Dhaka, Dec. 3 -- Already smarting under loads of bad loans, banks in Bangladesh worry about a new operational peril from profitability squeeze for narrowing interest spread that came to 5.74 per cent in September.

According to Bangladesh Bank statistics, the spread between weighted average interest rate (WAIR) on advances and on deposits across all 61-bank industry narrowed by 2.0 basis points to 5.74 per cent last September from previous month's standing.

The contraction has stoked concerns that banks' profitability may come under further pressure at a time when the sector is struggling with a high stock of non-performing loans stemming from years of malpractice.

The decline, driven by rising deposit costs and subdued lending growth, ...