Central Bank of Kuwait allows lenders to distribute cash dividends

Regulator said Kuwait's banking sector is capable of overcoming the Covid-19 crisis

The Kuwait Central Bank towers are pictured over the traditional Dhow harbor. The banking regulator has allowed lenders to distrubute cash dividends for 2020. Reuters.

The Central Bank of Kuwait will allow lenders to distribute cash dividends to their shareholders in line with their 2020 financial performance and operations.

The decision was based on the banks' strong capital adequacy levels, the banking regulator said in a statement on its website on Saturday.

"In light of the financial data of Kuwait banks that showed strong and solid capital adequacy levels, and the banks not using provision[s] in 2020, they can distribute cash dividends to their shareholders in proportion to their results and the net profit for the year, without affecting the capital adequacy required," the Central Bank of Kuwait said.

The decision comes after the Kuwait Banking Association in June instructed lenders not to distribute cash dividends in 2020 to preserve funds and help companies through the coronavirus pandemic. The decision was taken "to enable the banking sector to play the financial brokerage role, ensure liquidity flow and operations in various economic sectors", the state-run Kuwait News Agency said at the time, citing the association.

The Central Bank of Kuwait affirmed the ability of the banking sector to overcome the Covid-19 crisis and to continue with the regulator's approach to enhancing monetary and financial stability in the country, according to the statement.

The banking regulator is currently studying the financial statements of Kuwaiti banks for the financial year ending December 31 in order to issue its approval of the data, it said.

Lenders across the globe are being asked to extend support to cash-strapped firms by passing on the benefits of stimulus measures put in place by governments and central banks.

The global economy is expected to expand 4 per cent in 2021 after shrinking 4.3 per cent in 2020, according to the World Bank's semi-annual forecast released in January. However, it warned that a rise in Covid-19 infections and delays in vaccine distribution could limit global expansion to 1.6 per cent in 2021.