IPDC Finance valuation report: fair value BDT 6.9–20.7 (Oct 2026)

A normalised 11.6% ROE supports about 0.73x book; the price pays 1.66x

We put IPDC Finance's fair value at BDT 7–21 a share against a price of 29.4 on 29-Oct-2026; within that range the base case is 12.6 and the probability-weighted value 13.2. IPDC is one of the few healthy non-bank financial institutions (NBFIs) in Bangladesh: classified loans of 5.97% against a sector 37.11% and capital adequacy of 17.14% [s1 p.63, p.285]. But it earned only 6.4% on average equity in FY2025 (company figure 6.74%) [1 p.71], a trough: ROE stayed above 11.4% from FY2017 to FY2021 (14.2% in FY2021) [12 p.44] and was 13.7% in FY2022 [1 p.71]. We forecast 9.1% in FY2027F and 9.4% in FY2028F; with credit cost and tax back at their FY2021–25 averages the same balance sheet earns 11.6%, our sustainable ROE.

The business is a thin-spread lender. In FY2025 it lent at 12.2% and paid 10.0% for its funds, a 2.2pp spread (model, [11]). Term deposits cost 11.4%, against a 6.31% average for all bank deposits, an average pulled down by current and savings accounts that NBFIs may not offer [s1 p.287; s6]. Treasury income filled the gap: investment income nearly doubled to BDT 1.32bn and made up 38% of operating income [1 p.255]. At a 15.8% cost of equity, a 11.6% sustainable ROE is worth about 0.73x adjusted book.

The share price rose 57% in 14 sessions in June 2026 without a disclosure, and the securities regulator (BSEC) ordered the Dhaka Stock Exchange to investigate, as reported by The Financial Express [7]. On the no-growth basis our valuation uses, the price implies a sustainable ROE of 26.1% at our cost of equity, against IPDC's best recent year of 14.2% (FY2021) [12 p.44].

Why the market may pay 1.66x book. Several things support the price that our method does not capture. BRAC and the Government of Bangladesh together hold about 47% [1 p.285], which supports depositor trust in a sector where trust is scarce. After nine wind-ups, few sound NBFIs remain listed for investors who want the sector. Only 38% of shares are free float [1 p.285], so small flows move the price. Most of the two-year 76% rise came in June 2026, when the shares rose 57% in 14 sessions without a disclosure; the securities regulator then ordered the Dhaka Stock Exchange to investigate, as reported by The Financial Express [7]. Our range reflects fundamentals only.

Corporate loans are 44.6% of a BDT 74.6bn book; supply-chain and retail finance are the growth bets

IPDC lends to companies, small businesses and households and funds itself with term deposits. It was founded in 1981 as Bangladesh's first private-sector development finance institution and is licensed under the Finance Company Act 2023 [s1 p.20, p.285]. As an NBFI it cannot take current or savings deposits, so every taka of funding is a term deposit, a bank or refinance loan, or a bond.

At December 2025 the BDT 74.6bn loan book was 44.6% corporate (BDT 33.3bn), 32.2% SME and emerging corporate (BDT 24.1bn) and 23.2% retail (BDT 17.3bn) [s1 p.66-67, p.83]. Corporate grew 18.1% in FY2025 as large depositors moved in during the sector crisis; SME fell 0.6% as IPDC held back on medium enterprises and limited supply-chain finance to selected companies; retail grew 0.75% [s1 p.66-67]. Lending is concentrated: Dhaka Division holds 77.1% of loans and ready-made garments 14.8% [1 p.83].

Segment profits show where the franchise earns. In FY2025 corporate banking produced BDT 1.10bn of revenue and BDT 809mn of operating profit, 44% of the company's total; SME and emerging corporate produced BDT 847mn and 386mn; retail BDT 898mn and only 132mn, because branches, brand and retail staff are costly [s1 p.66-67]. Corporate is also the main deposit gatherer: corporate clients held BDT 28.9bn of customer deposits, retail BDT 26.0bn and SME BDT 6.0bn, and corporate deposits rose 58.8% in the year [s1 p.66-67]. Retail is the long-run diversification bet; at today's cost base it adds volume more than profit.

Products and digital channels. Interest income by product shows where the money is made: long-term loans BDT 3.62bn, short-term loans 1.85bn, mortgages 1.34bn, auto loans 0.68bn, channel (supply-chain) finance 0.63bn, leases 0.50bn and personal loans 0.09bn in FY2025 [1 p.286]. Supply-chain finance lends to distributors and retailers of large manufacturers against the manufacturer's purchase flow; IPDC runs it on a blockchain-based digital platform, launched a retailer-finance platform in 2025 and offers IPDC DANA, a loan application for micro-retailers [s1 p.20, p.81-82]. These products carry the highest yields and the shortest tenors, so they grow first when credit demand returns; our base case grows SME and supply-chain loans 7% in FY2027F and 9% in FY2028F.

Sponsors. BRAC holds 25.00%, the Government of Bangladesh 21.88%, the Ayesha Abed Foundation 10.00% and RSA Capital 5.00%: 61.88% in sponsor hands, the rest with the public [1 p.285]. BRAC brought management control in 2015 [1 p.20]. The Government stake and the BRAC name are part of why depositors chose IPDC during the 2025 run on weak NBFIs. Lending to companies in which directors have an interest was only BDT 50.5mn at December 2025, 0.7% of equity [1 p.277]. IPDC has no subsidiaries, so the solo accounts are the whole company and sum of the parts does not apply.

Sector classified loans hit 37.1% and nine NBFIs are being wound up; IPDC holds 12% of sector deposits

Bangladesh's finance-company sector is insolvent in aggregate. Classified loans reached BDT 294bn, 37.11% of loans, in September 2025, and the sector's capital adequacy ratio was −23.03% [s1 p.61-63]. In November 2025 Bangladesh Bank's board approved winding up nine finance companies: FAS Finance, BIFC, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People's Leasing and International Leasing, which together held 52% of the sector's defaulted loans [1 p.62].

Sector loans grew 3.6% to BDT 788bn in 2025 and deposits 6.5% to BDT 511bn [1 p.62]. IPDC's BDT 74.6bn of loans is 9.5% of the sector and its BDT 62.2bn of deposits is 12.2%: depositors who left failing NBFIs moved to the few sound ones. Those sound ones, IDLC, IPDC, LankaBangla and DBH among them, grew profit in 2025 largely on treasury income, as IPDC's own annual report says [1 p.62].

IPDC's own report names the transmission channels: weak business confidence, high borrowing costs, depositor anxiety and tighter inter-institution liquidity, with spillover to otherwise solvent institutions [1 p.63]. It also notes that NBFIs face stricter classification pressure than banks because their books are term loans and leases with little short-term rollover, and that they compete with banks that hold cheap current and savings deposits [1 p.63]. Both points feed our forecast directly: the first through the deposit-cost and credit-cost lines, the second through the spread.

Two things matter for IPDC. First, contagion runs through funding, not assets: IPDC's loans to other NBFIs were only BDT 428mn at December 2025 [1 p.277], and its placements are with banks. Second, the flight to quality is a one-off: deposits from banks and NBFIs fell from BDT 2.56bn to 1.33bn in 2025 while customer deposits rose 17.7% [s1 p.84, p.280]. Our base case slows deposit growth to 9% a year in FY2027–28F.

Loans grew 6.8% a year over five years; we forecast 6.8% in FY2027F and 8.8% in FY2028F

Loan growth is set by private credit demand, not by IPDC's funding. IPDC disbursed BDT 53.1bn in FY2025 but the book grew only BDT 5.1bn, because most of the book is short and medium term: 39% of loans fall due within a year [s1 p.70, p.274]. Private-sector credit growth slowed to 6.1% in December 2025 [1 p.62]; IPDC's own book grew 1.6% in the nine months to September 2026, to BDT 75.8bn [2].

We forecast each segment from its own driver. Corporate grows 3% in FY2026F and 6–8% after, tracking private credit as rates fall. SME and supply-chain loans stay flat in FY2026F, while IPDC keeps tightening, then grow 7% and 9% as the retailer and distributor platforms scale. Retail grows 2% in FY2026F, then 8% and 10% as lower rates revive home and car loans. Total loans reach BDT 88.2bn by FY2028F.

Deposits are 79% of funding and cost 11.4% in FY2025, 2.6pp above the one-year Treasury bill today

Funding is the weak point of the NBFI model, and IPDC pays up for it. At December 2025 term deposits were BDT 62.2bn and borrowings BDT 16.7bn, so deposits were 79% of interest-bearing funding [1 p.253]. Institutions supplied 61.85% of customer deposits and individuals 38.15% [1 p.84]. Borrowings are mostly cheap: BDT 10.95bn is Bangladesh Bank refinance for SME and green loans, plus BDT 3.0bn of short-term bank loans, a BDT 1.2bn subordinated bond and BDT 0.8bn of repo [1 p.279].

In FY2025 IPDC paid 11.4% on term deposits and 5.3% on borrowings, a 10.0% cost of funds (company figure 10.01%) [s1 p.71, p.287]. Banks paid a weighted average of 6.31% on deposits in FY2024-25 and 6.21% in FY2025-26, and lent at 12.33% and 12.13% [6]. The banks' figure is an all-deposit average that includes low-cost current and savings accounts, so it overstates the gap for like-for-like term money; we found no term-deposit-only bank rate in our sources. The structural point stands: banks fund part of their book with current and savings accounts and NBFIs cannot, yet IPDC earns about the same 12.2% on loans as banks. The 364-day Treasury bill paid 8.79% on 26-Oct-2026 [6], so IPDC must beat the bill rate to keep institutional money.

Deposit costs are now falling. Annualised interest expense in the nine months to September 2026 was about 9.2% of average deposits and borrowings, and about 8.9% in Q3 alone (model calculation from [2]). Half of IPDC's deposits mature within a year (BDT 30.5bn of 62.2bn) [1 p.280], so most of the book reprices to lower rates within four quarters of the August 2026 policy cut to 9.5%. We model the deposit cost at 9.6% in Q4 2026, 9.0% in FY2027F and 8.6% in FY2028F, against loan yields of 12.0% and 11.5%. The spread widens from 2.2% to 3.7% in FY2027F.

Treasury income was 38% of FY2025 operating income; we forecast 37.0% in FY2028F

FY2025 profit rose 25% on treasury income, not lending. Net interest income fell 16% to BDT 2.01bn as deposit costs rose faster than loan yields; investment income rose 93% to BDT 1.32bn, of which BDT 0.77bn was government securities (including BDT 113mn of gains) and BDT 0.40bn dividends on preference shares [s1 p.255, p.287]. Operating expenses rose 10.3% to BDT 1.63bn, mostly salaries (+14.7%), for a cost-to-income ratio of 46.8% [s1 p.63, p.71].

2026 has turned the mix back toward lending. In the nine months to September 2026, net interest income rose 27% to BDT 1.88bn, investment income 24% to BDT 1.16bn and operating income 26%; profit before provisions rose 40% [2]. IPDC parked the deposit inflow in government securities, which rose from BDT 6.2bn to 9.8bn [2]. With the 364-day bill at 8.79% and the ten-year bond at 9.27% [6], we cut the yield on that book from about 10% in Q4 2026 to 9.0% in FY2027F and 8.5% in FY2028F; investment income still grows because the book grows.

Opex follows wages and the Islamic wing. Staff costs grow 10% in FY2027F and 9% in FY2028F (CPI-linked increments and new Shariah staff, our assumption); other costs 8% and 7%. Cost-to-income falls to 40.8% in FY2026F on the income jump, then drifts up to 44.2%.

Classified loans 5.97% with 120% cover; 2026 provisions run at 2.2% of loans

IPDC's reported asset quality is strong for the sector but deteriorating. Classified loans rose from BDT 4.06bn to 4.45bn in FY2025, 5.97% of loans; 84% of them are bad/loss [1 p.276]. Provisions held (BDT 3.70bn) plus interest suspense (BDT 1.65bn) exceed classified loans by BDT 889mn, and provisions are BDT 387mn above Bangladesh Bank's requirement [s1 p.71, p.274]. Special-mention loans, the early-warning bucket, were BDT 1.60bn (2.1% of loans) [1 p.276].

The flow is worse than the stock. In FY2025 BDT 3.27bn of loans became classified, BDT 1.82bn were recovered or rescheduled and BDT 1.06bn written off [1 p.209]. Interest moved to suspense doubled to BDT 1.02bn while interest income rose 8.5% [1 p.277], which trips the F03 income-quality flag (suspense growth more than twice interest income growth). In 2026 the provision charge jumped to BDT 1.25bn in nine months, up 83% [2]; IPDC does not publish the classified ratio in its condensed interims.

Regulation is the swing factor. IPDC classifies loans under DFIM Master Circular 04 of July 2021 and DFIM Circular Letter 37 of December 2024 [s1 p.205; s10], Under the 2021 circular a one-to-five-year term loan is special-mention at 3 months overdue, sub-standard at 6, doubtful at 12 and bad/loss at 18; a short-term loan is sub-standard at 3 months and bad/loss at 9 [10 p.3]. Provisions are 20% / 50% / 100% (5% / 20% / 100% for small business) [1 p.205]. We could not read the December 2024 letter; IPDC's report warns of 'increasingly stringent loan classification standards' in 2026 [1 p.84]. NBFIs are also not allowed deferred tax on loan provisions, so every taka of provision is taxed as if it were profit [1 p.63]. Our base case lifts the classified ratio to 7.5% in FY2026F and 8.0% in FY2027F and holds credit cost at 2.0% (Q4 2026), 1.7% and 1.4%, above the FY2022–25 range of 0.7–1.3%.

Capital adequacy 17.1% falls to 14.7% by FY2028F and still funds a 40% cash payout

Capital is not the constraint. Capital adequacy was 17.14% at December 2025 against a 10% minimum, with Tier-1 capital of BDT 6.87bn on BDT 51.7bn of risk-weighted assets [1 p.285]. On our growth path the ratio falls to 15.3% in FY2027F and 14.7% in FY2028F, as the BDT 1.2bn subordinated bond amortises out of Tier-2. Leverage is high for a lender earning this ROE: average assets were 13.2x average equity in FY2025.

IPDC has paid 5% cash and 5% stock dividends for FY2023, FY2024 and FY2025, a cash payout of 45% of FY2025 profit [s1 p.64, p.71]; 20% of profit goes first to the statutory reserve under the Finance Company Act [1 p.285]. We model a 40% cash payout: DPS of BDT 0.48 for FY2026F and 0.66 for FY2027F, a 2.3% yield at today's price. We do not model further stock dividends. The auditor's FY2025 report raised key audit matters on loan provisioning, Treasury-bond measurement and IT controls; we found no emphasis-of-matter paragraph in the pages we read [1 p.250].

We forecast net profit of BDT 513mn in FY2026F and 788mn in FY2028F

Profit grows 20% a year from FY2025 to FY2028F, almost all of it from a wider spread. FY2026F is the nine-month actual (BDT 354mn, +35%) plus a Q4 of BDT 159mn, close to Q3's 146.8mn [2]. EPS is BDT 1.19 in FY2026F, 1.66 in FY2027F and 1.83 in FY2028F on 429.6mn shares. We keep the effective tax rate near 47–48% because provisions are not deductible for deferred tax.

Fair value BDT 7–21: 0.73x adjusted book for a 11.6% sustainable ROE

We value IPDC on its sustainable return on adjusted book, as the NBFI method requires. Adjusted book (ABV) is book equity less half of any classified loans not covered by provisions and suspense; at IPDC that haircut is zero because cover exceeds 100%. Sustainable ROE is normalised over a cycle: FY2028F profit before provisions, less credit cost at the FY2022–25 average (1.06%) and tax at the FY2021–25 average (45.4%), on average FY2027–28F equity, gives 11.6%. That sits inside IPDC's own range: 12–14% in FY2018–22 and 5–7% in the FY2023–25 trough [s12 p.44; s1 p.71]. Because 11.6% is below the 15.8% cost of equity, growth adds no value, so we use the no-growth multiple ROE_s / Ke = 0.73x (the growth formula gives a lower 0.57x); g therefore does not affect the base. That is or BDT 12.7 a share on FY2026F adjusted book.

Residual income gives BDT 11.6: adjusted book of BDT 7.30bn less BDT 1.23bn of present value of FY2026–28F residual income (profit below the equity charge) and a terminal at the same 0.73x that subtracts a further BDT 1.48bn, because IPDC earns less than its cost of equity on its book. Peers trade at a median 0.82x book (IDLC, DBH, LankaBangla, United, National Housing), which gives BDT 14.2 a share. Weighted 60 / 25 / 15, the base is BDT 12.6. IPDC has no subsidiaries, so sum of the parts does not apply.

Why growth adds little value here. When a lender earns less than its cost of equity, a taka of book retained to fund growth is worth less than a taka, so our multiple assumes no value from growth. Slower growth then lowers value only slightly, through lower forecast profit: zero loan growth in FY2027–28F takes the base to BDT 11.6, zero deposit growth to 12.1. Value rises only if ROE rises: each 1.5pp on sustainable ROE adds about BDT 1.4 a share in the grid below. The levers that would get there are a faster fall in deposit costs, a lower credit cost and the cheaper Islamic deposit pool.

What the price implies. At 29.4 IPDC trades at 1.66x FY2026F adjusted book and 24.6x FY2026F EPS. On our 15.8% cost of equity the price implies a sustainable ROE of 26.1% on the no-growth basis we use (22.2% with growth at 6.0%). IPDC's highest ROE in FY2017–25 was 14.2% in FY2021, when its cost of funds was 6% [s12 p.44; s1 p.71]. Put the other way, on our ROE the price discounts a cost of equity of about 7.0% on the no-growth basis, below the 9.27% ten-year bond, or 9.4% with growth, slightly above it [6]. Peers with better returns trade lower: IDLC at 0.82x book for a 12.3% ROE (screener, [5]).

One point on deposit or credit costs cuts FY2027F EPS by more than half and value to BDT 8.1

Leverage of about 13x turns small rate moves into large profit moves. Each risk below is a workbook recalculation with one driver changed from the base case (FY2027F EPS 1.66, fair value 12.6). Deposit cost, credit cost and loan yield each hit the same BDT 75–90bn base, so a 1pp move on any of them is worth roughly BDT 0.8–0.9bn of pre-tax profit against FY2027F net profit of BDT 0.71bn.

Two risks we cannot size. First, the June 2026 price move: BSEC asked the DSE for a probe report within 30 working days [7]; we found no published outcome. Second, sector contagion: a disorderly wind-up of the nine NBFIs could make institutional depositors, 62% of IPDC's customer deposits, cautious about the whole sector [1 p.84]. As an opportunity, the Islamic finance wing needs Shariah governance, separate accounts and final Bangladesh Bank approval before launch [s8; s9]; it is in our bull case only through faster deposit and loan growth.

• FY2026 annual results (expected by April 2027): net profit near BDT 513mn and the classified ratio; above 8% points to the bear case.
• Q1 2027 results (May 2027): annualised cost of funds below 8.5% confirms the spread recovery in our base case.
• Bangladesh Bank monetary policy statements (quarterly from Q4 2026): a further cut speeds deposit repricing.
• Any DFIM circular shortening the overdue periods for NBFI loan classification.
• Bangladesh Bank final approval and launch date of the Islamic finance wing.
• The DSE probe report on the June 2026 trading.

FAQ

What is IPDC Finance's fair value?

We estimate BDT 7–21 a share against a price of 29.4 on 29-Oct-2026. The base blends a justified price-to-adjusted-book multiple of 0.73x (60%), residual income (25%) and the 0.82x peer median price-to-book (15%).

Why is IPDC's ROE low when its asset quality is good?

Because NBFIs cannot take current or savings deposits. IPDC paid 11.4% on term deposits in FY2025, while banks' average cost across all deposits, including cheap current and savings accounts, was 6.2–6.3%; yet IPDC earned about the same 12.2% on loans, so its spread was only 2.2pp. Treasury income lifted FY2025 profit to BDT 455mn, a 6.4% ROE on average equity.

How exposed is IPDC to the failing finance companies?

Directly, very little: loans to other NBFIs were BDT 428mn at December 2025, and its placements are with banks. The exposure is through funding confidence; institutions supply 62% of its customer deposits.

Who owns IPDC Finance?

Sponsors hold 61.88%: BRAC 25%, the Government of Bangladesh 21.88%, the Ayesha Abed Foundation 10% and RSA Capital 5%. The rest is held by the public.

What does the Islamic finance wing change?

Bangladesh Bank approved it in principle in September 2026, subject to Shariah governance and separate accounts before final approval. It could widen IPDC's deposit base; we include it only in the bull case through faster growth.

Sources

1. IPDC Finance PLC Annual Report 2025 (year to 31-Dec-2025; audited, Nurul Faruk Hasan & Co) · link · accessed 2026-10-30
2. IPDC Q3 2026 condensed statements (unaudited, nine months to 30-Sep-2026) · link · accessed 2026-10-30
3. IPDC H1 2026 condensed statements (unaudited, six months to 30-Jun-2026) · link · accessed 2026-10-30
4. IPDC Q1 2026 condensed statements (unaudited, three months to 31-Mar-2026) · link · accessed 2026-10-30
5. AnalystBro market data: DSE prices (IPDC, DSEX) and NBFI screener, 29-Oct-2026 · link · accessed 2026-10-30
6. Bangladesh Bank: treasury auction and call money pages (29-Oct-2026); Scheduled Banks Statistics Apr-Jun 2026, Table-102 · link · accessed 2026-10-30
7. The Financial Express, 'IPDC Finance's price surge draws regulatory scrutiny', 22 Jun 2026 · link · accessed 2026-10-30
8. The Daily Star, 'IPDC gets permission for shariah-based financing', 27 Sep 2026 · link · accessed 2026-10-30
9. The Business Standard, 'IPDC Finance gets central bank nod to launch Islamic finance window', Sep 2026 · link · accessed 2026-10-30
10. Bangladesh Bank DFIM Master Circular No. 04 (26-Jul-2021), loan/lease classification and provisioning · accessed 2026-10-30
11. IPDC Finance PLC Annual Report 2021 (five-year ROE 2017-21) · link · accessed 2026-10-30
12. AnalystBro model (workbook on this page) · accessed 2026-10-30