Only eight local banks are in good condition, according to a Bangladesh Bank report.
The central bank's financial stability department recently prepared banks’ health index on the basis of June 2023-ending half-yearly financial performance.
According to the report, 16 banks, including eight local and eight foreign banks, were in good condition.
These banks are Prime Bank, Eastern Bank, NCC Bank, Midland Bank, Bank Asia, Shimanto Bank, Jamuna Bank, Shahjalal Islami Bank, Bank Alfalah, Woori Bank, HSBC, Commercial Bank of Ceylon, City Bank NA, Habib Bank, Standard Chartered Bank and State Bank of India.
The report also said 16 banks were in the green zone, meaning their financial health was good, while 29 banks were in the yellow zone, meaning their health was something in between good and fragile.
Nine banks, including four state-run ones, were in the red zone, meaning their financial health was fragile.
The nine banks are Bangladesh Commerce Bank, Padma Bank, Basic Bank, National Bank of Pakistan, National Bank, Janata Bank, Agrani Bank, Rupali Bank and AB Bank.
The yellow zone contains two state-owned commercial banks, Bangladesh Development Bank and Sonali Bank, 19 conventional private commercial banks and eight Shariah-based islamic Banks.
The 19 conventional banks are IFIC Bank, Meghna Bank, One Bank, United commercial bank, NRB Bank, NRB commercial bank, Mercantile Bank, Mutual Trust bank, Dutch-Bangla bank, Premier Bank, BRAC Bank, Southeast Bank, The City Bank, Trust Bank, SBAC Bank, Modhumoti Bank, Dhaka Bank, Uttara Bank and Pubali Bank.
The eight Shariah-based banks are First Security Islami Bank, Islami Bank Bangladesh, Social Islami Bank, Al Arafah Islami Bank, Standard Bank, Union Bank, Exim Bank and Global Islami Bank.
The report said that the yellow zone banks needed supervisory attention due to relative deterioration of their health in comparison to the industry average.
It also said that special attention was required for the banks falling in the red zone.
The report compiled all banks under a common platform using the international Camels rating system.
The Camels is used by bank supervisory authorities to rate financial institutions according to six factors represented by its acronym: capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk.
A rating of 1 is considered the best, while a rating of 5 is considered the worst.
The banks in both the red and yellow zones need supervisory attention, the report said.
Meanwhile, the health of 38 banks deteriorated during the review period of December 2020 to June 2023, while 16 banks' health improved, according to the BB report, which comes at a time when mergers and acquisitions of weak banks are in discussion.
Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and ICB Islamic Bank are excluded from the analysis because their data sets are different from the rest.
On the other hand, Bengal Commercial Bank, Citizens Bank, Community Bank Bangladesh and Probashi Kallyan Bank are not taken into account due to lack of historical data.
