IPDC posts record revenue despite pandemic

IPDC Finance has posted record revenue and its highest excess liquidity of all time in the first three quarters of this year, although a quarter has gone through the Covid-19 pandemic.

Established in 1981, the country's first private sector non-banking financial institution (NBFI) reported revenue growth of nearly 29% to a record high amount of Tk198.70 crore, compared to that of the first three quarters a year ago.

The company's credit rating is AAA.

It has witnessed significant growth in other major indicators such as deposit, liquidity and provision surplus – all meant for an even stronger position for the company to combat the economic uncertainties brought on by the pandemic.

"Bangladesh's remarkable economic recovery has left the world astounded with its record-high liquidity surplus. Like Bangladesh, IPDC has been able to achieve its all-time highest liquidity due to its good corporate governance, proactive planning, and taking responsibility for its customers, employees and the community," said its Managing Director and Chief Executive Officer Mominul Islam during a third quarter investors meet on Sunday evening.

The NBFI once suffered the highest non-performing loan (NPL) rate in the industry but currently maintains the lowest of such loans compared to its competitors.

IPDC managed to limit the rise of NPLs to only two basis points to 1.59% over the first nine months of the year.

Against 21% customer deposit growth, IPDC's credit portfolio saw an increase of 0.7% in the January-September period while its contingency liquidity cushion grew to over Tk825.90 crore at the end of September – from Tk664.60 crore at the end of June.

"The liquidity cushion will help IPDC meet any short-term liability instantly, and that is very important in terms of confidence in a lender," said Mominul Islam when some investors asked him about the conservative approach of the company to strengthen its financial position.

To ensure an additional suspense and provision reserve, it posted net profit of Tk50.30 crore – 13% higher than that in the first nine months of 2019.

According to the Dhaka Stock Exchange, IPDC posted earnings per share of Tk1.35 for the first nine months of the year, which was Tk1.42 for the same period in 2019.

The company recently issued 50% right shares with a 20% premium in 2019 and 5% stock dividends for 2019 alongside disbursing 10% cash dividends.

Over the first nine months of this year, IPDC made more significant progress in its long-term route to reduce bank dependency for deposits and credit lines for lending business.

Now banks do not contribute to IPDC's funds; the rate was 9% in December last year and 29% at the end of 2018.

Currently, the country's NBFI industry depends on banks for more than one-third of its funds, and banks often pull away the lifeline during a crisis of liquidity or confidence.

IPDC is an example of a significantly transformed financial firm after it got Brac, the Ayesha Abed Foundation and RSA Capital on its board following a 2015 divestment of the Aga Khan Fund for Economic Development, one of its foreign promoters.

With its enhanced focus on small and medium-sized enterprises and consumer loans, the once-industrial loan provider is now serving the socioeconomic development agenda in Bangladesh.