Kathmandu: Sanima Bank is set to distribute more than 20 percent dividend from its profit for the last fiscal year, according to its unaudited annual financial report for FY 2024/25.
The bank’s dividend capacity stands at 20.47 percent — almost double compared to the previous year.
In FY 2023/24, Sanima Bank had declared only a 5.26 percent dividend despite having a dividend capacity of 10.66 percent. While net profit rose by just 7 percent in the latest fiscal year, dividend capacity doubled mainly due to improved retained earnings, driven by recovery of overdue interest.
The bank transferred Rs 335.5 million from regulatory reserves to retained earnings after recovering overdue interest. In contrast, the previous year saw an increase in overdue interest, forcing the bank to allocate about Rs 140 million to regulatory reserves.
However, the bank’s non-banking assets increased, requiring a provision of Rs 7.9 million in regulatory reserves. Nevertheless, distributable profit for the year exceeded Rs 1.99 billion. With capacity utilization much lower last year, the current year’s high dividend potential reflects stronger distributable reserves.
The growth in net profit was primarily supported by higher income. Sanima Bank earned Rs 6.35 billion in net interest income and Rs 1.19 billion in fees and commissions, while setting aside Rs 1.89 billion in loan-loss provisions. In comparison, the previous year’s net interest income stood at Rs 6.18 billion, fee and commission income at Rs 1.02 billion, and provisions at Rs 1.43 billion.
Earnings per share (EPS) improved modestly to Rs 18.93. As of the end of Asar 2082 BS, the bank’s key financial ratios were as follows: core capital adequacy ratio at 9.86 percent, total capital adequacy ratio at 13.01 percent, gross non-performing loans (NPL) at 3.01 percent, net NPL at 1.21 percent, interest spread at 3.68 percent, and return on equity (ROE) at 11.73 percent. Compared to last year, core capital adequacy improved, while NPLs rose sharply and the interest spread narrowed.
Despite rising NPLs and a narrower spread, the bank managed to increase both income and profit. Over the past year, loan disbursement grew by Rs 17 billion to Rs 176 billion, while deposits rose by Rs 27 billion to Rs 224 billion. By the end of Asar (mid-July), the bank’s net worth per share stood at Rs 168.83, and its price-to-earnings (P/E) ratio was 19.80.
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