Central bank suspends Phoenix Finance’s cash dividend

The Bangladesh Bank has suspended Phoenix Finance's cash dividend payout six months after the listed company declared it for shareholders for 2020.

The suspension came after the central bank spotted inflated profits in the annual financial statement of the non-bank financial institution (NBFI).

Earlier, ONE Bank was penalised for declaring dividends for 2020 after manipulating financial numbers.

Although the bank was allowed to keep declaring the dividend unchanged considering this price-sensitive information for the shareholders but had to change the balance sheet.

Although Phoenix Finance's net profit declined last year, the share price of the company increased significantly after the cash dividend declaration.

Shareholders of the company experienced 20% price gains against each share in a month after it had declared the cash dividend on 27 June this year.

It had declared a 6% stock and 6% cash dividends for its shareholders for 2020.

Now, the company will pay a 12% stock dividend only for that year.

In a disclosure on the websites of stock exchanges on Tuesday, it said, as per the central bank instructions, a new recommended dividend is 12% stock instead of 6% cash, and 6% stock subject to the approval of shareholders in its annual general meeting (AGM).

The company said it will hold an AGM on 28 December through a digital platform.

When contacted, Mohammad Sayduzzaman, company secretary of Phoenix Finance, said the change in dividend was made following the order of the Bangladesh Bank.

The share price of the company hit Tk34 in October, the highest in one year. However, the share price remained downward after hitting the highest level and traded at Tk25.60 on Tuesday.

In a balance sheet analysis, the central bank has revealed that a significant portion of the company's profit was unrealised, according to a source at the Bangladesh Bank.

In this perspective, the listed company was asked to revise its declared dividend.

The net profit of the company declined to Tk20 crore at the end of last year from Tk24.73 crore in the previous year, according to the balance sheet of the company.

In the first nine months of 2021, its net interest income increased 48.75% compared to the same period of the previous year, but net profit after tax fell 5%.

Its net profit stood at Tk10.73 crore, and EPS at Tk0.73 in the January- September period, which was Tk11.33 crore, and Tk0.77, respectively, in the same period of 2020.

Phoenix Finance and Investments Limited had been listed on local stock exchanges in 2007.