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The first private sector non-bank financial institution – IPDC Finance Ltd – has finally turned around after being bootless for years.
Its non-performing loan (NPL) ratio dropped to 3.15 per cent from 13.04 per cent between 2011 and 2021 while deposit increased, and interest income and profit made a considerable progress.
This information was revealed in an equity note prepared by the EBL Securities Ltd.
According to its annual reports, IPDC’s loan volume increased from Tk 56.38 crore to Tk 205.62 crore between 2011 and 2021, but the NPL ratio dropped considerably which is the benchmark for the sectoral improvement.
The EBL equity note said IPDC expanded its loan portfolio remarkably since its takeover by BRAC and its NPL remains at a modest range. In 2015, BRAC and allied took (40 per cent) the ownership of IPDC.
The NBFI increased performance continuously after the BRAC held its share. The last five years of its financial performance was eye-catching.
Its deposit increased by 103 per cent, loan and leases 89.52 per cent and interest income and profit 119 per cent and 163 per cent respectively.
The deposit was Tk 2,975 crore in 2017, which rose to Tk 6,040 crore in 2021. Loan and leases increased from Tk 3,447 crore to Tk 6,533 crore between 2017 and 2021.
Meanwhile, the interest income was Tk 299 crore in 2017, which shot up to Tk 654 crore last year. Besides, its net profit after tax soared from Tk 33.54 crore to Tk 88 crore between 2017 and 2021.
IPDC Managing Director and CEO Mominul Islam told The Business Post that, “Undoubtedly, we have done better business than everyone expected. In order to become the most trusted financial institution in the country, we are giving more importance to the young society, women and disadvantaged segment of population.”
The company performed well during the pandemic last year. Loans, advances and leases increased 22 per cent, deposit 15 per cent and net profit 25 per cent last year compared to what was achieved in 2020.
In this context Mominul said during the pandemic IPDC continued to work with the SME and retail clients.
“We are the only NBFI in the country that has implemented the Covid-19 incentive package at due time,” claimed the managing director.
The EBL equity note mentioned that despite better performance, IPDC would suffer due to the gradually increase in its cost-income ratio.
IPDC is expanding business operation. Its number of branches, employees and IT investments rose in the last 2-3 years.
The cost-income ratio was within 30 per cent before 2015, and in 2016, it became 40 per cent and last year it was 41 per cent.
The current cost-income ratio stands at 36 per cent and if the aforesaid expansion fails to bring in desired profit, the increased operating costs will become a burden for the company, observed the EBL.
As part of its new business expansion, the company has some plans for their product Orjon & Danaa till 2026, the attainment of which may drive its growth.
IPDC has already developed its collaborations with companies like BSRM, Berger and bKash to make lending process easy and cost-effective.
Moreover, it is working with Unilever and British American Tobacco for channeling their supplies to rural areas, stated the equity note.
The institution was listed in the capital market in 2006. From the last week of March, its share price kept moving upward and increased 73.5 per cent to Tk 59 on April 5.
The market capitalization of the company is Tk 2,111 crore, its paid-up capital is Tk 371 crore and has a Tk 224 crore surplus reserve.
The company distributed 12 per cent cash dividend last year.
IPDC is the first private sector financial institution of the country which laid its foundation in 1981.
Now it has 15 branches and 860 employees dealing with retail, corporate, SME, women entrepreneurship, etc.
