Banks’ High Operating Profit Conundrum | 2018-01-14 |

Banks’ High Operating Profit Conundrum

Md. Zonaed Emran

    13th January, 2018 10:07:53 printer

Banks’ High Operating Profit Conundrum

Banks have made hefty operating profit in 2017 as reported in the Media. The profit data show that banks operating profits are impressive compared to the previous year. Although the economic situation of the country and business condition were not so conducive in 2017, however, the banking sector sees astonishing profit. As far as banks’ operating profit is concerned, it doesn’t indicate banks’ real profit. Banks’operating profit is calculated as gross profit minus operating expenses. However, operating profit is not real profits of the banks because provision for loans and advances and corporate tax are not deducted from operating profit. After maintaining required amount for provisioning from income and deduction of corporate tax, bank’s net/actual profit is calculated. We should not feel complacent seeing banks’high operating profit. Suppose if  bank A makes 200 crore as operating profit, however after making required provisioning for loan and advance say 230 crore it may go for loss. So we should not judge any bank’s condition good/bad by seeing its operating profit.


Md. Zonaed Emran MTB, CHO, Dhaka