Headlines
Credit-quality signals dominate; watch forbearance and the Islami-bank recapitalisation.
Today's leads cluster on credit quality. The report that loan-rescheduling and restructuring rules are being loosened lands against a system NPL ratio of 32.26% on the Q1 2026 print — looser terms let stressed borrowers re-age, so the next reported figure risks understating the real book rather than showing genuine repair. The parallel search for a foreign investor in Sammilito Islami Bank points to a capital need at the consolidated Islamic lender, while private credit growth holds at just 4.98%. The desk carries a defensive read on state-owned and merged-bank exposure into the sections, with provisioning coverage and any capital raise the lines to watch.
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)
Rate corridor on hold; liquidity ample as call money drifts to floor.
FX Reserves
Gross reserves climbed to $36.42bn by the Jul 2026 print, up from $31.09bn last Nov, near the $37.58bn series peak.
Nov 2025 marked the series low at $31.09bn; the run has since added over $5bn.
Treasury: the reserve build underpins import cover, though the last plotted point is the Jul 2026 read — watch for a fresher print.
WATCH
- ◆The next weekly reserves print, still at the 31 Jul $36.42bn read
- ◆Call money holding near the 7.5% SDF floor as a liquidity gauge
- ◆Any repo move at the next MPC after the 30 Jul cut
RISK
- ▼Reserve cover overstated if the stale 31 Jul figure has since drawn down
- ▼Call money spiking back toward the 11.0% SLF ceiling on a liquidity squeeze
Banking
Structural NPL stress persists; capital buffers thin on the last prints.
Overnight Money Market
Overnight rates eased: DOMMR (Dhaka Overnight Money Market Rate) to 9.18% by the 27 Aug print, from 10.09% in mid-April.
Lowest of the run that opened 15 Apr 2026; BOFR (Bangladesh Overnight Financing Rate) tracks it at 9.23%.
Treasury: cheaper overnight funding reflects ample liquidity, not credit demand — with private credit at 4.98%, expect deposit rates to drift lower.
WATCH
- ◆The Q1 2026 NPL figure at the next quarterly disclosure
- ◆Whether looser rescheduling rules pull the reported ratio down without real recovery
- ◆Sammilito Islami Bank's capital search as a proxy for state-owned commercial bank (SCB) stress
RISK
- ▼Forbearance masking true asset quality and delaying provisioning
- ▼CAR at 1.56% (Q3 2025) leaving little buffer against further NPL recognition
- ▼Tail risk concentrated in state-owned and merged banks
The credit-cycle read hangs on the gap between reported and true asset quality. The NPL ratio was 32.26% on the Q1 2026 print, and CAR was 1.56% on the older Q3 2025 read — a system carrying a large stock of bad loans against almost no capital buffer. Today's news that rescheduling rules are being loosened works directly on that gap: rescheduled loans move out of the NPL bucket, which can lower the headline ratio with no cash actually recovered. For a desk, that means the next NPL print is a weaker signal than usual — a fall would not necessarily mean the book is healing. The parallel search for a foreign investor in Sammilito Islami Bank points the same way — the consolidated lender needs outside capital to rebuild its balance sheet. The book stays defensive on state-owned and merged-bank exposure; provisioning coverage and any capital raise are the metrics that would change the call.
FX & External
Taka stable; external cushion resting on prints five weeks old.
External Flow Balance
Imports ran at $7.51bn in the Jun 2026 print, near the series high, against $4.20bn exports — a widening external gap.
Imports up from $4.39bn a year earlier (Jun 2025); exports rose from $3.35bn over the same span.
Treasury: the import surge outpaces export recovery, pressuring the trade balance and reserves — watch whether import-liberalisation policy accelerates the drain.
WATCH
- ◆The next reserves print, still at the 31 Jul $36.42bn read
- ◆Whether import-liberalisation policy widens the June $3.31bn trade gap
- ◆USD/BDT stability around 123 as the managed anchor
RISK
- ▼Reserve drawdown if imports are liberalised into a wider deficit
- ▼Stale 31 Jul reserve figure overstating the current cushion
- ▼Gold at $4,478/oz signalling global risk-off pressure on flows
The external picture is stable on the surface and thin underneath. The taka sat at USD/BDT 122.9959 on the 1 Sep read, and on that spot the rate looks well anchored. The support behind it is not current: gross reserves were last published at $36.42bn for 31 Jul, and the trade and export figures are June prints — a $3.31bn monthly gap against a $4.20bn export month. The reserve series has been building off a $31.09bn low last November, with the 31 Jul read at $36.42bn. What complicates it is policy: the day's call to liberalise imports to fight inflation trades a lower price level for a wider external deficit. If imports are freed while exports sit near $4.2bn a month, the gap widens and the import-cover buffer — 4.85 months on the June read — does the absorbing. The desk keeps FX exposure hedged and watches the next reserves print, still at 31 Jul, for signs the cushion is holding.
DSE Markets
Index steady on light volume; breadth positive but conviction thin.
DSEX Index
DSEX at 5,655.68 on the 27 Aug print, up just 1.3% over the year from 5,583.79, and 4.6% below the 5,926 peak.
A year ago (1 Sep 2025) the index sat at 5,583.79; the range low was 4,702.69.
Equity desk: a year of net-flat returns with a 26% peak-to-trough range signals a range-bound, low-conviction market — no trend to chase.
WATCH
- ◆Turnover recovering above Tk500 crore as a conviction signal
- ◆DSEX holding the 5,640 area that capped the recent pullback
- ◆Breadth staying positive on the next print
RISK
- ▼Thin turnover leaving the index vulnerable to sharp swings
- ▼Stale 27 Aug tape, five sessions old before the next read
T-Bonds & T-Bills
Yields drifting lower across tenors; funding costs easing for the sovereign.
BD Govt Yield Ladder
Yields fell across the ladder over Jun–Aug 2026: the 91-day T-bill from 9.44% to 8.83%, the 10-year from 10.24% to 9.23%.
The move spans three monthly points, Jun to Aug 2026 — roughly 60–100bp lower across the curve.
Treasury/ALCO: a lower, flatter curve cuts sovereign funding costs and re-prices floating-rate loan books — extend duration selectively while the front leads.
WATCH
- ◆The next T-bill auction cut-offs after the 24 Aug stops
- ◆The 10y at 9.234% (21 Aug) as the long-end benchmark
- ◆Whether the curve steepens or stays flat as the front eases
RISK
- ▼Duration risk if the front-loaded easing reverses on an inflation surprise
- ▼Stale 21 Aug bond marks against a moving front-end
Macro & Inflation
Real policy rate positive; disinflation slow while private credit stays subdued.
CPI Trend
CPI 12-month average eased to 8.66% by the Jul 2026 print from 9.77% a year earlier; food p2p at 8.6% (Jun), off a 13.8% peak.
The 12m-average low of the run is 8.59%, essentially where it now sits, down from 10.34% at the 2024 peak.
Treasury: with the 12m-average near its cycle low but core sticky above 9%, real rates stay positive — expect the MPC to hold, not cut.
WATCH
- ◆The Aug CPI print for whether food disinflation holds below the Jul 7.16%
- ◆M2 growth after the 11.11% Jun read — highest since Sep 2021
- ◆Private credit turning up from 4.98% as a demand signal
RISK
- ▼Accelerating M2 (11.11%, Jun) reigniting inflation while CPI is still sticky
- ▼Weak 4.98% private credit signalling stalled investment demand
- ▼Non-food inflation stuck near 9.28% (Jul) keeping headline elevated
The macro read is a disinflation that has slowed while money growth has picked up — a combination that argues for patience rather than easing. Headline point-to-point inflation was 8.32% in the Jul 2026 print, with food down to 7.16% but non-food stuck at 9.28%, so the sticky half of the basket is the core that does not respond to a good harvest. Against a 9.5% repo, the real policy rate is positive at 1.18% — the first genuine cushion in a while, and a reason the MPC can hold. The complication is M2 at 11.11% on the Jun read, the highest since Sep 2021 (11.2% then), running well ahead of 4.98% private credit growth. Money is expanding but not through private lending, which points to government financing and idle liquidity rather than a demand recovery. The desk reads this as hold-not-cut, with the Aug CPI and next M2 print the swing data.
Remittance
Inflows holding above $2.8bn provisional; a steady support for the taka.
Remittance Inflow
Remittance was $2,858.68mn in the Jul 2026 print, up from $2,421.9mn a year earlier, off a $3,755.1mn peak in the run.
The 12-month run bottomed at $2,421.9mn in Aug 2025 and peaked at $3,755.1mn.
Treasury: a rising remittance floor adds dollar supply and steadies USD/BDT — a constructive offset to the wide trade gap.
WATCH
- ◆Confirmation of the $2,820mn August flash against the $2,858.68mn July print
- ◆Whether inflows hold above $2.8bn into the next month
- ◆The YoY pace after the +16% August read
RISK
- ▼Downward revision of the provisional August flash
- ▼Seasonal fade in inflows pressuring dollar supply
Fiscal
Revenue tracking flat while today's tax breaks point to softer receipts ahead.
NBR Tax Revenue
Monthly NBR revenue was Tk28,027 crore in the Oct 2025 print, up from Tk26,555 crore a year earlier and Tk22,005 crore at the mid-2023 start.
The series peaked at Tk52,720 crore and bottomed at Tk21,478 crore across the run from Jul 2023.
Fiscal desk: collections swing seasonally; the last plotted Oct 2025 point predates today's Tk3.61tn YTD, so read the chart as trend, not level.
WATCH
- ◆The next NBR collection update against the flat Tk3.61tn YTD
- ◆Revenue impact of the sub-Tk2 crore minimum-tax exemption
- ◆Bank borrowing beyond the Jun Tk0.94tn read as the wage bill rises
RISK
- ▼Wider fiscal deficit crowding out private credit via bank borrowing
- ▼Revenue base narrowing as tax exemptions widen
Iran War & Oil
Oil off its highs; import-bill pressure easing at the margin.
Brent Crude
Brent fell to $89.31 by the 28 Aug print from $96.28 in early June, having swung between $71.18 and $100.38 over the run.
The three-month run opened at $96.28 on 3 Jun 2026 and troughed at $71.18 before recovering.
Treasury: crude off its high trims the energy import bill — watch the $90 line, above which import-cover math tightens again.
WATCH
- ◆Brent holding below $90 as the import-bill signal
- ◆The $71–$100 three-month range for a breakout either way
- ◆Any Iran-related supply headline reversing the easing
RISK
- ▼A renewed war premium pushing Brent back toward $100
- ▼Higher crude widening the import bill and pressuring reserves
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