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MAS lifts dividend cap on banks, finance companies

MAS lifts dividend cap on banks, finance companies

The Monetary Authority of Singapore (MAS) building in Singapore. (Photo: AFP/Roslan Rahman)

SINGAPORE: The Monetary Authority of Singapore (MAS) on Wednesday (Jul 28) announced it would lift dividend restrictions on local banks and finance companies.

Last year, the authority asked banks and finance companies to cap their financial year (FY) 2020 dividends per share at 60 per cent of the previous year’s and offer shareholders the option of receiving the remaining dividends to be paid for FY2020 in shares in lieu of cash.

“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,” MAS said in a press release.

READ: Local banks should cap FY2020 dividends, offer shareholders alternatives to conserve capital: MAS

It added that 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,” the authority said.

“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.”

READ: MAS urges finance firms to cap dividends, following similar advice to banks

It added that 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 strain, leading to the Singapore economy slipping away into recession in 2021”.

MAS’ deputy managing director Ho Hern Shin said local banks and finance companies “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,” she said.

She added that businesses may face added liquidity strains when COVID-19 measures are tightened from time to time, as the disease is not yet endemic.

“Banks and finance companies will do well to proactively work with customers to navigate these challenges,” she said.

Singapore returned last week to tighter Phase 2 (Heightened Alert) measures following a surge in locally transmitted COVID-19 cases.

The measures, which are set to last until Aug 18, include a ban on dining in and limiting social gatherings to two people.

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Source: CNA/ga(rw)

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