Islami Bank shares surge 32% in three sessions

Islami Bank Bangladesh PLC shares rebounded significantly after Bangladesh Bank’s intervention restored investor confidence, triggering a price surge on the stock market. However, trading halted due to a shortage of sellers afterwards.

Shares of the bank have surged 32 percent over three consecutive trading sessions after Bangladesh Bank pledged full support to the lender and dissolved its entire board of directors, halting a crisis that had wiped nearly a fifth off the stock’s value in two days.

Yesterday, the stock hit the upper circuit limit of 10 percent and trading was halted due to a shortage of sellers following the government’s announcement of support for the bank, according to data from the Dhaka Stock Exchange (DSE).

The BB governor on June 12 pledged full support to the bank and has already extended Tk 2,500 crore in liquidity support.

Two days later, the central bank dissolved the bank’s entire board of directors, including its chairman, Md Khurshid Alam, whose appointment had triggered depositor protests that accelerated an earlier sell-off.

The rebound follows a steep decline. After the Bangladesh Securities and Exchange Commission removed the floor price on June 8, the stock shed around 19 percent in just two days through June 10, as depositor unrest and political controversy compounded market pressure.

Islami Bank carries the banking sector’s largest non-performing loan burden -- Tk 95,629 crore, equivalent to 50.88 percent of its total outstanding loans.The bank paid a 10 percent cash dividend in 2023 but skipped payouts in the two years since, a lapse that saw its stock downgraded to the Z category.