Bank of Maharashtra dips into net worth to pay govt dividend

Following a government missive, the board of Bank of Maharashtra (BOM) has recommended a five per cent dividend or ~337 crore, for the financial year ending March 31, 2022. Bank officials said the dividend is being paid out of net worth. The revised net worth will be ~10,175 crore, down from ~10,512 crore. The dividend payout will make a small dent in the capital adequacy ratio (CAR) to 16.48 per cent from 16.85 per cent, according to a filing with the BSE.

BOM stock closed 3.73 per cent lower at ~15.5 per share on the BSE. It touched 52-low of ~15 per share in intra-day trading.

Bank of Maharashtra, which finalised its balance sheet for FY22 in April, decided to call a board meeting to consider dividend and approve revised financial statement for the year ended March 31, 2022.

The revision in audited results of the Pune-based lender will not change the net profit for FY22.

The bank’s net profit doubled to ~1,151.54 crore, as against ~550.25 crore in 202021. The board had not recommended dividend when it met in April 2022 to approve results for FY22.

The bank paid a dividend of eight per cent in FY15 when it posted a net profit of ~450.69 crore.

Another public sector lender Bank of Baroda will revise the recommended dividend and its board is meeting on May 31, to decide the quantum. Earlier, its board had recommended a dividend at ~1.2 per equity share (face value ~2 each) for FY22.

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

According to BS Research Bureau’s assessment, eight out of 12 public sector banks (PSBS) have recommended a dividend amounting to ~11,981 crore for FY22. All the 12 reported net profit this year.

In FY21, only two PSBS — State Bank of India (SBI) and Indian Bank — had declared dividends with outgo amounting ~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 requirements of at least 100 bps 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 and year ended March 2021, and to pay a dividend.