The country’s prominent NBFI, IPDC Finance Ltd has posted its financial performance of 2021 which showed a growth of 25% in net profit from Tk 70.6 CR in 2020 to Tk 88.1 CR in 2021.
Reported by TBS, IPDC’s provision for loans and advances of IPDC Finance increased 21.9% during the same period. Total deposit also registered a 15.2% rise last year. The credit portfolio of the company rose 21.9%.
Here are some highlights from IPDC’s financial performance of 2021:
- Deposits grew 15.2% to Tk 6041 Crore
- Loan and Advances grew 21% to Tk 6533 Crore
- Revenue grew 21.7% to Tk 355 Crore
- Operating Cost grew 7.9% to Tk 124 Crore
- Classified Loan Ratio grew to 3.15% from 1.38% in 2020
- Cost of Income Ratio reduced to 36.4% from 40.7% in 2020
- Net Profit grew 24.9% to Tk 88 Crore.
Reportedly, the NBFI has achieved record deposits, loans, income, and profits for the seventh consecutive year.
The business ecosystem is still recovering from the sudden outage due to the deadly pandemic. It’s great to see, IPDC is still growing to its utmost potential. So, why its working pretty well for IPDC? Let’s have a deep dive-
The growing demand for small loans
The small and medium enterprises along with the retailers are three of the major sectors that faced a major hit of the Covid-19 pandemic due to the lockdown and other barriers. One of the major barriers was the cost of running the supply chain to sustain the business during this pandemic. With an aim to help these MSMEs, IPDC introduced a brilliant product in 2019- Supply Chain Financing, which proved to be a game changer for IPDC itself during this pandemic turmoil.
(Supply Chain Financing mostly takes place when a loan takes place against the work orders they receive from large corporations.)
Evidently, this product was something the industry needed the most during this pandemic situation and it paid dividend to IPDC as well. Since, the MSMEs required financing during this tough time to sustain their business, IPDC’s supply chain financing reportedly grew by 50% to help its market share in the lending industry to be at 54% and currently 6,000 MSME customers are availing IPDC’s fund of over Tk600 crore in supply chain financing.
Here are some key highlights of IPDC’s Loan Portfolio-
- SME loan portfolio grew 27% to Tk 6533 Crore
- Retail Financing is accountable for 23% of total loan portfolio of IPDC
- Corporate loans reduced to 50% of the total loan book which was around 80% half a decade earlier.
Evidently, the numbers mentioned above encouraged the customers to deposit more in the NBFI as well. Hence, the customer deposit reportedly grew YoY by 20% to around Tk5,000 crore in 2021 and its bank borrowing grew by 5% to Tk1,000 crore.
Increased Operational Efficiency
If you notice the key highlights of IPDC’s financial performance in 2021, you will see along with the revenue (21.7%), the operational cost also increased by 7.9% YoY. However, the cost to income ratio has reduced to 36.4% from 40.7% in 2020. So, that indicates to only one thing- the operational efficiency.
Although IPDC had to cater to more portfolios which led to higher operational cost, it was evidently efficient enough to bring down the cost to income ratio.
Another key take-away could be the Increase in Classified Loan Ratio.
Classified loans are any loans deemed by the lender to be in danger of default of both principal and interest. However, this doesn’t mean there has to be past due. Financial institutes usually classify these loans as such as a precaution in case they need to write them off as a loss which helps lenders cut down on any further risk.
Since, the pandemic hit many companies and SMEs real hard, their capacity of repaying loan also took a hit. Hence, IPDC’s classified loan ratio reportedly stood at 3.15% at the end of last December, which was 1.38% a year ago.
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