What it is
Some companies have instruments that can later become shares: convertible bonds, convertible preference shares, employee options. If they convert, more shares share the same profit.
Diluted EPS shows the worst case: profit per share if all of them converted today. It is always equal to or lower than basic EPS.
Most Nepali banks have no such instruments, so the two numbers match. If they differ, the notes explain why.
How it is calculated
Diluted EPS = (Net profit + after-tax interest saved on convertibles) ÷ (Weighted shares + shares from assumed conversion).
Worked on Nabil Bank Limited, FY 2082/83 Q4
NABIL reported diluted EPS of Rs 28.36 for FY 2082/83 against basic EPS of Rs 28.36.
NABIL's share capital includes Rs 500.00 crore of preference shares, so per-share figures here use its 27,05,69,970 ordinary shares, as the filing does.
What good looks like
Equal to basic EPS, or very close. A big gap means a large convertible issue is waiting to dilute existing holders.
Watch out
- Bonus shares are not 'dilution' in this sense; they are already issued and in basic EPS.
- A diluted EPS higher than basic is a reporting error; it cannot be by definition.
- Rights shares announced but not issued are not in diluted EPS either.
- Non-convertible or redeemable preference shares (such as NABIL's) do not dilute; only convertible instruments enter diluted EPS.
In Nepal
Required by IAS 33 / NAS 33 under NFRS. In Punji's filings corpus the two figures are usually identical for BFIs.
Questions
It has no convertible instruments, so there is nothing to dilute.
No. It assumes more shares for the same profit, so it is always equal to or lower than basic EPS.