IDLC Finance’s classified loans surge 20% in Q1

IDLC Finance Limited – a publicly listed non-bank financial institution (NBFI) – has reported a 20% year-on-year increase in its classified loans in the January to March quarter of this year.

Classified loans are those loans that are at risk of being defaulted.

During the quarter, the classified loan amount stood at Tk524.36 crore – 4.72% of IDLC Finance's total loan portfolio – including all the subsidiaries.

The company's classified loans have been on the rise since 2021, according to its financial statements.

At the end of 2022, the company's non-performing loans stood at Tk437.41 crore, which was 60% higher than that in 2021.

Masud Karim Majumder, chief financial officer at IDLC Finance, told The Business Standard, "Our classified loans increased as the central bank withdrew the deferral facility for payment of instalments."

"Current defaulters have also defaulted before. But they were removed from the list of defaulters with a deferral facility."

He said new loan defaults have also increased as many are unable to pay instalments because of inflation and liquidity problems.

"Because of economic uncertainties and global crisis, we did not take any legal action to recover the classified loans in the past few years. But now we are taking steps and we hope our classified loan will reduce in the coming days," he added.

The net profit of IDLC Finance fell by nearly 28% year-on-year to Tk34.40 crore in the first quarter of 2023 owing to a decrease in net interest income, and a bleak stock market. Its earnings per share (EPS) stood at Tk0.83.