Czech central bank sets limits on bank dividends
- The bank said dividend proposals would be assessed individually and it expected to be able to complete assessments in the third quarter.
- Komercni Banka intends, as soon as the regulators allow, to return the capital surplus exceeding the volume needed in accordance with the outlook for organic and inorganic growth in risk-weighted assets and for capital requirements, to shareholders.
PRAGUE: The Czech central bank said on Thursday it would set limits on bank dividends from 2019 and 2020 earnings based on four criteria, including a maximum of 25% of combined profits.
The central bank said the maximum dividend would be set from the lowest value of the four criteria.
The other criteria for the payout level were 100 basis points of risk-weighted assets; capital buffers after the dividend payment being 4 percentage points above overall capital requirements; and the leverage ratio adjusted for funds held at the central bank at 7%.
The bank said dividend proposals would be assessed individually and it expected to be able to complete assessments in the third quarter.
Banks have refrained from payouts since central bank recommendations came into place after the initial wave of the coronavirus pandemic last year.
Profits dropped by around half in 2020 although lenders maintain strong capital buffers.
Prague-listed Komercni Banka, the country's third largest bank which is majority owned by France's Societe Generale, reiterated on Thursday it was ready to pay dividends.
"Komercni Banka intends, as soon as the regulators allow, to return the capital surplus exceeding the volume needed in accordance with the outlook for organic and inorganic growth in risk-weighted assets and for capital requirements, to shareholders," it said.
Brokerage Patria Finance said the maximum dividend for Komercni Banka could reach 24 crowns a share under the criteria, less than half the 51 crown a share payout from 2018 profits.
Its shares traded up 0.4% on Thursday at 684 crowns.
The other Prague-listed lender, MONETA Money Bank , has previously said it would likely wait until the fourth quarter when regulatory recommendations should expire, saying the size of any payout was too small to distribute due to administrative costs.
The other largest domestic banks are CSOB, which is owned by KBC of Belgium; Ceska Sporitelna, part of Austria's Erste Group Bank ; and Italian lender Unicredit's local unit.
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