IFIC Bank faces Tk 665 m capital shortfall till 2020

No cash dividend paid to shareholders in 5-yrs

Staff Correspondent: First generation private sector IFIC Bank once again has been facing economic debacle due to the wrong operation and direction. Overall performance of the bank has been treated by all of the regulatory bodies as ‘worst’.
The bank in 2020 has incurred huge loan loss but high operating cost against the poor income. The bank has a net shortage of capital for Tk 664.88 million at the end of the year 2020. The classified loan burden of the bank stood at Tk 1034.57 crore, which is 4 percent of the total loans and advances till December 2020.
The interest income of IFIC Bank in 2020 was Tk 2117.02 crore against Tk 2447.84 crore of 2019, which is 55.2 percent less than the income of 2019. The operating income of the bank has significantly decreased during the period registering 24.2 percent minus growth. The operating income of the bank in 2020 was Tk 8,424 million against Tk 11,120 million of 2019.
IFIC Bank has been facing Tk 123.40 crore provision due to its classified loans, most of which are treated as ‘bad and loss.’ As a result, the operating profit stood at Tk 290 crore, registering 43.3 percent minus growth in 2020.
The profit before tax was Tk 166.4 crore in 2020 agaisnt Tk 417.7 crore of 2019, which is 60 percent less than the profit of previous year. The net profit after tax has stood at only Tk 56.2 crore against Tk 244.4 crore of 2019. The net profit decreased by 77 percent in 2020. Earnings per share (EPS) have drastically fall at only Tk 0.35 in 2020 against Tk 1.51 of 2019.
All the negative growths have created huge reaction among the share holders. They have reacted yesterday while talking to Daily Industry at the transaction floor of a brokerage house in Dhaka. The highest share price of IFIC Bank in both the burses was Tk 12.7.
Due to the financial debacle of the bank, it has been able to allow only 5 percent stock dividend. In 2019, the bank has not been able to give any cash dividend. It has given 10 percent stock dividend in 2019 to the share holders. The bank has not been able to give any cash dividend to the shareholders in the consecutive five years due to the poor performance.
Managing Director of the bank in his financial performance report told: Import business of the bank was Tk 77,078 million in 2020 showing 10.6 percent decline from 2019 and export was Tk 74,061 million in 2020 indicating 21.8 percent fall from 2019. Net interest income (NII) decreased from Tk 6,398 million in 2019 to Tk 2,864 million in 2020 and net profit after tax reduced to Tk 562 million in 2020 from Tk 2,444 million in 2019.
Reviewing the balance sheet of the bank for 2020, it is found that the salary of the Managing Director has increased significantly despite the poor performance. The salary of Managing Director of IFIC Bank in 2019 was Tk 1,57,20,000 but it has increased to Tk 2,09,75,250. During the year the salary of Managing Director has increased by Tk 52,55,250.
The management of the bank has kept idle for about 250 mid-level officers whom length of service exceeds 20 years and aged between 40 to 55 years. These officers have asked to resign or ‘face termination’ by the management, especially by the Managing Director Shah Alam Sarwar.
Shah Alam Sarwar did not receive call while contacted over his cell phone for comment.