Dividend reinvestment plan sound

Choo says generally more banks might offer DRP as a means to maintain high dividend payouts without impacting their capital

PETALING JAYA: While the dividend reinvestment plan (DRP) is fast gaining popularity among banks in Malaysia as a tool to preserve capital with Basel III around the corner, its success will depend much on a bank's policy and capital level as well as shareholder take-up rate of the plan.

Ernst & Young Malaysia partner, assurance (financial services), Chan Hooi Lam said that while DRP was an effective and efficient way to maintain capital strength, it should tie in with the bank's dividend policy and its capital level targets.