MAS Lifts Dividend Restrictions on Local Banks and Finance Companies
Singapore, 28 July 2021… The Monetary Authority of Singapore (MAS) today announced that dividend restrictions on locally-incorporated banks and finance companies headquartered in Singapore (Local Banks and Finance Companies) will not be extended.
In July and August 2020, MAS called on Local Banks and Finance Companies respectively to cap their total dividends per share (DPS) for FY2020 at 60% of FY2019’s DPS, and offer shareholders the option of receiving the remaining dividends to be paid for FY2020If a bank has already paid out interim dividends for 1Q2020 ahead of MAS’ guidance, the dividend restrictions and the offering of dividends in scrip will be extended by an additional quarter until 1Q2021. in shares in lieu of cashRead more on MAS' call on Local Banks to moderate FY2020 dividends at this link, and MAS' call on Finance Companies to moderate FY2020 dividends at this link.. The dividend restrictions were a pre-emptive measure, introduced to ensure that Local Banks and Finance Companies maintain strong lending capacity to support the economy throughout the pandemic, given the significant uncertainties at that time.
The global economic outlook has since improved. While some uncertainties remain, Singapore’s economy is expected to continue on its recovery path, given strengthening global demand and progress in our vaccination programme. Local Banks and Finance Companies have maintained strong capital adequacy ratios and continued to meet the credit needs of individuals and businesses, despite higher levels of provisioning made during the pandemic. Under MAS’ latest stress tests, these ratios are projected to remain resilient even under an adverse macroeconomic scenario of a stalled global recovery associated with delays in vaccine deployment and a global resurgence in the pandemic due to mutated virus strains, leading to the Singapore economy slipping again into recession in 2021.
Ms Ho Hern Shin, Deputy Managing Director, MAS said, “Local Banks and Finance Companies have weathered the pandemic well and are in a strong position to support the economic recovery. As downside risks remain, Local Banks and Finance Companies should exercise continued prudence in their discretionary distributions, whilst prioritising support to customers. Particularly when COVID-19 is not yet endemic, businesses may face added liquidity strains when COVID-19 measures are tightened from time to time. Banks and Finance Companies will do well to proactively work with customers to navigate these challenges.”