Bangladesh Banking & Financial Services Q4 2018
As well as facing one of the world's highest non-performing loan (NPL) ratios and continued need for bail-outs for state-owned banks, Bangladesh went into Q418 amid immense political uncertainty as national elections could become a flashpoint forinstability. Asset quality is deteriorating while liquidity is under pressure due to low interest rates, which have encouraged borrowingbut prompted savers to look elsewhere for higher yields. If banks start rebuilding their loan loss provisions to prevent systemic crisis,they will face a significant reduction in profitability that will be reflected in the value of banking stocks, which are the biggest singlesector on the Dhaka Stock Exchange. The sector is so fragile that any significant event, such as major political unrest or aconstitutional crisis arising from the elections, could send the banking sector into a dangerous tailspin.
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