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Most NBFIs report lower EPS in first 9 months

  • Published at 10:28 pm November 21st, 2019
web-DSE-File photo of Dhaka Stock Exchange Limited
File photo of Dhaka Stock Exchange Limited Mehedi Hasan/Dhaka Tribune

According to the Dhaka Stock Exchange (DSE) data, 21 NBFIs out of 23 have disclosed their nine-month financial statements as of on Thursday

Above half the listed non-bank financial institutions (NBFIs) have reported lower earnings per share (EPS) for the first nine months (January-September) of the current year, compared to the same period of last year.

According to the Dhaka Stock Exchange (DSE) data, 21 NBFIs out of 23 have disclosed their nine-month financial statements as of on Thursday. 

Of the firms, nine institutions have seen higher EPS while 12 witnessed negative income growth in 3rd quarter (first nine months’19).

Slow growth in loans and advances, lacklustre deposit collections and huge fall in earnings in the first nine months of the current year dragged on the balance sheets of the NBFIs, said an analysis of EBL Securities Limited.

Talking to the Dhaka Tribune, experts blamed the rise of nonperforming loans as well as irregularities in loan disbursement for this regressive trend.

The volume of defaulted loans in the NBFI sector increased to Tk7,221 crore at the end of March 2019, from Tk5,460 crore in December 2018, according to the latest data of Bangladesh Bank.

The volume of defaulted loans in the country’s NBFI sector has been swelling amid a series of scams and irregularities. 

Massive irregularities in the People’s Leasing and Financial Services has finally resulted in its liquidation move.

According to the EBL Securities analysis, amid growing public distrust and series of scams in the NBFI sector, deposits decreased by 6.31% in June’19 over December ’18, while loans and Leases remained flat during the same period.

Former President of Bangladesh Leasing and Finance Companies Association (BLFCA) A Quadir Chowdhury told Dhaka Tribune that the negative situation in financial institution sector started 10 years ago caused mainly by unprofessional directors’ roles and lack of corporate good governance .

“If any company of the stock market performs badly, the entire sector gets affected. So stock investors need to invest after they have acquired financial literacy,” he suggested.

As per the unaudited financial statement, Premier Leasing and Finance Limited registered the highest income growth by 325% in the first nine months and its EPS stood at Tk0.09, which was Tk0.04  in the negative in the same period of previous year.

The EPS of Bay Leasing soared 168% year-on-year to Tk0.26 in the same period. Prime Finance's EPS rose 104%, LankaBangla Finance 100%, IPDC 50% And Islamic Finance’s EPS jumped by 25% during the period.

The EPS of Uttara Finance shot up by 4%, National Housing Finance 2% and Delta Brac Housing Finance 1%  during the first nine months of the year compared to the same period last year.

Conversely, from January to September, the EPS of International Leasing & Financial Services Ltd, FAS Finance, Phoenix Finance, IDLC Finance, Bangladesh (BD) Finance, United Finance, Union Capital, MIDAS Financing and GSP Finance registered negative growth.

The Fareast Finance, First Finance and Bangladesh Industrial Finance Company Limited have continued to incur losses. 

The EPS is the company's profit allocated to each share of a listed firm, indicating a company's profitability. However, analysts have said the unaudited EPS of a company often does not reflect actual financial health of a listed firm, but indicates profitability that influences investors towards their long-term investment plans.

Stock market expert and former Dhaka University teacher Professor Abu Ahmed told Dhaka Tribune that the small investors, muddled by the falling trend in the market and haphazard environment in the financial market, kept selling shares amid volatility in the market. 

The investors were going through a volatile situation amid financial scams, he added.