The 22-year-old ONE Bank is really a unique one in terms of treating its employees and owners as it cut staff salaries due to the Covid-19 pandemic but did not compromise on directors' dividends even amid the deterioration of its financial health last year.
At a time when banks are required to maintain higher provision and retained earnings as precautionary measures to fight the upcoming default loan wave after lifting the payment deferral facility for borrowers, ONE Bank is moving in the opposite direction.
It declared higher dividends for the year 2020 compared to the previous year even after having a provision shortfall.
The bank even declared higher cash dividends for last year compared to the previous year at a time when the central bank is encouraging banks to be conservative in disbursing cash to strengthen their capital.
ONE Bank declared 11.5% dividend, including 6% cash and 5.5% stock, for the year 2020 while the 2019 dividend was 10%, including 5% cash and 5% stock, according to the Dhaka Stock Exchange (DSE).
It announced the dividends without taking consent from the Bangladesh Bank, thus ignoring the dividend policy that the central bank had issued in February this year, said a senior executive of the central bank requesting anonymity.
Considering this, the Bangladesh Bank adjusted the bank's provision from its retained earnings, causing erosion in retained earnings, which needed to be strong to deal with the upcoming difficulties in the near future, he added.
M Fakhrul Alam, managing director of the bank, could not be reached for comments over the phone. He did not reply to text messages either.
Starting commercial operation on 14 July 1999, the bank, which will celebrate its 22nd anniversary today (Wednesday), experienced a 21% decline in net profit last year.
Its net profit stood at Tk131.3 crore at the end of 2020, down from Tk166 crore the year before, according to its annual report.
The fall in profit hit employees as they faced a 10-20% pay cut last year, which has not been restored yet.
When the bank awarded its owners higher dividends, it kept the employees' incentive bonus as well as promotions suspended during the pandemic year, said bank insiders.
As a result, many high-ranking officials left the bank, causing a severe manpower crisis, they said.
The bank's default loan, a vital indicator of a bank's financial health, increased by 9% in March this year, the fifth highest among private commercial banks.
Moreover, the financial indicators of the bank have been deteriorating due to a lack of good governance in the board.
In July last year, the Bangladesh Bank removed Sayeed Hossain Chowdhury from the bank's chairmanship due to his default status.
Though he rescheduled his loan, the central bank did not allow him to be reinstated in the post.
Moreover, the central bank appointed an observer in the bank in November last year to prevent the interference of outsiders in the board.
Sayeed, who is also the chairman and chief executive officer of HRC Group, had a default loan, which was rescheduled last year under the relaxed policy that the central bank had announced on 16 May 2019.
The deterioration of the bank's financial health was also reflected in its stock prices on the DSE.
Despite declaring higher dividends, each share of the bank is currently trading at nearly the face value of Tk10.
In the last one year, the bank's each share had been traded between Tk8 and Tk15, according to the DSE.