Bay Leasing’s H1 profit jump 7 times on capital market returns

Highlights

• Bay Leasing reported a net profit of Tk11.31 crore in H1, which was only Tk1.46 crore a year ago
• It earned Tk17 crore from the capital market investment
• Its net interest income dropped 87% to Tk0.87 crore
• It has recommended a 10% cash dividend for its shareholders for 2020
• Its share price jumped 127% to Tk36.40 within a year

Riding on good returns from its capital market investments, Bay Leasing and Investment Limited posted seven times higher profits in the first half of this year.

In the January-June period, the non-banking financial institution (NBFI) reported a net profit of Tk11.31 crore, which was just Tk1.46 crore at the same time a year ago.

But its net interest income – the core business of the company – dropped 87% to Tk0.87 crore due to an increase in the cost of funds.

During this period, the cost of funds for most NBFIs and banks has decreased as the central bank had fixed the deposit and lending rate at 6% and 9%, respectively, for the banks.

Non-banking financial institutions can collect funds from banks and individuals as term deposits but the NBFIs cannot operate current accounts like banks.

This correspondent phoned Bay Leasing's managing director for his comments but he did not answer.

In the first half of this year, the company earned Tk17 crore from the capital market, where its investment value is Tk236 crore.

During the period, the key index DSEX of the Dhaka Stock Exchange (DSE) rose 9.46% to reach 6,150 points.

"We did not have to maintain any provision against classified loans due to a loan moratorium opportunity given by the central bank. Besides, the booming capital market helped the company post such a profit growth," said a senior officer at the company, seeking anonymity.

"But during the period, its cost of the fund increased, which is a headache for the company."

The NBFI, which got listed on the DSE in 2009, has two subsidiary companies – BLI Capital Limited and BLI Securities Limited – whose business is fully dependent on the capital market. 

Bay Leasing is also going to form an asset management company named BLI Asset Management Limited, which has already received approval from the securities regulator.

The board of directors of the company earlier recommended a 10% cash dividend for its shareholders for 2020.

In 2019, it paid 7.50% cash and 2.50% stock dividends.

The annual general meeting (AGM) of Bay Leasing has been scheduled for 4 November where the company's recommended dividend and financial report will be approved.

The company, whose paid-up capital is Tk140.88 crore, set 18 October as the record date to determine the investors for the dividends.

The consolidated earnings per share (EPS) of the non-banking financial institution were Tk1.14 in the last year.

Meanwhile, the consolidated net asset value per share of the company stood at Tk19.80 in the last financial year that ended on 31 December 2020.

Sponsors and directors held 30.07%, institutional investors 35.46%, foreign investors 0.12%, and general investors 34.35% shares of the company until August this year.

In the last year, its share prices jumped 127% and the shares closed at Tk36.40 each at the DSE on Thursday.