A Comparison of the Finance Companies in Bangladesh

8/3/2019 A Comparison of the Finance Companies in Bangladesh

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Origin

The paper is done on the operation of finance companies in Bangladesh on basis of

4 financial companies (Lanka Bangla, Prime, MIDAS and Peoples Finance Company)

as a part of Financial Market and Institute (FIN 335) course.

Objective

To discuss the operation of finance companies in Bangladesh on basis of four

companies (Lanka Bangla, Prime, MIDAS and Peoples Finance Company)

Scope

We worked on Lanka Bangla, Prime, MIDAS and Peoples Finance Company. We

particularly worked on their basic information, source and use of fund, financial

performance and share market status.

Methodology

We used out gathered information from various sources to make the whole term

paper. We used online facility and collected data from the company also.

Limitation

Lack of details information source Lack of lab facility

Lack of time

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Finance companies are non bank financial institute. sometimes called loan company, a financial

institution that specializes in supplying credit for purchases of consumer goods; makes loans

directly to consumers or purchases loan contracts made with stores; operates in most industrial

nations; has existed since early 1900s, but had most prosperous years after World War II;

General Motors Acceptance Corporation, founded 1919, best known for financing auto

purchases. Finance companies are new concept in Bangladesh. They operating for around a

decade or so.

The main source of finance companies are:

Loans from banks

Commercial papers

Deposits

Bonds

Capital

The main uses of funds are:

Consumer loan

Business loans and leasing

Real Estate loans

Regulations for Finance Companies

In Bangladesh there are eight finance companies enlisted with Dhaka and Chittagong Stock

Exchange. These companies follow the company act 1991. From the act we can summarize the

following regulations:

1.Reserve Fund.-

(1) Every banking company incorporated in Bangladesh shall create a reserve fund and if the

amount in such fund together with the amount in the share premium account is not less than its

paid-up capital.

(2) Where a banking company appropriates any money from the reserve fund or the share

premium account for any purpose, it shall, within twenty-one days from the date of such

appropriation, report the fact to the Bangladesh Bank:

Provided that the Bangladesh Bank may extend the period for such report or condone any delay

in the making of such report.

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2.Cash Reserve

(1) Should maintain in Bangladesh by way of cash reserve in cash with itself, or with the

Bangladesh Bank or its agent, or both banks in equal parts, a sum equivalent to not less than fiveper cent. of its time and demand liabilities:

Provided that the Bangladesh Bank may, in any particular case, change, by notification in the

official Gazette and subject to the conditions settled therein in this behalf, the requirements

relating to the cash reserve or repeal, on previous approval by the Government, such

requirements.

3.Restrictions on the payment of dividends

No banking company except new and special banks shall pay any dividend on its shares, unless-

a) all its capitalised expenses including preliminary expenses, organisation expenses,

commission for share selling and brokerage, losses and other items have been completely written

off, or

b) it manages to preserve constantly six per cent of its temporary and demand deposits as

discharged and reserved capital.

4. should not create any charge upon any unpaid capital of the company and any such charge, if

created, shall be invalid.

5.Restrictions on commission of sale of shares, brokerage, discount etc. .-

Notwithstanding anything to the contrary in sections 105 and 105 A of the Companies Act, no

banking company shall pay out directly or indirectly by way of commission, brokerage, discount

or remuneration or otherwise in respect of any shares issued by it, any amount exceeding two

and one-half per cent of the paid-up value of the said shares.

Now we will look forward to 4 of the finance companies in Bangladesh.

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Lanka Bangla Finance Company:

Company Profile

Company Name : LankaBangla Finance Limited

Registered Office: Safura Tower (Level 11)

20, Kemal Ataturk Avenue

BananiDhaka1-1213

Bangladesh

Legal Form : Public Limited Company, incorporated in Bangladesh on November 5,

1996 under Companies Act of 1994. Certificate to Commence businessreceived on October 30, 1997.

Date of

Incorporation: November 5, 1996

Chairman of

Board of Directors: Mr. Mohammad A. Moyeen

Company Secretary: A.K.M. Kamruzzaman

Auditors: Acnabin & Co.

Lawyers: Lee Khan and Associates

Lanka Bangla Finance Limited (LBFL) is a multinational joint venture financial institution. It

was established in the year 1997 having license from Bangladesh Bank under Financial

Institutions Act1993.

Lanka Bangla Finance company has proved to be a diversified service providing company in the

country. Institutional shareholding structure, educated & motivated human resources, friendly

working environment & dynamic corporate culture has made it possible to be the one of the front

line finance companies in the country. Sampath Bank Sri Lanka is providing the technical

support. It has helped the company to be the most innovative financial solution provider in the

country.

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LankaBangla went for public issue in 2006 and its shares are listed in both Dhaka Stock

Exchange and Chittagong Stock Exchange on 17-October-2006 and 31-October-2006

respectively.The shareholding structure of LBFL consists of Commercial banks, Investment

Bank, Corporate & prominent Industrialists from home & abroad. The current structure is:

Details PercentageForeign Sponsors

34.29%a)Sampath Bank Limited, Sri Lanka 22.86%

b)First Gulf Asia Holdings Limited, Saudi Arab 11.43%

Local Sponsors

36.62%

a) One Bank Limited, Bangladesh 10.39%

b) SSC Holdings Limited, Bangladesh 2.86%

c) Shanta Apprels Limited, Bangladesh 2.60%

d) Others - Individuals, Bangladesh 20.78

General Shareholders 29.09%

Total 100%

Issue Management:

The companies intend to raise fund from general public by issuing ordinary shares, preference

shares and different types of bonds require professional service of an Issue Manager.

LankaBangla Finance Limited has been providing issue management services to the issuing

companies since 1998. The expertise developed over the years help LankaBangla Finance

Limited provides issue management service with professional acumen. The major functions

involved in issue management service are as follow:

Lease Finance

Determine fund requirement

Identify appropriate instrument

Fulfill regulatory compliance

Prepare sales document like prospectus, information memorandum etc.

Arrange underwriting

Arrange subscription

Arrange listing

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Portfolio Management:

LANKABANGLAs Portfolio Management service is designed to provide personalized, secure

and simple financial solutions for a wide variety of investors who wish to enhance their

opportunities while minimizing their administrative burden.

Under LANKABANGLAs Portfolio Management services a client retains full discretion over

all financial decisions. The Company administer and manage all investment documentation,

collect investment income, act as custodian for the clients assets (but without physical control),

provide a dedicated Client Service Officer, issue quarterly statements and last of all they provide

loan facilities to the portfolio account holder at a very competitive rate.

LankaBangla Deposit Schemes:

LankaBangla offers various Deposit Schemes with attractive rates of interest.The client can

choose any of them according to their preference. The general interest rate structure is:

Deposit Amount 1 year 2 year 3 years and above

Less than Tk.5.00

million

13.25% 13.50% 13.75%

Tk. 5.00 million &

Above

13.50% 13.75% 14.00%

Following Deposit Schemes are available with LankaBangla

1. LankaBangla Cumulative Term Deposit:

Under this scheme the Deposit amount will turn into a desirable amount through accumulation of

interest.

Option 1: If you deposit less than Tk. 5.0 million assuming Tk. 100,000 deposit your receivables

on maturity will be:

Amount 1 Year 2 Years 3 Years

Tk.100,000 Tk. 113,250 Tk.128,823 Tk.147,182

Option 2: If you deposit Tk. 5.0 million or above assuming Tk. 100,000 deposit your receivables

on maturity will be:

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Amount 1 Year 2 Years 3 Years

Tk.100,000 Tk. 113,500 Tk.129,391 Tk.148,154

2. LankaBangla Periodic Return Term Deposit

Under this scheme you can draw the interest periodically (Monthly/Quarterly/Half-

yearly/Annually) keeping the original deposited amount intact.

Option 1 : If the deposit amount is less than Tk. 5.0 million then the interest income for a deposit

of Tk. 100,000 for different period will be:

Tenure Monthly Quarterly Half-Yearly Annually

1 year Tk.1,035 Tk.3,144 Tk.6,401 Tk.13,250

2 years Tk.1,055 Tk.3,023 Tk.6,522 Tk.13,500

3 years Tk.1,074 Tk.3,262 Tk.6,643 Tk.13,750

Option-2 : If the deposit amount is Tk. 5.0 million or above then the interest income for a deposit

of Tk. 100,000 for different period will be:

Tenure Monthly Quarterly Half-Yearly Annually

1 year Tk.1,055 Tk.3,023 Tk.6,522 Tk.13,5002 years Tk.1,055 Tk.3,023 Tk.6,522 Tk.13,500

3 years Tk.1,074 Tk.3,262 Tk.6,643 Tk.13,750

3. LankaBangla Double Money Term Deposit:

Deposit amount placed at a time will turn double on completion of 5 years 9 months

4. LankaBangla Money Builders Term Deposit:

Under this scheme the depositor will open an account with an amount of deposit, there after he

will deposit a fixed amount on monthly basis for an agreed period. On expiry the depositor will

receive the deposited amount along with the interest accrued there on.

Assuming a depositor open an account with Tk. 100,000 & thereafter make deposit fixed amount

monthly, then the accumulated amount will be:

Monthly Amount 1 year 2 year 3 year

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Tk.10,000 Tk.242,221 Tk.405,672 Tk.594,769

Tk.15,000 Tk.306,707 Tk.544,097 Tk.818,563

Tk.20,000 Tk.371,192 Tk.682,522 Tk.1,042,357

Tk.25,000 Tk.435,678 Tk.820,947 Tk.1,266,151

Financial Ratio Analysis:

Ratios 2003 2004 2005 2006 2007 Growth

Current ratio 1.38 1.09 1.13 1.07 1.14 6.56%

Debt equity ratio 5.09 7.83 5.05 5.67 8.68 52.99%

Return of equity (%) 30.17 18.71 23.50 19.32 41.23 113.38%

Return of total assets(%)

2.74 2.42 3.26 3.00 4.89 62.76

0

10

20

30

40

50

60

2003 2004 2005 2006 2007

retutn on asset

Return on equity

Debt-Equity

Current

Graph: Ratios over different time period

We can observe an upward tendency in the curves of the given ratios. It indicates that the

company is in growth stage. And they getting more and more efficient day by day. If we look at

the growth of teturn of total asset ratio we can see that the growth is 62.76%. which indicates that

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the company has become more capable in earning more profit using the same amount of asset.

Similar things can be observed in the other ratios as well.

Share Information:

2003 2004 2005 2006 2007 Growth

No. of share

outstanding

20.11 24.11 26.00 35.00 35.00 -

Net asset value per

share

6.40 8.08 1031 12.11 17.07 40.98

Earning per share (%) 10.34 13.70 21.40 24.30 60.10 147.33

Here we can see that the company is presently earning 147% more than that the company could

earn before against same amount of share.

Concerning all the above factors we can conclude that it can a very safe and profitable

investment source.

Prime Finance Company :

Prime Finance & Investment Limited incorporated as a public limited company on 10 March

1996 is an integrated financial service provider in the fields of financing, investment and capitalmarket operations. The company offers its business and institutional customers a comprehensivepackage of products and services through its corporate head office at Dhaka and branch office at

Chittagong. In its competitive market, Prime Finance & Investment Limited with its sound

financial position, broad risk spread and extensive expertise occupies a strong position in leasing,term financing, corporate financial services and capital market operations.

Prime Finance holds a leading position in the capital market operations. It is the undisputed

number one in providing comprehensive and integrated capital market services. Prime Financeboasts up a broadly diversified business profile. This enables us to offer our clients the full range

of services, they expect from a leading financial institution.

Shareholding structure as on 31 December 2004

Name of Shareholder no. ofshares % of total

shareholding

A Corporate shareholder

1. Pedrollo NK Limited 227,100 12.62

3. Khaled Textile Mills Limited 222,660 12.37

4. Acorn Limited 222,660 12.37

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5. GQ Enterprise Limited 220,680 12.26

6. Agami Apparels Limited 194,580 10.81

7. Maksons (Bangladesh) Limited 180,000 10.008. Mawsons Limited 126,000 7.00

9. Abeeco Industries Limited 92,220 5.12

Total corporate shareholdings 1,713,180 95.18

IPO size and issue price

Total no of share to be issued Issue price Total public issue

500,000 100 50,000,000

The proceeds of shares to be offered will be used in the financing and investment activities of the

company. The offering price of the common stock of the company has been determined byassessing the book value per share based on financial statements for the year ended 31 December

2004.

Dividend, voting, pre-emption rights

The share capital of the Company is divided into ordinary shares and receives dividend in terms

of the relevant provision of the Companies Act 1994 and the Articles of Association of the

company. Shareholders shall have the usual voting right proportionate to the number of sharesheld by individual shareholders. The Shareholders exercise their voting right upon show of hands

present in person or by Attorney or Proxy in connection with, among others, election of

Directors, Auditors and the usual Agenda for General Meeting.

Conversion and liquidation rights

In terms of the provisions of the Companies Act, 1994, Articles of Association of the Companyand other relevant rules in force, the shares of the Company are freely transferable. The

Company shall not charge any fee for registering transfer of shares. No transfer shall be made to

a firm, an infant or person of unsound mind.

Dividend policy

1. The profit of the Company, subject to any special right relating thereto created or authorized to

be created by the Memorandum of Association and subject to the provisions of the Articles of

Association, shall be divisible among the members in proportion to the amount of capital paid-upon the shares held by them respectively.

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2. No larger dividend shall be declared than is recommended by the Directors, but the Company

in its General Meeting may declare a smaller dividend. The declaration of Directors as to the

amount of Net Profit of the Company shall be conclusive.

3. No dividend shall be payable except out of the profits of the Company or any other

undistributed profits. Dividend shall not carry interest as against the Company.

4. The Directors may from time to time pay the members such interim dividend as in their

judgment the financial position of the Company may justify.

5. A transfer of shares shall not pass the right to any dividend declared thereon before the

registration of transfer.

Financial structure

Authorized capital

5,000,000 ordinary shares of Tk. 100 each. Tk 500,000,000

Subscribed Capital

1,800,000 ordinary shares of Tk. 100 each subscribed by the Sponsors Tk 180,000,000

Total subscribed capital before subscription of IPO Tk 180,000,000Issue of shares

Initial Public Offering (IPO) Tk 50,000,000

Total paid up capital after subscription of IPO Tk 230,000,000

Debt securities:

The Company has offered five years term bonds of Tk 300 million under private placement for

which consent from SEC was obtained (Reference no SEC/CPLC/06/2003/307 dated November

30, 2004) and Tk 90 million has been subscribed within December 31, 2004. Subscription ofbalance amount is being processed in current year and is expected to be closed within December

2005. The detail features of the said bond is given below:

Sl. no Name of subscribers Principaloutstanding as on

31 December, 2004

(Taka)

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1 ICB 25,000,000

2 ICB unit Firm 45,000,000

3 Third ICB Mutual Fund 1,000,000

4 Fourth ICB Mutual Fund 1,000,000

5 Fifth ICB Mutual Fund 3,000,000

6 Sixth ICB Mutual Fund 5,000,0007 Seventh ICB Mutual Fund 5,000,000

8 .Eighth ICB Mutual Fund 5,000,000

5,000,000

Products and services

Prime Finance & Investment Limited offers both fund based and fee based products and services.

which include the followings:

Fund based services

Lease finance

Term finance

Real estate finance

Bill discounting

Bridge/equity finance

Syndicated finance

SME financing

Fee based services

Public issue of securities Underwriting of securities

Portfolio management

Merger & amalgamation

Corporate financial services

Financial Performance:

2008 2007 2006 2005 2004

Cash flow

Operating revenue 819.62 7 24.42 445.16 378.74 337.12

Operating expenses 531.07 522.46 319.23 275.80 2 59.94Profit before tax 288.55 201.96 125.93 103.45 77.18

Balance Sheet

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Total investments 5,079.41 4,174.8 3,473.88 2,927.44 2,372.65

Total Deposits 2,177.79 2,124.82 1,480.68 1,217.82 1,010.44Total liabilities 4,700.36 3,843.98 3,236.61 2,676.72 2,187.33

Paid-up capital 460.46 328.90 299.00 230.00 180.00

Shareholders' equity 921.31 635.26 498.10 390.75 284.40

Cash flow

Operating revenue 819.62 724.42 445.16 378.74 337.12

Operating expenses 531.07 522.46 319.23 2 75.80 259.94

Profit before tax 288.55 201.96 125.93 103.45 77.18

Ordinary shares information

Earning per share 62.12 59.89 33.99 48.79 40.10

Dividend 40B 40B 20, 10B 30B 20Book value

(end of period) 200.09 193.15 166.59 169.89 158.00

Financial ratios (%)

ROI 6.18 5.15 3.23 3.62 3.65

ROA 5.66 4.80 3.04 3.46 3.44Return on equity 36.75 34.76 3.27 28.42 29.07

Current ratio (times) 1.31 2.22 2.09 2.70 1.32

Price earningsratio (times) 17.80 9.89 8.27 8.49 n/a

Debt equity ratio

(times) 3.94 4.97 5.31 5.61 4.84

Investment Growth (Taka in million)

Investment growth enhanced at a satisfactory level. At year-end 2005, total investment stood at

Tk. 2.6 billion as against Tk. 2.2 billion at the year end 2004 showing an increase of 21.66

percent.

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Return on Average Shareholders' Equity (%)

The return on shareholders' equity marginally fell from 29.07 percent to 28.42 percent as the

outstanding shares has increased because of injection of fresh capital of Tk. 50 million in 2005

through IPO.

Earnings Per Share (In Taka)

The Company could maintain a highly satisfactory EPS for the year 2005. In 2005, earnings per

share increased to Tk. 48.10 from Tk. 40.10 of 2004. Per share earning has increased by 171.06percent over the period from 2001 through 2005.

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MIDAS Finance Company:

MIDAS Financing Ltd. (MFL) is a Public Limited Company limited by shares duly incorporated

vide registration no. C-28404 (2250)/95 date May 16, 1995 under section 150 of the CompaniesAct 1994 with share contribution from MIDAS, the members of the general body of MIDAS and

other interested organizations and persons acceptable to MIDAS Board. The Company has

obtained license from Bangladesh Bank vide license no. FID (L)/22 dated 11 October, 1999 to

operate as a non-banking financial institution.

MIDAS (Micro Industries Development Assistance and Services) was created in 1982 as a non-

profit organization. It is a knowledge based, service oriented organization which has addressed

the challenge of poverty in the most practical way: by creating jobs. Its main goal is to generate

sustainable employment opportunities by promoting the development of small and micro

enterprises. It is a pioneer in promoting small-time entrepreneurs and committed to build anenterprising society in Bangladesh through them. MIDAS is the major sponsor and shareholder

of MIDAS Financing Ltd. All the Board Members of MIDAS Financing Ltd. are on the Board of

Directors of MIDAS. Besides them there are some additional members.

MIDAS Financing Ltd. (MFL) is a subsidiary of MIDAS. MFL was set up with the primary

objective of taking over the enterprise financing role of MIDAS and performing it in a better way

and on a larger scale. MFL is a public Company limited by shares and is licensed by Bangladesh

Bank to operate as a non-banking financial institution. The credit and investment services of

MIDAS are being provided through MFL since January 2000. MFL extends long-term and

medium term project loans, short-term working capital loans and lease financing for theestablishment and expansion of small and micro enterprises.

The Prospectus has been prepared by First Securities Services Ltd.(FSSL) from information

supplied by MIDAS Financing Limited (the Company) and also several discussions with the

Managing Director and concerned executives of the Company.

MLF Shares

MIDAS Financing Ltd. (MFL) is a Public Limited Company limited by shares duly incorporated

vide registration no. C 28404 (2250)/95 date May 16, 1995 under section 150 of the Companies

Act 1994. The Company obtained license from Bangladesh Bank vide license no. FID (Q/22

dated I I October, 1999) under the Financial Institutions Act 1993 to operate as a non bank

financial institution and it started operation in full swing from January 2000.

Initial Public Offering (IPO)

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Under advice from Bangladesh Bank the Company went for Initial Public Offering (IPO) of

0.446 million ordinary shares of Tk. 100.00 each in June 2002. The entire process was

successfully completed by August 2002 and thereon the Company's Paid-Up Capital rose from

Tk. 55.4 million to Tk. 100.00 million.

Dividend:

The Company declared stock dividend for the years 2003, 2004, 2005 and 2006 at the ratio of

2B: 25,1B: 10, 1B:10 & 2% Cash and 1B:10 & 2% respectively.

Rights Offer:

To comply with the Bangladesh Bank FID Circular No. 02 dated 29 June 2003 for raising the

paid-up capital and reserve of all non-bank financial institutions to Tk. 25 crore, the Company

offered 1,175,812 Rights shares of Tk. 100.00 each for subscription in full to its shareholders at

the ratio of 1:1 at par. The entire process was successfully completed by May 2005 and thereon

the Company's Paid-Up Capital rose from Tk. 117.58 million to Tk. 235.16 million

Financial Structure as on June 30, 2006:

Authorised Capital: Tk. 500,000,000

Paid up capital: Tk. 284,546,500

1. Evaluation of paid-up capital:

Particulars Amount of the event Paid-up Capital

after the event

a)Issued and Paid up Capital as

on 3 1 st December 2001 Tk. 55,400,000 Tk. 55,400,000

b Individual and Institutional Pre IPO Placement Tk. 29,600,000 Tk. 85,000,000

c IPO Tk. 15,000,000 Tk.100,000,000

d Stock Dividend for the year 2003: Tk. 6,892,000 Tk.106,892,000

e Stock Dividend for the year 2004: Tk. 10,689,200 Tk.117,581,200

f Rights Issue (Ratio 1:1 at par): Tk.117,581,200 Tk.235,162,400

g Stock Dividend for the year 2005: Tk. 23,516,200 Tk.258,678,600

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h Stock Dividend for the year 2006: Tk.25,867,900 Tk.284,546,500

Enlistment with the Stock Exchanges:

The Company was enlisted with the Dhaka Stock Exchange Limited on October 2002 and with theChittagong Stock Exchange Limited on July 2004. Its shares are being regularly traded in the Market.

Category Shareholders as on 30 June 2007:

Category Shareholders No. of Shares Percentage of

total Shares

Sponsors 1,517,192 53.32%

Non resident - -

Companies & Institutions 787,233 27.67%

General Public 541,040 19.01%

Total: 2,845,465 100.00%

Financial Performances:

(Tk. in Million)

2002-03 2003-04 2004-05 2005-06 2006-07 Growth(%)

Financial Performance

Loan / Lease portfolio

289.59 466.38 627.72 1026.411272.6223.99%

Total assets 312 502 849 1104 1468 32.97%

Long term liabilities

141 221 380 333 329 (1.20)%

Shareholders' equity

110 131 286 322 372 15.53%

Net profit- after tax

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7.88 21.81 42.45 35.35 55.16 56.04%

Financial Ratios

Debt equity ratio

1.67 2.60 1.64 1.58 1.75 10.76%

Current ratio 1.03:1 1.61:1 4:1 1.23:1 1.39:1 13%

Net asset value per share (Tk)

110 122 124 125 131 4.80%

Return on shareholders' equity(%)

7.16 16.59 16.23 10.80 23.45

117.13%

Earnings per share

7.89 20.41 18.06 13.67 19.39 41.84%

Price earnings ratio

15.84 13.52 17.95 15.5 16.16 4.26%

Dividend per share (%)

8 10 12 12 15 25.00%

MIDAS provide wide range of schemes to the clients from their various operations we are going

to discuss the key schemes of MIDAS.

Consumers Credit Scheme (CCS)

Credit facility for purchase of consumer durables and household equipment is becoming popular

day by day in our country especially to middle and fixed income group, who have a dream and

desire but do not have required financial solvency.

MIDAS Financing Limited (MFL) in keeping launched its Consumers Credit Scheme (CCS) in

August 2001 to provide financial assistance to acquire household items and others consumer

durables to the consumers to limited and fixed income of the society in order to improve their

standard of living.

Confirmed employees within the age limit of 25-55 and business persons of the following types

of Organization can availed the loans under CCS:

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Government Organization

Semi-Government Organization

Bank/Financial Institutions

Autonomous bodies

Multi national Companies

Educational Institutions

Form charge- 50 TK.

Amount of loan- Tk. 10,000/= to Tk. 200,000/=

Interest Rate- 12% (Flat) p.a

Loan Term

The loan will be amortized over a period of 1(one) to 4(four) years.

Security

i. Personal guarantee and demand promissory note of the borrower for timely repayment of

installments

ii. Post dated cheques in favour of MFL for all the installments covering entire loan period. In

addition to the installment cheques, the borrower shall issue to MFL two cheques perfect in allrespects except that the date shall be left bank, each for the half amount of the loan and payable

on demand. These cheques will be placed for encashment only on default of the borrower to pay

all or any three consecutive installments.

iii. Guarantee from a responsible person accepted to MFL.

Housing Loan Program:

MIDAS Financing Ltd, (MFL) has entered into an agreement with Bangladesh Bank to providehousing loan to limited income people under the Refinance Scheme.

Eligibility to avail the Loan Facility

Any Bangladeshi citizen, whose monthly gross salary/income does not exceed Tk.30,000/-.

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The persons who, in the name of their wives or husbands or children, have no

house/apartment in 6 (six) city corporation (Dhaka, Chittagong, Rajshahi, Khulna, Barishal, &

Sylhet) areas and Tongi, Gazipur, Savar, & Narayangonj Municipality areas.

The salaried applicants who do not have any housing loan scheme in their organizations.

The persons who have not availed any housing loan so far from any bank/financial

institution

Size of the Apartment

1,250 sft. Maximum

Size of the Loan

An applicant can avail maximum Tk.20.00 (Twenty) lac loan facility, but not more than 60% of

total price of the apartment to be purchased.

Period of the Loan

20 years maximum.

Mode of Repayment

The loan will be repayable in monthly installments.

Rate of Interest

The interest rate is @10% per annum calculated on quarterly rests basis.

Disbursement of Loan

The sanctioned loan will be disbursed at a time or in installments as per the approved schedule

within 1 (one) year from the date of disbursement of the 1st installment.

Security

Property purchased with MFL loan shall remain under registered mortgaged till liquidation of the

loan.

Advance Repayment of Loan

Loan can be repaid, partially or in full, any time before the maturity without any extra charges.

Loan Processing Fees

Application fees: A non refundable amount @ 0.5% of the loan, but not exceeding Tk.5,000/-, is

payable at the time of submission of application.

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Appraisal fees: Appraisal expenses @ 1% of the loan sanctioned is payable while accepting the

sanction letter.

Documentation Expenses

All documentation expenses are to be borne by the borrower.

Involvement in Call money Market:

Operation in Call money market is a new product of MIDAS Financing Limited. MIDAS

Financing Limited started operation in Call Money Market from April, 2005 with a small amount

of fund. Now it is gradually increasing day by day and still dominating in the lending side.

Peoples Leasing and Financial services Limited

Corporate information:

Registered Name: Peoples Leasing and Financial services Limited

Date of incorporation: August 12, 1996

Business Commencement: August 26, 1996

Registered Office: City Heart (7th floor), 67 Nayapaltan, Dhaka-1000, Bangladesh. Tel: 9331281,

Fax: 88028318275, Email: [email protected], Website: www.plfsbd.com.

Authorized Capital: Tk 100, 00, 00,000

Paid up capital: Tk 34, 22, 00,000

Board of directors: 9

Number of employees: 34

Number of shareholders: 1039

Last AGM held: May 29, 2006

Financial year: January to December

Auditor: Syful Shamsul Alam & co. Chartered Accountants

Listing With Stock Exchanges: July 20, 2005

Company Objectives:

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Peoples Leasing and Financial services Limited, a financial Institution, commenced i9ts

business operation with the distinct objective of providing lease and loan finance for the

developmental productive enterprises and industrial units for overall economic development of

the country

Sources of Fund:

Peoples Leasing and Financial services Limited depends on the term loans from the Commercial

banks to obtain necessary funding. Besides, the company entered into an agreement with

Bangladesh bank for fund to finance the SME. The company is launching different types of

deposit schemes for encouraging individuals savings.

Different sources of fund of Peoples Leasing and Financial services Limited are:

1. Lease Income2. Income from Loan and Advances

3. Income from Term Finance

4. Dividend Income

Uses of fund:

Companys operating asset port folio, which includes Lease finance, loan and investment in

shares stood at tk 2848 million in December 2006. This reflects more than 36 % growth. Lease

finance portfolio of the company is spread in a balanced way in different sectors namelyIndustrial machineries, transport ,food and agro- based industries, services, pharmaceuticals,

medical diagnostics equipment, RMGs & textiles. The company also provide loan for

Industrial, commercial and personal use in Bangladesh and also allows temporary finance to its

client within the purview of the law. Companys exposure of 3 wheeler CNG vehicles has been

commendable; PLFS has a very prudent investment in shares in the capital market.

Area of Lease / Loan financing:

Consumer durables

Garments and Textiles

Capital machineries

Syndication of loan

Office and communication equipment

Bridge finance

Bill discounting

Short term loan

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Construction equipment

Developers loan

Home loan

Generators

All type of motor vehicles

Loan for shares

Sector wise breakup of investment

As on December31, 2006

Sector Amount in taka %

Exports/RMG 614,657,583 21%

Services 397,319,782 14%

commercial transports 352,331,524 12%

Vehicles 284,827,425 10%

Taxicab 92,568,913 3%

Foods 178,017,140 6%

Medical 199,379,197 8%

Electronic 263,465,368 9%

Pharmaceuticals 291,948,110 10%

Agriculture 142,413,712 5%

Investment in share 31,345,493 1%

Total 2,848,274,247 100%

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Portfolio of Investment

22%

14%

12%10%3%

6%

8%

9%

10%

5%

1%

Exports/RMG

Services

commercialtransportsVehicles

Taxicab

Foods

Medical

Electronic

Pharnaceuticals

Agriculture

Investment inshare

Financial Highlights:

Year 2006 2005 2004 2003 2002

Operational Income 358 226 102 63 19

Operational Expenses 200 137 63 43 16

profit Before tax 158 88 38 20 3

Net profit after tax 148 81 33 20 2

Investment in Leases 1129 967 750 311 131

Investment in term Finances 1283 920 187 33 0

Shareholders Equity 510 362 217 75 55

Paid up capital 342 236 130 63 52

Year 2006 2005 2004 2003 2002

Earning per share 49.58 39 28 39 3

Dividend 30% 45% 0% 20% 0%

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Return on equity 29% 23% 15% 27% 3%

EPS:

Earning per share is calculated in accordance with IAS 33 Earning per share.

Basic Earning per share has been calculated by dividing the basic earnings by the

weighted average number of ordinary shares outstanding during the year. Weighted

average number of ordinary shares outstanding during the period was 29,79,500 (i.e.23,60,000+ (10,62,000 * 7/12))

Year 2006 2005 2004 2003 2002

Earning per share 49.58 39 28 39 3

Earning Per Share

2006 2005 2004 2003 2002

49.58 39 28 39 30

500

1000

1500

2000

2500

1 2 3 4 5

Year

Earning pe

share

Dividend:

Year 2006 2005 2004 2003 2002

Dividend 30% 45% 0% 20% 0%

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Dividend

2006 2005 2004 2003 2002

30% 45% 0% 20% 0%

0

500

1000

1500

2000

2500

1 2 3 4 5

Year

Divide

Return on equity:

Year 2006 2005 2004 2003 2002

Return on equity 29% 23% 15% 27% 3%

Auditors:

The auditors of the company M/S Syful Alam & co. Chartered Accountants has carried out theaudit for the year 2006 of the company and being eligible express their willingness to continue in

the office for the year 2007 with a remuneration of Tk 70,000.

Conclusion:

Finance company is not a very old concept in Bangladesh. We can see that the Finance

companies that are prevailing in the country are operating for around or less than a decade.

Though they have a great prospects not yet all the finance companies have been completely

successful in their business run. People of Bangladesh still do not know very well about finance

companies. Again some feel it is more profitable to invest in individual stock rather than

investing in finance companies as here the margin of profit decreases by the diversified

investment. Manager of some finance companies are not very efficient. Uttara Finance

companys standing in top 5 losers is the clear indication of the fact. We do not hope this to be

happen in the finance companies. Rather we hope that the managers will be more efficient in

their decision making and portfolio management and gain peoples faith.

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Documents

A Comparison of the Finance Companies in Bangladesh