Bank Asia to issue Tk800cr bond

Bank Asia PLC, a private sector lender, has decided to issue a bond worth Tk800 crore to enhance its capital base through private placement.

The floating rate non-convertible subordinate bond aimed at raising regulatory capital (Tier-2) is expected to help the bank fulfil its Basel-III requirements.

The decision to issue the bond was approved by the board of directors at a board meeting on 4 June, according to a disclosure on the stock exchanges on Wednesday (5 June).

The issuance of the bonds, which have a seven-year term, is subject to approval from the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank.

Currently, the local bond market is dominated by subordinated bonds, mainly issued by banks. These bonds help lenders construct their mandatory tier-2 capital base through the bond proceeds within a specific tenure.

The Bangladesh Bank is implementing Basel-III in the local banking industry to ensure that banks have adequate capital to avert systemic risk.

Basel-III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital.

According to its first-quarter financials for January to March 2024, Bank Asia PLC reported a profit of Tk77.88 crore, which is 41% down compared to the same period of the previous year.

During this period, its operating income increased by 33.63% to Tk634.77 crore.

The earnings per share (EPS) in the first quarter declined to Tk0.67, from Tk1.14 in the same quarter of 2023.

The company stated that its EPS declined mainly due to maintaining higher provisions compared to the same quarter of last year. Its total provisions stood at Tk192 crore, up from Tk45 crore, according to its quarterly statements.