The deposit of Islami Bank Bangladesh Limited (IBBL) has decreased by Tk 177.83 billion (17,783 crore) in 2022, meaning the depositors withdrew the amount of money from the private bank that year, according to an analysis of the bank’s financial statement of 2022.
The statement also said despite decrease in the bank’s deposit, IBBL disbursed loans of Tk 114.30 billion last year.
The IBBL was suffering from liquidity crisis last year as its amount of loan disbursement increased against the decrease in deposit.
The analysis of the bank’s statement also revealed that the flow of money against each share of the Islami Bank was Tk 56 (negative) at the end of last year.
A huge loan scam in the bank came to light year. The bank disbursed loans to the companies that were opened in real and false names just a few days before the loan disbursement.
The loans were disbursed from Khatunganj and Agrabad branches of the bank in Chattogram, Rajshahi branch and New Market branch in Rajshahi, Pabna, and branches at Gulshan, Gulshan-2, Farmgate, Nawabpur Road and Baridhara in the capital.
The depositors of Islami Bank panicked when the information of loan scam was published, said the people involved with the banking sector. As a result its deposit dropped. The bank then had to borrow money and took in deposits at high interest rates.
Finally, the central bank appointed an observer to stop the bank’s situation from worsening and to reassure its depositors. Since then the situation has improved a bit, said some officials of the bank.
Though the central bank officials visited Islami Bank to look into various irregularities, it was learned that it has not taken any punitive action. At the same time, Bangladesh Bank backtracked after it had advised the on Islami Bank certain measures to curb the irregularities.
The analysis of the bank’s statement revealed that it was suffering from a liquidity crisis last year as its amount of loan disbursement increased against the decrease in deposit. At the same time the flow of money against each share of the Islami Bank was Tk 56 at the end of last year. This suggests the bank had a serious crisis in flow of cash in 2022 though it had surplus in liquidity in 2021. The monetary value of surplus in liquidity in 2021 was over Tk 41. That means the flow of cash decreased by more than Tk 97 in a year.
The amount of deposit at Islami Bank at the end of 2021 was Tk 138,198 crore (over Tk 1.38 trillion) and the loan amount was Tk 128,599 (over Tk 1.28 trillion).
Profit increases even after this
Despite increase in loan disbursement and decrease in deposit last year, the Islami Bank registered profit of Tk 616.70 crore (over Tk 6.16 billion) that year. The amount of profit was Tk 480.76 crore in 2021. That means the bank’s profit has increased by 28.28 per cent in one year.
Based on the financial statement, the bank’s board of directors recommended disbursing 10 per cent of the profit in cash to the shareholders for 2022. IBBL has convened an annual general meeting (AGM), to be held virtually on 22 June, to take approval of the shareholders regarding the announced profit share and other issues of the year. The record date for this has been fixed 22 May.
Several officials of the bank told Prothom Alo that the bank disbursed more loans last year than any time before. The profit from those loans was added to the net income of the bank. But the bank’s deposits have dropped more than any time before as well. As a result, the depositors were given less profit. On the one hand more profit was made by disbursing more loans and on the other hand, the income of the bank has increased as it had to spend less on distribution of profits due to decrease in deposits.
Earlier, Bangladesh Bank raised questions about the quality of a number of loans disbursed by the Islami Bank whose ownership has changed.
The Islami Bank has been distributing 10 per cent of its profit in cash among shareholders since 2016. Before that the bank distributed 20 per cent of its profit in cash among shareholders in 2015.
Though the net profit increased in 2022, the bank’s directors decreased the profit of shareholders.
Mohammed Monirul Moula, managing director of Islami Bank Bangladesh Ltd, did not respond when Prothom Alo contacted him seeking his remarks on the issue.