The main challenge of the ICB is to overcome the financial crisis and support the share market
The Investment Corporation of Bangladesh (ICB) has incurred a loss of Tk134 crore in the first quarter (July-September) of the current fiscal year.
During the period the Cost of Fund of the state-owned company, formed for investing in the share market, increased by 15 percent. Alongside the Prime Index of Dhaka Stock Exchange (DSEX) decreased by 9 percent. So, the ICB suffered a big loss in the first quarter.
Md Abul Hossain, managing director of the ICB told The Business Standard, the ICB incurred the loss as the share market plunged. There is also a crisis of cash. The main challenge of the ICB is to overcome the financial crisis and support the share market.
Besides investing in the share market, the ICB has been doing business as a non-bank financial institution by taking Bangladesh Bank registration.
In the first three months of the current fiscal year, the DSEX fell by 437 points and stood at 4,947 points. As a result, the market capital dropped by Tk24,226 crore.
In the first quarter of the fiscal year 2019-20, ICB's fund cost was Tk285 crore. During the same period in the previous year, the cost was Tk248 crore.
However, during the period the ICB's interest income fell by 10 percent, dividend income from the company's share slid by 31 percent and capital gain from the sale of a share in the secondary market decreased by 75 percent.
As a result, the ICB's net loss was Tk134 crore and loss per share was Tk1.93. During the same period in previous year, the net profit was Tk29 crore and earnings per share (EPS) was Tk0.41.
Bangladesh Bank in 2016 fixed single borrower exposure limit to 25 percent of the capital of the bank concerned. This means no bank can give more than 25 percent of its capital as loans to a single borrower. Earlier, there was scope for giving more than this limit as loan.
The ICB plunged into crisis due to this provision because the investment of the nationalised banks in the ICB was more than 25 percent of their capital. As a result, the banks had to withdraw their investment from the ICB.
In the first quarter of the current fiscal year, the ICB has been facing Tk607 crore cash crunch.
However, the ICB in a meeting with the stakeholders in the share market recently decided to collect Tk200 crore by issuing a bond to overcome the cash crisis. The amount will be invested in the share market. Earlier, the ICB issued Tk2,000 crore bond.
The ICB has recommended giving a 10 percent stock dividend to the shareholders for the fiscal year 2018-19. For this, the record date is November 18. The company will hold its Annual General Meeting (AGM) on December 21.
But during the period, the ICB's profit fell by 86 percent and stood at Tk60 crore, its EPS was Tk0.86.
During the previous year (the fiscal year 2017-18), the ICB gave 30 percent cash dividend and 5 percent stock dividend. And the company's net profit was Tk416 crore and the EPS Tk5.97.
Upon information of loss in the first quarter, the ICB share price in the Dhaka Stock Exchange on Tuesday fell by 4.86 percent. On the day, the closing rate of the company's share was Tk89.90. In the last one year, the highest price of the company's share was Tk141 and the lowest Tk78.50.