Midas Financing’s annual profit slumps 90pc

Midas Financing reported a 90 per cent year-on-year plunge in profit to Tk 8.63 million in 2022 due to higher provisioning against loans and advances coupled with shrinkage income from the stock market investment.

As a result, the non-bank financial institution's consolidated earnings per share (EPS) stood at Tk 0.06 for 2022, down from Tk 0.59 (restated) a year ago, according to a stock exchange filing on Tuesday.

Midas Financing incurred a loss of Tk 332 million in the first nine months through September last year due to huge provisioning against loans and advances.

However, it rebounded strongly in the final quarter, which kept it from going in the red.

Company secretary Tanvir Hasan said profit was lower than expected since the company had to set aside an additional amount of Tk 600 million for provisioning and Tk 390 million in interest suspensions out of its 2022 income.

He added that the company expected a recovery in the coming quarters when their clients would begin repaying loans.

About the final quarter's substantial profit growth, Mr Hasan said increased loan recovery and interest income had helped the company come back strongly in the quarter.

The year 2022 was a challenging year as the NBFI had to keep 100 per cent provision against non-performing loans upon instructions of the Bangladesh Bank.

Midas Financing declared 1.50 per cent cash dividend for 2022.

The company will hold an annual general meeting virtually on November 22. The record date is November 7.

Meanwhile, Midas board has decided to launch a Shariah-based financing business window and amend the relevant clauses of the memorandum and articles of association of the company, subject to the approval of the shareholders and regulatory authorities.

The Shariah-compliant business will run simultaneously alongside existing operations.

The stock has been stuck at the floor price of Tk 10 for the last one month.

Equity researchers say most of the non-banking financial institutions are in a bad shape. So, investors are not interested in putting money in these companies' shares.

Of the 23 NBFIs listed in the stock market, eight are traded at below the face value of Tk 10 a share, the DSE data showed.

Almost all the NBFIs saw their profit fall in 2022, while some suffered big losses, owing to rising costs of funds rendered by shrinking interest spread coupled with widespread scams.

The gap between borrowing and lending rates came down to a historic low at 0.27 per cent on an average in June this year for the NBFI industry, while it was 0.75 per cent for January-June this year, according to the Bangladesh Bank data.

Midas Financing's spread was less than 1 per cent during the year.

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