Stocks slide as BB tightens bank dividend rules

Stocks opened lower on Sunday as investors reacted negatively to the Bangladesh Bank’s tougher rules on bank dividend declarations.

The central bank on Saturday introduced a stricter dividend policy for banks, allowing only lenders with at least Tk 20 billion in paid-up capital to declare cash dividends from 2026 onward.

The Bangladesh Bank said the move is aimed at strengthening the banking sector’s capital base and enhancing lenders’ capacity to absorb future risks amid challenging global and domestic economic conditions.

However, the new policy frustrated investors, as only one bank is currently eligible to pay cash dividends next year under the revised requirement.

Market analysts also criticised the decision to link dividend eligibility with paid-up capital, arguing that it should instead depend on factors such as shareholders’ equity, capital adequacy ratio and provisioning status.

Under the latest rules, most commercial banks will not be able to offer cash dividends from next year, a development that may negatively affect the capital market, analysts said.

Meanwhile, Sunday marked the last trading session before the Eid-ul-Azha holidays, with the market set to remain closed from May 26 to May 31 for the country’s second-largest religious festival.

Following the previous week’s gains, the benchmark DSEX index of the Dhaka Stock Exchange fell 18 points, or 0.33 per cent, to 5,310 at 11:00am when the report was filed.
The DS30 Index, comprising 30 blue-chip companies, lost 12 points to 2,018, while the DSES Index, which tracks Shariah-based companies, edged up 0.70 point to 1,077.
Turnover, another key market indicator, remained low at Tk 2.09 billion until then.
Among the traded issues on the DSE, 134 advanced, 158 declined and 91 remained unchanged.

The City Bank was the most traded stock, with shares worth Tk 110 million changing hands, followed by Dominage Steel Building Systems, BD Thai Aluminium and BRAC Bank.

The Chittagong Stock Exchange, however, witnessed a positive trend, with its CASPI index gaining 10 points to 14,851, while the CSCX index rose 2 points to 9,132 at that time.

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