BRAC Bank Limited recorded a staggering 75% growth in year-on-year after tax profit in the first six months (January-June) of 2016, said a statement. The bank reported a consolidated after tax profit of BDT 1,746 million during January-June 2016 which was BDT 1,000 million in the corresponding period of 2015. The net asset value (NAV) per share of the bank at the end of June 2016 stands at BDT 31.39, compared to BDT 26.47 at the end of June 2015. The bank’s consolidated Earnings Per Share (EPS) hit BDT 2.52 during January-June 2016 which was BDT 1.44 during same period of 2015. Local and foreign Investment analysts and capital market experts participated in the program which was also broadcast live on the internet for overseas stakeholders. Mr. Selim R. F. Hussain, Managing Director & CEO, BRAC Bank Limited and Mr. Parvez Sajjad, Chief Financial Officer, presented the financial results and then answered queries in a Q&A session.
Speakers Saturday called for patronisation and use of homegrown technology for implementing the initiative of ‘Digital Bangladesh’. According to the speakers, the country should take the advantage of local talent and resources and reduce the dependency on foreign technologies. They also said dependency on foreign technologies may create problem for the country’s development and real development may not come if the country fail to utilise local talent and resources. They made the observations at the inauguration ceremony of online banking system of Ansar-VDP Unnayan Bank at a city hotel. The programme was jointly organised by Ansar-VDP Unnayan Bank and Infinity Technology International Limited, a Bangladeshi banking software institution.
Private sector credit growth rises to 16.6% in FY 16 on SCB lending
The private sector credit growth in the country stood at 16.6% in the recently concluded fiscal year 2015-16, which was the highest in four years, as the loan disbursement by state-owned commercial banks increased abnormally during the period. Credit flow to the private sector stood at BDT 6.7 trillion in FY 16 against BDT 5.7 trillion in FY 15. According to the Bangladesh Bank data, the private sector credit had registered 13.2% growth in FY 14, 12.3% in FY 13 and 10.9% in FY 12. The private sector credit growth maintained an upward trend between August and June in a row in the last fiscal year. The BB data showed that the year-on-year private sector credit growth in the SCBs, which are struggling with defaulted loans, increased to 16.0% in May from 6.4% in July of FY 16. An increased trend in defaulted loans of the five SCBs — Sonali, Janata, Agrani, Rupali and BASIC – in recent months also played a role in increasing their private sector credit growth, the BB official said. The credit growth of the five banks would have decreased if they were able to recover their non-performing loans.
Government agrees to borrow from World Bank’s hard-term fund
The World Bank has finally succeeded in persuading the government to take costly credits from the former’s ‘Scale-up Facility’ fund and the Bangladesh Bank (BB) is going to be one of the recipients, officials said Saturday. Bangladesh recently agreed to borrow the high interest fund after the Washington-based lender had series of meetings with the government policymakers to make its case on lending from the Scale-up Facility (SUF). The lender recently selected four projects, including the central bank’s ‘investment promotion and financing facility project-II (IPFF-II), to provide some USD350 million, said a senior Ministry of Finance (MoF) official. Three other projects are from power and IT sectors. According to the WB, it would send a “preparation mission” for the IPFF-II project in Bangladesh where the loan modalities and different issues of the projects would be discussed.
New regulations cause frustration in Insurance industry
The non-life management expenditure regulations, issued by the insurance regulator last week, have caused frustration in the industry as it included agent commission in the entire management cost. The latest regulation was prepared under the Insurance Act of 2010, scrapping the age-old rules issued in 1958. The rules of 1958 had separate provisions about the commission to be paid to the agents for procurement of business. Currently, there are guidelines issued by the insurance regulator giving 15% commission to the agents. But the latest regulation incorporated the commission in the management expenses which have increased by 6-8% point. The initial ceiling of premium earnings also surged between BDT 10 million and BDT 50 million in the latest regulation. It was BDT 10 million at the initial stages in the rules of 1958. The industry insiders say those who do big business will face troubles due to the latest regulation.
Investment returns of country’s life-insurers dropped substantially, up to 20.0%, last year due mainly to poor yields accrued from government securities and time-deposits. The investment returns of most of the life-insurance companies fell between a range of 5.0 and 20.0% in 2015 over the corresponding year, according official statistics available with the Insurance Development and Regulatory Authority (IDRA) Industry-insiders said such decline implies that it will give poor dividend for both the policyholders and the shareholders. It means that the life funds of the insurers grew less. However, people at the insurance regulator attributed the fall to risky investment by the firms, like in the stock market and property market. They argued that there were a few life firms whose investment returns grew significantly despite the ‘unfavorable situation’ in the key investment areas. There are two more life firms that grew marginally in 2015. They are Delta Life and the National Life Insurance. Kazi Mortuza Ali, chief consultant at the privately-owned Prime Islami Life Insurance, said returns from the capital market were poor in 2015, leading to a fall in the volume of total returns.
Capital market refinancing scheme: Government extends tenure till December 31, 2017
The government extended the tenure of the capital market refinancing scheme till December 31, 2017 and reduced the interest rate of the loans following the proposal of the securities regulator, officials said. The committee extended the timeframe in the wake of non-disbursement of the fund during the last three months. Earlier, the deadline for submitting application was extended five times to avail of loan facility. The government completed disbursement of BDT 9.0 billion for the scheme in June 2015 through three equal installments for the affected small investors. The supervisory committee disbursed BDT 6.42 billion under the capital market refinancing scheme by April, 2016. The last disbursement of BDT 45.90 million was made by April 21, 2016. But there was no disbursement in last three months. Under such a situation, the committee concerned further extended the timeframe of submitting application by the borrowers under the refinancing scheme. Following the committee’s proposal, the finance ministry in June last extended the tenure of the refinance scheme by one more year from December 31, 2016 and reduced interest rate to 7.5% from previous 9.0% to get better response from the investors.
Renewal fee non-payment: CDBL closes 217,000 BO accounts in July
A total of 217,000 beneficiary owners’ accounts were closed in July this year mainly due to non-payment of annual account renewal fees by the account holders. The number of active BO accounts was 3,153,442 as on June 30, but the figure declined to 2,936,214 as on July 28, a Central Depository of Bangladesh Limited data showed. The number of active BO accounts was 3,195,852 as on June 30, 2015. Opening a BO account with the CDBL through a depository participant, which is usually a stockbroker or a merchant bank, is a must for trading shares at the Dhaka and Chittagong stock exchanges. Currently, an investor has to pay BDT 500.0 per annum to keep the account active. Of the BDT 500, the DP gets BDT 100.0, the CDBL BDT 150, government BDT 200.0 the Bangladesh Securities and Exchange Commission BDT 50.0. Of the active BO accounts as on July 28, individual investors operate 1,828,531 BO accounts, investors jointly operate 1,097,055 BO accounts and 10,628 accounts are operated by different companies including institutional investors, the CDBL data showed. Of the accounts (excluding the company-owned BO accounts), 2,783,090 BO accounts are owned by Bangladeshi investors and 142,496 accounts owned by non-resident Bangladeshi investors, it showed. Of the 2,925,586 accounts, 2,131,591 are owned by male investors and 7,93,995 by female investors. According to a Dhaka Stock Exchange report, fund raising from the capital market by issuer companies through IPOs declined by 34.3% or BDT 4.5 billion in the just concluded fiscal year 2015-16 compared with that in the previous fiscal year.
The National Board of Revenue (NBR) has prepared an integrated strategy paper with a focus on enhancing surveillance on large taxpayers to attain its huge revenue collection target for the 2016-17 fiscal year. The revenue target for the current fiscal is Tk 2,03,212 crore which is 35.4 percent higher than the revised target of the 2015-16 fiscal year. VAT will be the biggest contributor to revenue earnings with Tk 72,764 crore. Besides, Tk 71,940 crore will come from income tax and tax on profit, supplementary duty will contribute Tk 30,075 crore, excise duty Tk 4,449 crore, export duty Tk 44 crore and other taxes and duties Tk 1,428 crore. In the strategy paper, the NBR asked the officials of its tax zones and circles to enhance their surveillance on the big taxpayers.
Import payments registered a growth of 4.2% in the recently-concluded fiscal year 2015-16 compared with that of 3.4% in the FY 15 as the import of capital machineries and industrial raw materials slightly increased during the period, according to the latest Bangladesh Bank data. The BB data, however, showed that opening of letters of credit, generally known as actual import orders, posted a lower growth of 0.6% in the FY 16 compared with that of 3.0% in the FY 15. A BB official told New Age on Thursday that the import growth had maintained a sluggish trend in the maximum period of the last fiscal year but it picked up between May and June of the FY 16. According to the BB data, the settlement of LCs stood at USD 40.1 billion in the FY 16 against USD 38.5 billion in the FY 15. The settlement of LCs was USD 37.2 billion in the FY 14. The BB official said that the import figure of the FY 16 might increase by USD 2.0 billion-USD 3 billion when the central bank would include the Freight on Board-related charges with the amount. The import of industrial raw materials posted a growth of 3.2% in the FY 16 compared with that of a 3.1% growth during the same period of the FY 15. The settlement of LCs for the industrial raw materials stood at USD 15.7 billion in the FY 16 against USD 15.2 billion in the FY 15. The BB data, however, showed that the settlement of LCs for capital machinery posted a lower growth of 14.1% in the FY 16 compared with that of a 22.97% growth in the FY 15. The import payments for the capital machinery stood at USD 3.5 billion in the FY 16 against USD 3.09 billion in the FY 15.
Ministries and divisions spent BDT 281.7 billion, or 34.0% of their total development budget, in the last month of fiscal 2015-16, in continuation of the old practice of accelerated expenditure toward the end of the year. Total spending under the annual development program was BDT 834.9 billion last fiscal year, which is 91.7% of the budget — the lowest in six years. Economists often criticize the large expenditures at the end of the fiscal year, saying it leads to waste. At the beginning of the fiscal year, implementation works are usually delayed due to monsoons, said planning ministry officials. But data shows that spending did not accelerate even when the dry season set in. Spending ranged from only BDT 40.0 billion to BDT 50.0 billion, going over BDT 60.0 billion in only two months. Over the last two years, Planning Minister AHM Mustafa Kamal spoke of various steps to increase ADP implementation but the performance did not improve. The government has taken steps to ensure that implementation gains momentum this fiscal year, they said. The size of the total ADP in the current fiscal year has been set at BDT 1.1 trillion, which is 21.7% higher than the revised ADP of the immediate-past fiscal year.
Top spinners urged the government to increase gas price in phases, not in one go, as the sector is facing challenges due to the import of cheaper yarn and fabrics from India and China. A proposed 130% hike in gas prices for captive power plants, which the spinners use for continued power generation, will badly hurt the sector, said A Matin Chowdhury, managing director of Malek Spinning Mills. The proposed hike is abnormally high and it will be difficult for the spinners to absorb price shocks in the current volatile situation, Chowdhury added. The hike will take the price of gas to BDT 19.26 per cubic metre from BDT 8.36 now. The government had already raised the price of gas for captive power plants as recently as September last year from BDT 4.36 per cubic metre to the current rate. Bangladesh Energy Regulatory Commission will hold a public hearing on the gas price hike proposed by Titas Gas Transmission and Distribution Company Ltd on August 7-8. The sector has also been facing a downward price pressure of yarn and fabrics, volatile cotton markets and the negative impact of the Gulshan terror attack on the garment sector, Chowdhury told reporters on Thursday. Recently, the Indian government announced a package worth USD900 million for employment generation and promotion of export in the textile and apparel sector, according to Chowdhury.
United Power Generation and Distribution Company Ltd backtracks from merger with two associates
United Power Generation and Distribution Company Ltd has backtracked from its decision to merge with its two associate companies — Shajahanullah Power Generation Company Ltd and United Ashuganj Power Ltd. The decision came after the Bangladesh Securities and Exchange Commission filed a leave to appeal with the Appellate Division challenging a High Court judgment passed on March 2, 2016 approving the amalgamation scheme of UPGDCL with SPGCL and UAPL. The capital market regulator raised question regarding the valuation of SPGCL and UAPL. The commission in its petition also questioned the logic behind the merger of United Ashuganj Power with UPGDCL for being a quick rental power plant with limitation in power purchase agreement with the Bangladesh Power Development Board, BSEC officials said. They also said the commission usually does not allow quick rental power generation companies to float shares at the capital market as the business of such companies depend on renewal of contract with the government. As the merger of UAPL with UPGDCL will allow sponsors of UAPL to float shares at the capital market, the commission also opposed the merger move on the ground, the BSEC officials said.
Beximco Pharmaceuticals to start drug exports to US in August
Beximco Pharmaceuticals is set to make its debut in the US, one of the highly regulated drug markets in the world — an achievement that is expected to take Bangladesh’s medicine industry to a new height. This is the first time that a drug made in Bangladesh will be sold in the US market. The company, which received the approval from the US’s Food and Drug Administration last year, will make the first shipment of the blood pressure prescription drug Carvedilol in the first week of August, he said. Prior to giving the authorization, the FDA inspected the facilities of Beximco Pharma and Square Pharma and gave its seal of approval. Now, some other local drug markers are working to get the FDA approval. The development comes at a time when the pharmaceutical industry is looking to accelerate the export of generic drugs by taking advantage of the World Trade Organisation’s patent waiver facility for least-developed countries until January 2033.
Japanese battery giant YUASA has recently launched its second sales and service centre at Cosmo Filling Station at Uttara in the capital to meet growing consumer demand, said the company in a statement yesterday. This outlet will sell exclusively YUASA batteries and offer after and pre sales services as part of continuous efforts to enhance customer satisfaction. YUASA, the largest motorcycle battery manufacturer and second largest car battery manufacturer in the world, has teamed up with Japan Solartech Bangladesh Limited to offer original equipment under a Technical Service Agreement (TSA) in Bangladesh. Japan Solartech Bangladesh has invested US$15 million to set up a state of the art battery factory in Chittagong having production capacity of 30,000 units per month. In Bangladesh, YUASA battery is marketed by Eastern Lubricants Blenders Limited, a subsidiary of state-owned Padma Oil Company Ltd. Md Abul Khair, managing director of Padma Oil Company Ltd (POCL) and executive director of Eastern Lubricants Blenders Ltd, inaugurated the sales and service centre.
Increasing demand and buyers’ confidence, local makers’ capacity enhancement, and duty-free market access, among others, have helped the country’s readymade garment (RMG) sector to significantly raise its export earnings – more than double – in last six years, industry people said. They also attributed the government’s policy support, availability of gas and land at reasonable prices, good industrial relation, and both product and market diversification efforts for the gradual increase in export earnings. The country fetched USD 28.1 billion from RMG (knit and woven) exports in fiscal year (FY) 2015-16, which was USD 12.5 billion in FY 2009-10, according to the official data. Its contribution to the total foreign currency earnings also increased to 82.0% in last fiscal, which was nearly 77.0% six years back, data showed. Out of the USD 28.1 billion income in last fiscal, knitwear sector fetched USD 13.4 billion, while USD 14.7 billion came from export of woven items. In 2009-10 fiscal, export earnings from knitwear and woven were USD 6.48 billion and USD 6.0 billion respectively.
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