IDLC Finance's income up 32pc, driven by high interest rate, lower provision
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IDLC Finance experienced a 32 per cent year-on-year rise in consolidated net profit to Tk 2.0 billion in 2024, driven mostly by a rise in interest rate.
A significant decline in provisioning also facilitated the company's profit growth.
The company's board of directors on Thursday approved the financial statements for the year and recommended a 15 per cent cash dividend and a 5.0 per cent stock dividend for 2024.
Its additional managing director Syed Javed Noor said the firm rationalised interest rate of existing loans following the introduction of market-driven interest rate in May last year.
Apart from a high return from investments in Treasury bills, the company's provisioning requirement declined 40 per cent in 2024. The non-performing loan (NPL) ratio fell to 4.45 per cent in 2024 from 4.70 per cent in the previous year.
"All these factors played a role behind the significant profit growth experienced by IDLC Finance," Mr. Javed said.
The company has reported a consolidated EPS (earnings per share) of Tk 4.82 for 2024, up from Tk 3.64 the year before.
In 2024, IDLC Finance laid importance on collections that resulted in a positive operating cash flow in 2024 whereas the cash flow was negative in the previous year.
It reported a net operating cash flow per share of Tk 8.42 in 2024 against Tk (22.53) in 2023.
IDLC Finance reported a consolidated net profit worth Tk 2.54 billion in 2020, increased from Tk 1.69 billion in 2019, supported by profits realised from Treasury bonds.
Later, the profit gradually declined to Tk 1.51 billion in 2023 as the company's interest spread was squeezed by a lending rate cap imposed by the government in 2020 following the Covid outbreak. The company's loan installments were also stalled at the time.
"After the withdrawal of the lending rate cap in July 2023, we started witnessing a turnaround," Mr. Javed said.
In the meantime, the company's stock closed at Tk 42.50 per share on August 15, 2024. Later, the stock experienced ups and downs and finally closed at Tk 30.50 each share on Thursday.
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