Rupali Bank slips into deep loss as non-performing loans surge

Rupali Bank has reported hefty losses for the third quarter through September this year due to rising non-performing loans.

The lone listed state-run lender suffered a loss of Tk 1.68 billion in the quarter to September this year, as against a profit of Tk 31 million in the same quarter a year ago.

Subsequently, the consolidated earnings per share (EPS) stood at Tk 3.44 in the negative in the quarter, from positive Tk 0.13 per share in the same period last year, according to a stock exchange filing on Sunday.

Following the disclosure, the stock of Rupali Bank plunged 9.84 per cent to Tk 17.40 per share on Sunday, becoming the day's top loser on the Dhaka Stock Exchange.

A sharp decline in operating income due to higher interest payments to depositors led to the losses, said the bank in its earnings note. Rupali Bank earned less in interest from loans than what it paid to its depositors.

The weighted average deposit rate for banks in September this year stood at 6.42 per cent, while the average lending rate was 12.16 per cent, bringing the spread down to 5.74 per cent, the lowest since April last year, according to Bangladesh Bank data.

While Rupali Bank's interest income was Tk 7.36 billion in the quarter to September, interest payments to depositors and lenders jumped to Tk 13.02 billion during the time under review.

The bank also incurred a loss of Tk 1.58 billion in the nine months to September this year, as its first- and second-quarter profits offset some of the losses.

Due to heavy losses, the bank could not keep adequate provisions.

Consolidated net operating cash flow per share (NOCFPS) rose to Tk 128.19 for January-September this year as against Tk 43.33 in the negative for the same period last year due to an increase in deposits.

The bank's deposits grew almost 4 per cent year-on-year to Tk 731 billion in January-September, while the loan portfolio dropped more than 2 per cent to Tk 503 billion during the time.

Annual profits of Rupali Bank have been gradually falling. In 2023, profit was Tk 626.68 million, which fell 82 per cent to Tk 113.92 million in 2024.

The bank also could not declare dividends for 2024 against the backdrop of a provision shortfall of Tk 153.75 billion.

As per the latest Bangladesh Bank directives, banks that fail to meet required provisions or opt for deferral facilities are prohibited from distributing dividends from 2024 onwards.

Meanwhile, Rupali Bank is in the process of issuing ordinary shares worth Tk 6.80 billion against funds received from the government as share money deposits.

The outstanding amount of such share money deposits stands at Tk 6.80 billion as of September this year, according to the lender's latest financial statements.

The bank will issue 453.33 million shares at Tk 15 each, including a premium of Tk 5 per share, in favour of the secretary of the finance division.

The ordinary share issuance is poised to substantially boost the bank's existing paid-up capital, as these shares will be added to the existing shares. Currently, the company's number of shares is 488 million, which will go up to 941 million after the issuance of fresh shares.

babulfexpress@gmail.com