Capricious capital market halves ICB’s profit in H1 FY23

The recent instability in the capital market has caused serious pain to the Investment Corporation of Bangladesh (ICB), as the country’s lone investment bank reported a 67 per cent year-on-year plunge in its net profit in the first half of the current fiscal year.

The ICB which is responsible to keep the share market stable through liquidity supply blamed the capital market volatility for the large-scale drop in its profit.

The ICB is one of the largest investors in Bangladesh’s capital market. Investing in the stock market, providing loans and advances, and acting as manager, trustee, or custodian of mutual funds are the principal roles of the ICB.

Capital market analyst Professor Abu Ahmed, however, raised the question of whether the government provided funds to the ICB to overcome the market instability and bring it back to a dynamic state.

“If the investment bank fails to make a profit due to the stock market’s instability, then who will provide liquidity to the capital market,” this professor said.

The ICB, in the first six months of the fiscal year 2022-23, posted Tk 46.53 crore in net profit against the profit of Tk 140.45 crore in the same period last fiscal.

The company’s net profit in the July-December period of FY23 was also much lower than the H1 profit made in the fiscal year 2020-21.

The company reported a net profit of Tk 62.09 crore in H1 of FY21.

Its consolidated net asset value (NAV) per share stood at Tk 52.98 as on December 2022 which was Tk 52.94 till June same year.

The investment bank’s net operating cash flow per share (NOCPS) stood at Tk 0.19 for the July-December period of the current fiscal because of increased loan recovery and decreased interest payments, according to sources at the ICB.

The company’s net asset value (NAV) per share stood at Tk 54.98 for the July-December period of FY23.

Bivas Saha, deputy general manager and spokesperson for the ICB told The Business Post that the prime reason for the decline in its profits was the slowdown in the capital market.

The country’s capital market started the fiscal year 2022-23 with the Dhaka Stock Exchange’s (DSE) key index at 6,300 points, according to stockbrokers.

But at the end of December 2022, the benchmark index of the DSE stood below 6,200 points, causing losses for most of the listed companies as well.

Another reason behind the slim profits was its inability to liquidate shares due to the prevailing floor prices in the stock market, said Bivas Saha.

As a result, there was a big problem in raising capital by selling shares or making new investments, he added.

The state-owned investment bank’s consolidated net profit stood at Tk 144.58 crore in the last fiscal year (2021-22) which was Tk 115.33 crore in FY21.

Its profit on a solo basis increased by 18 per cent to Tk 113.26 crore in FY22, from Tk 95.27 crore in the previous fiscal.

Got listed on the stock exchanges in 1977, the majority portion of ICB’s profit comes form from capital gains and dividends from the stock market.

Sponsors and directors held a 69.49 per cent stake in ICB, while the government owned 27 per cent, institutional investors 1.92 per cent, and the general public 1.59 per cent as on November 2022.

Its shares remained unchanged at Tk 87.60 per share on the DSE trading board on Wednesday.