Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Midland Bank has decided to issue redeemable zero-coupon bonds to raise Tk 5.06 billion to boost the lender's asset portfolio.
The decision was first taken at a board meeting in November 2021, according to a filing on the Dhaka Stock Exchange. The terms and timeline, and the coupon rate were set in subsequent board meetings considering the prevailing rate of the instruments of the financial market.
A zero-coupon bond is a debt instrument that does not make interim interest payments. It instead trades at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.
The bonds will be issued to high net worth individuals, general insurance companies, life insurance companies, asset management companies, corporate entities, trusts etc, said the bank.
The tenure of the bonds will be 5 years with a discount of 6.50 per cent to 7.75 per cent per year (proposed). The discounted value will be Tk 4.29 billion-Tk 4.40 billion depending on the discount rate at which the bonds will be subscribed.
Midland Bank, which made its trading debut in March this year, raised Tk 700 million from the primary market by floating 70 million ordinary shares under the fixed price method.
The bank's assets grew 15.72 per cent year-on-year to Tk 79.86 billion at the end of 2022.
The bank recorded a moderate 9.33 per cent growth in net profit to Tk 562 million in 2022. Based on the profit, the bank declared 5 per cent cash dividend to shareholders.
In terms of asset quality, the bank's non-performing loan (NPL) stood at 2.78 per cent in 2022, down from 3.17 per cent a year before while the market average is 8.16 per cent.
The loan book recorded a growth of 15.10 per cent to reach an outstanding total of Tk 52.79 billion at the year end, mainly contributed by the corporate loan portfolios.
Deposits grew 13.86 per cent to reach Tk 57.76 billion at the end of 2022.
The bank's capital-to-risk weighted assets ratio (CRAR) was 14.83 per cent under Basel-III as of December 2022, against the central bank's requirement of 12.50 per cent.
babulfexpress@gmail.com