Two significant news hit the headlines today.
SG BANKS DIVIDENDS CAP
One: The Monetary Authority of Singapore (MAS) has called on locally-incorporated banks to cap their total dividends per share (DPS) for FY2020 at 60% of FY2019’s DPS and offer shareholders the option of receiving the dividends to be paid for FY2020 in scrip in lieu of cash.
MAS highlighted that while the local banks’ capital positions are strong, the dividend restrictions are a pre-emptive measure to bolster their resilience and capacity to support lending to businesses and individuals through an uncertain period ahead for our economy.
The news immediately took the wind out of our local banks, with their share prices falling between 3-3.8%. The general consensus on the street has been that both DBS and OCBC will likely be able to maintain their DPS payment for FY2020 while UOB will likely see a minor reduction. Hence, the MAS announcement definitely came as a negative shock....