Brac Bank post-9-month consolidated growth
Muhammad Ayub Ali :
Brac Bank PLC posted 21.6 percent consolidated profits during the first nine months of 2024, supported by strong deposit and revenue growth.
Despite the prevailing liquidity crunch in the banking sector, Brac bank deposits showed impressive growth of 22.9 percent during 9 month of the 2024, while Loan growth remained modest at 10.4 percent amidst decelerated private sector investments.
The bottom line experienced consistent growth over the past five years, with earnings per share (restated) rising from Tk 2.5 in FY’20 to Tk 6.6 in the nine months of 2024.
Moreover, the net profit witnessed a staggering 73.8 year-on-year growth during 9 months of the 2024 owing to higher operating profits along with an improved cost to income ratio from 66.1 per cent in FY’23 to 57.6 percent in FY’24.
The operating income of the bank experienced a stellar growth of 34.5 percent year on year during 9 months of 2024, despite an 18.0 percent year-on-year decline in net interest income mainly due to a boost in investment income (increased by 112.4 year on year) alongside a strong growth in commission and fee-based revenue streams.
Meanwhile, the bank’s investment in government securities increased by 46.0 percent to Tk 264.8 billion till 9 months of 2024.
BRAC Bank maintains a well-diversified loan portfolio with the highest exposure to ‘high-yielding’ SME segments.
Moreover, to further enhance its Tier II capital, BRAC Bank issued the “BBPLC 2nd Subordinated Bond” worth Tk 7,000 million with a 7-year tenor in FY’24. As of September 2024, bonds amounting to Tk 3,456 million have already been subscribed. Upon full subscription, the bond will further strengthen the bank’s capital base.
The bank consistently improved its credit quality, with the NPL ratio reducing steadily from 3.9 percent in 2021 to 3.0 percent as of September 2024, while the overall banking sector has been grappling with a rising amount of classified loans.
Moreover, subdued growth in the country’s SME sector is expected to persist, given the prevailing macroeconomic and political concerns which may pose challenges to the business growth of small and medium enterprises.
As a result, BRAC Bank may face challenges in sustaining its SME-driven growth and could potentially be compelled to shift toward lower-yielding loan segments during the period.
Despite consistently declaring dividends over the past years in mixed form, the dividend yield of BRACBANK has been relatively lower than the other top-tier banks (less than 3%), making it less attractive for value investors seeking high dividend paying stocks.
