B Mirror Report:  IFIC Bank PLC, a listed company on Bangladesh’s stock market, has reported significant provision shortfalls, a severe capital deficit and substantial losses in its audited financial statements for 2025, raising concerns over the bank’s financial health.

In its audit report, the external auditor included an “Emphasis of Matter” paragraph, drawing investors’ and stakeholders’ attention to issues related to loan-loss provisions, off-balance sheet exposures, deposits with other banks and financial institutions, capital adequacy and the bank’s profit-and-loss position. However, the auditor did not modify its audit opinion.

According to the financial statements, the bank required Tk 2,701.62 crore in general provisions, including provisions against unclassified loans, Special Mention Account (SMA) loans and offshore banking operations. Against this requirement, IFIC Bank maintained Tk 2,005.71 crore, leaving a shortfall of Tk 695.91 crore.

The bank also faced a provision deficit of approximately Tk 3.86 crore against off-balance sheet exposures, having maintained Tk 1,192.41 crore against a required amount of Tk 1,195.90 crore.

A major concern emerged regarding provisions against fixed deposits (FDRs) placed with banks and financial institutions. The auditor reported that IFIC Bank needed Tk 316.68 crore in provisions for this exposure but had maintained only Tk 166.85 crore, resulting in a shortfall of about Tk 300 crore.

The report noted that Bangladesh Bank, through a special directive issued on April 30, 2026, allowed the bank to defer the immediate adjustment of Tk 2,157.84 crore in provisions against loans and advances and deposits placed with AB Bank. This regulatory relaxation enabled the bank to finalise its 2025 financial statements.

The bank’s capital adequacy position also deteriorated sharply. At the end of 2025, IFIC Bank’s total regulatory capital stood at Tk 1,478.27 crore, while its risk-weighted assets amounted to Tk 58,631.54 crore. The minimum required capital was Tk 5,863.15 crore, resulting in a capital shortfall exceeding Tk 4,798.22 crore.

Consequently, the bank’s Capital to Risk-Weighted Assets Ratio (CRAR) fell to 1.82 percent, down from 7.27 percent a year earlier. Its Common Equity Tier-1 (CET-1) ratio declined to 0.42 percent from 5.23 percent, while the total Tier-1 capital ratio also stood at 0.42 percent.

Financial performance also weakened considerably. During 2025, IFIC Bank generated total operating income of Tk 3,228.45 crore from interest, dividends, commissions, brokerage and other sources. However, total expenses, including interest, administrative and operating costs and depreciation, reached Tk 5,593.91 crore, resulting in a pre-provision loss of Tk 2,365.49 crore. In contrast, the bank had posted a profit of Tk 548.67 crore in the previous year.

The auditor further noted that the bank’s retained earnings shifted from a surplus of Tk 21.58 crore in 2024 to a negative balance of Tk 2,345.98 crore in 2025, placing significant pressure on shareholders’ equity.

Overall, the audited report indicates that IFIC Bank is under considerable financial strain due to provision shortfalls, capital deficiencies and heavy losses. While regulatory concessions from Bangladesh Bank have allowed the bank to finalise its accounts, strengthening capital and maintaining adequate provisions remain major challenges going forward.