Written by The Banking Post
Islami Bank Bangladesh has posted its weakest quarterly profit since listing, as surging loan defaults and heavy provisioning battered earnings.
The Shariah-based lender reported a profit of just Tk 376 million for April–June 2025, down 88% from Tk 3.07 billion in the same period last year, according to a stock exchange filing on Monday. Half-yearly profit also slumped 81% year-on-year to Tk 674 million.
Bank officials said the decline stemmed from stricter recognition of non-performing loans (NPLs) under the central bank’s newly enforced policy. The bank’s NPLs soared to Tk 476.18 billion in March from Tk 328.17 billion three months earlier.
As a result, provisions ballooned while payments to mudaraba depositors rose 64% to Tk 34.5 billion during the quarter.
The financial strain traces back to large-scale defaults tied to S Alam Group and allied businesses, which reportedly borrowed around Tk 500 billion over seven and a half years in violation of banking rules. The group’s influence over the bank was curtailed in August 2024 when Bangladesh Bank restructured Islami Bank’s board, removing its representatives.
The troubles are reflected in cash flow as well. Net operating cash flow per share plunged to Tk 17.68 in January–June 2025, from Tk 54.79 a year earlier, hurt by additional investments worth Tk 126.1 billion.
Annual performance has been no better. In 2024, Islami Bank’s profit dropped 83% to Tk 1.09 billion as provisions topped Tk 10 billion. Depositor payouts climbed above Tk 90 billion, up 36% from a year ago. Despite profits, no dividend was declared, in line with Bangladesh Bank restrictions barring payouts by lenders with provisioning deferrals or high NPL ratios.
The bank remains one of three firms still trading under the floor price mechanism. Its shares slipped 2.07% on Monday to Tk 42.5 at the Dhaka Stock Exchange, a day after edging off the floor.
