Listed banks are declaring ‘poor dividend’ for investors for the last year dashing the retail investors’ hope of recovering some losses incurred in the downtrend of the market.
Investors at different brokerage houses said most of the banks, which hold the large portion of the capitalisation of the Dhaka Stock Exchange, had records of declarations of good dividends in the recent past.
They said that they had bought and held bank shares with a hope that the banks would continue to give good dividend for 2012 but most of them declared lower dividend than the previous years.
If the fundamentally good companies declare poor dividends, then there is no point of buying and holding good company shares, rather it influences retail investors to go for daily trading of junk shares, they said.
The bankers, however, said the overall economic condition had not been business friendly last year which pushed down their profits and affected the dividends for shareholders.
Share prices of some banks declined heavily in the DSE in last few days after poor dividend declarations made by the banks.
‘Only our losses increased as we did not get the expected return and also the prices of bank shares are falling heavily after the poor dividend declarations,’ Shah Newaz, an investor who trades at Mercantile Bank Brokerage House, told New Age on Tuesday.
He said small-scale investors were suffering for the last two years for continuous depression of the market after the DSE general index crash-landed from its pick to 8918.51 points in December 5, 2010.
‘The poor corporate declarations by banks are affecting the entire market as it is the most influential sector of the market,’ said Muniruzzaman, an investor, who trades at Sonali Investment.
Faisal Ahmed, an investor who trades at the Dynamic Securities, alleged that some banks declared less dividends compared to their profit.
‘Bangladesh Bank and other regulatory authorities should investigate whether there was any motive behind the poor dividend declarations by the banks,’ he said.
Investors said they were apprehending that the banks which were yet to declare dividends would follow the same trend.
Of the 30 listed banks with the DSE, 14 declared dividends until Tuesday out of which 13 banks declared lower dividends than the previous year and one bank announced the same dividend as last year.
‘The loan provisioning of banks increased in recent times which pushed down their profit. As a result the dividends also declined,’ Association of Bankers’ vice-president Helal Ahmed Chowdhury told New Age on Tuesday.
Bank Asia, BRAC Bank, Dhaka Bank, Eastern Bank, Islami Bank Bangladesh, First Security Islami Bank, Mercantile Bank, Prime Bank, Pubali Bank, Southeast Bank, Standard Bank, Mutual Trust Bank and Trust Bank declared lower dividends for last year compared to the previous year.
Bank Asia declared 10 per cent stock dividend for 2012 which announced 20 per cent bonus for 2011 and 40 per cent cash dividend for 2010.
BRAC Bank declared 15 per cent stock dividend for 2012 which was 20 per cent stock for 2011, and 10 per cent cash and 20 per cent bonus for 2010.
Dhaka Bank offered 16 per cent stock dividend for its shareholders for 2012, which was 5 per cent cash and 30 per cent bonus for 2011, and 35 per cent bonus for 2010.
For the year 2012, Eastern Bank announced 20 per cent cash dividend while it was 35 per cent bonus for 2011 and 55 per cent bonus for 2010.
First Security Islami Bank declared 10 per cent stock dividend for 2012 while it was 10 per cent bonus for 2011 and 12 per cent bonus for 2010.
Mercantile Bank declared 7 per cent cash and 8 per cent stock dividend for 2012 while it was 23 per cent bonus for 2011 and 22 per cent bonus for the earlier one.
Prime Bank recommended 10 per cent cash and 10 per cent stock dividend for 2012 while declared 10 per cent cash and 20 per cent bonus for 2011, and 5 per cent cash and 35 per cent bonus in the earlier year.
Pubali Bank declared 10 per cent cash dividend for the year 2012 while it declared 5 per cent cash and 25 per cent bonus for 2011, and 5 per cent cash and 35 per cent bonus for the earlier year.
-With New Age input
