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Most of the listed non-bank financial institutions are struggling amid growing public distrust and series of scams in the sector.
Out of the 22 listed NBFIs excluding People’s Leasing and Financial Services Limited (PLFS), six witnessed heavy losses, seven saw profit fall and nine made increased profits in the January-September period of this year compared with that in the same period of the previous year, according to an EBL Securities Limited research.
Brokerage house EBL Securities Limited is a subsidiary of Eastern Bank Limited.
Bangladesh Industrial Finance, Far East Finance, First Finance, state-run Investment Corporation of Bangladesh, MIDAS Finance and Union Capital witnessed losses in the nine months.
Profits of six NBFIs — Bay Leasing, BD Finance, Fas Finance, International Leasing Finance, Prime Finance, and Premier Finance — were below Tk 4 crore.
IDLC made the highest net profit after tax of Tk 130.8 crore in the nine months of 2019 followed by Uttara Finance Tk 104.3 crore and Delta Brac Housing Finance Tk 82 crore.
Profits of Lanka Bangla Finance, IPDC and Uttara Finance increased in the period.
Profitability including return on equity and return on assets showed descending trend.
Market experts said that investors and depositors became panicked after the government in July directed the Bangladesh Bank to liquidate People’s Leasing and Financial Services due to worsening financial health of the company.
The central bank also sought the finance ministry approval regarding liquidation of another NBFI — Bangladesh Industrial Finance Limited — as the financial condition of the company became worse with around 98 per cent of its loans becoming defaulted.
The move further exposed the sorry state of the financial sector.
The country’s financial sector has been grappling with a host of issues including various scams, irregularities, rising non-performing loans and poor corporate governance that lowered the level of confidence of investors and depositors.
The amount of defaulted loans in the NBFI sector stood at Tk 8,068 crore at the end of June this year, which was Tk 5,460 crore at the end of December last year, according to the EBL Securities research.
The total deposits in the sector stood at Tk 50,139 crore as of September, 2019 compared with Tk 51,601 crore as of September, 2018, it said.
Observing the overall situation in the NBFI sector, investors and depositors went for withdrawing their investments and deposits from the sector that impacted the NBFIs’ profit-making ability badly.
Most of the NBFIs experienced negative growth in the income from investments due to dull performance of the country’s capital market in 2019 so far.
The investment income in the sector sank by 29.6 per cent in the January-September period.
Besides, commission, exchange and brokerage income decreased by 15.1 per cent in the nine months of 2019.
Out of the 22 listed NBFIs, shares of nine NBFIs were trading below face value of Tk 10 while those of 15 others trading below Tk 20 a share as investors sold off shares of the entities significantly to avoid risk.
(NA)
