IPDC Finance's profit rose 5.9pc on higher investment, interest income

IPDC Finance has reported a 5.9 per cent year-on-year growth in profit to Tk 363 million for 2024, driven by robust investment income and higher interest earnings following the introduction of market-based interest rate.

The non-bank financial institution's earnings per share (EPS) stood at Tk 0.93 for the year, up from Tk 0.88 the year before, according to a stock exchange filing on Thursday.

The profit growth could be secured due to higher investment income from government securities and lower operating expenses, said the company in a statement. The company's operating efficiency seems to have played a big role in its business performance in an adverse business climate engendered by inflationary pressure. Its operating profit jumped 35.8 per cent year-on-year to Tk 1.76 billion in 2024.

At the same time, the NBFI's investment portfolio comprising government securities and other financial instruments recorded a remarkable 110.5 per cent year-on-year growth in 2024. That boosted investment income by Tk 452 million, making a 194.6 per cent year-on-year growth last year, said the company.

Notably, investment in government securities more than tripled from Tk 1.61 billion in 2023 to Tk 5.20 billion in 2024, ensuring a stable and secure income stream amid challenging economic conditions.

Despite a slight contraction in the loan portfolio, gross interest income rose 18.5 per cent year-on-year to Tk 8.81 billion, primarily driven by elevated interest rates. The Bangladesh Bank (BB) introduced a market-driven interest rate in May last year after a break of four years while the average yield rate of the government securities hovered nearly 12 per cent throughout the year.

Interest expenses also increased 28.1 per cent, owing to higher deposit costs, policy rate hikes, and overall liquidity stress in the financial sector, said the company.

In response to the evolving macroeconomic environment, IPDC Finance adopted a cautious stance on corporate lending, with strategic emphasis on small-ticket SME financing, consumer lending, and risk-free investments, said the company.

The NBFI maintained prudent credit risk management practices throughout the year, limiting the non-performing loan (NPL) ratio to 5.83 per cent, well below the industry average, despite significant external headwinds.

To safeguard portfolio quality, the company increased its accumulated provisions by 18.4 per cent to Tk 3.57 billion in 2024.

Customers' deposits stood at Tk 51.76 billion as of December 2024, registering a modest 2.1 per cent growth compared to a year earlier, despite weakening customer sentiment across the financial sector.

IPDC Finance continued to hold a robust market presence, securing over 11 per cent of the deposit market of non-bank financial institutions.

Based on the annual profit, the board of directors of the company has recommended 5 per cent cash and 5 per cent stock dividends for 2024, subject to the approval of regulatory authority and shareholders in the upcoming annual general meeting.

The company's AGM will be held on June 2 while the record date is May 8.

"Stock dividend has been recommended to strengthen the capital base of the company for supporting future business growth as well as loans portfolio growth aspirations in the upcoming years and supporting smooth operational cash requirement," said the company in its earnings note.

Meanwhile, the stock rose 1.21 per cent to Tk 16.7 per share on Thursday on the Dhaka Stock Exchange.

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