DBH Finance's profit rose 3.5 per cent year-on-year to Tk 237 million in the second quarter this year, on the back of the removal of interest rate cap.
Earnings per share (EPS) stood at Tk 1.19 for April-June this year, up from Tk 1.15 for the same quarter last year, according to unaudited financial statements published on Monday.
The leading non-bank financial institution (NBFI), which mainly caters to the demand for home loans, reaped handsome profits from investments in government securities alongside high interest income although interest expenses on deposits also went higher.
Accordingly, the company's income from investments jumped 5.60 times year-on-year to Tk 213 million in the April-June quarter.
While interest income was up 22 per cent year-on-year to Tk 1.81 billion in the quarter through June, interest payment to depositors and lenders soared 46 per cent to Tk 1.51 billion.
DBH Finance's average interest spread narrowed to 2 per cent in the second quarter of this year from 2.56 per cent in the same quarter last year. That means the profit growth was driven by higher investment income.
However, higher provisioning against capital market investments due to price erosion of major stocks hindered the expected profit growth, said company secretary Jashim Uddin.
Meanwhile, the company had mistakenly posted EPS of Tk 0.78 for April-June this year, which was later revised. The company secretary said the half-yearly earnings and other figures remained unchanged.
DBH Finance's half-yearly profit fell almost 17 per cent year-on-year to Tk 408 million in January-June this year, owing to increased interest payment on deposits coupled with higher provision against stock investments.
According to the rules, NBFIs are required to keep 100 per cent provision against stock market investments as unrealized losses.
Following the withdrawal of the price restriction on stocks, the company saw major erosion of the value of its assets in the equity market. Consequently, DBH had to set aside Tk 136 million in provision against stock investments, which was 14.74 per cent of its total investments in listed securities, said the company in its earnings note.
The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, turned negative in January-June this year, which was Tk 26.93 in the same period last year.
The company said that net operating cash flow was Tk 3.66 in the negative in the six months to June as loan disbursement increased by Tk 764 million year-on-year in January-June this year, while deposits declined by Tk 570 million in the six months through June, compared to the same period a year ago.
DBH Finance, formally known as Delta Brac Housing Finance Corporation, has been driving the growth of the real estate sector by helping clients fulfill their dreams of owning a home through credits.
Its 2023 annual profit slid 3 per cent year-on-year to Tk 985 million and the company declared 15 per cent cash dividends for shareholders.
DBH has always been able to keep operating costs down and mobilize funds at relatively lower costs due to its excellent market reputation, which enabled the company to remain competitive in the market.
Last year, DBH Finance introduced Shariah-compliant deposit schemes and housing financing products and services in all of its 14 branches located in major cities of the country simultaneously, alongside existing operations.
Meanwhile, DBH stock slid 1.53 per cent to Tk 32.1 per share on the Dhaka Stock Exchange on Monday from the previous session. It plunged more than 43 per cent since the removal of the price restriction.
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