National Bank Ltd (NBL) will have to adjust this year a loss of over Tk80 crore incurred in share business last year, which would have negative impact on its profitability this year.
The bank listed in the stock exchanges having 53.27% public stake did not show last year’s losses in its last year’s financial statements.
On April 27 the bank has announced 10% stock dividend for its shareholders for 2013.
As it distributed 10% stock dividend, the bank is placed in “A” category from existing “B” category as on today.
In response to the bank’s request, Bangladesh Bank (BB) has allowed the bank to show the losses as deferral of provision in the statements, said the NBL in a statement on May 25.
The first generation private bank had made a profit of Tk208 crore in 2013 and Tk143 crore in 2012.
In addition, outstanding loans of 14 parties totaling to Tk1,193.66 crore have been rescheduled based on no objection certificates from the central bank, the statement said. The total loan amount of the 14 parties is backed by collateral security of Tk462.74 crore.
The central bank also permitted NBL to keep a shortfall of Tk25.1 crore in gratuity provision while it is previously required to have a balance of Tk30.1 crore.
The NBL explained that as per approval of BB, have maintained a fund for the gratuity provision and no amount was disbursed from the fund account while accumulated interest has increased the fund position. The fund stands at Tk86.05 crore which is being administered by a board of trustee consisting of four members.
The interest paid by the bank in 2013 on deposits rose by over 20% while interest revenue earned on advances remained almost the same against the figures of 2012.
The bank’s latest net Q1 profit stood at Tk35.6 crore against a loss of Tk14.3 crores in the same period last year.
Brokers say despite having an impressive Q1 profit figures, investors did not rush to buy shares of the bank, showing mature behaviour.
Since Q1 report disclosure, shares have lost value of 7.6%, as investors anticipated its losses this year due to adjustment of deferred Tk80 crore that it made losses in the share market last year.
“The banking sector overexposed to the stock market during 2007 to 2010, which was not good, as at that time there was no appropriate risk management policies,” said Md Moniruzzaman, managing director of IDLC Investments Ltd.
“Not all banks had the experience of 1996 bubble and burst ... the situation is now worse than 1996 mostly due to the leveraged product margin loan.”
He said all these are causing systematic risk in the capital market subsidiaries and challenging their capital adequacies.
