Loss-making Union Capital unable to pay dividends for years

Union Capital Ltd, which posted profits for more than a decade after its listing in 2007, has been incurring losses for years and is unable to pay any dividends to its shareholders.

According to its financial statements, the non-bank financial institution (NBFI) ended its 12-year winning streak in 2019 and plunged into losses, with the trend persisting into the first half of this year.

It last paid 5% stock dividends in 2018.

According to the latest financial reports, Union Capital posted a consolidated loss of Tk206 crore in 2022, the highest in its history. The loss stood at Tk138 crore in 2021.

In the first six months of this year, the loss stood at Tk103 crore, and the NBFI's accumulated losses till June amounted to Tk594 crore.

Company Secretary Md Abdul Hannan said all the information has been given in the company's report. "Nothing can be said beyond that."

Income from all segments drops, but provision rises 

According to the six-month financial report, interest on loans, income from investments in the stock market, and brokerage commissions on share transactions are decreasing. However, due to the non-payment of loans, provisioning against defaulted loans has increased.

At the end of June 2023, provisioning against defaulted loans rose to Tk74 crore, which is 37% more than the same period of the previous year.

Union Capital recorded a net loss of Tk103 crore in the January-June period of 2023 and the loss per share stood at Tk5.37.

According to the financial report, its income from interest, investment, and fees, commission, exchange, and brokerage dropped to Tk16.60 crore, Tk53 lakh, and Tk4.43 crore, respectively.

The figures show a decrease of 42.56%, 60%, and 39.80%, respectively, compared to the first six months of the previous year.

The company said its earnings per share (EPS) for the period ended on 30 June decreased from the same period of the previous year due to decreasing interest income resulting from increasing non-performing loans, increasing provision requirements for increased non-performing loans, and decreasing brokerage commission due to a sluggish trend in the capital market.

The NBFI won't pay dividends

Its consolidated loss per share stood at Tk11.95, which increased from Tk8.03 in 2021.

Union Capital will not pay any dividends to shareholders for 2022 due to heavy losses.

The consolidated net asset value per share became negative at Tk15.86, which was negative Tk3.91 in the previous year.

The Union Capital said its consolidated EPS for 2022 has decreased from the previous year due to an enhanced provision requirement as a result of increased NPL and decreased interest income resulting from no disbursement and increased NPL.

Sponsor-directors hold 33%, institutional investors 20.97%, and general investors 46.03% of the shares in the company.