Mercantile Bank posts Tk 223cr profit

Mercantile Bank's net income rose 0.39 per cent year-on-year to Tk 223 crore in 2020 thanks mainly to the lower provisioning by the third generation private financial institution.

Depending on the profit, the listed bank recommended 10 per cent cash and 5 per cent stock dividends for its shareholders.

The dividend declarations boosted its share price to hit Tk 13.3 each yesterday, posting a 3.91 per cent increase from the previous day. However, the bank's audited financial report indicated that its net interest income dropped 45 per cent to Tk 273 crore during the period.

The bank was actually saved by the lower provision, which dropped 67 per cent year-on-year to Tk 127 crore.

Its profit before provision fell 45 per cent to Tk 408 crore. The bank's net investment income that comprises of Treasury bill bonds and investment in equities rose 8 per cent year-on-year to Tk 416 crore.

The bank has also informed that stock dividend has been declared to strengthen Tier-1 capital base as per Basel-III compliance for the coming year, according to the report.

The bonus shares were declared out of accumulated profit and not declared from the capital reserve or revaluation reserve or any unrealised gain or out of profit earned prior to incorporation of the bank.

They were also not declared through reducing paid-up capital or through doing anything so that the post dividend retained earnings become negative or a debit balance, according to the bank.