DBH Finance financial analysis: 0.84% NPL, 30.7% CAR, 1.4pp loan spread (from 1.7pp) and a 9% smaller balance sheet in 2026 (Oct 2026)

Investment considerations: lower NPL and higher capital than the listed peers compared, but a flat loan book, a 1.4pp spread and ROE below 10%

DBH Finance PLC is a specialist housing-finance company licensed by Bangladesh Bank (BB) under the Finance Company Act 2023. It was incorporated in 1996 as a joint venture of BRAC, Delta Life Insurance and Green Delta Insurance with two foreign partners, HDFC of India and the International Finance Corporation (IFC), and began lending in 1997 [1 p.15]. Thirty years later it has financed homes for 62,869 families, runs a BDT 45.6bn loan book funded mainly by BDT 46.7bn of term deposits, and is rated AAA [1 p.15] [1 p.262]. It has no subsidiaries, so every figure here is the company's own.

The investment case has two sides that do not move together. On safety DBH's figures are far from the sector NPL of about 40% cited in DBH's annual report [1 p.15] and better than the three peers in the peer table: gross NPL of 0.84%, a capital adequacy ratio of 30.73% against a 10% minimum, provisions of 2.7 times classified loans, and an unmodified audit opinion [1 p.31] [1 p.299] [1 p.254] [18]. On returns it is a business that has stopped growing. The home-loan portfolio is roughly where it was in 2018, the spread between what DBH earns on loans and pays for funds has narrowed, and ROE has halved since 2018 as equity accumulated faster than the book [18]. In 2025 more than 40% of operating income came from treasury bonds and bank placements rather than lending [18].

Business model: secured home loans in Dhaka, funded by term deposits and an IFC bond

DBH lends to households to build, acquire, extend or improve homes and to acquire plots, repaid by equated monthly instalments [2 p.1] [1 p.278]. At Dec-2025 conventional housing loans were BDT 36.6bn, term loans BDT 4.3bn, Islamic home finance under Hire Purchase under Shirkatul Melk (HPSM) BDT 4.4bn, and loans against deposits and to staff the rest [1 p.290]. By industry, BDT 40.8bn was housing or real estate and BDT 4.7bn consumer finance [1 p.290]. It is almost entirely secured lending: BDT 45.4bn of the BDT 45.6bn book is classed as fully secured [1 p.291].

The book is concentrated in the capital. Loans booked in Dhaka were BDT 36.5bn, 80.0% of the total, down from 82.9% a year earlier as Gazipur, Khulna, Rangpur, Mymensingh and Barishal grew [1 p.291] [18]. The annual report sets a goal of 25 branches by June 2027 and reports BDT 252 crore of affordable-housing loans disbursed in 2025, aimed at middle- and lower-middle-income families [1 p.15] [1 p.20].

On the liability side DBH cannot take current or savings accounts; it raises term deposits from individuals and institutions, borrows short-term from banks, draws BB housing refinance, and issued a BDT 3.5bn senior bond fully subscribed by IFC to fund affordable housing [1 p.294] [1 p.295]. It earns its money in three places: the spread on loans, interest on bank placements and government securities kept partly to meet liquidity rules and partly as surplus, and loan fees [1 p.300]. It has no subsidiaries and no off-balance-sheet guarantees [1 p.262].

Loan growth: about 1% a year since 2017, and the book shrank 3% in 9M 2026

The home-loan book is the weakest part of the story. The company's own highlight tables show a portfolio of BDT 42.0bn in 2017, 44.3bn in 2019, 42.6bn in 2020, 43.2bn in 2023 and 45.4bn in 2025 [5 p.25] [1 p.30]. That is about 1% a year compounded over eight years, below inflation. The flat book is not a lack of activity: DBH disbursed BDT 12.3bn in 2025 and BDT 12.5bn in 2024, but repayments and early settlements of BDT 11.2bn and 11.7bn absorbed nearly all of it [1 p.290]. Disbursement in 2017 was BDT 14.7bn, above any year since [5 p.25] [1 p.30].

Three things explain it from the filings. First, the company has turned to affordable housing (BDT 252 crore disbursed in 2025) and a goal of 25 branches by June 2027 as its growth levers [1 p.15]; the filings do not quantify demand at its traditional ticket size. Second, funding moved against it: deposits fell 9% in 2022 and the cost of deposits and borrowings rose sharply from 2023, which limited how aggressively DBH could price new mortgages [4 p.270] [18]. Third, management has prioritised credit quality: loan approvals of BDT 14.0bn in 2025 were 3.3% below 2024 [1 p.30]. In 2026 the book is shrinking outright: loans fell from BDT 45.6bn at December to 44.6bn in June and 44.2bn at 30-Sep-2026, with the cash-flow statement showing BDT 1,356m of net loan repayments in nine months [3 p.1] [2 p.1].

Funding: 85-91% term deposits, increasingly retail, with the IFC bond the largest borrowing

Deposits are 85.3% of interest-bearing funding at Dec-2025 and 90.9% at Sep-2026 [18]. The mix has moved towards retail: individuals held BDT 28.3bn of deposits at Dec-2025 against 22.0bn at Dec-2023, while bank deposits fell from BDT 6.2bn to 0.4bn [1 p.295] [4 p.255]. Other institutions, mostly corporate treasuries and funds, still supplied BDT 18.0bn [1 p.295]. Retail deposits are stickier but they are priced for savers who compare DBH with bank FDs and government savings certificates, so the shift has not lowered funding costs.

Maturities are long for a finance company: BDT 29.8bn of deposits, 63.7%, were due beyond one year at Dec-2025, including BDT 8.4bn beyond ten years [1 p.295]. That matches 15-20-year mortgages better than most peers, but it also means deposits raised at 2024-2025 rates reprice slowly when market rates fall.

Borrowings were BDT 8.03bn at Dec-2025. The largest item was the IFC-subscribed DBH Affordable Housing Bond at BDT 2.94bn, repayable in eight equal half-yearly instalments of BDT 437.5m from its second year, at an effective rate of 8.83% [1 p.294]. Short-term secured loans from Standard Chartered (BDT 1.64bn) and Citibank (BDT 1.18bn), an unsecured BDT 1.2bn from Standard Bank, BB housing refinance of BDT 634m and zero-coupon bonds of BDT 263m made up most of the rest [1 p.293] [1 p.294]. By Sep-2026 borrowings were down to BDT 4.38bn: the cash-flow statement shows BDT 2.49bn of net bank repayments and BDT 1.32bn of bond and zero-coupon repayments in nine months [2 p.1].

Spread and line items: funding costs outran loan yields, and treasury bonds carried 2025 profit

Interest income rose from BDT 5,924m (2023) to 7,918m (2025), but interest expense rose from BDT 4,130m to 6,610m, so net interest income fell from BDT 1,794m to 1,308m [4 p.223] [1 p.263]. On average balances, the loan yield went from 12.20% in 2024 to 13.53% in 2025, while interest on deposits rose from 10.12% to 11.74% of average deposits and total interest expense from 10.50% to 12.11% of average deposits plus borrowings [18]. The spread therefore narrowed from 1.70% to 1.42%. The company's own 'Cost of fund' line, on Bangladesh Bank's definition, was 7.42% for 2023, 10.89% for 2024 and 10.60% for 2025 [4 p.270] [1 p.312]; it is lower than our ratio because it is measured differently, so the two are shown side by side and not mixed.

The driver is the deposit book repricing: deposits are long-dated, so higher rates locked in during 2024 kept flowing through interest expense in 2025, while mortgages reprice by contract and competition. One 2025 item also cut interest income: BDT 156.8m was reversed as 'un-realized income as per Bangladesh Bank requirement' and parked in other liabilities [1 p.300] [1 p.295]. Without it, 2025 net interest income would have been BDT 1,465m; the filing does not say whether it will be recognised later.

Investment income filled the gap. Interest on treasury bonds rose to BDT 998m in 2025 from 814m, and total investment income from BDT 190m in 2023 to 1,006m in 2025 [1 p.300] [4 p.223]. Bank placements earned a further BDT 1,896m, inside interest income [1 p.300]. Fees (mainly loan fees of BDT 118m) were flat at BDT 176m [1 p.300]. Operating expenses rose 7.2% to BDT 765m, led by salaries of BDT 510m including the managing director [1 p.263]. Loan provisions rose from BDT 29m to 150m as specific provisions were topped up [1 p.296]. Tax took 39.9% of profit before tax against the 37.5% statutory rate, because some provisions and expenses are not deductible [1 p.302].

Each 1pp change in the 2025 cost of deposits on an average deposit base of about BDT 46.3bn moved interest expense by about BDT 463m, more than a third of 2025 net interest income [18]. That is the single biggest sensitivity in the income statement.

2026 so far: a 9% smaller balance sheet, 57% higher net interest income and a collapse in treasury income

The 2026 interim accounts show a deliberate change. Between December and September DBH let deposits fall from BDT 46.7bn to 43.8bn, cut borrowings from 8.0bn to 4.4bn and sold down or let mature government securities from BDT 6.1bn to 2.8bn; total assets fell 9.2% to BDT 62.4bn [2 p.1] [18]. Interest expense for nine months fell 24% to BDT 3,881m while interest income fell only 10%, so interest expense dropped from 83.5% to 71.0% of interest income and net interest income rose 57% to BDT 1,588m [2 p.1] [18].

The other side is the treasury book. Income from investment fell from BDT 822m to 364m in nine months and from BDT 345m to 84m in the third quarter [2 p.1]. Fees fell 28% as fewer loans were booked. Nine-month profit after tax still rose 8.6% to BDT 808m (EPS BDT 3.98), helped by a write-back of investment provisions and lower loan provisions, but third-quarter profit fell 22% to BDT 251m (EPS BDT 1.24) [2 p.1]. The Business Standard attributed the Q3 fall to lower income from government securities, and reported the company citing a write-back of about Tk5.5 crore of investment impairment and lower loan provisioning for the nine-month rise [10]. Net operating cash flow was BDT -915m, reflecting the BDT 2.95bn fall in deposits [2 p.1].

Asset quality: 0.84% NPL, provisions 2.7 times classified loans, and a first meaningful write-off

Classified loans were BDT 383m at Dec-2025: sub-standard BDT 32m, doubtful BDT 11m and bad/loss BDT 341m, or 0.84% of loans, down from 0.97% [1 p.292]. Special mention loans, the early-warning bucket, rose from BDT 73m to 158m (0.35% of loans) [1 p.292] [18]. The ratio has crept up over a decade, from 0.27% in 2017 to 0.97% in 2024, but from a level a fraction of the sector's [5 p.25] [1 p.31]. The annual report puts the sector at about 40% [1 p.15]; that is the company's figure, not ours.

Provisions are well above what BB requires. Specific provisions of BDT 563m exceed classified loans, and general provisions add BDT 458m; together they were 2.66 times classified loans and BDT 492m more than the BB-basis requirement of BDT 529m [1 p.292] [1 p.296] [18]. The BB highlights page reports a 'provision surplus against classified loan' of BDT 179.9m [1 p.312]. The company's own 'provision coverage ratio' line shows 1.5x on its definition [1 p.31]; our 2.66x counts specific and general loan provisions against classified loans. DBH provides fully for loans more than six months overdue [1 p.272] and the auditor checked classification against BB's quick-summary report [1 p.255].

2025 was the first year in the record with a material write-off: BDT 78.9m of fully provided loans, against nil in 2024; BDT 0.1m was recovered from earlier write-offs and BDT 87.6m of written-off loans remain under lawsuit [1 p.291] [1 p.292]. Interest suspense rose to BDT 91m [1 p.297]. Credit cost was 0.33% of average loans in 2025 [18]. DBH has set up a wilful-defaulter unit under DFIM Circular 04 of 3-Apr-2024 and reported such borrowers to the CIB [1 p.292]. In 9M 2026 loan provisions fell to BDT 94m from 178m [2 p.1].

Capital and returns: CAR of 30.7% and equity at 14.6% of assets halved ROE since 2018

Capital adequacy rose every year from 24.22% (2020) to 30.73% (2025) [1 p.31]. At Dec-2025 Tier-1 capital was BDT 10,052m and Tier-2 (general provisions) BDT 357m against risk-weighted assets of BDT 33,876m, a surplus of BDT 7,021m over the 10% minimum [1 p.298] [1 p.299] [18]. Reserves include a BDT 2.5bn general reserve, BDT 1.28bn contingency reserve and a BDT 700m dividend-equalisation reserve built in 2024 [1 p.299] [1 p.300]. The statutory reserve (BDT 1.97bn) is close to paid-up capital (BDT 2.03bn), so the 20% transfer only applies when capital grows [1 p.262] [1 p.275].

This capital is the reason returns have fallen. Equity was 8.0% of assets in 2017 and 14.6% in 2025; ROA moved little, from 1.87% (2018) to 1.40% (2025), but ROE fell from 22.3% to 9.8% because each taka of profit now sits on twice as much equity [18]. With the 15% cash-dividend ceiling the board attributes to BB and the loan book flat, capital keeps building. The company's 'Return on Shareholders' Equity' line, which uses its own averaging, shows 9.78% for 2025 [1 p.31].

Peers: lowest classified ratio and highest ROA, but ROE below IDLC's on twice the capital

The peer table uses the same Bangladesh Bank 'Highlights' annexure that each finance company files, so the labels match: 'Percentage of classified loans against total loans', 'Cost of fund' and 'Return on assets (ROA)' [1 p.312] [6 p.163] [7 p.166] [8 p.163]. LankaBangla's 2025 annual report is not in our corpus, so its 2024 standalone figures are shown and labelled. Capital ratios are standalone from each company's capital note, and ROE uses each company's own label.

DBH's classified-loan ratio is 3.59pp below IDLC's and 9.04pp below NHFIL's, the other listed housing lender. Its reported cost of fund of 10.60% is 0.48pp above IDLC's 10.12% but 1.74pp below NHFIL's 12.34% [18]. IDLC funds a higher-yielding SME and consumer book and earned a higher ROE (10.98% vs 9.78%) on much less capital (CAR 17.82% vs 30.73%) [6 p.162] [6 p.170] [1 p.31]. NHFIL, with a 9.88% classified ratio, earned 4.43% [7 p.166]. DBH's ROA of 1.40% is the highest of the four [1 p.312].

Governance: three sponsors own 51%, and Delta Life's 17.6% sits with an insurer that went through a 2021-22 regulatory intervention

Three institutional sponsors own 51.32%: BRAC 18.39% (37.30m shares), Delta Life Insurance 17.63% (35.76m) and Green Delta Insurance 15.30% (31.05m); general and foreign investors own the rest [1 p.23] [1 p.297]. HDFC and IFC, the founding foreign partners, no longer appear among shareholders [1 p.15] [1 p.297]; IFC's current link is as the sole investor in the BDT 3.5bn affordable-housing bond [1 p.294]. The chairman, Syed Moinuddin Ahmed, is Green Delta's nominee; Delta Life has two nominee directors, Khandkar Manwarul Islam and Nazir Rahim Chowdhury, both since November 2022; BRAC has one; there are two independent directors [1 p.23] [1 p.192] [1 p.307]. The managing director and CEO is Nasimul Baten [1 p.23].

Delta Life's stake deserves attention. At BDT 38.9 it is worth about BDT 1.39bn [18]. IDRA suspended Delta Life's board and appointed an administrator in February 2021, as reported by the Financial Express [11]; IDRA withdrew the administrator and the board was reconstituted in September 2022, as reported by the Financial Express and The Business Standard [12] [13]. The Daily Star reported in December 2021 an IDRA-appointed auditor's interim estimate that irregularities had cost the insurer Tk3,687 crore [14]. None of these reports mentions DBH. For DBH, the filings show the practical effects: Section 15(3) of the Finance Company Act 2023 and DFIM Circular 01 of 29-Feb-2024 allow one nominee director per institution, so Delta Life put forward only Khandkar Manwarul Islam for re-election at the 30th AGM, subject to a BB no-objection [1 p.66]. Any future decision by Delta Life to reduce its 17.63% stake would put 35.76m shares, 17.6% of the company, in play; our corpus contains no announcement of such a plan.

Related-party dealings are small. In 2025 DBH paid insurance premiums of BDT 4.5m to Delta Life and BDT 1.9m to Green Delta; Delta Life placed BDT 190m of deposits and had BDT 197m outstanding at year end, and BRAC's deposits stood at BDT 1,309m [1 p.305]. Sponsor deposits were 3.2% of total deposits [18]. Securities trades through Green Delta Securities were BDT 159m of purchases and BDT 156m of disposals [1 p.305]. Note 7.3 shows no loans to companies in which directors have an interest [1 p.290] [1 p.291]; the related-party note does list two small loans to Green Delta Insurance with BDT 5.3m outstanding [1 p.305]. The auditor, Hoda Vasi Chowdhury & Co, gave an unmodified opinion dated 10-May-2026 with key audit matters on loan provisions, interest income, deposits, treasury valuation, deferred tax, the gratuity scheme, legal matters and IT [1 p.254] [1 p.255] [1 p.261].

Dividends: cash payout at the 15% ceiling the board attributes to BB, a third of 2025 profit

Cash dividends fell from BDT 3.00 a share for 2020 to BDT 2.50 for 2021 and 2022, BDT 1.70 for 2023 and BDT 1.50 for 2024 and 2025 [1 p.31]. Bonus shares were issued in most years: 2.0% in 2025 (3.98m shares on 29-Jun-2025), and larger issues in 2019-2022 [1 p.298]. The cash payout fell from 52% of profit on our calculation (2020; the company reports 37%) to 32% (2025) [18]. The board states that BB 'currently allows Financial Institutions to declare a maximum cash dividend of 15%', and its 2025 dividend of 15% (BDT 1.50) is that ceiling, about 32% of profit by the company's own count [1 p.66]. The record date was 4-Jun-2026 and the AGM 29-Jun-2026 [9]; BDT 304m was paid in 2026 [2 p.1]. While the 15% ceiling stands and paid-up capital is BDT 2.03bn, the cash dividend is capped at about BDT 304m a year, against 2025 profit of BDT 952m [18].

At BDT 38.9 DBH trades at 0.75x Sep-2026 NAV and 7.8x trailing profit, with a 3.9% yield on the 2025 dividend [17] [18]. Its year-end price-to-book was 2.22x in 2020 and 0.70x in 2025 [18]. These are facts about the price, not a view on it.

Bangladesh Bank rules: capital, provisioning, nominee directors and, per the board, a 15% cash-dividend ceiling

BB regulates DBH through its Department of Financial Institutions and Markets (DFIM). The rules that move DBH's numbers are: the 10% minimum capital ratio under the Basel II CAMD guideline [1 p.279]; the cash reserve requirement of 1.5% and SLR of 5%, which DBH exceeds at 1.55% and 39.14% [1 p.31]; loan classification and provisioning under DFIM Circular 04 of 26-Jul-2021, with 1% general provision on standard loans and 5% on SMA [1 p.255] [1 p.292]; the 20% statutory reserve transfer [1 p.275]; governance rules in DFIM Circulars 01 and 02 of 2024 on nominee and independent directors [1 p.66] [1 p.301]; and, according to the board, a 15% cash-dividend ceiling [1 p.66]. The BB-required reversal of BDT 156.8m of income in 2025 shows the regulator can reach directly into reported income [1 p.300].

The sector backdrop matters for funding. The company's annual report cites a sector NPL near 40% [1 p.15]; that has pushed depositors towards the few strong names, which helps DBH's deposit base, but it also lets banks compete for the same savers. Tax for listed finance companies is 37.5% [1 p.302]. Bangladesh's LDC graduation was moved from 24-Nov-2026 to 24-Nov-2029 by a UN General Assembly decision adopted on 29-Oct-2026 [15] [16]; for a domestic mortgage lender the effect runs through rates and the economy rather than directly through trade preferences.

What's next: FY2026 results, the board-stated 15% dividend cap, branch expansion and LDC 2029

The FY2026 annual report will answer the three open questions from the interims: whether the balance-sheet shrinkage continued into the fourth quarter, whether the lower interest expense ratio (71.0% in 9M 2026) lasts, and how much treasury income is left after the government-securities book fell to BDT 2.8bn [2 p.1]. It will also show whether the BDT 156.8m of reversed income comes back and whether SMA loans (BDT 158m) migrate [1 p.292] [1 p.300]. The FY2026 cash dividend can be at most 15% while the ceiling the board attributes to BB stands [1 p.66].

The affordable-housing push and new branches are the only stated growth levers [1 p.15]; if they work they show first in disbursements outside Dhaka (Dhaka was 80.0% of loans at Dec-2025) [18]. Lower deposit rates would raise net interest income: on 2025 balances, each 1pp fall in the cost of deposits was worth about BDT 463m before tax [18].

Risks: deposit costs, fading treasury income and a shrinking book matter more than credit

Each risk is tied to the line it moves; size them against 2025 profit before provisions of BDT 1,740m and equity of BDT 10.05bn [18].

Key questions: growth, funding cost, treasury income and the use of surplus capital

FAQ

What is DBH Finance's NPL ratio?

0.84% at 31-Dec-2025 (BDT 383m of BDT 45.6bn loans), down from 0.97% [1 p.292] [1 p.312].

What is DBH's capital adequacy ratio?

30.73% at Dec-2025 against a 10% minimum, with BDT 7.02bn of surplus capital [1 p.299].

Who owns DBH Finance?

BRAC 18.39%, Delta Life Insurance 17.63% and Green Delta Insurance 15.30%; the rest is owned by general and foreign investors [1 p.23].

How much dividend does DBH pay?

15% cash (BDT 1.50 a share) for 2025, which the board says is the maximum BB currently allows finance companies [1 p.66].

Why did DBH's Q3 2026 profit fall?

Investment income fell from BDT 345m to 84m as government securities were run down, outweighing a 91% rise in net interest income [2 p.1] [10].

Which results does this report use?

Audited 2025 statements (with 2023-2024 comparatives), five-year tables back to 2016, and the unaudited H1 and 9M 2026 statements.

Sources

1. DBH Finance PLC Annual Integrated Report 2025 (audited statements, year to 31-Dec-2025) · link · accessed 2026-10-31
2. DBH Finance PLC unaudited financial statements, nine months to 30-Sep-2026 · link · accessed 2026-10-31
3. DBH Finance PLC unaudited financial statements, half year to 30-Jun-2026 · link · accessed 2026-10-31
4. DBH Finance PLC Annual Integrated Report 2024 (incl. 2023 comparatives) · link · accessed 2026-10-31
5. Delta Brac Housing Finance Corporation Annual Report 2020 (five-year highlights 2016-2020) · link · accessed 2026-10-31
6. IDLC Finance PLC Integrated Annual Report 2025 (peer) · link · accessed 2026-10-31
7. National Housing Finance PLC Annual Report 2025 (peer) · link · accessed 2026-10-31
8. LankaBangla Finance PLC Annual Report 2024 (peer; 2025 annual not in corpus) · link · accessed 2026-10-31
9. DSE announcements via AnalystBro events: Q3 2026 results (14-Oct-2026), board meetings 10-May-2026, 29-Jul-2026, 13-Oct-2026, AGM 29-Jun-2026, record date 4-Jun-2026 · link · accessed 2026-10-31
10. The Business Standard, 'DBH Finance posts 22% profit fall in Q3 on lower treasury income' (14-Oct-2026) · link · accessed 2026-10-31
11. The Financial Express, 'Delta Life gets administrator' (12-Feb-2021) · link · accessed 2026-10-31
12. The Financial Express, 'Delta Life's board reconstituted' (24-Sep-2022) · link · accessed 2026-10-31
13. The Business Standard, 'Delta Life administrator withdrawn, new board to take over on Tuesday' (19-Sep-2022) · link · accessed 2026-10-31
14. The Daily Star, 'Irregularities cost Delta Life Ins Tk 3,687cr' (4-Dec-2021) · link · accessed 2026-10-31
15. The Daily Star, 'Bangladesh gets 3 more years for LDC graduation' (30-Oct-2026) · link · accessed 2026-10-31
16. The Business Standard, 'Bangladesh gets 3 more years for LDC graduation' (30-Oct-2026) · link · accessed 2026-10-31
17. AnalystBro price data (TradingView feed): DSE:DBH weekly bars to the week of 25-Oct-2026 · link · accessed 2026-10-31
18. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31