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IDLC Finance secured an 80 per cent higher profit in its third quarter through September this year, compared to the same quarter a year ago, on capital gains from good shares.
According to a stock exchange filing on Monday, the non-bank financial institution (NBFI) secured earnings of Tk 503 million in Q3 this year.
In the first nine months to September this year, profit surged 25 per cent year-on-year to Tk 1,254 million.
"We have as usual return from our loan portfolio in this quarter but we have gained a very good return from our stock market investment and government bonds and bills," said Mohammad Masud Karim Majumder, chief financial officer (CFO) of IDLC Finance.
After the regime change on August 5, the capital market index jumped 15 per cent in just 4 trading days. The main index jumped from 5,229 points on August 4 to 6,016 points on August 11.
Though the index has lost 14 per cent since then, fundamentally-strong companies have not lost all the initial gains made in the second week of August. BRAC Bank, for example, soared 58.40 per cent on the Dhaka Stock Exchange between August 4 and September 2 and then lost 16 per cent by Monday.
"We had a huge investment in BRAC Bank. So we had a huge recovery there. Also, other fundamentally strong stocks have given us a boost to the profit. At the same time we have rebalanced our portfolio by selling some weak shares and taking positions in some good stocks," said the CFO.
In the first nine months of 2024, the NBFI's cash flow improved to Tk 8.47 per share from Tk 0.69 in the negative per share. Cash flow increased as cash generation from loans and advances went up by TK 11,948 million, according to the company.
Historically, IDLC Finance is a big investor in the equity market. So it is already evident that when the market does well the company's profit goes up.
The stock of IDLC Finance climbed 3.43 per cent to Tk 36.20 per share on the Dhaka Stock Exchange on Monday.
In 2023, the NBFI earned a profit of Tk 1.51 billion, 21 per cent lower than 2021.
Its profit returned to the growth trajectory after the government removed the interest rate cap.