Last Day to Secure Everest Bank Dividend: Book Closure Tomorrow
9th October 2025, Kathmandu
The announcement by Everest Bank Limited (EBL) regarding its book closure date of Ashoj 24, 2082 BS (October 10, 2025), for the purpose of the 31st Annual General Meeting (AGM) and dividend distribution, is a critical event for the Nepalese stock market.
Everest Bank Dividend
The proposed dividend, a combination of 6% Bonus Shares and 14% Cash Dividend (inclusive of tax on bonus shares), has significant implications for the bank’s financial structure, its standing with the Nepal Rastra Bank (NRB), and its appeal to the investor community.
I. Financial Engineering and Capital Adequacy Implications
The blend of cash and bonus shares is a common strategic move by commercial banks in Nepal, but it carries specific financial consequences governed by central bank directives.
Capital Augmentation via Bonus Shares: The 6% bonus share issuance is a mechanism of capital conversion. The bank transfers an equivalent amount from its distributable reserves (retained earnings, profit, or general reserve) to its paid-up capital. This action immediately increases the bank’s core capital base (Tier I Capital) without having to raise funds externally.
Regulatory Compliance: This strategic decision helps EBL maintain or improve its Capital Adequacy Ratio (CAR), which is a mandatory regulatory requirement set by the NRB. The NRB generally mandates a minimum CAR, and an additional buffer is often required when declaring a cash dividend. By capitalizing a portion of the profits, EBL demonstrates its commitment to a robust capital structure, supporting future lending growth and ensuring resilience against financial shocks, as stipulated under the Basel framework directives enforced by the NRB.
Cash Dividend and Liquidity Management: The 14% cash dividend, while rewarding shareholders with immediate liquidity, requires a direct cash outflow.
Tax Component: Importantly, the 14% cash dividend is explicitly stated as inclusive of the tax on the bonus shares. Under Nepalese law, shareholders are typically liable for a capital gains tax on the bonus shares they receive. By including this tax amount in the cash dividend component, the bank effectively handles the tax liability for the shareholders, simplifying the process and ensuring the bonus shares are received entirely tax-free by the investor. This is a positive gesture that enhances the effective return for shareholders.
Impact on Earnings Per Share (EPS) and Market Perception: The issuance of bonus shares increases the number of outstanding shares. Following the distribution, the bank’s Earnings Per Share (EPS) will technically be diluted in the subsequent reporting period (unless the net profit growth outpaces the increase in capital). However, the market often perceives a consistent dividend payout (totaling 20% in this case) as a signal of strong operational performance and management confidence in future earnings capacity. This signaling effect can often mitigate the immediate negative impact of dilution on the stock price in the long run.
II. Regulatory Governance and AGM Agendas
The AGM is a crucial platform for rubber-stamping major corporate governance changes, which are closely monitored by the central bank.
Alignment with NRB Directives: The proposed amendments to the Bank’s Articles of Association and Bylaws are not arbitrary. They are often mandated by evolving NRB directives, particularly those concerning corporate governance, risk management, board composition, and the roles of key management personnel. Since Everest Bank is a prominent commercial bank and a joint venture with India’s Punjab National Bank (PNB), its governance standards are under continuous scrutiny to align with both national and international best practices.
Auditor Appointment and Transparency: The appointment of external auditors for the upcoming fiscal year ensures an independent, third-party review of the bank’s financial statements. This is a core pillar of corporate governance, ensuring transparency and accountability to all stakeholders, including the NRB, the Securities Board of Nepal (SEBON), and the public. Any change in auditors or the nature of their mandate must comply with the requirements set forth by these regulatory bodies.
III. Investor Behavior and Market Dynamics
The book closure announcement triggers immediate and measurable effects on the stock market:
“To Secure the Dividend” Rationale: Today, Ashoj 23, 2082 BS (October 9, 2025), being the last trading day for eligibility, creates a rush to buy shares. Investors who purchase EBL shares today and have them registered in their Demat accounts by the end of the day will be counted as shareholders before the book closure on Ashoj 24, 2082 BS (October 10, 2025), and will thus be entitled to the full 20% dividend package.
Ex-Dividend Effect: The day the book closes (Ashoj 24) is the ex-dividend date for future trading. On this date, the theoretical market price of the EBL shares is expected to drop by approximately the value of the declared dividend (the 14% cash component plus the theoretical value of the 6% bonus shares). This drop reflects the removal of the dividend entitlement from the stock’s value.
Shareholder Engagement: The AGM, scheduled for Kartik 12, 2082 BS, serves as the official forum for shareholders to exercise their rights. Attending the meeting is vital for corporate democracy, allowing shareholders to vote on the dividend proposal and governance changes, thereby holding the bank’s management accountable.
In summary, the EBL announcement confirms a generous dividend payout that satisfies investors with immediate cash flow while simultaneously strengthening the bank’s capital base through bonus shares, a critical maneuver for regulatory compliance. The strict book closure deadline underscores the necessity for timely action by investors to lock in their rights, making this a pivotal moment in the bank’s annual corporate calendar that intertwines financial strategy with strict regulatory adherence.
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