When can shareholders expect dividends from the remaining banks?

ShareSansar, March 12:

Though most of the 31 commercial banks have either already distributed the dividend or have pledged dividends through AGM, a handful of banks still keep the shareholders waiting.

Nepal Credit and Commerce Bank Limited is the only commercial bank that is yet to even pledge dividend to the shareholders from the profit it posted in the last fiscal year 2069/70.

“We will forward the final balance sheet to the central bank within a week. We are planning to declare the dividend by April and we are also trying to hold the AGM within Chaitra (mid-April) though there is a slim chance for that,” NCC Bank’s Chief Operating Office Ramesh Raj Aryal told ShareSansar today.

Another highly placed NCC source said that the bank was in the mood to give more bonus shares -- and not right shares -- to meet the mandatory provision of shoring up its paid-up to Rs 2 arba from the existing 1.47 arba.

“Since we are not thinking to offer right shares, and not even thinking along the line of merger to meet the paid-up requirement, we want to issue more bonus shares” the source added.

The bank must issue more than 35 percent bonus shares if it is meet the paid-up requirement if it is not to issue the right shares or to go for merger as he claimed. But the bank’s balance sheet does not seem to support such a high bonus.

There is also rumor in the market that it will issue 18 percent bonus shares.

Likewise,  the commercial banks which are yet to announce the AGM are Agricultural Development Bank Limited, Kumari Bank Limited and Sunrise Bank Limited, besides, of course, the troubled NCC Bank, which has recently been taken over the central bank. We cannot put Nepal Bangladesh Bank Limited in this category in that its AGM was revoked following the festering row over the share ownership transfer.

It may be noted that though five other banks -- the state-run Nepal Bank Limited and Rastriya Banijya Bank as well as public-private commercial bank Kist Bank Limited -- have also not pledged dividend, it is not a huge issue in that the share investors know very well that they are simply in no position to offer any dividend.

ADBL, which has offered 31 percent dividend, is expected to come up with an announcement within the next few days to hold its AGM within Chaitra (mid-April), according to sources related to the bank.

“The central bank is most likely to endorse the proposed dividend as it is within this or next week,” the source said. “Following this, the AGM announcement will be made shortly.”

ADBL’s AGM held in July last year had 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 after the central bank did not approve of the dividend mainly due to the bank’s failure to convert Rs 16.25 crore issued capital to paid-up capital.

Nonetheless, ADBL had gone on to post a massive net profit of Rs 1.86 arba in the last fiscal year 2069/70.

Although the operating profit of the bank was negative, ADBL was able to post a net profit of Rs 1.86 arba due to a huge chunk of write back from the provisioning for possible losses.

The bank’s fourth quarterly report of the last fiscal shows that the write back amounted to Rs 2.17 billion. The bank had posted a net profit of Rs 1.57 billion during the previous fiscal year.

In regards to Sunrise Bank, bank officials told ShareSansar today that they were planning to hold a meeting of the Board of Directors to set a date for the AGM.

This also shows that the central bank has already approved of 11 percent bonus shares Sunrise Bank had earlier proposed to the shareholders from the net profit it posed in the last fiscal.

“The BoD meeting is expected to plan the AGM within Chaitra,” a highly placed source said.

Talking about Kumari Bank, which had posted just 5.82 percent growth in profit for the FY 2069/70 by making a net profit of Rs 29.15 crore, it has announced 14 percent dividend. Though it had earlier planned around 35 percent dividend, it could not deliver it basically due to regulations that bars a bank from sharing the profit made from debenture up to a certain time period.
 
However, the bank official claim that the proposed dividend will be endorsed as it.
“We had proposed the dividend after consulting the central bank, and the central bank had agreed in principal to the proposed dividend. Hence, we are confident that the dividend will be endorsed as it is,” said an official with the bank.

He, however, said that KBL has not been able to forward the proposed dividend for the formal approval of the central bank due to a technical snag, especially related to the ongoing strike of auditors.

“We are planning to forward it today,” the official further informed, adding that they still hope to hold the AGM by mid-April, though it might be deferred further.