The shareholders approved 15 per cent cash dividend and 5 per cent stock dividend for 2020
IDLC Finance, the largest non-bank financial institution of the country -- has approved 15 per cent cash and 5 per cent stock dividend instead of the previously announced 35 per cent cash dividend for 2020.
The board of directors placed a revised proposal of dividends at the 36th annual general meeting (AGM), in line with the directives of the Bangladesh Bank (BB).
The shareholders approved 15 per cent cash dividend and 5 per cent stock dividend for 2020 -- a robust feat against the market trend and the prevalent pandemic adversity.
The AGM was held virtually on a digital platform in compliance with the directives set by Bangladesh Securities and Exchange Commission (BSEC).
The non-bank financial institution (NBFI), which offers home, construction, car and personal loans, brokerage services, investment banking services, small and medium enterprise financing, and internet trading, logged in a profit of Tk 254.1 crore for its 2020 financial year, which runs from January to December -- up 49.5 per cent from a year earlier.
At the meeting, it was informed that on the back of a strong governance framework and commitment towards a customer-centric drive, IDLC continued to be the frontrunner in the financial market, and displayed resilient performance in 2020 despite the ongoing pandemic and extremely challenging market conditions.
Aziz Al Mahmood, chairman of IDLC Finance, directors Atiqur Rahman, Nurullah Chaudhury, Mahia Juned, Mohammad Mahbubur Rahman, Md Kamrul Hassan, Syed Shahriyar Ahsan, and Independent Directors Niaz Habib and Matiul Islam Nowshad were present at the meeting.
Mahmood highlighted how IDLC attained the financial performance through prudent and timely strategic manoeuvres that enabled the company to provide a return on equity (ROE) of 17.37 per cent, without any layoffs or salary cuts.
Outgoing IDLC CEO Arif Khan, whose last day with the organisation was Wednesday, explained how the management saw opportunities in alternative investment channels that allowed the booking of gains.
Moreover, with improvement in the capital market in the latter half of 2020, the subsidiaries attained commendable returns.
He also highlighted the increase in robustness of the company as the total asset size of IDLC Group increased by eight per cent, reaching Tk 12,687 crore at the end of 2020, which led to a strong return on assets of 2.08 per cent.
Additionally, it was mentioned that despite the extraordinary circumstance, the company was able to maintain the loan book portfolio and attain a one per cent growth, on the back of an unwavering stand on maintaining a quality portfolio.
At the end of 2020, IDLC’s net operating cash flow per share (NOCFPS) -- which is all cash generated by its main business activities -- stood at Tk 9.05, in contrast to Tk 4.87 in the negative a year earlier.
Earlier on March 22, the Bangladesh Bank permitted NBFIs to issue up to 30 per cent dividends to shareholders.
A maximum of 15 per cent can be issued as cash dividends while the remaining 15 per cent can be issued as stock dividends, the BB clarified after a notice it issued on February 24 faced criticism from stock market investors.
In the notice, the BB had mentioned that NBFIs would be allowed to issue a maximum 15 per cent cash dividend to investors.
However, the notice neither mentioned the stock dividend limit nor specified whether the NBFIs would be allowed to issue any stock dividend at all, creating confusion among investors.
To clarify the issue, the BSEC on March 15 took up the matter -- along with the dividend ceiling specified in the policy issued by BB on February 7 -- with the central bank.
The clarification was also prompted by the previous 35 per cent dividend declaration of IDLC Finance, which found itself afoul of the regulator for rewarding its shareholders way more than what is allowed under this dividend policy.