According to preliminary statistics, the 29 PCBs earned Tk 2,242 crore in operating profit in 2004.

Islami Bank Bangladesh Ltd achieved the highest operating profit in 2004 with Tk 293 crore followed by Prime Bank with Tk 137 crore.

Banking sources, however, said, operating profit figures do not show the real financial health of banks as government tax, provision and capital requirements are deducted from the pre-tax income to get net profit figure.

Banking sources attributed higher interest income to the operating profit growth. Sources said, PCBs do not reduce lending rate proportionate to the deposit rate creating a scope for interest income.

As the banks reduced deposit rate more than the lending rate last year, the spread between lending and deposit rates were reduced to 5.3 percent in June 2004 which was 6.6 percent in December 2002, the central bank sources said.

Sources said, in spite of efforts from different quarters, the spread between lending and deposit rates is still high. Ideally the spread should be two to three percent, the central bank sources added.

The net interest income of the banks rose to Tk 16.6 billion in 2003 from Tk 6.3 billion in 1997 and the increase was significant in case of PCBs and foreign commercial banks.

Sources said, PCBs will need one or two weeks to give full picture of profits.