The Dhaka Stock Exchange’s net profit nosedived to around Tk 27 crore in the last financial year 2019-20, the lowest after FY2006-07, due to the cost of its Nikunja Tower building and poor trading during the COVID-19 outbreak.
The DSE’s profits plummeted by 75 per cent to Tk 27 crore in FY20 from Tk 96 crore in FY19, according to DSE sources.
Its profits in FY20 were the lowest after FY07 when it fetched just Tk 8.89 crore, the DSE data said.
The bourse’s board of directors would approve the financial results soon. The annual general meeting is scheduled to be held on December 28.
Considering the DSE’s 180,37,76,500 shares, its earnings per share dived to Tk 0.14 in FY20 from Tk 0.54 in FY19.
The struggling capital market saw even greater struggles during the coronavirus outbreak with sharp falls in the index and plunging investors’ participation.
The market remained shut from March 29 to May 30 to curb the spread of the coronavirus that also weighed heavily on the DSE profits as the majority of its income is generated through daily trading.
Even before the outbreak, investors grappled with slow movement on the market due to widespread anomalies, woes in the financial sector and huge foreign sales.
A senior DSE official said that imposition of increased taxes on the bourse’s incomes was another reason for the decline in profits.
The bourse enjoyed 40 per cent tax exemption in FY18 that fell to 20 per cent in FY19 while the bourse was required to pay taxes at the full rate to the government from FY20.
He also said that the DSE Nikunja building also became a heavy drag on profits as around Tk 20 crore in expenses were added to total expenditures.
On November 3, 2019, the DSE moved into its new building at Nikunja from its 60-year-old location at Motijheel in the capital.
The expense of the tower would increase every year due to depreciation and maintenance costs, the official said.
DSE director Shakil Rizvi told New Age that the bourse’s net profits declined as its operational profits dipped significantly due to a prolonged bearish trend on the market.
He also said that a large part of the DSE profits came from the interests generated from the bourse’s fixed deposits with banks that had also decreased significantly in FY20 due to a sharp fall in the bank interest rate.
DSE officials said that the bourse had fixed deposits worth around Tk 600 crore in 2019.
Turnover on the DSE totalled Tk 78,024.37 crore in FY20 with a daily average turnover of just Tk 381.61 crore, while the figures were Tk 1,46,193.04 crore and Tk 614.25 crore respectively in the previous fiscal year.
The key index, DSEX, slumped by 26.56 per cent to close at 3,989.09 in FY20.
The bourse became demutualised in November, 2013 to become a profitable organisation.
In 2013, the DSE said that 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 on the market and the equity-based market failed to attract different groups of investors, market experts said.
The bourse generated profits worth Tk 104.4 crore in FY18, Tk 123.91 crore in FY17, Tk 119.82 crore in FY16, Tk 134 crore in FY15, Tk 135 crore in FY14 and Tk 115 crore in FY13.
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