Too much uncertainty amid Gaza war to allow dividend boost, Israel banking regulator says
TEL AVIV, May 19 (Reuters) - Israel's banking regulator on Monday said it was still too early to give the green light to commercial banks to raise dividend payouts due to ongoing economic uncertainty stemming from the war in Gaza.
At the outset of the war triggered by Hamas' October 2023 attack on Israel, the central bank told lenders to hold off on large payouts in order to be able to provide sufficient credit. Banks responded by reducing payouts to 15-20% of quarterly net profit - from as much as 50% prior to the conflict.
They have since been allowed to raise that to 40%, with most banks paying out 30% of net profit in the form of dividends and another 10% in share buybacks.
With strong capital ratios and profits, banks have lobbied for a rise back to 50% despite public anger that lenders are cashing in on higher interest rates while dragging their feet on raising savings rates.
"Between 40 and 50 percent is not really significant," Supervisor of Banks Daniel Hahiashvili told a news conference. "But we still think we are in a period of uncertainty in the economy so banks need to preserve their capital buffers.
"What we are conveying to the banks is that the main concern remains risk and the importance of strengthening capital ratios and our discussions with the banks are aimed at clarifying this approach," he said, declining to set a time frame for allowing higher payouts.
Bank Hapoalim (POLI.TA), opens new tab earlier said it would distribute 970 million shekels ($274 million) to shareholders in dividends and buybacks, while Israel Discount Bank (DSCT.TA), opens new tab will pay out a total of 40% of quarterly net profit, adding that it would raise that to 50% once permitted by the banking regulator.
($1 = 3.5410 shekels)
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