Headlines
NPL stock leaps to Tk 5.89tn as FY27 budget week opens.
The tape has a single throughline: the credit cycle printed a hard number. System NPLs jumped Tk 31,487cr in one quarter to Tk 5.89tn — the stock compounding behind a CAR 844bp below the 10% floor — and it lands the morning the FY27 budget framing opens and a fresh power-tariff hike takes effect. The fiscal leg reinforces it: government bank borrowing has run to BDT 1.25tn, past its full-year ceiling, pulling capacity toward the sovereign while private credit stalls at 6.03% YoY. The softer items — a 0.25% sovereign-guarantee fee, the LDC-graduation reprieve to 2029, a full-tenure tax roadmap — read as fiscal-discipline signalling against that backdrop. The desk stays defensive on bank credit and treats the Q1 2026 disclosures, due June, as the catalyst that can move the call.
Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
Policy rate holds 10% on the Apr MPS; easing room thin.
FX Reserves
WATCH
- ◆Next MPS date and forward rate guidance
- ◆SDF utilisation as the excess-liquidity tell
- ◆Q1 2026 bank disclosures — due June
RISK
- ▼Real policy rate +1.29% thins if the power-tariff hike lifts CPI
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
NPLs leap Tk 31,487cr to Tk 5.89tn; CAR 844bp below floor.
WATCH
- ◆Q1 2026 bank-level disclosures — due June
- ◆Whether the Tk 31,487cr quarterly jump repeats next print
- ◆Any BB recapitalisation roadmap for state lenders
RISK
- ▼CAR 844bp below floor implies open-ended forbearance
- ▼Power-tariff hike and dearer crude squeeze corporate debt-service capacity
The credit cycle here is not turning — it is compounding. The headline ratio has read 35.73% for quarters, but the volume just moved: NPLs jumped Tk 31,487cr in one quarter to Tk 5.89tn — recognition catching up with reality, not reversing it. CAR at 1.56% leaves the system 844bp short of the 10% floor, a solvency hole only forbearance keeps off the front page. The fiscal channel compounds it: government bank borrowing has run to BDT 1.25tn, past its full-year ceiling, pulling scarce capacity toward the sovereign and away from a private-credit pulse already subdued at 6.03% YoY. A fresh power-tariff hike presses corporate debt-service capacity at the same time. The desk holds no fresh state-lender or stressed-private exposure and treats the Q1 2026 disclosures, due June, as the only near-term catalyst that can move the call.
FX & External
Anchored at 122.75; remittance $3.13bn still covers the trade gap.
External Flow Balance
USD/BDT flat at 122.75; remittance $3.13bn covers the $2.26bn trade gap, reserves hold $35.11bn.
USD/BDT unmoved since the April band reset; remittance held at the $3.13bn print, reserves on the 2 Jun read.
Treasury: the remittance surplus still funds the gap, but Brent at $95.16 and the power-tariff hike are the new drains — watch import-payment timing.
WATCH
- ◆June–July seasonal remittance dip on reserve cover
- ◆Brent pass-through into post-Eid import-payment lines
- ◆Import cover near 6 months — 5.86 on the Mar print
RISK
- ▼Oil holding $95.16 widens the import bill
- ▼Power-tariff hike adds to the import-cost channel
DSE Markets
DSEX holds 5,372 with turnover steady at BDT 912cr — breadth firm.
DSEX Index
DSEX holds 5,372.63 — turnover steady at BDT 912cr, breadth 179/152; the post-Eid breakout is consolidating, not extending.
Holding the 31 May post-Eid base of 5,336; turnover above BDT 900cr for a second session.
Risk/equity desk: base is volume-backed but flat — add only if turnover holds above BDT 900cr; watch the power-tariff hike on consumer counters.
WATCH
- ◆Whether turnover holds above BDT 900cr to confirm the base
- ◆Consumer counters against the power-tariff hike
- ◆Brent's $95.16 hold on cost-sensitive counters
RISK
- ▼Thin post-holiday float can still exaggerate moves
- ▼Power-tariff hike and oil at $95.16 pressure consumer-counter margins
T-Bonds & T-Bills
Front-end at 10.15%; curve near-flat at 10.91%, fiscal pace the risk.
BD Govt Yield Ladder
91d T-Bill 10.15%, 364d 10.50%; curve near-flat through 10y at 10.91%, the 5y–10y spread just 13bp.
Short-end stepped lower since late April — 91d off 10.17%, 364d off 10.65%; the curve near-flat, spread now 13bp.
ALCO: front-end easing supports roll-down and multiples — watch the FY27 budget borrowing pace, now BDT 1.25tn, for reversal risk.
WATCH
- ◆Next auction sizes for the demand signal
- ◆Govt bank-borrowing pace into the FY27 budget
RISK
- ▼Fiscal crowding as borrowing runs to BDT 1.25tn
- ▼Flat curve compresses NIM on ALM (Asset-Liability Management) books
Macro & Inflation
CPI 12m-avg 8.6% on the Mar print; power-tariff hike a forward risk.
CPI Trend
CPI 12m-avg eased to 8.6%, food 8.24%, non-food 9.09% — disinflation intact but the non-food leg stays sticky above 9%.
CPI 12m-avg at lowest since Mar 2023 (8.4% then); non-food lowest since Feb 2026 (9.0% then).
MPC: a fresh power-tariff hike and Brent at $95.16 are cost-push risks — watch the Apr CPI print before any easing tilt.
WATCH
- ◆Apr 2026 CPI print from BBS for disinflation confirmation
- ◆Power-tariff and oil pass-through into the next CPI read
- ◆Private-credit trajectory — 6.03% YoY is subdued
RISK
- ▼Power-tariff hike and Brent at $95.16 reverse food-led disinflation
- ▼Non-food above 9% constrains MPC easing flexibility
Remittance
Remittance holds $3.13bn, covering the trade gap; seasonal dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆May print confirmation from BB
- ◆Gulf labour-policy shifts affecting worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold $4,515/oz; LNG $15/MMBtu on the Apr print — monsoon the watch.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Sustained gold strength signals USD weakness and geopolitical hedging
Fiscal
Govt bank borrowing leaps to BDT 1.25tn; FY27 budget due June.
WATCH
- ◆FY27 budget — expected June 2026
- ◆NBR collection pace against the full-year target
- ◆Sovereign loan-guarantee fee rollout at 0.25%
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼Borrowing past ceiling pressures the T-Bill curve into FY27
The sovereign's funding pull just stepped up. Government bank borrowing has run to BDT 1.25tn — past its full-year ceiling with a quarter of FY26 still to go — a BDT 0.33tn jump from the BDT 0.92tn that already breached the cap. NBR collection has climbed to BDT 3.27tn, but the revenue path still trails, so the gap keeps landing on bank balance sheets. That is the credit-cycle link: every taka the state borrows from a system carrying Tk 5.89tn of bad loans and a CAR 844bp below floor is a taka not extended to private credit, already subdued at 6.03% YoY. A new 0.25% fee on sovereign loan guarantees and a full-tenure tax roadmap signal the government knows the arithmetic. The desk reads the FY27 budget, due June, as the binding catalyst — watch the deficit-financing mix for how much more falls on the banks.
Iran War & Oil
Brent holds $95.16; cost-push stays armed into the next CPI print.
Brent Crude
Brent holds $95.16, WTI $92.32 — roughly $16 below the May $111 peak; the relief has stalled in the mid-$90s.
Flat versus the prior $95.16 print; the slide toward $90 has stalled, the May $111 peak still ~$16 above.
Treasury: crude in the mid-$90s keeps the dollar fuel bill elevated and re-arms cost-push — watch a $100 retest and the next CPI print.
WATCH
- ◆$95 hold or a push back toward $100
- ◆Oil pass-through into the next BBS CPI print
- ◆OPEC+ June production decision
RISK
- ▼Crude in the mid-$90s widens the import bill
- ▼Renewed supply premium if the ceasefire frays
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