| |
2014 |
2015 |
2016 |
2017 |
2018 |
| Common dividends per share (before tax) |
$0.40 |
$0.40 |
$0.50 |
$0.55 |
$0.55 |
| Common dividends per share (after tax) |
$0.38 |
$0.38 |
$0.48 |
$0.50 |
$0.50 |
| Dividend Distribution Proposal Announcement |
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| Dividend Distribution Announcement |
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Dividend Policy
Since 1996, the Board of Directors of the Bank has recommended the distribution to holders of common shares of a dividend payment of at least 30% of after-tax profits in each year.
Pursuant to the Bank’s by-laws, subject to the requirements of Lebanese law, the Bank’s net income in each financial year shall be allocated in the following order of priority:
- To the allocation of 10% of net income to the legal reserve until such reserve reaches one-third of the Bank’s share capital.
- To the allocation of amounts required for the establishment of legal regulatory reserves.
- To the payment of distributions in respect of any outstanding series “H” preferred shares, series “I” preferred shares and series “J” preferred shares, as and when approved by the shareholders of the Bank pursuant to a resolution adopted at the general meeting of shareholders during which the most recent annual audited financial statements of the Bank are approved.
- To the holders of common shares.
- To the establishment of additional special or general reserves or to the allocation of amounts to be carried forward to the following year, in accordance with a decision of the Bank’s shareholders pursuant to a resolution adopted at a general meeting.
The Bank is legally required to establish and maintain a legal reserve to which an amount equal to 10.0% of the annual net profits after taxation must be transferred each year until such reserve reaches one-third of the Bank’s share capital. The legal reserve is distributable only upon the liquidation of the Bank.
In addition, Central Bank Decision 7740, dated 21 December 2000, as amended, provides that banks are required to establish a special reserve for properties acquired in satisfaction of debts and not liquidated within the required delays. The Banking Control Commission Circular 4/2008 provides that banks must establish such special reserve at the end of the fiscal year during which the acquired property should have been liquidated. This special reserve shall be withheld from the annual profits and shall not be accounted for as an expense in the profit and loss account, in accordance with IFRS. Pursuant to Central Bank Decision 12116 dated 26 October 2015, as amended, the special reserve should be constituted over a period of 20 years.
In accordance with the Banking Control Commission Circular 270 dated 19 September 2011, the Bank was required to allocate the value of gross unrealized profits on financial assets at fair value through profit or loss as a special reserve. This reserve is not available for dividend distributions until such profits are realized and released to the Bank’s general reserves.
No dividends or other distributions in respect of the common shares may be made unless and until the full amount of distributions in respect of any outstanding series “H” preferred shares, series “I” preferred shares and series “J” preferred shares, and any future series of preferred shares of the Bank at the time outstanding and ranking pari passu with the existing preferred shares, in each case, then due and payable shall have been paid or declared and set aside.
Payment of dividends to holders of common shares must be made annually and are subject to the aforementioned regulations, on the dates specified by the general meeting (or any other shareholders’ meeting) at which the relevant annual audited financial statements of the Bank are approved. Under Lebanese law, dividends not claimed within five years of the date of payment become barred by statute of limitations; half of these unclaimed dividends revert to the Bank, while the balance is paid over to the government.
In 2019 and 2020, the Central Bank issued two circulars impacting the Bank’s dividend distribution policy: in November 2019, BdL Intermediary Circular 532 restricted banks operating in Lebanon from distributing dividends from 2019 profits, while Intermediary Circular 543 issued in February 2020 prohibited banks from paying dividends on future periods if capital adequacy ratios fall below the newly introduced levels of 7%, 10% and 12% respectively for CET1, Tier 1 and Total Capital. Pursuant to those circulars, the Board of Directors recommended to the Ordinary General Assembly, in its April 2020 meeting, not to distribute common and preferred dividends on the 2019 exercise.
