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IDLC Finance's consolidated profit declines 9.47pc

It recommends 15pc cash dividend

FE Report | April 09, 2023 00:00:00

IDLC Finance, a leading non-banking financial institution, posted a decline in its consolidated profit in 2022 due to several factors such as a long bearish trend in the capital market and a new cap on lending rates.

The company's consolidated net profit fell 9.47 per cent to Tk 1.91 billion in 2022, compared to the previous year.

Its officials attributed the decrease in profits of the subsidiaries of the IDLC Finance to the bearish trend in the capital market.

Also, the mandatory cap on lending rates imposed in July 2022 for the non-banking financial institutions was one of the reasons behind the decline in the consolidated profit, they said.

The yearly consolidated profit of IDLC Finance was Tk 2.11 billion in 2021, Tk 2.54 billion in 2020, Tk 1.70 billion in 2019 and Tk 2.17 billion in 2018.

The company's subsidiaries are IDLC Securities, IDLC Investments, and IDLC Asset Management.

However, IDLC Finance alone posted a 3.18 per cent growth in its net profit to Tk 1.62 billion for 2022 as against Tk 1.57 billion reported for the previous year.

Chief financial officer (CFO) of IDLC Finance Mohammad Masud Karim Majumder said the share trade volume at IDLC Securities slumped around 50 per cent in 2022.

"The profit from margin loans and its own portfolio has also declined in 2022 due to the bearish market trend," he said.

Moreover, the government imposed an 11 per cent cap on lending rates in July 2022 for the non-banking financial institutions, he said.

"To comply with the provision, we had to change the interest rate to 11 per cent from 14 per cent earlier for a large portfolio of SME loans. This was a reason behind the decline in growth of consolidated profit," he added.

On Thursday, the board of directors of IDLC Finance recommended 15 per cent cash dividend for the year 2022.

The company disbursed 15 per cent cash and 5.0 per cent stock dividends in 2021, 15 per cent cash and 5.0 per cent stock in 2020, 35 per cent cash in 2019 and 35 per cent cash in 2018.

The IDLC Finance, presently an 'A' category company, was listed on the stock exchange in 1992.

The company's sponsor-directors hold 56.66 per cent of shares, institutes 27.84 per cent, foreigners 1.16 per cent and general investors 14.34 per cent as on February 28, 2023.

The company's share price came down to the floor price at Tk 46.50 on the Dhaka Stock Exchange (DSE) on October 17, 2022. Since then, the company's shares are being traded at the floor price.

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