Loan moratorium, salary cuts push up profits for GSP Finance

Salary cuts, and a loan moratorium facility of Bangladesh Bank, have helped GSP Finance, a non-banking financial institution (NBFI), post a 33% growth in net profit for the first half of this year.

NBFIs can collect funds from banks and individuals as term deposits but cannot operate current accounts like banks.

According to its first-half un-audited financial statement, the company reported a consolidated net profit of Tk11.24 crore and consolidated earnings per share of Tk0.79, which was Tk8.45 crore and Tk0.59, respectively, for the same time frame a year ago.

A senior officer at GSP Finance, seeking anonymity, said the company had reduced salaries to ward off the pandemic shock which helped the NBFI save 32% in expenses on staff salary and allowances.

Also, in the January-March quarter, the company maintained excess provisions against its classified loans as per the central bank's instruction.

But in the second quarter, the NBFI managed to reverse some provisions against the classified loans to the balance sheet in line with the central bank's new directives on a loan moratorium.

He added that the company secured five times higher profits from its capital market investments, which helped the NBFI post such strong growth in net profit.

But its net interest income – the core business of the company – dropped 9% to Tk17.81 crore, owing to prevailing lower interest rates.

At the end of 30 June this year, GSP Finance's classified loans stood at Tk120 crore, which was 17% of total disbursement.

The NBFI, which got listed on the Dhaka Stock Exchange (DSE) in 2012, has a subsidiary company – GSP Investments Limited – whose business is fully dependent on the capital markets.

The board of directors of the company had earlier recommended a 5.50% cash and 5.50% stock dividend for shareholders for 2020.

But the Bangladesh Bank asked the company to change the dividend to 10% in stock dividends only.

Following the central bank's instruction, the company changed the dividend payout, which was approved by shareholders at the company's annual general meeting. In 2019, it paid a 10.50% stock dividend.

Last year the consolidated earnings per share of the NBFI were Tk1.55.

Its share prices jumped 110% to reach Tk28 each in the last six months at the DSE. But on Monday, its share fell 5.80% and closed at Tk26 at the country's premier bourse.