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AB Bank posted a staggering loss of Tk 15.03 billion for the April-June quarter this year, catching investors off guard, as it had shown a profit of Tk 36 million for the same period a year ago.
The listed commercial bank hoisted a warning sign about a month ago when it disclosed an annual loss of more than Tk 19 billion for 2024. Still, it was hard to anticipate the speed at which the lender is sinking into the red.
The bank's loss -- Tk 17.58 billion -- in the six months between January and June this year is close to the loss it endured in the whole year of 2024. The six-month loss of AB Bank is the highest among listed banks, having surpassed even the loss sustained by well-known Shariah-based banks that are facing merger for their acute liquidity crisis.
AB Bank's loss was primarily driven by the unveiling of its poor asset quality after the political changeover in August last year. That explains why the bank, which had appeared to be a profit-making business until June last year, turned out to be in a deluge of non-performing loans by December.
The Sunday's earnings disclosure prompted investors to sell off their holdings. The bank's share price dropped from Tk 7.10 each to Tk 6.80 each before partially recovering to close at Tk 7.00 each on the Dhaka Stock Exchange (DSE). A steeper decline could be avoided because of the overall bullish market sentiment that pushed the key index up to a 10-month high.
Company secretary Md. Jasim Uddin told The FE that 83 per cent of total loans disbursed by the bank had turned sour.
"We are not getting any interest on them, but we are paying huge interest on deposits…. We also had to keep a big amount of provision for the mounting NPLs," he added.
In addition to that, the company had its overhead costs.
Due to the unavailability of cash, AB Bank could not invest in Treasury bills and bonds at a time when the interest rates of government securities were remarkably high.
The net asset value, which refers to the excess of total assets over total liabilities, turned Tk 12.33 in the negative per share as of June this year, which means AB Bank has more liabilities than assets.
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