First Security Islami Bank reports Tk1,692cr loss in H1

Infographics: TBS

First Security Islami Bank has reported a staggering consolidated loss of Tk1,692 crore for the January–June period of 2025, compared to a profit of Tk90.22 crore in the same period a year earlier.

According to the bank's unaudited financial statement, the loss dragged its consolidated earnings per share (EPS) down to negative Tk14.01. The bank's net asset value (NAV) per share also plunged by 89%, falling to just Tk2.60 from Tk21.44 in 2024.

The bank's financial position was further strained by a negative consolidated net operating cash flow of Tk2,666 crore during the six-month period, indicating a critical operating cash shortage.

In the April–June quarter alone, the bank posted a consolidated loss of Tk1,116 crore, reversing a profit of Tk53 crore in the same quarter of 2024. EPS for the quarter came in at negative Tk9.24.

In its financial statement, the bank attributed the substantial loss in the first half of 2025 to a sharp rise in classified investments, which led to a Tk1,977 crore decline in net investment income compared to the same period last year.

As a result of the heavy loss, retained earnings fell by Tk1,692.14 crore, turning negative at Tk2,166 crore. This contributed to the steep drop in consolidated NAV per share.

The bank also noted that deposits from customers and placements from banks and financial institutions declined by Tk4,113 crore year-on-year during the period, resulting in a significant negative consolidated net operating cash flow per share.

Investors reacted to the bleak earnings update on Monday, pushing the bank's share price down by 4.88% to close at Tk3.90 on the Dhaka Stock Exchange. The bank's market capitalisation currently stands at Tk495 crore, against a paid-up capital of Tk1,208 crore.

Although the bank has yet to disclose its NPL in the half-yearly report, in the audited report for 2024, First Islami Bank reported that its total non-performing loans stood at Tk55,920 crore, accounting for a staggering 92% of its total loan portfolio.

The bank also disclosed a provision shortfall of Tk47,862 crore as of 31 December 2024, which led its board of directors to forgo declaring any dividend for the year.

Earlier in August last year, the Bangladesh Bank dissolved the board of directors of the First Security Islami Bank and formed a new five-member board.

The bank had been controlled by the S Alam Group, a business conglomerate with a history of alleged irregularities and corruption.

S Alam Group is alleged to have engaged in irregularities and corrupt practices within the bank, particularly in the areas of recruitment and loan disbursement. Following the allegations, the central bank dissolved the First Security Islami Bank's board.