DSE profits hit 7-yr low on market woes, poor business activity

Mostafizur Rahman | Published: 00:00, Nov 30,2019


A file photo shows the Dhaka Stock Exchange building at Motijheel in Dhaka. The net profit of Dhaka Stock Exchange dropped to around Tk 98 crore in last financial year (2018-19), the lowest after FY 201112 due mainly to prolonged bearish trend at the market and poor business activities by the country’s premier bourse. — New Age photo

The net profit of Dhaka Stock Exchange dropped to around Tk 98 crore in last financial year (2018-19), the lowest after FY 2011-12 due mainly to prolonged bearish trend at the market and poor business activities by the country’s premier bourse.

The bourse’s board of directors would approve financial results and propose dividend at its next board meeting to be held on Monday.

The financial statements and the proposed dividend would be approved by the DSE shareholders in its annual general meeting scheduled to be held on December 29 subject to the High Court’s approval on holding another AGM in the same year.

According to DSE sources, the profit of DSE declined to Tk 98 crore in FY19 from Tk 104.56 crore in FY18.

Considering 180,37,76,500 shares of the DSE, its earnings per share decreased to Tk 0.54 in FY19 from Tk 0.58 in FY18.

The profit in FY19 was the lowest after FY12 when it fetched Tk 94.4 crore. The bourse became demutualised in November, 2013.

The DSE in its business plan that was approved by the Bangladesh Securities and Exchange Commission with its demutualisation scheme, however, had said the bourse’s earnings would increase by 28.50 per cent annually in the first seven years of its demutualisation.  There was no product diversification at the market and only equity-based market failed to attract different groups of investors, market experts said.

In the financial year of 2018-19, investors were grappled with a number of issues including woes in the banking sector, widespread anomalies at the capital market and dispute over approval of weak initial public offerings with huge amount of placement shares.

Therefore, the market was mostly bearish throughout the period that directly impacted on the bourse’s profit.

A senior DSE official said the imposition of increased amount of tax on the bourse’s income was another reason for the profit fall.

The bourse enjoyed 40 per cent tax exemption in FY18 that declined to 20 per cent in FY19, and from the current financial year, the bourse must pay taxes at full rate to the government.

The DSE’s failure in implementing its business plans last fiscal year was also a cause of not attaining desired margin of profit by the bourse, DSE sources said.

DSE director Rakibur Rahman told New Age on Friday that the bourse’s profit declined as its operational profit dipped significantly due to prolonged bearish trend at the market.

He also said that a large part of the DSE profit came from the interests generated from the bourse’s fixed deposits with banks that had also decreased in recent years.

Rakibur also said, ‘We expect that the profitability will turn around after introducing new products like bonds, debentures, and inclusion of small medium entrepreneur board and alternative trading board.’

DSE officials said that the bourse had fixed deposits worth around Tk 805 crore in 2018.

The turnover on the DSE totalled at Tk1,45,9655 crore in FY19 with the daily average turnover of Tk 613.3 crore, while the figures were Tk 1,59,085 crore and Tk 646.6 crore respectively in the previous fiscal year.

The key index, DSEX, gained just 16.16 points or 0.29 per cent in FY19.

The bourse made Tk 123.91 crorein profit in FY17, Tk 119.82 crorein FY16, Tk 134 crore in FY15 and Tk 135 crorein FY14.

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