Bankers claim choosing the right clients helped Uttara Bank perform better during the sector’s crisis
Uttara Bank Limited has recommended 25 percent stock and 10 percent cash dividends to its shareholders for the 2019 financial year, which is the highest payout of the bank in the last six years.
The bank's board of directors meeting was held online, on Sunday, amid the novel coronavirus pandemic. The meeting recommended the dividend payout.
Uttara Bank posted a net profit of Tk187.46 crore last fiscal year. Net profit of the bank rose 42 percent in the last six years, while its dividend payouts in the last couple of years averaged around 20 percent.
"The whole banking sector has been struggling in the last few years owing to a huge number of defaulted loans and high interest rates. Our bank performed better amid the squeeze," Iftekhar Zaman, company secretary of Uttara Bank, told The Business Standard.
Iftekhar says Uttara Bank did well because it focused on client selection. He added that they always try to give their shareholders the best.
The annual general meeting of Uttara Bank is slated for 28 May where the bank's recommended dividends and financial report will be approved. The record date is April 27.
The earnings per share of the bank stood at Tk4.59 while the net asset value per share amounted to Tk38.36 by the end of the 2019 financial year.
However, the bank's net operating cash flow per share is Tk20.50 negative, which means Uttara Bank is suffering from a liquidity crisis.
"There was a liquidity crisis in the banking sector last year. Additionally, there was huge competition regarding deposits, too. Some big clients moved out their deposits owing to the two factors," said a high official of Uttara Bank preferring to remain anonymous.
"However, our loan recovery looks good so far," added the official.
In the meantime, Uttara Bank has decided to raise its authorized capital to Tk1,000 crore from Tk600 crore. An extra general meeting of the shareholders on May 8 will bring required changes to the Memorandum of Articles, allowing the bank to raise its volume of authorized capital.
The paid-up capital of the bank is currently Tk408 crore.
The bank's board had 20.88 percent shares collectively till 2018. Later, the board bought shares from the secondary market of the Dhaka Stock Exchange to fulfill the 30 percent share quota.
Sponsors and directors together had as much as 30.54 percent shares of Uttara Bank till last February. The institutional investors, foreign investors and general investors owned 19.62 percent, 2.81 percent and 47.03 percent shares respectively till February 2020.
The closing price of Uttara Bank shares was Tk26.20 on the Dhaka Stock Exchange, while the bank's shares hit their highest – Tk30.80 – last year.