Bank of Maharashtra to pay 5% dividend from net worth on govt nudge

The payout will make a small dent in lender's capital adequacy ratio; stock sheds 3.73% on BSE

Following the government missive, the board of Bank of Maharashtra has recommended a five per cent dividend (Rs 337 crore) for the financial year ended March 31 2022.

Officials said the money, following government nudge, is being paid out of net worth. The revised net-worth would be Rs 10,175 crore, down from Rs 10,512 crore.

The dividend payout will make a small dent in capital adequacy ratio (CAR) to 16.48 per cent from 16.85 per cent, according to filing with BSE.

BoM stock closed 3.73 per cent lower at Rs 15.5 Per share on BSE. It touched 52-low of Rs 15 per share in intra-day trading.

The revision in audited results will not change net profit for Fy22. The bank's net profit doubled to Rs 1,151.54 crore, as against Rs 550.25 crore in 2020-21. The board had not recommended dividend when in met in April 2022 to approve results for Fy22.

Another public sector lender Bank of Baroda will revise the recommended dividend and its board is meeting on May 31, 2022 to decide quantum. Earlier, its board had recommended a dividend at Rs 1.20 per equity share (face Value Rs two each) for the Fy22.

Kolkata-based UCO Bank which had planned a board meeting on May 19 to consider dividend proposal. But it could not go ahead with tje proposal since the bank had not yet received the requisite regulatory approval for declaration of dividend.

According to BS Research assessment, for FY22 eight out of 12 public sector banks have recommended a dividend amounting Rs 11,981 crore.  All 12 reported net profit this year. In FY21, only two PSBs - SBI and Indian Bank -- had declared dividends with outgo amounting Rs 3,796 crore.

Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings said the profitability of PSBs has substantially improved in FY22 vis-à-vis FY21 levels leading most of them to announce dividends. This is what is normally followed by the corporate world in a business as usual situation.

Also the fact that all PSBs have a cushion over regulatory Tier 1 capital adequacy requirement of at least 100bps, it makes them well placed to pay out dividends from their profits, he added.

The board of Life Insurance Corporation (LIC) will meet on May 30 to approve the results for the quarter ended and year ended March, 2021, and payment of dividend. BSE listed LIC has not paid any dividend to the government, which now holds 96.5 per cent stake in the insurer, for the last two financial years – FY21 and FY20.

The government’s share of surplus for FY20 amounting to Rs 2,699.73 crore and in FY21 amounting to Rs 2,903.14 was retained as reserves by the insurer, in accordance with approval from Government of India and Insurance Regulatory and Development Authority of India (Irdai).