KARACHI – The State Bank of Pakistan (SBP) has directed banks to suspend cash dividend payments for the two quarter i.e. Mar’20 and Jun’20 quarters to keep capital adequacy of the sector strong.
For the banks who have already announced their cash dividends before yesterday (22 Apr’20), they will be allowed to pay out dividends as per BoD decision. However, these banks will not declare dividends for Sep’20 quarter.
UBL has not announced the result of its board meeting yet despite its BoD meeting scheduled for yesterday (22 Apr’20), suspension of dividend may put some pressure on UBL’s stock price in today’s session.
Although the estimated amount of the potential cash dividends in the next two quarters is not huge, SBP has prudently stopped the banks from making dividend payments to make provisions for worst-case scenarios.
Since the requirement is not applicable on bonus payments, cash dividends may be replaced with bonuses in the next two quarters especially for banks like UBL, MEBL, BAFL and ABL.
