Bank of Kathmandu proposes 10.42% bonus share despite the Melamchi row

ShareSansar, September 14:

Bank of Kathmandu has proposed 10.42 percent bonus shares and 0.55 percent cash dividend to its shareholders from the net profit it posted in the last fiscal year 2070/71.

BoK’s Board of Directors has just taken the decision to this effect.

Though BoK’s dividend this time is slightly less than what it had offered for the previous fiscal year 2069/70, it should not be forgotten that the bank has unintentionally dragged in the Melamchi row, and forced to set aside a huge sum owing to the case.

Last year BoK had endorsed 14 percent bonus shares and 0.74 percent cash dividend to its shareholders from the net profit it earned in the previous fiscal year while it had distributed 21.32 percent cash dividend and 5 percent bonus share to the shareholders from the profit it posted in the fiscal year 2068/69.

The commercial bank’s net profit dropped from Rs 61.7 crore to Rs 51.43 crore despite mobilizing much higher amounts of deposit and loans as well as better reserves and surplus.

BoK management, which is optimistic that the Melamchi dispute would soon end, has repeatedly stated that it is determined to continuously improve the risk management and operational procedure, revision of internal policies & guidelines and reiterated the bank’s ability to fulfill the commitment of the bank in every sector in a sustainable manner.

The BOK and Himalayan Bank (HBL) have moved the court to withhold making payments to Melamchi Water Supply Development Board (MWSDB) following a row between the parties.
This had worried the shareholders as it might affect the distribution of dividends offered by the banksas they might have to provision the due amount.

The BoK, which had issued advance payment guarantee, risk losing US $6.62 million to pay as counter guarantee amount to MWSDB after their client — China Railway 15 Bureau Group Corporation — failed to complete the construction of the tunnel.

Himalayan Bank stands to lose $6.2 million for guarantee made for the contractor’s performance bond.

The dividend proposed by BoK for the last fiscal year is, however, subject to the approval of NRB and its upcoming AGM.