DSE expenditures spike as profits tumble

The net profit of the Dhaka Stock Exchange (DSE) declined nearly three-fourths to around Tk27 crore in the 2019-20 financial year. The previous year the DSE clocked about Tk97 crore in profit.

The DSE's profits plummeted by Tk70 crore, or 72%, compared to the previous financial year – the lowest in the last 13 years.

DSE officials claimed both the income and profits nosedived due to the novel coronavirus pandemic beginning in March. The pandemic dealt a massive blow to the last three months of FY2019-20.       

They said the bearish trend on the market prior to the virus outbreak in the country also contributed to the revenue loss. 

The DSE has decided to pay a 3% cash dividend to shareholders as profits plunged, and it will be passed at its annual general meeting on 24 December. The bourse had paid a 5% cash dividend in the previous financial year.

The bourse official said the market was shuttered from 29 March to 30 May to curb the spread of the novel coronavirus that also weighed heavily on the DSE profits as the majority of its income is generated through daily trading.

Additionally, they said the DSE profits from the interest generated from the bourse's fixed deposits with banks also decreased significantly in FY20 due to a sharp fall in the bank's interest rate.

Abdul Matin Patwary, chief financial officer to the bourse, told The Business Standard that their incomes from all sources declined while the spending climbed up on the contrary.

"Compared to the previous financial year, the total income declined Tk62 crore but the profits decreased Tk70 crore. The profits dropped drastically as the additional expenditures mounted," he said.

He said though the bourse has moved its office to its own building in Dhaka's Nikunja, the DSE is yet to earn from floor rental while it spent Tk20 crore for the new office construction – which is also one of the reasons for the decline in profits.

The DSE's total income in the 2019-2020 FY was Tk157.13 crore. After paying the expenses and taxes, the net profit stood at Tk 27.39 crore while the earnings per share (EPS) was Tk0.15.

In the previous year, the bourse fetched Tk218.95 crore income and registered a profit of Tk97.48 crore, while its EPS was Tk0.54.

In 2018-19 FY, the average daily turnover on the DSE was Tk613 crore, but it was only Tk384 crore in the next financial year. Income from share transaction fee in FY20 was Tk37.69 crore, which in the previous year was Tk72.32 crore. The DSE's income from this source alone decreased 48%.

According to DSE sources, fixed deposits of Tk1,000 crore are the main income source for the course. Due to interest rate cut and investment in other places, income from fixed deposits and dividends has decreased about Tk12 crore.

Apart from this, DSE also earns from data sales. Earning from this sector in FY20 was only Tk8.70 crore while data sales clocked Tk20.34 crore income in the previous year. In other words, income from this source has decreased 57%.

Only three companies were listed in FY20 owing to the changes brought in the Public Issue Rules. In the previous year, 11 companies were listed with the bourse.

The DSE in FY20 received less in electronic subscription and listing fees as fewer companies turned up for enlistment, which contributed to less income as well as profit in the end.

DSE director Rakibur Rahman told TBS, "The Tk1,000 crore fixed deposits are our main source of income. Due to the interest rate cut, income from the sector decreased. Further, the market closure during the pandemic also decreased the income from transaction fees."