CAL Bangladesh flags five banks for potential upside as sector reforms reshape lending

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Bangladesh banks reform optimism

Highlights

CAL Bangladesh research identifies BRAC Bank, City Bank, Eastern Bank, Dutch-Bangla Bank, and Pubali Bank as top picks for significant potential upside, with BRAC Bank targeting Tk117.45 versus Tk65 as of 5 October 2026 (80.7% upside).
Private sector credit growth is projected to accelerate from 4.3% in FY26 to 12% by FY29, with Tk6.23 trillion in new credit and the 14 'Cycle-Ready' banks accounting for 55.5% of that expansion.
The recovery in Bangladesh’s banking sector is expected to start with retail and SME lending and broaden to corporate and trade finance, with BRAC Bank and City Bank especially poised to benefit.

Top bank picks and recovery outlook

As reported by The Business Standard, citing CAL Bangladesh in its research report "Banking on the Next Cycle", the investment research firm identifies 14 "Cycle-Ready" banks based on asset quality, capital adequacy, funding strength and lending capacity, and names BRAC Bank, City Bank, Eastern Bank, Dutch-Bangla Bank and Pubali Bank as its preferred listed picks.

BRAC Bank leads the recommendations with a target price of Tk117.45 versus its closing price of Tk65 on 5 October 2026, implying upside of 80.7%. City Bank has a target price of Tk48.36, suggesting a 62.8% gain from Tk29.70; Eastern Bank's target price of Tk34.38 indicates 50.8% upside from Tk22.80; Dutch-Bangla Bank could rise 47.8% to Tk67.25 from Tk45.50; and Pubali Bank has a target price of Tk55.88, implying 44% upside from Tk38.80. The projections exclude cash dividend yields.

The report says these banks are better positioned to withstand ongoing balance-sheet adjustments and to benefit from a recovery in credit demand. It projects private sector credit growth to accelerate from 4.3% in FY26 to 12% by FY29, adding Tk6.23 trillion to private credit from June 2026 levels, with the 14 selected banks accounting for 55.5% of that expansion.

The expected recovery begins with retail and small and medium enterprise lending, including consumer finance and credit cards, before broadening into corporate lending, import financing and trade services. CAL Bangladesh says BRAC Bank's deposit growth, SME franchise and stake in bKash support its outlook, while City Bank is positioned to benefit from a rebound in consumer spending through cards, payments and retail banking.

Our earlier report on Pakistan’s push to expand priority-sector lending outlined government-backed targets to raise financing for housing, agriculture and SMEs, alongside incentives for banks that improve credit access. It also described planned regulatory reforms and risk-sharing mechanisms intended to reduce bottlenecks, speed up loan processing and support broader private-sector credit growth.

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