The 12 new-generation banks are doing well despite the economic stagnation caused by the Covid-19 pandemic, with them owning 4.9% of the banking sector's total assets at the end of December 2020, up from 4.8% a year ago.
Loans accounted for 69.2% of these assets, down from 71.7% a year ago, said the Bangladesh Bank's latest financial stability report.
It said loan disbursements and deposits had grown at these banks.
Their performance in other indices, including default loans and provision maintenance, also improved at the end of 2020.
On the other hand, most of the scheduled banks performed poorly as they could not make expected profits for a long time.
This was because they were unable to invest their deposits due to low credit flow.
Default loans at the new-generation banks fell, reaching 7.8% at the end of December 2020.
Besides, their loans stood at 5.4% at the end of December 2020, up from 5.1% a year ago.
The new-generation banks are in a slightly better position in terms of loan disbursements compared to the overall banking sector, the central bank report said.
The amount of default loans in the banking sector was Tk99,205 crore at the end of June 2021, which was 8.18% of the disbursed loans.
The new generation banks were very careful about disbursing loans. The amount of their default loans was much less than that of all other banks as they had lent to good clients.
At the end of December 2019, default loans at all scheduled banks and the new-generation banks were 9.5% and 9.3% respectively.
The Bangladesh Bank report said all the new-generation banks had successfully maintained the required provisions at the end of December 2020, except for one.
It also said the ratio of provisions maintained by the new banks to their required provisions was 100.1% whereas the same for the banking sector was 99.8% at the end of December 2020.
Besides, the return on assets (ROA) of the new banks (0.9%) was much higher than that of the banking sector (0.3%) in the fiscal year 2019-20, it said.
It further said except for one bank, the profitability trend of the new banks was good.
The 12 new-generation banks were approved between 2012 and 2020.
Three of them – NRB Bank, Global Islami Bank, and NRB Commercial Bank – were founded by Bangladeshi expatriates.
The remaining nine were set up by local entrepreneurs. They are Union Bank, Meghna Bank, Midland Bank, Modhumoti Bank, Padma Bank, South Bangla Agriculture and Commerce Bank, Community Bank, Shimanto Bank, and Bengal Commercial Bank.
One of the 12 banks is Shariah-based, one is specialised, and the 10 others provide conventional banking services.
South Bangla Agriculture and Commerce Bank started its journey to bring a wave of change in agriculture and the rural economy.
At the end of 30 June 2020, its deposits stood at Tk6,676 crore, including loans of Tk5,905 crore. It operates 83 branches and 14 sub-branches.
Its Managing Director and Chief Executive Officer Mosleh Uddin Ahmed said they were working for the development of the marginalised people while most banks were focusing on corporate loans.
He said last year's agriculture loan disbursement was higher than the target and that hopefully would be the case this year as well.
The bank had opened branches in villages to serve the marginalised people, he said.
He also said they had introduced online banking and would start agent banking in October.
NRB Commercial Bank started operations in 2013, but its board was restructured in December 2017 on the order of the central bank due to various irregularities.
It has deposits of over Tk10.71 lakh crore, including loans of about Tk8.62 lakh crore. It has 83 branches and 450 sub-branches.
Its Managing Director and Chief Executive Officer Golam Awlia said they offer microfinance for new entrepreneurs in groups.
He said they had reached a record level in terms of deposits among the new-generation banks and were disbursing microfinance through non-governmental organisations.
"We will launch new products to expand our network," he added.