With only 0.63 percent market share in terms of branches, foreign banks operating in Bangladesh grabbed 21 percent or Tk1180 crore of the total banking sector profits of Tk5623 crore in 2006.

The local banks with 99.37 percent market share made the rest 79 percent profits. Among the local banks, performance of the nationalised commercial banks (NCBs) in earning profit was comparatively poor.

Sources said high service charges, spread on interest rates for deposit and credit, and low classified loans help the nine foreign banks earn huge profits every year.

The spread is the difference between the interest rates fixed for deposit and credit.

According to Bangladesh Bank statistics, the total operating profit of 48 local and foreign commercial and specialised banks stood at Tk5623 crore last year. The profit of four NCBs was 19 percent or Tk1107 crore, while the profit was Tk3291 crore or 58 percent for 30 private commercial banks (PCBs) and 0.76 percent or Tk43 crore for the specialised banks.

All types of banks are performing their financial activities through 6412 branches across the country. Among these branches, the market share of foreign banks was only 0.63 percent, while the NCBs' share was 51 percent, PCBs' 26 percent and that of specialised banks was 21 percent in 2006.

The total deposit of all the banks was Tk1,86,063 crore last year. In terms of deposit, the foreign banks' share was 8 percent, NCBs' 35 percent, PCBs' 51 percent and specialised banks' 6 percent.

In 2006, the total credit of all the banks stood at Tk1,54,364 crore. Of the amount, foreign banks disbursed 6 percent loan, NCBs 34 percent, PCBs 52 percent and specilised banks 8 percent.

The statistics showed that the profit share of NCBs was comparatively low, although they have majority market share in terms of deposit, credit and operational network.

Although the main source of the banks' profit is interest, the NCBs failed to get expected income against huge loan disbursement due to default loans. As a result, they had to keep their interest against bad loans undersuspension.

Such an amount with all the

banks stood at Tk4619 crore last yearagainst their bad loans.

The NCBs' interest suspense was Tk3154 core, PCBs' Tk717 crore, specialised banks' Tk712 crore and that of foreign banks was Tk35 crore in 2006.

The foreign banks grabbed considerable profit due to their huge interest rate spread between deposit and credit.

The interest rate spread of foreign banks was 8.12 percent, while the NCBs' 5.36 percent, PCBs' 5.45 percent and that of specialised banks was 3.25 percent in 2006.

Private bank sources said foreign banks earn huge profit as they charge more interest rate to their borrowers than the interest rate they offer to their depositors.

There is a huge difference between local and foreign banks in the case of taking service charges and commission. For example, an NCB usually charges Tk250 for opening an L/C (letter of credit), while a foreign bank charges Tk3200.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Monday took the issue to Energy Adviser Tapan Chowdhury.