First Security Islami Bank posts Tk57,576cr loss after BB lifts regulatory deferral

Infographic: TBS

First Security Islami Bank, once controlled by the scam-hit S Alam Group, has reported an unprecedented consolidated loss of Tk57,576 crore for the January-September 2025 period after the Bangladesh Bank withdrew a long-standing regulatory deferral facility and ordered the lender to recognise its full provision shortfall.

The staggering loss was disclosed in the bank's revised unaudited financial statements, filed with the Dhaka Stock Exchange (DSE) following a directive from the central bank. 

The revision marks one of the largest losses ever reported by a Bangladeshi bank and effectively confirms the institution's insolvency ahead of its merger into a new consolidated Islamic bank.

According to the revised statements, the bank's consolidated loss per share stood at Tk462.57 for the July-September quarter of 2025, compared with Tk0.26 in the same quarter a year earlier. For the nine months to September 2025, the consolidated loss per share ballooned to Tk476.57, reversing an earnings per share of Tk0.48 reported in the corresponding period of 2024.

The bank said the revision followed a Bangladesh Bank letter dated 25 November 2025, which withdrew the previously granted deferral facility that allowed the lender to prepare financial statements without fully adjusting for provision shortfalls against classified loans and investments.

A senior bank official, speaking on condition of anonymity, told TBS that the Bangladesh Bank recalculated the lender's actual losses by fully accounting for bad loans and impaired investments, particularly in light of the bank's impending merger. "The earlier figures did not reflect the true financial position because provisions were deferred. Once those adjustments were made, the real extent of losses became visible," the official said.

Previously, the bank had disclosed a consolidated loss of Tk3,750 crore for January-September 2025, prepared under the deferral facility.

Even more alarming, consolidated net asset value per share plunged to Tk460.18 negative as of 30 September 2025, from Tk20.66 a year earlier.

Banking analysts say such a deeply negative NAV is a clear indicator of insolvency. It implies that the bank's liabilities exceed its assets by a wide margin, leaving no residual value for shareholders.

"In practical terms, the equity of First Security Islami Bank is wiped out. Even if all assets were liquidated, they would not be enough to meet depositor and creditor claims," said a senior analyst at a Dhaka-based brokerage.

The roots of the crisis lie in the bank's massive volume of classified loans and investments. At the end of 2024, classified loans stood at Tk55,920 crore, accounting for about 92% of total loan outstanding.

The provision shortfall against these classified investments amounted to Tk47,862 crore. Despite this, the bank had earlier received regulatory approval to prepare its 2024 financial statements using the deferral facility, effectively masking the true scale of losses.

In early November, the central bank declared First Security Islami Bank ineffective and appointed an administrator, announcing that it would be merged with four other Islamic banks – Social Islami Bank, EXIM Bank, Union Bank and Global Islami Bank – into a new entity named Sammilito Islami Bank.

Following the announcement, trading of First Security Islami Bank shares was suspended on 6 November. While the delisting process has yet to begin, the fate of shareholders has already been sealed, according to the regulator.

At the merger announcement event on 5 November, Bangladesh Bank Governor Ahsan H Mansur said shares held by sponsor directors and general shareholders of the five merging Islamic banks were effectively valued at zero. "Shareholders will not get any compensation as the net asset value against the Tk10 face value has become negative, in some cases exceeding Tk450 per share," he said.

The situation mirrors developments at Union Bank, which earlier revised its own financials to report a loss of Tk25,794 crore and a negative net asset value of Tk237.44 per share.