Due to central bank’s flexible policy most of the commercial banks appear able to provide dividends to shareholders from last fiscal year’s profit, as their balance sheets are comparatively better than last year.
Of the 20 commercial banks in operation, all except 4 will be able to distribute dividends to shareholders, according to their unaudited balance sheets of the last fiscal year 2024-25.
Based on last fiscal year’s profits, the banks’ capacity to distribute dividends ranges from 1.44 percent to 38.27 percent thanks to the Monetary Policy 2025-26 brought by the Nepal Rastra Bank (NRB) giving, the overburdened banks with toxic assets, a breathing space.
Among the 20 commercial banks, Everest Bank has the highest dividend-paying capacity at 38.27 percent, while Nepal Investment Mega Bank’s capacity stands at 1.44 percent. On an average, banks have a dividend-paying capacity of 10.33 percent.
Central bank governor Bishwonath Poudel has also encouraged the banks to pay cash dividends, and that too before the Dashain festival, according to the bankers.
However, Nepal Bank, Kumari Bank, Himalayan Bank, and NIC Asia Bank will not be able to distribute any dividends to shareholders this year.
As of the last fiscal year 2024-25, the commercial banks reported a combined profit of Rs 71.18 billion, which is 43.68 percent increase compared to the previous fiscal year.
Declining interest rates, increasing non-performing loan (NPL) due to slow economy and merger baggage had weakened cost efficiency, but regulatory relief from central bank helped the banks significantly to increase their profits in the last quarter. The banks also worked hard and managed to improve loan recoveries toward the end of the fiscal year.
The policy relaxations helped banks to reduce NPL ratios and write back certain provisions set aside for potential future risks, boosting annual profits by as much as 43 percent, according to the bankers. “It not only helped increase profits but also enhanced banks’ capacity to distribute dividends to investors.”
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