Banking leaders in Bangladesh are cautiously optimistic about a potential recovery in the sector in the new year, buoyed by anticipated post-election stability and policy predictability.
The year 2025 proved exceptionally challenging for Bangladesh’s banking industry. A combination of legacy administrative inefficiencies, misdirected lending, and systemic weaknesses accumulated over previous administrations weighed heavily on the sector. These pressures were further exacerbated by economic stagnation, which restricted the flow of private-sector credit amid a high-interest-rate environment. Additionally, instances of irregularities in certain banks triggered public concern, prompting intervention from the central bank.
A key indicator of the sector’s strain was the persistent contraction of the net interest margin (NIM), which significantly pressured banks’ profitability.
Private-Sector Credit and Liquidity Trends
According to data from Bangladesh Bank, private-sector credit grew by only 6.23% by the end of October 2025—the slowest pace in two decades. Other key indicators are summarised below:
| Indicator | Status End-2025 | Commentary |
|---|---|---|
| Private-sector credit growth | 6.23% | Lowest in 20 years |
| Average Net Interest Margin (NIM) | Declining | Pressures profitability |
| Investment in government securities | Rising | Investors seek risk-free returns |
| Central bank foreign currency purchases | $3.14 billion | Injected ~400 billion BDT liquidity |
Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank (MTB) PLC, described 2025 as “an extremely challenging year.” He expressed hope that post-election economic activity would revive, while cautioning that liquidity pressures are likely to persist. He emphasised the role of government revenue mobilisation in easing these pressures, particularly as public borrowing can impact private-sector lending.
Mohammad Ali, CEO of Pubali Bank PLC, adopted a more positive outlook. He suggested that political stability following the February elections could restore investor confidence and stimulate economic activity. Nevertheless, he warned that banks must manage liquidity prudently to ensure lending reaches productive sectors.
Dr. Md. Touhidul Alam Khan, CEO of NRB Commercial Bank, highlighted the importance of sectoral transformation. He recommended strengthening internal audit frameworks, adopting risk-based supervision, and implementing expected credit loss (ECL) models under IFRS 9 to restore confidence in the banking system through professional and politically neutral management.
A senior treasury official at a leading private bank (speaking anonymously) cautioned that even with policy support, extending repayment periods for high-risk borrowers could temporarily intensify liquidity pressures. “2025 was a learning year for us,” he noted. “Banks will approach new lending more cautiously.”
Overall, banking leaders concur that a combination of policy transparency, political stability, and robust governance structures could guide Bangladesh’s banking sector toward a sustainable post-election revival.