What is the maximum dividend capacity of Development Banks and Finance companies? Find out here

As per the Unified Directives, 2075 of Nepal Rastra Bank, alike class ‘A’ institutions, class ‘B’ and ‘C’ institutions have to follow financial statements formats as per Nepal Financial Reporting Standards (NFRS) from last quarter of 2075/76 onwards. The directives mandated development banks and finance companies to publish financial statements of 4^th quarter 2075/76 in both new and old formats. However, not all companies have obliged with the directives.

With commercial banks and microfinances declaring dividends, we try to identify companies, across development banks and finance companies, which can provide maximum dividends to the investors.

Development Banks

ODBL leads other development banks with maximum dividend capacity of 29.5%, followed by SBBLJ AND GDBL with capacity of 26.4% and 25.3% respectively. Currently, ODBL is in the final stage of merger with NMB Bank. The maximum dividend capacity includes company’s capacity from retained earnings and share premium amount. In terms of dividend capacity only from FY 2075/76 profit, SHINE leads the category with 19.5% closely followed by MNBBL at 19.2%.

(Note: LBBL’s 17.07% bonus share for FY 7074/75 has been adjusted to its paid-up capital.)

FINANCE COMPANIES

Among the finance companies furnishing reports as per the NFRS format, UFL tops the table with maximum dividend capacity of 35.0%, largely driven by capacity from share premium collected (18.7%). PFL and MFIL stands second and third having maximum capacity of 28.1% and 26.3% respectively. CEFL, GUFL, BFC and WMBF won’t be able to provide dividend this year due to their negative retained earnings.

Companies for which data was not available as per the NFRS standard or doesn’t have the required above data are as follows:

(Note: Dividend capacity form Share premium of companies having negative retained earning has been excluded from the calculation. “N/A” in distributable profit column denotes unavailability of data. The analysis is done as per the best of the knowledge, investors are requested not to fully depend in this analysis for any buying and selling transactions. Invest wisely.)