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City Bank jumped 4.17 per cent to Tk 22.50 per share on the Dhaka Stock Exchange (DSE) on Thursday after the lender had reported record profit for 2023.
The first generation private commercial bank had disclosed a consolidated net profit of Tk 6.38 billion in 2023, marking a 33.5 per cent gain compared to the year before.
The board of directors declared a 25 per cent dividend (15 per cent cash and 10 per cent stock) for 2023.
"Stock dividend has been recommended to strengthen the capital base of the bank for supporting future business growth and also to improve certain regulatory ratios," said the bank in its earnings note on Wednesday.
The bank paid 10 per cent cash and 2 per cent stock dividends for 2022.
Following the impressive financial performance, investors rushed to grab the bank shares, leading to a more than 4 per cent price hike, the highest among all the bank shares on Thursday.
Higher dividend declaration attracted investors to the stock as the price level was deemed lucrative, said a leading stockbroker.
Some 1,115 trades were executed with a total of 2.46 million shares of City Bank changing hands. The turnover was Tk 55.31 million.
City Bank's price-to- earnings (P/E) ratio stood at 4.32 as of Thursday, which is much lower than the market average. Currently, the overall market's P/E ratio is around 12.
The bank's dividend yield stood at 6.67 per cent as per the latest dividend declaration of 15 per cent cash for 2023.
The final approval of the dividends will come during the annual general meeting (AGM) scheduled for May 30. The record date is April 23.
The bank managed to achieve an operating profit of Tk 13.91 billion in 2023, up from Tk 12.37 billion in 2022 despite a 74 per cent drop in foreign exchange income due to the dollar crisis.
"This was attributed to the bank's ability to control its cost of deposits, expand its performing loan book, and earn substantially from investments in government securities," said the bank in a statement.
About 26 per cent of the total income came from fees and commissions, while 40 per cent was generated by its retail, cards, and small and micro lending business segments.