Listed non-bank financial institution Phoenix Finance & Investment is facing serious uncertainty over its ability to continue normal operations, with its auditor raising concerns over its financial viability amid massive losses, negative net assets, a huge liquidity shortfall and a severe capital adequacy crisis.
Mahmud Hossain, managing partner of audit firm Mahmud Sabuj & Co., expressed the concerns after auditing Phoenix Finance’s financial statements for 2025.
According to the audit report, the company posted a net loss of Tk 3.39 billion in 2025, although the loss was significantly higher at Tk 8.08 billion in 2024. As a result of continued losses, its net assets stood at a negative Tk 16.996 billion as of December 31, 2025.
The auditor reviewed the maturity profile of the company’s assets and liabilities to assess whether it would be able to continue operations. The review found significant risks to its future liquidity position.
As of December 31, 2025, Phoenix Finance had a net liquidity shortfall of Tk 16.881 billion, indicating a substantial gap in the funds required to meet its liabilities and financial obligations on time.
The auditor said these circumstances created material uncertainty about the company’s ability to continue as a going concern. Although the financial statements were prepared on a going-concern basis, this depended on the success of urgent measures to increase income and raise additional capital.
The company’s capital position has also deteriorated sharply.
Under Bangladesh Bank’s capital adequacy requirements for financial institutions, Phoenix Finance was required to maintain a minimum total capital and capital conservation buffer equivalent to 10 percent.
However, its capital adequacy ratio had fallen to a negative 109.68 percent, reflecting a severe capital shortfall.
Phoenix Finance jointly owns an eight-storey building in the Dilkusha commercial area of Motijheel with Phoenix Insurance Company.
The company uses around 4,351 square feet on half of the first floor for its SME branch, share department and warehouse, while the remaining portion is rented out.
The company earned around Tk 10 million in rental income from the property in 2025. The auditor, however, said the portion used for rental purposes should have been classified as investment property rather than being recorded entirely as property, plant and equipment.
The auditor also identified discrepancies in the company’s income tax accounting.
Phoenix Finance paid a lower amount of tax than the amount initially recognised as payable in its accounts, but a tax provision of around Tk 24.6 million was neither reversed nor adjusted.
In addition, tax assessments for previous years completed by the tax authorities had not been reconciled with the company’s current tax payable accounts.
The company has also failed to regularly update the valuation of its land and buildings. Its land was last revalued in 2017, while its buildings were last revalued in 2010.
The auditor noted that assets should generally be revalued every three to five years to ensure that their carrying values do not materially differ from market values.
The company also did not review the useful lives and residual values of depreciable assets at the end of each year or assess whether its fixed assets had suffered impairment.
The auditor raised objections over the calculation of employee gratuity liabilities, saying the company had not conducted the required actuarial valuation and instead calculated provisions based on employees’ length of service.
The company also showed Tk 383,883 as unpaid dividends, including dividends from 2019 and 2020. Despite more than three years having passed, the amount had not been transferred to the Capital Market Stabilization Fund (CMSF) as required by BSEC directives.
Phoenix Finance also failed to implement International Financial Reporting Standard 16 on leases. As a result, it should have recognised right-of-use assets of Tk 47.66 million and lease liabilities of Tk 35.54 million as of December 31, 2025, according to the auditor.
Investors hold nearly 74%
Phoenix Finance was listed on the stock market in 2007. The company currently has paid-up capital of Tk 1.659 billion, of which investors other than sponsors and directors hold a 73.99 percent stake.
Despite its severe financial difficulties, the company’s shares continue to trade on the stock market. On Monday (August 31), its share price closed at Tk 3.70 on the Dhaka Stock Exchange.
The combination of massive losses, negative net assets, a liquidity shortfall of more than Tk 16.88 billion, negative capital adequacy and multiple accounting irregularities has intensified concerns over Phoenix Finance’s ability to remain a going concern.
