CHAPTER I

INTRODUCTION
1.1 Introduction of the study
The term „Bank‟ is derived from Old Italian word „Banca‟ or from a French word
Benque‟ both mean a bench or money exchange table .According to W. Hock “Bank is
such an institution which creates money by money only.” Bank is financial institution
which deals with deposits and advances and others related services. It receive money
from those who want to save in the form of deposit and it lends money to those who need
it .Bank also provide financial service such as wealth management, currency exchange
and safe deposit and many more. So we can say bank accepts deposits from the public
and creates a demand deposit while simultaneously making loans.

A dividend policy is the policy a company uses to structure its dividend payout to
shareholders. Some researchers suggest the dividend policy is irrelevant, in theory,
because investors can sell a portion of their shares or portfolio if they need funds.

Dividend payment policy purpose objectives the company. If the Retained Earnings can
be re-invested in different business opportunities having return, dividend payment is less.
In the absence of high return chance dividend payment is more. Some time company may
not pay any dividend. Sometimes all the dividend may be paid and sometimes all the
dividend may be also retained. For the common stock valuation also dividend discounting
model can be also used Everest Bank bonus shares. Due toil, capital base of the company
is increasing and chance of high profit earning is also increasing. All this profit shows
that the company can adopt any profit for the dividend payment.

The general dividend policy behaviors among the companies that they normally
avoid reducing dividend, because of company future prospects, dividends are increase
in earnings. If future earning is not expected to grow, the companies at least try
to maintain the dividend at present level and they are increased only after an increase
in earning it appears to be sustainable and relatively permanent. Once the firms try
to maintain them at the level.
 2

1.2 Profile of the organization

Sanima Bank Limited, one of Nepal's leading commercial banks, was established in
2004. Over the years, the bank has grown significantly, maintaining a strong presence in
the country's banking sector. It aims to provide high-quality banking services while
contributing to the economic development of Nepal. Sanima Bank was initially promoted
by Non-Resident Nepalis (NRNs) and has since evolved into a robust financial
institution. Its journey began with a mission to cater to the banking needs of individuals
and businesses, leveraging the experience and expertise of its founders.

The vision of Sanima Bank is to be a bank of choice by providing superior services and
contributing to the economic development of Nepal. Its mission includes offering
innovative and high-quality banking products and services, ensuring customer
satisfaction through efficient and personalized services, and maintaining a strong
financial performance and shareholder value. The bank upholds values of integrity,
customer centricity, excellence, innovation, and social responsibility.

Sanima Bank offers a wide range of financial products and services designed to cater to
diverse customer needs. In personal banking, it provides savings accounts, fixed deposits,
home loans, auto loans, personal loans, credit cards, and remittance services. For
corporate banking, the bank offers corporate loans, working capital finance, trade
finance, treasury services, and cash management services. The bank also supports SME
banking with SME loans, business accounts, and financial advisory services.
Additionally, Sanima Bank leverages digital banking through internet banking, mobile
banking, SMS banking, and e-commerce payment solutions.

The bank has established a comprehensive branch network across Nepal, ensuring
accessibility for customers in both urban and rural areas. As of now, Sanima Bank
operates over 100 branches and more than 90 ATMs nationwide. Sanima Bank
continuously expands its reach to serve more communities and provide inclusive
financial services. It has demonstrated consistent financial growth and stability, with key
performance indicators such as profitability, asset quality, and capital adequacy ratios
reflecting the bank's strong financial health. The bank's prudent risk management
practices and strategic initiatives have contributed to its robust performance.
 3

Sanima Bank is committed to contributing to the socio-economic development of Nepal

through its corporate social responsibility (CSR) initiatives. These initiatives focus on
education, health, environment, and community development. The bank actively supports
various programs and projects aimed at improving the quality of life for underprivileged
communities. It leverages advanced technology to enhance its service delivery and
operational efficiency. The bank has invested in modern banking solutions, including a
robust core banking system, digital platforms, and cybersecurity measures, ensuring
seamless and secure banking experiences for customers.

The governance framework of Sanima Bank is built on transparency, accountability, and

ethical practices. The bank is led by a team of experienced professionals and a diverse
board of directors who provide strategic direction and oversight. The leadership's
commitment to good governance has earned the bank trust and credibility in the market.
Sanima Bank aims to continue its growth trajectory by exploring new opportunities,
expanding its product offerings, and enhancing customer experiences. The bank plans to
invest in innovative technologies, strengthen its risk management practices, and focus on
sustainable development. With a customer-centric approach and a strong foundation,
Sanima Bank is poised to achieve its long-term objectives and contribute to the economic
prosperity of Nepal.

In conclusion, Sanima Bank Limited has established itself as a reliable and dynamic
financial institution in Nepal. Its commitment to excellence, customer satisfaction, and
social responsibility has positioned the bank as a key player in the banking sector. As it
moves forward, Sanima Bank continues to strive for innovation and sustainable growth,
ensuring a positive impact on the communities it serves.

1.3 Statement of Problem

Dividend policy is concerned with determining the proportion of firms earning to be
distributed in the form of cash dividend and the proportion of earnings to be retained.
Any firm's dividend policy is influenced by large numbers of factors like legal
requirement, firm's liquidity positions, repayment need, expected rate of return stability
of earning, desire for control etc. The specific problems are as follows:
 4

• What is the scheme of dividend payment of Everest Bank ltd?

• What is the trend of dividend payment of Everest Bank ltd?

1.4 Review of Literature

A literature review is an overview of the previously published works on a specific topic.
The term can refer to a full academic paper or a section of a academic work such as a
book, or an article. On the way of preparing this project work report of Sanima Bank
Limited, It moves through many books of finance and accounts for the dividend policy.

Gurung, Jas & Chapagain, Ramkrishna & Baral, Amrit & Boro, Lija. (2023). The Impact
of Dividend Policy on Stock Prices: Evidence from Nepalese Banking Sector.
Contemporary Research: An Interdisciplinary Academic Journal. . The study examined
the impact of dividend policy on market price of share in banking sector of Nepal. Out of
27 commercial banks, 10 banks have been selected under convenience sampling with ten
years data for the period 2068/69 to 2077/78 were taken for the analysis. Panel data
regression models (random effect model) has been utilized to analyze the data as the
Hausman test suggest the random effect model is the most appropriate for describing the
relationship among the given variables. The result indicates that earning per share,
dividend per share, price-earnings ratio and retained earnings have a positive relationship
on stock prices of commercial banks. The study concluded that dividend payments lead to
a rise in the market price of a stock. Hence, it can be inferred from the outcome of the
random effect regression model that it is consistent with the applicable methods related to
dividend policy, indicating that there is a noteworthy impact of dividend policy on the
stock price of companies. The findings of this study will contribute to the existing
literature on dividend policy and market price of share, especially in the context of Nepal.
The study will also provide important implications for investors, policymakers, and
companies in making decisions regarding dividend rules and its impact on the stock
prices.

"Dividend Policy and Bank Performance: Evidence from European Banks" (2022)
explores the relationship between dividend policies and financial performance across
 5

European banking institutions. The study highlights how banks adjust their dividend
strategies in response to economic conditions and regulatory environments to optimize
shareholder value.
"Impact of Regulatory Changes on Dividend Payout in Banking Sector: Evidence from
Developed and Developing Economies" (2023) discusses the evolving regulatory
landscape and its impact on dividend payout decisions globally, offering comparative
analyses between developed and developing economies. These studies underscore the
importance of adaptive dividend policies aligned with financial stability, regulatory
compliance, and shareholder expectations in the banking industry.

The definition of dividend policy is concerned with financial policies regarding

paying cash dividend in the present or paying an increased dividend at a later stage.

According to the Awarding to Arthur bull van, “Dividend is payment made by a

corporation to its shareholders members it’s the portion of corporal profit paid out to
stack holders,"

According to investorswords.com" A taxable payment declares by a company's board of

directors to its shareholders out of the company's current or Retained Earning."

Ross N. Dickens, K. Michael Casey and Joseph A. Newman (2007) quarterly journal of
business and economics, explained that dividends should be important because the
intrinsic model holds that a stock's price is the present value of its future dividends. Fama
and French (1998) find empirical support for such a relationship. Theory also holds that
dividends can signal management's view of a firm's condition (Bhattacharya, 1979. Miller
and Rock,(1985). If dividends impact firm value, then the factors determining those
dividends deserve investigation. One such study is Barclay, Smith, and Watts (1995),
which utilizes industrial firms, but excludes banking firms. We adapt their study for
banking firms, given their managerial differences relative industrial firms as well as their
vital economic role from a practical standpoint, identifying factors that explain bank
dividends is important simply because so many hanks pay dividends.

Gittman (2004, pp. 312) divided stock into two types, such as common stock and
preferred stock. He also showed that dividends are the outcome of investment. So,
 6

common stocks are an ownership claim against primarily real or productive assets.

According to Short and Welsch (1990), Johns (1998) and Port (1976), a dividend is a
usually distributed in cash form to stock holders of a corporation approved by the board
of director. It may also include stock dividend or other forms of payment. A stock
dividend represents a distribution of additional shares to common stockholders.

Shiller (1984, 1989) recommended investors in his study to buy the stocks when price is
low relative to dividends and to sell stocks when it is high payoffs.

Miller and Modigliani (1961) also a state that if the market is imperfect, dividend may
affect stock price and the market value of a company is correctly calculated as the present
value of its future earnings and its underlying assets, and is independent of its capital
structure.

Shrestha, 2013 dividend policy of commercial bank Dividend decision has great
influence on financial structure, flows of funds, corporate liquidity and so on. The
relationship between dividend and the value of the share is not clear cut. There were
irregularities in the dividend payment by the commercial banks of Nepal. There was also
no stability in the dividend payout ratio of the commercial banks. Thus he has
recommended the investors to consider the select company having high profit companies
for purchasing shares. There was a positive correlation between DPS and MPS of
commercial banks whereas no correlation was found in manufacturing companies. There
is a positive relationship between cash flow and current profit and dividend percentage of
share. There are no criteria to adopt dividend payout ratio and it is observed that there is a
negative relationship between payout ratio and valuation of shares. Similarly he found
that there was a negative relationship between MPS and stockholders‟ required rate of
return also.
 7

1.5 Objectives of the Study

Dividend is paid to the investors by any business organization or financial institution.

Some of the objectives related with the study or research work are as follows.

• To identify the scheme of dividend payment of Everest Bank Ltd.

• To analyze the trend of dividend payment.

1.6 Rationale/Significance of the Study

The study is about the role of the dividend policy of Sanima Bank Limited. It is mainly
deal with dividend policy analysis bank's overall efficiency and performance. A variety
of dividend ratio can be used to assess the financial health of the bank. It is a decision
tools because of the following importance:

• It provides information related to bank's dividend policy.

• The study helps to know about the real situation of the banks.

• The dividend policy analysis can show the overall condition of bank.

• The study helps to increase the academic status and knowledge after doing the
field study.

1.7 Research Methodology

This chapter expresses the way and technique of the study applied in the research
process. It includes research design, population and sample, data collection procedure and
processing, tools and also methods of analysis.

1.7.1 Research Design

This research report is applied research. For preparing this report descriptive
and analytical research design is used. Data will be collected as per description given by
the personal of bank and these data will be analyzed with the help of different analytical
tools. Both qualitative and quantitative data included in research report.
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1.7.1.1 Population and Sample

Commercial banks, classified as Class "A" banks by the Nepal Rastra Bank, number 20
as of Ashad's end, 2080 BS (Mid-July 2023). These banks correspond to the population
for this study. Out of these, Sanima Bank Ltd. have been selected as the sample. A
purposive sampling method has been employed to select a representative sample of
commercial banks in Nepal, ensuring an equitable representation of both large and minor
enterprises in the Nepalese banking sector.

1.7.2 Data Collection Method

Data can be collected from secondary sources. Here secondary data while preparing this
report are:

1.7.2.1 Secondary Data

When it is impractical to collect primary data because of a lack of funds or time,
secondary data that has previously been collected by others is used. It is easy to use
secondary data that has been gathered by others. We will gather secondary data and
information from budgets, yearly reports, newspaper advertisements, and vouchers,
among other sources.

1.7.3 Data Presentation and Analysis Tools

Data collections from various sources and method cannot be measurable and meaningful
without its presentation and analysis. This uses the following tools for data presentation
and analysis.

• Simple table

• Trend line

• Financial tools

The different financial tools used for the analysis of data are as follows:

• DPR= Dividend/Net Income

• EPS= Net Income/No. of share

• DPS= Total Dividend/No. of share outstanding Where,

 9

DPR=Dividend Payout Ratio

EPS= Earning Per Share

DPS= Dividend per Share

1.8 Limitations of the Study

The finding of the study is subject to various limitations and may not be applicable
in area other than one study. Despite of effort to collect all information data for over
all analysis of the organization and indented system there are still some limitations of
the study because of various reasons and they are as follows;
• The study is based on only 5 years data starting from 2075/76 to 2079/80.
• The accuracy of the study is based on annual reports, NRB publication or
secondary data. Limited time and financial resources are also limitation of this
study.
• The study only concerns with the financial aspect of the firm.
 10

CHAPTER-II
RESULT AND ANALYSIS

2.1 Introduction of Data

Data can be defined as a systematic record of a particular quantity. It is the different clues
of that quantity represented together in a set. It is a collection of facts and figures to be
used for a specific purpose such as a survey or analysis. When arrange an organized
forms, can be called information. Data, information, knowledge, and wisdom are closely
related concepts, but each has its role concerning the other, and each term has its
meaning. According to a common view, data are collected and analyzed; data only
becomes information suitable for making decisions once it has been analyzed in some
fashion. One can say that the extent to which a set of data is informative to someone
depends on the extent to which it is unexpected by that person. The amount of
information contained in a data stream may be characterized by its Shannon entropy.

2.2 Data Presentation and analysis

The main aim of this chapter is presentation and analysis of data according to research
methodology to attain the objective of this study. In this chapter, an attempt has been
made to analyze the dividend payout of five year. The data for his study are presented in
table form and are analyze with the help of financial tools.

2.2.1 Cash Dividend and Stock Dividend of Sanima Bank Limited

Cash dividends are a release of a portion of the profit for the shareholders of the
company. Stock dividends are a release of stock for the shareholders of the company.
Cash dividends do not dilute the ownership stake privately held by the major
shareholders or promoters of the company. It only reduces the disposal profit and
available cash of the company.

Stock dividends, on the other hand, increase the absolute quantum of publicly traded
stocks of the company. Though overall stake percentage may remain the same. Still, the
control and movements of stock prices alter due to increased free float in the market.
Increased float is also a cause of concern for the major shareholders and promoters of the
company. Because the accumulation by certain suitors can jeopardy the interest company.
 11

Table No. 1 Cash Dividend and Stock Dividend of Sanima Bank Limited for different year

Fiscal Year Cash Dividend Stock Dividend

2075/76 20 5

2076/77 5.53 5

2077/78 4.32 6

2078/79 7.68 13

2079/80 10.53 10
Source: Annual Report of Sanima Bank Limited
The table presents the dividend distribution of a company over five fiscal years, from
2075/76 to 2079/80. It includes both cash dividends and stock dividends issued to
shareholders. In the fiscal year 2075/76, the company distributed a cash dividend of 20%
and a stock dividend of 5%. The following year, 2076/77, shows decrease in cash
dividends to 5.53%, while the stock dividend remained constant at 5%. In 2077/78, the
cash dividend again decreased to 4.32%, but the stock dividend increase to 6%. The trend
reversed in 2078/79, with the cash dividend increasing to 7.68% and the stock dividend
also rising to 13%. In the most recent fiscal year, 2079/80, the company issued a cash
dividend of 10.53% and a stock dividend of 10%, indicating a balanced approach to
rewarding shareholders with both cash and equity.
Fig.no.1 Cash dividend and stock dividend

Cash dividend and stock dividend of SANIMA BANK LIMITED

25

20

15

10

0
2075/76 2076/77 2077/78 2078/79 2079/80
Cash Dividend 20 5.53 4.32 7.68 10.53
Stock Dividend 5 5 6 13 10

Cash Dividend Stock Dividend

 12

The chart illustrates the distribution of cash dividends and stock dividends by SANIMA
BANK LIMITED over five fiscal years, from 2075/76 to 2079/80. In the fiscal year
2075/76, SANIMA BANK LIMITED issued a significant cash dividend of 20%,
accompanied by a stock dividend of 5%. The following year, 2076/77, there was a steep
decline in the cash dividend to 5.53%, while the stock dividend remained stable at 5%. In
2077/78, the cash dividend continued to decrease slightly to 4.32%, and the stock
dividend increased marginally to 6%.The trend began to change in 2078/79, with the cash
dividend increasing to 7.68% and the stock dividend rising significantly to 13%. By
2079/80, the cash dividend further increased to 10.53%, while the stock dividend
decreased slightly to 10%.

Overall, the graph shows an initial decline in cash dividends followed by a gradual
recovery, while stock dividends remained relatively stable initially before increasing
significantly and then slightly decreasing in the final year. This reflects SANIMA BANK
LIMITED's shifting strategy in balancing its dividend distribution between cash and
stock dividends over the observed period.

2.2.2 Earnings per Share (EPS)

The EPS represents the amount earned on behalf of each outstanding share of common
stock. They are closely watched by investing public and are considered an important
indicator of firm‟s success. It is calculated as:

Net Profit After Tax

Earning Per Share (EPS)=
No. of Common Share Outsanding
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Table No. 2 Earnings per Share of SANIMA BANK LIMITED for different Year

Fiscal Year EPS

2075/76 38.05

2076/77 24.71

2077/78 19.91

2078/79 26.30

2079/80 31.43
Source: Annual Report of SANIMA BANK LIMITED

The table shows the Earnings Per Share (EPS) for a company over five fiscal years, from
2075/76 to 2079/80. In 2075/76, the EPS was high at 38.05. However, it is decreasing up
to certain years, dropping to 24.71 in 2076/77 and further to 19.91 in 2077/78. The EPS
began to increase in 2078/79, rising to 26.30, and continued this upward trend in 2079/80,
reaching 31.43. This suggests a period of initial decline in earnings, followed by a
gradual improvement over the later years.

Overall, this table shows the bank's earnings per share, which is an important financial
indicator of the bank's profitability and performance. It is important to note that the
fluctuation in EPS could have impacted the dividend policy and payout ratio of the bank
during each fiscal year
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Fig. 2 Earning per share

Earnings per Share

40
35
Earnings per Share

30
25
20 EPS
15
10
5
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

The chart depicts the Earnings Per Share (EPS) of SANIMA BANK LIMITED over five
fiscal years, from 2075/76 to 2079/80. Starting at a high of 38.05 in 2075/76, the EPS
experienced a significant decline to 24.71 in 2076/77 and further dropped to 19.91 in
2077/78. However, there was a recovery in the following years, with the EPS increasing
to 26.30 in 2078/79 and continuing its upward trend to reach 31.43 in 2079/80. This
indicates that after an initial period of declining earnings, SANIMA BANK LIMITED's
financial performance improved, leading to a gradual increase in EPS over the last two
years of the observed period.

2.2.3 Dividend Per Share (DPS)

Dividend per share is calculated to know proportion of the earnings distributed to the
shareholders per share; DPS is calculated with the help of following formula.

Earning Paid to Share Holders

Dividend Per Share (DPS)= No.of common share Outstanding
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Table No. 2.3 Dividend per Share (DPS) of Sanima Bank Limited for different year

Fiscal Year No. of share DPS (%)

2075/76 80268633 25

2076/77 84702068 10.53

2077/78 88937172 10.32

2078/79 94273402 20.68

2079/80 106980944 20.53

Source: Annual Report of Sanima Bank Limited

The table presents a summary of the number of shares and the Dividend per Share (DPS)
percentage for a company over five fiscal years, from 2075/76 to 2079/80. In the fiscal
year 2075/76, the company had 80,268,633 shares and declared a DPS of 25%. The
number of shares increased to 84,702,068 in 2076/77, with a reduced DPS of 10.53%.
This upward trend in the number of shares continued, reaching 88,937,172 in 2077/78,
accompanied by a slight decrease in DPS to 10.32%. In 2078/79, the shares grew to
94,273,402, and the DPS saw a significant rise to 20.68%. By 2079/80, the number of
shares surged to 106,980,944, with the DPS slightly decreasing to 20.53%. This data
reflects the company's expanding equity base and the fluctuating dividend payouts over
the years.

Figure No.3 Dividend Per Share (DPS)

Dividend per Share (DPS)

30
DPS (%)

20
10
DPS (%)
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year
 16

The chart shows the Dividend Per Share (DPS) of Sanima Bank Limited over five fiscal
years, from 2075/76 to 2079/80. In 2075/76, the DPS was high at 25%. It then
experienced a sharp decline to around 10% in 2076/77 and remained stable at this level in
2077/78. In 2078/79, the DPS increased significantly to approximately 20% and
maintained this level into 2079/80. This indicates a period of high dividend distribution
initially, followed by a substantial decrease and subsequent recovery, with dividends
stabilizing at a higher level in the latter years.

2.2.4 Dividend Payout Ratio (DPR) / Relationship between DPS and EPS
Dividend payout ratio is the ratio that represents the percentage of the profit distributed as
dividend and the percentage retained as revenue and surplus for the bank. It can be
calculated as:

Dividend Payout Ratio (DPR) = 𝐷𝑖𝑣𝑖𝑑𝑒 𝑛𝑑 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒 ×100%

𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒

Table No 4 Dividend Payout Ratio

Fiscal Dividend Per Share (In Earning Per Dividend Payout Ratio In
Year Rs.) Share (%)
2075/76 25 38.05 65.70

2076/77 10.53 24.71 42.61

2077/78 10.32 19.91 51.83

2078/79 20.68 26.30 78.63

2079/80 20.53 31.43 65.31

(Source: Annual Report of Sanima Bank Limited)

The table provides a comprehensive overview of the financial performance of Sanima

Bank Limited over five fiscal years, from 2075/76 to 2079/80, focusing on the Dividend
Per Share (DPS), Earnings Per Share (EPS), and the Dividend Payout Ratio. In 2075/76,
the DPS was Rs. 25 with an EPS of 38.05, resulting in a high dividend payout ratio of
 17

65.70%. The following year, 2076/77, saw a significant drop in DPS to Rs. 10.53 and
EPS to 24.71, leading to a lower payout ratio of 42.61%. In 2077/78, DPS slightly
decreased to Rs.
10.32 while EPS further declined to 19.91, causing an increase in the payout ratio to
51.83%. The year 2078/79 marked a recovery, with DPS rising to Rs. 20.68 and EPS
increasing to 26.30, resulting in the highest payout ratio of the period at 78.63%. By
2079/80, both DPS and EPS continued to improve, reaching Rs. 20.53 and 31.43
respectively, with a payout ratio of 65.31%. Overall, the data reflects Sanima Bank
Limited 's fluctuating financial strategy, balancing between rewarding shareholders and
maintaining earnings growth.

Figure No 4 Dividend payout ratio

Dividend Payout Ratio

90
80
70
60
50
Dividend Per Share (In Rs.)
40
EPS, DPS and DPR

Earning Per Share

30
Dividend Payout Ratio In (%)
20
10
0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal year

The chart provided illustrates the Dividend Payout Ratio along with Dividend Per Share
(DPS) and Earnings Per Share (EPS) over a five-year period, from the fiscal year 2075/76
to 2079/80.

Earnings Per Share (EPS): Represented by the line with square markers, EPS starts at
around 36 Rs. in 2075/76 and decreases slightly in the following years. It stabilizes
 18

around 28 Rs. during 2077/78 and 2078/79 before rising again to 33 Rs. in 2079/80.

Dividend Per Share (DPS): Shown by the line with diamond markers, DPS begins at
approximately 18 Rs. in 2075/76. It dips to around 10 Rs. in 2076/77 and fluctuates
slightly over the next three years, maintaining a generally stable level around 15 Rs. in
the final two years.

Dividend Payout Ratio (DPR): Depicted by the line with triangle markers, the DPR
starts at 70% in 2075/76 and experiences a significant drop to around 40% in 2076/77.
The ratio shows an upward trend, peaking at around 80% in 2078/79, before declining to
approximately 50% in 2079/80.

2.3 Major Findings

• From the figure and table no 1 show that In the fiscal year 2075/76, Sanima Bank
Limited issued a high cash dividend of approximately 20%. However, there was a
significant drop in cash dividends to about 5% in the following two fiscal years,
2076/77 and 2077/78. During this period, the stock dividend remained stable at
around 5% for 2075/76 and 2076/77, with a slight increase in 2077/78. The stock
dividend saw a marked increase to approximately 12% in 2078/79. By 2079/80,
both cash and stock dividends were aligned at approximately 12%, indicating a
more balanced dividend distribution strategy by the bank.

• From the figure and table no 3 show that The Earnings per Share (EPS) for
Sanima Bank Limited was high at around 35 in the fiscal year 2075/76. This
figure showed a declining trend, reaching a low of around 20 in 2077/78.
However, after this period, there was a gradual recovery in EPS, with the figure
increasing to about 30 by the fiscal year 2079/80. This recovery indicates an
improvement in the bank's profitability and financial health over the latter years.

• From the figure and table no 3 show that Dividend per Share (DPS) for
Sanima Bank Limited was notably high at 25% in the fiscal year 2075/76.
This figure experienced a sharp decline to around 10% in 2076/77, and this
lower level was maintained through 2077/78. From 2077/78 to 2078/79, there
was an increase in DPS to approximately 20%, which was then maintained in
 19

2079/80. This trend reflects a period of adjustment followed by stabilization in

the bank's dividend distribution policy.

• From the figure and table no 4 show that the fiscal years 2075/76 to 2079/80,
the Dividend Payout Ratio exhibited significant fluctuations, starting at
65.70% and dropping to a low of 42.61% in 2076/77, then peaking at 78.63%
in 2078/79 before settling at 65.31% in 2079/80. Despite these changes, the
Dividend Per Share (DPS) showed relative stability, decreasing from Rs. 25 in
2075/76 to around Rs. 10-15 in subsequent years, with a slight recovery to Rs.
20.53 by 2079/80. Earnings Per Share (EPS) also followed a generally
downward trend from Rs. 38.05 in 2075/76 to a low of Rs. 19.91 in 2077/78,
but it recovered to Rs. 31.43 by 2079/80. These trends indicate variations in
the company‟s profitability and dividend distribution policies.
 20

CHAPTER III

SUMMARY AND CONCLUSION

3.1 Summary
Sanima Bank Limited's dividend policy is structured to balance rewarding shareholders
while maintaining sufficient capital for growth and regulatory requirements. The bank
typically aims to distribute a portion of its profits as dividends while retaining the rest to
support its expansion plans and ensure financial stability. This approach reflects the
bank's commitment to providing consistent returns to its shareholders and enhancing
long-term value.

In recent years, Everest Bank has maintained a steady dividend payout ratio, reflecting its
strong financial performance and robust capital position. The bank has consistently
declared both cash and stock dividends, allowing shareholders to benefit from immediate
income and potential capital appreciation. This dual approach caters to a diverse
shareholder base, offering both liquidity and the opportunity for reinvestment. The
dividends are usually announced following the annual general meeting, aligning with the
bank's transparent and shareholder-friendly practices.

These findings suggest that Sanima Bank Limited went through a period of adjustment
and recovery in terms of dividends and earnings per share. The significant reduction in
cash dividends from 2075/76 to 2076/77, followed by gradual stabilization and alignment
of cash and stock dividends by 2079/80, indicates efforts to balance shareholder returns.
The declining EPS trend until 2077/78, followed by a recovery, highlights improvements
in profitability and financial performance. The sharp decline in DPS from 2075/76 to
2076/77 and subsequent recovery and stabilization at around 20% in later years further
demonstrate the bank's strategic adjustments to enhance financial stability and growth.

The dividend policy of Everest Bank also takes into consideration the regulatory
environment and capital adequacy requirements set by the central bank. By adhering to
these guidelines, Everest Bank ensures that its dividend distributions do not compromise
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its capital base or financial health. This prudent policy has helped the bank maintain a
strong capital adequacy ratio, thereby reinforcing its capacity to absorb potential losses
and support future growth initiatives. Overall, Everest Bank's dividend policy is a
strategic blend of rewarding shareholders and sustaining long-term business growth.

3.2 Conclusion
Everest Bank's dividend policy demonstrates a consistent approach to rewarding its
shareholders, reflecting its strong financial health and commitment to shareholder value.
The bank has maintained a stable dividend payout ratio, balancing the need to provide
returns to investors while retaining sufficient earnings to support future growth and
operational stability. This policy indicates a strategic focus on sustainable long-term
performance, ensuring that the bank remains attractive to investors by offering regular
and reliable dividends. Such a policy not only enhances investor confidence but also
underscores the bank‟s prudent financial management and robust profitability.
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Annual Report of Sanima Bank Limited from 2075 to 2079 B.S.