bKash posts losses for 3rd year in a row

bKash – the biggest mobile financial service (MFS) operator in Bangladesh – incurred Tk 123 crore losses in 2021, despite posting a 22 per cent increase in revenue hitting Tk 3,196 crore.

This was recently disclosed in the audited financial statement by BRAC Bank, the majority shareholder of bKash. This particular statement incorporated an audited report of bKash as well. The leading MFS operator has been suffering consistent losses since 2019.

bKash posted Tk 67 crore losses in 2020, and  Tk 62.51 crore in 2019, according to the company’s financial statements.

The MFS operator attributed these losses to the increase in agent and distributor commissions, commercial outlay, and technology expenses to support the early investment and growth stage of the company.

However, a consistent rise in the number of active customers and revenue due to these concerted investments is expected to yield higher returns in the forthcoming years, company sources say.

The Business Post had made multiple attempts to contact bKash’s senior officials on phone for comments on the matter, but they did not respond till the filing of this report.

bKash had posted Tk 2,625 crore in revenue in 2020. The company has 57 million registered customers across Bangladesh, and holds a 75 per cent market share of the country’s MFS sector. 

Meanwhile, the profits of BRAC Bank – bKash’s parent company – have jumped by 22 per cent to Tk 555 crore in 2021.

Brac Bank recently admitted to flouting regulations by declaring a 15 per cent dividend to shareholders for the year 2021 without securing prior approval from the Bangladesh Bank.

According to the dividend policy for banks issued on February 7 last year, the central bank’s approval is a must for declaring a 15 per cent dividend – including 7.5 per cent in cash, which banks can only announce after preserving 11.87 per cent capital against risk-weighted assets.

On the issue, Bangladesh Bank Executive Director and spokesperson Md Serajul Islam had said, “BRAC Bank has responded to as central bank letter, and admitted to breaking the regulation.” They have assured us that such a violation will not be repeated in the future.”

Meanwhile, a senior official of Brac Bank had said, “The final approval regarding the dividend announcement will come during the annual general meeting (AGM) scheduled for April 28th this year.”

The bank reported consolidated earnings per share (EPS) of Tk 3.93 for the year that ended on December 31, 2021, compared to Tk 3.17 for the same period previous year. 

In November last year, Japan’s SoftBank agreed to acquire a 20 per cent stake in bKash.

BRAC Bank’s board approved the execution of a share purchase and subscription agreement amongst bKash and its existing shareholders, said BRAC Bank in a statement.

There will be no changes to the number of shares held by BRAC Bank in bKash and, on completion of the transaction, BRAC Bank will continue to remain the majority voting shareholder of bKash, it added.

The agreement is subject to the relevant regulators’ approval.

According to BRAC Bank’s most recent financial report, BRAC Bank owns 51 per cent of bKash’s total equity shares, USA’s Money in Motion LLC owns 29 per cent, International Finance Corporation (IFC) owns 9.9 per cent, and Alipay Singapore owns 10 per cent.

The Bill and Melinda Gates Foundation invested in bKash, in 2014, and Alipay Singapore E-Commerce Private Limited (Alipay) in 2018. bKash began operations in 2011, and launched international remittances in 2013.