Written by The Banking Post
Jamuna Oil Company’s profit plunged 51 per cent year-on-year to Tk 691 million in the second quarter of FY26, hit hard by the sudden loss of interest income from bank deposits locked in troubled Islamic banks.
The state-run fuel marketer failed to accrue interest on fixed deposits worth Tk 10.66 billion held in four crisis-hit banks—First Security Islami Bank, Global Islami Bank, Union Bank, and Social Islami Bank—which were recently merged into Sammilito Islami Bank as part of a rescue effort.
Due to persistent liquidity shortages, the newly formed bank has been unable to pay interest, dealing a direct blow to Jamuna Oil’s bottom line. The company said interest income for the October–December quarter was not accrued, while previously booked interest for the first quarter was reversed as recovery became uncertain.
Despite stable revenue from petroleum product sales, Jamuna Oil’s non-operating income—largely driven by interest earnings—collapsed 56 per cent year-on-year to Tk 970 million in the quarter. This sharp fall exposed the company’s heavy reliance on bank deposits to boost profitability.
In FY25, Jamuna Oil posted a record profit of Tk 6.48 billion, of which Tk 5.27 billion, or 81 per cent, came from interest income amid high deposit rates. That earnings model now appears fragile as banking sector stress intensifies.
For the first half of FY26, the company’s profit declined 18 per cent year-on-year to Tk 2.17 billion, again reflecting the erosion of interest income.
“Income from bank deposits may fall further due to credit risk and blocked interest in the merged bank,” said Akramul Alam, head of research at Royal Capital. He added that the company’s exposure to financially weak banks could lead to further liquidity pressure.
Jamuna Oil’s deposits include Tk 3.26 billion in First Security Islami Bank, Tk 4.32 billion in Global Islami Bank, Tk 2.89 billion in Union Bank, and Tk 186 million in Social Islami Bank. These were placed at interest rates between 10 per cent and 12.5 per cent, once a lucrative income source that now risks becoming irrecoverable.
The company also holds Tk 70 million in National Bank and Tk 740 million in Bangladesh Commerce Bank—both struggling with high default loans.
Jamuna Oil has formally sought encashment of its deposits from the merged banks, but no positive response has yet been received due to liquidity constraints, according to the auditor’s qualified report for FY25.
“This exposed weak corporate governance. Proper risk assessment should have been done well before the banks’ collapse,” Alam said, warning of potential counterparty credit losses.
The financial strain was also reflected in cash flows. Net operating cash flow per share dropped sharply to negative Tk 131.21 in July–December 2025, from positive Tk 74.13 a year earlier. The company attributed the deterioration to higher inventories and lower credit and accruals.
On Monday, Jamuna Oil’s shares fell 1.64 per cent to Tk 167.5 on the Dhaka Stock Exchange.
