Struggling SIBL ReportsQ2 Loss of Tk321 crore due to mounting NPL issues and financial troubles
Social Islami Bank (SIBL), one of Bangladesh's leading financial institutions, is facing financial challenges due to a combination of factors, including deteriorating asset quality, loan irregularities, liquidity shortages, and economic pressures.
In the April-June quarter of 2025, SIBL reported a consolidated loss of Tk321 crore, a stark contrast to the Tk80 crore profit it made during the same period the previous year [1]. The loss was primarily due to a decline in interest income, arising from a rise in non-performing loans (NPLs), and high borrowing costs [2].
The bank's liquidity crunch is further aggravated by a current account deficit of Tk3,400 crore with Bangladesh Bank, a significant amount relative to the bank's size [2]. Internal audits have uncovered serious loan irregularities, including breaches of the single borrower exposure limit and investment-to-deposit ratio, during the previous management, contributing to financial instability [2].
SIBL's classified investment jumped by 13 times to Tk23,633 crore compared to the previous year, according to the audited statement for 2024 [3]. The bank was also required to keep provisions against investment worth Tk22,359.72 crore, but it maintained only Tk1,366 crore [3].
These issues have led to a provision shortfall of Tk20,994 crore as of 31 December 2024 [6]. The bank's share price edged up by 1.23%, closing at Tk8.20 last Thursday at the Dhaka Stock Exchange (DSE) [7]. However, the loss per share for the quarter was Tk2.93, and for the six-month period, it was Tk4.33 [4][7].
Inflationary pressures and a tightening monetary policy have reduced domestic credit demand, worsening the bank’s lending environment [2]. The bank's shareholders have been affected by these losses, as the earnings per share (EPS) for the same period last year were Tk0.33, contrasting sharply with the negative EPS in 2025 [5].
In August 2022, the Bangladesh Bank dissolved the board of directors of SIBL and formed a new five-member board [8]. The bank has been under the control of the S Alam Group, a business conglomerate with a history of alleged irregularities and corruption, since 2017 [9].
In conclusion, SIBL's financial difficulties are a result of a combination of deteriorating asset quality, loan and governance irregularities, a strained liquidity position, and economic pressures that have suppressed credit demand and earnings. These factors have led to sharply reduced net interest income and significant losses.
References: 1. Bangla Tribune 2. Dhaka Tribune 3. Financial Express 4. Daily Star 5. New Age 6. Bangla Tribune 7. Dhaka Tribune 8. Bangla Tribune 9. Dhaka Tribune
The economic pressures and strained liquidity position of Social Islami Bank (SIBL) have led to a significant decrease in net interest income and accumulation of substantial losses in the finance industry. The bank's loan irregularities during the previous management, including breaches of the single borrower exposure limit and investment-to-deposit ratio, have contributed to this financial instability, impacting business operations within the banking-and-insurance sector.
