Banks in Kuwait are yet to take a decision on the distribution of cash dividends this year as the global economy copes with the effects of coronavirus pandemic, top lenders said on Thursday.
The banks were reacting to an announcement made by the Kuwait Banking Association on Wednesday, instructing lenders in the country to withhold dividends this year to preserve cash and help companies through the challenges caused by the Covid-19 outbreak.
Kuwait Finance House, National Bank of Kuwait, Warba Bank, Kuwait International Bank and other local lenders issued a statement to Boursa Kuwait on Thursday saying the decision to distribute cash dividends for 2020 will be made based on the financial results of the company.
“[Deciding whether to distribute] profits or not is based on a recommendation from the board of directors to the general assembly at its annual meeting which is to be held after the end of the financial year," Kuwait Finance House, the largest sharia-compliant lender in the country, said.
Kuwait Finance House said that since the financial year has not ended yet, “the bank is not in a position to hold the annual general assembly meeting. Therefore, no recommendation was issued by the board of directors in this concern".
The bank also cited Kuwait central bank governor Mohammad Al Hashel's statement to Al Qabas newspaper in which he said the move to cancel dividends "is optional for every bank".
“Each bank has the option to decide [whether to] benefit from the CBK's measures pertaining to easing the regulatory requirements or not,” Kuwait Finance House said.
National Bank of Kuwait, another top lender in the country, also said the decision on dividends would be taken at the end of the year based on financial results and recommendations made by the board of directors to the general assembly.
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 contract 5.2 per cent in 2020, the World Bank said earlier this week, sharply revising an earlier forecast of a 2.5 per cent expansion downwards.
Britain’s top banks have also axed dividend payments after pressure from the regulator, saving their capital as a buffer against expected losses from the economic fallout from the coronavirus.
