The host of facilities extended by the Bangladesh Bank to soften the blow of the global coronavirus pandemic is to thank for the 26.7 per cent higher profit
Dutch Bangla Bank logged in a record profit of Tk 550 crore in 2020 -- incredible seeing that it came amid the global coronavirus pandemic that wreaked havoc on lives and livelihoods like never before.
While the reasons for the surge in profit has not been disclosed yet, one can assume the host of facilities extended by the Bangladesh Bank to soften the blow of the global coronavirus pandemic is to thank for the 26.7 per cent higher profit in 2020.
On March 19 last year, 11 days after Bangladesh announced its first confirmed cases of Covid-19, the central bank asked lenders not to consider businesspeople as defaulters if they fail to repay their instalments until June 30.
The deadline was extended twice since to December 31 this year.
Banks usually keep aside 0.5 per cent to 100 per cent in provisioning. They keep lower provisioning for regular loans but 20 to 100 per cent for default loans.
The payment holiday meant banks were not obliged to set aside funds from their income to account for future losses.
Besides, Dutch-Bangla Bank owns Rocket, a formidable player in the mobile financial services field that got a boost amid the pandemic.
“We have been able to maintain our growth despite the pandemic and the single-digit interest rates, but it will be difficult for us to maintain the growth in the coming days,” said a senior official of Dutch-Bangla Bank on condition of anonymity as he is not authorised to speak with media.
With the weaning off of loan moratorium facility from this year and given the tough operating conditions last year, the amount of bad loan is expected to see a spike, meaning a big hit to banks’ balance sheet in 2021.
Besides, banks’ fresh credit disbursement, their bread-and-butter, has been on the slow lane since last year, so their interest income is expected to shrink much.
In 2020, Dutch-Bangla Bank’s net operating cash flow, which is the amount of cash generated by its normal business operations, leapt 2.7 times to Tk 31.2.
But because of the central bank's cap on dividend handout the bank announced the maximum 30 per cent it is allowed this year: 15 per cent cash and 15 per cent stock dividends. In 2019, it gave 15 per cent cash and 10 per cent stock dividends.
Shares of Dutch-Bangla Bank, which was listed on the Dhaka Stock Exchange in 2001, shed 7.4 per cent in 2020. On Thursday, they closed at Tk 62.90, down 1.3 per cent from the previous session.