Pakistani listed companies paid 87% more profit to shareholders in 2021 — report

Stockbrokers monitor share prices at the Pakistan Stock Exchange (PSX) in Karachi, Pakistan, on March 13, 2020. (AFP/File)

• Companies listed on Pakistan Stock Exchange paid Rs500 billion dividends in 2021, compared to Rs267.6 billion in 2020
• Payouts of these companies increased due to higher profitability and improved liquidity last year, analysts say

KARACHI: Pakistani listed companies have given 87 percent more returns to their shareholders in 2021, as compared to the previous year, due to higher income and improved liquidity, a market research report suggested on Monday. 
During the outgoing year, the companies listed on the Pakistan Stock Exchange (PSX) paid cash dividends of Rs500 billion to their shareholders, compared to Rs267.6 billion paid in 2020, read a research report issued by Optimus Capital Management, a stock brokerage and financial advisory firm. 
The overall cash dividends paid in 2021 were Rs232.2 billion more than the previous year’s. The banking sector topped the list of companies with Rs139 billion, followed by oil and gas exploration firms with more than Rs71 billion. 
“There was capping on some companies in 2020 but is was removed in 2021 like Mari Petroleum, which had given Rs800 million in previous year, but in 2021 paid Rs19 billion cash dividends,” Muhammad Mohsin Ahsan, managing director of Optimus Capital management, told Arab News. 
The reason for higher banking sector payout was that the “central bank had suspended profit payout in 2020 due to the COVID-19 outbreak, but in 2021 there was no such restriction,” he said. 
In 2020, the central bank had directed commercial banks to suspend profit payments in cash or in the form of shares to their shareholders in order to strengthen their capacity to lend and absorb any losses they might incur due to the pandemic. 
Analysts said the profitability of companies, mainly listed on PSX, had increased, which was evident from dividend payouts. 
“The payout of the companies was increased in 2021 due to the increased profitability and liquidity of companies,” Samiullah Tariq, research director at Pakistan Kuwait Investment Company, told Arab News. 
The Pakistani bourse’s benchmark KSE-100 index closed bullish on the first trading day of 2022 on Monday, gaining 290 points to reach the 44,887-point level. It is expected to continue the momentum throughout the year mainly on the back of higher returns. 
“The stocks are likely to continue their current momentum though it is not likely to post such higher gains,” Ahsan said. 
A total of 195 million shares were traded in the PSX on Monday, which were valued at Rs6.52 billion. 
“Stocks closed bullish led by oil and banking scrips on surging global crude oil prices and bond yields on higher inflation,” said Ahsan Mehanti, the chief executive officer (CEO) of Arif Habib Corporation. 
“Strong rupee recovery and exports surging by 16.7 percent in December 2021 played a catalyst role in the bullish close.” 
Analysts, however, believed the current account deficit and rising inflation would continue to be sources of concerns for investors in 2022.