State-run Investment Corporation of Bangladesh (ICB) showed a 58 per cent lower profit for FY24, compared to the year before.
However, it made a remarkable recovery from a loss of Tk 2.67 billion in the first nine months through March of FY24 to gain an annual income of Tk 0.33 billion by the end of the fourth quarter to June this year.
"We have earned well in dividends, capital gains, and commission in the last quarter of FY24. Historically, we earn more in June than in the previous months of the year. We saw huge trade volumes in the last days of June at ICB from which we earned a lot in commission," said ICB Managing Director Md. Abul Hossain.
The recovery was unexpected because the investment bank had a negative net interest income (interest income-interest expenses) of Tk 5.39 billion in the first three quarters to March.
The gap was supposed to widen in the fourth quarter because of the rising interest rates. The ICB has a huge amount of debts in its balance sheet.
The ICB was able to earn a little more than Tk 5 billion in the form of dividend income, capital gains, commission, and other income during the first nine months to March, which resulted in an operating loss.
The annual recovery was also unexpected because the capital market was dull during the April-June quarter.
The aggregate income of dividends, capital gains, commission, and other earnings must be a hefty amount to outstrip negative interest income, operating expenses, provisions against bad loans, and tax.
After the earnings disclosure, the ICB stock went up 0.62 per cent to Tk 65.40 per share on the Dhaka Stock Exchange (DSE) on Monday.
The company also declared 2 per cent cash dividends for shareholders.
The net operating cash flow per share, which indicates a company's ability to generate cash from its operations, is reported to have increased to 4.20 in FY24 from Tk 1.30 the year before.
What drags ICB to its current state?
Over the 15 years to 2024, the ICB lost what it had gained in 30 years since 1977.
It borrowed funds from unlikely sources and made wrong investment decisions.
For example, the investment bank made a capital investment of TK 0.85 billion on Padma Bank (former The Farmers' Bank) when it had already stirred controversy through loan scams.
Padma Bank is not in a situation to pay back the ICB and whether it will ever be able to make any repayment is uncertain.
The ICB also kept nearly Tk 1.9 billion as a fixed deposit in the loss-making International Leasing & Financial Services. It is not getting any return from the fund either.
This is the backdrop to ICB's interest expenses growing at a faster pace every year between FY10 and FY23, compared to the growth of interest income.
Consequently, interest expenditure ballooned to nearly double the operating income by the end of FY23.
Now, the high borrowing cost is the biggest concern. Currently, the ICB earns only from portfolio management.
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