Higher investment in govt securities fuels EBL profit by 12pc

Eastern Bank Ltd. (EBL) gained a moderate 11.96 per cent year-on-year growth in profit in January-September this year, reaping benefits from increased investments in government securities.

The lender bagged a consolidated net profit of Tk 4.21 billion in the nine months to September.

The consolidated earnings per share (EPS) stood at Tk 3.53 for January-September this year, increased from Tk 3.20 reported for January-September last year.

EBL also had less requirement of provisioning against bad loans for January-September, supporting the profit growth.

Its Managing Director Ali Reza Iftekhar said the bank had invested surplus deposits in government securities, while the Bangladesh Bank set six-month moving average rate (SMART) of Treasury bills as the reference rate for fixing the lending rate.

The market-based reference rate or SMART was introduced at the end of June this year.

It takes time to make clients accustomed to any new system such as SMART, said Mr Iftekhar, which was why EBL laid emphasis on investments in government securities. The investment provided a "very good return", he added.

Due to the introduction of SMART, borrowing interest rose up to 10.10-10.14 per cent in August-September from the earlier 9 per cent cap.

EBL gained a 39 per cent profit growth to Tk 2.37 billion in April-June, this year, compared to the previous quarter ended in March. Its profit fell quarter-on-quarter to Tk 1.83 billion in the third quarter to September this year.

EBL's consolidated net operating cash flow per share (NOCFPS) was Tk. 4.04 for January-September, down from Tk. 9.42 (restated) for January-September last year.

The consolidated net asset value (NAV) per share was Tk. 31.88 as of September this year, up from Tk. 29.62 (Restated) until December last year.

The share price of EBL has remained stuck at the floor price of Tk 29.40 since May 7.

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