Citizens and Kumari Bank Rush Pre-Dashain AGMs, But Dividend Payouts Hit Historic Lows

Kathmandu — In a bid to offer some financial relief to their shareholders ahead of the Dashain holidays, Citizens Bank International and Kumari Bank are rushing to convene their Annual General Meetings (AGMs). Both commercial banks have scheduled their assemblies for Ashwin 28, aiming to endorse and distribute their proposed dividends just in time for the country's biggest festival. However, compared to the lucrative double-digit returns investors historically enjoyed, shareholders will have to settle for meager payouts this year.

The modest dividend declarations—4 percent by Citizens Bank and a mere 2.10 percent by Kumari Bank—are a stark reflection of the current macroeconomic stress gripping Nepal's banking sector. A prolonged economic slowdown coupled with a troubling surge in Non-Performing Loans (NPLs) has forced banks to set aside massive provisioning funds, severely squeezing their distributable profits and dividend capacities. Despite these financial headwinds, the banks have strategically timed their assemblies to ensure shareholders receive at least a token festive allowance.

To finalize the list of eligible investors, both financial institutions have announced a simultaneous book closure date on Ashwin 19. Factoring in the standard stock settlement cycle on the Nepal Stock Exchange (NEPSE), only investors who purchase or hold shares of these banks by Ashwin 16 will be entitled to participate in the AGMs and claim the proposed dividends.

Citizens Bank International is gearing up for its 20th AGM at Amritbhog in Kalikasthan, Kathmandu. The bank’s board of directors has proposed a 4 percent total dividend from the net profit of the fiscal year 2082/83. Sticking to a strategy of bolstering its capital base, the bank will distribute 3.80 percent in bonus shares (amounting to Rs 589.2 million) alongside a nominal 0.20 percent cash dividend (Rs 31 million) strictly to cover tax liabilities. Following the capitalization of these bonus shares, the bank’s current paid-up capital of Rs 15.50 billion will expand, an agenda that requires an amendment to its Articles of Association during the assembly.

Conversely, Kumari Bank has opted for a purely cash-based reward mechanism this year. During its 26th AGM at the Silver Oak Banquet in Kathmandu, the bank will seek approval to distribute a 2.10 percent cash dividend (inclusive of taxes), translating to a total cash outflow of Rs 552.1 million. Financial analysts interpret this as a highly cautious and necessary strategy; with an already bloated paid-up capital of Rs 26.22 billion, injecting more bonus shares would have severely diluted the bank's Earnings Per Share (EPS). Opting for a cash-only dividend helps the bank mitigate immediate downward pressure on its stock valuation.

Beyond the much-anticipated dividend endorsements, both AGMs will navigate through routine corporate governance formalities. The assemblies will deliberate on and approve the annual reports presented by the boards of directors, the auditors' reports, and the consolidated financial statements for the past fiscal year—including those of their subsidiary companies like Kumari Capital and KBL Securities. Additionally, shareholders will vote on the appointment and remuneration of external statutory auditors for the ongoing fiscal year 2083/84, officially wrapping up a financially challenging year for the banking industry.