Pubali Bank Climbs to Second in Half-Year Profit

Dhaka: Pubali Bank has emerged as the second most profitable private commercial bank in Bangladesh during the first six months of the current year, supported largely by a sharp rise in earnings from investments in government treasury bills and treasury bonds.

According to the bank’s published half-year financial statements, Pubali Bank posted a post-tax profit of Tk 6.85 billion between January and June, compared with Tk 5.78 billion during the corresponding period last year. The increase of Tk 1.07 billion, representing an annual growth of approximately 18.5 per cent, reflects the bank’s ability to capitalise on changing market conditions despite subdued private-sector lending.

A detailed review of the financial results indicates that the strongest driver behind the improved earnings was the substantial increase in income generated from government securities. With demand for private-sector credit remaining relatively weak during the first half of the year, the bank channelled a significant portion of its excess liquidity into treasury bills and treasury bonds, which offered both safety and attractive returns.

Income from investments in government treasury bills and bonds rose to Tk 20.93 billion during the January-June period, up from Tk 15.67 billion in the same period a year earlier. This represents an increase of Tk 5.26 billion, or nearly 34 per cent, making it the single largest contributor to the bank’s higher profitability.

Banking sector sources said Pubali Bank attracted around Tk 100 billion in fresh deposits during the first six months of the year. As a result, its total customer deposits have now exceeded Tk 1 trillion, marking a significant milestone for the institution.

However, the rapid growth in deposits was not matched by a similar increase in lending opportunities. With private-sector borrowing remaining below expectations, the bank opted to invest the surplus funds in government securities instead of expanding its loan portfolio aggressively. The strategy enabled the bank to earn stable investment income while maintaining a conservative risk profile.

The bank also recently received recognition from Bangladesh Bank as a Primary Dealer, a status that allows it to participate more actively in the government’s debt market. The designation enhances the bank’s ability to purchase, hold and trade government bonds directly, potentially creating additional opportunities to expand investment income in the coming years.

While investment income recorded robust growth, the bank’s core lending business faced pressure from rising funding costs.

Interest income from loans increased modestly to Tk 34.70 billion during the first half of the year, compared with Tk 33.46 billion in the corresponding period last year. The increase of Tk 1.24 billion reflected gradual growth in lending income.

The cost of deposits, however, rose at a considerably faster pace. Interest expenses on customer deposits climbed to Tk 29.47 billion, up from Tk 26.95 billion a year earlier, representing an increase of Tk 2.52 billion.

As a result, the bank’s net interest income declined by Tk 1.29 billion compared with the same period last year. Nevertheless, the higher returns from treasury investments more than compensated for this decline, enabling the bank to deliver stronger overall profitability.

Among all listed banks, BRAC Bank recorded the highest post-tax profit during the January-June period, earning Tk 14.23 billion. Pubali Bank secured second place, while The City Bank ranked third with a post-tax profit of Tk 5.27 billion.

Pubali Bank’s Chief Financial Officer, Mohammad Liton Mia, said the bank’s deposit base had already crossed Tk 1 trillion, supported by approximately Tk 100 billion in new deposits during the first half of the year. He explained that weaker loan demand prompted the bank to invest a substantial share of its excess liquidity in treasury bills and treasury bonds. He added that obtaining Primary Dealer status has further strengthened the bank’s capacity to invest in government securities, contributing significantly to higher income and profitability.

The latest results also underline the bank’s strong momentum compared with last year’s performance. Pubali Bank reported an annual post-tax profit of Tk 10.90 billion for the previous financial year. By earning Tk 6.85 billion in just the first six months of the current year, the bank has already achieved nearly 63 per cent of last year’s full-year profit.

Although the second half of the year may present different economic conditions, the bank appears well positioned to maintain healthy earnings if deposit growth remains steady, private-sector lending gradually recovers, and investment returns from government securities continue to provide strong support. The first-half results demonstrate how prudent liquidity management and a carefully balanced investment strategy can offset pressure on traditional banking income during periods of softer credit demand.