LankaBangla Finance's income gets a 605pc boost from high interest rates

LankaBangla Finance posted an impressive 605 per cent year-on-year growth in profit to Tk 261 million in the third quarter (Q3) this year, riding on higher net interest income and investment income.
The non-bank financial institution's consolidated earnings per share (EPS) was Tk 0.46 for July-September this year, up from Tk 0.07 for the same quarter last year, according to a stock exchange filing on Sunday.
Following the earnings disclosure, the stock of LankaBangla Finance surged 3.08 per cent to Tk 16.7 per share on the Dhaka Stock Exchange (DSE) on Sunday while the market experienced a sharp decline.
The company in its earnings note said the profit had escalated because of an increase in net interest income, investment income, and exchange & brokerage commission.
LankaBangla Finance reaped handsome profits from investments in government securities alongside high net interest income amid rising interest rates.
Its interest income grew 28 per cent year-on-year to Tk 2.69 billion in the quarter through September while interest payment to depositors and lenders rose 25 per cent to Tk 1.83 billion.
Hence, net interest income jumped 35 per cent year-on-year to Tk 861 million in the quarter.
The company had increased investment in government securities to take advantage of the rising rate regime. Its income from the segment surged 430 per cent year-on-year to Tk 498 million in July-September this year.
The yield rates of T-bonds ranged between 12 per cent and 14.80 per cent, with maturity periods of 2-20 years, while T-bills' yields varied between 15 and 15.2 per cent during the July-September quarter.
The financial institution's income in the form of exchange and brokerage commission was also up 22 per cent year-on-year to Tk 170 million in the quarter.
LankaBangla Finance's nine-month profit soared 72 per cent year-on-year to Tk 374 million in January-September this year, as net interest income rose 21 per cent to Tk 1.77 billion during the period compared to the same period a year ago.
The consolidated net operating cash flow per share, a measure of a company's ability to generate cash from its operations, improved to Tk 5 in January-September this year, which was Tk 3.43 in the same period last year.
The company explained that cash flow had jumped due to the settlement and recovery of more than Tk 4.91 billion during the period.

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