Uttara Bank valuation report: fair value BDT 13.3–34.3 (Oct 2026)

Fair value BDT 13–34, base 22: Uttara earns 13.5% against a 15.3% cost of equity, so small margin moves swing value

We put Uttara Bank PLC's fair value at BDT 13–34 a share, base 22 (probability-weighted 23.1), against a price of 21.3 on 29 October 2026. Uttara is a first-generation bank, nationalised in 1972 and privatised in 1983, with 250 branches [2 p.12]. Its standalone net profit rose 23% to BDT 5.98bn in FY2025 [1 p.204]. In the first half of 2026 it rose 53% to BDT 2.80bn, an EPS of 2.31 against 1.50 [s2 p.9, p.14]. That jump came from a low base: H1 2025 carried BDT 1.7bn of loan provisions [2 p.9].

Uttara is growing very fast. Deposits rose 21% in the six months to June 2026, to BDT 326bn, and loans rose 14% to BDT 251bn [2 p.7]. Over the year to June 2026, deposits rose 41% and loans 33% [s5 p.7; s2 p.7]. The banking system grew deposits 10.7% and loans 4.3% over the same twelve months [11]. Uttara is winning deposits in the flight to quality, but it pays for them. Fixed deposits rose from 38% to 43% of deposits in six months [2 p.7]. Its cost of funds rose from 4.8% in FY2025 to about 5.9% annualised in Q2 2026 [s12 on s1 p.138; s3 p.9; s2 p.9]. Net interest income therefore fell 14% in H1 2026, and profit growth came from investment income, which rose 72% [2 p.9].

Our forecast has standalone EPS of BDT 4.83 in FY2026F, 4.58 in FY2027F and 5.25 in FY2028F. FY2027F dips because credit cost returns to the FY2025 level on a loan book a third larger, while new money earns less as T-bill yields fall. Nine-month profit was BDT 4.41bn (EPS 3.64), with Q3 at BDT 1.61bn and tax at 45.3% [4 p.9]. Our Q4 2026F is BDT 1.45bn, a little below Q3, with NII flat at about the Q3 level of BDT 2.40bn because the cost of funds is still rising. ROE falls from 20.8% in FY2025 to 14.0% in FY2027F. The spread narrows, and the new dividend rule keeps all profit inside the bank.

No cash dividend until paid-up capital reaches Tk2,000 crore. Bangladesh Bank's SPCD Circular No. 06 of 23 May 2026 bars cash dividends for banks with paid-up capital below Tk2,000 crore, from the FY2026 dividend onward [8]. Uttara's paid-up capital is Tk1,213 crore after the 25% stock dividend for FY2025 [2 p.13]. It needs 65% more shares, and its authorised capital of Tk1,500 crore [1 p.178] means an EGM first. At 25% stock dividends a year, paid-up crosses the line only when the FY2028 bonus is issued (our interpretation of when the test applies), so we model no cash dividend for FY2026–28. The FY2025 cash dividend was already only 5% (BDT 485mn) [s7; s2 p.5].

Valuation. Our normalised (sustainable) ROE is 13.5%. That is below Uttara's FY2022–25 range of 13.9%–20.8% (median 17.4%, NPAT over average equity [s12 on s1 p.204]), for three reasons. Funding now costs about 1pp more. Retained profit swells equity because no cash can be paid out. And the investment yield normalises to the 10-year T-bond less 1pp. Against a 15.3% cost of equity, 13.5% justifies 0.79x adjusted book. The price implies about 13.2%: the market is already pricing roughly our base case. Because ROE sits so close to the cost of equity, each driver moves value a lot. One bear-size move in the loan yield takes the base to BDT 19.9, and one in funding cost to 19.9. The bear case (sustainable ROE 10.8%, near the bottom of Uttara's own record) is BDT 13.3; the bull (16.1%) is 34.3. A stacked stress with every bear move at full size plus Ke +1pp gives BDT 2.9; we show it outside the range. We rate uncertainty High. The stock rose 42% in two years against 3% for the DSEX [9].

Uttara is a 250-branch first-generation bank whose deposit share rose from 1.16% to 1.47% in a year

Uttara Bank PLC began in 1965 as the Eastern Banking Corporation. It was nationalised as Uttara Bank in 1972, became a public limited company in 1983 and listed in 1984 [2 p.12]. It is a mass-market branch bank. At June 2026 it had 250 branches, 51 sub-branches, 3 cash-recycling booths and 30 ATM booths [2 p.12]; staff numbered 3,971 at end-2025 [1 p.204]. The network grew slowly: 243 branches in 2021 against 250 in 2025 [1 p.204]. Average deposits are about BDT 1.3bn a branch.

How it makes money. Uttara earns money in three ways. First, lending to small businesses and traders: cottage, micro, small and medium enterprise loans were BDT 106.8bn, or 48.5% of loans, at end-2025 [1 p.27]. Wholesale and retail trade took BDT 73.4bn, industry 76.7bn, consumer loans 10.7bn and NGO/microfinance on-lending 10.8bn [1 p.170]. Most lending is cash credit and overdrafts: cash credit alone earned BDT 12.8bn of the BDT 22.6bn of loan interest in 2025 [1 p.182]. Second, treasury. Uttara is a primary dealer in government securities and held BDT 64.3bn of T-bills and bonds at end-2025, plus BDT 7.25bn of other banks' subordinated bonds and BDT 1.2bn of quoted shares [1 p.64]. By June 2026 government securities had grown to BDT 81.5bn [2 p.7]. Third, fees and foreign exchange from trade and remittances: BDT 1.62bn of commission and exchange income in 2025 [1 p.138].

Trade and remittances. Uttara handled BDT 69.8bn of imports and 56.7bn of exports in 2025, up from 50.0bn and 46.7bn, through 39 authorised-dealer branches [s1 p.69, p.204]. Inward remittances were BDT 12.5bn in 2025 against 7.2bn in 2024, through drawing arrangements with 46 banks and exchange houses [1 p.69]. That is still about half the BDT 24.0bn handled in 2021 [1 p.204], so Uttara has lost ground in a market it used to serve through its rural branches. Remittances feed deposits and the BDT 482mn of exchange gains (2.4% of operating income) rather than a separate fee line [1 p.184]. We did not find Uttara's share of national remittances in our sources.

Deposit share. System deposits were Tk22.10 lakh crore (BDT 22,104bn) at June 2026 [11]. Uttara's BDT 326bn is 1.47% of that, up from 1.16% a year earlier [s5 p.7; s2 p.7; s11]. Loan concentration is moderate. Nine borrowers each above 10% of capital owed BDT 23.1bn at end-2025, 10.5% of loans, none classified [1 p.170]. Loans to staff and officers were BDT 2.76bn [1 p.171].

Ownership and governance. Directors and sponsors held 28.1% at end-2025, banks and financial institutions 23.6%, foreigners 0.9% and the general public 47.4% [1 p.178]. According to the DSE, the board's collective holding rose to 30.53% when director Asif Rahman (2.42%) was re-inducted on 29 April 2026 [7]. Related-party exposure is disclosed: a BDT 1.81bn funded term loan to Navana Real Estate, with Navana's chairman, the brother of Uttara's chairman, as guarantor, at June 2026 [2 p.16]. CRAB rates the bank AA1 / ST-2 with a stable outlook (July 2026) [7]. In May 2026 the board decided to sell 19.5 decimals of land at Mirpur, Dhaka [7].

Uttara Bank Securities lost BDT 81mn in 2025, 1.4% of bank profit; it is below every materiality test

Uttara has one subsidiary, Uttara Bank Securities Ltd (UBSL), a DSE/CSE brokerage that the bank owns almost entirely (non-controlling interest is BDT 25,156 [2 p.2]). On its own audited statements, UBSL lost BDT 81.2mn in 2025 after 95.7mn in 2024. Revenue was BDT 231mn, mostly margin-loan interest, while finance costs were BDT 264mn [1 p.213]. Equity fell to BDT 419mn on total assets of BDT 3.71bn [1 p.212]. The assets are mainly margin loans to clients (BDT 1.62bn receivable, against a BDT 255mn provision for negative equity) and BDT 1.63bn of listed shares, funded by a BDT 2.87bn short-term loan [1 p.212]. Most of that loan is an overdraft from Uttara itself [2 p.16].

2026 rights issue. In April 2026 UBSL's shareholders approved a 1-for-4 rights issue, and Uttara said it would invest BDT 1,925.6mn [7]. The bank's overdraft to UBSL fell from BDT 2,463.6mn to 638.6mn in H1 2026 [2 p.16], so the money largely repaid the bank. This is a swap of a loan for equity inside the group, not new capital. The group consolidated loss from UBSL was about BDT 89mn in H1 2026: consolidated profit BDT 2,707mn against standalone 2,796mn [s2 p.4, p.9].

Materiality. UBSL is 1.4% of bank profit (negative), 1.2% of bank assets and well under 10% of our fair value. It is not listed, so it fails every test for a significant subsidiary, and sum of the parts does not apply: no part is 15% of value. We value the bank on standalone figures and write UBSL down to its own book: the bank's cost of BDT 500mn (investment in subsidiary, note 10.01 [1 p.173]) less equity of 419mn takes BDT 81mn off adjusted book. The offshore banking unit is a division inside the standalone accounts and earned BDT 15mn of interest in 2025 [1 p.182].

Deposits grew 41% in a year, but fixed deposits took the cost of funds from 4.8% to about 5.9%

The rate backdrop. Bangladesh's banks grew deposits 10.7% and loans 4.3% in the year to June 2026 (Scheduled Banks Statistics, Table 102 [11]). The system's weighted-average deposit rate eased from 6.31% to 6.21% and the lending rate from 12.33% to 12.13% [11]. By 29 October 2026, overnight call money averaged 9.24%, 91-day to 364-day T-bills cleared at 8.56–8.79% and the 10-year bond at 9.27% [10]. We did not verify the current policy (repo) rate.

Uttara's funding. Deposits were BDT 268.5bn at end-2025, up 20.5%, after only 0.6–7.7% a year in 2022–24 [1 p.204]. They rose another 21.3% in H1 2026, to BDT 325.6bn [2 p.7]. Uttara has almost no other funding: borrowings were BDT 4.0bn of Bangladesh Bank refinance at June 2026 [s2 p.7; s1 p.174], and it has no subordinated bonds [1 p.179]. The new money is mostly term deposits. Fixed deposits rose from BDT 103.0bn to 140.6bn in H1 2026, from 38% to 43% of deposits. Current and other accounts (which include notice and scheme deposits) plus savings fell from 55% to 50% [2 p.7]. The bank's savings schemes are a large part of the base: scheme deposits (monthly deposit, double-benefit, millionaire, kotipoti and others) held BDT 31.9bn at end-2025, inside 'current and other accounts' [1 p.174].

Cost of deposits. Interest on deposits was BDT 11.8bn in 2025, 4.80% of average deposits, after 3.87% in 2024 [s1 p.183, p.204]. FD interest alone rose 52% to BDT 7.1bn [1 p.183]. The bank reports its own cost of fund at 5.03% for 2025 against 3.97% for 2024 [1 p.197]. Interest expense over average deposits and borrowings was 4.78% in FY2025 and 5.65% annualised in H1 2026; in Q2 2026 alone it was about 5.9% [s12 on s2 p.9; s3 p.9]. That is still below the system's 6.21% average deposit rate [11], so Uttara is not the most expensive bank, but its cost is rising toward the system.

Our deposit and funding forecast. We grow deposits 3% in Q4 2026 (deposits were BDT 334.8bn at September [4 p.7]), then 13% and 12% a year in FY2027–28F. That is still above system growth as the share gains slow. We hold the cost of funds at 6.0% in Q4 2026; Q3 was 5.96% annualised and still rising [s4 p.7, p.9], which is the level our bear signpost watches. It then eases to 5.8% and 5.6% as fixed deposits reprice with lower T-bill yields. We assume only 30% of a fall in market yields passes to deposit costs, because the system deposit rate fell only 0.10pp in a year while T-bill yields fell further [s11; s10]. Liquidity is ample: loans were 77% of deposits at June 2026, the liquidity coverage ratio was 349% and the net stable funding ratio 116% at end-2025 [1 p.260].

Core NIM falls from 6.6% in FY2025 to 4.9% by FY2028F as funding cost catches up with loan yields

Lending margin. Interest income over average loans was 11.4% in FY2025 and 11.59% annualised in H1 2026 [s12 on s1 p.138; s2 p.9]. That is close to the system's 12.13% lending rate [11]. The spread between this loan yield and the cost of funds was 6.6% in FY2025 and about 5.9pp in H1 2026. Net interest income fell from BDT 6.03bn to 5.16bn in H1 2026 although interest income rose 22% [2 p.9]. We take the loan yield to 11.1% in FY2027F and 10.8% in FY2028F as lending rates follow T-bill yields down, so the spread narrows to 5.2% by FY2028F.

Treasury. Investment income was BDT 6.02bn in 2025, up 62%: BDT 5.55bn of interest and amortisation on T-bills and bonds, 210mn on subordinated bonds and 238mn of trading gains, less a BDT 574mn revaluation loss [1 p.183]. It was 9.9% of average investments in FY2025, and investment income rose 72% to BDT 4.12bn in H1 2026 as the book grew from BDT 73.9bn to 99.2bn [s2 p.7, p.9]. Surplus deposits go into bonds in our model (investments are the balance-sheet plug), so investment income rises to BDT 11.3bn in FY2028F at a yield easing to 8.7%. Investment income becomes 51% of core income (NII plus investment income) by FY2028F, against 24% in FY2024. The bank becomes more sensitive to T-bill yields, but stays under F01's 60% flag.

Fees. Commission, exchange and other income was BDT 2.26bn in 2025 (+4%). It was made up of trade commission on letters of credit and guarantees (BDT 541mn), other service commission (598mn), exchange gains (482mn) and account, SMS and other charges (639mn) [1 p.184]. It grew 16.7% in H1 2026 to BDT 1.25bn [2 p.9], with imports and remittances rising. We forecast +22% for FY2026F, then +10% a year. Costs. Staff costs were BDT 5.63bn in 2025 (+14%) and rose 16.5% in H1 2026; other costs fell 4% [s1 p.138; s2 p.9]. With 250 branches and 3,971 staff, cost-to-income was 39.0% in FY2025; we forecast staff costs +17% in FY2026F and +10% after, so cost-to-income reaches 41.8%.

Tax. Uttara accrues tax at 47–51% in its interims and trues it up at the year end. The 9M 2025 rate was 51%, but Q4 2025 tax was only BDT 158mn on PBT of BDT 2.7bn, giving a full-year rate of 38.3% [s6 p.9; s1 p.138]. The full-year rate was 46.6–46.8% in 2022–24 [1 p.204]. The 9M 2026 rate was 45.3% [4 p.9]. We use 45% for FY2026F with no year-end release, and 45% after, against a 37.5% statutory rate [2 p.13]. Disallowed provisions explain most of the gap.

NPL fell to 4.84% at end-2025 with a BDT 1.12bn provision surplus and no deferral; the risk is the new loans

Asset quality is better than the system's. Uttara's classified loans were BDT 10.65bn at end-2025, 4.84% of loans. The ratio was 7.53% in 2021, 6.83% in 2022, 5.46% in 2023 and 5.62% in 2024 [1 p.204]. The classified book split into BDT 3.93bn sub-standard, 2.02bn doubtful and 4.69bn bad/loss; special mention loans were BDT 7.90bn [s1 p.170–171]. The system's classified-loan ratio is far higher after Bangladesh Bank tightened the overdue rules, but we did not have the latest Financial Stability Report figure in our sources.

Provisions: a surplus, not a shortfall. Bangladesh Bank rules required BDT 5.97bn of loan provisions at end-2025, and Uttara held BDT 7.10bn, a surplus of BDT 1.12bn [1 p.171]. In 2024 the surplus was BDT 6mn. There is no BB provision deferral in the notes. The auditors' emphasis of matter points to Note 3, which explains that loans were classified and provided under Bangladesh Bank's rules, and says 'our opinion is not modified' [1 p.120]. Loan provisioning and interest recognition are a key audit matter. The auditors compared the bank's provisions with the requirements set by Bangladesh Bank's inspection teams [1 p.121]. The specific provision of BDT 4.07bn includes BDT 2.41bn of extra provisions: BDT 1.02bn for loans under court stay ('writ accounts'), 559mn for rescheduled loans, 520mn from Bangladesh Bank inspections and 304mn for future credit risk [1 p.177]. The amount of loans under writ is not disclosed, which is a gap for the reader.

Coverage and adjusted book. Specific provisions plus BDT 3.93bn of interest suspense covered 75% of classified loans at end-2025, 107% including the BDT 3.34bn general provision [s1 p.177, p.179]. Net NPL after specific provisions and interest suspense was BDT 2.64bn. We deduct half of it (1.32bn) from book value, and all of it in the bear case. Write-offs were BDT 2.58bn in 2025 and recoveries of written-off loans BDT 1.11bn; cumulative written-off loans stand at BDT 20.2bn [1 p.172]. Additions to interest suspense jumped to BDT 4.43bn from 2.46bn [1 p.177]: more borrowers stopped paying interest in 2025.

Our forecast. The 2026 interims do not disclose NPL. Loans grew 33% in the year to June 2026, and new loans usually look clean for a year or two before some go bad. We therefore take credit cost from 0.95% annualised in H1 2026 to 1.1% in FY2027F and 1.0% in FY2028F (FY2025: 1.18%), and gross NPL from 4.84% to 5.5% by FY2028F. The bear case uses 1.4% of loans in FY2027F and NPL of 7.5% by FY2028F.

Paid-up capital of Tk1,213 crore bars cash dividends; reaching Tk2,000 crore needs 65% more shares and an EGM

Capital is strong. CRAR was 17.14% at end-2025 and CET1 15.36%, against a 12.5% minimum including the conservation buffer [1 p.179]. Capital was all common equity plus BDT 3.34bn of general provisions; Uttara has no subordinated debt or AT1 [1 p.179]. The surplus above 12.5% was BDT 8.75bn [1 p.179]. With all profit retained, we forecast CRAR at 16.6% in FY2026F and 17.6% in FY2028F, even with loans growing 11–12% a year.

The dividend rule. Bangladesh Bank's SPCD Circular No. 06 (23 May 2026) says that a bank with paid-up capital below Tk2,000 crore may not pay any cash dividend (para 3(a)). Banks above it may pay at most 50% of the total declared dividend in cash (para 3(b)). It applies to dividends for the year ending 31 December 2026 and after (para 4), and DOS Circular 01/2025 stays in force (para 5) [8]. Uttara's paid-up capital is Tk1,212.8 crore [2 p.13], so it needs Tk787 crore (65%) more. Its authorised capital is only Tk1,500 crore [1 p.178], so any route needs shareholders to raise it at an EGM first.

Capital actions in the last 24 months (DSE). For FY2024 the board declared 17.5% cash and 17.5% stock. For FY2025 it cut cash to 5% and raised the stock dividend to 25%, saying it would 'strengthen the capital base' [7]. That took paid-up from Tk970 crore to Tk1,213 crore in mid-2026 [2 p.5]. The FY2025 stock dividend briefly needed BSEC approval because the board's holding had dipped below 30%; the re-induction of a director lifted it to 30.53% [7]. UBSL's rights issue (bank investment of BDT 1.93bn) and the Mirpur land sale are the other capital items [7]. We found no rights issue, bond issue or authorised-capital change by the bank itself.

Two routes, and what each is worth. (a) Stock dividends: at 25% a year, paid-up is Tk1,516 crore after the FY2026 bonus and Tk1,895 crore after FY2027. It passes Tk2,000 crore only when the FY2028 bonus is issued in 2029, so the first cash dividend would be for FY2029. That timing is our interpretation: the circular does not say whether the Tk2,000 crore test is applied at declaration or after that year's bonus, and the 25% rate is an assumption; a larger bonus after an EGM could bring cash forward to FY2027–28. This is our base case: no cash for FY2026–28. A stock dividend changes no value; it splits the same bank into more shares. (b) A rights issue at the Tk10 par for the whole gap: 787mn new shares, about 0.65 for every share held. Because the new money earns a return below the cost of equity (0.79x justified book), our value per share would fall to BDT 16.6 after the issue. A shareholder who subscribes is worse off by BDT 1.38 a share, and one who does not by BDT 5.70. The theoretical ex-rights price at today's 21.3 would be BDT 16.85.

We forecast net profit of BDT 5.86bn in FY2026F and 6.37bn in FY2028F; bond income replaces lending margin

Our model is built from the balance sheet. Deposits and loans grow at the rates above; investments absorb the rest. Each income line is a rate on its own balance: the loan yield on average loans, the cost of funds on deposits and borrowings, the investment yield on the bond book, and credit cost on loans. Fees, staff and other costs grow from their own history. FY2026F is the actual nine months plus a Q4 priced at about the Q3 2026 rates on the September 2026 balance sheet, so it agrees with the latest actuals.

FY2026F. Net profit is BDT 5.86bn, flat on FY2025 (EPS 4.83). NII falls to BDT 9.9bn, while investment income rises to 8.8bn. Provisions are BDT 2.08bn (Q4 at 0.9% of loans, between Q3's 0.57% and the 9M 0.83%), and tax is 45%. Q4 NII is BDT 2.37bn against Q3's 2.40bn [4 p.9]. Q4 2026F profit is BDT 1.45bn against Q3's 1.61bn. Q4 2025 was BDT 2.58bn only because of a year-end tax release [s6 p.9; s1 p.138], which we do not assume again.

FY2027–28F. Profit dips to BDT 5.55bn in FY2027F. Credit cost rises to 1.1% on a larger book and the loan yield eases to 11.1%, while the cost of funds only falls to 5.8%. Profit then recovers to BDT 6.37bn in FY2028F as the balance sheet keeps growing. ROE falls from 17.3% to 14.0% because equity grows 32% in two years with no cash dividend.

Fair value BDT 13–34, base 22: a 13.5% sustainable ROE justifies 0.79x adjusted book

Method. Our main method is residual income on adjusted book (F01 G1), weighted 80%. The other 20% is a justified P/E on normalised earnings. We start from adjusted book of BDT 29.68bn at end-2025 (24.47 a share). We add the present value of profit above the cost of equity in FY2026–28F (BDT 1.34bn), and a terminal value in which ROE settles at the sustainable rate and grows at g = 7%. Because the sustainable ROE is below the cost of equity, the terminal term is negative (BDT -6.58bn): each taka of retained book is worth 0.79. The value rolled to 30 October 2026, less the FY2025 cash dividend paid, is BDT 22.28 a share.

Cost of equity 15.3%. Rf is the 9.27% 10-year T-bond cut-off of 25 October 2026 [10]. The raw two-year weekly beta against the DSEX is 0.52 (R² 0.20; Blume-adjusted 0.68) [9]. We floor it at 0.8 under F01 G1, the bank sector spec, which takes precedence over the 0.6 floor in our general valuation guide; the fit is weak and the stock trades thinly. The equity risk premium is 7.5%, as in our other bank reports.

Sustainable ROE 13.5%, checked against history. We take FY2028F profit, reset the investment yield to the T-bond less 1pp (net of 30% funding pass-through, -0.22bn after tax), and keep credit cost at the 1.0% through-cycle rate. Uttara's ROE (NPAT over average equity) was 13.9% in FY2022, 14.9% in FY2023, 19.9% in FY2024 and 20.8% in FY2025, a median of 17.4%. The reported 'income from equity' was 11.1% in FY2021 [1 p.204]. FY2024–25 were peak years: deposits cost 3.9–4.8% while T-bonds paid 10–12%, and FY2025 also had a year-end tax release. Now funding costs about 1pp more, and the dividend rule keeps all profit in a bank that can only invest it in bonds at about 9%. So we sit below the FY2022–23 levels. The price implies 13.2%, almost the same.

Terminal payout and growth. The ceiling for g is 7% (6% in the bear). Because the sustainable ROE is below the cost of equity, our low-ROE rule applies: g is limited to what the bank can fund from its own retention. Uttara paid 29.6% of profit in cash for FY2024 and 8.1% for FY2025 [s1 p.204; s2 p.5], so we use retention of 81% (one minus the 19% median), and g = min(ceiling, ROE_s × 81%). That exceeds the ceiling, so g is 7% (6% in the bear). The payout is 1 − g/ROE_s = 48%. The same g, ROE_s and payout drive the residual income terminal value, the justified P/B (0.79x) and the justified P/E (6.2x = payout × (1 + g) / (Ke − g)). The P/E leg applies that multiple to normalised EPS of BDT 3.62 on adjusted book, giving 22.6; both legs agree because they share inputs. We do not use Uttara's own historical P/E (3.7–8.0x at year ends 2021–25 [1 p.204]), because it echoes the price and includes the DSE floor years. A peer P/B leg is dropped: peers' books are only available to us on a consolidated screener basis, not from their filings on Uttara's standalone basis. Sum of the parts does not apply, because no part reaches 15% of value.

Implied multiples of the base value. 0.77x June 2026 book, 4.6x FY2026F EPS and 4.9x FY2027F EPS. The terminal term is -27% of the residual income value: the value is mostly today's adjusted book, less a discount for earning below the cost of equity.

Loan yield and funding cost are the largest risks: one bear-size move takes 11% and 11% off base value

Each risk below is a driver in the model, moved by the same amount as in the bear case, one at a time. The bear case moves them all together with the cost of equity unchanged; the larger stacked stress sits outside the range. The largest single risks are the loan yield (BDT 19.9) and the cost of funds (BDT 19.9). Uttara's equity is about 9% of assets, so a few tenths of a point on the spread is a large share of profit. Slower growth (19.5) matters because the model's investment income depends on deposit inflows. A 1pp rise in the cost of funds, outside our bear range, would take value to BDT 5.9 (Grid B).

Other risks. (1) Governance and related parties: the BDT 1.81bn funded term loan to Navana Real Estate, guaranteed by the brother of Uttara's chairman [2 p.16] and BDT 1.02bn of provisions for loans under court stay [1 p.177] are worth watching. (2) Regulation: Bangladesh Bank could tighten loan classification again; the auditors' key audit matter already compares provisions with BB inspection findings [1 p.121]. (3) Capital action: a rights issue at par to reach Tk2,000 crore would cut our value per share (capital section). (4) Subsidiary: UBSL's margin-loan book carries a BDT 255mn negative-equity provision [1 p.212]; a market fall would add to its losses, but it is small for the bank.

FAQ

What is Uttara Bank's fair value?

We estimate BDT 13–34 a share, base 22 and probability-weighted 23, against 21.3 on 29-Oct-2026. It blends residual income on adjusted book (80%) and a justified P/E on normalised earnings (20%). The range is wide because the bank's sustainable ROE (13.5%) is close to its cost of equity (15.3%).

Can Uttara Bank pay a cash dividend for 2026?

Not under the current rule. Bangladesh Bank's SPCD circular 06 of 23 May 2026 bars cash dividends for banks with paid-up capital below Tk2,000 crore from the FY2026 dividend onward, and Uttara's is Tk1,213 crore. It needs 65% more shares and an EGM, because its authorised capital is Tk1,500 crore.

Does Uttara Bank have a provision shortfall?

No. At end-2025 it held BDT 7.10bn of loan provisions against BDT 5.97bn required by Bangladesh Bank rules, a surplus of BDT 1.12bn, and there is no provision deferral. Gross NPL was 4.84%.

Why did Uttara Bank's net interest income fall in 2026?

Deposits grew 21% in six months, mostly as fixed deposits, and the cost of funds rose to about 5.9% in Q2 2026 from 4.8% in 2025. Interest expense grew faster than interest income, so NII fell 14% in H1 2026 while investment income rose 72%.

How big are Uttara Bank's remittances and subsidiaries?

Inward remittances were BDT 12.5bn in 2025, up from 7.2bn but about half the 2021 level. The only subsidiary, Uttara Bank Securities, lost BDT 81mn in 2025, 1.4% of bank profit, and is not material to the valuation.

Sources

1. Uttara Bank PLC Annual Report 2025 (year to 31-Dec-2025), standalone and consolidated, incl. Uttara Bank Securities Ltd statements; page numbers are PDF pages (printed page = PDF page - 2) · link · accessed 2026-10-31
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10. Bangladesh Bank call money and treasury auction pages, 29 Oct 2026 (10-year bond cut-off 9.2680% on 25-Oct-2026) · link · accessed 2026-10-30
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