International Leasing & Financial Services Ltd (ILFSL) sank to losses in 2019 as the lender has had to set aside a huge amount of fund to cover for the money swindled by its former director PK Halder.

The non-bank financial institution incurred a loss of Tk 2,802 crore last year after making a profit of Tk 11.2 crore in 2018, according to its financial report. This was the first loss for the company in recent years.

The company's net asset value was Tk 285 crore as on September 30 last year, but it turned into liabilities of Tk 2,773 crore as on December 30 for the once-profitable venture because of the loan embezzlement.

"A huge amount of our loans has become low quality, so we needed to keep a higher amount of provision this year," Syed Abed Hasan, chief financial officer of ILFSL, told The Daily Star.

He declined to make comments when asked whether the loans' quality worsened because of the forgery committed by PK Halder.

In an investigation, the central bank found that Tk 1,596 crore was transferred from ILFSL in violation of rules through 48 accounts of various organisations related to Halder and its shareholders.

The net profit after tax of ILFSL declined by Tk 2,813.91 crore in 2019 from a year ago because of lower interest income, higher interest expenses and increased provisioning for leases, loans and advances, according to the NBFI.

Provisioning is an expense that is reserved for default or bad performing loans.

ILFSL's default loans were Tk 941.67 crore, or 24.42 per cent of the outstanding loan as of December 2019. It rose to Tk 3,356.83 crore, or 83.98 per cent of the outstanding loans as of June this year.

In 2019, the interest income of ILFSL dipped by Tk 756.98 crore as a result of interest suspense and provision for leases, loans and advances of Tk 759 crore and Tk 2,035 crore respectively as required by the Bangladesh Bank and its auditor.

The interest expenses were up by Tk 62 crore last year compared to 2018 due to the increase in the cost of fund.

As the company fell into losses, its stock price tumbled by a third to Tk 5.5 in the last few days. It closed 5.56 per cent lower at Tk 5.1 on the Dhaka Stock Exchange yesterday.

In order to keep the NBFI afloat, the High Court had appointed Khandaker Ibrahim Khaled, a former deputy governor of the Bangladesh Bank, as ILFSL chairman on January 19.

He assumed the post on February 5 but resigned after just 25 days into the job citing health reasons.

One PK Halder and his associates ate up Tk 1,600 crore of Tk 3,500 crore loans, he had said after quitting.

The central bank replaced Khaled with Md Nazrul Islam Khan, a former secretary.