Union Bank posts 5% profit growth before the stock market debut

Union Bank posted a 5% net profit growth in the January to September period of 2021 just before its stock market debut on the country's bourses.

From January to September, the bank's net profit stood at Tk121.96 crore, which was Tk115.76 crore in the same period of 2020.

During the period, its earnings per share (EPS) was Tk2.18, which was Tk2.07 in the same period of the previous year.

However, its post-IPO EPS stood at Tk1.24 and its net asset value per share was Tk14.82.

From July to September last year, the private sector lender made a profit of Tk36.41 crore and EPS Tk0.65.

On 23 January, the Central Depository Bangladesh Limited (CDBL) credited the bank's primary shares to the beneficiary owner (BO) accounts of investors.

The bank completed its initial public offering (IPO) subscription between 26 and 30 December 2021.

According to the Dhaka Stock Exchange, investors subscribed to a total of Tk1,548 crore of the IPO shares, which was 3.62 times higher than its IPO size. 

The Bangladesh Securities and Exchange Commission (BSEC) allowed Union Bank to raise Tk428 crore from the capital market upon two conditions.

First, the bank must invest Tk200 crore in the capital market in 2021 as per Bangladesh Bank's circular. At the end of 2020, it had invested Tk4 crore in the capital market.

The other condition stipulates that until being listed on the capital market, the private sector lender may not declare any dividends for its shareholders.

The face value of the shares was Tk10 each.

Of the total funds raised, the bank will invest Tk271.50 crore in SME and project finance, Tk100 crore in government securities, Tk50 crore in the share market, and the rest for IPO expenses.

Prime Bank Investment and Brac EPL Investment are the issue managers of Union Bank's IPO.

As per the bank's draft prospectus, S Alam Group is its owner, and most of the bank's directors are from the same business group.

Union Bank was incorporated in 2013 and is operating as a full-fledged Islami bank. Its paid-up capital is Tk558.93 crore.

According to its financial statements, the bank's net profit was Tk98.84 crore at the end of 2020, 66% higher than a year ago. In 2018, its net profit was Tk95.36 crore, 37% higher than in 2019.

At the end of 2021, its classified loans stood at Tk420 crore, which was 2.52% of its total loan portfolio.