The Hongkong and Shanghai Banking Corporation (HSBC) Bangladesh registered a profit close to Tk 1,000 crore in 2023, its highest on record, making it one of the most profitable banks in the country.
The British multinational bank attributed it to a rise in both interest income and investment income from treasury bills and bonds.
The profit amounted to Tk 999 crore, soaring 70 percent year-on-year. It was Tk 587 crore in 2022.
Meanwhile, net interest income rose 6 percent to Tk 929 crore, the foreign bank said in financial statements that it had made public yesterday.
Its income from investments in treasury bonds shot up almost fourfold to Tk 806 crore.
However, its income from commissions dropped 21 percent to Tk 636 crore.
“We continue to build strength across Asia. The set of results shows that our strategy is working,” said the bank in an email reply yesterday.
“Our international connectivity remains our biggest differentiator – for businesses, communities, and the customers we serve,” it added.
HSBC announced its massive profit hot on the heels of multinational Standard Chartered Bangladesh (SCB) last month declaring the biggest profit of the banking sector in the country till date.
SCB said its profit had gone up 41 percent year-on-year last year, riding on higher interest income and earnings from investments in treasury bills and bonds.
The profit amounted to Tk 2,335 crore in 2023 whereas it was Tk 1,655 crore in 2022, according to its financial reports.
Among the local banks, Dutch-Bangla Bank recorded a profit of around Tk 800 crore, one of the highest among private banks, posting a growth of nearly 42 percent.
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HSBC, which began its banking operations in Dhaka in 1996, said it increased its investments in treasury bonds to reap the benefits of their high yields.
However, it reduced its loans and advances.
At the end of the year, HSBC had 34 percent more treasury bills and bonds than what it had in 2022.
It was to the tune of Tk 11,647 crore whereas it was Tk 8,683 crore in the previous year.
The loan portfolio decreased 3.77 percent to Tk 21,709 crore.
The foreign bank, however, recorded a hike of almost 17 percent in its classified loans, which reached Tk 699 crore.
Of the classified loans, Tk 499 crore was “bad loans”, Tk 129 crore “substandard” and the rest “doubtful”.
The bank remitted a profit of Tk 113 crore to its head office in 2023 whereas it was Tk 272 crore in the preceding year.
The bank said there was an ambiguity around the inclusion of banking and non-banking financial institutions within the scope of maintaining a worker’s profit participation fund under Bangladesh Labour Act, 2006.
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As per the law, employers need to provide 5 percent of their net profit to the worker’s participation fund. However, it is in contradiction with the Bank Company Act, 1991.
The ambiguities are yet to be clarified and therefore, the probability of a legal obligation for payments out of the fund is low at the current stage, for which no provision has been made for the same.
However, as long as the issue is not resolved, HSBC Bangladesh is maintaining sufficient retained earnings to meet any future liability, which was estimated at Tk 305 crore.
