Mercantile Bank sees 8% profit drop in H1
Mercantile Bank PLC has reported an 8% year-on-year drop in its consolidated net profit for the first half of 2025, driven by mounting non-performing loans and a significant provision shortfall.
According to the bank's audited financial statement, approved and published on Thursday, its consolidated earnings per share (EPS) stood at Tk1.82 for the January-June period, down from Tk1.98 in the same period last year.
In the April-June quarter of this year, the bank posted the consolidated EPS of Tk0.98, which was 22% lower form the previous year in the same quarter.
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At the end of June, its consolidated net asset value per share was Tk25.11.
On Thursday, Mercantile Bank shares closed 1.20% lower at Tk8.20 on the Dhaka bourse.
Earlier, in June, the bank decided not to declare any dividend for 2024 after reporting a provision shortfall of Tk1,700 crore against non-performing loans as of 31 December last year.
The bank, in its financial statement, said Bangladesh Bank's assessment revealed a Tk2,121.19 crore provision shortfall as of 31 December 2024, with only Tk220.33 crore maintained, leaving an initial deficit of Tk1,900.86 crore.
Following a 22 May directive, the bank allocated Tk200 crore from 2024 pre-provision profits, reducing the gap to Tk1,700.86 crore.
Given profit constraints and capital adequacy considerations, the Bangladesh Bank permitted finalising the 2024 financials without full shortfall adjustment, resulting in no dividend declaration, read the statement.
According to the audited statement of the bank for 2024, its classified investments surged by 199% year-on-year to Tk5,176 crore, making up 17.25% of its total loan portfolio.
This rise in bad loans led to a net loss of Tk272 crore in the December quarter last year.
As a result, the bank's consolidated net profit dropped by 68% to Tk64.95 crore for the year, with earnings per share (EPS) falling to Tk0.58 from Tk1.86 the year before.
