Phoenix Finance incurs Tk1,323cr loss since 2021

Infographic: TBS

Phoenix Finance and Investments has reported a staggering loss of Tk1,323 crore from 2021 to June 2024, primarily attributed to the fallout from loan scams that plagued the non-bank financial institution, according to the company insiders.

In 2021, the company reported a loss of Tk35 crore, which escalated to Tk138 crore in 2022 and further surged to Tk705 crore in 2023.

At the end of the last year, its earnings per share was Tk42.52 negative, which was Tk8.36 negative a year ago.

This year, the company has already incurred a loss of Tk444 crore in the first half, representing a 99% increase compared to the same period last year.

In the first half of this year, its loss per share stood Tk26.74, which was Tk13.47 a year ago at the same time.

Due to the mounting losses, its board of directors could not recommend any dividend to its shareholders for the last year, according to the price-sensitive statement filed on the Dhaka bourse.

A senior officer from the company, speaking on condition of anonymity, shared with TBS that the company once enjoyed a strong reputation in the industry under the leadership of its late promoter, Deen Mohammad. During his tenure, the company received the prestigious International Star Award for Quality (ISAQ) in the gold category from Business Initiative Directions, a renowned business organisation based in Madrid, he said.

"However, Deen Mohammad passed away in 2021, and prior to his death, he was unable to lead Phoenix Finance due to declining health," he said.

The officer noted that his successor has not been able to fill his shoes, which ultimately led the company's former managing director, Intekhab Alam, to allegedly become involved in loan scams. "This has resulted in a mounting burden of defaulted loans and a severe deterioration in the company's financial health," he said.

In December of last year, the Bangladesh Bank removed Intekhab from his position on charge of violations of lending regulations. Furthermore, the central bank imposed restrictions on his foreign travel.

According to the central bank letter, Intekhab was found to be involved in the loan irregularities, which hampered depositors' trust.

Loan irregularities at Phoenix Finance involving borrower companies SA Oil Refinery and Aman Cement Mills Unit-2, Monospool Paper Manufacturing Company, Mahin Enterprises Limited, Mc Steel Industries along with individual borrowers — Najma Parveen and Farhan Musharraf —prompted the central bank to order Phoenix Finance to conduct a thorough internal investigation and take decisive administrative and legal action against those implicated, said the letter.

Currently, Phoenix Finance is governed by two shareholder directors and one independent director. Mohammed Mohsin serves as the chairman of the company, while Meherun Haque represents Phoenix Insurance as a nominated director.

Mohsin told TBS that the company's default loans increased due to large borrowers failing to make their repayments. This has resulted in significant losses as the company is required to maintain high provisions, he said.

Phoenix Finance shares are classified under the Z category, commonly referred to as the junk category. On Thursday, its share price increased by 5.56%, reaching Tk5.70 on the Dhaka Stock Exchange.