The regulator has recommended dividend restrictions as a pre-emptive measure to bolster the resilience and capacity of banks to support lending to businesses and individuals, given the uncertain economy.
The Monetary Authority of Singapore (MAS) has asked local banks to cap their total dividends per share (DPS) for the financial year 2020 at 60 percent of the previous year's DPS, and to offer shareholders the option of receiving the FY2020 dividends in scrip in lieu of cash.
While MAS said that the capital position of local banks is strong, and they are well-placed to weather the risks and uncertainties ahead, it recommended setting aside a greater portion of earnings during this period as a prudent measure, given the substantial uncertainties ahead and that global economies are not yet showing sustained signs of recovery.
«This will bolster the Local Banks’ ability to continue to support the credit needs of businesses and consumers as well as absorb economic shocks should a more adverse scenario materialize,» MAS said in a statement on Wednesday.
UOB Gives Support
«We support MAS' precautionary move,» Lee Wai Fai, Group Chief Financial Officer, UOB, said in response to the announcement.
«UOB remains well-capitalised and are confident of our ability to ride through the COVID pandemic. We will continue to maintain a strong balance sheet in support of our customers and to sustain our investments in our franchise and capabilities,» Lee added.
