The Bangladesh Bank has fixed the ceiling of dividend payment for banks against their profits for 2019. The banks that maintain capital base more than 12 percent against their total risk weighted assets can only give 30 percent dividend including 15 percent in cash to their shareholders.
In this way, considering four stages of capital, at least 5 percent bonus dividend can be issued.
In such reality, a curiosity has grown among general investors to know about capital bases of all the banks listed with the capital market.
According to Bangladesh Bank data, of 30 listed banks, 24 had maintained capital base more than 12 percent against risk weighted assets in last December while 18 out of 29 non-listed banks had above 12 percent capital against their risk weighted assets.
Bankers said the banks' earnings in commission reduced because of a fall in export and import activities in 2019. The banks have to keep provisions against default loans which are not actually recovered even though they regularly reschedule large amounts of non-performing ones.
For all these reasons, the banks could not make good profits in 2019. As a result, even if most listed banks have capital base above 12.5 percent, it will not possible for them to pay good dividends to their shareholders.
However, many banks have taken provision deferral facility (extra time to keep provision). Hence, only a handful of banks can pay maximum dividends this time even if the central bank allows them to do so.
While asked, Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said, "I do not think there are too many banks to pay 30 percent dividend for 2019.
According to him, now is a bad time for the banks. They are not earning much. Again, they have to be under pressure to implement various incentive packages in the future.
Under this situation, if cash went with dividends, their capital base would be weakened. As per the central bank's directive, the money will remain in the banks till September. However, this will put some pressure on small investors, he added.