Business Reporter

Prime Bank Limited performed well in the first half despite the difficult economic environment with an increase in operating Profit by 102% to Tk. 138.78 Million compared to the same period last year. The Bank also made its mark in efficiently managing its loan portfolio by keeping the Classified Loans and Advances at 1.98% being one of the lowest in the Banking Sector of the country, says a press relea

The Board of Prime Bank Limited takes the privilege to welcome you all to the Fifth Annual General Meeting and has the pleasure to present the Fifth Annual Report of the Bank along with the Annual Account and Auditors Report for the year 1999.

i) Bangladesh Economy-an Overview
Bangladesh is pursuing a prudent monetary and fiscal policy in order to achieve higher economic growth as well as maintaining macro-economic stability. The country has been largely successful in implementing the rehabilitation programs to make up the colossal damage caused by the devastating flood of 1998 and achieved 5.2 percent GDP growth in FY 1999 as against 5.7 percent in the previous year. The inflation rate has come down significantly to 7.2% at the end of November 1999 mainly due to bumper crop production. The monetary and credit policy for FY 2000 has been formulated with the objective of keeping foreign exchange reserves at a satisfactory level and rate of inflation at a tolerable limit. Adoption of measures like massive agricultural credit disbursement and increased input supply have contributed a lot to bumper crop production in FY 1999. Similar measures have also been undertaken to maintain higher growth in agriculture in current FY 2000.

Performance of the Industrial Sector, however, was not satisfactory during the year. After growing by 9.5% in 1997-98, industrial production fell to 2.5% in 1998-99. The total value of GDP, however, increased to US$ 36503 million compared to US$ 34059 million in the previous year increasing per Capita GDP to US$ 282 compared to US$ 268 in last year.

ii) Money and Banking
Monetary and credit policies in Bangladesh were pursued with a view to accelerate the pace of economic activities during FY 1999. Total domestic Credit during the year rose by 13.1% compared to 12.6% in 1998-99, net credit to private sector increased by 13.8% compared to 13% increase in 1997-98. Money supply growth was 8.6% in 1998-99 compared to 4.8% in 1997-98. During the year, Bank deposits increased by 14.2% to Tk. 592340 million which was 11.3% in the preceding year.

Total export earnings during the year 1998-99 was US$ 5324 million compared to US$ 5172 million in 1997-98 showing a growth of 2.9% Total import payment for 1998-99 was US$ 8018 million which was 6.6% higher than that of  the previous year. The current account deficit increased to US$ 394 million from US$ 253 million in the preceding year due to increase in import payment during the year.

Bangladesh Bank reduced Bank Rate (the rate at which it lends to Commercial Banks) to 7% from 8% with effect from August 29, 1999. The minimum Cash Reserve Requirement (CRR) of the scheduled banks to be maintained with Bangladesh Bank has been reduced from 5% to 4% However, Statutory Liquidity Requirement (SLR) remained unchanged at 20%.

Bangladesh Bank also placed severe restriction with regard to credit allocation to the Directors of Private Banks (Incidentally since inception, the Directors of Prime Bank do not borrow from their own Bank as a policy  decision decision of the Board).