PHILIPPINE banks are likely to cut their dividend payouts or issue more stock than cash dividends going forward in order to meet the capital adequacy ratios (CAR) required by the Bangko Sentral ng Pilipinas (BSP).
Rolando Avante, president of Philippine Business Bank (PBB), said Philippine banks, particularly those that are implementing branch expansion programs, are likely to either “lessen” their dividend payouts or issue stock rather than cash dividends to be able to maintain a 10 percent car.
Avante made the statement after a stockholder recently asked why the bank issued stock dividends instead of paying out cash dividends which most stockholders prefer.
“It depends per bank. If your capitalization is very good, like those of unibanks, then it’s okay . . . The direct concern here is the capital adequacy,” Avante said.
“There is a minimum capital adequacy ratio the BSP has set for banks. Within those [levels], then you cannot declare cash dividends,” he added.
As of end-December 2014, Philippine banks recorded an average 15.23 percent CAR on a solo basis and 16.19 percent on consolidated basis.