Home ›› 09 Sep 2022 ›› Stock
Two regulators – the Bangladesh Bank (BB) and the Bangladesh Securities and Exchange Commission (BSEC) – seem in divergence over the Rupali Bank’s dividend issue.
For the year 2021, the listed state-owned bank had declared a 2 per cent stock dividend but the security regulator BSEC declined it stating that it could not further issue any stock dividends because the publicly-traded company in the last 36 years did not issue any cash dividend.
In face of this regulatory pressure, a 2 per cent cash dividend was approved in Rupali Bank’s 36th annual general meeting (AGM) held on August 7 this year.
But a fresh twist appeared as the Bangladesh Bank declined the publicly-traded bank’s approval of a 2 per cent cash dividend in exchange for a 2 per cent stock dividend.
Therefore, the listed bank has applied again to the security regulator for the approval of a 2 per cent bonus dividend, said a filing on the website of the Dhaka Stock Exchange (DSE) yesterday.
The bank came with information that Bangladesh Bank declined the approval of a 2 per cent cash dividend instead of a 2 per cent stock dividend, the DSE filing read.
The publicly-traded company also noted that it requested the BSEC to reconsider its previous decision and approve a 2 per cent bonus dividend as per the Bangladesh Bank’s direction.
When contacted, Mohammad Rezaul Karim, executive director and spokesperson of BSEC, commented to the Business Post that any application would not be accepted by the commission unless it complies with the existing securities rules.
The state-owned bank has never given its investors any cash dividends since its listing on the stock exchanges since1986.
Taking into account the investors’ frustrations for the bank’s failure in paying any dividend payouts for a long period despite sitting on cash, the commission recently asked it to explain why it did not provide cash dividends.
According to the BSEC data, Rupali Bank increased its paid-up capital by nearly 140 per cent over the last decade by issuing stock dividends. This was because the commission had not approved its issuance of 2 per cent stock dividend for the year 2021 that was declared on April 28 this year.
On June 13 this year, the commission served the listed bank a show-cause notice asking about why it remained reluctant to pay any cash dividends since its listing. In response, the bank had failed to answer properly.
The company was downgraded to the ‘B’ category from the ‘A’ category on the Dhaka bourse on August 10 this year because of the approval of a 2 per cent cash dividend.
Rupali Bank’s default loans stood at Tk3,972 crore, including Tk3,825 crore in bad loans. Its paid-up capital is Tk 455 crore.
In the first half of 2021, its total operating profit was Tk581.85 crore, up 9 per cent compared to the same period a year back.
The state-owned bank’s consolidated earnings per share (EPS) stood at Tk0.07 for April-June of 2022, which was Tk0.22 during the corresponding period of 2021.
The bank’s per share was traded at Tk26.9 yesterday, up 1.89 per cent compared to the last trading session.
