Islamic Bank First Security posts a net loss of Tk 1,692 crore in the first half of the year
First Security Islami Bank reported a substantial net loss of approximately BDT 16,921 million (Tk1,692 crore) for the first half of 2025, marking a dramatic reversal from a profit of BDT 895.87 million in the same period a year earlier [1][2][4]. The loss per share from continuing operations was BDT 14.01 compared to earnings per share of BDT 0.74 a year ago.
The primary reason for this significant loss was the extraordinarily high volume of classified loans, which stood at Tk55,920 crore at the end of 2024. This amount constituted 92% of the bank's total loan disbursements, reflecting severe asset quality deterioration [3]. The bank also disclosed a provision shortfall of Tk47,862 crore against these classified loans as of December 31, 2024.
Regulatory actions played a role in the bank's financial struggles. In August 2024, the Bangladesh Bank dissolved the previous board of First Security Islami Bank due to irregularities linked to the controlling S Alam Group, which had a history of alleged corrupt practices in recruitment and loan disbursement [3]. The failure to maintain adequate provisions and meet regulatory requirements led the bank’s board to forgo dividend declaration for the prior year.
The massive non-performing loan (NPL) burden, combined with provision shortfalls, has deepened financial losses and impaired the bank’s capital position [3]. This deterioration prompted a sharp drop in share price and investor confidence [3].
The implications for the bank's financial position are severe. Worsening capital adequacy due to large loan losses and inability to adequately provision against them, constraints on dividend payments and likely restrictions on operations by the central bank until financial health improves, continued erosion of investor confidence, and potential liquidity challenges given the large volume of bad loans are all potential challenges the bank faces. Restructuring or recapitalization measures may be necessary to restore stability.
The bank's situation reflects broader challenges in Bangladesh’s banking sector where stricter regulatory oversight is revealing hidden asset quality problems and forcing banks with large NPLs into deep losses [5].
On Monday, investors reacted to the bleak earnings update, pushing the bank's share price down by 4.88% to close at Tk3.90 on the Dhaka Stock Exchange. Retained earnings for the January-June period of 2025 fell by Tk1,692.14 crore, turning negative at Tk2,166 crore. The decline in net investment income contributed to the steep drop in consolidated NAV per share. Deposits from customers and placements from banks and financial institutions declined by Tk4,113 crore year-on-year during the period. This resulted in a significant negative consolidated net operating cash flow per share.
In summary, the significant loss reported by First Security Islami Bank in H1 2025 mainly stems from a massive burden of classified loans and insufficient loan loss provisions, greatly weakening the bank’s financial position, regulatory compliance, and investor confidence [1][3][5]. The bank's EPS for the April-June quarter of 2025 is negative Tk14.01. The bank's consolidated loss in the first half of 2025 was a reversal from a profit of Tk90.22 crore in the same period a year earlier. Earlier in August last year, the Bangladesh Bank dissolved the board of directors of the First Security Islami Bank and formed a new five-member board. The S Alam Group is alleged to have engaged in irregularities and corrupt practices within the bank, particularly in the areas of recruitment and loan disbursement. Following the allegations, the central bank dissolved the First Security Islami Bank's board.
The substantial net loss reported by First Security Islami Bank in H1 2025, primarily due to a large burden of classified loans and insufficient loan loss provisions, has negatively impacted the bank's financial position, regulatory compliance, and investor confidence [1][3][5]. This loss in the industry sector, particularly in banking and insurance, has implications that extend beyond the bank, reflecting broader challenges in Bangladesh’s banking sector [5]. The banking-and-insurance sector's stricter regulatory oversight is progressively unearthing hidden asset quality problems, forcing banks with large non-performing loans into deep losses [5].
