Pubali Bank emerged as the second most profitable private commercial bank in Bangladesh during the first six months of the year, driven largely by strong returns from investments in government treasury bills and treasury bonds. The bank reported a post-tax net profit of Tk 685 crore between January and June, representing an increase of Tk 107 crore, or approximately 18.5 per cent, compared with Tk 578 crore earned during the same period a year earlier.
An analysis of the bank’s half-yearly financial statements indicates that the primary driver behind this earnings growth was the substantial increase in income generated from government securities. The strategy reflects a broader shift across Bangladesh’s banking sector, where excess liquidity and subdued private-sector borrowing have encouraged banks to allocate more funds to low-risk government instruments instead of expanding their loan portfolios.
With demand for private-sector credit remaining relatively weak, Pubali Bank redirected a significant share of its surplus funds into treasury bills and treasury bonds. These government-backed investments provided stable and predictable returns, helping the bank offset mounting pressure on its traditional interest income.
The financial statements show that income from treasury bills and treasury bonds climbed from Tk 1,567 crore in the first half of the previous year to Tk 2,093 crore during the corresponding period this year. This represents an increase of Tk 526 crore, or around 34 per cent, making treasury investments the single largest contributor to the bank’s improved profitability.
The bank also recorded strong growth in deposits. According to bank officials, approximately Tk 10,000 crore in fresh deposits were mobilised during the first six months of the year, pushing total deposits beyond the significant milestone of Tk 100,000 crore. Although higher deposits typically create greater lending capacity, the subdued appetite for private-sector borrowing meant that much of these additional funds were channelled into government securities instead.
This approach allowed the bank to utilise excess liquidity efficiently while generating reliable income from virtually risk-free investments. The strategy also strengthened the bank’s balance sheet during a period when many lenders have been grappling with slower credit expansion.
Another notable development during the period was Pubali Bank’s recognition by Bangladesh Bank as a Primary Dealer. This status enables the bank to participate directly in primary auctions of government treasury bills and bonds, while also expanding its ability to purchase, hold and trade these securities in the secondary market. The designation is expected to create additional opportunities for treasury investment and could support future earnings if government securities continue to offer attractive yields.
Despite the rise in overall profitability, the bank continued to face pressure from higher funding costs.
Interest income from loans increased modestly to Tk 3,470 crore during the January-June period, compared with Tk 3,346 crore in the corresponding period last year, reflecting an increase of Tk 124 crore.
However, interest expenses on customer deposits rose much more sharply. Deposit interest costs reached Tk 2,947 crore, up from Tk 2,695 crore a year earlier, marking an increase of Tk 252 crore. As a result, the bank’s net interest income declined by Tk 129 crore compared with the previous year.
Ordinarily, such pressure on net interest income would weigh on profitability. In Pubali Bank’s case, however, the strong performance of its treasury investment portfolio more than compensated for the decline, enabling the bank to maintain healthy earnings growth.
Among Bangladesh’s listed banks, BRAC Bank remained the most profitable private-sector lender during the first half of the year, posting a post-tax profit of Tk 1,423 crore. Pubali Bank ranked second, while The City Bank secured third place with a post-tax profit of Tk 527 crore. The rankings underline Pubali Bank’s ability to deliver robust financial performance despite a challenging operating environment for the banking industry.
Chief Financial Officer Mohammad Liton Mia said the bank attracted nearly Tk 10,000 crore in new deposits during the first six months, taking total deposits above Tk 100,000 crore. He explained that weaker demand for loans led the bank to invest a substantial portion of its excess liquidity in treasury bills and treasury bonds. He also noted that t