Corporate profits plunge 44% as inflation, energy crisis deepen pressure

Highlights:

• Corporate profits across 17 sectors fell 44% in Q1 2026
• Banking sector suffered 144.6% profit collapse, posting major losses
• Inflation, energy shortages, and weak banks squeezed business operations
• Textile, cement, ceramics, and NBFIs faced sharp profit declines
• Analysts expect continued challenges without investment and economic stability
• Fuel, power, and telecommunications sectors showed notable profit growth

Stubbornly high inflation is draining consumers' pockets, and businesses are feeling the pain as corporate profits across 17 sectors crashed by 44% in the first quarter of 2026, led by a 144.6% fall in the banking sector.

According to data from Lion City Advisory, aggregate net profits fell to Tk2,764.45 crore in Q1 of 2026, down from Tk4,962.11 crore in the same period last year.

The financial advisory firm compiled financial data from 232 listed companies across 17 sectors, including banks, non-bank financial institutions (NBFIs), manufacturing and services.

Of more than 350 listed companies, 232 have published their financial statements as of 30 June. Companies following the July-June fiscal year reported nine-month earnings, while those following the January-December calendar year disclosed first-quarter results.

Infograph: TBS

Business leaders and analysts said the profit crunch followed a highly sluggish 2025, pushing the corporate sector into a prolonged period of economic stagnation.

Companies are under severe pressure as high inflation, gas and power shortages, and banking sector weaknesses squeeze operations and erode margins, they added.

Banking sector's 144.6% plunge

Leading the downturn, the banking sector suffered a 144.6% plunge in profits, swinging from a Tk1,459.67 crore profit in Q1 2025 to a staggering loss of Tk651.47 crore in Q1 2026.

Of the 30 banks that published financial results, only five reported significant losses. However, losses at these institutions wiped out the gains made by profitable banks.

The five banks – National Bank, IFIC Bank, Islami Bank, Premier Bank, and Rupali Bank – posted combined net losses of Tk2,787.61 crore during the January-March quarter.

The travel and leisure sector recorded the sharpest deterioration, plunging 2,755.5% into losses. The ceramics sector and NBFIs also suffered heavy setbacks, with profits declining by 438% and 107.3%, respectively.

Traditional manufacturing sectors remained under pressure from the economic slowdown. Textile profits dropped 76.3%, while cement earnings declined 41.3%, data showed.

However, some sectors managed to withstand the downturn. Fuel and power emerged as a major growth driver, with profits rising 53.9% to Tk814.45 crore. Telecommunications also posted a 19.7% increase to record the highest sectoral profit of Tk966.63 crore.

The pharmaceutical sector, which has been a consistent performer, also saw profits decline by around 9% year-on-year in the first quarter.

Commenting on the quarterly results, Abdullah Al Faisal, director at Lion City Advisory, said the figures showed that Bangladesh's corporate sector remained under pressure.

"While revenues have remained resilient, profitability has been hit by weak demand, banking sector vulnerabilities, business uncertainty and structural challenges," he said.

"Although aggregate revenue stayed broadly stable, net profits declined sharply, highlighting the difficulties businesses continue to face despite some easing in financing costs."

He said recovery depended on stronger private investment, a healthier banking sector, faster public project implementation and greater macroeconomic stability in the coming quarters.

'Industries under systematic pressure'

Riad Mahmud, president of the Bangladesh Association of Publicly Listed Companies (BAPLC) and managing director of National Polymer Industries, told The Business Standard that the industrial sector had been under systematic pressure since the Covid-19 pandemic.

"Alongside high inflation, the gas and electricity crisis continues. High lending rates have made the industrial sector more vulnerable. It is difficult to run businesses with 12-14% borrowing costs, discouraging entrepreneurs from making new investments," he added.

Mahmud said the government had recognised the industrial sector's crisis and announced an incentive package that could ease working capital shortages if implemented.

"However, it remains only an announcement. Banks have not yet given any final decision on implementing the incentives. Even after receiving letters, they have not responded," he said.

Mohammed Amirul Haque, managing director of Premier Cement Mills, told TBS that the overall business situation in the cement sector remained weak.

"Some large companies are performing well due to their own sales networks and brand reputation, but others have failed to maintain growth," he said.

Cement sector entrepreneurs said the slowdown in government mega projects and annual development activities had created stagnation across the steel and cement industries.

However, Amirul said the new government had taken up several development projects that could improve business prospects in the sector in the coming days.

'Remainder of the year will remain challenging'

Multinational cement manufacturer LafargeHolcim Bangladesh reported Tk112.2 crore in profit for Q1, down 19% from Tk139.1 crore in the same period last year.

The company said rising energy costs and persistent inflation, driven by global disruptions linked to the Middle East crisis, weighed on its bottom line.

It said the rest of the year would remain challenging due to high inflation and energy costs but remained optimistic after implementing cost-efficiency measures and strategic pricing adjustments.

Chief Executive Officer Iqbal Chowdhury said the company remained focused on resilience through innovation and operational efficiency despite ongoing inflationary pressures.

He said specialised products such as Water Protect and Fair Face continued to perform strongly, strengthening the company's market position and customer confidence.

Several factors contributed to weak profitability

Abdullah Al Faisal said the economy was going through a transition following political changes, while uncertainty from the Middle East conflict had weakened business confidence.

"The banking sector also remains vulnerable, with non-performing loans above 32% and distressed loans estimated at around 59% of total loans," he said.

He added that the ongoing Asset Quality Review (AQR) had revealed further weaknesses in banks' balance sheets, including negative CRAR. Although higher interest rates initially increased banks' income, rising bad loans had sharply reduced profitability.

"Performance varied across sectors. Food & Allied companies performed strongly as demand for essential goods remained stable. However, Travel & Leisure suffered the biggest decline due to weaker consumer spending. Engineering companies saw stronger sales because two Eid festivals fell within the quarter, but higher costs limited profit growth," he said.

Faisal said the construction sector remained weak due to slower ADP implementation during the transition period and a slowdown in the real estate market.

Tk75,936cr revenue in Q1

According to the data, companies reported aggregate revenue of Tk75,936.18 crore in Q1 2026, representing a marginal year-on-year decline of 0.5% from Tk76,355.63 crore.

The banking sector emerged as the top revenue generator, earning Tk24,707 crore. It was followed by fuel and power at Tk14,601.74 crore, engineering at Tk11,543 crore, telecommunications at Tk6,414.42 crore, pharmaceuticals and chemicals at Tk6,137 crore, and textiles at Tk4,480.68 crore.

Textile profits shrink 76%

As of 20 June, 34 of 58 listed textile firms published quarterly results, reporting combined profits of Tk45 crore, down from Tk192.50 crore in the same period last fiscal year.

Half of these firms, or 17 companies, reported losses, with some continuing to remain in the red and others falling into losses for the first time.

Earlier, Rakibul Alam Chowdhury, former vice-president of BGMEA, told TBS, "We have experienced negative growth for most of the past 10 months. April showed some improvement, but the overall trend remains negative."

He said global conflicts, persistent inflation and higher retail prices had weakened consumer purchasing power in major markets, reducing sales and shrinking apparel orders.

"When major competitors receive policy support and incentives to cushion external shocks, our exporters face growing pressure without similar assistance. This has affected competitiveness and order flows," he added.