IPDC reports 35.8% massive rise in 2024 operating profit

IPDC Finance PLC posted an operating profit of BDT 1,765 million in Y2024, reflecting a commendable 35.8% year-on-year growth.

As of 31 December 2024, the gross asset portfolio stood at BDT 79,048 million, registering a 5.3% increase from the previous year. During this period, the investment portfolio, comprising government securities and other instruments, witnessed a remarkable expansion of 110.5%, driving a substantial rise in investment income by BDT 452 million, equivalent to a 194.6% year-on-year growth.

Although the loan portfolio experienced a slight decline in Y2024, IPDC's gross interest income rose by 18.5%, reaching BDT 8,811 million, driven primarily by higher interest rates than the previous year. However, interest expenses also saw a significant increase of 28.1%, mainly due to the rising cost of deposits, policy rate hikes by Bangladesh Bank, and overall liquidity stress within the financial sector. Despite these challenges, total operating income grew to BDT 3,242 million in Y2024, reflecting an 11.7% year-on-year increase, primarily fueled by robust investment income. As a result, net profit stood at BDT 363 million, marking a 5.9% growth over the previous year.

In light of the prevailing macroeconomic conditions, IPDC adopted a prudent approach to corporate lending, emphasising small-ticket SME financing, consumer lending, and risk-free investments in government securities. Reflecting this strategic shift, IPDC more than doubled its investment in government securities, rising from BDT 1,612 million as of 31 December 2023 to BDT 5,206 million by year-end 2024, establishing a stable and secure avenue for revenue generation amid a challenging economic landscape.

Over the year, IPDC remained diligent in preserving portfolio quality, successfully containing non-performing loans at a prudent 5.83%, despite considerable macroeconomic challenges faced by many of our clients. In line with its commitment as a responsive financial institution, IPDC ensured adequate coverage against impaired assets, leading to an 18.4% increase in accumulated provisions, which stood at BDT 3,571 million by the end of Y2024.

Through a strategic focus on efficient resource utilisation, selective hiring for essential roles, and enhanced operational processes, the company successfully reduced operating expenses by BDT 124 million, or 7.8%, compared to Y2023, while maintaining team stability and overall effectiveness.
As of year-end 2024, customer deposits stood at BDT 51,761 million, reflecting a modest 2.1% growth despite weakened customer confidence from mismanagement issues within specific financial sector segments. IPDC retained a strong position in the industry, holding over 11% of the total deposit market share among NBFIs.

Loan growth across most banks and non-bank financial institutions (NBFIs) has remained subdued, with NBFI loan growth reaching a modest 3.14% by the end of 2024 compared to December 2023. This is primarily attributed to a slowdown in private sector credit, which fell to 7.24% year-on-year in December 2024, alongside higher interest rates and persistent inflationary pressures. Customer confidence has also been dampened by disruptions and mismanagement within the financial sector, resulting in sluggish deposit growth among NBFIs, which increased by only 1.12% from December 2023.
Conversely, the classified loan (CL) ratio for banks and NBFIs has risen sharply, reflecting macroeconomic challenges and sectoral mismanagement. By September 2024, the total CL ratio for NBFIs had increased to BDT 262 billion, or 35.52% of total outstanding loans, up from 31.55% in December 2023. Additionally, the weighted average interest rate (WAIR) on loans for NBFIs rose to 12.55% in September 2024, up from 10.37% in December 2023, while the WAIR on deposits climbed to 10.57% in December 2024, up from 8.53% in the previous year, resulting in an expanding interest rate spread compared to recent trends.