DBH Finance PLC has declared the lowest dividend in a decade after a marginal decline in profit in 2022.
It announced 15 per cent cash and 2 per cent stock dividends for 2022, the lowest since 2012. The company disbursed 15 per cent cash and 10 per cent stock dividends for 2021.
DBH Finance, formally known as Delta Brac Housing Finance Corporation, which is exclusively focused on home loans, has a good track record of paying handsome dividends every year among the listed non-bank financial institutions (NBFIs).
It made a profit of Tk 1.02 billion in 2022, only 1.9 per cent lower than the year before, due to lower interest income and higher provision.
Interest income declined due to the lending rate cap, said company secretary Jashim Uddin.
The company has yet to disclose the annual interest income data of 2022. Its interest income dropped 18 per cent year-on-year to Tk 1.35 billion in the nine months through September 2022.
DBH has been playing an active role in the real estate sector, but sales of flats and properties slowed down due to the raging inflation and higher construction costs.
Construction costs rose as the prices of rods and cement surged because of the Russia-Ukraine war.
The hike in raw materials' prices pushed up the prices of flats by Tk 1,500 to Tk 2,000 per square foot on an average in a year while many realtors are not launching new projects at the moment fearing low return on investments, industry insiders say.
A major challenge in the business of financial institutions has been the thin gap between the deposit rate and the lending rate.
Moreover, the inflationary pressure prompted depositors to withdraw savings. In 2022, the company's net cash outflow was Tk 3.92 billion due to higher encashment by depositors.
The company's net operating cash flow per share stood at Tk (19.64) from Tk (0.04) a year ago for higher encashment of deposits during the year, according to a company disclosure.
The company said stock dividend was aimed at utilizing its retained amount as paid-up capital for improving the capital adequacy and facilitating business expansion.
The stock, meanwhile, has remained stuck at the floor price -- Tk 57.80 - since September 15 last year.
DBH has a solid capital adequacy ratio (CAR) of 28.37 per cent and return on equity (ROE) 13.34 per cent as of December 2022.
Foreign investors have an 18.85 per cent stake in DBH Finance, higher than in other NBFIs, because of its reputation.
The stake, however, has declined in the last one year due to foreign exchange volatility.
DBH is the only AAA-rated financial institution for the last 17 years in Bangladesh. It has 14 branches covering all divisions and a plan for further geographic expansions.
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