Top NBFIs post higher earnings in third quarter

Non-bank financial institutions (NBFI) seem to have completely recovered from the Covid shock as the key market players, except for IDLC Finance, have posted significant rise in their earnings in the July-September period of the current year, comparing to that of the previous year’s same period.

According to the Dhaka Stock Exchange (DSE) data, eight leading NBFIs disclosed their financial statements for the third quarter until Thursday.

Of them, six posted higher earnings per share (EPS) while the remaining two witnessed negative income growth in the third quarter.

The good performing NBFIs are – Bay Leasing and Investment Limited, Prime Finance and Investment Limited, Bangladesh Finance, Lanka Bangla Finance Limited, IPDC Finance, Delta Brac Housing Finance Corporation.

On the other hand, IDLC Finance and Islamic Finance and Investment Limited posted 41 per cent and 48 per cent negative earnings respectively.

Industry insiders attributed the good earnings to increased deposits and loans, uptrend of spread (interest difference between deposits and loans), and good return from the capital market.

In the third quarter, Bay Leasing reported a 122 per cent growth in its earnings, which is the highest growth rate comparing to that of its peers.

It is followed by Prime Finance which posted around 67 per cent growth in earnings. In a filing with the DSE, Prime Finance said the capital gained from the company’s land sale put a positive impact on its earnings.

Bangladesh Finance witnessed a 55 per cent growth in earnings in the quarter. Its Managing Director and

Chief Executive Officer Md Kyser Hamid told The Business Post, “EPS has increased owing to reduction of cost of deposit and borrowings, realized capital gain from investment in share and increase in brokerage commission compared to the same period of previous year.”

He also said that net asset value (NAV) had increased due to rise in deposit comparing to the same period of previous year.

Apart from that, the rates of earning growth of Lanka Bangla, IPDC and Delta Brac Housing Finance Corporation were 90 per cent, 48 per cent and 26 per cent respectively.

IPDC Managing Director Mominul Islam told The Business Post, “Our loans and advances have increased by 17 per cent and deposits by 15 per cent last quarter, which translated into the income growth.”

He further said, “The profit we made in the last quarter as well as in the previous nine months is sustainable as we have been able to maintain the provision’s reserves.”

On the contrary, one of the leading NBFIs, IDLC Finance, reported a negative profit growth owing to increased default loans.

The company’s EPS declined 41 per cent in the July-September quarter, comparing to the previous year’s same period.

The earnings decline rate of Islamic Finance is even higher than that of IDLC as it posted a 48 per cent fall in its earnings in the July-September period.

Currently, there are a total of 23 NBFIs listed with the stock exchanges. Of them, at least five institutions are in critical condition due to different financial scams. Another three companies that are marred with myriad irregularities are struggling to survive.