United Commercial Bank (UCB) PLC’s capital adequacy ratio could collapse to 0.93 per cent if the lender fully recognises its provision shortfall, far below the regulatory minimum requirement of 12.5 per cent under Basel III standards, according to its auditor.
The auditor issued a qualified opinion on UCB’s 2025 financial statements and included “Emphasis of Matter” and “Other Matter” paragraphs in the audit report for the year ended 31 December 2025, highlighting large provisioning deficits, capital shortfalls and unrecognised impairment losses.
According to the audit report, UCB reported a Capital to Risk-Weighted Assets Ratio, commonly known as CRAR, of 8.42 per cent at the end of 2025.
That remained below the 12.5 per cent minimum capital requirement prescribed under Basel III, the international banking framework designed to ensure banks maintain sufficient capital buffers against financial shocks.
The auditor said the bank’s total provision shortfall stood at Tk5,594.93 crore.
If the entire shortfall were recognised in the financial statements, UCB would incur aggregate losses of Tk3,278.88 crore and its CRAR would fall sharply to 0.93 per cent on a standalone basis, the audit report stated.
The report also identified a capital shortfall of Tk2,659.64 crore.
According to the auditor, UCB required Tk6,512.17 crore in capital at the end of 2025 but maintained only Tk5,480.58 crore.
The auditor further said the capital deficit would widen to Tk5,975.52 crore if the full provision shortfalls were adjusted in the accounts.
The audit findings showed the bank-maintained provisions of Tk2,524.38 crore against required provisions of Tk7,679.42 crore for classified loans and advances, resulting in a provisioning gap of Tk5,155.04 crore.
UCB’s total loans and advances stood at Tk61,789.01 crore at the end of 2025, including classified loans amounting to Tk9,576.23 crore.
The auditor also identified an additional provision shortfall of Tk439.89 crore against other assets.
That included an impairment loss of Tk438.02 crore linked to UCB Fintech Company Limited, a subsidiary in which the bank holds 99.99 per cent shares.
According to the audit report, the subsidiary accumulated losses amounting to Tk438.02 crore by the end of 2025, but the bank did not recognise any impairment loss in its standalone financial statements.
Despite the identified shortfalls, Bangladesh Bank allowed UCB to finalise its 2025 financial statements without adjusting the full provision deficit of Tk5,594.93 crore.
The approval was issued by the central bank on 29 April 2026, according to the audit report.
