Regulator signals banks to keep dividends low

Supervisor of Banks Daniel Hahiashvili credit: Eyal Izhar, Shlomi Yosef processing: Tali Bogdanovsky

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Israel's banks generally distribute 40% of their quarterly profits, but are again expected to cut this by half.

The banks will not go back to distributing dividends in accordance with their normal dividend policies, and will again suffice with reduced dividends. Supervisor of Banks Daniel Hahiashvili sent a letter today to the heads of the banks telling them to consider the consequences of the security situation in setting their dividends. So whereas, on average, the banks usually distribute 40% of their quarterly profits, they are expected to keep their dividends at 20% of profits for the second successive quarter.

"The current geopolitical situation makes necessary continued conservative and rational examination of capital planning, dividend distribution policy, and share buybacks, taking into consideration actual capital ratios and the capital cushions required in the various possible scenarios," Hahiashvili writes. He adds, however, that "alongside the uncertainty in our region, the banking system continues to show financial strength."

Published by Globes, Israel business news - en.globes.co.il - on May 16, 2024.