KNF recommends banks pay 75-100% of profits in dividend payouts

Financial Supervision Authority KNF said that it recommends banks to pay out 75-100 percent of its profits in dividends in the medium term. Full dividend payout ratios will be allowed for banks that would fulfill the same criteria even in a stress test scenario, the KNF said in a confirmation of current policy. KNF said in a published statement that in order to pay out higher dividends banks cannot be undergoing restructuring, must have a leverage ratio above 5 percent and must have a Tier 1 and total capital ratio no lower than the required minimum plus 150 basis points. “It is recommended that banks fulfilling the above-mentioned criteria may pay (on dividends) up to 75 percent of the generated profit for the year preceding the decision,” KNF said in its statement, reiterating that some banks will be able to pay out all of their net profit in dividends. The policy is conditional and the KNF reserved itself the right to revoke or change policy as “significant changes” in the regulatory, macroeconomic or other conditions demand.