Floor price eats into Dhaka bourse’s revenue, profit
In FY23, DSE’s revenue fell by 25% to TK238 crore, which is lowest since FY20
The Dhaka Stock Exchange (DSE), Bangladesh's premier bourse, experienced a substantial decline in revenue and profit during the fiscal year 2022-23 due to volatile market conditions and reduced share transactions amid floor price regulations.
According to its financials, in FY23, DSE's revenue fell by 25% to TK238 crore, which is lowest since FY20.
Its net profit after tax declined to Tk80 crore, 35% lower than the previous fiscal year.
As profit fell, the DSE board has recommended a 4% cash dividend for its shareholders for FY23.
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In the previous fiscal year, it had paid a 6% cash dividend to its shareholders.
After the Russia-Ukraine War, which started early last year, the country's stock market has been experiencing a volatile situation with the lower turnover at the DSE.
The Bangladesh Securities and Exchange Commission (BSEC) on 28 July last year set the floor price to prevent free fall.
The floor price is the lowest price at which a stock can be traded. Owing to such a price mechanism, stocks investors have been failing to sell shares, as a result, the bourse observed lower shares transaction.
"The revenue of DSE declined because of lower shares transection at the bourse. In the last fiscal, shares trading declined significantly," ATM Tariquzzaman, managing director of the DSE, told The Business Standard.
He said, "In line with lower revenue, the profitability of the bourse also declined as expenditures increased."
Shares transaction fees, which is the main revenue segment slashed by around 50% to Tk78 crore.
The DSE gets 0.25% from shares buying and selling at the bourse.
Due to the Covid-19 pandemic, the DSE experienced a significant setback in FY20. The stock market was forced to close from March 29 to May 30, resulting in a revenue of Tk157 crore and a profit of Tk27 crore.
According to DSE financials, shares transaction fees, which is the main revenue segment, declined by around 50% to Tk78 crore in FY23. This revenue segment has contributed 39% of the total revenue.
Besides the shares transaction revenue, the DSE earned a significant revenue from its fixed deposit and dividend. The FDRs contributed 33% in its total revenue.
The DSE has fixed deposit receipts (FDRs) worth Tk861 crore in banks. In FY23, the DSE earned approximately Tk80 crore, which is an increase from Tk66 crore in the previous fiscal year.
In its total revenue, listing fees contributed around 10%, rental income 5%, and licensing and other fees contributed around 13%.
