Most banks see EPS fall
Some 18 of the 30 listed banks saw their earnings per share (EPS) plummet in the first quarter of the year because of huge provisioning against default loans.
EPS is the portion of a company's profit allocated to each outstanding share of common stock. In short, it serves as an indicator of a company's profitability.
One, AB, Al Arafah, City, Dhaka, Eastern, First Security, Islami, Mercantile, National, Prime, Rupali, Shahjalal, Southeast, Standard, Trust and Uttara saw their EPS decline, according to data from the Dhaka Stock Exchange.
On the other hand, ICB Islami saw higher losses this quarter. Ten banks though saw their EPS grow. Pubali is yet to announce their EPS.
In the first quarter, One Bank's EPS declined the most, by 73.17 percent year-on-year, to Tk 0.33.
“We had Tk 30 crore of unrealised loss from our capital market exposure due to the decline in bourse's index,” said Ashraful Haq Amin, senior vice-president and in-charge of finance division of One Bank. Dhaka Stock Exchange statistics shows its benchmark index, DSEX, declined 656.97 points, or 10.50 percent, to 5,597.44 points in the first quarter.
The banking sector had to keep huge provisioning in the first quarter as the classified loans are soaring, said Khondkar Ibrahim Khaled, a former deputy governor of the Bangladesh Bank. “Those with higher classified loans saw their EPS decline mostly.”
On the other hand, many banks could not disburse new loans in the first quarter as they have already reached their loan-deposit ratio, so profits were hampered, he added. Huge competition to attract deposits is another reason for the decline in banks' EPS in the quarter.
Banks are offering higher interest on deposits but the lending rate is yet to rise proportionally, so the spread declined this quarter and with it, the EPS.
For instance, in March banks' spread stood at 4.34 percent, in contrast to 4.62 percent a year earlier.
“We are keeping sufficient provisioning, so EPS is affected,” said Mohammad Habibur Rahman Chowdhury, deputy managing director and chief financial officer of Prime Bank.
The main difference maker in this quarter's EPS was the declining operating profit, he said.
Prime Bank's operating profit this quarter stood at Tk 109 crore, down almost 55 percent year-on-year.