The struggling First Finance has reported a 76 per cent year-on-year reduction in losses to Tk 408 million for 2023 for what the company said was settlement of a large number of classified loan accounts.
Company secretary Mohammad Ekramur Rahman said the financial organisation focused on recovery of non-performing loans, which reflected on the decline in the interest suspenses.
If any client fails to pay loan installments for more than three months in a row, their accounts get suspended, and the pending interest is not shown as income.
The non-bank financial institution's operating losses also fell 57 per cent to Tk 27.16 million in 2023, supporting the development in the business, said Mr Rahman.
As a result, the company witnessed a loss of Tk 3.44 per share in 2023, as against a loss of Tk 14.52 per share the year before, according to a stock exchange filing on Tuesday.
Meanwhile, the stock plunged 5.41 per cent to Tk 3.40 per share on the Dhaka Stock Exchange (DSE) on Tuesday when there was no restriction on price fall/rise due to the corporate declaration.
The stock has been trading below the face value for more than a decade.
Meanwhile, the company's accumulated losses surged to Tk 5.30 billion in the six years to 2023, as per the data available on the DSE.
The new board has been striving to bring down NPLs but yet to get expected results, said the company secretary. "That's why the company has not been able to come out of the red."
Shareholders' equity is Tk 3.76 billion in the negative, meaning liabilities have surpassed the worth of assets, due to irregularities and mismanagement in loan disbursement.
Shareholder's equity is a company's net worth and it is equivalent to the amount that would be returned to shareholders if the company must be liquidated and all its debts are paid off.
If a company's shareholder equity remains negative, it is considered to be balance sheet insolvency. Moreover, shareholders will receive no return from their investments if the company liquidates.
First Finance got listed on the stock exchange in 2003 and was downgraded to Z category in 2016 because of its failure to provide any cash dividend to shareholders since listing. It paid only stock dividends.
In July last year, the stock market regulator restructured the board of First Finance, appointing five independent directors, as the company performed poorly for a long time.
"There are several irregularities and instances of non-compliances that have negative implications for investors, and hence undermine the trust and confidence of investors," reads a regulatory directive issued in July last year.
First Finance reported a loss of Tk 230 million for January-March this year, increased from the loss of Tk 226 million in the same quarter a year ago.
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