Floor price shrinks CSE's FY23 profit by 11%

The net profit of port city bourse Chittagong Stock Exchange (CSE) dropped by 11% year-on-year in the fiscal 2022-23, owing to the floor price mechanism that was imposed to arrest a stock market freefall.

In FY23, the bourse's net profit stood at Tk34 crore and earnings per share at Tk0.54, which were Tk38 crore and 0.61 respectively in the previous fiscal.

According to CSE officials, the stock exchange's net profit declined mainly because of lower transactions caused by the floor price mechanism, and the reduction of listing fees.

Ghulam Faruque, acting managing director of CSE, told The Business Standard, "Decline in the regulatory approval of new companies' listing and low turnover have shrunk our profit as we lost significant income from those two segments."

Meanwhile, despite the declining profit, CSE recommended a 5% cash dividend to its shareholders for FY23. The dividend will be distributed after the annual general meeting (AGM) on 23 November.

In July last year, the Bangladesh Securities and Exchange Commission (BSEC) imposed the floor price in order to prevent stocks from plummeting. Now, the share price of most of the companies are stuck at floor prices, which is why transactions in these stocks have decreased, affecting the income of the stock exchange. 

Also, the BSEC allowed only five companies to raise funds through initial public offering (IPO) in FY23. The number was 12 in the previous year.

The two major sources of regular income of stock exchanges are trading fees and listing fees. When a new company is listed in the stock market, the stock exchange authority receives a certain fee. Apart from this, the stock exchange gets a huge amount of interest against the fixed deposit.