National Bank continues incurring losses

The National Bank Ltd (NBL) has continued to suffer as the country's first private bank counted losses for the second year in a row thanks to high default loans.

The loss of the first-generation bank—now a topic of discussion for its possible merger with the United Commercial Bank—decreased by a half in 2023, but the amount is still high.

It incurred losses of Tk 1,497 crore in 2023, down by around 54 percent from Tk 3,285 crore of the previous year.

Similarly, its earnings per share hit Tk 4.65 in the negative in 2023, down from the previous year's Tk 10.13 in the negative, according to a disclosure of the bank posted on the website of the Dhaka Stock Exchange (DSE) today.

The NBL made a profit of Tk 419 crore in 2019, Tk 348 crore in 2020 and Tk 19 crore in 2021 but rising bad loans changed the scenario in the next year.

In 2022, the private bank, which got listed with the stock market in 1984, suffered highest ever losses because of extending waiver in interest and a fall in interest incomes for rising nonperforming loans.

At this point, the banking regulator reconstituted National Bank's board in December last year in order to restore good governance in the financial institution.

On the DSE posting, the NBL said it could not book interest on loans and advances due to failure to recover from defaulters, so it remained in the red.

Borrowers failed to repay instalments on time and became classified while the interest on such loans and advances could not be taken to the income segment of the balance sheet, according to the posting.

Moreover, the National Bank incurred high interest expenses on borrowings.

Its net asset value per share stood at Tk 7.3 as of December 31 of 2023, which was Tk 13 a year ago.

However, the new board and the new management are trying their best to improve the bank's financial health by streamlining recovery drives, mobilising low-cost deposits and establishing good corporate governance, the statement read.

The bank did not extend any dividend in 2021 and 2022 and it did not share any information regarding dividends for 2023 also.

The bank is currently going through the process of merging with the United Commercial Bank.

Default loans of National Bank accounted for 25 percent of its total loans at the end of 2022.

Its classified loans stood at Tk 6,658 crore in 2022, accounting for 15.76 percent of the total loans and advances of the bank.

At present, the paid-up capital of the bank is Tk 3,219 crore and it has a reserve of Tk 1,972 crore, according to the data published on the DSE website.

Sponsors and directors of National Bank held 20.32 percent shares of the company at the end of March this year while institutional investors 32.9 percent, foreigner investors 0.42 percent and general public 46.36 percent.

Shares of National Bank rose 5 percent to Tk 5.8 at the DSE today.