Islami Bank sees first loss in decades amid high provision

Islami Bank Bangladesh PLC incurred a loss of Tk 89 crore in the third quarter of 2024, a first in the past couple of decades, due mainly to the necessity of retaining high provisioning against classified loans.
The country’s first Shariah-based bank had logged a profit of Tk 94 crore in the same period of the previous year.
The loss per share this time around stood at Tk 0.55 whereas in the third quarter of 2023 it was Tk 0.59 in earnings per share.
“The earnings per share of the company dropped due to an increase in total provision against investments compared to the previous period,” the company said.
The bank’s provisioning rose 205 percent year-on-year to Tk 364 crore in the July-September period of the current year.
Once well-run and profitable, the bank’s financial health took a turn for the worse after S Alam Group Chairman Mohammad Saiful Alam took over the board by exerting his political influence and creating a narrative that the bank was involved in financing terrorists.
However, none could prove that the bank did anything like that. Meanwhile, Chattogram-based business giant S Alam Group utilised the bank for its own benefit by taking loans in the name of several firms.
The group accounts for more than half of the outstanding loans of Islami Bank. At the end of June, Islami Bank’s total outstanding credit stood at Tk 174,000 crore, according to the bank’s records.
Following the July-August student movement this year, the central bank reconstituted the Islami Bank board on August 22, with Md Obayed Ullah Al Masud, the former managing director of Rupali Bank, as its chairman.
Four independent directors were also appointed. Since then, the bank has been trying to recuperate.
Islami Bank logged a 24 percent year-on-year higher net investment income in the quarter, amounting to Tk 1,123 crore.
At the same time, its other operating incomes, including commissions, dropped 1 percent to Tk 545 crore.
The financial report of the company showed that its operating costs rose 11 percent to Tk 1,193 crore.
However, if the January-September period of the current year is considered, the bank logged a profit of Tk 267 crore, although it was a 63 percent year-on-year decline.
The price of its shares rose 4 percent to Tk 53 at Dhaka Stock Exchange yesterday.
S Alam Group Chairman Mohammad Saiful Alam is apparently absconding and so could not be reached for comments.