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Banks able to pay higher dividends after relaxation of reserve fund rules


The central bank has removed the requirement for both conventional and Islamic banks to maintain a reserve fund last Wednesday, which analysts and industry observers said would pave the way for banks with a higher common equity tier 1 (CET1) ratio to declare higher dividends.  “Banks with higher CET1 ratio and that are able to comply with the stringent capital requirements under the ruling like capital conservation and counter-cyclical capital buffers are more capable to offer higher dividend payout,” said an industry official.

The central bank has removed the requirement for both conventional and Islamic banks to maintain a reserve fund last Wednesday, which analysts and industry observers said would pave the way for banks with a higher common equity tier 1 (CET1) ratio to declare higher dividends. “Banks with higher CET1 ratio and that are able to comply with the stringent capital requirements under the ruling like capital conservation and counter-cyclical capital buffers are more capable to offer higher dividend payout,” said an industry official.

PETALING JAYA: Shareholders of banks with strong capital ratios stand a better chance of being rewarded with higher dividends following Bank Negara’s move last week to scrape the requirement for reserve fund.

The central bank has removed the requirement for both conventional and Islamic banks to maintain a reserve fund last Wednesday, which analysts and industry observers said would pave the way for banks with a higher common equity tier 1 (CET1) ratio to declare higher dividends.

Markets , dividend

   

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