LankaBangla Finance posts 93% annual profit growth for 2020

Defying the pandemic, LankaBangla Finance Ltd has secured a massive growth in its annual profits for the year 2020.

The non-bank financial institution's (NBFI) consolidated net profit after taxes soared to Tk97.9 crore in 2020, which was 93% higher than that a year ago.

"The credit for such an upsurge in profits goes to all components of the group as every company under the umbrella of LankaBangla group has had massive growth in bottom line," the listed company's Managing Director and Chief Executive Officer Khwaja Shahriar told The Business Standard.

He thanked all the business divisions for performing better despite the fact that 2020 was the most challenging year in the firm's history, as its lending business as well as the capital market operations had been off for nine weeks with the overall economy.

LankaBangla's Chief Financial Officer (CFO) Shamim Al Mamun said LankaBangla Finance, the mother company engaged in lending business, posted a 12% profit growth, while its brokerage arm LankaBangla Securities Ltd posted an 11% annual profit growth last year.

Merchant banking subsidiary LankaBangla Investments Ltd registered a 108% growth in annual profit in 2020 and the annual profit of mutual fund manager LankaBangla Asset Management grew by 105%.

"Three factors can be attributed to such a winning result: cost optimisation across the whole group, reversal of provision of investments in the capital market and increased investment income from the capital market," said the CFO.

LankaBangla is a major name in each of the intermediary industries in the capital market of the country as its brokerage arm is the top firm in terms of trade execution, while the merchant bank is also a leading name in investment banking, issue management, corporate advisory, and portfolio management business.

LankaBangla Asset Management, the latest addition in the group's business wings, also turned around in line with the stock market indices.

Meanwhile, LankaBangla Finance Ltd is operating with the second largest balance sheet in its sector with a significant customer base in retail, SME and corporate lending arenas. 

LankaBangla is the third lender to offer credit cards in Bangladesh and still the lone NBFI in the plastic money business.

Khurshed Alam, head of LankaBangla's retail financial services, said, with 1.45 lakh active LankaBangla credit cards and an exposure of Tk415 crore, his firm is the fourth largest player in the entire credit card market of Bangladesh.

His company is also leading the NFBIs in the businesses of personal loans and car loans, while it is at the second spot in housing loans and SME loans as Delta Brac Housing and IDLC Ltd has special focuses in housing and SME financing respectively.

In corporate loans, LankaBangla slid to the second spot within the NBFI sector in 2019 as it found retail more profitable and also has very high potentials, said Khurshed Alam.

Due to significant involvement with the capital market, LankaBangla's profitability as a group is strongly tied with the stock market performance.

Its consolidated profit after taxes almost quadrupled over the 2015-2017 period as the stock indices rallied around 50% over the two years.

Again, as the stock market went depressed from the beginning of 2018 until mid-2020, LankaBangla's consolidated profits nosedived to the 2015 level in 2018 and 2019.

However, the turnaround now helped the company's consolidated earnings per share (EPS) to grow to Tk1.81 in 2020, which was Tk0.94 in 2019.

Net asset value per share of the company stood at Tk18.73 at the end of last December, which was Tk17.6 a year ago.

The company declared a 12% cash dividend for 2020.