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City Bank secured an impressive 34 per cent year-on-year growth in profit in the second quarter through June this year, driven by substantial income from investments in government securities.
The first generation commercial bank's consolidated earnings per share (EPS) stood at Tk 1.55 for April-June this year, increased from Tk 1.16 for the same quarter a year ago.
The bank's un-audited financial statement was approved at the board meeting on Sunday, according to a stock exchange filing.
The net interest income, the core source of income for banks, was not as overwhelming but a significant gain from investments in Treasury bills and bonds supported the lender's impressive profit growth in an adverse climate engendered by inflationary pressure.
"As a strategic initiative, the bank's substantial investment in government securities led to a marked increase in investment income, effectively offsetting the decline in net interest income and supporting the coverage of escalating operating expenses," said the bank in its earnings note.
Following the earnings disclosure, the bank's stock rose 3.38 per cent to Tk 24.5 per share on Monday on the Dhaka Stock Exchange. The stock soared more than 24 per cent in the past one month.
The bank's half-yearly earnings also increased by nearly 21 per cent year-on-year to Tk 2.23 per share for the period of January-June this year.
The net operating cash flow per share soared to Tk 18.04 in H1 this year from just Tk 2.87 in the same period last year, representing a more than 6-fold increase.
The bank explained that operating cash flow improved significantly due to higher inflows in the form of customer deposits.
The net asset value, which refers to the excess of total assets over total liabilities, reached Tk 35.60 per share as of June this year, up from Tk 34.26 in December last year, as profit surged.
The bank is yet to publish its detailed financial statements for the second quarter this year. However, it announced that it will organise an earnings disclosure programme on its Q2 financial statements on July 31.
Meanwhile, deposits at City Bank, including in its Islamic banking wing, grew 28 per cent between December last year and May this year to Tk 564 billion, Bangladesh Bank data shows.
"A significant portion of this surplus fund was invested in government securities, resulting in highest interest income from the investment," said an official of the bank, requesting not to be named.
Bankers say that as the central bank began enforcing disciplinary measures, including the restructuring of bank boards, special audits and merger process involving some weak banks, depositors flocked to stronger, better-governed banks widely perceived as safer money managers.
City Bank raised employee salaries by Tk 3 billion last year to motivate its workforce as the board showed commitment to ensuring growth through good governance practices.
"These are the primary drivers of the performance," said Mashrur Arefin, managing director and chief executive officer (CEO) of City Bank, in a statement earlier.
Annual performance
City Bank's annual profit surpassed Tk 10 billion in 2024 for the first time since its inception in 1983, securing a remarkable 59 per cent year-on-year growth, driven by substantial income from investments in government securities.
Buoyed by the record profit, the bank board disbursed 25 per cent dividends (12.5 per cent cash and 12.5 per cent bonus shares) for 2024.
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