Brac Bank's profits soar 35pc in 2017

Brac Bank saw its profits soar 35 percent year-on-year to Tk 550 crore in 2017 on the back of nimble performance by the small and medium enterprise section.

The bank offered 25 percent dividend for the year, down from 30 percent in 2016.

The total dividend for 2017 would be in stocks, whereas in 2016 it was 10 percent cash and 20 percent stock. Selim RF Hussain, managing director of Brac Bank, said the lower dividend was because the bank's capital expenditure surged due to compliance with Bangladesh Bank's capital requirement.

It did not declare cash dividend as it is planning to reinvest for business expansion, particularly in corporate banking. “Foreign investors prefer cash dividend but local investors prefer stock dividend.”

At the Dhaka Stock Exchange, Brac shares gained 1.52 percent, or Tk 1.5, to close at Tk 100 yesterday.

The higher profit growth is unlikely in the coming year due to lots of challenges prevailing in the market amid liquidity pressure, Hussain said. “The entire banking sector is going through a serious crisis with the stress of liquidity and high non-performing loan ratio. However, Brac is well-positioned with liquidity and will continue in the comfort zone.”

The liquidity crisis in the banking sector is the consequence of indiscipline in the last several years, he said.

Hussain went on to laud the central bank move to lower the banks' cash reserve ratio to 5.50 percent from 6.50 percent, saying it will ease liquidity pressure for a number of banks. “The lending rate will also go down within one or two months.”