Impact of Covid-19 Pandemic on the Financial Performance of the Banking Sector of Bangladesh

Covid-19 pandemic has affected both real and nominal sectors of all countries in the world. The paper has examined the impact of this pandemic on the banking sector of Bangladesh. Using ratio and correlation analysis on 2019 and 2020 data some interesting findings are invented. Pandemic has incurred devastating and homogeneous impacts for all type of banks in Bangladesh. Profitability and efficiency have decreased sharply. The analysis shows that if the provision criteria had not been relaxed, the profit rate would have been decreased further. Negative growth of profitability and interest earning by the most banks are very glaring. Aggregate profit of the banking system has fallen about 4 percent. Further, evidence of investment scope shrinking is also manifested. Hence, sheer income rearrangement is also detected by the banks in pandemic situation. The loss caused by the decrease of interest earning was attempted to offset by the increase of fee based income. However, productivity is remained largely unchanged during the pandemic. Additionally, drastic fall of major balance sheet items in 2020 are also noticed. Banks were desperate to save themselves from the tsunami of losses by searching alternative sources of business too. Additionally, profit fall and international linkage of individual banks have very high association. The paper has very high stake particularly for crisis management of the banking system of developing countries where banks are suffering from the less variety of product and lending activities.