BOJ authorises resumption of dividend paymentWednesday, April 07, 2021
The Bank of Jamaica (BOJ), following a recent meeting with the representatives of financial holding company designates (FHC) and deposit taking institutions (DTIs), has agreed to the resumption of dividend declarations and distributions from these entities.
Prior to this, the central bank had authorised the suspension of dividend payment from these institutions since April last year following the outbreak of the novel coronavirus pandemic on the island.
“Effective immediately, the boards of FHCs and DTIs can choose to resume the distributions of dividends to shareholders owning more than one per cent of issued shares which had been declared for their 2019 and 2020 financial years. Dividends for 2021 can be declared and distributed to shareholders owning more than one per cent of issued shares,” the BOJ said in a news release issued on Monday.
The BOJ said that this agreed position to resume dividend distributions stemmed from the commendable efforts of financial institutions which over the last year have proactively managed the risk associated with the COVID-19 crisis.
“The agreement to resume dividend declaration and distribution reflects the fact that the quantum of loans that were afforded payment accommodations since the onset of the COVID-19 pandemic has fallen. In addition, BOJ believes that the worst of the impact of the pandemic on the economy is behind us although the economic outlook remains uncertain,” the BOJ also stated further that its position was taken with a view that the local financial system has adequate capacity to absorb unexpected losses that could arise as the crisis continues to unwind.
The bank, however, urged the entities to remain prudent in their decisions to declare and distribute dividends since some level of uncertainty remains.
This latest agreement follows from a previous decision taken last year by the BOJ, which in consultation with FHCs and DTIs, moved to suspend dividend payments with a view to conserve capital and further enhance the lending and loss-absorption capacities of licensed financial entities. The decision was taken as a direct response to the growing uncertainties occasioned by the outbreak of the COVID-19 in March last year.
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