Beleaguered First Finance causes investors to go broke

Even after the 2010 market collapse, stock investors had enough interest in First Finance Limited but its business has been falling since 2012, dragging down its price of shares from Tk200 each to just Tk3 in 2019.

When non-bank financial institutions (NBFIs) such as IDLC, IPDC Finance are constantly doing or trying to do well, First Finance has incurred huge losses in the last four years.

And the most alarming thing is that the liability of the company has exceeded its assets. Its net asset value per share stands at Tk5.26.

Experts say if the NBFI got liquidated, its shareholders will receive no return from their investments. 

According to its data, First Finance paid a 2% stock dividend just in 2019 in the last six years.

Due to the feeble health of the company, its depositors and general shareholders have suffered huge losses.

At present, its shares have been trading below the face value of Tk10 for the last eight years at the Dhaka Stock Exchange (DSE). 

Shareholders brought changes to the board of the company in mid-2020 to protect the interest of investors.

Khan Mohammad Moinul Hasan, the current chairman of the board, told The Business Standard, "The biggest problem of the company is its failure to collect loans. Reviewing documents, I have come to know that most of the loans had been given indiscriminately during the previous board."

There was no initiative to collect the loans and this mismanagement has pushed the once well-established company into a big crisis, he added.

Moinul Hasan said, "Immediately after taking charge, we changed the top management and put focus on loan recovery. If we can do even 2% better in the next six months from the current state of the company, it will stand at 20% by the end of the year." 

The company on Wednesday evening approved the unaudited financial statements for the first nine months of this year.

During that period, the NBFI incurred a loss of Tk115.57 crore and its consolidated loss per share stood at Tk9.41.

Defaulted loans, continuous losses and provision deficit have brought the company to this position.

Following the news that was disclosed on the DSE on Thursday, the company's share price fell 9% to Tk6.30 in the morning. However, it closed at Tk6.70 per share in Thursday's trading session.