Auditor casts doubt on Premier Leasing’s survival
Stocks
High classified loans, negative capital adequacy ratio, excess liabilities and big losses, put Premier Leasing and Finance Limited, a non-bank financial institution in the country, in trouble with doubts about its survival, said the company's auditor after reviewing its financial report 2021.
The company's total classified loan stood at Tk938.35 crore, which was 72% of its total loan at the end of 2021, the auditor found.
However, the financial crisis of the company continued the first nine months of 2022 with an earnings per share (EPS) of Tk6.32 negative and the net asset value (NAV) per share Tk8.57 negative, they said.
The NBFI maintained a provision of Tk159 crore against the Tk466.14 crore required, leaving the shortfall at Tk307.14 crore. The Bangladesh Bank has provided deferral facilities for the company to maintain provisions.
The auditor says if the company maintained the required provision, its EPS would have been Tk62.98 negative and NAV per share Tk50.35 negative in 2021. But it showed an EPS of Tk18.44 negative and NAV per share Tk5.79 negative in 2021.
The capital adequacy ratio of the company stood at 41.71% negative. This represents the entity's heavy dependence on liquid assets funded from external sources, and increases the operational risk of the company.
A negative capital adequacy ratio implies the company may not have sufficient capital to handle a certain amount of losses, and exposes the entity to higher insolvency risk, the auditor added.
Several stock market analysts said the company's profits have plummeted over the last five years due to irregularities and mismanagement of debt disbursements, even though it was once in a good position.
Meanwhile, it could not declare any dividends for its shareholders in the last three consecutive years due to losses and provision shortfalls.
Currently, its shares trade below the face value of Tk10 each. On Wednesday, its share price was Tk6.80 at the DSE.
In March this year, the company appointed Fazlur Rahman as the new managing director, hoping to overcome the financial crisis.
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