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Phoenix Finance and Investments suffered a record loss in 2024, driven by increased provisioning and reduced income from the ailing stock market.
The non-bank financial institution reported a loss of Tk 8.08 billion in 2024, compared to a loss of Tk 7.05 billion the previous year.
As a result, the company's loss per share widened to Tk 48.73, up from Tk 42.52 in 2023, according to price-sensitive information disclosed on Thursday.
In light of the substantial losses, the board of directors declared no dividend for the year. The company's annual audited financial statement was approved at a board meeting held the same day.
The company explained that the loss has escalated due to increase in provision of loans, advances and investments. The company had to keep higher provisions against bad loans, which significantly contributed to the overall loss.
According to the rules, every lender has to set aside a certain amount of its income, commensurate with non-performing loans. That is called provision.
Phoenix Finance recorded its first-ever loss of Tk 350 million in 2021 due to additional interest suspense allocations and provisions against stressed loans.
Since then, the non-bank financial institution has accumulated nearly Tk 17 billion in losses over the four-year period from 2021 to 2024, primarily due to prolonged macroeconomic challenges and the lingering post-pandemic impact on its corporate client base.
If clients fail to pay loan installments for more than three months in a row, their accounts get suspended, and the pending interest is not shown as income.
If interest income against bad loans accrues on paper but are not realised, the amount should be excluded from the profit and loss accounts. When this happens, the amount in the suspense accounts may keep growing.
The company did not receive repayments against loans as expected due to the financial distress clients had been going through after the pandemic, which led to big losses.
The NBFI had to keep 100 per cent provision against defaulted loans as per Bangladesh Bank's instructions.
Market analysts said the company has been suffering losses due to irregularities and mismanagement of debt disbursements, even though it was once in a good position.
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