AB Bank (ABBANK) financial analysis: 56% NPL, negative equity, Tk16,875 crore provision gap (Oct 2026)

Investment considerations: a deposit franchise kept running by Bangladesh Bank, with most loans classified and equity of minus BDT 48.6bn

AB Bank PLC, listed on the Dhaka Stock Exchange since 1983 [5 p.41], was Bangladesh's first private commercial bank. It runs 105 branches, 47 sub-branches and 192 agent outlets (2023) [5 p.40], a branch in Mumbai, an offshore banking unit and four consolidated subsidiaries: AB Investment Limited, AB Securities Limited, Cashlink Bangladesh Limited and AB International Finance Limited in Hong Kong [4 p.8] [1 p.22]. At 30 June 2026 the standalone balance sheet showed gross loans of BDT 364.8bn, deposits of BDT 334.9bn, borrowings of BDT 45.4bn and shareholders' equity of minus BDT 48.6bn [1 p.7] [1 p.20].

The filings describe a bank whose loan book has largely stopped paying. Classified loans rose from BDT 95.1bn (30.00%) in 2023 to BDT 222.8bn (67.14%) in 2024 [5 p.40] [4 p.79]. The auditor of the 2024 accounts, M M Rahman & Co., found BDT 23,225.73 crore of classified loans against the BDT 22,279.14 crore the bank reported, a required loan provision of BDT 19,406.34 crore and only BDT 2,531.62 crore maintained: a shortfall of BDT 16,874.72 crore [4 p.1]. The opinion was not modified because Bangladesh Bank (BB) gave a waiver by letter DOS(CAMS)1157/41/(Dividend)/2025-3092 of 21 May 2025 [4 p.1]. Even without that provision, the bank lost BDT 19.2bn in 2024, BDT 37.1bn in 2025 and BDT 16.3bn in the first half of 2026 [4 p.16] [1 p.29] [1 p.9].

Business and story: a trade-finance bank that was thinly profitable for a decade before its loan book broke in 2024

AB Bank makes money the way a Bangladeshi commercial bank normally does: it takes term and savings deposits, lends to corporate and trade customers, and earns fees on letters of credit, guarantees, foreign exchange and remittances. In 2023 it handled imports of BDT 54.4bn, exports of BDT 41.3bn and inward remittance of USD 343m [5 p.39]. Loans are concentrated in Dhaka: urban Dhaka branches held BDT 256.3bn of the BDT 364.8bn book at Jun-2026, Chattogram BDT 53.8bn [1 p.20].

For most of the last decade the bank was large and thinly profitable. Total assets grew from BDT 246.3bn in 2014 to BDT 434.3bn in 2023, but profit after tax never exceeded BDT 1.3bn and was BDT 18m in 2018 and BDT 168m in 2019 [5 p.39]. Classified loans already reached 33.07% in 2018; they were brought down to 14.15% by 2021 with provisions of BDT 4.3-5.1bn a year, then rose again to 20.23% in 2022 and 30.00% in 2023 [5 p.40]. Return on equity stayed between 0.08% and 2.95% from 2017 to 2023 [5 p.39].

2024 broke the model. Classified loans more than doubled to BDT 222.8bn, interest income fell from BDT 25.5bn to BDT 9.1bn as classified loans stopped accruing interest, and the bank lost BDT 19.2bn [4 p.79] [4 p.16]. Deposits fell by 9.0% to BDT 322.9bn [4 p.79] [13]. Equity fell from BDT 24.5bn to BDT 4.8bn [5 p.39] [3 p.7], and the losses continued through 2025 and 2026 [1 p.29] [1 p.9].

Asset quality: 55.7% of loans classified, 96.2% of them bad/loss, and SMA loans tripled in six months

The classified-loan ratio is the centre of the story. It was 18.28% in 2019, 14.15% in 2021, 30.00% in 2023 and 67.14% in 2024 on the bank's own highlights page [5 p.40] [4 p.79]. From the note 7.4 classification table, classified loans were BDT 203,234m (56.53%) at Dec-2025 and BDT 203,283m (55.73%) at Jun-2026 [1 p.20] [13]. The fall from 2024 is not recovery: total loans rose by BDT 27.7bn in 2025 [13], and the auditor had noted that BDT 1,444.91 crore of non-banking assets taken over on powers of attorney had been netted against loans in 2024 [4 p.1]; non-banking assets fell from BDT 17.7bn to BDT 3.3bn during 2025 [3 p.7] [1 p.7].

Almost all of the classified book is in the worst category. Bad/loss loans were BDT 195.6bn at Jun-2026, 96.2% of classified loans [1 p.20] [13]. The unclassified book is also moving the wrong way: the special mention account rose from BDT 26.0bn at Dec-2025 to BDT 84.5bn at Jun-2026, from 7.2% to 23.2% of loans, while standard loans fell from BDT 129.5bn to BDT 76.0bn [1 p.20] [13]. SMA loans are overdue but not yet classified, so this is where the next classifications would come from.

Coverage is thin. Specific provisions were BDT 14,880.8m at both dates, 7.3% of classified loans, and general provisions BDT 8.1bn [1 p.25] [13]. Interest suspense, which holds interest charged but not taken to income, rose from BDT 44.0bn to BDT 50.3bn in six months [1 p.20]. Even counting provisions and suspense together, BDT 130.0bn of classified loans had no cover at Jun-2026 [13]. The specific provision balance was cut during 2025 by BDT 2,340.6m of write-offs and a BDT 1,305.8m transfer to the general provision [1 p.25].

Audit and forbearance: a BDT 16,874.72 crore loan provision shortfall, 35 times equity, kept out of the 2024 accounts by a BB waiver

The 2024 audit report is the most complete public statement of the gap between the bank's books and the rules. M M Rahman & Co. signed it on 31 May 2025 [4 p.8]. The opinion is unmodified, but the auditor drew attention to six matters, stated that BB had given a waiver by letter of 21 May 2025, and wrote: "Our opinion is not modified in respect of these matters" [4 p.1]. The same report, in the section on other legal requirements, states that provisions have not been made for loans and other assets that are in the auditor's opinion doubtful of recovery, and that CRAR was not maintained adequately [4 p.8].

The matters are: classified loans understated by BDT 946.59 crore, with the auditor's figure of BDT 23,225.73 crore equal to 69.99% of loans; a loan provision shortfall of BDT 16,874.72 crore; BDT 1,444.91 crore of non-banking assets booked on registered powers of attorney rather than court certificates; a BDT 130.19 crore provision shortfall on the Pinnacle Global Fund investment; and a BDT 609.81 crore mark-to-market loss on repo'd government securities recorded as a deferred asset instead of in profit and loss [4 p.1] [4 p.2]. It also lists non-compliance with CRR, SLR, CRAR (3.47% against 12.5%) and the single-borrower exposure limit [4 p.2].

Booked in full, the BDT 168.7bn loan shortfall alone would have turned Dec-2024 equity of BDT 4.8bn into about minus BDT 164bn, before tax effects [13]. The deferred MTM loss is still on the books: government securities of BDT 4,234.3m at Jun-2026 include BDT 3,490.1m of 'Deferred MTM Loss', 82.4% of the line [1 p.18] [13]. For 2025 the corpus holds no audit report. The H1 2026 statements refer to a later BB letter, BSD-06/6000(36)/AB-Ka/2026-330 of 29 April 2026, which records a provision shortfall of BDT 566.51 crore against investments, of which BDT 135.51 crore relates to Pinnacle Global Fund [1 p.27]. The same note says the provision requirement for letters of guarantee in excess of BRPD Circular 06 of 2023 is determined under that letter [1 p.27]. The sentence in the filing is cut off after the Pinnacle figure, so we do not know the rest of the breakdown.

Line items: interest income has collapsed with the loan book while interest paid has not, so every quarter adds a loss

Interest income is driven by the performing loan book and the rate on it. Interest on classified loans is not taken to income but held in suspense under BRPD Circular 15 of 27 November 2024 [1 p.12]. As the classified share went from 30% to 67%, interest income fell 64.3% in 2024, from BDT 25,508.6m to BDT 9,118.6m [4 p.16] [13]. In Q2 2025 the quarterly figure was negative (minus BDT 4,870.9m), which we read as a reversal of interest accrued earlier; the statements do not explain it [1 p.9]. In H1 2026 it was BDT 1,449.7m, of which BDT 1,328.4m came from loans [1 p.30] — about 0.7% of the BDT 364.8bn book on an annualised basis (BDT 1,328.4m x 2 / BDT 364,783.8m).

Interest expense is driven by deposit volume and deposit rates, and since 2025 by borrowing from BB. It rose 36.3% in 2024 to BDT 28,108.0m [4 p.16] [13], and was BDT 16,875.8m in H1 2026, of which BDT 15,187.6m was on deposits (BDT 8,663.9m on fixed deposits) and BDT 1,562.7m on borrowings [1 p.30]. The cost of fund printed in the highlights rose from 6.76% in 2021 to 7.44% in 2023 and 9.38% in 2024 [5 p.39] [4 p.79]. The bank's own explanation of the H1 2026 net interest loss of BDT 1,542.61 crore is the 'increase of non-performing loans and significant increase of both deposit and borrowing interest rates' [1 p.12]. History-based sensitivity: in H1 2026 each 1pp on the cost of BDT 335bn of deposits is about BDT 1.7bn of interest expense for the half [13].

Investment income comes from treasury bills and bonds, perpetual and zero-coupon bonds and shares. It was BDT 3,917.8m in 2023 and BDT 4,920.2m in 2024 [4 p.16]. H1 2025 was depressed by BDT 1,712.2m of losses on treasury securities; in H1 2026 the loss was BDT 6.4m and treasury bond interest BDT 1,285.7m, so the line rose to BDT 1,660.9m [1 p.30]. The investment book includes BDT 2,760.0m of Beximco Limited zero-coupon bonds and BDT 2,700.0m of perpetual bonds of ONE Bank and Pubali Bank [1 p.19].

Fees, commission and exchange follow trade volumes: imports, exports and remittances. The line fell from BDT 2,021.2m in 2023 to BDT 1,792.5m in 2024 [4 p.16] and recovered to BDT 823.2m in H1 2026 from BDT 764.3m [1 p.9], of which LC commission was BDT 241.4m [1 p.31]. Operating expenses were BDT 6,443.6m in 2024, salaries BDT 3,202.7m of it [4 p.16]; H1 2026 opex fell to BDT 3,229.1m [1 p.9]. Provisions are small because the bank is not booking what the rules require: BDT 453.6m in 2024 and BDT 141.9m in H1 2026 against a BDT 168.7bn shortfall [4 p.16] [1 p.9] [13]. Tax is still charged (BDT 92.9m in H1 2026) despite the loss, on the Mumbai branch and minimum-tax rules [1 p.9] [1 p.26].

Funding: deposits have stabilised at BDT 335bn, but loans are 109% of deposits and BB support reached BDT 43.8bn

Funding is term-heavy. Fixed and other deposits were 79.9% of deposits at Jun-2026, current and savings accounts 19.7% [1 p.7] [13]. Savings deposits have drifted down from BDT 36.6bn at Dec-2024 to BDT 34.7bn, current accounts from BDT 33.9bn to BDT 31.3bn [3 p.7] [1 p.7]. Gross loans were 108.9% of deposits at Jun-2026 [13], which means the bank has to fund part of its loan book, and its losses, from outside its deposit base.

That outside money is Bangladesh Bank. Borrowings from other banks, financial institutions and agents rose from BDT 14.0bn at Dec-2024 to BDT 35.8bn at Dec-2025 and BDT 45.4bn at Jun-2026, of which BDT 43.8bn was from BB under 'Export Development Fund & Liquidity Support' [3 p.7] [1 p.23]. Cash and balances with BB fell from BDT 17.0bn to BDT 8.5bn over the same period [3 p.7] [1 p.7]. The 2024 auditor had already noted that the bank did not maintain CRR and SLR [4 p.2]. The H1 2026 cash flow shows the pattern: an operating outflow of BDT 3,106.4m, with deposits from customers adding BDT 3,359.6m and short-term borrowings BDT 9,663.8m [1 p.10].

Capital: CRAR of 3.47% at Dec-2024, and common equity has been negative since 2025

Solo CRAR stayed between 10.03% and 10.84% from 2017 to 2023, below the 12.5% requirement including the conservation buffer, with a capital deficit every year since 2017 (BDT 8.3bn in 2023) [5 p.40]. At Dec-2024 total capital was BDT 16,513.9m against required capital of BDT 59,498.2m: CRAR 3.47% and a shortfall of BDT 42,984m [4 p.68] [4 p.79] [13]. Tier-I capital was BDT 7,432.7m [4 p.68].

Since then the bank has lost a further BDT 53.3bn (BDT 37.1bn in 2025 and BDT 16.3bn in H1 2026) [1 p.29] [1 p.9], so common equity is negative and the regulatory capital base can only rest on the perpetual bonds (BDT 5,710.9m) and the amortising Tier-II bond (BDT 2,293.8m at Jun-2026) [1 p.24]. Neither interim statement in the corpus prints a CRAR for 2025 or 2026, so we do not quote one. Holders of the perpetual bonds include IFIC Bank, NCC Bank and The Premier Bank; the Tier-II bond is held by Sonali and Agrani; Janata held BDT 850m until Dec-2025 [1 p.24].

Ratios and peers: classified loans 60pp above NCC Bank and 12pp above IFIC in 2024, and cost of fund 2.04pp above IFIC

Returns. ROE was 1.6%-3.0% from 2020 to 2023 and ROA 0.1%-0.2% [13]; in 2024 the loss equalled 131% of average equity [13]. With equity now negative, ROE is not meaningful. Efficiency. Cost-to-income rose from 46.8% in 2020 to 54.9% in 2023 [13]; since 2024 operating income has been negative, so the ratio cannot be computed. Credit cost. The provision charge fell from 1.94% of average loans in 2020 to 0.14% in 2024 [13], while the classified ratio rose fourfold — the opposite of what the loan book needed. Growth. Loans grew 1.6%-8.3% a year [13]; deposits fell 9.0% in 2024 and grew 3.1% in 2025 [13]. Payout. The last distribution was a 2% stock dividend for 2023; the 2021 distribution included 2% cash [5 p.40].

Peers on the same label (FY2024). On 'Ratio of classified loans against total loans and advances' ABBANK printed 67.14%; IFIC Bank printed 54.97% on its 'Percentage of classified loan against total loans & advances', 12.17pp lower; NCC Bank's 'Non performing loans as % of total loans' was 7.32%, 59.82pp lower [4 p.79] [7 p.242] [8 p.183] [13]. On 'Cost of fund', ABBANK printed 9.38% against IFIC's 7.34% (2.04pp gap) and NCC Bank's 'Cost of fund (COF) (%)' of 8.51% (0.87pp gap) [7 p.242] [8 p.184] [13]. NCC Bank's CRAR was 15.14%, 11.67pp above ABBANK's 3.47% [8 p.183] [13]. For 2025, IFIC printed 61.47% and NCC 4.12%; ABBANK's Dec-2025 ratio from its note 7.4 table is 56.53%, not a printed highlights figure [7 p.242] [8 p.183] [1 p.20].

Market multiples, as facts. At BDT 4.4 the market value was about BDT 3.94bn [10] [13]. Book value per share was BDT -54.24 at Jun-2026 and EPS for H1 2026 BDT -18.18, so P/B and P/E are both negative and not meaningful [1 p.15]. The share traded at BDT 9.70 at end-2023 when NAV per share was BDT 27.87 [5 p.40].

Ownership and governance: sponsors held 31.21%, BDT 10.0bn is lent to sponsor-linked companies, and no dividend since 2023's 2% stock

Ownership. At Dec-2023 sponsors and directors held 31.21%, local institutions 22.79%, the general public 44.50%, the government 0.57% and foreign institutions 0.80% [5 p.34]. The then chairman was nominated by Pacific Industries Limited, which held 85.9m shares; other nominating shareholders were Hexagon Chemical Complex Limited and Emkay Holdings Limited [5 p.34]. The corpus holds no later shareholding pattern.

Related parties. The H1 2026 statements disclose term loans and bank guarantees to Pacific Motors Ltd. (BDT 2,741.5m) and Pacific Bangladesh Telecom Ltd. (BDT 7,255.4m), described as under a significant shareholder's joint control, and a lease with Pacific Industries Ltd., whose nominee sits on the board [1 p.13]. Loans and placements to the bank's own subsidiaries were BDT 3,104.4m [1 p.13].

Management. The H1 2026 statements were signed on 29 July 2026 by an acting managing director, the chief financial officer, the company secretary, an independent director and the chairman, and note that the managing director and CEO post was vacant for the 2026 reporting period [1 p.3] [1 p.31]. The Q1 2026 statements were signed by an acting MD & CEO, the vice chairman and the chairman [2 p.9].

Dividends. The bank paid stock dividends of 5% for 2019 and 2020, 5% (3% stock and 2% cash) for 2021, 2% stock for 2022 and 2% stock for 2023 [5 p.40]. Paid-up capital has been BDT 8,956.9m since 2024 [3 p.7] [1 p.7], so no shares were issued for 2024 or 2025. BB's SPCD Circular 06 bars any cash dividend where paid-up capital is below Tk2,000 crore and applies from the year ending 31 December 2026 [6 p.1]; ABBANK's Tk895.69 crore is 55.2% short of that line [13].

News flow (24 months, DSE). Board meetings for results were held on 30-Apr-2025 and 31-May-2025 (FY2024 and Q1 2025), 31-Jul-2025, 30-Oct-2025, 30-Apr-2026 (FY2025 and Q1 2026), 29-Jul-2026 and 29-Oct-2026; DSE announced spot-market periods from 24-Jun-2025 and 18-May-2026 [9]. We use no press reports in this note.

What's next: the first year-end under SPCD Circular 06, the FY2026 provision letter, the Tier-II bond maturity and LDC graduation in 2029

Nothing below is a forecast; each item is dated and sourced, with the line it moves.

Passed, outcome unknown. The board met on 29-Oct-2026 for the Q3 2026 results [9]; the statements are not yet in our corpus, so we do not quote them. The FY2025 accounts were considered at the board meeting of 30-Apr-2026 [9], but the audited FY2025 statements and audit report are also not in the corpus; the FY2025 loss of BDT 37.1bn used here comes from the retained-earnings note in the H1 2026 statements [1 p.29].

FY2026 accounts (around 30-Apr-2027). The FY2024 accounts relied on a BB waiver of 21-May-2025 [4 p.1], and the H1 2026 statements cite a BB letter of 29-Apr-2026 recording a BDT 566.51 crore investment provision shortfall (Pinnacle BDT 135.51 crore) and setting the guarantee provision rule [1 p.27]. What BB writes for FY2026 decides how much of the shortfall reaches equity, which is already negative.

Dividend year-end (31-Dec-2026). SPCD Circular 06 applies from the year ending 31 December 2026 [6 p.1]. With paid-up capital of Tk895.69 crore and negative retained earnings of BDT 69.8bn [1 p.7], no cash dividend is possible under it [13].

LDC graduation (24-Nov-2029). The UN General Assembly adopted the move of Bangladesh's graduation from 24 November 2026 to 24 November 2029 on 29 October 2026 in New York (30 October in Dhaka) [11] [12]. For AB Bank the link runs through trade fees: LC commission was BDT 241.4m in H1 2026 [1 p.31]. The later date pushes back any loss of LDC trade preferences for its export customers.

Risks: resolution, a provision catch-up, a negative spread, more classifications and dependence on BB funding

Each risk is tied to the line it moves; we put no probability on any of them.

Resolution. With CRAR at 3.47% in 2024 and equity negative since 2025 [4 p.2] [1 p.7], the bank is below every capital line in the filings. We have no filing that says BB has started any resolution step for AB Bank, and we put no probability on it; the share count and equity are the lines such a step would move.

Provision catch-up. The single largest number is the BDT 168.7bn loan provision shortfall the auditor measured at Dec-2024 [4 p.1] [13]. It is outside the accounts only because of a BB waiver.

Negative spread. Interest paid has run at more than ten times interest income in each of the last two half-years [13]. Each extra BDT 1bn of interest paid adds BDT 1bn to the loss; there is no margin to absorb it.

Next classifications. The SMA bucket rose by BDT 58.5bn in six months [1 p.20] [13]. If those loans move to classified, interest income would fall further, interest suspense would rise, and the provision gap would widen.

Liquidity. BB funding of BDT 43.8bn now exceeds the bank's cash and BB balances of BDT 8.5bn [1 p.23] [1 p.7]. Any change in its terms moves both interest paid and liquidity.

Key questions: the FY2025 audit, the next BB letter, the SMA bucket, BB funding and the sponsor-linked loans

FAQ

What is AB Bank's NPL ratio?

55.73% of loans were classified at 30-Jun-2026 and 56.53% at 31-Dec-2025 from the note 7.4 table; the bank's 2024 highlights printed 67.14% [1 p.20] [4 p.79].

Does AB Bank have a provision shortfall?

Yes. The 2024 auditor measured a loan provision shortfall of BDT 16,874.72 crore, waived for the accounts by BB letter of 21-May-2025 [4 p.1]. A BB letter of 29-Apr-2026 records a further BDT 566.51 crore shortfall against investments [1 p.27].

Is AB Bank's equity negative?

Yes: minus BDT 32.3bn at Dec-2025 and minus BDT 48.6bn at Jun-2026 (NAV per share BDT -54.24) [1 p.7] [1 p.15].

How much did AB Bank lose?

BDT 19.2bn in 2024, BDT 37.1bn in 2025 and BDT 16.3bn in H1 2026 on a standalone basis [4 p.16] [1 p.29] [1 p.9].

What is AB Bank's CRAR?

3.47% solo at Dec-2024 against 12.5% [4 p.2]; no later CRAR is printed in the statements in our corpus.

Can AB Bank pay a dividend?

Not a cash dividend under SPCD Circular 06 while paid-up capital (Tk895.69 crore) is below Tk2,000 crore [6 p.1]; the last distribution was 2% stock for 2023 [5 p.40].

Which results does this note use?

Standalone figures: the ten-year table to 2023, audited 2024 statements, the Dec-2025 comparatives and H1 2026 unaudited statements. The audited FY2025 statements and the Q3 2026 statements are not yet in our corpus.

Sources

1. AB Bank PLC unaudited consolidated and separate financial statements, six months to 30-Jun-2026 (includes 31-Dec-2025 balance sheet) · link · accessed 2026-10-31
2. AB Bank PLC unaudited financial statements, three months to 31-Mar-2026 · link · accessed 2026-10-31
3. AB Bank PLC unaudited financial statements, three months to 31-Mar-2025 (filed in the corpus as ABBANK_ANNUAL_2025; includes 31-Dec-2024 balance sheet) · link · accessed 2026-10-31
4. AB Bank PLC audited financial statements 2024 (auditor M M Rahman & Co.) · link · accessed 2026-10-31
5. AB Bank PLC Annual Report 2023 (ten-year performance, shareholding) · link · accessed 2026-10-31
6. Bangladesh Bank SPCD Circular No. 06, 23-May-2026, dividend declaration policy for banks (Bangla) · link · accessed 2026-10-31
7. IFIC Bank PLC Annual Report 2025 (peer: solo financial highlights, 2025 and 2024) · link · accessed 2026-10-31
8. NCC Bank PLC Annual Report 2025 (peer: five-year standalone information) · link · accessed 2026-10-31
9. DSE announcements via AnalystBro events: board meetings (LR16/LR19), interim results, spot-market notices, 2025-2026 · link · accessed 2026-10-31
10. AnalystBro price data (TradingView feed): DSE:ABBANK daily bars to 29-Oct-2026 · link · accessed 2026-10-31
11. The Daily Star, 'Bangladesh gets 3 more years for LDC graduation' (30-Oct-2026) · link · accessed 2026-10-31
12. The Business Standard, 'Bangladesh gets 3 more years before LDC graduation' (30-Oct-2026) · link · accessed 2026-10-31
13. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31