12:00 AM, May 14, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Banks' dividends fail to lift investor confidence

Banks' dividends fail to lift investor confidence

Sarwar A Chowdhury

All but one listed banks have announced dividends for 2013 in a mixed trend that failed to lift investor confidence in banking shares.
Of the 30 listed banks, 13 declared higher dividends than in the previous year, eight announced lower dividends, and eight the same, according to Dhaka Stock Exchange.
With the mixed trend in dividend declaration, the banking shares were unable to draw the investors' attention in the last couple of months, as corporate declarations from the sector could not fulfil retail investors' expectations.
Although the banking sector accounts for around 20 percent, the highest, of the total market capitalisation, the sector's turnover was around 10 percent in the last couple of months.
Fuel and power, pharmaceuticals, engineering and multinational sectors performed better than the banking sector during the period.
Dutch-Bangla Bank came up with the highest amount of dividends—40 percent cash—for its general shareholders. ICB Islamic Bank gave no dividends.
Although 2013 was a tough year for banks as business activities were hampered by political unrest, the central bank move of relaxing loan provisioning rules at the yearend helped them recover losses, a banker said.
Provision, essentially, is an expense for banks to account for future losses on loan defaults.

But Bangladesh Bank had asked lenders to reconsider loan rescheduling and down payments until June this year on a case-by-case basis for borrowers in all sectors affected by political instability.
With the BB move, the banks saw a big jump in their earnings in the fourth quarter compared to the previous three quarters.
“The dividends would have been much lower had the provisioning rules not been relaxed,” said Anis A Khan, managing director of Mutual Trust Bank.
He said the banks' income from lending business declined in 2013 than the previous year due mainly to the political volatility. “But we managed to maintain the growth in our balance sheet with income from investment in government treasury bonds, efficiency and cost effective measures,” he said.


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