. Banks and financial institutions declaring dividends is not a new issue. Every year at the end of the financial year, banks make profits, conduct audits, get regulatory approvals and declare dividends. This is a regular process in the banking sector.

But sometimes even within the regular process, there are incidents that get everyone’s attention. Kamana Sewa Bikas Bank (Kamana Sewa Bikas Bank) announced its dividend on August 9. The reason was not just the percentage of dividends, it was the time. The bank has proposed a 15 percent cash dividend within a month of the current fiscal year. This is not a common occurrence in the banking sector.

Generally, most banks and financial institutions spend months after the end of July to prepare financial statements, adjust interest, complete the audit process and send documents to the Rastra Bank.TAG_OPEN_p_80 Moreover, the dividend declaration will come only later.

Against this backdrop, the announcement of Kamana Sewa Bikas Bank has attracted the attention of investors, banking sector and regulatory bodies at the same time.TAG_OPEN_p_79

Nepal Rastra Bank (NRB) has allowed banks and financial institutions (BFIs) to calculate the interest collected till July 30 in the income of the previous fiscal year.TAG_OPEN_p_78 This system was first introduced during the Covid-19 pandemic. This facility was given to provide relief to the banks when the recovery of loans was affected due to the epidemic.

Although there have been repeated discussions to remove this facility after the end of COVID, banks and financial institutions have been continuously demanding its continuation.TAG_OPEN_p_77 As a result, the central bank is still allowing the interest collected till July 15 to be counted in the income of the previous year.

This means that if the interest that has not been collected till the end of July can be included in the profit of the previous financial year, it can be included in the profit of the previous financial year. Therefore, many banks focus on recovering interest for two weeks even after the end of July. This facility is considered useful for increasing profitability and reducing the ratio of non-performing loans.

This is the reason why many banks and financial institutions wait till July 15.TAG_OPEN_p_75 Only then will the process of preparing and disclosing the financial statements proceed.

But Kamana Sewa Bikas Bank took a different decision.TAG_OPEN_p_74

The bank made public its financial statements on July 18 based on the actual financial position up to the end of July. After that, the audit process was initiated and a proposal was sent to the Nepal Rastra Bank for approval of dividend. Finally, on August 9, the company announced a 15 percent cash dividend offer.

This gave rise to an obvious question—”How did Kamana declare dividends when other banks are still preparing financial statements?”

Dinesh Thakali, the bank’s chief executive officer, doesn’t think it’s a miracle.TAG_OPEN_p_71 According to him, it is the result of planned preparation, discipline and time management.

“We didn’t do anything special,” Thakali says.TAG_OPEN_p_70 After the account was closed in mid-July, we completed the necessary process on time. If you plan on time, it doesn’t take long to disclose your financial statements and declare dividends. ”

According to him, the bank has been continuing this practice for the last three years.TAG_OPEN_p_69 The management has concluded that it would be better to present the real financial situation rather than increasing the profit by using the facility till July 29 after the end of July.

“The facility that was introduced during COVID was necessary at that time. Now the situation has become normal. That’s why we have decided to publish the financial statements on the basis of real time,” says Thakali.

According to him, even if the profit may increase in the short term, its impact will be seen in the financial statements of the coming year.TAG_OPEN_p_67 Therefore, the bank has given priority to long-term transparency and corporate governance.

According to bank officials, even if there is immediate benefit from using the facility till July 2 TAG_OPEN_p_66 9, the amount will eventually remain within the bank. Therefore, it is more appropriate to make the real situation public than to wait for a few days and show the profit.

This practice of desire is not made possible only by the will of the management.TAG_OPEN_p_65 According to the bank officials, the board of directors has full support in this. The Board of Directors has created an environment to take decisions on time, provide necessary approvals quickly and allow the management to work independently.

Similarly, the hard work of the employees of the branch offices across the country is equally important.TAG_OPEN_p_64 Now that most of the banking processes are digital, information collection, adjustment, and reporting preparation can be done relatively quickly. But for that, you need a culture of working on time.

According to banking sector experts, the practice shown by Kamana Sewa Bikas Bank has sparked an important debate.TAG_OPEN_p_63 Although it is legally correct to use the facilities provided by the Rastra Bank, it does not mean that all institutions should depend on it.

Kamana exemplifies that institutions, especially those that prioritize corporate governance and transparency, can publish reports quickly based on the actual financial situation.TAG_OPEN_p_62

The impact has been positive on investors as well. The shareholders of the bank are happy that the dividend has been announced on time. The bank is preparing to distribute dividend by holding its annual general meeting before Dashain. If the regulatory process is completed on time, shareholders will be able to receive dividends decades earlier.

It is said that the officials of the Rastra Bank have also taken the practice of desire positively.TAG_OPEN_p_60 In the last few years, Kamna has become known as an organization that brings financial statements and dividend proposals on time.

TAG_OPEN_p_59 In fact, Kamana has not made any new rules by declaring dividends. He’s doing regular work. But in the banking sector, it has been unusual to act on time amid a culture of delays that has been established for years.

The dividend declaration on August 24 became the talk of the town. The reason was that it was bigger than the 15 percent dividend at the time of the announcement. It is still a rare practice in Nepal’s banking sector to declare a dividend by publishing its financial statements within a few weeks of the end of the financial year.

This is the reason why many are interpreting this move of Kamana Sewa Bikas Bank as an ‘extraordinary work within the regular process’.TAG_OPEN_p_57 The practice of disclosing the real financial position, completing the audit on time and giving fast returns to the shareholders without relying on the Covid facility has given the bank a different identity.

The banking sector is a business run on trust. That trust is built not only by profit, but also by a culture of transparency, discipline, and timely fulfillment. Kamana Sewa Bikas Bank has given this message in practice. So there’s a buzz going on in banking circles right now — if there’s desire, preparation and commitment, why wait months for financial statements and dividends?

89.41 crore net profit

}

. Kamana Sewa Bikas Bank Limited has published its unaudited financial statements for the fourth quarter of the fiscal year 2082/83. During the review period, the bank earned a net profit of Rs 89.41 crore, which was 33.51 percent higher than the corresponding period of the previous FY.

The bank had posted a net profit of Rs 66.TAG_OPEN_p_53 97 crore in the corresponding period of the previous FY.

In the review period, the bank’s net interest income increased by 3.98 percent to Rs 2.41 billion.TAG_OPEN_p_52 Such income had been Rs. 2.31 billion in the same period of the previous year.

The bank’s operating profit has also increased significantly.TAG_OPEN_p_51 As of mid-July 2018, the bank’s operating profit stood at Rs 1.38 billion which was 32.87 percent higher than Rs 1.04 billion in the previous year.

The bank’s distributable profit has reached Rs 60.TAG_OPEN_p_50 11 crore till mid-July. Based on this, the dividend potential of the bank is 15.16 percent.

The bank’s impairment charges decreased significantly during the review period.TAG_OPEN_p_49 The impairment charge has come down to Rs 13.65 crore from Rs 41.81 crore in the same period of the previous FY.

However, bank bad loans (NPLs) have increased slightly.TAG_OPEN_p_48 The NPA ratio increased to 3.77 percent in the review period from 3.49 percent in the fourth quarter of the previous fiscal year.

As of mid-July this year, the bank has a paid-up capital of Rs 4.21 billion and reserve fund of Rs 2.14 billion.TAG_OPEN_p_47

During the review period, the bank collected deposit of Rs 66.74 billion and extended loans of Rs 55.80 billion.TAG_OPEN_p_46

The bank’s earnings per share (EPS) has also increased.TAG_OPEN_p_45 Earnings per share increased to Rs 22.75 in the review period from Rs 19.08 in the previous financial year.

Similarly, the bank’s net worth per share has increased from Rs 169.12 to Rs 171.01.