UCB declares no dividend for 2024 to comply with regulatory requirement

United Commercial Bank (UCB) could not recommend any dividend for shareholders for the year ending 31 December 2024 due to a significant provision shortfall.

According to the bank's disclosure, a sharp decline in profit and its failure to meet the required provision levels under Bangladesh Bank's policy were the main reasons behind the decision. 

In 2023, UCB had paid a 5% cash and 5% stock dividend to its shareholders.

As per central bank guidelines, banks are barred from declaring dividends if they fail to maintain adequate provisions against loans or have taken deferral facilities.

UCB has scheduled its 42nd annual general meeting for 31 July, with the record date set for 29 June.

According to the financial statement as of December 2024, the bank's required provision against loans and advances stood at Tk6,055 crore, but it managed only Tk2,706 crore, leaving a shortfall of Tk3,345 crore.

At the end of 2024, the bank reported a profit after tax of only Tk8 crore – a steep decline of Tk220 crore compared to the previous year. 

Its net interest income rose to Tk2,156 crore, up from Tk1,629 crore in the same period the previous year. However, its earnings per share plummeted to Tk0.05 from Tk1.45 a year ago.

In its official statement, the bank said the decline in net profit was primarily due to increased provision requirements against loans and advances. Net Operating Cash Flow Per Share (NOCFPS) also decreased, mainly because loan disbursements outpaced deposit growth. Despite this, the bank continues to meet all regulatory liquidity requirements.

The downward trend continued into the first quarter of 2025 (January–March), during which the bank posted a net profit after tax of Tk6 crore, significantly lower than Tk64 crore in the same period the previous year. 

Net interest income during the quarter was Tk365 crore, down from Tk465 crore year-on-year. Earnings per share for Q1 2025 stood at Tk0.04, which was Tk0.42 a year ago. 

Previously, on 27 August last year, the Bangladesh Bank restructured the board of directors of the UCB. The board members include former Bangladesh Bank executive director Sajjad Hossain, former Agrani Bank deputy managing director Md Yusuf Ali, and chartered accountant Obaidur Rahman.

Additionally, Sharif Zahir and Md Tanvir Khan have been appointed as shareholder directors, subject to the condition that they resign from their respective board positions at National Finance Ltd and Eastland Insurance Company Ltd.

Sharif Zahir, also the managing director of Ananta Group, has been elected as the new chairman of UCB at a board meeting held on 29 August.