SINGAPORE: Finance companies incorporated in Singapore have been urged to cap their dividends, said the Monetary Authority of Singapore (MAS) on Friday (Aug 7), following a similar advice for local banks last week.
The central bank urged finance companies to cap their total dividends per share for the fiscal year 2020 at 60 per cent of the previous year's level.
AdvertisementAdvertisementThey are also encouraged to offer shareholders the option of receiving the dividends to be paid for 2020 in scrip in lieu of cash.
"Capital positions of the finance companies remain strong and the dividend restriction is a pre-emptive measure to bolster the finance companies’ ability to continue to support the credit needs of businesses and consumers in the current business environment," said MAS.
"The dividend restriction for finance companies balances the objective of capital conservation to sustain lending with the interests of shareholders who may rely on this income."
[h=3]READ: DBS Q2 profit skids 22% on loan losses, says business steadying[/h] AdvertisementAdvertisement[h=3]READ: OCBC Q2 profit slumps 40%, hurt by loan-loss provisions[/h]MAS said last week that stress tests have shown that local banks remain resilient amid the COVID-19 crisis.
However, as the global economy has not shown signs of recovery and the situation remains uncertain, MAS said it would be prudent for local banks to put aside a "greater portion of earnings" during this period.
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