UCB seeks strategic investors to raise capital, plans Tk750cr injection via fresh shares
The decision was made at a meeting of the bank’s board of directors held on Thursday
United Commercial Bank (UCB) has announced plans to issue new shares equivalent to 50% of its audited paid-up capital to a strategic investor, as part of its plan to strengthen its core capital.
The decision was made at a meeting of the bank's board of directors held on Thursday.
In addition to this move, the private-sector lender also plans to issue Right Shares at a 2:1 ratio – one Right Share for every two existing shares – at face value.
According to a stock exchange disclosure today (1 June), UCB plans to raise new capital equivalent to 50% of its audited paid-up capital.
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Based on current estimates, this would amount to approximately Tk750 crore. However, the exact paid-up capital will be determined based on the bank's audited financial statements as of 31 December 2024.
The offer price for the new shares will be finalised through negotiations with the strategic investor and disclosed in due course, the stock filing stated.
Though the bank has not disclosed any names of potential investors, sources familiar with the matter told The Business Standard that UCB has appointed two Singapore-based investment banks to scout for suitable strategic investors.
A senior executive of the bank expressed optimism, saying he expects positive news regarding the deal's closure in the second half of the year.
Today, the bank's share price closed at Tk10 on the DSE.
Meanwhile, the bank could not recommend any dividend for shareholders for the year ending 2024 due to a significant provision shortfall.
According to the bank's disclosure, a sharp decline in profit and its failure to meet the required provision levels under Bangladesh Bank's policy were the main reasons behind the decision.
As per central bank guidelines, banks are barred from declaring dividends if they fail to maintain adequate provisions against loans or have taken deferral facilities.
UCB has scheduled its 42nd annual general meeting for 31 July, with the record date set for 29 June.
According to the financial statement as of December 2024, the bank's required provision against loans and advances stood at Tk6,055 crore but it managed only Tk2,706 crore, leaving a shortfall of Tk3,345 crore.
At the end of 2024, the bank reported a profit after tax of only Tk8 crore – a steep decline of Tk220 crore compared to the previous year.
Its net interest income rose to Tk2,156 crore, up from Tk1,629 crore in the same period the previous year. However, its earnings per share plummeted to Tk0.05, down from Tk1.45 a year ago.
In its official statement, the bank said the decline in net profit was primarily due to increased provision requirements against loans and advances. Net Operating Cash Flow Per Share (NOCFPS) also decreased, mainly because loan disbursements outpaced deposit growth. Despite this, the bank continues to meet all regulatory liquidity requirements.
The downward trend continued into the first quarter of 2025 (January–March), during which the bank posted a net profit after tax of Tk6 crore, significantly lower than Tk64 crore in the same period the previous year.
Net interest income during the quarter was Tk365 crore, down from Tk465 crore year-on-year. Earnings per share for Q1 2025 stood at Tk0.04, compared to Tk0.42 a year earlier.
