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NIB proposes 20% Cash Dividend: Investors hugely disappointed

Published by Octron on August 25, 2009

The BOD in its 322nd meeting held on 25 August 2009 has proposed 20% cash dividend from the profit of F/Y 2065/066 which is subjected to approval from NRB and AGM. As soon as the news broke, its share price was seen slashing down like never before on 25th August 2009 trading session. Investors who already feared for such decision were highly disappointed with the news. The market which was already struggling for some revival has been axed due to such BOD decision. Even a new comer banks like CZBIL announced 10% dividend along with 1:1 Right Share, where as NIB who has always been giving Bonus Shares along with Right shares every year hugely disappointed the investors.

With its paid up capital already above the criteria of 2 Billion Rupees, NIB has decided in its 32nd BOD meeting only to give 20% cash dividend. According to fourth quarter financial report of the bank, it had earned Rs. 914.575 millions net profit for the fiscal year 2065/66 with Rs. 1.328 billions operating profits. However, the bank has 2.407 billions paid up capital and Rs. 1.996 billions in its reserve and surplus. Its NPL to total loan stands at 0.82% and total loan loss provision to total NPL is 193.45 percent.

Likewise, fourth quarter company analysis of the bank affirms Rs. 38 as earning per share, P/E ratio stands at 36.53, Rs. 182.93 net worth per share and liquidity ratio of 10.32 percent.

Upon questioning regarding future bonus share or right share topic; all they said were; The proposal of 20% cash dividend was agreed in this BOD meeting, we can’t say anything more regarding future BOD meeting plans.
Similar situation happened during CZBIL 10% dividend announcement, as soon as CZBIL announced 10% cash dividend, the price plummet and within a month later CZBIL announced 1:1 Right shares and price came back to normal; Rs. 680 – Rs. 730.

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