The country’s two first generation private sector lenders – Islami Bank and National Bank – suffered massive losses in the first nine months of 2026, driven by high non-performing loans and declining investment income.
Together, the two banks incurred losses of Tk6,303 crore during January-September, with Islami Bank accounting for Tk3,286 crore and National Bank Tk3,016.89 crore, according to their price-sensitive disclosures.
Both banks held board meetings on Thursday to approve their financial statements for the period. The nine-month results were published in newspapers yesterday to meet regulatory requirements. However, the full quarterly financial statements have yet to be published.
Islami Bank’s sharp reversal
Islami Bank Bangladesh reported consolidated profits of around Tk100 crore in the first nine months of 2025. A year later, however, it swung to a consolidated loss of Tk3,286 crore. On a standalone basis, excluding its subsidiaries, the bank incurred a loss of Tk3,302.57 crore.
According to its quarterly financial disclosures, the bank suffered a particularly severe setback in the July-September quarter, incurring a loss of Tk1,970.18 crore.
In an explanation of the significant variation in its financial performance, the bank attributed the decline mainly to lower investment income and higher profit payments on deposits.
“The decline in investment [income reflects] the continuing high level of classified or non-performing investments, mostly due to embezzlement of funds by connected parties against large legacy exposures and the consequent constraints on income recognition from such investments,” the bank said.
“Again, profit paid on deposits also increased despite the decline in the period-end deposit base,” it added.
Outlining measures to improve its financial health, the bank said it had undertaken various initiatives in line with recent Bangladesh Bank guidance to strengthen its capital base, improve asset quality, accelerate investment recovery and enhance income generation.
“These measures are expected to contribute positively to the bank’s future earnings,” it said.
Islami Bank’s net operating cash flow also deteriorated sharply in the nine months ended 30 September 2026, pushing its cash flow per share into negative territory at Tk36.54, reversing the positive position recorded earlier.
Explaining the negative cash flow, the bank said it had declined mainly because of deposit withdrawals under unusual circumstances during the third quarter.
In line with Bangladesh Bank’s regulatory guidance, the lender is taking steps to strengthen deposit mobilisation, maintain adequate liquidity and improve operating cash flow, it added.
In 2025, Islami Bank posted a profit of Tk136 crore but did not declare any dividend.
NBL’s losses continue to mount
National Bank, another private sector lender, incurred a loss of Tk3,016.89 crore in the first nine months of 2026. The loss nearly doubled from Tk1,448.42 crore in the same period of the previous year, when its loss per share stood at Tk4.50, according to its disclosures.
National Bank’s loss stood at Tk2,283.85 crore at the end of June 2026. This means it incurred a further loss of Tk733.04 crore in the July-September quarter.
Explaining the losses, the bank said it could not recognise interest income on some loans and advances because of their classification and non-recovery. It also incurred higher interest expenses on deposits and borrowings.
“Consequently, the period concluded with an operating loss, with significant deviations observed in earnings per share and net asset value. On the other hand, deposit withdrawals declined compared with the previous year due to the regaining of customers’ confidence,” it said.
Previous financial disclosures show that National Bank has been incurring substantial losses since 2022.
Over the four years and nine months through September 2026, its cumulative losses reached Tk11,914.17 crore. Of this, Tk8,897.28 crore was incurred over the four years from 2022 to 2025, while Tk3,016.89 crore came in the first nine months of 2026.
According to an earlier report by TBS, the bank resumed full banking services in mid-October as customers began withdrawing and depositing money and opening letters of credit.
Customers could once again withdraw money as needed from all branches and ATMs, while some branches also began accepting fresh deposits into business accounts.
Tk7,000cr liquidity support
National Bank has received Tk7,000 crore in liquidity support to restore normal banking operations, according to the report.
State-owned Sonali Bank provided the funds against a Bangladesh Bank guarantee. However, the central bank imposed several conditions on their use.
Under the conditions, deposits belonging to former or current directors of National Bank cannot be repaid using the funds. The money also cannot be used to disburse new loans.
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