78 billion recorded during the corresponding period last year.

The improved earnings were driven primarily by a sharp rise in income from investments in Bangladesh government Treasury bills and bonds. While the country’s banking sector has continued to face relatively subdued private-sector credit demand, Pubali Bank benefited from deploying a substantial portion of its excess liquidity into government securities, where returns remained favourable.

Financial disclosures show that income from Treasury bills and bonds climbed to BDT 20.93 billion during the first six months of the year, up from BDT 15.67 billion in the same period a year earlier. This represents an increase of BDT 5.26 billion, or nearly 34 per cent, making investment income the single largest contributor to the bank’s improved profitability.

Banking industry sources said Pubali Bank attracted roughly BDT 100 billion in additional customer deposits during the first half of the year. With demand for new loans remaining relatively weak across the market, much of this fresh liquidity was channelled into government securities instead of conventional lending. The bank also recently obtained Primary Dealer status from Bangladesh Bank, enabling it to participate more actively in the primary market for government securities and expand its holdings of Treasury instruments. The enhanced investment capacity has further strengthened its earnings from fixed-income assets.

Although investment income rose sharply, the bank’s core lending business presented a more mixed picture. Interest income from loans increased modestly to BDT 34.70 billion during January-June, compared with BDT 33.46 billion in the same period last year, representing a year-on-year increase of BDT 1.24 billion.

However, the higher interest rate environment also pushed up the cost of deposits. Interest expenses on customer deposits reached BDT 29.47 billion during the reporting period, up from BDT 26.95 billion a year earlier. The additional BDT 2.52 billion in funding costs outpaced the growth in loan interest income, resulting in a decline in the bank’s net interest income by BDT 1.29 billion compared with the previous year’s first half.

Despite the pressure on its core interest margin, the substantial increase in investment income more than compensated for the decline in net interest earnings, allowing overall profitability to improve significantly.

A review of financial results released by listed banks indicates that BRAC Bank remained the most profitable private commercial bank during the first half of the year, posting after-tax earnings of BDT 14.23 billion. Pubali Bank ranked second, while City Bank secured third position with a net profit of BDT 5.27 billion during the same period.

Commenting on the performance, Pubali Bank Chief Financial Officer Mohammad Liton Mia said the bank’s total deposits have already exceeded BDT 1 trillion. He noted that deposits increased by around BDT 100 billion over the past six months, creating a substantial pool of investable funds. Given the limited demand for credit in the market, the bank strategically allocated a significant share of those funds to government Treasury bills and bonds, where returns proved attractive. He added that the newly acquired Primary Dealer certification had expanded the bank’s ability to invest in government securities, contributing positively to earnings.

Pubali Bank closed the previous financial year with an after-tax profit of BDT 10.90 billion. By the end of June this year, it had already generated around 63 per cent of that full-year profit, underscoring the strength of its first-half performance. Whether the bank can maintain this momentum during the second half of the year will largely depend on the trajectory of credit demand, interest rates and investment yields in Bangladesh’s evolving banking landscape.