Social Islami Bank reports Tk20,994cr provision shortfall

Social Islami Bank has reported a provision shortfall of Tk20,994 crore as of 31 December 2024, prompting its board of directors to withhold any dividend declaration for the year.

According to a bank's disclosure filed on the Dhaka Stock Exchange (DSE), a sharp decline in profit and its failure to meet the required provision levels under Bangladesh Bank's policy were the main reasons behind the decision. 

The central bank's guidelines bar banks from declaring dividends if they fail to maintain adequate provisions against loans or have taken deferral facilities.

Following the financial disclosure, Social Islami Bank's share price fell by 1.28% to close at Tk7.50 today.

According to the audited statement of the bank for 2024, its classified investment jumped by 13 times to Tk23,633 crore compared to the previous year.

The bank was required to keep provisions against investment was Tk22,359.72 crore, but it maintained only Tk1,366 crore.

As a result of the significantly classified investment, the bank incurred a consolidated loss of Tk55 crore in the last year, while the loss per share stood at Tk0.89.

In the first quarter of 2025 (January-March), the bank reported a consolidated loss of Tk148 crore, with the loss per share at Tk1.41.

Earlier in August last year, the Bangladesh Bank dissolved the board of directors of the Social Islami Bank and formed a new five-member board.

Later, the new board elected Sadiqul Islam as chairman of the bank.

Since 2017, Social Islami Bank had been controlled by the S Alam Group, a business conglomerate with a history of alleged irregularities and corruption.

S Alam Group is alleged to have engaged in irregularities and corrupt practices within the bank, particularly in the areas of recruitment and loan disbursement. Following the allegations, the central bank dissolved the Social Islami Bank's board.