Most National-Level Development Banks in Nepal Positioned to Distribute Dividends

Preliminary financial statements for the past fiscal year indicate that majority of national-level development banks in Nepal are in a position to distribute dividends to shareholders. However, some banks may choose not to pay dividends in a given year, opting instead to retain profits and offer higher payouts in the following year.

Among the eight national-level development banks, Jyoti Bikash Bank is the only institution reporting a negative distributable profit. As of mid-July, the bank’s distributable profit stood at over Rs 784 million in deficit. Despite this, the bank recorded a net profit of over Rs 123 million in the fourth quarter of the previous fiscal year, though this represented a roughly 93 percent decline from the prior year’s net profit of Rs 175 million.

The company had set aside over Rs 1.28 billion for impairment charges in the last fiscal year, compared to over Rs 1.13 billion the year before. Interest income also fell, from over Rs 2.37 billion in the previous fiscal year to over Rs 2.09 billion last year. Jyoti Bikash Bank has not distributed dividends since fiscal year 2021/22, when it issued the lowest payout in recent years at 6.8 percent. Its highest dividend came in fiscal year 2020/21, at 15.5 percent. Despite the negative distributable profit, the bank could still pay dividends from its reserve fund, which stood at over Rs 2.92 billion at year-end.

Muktinath Bank Leads in Dividend Capacity

Among the seven development banks with positive distributable profits, Muktinath Bikas Bank has the highest capacity to pay dividends, at 20.75 percent. The bank did not pay dividends to investors last year, but in fiscal year 2022/23, it distributed a total of 10.26 percent in dividends, comprising a 9.75 percent bonus share and 0.52 percent cash dividend for tax purposes.

Among other national-level development banks, Lumbini Bikas Bank has the lowest dividend capacity at 8.13 percent. Kamana Sewa Bikas Bank can distribute 17.30 percent, Shine Resunga Development Bank 13.96 percent, Garima Bikas Bank 12.59 percent, Sangri-la Development Bank 11.64 percent, and Mahalaxmi Bikas Bank 11.51 percent.