Cash dividends fail to attract investors
KATHMANDU, OCT 17:
The investors in anticipation of bonus shares are less than thrilled about the lucrative cash dividends declared by the commercial banks.
The major commercial banks like Nabil Bank only declared cash dividends this time that surely has discouraged the investors, said general secretary of Nepal Stock Investors Association Prakash Rajoria.
At present when the share prices are on their low, bonus shares of commercial banks are coveted by the investors as they are not getting any, investors are opting to liquidate the shares.
The investors prefer cash dividends from finance companies and smaller development banks but with commercial banks they expect bonus shares. Commercial banks are doing well, none of their stock prices are below Rs 200, so bonus shares are always welcome to the investors than meager cash dividends, pointed out Rajoria.
President of Stock Brokers Association of Nepal Anjan Raj Poudel also attributes the current static market situation to relatively less dividends declared by the commercial banks.
Unlike previous years, this year dividends announced by listed banks are almost as much as that of last year or less, disappointing investors, he said, adding that major banks failed to declare bonus shares leading to the lowering of their share prices as disheartened investors started to sell. Nabil Bank has announced only 30 per cent cash dividend that led to massive fall of its share prices from Rs 1,180 to Rs 885.
Of the eleven commercial banks, among 24 listed ones that have already declared dividends from last fiscal years profits, Everest Bank has declared 50 per cent cash dividend and 10 per cent bonus shares. NIC Bank decided to distribute 20 per cent cash dividend pulling its stock price from Rs 503 to Rs 453 on todays trading.
Most of the commercial banks still need additional funds to meet the paid up capital requirement of Rs 2 billion as per the regulators instruction. Capitalising the profits earned by issuing bonus shares is one of the easiest ways for the companies to increase its paid up capital.
According to the market experts, during the downward trend investors look for underlying benefits like cash dividends and bonus shares, instead of short term return. However, handsome dividends are also failing to attract investors from purchasing shares in spite of fundamentally attractive aspects.
The listed commercial banks average net profit has increased by about 17 per cent last fiscal year compared to a year ago. But the average dividends announced are less than that of previous year by 1.2 per cent.
Source: THT
The investors in anticipation of bonus shares are less than thrilled about the lucrative cash dividends declared by the commercial banks.
The major commercial banks like Nabil Bank only declared cash dividends this time that surely has discouraged the investors, said general secretary of Nepal Stock Investors Association Prakash Rajoria.
At present when the share prices are on their low, bonus shares of commercial banks are coveted by the investors as they are not getting any, investors are opting to liquidate the shares.
The investors prefer cash dividends from finance companies and smaller development banks but with commercial banks they expect bonus shares. Commercial banks are doing well, none of their stock prices are below Rs 200, so bonus shares are always welcome to the investors than meager cash dividends, pointed out Rajoria.
President of Stock Brokers Association of Nepal Anjan Raj Poudel also attributes the current static market situation to relatively less dividends declared by the commercial banks.
Unlike previous years, this year dividends announced by listed banks are almost as much as that of last year or less, disappointing investors, he said, adding that major banks failed to declare bonus shares leading to the lowering of their share prices as disheartened investors started to sell. Nabil Bank has announced only 30 per cent cash dividend that led to massive fall of its share prices from Rs 1,180 to Rs 885.
Of the eleven commercial banks, among 24 listed ones that have already declared dividends from last fiscal years profits, Everest Bank has declared 50 per cent cash dividend and 10 per cent bonus shares. NIC Bank decided to distribute 20 per cent cash dividend pulling its stock price from Rs 503 to Rs 453 on todays trading.
Most of the commercial banks still need additional funds to meet the paid up capital requirement of Rs 2 billion as per the regulators instruction. Capitalising the profits earned by issuing bonus shares is one of the easiest ways for the companies to increase its paid up capital.
According to the market experts, during the downward trend investors look for underlying benefits like cash dividends and bonus shares, instead of short term return. However, handsome dividends are also failing to attract investors from purchasing shares in spite of fundamentally attractive aspects.
The listed commercial banks average net profit has increased by about 17 per cent last fiscal year compared to a year ago. But the average dividends announced are less than that of previous year by 1.2 per cent.
Source: THT
