CSE profit falls despite market vibrancy

The port city bourse Chittagong Stock Exchange (CSE) witnessed a drop in profit in the 2020-21 fiscal year, even though the market remained vibrant and the average daily turnover increased by 81% compared to the previous year.

Last year, the CSE profit dropped 11% year-on-year to stand at Tk28.34 crore, while its revenue increased by 11% to Tk36.95 crore.

Its earnings per share (EPS) stood at Tk0.45 and it declared a 4% dividend for shareholders for the last year.

In FY21, CSE All Share Price Index (CASPI) stood at 17,795 points, which was 57% higher compared to a year ago.

At present, the bourse receives revenue in the forms of share transaction charge, company listing fees, members' certificate renewal fees, service charge, and commission.

For each transaction, the CSE charges its brokers 0.023% of the turnover value which comes down to 0.004% in the case of bulk transactions – as large as Tk50 lakh – in a single trade.

A senior officer of the stock exchange said a big portion of the total income comes from the fixed deposit. But due to a fall in deposit rate in the banking industry the company lost income.

He also said the stock exchange is trying to boost income by introducing new products.

At the end of last year, its total fixed deposit with different banks and non-banking financial institutions was Tk445.70 crore. Out of which, the company could not withdraw Tk27.20 crore from International Leasing, Union Capital, Prime Finance and Premier Leasing even after their maturity.

A senior officer of the CSE said these non-banking financial institutions failed to pay the fixed deposit after maturity because of their poor condition.

The auditor of the CSE said in the financial statement that the bourse did not maintain the provision against the fixed deposit that got stuck in the non-banking financial institutions.

Meanwhile, the CSE in its financial statement said they were working closely with the securities regulator and other stakeholders to implement a full-fledged global standard Bond Market.

They also introduced structured products like derivatives and commodities, a field that is widely expanding globally.

But the bourse could not reach strategic investors, which is a regulatory condition for a demutualised exchange. But the securities regulator has extended the time till 2022 to find a strategic partner.

The bourse said in the statement that it had offered to and contacted a number of local and foreign institutions to become strategic investors by taking its shares.

The total number of listed securities in the CSE stood at 348 at the end of June 2021. The market capitalisation of the bourse stood at Tk4,38,365 crore at the end of the last fiscal, which was 79% higher compared to the previous year.

At the end of June 2021, Price Earnings (P/E) ratio in the CSE increased to 17.68 from 10.68 at the end of the preceding year. The yield slightly decreased to 3.63 at the end of June 2021 which was 4.73 at the end of June 2020.

The port city bourse began its journey in 1995 to compete with the Dhaka Stock Exchange (DSE) which was born in the mid-1950s.

The CSE was trading 30-50% of what the DSE would do until the early 2000s and sometimes it went as high as that of the DSE, said a stock broker, adding "However, the exchange began to lose the edge in the mid-2000s as the capital market regulator had stopped intraday trading facility which, only, the CSE would offer."