IPDC Finance posts Tk8cr profit in April-June

Publicly traded IPDC Finance Limited, in this April-June quarter, has posted a net profit of Tk8 crore — about five times of what it was in the previous quarter.

But the non-bank financial institution (NBFI) still has a long way to go in this year's second half for recovering its annual performance.

In the January to June period this year, the company's profit after taxes stood at Tk9.51 crore — a 78% plunge from what it was in the same six months of 2022.

Analysts said the NBFI industry has gone through a tough time in the first half of 2023 due to a pressure to pay more interest against the collected funds amid the inability to charge their borrowers more because of the lending rate cap.

The spread — the difference between borrowing and lending rates — came down to a historic low of less than 1% for the overall NBFI industry, and less than 3% for top tier firms, according to analysts.

However, the cap was withdrawn at the beginning of July and the NBFIs were allowed to charge up to 500 basis points higher than the benchmark six month average of 182 day treasury bills. This change is helping the NBFI industry to increase their spread a little bit.

Focusing on real recovery of loans instead of restructuring and rescheduling to show a rosy picture was another reason that hurt IPDC's bottom line in the first half, said its CEO Mominul Islam.

At the end of June, the company ensured 109% provision against classified loans, he said, adding that IPDC's capital adequacy ratio was 17.42% against the regulatory requirement of 10%.

The quarter-on-quarter improvement in performance indicates a turnaround point, and the second half should be a better one for IPDC, believes Mominul Islam as the NBFI eyes more recovery and higher spread alongside business growth.

At the end of June, IPDC's net asset value per share stood at Tk17.51.

IPDC shares, having a face value of Tk10 apiece, closed at the floor price of Tk57.6 on Sunday at the Dhaka Stock Exchange.