A Sigh of Relief: MAS Lifts Dividend Restrictions on Local Banks

·2-min read
Singapore Banks at Night
Singapore Banks at Night

What happened

Yesterday, the Monetary Authority of Singapore (MAS) announced that it will not extend dividend restrictions on local banks and finance companies.

Recall that a year ago, MAS made a surprise announcement by calling on the local banks to cap their dividend payments to 60% of what was paid out in 2019.

The imposition of this rule was due to the uncertainties created by the pandemic back then and was a pre-emptive measure to ensure the banks remained prudent in the face of a tough economic climate.

So what

With the global outlook improving, MAS feels that the dividend restrictions are no longer necessary.

A month ago, the central bank announced that it would conduct further stress tests on the local banks to assess if the curbs will continue.

Singapore’s economy is now expected to continue recovering after posting a 14.3% year on year growth in the second quarter.

The brighter outlook is a boon for the banks as they will face less stress from borrowers who have trouble servicing their loans.

Now what

It remains to be seen if the trio of local banks will restore their dividends to the levels seen in 2019.

OCBC Ltd (SGX: O39) and United Overseas Bank Ltd (SGX: U11), or UOB, will report their half-year earnings on 4 August.

As a recap, OCBC paid out an interim dividend of S$0.159 last year while UOB’s dividend amounted to S$0.39 per share.

DBS Group (SGX: S05) will report a day later on 5 August.

The lender paid out a quarterly dividend of S$0.18 for its second quarter last year.

If you could only buy one of these dividend stocks in August, which would you pick?

The pandemic survivor, Keppel DC REIT (SGX: AJBU)..

The property mogul, Frasers Logistics & Commercial Trust (SGX: BUOU)…

Or the blue chip darling, DBS (SGX: D05)?

This is the challenge we created for ourselves this month.

We asked the public to choose 3 stocks for us.

And we will be buying one of them.

Now, it might sound crazy to stake our money on the public’s opinion. But we’ve done our homework.

And on 29 of July, you’ll be able to watch our analyses live on a webinar.

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We’ve never done this before, so you’re in for a treat. If you have any interest in dividend stocks, this webinar is for you.

Click here to register and reserve yourself a spot for free!

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Disclaimer: Royston Yang owns shares of DBS Group.

The post A Sigh of Relief: MAS Lifts Dividend Restrictions on Local Banks appeared first on The Smart Investor.

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