IDLC profits pounded by topsy-turvy financial markets
IDLC Finance, a listed non-bank lender, took another hit to its profit this past year thanks to the bearish currency markets and volatile money market.
In 2019, its profit dropped 21.65 per cent, or Tk 47 crore, to stand at about Tk 170 crore in.
"Growth in revenues from our core lending business was not satisfactory to counter the fall in capital market returns, so profits fell," explained Arif Khan, ceo of IDLC Finance.
IDLC's net interest income was up 10 % from the prior year to Tk 467 crore in 2019. The business's income from currency markets investment tumbled an astounding 82.81 % to Tk 46.31 crore.
Fee income of the business stood at Tk 85 crore towards the end of the entire year, registering de-growth of 18.35 %. It mainly resulted from declines in brokerage fees and fund management fees in the currency markets.
DSEX, the benchmark index of the Dhaka STOCK MARKET, descended about 17 % in 2019. And the common daily turnover stood at Tk 480 crore, dropping 12.8 per cent from the prior year.
Thanks to the downtrend scenario of the administrative centre market, IDLC Finance have reduced its currency markets investment already.
It restructured the asset composition of its lending business over the entire year, with investments in marketable shares composing 9.88 % of equity at the close of 2019, down from 19.63 % in the beginning of the year.
For its subsidiaries, it really is focusing more on foreign clients and high net-worth individuals through the research teams in its brokerage and investment banking subsidiaries.
The year 2020 will be more challenging for the money market, currency markets and all businesses due to the impact of COVID-19, Khan told The Daily Star yesterday.
"If the economy tanks and loan disbursement drops, we may also face a problem though IDLC Finance may be the most profitable NBFI now," he added.
Return on asset of IDLC Financing is 1.50 %, which may be the highest in the market.
In 2019, the NBFI industry saw a de-growth in deposits as a result of liquidity crisis following a bankruptcy of People's Leasing and Financial Services, which created a poor perception for depositors about the sector.
However, IDLC's term deposits grew 7.34 per cent, with non-bank deposits rising 17.29 %.
The business's lending portfolio grew 10.02 %, reaching Tk 9,235 crore in 2019.
By the end of the entire year, its default loan ratio stood at 3.07 %, up from 2.20 % a year earlier.
Stocks of IDLC, which got listed with the DSE in 1992, traded at Tk 41.90 on March 25, the last day of trading before the bourses shut for the countrywide shutdown.
It announced 35 per cent income dividend for shareholders for the year ended on December 31, 2019 that was same in the last year.
