By Sandeep Chaudhary
Citizen Bank (CZBIL) Bonus Share Trend 2068–2082 — Declining Bonus, Rising Cash Focus Explained
Over the past decade, Citizen Bank International Limited (CZBIL) has undergone a remarkable transformation in its dividend structure — moving away from high bonus share distributions toward a cash-dividend-focused policy. This shift mirrors not just the bank’s internal capital management strategy but also Nepal Rastra Bank’s (NRB) evolving regulatory environment, which encourages banks to prioritize liquidity and maintain strong capital adequacy levels.
Between FY 2068/69 and 2074/75, CZBIL was among the more generous banks in terms of bonus share issuance. For instance, the bank offered 20% bonus shares in FY 2071/72, 16% in 2074/75, and 12.91% in 2078/79, often paired with moderate cash components. This strategy was designed to strengthen the bank’s paid-up capital base and enhance shareholder value over time. However, as the financial ecosystem matured and NRB began enforcing stricter capital adequacy and risk management norms, the emphasis shifted from stock-based bonuses to steady cash dividends.
From FY 2079/80 onward, CZBIL began scaling down its bonus share ratio sharply — providing no bonus shares in 2079/80 and 2080/81, and only 0.26% bonus in FY 2081/82. The increasing reliance on cash dividends, such as 5% in 2081/82, reflects a deliberate pivot toward rewarding investors with immediate liquidity while maintaining robust retained earnings. This trend aligns with broader market behavior, as many Nepali commercial banks now favor smaller bonuses coupled with stable cash payouts, reflecting improved profitability control and liquidity discipline.
The rising cash focus also benefits investors who prefer consistent short-term returns over the long-term dilution effects of bonus shares. While bonuses expand shareholding equity, they often lead to temporary price adjustments and slower per-share earnings growth. By emphasizing cash returns, CZBIL signals confidence in its earnings and an intention to deliver tangible value rather than merely inflating capital structure.
If you want to understand such dividend transitions, valuation impacts, and investor psychology, you can join Mr. Sandeep Kumar Chaudhary’s professional stock market training classes, available both online and physically. He is one of Nepal’s most respected market analysts and trainers, renowned for expertise in technical analysis, price action, and financial fundamentals. His training will help you analyze dividend patterns, study financial statements, and make informed decisions about companies like CZBIL. For enrollment or inquiries, contact +977 9709066745.
