Al-Arafah shares jump on board overhaul

Shares of Al-Arafah Islami Bank surged 7.45 percent after Bangladesh Bank restructured the board of directors by retaining the existing members and adding representatives of the bank’s founding sponsors.

On Wednesday, Bangladesh Bank informed the bank’s managing director of its decision regarding the board. Within a day, Al-Arafah Islami Bank’s share price climbed 7.45 percent to Tk 17.30 as investors reacted to the move.

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A total of 3.37 lakh shares changed hands on the Dhaka Stock Exchange (DSE) yesterday.

Al-Arafah Islami Bank PLC was established as a private limited company in 1995 under the leadership of its sponsor-directors.

In 2023, Abdus Samad Labu, vice-chairman of S Alam Group, became chairman of the bank. Following former prime minister Sheikh Hasina’s departure from the country on August 5, 2024, amid political unrest, Labu also left the country and lost control of the bank.

Following the political transition, Bangladesh Bank dissolved the boards of several banks. Al-Arafah Islami Bank’s board was reconstituted with the appointment of Khwaja Shahriar, former managing director and CEO at LankaBangla Finance, as chairman.

However, the bank’s non-performing loans continued to rise, and it failed to declare any cash dividend over the past two years. As a result, it was downgraded to the Z category on the Dhaka Stock Exchange. On Wednesday, Bangladesh Bank restructured the board once again.

The new board retains the existing members while adding 14 directors from the bank’s original sponsor-entrepreneurs, including Khalilur Rahman, founder of Chattogram-based KDS Group, and his associates.

Although S Alam Group had taken control of the bank in the past, it has no significant loan exposure with the lender.

The bank’s profit rose 11.7 percent year on year to Tk 85 crore last year. During the same period, deposits increased 6.89 percent to Tk 48,596 crore.

Non-performing loans climbed 19 percent to Tk 8,852 crore, accounting for 17 percent of total loans. At the end of the year, the bank’s return on assets stood at 0.13 percent, while its net profit margin was 1.05 percent.