Dividend Capacity of Commercial Banks : Which Bank Has Improved the Most ?

With the publication of the financial statements for the fiscal year 2080–81, commercial banks have seen an increase in profits. This growth is 12 percent higher compared to the previous year, bringing the total profit to NPR 64.06 billion. However, despite this profit increase, the dividend distribution capacity of the banks has not seen a similar improvement.

Performance of Major Banks

Nabil Bank has shown the best position with a 14.26 percent dividend distribution capacity. The bank's distributable profit is NPR 3.85 billion. Similarly, Everest Bank has demonstrated strong performance with a dividend distribution capacity of 29.86 percent.

Other major banks this year include Standard Chartered Bank, which has shown a 26.5 percent dividend distribution capacity, Agricultural Development Bank with 17.37 percent, and Nepal SBI Bank with 11 percent dividend distribution capacity.

Weaker Banks

On the other hand, some banks have shown negative profits and weak dividend distribution capacities. Kumari Bank, Nepal Investment Mega Bank, NIC Asia Bank, and Himalayan Bank have reported negative profits, leading to weak dividend distribution capacities.

Economic Analysis

The improvement in profits for commercial banks this fiscal year indicates a strengthening of the country's financial situation. However, the disparity in dividend distribution capacity suggests that internal management improvements are necessary within these banks.

Even though some banks have earned high profits, they have been unable to increase their share of distributable profits. These banks need to improve their capital structure and risk management. Conversely, banks with weaker profits should prioritize internal strengthening and effective strategies.

Overall, while the banking sector shows diversity in dividend capacity, there is a strong potential for improvement in the coming years. It is time for banks to enhance their dividend capacities and gain the trust of investors.