IDLC Finance sees marginal profit rise on lower costs, provision
FE REPORT | Sunday, 21 July 2024
IDLC Finance secured a 4 per cent year-on-year increase in profit to Tk 0.75 billion in the first six months through June this year despite a lower interest margin, supported by reduced provisioning and operating expenses.
The non-bank financial institution's interest income rose 15 per cent to Tk 7.01 billion during the period, compared to the same period a year ago, but interest expense jumped 23 per cent year-on-year to Tk 4.46 billion in the six months to June.
In January-June last year, the NBFI's interest margin was Tk 40 out of Tk 100 each earned in interest, which fell to Tk 36 for the six months to June this year.
"We are yet to get the advantage of higher interest rate. We can raise the price of asset portfolio (interest rate of loans) twice a year, while our deposit rate is growing at a faster pace. We will get the advantage of increased interest rate in near future," said Chief Financial Officer Masud Karim Majumder.
The NBFI kept less provision this year. The provision was Tk 0.52 billion in the six months though June a year ago and this year it fell to Tk 0.44 billion in January-June.
The company gave emphasis on loan collection in the second quarter through June. "So our NPL (non-performing loan) situation has improved.
"We also contained our costs this [latest] quarter," said Mr Majumder.
The operating expenses were slightly cut year-on-year to Tk 1.49 billion from Tk 1.50 billion in the six months to June.
The company's other income, which includes fees, commission and return on investment, increased to Tk 0.80 billion in January-June from Tk 0.60 billion a year earlier.
The cash flow was Tk 2.83 billion in January-June, a remarkable recovery from Tk 1 billion in the negative a year ago.
According to the CFO, the NBFI has been prioritizing small savers who helped increase deposits during the period in review.
The financial institution made an eight-year-low profit of Tk 1.51 billion in 2023 and declared 15 per cent cash dividends for the year.