LankaBangla Finance's profit plunges as provision soars

LankaBangla Finance showed a 74 per cent year-on-year decline in profit to Tk 25.77 million in the second quarter through June this year as its provision soared by a whopping 1,200 per cent.
According to its financial statements, it had kept Tk 24.05 million as provision against non-performing loans and unrealised losses in investments in the second quarter last year, which escalated to Tk 328 million in the same quarter this year.
Due to the big jump in the provision, the financial institution's profit plunged despite a 37 per cent year-on-year increase in operating profit in the second quarter this year.
The high provision impacted LankaBangla's six-month profit as of June this year too. Profit slumped 37 per cent to Tk 113 million in the six months to June this year.
According to the company, earnings per share fell because of lower income from share investments, fee, exchange, and brokerage income and increased operating expenses, compared to the previous corresponding period.
The cash flow per share decreased to Tk 0.14 in Q2 this year from Tk 1.42 in Q2 last year.
The company said the cash flow had gone down due to increased disbursement and settlement of deposits. Also, cash generated from operations decreased while income tax payment increased in January-June this year compared to a year ago.
LankaBangla also declared 10 per cent cash dividends for 2023, unchanged from the year before.
Its yarely profit was down 58 per cent in 2023 to Tk 37 million, compared to 2022. The organisation made delayed earnings disclosure for 2023 along with financial results of the first and second quarters of this year on Tuesday.
According to the company, reasons for deviation in the yearly EPS is a reduction in interest income caused by the imposition of lending rate cap by regulators and slightly deteriorated assets' quality due to post COVID-19 impact and Russia-Ukraine war and an increase in interest expenses because of foreign exchange loss.
Meanwhile, the stock stood unchanged at Tk 22.30 per share on the Dhaka Stock Exchange on Tuesday.

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