Treasury income comes to the rescue as Jamuna Oil’s FDR earnings slide
Bank liquidity issues hit Jamuna Oil’s FDR income, boosting reliance on treasury and bonds
Jamuna Oil Company, a state-owned firm, saw its net profit fall by 18% in the first half of FY 2025-26, hit by unaccrued interest on fixed deposit receipts (FDRs) held in four banks that have merged into Sammilito Islami Bank.
The company reported a profit of Tk216.81 crore and earnings per share (EPS) of Tk19.63, down from Tk 264 crore and EPS Tk23.92 in the same period last year.
In a disclosure to the stock exchanges, Jamuna Oil said the EPS decline was due to interest on bank deposits with Sammilito Islami Bank for the second quarter not being accrued. Interest accrued in the first quarter was also written back, as it is now presumed that it could not be realised.
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Despite the slump in FDR income, Jamuna Oil's earnings from treasury bills and bonds partially offset the decline. The company earned Tk297.17 crore from other income primarily interest on T-bills and T-bonds, dividends, and other sources down from Tk380.35 crore in H1 FY25.
Income from FDRs fell 45.44% to Tk188.79 crore from Tk346.01 crore in the previous fiscal. Treasury bills and bonds, a new investment avenue, generated Tk73 crore, which was not recorded in the previous year.
The company's auditor raised concerns over the recoverability of FDRs in six banks, four of which merged into Sammilito Islami Bank, while two remain independent.
Jamuna Oil has total investments of Tk1,541.08 crore across these banks, including FDRs and SND accounts at First Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, Bangladesh Commerce Bank, and National Bank.
The auditor noted that Jamuna Oil has realised Tk94.17 crore out of Tk106.71 crore from FDRs, with Tk1.25 crore still due as of 30 June 2025.
Interest of Tk58 crore accrued between the last maturity date and the balance sheet date remains uncertain due to liquidity issues. The company has requested encashment from the banks, but responses have been limited.
In FY25, buoyed by FDR income, Jamuna Oil posted a record profit of Tk441 crore and recommended a 180% cash dividend, which will be considered at its annual general meeting on 31 January.
Today (26 January), Jamuna Oil's shares closed at Tk168.40 each on the Dhaka Stock Exchange, down 1.64% from the previous session.
