BRAC Bank's earnings from govt securities jump 293% in H1
The bank reported a staggering Tk769 crore in income from this segment as the interest rate on Treasury bonds reached a decade-high of around 13%
BRAC Bank's earnings from investments in government securities – known as Treasury bonds – soared 293% year-on-year in the first half of 2024, according to the financial statement of the public sector lender.
The bank reported a staggering Tk769 crore in income from this segment as the interest rate on Treasury bonds reached a decade-high of around 13%.
However, the lender's total income from government securities, including capital gains, rose to Tk858 crore, marking an 180% year-on-year increase.
In the January-June period, BRAC Bank invested Tk22,978 crore in government securities, which is 26% higher than the previous year.
The bank's total investment was Tk24,000 crore, and it earned Tk1,191 crore from it, which was 102% higher than the previous year.
Selim RF Hussain, managing director at BRAC Bank, told The Business Standard, "During the first half, the bank's customers, loan portfolio, and deposits increased. As a result, their investments in government securities have also increased."
"All our business tools performed well because the bank always strictly follows good governance practices," he added.
As per data from the Bangladesh Bank, in May, interest rates were increased by 25 basis points to 11.60% for 91-day Treasury bills, by 40 basis points to 11.80% for 182-day Treasury bills, and by 50 basis points to 12% for 364-day Treasury bills.
Earlier this year, in January, the central bank increased the interest rate on all types of Treasury bills by 20 basis points.
Additionally, the interest rate on the 5-year Treasury bond increased by 30 basis points, bringing the interest rate to 12.40%. Previously, banks used to receive a maximum interest rate of 12.10% for purchasing such bonds.
Riding on the investment income, BRAC Bank posted a record profit of Tk591 crore in the first half of this year, which is 77% higher than the same period the previous year.
At the end of June, its consolidated earnings per share were Tk2.95, up from Tk1.75 a year ago.
However, its net interest income dropped by 15% year-on-year to Tk 863 crore in January-June due to increased borrowing costs.
In the January to June period this year, its interest paid on deposits and borrowing increased by 91% to Tk1,778 crore, while the interest income from loans rose by 35% to Tk2,641 crore compared to the previous year.
According to the financial report for the first half, its total disbursed loans and advances were Tk56,000 crore, and total deposits were Tk67,000 crore.
Its classified loans stood at Tk 1,736 crore at the end of June, which was 7.36% lower than the previous year, and accounted for only 3.10% of total disbursements.
Earlier, BRAC Bank paid a 10% cash and 10% stock dividend to its shareholders for the last year, marking the highest payout in the last six years.
The private-sector lender was listed on the Dhaka Stock Exchange in 2007. Its shares closed at Tk37.20 on Tuesday, down 0.80% from the previous session.
Currently, it ranks as the 11th largest stock on the country's premier bourse in terms of market capitalization, standing at Tk6,583 crore.