What is the dividend capacity of Commercial Banks? What can we expect?
Sun, Aug 18, 2019 5:28 PM on Dividend, Bonus & Rights, Exclusive, Stock Market,
With the end of month of Shrawan, we have seen plethora of companies unveiling their fourth quarterly reports of various companies across different sectors. Publication of fourth quarterly reports is one of most anticipated event as it gives an investor a complete picture about company’s performance over the entire financial year.
Dividend, either cash or bonus share, is why a long term investor predominately puts money on any company’s share. In commercial banks, capacity distribute dividend depends upon its share capital, profit and other regulatory requirements as per Nepal Rastra Bank. Apart from its profit, banks can also distribute dividends from the Share Premium collected.
Let’s look into the table below to figure out dividend capacity of each of the commercial banks in Nepal.
|
Amount in ‘000 |
Dividend Capacity From |
|||||
|---|---|---|---|---|---|---|
|
Symbol |
Paid Up Capital |
Distributable Profit |
Share Premium |
Profit |
Share Premium |
Total Capacity |
|
ADBL |
9,015,529 |
3,311,348 |
- |
37% |
0% |
37% |
|
BOKL |
8,063,101 |
1,300,198 |
- |
16% |
0% |
16% |
|
CBL |
8,003,390 |
556,986 |
- |
7% |
0% |
7% |
|
CCBL |
8,415,472 |
535,129 |
34,369 |
6% |
0% |
7% |
|
CZBIL |
8,371,065 |
1,119,466 |
46,816 |
13% |
1% |
14% |
|
EBL |
8,106,863 |
2,188,039 |
238,470 |
27% |
3% |
30% |
|
GBIME |
10,310,516 |
2,429,858 |
- |
24% |
0% |
24% |
|
HBL |
8,520,256 |
2,022,439 |
- |
24% |
0% |
24% |
|
JBNL |
8,000,786 |
972,650 |
- |
12% |
0% |
12% |
|
KBL |
8,685,573 |
967,097 |
54,803 |
11% |
1% |
12% |
|
LBL |
8,920,509 |
1,156,190 |
- |
13% |
0% |
13% |
|
MBL |
8,055,693 |
1,320,458 |
30,882 |
16% |
0% |
17% |
|
MEGA |
10,388,621 |
1,358,077 |
- |
13% |
0% |
13% |
|
NABIL |
9,011,845 |
3,184,640 |
74 |
35% |
0% |
35% |
|
NBB |
8,088,299 |
1,039,759 |
- |
13% |
0% |
13% |
|
NBL |
9,811,148 |
3,451,284 |
3,262,811 |
35% |
33% |
68% |
|
NCCB |
7,018,587 |
1,199,791 |
172,446 |
17% |
2% |
20% |
|
NIB |
12,869,749 |
1,390,682 |
102,246 |
11% |
1% |
12% |
|
NICA |
8,834,229 |
2,152,857 |
- |
24% |
0% |
24% |
|
NMB |
9,618,163 |
1,274,791 |
2,512,799 |
13% |
26% |
39% |
|
PCBL |
9,318,627 |
1,600,773 |
- |
17% |
0% |
17% |
|
PRVU |
8,892,675 |
1,733,808 |
- |
19% |
0% |
19% |
|
SANIMA |
8,001,255 |
1,625,693 |
- |
20% |
0% |
20% |
|
SBI |
8,449,251 |
1,596,826 |
- |
19% |
0% |
19% |
|
SBL |
8,887,605 |
1,652,018 |
122,092 |
19% |
1% |
20% |
|
SCB |
8,011,431 |
1,802,453 |
- |
22% |
0% |
22% |
|
SRBL |
8,152,556 |
1,117,741 |
127,161 |
14% |
2% |
15% |
(Source: Quarterly Reports)
Amongst the 27 listed commercial banks in NEPSE, Nepal Bank Limited (NBL) holds highest dividend distributing capacity of 68%, out of which 33% is from share premium collected. However, last year’s negative retained earnings is estimated to reduce this year’s dividend capacity by almost 5%. With dividend capacity of 39%, NMB Bank Limited (NMB) stands second largely due to its capacity from share premium (26%). Closely following NMB is Agriculture Development Bank Limited (ADBL) with 37% dividend capacity. Century Commercial (CCBL), Civil Bank (CBL) and Nepal Investment Bank (NIB) are the banks with mere 7%, 7% and 12% respectively.
Looking at dividend capacity only from the earned profit, Agriculture Development Bank and Nabil Bank leads with 37% and 35%.
From various study, we know that market price movement is affected by dividend declared by companies. Higher the dividend declared, higher will be the market price and vice-versa. However, with the overall market confidence going down, will dividend be a key factor to boost investors’ confidence back into the market? Hope it will!
As per Q4 reports, 9 out of 27 listed banks have Capital Adequacy Ratio (CAR) less than 13%, mandated by NRB with implementation of 2% Countercyclical Buffer (CCyB) in this year’s monetary policy. It is likely that many of the banks will opt for bonus shares than cash dividends as CCyB has to be maintained with equity capital.
(Disclaimer: The analysis is solely done by media and research team as per the best of the knowledge, so investors are requested not to fully depend in this story for any buying and selling transactions. Invest wisely)
