National Bank incurs loss of Tk766cr in Jan-Mar
National Bank Limited, the country's first-generation private sector lender, reported a loss of Tk766 crore in the January-March period of this year, attributed to poor governance practices and the burden of non-performing loans.
The bank released its unaudited financial report for the first quarter via the Dhaka Stock Exchange (DSE) today (16 May).
According to the financial statement, its consolidated loss jumped by 145% during the quarter, compared to the same period last year.
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Moreover, its net asset value (NAV) per share worsened compared to the same period last year. In January-March, the NAV per share stood at Tk4.92, marking a 59% decrease from the previous year.
In the statement, the bank said it could not book interest on loans and advances due to non-recovery from defaulters.
Additionally, the bank incurred higher interest expenses on deposits and borrowings. As a result, the period concluded with an operating loss, it added.
Nevertheless, the new board and the new management are exerting maximum efforts to improve the financial health of the bank by streamlining recovery drives and mobilisation of low-cost deposits, said National Bank.
At the end of 2023, its total classified loans stood at Tk15,725 crore, which was 47% higher than the previous year.
The bank has been incurring losses since 2022, and its cumulative loss stood at Tk3,400 crore at the end of March this year.
On 5 May, Bangladesh Bank dissolved the board of National Bank and formed a new board consisting of 10 members, including three independent directors. It excludes members of the Sikdar family, who are the owners of the bank, as well as directors of their related institutions.
As per the central bank's decision, Khalilur Rahman, a longstanding entrepreneurial shareholder of National Bank and also the chairman of the KDS Group, has been serving as the chairman of the bank.
Khalilur Rahman, in a press briefing on 6 May, stated that the new board plans to raise Tk4,000 crore in capital, with an initial infusion of Tk1,000 crore from directors and shareholders, and the remaining Tk3,000 crore through deposits, aiming to address the financial challenges.
Big trade on block market
After the change in the board, a significant volume of National Bank shares was traded on the block market at the DSE, totaling 20.80 crore shares valued at Tk138.57 crore on 6, 7, and 16 May. These shares represented 6.46% of the bank's total shares.
In the block market, both buyers and sellers are predetermined, and the share price is predetermined as well.
According to DSE sources, a few business firms bought these shares through the block market.
It is noteworthy that the holdings of sponsors and directors decreased by 20.33% from the regulatory threshold of 30% following the change in the board. Market insiders said that to fill this gap, some investors may seize the opportunity to enter the bank's board.
Its shares rose by 1.59% and closed at Tk6.40 each at the DSE yesterday. Its total market capitalisation stood at Tk2,028 crore.
On 9 April, just before the Eid holiday, Bangladesh Bank instructed the private sector United Commercial Bank to merge with National Bank. The announcement of the merger led to a decline in the price of National Bank shares in the stock market starting from 15 April, after the Eid holiday.
Between 15 and 24 April, the market price of the bank's shares dropped from Tk7 to Tk5.50. Later, the board of National Bank decided to refrain from merging with any other bank for the time being.
