SC orders status quo on National Bank AGM till 21 Jan
The director demanded that the AGM be held physically instead of on the digital platform
The chamber judge of the Supreme Court's Appellate Division on Tuesday imposed a status quo on the holding of the annual general meeting (AGM) of the National Bank until 21 January 2024.
The AGM for 2022, which was scheduled for 21 December on a digital platform, will not be held on time due to the status quo, according to officials at the private sector lender.
Barrister Tanjib-ul Alam and Advocate Ahsanul Karim represented the bank at the court.
Karim told The Business Standard that the High Court had earlier stayed the AGM upon an application by a director of the bank.
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The director demanded that the AGM be held physically instead of on the digital platform, the lawyer said.
Subsequently, the bank moved to the chamber court, challenging the High Court order.
The next hearing will be held at the Appellate Division on 16 January next year, Advocate Karim continued.
Earlier, in May, National Bank had decided to hold the AGM on 17 August, but in July, it postponed the AGM. Later, in October, the bank set the new schedule to hold the AGM on 21 December.
Financial performance
National Bank incurred a heavy loss of Tk1,123 crore in the first nine months of 2023, which was 214% higher than the previous year at the same time.
According to its disclosure published on stock exchanges, the consolidated loss per share stood at Tk3.49 during the January–September period.
The bank said it had to classify a significant amount of loans as borrowers could not repay loan instalments in time because of a liquidity crunch in the market due to higher inflation in the world economy as well as in Bangladesh.
"Interest on such loans and advances could not be applied to income. Consequently, profitability and EPS (earnings per share) decreased significantly," reads the disclosure.
In 2022, the bank incurred a huge loss of Tk3,260 crore as its borrowers could not repay their instalments on time, and a significant amount of loans became classified.
Due to the high loss, the bank failed to pay any dividends to its shareholders in 2022. It did not pay any dividends in 2021 as well.
The default loan rate of the bank stood at 29.47% in September this year, which was the second highest among private banks.
It also faced a whopping provision shortfall of Tk13,797 crore as a consequence of high default loans.
Provision is the fund set aside by banks to pay for anticipated future losses. High-default loans require banks to maintain higher provisioning, which is kept from their profits.
Rising provision shortfalls cause banks' capital to erode, reducing lending capacity and, ultimately, putting public money at risk.
It was identified as one of the ten weak banks by the Bangladesh Bank after Governor Abdur Rouf Talukder took charge.
The central bank suspended the lender's loan activities in May 2021 against the backdrop of a liquidity crisis caused by huge loan irregularities.
Later, the suspension was withdrawn in December 2021 in the wake of an improvement in the liquidity situation.
But, even after the long suspension, loan-related irregularities continued to take place in the bank, prompting the central bank to go for further suspension in May last year. However, this time, the suspension was partial, limiting its lending.
National Bank shares were traded at Tk8.30 each yesterday, which was below their face value of Tk10 each, at the Dhaka bourse.
