One of the big and oldest banks of Nepal - Himalayan Bank Limited (HBL) finally annouced its profit sharing proposal. The BOD meeting of the company dated 2066 Kartik 17 has decided to propose 12% cash dividend and 31.5557% Bonus Share subject to approval from Nepal Rastra Bank and upcoming AGM.

Currently on 04 November, 2009 the share is trading at Rs. 1400 (+1.45%), which might increase to some extent after this annoucement. The annoucement came as good news for long term investors who had been holding HBL shares for pretty long and haven’t got anything for pretty long period of time. The increase in the price of HBL share might give some boost to NEPSE, which has been dipping since Maoist’s protest programme began.

The 73rd BOD meeting of the company dated 5 November 2009 has decided to issue 10% bonus share and 0.526% cash dividend subject to approval from NRB and its upcoming AGM. The meeting has further decided to issue right shares at 1:1 propotion after issuance of bonus shares to increase the total paid up capital to NPR 2.2 billion.

Many investors were amused with 0.526% cash dividend, while new entrants in the stock market were annoyed with near to ZERO cash dividend. They thought it had no purpose and should have not been included in this profit sharing scheme. Well, for all those newcomers, 0.526% cash dividend was actually provided for TAX purpose. For every bonus share or dividend, you will be imposed with certain tax, so the provided bonus cash would compensate as a tax.

As soon as the news hit the marquee, the prime bank share price increased by 10%, closing at Rs. 664 (+10%) on 8th November 2009. Its peer bank Sunrise also annouced 5:3 Right Share proposal, but couldn’t give enough throtle to raise the price of the share. Currently, its trading at Rs. 455. Investor are also anticipating some good news from other peers like Vibor, PDB and Arun Valley Hydropower.