Jamuna Bank’s profit grows, AB Bank’s shrinks

FT ONLINE

During the first nine months of this year, AB Bank's net profit decreased by 55 percent, while Jamuna Bank's profit increased by 36 percent, said related sources.

AB Bank

In the first nine months of the accounting year 2019, AB Bank made a net profit of Tk14 crore after paying taxes and its earning per share (EPS) was Tk0.19. During the same period in the previous year, the bank's profit amounted to Tk31 crore and EPS was Tk0.41.

KM Mohiuddin, Chief Financial Officer of AB Bank, said that the bank has been going through a slump since 2017. Significant changes have been brought about in the bank's board of directors and management to pull the bank out of this critical phase. But still, a significant period of time is required to restore the bank to its old glory.

According to officials of AB Bank, the amount of the bank's default loans till December 31, 2018 was almost Tk8,000 crore. By September this year, the amount decreased by Tk1,800 crore. On the other hand, its deposits increased by Tk3,073 crore.

Besides, the advance-deposit ratio has been brought down to 84.59percent, which was 91.09 percent in December last year. The advance-deposit ratio fixed by the central bank is 85 percent.

The chief financial officer of the AB Bank said that at present the bank emphasises the proper implementation of the regulations imposed by the central bank.

AB Bank's current shortfall in provisioning against defaulted loans is Tk6,500 crore. Responding to the bank's appeal, the central bank has given it till 2028 to overcome this shortfall in provisioning.

AB Bank, which was listed on the stock market in 1983, has not been giving dividends to its shareholders since 2017. The bank made a profit of Tk150 crore and provided 12.50 stock dividends in the accounting year 2016.

On Sunday, the closing price of the AB Bank's share at Dhaka Stock Exchange was Tk8.10. In the last one year, the highest price of the bank's share was Tk13.90 and the lowest was Tk7.70.

Meanwhile, BNP Vice Chairman and former foreign minister M Morshed Khan resigned from the board of directors of AB Bank this year. All the directors nominated by Pacific Group, being directed by Morshed Khan, also resigned during the process of the changes made in the bank's board of directors.

As a result of such developments, the accumulated shares held by the bank's board of directors came down to 29.25. But according to the laws of the Bangladesh Securities and Exchange Commission, the board of directors must hold 30 percent shares together.

Syed Afzal Hasan Uddin and Moshtak Ahmed Chowdhury, two members of the board nominated by M Morshed Khan, and Ashish Baran, nominated by Morshed's Pacific Motors, resigned from the bank in July this year.

Currently, M Morshed Khan holds 5.04 percent share of AB Bank while Pacific Motors holds 7.22 percent.

They resigned from the board of directors, but did not sell their shares, said the bank's chief financial officer.

It should be noted here that M Morshed Khan stands accused of embezzling nearly Tk400 crore taken out as a loan from AB Bank. He took out the loan in the name of Pacific Telecom's mobile operator Citycell. The Anti-Corruption Commission filed a case against M Morshed Khan and some other individuals involved in the alleged embezzlement.

Jamuna Bank

During the first nine months of 2019, Jamuna Bank earned Tk215 as net profit, while the bank's earning per share was Tk2.88. During the same time in the previous year, the Bank's net profit was Tk159 crore and its earning per share was Tk2.12.

Shafiqul Alam, managing director of Jamuna Bank, said, "The board of directors do not participate or intervene in the operation of the bank in any way. If professional bankers follow regulations, the profit and balance sheet of their bank turn out better than those of rival banks. This is reflected in the bank's financial performance. The default loan of the bank is now 3 percent, which is a great strength."

On December 31, at the end of the accounting year 2018, Jamuna Bank gave its shareholders a 20 percent dividend. At that time their net profit was Tk230 crore and earning per share was Tk3.07.

On Sunday, the bank's closing price was Tk18.30. During the last year the highest price of its share was 21.80 and the lowest was Tk16.