Despite the Covid-19 situation, Eastern Bank Ltd has declared a 35% dividend - the highest in the last five years - to its shareholders for the financial year that ended on 31 December 2020.
Of the 35% dividend, 17.5% is cash, and 17.5% stock. This payout was determined, following the dividend ceiling set by Bangladesh Bank.
For the last financial year, only 15 of 31 listed banks have declared dividends. Of them, Eastern Bank declared the highest dividend payout.
Among the 14 other banks, Dutch Bangla Bank declared 30% dividends, Uttara Bank 25%, City Bank 22.5%, Premier Bank 20%, and Jamuna Bank declared 17.5% dividends to shareholders for financial year 2020. The rest of the banks declared lower dividends for that year.
Abdullah Al Mamun, company secretary of Eastern Bank, told The Business Standard that the bank always maintains good accounting policy to disburse handsome profits to its shareholders.
"Among the listed banks, Eastern Bank has the lowest non-performing loan (NPL) ratio of 2.72%. Also, the bank has sufficient retained earnings and provisioning for which it is less likely to face any liquidity crisis," he added.
Earlier on 17 March, the central bank raised the dividend issuance ceiling for banks to 35% from 30%.
Because the dividend ceiling issue had caused dissatisfaction among stock market investors, the Bangladesh Securities and Exchange Commission (BSEC) discussed it with the central bank.
After discussion, the central bank raised the dividend limit.
As per the newly issued circular, banks are allowed to issue up to 17.5% cash and 17.5% stock dividends instead of 15% cash and 15% stock dividends to their shareholders.
The 35% dividend is applicable to banks which have refrained from taking deferral for maintaining provisions and have maintained 15% capital, including a 2.5% capital conservation buffer.
The central bank imposed a dividend ceiling for strengthening banks' capital base by keeping profit, so that banks can contribute more to the country's economy to tackle the Covid-19 fallout.
In the last financial year, Eastern Bank posted a net profit of Tk418.08 crore, including subsidiary income. Its earnings per share was Tk5.15, which was 5% higher compared to the previous year.
Following the highest dividend payout declaration, the share price of the bank rose by 3.39% to Tk39.70 each at the Dhaka Stock Exchange on Tuesday.
Of Eastern Bank's total shares, sponsors and directors hold 30.18%, institutional investors 45.28%, foreign investors 0.61%, and general investors have 23.93% as of February.