How volatile stock market squeezes LankaBangla Finance profits by 71%
LankaBangla Finance Limited – a non-bank financial institution (NBFI) – has suffered a 71% year-on-year slump in its profit for the July to September quarter of 2022 owing to stock market volatility.
The NBFI has blamed it mainly on a declining return from its stock investments and a decrease in its commission from various activities, exchange and brokerage income.
LankaBangla Finance's income from interest against lending – the core business of the company – also dropped by 9% in the three months through September compared to the same period a year ago.
In the first half of the year, a vibrant stock market boosted the profit of the company as its capital market subsidiaries logged a good income from the market.
But in the third quarter, the stock market passed through a volatile situation amid the Russia-Ukraine war, macroeconomic uncertainty, and power disruptions.
And the market volatility has eaten up the profit of LankaBangla.
According to its unaudited consolidated financials, the financial institution's total operating income has declined by 22% to Tk123.26 crore, and net profit dropped to Tk14.78 crore from Tk52.49 crore.
Its consolidated earnings per share (EPS) stood at Tk0.28, which was Tk0.96 for the July-September quarter of 2021.
Its return from the stock market investments fell by 58.86% to Tk14.24 crore from Tk34.64 crore in the same period of the previous year.
The income of the company from the commission, exchange, and brokerage declined by 42% to Tk24.96 crore from Tk43.28 crore in the July-September of 2021.
The NBFI said its net operating cash flow per share has decreased as a cash outflow for loans disbursement, deposits settlement, and other liabilities settlement was higher compared to the previous year.
The net operating cash flow per share stood at Tk11.09 negative in the first nine months of this year, down from Tk2.83 in the January-September of 2021.
According to financials, in the first nine months of this year, its profit declined by 48% to Tk47.09 crore.
During the January-September period, its earnings from stock investments fell by 46% to Tk38.98 crore, and income from commission, exchange, and brokerage by 36.76% to Tk63.45 crore over the same period of the previous year.
LankaBangla, a joint venture financial institution between some local and Sri Lankan individuals and banks, began its journey in the late 1990s and it has been listed on local bourses since 2006.
Besides its capital market services wing, LankaBangla is also a leading player in the country's credit card market, and other retail financial services like personal loans, car loans and mortgage loans.
