Letter of credit (L/C) business is booming for private banks in Bangladesh according to a senior banker.

Managing director of Bank Asia, Mohammed Arfan Ali, says private sector credit growth and large infrastructure projects are behind the surge in L/C business, and the same factors are helping private banks report very healthy profit margins.

L/C growth

Ali told local media that he has seen "huge growth" in the opening and settlement of L/Cs in recent months.

"The banks have enjoyed a hefty amount of charges and commissions against the guarantees they offered to contractors," he added.

Business drivers

Ali says private sector credit growth has been perhaps the main reason why Bangladeshi banks are doing so well at the moment.

Another reason for the rise in operating profits is the acceleration of the implementation of mega infrastructure projects he added.

Bank Asia's profits for the last twelve months surged more than any other bank in Bangladesh.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.