Islami Bank posts Tk136cr profit despite Tk84,615cr provision shortfall

Exposure to S Alam Group remains a key concern, with Tk73,000 crore in borrowings

Islami Bank Bangladesh PLC has posted a consolidated profit of Tk136 crore for the year ended December 2025, but the earnings were overshadowed by a staggering Tk84,615 crore provision shortfall against its classified investments, highlighting continued strain in its balance sheet.

Despite the profit, the bank’s financial health remains under pressure, according to a price-sensitive disclosure filed with the Dhaka Stock Exchange (DSE).

The lender’s result was largely supported by a regulatory deferral facility from Bangladesh Bank, which allowed the provision gap to be spread over 20 years under a recovery plan submitted last October.

However, key indicators point to weakening fundamentals. Net operating cash flow dropped by Tk5,107 crore in 2025, while investment recovery slowed. Deposits from banks and financial institutions also declined by Tk9,662 crore, reflecting liquidity pressure.

The bank’s earnings trajectory has also remained weak, falling from Tk635 crore in 2023 to Tk108 crore in 2024 before edging up to Tk136 crore in 2025.

At the end of 2025, consolidated earnings per share stood at Tk0.85, while net asset value per share rose slightly to Tk44.52 from Tk44.36 a year earlier.

A major concern, according to banking sources, remains the bank’s exposure to S Alam Group, which along with its affiliates reportedly borrowed over Tk73,000 crore almost half of the bank’s total investment portfolio.

Although assets worth around Tk20,000 crore linked to the group have been attached, recovery has been slow due to weak auction response.

The bank has also skipped dividend payments for the second consecutive year and has been downgraded to the ‘Z’ category on the stock exchange for the first time, reflecting heightened financial stress.

Following the disclosure, the bank’s share price fell over 4% to Tk33.30.

The AGM has been scheduled for 25 June, with the record date set for 21 May.

Meanwhile, management reshuffles are underway, with Managing Director Md Omar Faruk Khan sent on extended leave and Md Altaf Hossain appointed as acting MD amid ongoing regulatory oversight and restructuring efforts.