The Polish Financial Supervision Authority released guidelines regarding the payment of dividends by banks in the medium term, a move expected to help local lenders with future financial planning.
In order to pay a dividend, lenders cannot operate under a restructuring program, and they need to have a leverage ratio of above 5%, as well as Tier 1 and total capital ratios at the minimum required levels plus 1.5 percentage points, among other things.
Banks that meet all the rules will be allowed to pay up to 75% of their profit as dividends. Banks that want to share their entire profits with shareholders will need to prove that they are not sensitive to capital shocks under negative macroeconomic scenarios, in addition to meeting all requirements mentioned above.
In the case of banks with foreign-currency-mortgage exposures, dividend levels will have to be adjusted, taking into account the size of the portfolios and the year of issuance of the loans. Those criteria will gradually lose their importance along with the amortization of forex portfolios.
The regulator noted that the guidelines, which take into account an improved capital base at local banks, need to be met both at the stand-alone and consolidated level for lenders to share their profits and could be altered in the light of significant legal and macroeconomic changes.
Following the publication of the FSA's medium-term dividend guidelines, Poland's largest lender, PKO Bank Polski SA, confirmed that it would be able to pay a divided of up to 25% of its net 2017 profit based on the regulator's criteria. The lender did not pay a dividend on its 2016 profit.
