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Islami Bank has reported its lowest quarterly profit of Tk 376 million for the April-June period this year since its listing on the stock exchanges, dragged down by higher provisioning and increased payments to mudaraba depositors.
The country's largest Shariah-compliant lender had earned Tk 3.07 billion in profit in the same quarter a year earlier, according to a stock exchange filing on Monday.
The bank published its financial results for the first and second quarters simultaneously on Monday, delayed by four months and one month respectively, after receiving regulatory approval.
To comply with the newly-enforced stringent non-performing loan (NPL) policy, the lender had to disclose its actual status regarding loans that had turned sour. As a result, its NPLs rose sharply to Tk 476.18 billion in March this year from Tk 328.17 billion in December last year.
Higher loan defaults pushed up provisions significantly. Alongside, the bank paid Tk 34.5 billion to mudaraba depositors in April-June this year - a 64 per cent increase over the same quarter last year.
The bank's half-yearly profit through June this year also plunged 81 per cent year-on-year to Tk 674 million.
S Alam Group and several other business groups, which had close ties to the previous regime and the Awami League, defaulted on loans taken from the bank.
The Chattogram-based conglomerate and its sister concerns reportedly borrowed around Tk 500 billion over seven and a half years in violation of banking rules.
Islami Bank had not set aside adequate provisions against these toxic loans until the political changeover in August last year. To rescue the troubled lender, the Bangladesh Bank reconstituted the board on August 28 last year, removing the group's representatives.
The bank's net operating cash flow per share fell to Tk 17.68 in January-June this year, from Tk 54.79 in the same period a year ago, mainly due to an additional investment of Tk 126.1 billion over the year.
Annual performance
The bank's annual profit also dropped 83 per cent year-on-year to Tk 1.09 billion in 2024, weighed down by higher provisioning.
Provisions exceeded Tk 10 billion in 2024. During the same period, the bank paid more than Tk 90 billion in profit to depositors, up 36 per cent from the year before.
Despite posting a profit, the bank declared no dividend for 2024, following restrictions imposed by the Bangladesh Bank.
According to the central bank's latest directive, issued in March this year, banks availing deferral facilities to meet provisioning requirements are barred from paying dividends from 2024 onwards.
In addition, banks with non-performing loans above 10 per cent of total loans are prohibited from declaring dividends for 2025.
Islami Bank remains one of three companies still trading under the floor price mechanism. Its stock came off the floor a day after the fall of the Awami League-led government on August 6 last year.
The stock closed at Tk 42.5 per share on Monday, down 2.07 per cent from the previous day on the Dhaka Stock Exchange.
babulfexpress@gmai.com