Bankers say most of the banks' earnings are better because of improved recovery from their defaulting clients, and higher interest rates on lending
Eighty percent listed banks have reported higher earnings per share (EPS) for the first six months (January—June) of the current year, compared to the same period of last year.
Bankers say most of the banks' earnings are better because of improved recovery from their defaulting clients, and higher interest rates on lending.
Stakeholders of capital market attributed the rise in banks’ profitability to their efforts to lessen operational costs and lower rates for deposit.
This profitability will have a positive role in the capital market, they hope.
According to banks’ disclosure posted on the Dhaka Stock Exchange (DSE) website, of the 30 listed banks 24 registered higher EPS while six banks have registered negative growth in January-June period compared to the same period last year.
The EPS is the company's profit allocated to each share of a listed firm, indicating a company's profitability.
Pubali Bank Managing Director MA Halim Chowdhury told Dhaka Tribune that as per the half yearly unaudited report most of listed banks’ earnings are better because of better recovery of their defaulted loans.
“Besides, the banks are now more compliant than before and abiding by all directives of the central bank”, he added.
As per the unaudited financial statement, Exim Bank registered the highest growth by 331% in the first half of the current year and its EPS stood at Tk0.56, which was at Tk 0.13 in the same period a year ago.
Exim Bank managing director and CEO Mohammed Haider Ali Miah told Dhaka Tribune: “Our recovery team has been strengthened, and bad loans have decreased. We are now very cautious in terms of new investment, but income has increased due to nursing of old investment.”
The IFIC Bank's consolidated EPS also rose 159% to Tk 1.01 for the given period; which was Tk 0.39 in the same period last year.
The First Security Islami Bank's consolidated EPS also jumped 126% to Tk0.95 for January-June 2019 compared to the same period of the previous year.
According to DSE data, the EPS of Uttara Bank, Trust Bank, Southeast Bank, Al-Arafah Islami Bank , The City Bank, Dutch Bangla Bank, Eastern Bank, Islami Bank, Jamuna Bank, Mercantile Bank, Mutual Trust Bank, NCC Bank, ONE Bank, Premier Bank, Pubali Bank, Shahjalal Islami Bank, SIBL, UCB, Uttara Bank and Prime Bank rose in the first half of the year compared to the same period last year.
On the other hand, AB Bank has seen the highest fall in EPS by 62% to Tk0.15, which was Tk0.39 in the same period last year.
The EPS of Rupali Bank, National Bank, Brac Bank and Standard Bank also fell between 5%-20% during the period.
ICB Islamic Bank has continued to incur losses. The bank's EPS (negative) contracted to Tk0.29 from Tk0.31.
Director of DSE Minhaz Mannan Emon told Dhaka Tribune that the rise in the profitability of the banking sector is good news for the stock investors. Following the development, investors may have some confidence and come back to capital market.
“This profitability will have a positive impact in the stock market” said Emon.