Infographic: TBS

Despite economic challenges amid ongoing inflation and a dollar crisis, seven listed banks achieved record profits in 2023, credited to their effective business policies and strategies.

Out of the 36 banks listed on the stock exchanges, nine have published their financial reports and recommended dividends for 2023.

According to the financial statements, Dutch-Bangla Bank achieved a 42% growth in profit to Tk801 crore in 2023 compared to the previous year, marking the highest profit in its history. It also recommended a 17.50% cash dividend and 17.50% stock dividend for the shareholders.

BRAC Bank’s profits jumped by 35% to Tk827 crore, while Pubali Bank saw a surge of 23% to Tk695 crore in profits.

BRAC Bank declared a 10% cash dividend and 10% stock dividends for the last year, while Pubali Bank recommended a 12.50% cash dividend and 12.50% stock dividends.

City Bank’s profits rose by 33% to Tk638 crore, while Eastern Bank’s profits grew by 20% to Tk612 crore.

City Bank proposed a 15% cash dividend and 10% stock dividends, and Eastern Bank declared a 12.50% cash dividend and 12.50% stock dividends for the last year.

Additionally, Shahjalal Islami Bank experienced a moderate increase to Tk358 crore in profits, and Uttara Bank’s profits rose by 17% to Tk317 crore.

Shahjalal Islami Bank recommended a 14% cash dividend, and Uttara Bank proposed a 17.50% cash dividend and 12.50% stock dividends.

This achievement was attributed to the banks’ ability to control their cost of deposits, expand their performing loan book, and generate substantial revenue from investments in government securities, according to industry insiders.

However, they added that the exchange gain was not as impressive as in 2022.

Eastern Bank in its annual report for 2023 said that Bangladesh is facing unprecedented macroeconomic pressures since 2022 which are reflected in unabated inflation, rapid depletion of foreign exchange reserves and mounting pressure on foreign exchange liquidity.

Consequently, private sector credit growth shrank to 10.13% in December 2023 compared to 12.89% in December 2022. Confidence in the macro economy has been weakened hurting FDI inflows and causing downgrade of the country’s credit ratings.

All these made the already fragile banking sector very weak. Lack of good governance, liquidity crisis and high loan default rate made the banking sector to yield subpar performance putting the overall economy at risk, it added.

Moreover, Mutual Trust Bank posted a 21% growth in profit to Tk286 crore in 2023, although it is not the highest in its history. It proposed a 10% cash dividend to the shareholders.

Only Mercantile Bank failed to achieve growth in profit; rather, its profit dropped by 12% to Tk206 crore in the last year compared to the previous year. Despite profit drop, it declared a 10% cash dividend for the last year.

Selim RF Hussain, managing director of BRAC Bank, told The Business Standard, the bank achieved its highest-ever profit last year, primarily propelled by interest income.

He added that the bank’s loan disbursement and deposit collection experienced growth surpassing the banking sector average, which was made possible through the development of digital banking services.

In the annual report of the Eastern Bank, Ali Reza Iftekhar, managing director at the bank, said when customer confidence in low performing banks dwindled last year mainly due to governance concerns, Eastern Bank continued to grow as a preferred bank for customers for its track record of championing compliance.

In 2023, the bank achieved the milestone of exceeding Tk600 crore profit, reflecting efficient ALM practice, prudent risk management and varied cost rationalisation measures during persistently high inflation, he added.

Asset and liability management, known as ALM, is the practice of managing financial risks that arise due to mismatches between the assets and liabilities as part of an investment strategy in financial accounting.

A senior officer at Dutch-Bangla Bank, told TBS on condition of anonymity that the robust profit achieved by the bank was mainly driven by the growth of high-quality loans and a faster increase in return on loans compared to the cost of deposits during 2023, as opposed to 2022, under the SMART rate mechanism.

Earlier, the Bangladesh Bank’s derivation of a new lending rate formula for commercial banks has helped alleviate their deposit cost pressure. According to the new lending rate policy, the rate will be based on the weighted average rate of a six-month treasury bill plus a 3% premium, which has been effective from 1 July 2023.

Default loan

The country’s banking sector experienced a steep rise in default loans by Tk25,000 crore in 2023 amid election-centric political uncertainties and a severe dollar shortage that slowed down business activities, rendering many borrowers unable to continue debt servicing.

At the end of December last year, the total default loan in the banking sector stood at Tk1.45 lakh crore, accounting for 9% of the total loans, which amounted to Tk16.17 lakh crore, according to Bangladesh Bank data.

The Bangladesh Bank recently unveiled its roadmap aimed at reducing default loans to 8% by June 2026 to comply with a condition imposed by the International Monetary Fund (IMF) as part of a $4.7 billion loan package.

Aamra Networks Ltd, an IT solutions provider, has recorded a 39% year-on-year increase in revenue from its IT support and software segment in the first nine months of the current fiscal year.

During the July to March period of FY24, its total revenue saw an 8% growth, and its net profit surged by 11.91% compared to the corresponding period of the previous fiscal year.

Aamra Networks, a subsidiary of the Aamra Group and a publicly listed company in the information technology sector on the Dhaka and Chittagong stock exchanges, released its financials yesterday.

However, its revenues from internet and Wi-Fi bandwidth and equipment sales grew by 1.92%, and those from the Export Processing Zones (EPZ) projects decreased by 19.58%.

As the company reported growth in profit and revenue, its share prices increased by 3.69% or Tk1.4 each to Tk39.30 each at the Dhaka Stock Exchange (DSE).

According to its unaudited financials, its revenue grew to Tk98.86 crore during the July to March period of FY24, and its profit increased to Tk22.53 crore.

Revenue from its primary source, internet and Wi-Fi bandwidth and equipment sales, increased to Tk61.99 crore from Tk60.82 crore. Revenue from the IT support and software segment also grew to Tk28.77 crore from Tk20.64 crore. However, revenue from EPZ projects declined to Tk8.09 crore from Tk10.06 crore.

While its profit increased to Tk22.53 crore, which was Tk20.14 crore during the July to March of FY24.

The earnings per share (EPS) stood at Tk3.64, net asset value per share Tk40.65, and net operating cash flow per share Tk4.62 in the first nine months of FY24.

Aamra Networks in a disclosure said profit increased as the revenue improved, riding on more profitable IT Support and Software Services, as well as Internet sales. Besides, an efficient cost control measure has been observed.

The net operating cash flow per share increased as the cash received from customers and others increased more than the corresponding increase in supplier payments, income tax paid and financing costs.

However, in the third quarter (January to March) of 2024, Aamra Network reported Tk30.29 crore in revenue and Tk7.84 crore in profit, which was Tk29.96 crore and Tk6.28 crore respectively.

The Uttara Bank has declared a 30% dividend including 17.50% cash and 12.50% stock to its shareholders for the year of 2023 ended on 31 December.

The dividend declaration came out from its board meeting held on Monday, according to the bank’s statement.

To approve the dividend, it will hold the annual general meeting on 30 May and the record date is 7 May.

As per the statement, its net profit rose by 17% to reach Tk317 crore compared to the previous year.

President Joe Biden has told Israeli Prime Minister Benjamin Netanyahu that the United States would not participate in any Israeli counter-offensive against Iran, a White House official said on Sunday.

Iran launched hundreds of drones and missiles at Israel on Saturday night in response to a suspected Israel attack on Iran’s Syria consulate on 1 April.

In a statement issued late on Saturday following the attacks, Biden said he told Netanyahu that Israel had “demonstrated a remarkable capacity to defend against and defeat even unprecedented attacks.”

Biden did not say in the statement if he and Netanyahu discussed a possible Israeli response or potential US involvement.

John Kirby, the White House’s top national security spokesperson, told ABC’s “This Week” program on Sunday that the United States will continue to help Israel defend itself, but does not want war with Iran.

Asked if the United States would support retaliation from Israel in Iran, Kirby said that “our commitment is ironclad” to defending Israel and to “helping Israel defend itself.”

“And as the president has said many times, we don’t seek a wider war in the region. We don’t seek a war with Iran. And I think I will leave it at that,” Kirby added.

“We don’t seek escalated tensions in the region. We don’t seek a wider conflict,” Kirby said.

Infographics: TBS

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), witnessed a notable surge on Monday (8 April). Analysts in the sector attribute this rise to the expected reappointment of Shibli Rubayat Ul Islam as the Bangladesh Securities and Exchange Commission (BSEC) chairman for another four years. 

The bourse indices continued their upward trend for the third consecutive session as cautious investors demonstrated a willingness to buy following a significant correction.

According to market insiders, the BSEC chairman’s reappointment news has a positive effect on investors. One of the reasons for the decline in the indices over the past few weeks was the appointment issue. The market may extend the upward momentum if a circular is issued soon.

During Monday’s session, the DSEX rose 64 points to reach 5,860, while the blue-chip index DS30 saw a gain of 18 points, settling at 2,033 and the DSES Index increased by 15 points to 1281.

Among the stocks traded, 316 advanced, 36 declined, and 40 remained unchanged.

However, turnover slightly decreased to Tk415 crore, compared to Tk436 crore in the previous session.

Deshbandhu Polymer, Bd Thai Aluminium, captured the DSE top gainer list followed by Fu Wang Food, Emerald Oil Industries, Navana CNG, Olympic Accessories, Anlimayarn Dyeing and Aftab Automobiles Ltd.

On the other hand, Northern Jute, and Pubali Bank captured the DSE top loser list followed by Kay & Que, IDLC Finance, and Peoples Leasing.

At the DSE, the top three most traded stocks were Alif Industries, Taufika Foods, and Malek Spinning Mills Ltd.

EBL Securities wrote in its daily market commentary that the capital bourse of the country extended its upbeat vibe as bargain hunters continued to take positions in lucrative issues in anticipation of a potential turnaround from the prolonged bearish sentiment across the trading floor.

The indices remained upbeat throughout the session as buyers remained predominant across the trading floor.

However, trading activities remained stagnant, with market turnover further declining by 4.9% to Tk4.2 billion as against Tk4.4 billion in the previous session, as cautious investors prefer to stay on the sidelines to observe the sustainability of the current upbeat vibe in the market, the brokerage house said in its commentary.

On the sectoral front, Bank 18.7% issues exerted the highest turnover, followed by Textile 15.4% and Pharma 14.2% sectors.

All the sectors displayed positive returns, out of which Services 2.9%, General Insurance 2.4% and Ceramic 2.4% exhibited the most positive returns on the bourse today.

The port city bourse, Chattogram Stock Exchange (CSE), also settled on green terrain. The selected indices (CSCX) and All Share Price Index (CASPI) advanced by 42.6 and 73.4 points, respectively.