Foreign Banks in Bangladesh See Profit Fall 38% in H1 While Treasury Bets Lift Domestic Rivals

Bangladesh's nine foreign commercial banks just had their weakest half year in recent memory, with combined net profit falling 38% to Tk2,321 crore in January to June 2026. A few kilometres away in balance sheets across the same banking sector, many domestic listed lenders posted their best results in years, propped up almost entirely by one thing, bets on government securities.

• Nine foreign banks and their 67 branches earned Tk2,321 crore in H1 2026, down 38% from Tk3,738 crore in the second half of 2025.
• Pre-tax profit fell 18.4% year on year, as weak trade activity and energy shortages cut into import and export financing.
• Meanwhile, 16 of 28 listed domestic banks grew profits, mostly on treasury investment income rather than lending.
• Foreign banks still carry far healthier loan books, a 6.5% bad loan ratio against a sector-wide ratio above 32%.

A sharp drop for the foreign banks

According to Bangladesh Bank data, the nine foreign commercial banks operating through 67 branches in Bangladesh earned a combined Tk2,321 crore in net profit during the first half of 2026, down from Tk3,738 crore in the second half of 2025, a drop of Tk1,417 crore. Measured against the same period a year earlier, January to June 2025, profit fell by about 17.5%, from Tk2,815 crore. Pre-tax profit told a similar story, down 18.4% year on year and 17.3% from the preceding six months, with returns on both assets and equity easing alongside it.

Bangladesh Bank and bankers pointed to three forces behind the slide. Trade activity stayed weak, leaving fewer income generating opportunities for banks that specialise in financing large corporates and export oriented firms. Higher global commodity prices pushed up the foreign currency bill for imports even as import volumes fell. And continuing gas and electricity shortages disrupted factory production, which fed through into less import and export financing business for the banks that handle a large share of it.

"When the NPL ratio tops 30% and distressed assets exceed half of total assets, losses become inevitable," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank, describing the broader pressure on the banking sector.

A very different story for domestic banks

The contrast with many domestic listed banks is stark. Of the 28 listed banks that had released unaudited H1 results, 16 grew their profits year on year, five earned less, six posted wider losses, and one slipped into loss. But the engine behind most of the gains was not lending. It was treasury investment income, largely from government securities, as banks sitting on surplus cash and facing sluggish private sector credit demand parked more of it in treasury bills and bonds instead.

BRAC Bank posted the strongest result among large lenders, Tk1,423 crore in net profit, up 57%, with investment income up 25% to Tk2,556 crore. City Bank's profit jumped 75% to Tk527 crore, also on a 15% rise in investment income. Dutch-Bangla Bank's profit surged 321%, the fastest growth of any listed bank, to Tk442 crore, even as its net interest income fell 21%, underscoring how much of the gain came from treasury bets rather than core lending. Pubali Bank, Eastern Bank and Prime Bank all posted double digit profit growth on the same pattern.

Not every bank benefited. Islami Bank Bangladesh swung to a consolidated loss of Tk1,316 crore, from a Tk67.4 crore profit a year earlier, citing higher profit paid out on deposits and lower investment income. Losses also widened at IFIC, National, Rupali, AB, Premier and ICB Islamic banks, lenders generally carrying heavier bad loan burdens.

Why foreign banks still look healthier on paper

Despite the profit drop, foreign banks remain in a stronger structural position than most of the sector. Their non performing loan ratio rose to 6.5% from 6.1% a year earlier, but that is still a fraction of the more than 32% bad loan ratio weighing on the banking sector as a whole, a gap BD Financial Review has tracked in detail as the central bank pushes banks to clean up distressed debt. Foreign banks' capital adequacy ratio stood at 41.21%, with Tier 1 capital around 39.4%, both multiples of the regulatory minimum, and liquid assets made up close to half of their total assets of Tk3,10,621.3 crore.

Foreign banks also still punch above their weight in trade finance. They processed $3.95 billion in export receipts, 18.6% of the national total, and facilitated $4.62 billion in import payments, more than 13% of the total, despite holding only around 4% of the sector's deposits. Their loan book grew just 0.7% over the year, to Tk48,704 crore, a sign of how cautious they have stayed while domestic banks leaned into government securities instead.

Bank group or bank	H1 2026 net profit	Change
Foreign banks (9, combined)	Tk2,321 crore	down 38% half on half
Dutch-Bangla Bank	Tk442 crore	up 321%
City Bank	Tk527 crore	up 75%
BRAC Bank	Tk1,423 crore	up 57%
Eastern Bank	Tk439 crore	up 25%
Pubali Bank	Tk685 crore	up 19%
Prime Bank	Tk433 crore	up 6%
Islami Bank Bangladesh	loss of Tk1,316 crore	from a Tk67.4 crore profit

What it means for you

For savers and depositors, the divergence is mostly reassuring rather than alarming. Foreign banks' profit dip comes from thinner trade financing margins, not from credit losses, and their capital and liquidity positions remain among the strongest in the sector, so deposits there are not at elevated risk. If you are comparing where to park a fixed deposit, it is still worth checking current offers across banks with the FDR rate comparison tool rather than assuming foreign banks pay more simply because they are considered safer.

For borrowers and business owners, the bigger signal is that domestic banks' recent profit growth is not coming from more lending. If anything, parking money in treasury bills instead of loans suggests banks remain cautious about private sector credit risk, which can mean tighter underwriting and slower approvals even at banks reporting strong headline profits. Businesses seeking financing may find foreign banks, despite their profit slide, still the more consistent counterparties for trade heavy transactions, given their far lower bad loan ratio and deep capital buffers.