Ten banks accounted for more than 72% of Bangladesh’s banking sector’s total non-performing loans (NPLs) as of June, highlighting the concentration of financial distress among a small group of lenders, The Daily Star reported, citing Bangladesh Bank data.

Total NPLs across the banking sector reached BDT6,065.55bn ($49.2bn) in June, of which BDT4,395.27bn was held by Islami Bank Bangladesh (DSE: IBBL), Janata Bank, Agrani Bank, IFIC Bank (DSE: IFIC), National Bank (DSE: NBL), AB Bank (DSE: ABBANK), First Security Islami Bank (DSE: FIRSTSBANK), EXIM Bank (DSE: EXIMBANK), Social Islami Bank (DSE: SIBL) and Union Bank (DSE: UNIONBANK).

Islami Bank Bangladesh had the largest volume of bad loans at about BDT989.14bn, equivalent to 52.15% of its disbursed loans. Its NPLs increased by BDT67.99bn during the first six months of the year from BDT921.15bn at the end of December.

A significant portion of Islami Bank’s problem loans is linked to S Alam Group, which took control of the lender in 2017. The group and associated companies accounted for about 80% of the bank’s total lending, according to the report. The bank came under Bangladesh Bank supervision after the Awami League government was ousted in August 2024.

Janata Bank had the second-largest NPL portfolio at BDT757.29bn, representing 75% of its disbursed loans. About 80% of its bad loans are concentrated among its 20 largest defaulters, including Beximco Group, S Alam and AnonTex. Beximco alone accounted for about BDT250bn of exposure.

First Security Islami Bank reported NPLs of BDT606.45bn, or 97% of its disbursed loans, while EXIM Bank’s bad loans stood at BDT380.53bn, equivalent to nearly 71% of its loans.

Other heavily distressed lenders included Agrani Bank, with BDT321.33bn of NPLs, National Bank with BDT282.76bn, IFIC Bank with BDT285.20bn, Social Islami Bank with BDT297.99bn and Union Bank with BDT271.34bn. AB Bank’s NPLs stood at BDT203.25bn.

The concentration of bad loans has raised concerns over weak governance, lending irregularities and excessive exposure to large corporate borrowers. Bangladesh Institute of Bank Management Director General Md Ezazul Islam said economic factors accounted for about 10 percentage points of the banking sector’s 30% NPL ratio, while wilful defaults, irregularities and corruption accounted for the remaining 20 percentage points.

He said banks need to reduce their reliance on a small number of large borrowers and diversify their loan portfolios.