ADBL to seek strategic partnership by Sept; expect impressive dividend

ShareSansar, January 20:

The state-run Agricultural Development Bank Limited (ADBL) has decided to seek strategic partnership with national or foreign institution within eight months, top officers bank informed during a press meet organized on the eve the bank’s anniversary yesterday.

The government has already decided to divest its 30% stake in the bank and bring in strategic partners to improve the management and performance of the bank.

“We are currently holding special audit (in the run-up to the AGM),” CEO of the bank Tej Bahadur Budathoki said. “Once the audit is over, we will issue an advertisement for the strategic partnership.”

He also informed that the bank was acting to forge the strategic partnership by September as directed by the privatization cell of the Ministry of Finance.

Though Budathoki could not suggest the date for the bank's upcoming AGM, he said that the ADBL is planning to give maximum dividend to the shareholders from the net profit it posted in the previous few fiscal years.

“We are working to offer a cumulative dividend to the shareholders this time around,” he said. “We are sure that our shareholders will be pleasantly surprised and encouraged following the dividend announcement.”

The dividend to be proposed by the ADBL will, however, be subject to the approval of the central bank.

ADBL, one of the largest banks in the country, has not been able to offer any dividend to the shareholders even five years after the issuance of its ordinary shares.

According to sources privy of the development, ADBL is expected to give around 30 percent dividend to the shareholders from the net profit it posted in the last fiscal year 2069/70.

The shareholders, who were dejected by the bank’s failure to deliver the pledged dividend for the previous fiscal year 2068/69, are very upbeat about dividend this time around as the bank is fairing much better.

“The bank officials themselves want to pledge around 35 percent dividend this time around,” the source said. “Even if the central bank demands some provisioning, investors can expect anything between 25 to 35 percent dividend.”

ADBL’s AGM held in July last year failed to deliver 5.26 percent cash dividend for the shareholders and 6 percent for preference shareholders announced earlier by the  bank  from the net profit it had posted in the previous fiscal year.

Nepal Rastra Bank had refused to grant permission for the dividend mainly due to the bank’s failure to convert Rs 16.25 crore issued capital to paid-up capital.

This despite the fact that ADBL had posted an impressive net profit of Rs.225.99 crore in the fiscal year 2068/69.

The bank reported a net profit rise of 6.37 percent, publicizing its unaudited first quarter report in November.

It has posted a net profit of Rs 23.70 crore in the first quarter compared to Rs 22.28 crore in the corresponding quarter last year.

Though the bank’s net interest income has increased from Rs 93.82 crore in the corresponding quarter to Rs 1.05 arba in the first quarter, its operational profit has dipped Rs 9.97 crore , down from Rs 11.39 crore.

The bank has set aside Rs 48.04 crore as a provision for possible losses.

However, its non performing loan has marginally decreased from 5.88 percent to 5.57 percent.

The EPS (annualized, ordinary shares only) of the state-run bank stands at Rs 17.56 and net worth per share at Rs 286.