Kathmandu. In recent times, the problems seen in the overall economic sector have also been seen in the banking sector. The direct and indirect impact of this is seen in the dividend paid by the bank.

There was a time when those who bought shares of commercial banks were confident of getting good returns. There was a “dividend era” in commercial bank stocks. Buying the bank’s shares would be good, the investment would not sink and the immediate and long-term dividend investment would be safe.

In the last 10 years, banks have been paying 30, 40, 50 to 100 percent dividend every year. If you look at the statistics of the last 3-4 years, this trend has been declining.

More than half of the 20 commercial banks operating in the last three years have not been able to distribute dividends due to the problems in the economy after the Corona epidemic and strict regulation by the regulatory body.

The real situation of the banking sector is evident from the statistics of dividends distributed by 19 commercial banks to shareholders in the 10 years from fiscal year 2072/73 to 2081/82. The capacity of 19 commercial dividends issued to the public is declining.

During this period, some banks have paid dividends continuously. However, the data shows that the dividend ratio of these banks is also declining. The bank’s profit has been declining for some time now. Manoj Gyawali, Chief Executive Officer (CEO) of Nabil Bank, said that the dividend distribution capacity of the banks has also declined.

“The main reason for the decline in bank profits is the slowdown in credit expansion,” says Gyawali. Loans are the main source of income for the bank. “This decrease has reduced the bank’s profit,” he said, adding that the bank’s dividend has also decreased due to the decrease in profit.

“In the last few years, the banking sector has become digital-friendly,” says CEO Gyawali. This affected the bank’s profit. This has had an impact on dividends. ’’

Other bankers say that the bank’s dividend capacity has also decreased due to some regulatory provisions of the central bank. Bankers say that the dividend capacity of the banks has decreased due to the tightening of capital adequacy ratio, loan-deposit ratio and risk management.

Bad loans (NPL) of banks have also been on the rise in the last few years. The ratio of bad loans has increased due to non-payment of loans taken by industrialists on time. “When NPL increases, banks have to make a large amount of provision for risk management, which reduces profits,” says Bhuwan Dahal, a former banker.

“Before 10 years, banks were allowed to maintain the interest spread above 5 percent. Now it has decreased,” says Dahal, “This has reduced the income of the banks.” As income decreased, profits decreased and dividend potential decreased”

Nabil Bank is one of the largest dividend distributors in the last 10 years. The bank has distributed an average dividend of 27.77% in 10 years. Standard Chartered Bank is the other bank that has distributed the highest dividend. The bank has distributed an average dividend of 28.52 percent.

Everest Bank is the third largest bank in the country in 10 years. The bank has distributed an average dividend of 25.1 percent in 10 years.

Himalayan Bank, which has not been able to distribute dividend for the last three years, has also distributed an average dividend of 22.96 percent in the last seven years. Sanima Bank, NMB Bank, Siddhartha Bank, Global IME Bank, Nepal SBI Bank, Standard Chartered, Everest Bank and Nabil Bank are among the banks that have distributed regular dividend in the last 10 years.

NIC Asia Bank has not been able to distribute dividend for four years in 10 years. The bank has distributed an average dividend of 13.05 percent in six years. Similarly, Machhapuchchhre Bank has not been able to distribute dividend for two years in 10 years. The bank has distributed an average dividend of 12.13 percent in the last eight years.

Similarly, Prime Commercial Bank has also made one year of investment vacancies in the last 10 years. The bank has distributed an average dividend of 13.14% in 9 years.

The government-owned Agriculture Development Bank failed to distribute dividend in the fiscal year 2079÷80. According to the bank’s data, the bank has distributed an average dividend of 16.65 percent in the last nine years.

Nepal Bank, another government-owned bank, has distributed dividend for only four fiscal years in 10 fiscal years. The bank has paid an average dividend of 7 percent in the last four years.

Similarly, Prabhu Bank has also made four years of investment in 10 fiscal years, according to the bank’s data. The bank has distributed an average dividend of 11.28 percent in the last six years.

Nepal Investment Mega Bank has not been able to distribute dividend for the last three years. The bank has distributed an average dividend of 26.5 percent in 7 years. Kumari Bank has not been able to declare dividend for three years in 10 years. The bank has distributed 12.56 percent dividend in the last seven years.

In the last two years, commercial banks seem to have given special priority to cash dividend rather than bonus shares. Nabil Bank has been distributing cash dividend to its shareholders for the last three years.

For the last 3 years, Standard Chartered Bank has also given priority to the distribution of cash dividends, according to the bank’s data.

Bank’s 10-Year Dividend Figures