Moon Desk: Union Bank, a prominent private sector bank listed on the Dhaka Stock Exchange (DSE), announced a 5% cash dividend for its shareholders for the financial year 2023. This news, released on Sunday, comes with mixed signals, as the bank’s share price saw a slight decline despite the dividend declaration.
The Board of Directors, after reviewing the audited financial statements, recommended the 5% cash payout. This marks a decrease from the previous year’s dividend of 10%, which offered a combination of cash and other forms of distribution.
While the dividend announcement might seem like positive news for investors, Union Bank’s share price on the DSE fell by 1.33%. It’s important to understand that DSE regulations allow for normal market fluctuations on the day a dividend is declared, meaning the price movement isn’t necessarily a direct response to the dividend itself. Investors might be considering various factors beyond just the dividend when making their trading decisions.
Taking a closer look at Union Bank’s financial performance reveals some positive developments. The bank’s earnings per share (EPS) showed a slight increase, rising from 1 taka 57 paisa in 2022 to 1 taka 58 paisa in 2023. This indicates the bank’s profitability is holding steady.
The bank’s consolidated net asset value (NAV) per share also improved. As of December 31st, 2023, the NAV stood at Tk 16.03, compared to Tk 15.82 in 2022. This suggests that the bank’s overall value per share is growing.
Another encouraging sign is the improvement in Union Bank’s net operating cash flow per share. In 2023, the cash flow was negative 27 paisa, which is a significant improvement compared to the negative Tk 13.81 reported in 2022. This indicates the bank is generating more cash from its operations, a key metric for financial health.
Looking to the future, Union Bank’s annual general meeting (AGM) is scheduled for August 12th, 2024. This is where shareholders will have the opportunity to formally approve the proposed 5% cash dividend. The record date, set for June 6th, 2024, will determine which shareholders are eligible to receive the dividend payout.
While the decrease in dividend payout compared to the previous year might raise some questions, Union Bank’s overall financial performance shows signs of stability and potential growth. The coming months will be crucial as investors analyze the bank’s future prospects and decide whether the 5% cash dividend, combined with the bank’s financial health, justifies holding or acquiring shares in Union Bank.
