Listed non-bank financial institutions (NBFIs) in Bangladesh have reported a decline in earnings for the January-June period this year, compared to the same period in the previous year. Out of the 23 NBFIs listed on the Dhaka Stock Exchange, 13 have disclosed their half-yearly financial statements, all showing diminished profits. The reduced earnings can be attributed to factors including decreased interest income, limited returns from the capital market, and challenges faced by borrowers in loan repayments. The inflationary trend in the country has led lenders to offer interest rates surpassing deposit rate ceilings, affecting the spread for NBFIs. This situation, combined with rising operational costs due to inflation, has led to increased classified loans and provisioning, thereby squeezing overall earnings. Non-performing loans in the NBFI sector spiked by over 25 percent YoY in March, standing at Tk 17,855 crore.
Despite the challenging landscape, some NBFIs managed to record profits, albeit with reductions. IDLC, for instance, reported a 20 percent YoY decrease in profits at Tk 72 crore. Similarly, DBH witnessed a 9 percent decline, amounting to Tk 49 crore. LankaBangla Finance and National Housing experienced declines of around 45 percent and 20 percent, respectively, while BD Finance faced the most significant blow, with profits plummeting by 72 percent YoY to Tk 5 crore. Last year, around 14 of the 35 listed and non-listed NBFIs were adversely impacted by higher non-performing loans and corruption, as indicated in a stress test report by Bangladesh Bank.
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