Midas Financing absorbs pandemic shock in first quarter

Midas Financing Ltd has posted a loss of Tk3.78 per share in the January-March quarter of this year compared to its yearly earnings per share of Tk0.83 in 2020.
 

The loss was mainly due to provisioning costs against irregular loans, according to Tanvir Hasan, company secretary of the non-bank financial institution (NBFI) which is listed on local stock exchanges.

"Efforts to keep the books realistic as much as possible have resulted in negative earnings," he told The Business Standard.

Also, a slowdown in loan growth was behind the first-quarter earnings deterioration, he added.

Tanvir Hasan said, "We classified some loans over the January-March period this year due to non-payment of installments and for that, we had to incur a big provisioning cost."  

Like its industry counterparts, Midas Financing deferred the loan classifications since the first lockdown in late March 2020 and the same ran up to the end of the year as instructed by the central bank.

But, as the central bank left the classification factor to lenders, deferral was not an obligation until the Bangladesh Bank came up with a reinforced deferral order for the April-June period of this year on the condition of paying at least 20% of the actual figure, Midas decided to follow its principles and took some of the shocks.

Some of the irregular loans were classified in the last quarter, Tanvir said, adding that many of the troubled clients were being regularised through their efforts to pay some and stay afloat.

The details of the quarterly accounts were unavailable as the company was yet to publish the financial statements till the filing of this report on Tuesday, despite the fact that its board meeting was held on Monday.

Midas Financing Board of Directors recommended 2.5% cash and 2.5% stock dividends for 2020 against a moderate profit disclosed alongside the net asset value of over Tk11 per share (NAVPS) at the end of December last year, according to stock exchanges.  

The big quarterly loss pushed the NAVPS down to Tk7.91 at the end of March this year, against each share's face value of Tk10.

The board of directors also decided to transfer the ownership of a 3,790 square-foot floor space and three car parking spaces at its Dhanmondi building in Dhaka in favour of its sponsor Micro Industries Development Assistance and Services at a cost of Tk1.71 crore.

The asset transfer plan is subject to shareholders' approval in an extraordinary general meeting to be held on 20 September this year.

Midas Financing Ltd began its operation as an NBFI at the end of 1999 and it got listed on local bourses in the early 2000s.

Midas Financing's shares were down by 3.4% on Tuesday to close at Tk19.7 at the Dhaka Stock Exchange.