Thursday, 9th February, 2023
Thursday, 9th February, 2023
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Dutch-Bangla Bank posted record profit in 2020

Dutch Bangla Bank posted record high profit of Tk 550 crore in colander year 2020 amid a pandemic hit period affecting livelihood and business.
While the reasons for the surge in profit not yet disclosed, many assume that various support measures extended by Bangladesh Bank (BB) to soften the impact of the pandemic blow may have led to 26.7 per cent rise in profit last year.

 

On March 19 last year, 11 days after Bangladesh announced its first confirmed cases of Covid-19, the central bank asked lenders not to consider business people as defaulters if they fail to repay their installments until June 30.
The deadline was extended twice since to December 31 this year. Banks usually keep aside 0.5 per cent to 100 per cent in provisioning. They keep lower provisioning for regular loans but 20 to 100 per cent for default loans.
The payment holiday meant banks were not obliged to set aside funds from their income to account for future losses. Besides, Dutch-Bangla Bank owns Rocket, a formidable player in the mobile financial services that got a boost amid the pandemic.
“We have been able to maintain our growth despite the pandemic and the under single-digit interest rates, but it will be difficult for us to maintain the growth in the coming days,” said a senior official of Dutch-Bangla Bank on condition of anonymity.

 

With the weaning off loan moratorium facility from this year and given the tough operating conditions last year, the amount of bad loan is expected to see a spike, meaning a big hit to banks’ balance sheet in 2021.
Besides, banks’ fresh credit disbursement, their bread-and-butter, has been on the slow lane since last year, so their interest income is expected to shrink much. In 2020, Dutch-Bangla Bank’s net operating cash flow, which is the amount of cash generated by its normal business operations, leapt 2.7 times to Tk 31.2.
But because of the central bank’s cap on dividend handout the bank announced the maximum 30 per cent it is allowed this year: 15 per cent cash and 15 per cent stock dividends. In 2019, it gave 15 per cent cash and 10 per cent stock dividends.
Shares of Dutch-Bangla Bank, which was listed on the Dhaka Stock Exchange in 2001, shed 7.4 per cent in 2020. On Thursday, they closed at Tk 62.90, down 1.3 per cent from the previous session.

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