Jamuna Bank's profit grows 18pc on higher interest, investment income

Jamuna Bank has secured more than 18 per cent year-on-year growth in profit to Tk 2.80 billion in 2024, driven by higher interest and investment income following the introduction of market-based interest rate.

The third generation private commercial bank's consolidated earnings per share (EPS) stood at Tk 3.17 for the year, up from Tk 2.68 (restated) for the previous year, according to a stock exchange filing on Monday.

Higher net interest income, the core source of earnings for the bank, along with gains from government securities, bolstered the lender's earnings growth, even in a challenging business environment.

Based on the profit growth, the board has recommended 17.5 per cent cash and 6.5 per cent stock dividends for the year, subject to the approval of regulatory authority and shareholders in the upcoming annual general meeting on June 24.

Currently, the number of outstanding shares of the bank is 882 million. As a result, the bank will provide Tk 1.54 billion in cash dividends to its shareholders.

"The retained amount of recommended stock dividend will be used to strengthen the capital base of the bank as per BASEL III, which will also help increase business capacity of the bank and improve certain regulatory ratios," said the bank in its earnings note.

The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, stood at Tk 24.61 per share, slightly down from Tk 24.67 in the previous year.

Meanwhile, despite the higher profit, the bank's stock dropped 2.56 per cent to Tk 19 per share on Monday on the Dhaka Stock Exchange.

The bank is yet to disclose the detailed annual financial results, such as interest income, interest payment and investment income for 2024.

However, its nine-month interest income grew 38 per cent year-on-year through September last year, while interest payment also rose 54 per cent during the period compared to the same period a year ago.

Subsequently, the lender's net interest income rose 2.10 per cent year-on-year in the nine months through September last year.

The bank's investment income also jumped 17 per cent year-on-year in the nine months, leading to higher profits.

Bank to issue subordinated bonds Jamuna Bank wants to raise Tk 10 billion by issuing 5th subordinated bonds to enhance the Tier-II capital base of the bank in line with the Bangladesh Bank's guidelines on risk-based capital adequacy.

The bond issuance is subject to the approval of the regulatory authorities concerned, which will be non-convertible coupon bearing subordinated redeemable bonds.

The proceeds will be treated as capital and it will help the bank grow its investment and loan portfolio.

Subordinated bond is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated bonds are thus also known as junior securities

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