How ONE Bank posts 242% profit growth in April-June of 2024

Rising interest rates in government securities and the lifting of the bar on the lending rate helped ONE Bank boost its net profit by 242% in the April-June quarter of this year.

The outstanding performance by the bank attracted investors on hopes of better returns in the future. As a result, its share price jumped 9.72% to reach Tk7.90 on the Dhaka Stock Exchange today.

According to the bank’s unaudited financial statement for January-June of 2024, it posted a consolidated net profit of Tk78.51 crore in the April-June quarter, up from Tk22.96 crore during the same period a year ago.

During the first half of this year, its consolidated net profit stood at Tk119.64 crore, which was 136% higher than the previous year at the same time.

The consolidated earnings per share of the bank stood at Tk1.16 at the end of June this year.

ONE Bank said in its financial statement that profit increased during the period mainly due to an increase in investment income and interest income.

The bank has invested over Tk4,800 crore in government securities, from which it earned Tk270 crore in investment income in the April-June quarter, 256% higher than the previous year during the same period.

As per Bangladesh Bank data, in May, interest rates were increased by 25 basis points to 11.60% for 91-day Treasury bills, by 40 basis points to 11.80% for 182-day Treasury bills, and by 50 basis points to 12% for 364-day Treasury bills.

Earlier, in January this year, the central bank increased the interest rate on all types of Treasury bills by 20 basis points.

Additionally, the interest rate on the 5-year Treasury bond increased by 30 basis points, bringing the interest rate to 12.40%. Previously, banks used to receive a maximum interest rate of 12.10% for purchasing such bonds.

Besides, ONE Bank’s net interest income also jumped around 95% to Tk117 crore during the second quarter as the Bangladesh Bank lifted the lending rate bar, which helped the bank increase the lending rate.

The central bank in May discontinued the SMART lending rate mechanism, transferring the responsibility to individual banks.

As per the BB circular, banks will have the authority to determine their lending rates based on demand and supply dynamics.

Meanwhile, according to ONE Bank’s audited financial statement for 2023, its classified loan stood at Tk2,681 crore, which was 11.95% of its total disbursed loans.

The ONE Bank’s audit report was prepared by the MABS and J partners— an audit firm and also a member of Nexia International.

The firm said as per the emphasis of the matter, the bank was required to keep a provision of Tk1,721 crore against loans but it maintained Tk1,080 crore.

A central bank letter issued on 28 April this year said ONE Bank has to keep the remaining amount of Tk641 crore till the finalisation of the financial statements for 2024.