Union Capital's losses surged by 35 per cent year-on-year to Tk 127.52 million in the nine months through September this year due to declining net interest income and higher provisioning against default loans.
Its financial statements show that both the earnings per share and the net asset value per share are in the negative at Tk 7.39 and Tk 23.25 for the period.
The non-bank financial institution's net interest income, returns on investment, and brokerage commissions on share transactions dropped significantly, according to its earnings note.
At the same time, provisioning against default loans has gone up.
Company secretary Md Abdul Hannan said negative income had ballooned due to higher provisioning against bad loans coupled with lower income from brokerage commission due to the sluggish stock market.
The NBFI had to keep 100 per cent provision against non-performing loans as per instructions of the Bangladesh Bank.
It has been in the red for four years and the aggregate loss stood at Tk 4.91 billion as of 2022.
Due to persistent losses, liabilities have exceeded the total worth of assets by Tk 2.73 billion, as estimated by the auditor of the company. The company's total consolidated liabilities stood at about Tk 18.89 billion as of 2022.
The capital adequacy ratio was 15.12 per cent in the negative as of 2022, which indicates the entity's heavy dependence on liquid assets from external sources, the auditor said.
A negative capital adequacy ratio implies that the company is exposed to high insolvency risk and may not have sufficient capital to overcome losses.
That in turn raises doubts about the company's ability to continue its operation, reads the auditor's note.
Stock market analysts said Union Capital had been suffering losses due to irregularities and mismanagement in debt disbursement.
Union Capital has been trapped into a high volume of classified loans, negative capital adequacy ratio, excess liabilities, and swelling losses, which, according to the auditor, would be difficult to get out of.
The company provided loans to its subsidiary -- UniCap Investments -- amounting to Tk 1.53 billion, but has not received any interest payment since October 2019.
FDRs kept in two scam-hit financial institutions -- Bangladesh Industrial Finance Company and International Leasing -- amounting to Tk 965 million are equivalent to 5.97 per cent of the company's total assets.
The company could not declare any dividend for shareholders for the last four years.
The stock traded at far below the face value of Tk 10 each share for more than a year. It has been stuck at Tk 7.30 for the last two weeks.
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