In the review period, the net profit of the banks decreased due to the lockdown imposed by the government to control the spread of COVID-19. Moreover, the banks also failed to recover non-performing loans during the period. As a result, their dividend distribution capacity also declined during the period.
As per the financial reports published by the banks, 14 development banks have earned Rs 2.19 billion in net profit. The development banks can distribute an average 7 percent dividend to the shareholders. The banks can also use share premium and reserve for dividend distribution. However, the share premium is not included in this calculation. If the share premium is included, the dividend distribution capacity will definitely increase.
In the last FY, Muktinath Bikas Bank earned the highest distributable profit of Rs 473.3 million. The bank is able to distribute 10.94 percent dividend to its shareholders. Moreover, if the reserve fund of the bank is added, the bank distributable profit will further increase.
(note: the table does not include Karnali Development Bank, Green Development Bank, Corporate Development Bank and Sahara Bikas Bank. Karnali Development Bank has not published its Q4 report. Similarly, the other three banks have not revealed their distributable profit in their reports)
As per the fourth-quarter report, Sidhu Bikas Bank has a negative distributable profit of Rs 5.5 million. Similarly, Saptakoshi Development Bank has merely 1.56 percent in distributable profit.
