King’s Town Bank (京城銀行) yesterday proposed to distribute a cash dividend of NT$1.8 per share based on last year’s earnings, becoming the nation’s third bank to surpass the regulatory limit of NT$1.5 per share for cash dividends.
Article 50 of the Banking Act (銀行法) demands that a bank set at least 30 percent of its net profit as legal reserve each year.
Until a bank’s accumulated legal reserve reaches the level of its paid-in capital, the cash dividend it can distribute would be capped at NT$1.5 per share, according to the act.
Photo: Lee Chin-hui, Taipei Times
Shanghai Commercial and Savings Bank Ltd (上海商業儲蓄銀行) was the first bank in Taiwan that met the requirements, paying cash dividends of NT$1.8 per share in 2017, NT$2 in 2018 and NT$2.05 in 2019, company data showed.
State-run Mega International Commercial Bank (兆豐銀行) came in second, paying cash dividends of NT$1.96 per share in 2018 and NT$1.92 in 2019.
Both Shanghai Commercial and Mega Bank have not announced their cash dividend proposals for last year.
King’s Town’s accumulated legal reserve reached NT$11.43 billion (US$403.9 million) last year, higher than its paid-in capital of NT$11.21 billion, the Tainan-based bank told an investors’ conference in Taipei.
As the bank’s earnings per share hit a record NT$4.9 last year, the proposed cash dividend of NT$1.8 per share represents a payout ratio of 36.73 percent.
“We hope our distribution remains stable and consistent for years,” King’s Town chairman Terence Tai (戴誠志) said. “We expect our cash dividend to stand at least NT$1.8 for the next five to 10 years. That is our commitment to our shareholders.”
With the bank’s share price falling 2.66 percent to NT$38.45 in Taipei trading yesterday, the proposed cash dividend of NT$1.8 per share suggested a yield rate of 4.68 percent.
King’s Town reported that its net profit last year grew 61.51 percent year-on-year to NT$5.49 billion, which it attributed to a double-digit rise in its net interest income due to lending growth and good returns from overseas bond investments, while provision dropped 71.96 percent from a year earlier.
Net interest income grew 10.32 percent to NT$5.25 billion, while fee income increased 3.73 percent to NT$1.91 billion, company data showed.
The bank's return on assets (ROA) and return on equity (ROE) reached 2.06 percent and 14.31 percent last year respectively.
The bank holds a cautious, but optimistic outlook for this year, expecting its net interest margin to remain flat, it said.
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