bob registers record profit of nu 510mn in 43 years

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Amid a sturdy battle with the central bank and strong competition from other players in the banking sector, the Bank of Bhutan (BOB) recorded the highest ever profit of over Nu 510mn last year.

The bank also made a record income of over Nu 1.4bn, registering a whopping 8.31% annual growth in its profit after tax. BOB declared 75% dividend amounting to Nu 300mn to its two share holders, the Druk Holding and Investments (DHI) and the State Bank of India (SBI). DHI holds the majority of 80% shares of the bank while SBI holds the remaining 20% shares.

Describing it as the highest financial performance by the bank in its history, BOB officials said, prudent lending policy and strong recovery efforts by the bank led to the decrease in the provisions for loans consequently increasing profit margins. The increased profit was also attributed to drastic decrease in the bank’s Non Performing Loans.

Out of the total income, the bank’s interest income which is earned from loans and advances amounted to Nu 1.14bn while non interest income increased by 6.66%. The total expenditure of the bank was Nu 690mn. BOBcurrently has a reserve of about Nu 2.27bn, up from 2bn in 2009.

According to BOB’s annual report, the book value of a share of the bank is valued at Nu 5592.54. Book value is the total value of the company’s assets that shareholders would receive if the bank is liquidated. .

Critics attribute the availability of low cost funds for the bank as a significant factor in increasing the profitability of the bank year on. Unlike other banks, the BOB fund includes cheap government funds, for which the bank does not pay interest.

Other banks pay interest on the deposits they receive while 33% of every Nu 100 must be mandatorily parked with the RMA as reserve. This means the banks must make profit from the loans rendered from the remaining Nu 77.