There was no abrupt volatility in liquidity during the April to June quarter owing to the easy monetary policy adopted by the Bangladesh Bank, according to the central bank’s financial stability assessment report that was released on Tuesday.
The industry maintained a strong capital position, which is much higher than the minimum regulatory requirement, it said.
The lockdowns around the globe took a heavy toll on the country’s export growth, which recorded a sharper decline than imports and thus widened the country's current account deficit.
However, a pickup in exports near the end of the quarter is expected to ease the pressure on the current account balance in the coming days.
As the debt servicing capacity of borrowers eroded amidst the COVID-19 crisis, banks' profitability was on the decline, as per the report.
While gross default ratio decreased mainly due to the BB's policy relaxation to tackle the adverse impact of COVID-19, strict monitoring of stressed assets would be key to maintaining asset quality once the relaxation is over, it also said.
According to the report, the capital base known as capital to risk-weighted assets ratio of 23 banks would fall below the minimum regulatory requirement if the top three borrowers of the entities turn into defaulters.
“Like other economies, the Bangladesh economy is facing an unprecedented shock due to the worldwide outbreak of the COVID-19 pandemic.”
To overcome the possible negative impact of the pandemic on the economy, the BB has taken a host of instant and proactive measures that facilitated the attainment of 5.2 per cent GDP growth last fiscal year amidst the pandemic, the report added.
