BRAC Bank's Q3 profit rises but stock lies low

Mohammad Mufazzal | Tuesday, 1 November 2022

BRAC Bank is traded at depressed prices despite a whopping 53.66 per cent year-on-year profit growth in the third quarter to September this year.
During the time, its consolidated earnings per share also went higher from Tk 0.95 to Tk 1.06.
Mobile financial service provider bKash, which is a subsidiary of BRAC Bank, also gained profit amounting to Tk 460 million in Q3, 2022 having endured losses for 13 quarters in a row.
Stakeholders said the company's performance was not reflected in the market prices because of the selling pressure by foreign investors and the bleak state of the banking sector.
The stock has recently got stuck at the floor price-Tk 38.50 -- on the Dhaka Stock Exchange (DSE). This is not an exception. A majority number of listed securities have remained at floor prices on the DSE. A moderate decline has been observed in the stakes held by foreigners in BRAC Bank in the last few months.
Mohammad Moniru-zzaman, managing director of IDLC Investments, said all major banks had suffered a dip in net income in the third quarter. "BRAC Bank is different and its subsidiary bKash secured a profit after 13 quarters."
Currently, the company's shares are traded at prices below the net asset value.
About the decline in foreign stakes, the IDLC's managing director said local currency depreciation in frontier markets was a major reason behind sales executed by foreigners.
According to the DSE, foreigners held 37.88 per cent shares in BRAC Bank until the end of 2021. The stake fell to 34.17 per cent in the months to September this year.
The company's share price tumbled in the first two quarters of this year against the backdrop of falling quarterly profits.
The share price was Tk 55.70 on January 2, 2022. Then it came down to Tk 45 on April 12, registering a loss of 24 per cent.
The lender saw another downward trend and the share price closed at Tk 37.90 on July 28 this year, having suffered a 32 per cent decline between January and July this year.
BRAC Bank's earnings per share gained 18 per cent to Tk 3.93 from 2021 to 2022. It disbursed 7.5 per cent cash and 7.50 per cent stock dividend in 2021 and 10 per cent cash and 5.0 per cent stock dividend in the year before.

[email protected]