IDLC Finance Limited yesterday turned out to be the top loser at Dhaka Stock Exchange – clearly a sharp response by the investors to its two price sensitive corporate disclosures.
The company’s share price lost its value by 9.8% to close at Tk46.8 each, making up a total of Tk3.27cr worth of shares traded.
The non-banking financial institution has reported a net loss of Tk4.49 crore during the first quarter of the current year against a profit of Tk10.27 crore during the same period last year.
The quarterly reports show specific provisioning to be weighing down profitability despite showing a significant growth in its core business, net interest income.
Specific provision for the first quarter increased to Tk21.2 crore from Tk2.3 crore last year.
“Due to regulatory requirement, we had no option to divide the provisioning into four quarters of a year, but to report in the last quarter that ate up most of our profits,” said Md Moniruzzaman, managing director of IDLC Investments Ltd, a wholly-owned subsidiary of IDLC Finance Ltd.
He mentioned that the up coming quarters will not see such provisioning, which would directly result in a surge of the company’s profits.
The company’s operating expenses showed a growth of around 5% while operating income surged by 50% in the last quarter again the same period of the previous year.
The reports show abnormal specific provision figures that made the company to report losses.
Md Moniruzzaman added: “In the future, additional provisioning will not be required unless the loan portfolio does not deteriorate.”
Analysts suggest poor business environment and loan quality in the past years might have played a part in such high provisions.
The company in its other corporate disclosure, has also informed that its board of directors’ decision to purchase a commercial floor space on the fifth floor of World Trade Centre Agrabad C/A, Chittagong measuring around 7,871.40 square feet along with eight car parking spaces.
The purchase will be used for its business purposes costing the company Tk14.64852cr, said the disclosure.