Prime Finance dives into the red again

Prime Finance & Investment suffered a loss of Tk 341 million in the nine months through September 2022, due to what the company claims is huge provisioning against loans and advances.

The non-bank financial institution (NBFI) recorded a profit of Tk 79 million in the same period of the previous year, according to a stock exchange filing on Wednesday.

As a result, the company incurred a loss of Tk 1.25 per share in January-September 2022, as against profit of Tk 0.29 per share in the same period a year ago.

The company disclosed pending financial statements and annual earnings data of the year 2021 on Wednesday.

According to the disclosure, the company suffered a loss of Tk 188 million in the financial year that ended in December 2021 although it reported profits for the first nine months of the same year.

Huge provisioning in the final quarter sent the company into a deep red zone, it said.

As a result, the board of the company declared 'no' dividend for 2021.

Prime Finance disbursed 2 per cent cash dividend for 2019 after four years as it failed to pay any dividend for 2015 to 2018 due to repeated losses.

The company could not make any profit from 2015 to 2017 due to the adverse impact of non-performing loans.

After receiving the policy support of the Bangladesh Bank, the company could make some profit in 2019 and 2020.

Company secretary Mohammad Zaman said the company had incurred losses mainly due to higher provision against loans and advances.

The company received a court order to hold the pending annual general meetings for the calendar year 2021. It will also declare a financial statement for 2022 shortly, Mr Zaman said.

As per the court order, the company convened a virtual general meeting on September 10 last year.

The stock has been stuck at the floor of Tk 11.50 since October last year.

Equity researchers say most of the non-banking financial institutions are in a bad shape now. So, investors will be cautious about investing their money in these companies.

The NBFIs overall profit halved year-on-year in the first six months of this year, owing to rising costs of funds rendered by shrinking interest spread.

The gap between borrowing and lending rates came down to a historic low at 0.27 per cent on an average in June for the NBFI industry, while it was 0.75 per cent for January-June this year, according to the Bangladesh Bank data.

Prime Finance's interest spread was negative - at 0.90 per cent -- on an average in January-September 2022, showed the central bank data.

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