Kuwait Central Bank permits lenders to distribute cash dividends

By Rahul Vaimal, Associate Editor
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The Central Bank of Kuwait (CBK) will allow lenders to distribute cash dividends to their shareholders in accordance with their 2020 financial results and operations.

The banking regulator said in a statement that the decision was based on the high capital sufficiency levels of the banks.

“In light of the financial data of Kuwait banks that showed strong and solid capital adequacy levels, and the banks not using provision[s] in 2020, they can distribute cash dividends to their shareholders in proportion to their results and the net profit for the year, without affecting the capital adequacy required,” said the Central Bank of Kuwait.

The decision comes after the Kuwait Banking Association instructed lenders not to distribute cash dividends in 2020 to conserve funds and support companies, due to the coronavirus pandemic situation.

According to the recent reports, “The decision was taken to enable the banking sector to play the financial brokerage role, ensure liquidity flow and operations in various economic sectors.”

The Central Bank of Kuwait has confirmed the capacity of the banking sector to resolve the COVID-19 crisis and to continue the approach of the regulator to increase monetary and financial stability in the country, as per the statement.

Furthermore, the bank added that the banking regulator is currently examining the financial statements of Kuwaiti banks for the financial year ending December 31 to issue its approval of the data.

Lenders across the world are asked to provide support to cash-strapped businesses by passing on the benefits of stimulus initiatives introduced by governments and central banks.

According to the World Bank’s semi-annual forecast, the global economy is expected to rise 4 percent in 2021 after declining 4.3 percent in 2020. However, it has been cautioned that a spike in COVID-19 infections and delays in vaccine distribution could limit global expansion to 1.6 percent this year.