Most banks post moderate earnings in Q3

Most banks have reported moderate earnings in the third quarter of the current year thanks to higher incomes from share market investments and credit growth.

Of the 30 listed with Dhaka Stock Exchange (DSE), 19 banks made healthy earnings per share (EPS) compared to that in the same period last year. Four earned marginal returns while five saw a fall.

Only ICB Islamic and AB reported negative earnings.

EPS is the portion of a company's profit allocated to each outstanding share of common stock, meaning it is an indicator of the company's profitability.

Banks made good profits this year compared to the preceding one due to rising credit demand for business expansion in the private sector, said MA Halim Chowdhury, managing director of Pubali Bank.

Share price hikes in recent months also contributed to it with banks profiting from stock investment because of a bullish market, the chief executive said.

Pubali Bank made a net profit of Tk 38 crore in the July-September quarter compared to Tk 30 crore in the same period last year. Meanwhile, its EPS improved to Tk 0.40 from Tk 0.32.

Rupali Bank, the only listed state-owned bank, made a profit of Tk 7 crore, recovering from a huge loss of around Tk 275 crore in the same period last year.

The financial institution's EPS increased to Tk 0.23 in the July-September period, up from negative Tk 9.05 in the same period last year.

Its EPS surged to Tk 0.90 in the nine months, although it was at a loss of Tk 7.96 in the same period last year.  The bank's effort to automate its system to the full has contributed a lot to improve its service quality and bag a good profit, said Md Ataur Rahman Prodhan, managing director of Rupali Bank.

He said the bank emphasised increasing SME loans at the field level. Moreover, the bank got linked with some reputed business groups by providing loans, he said.

The bank is also investing in different sectors and expanding the loan portfolio which also resulted in a good profit, said the executive.

Since June 29, Rupali Bank's stock price soared 140 percent to Tk 64.2 on Thursday, according to the DSE.

AB Bank made a loss of Tk 11.45 crore in the third quarter this year from a profit of Tk 25 crore in the same period last year.

The bank reported negative earnings of Tk 0.17 per share in the July-September period, although it was in the positive at Tk 0.37 in the same period last year, according to DSE.

The bank incurred a loss in the third quarter due to a squeeze in business activities, said Moshiur Rahman Chowdhury, managing director of AB Bank.

He said the bank could not raise its capital according to fulfil the regulatory requirement as Bangladesh Securities and Exchange Commission (BSEC) did not give go-ahead to it to raise the fund.

In July last year, the bank applied to BSEC seeking approval to raise capital through issuing rights shares, he said.

But the authority did not respond for one year and did not even show any ground for keeping the case pending, said the executive.

As a result, the bank reduced the loan portfolio to comply with the regulatory capital requirement, he said.

He said the bank recently sent a proposal for restructuring a big chunk of loans. The default loan amount will reduce by December if the regulatory body approves it, he hoped.  

The banks which saw a fall in the third quarter earnings are: First Security Islami Bank, Islami Bank, Mutual Trust Bank, One Bank and Standard Bank.

Islami Bank's EPS have been on the decline this year, which became a matter of concern for the thousands of investors of the country's largest private bank.

At the third quarter's end in 2017, Islami Bank's EPS stood at Tk 0.31, down from Tk 1.18 in the second quarter and Tk 0.62 in the first quarter.

The bank earned Tk 2.11 per share during the January-September period this year, down from Tk 2.61 a year earlier.

Even though the operating profit surged, the EPS declined as the bank has to maintain huge provisioning against loans that are awaiting the nod from the central bank for rescheduling, said Arastoo Khan, Islami Bank's chairman.

In the first nine months of 2017, Islami Bank's operating profit surged 29.24 percent year-on-year to Tk 1,569 crore.

The banks which reported good earnings in the third quarter are: Bank Asia, Brac Bank, City, Dhaka, Dutch-Bangla, EBL, Exim, Jamuna, Mercantile, NBL, NCC, Premier, Prime, SIBL, Southeast, Trust and UCB.

Al-Arafah, IFIC, Shahjalal Islami and Uttara saw marginal profits.