City Bank to issue Tk800cr bond

City Bank, a private sector lender, has decided to raise Tk800 crore through issuing bonds, aiming to enhance its capital base.

According to its price-sensitive statement, 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 Sunday (9 February), read the statement.

The issuance of the bond is subject to approval from the Bangladesh Securities and Exchange Commission 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.

Its share closed at Tk22.80 on Sunday at the Dhaka Stock Exchange.

Meanwhile, City Bank's consolidated net profit for the January-September period of 2024 increased by 19% to Tk450 crore compared to the same period last year.

According to the price-sensitive information of the private sector lender, its consolidated earnings per share was Tk3.35, up from Tk2.21 a year ago.

As of 30 September last year, the bank's consolidated net asset value per share stood at Tk29.91, and the consolidated net operating cash flow per share was Tk42.38.

The bank has paid a 15% cash dividend and a 10% stock dividend for the financial year ending 31 December 2023.

In that year, its net profit was Tk638 crore, a 33% increase from the previous year.