Bangladesh banks see deepening losses despite tax payments

Bangladesh’s banking sector is experiencing worsening financial difficulties, as 40 of the country’s 62 commercial banks posted losses in their corporate tax filings for the 2025-26 fiscal year. This downturn mirrors deeper economic headwinds, including stagnant business activity and declining private-sector credit expansion. Although 22 banks still reported profits, their financial strength has eroded, and others continued to underperform despite fulfilling tax obligations.

The National Board of Revenue (NBR)’s internal review, shared with a local financial outlet, shows losses spreading across the sector. Of the 22 banks that remained profitable in 2025-26, 11 shifted to losses the following year. Meanwhile, 21 banks collectively recorded losses of about Tk 382 billion in 2026-27, excluding Bangladesh Krishi Bank, whose figures were not provided. The decline affects both state-run institutions like Janata Bank and long-standing private lenders.

A senior NBR tax official explained that banks still paid taxes even amid losses, partly through turnover tax and deductions from bond sales. Former commissioner Apurba Kanti Das added that corporate taxpayers face separate levies for business income and securities transactions, ensuring some payments continue regardless of profitability. However, the data indicates that declining earnings are reducing the sector’s ability to generate corporate income tax revenue.

Among the sector’s top taxpayers were state-owned Sonali Bank, Dutch-Bangla Bank, and private lenders such as BRAC Bank, along with Pubali Bank, HSBC, City Bank PLC, Eastern Bank, Agrani Bank, Shahjalal Islami Bank, Uttara Bank, and Prime Bank. Yet the assessment reveals a concerning trend: institutions that had previously been profitable are now struggling, pointing to systemic pressures within the industry.

The challenges extend beyond immediate financial results. Former Sonali Bank chairman Muslim Chowdhury identified deeper structural issues, including money laundering and unsecured lending practices. He observed that many loans were issued under project names but funds were siphoned and laundered overseas. When trust in banks like Islami Bank weakened, depositors redirected savings to Sonali Bank, which then allocated those funds into treasury bills and bonds to maintain profitability through treasury operations.