Nabil's shareholders approve a 15.8% dividend as bank payouts range from 2% to 20%
Bank boards have proposed their dividends for 2082/83. The spread is wide, and for the first time several must also pay holders of their new preference shares.
Dividend season for Nepal's listed banks is under way, and the payouts show how unevenly the past year treated them. On Thursday 8 October Nabil Bank's 42nd annual general meeting approved a dividend of 15.80% of paid-up capital for the fiscal year 2082/83, made up of 5% in bonus shares and 10.80% in cash, Bajarko Chirfar reported. A year earlier Nabil paid 12.50%, all in cash, ShareSansar reported.
Other banks have set out their proposals, which still need approval from Nepal Rastra Bank and from shareholders. According to ShareSansar, Siddhartha Bank proposes 20% (10% bonus shares and 10% cash) and Everest Bank 15% (5% bonus and 10% cash). Sanima Bank proposes a 10% cash dividend worth Rs 1.35bn, and NMB Bank 7% in cash, also about Rs 1.35bn on its larger capital base, with no bonus shares. Machhapuchchhre Bank proposes 6%, split equally between bonus shares and cash, and Kumari Bank a cash dividend of 2.1053%. Outside the commercial banks, Manjushree Finance has proposed 20%, of which 5% is bonus shares, Bajarko Chirfar reported.
Some lenders will pay nothing. NIC Asia Bank, which is trying to rebuild its capital through a rights issue, reported a large distributable deficit, as the site's report on bank profits explains. The latest figures for each bank are on the site's bank results page.
A new claim on profits
This is the first dividend round in which several banks owe money to holders of perpetual non-cumulative preference shares, the tier 1 instruments they began selling to institutions last year. These holders are paid before ordinary shareholders. Nabil proposes Rs 233.4m for its 8% preference shares, NMB Rs 122m and Siddhartha Rs 107.5m at 8.25%, Machhapuchchhre Rs 74.5m and Sanima Rs 52.4m, according to ShareSansar's reports of the board decisions. Together that is about Rs 590m, or $3.8m. Sanima's preference shares were listed only in May, Insurance Khabar reported.
The amounts are modest beside ordinary dividends: Nabil's 10.80% cash payout alone is worth Rs 2.92bn including tax, ShareSansar reported. But under Nepal Rastra Bank's rules, preference dividends can come only from the current year's profit, so a bank with a weak year must still put these holders first. How the instruments work is covered in a separate report on the bond and preference-share market.
Bonus shares or cash
The split between bonus shares and cash matters to investors. Cash dividends are taxed and paid out; bonus shares add to paid-up capital, which banks need to support lending, but dilute earnings per share. The Nepal Stock Exchange adjusts share prices after bonus issues, as it did this month for Citizens Bank and Bikash Hydropower, Bajarko Chirfar reported. Prices at the time of the proposals varied widely: ShareSansar quoted Everest Bank at Rs 729.50, Siddhartha at Rs 431, NMB at Rs 255.20 and Kumari at Rs 221.60.
What to watch
Each bank holds its general meeting after the central bank signs off on its proposal, so the next signals are Nepal Rastra Bank's approvals and the price adjustments on book-closure dates. The next test is whether banks that paid little this year, or nothing, can restore distributable profit in 2083/84.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
The long view The Nepal Stock Exchange
