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Bearish stock market

Listed banks endure up to 72pc price erosion in one year

Babul Barman | April 30, 2020 00:00:00

Share prices of all listed banks tumbled up to 72 per cent in the past one year until March 25, 2020 amid prolonged bearish trend in the country's capital market.

All the 30 banks listed on the Dhaka Stock Exchange witnessed price erosion between 4.0 per cent and 72 per cent during the period under review, according to available data with the DSE.

The banking sector, once a bellwether for the whole stock market, also lost its dominance in market-cap for the first time due to the massive sales of banking issues amid Covid-19 pandemic and pressure on banks to implement single-digit lending rate.

The banking sector ranked second in market-cap position with Tk 452.90 billion in its portfolio on March 25, 2020.

Currently, the banking sector accounts for 17.80 per cent of the DSE's total market-cap after pharmaceuticals which accounts for 17.90 per cent.

The banking sector also lost 16 per cent during the period under review.

Following the rampant selling pressure, the banking sector has become the cheapest sector among the all sectors as its price earnings ratio drastically dipped to 6.20 as of March 25, 2020.

The shares of eight banks out of 30 listed on the country's capital market were also traded below face value of Tk 10 each due to huge sale pressure, the DSE data showed.

Market analysts said the investors have been suffering from confidence crisis for a long while coronavirus pandemic and possible impact of the single-digit interest rate on the banking business affected their confidence.

The rot set in when the market volatility became acute from January this year with the alarming rise of non-performing loans after the government announced banks must implement single-digit lending rate from April 1 that spurred fears about the impact of the measure on the financial sector, said an analyst.

He noted that investors were skeptical about the banks' ability to make good profits and declare healthy dividends with lower lending rate.

Amid the concerns over interest rate, the outbreak of Covid-19 pandemic triggered uncertainties among investors about its impact on the country's economy, he added.

The DSE key index also lost 1,522 points, wiping out market capitalisation of Tk 1,015 billion in the past one year since March 25 of last year.

The most sought-after banking stocks were also not spared from the free fall in the share prices during the period under review.

Dutch-Bangla Bank suffered most as its share price plunged 72 per cent in the past one year to close at Tk 58.80 each on March 25, 2020.

However, its share price was adjusted during the period under review as the bank disbursed 150 per cent stock dividend for the year ended on December 31, 2018.

Share price of Brac Bank fell 59 per cent in the past one year to close at Tk 31.90 on March 25, 2020.

The prices of ONE Bank shed 43 per cent to close at Tk 9.40 on March 25, 2020.

The state-run Rupali Bank also lost 40 per cent to close at Tk 24.50 on March 25, 2020.

Share price of City Bank also lost 38 per cent, followed by Islami Bank with 35 per cent, UCB 31 per cent, Al-Arafah Islami Bank 30 per cent, AB Bank 29 per cent, Southeast Bank 28 per cent, Dhaka Bank 27 per cent, Mutual Trust Bank 26 per cent, Shahjalal Islami Bank 26 per cent, ICB Islamic Bank 25 per cent and NCC Bank 24 per cent.

Share of Premier Bank also lost 23 per cent, followed by Pubali Bank 23 per cent, National Bank 22 per cent, Mercantile Bank 20 per cent, SIBL 20 per cent, IFIC Bank 19 per cent, Trust Bank 17 per cent, Eastern Bank 17 per cent, Prime Bank 16 per cent, Exim Bank 14 per cent, First Security Islami Bank 13 per cent, Standard Bank 13 per cent, Uttara Bank 10 per cent, Bank Asia 6.0 per cent and Jamuna Bank 4.0 per cent.

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