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The state-owned Investment Corporation of Bangladesh (ICB) has finally revealed its true financial picture, declaring a loss of Tk 12.14 billion for FY25 after making full provisions that had previously been deferred.
"Corrupt people, linked to the past regime, misused public money to serve their own purpose. There are loans provided by the ICB under the previous regime, which are yielding no return," said ICB Chairman Prof Abu Ahmed.
He also said the ICB had invested in junk stocks in the name of supporting the market under the past regime. "The funds collected for the investments cost ICB more than 12 per cent annual interest.
"The bad investments are not giving any return, but the ICB is paying the interest. This is an impossible situation. This is an outcome of the misdeeds done by the past government since 2011," Mr Ahmed said.
The incumbent management has decided to disclose the true financial status of the investment bank.
As the ICB had been avoiding making provisions for the bad loans, the earnings reported previously were not actual figures. This time, the organisation fully complied with the provision requirement.
"We have to recognize our true situation if we want to revive," the ICB chief said.
According to him, the ICB will need a fresh loan of at least Tk 50 billion from the government at a cheaper rate - 4 per cent interest - for its survival.
"The loan is needed very soon. Otherwise, the loss will deepen.
"We will pay the costly loans as soon as we get the money. The rest of the money will be invested in the stock market. We have made guidelines for stock selection. We will sell bad shares and will invest in good shares, which will help us recover."
The investment bank showed remarkable gains from dividends after a Tk 10 billion investment in the equity market, received in December last year from the government as a comparatively affordable loan.
Earlier, ICB demanded a Tk 50 billion low-cost loan from the government and has received Tk 30 billion so far. Out of the fund, ICB repaid Tk 20 billion of costly loans and invested Tk 10 billion in the stock market, from where it earned a handsome amount.
The Bangladesh Bank has recently rejected a suggestion by the Ministry of Finance to disburse another Tk 10 billion to the ICB to avoid risking public money.
But the ICB chief, a veteran economist, believes if the ICB collapses, there will be a bigger impact on the economy.
Following the latest disclosure, ICB's share price dropped 6.14 per cent to Tk 42.80 on the Dhaka Stock Exchange (DSE) on Wednesday.
Currently, the ICB is paying nearly Tk 10 billion a year as interest, whereas it earns only Tk 7 billion annually in the form of interest, dividends and capital gains.
It has declared no dividend for FY25 for the first time since its listing.
It has also reported a loss per share of Tk 14 in FY25, compared to Tk 0.38 per share profit in FY24.
The corporation has long been playing a stabilising role in the capital market, using funds received from the central bank as well as its own resources. After the 2010 stock market debacle, the ICB borrowed heavily at high interest rates and invested in the volatile market to support stability.
However, the institution has also suffered losses from poor investment decisions. It has fixed deposit receipts (FDRs) worth more than Tk 9.20 billion locked in weak and scam-hit non-bank financial institutions, from which it is not receiving any return.
ICB had maintained a strong performance after its listing in 1977 through 2011, when it posted a record annual profit of Tk 5 billion. Its gradual decline began thereafter, caused by factors such as a prolonged bear market, high cost of funds, a liquidity crunch, and overdependence on the stock market for income.
ICB Securities Trading Company - a subsidiary - trades shares on behalf of investors while managing its own portfolio, earning commission and capital gains. Two other subsidiaries - ICB Asset Management Company and ICB Capital Management - have failed to generate expected earnings amid the prolonged market gloom.
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