Equity Analysis /

BANGLADESH BANKS: Central bank price-cap circulars make for more challenging operating environment

    Waseem Khan
    Waseem Khan

    Equity Research Analyst, Financials, Consumer and Pharmaceuticals (Bangladesh)

    Tellimer Research
    31 May 2018
    Published byTellimer Research
    Pre-election populism will take its toll on margins. Central bank circulars (1,2) released recently implement limitations on re-pricing and loan-deposit spreads with immediate effect. As per the circulars, banks can raise lending rates for variable rate loans only once a year (with three months’ notice), with a repricing cap of 0.5% for term loans and 1.0% for working capital loans. Also, the maximum loan-deposit spread (excluding credit card and consumer loans) has been cut by 100bps to 4.0%.