FAS Finance & Investment is bound to have a slow death. What is to be seen is how long it can survive bearing losses.
Loan scams orchestrated by Proshanta Kumar Halder alias PK Halder between 2015 and 2017 left it so wounded that it could not make even a small step for recovery.
The latest financial results show that the nine-month period through September recorded a further loss of Tk 2.03 billion.
The first-generation financial institution has been suffering losses for nearly five years in a row. Losses piled up to nearly Tk 16 billion until September this year, as per the Dhaka Stock Exchange.
High classified loans, negative capital adequacy ratio, excess liabilities, and big losses pushed FAS Finance to the verge of collapse.
The net asset value, which refers to the assets remaining after deducting all liabilities, escalated to Tk 99.75 per share in the negative in Jan-Sept, from Tk 51.15 per share in the negative for the nine months last year.
In 2021, the stock market regulator restructured its board by appointing nine independent directors, but they failed to make the scam-hit non-bank financial institution (NBFI) functional due to its huge non-performing loans.
Company secretary Zahid Mahmud said loan scams were the main reasons for the losses.
The new board has been trying to recover non-performing loans but is yet to get an expected result, he said.
FAS Finance has reported a consolidated loss of Tk 13.63 per share for January-September this year, while it was Tk 17.79 per share in the same period a year before, according to a stock exchange filing on Thursday.
The consolidated net operating cash flow per share, a measure that indicates a company's ability to generate cash from its operation, is Tk 1.77 in the negative. It was Tk 1.74 in the negative for the same period last year.
Earlier, a Bangladesh Bank investigation found that PK Halder had siphoned off Tk 13 billion by taking a series of loans from the company under different names between 2015 and 2017.
PK Halder, former managing director of the International Leasing and Financial Services, and his associates, took control of the FAS Finance board in 2014 by purchasing shares. They then fired the existing employees and hired people who would serve their interests.
The directors of the board were also replaced.
Stock market analysts said the NBFIs negative earnings per share and net asset value were signs of alarm for shareholders. Its current financial health shows no possibility of future financial stability
The recovery of bad loans and gaining back investors' confidence are major challenges for the company, said Prof Abu Ahmed, former chairman of the economics department of the University of Dhaka.
As per the audited report, FAS Finance has no asset mortgaged against the loans. So, getting the money back is very difficult for the company, added Mr Ahmed.
The stock has been trading at far below the face value and has been stuck at Tk 5.40 for the last six months.
The NBFI has not yet raised the stake of sponsor-directors up to 30 per cent, as required by the regulatory body of the stock market. As of November, the stake remained at 13.20 per cent.
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